ANZ Bank New Zealand Limited
Registered Bank Disclosure Statement
FOR THE NINE MONTHS ENDED 30 JUNE 2015 | NUMBER 78 ISSUED AUGUST 2015

ANZ Bank New Zealand Limited

Registered Bank Disclosure Statement
For the nine months ended 30 June 2015

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' Statement

15

Glossary of Terms
In this Registered Bank Disclosure Statement (DisclosureStatement) unless the context otherwise requires:(a) Bank means ANZ Bank New Zealand Limited;(b) Banking Group means the Bank and all its controlled
entities;(c) Immediate Parent Company means ANZ Holdings (New
Zealand) Limited;(d) Ultimate Parent Bank means Australia and New Zealand
Banking Group Limited;(e) Overseas Banking Group means the worldwide
operations of Australia and New Zealand Banking Group
Limited including its controlled entities;(f) New Zealand business means all business, operations, orundertakings conducted in or from New Zealandidentified and treated as if it were conducted by acompany formed and registered in New Zealand;(g) NZ Branch means the New Zealand business of the
Ultimate Parent Bank;(h) ANZ New Zealand means the New Zealand business of
the Overseas Banking Group;(i) Registered Office is Ground Floor, ANZ Centre, 23-29
Albert Street, Auckland, New Zealand, which is also the
Banking Group’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 (New Zealand Incorporated Registered
Banks) Order 2014; and(m) 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.

ANZ Bank New Zealand Limited

2

General Disclosures
This Disclosure Statement has been issued in accordancewith the Order.

Credit Rating Information
The Bank has three credit ratings, which are applicable to its
long-term senior unsecured obligations. The Bank’s credit
ratings are:
Current Credit
RatingAA-

Qualification
Outlook Stable

Moody’s Investors Service

Aa3

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Rating Agency
Standard & Poor’s

Guarantors
No obligations of the Bank are guaranteed as at 14 August
2015.
ANZNZ Covered Bond Trust
Certain debt securities (Covered Bonds) issued by the Bank’s
wholly owned subsidiary, ANZ New Zealand (Int’l) Limited,
are guaranteed by ANZNZ Covered Bond Trust Limited (theCovered Bond Guarantor), solely in its capacity as trustee of
ANZNZ Covered Bond Trust. The Covered Bond Guarantor
has guaranteed the payment of interest and principal of
Covered Bonds with a carrying value as at 30 June 2015 of
NZ$4,983 million, pursuant to a guarantee which is secured
over a pool of assets. The Covered Bond Guarantor’s addressfor service is Level 9, 34 Shortland Street, Auckland, New
Zealand. The Covered Bond Guarantor is not a member ofthe Banking Group and has no credit ratings applicable to its
long term senior unsecured obligations payable in New
Zealand dollars. The Covered Bonds have been assigned along term rating of Aaa and AAA by Moody’s InvestorsService and Fitch Ratings respectively. Details of the pool ofassets that secure this guarantee are provided in Note 7.

Other Matters
APRA has informed the four major Australian banks,
including the Ultimate Parent Bank, that it is reviewing thelevel of non-equity and contingent funding that can beprovided to their respective New Zealand banking
subsidiaries and branches. Whilst details of this review aresubject to further discussions with APRA, we believe that the
Ultimate Parent Bank will continue to be able to provide
financial support to ANZ New Zealand. We expect that any
changes, if implemented, will be made with an appropriate
transition period determined by APRA to allow ANZ New
Zealand to adjust to any new arrangements.

Conditions of Registration
The Bank has identified that due to noncompliance with adocumented internal process, the Bank was required toinclude the assets of the associated Bonus Bonds unit trust in
the risk weighted exposures for the Banking Group for capital
adequacy purposes. As a result, the Bank was technically in aposition of noncompliance with Condition of Registration 1B
for a period of time. These assets are included in the Banking
Group’s risk weighted exposures as at 30 June 2015 and, as atthat date, the Bank was in full compliance with its Conditionsof Registration. The Banking Group's capital ratios were notmaterially affected, and no additional capital is required to beheld as a result of including these assets in the Banking
Group’s risk weighted exposures. The Bank proactively
brought this matter to the attention of the RBNZ, who haveacknowledged that the matter is not material, technical innature, and that no further action is warranted on the part of
the RBNZ.

