ANZ BANK NEW ZEALAND LIMITEDREGISTERED BANK DISCLOSURE STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2017
NUMBER 88 | ISSUED FEBRUARY 2018

ANZ Bank New Zealand Limited

REGISTERED BANK DISCLOSURE STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2017

CONTENTS
Condensed Consolidated Interim Financial Statements
Income Statement

2Statement of Comprehensive Income

2

Balance Sheet

3

Condensed Cash Flow Statement

4Statement of Changes in Equity

4

Notes to the Financial Statements

5

Registered Bank Disclosures
General Disclosures

11

Additional Financial Disclosures

12

Asset Quality

13

Capital Adequacy under the Internal Models Based Approach

13

Concentration of Credit Risk to Individual Counterparties

14

Insurance Business14

Directors' Statement

15

GLOSSARY OF TERMS
In this Registered Bank Disclosure Statement (Disclosure Statement) unless the context otherwise requires:
Bank means ANZ Bank New Zealand Limited.
Banking Group, We or Our means the Bank and all its controlled entities.
Immediate Parent Company means ANZ Holdings (New Zealand) Limited.
Ultimate Parent Bank means Australia and New Zealand Banking Group Limited.
Overseas Banking Group means the worldwide operations of Australia and New Zealand Banking Group Limited including its controlled
entities.
New Zealand business means all business, operations, or undertakings conducted in or from New Zealand identified and treated as if itwere conducted by a company formed and registered in New Zealand.
NZ Branch means the New Zealand business of the Ultimate Parent Bank.
ANZ New Zealand means the New Zealand business of the Overseas Banking Group.
UDC means UDC Finance Limited.
Registered Office is Ground Floor, ANZ Centre, 23-29 Albert Street, Auckland, New Zealand, which is also the Banking Group’s address forservice.
RBNZ means the Reserve Bank of New Zealand.
APRA means the Australian Prudential Regulation Authority.
the Order means the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014.
Any term or expression which is defined in, or in the manner prescribed by, the Order shall have the meaning given in or prescribed by theOrder.

ANZ Bank New Zealand Limited

2

INCOME STATEMENT
31 Dec 17

31 Dec 16

NZ$m

NZ$m

Interest income

1,593

1,551

Interest expense

808

789

785

762

210

168

111

21

1

1

Operating income

1,107

952

Operating expenses

386

369

Profit before credit impairment and income tax

721

583

12

38

Profit before income tax

709

545

Income tax expense

199

152

Profit after income tax

510

393

For the three months ended

Note

Net interest income
Other operating income

2

Net funds management and insurance income
Share of associates' profit

Credit impairment charge

5

STATEMENT OF COMPREHENSIVE INCOME
31 Dec 17

31 Dec 16

For the three months ended

NZ$m

NZ$m

Profit after income tax

510

393

Unrealised gains / (losses) recognised directly in equity

2

(15)

Realised losses / (gains) transferred to income statement

22Income tax credit / (expense) relating to items that may be reclassified(1)

3

Items that may be reclassified subsequently to profit or loss

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

3

(10)

