Australia and New Zealand Banking Group Limited– New Zealand Branch
General Short Form Disclosure Statement
FOR THE THREE MONTHS ENDED 31 DECEMBER 2010 | NUMBER 9 ISSUED FEBRUARY 2011Australia and New Zealand Banking Group Limited - New Zealand Branch

General Short Form Disclosure Statement
For the three months ended 31 December 2010

Contents
General Disclosures
Income Statement and Statement of 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
7
8
9
10
11
25
27
28

Glossary of Terms
This General Short Form Disclosure Statement has been issued in accordance with the Registered Bank DisclosureStatement (Off-Quarter - Overseas Incorporated Registered Banks) Order 2008 ("the Order").
In this General Short Form Disclosure Statement unless the context 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 Funds Pty Limited, which is the immediate parent company of ANZ Holdings(New Zealand) Limited;(d) "NZ Branch" means the New Zealand branch office of Australia and New Zealand Banking Group Limited;(e) "ANZ New Zealand" means the combined New Zealand operations 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; and(j) Any term or expression which is defined in, or in the manner prescribed by, the Order shall have the meaning given inor prescribed by the Order.

Australia and New Zealand Banking Group Limited - New Zealand Branch

2

General Disclosures
General Matters
The NZ Branch was registered as a bank on 5 January 2009.
Wellington, New Zealand.

Its address for service is Level 6, 1 Victoria Street,

The address for service for the Ultimate Parent Bank is ANZ Centre Melbourne, Level 9, 833 Collins Street, Docklands,
Victoria 3008, Australia.
On 30 November 2009, ANZ New Zealand 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 in ownership, the name of these businesses was changed to OnePath in November 2010.

Nature of Business
ANZ New Zealand provides a broad range of banking and financial products and services to retail, small business, rural,commercial and institutional clients.

Pending Proceedings or Arbitration
Other than disclosed in the General Short Form Disclosure Statement, there are no pending proceedings or arbitration
concerning any member of ANZ New Zealand that may have a material adverse effect on ANZ New Zealand as at 21
February 2011.
Further details on pending proceedings or arbitration are set out in Note 21.

Other Material Matters
There are no matters relating to the business or affairs of the NZ Branch and ANZ New Zealand 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 NZ Branch or any member of ANZ New Zealand is theissuer.

Credit Rating Information
Credit ratings are assigned to sovereigns and businesses by the international credit rating agencies. Credit ratings provide
investors with an indication of the credit-worthiness of an entity in which they are considering investing. There are threemajor internationally recognised credit rating agencies: Standard & Poor’s, Moody’s Investors Service and Fitch Ratings.
As at 21 February 2011 the Ultimate Parent Bank has three current 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 Ultimate Parent Bank’s Aa1 rating on review for possible downgrade. A similar action was taken on the othermajor Australian Banks. On 20 May 2010 Fitch changed the outlook on the Ultimate Parent Bank from Stable to Positive.
On 2 March 2009, Moody’s changed the outlook on the Ultimate Parent Bank from Stable to Negative. During the twoyears ended 31 December 2010 there were no other changes to the Ultimate Parent Bank’s credit ratings or qualifications.

Australia and New Zealand Banking Group Limited - New Zealand Branch

3

General Disclosures
The Ultimate Parent Bank's Credit Ratings are:Rating Agency

Current Credit Rating

Qualification

Standard & Poor’s

AA

Outlook Stable

Moody’s Investors Service

Aa1

Review for Possible
Downgrade

Fitch Ratings

AA-

Outlook Positive

Standard & Poor's

Moody's InvestorsService

Fitch Ratings

The following table describes the credit rating grades available:

The following grades display investment grade characteristics:
Ability to repay principal and interest is extremely strong. Thisis the highest investment category.

AAA

Aaa

AAA

Very strong ability to repay principal and interest.

AA

Aa

AA

Strong ability to repay principal and interest althoughsomewhat susceptible to adverse changes in economic,
business or financial conditions.
Adequate ability to repay principal and interest. Morevulnerable to adverse changes.

A

A

A

BBB

Baa

BBB

BB

Ba

BB

B

B

B

The following grades have predominantly speculative characteristics:
Significant uncertainties exist which could affect the paymentof principal and interest on a timely basis.
Greater vulnerability and therefore greater likelihood of
default.
Likelihood of default now considered high. Timely repayment ofprincipal and interest is dependent on favourable financial
conditions.
Highest risk of default.
Obligations currently in default.

CCC

Caa

CCC

CC to CCa to CCC to CD-

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 Investors Service 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.