Directorate
As at 14 August 2015 there have been no changes to the
Directors of the Bank since 30 September 2014, the balancedate of the last full year disclosure statement.

Auditor
The Banking Group’s auditor is KPMG, Chartered
Accountants, Level 9, 10 Customhouse Quay, Wellington,
New Zealand.

ANZ Bank New Zealand Limited

3

Income Statement
Unaudited

Unaudited

9 months to

9 months toYear to30/06/2015

30/06/2014

30/09/2014

Interest income

5,197

4,588

6,272

Interest expense

3,059

2,551

3,529

Net interest income

2,138

2,037

2,743

Net trading gains

218

145

210

Net funds management and insurance income

280

232

325

367

381

547

4

3

3

Operating income

3,007

2,798

3,828

Operating expenses

1,134

1,095

1,489

Profit before credit impairment and income tax

1,873

1,703

2,339

56

(26)

(16)
2,355

NZ$ millions

Other operating income

Note

2

Share of associates' profit

Credit impairment charge / (release)

5

Audited

1,817

1,729

Income tax expense

502

473

639

Profit after income tax

1,315

1,256

1,716

AuditedProfit before income tax

Statement of Comprehensive Income
NZ$ millions

Profit after income tax

Unaudited

Unaudited

9 months to

9 months toYear to30/06/2015

30/06/2014

30/09/2014

1,315

1,256

1,716

(26)

25

35

7

(7)

(10)

(19)

18

25

2

(7)

(2)

(16)

(33)

(41)

4

11

12

(10)

(29)

(31)

1,286

1,245

1,710

Items that will not be reclassified to profit or loss
Actuarial gain / (loss) on defined benefit schemes
Income tax credit / (expense) relating to items that will not be reclassified
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Unrealised gains / (losses) recognised directly in equity
Realised gains transferred to income statement
Income tax credit relating to items that may be reclassified
Total items that may be reclassified subsequently to profit or loss
Total comprehensive income for the period

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

ANZ Bank New Zealand Limited

4

Statement of Changes in Equity

NZ$ millions

As at 1 October 2013 (Audited)

Share capital

Availablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total equity

7,243

(2)

26

4,187

11,454

Profit after income tax

-

-

-

1,256

1,256

Unrealised gains / (losses) recognised directly in equity

-

3

(10)

-

(7)

Realised gains transferred to the income statement

-

-

(33)

-

(33)

Actuarial gain on defined benefit schemes

-

-

-

25

25

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

-

(1)

12

(7)

4

Total comprehensive income for the period

-

2

(31)

1,274

1,245

Ordinary dividend paid

-

-

-

(1,510)(1,510)Preference dividend paid

-

-

-

(6)

(6)

Ordinary shares issued

970

-

-

-

970

As at 30 June 2014 (Unaudited)

8,213

-

(5)

3,945

12,153As at 1 October 2013 (Audited)

7,243

(2)

26

4,187

11,454

Profit after income tax

-

-

-

1,716

1,716

Unrealised gains / (losses) recognised directly in equity

-

3

(5)

-

(2)

Realised gains transferred to the income statement

-

-

(41)

-

(41)

Actuarial gain on defined benefit schemes

-

-

-

35

35

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

-

(1)

13

(10)

2

Total comprehensive income for the period

-

2

(33)

1,741

1,710

Ordinary dividend paid

-

-

-

(2,340)(2,340)Preference dividend paid

-

-

-

(13)

(13)

Ordinary shares issued

970

-

-

-

970

As at 30 September 2014 (Audited)

8,213

-

(7)

3,575

11,781

Profit after income tax

-

-

-

1,315

1,315

Unrealised gains recognised directly in equity

-

1

1

-

2

Realised gains transferred to the income statement

-

-

(16)

-

(16)

Actuarial loss on defined benefit schemes

-

-

-

(26)

(26)

Income tax credit on items recognised directly in equity

-

-

4

7

11

Total comprehensive income for the period

-

1

(11)