513

383

ANZ Bank New Zealand Limited

3

BALANCE SHEET
As at

Note

31 Dec 17

30 Sep 17

NZ$m

NZ$m

3,273

2,338

Assets
Cash

270

536

Collateral paid

1,734

1,415

Trading securities

9,625

7,663

135

123

Derivative financial instruments

8,801

9,878

Available-for-sale assets

6,293

6,360

121,454

117,627

Settlement balances receivable

Investments backing insurance contract liabilities

Net loans and advances

4

UDC assets held for sale

11

-

3,065

Other assets

753

683

Life insurance contract assets

668

636

Investments in associates

77

Premises and equipment

363

367

Goodwill and other intangible assets
Total assets

3,405

3,275

156,781

153,973

1,860

1,840

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings

7

Derivative financial instruments

383

613

106,356

101,657

9,378

9,826

Current tax liabilities

66

39

Deferred tax liabilities

204

187

-

1,088

1,350

1,151

Employee entitlements

126

119

Other provisions

61

66

23,70324,606

Total liabilities

143,487

141,192

Net assets

13,294

12,781

8,888

8,888

UDC liabilities held for sale

11

Payables and other liabilities

Debt issuances

8

EquityShare capital

51

48

Retained earnings

4,355

3,845

Total equity

13,294

12,781

Reserves

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

CONDENSED CASH FLOW STATEMENT
31 Dec 17

31 Dec 16

NZ$m

NZ$m

Interest received

1,591

1,549

Interest paid

(750)

(772)

Other cash inflows provided by operating activities

224

221

Other cash outflows used in operating activities

(596)

(543)

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

469

455

Net changes in operating assets and liabilities

1,540

2,740

Net cash flows provided by operating activities

2,009

3,195

Cash outflows used in investing activities

(14)

(15)

Net cash flows used in investing activities

(14)

(15)

Cash inflows provided by financing activities

375

250

Cash outflows used in financing activities(1,512)(2,448)Net cash flows used in financing activities(1,137)(2,198)Net increase in cash and cash equivalents

858

982

Cash and cash equivalents at beginning of the period

2,439

2,315

Cash and cash equivalents at end of the period

3,297

3,297

For the three months ended

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

STATEMENT OF CHANGES IN EQUITY

Share capital

Availablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total
equity

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

As at 1 October 2016

8,888

-

62

3,760

12,710

Profit after income tax

-

-

-

393

393

Unrealised gains / (losses) recognised directly in equity

-

7

(22)

-

(15)

Realised losses transferred to the income statement

-

-

2

-

2

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

-

(2)

5

-

3

Total comprehensive income for the period

-

5

(15)

393

383

As at 31 December 2016

8,888

5

47

4,153

13,093As at 1 October 2017

8,888

5

43

3,845

12,781

Profit after income tax

-

-

-

510

510

Unrealised gains / (losses) recognised directly in equity

-

15

(13)

-

2

Realised losses transferred to the income statement

-

-

2

-

2

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

-

(4)

3

-

(1)

-

11

(8)

510

513

8,888

16

35

4,355

13,294

Total comprehensive income for the period
As at 31 December 2017

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

NOTES TO THE FINANCIAL STATEMENTS
1.

SIGNIFICANT ACCOUNTING POLICIESStatement of compliance
These interim financial statements for the Banking Group have been prepared in accordance with the requirements of the Reserve Bank of
New Zealand Act 1989, and should be read in conjunction with the Banking Group’s financial statements for the year ended 30 September
2017.
These financial statements comply with:• New Zealand Generally Accepted Accounting Practice, as defined in the Financial Reporting Act 2013
• NZ IAS 34 Interim Financial Reporting and other applicable Financial Reporting Standards, as appropriate for publicly accountable forprofit entities• IAS 34 Interim Financial Reporting.
Basis of measurement
These financial statements have been prepared on a going concern basis in accordance with historical cost concepts except that thefollowing assets and liabilities are stated at their fair value:••••

derivative financial instruments
available-for-sale financial assets
financial instruments held for trading
financial instruments designated at fair value through profit and loss.

Changes in accounting policies
The accounting policies adopted by the Banking Group are consistent with those adopted and disclosed in the previous full year financial
statements.
Presentation currency and rounding
The amounts contained in the financial statements are presented in millions of New Zealand dollars, unless otherwise stated.
Comparatives
Certain amounts in the comparative information have been reclassified to ensure consistency with the current period’s presentation.
Principles of consolidation
The financial statements consolidate the financial statements of the Bank and its subsidiaries.

2.