Ranking of Local Creditors in Liquidation
There are material legislative restrictions in Australia which subordinate the claims of a class of unsecured creditors of the
NZ Branch on the assets of the Ultimate Parent Bank to those of another class of unsecured creditors of the Ultimate
Parent Bank, in liquidation of the Ultimate Parent Bank.
The Banking Act 1959 of the Commonwealth of Australia (the "Banking Act") gives priority over Australian assets of the
Ultimate Parent Bank to deposits/liabilities in Australia if the Ultimate Parent Bank is unable to meet its obligations orsuspends payment. Accordingly, deposits/liabilities in New Zealand (together with all other senior unsecured creditors of
the Ultimate Parent Bank) will rank after deposits/liabilities in Australia of the Ultimate Parent Bank in relation to claims
against Australian assets.
Specifically, pursuant to section 13A(3) of the Banking Act, if an Authorised Deposit-Taking Institution (defined in that Act
to include a Bank like the Ultimate Parent Bank) (an "ADI") becomes unable to meet its obligations or suspends payment,
the assets of the ADI in Australia are to be available to meet the ADI's liabilities in the following order:(a) first, the ADI's liabilities to APRA (if any), because of the rights APRA has against the ADI because APRA has made,or is required to make, payments to depositors under the Financial Claims Scheme (defined below);(b) second, the ADI's debts to APRA for costs incurred by APRA in administration of the Financial Claims Scheme inrespect of the ADI;(c) third, the ADI's liabilities (if any) in Australia in relation to protected accounts that account-holders keep with theADI;(d) fourth, the ADI’s debts (if any) to the Reserve Bank of Australia;(e) fifth, the ADI’s liabilities (if any) under an industry support contract that is certified by APRA; and(f) sixth, the ADI's other liabilities in the order of their priority (apart from section 13A(3)).
Under section 13A(1) of the Banking Act, in certain circumstances APRA may take control of an ADI’s business or appoint
an administrator (defined in the Banking Act) to take control of the ADI’s business. Section 16(1) and (2) of the Banking
Act provide that, despite anything contained in any law relating to the winding up of companies, but subject to section
13A(3) of the Banking Act, the debts of an ADI to APRA in respect of APRA's costs (including costs in the nature of
remuneration and expenses) of being in control of the ADI's business or of having an administrator in control of the ADI's
business have priority in a winding-up of the ADI over all other unsecured debts.

Australia and New Zealand Banking Group Limited - New Zealand Branch

4

General Disclosures
Section 86 of the Reserve Bank Act provides that notwithstanding anything contained in any law relating to the winding up
of companies, but subject to section 13A(3) of the Banking Act, debts due to the Reserve Bank of Australia by any ADI
shall, in a winding up, have priority over all other debts other than debts due to the Commonwealth of Australia.
Section 13A(3) of the Banking Act affects all of the unsecured deposit liabilities of the NZ Branch which as at 31 December
2010 amounted to $nil (31/12/2009 $nil).

Requirement to Hold Excess Assets over Deposit Liabilities
Section 13A(4) of the Banking Act states that it is an offence for an ADI not to hold assets (other than goodwill) in
Australia of a value that is equal to or greater than the total amount of its deposit liabilities in Australia, unless APRA has
authorised the ADI to hold assets of a lesser value. During the three months ended 31 December 2010, the Overseas
Bank has at all times held assets (other than goodwill and any assets or other amounts prescribed by APRA) in Australiaof not less than the value of the Overseas Bank's total deposit liabilities in Australia.
Section 13E of the Banking Act states that APRA may give the Ultimate Parent Bank a direction that requires it to increase
its level of capital.
The requirements of these sections of the Act have the potential to impact on the management of the liquidity of ANZ New
Zealand.

Guarantees
The Ultimate Parent Bank has guarantees from the Commonwealth of Australia under:(a) in the case of deposits and certain other accounts up to A$1 million, a scheme (The "Financial Claims Scheme")
pursuant to the Financial System Legislation Amendment (Financial Claims Scheme and Other Measures) Act 2008 of
the Commonwealth of Australia (The "Financial Claims Scheme Act");(b) in the case of wholesale funding, by a Deed of Guarantee executed by the Treasurer (and related scheme rules) (the"Wholesale Funding Guarantee").
The Financial Claims Scheme applies to the NZ Branch, as it is a foreign branch of an eligible Australian ADI.
Wholesale Funding Guarantee may also apply as described below.