1,296

1,286

Ordinary dividend paid

-

-

-

(1,015)(1,015)Preference dividend paid

-

-

-

(7)

(7)

8,213

1

(18)

3,849

12,045As at 30 June 2015 (Unaudited)

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

ANZ Bank New Zealand Limited

5

Balance Sheet
Unaudited

Unaudited

Audited30/06/2015

30/06/2014

30/09/2014

3,643

3,041

1,822

346

882

855

Collateral paid

2,219

1,304

783

Trading securities

12,257

12,492

11,750

NZ$ millions

Note

AssetsCash
Settlement balances receivable

Investments backing insurance contract liabilities
Derivative financial instruments

141

174

190

16,507

7,653

11,404Current tax assets

78

95

-

Available-for-sale assets

782

1,056

772

Net loans and advances

105,262

94,19396,299Other assets

4

717

612

648

Life insurance contract assets

541

454

470

Investments in associates

90

90

88

Premises and equipment

374

376

380

Goodwill and other intangible assets

3,471

3,452

3,454

146,428

125,874

128,915

124,684

112,740

111,914

Settlement balances payable

1,620

1,539

2,296

Collateral received

1,278

553

800

91,89085,32984,01915,957

8,073

10,205--67

Total assets
Interest earning and discount bearing assets
Liabilities

Deposits and other borrowings

8

Derivative financial instruments
Current tax liabilities
Deferred tax liabilities
Payables and other liabilities
Provisions
Debt issuances
Subordinated debt

98

50

60

1,689

1,267

1,297

195

205

204

19,313

15,573

17,042

2,343

1,132

1,144

Total liabilities

134,383

113,721117,134

Net assets

12,045

12,153

11,781

8,213

8,213

8,213

(17)

(5)

(7)

Retained earnings

3,849

3,945

3,575

Total equity

12,045

12,153

11,781

109,679

97,35797,809EquityShare capital
Reserves

Interest and discount bearing liabilities

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

ANZ Bank New Zealand Limited

6

Condensed Cash Flow Statement
NZ$ millions

Unaudited

Unaudited

9 months to

9 months to

AuditedYear to30/06/2015

30/06/2014

30/09/2014

Cash flows from operating activities
Interest received

5,129

4,530

6,189

Interest paid

(2,967)(2,488)(3,429)Other cash inflows provided by operating activities

688

706

951

Other cash outflows used in operating activities(1,679)(1,505)(1,898)Cash flows from operating profits before changes in operating assets and liabilities

1,171

1,243

1,813

Net changes in operating assets and liabilities

(420)

1,008

(536)

Net cash flows provided by operating activities

751

2,251

1,277

Cash flows from investing activities
Cash inflows provided by investing activities

-

13

18

Cash outflows used in investing activities

(77)

(84)

(120)

Net cash flows used in investing activities

(77)

(71)

(102)

Cash inflows provided by financing activities

4,296

4,686

5,401

Cash outflows used in financing activities(3,089)(5,876)(6,950)Net cash flows provided by / (used in) financing activities

1,207(1,190)(1,549)Net increase / (decrease) in cash and cash equivalents

1,881

990

(374)

Cash and cash equivalents at beginning of the period

1,830

2,204

2,204

Cash and cash equivalents at end of the period

3,711

3,194

1,830

Cash flows from financing activities

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

ANZ Bank New Zealand Limited

7

Notes to the Financial Statements
1.

Significant Accounting Policies(i)Reporting entity and statement of compliance
These interim financial statements are for the Banking
Group for the nine months ended 30 June 2015. They havebeen prepared in accordance with New Zealand Generally
Accepted Accounting Practice as appropriate for profit
oriented entities, the requirements of NZ IAS 34 Interim
Financial Reporting, IAS 34 Interim Financial Reporting andthe Order, and should be read in conjunction with the
Banking Group’s financial statements for the year ended
30 September 2014.

(ii)

Basis of measurement
These financial statements have been prepared on a going
concern basis in accordance with historical cost concepts
except that the following assets and liabilities are stated attheir fair value:





2.

derivative financial instruments, including in 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.