OTHER OPERATING INCOME

For the three months endedi) Net fee and commission income

31 Dec 17
NZ$m

31 Dec 16
NZ$m

105

105

ii) Other income
Net trading gains

60

55

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

13

(16)

Net foreign exchange earnings and other financial instruments income

73

39

Derivative valuation adjustments

517Loss on sale of mortgages to NZ Branch

(1)

(1)

Insurance proceeds

20

-

Other

8

8

Other income

105

63

Total other operating income

210

168

ANZ Bank New Zealand Limited

6

NOTES TO THE FINANCIAL STATEMENTS
3.

SEGMENT ANALYSISThe Banking Group is organised into three major business segments for segment reporting purposes - Retail, Commercial and Institutional.
Centralised back office and corporate functions support these segments. These segments are consistent with internal reporting provided
to the chief operating decision maker, being the Bank’s Chief Executive Officer.
Segment reporting has been updated to reflect minor changes to the Banking Group’s structure. Comparative data has been adjusted tobe consistent with the current period’s segment definitions.
RetailRetail provides a full range of banking and wealth management services to consumer, private banking and small business banking
customers. We deliver our services via our internet and app-based digital solutions and network of branches, mortgage specialists,
relationship managers and contact centres.
Commercial
Commercial provides a full range of banking services including traditional relationship banking and sophisticated financial solutions(including asset financing) through dedicated managers focusing on privately owned medium to large enterprises and the agriculturebusiness segment.
Institutional
The Institutional division services global institutional and business customers across three products sets: Transaction Banking, Loans &Specialised Finance and Markets.
•

Transaction Banking provides working capital and liquidity solutions including documentary trade, supply chain financing as well as
cash management solutions, deposits, payments and clearing.

•

Loans & Specialised Finance provides loan products, loan syndication, specialised loan structuring and execution, project and export
finance, debt structuring and acquisition finance, structured trade and asset finance, and corporate advisory.

•

Markets provide risk management services on foreign exchange, interest rates, credit, commodities, debt capital markets and wealthsolutions in addition to managing the Banking Group’s interest rate exposure and liquidity position.

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

3 months ended 31 December 2017

RetailCommercial

Institutional

Other

Total

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

External revenues

679

452

180

(204)

1,107

Intersegment revenues1

(62)

(206)

(3)

271

-

Total revenues

617

246

177

67

1,107

Profit after income tax

247

133

92

38

510

952

3 months ended 31 December 2016

External revenues

668

457

189

(362)

Intersegment revenues1

(70)

(227)

-

297

-

Total revenues

598

230

189

(65)

952

Profit / (loss) after income tax

247

99

98

(51)

393

31 Dec 17

31 Dec 16

NZ$m

NZ$m

Other segment
Other segment profit / (loss) after income tax comprises:
For the three months ended
2

Central functions

15

(2)

Technology and Group Centre

5

10

Economic hedges

6

(11)

Revaluation of insurance policies

12

(48)

Total

38

(51)

1
2

Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.
Central functions’ external revenues for the three months to 31 December 2017 includes the $20 million insurance proceeds (note 2) that were received from a member of theOverseas Banking Group.

ANZ Bank New Zealand Limited

7

NOTES TO THE FINANCIAL STATEMENTS
4.

NET LOANS AND ADVANCES
31 Dec 17
NZ$m

30 Sep 17
NZ$m

Overdrafts

778

1,040

Credit cards

1,727

1,638

Term loans - housing

73,506

72,524

Term loans - non-housing

44,251

44,227

Note

1,664

1,577

121,926

121,006

Unearned income

(253)

(222)

Capitalised brokerage/mortgage origination fees

323

334

121,996

121,118

Finance lease and hire purchase receivables
Subtotal

Gross loans and advances (including assets classified as held for sale)Less: Provision for credit impairment

5

Net loans and advances (including assets classified as held for sale)Less: UDC net loans and advances held for sale
Net loans and advances

11

(542)

(579)

121,454

120,539-(2,912)

121,454

117,627

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of NZ$3,867 million as at 31 December 2017 (30September 2017: NZ$4,337 million). These assets qualify for derecognition as the Bank does not retain a continuing involvement in thetransferred assets.