The

Financial Claims Scheme
Under the Financial Claims Scheme if:• APRA has applied for an ADI to be wound up; and• the responsible Minister makes a declaration that the Financial Claims Scheme applies to that particular ADI
then each account holder of a Protected Account (defined below) with that ADI is entitled to be paid by APRA an amountequal to the balance of the protected account plus accrued interest which has been accrued to the account (subject tovarious adjustments and preconditions described in the Financial Claims Scheme Act). Once the responsible Minister has
made a declaration, there are no other material conditions to payment other than the ADI being unable to meet its
obligations or suspending payment. The deposit must be for an amount less than A$1 million. Deposits for a greater
amount are covered by the Wholesale Funding Guarantee (to the extent that is applicable as described below).
A protected account includes accounts or covered financial products (defined below) kept by an account holder with an
ADI and either:• requiring the ADI to pay the account holder, on demand by the account holder or at a time agreed by them, the net
credit balance of the account at the time of the demand or the agreed time; or• an account prescribed by regulations.
A covered financial product is a financial product declared by the Australian Treasurer to be a covered financial productand includes accounts such as saving, call, current, cheque, debit card, transaction and mortgage offset accounts.
Deposit holders do not have to be Australian residents to obtain the benefit of the Financial Claims Scheme and it applies
to deposits denominated in any currency.
From 12 October 2011 the Financial Claims Scheme applies to Australian dollar deposits only, and is generally subject toreview at that time.
Wholesale Funding Guarantee
The Wholesale Funding Guarantee is a deed governed by the laws of the State of New South Wales and has been
executed by the Australian Treasurer on behalf of the Australian Government. Australian institutions which are ADIs
under the Banking Act, which includes the Ultimate Parent Bank, were entitled to apply for the Wholesale Funding
Guarantee prior to 25 March 2010 to apply to deposit accounts over A$1 million and certain funding liabilities.
Foreign banks authorised to carry on banking business in Australia were also able to apply to have certain deposits andfunding liabilities held by Australian residents guaranteed by the Australian Government. The Reserve Bank of Australia
administers the Wholesale Funding Guarantee.

Australia and New Zealand Banking Group Limited - New Zealand Branch

5

General Disclosures
On 7 February 2010 the Australian Government announced the withdrawal of the Wholesale Funding Guarantee on 31
March 2010. The final date for ADIs to apply for access to the Wholesale Funding Guarantee was 24 March 2010.
Existing guaranteed liabilities of ADIs, including those of the Ultimate Parent Bank, will continue to be covered by the
Wholesale Funding Guarantee to maturity for wholesale funding and term deposits and to October 2015 for at calldeposits. The Wholesale Funding Guarantee continues to operate for existing guaranteed liabilities as follows.
Under the Wholesale Funding Guarantee, the Commonwealth of Australia irrevocably guarantees the payment of liabilities
covered by an eligibility certificate issued by the Australian Government in response to an application made by the ADI,
and irrevocably undertakes that whenever the ADI does not pay a liability on the date on which it becomes due orpayable, it shall, upon a claim by a person to whom a guaranteed liability is owed, and following the expiry of any
applicable grace period, pay the guaranteed liability in accordance with the scheme rules. A claim must be made in theform provided in the scheme rules. In the case of a liability of an Australian ADI, such as the Overseas Bank, the claimantneed not be a resident of Australia.
In order to have the Wholesale Funding Guarantee apply, an ADI was required to apply to the Reserve Bank of Australia
for an eligibility certificate. Fees were also paid, calculated by reference to the term and amount of the liabilities
guaranteed and the credit rating of the ADI the fee which applied to the Ultimate Parent Bank based on its rating byStandard and Poor’s of AA, was 70 basis points per annum applied in respect of its guaranteed liabilities in accordancewith the Wholesale Funding Guarantee). The fees are levied on a monthly or quarterly basis depending on the liability. An
ADI was able to apply for an eligibility certificate in respect of a program under which it issues debt instruments from time
to time or on a series-by-series basis.
A person to whom a guaranteed liability is owed may rely on the eligibility certificate issued by the Australian Government
as conclusive evidence that the liability satisfies the criteria for eligibility to be guaranteed under the Wholesale Funding
Guarantee.
An application must set out details of the liabilities to be guaranteed and be accompanied by an executed counter
indemnity in favour of the Australian Government, external legal opinions in a prescribed form, an executed fee letter anda letter of prudential compliance. Further information with respect to the application procedure and fees can be found at
the Australian Government Guarantee website at guaranteescheme.gov.au.
If the ADI is an Australian ADI (such as the Ultimate Parent Bank) or an Australian subsidiary of a bank incorporated
overseas, it was able to apply for the guarantee to apply to:• Deposit liabilities for amounts over A$1 million: The deposit could be at call or with maturity of up to 60 months
in excess of $1 million per customer per ADI, be in any currency and pre-date the Wholesale Funding Guarantee.
There were no restrictions on the types of depositors;• Deposits held in overseas branches: Deposits held in overseas branches of Australian-owned ADIs could becovered by the Wholesale Funding Guarantee. There were no restrictions on the types of depositors;• Short Term Wholesale Funding Liabilities: The liability (which could be in any currency) was required to be asenior and unsecured debt instrument with a maturity not exceeding 15 months. In addition, the instrument must be"not complex" and be either a bank bill, a certificate of deposit or transferable deposit, a debenture or commercial
paper; and• Term Wholesale Funding Liabilities: The liability (which may be in any currency) was required to be a senior andunsecured debt instrument with a maturity not exceeding 60 months but greater than 15 months. The instrument
required to be "not complex" and be either a bond, a note or a debenture.
In the case of all instruments, they would be issued in bearer, registered or dematerialised form. An instrument could not
be granted an eligibility certificate unless it was "not complex". The Government has published a list of the features thatwere likely to be regarded by the Government as "complex".
If the Australian Government does not perform its obligations under the Wholesale Funding Guarantee, a beneficiary of
the guarantee could sue the Commonwealth of Australia under the Judiciary Act 1903 of Australia. In such a suit, therights of parties are similar to those in a suit between subjects of the Commonwealth of Australia. Jurisdiction to hearclaims against the Commonwealth of Australia in contract is vested in certain Australian courts under the Judiciary Act
1903 of Australia. If a judgment is obtained against the Australian Government, no execution or attachment can beissued against the property or revenues of the Commonwealth of Australia. However, if any judgment is given against theAustralian Government, the Minister for Finance is obliged to satisfy the judgment out of money legally available, on
receipt of a certificate of the judgment issued by an officer of a court in which such judgment has been obtained.
In order to render money legally available, specific appropriation by legislation passed by the Parliament of theCommonwealth of Australia would be necessary before any payment is made, unless the amount involved is such that it
could be paid out of funds available under an existing standing appropriation. The Australian Government has enacted
legislation which appropriates funds from consolidated revenue for the purposes of paying claims under the Wholesale
Funding Guarantee. The Wholesale Funding Guarantee does not contain any submission to the courts of a foreign
jurisdiction or any waiver of any immunity which might be available to the Commonwealth of Australia under the law ofany foreign jurisdiction.
The Australian Government shall not be liable to perform its obligations under the Wholesale Funding Guarantee in respectof liabilities which have been varied, amended, waived, released, novated, supplemented, extended or restated in any
material respect without the written consent of the Australian Government.