(iii) Changes in accounting policies
The accounting policies adopted by the Banking Groupare consistent with those adopted and disclosed in theprevious full year Disclosure Statement.
(iv) Presentation currency and rounding
The amounts contained in the financial statements arepresented in millions of New Zealand dollars, unlessotherwise stated.
(v)

Comparatives
Amounts in the cash flow statement for cash and cash
equivalents and net changes in operating assets andliabilities have been updated for the revised definition of
cash and cash equivalents applied in the previous full year
Disclosure Statement.

(vi) Principles of consolidation
The financial statements consolidate the financial
statements of the Bank and its subsidiaries.

Other Operating Income
Unaudited

Unaudited

9 months to

9 months toYear to30/06/2015

30/06/2014

30/09/2014

Net fee income

304

306

408

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

25

(6)

35

Insurance settlement relating to ING Diversified Yield Fund and ING Regular Income Fund

-

91

91

Loss on sale of mortgages to NZ Branch

(2)

(23)

(23)

Other income

40

13

36

367

381

547

NZ$ millions

Total other operating income

AuditedANZ Bank New Zealand Limited

8

Notes to the Financial Statements
3.

Segment Analysis

The Banking Group is organised into four major businesssegments for segment reporting purposes - Retail,Commercial, Wealth and Institutional. Centralised back officeand corporate functions support these segments. Thesesegments are consistent with internal reporting provided tothe chief operating decision maker, being the Bank’s Chief
Executive Officer.
Segmental reporting has been updated to reflect minorchanges to the Banking Group’s structure. Comparative data
has been adjusted to be consistent with the current period’s
segment definitions.
RetailRetail provides products and services to personal customers
via the branch network, mortgage specialists, the contact
centre and a variety of self-service channels (internet
banking, phone banking, ATMs, website and mobile phonebanking). Core products include current and savings
accounts, unsecured lending (credit cards, personal loans
and overdrafts) and home loans secured by mortgages overproperty. Retail distributes insurance and investment
products on behalf of the Wealth segment.

services are offered to small enterprises (typically with annual
revenues of less than NZ$5 million). Commercial & Agricustomers consist of primarily privately owned medium tolarge enterprises. The Banking Group's relationship withthese businesses ranges from simple banking requirementswith revenue from deposit and transactional facilities, andcash flow lending, to more complex funding arrangementswith revenue 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 sizedbusinesses, as well as investment products.
WealthWealth comprises the Private Wealth, Funds Management
and Insurance businesses, which provide private banking,investment, superannuation and insurance products andservices.
Institutional
Institutional provides financial services through a number of
specialised units to large multi-banked corporations, often
global, which require sophisticated product and risk
management solutions. Those financial services include loan
structuring, foreign exchange, wholesale money market
services and transaction banking.

Commercial

Other

Commercial provides services to Business Banking,Commercial & Agri, and UDC customers. Business Banking

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

Business segment analysis1
NZ$ millions

RetailCommercial

Wealth2

Institutional

Other 3

Total

Unaudited 9 months to 30/06/2015

External revenues

725

2,359

114

676

(867)

3,007

Intersegment revenues

230(1,202)

124

(175)

1,023

-

Total revenues

955

1,157

238

501

156

3,007

Profit after income tax

330

545

100

253

87

1,315

Unaudited 9 months to 30/06/2014

External revenues

753

2,085

178

592

(810)

2,798

Intersegment revenues

154(1,002)

121

(130)

857

-

Total revenues

907

1,083

299

462

47

2,798

Profit after income tax

308

538

148

237

25

1,256
3,828

Audited year to 30/09/2014

External revenues

991

2,850

211

802

(1,026)

Intersegment revenues

225(1,395)

165

(177)

1,182

-

1,216

1,455

376

625

156

3,828

412

717

181

320

86

1,716

Total revenues
Profit after income tax
1
2

3

Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.
Wealth external revenues for the nine months to 30 June 2014 and year to 30 September 2014 includes the NZ$91 million insurance settlement relating to the Bank’s
former involvement in the ING Diversified Yield fund and the ING Regular Income Fund.
This segment has negative external revenues as this segment incurs funding costs on behalf of the Banking Group and is reimbursed internally.