5.

PROVISION FOR CREDIT IMPAIRMENTProvision for credit impairment - balance sheet
31 Dec 17

30 Sep 17

NZ$m

NZ$m

Individual provision

125

152

Collective provision

417

427

Total provision for credit impairment

542

579

31 Dec 17

31 Dec 16

NZ$m

NZ$m

Credit impairment charge - income statement
For the three months ended

New and increased provisions

40

74

Write-backs

(12)

(15)

Recoveries of amounts previously written-off

(6)

(6)

Individual credit impairment charge

2253Collective credit impairment release

(10)

(15)

Total credit impairment charge

1238

31 Dec 17

30 Sep 17

NZ$m

NZ$m

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

190

182

Impaired loans

322

357

6.

IMPAIRED AND PAST DUE LOANS

ANZ Bank New Zealand Limited

8

NOTES TO THE FINANCIAL STATEMENTS
7.

DEPOSITS AND OTHER BORROWINGS
31 Dec 17
NZ$m

30 Sep 17
NZ$m

Term deposits

47,44545,457

On demand and short term deposits

42,00041,451

Deposits not bearing interest

9,952

8,882

UDC secured investments

972

1,039

Total customer deposits

100,369

96,829Certificates of deposit

1,585

1,916

Note

Deposits from banks and securities sold under repurchase agreements
Commercial paper
Deposits from Ultimate Parent Bank and other members of ANZ New Zealand
Deposits and other borrowings (including liabilities classified as held for sale)

952

157

3,389

3,721

61

73

106,356

102,696-(1,039)106,356

101,657

31 Dec 17
NZ$m

30 Sep 17
NZ$m

Senior debt
Covered bonds
Total unsubordinated debt
Subordinated debt

16,223
4,196
20,41916,0085,315
21,323- Additional Tier 1 capital

Less: UDC secured investments held for sale
Deposits and other borrowings

8.

11

DEBT ISSUANCES

2,438

2,438

- Basel III transitional subordinated bonds

835

835

- Other

11

10

Total subordinated debt

3,284

3,283

Total debt issued

23,70324,606

Covered bonds are guaranteed by ANZNZ Covered Bond Trust Limited (the Covered Bond Guarantor), solely in its capacity as trustee of
ANZNZ Covered Bond Trust (the Covered Bond Trust). The Covered Bond Trust is a member of the Banking Group, whereas the Covered
Bond Guarantor is not a member of the Banking Group.
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 the Covered Bond Guarantor as trustee of the Covered Bond Trust of issuances of covered bondsby 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.

ANZ Bank New Zealand Limited

9

NOTES TO THE FINANCIAL STATEMENTS
9.

FAIR VALUE MEASUREMENTS

Financial assets and financial liabilities measured at fair value in the balance sheet
The Banking Group categorises financial assets and liabilities carried at fair value into a fair value hierarchy as required by NZ IFRS 13 Fair
Value Measurement based on the observability of inputs used to measure fair value:•

Level 1 – valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities.

•

Level 2 – valuations using inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability,
either directly or indirectly. Modelled valuation techniques are used that incorporate observable market inputs for securities withsimilar credit risk, maturity and yield characteristics; and or/current market yields for similar instruments.

•

Level 3 – valuations using inputs for the asset or liability that are not based on observable market date (unobservable inputs).

We deem transfers into and out of Level 1 and Level 2 to have occurred as at the beginning of the reporting period in which the transfer
occurred.
The table below summarises the attribution of financial instruments carried at fair value to the fair value hierarchy:
31 Dec 17
Level 1
NZ$m

Level 2
NZ$m

7,163
3

30 Sep 17

Level 3
NZ$m

Total
NZ$m

Level 1
NZ$m

2,462

-

9,625

7,276

8,795

3

8,801

5

5,511

781

1

6,293

5,336

-

135

-

135

12,677

12,173

4

24,854

Deposits and other borrowings

-

3,389

-

Derivative financial instruments

27

9,351

-

Payables and other liabilities

342-

Total financial liabilities held at fair value

369

12,740Level 2
NZ$m

Level 3
NZ$m

Total
NZ$m

387

-

7,663

9,870

3

9,878

1,023

1

6,360

-

123

-

123

12,617

11,403

4

24,024

3,389

-

3,721

-

3,721

9,378

24

9,801

1

9,826

-

342

151

-

-

151

-

13,109175

13,522

1

13,698Financial assets
Trading securities
Derivative financial instruments
Available-for-sale assets
Investments backing insurance contract liabilities
Total financial assets held at fair value
Financial liabilities

Financial assets and financial liabilities not measured at fair value
Below is a comparison of the carrying amounts as reported on the balance sheet and fair values of financial asset and liability categories
other than those categories where the carrying amount is at fair value or considered a reasonable approximation of fair value.
The fair values below have been calculated using discounted cash flow techniques where contractual future cash flows of the instrument
are discounted using discount rates incorporating wholesale market rates or market borrowing rates of debt with similar maturities or ayield curve appropriate for the remaining term to maturity.
31 Dec 17
Carrying
amount
NZ$m

30 Sep 17
Fair value
NZ$m

Carrying
amountNZ$mFair value
NZ$m

121,454

121,553

120,539

120,588

Deposits and other borrowings2, 3

102,967

103,022

98,97599,030Debt issuances1

23,70324,18924,60625,018AssetsNet loans and advances1, 2Liabilities

1

2
3

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.
Amounts for 30 September 2017 include UDC items classified as held for sale.
Excludes commercial paper (note 7) designated at fair value through profit or loss.

ANZ Bank New Zealand Limited

10

NOTES TO THE FINANCIAL STATEMENTS
10. CREDIT RELATED COMMITMENTS, GUARANTEES AND CONTINGENT LIABILITIES
31 Dec 17
NZ$m

30 Sep 17
NZ$m27,67926,769Contract amount of:
Credit related commitments - facilities provided
Undrawn facilities
Guarantees and contingent liabilities
991

1,010

Performance related contingencies

1,769

1,598

Total guarantees and contingent liabilities

2,760

2,608

Total credit related commitments, guarantees and contingent liabilities

30,43929,377

Guarantees and letters of credit

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 tocustomers, therefore these transactions are subjected to the same credit origination, portfolio management and collateral requirements
for customers applying for loans. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect
future cash requirements.
Other contingent liabilities
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 deemednecessary.

11.

ASSETS AND LIABILITIES HELD FOR SALE

On 11 January 2017, the Bank announced that it had entered into a conditional agreement to sell UDC to HNA Group (HNA). On 21
December 2017, the Bank announced that it had been informed that New Zealand’s Overseas Investment Office had declined HNA’s
application to acquire UDC and the agreement with HNA was terminated in January 2018. As a result, the assets and liabilities of UDC were
not classified as held for sale as at 31 December 2017.

12. SUBSEQUENT EVENTSOn 17 January 2018, the Bank entered into an agreement to sell its 25% shareholding in Paymark Limited (Paymark) to Ingenico Group for
NZ$47.5 million. The carrying amount of the Banking Group’s investment in Paymark at 31 December 2017 was NZ$7 million and isincluded in Investments in Associates on the balance sheet. The transaction is subject to regulatory consents.
On 9 February 2018, the Bank’s Board resolved to:•

pay a preference dividend of NZ$6 million no later than 6 March 2018 and•repay an NZ$835m perpetual subordinated bond on 18 April 2018. This bond previously qualified as transitional tier 2 capital under
the RBNZ’s Basel III capital requirements.

ANZ Bank New Zealand Limited

11

REGISTERED BANK DISCLOSURESThis Disclosure Statement has been issued in accordance with the Order.