ANZ Bank New Zealand Limited

9Notes to the Financial Statements
4.

Net Loans and Advances
Unaudited

Unaudited

Audited30/06/2015

30/06/2014

30/09/2014

Overdrafts

1,657

1,689

1,744

Credit card outstandings

1,676

1,546

1,580

Term loans - housing

58,13451,53552,717

Term loans - non-housing

43,027

39,24039,622

Lease receivables

243

103

277

Hire purchase

911

791

837

Other

125

124

125

105,773

95,02896,902

(638)

(692)

(666)

Less: Unearned income

(214)

(361)

(212)

Add: Capitalised brokerage/mortgage origination fees

290

189

208

Add: Customer liability for acceptances

51

29

67

105,262

94,19396,299

NZ$ millions

Note

Total gross loans and advances
Less: Provision for credit impairment

5

Total net loans and advances

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of NZ$7,719 million as at 30 June 2015
(30/06/2014 NZ$9,743 million, 30/09/2014 NZ$9,176 million). These assets qualify for derecognition as the Bank does not retain acontinuing involvement in the transferred assets.

5.

Provision for Credit Impairment

Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

Collective provision

85

123

259

467

Individual provision

60

8

103

171

Total provision for credit impairment

145

131

362

638

NZ$ millions
Unaudited 30/06/2015

Collective credit impairment charge

7

5

4

16

Individual credit impairment charge / (release)

(6)

47

(1)

40

Credit impairment charge

1

52

3

56

86

112

282

480

Unaudited 30/06/2014

Collective provision
Individual provision

53

22

137

212

Total provision for credit impairment

139

134

419

692

Collective credit impairment release

(15)

(5)

(42)

(62)

Individual credit impairment charge / (release)

(4)

63

(23)

36

Credit impairment charge / (release)

(19)

58

(65)

(26)

Collective provision

78

118

255

451

Individual provision

72

15

128

215

Total provision for credit impairment

150

133

383

666

Collective credit impairment charge / (release)

(23)

1

(69)

(91)

Individual credit impairment charge / (release)

4

79

(8)

75

(19)

80

(77)

(16)

Audited 30/09/2014

Credit impairment charge / (release)

ANZ Bank New Zealand Limited

10Notes to the Financial Statements
6.

Impaired and Past Due Assets
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

Total impaired assets

112

31

269

412

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

117

36

59

212

Total impaired assets

168

39

423

630

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

101

36

77

214

Total impaired assets

189

35

410

634

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

88

30

32

150

NZ$ millions
Unaudited 30/06/2015

Unaudited 30/06/2014

Audited 30/09/2014

7.

Financial Assets Pledged as Collateral

NZ$ millions

Cash collateral given on derivative financial instruments

Unaudited

Unaudited

Audited30/06/2015

30/06/2014

30/09/2014

2,219

1,304

783

Trading securities encumbered through repurchase agreements

826

1,350

47

Residential mortgages pledged as security for covered bonds

7,020

6,858

7,283

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

2,458

2,310

2,354

Total financial assets pledged as collateral

12,523

11,822

10,467ANZNZ 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 (if any) after all prior ranking creditors of the Covered Bond
Trust have been satisfied.
The Banking Group continues to recognise the assets of the Covered Bond Trust on its balance sheet as, although they are pledged
as security for covered bonds, the Bank retains substantially all the risks and rewards of ownership.

8.

Deposits and Other Borrowings

NZ$ millions

Note

Unaudited

Unaudited

Audited30/06/2015

30/06/2014

30/09/2014

Certificates of deposit

2,257

2,236

1,376

Term deposits

34,401

33,91634,758Other deposits bearing interest and other borrowings

39,32633,31434,027

Deposits not bearing interest

6,366

5,812

6,001

Deposits from banks

1,002

1,575

226

6,877

6,951

6,057

1,654

1,519

1,569

7

6

5

91,89085,32984,019Unaudited

Unaudited

Audited30/06/2015

30/06/2014

30/09/2014

Commercial paper
UDC secured investments
Deposits from other members of ANZ New Zealand
Total deposits and other borrowings

9.