B1. GENERAL DISCLOSURES
Guarantors
The Bank has guaranteed the payment of interest and principal of covered bonds issued by its subsidiary ANZ New Zealand (Int’l) Limited.
This obligation is guaranteed by ANZNZ Covered Bond Trust Limited (the Covered Bond Guarantor), solely in its capacity as trustee of
ANZNZ Covered Bond Trust. The Covered Bond Guarantor’s address for service is Level 9, 34 Shortland Street, Auckland, New Zealand. The
Covered Bond Guarantor is not a member of the Banking Group and has no credit ratings applicable to its long term senior unsecured
obligations. The covered bonds have been assigned a long term rating of Aaa and AAA by Moody’s Investors Service and Fitch Ratings
respectively. Refer to page 8 for further details, and to page 12 for the amount of assets of the ANZ Covered Bond Trust pledged as security
for covered bonds.
No other material obligations of the Bank are guaranteed as at 19 February 2018.
Changes in the Bank’s Board of Directors
As at 19 February 2018 there have been changes to the Directors of the Bank since 30 September 2017, the balance date of the last fullyear disclosure statement. These changes were:• The Rt Hon. Sir John Phillip Key, GNZM, AC was appointed as a Non-Executive Director on 18 October 2017 and was appointed Chair of
the Board of Directors on 1 January 2018.
• John Judge retired as a Non-Executive Director on 31 December 2017.
Changes to Conditions of Registration
The conditions of registration applying to the Bank were amended on 1 October 2017 to refer to a revised version of the RBNZ Banking
Supervision Handbook document Outsourcing Policy (BS11) which includes changes to outsourcing arrangements.
Adoption of this amendment has not resulted in any material change to the Banking Group’s reported result or financial position.
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:Rating Agency

Current Credit Rating

Qualification

AA-

Outlook Negative

Moody’s Investors Service

A1

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Standard & Poor’s

Financial support
APRA has reviewed the level of financial exposures that can be provided to the respective New Zealand banking subsidiaries and branches(New Zealand operations) of the four Australian parent banks, including the Ultimate Parent Bank.
APRA has confirmed that by 1 January 2021 no more than 5% of the Ultimate Parent Bank’s Level 1 Tier 1 capital base can comprise nonequity exposures to its New Zealand operations during ordinary times. Exposures in excess of this limit as at 1 January 2016 must be
reduced in equal percentages over the five year transition period and may not increase above the exposures as at 30 June 2015. This limit
does not include holdings of capital instruments or eligible secured contingent funding support provided to the Bank during times offinancial stress.
The Ultimate Parent Bank established a New Zealand branch which was registered on 5 January 2009. The Bank sells, from time-to-time,
residential mortgages into the NZ Branch to provide funding for the Bank’s business. As at 31 December 2017, the NZ Branch held
approximately NZ$3.9 billion of residential mortgages. To satisfy APRA’s requirements described above, the Bank intends to repay thisfunding at approximately NZ$1.6 billion per annum over the transition period ending 31 December 2020.
APRA has also stated that contingent funding support by the Ultimate Parent Bank to the Bank during times of financial stress must be
provided on terms that are acceptable to APRA and the Ultimate Parent Bank’s exposures to the Bank and its other New Zealandoperations must not exceed 50% of the Ultimate Parent Bank’s Level 1 Tier 1 capital base. At present, only covered bonds meet APRA’s
criteria for contingent funding. On this basis, the Ultimate Parent Bank believes it will be able to continue to provide financial support to
the Bank.
Further, from 1 July 2017, APRA’s Level 3 Conglomerates regulations became effective which limit the financial and operational assistancethe Ultimate Parent Bank can provide the Bank. These requirements are not expected to place additional restrictions on the Ultimate
Parent Bank’s ability to provide financial or operational support to the Bank.

ANZ Bank New Zealand Limited

12

REGISTERED BANK DISCLOSURES
B2. ADDITIONAL FINANCIAL DISCLOSURES
Additional information on the balance sheet
NZ$m

As at 31 December 2017

Total interest earning and discount bearing assets

142,695

Total interest and discount bearing liabilities

121,429

Total amounts due from related entities

3,733

Total amounts due to related entities

5,275

Assets charged as security for liabilities
These amounts exclude the amounts disclosed as collateral paid in the balance sheet that relate to derivative liabilities. The terms andconditions of the collateral agreements are included in the standard Credit Support Annex that forms part of the International Swaps andDerivatives Association Master Agreement.
Assets charged as security for liabilities include the following types of instruments:• Securities provided as collateral for repurchase transactions. These transactions are governed by standard industry agreements.
• UDC secured investments are secured by a security interest granted under the trust deed over all of UDC’s present and future assets
and undertakings, to Trustees Executors Limited, as supervisor. The assets subject to the security interest comprise mainly loans to
UDC's customers and certain plant and equipment. The security interest secures all amounts payable by UDC on the UDC secured
investments and all other moneys payable by UDC under the trust deed.
• Specified residential mortgages provided as security for notes and bonds issued to investors as part of the Bank’s covered bondprogramme.
The amortised cost of assets pledged as security are as follows:
As at 31 December 2017

Note

NZ$m

8

10,592

933

Securities sold under agreements to repurchase
Residential mortgages pledged as security for covered bonds
Assets pledged as collateral for UDC secured investments

3,086

Additional information on the income statement
The amounts of net trading gains or losses and other fair value adjustments are included in note 2 to the financial statements. The Banking
Group does not have any loans and advances designated at fair value through profit or loss. Other operating income for the purposes of
the Order comprises Net fee and commission income, Insurance proceeds and Other (all in note 2), Net funds management and insuranceincome and Share of associates’ profit (both shown on the income statement).
Additional information on liquidity risk
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 internal and regulatory liquidity scenario metrics.
As at 31 December 2017

NZ$m

Cash and balances with central banks

2,222

Certificates of deposit

419

Government, local body stock and bonds

5,961

Government treasury bills

1,015

Reserve Bank bills

1,542

Other bonds

6,163

Total liquidity portfolio

17,322The Bank also held unencumbered internal residential mortgage backed securities which would entitle the Banking Group to enter into
repurchase transactions with a value of NZ$6,683 million at 31 December 2017.

ANZ Bank New Zealand Limited

13

REGISTERED BANK DISCLOSURES
B3. ASSET QUALITY
End of period balances
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

As at 31 December 2017

NZ$m

NZ$m

NZ$m

NZ$m

Total impaired assets

30

20

272

322

Individual provision

22

7

96

125

Collective provision

77

122

218

417

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

129

32

29

190

Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

NZ$m

NZ$m

NZ$m

NZ$m

Individual credit impairment charge / (release)

(2)

14

10

22

Collective credit impairment charge / (release)

2

1

(13)

(10)

Credit impairment charge / (release)

-

15

(3)

12

Charges to the income statement

3 months ended 31 December 2017

Asset quality for assets designated at fair value
The Banking Group does not have any loans and advances designated at fair value through profit or loss.

B4. CAPITAL ADEQUACY UNDER THE INTERNAL MODELS BASED APPROACH
RBNZ Basel III capital ratios
RBNZ
minimum
ratios

Ratio

Common equity tier 1 capital

4.5%

11.3%

Tier 1 capital

6.0%

14.7%

Total capital

8.0%

15.0%

Buffer ratio

2.5%

6.8%

As at 31 December 2017

CapitalBeforedeductions

Deductions

Total

As at 31 December 2017

NZ$m

NZ$m

NZ$m

Common equity tier 1 capital

12,994(3,734)9,260

Additional tier 1 capital

2,797

(18)

Tier 2 capital
Total capital

2,779
12,039Total tier 1 capital
835

(601)

234
12,273

Capital structure
There have been no capital instruments issued since the reporting date for the last disclosure statement. Common equity tier 1 capital
includes the Available-for-sale revaluation reserve of NZ$16 million and Additional tier 1 capital includes retained earnings of the Bonus
Bonds Scheme of NZ$38 million (NZ$56 million less NZ$18 million deduction) as at 31 December 2017.