7

Related Party Balances

NZ$ millions

Total due from related parties

4,369

2,932

4,116

Total due to related parties

5,879

3,559

4,834

ANZ Bank New Zealand Limited

11

Notes to the Financial Statements
10. Capital Adequacy
Basel III capital ratios

Banking Group
30/06/2015

30/06/2014

30/09/2014

Common equity tier 1 capital

10.0%

11.3%

10.7%

Tier 1 capital

12.3%

11.8%

11.1%

Total capital

13.1%

13.0%

12.3%

Buffer ratio

5.1%

5.0%

4.3%

Common equity tier 1 capital

4.5%

4.5%

4.5%

Tier 1 capital

6.0%

6.0%

6.0%

Total capital

8.0%

8.0%

8.0%

Buffer requirement

2.5%

2.5%

2.5%

Unaudited

RBNZ minimum ratios:

Capital of the Banking Group
Unaudited
NZ$ millions

30/06/2015

Common equity tier 1 capital before deductions

11,745Less deductions from common equity tier 1 capital(3,702)

Common equity tier 1 capital

8,043

Additional tier 1 capital

1,836

Total tier 1 capital

9,879

Tier 2 capital

702

Total capital

10,581

Capital requirements of the Banking Group

Exposure atdefault

Risk weighted
exposure or
implied risk
weighted
exposure1

Total capitalrequirement

Corporate exposures

48,33927,572

2,206

Sovereign exposures

11,199309

25Bank exposures

12,201

3,831

306

Retail mortgage exposures

64,294

15,992

1,278

Other retail exposures

10,551

8,470

678

Exposures subject to internal ratings based approach

146,584

56,174

4,493

Specialised lending exposures subject to slotting approach

9,731

9,132

731

Exposures subject to standardised approach

2,055

356

29

92

389

31

NZ$ millions
Unaudited 30/06/2015

Equity exposures
Other exposures

3,311

1,469

117

Total credit risk

161,773

67,5205,401

Operational risk

n/a

5,496

440

Market risk
Total
1

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

n/a

7,624

610

161,773

80,6406,451

ANZ Bank New Zealand Limited

12

Notes to the Financial Statements
Pillar II capital for other material risks
The Banking Group has an Internal Capital Adequacy Assessment Process (ICAAP) which complies with the requirements of theBank'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 1 and total capital ratios. The other material risks identified by the
Banking Group include pension risk, insurance risk, strategic equity risk, fixed asset risk, deferred acquisition cost risk, value in-force
risk, business retention risk and software risk.
The Banking Group's internal capital allocation for these other material risks is NZ$450 million (30/06/2014 NZ$457 million;
30/09/2014 NZ$485 million).
The Banking Group regularly reviews the methodologies used to calculate the economic capital allocated to other material risks.
Updated capital methodologies (particularly relating to software, strategic equity and value in-force risk) were applied in March 2015
and prior periods restated accordingly.
Residential mortgages by loan-to-valuation ratio
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the Banking
Group's valuation of the security property at origination of the exposure. Off balance sheet exposures include undrawn and partiallydrawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing lending whichhave been accepted by the customer.
30/06/2015
UnauditedOn-balancesheet

Off-balance
sheet

Total

Does not exceed 60%

20,9773,960

24,937

Exceeds 60% and not 70%

10,6731,201

11,874

Exceeds 70% and not 80%

17,793

1,958

19,751

Does not exceed 80%

49,443

7,119

56,562

Exceeds 80% and not 90%

4,520

237

4,757

Exceeds 90%

2,143

243

2,386

Total

56,106

7,599

63,705

NZ$ millions

LVR range

11. Liquidity Portfolio
The Banking Group holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The
size of the Banking Group’s liquidity portfolio is based on the amount required to meet its liquidity policy and includes both items
classified as cash and those classified as operating assets in the Condensed Cash Flow Statement.
Unaudited 30/06/2015
NZ$ millions

Cash and balances with central banks

Cash

Trading
Securities

Available-forsale securities

Total

1,828

1,828

-

-

853

-

-

853

Certificates of deposit

-

-

398

398

Government, local body stock and bonds

-

4,280

172

4,452

Government treasury bills

-

1,598

28

1,626

Securities purchased under agreement to resell

Other bonds
Total liquidity portfolio

-

5,859

-

5,859

2,681

11,737598

15,016The Bank also held unencumbered internal residential mortgage backed securities which would entitle the Banking Group to enter
into repurchase transactions with a value of NZ$5,906 million at 30 June 2015.