ANZ Bank New Zealand Limited

14

REGISTERED BANK DISCLOSURES
Capital requirements
As at 31 December 2017

NZ$m

Corporate exposures

2,249

Sovereign exposures

11

Bank exposures

253
1,348

Retail mortgage exposures

697

Other retail exposures

4,558

Exposures subject to internal ratings based approach
Specialised lending exposures subject to slotting approach

843

Exposures subject to standardised approach

37

Equity exposures

3

Other exposures

137

Total credit risk 1

5,578

Operational risk

464

Market risk

350
139

Agri business supervisory adjustment

6,531

Total capital requirements
1

The calculation of capital requirements for total credit risk includes a scalar of 1.06 in accordance with the Bank's Conditions of Registration.

Additional mortgage information
As required by the RBNZ, loan-to-valuation ratios (LVR) 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 partially drawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing
lending which have been accepted by the customer.
On-balance
sheet
NZ$m

Off-balance
sheet
NZ$m

Total
NZ$m

Does not exceed 60%

34,482

5,394

39,876

Exceeds 60% and not 70%

16,152

1,361

17,513

Exceeds 70% and not 80%

16,633

1,146

17,779Does not exceed 80%

67,267

7,901

75,168

Exceeds 80% and not 90%

2,506

126

2,632

Exceeds 90%

1,416

185

1,601

Total retail mortgage exposures

71,1898,212

79,401As at 31 December 2017

LVR range

Capital for other material risks
The Banking Group's internal capital allocation for other material risks is NZ$410 million. The risks covered by this include risks arising frompensions, insurance, strategic equity, fixed assets, deferred acquisition costs, value in-force, business retention and software.

B5. CONCENTRATIONS OF CREDIT RISK TO INDIVIDUAL COUNTERPARTIESThe Banking Group measures its concentration of credit risk to individual counterparties at the reporting date on the basis of actual
exposures. Peak end-of-day aggregate credit exposures are measured on the basis of internal limits that were not materially exceeded
between the reporting date for the previous disclosure statement and the reporting date for the Disclosure Statement. As required by theOrder, this credit exposure information excludes exposures to connected persons, central government of any country and any bank with along term credit rating of A- or A3 or above, or its equivalent.
For the three months ended 31 December 2017 there were no individual counterparties where the Banking Group’s period end or peak
end-of-day credit exposure equalled or exceeded 10% of equity as at the end of the period.

B6. INSURANCE BUSINESSThe Banking Group conducts insurance business through its subsidiary OnePath Life (NZ) Limited (OnePath Life). The Banking Group’s
aggregate amount of insurance business comprises the total assets of OnePath Life of NZ$966 million, which is 0.6% of the total
consolidated assets of the Banking Group.

ANZ Bank New Zealand Limited

15

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 Statements (New Zealand
Incorporated Registered Banks) Order 2014

(ii)

The Disclosure Statement is not false or misleading.

Over the three months ended 31 December 2017, after due enquiry, each Director believes that:(i)

ANZ Bank New Zealand Limited has complied with all Conditions of Registration that applied during that period(ii)

Credit exposures to connected persons were not contrary to the interests of the Banking Group(iii) ANZ Bank New Zealand 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, operational risk and other business risks,
and that those systems were being properly applied.

This Disclosure Statement is dated, and has been signed by or on behalf of all Directors of the Bank on, 19 February 2018.

Antony Carter

Shayne ElliottDavid Hisco

The Rt Hon. Sir John Key, GNZM, AC

Mark Verbiest

Nigel Williams

Joan Withers