ANZ Bank New Zealand Limited

13

Notes to the Financial Statements
12. Fair Value Measurements
Financial assets and financial liabilities not measured at fair value
Below is a comparison of the carrying amounts as reported on the balance sheet and fair value of financial asset and liability
categories other than those categories where the carrying amount is at fair value or considered a reasonable approximation of fairvalue.
The fair values below have been calculated using discounted cash flow techniques where contractual future cash flows of the
instrument are discounted using discount rates incorporating wholesale market rates or market borrowing rates of debt with similar
maturities or a yield curve appropriate for the remaining term to maturity.
Unaudited

Audited30/06/2015
Carrying
amountFair value

Unaudited

30/06/2014
Carrying
amountFair value

30/09/2014
Carrying
amountFair value

105,262

105,755

94,193

94,20396,29996,397

Deposits and other borrowings2

91,89092,041

85,32985,32084,01984,042

Debt issuances1

19,313

19,45815,573

15,742

17,042

17,225Subordinated debt

2,343

2,335

1,132

1,113

1,144

1,137

NZ$ millions

AssetsNet loans and advances1
Liabilities

1

2

Fair value hedging is applied to certain financial instruments within these categories. The resulting fair value adjustments mean that the carrying value differs from theamortised cost.
Includes commercial paper (note 8) designated at fair value through profit or loss.

Financial assets and financial liabilities measured at fair value in the balance sheet
The Banking Group uses a valuation method within the following hierarchy to determine the carrying amount of assets and liabilities
held at fair value, all of which are recurring fair value measurements. There are no assets or liabilities measured at fair value on a nonrecurring basis.


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



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

Level 3 – Financial instruments that have been valued using valuation techniques which incorporate significant inputs that are
not based on observable market data (unobservable inputs).

There have been no substantial changes in the valuation techniques applied to different classes of financial instruments during theperiod.
Valuation hierarchy
Unaudited
NZ$ millions

Level 1

Unaudited

30/06/2015
Level 2 Level 3

Total

Level 1

Audited30/06/2014
Level 2 Level 3

Total

Level 1

30/09/2014
Level 2 Level 3

Total

Financial assets
Trading securities
Derivative financial instruments
Available-for-sale assets1

12,16889

6 16,501- 12,257 12,487

5

4

7,649

-

7,653

- 16,507- 12,492 11,659

91- 11,750

2 11,402- 11,404

324

456

2

782

1,054

-

2

1,056

712

58

2

772

Investments backing insurance contract
liabilities1

2

139

-

141

119

55

-

174

129

61

-

190

Total financial assets held at fair value

12,500 17,185

2 29,687 13,664

7,709

2 21,375 12,502 11,612

2 24,116

6,877

-

6,951

-

6,951

-

-

- 15,957

5

8,068

-

8,073

5 10,200

194

-

-

194

Financial liabilities
Deposits and other borrowings-

Derivative financial instruments

4 15,953

6,877

Payables and other liabilities

526

Total financial liabilities held at fair value

530 22,830

1

-

-

526

- 23,360

199 15,019- 15,218

226

6,057
-

231 16,257

6,057- 10,205-

226- 16,488

During the period, available-for-sale assets of NZ$159 million and Investments backing insurance contract liabilities of NZ$126 million were reclassified from Level 1 toLevel 2 following a reassessment of available pricing information. Transfers into and out of Level 1 and Level 2 are deemed to have occurred as of the beginning of thereporting period in which the transfer occurred.

ANZ Bank New Zealand Limited

14

Notes to the Financial Statements
13. Concentrations of Credit Risk to Individual Counterparties
The Banking Group 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 nine months ended 30 June 2015 there were no individual counterparties, excluding connected parties, governments andbanks with long term credit ratings of A- or above, where the Banking Group’s period end or peak end-of-day credit exposure
equalled or exceeded 10% of the Banking Group’s equity as at the end of the period.

14. Insurance Business
The Banking Group conducts insurance business through its subsidiary OnePath Life (NZ) Limited. OnePath Insurance Services (NZ)
Limited, which was a subsidiary of OnePath Life (NZ) Limited, also conducted insurance business until it amalgamated with OnePath
Life (NZ) Limited on 30 November 2014.
The Banking Group’s aggregate amount of insurance business comprises the total consolidated assets of OnePath Life (NZ) Limitedof NZ$862 million (30/06/2014: NZ$827 million; 30/09/2014 NZ$850 million), which is 0.6% (30/06/2014: 0.7%; 30/09/2014 0.7%) of
the total consolidated assets of the Banking Group.

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

Unaudited

Unaudited

Audited30/06/2015

30/06/2014

30/09/2014

Credit related commitments
Commitments with certain drawdown due within one year

1,217

990

764

Commitments to provide financial services

30,223

26,621

27,378

Total credit related commitments

31,44027,611

28,142

971

841

925

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

60

61

79

1,350

1,199

1,321

90

91

111

2,471

2,192

2,436

The Banking Group 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 to the same credit
origination, portfolio management and collateral requirements as for customers that apply for loans. The contract amountrepresents the maximum potential amount that could be lost if the counterparty fails to meet its financial obligations. As thefacilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements.
Other contingent liabilities
On 11 March 2013, litigation funder Litigation Lending Services (NZ) Limited announced plans for a representative action againstbanks in New Zealand for certain fees charged to New Zealand customers over the past six years. Proceedings were filed against the
Bank on 25 June 2013. The potential outcome of this litigation cannot be determined with any certainty at this stage.
The Banking Group has other contingent liabilities in respect of actual and possible claims and court proceedings.
An assessment of the Banking Group’s likely loss in respect of these matters has been made on a case-by-case basis and provision
made where deemed necessary.
On 3 December 2014, the Commerce Commission and the Financial Markets Authority (FMA) announced settlements with the Bank
relating to the Commission's and the FMA's investigations into the promotion, sale and offer of interest rate swaps to rural customers
from 2005 to 2009; the settlement includes a payment fund of NZ$18.5 million and a contribution to the Commission’s and the
FMA's costs.

16. Subsequent Events
On 14 August 2015 the Bank’s Board resolved to pay a preference dividend of NZ$7 million on 1 September 2015 and to pay an
ordinary dividend of NZ$730 million no later than 30 September 2015.

ANZ
A Bank New
w Zealand Lim
mited

1
15

DirectorsDs' Statem
ment
As
A at the date oon which this Disclosure Statement is signedd, after due enq
quiry, each Direector believes thhat:(i)

The Disclossure Statementt contains all th
he information that is requiredd by the Registtered Bank Discclosure Statements (New
Zealand Inccorporated Reg
gistered Banks)) Order 2014; a nd(ii)

The Disclossure Statementt is not false or misleading.

OverOthe nine mmonths ended 30
3 June 2015, afteradue enquiiry, each Directtor believes tha
at:(i)

ANZ Bank N
New Zealand Limited has com
mplied with all C
Conditions of RegistrationRtha
at applied duriing that period except as noteed
on page 2;(ii)

Credit expo
osures to conne
ected persons were not contrrary to the interests of the Bannking Group;(iii) ANZ Bank N
New Zealand Limited had systtems in place tto monitor and control adequuately the Bankking Group’s ma
aterial risks,

including ccredit risk, conccentration of credit risk, intereest rate risk, currrency risk, equuity risk, liquiditty risk, operatio
onal risk andother busin
ness risks, and thattthose syste
ems were bein g properly app
plied.
This
T Disclosure
e Statement is dated,dand hass been signed by or on behalf of all Directoors of the Bankk on, 14 Augusst 2015.

AntonyA
Carter

ShayneS
Elliott

David
D
Hisco

ohn Judge
Jo

Michael
M
Smith

Mark
M
Verbiest

oan WithersJo