Australia and New Zealand Banking Group Limited - New Zealand Branch

6

General Disclosures
Further information on the Wholesale Funding Guarantee including the Wholesale Deed of Guarantee is available in themost recent Supplemental Disclosure Statement.
Copies of eligibility certificates issued by the Reserve Bank of Australia under the Wholesale Funding Guarantee areavailable at guaranteescheme.gov.au.
The name of the Guarantor and address for service is: The Scheme Administrator, Australian Government Guarantee
Scheme for Large Deposits and Wholesale Funding, c/- The Secretary, Reserve Bank of Australia, 65 Martin Place, Sydney,
New South Wales 2001, Australia.
Further details of the arrangements, together with relevant legislation, regulations and other documents setting out theterms and conditions of the current guarantee arrangements, are available at the Treasury website treasury.gov.au,
apra.gov.au and guaranteescheme.gov.au.
The most recent audited financial statements of the Commonwealth of Australia can be obtained at the Treasury's Budget
website budget.gov.au. As at the date of signing of the General Short Form Disclosure Statement, the following ratings
were assigned to the Commonwealth of Australia's long term, AUD denomination debt: AAA Outlook Stable (Standard &Poor's), Aaa Outlook Stable (Moody's) and AAA Outlook Stable (Fitch). These ratings have remained unchanged in thetwo preceding years.
New Zealand Guarantee Arrangements
The Crown guarantees wholesale funding of participating New Zealand financial institutions under the New Zealand
Wholesale Funding Guarantee Facility. The NZ Branch does not have a guarantee under this Scheme.

Supplemental Disclosure Statement
A copy of the most recent Supplemental Disclosure Statement for the three months ended 31 December 2010 is available
at no charge:(a) on ANZ New Zealand's website at anz.com;(b) immediately if request is made at ANZ New Zealand's registered office, located at Level 6, 1 Victoria Street,
Wellington, New Zealand.; and(c) within five working days of a request, if a request is made at any branch of ANZ or The National Bank of New
Zealand.
ANZ New Zealand's most recent Supplemental Disclosure Statement contains a copy of the 30 September 2010 Annual
Report for the Overseas Banking Group and a copy of the Deed of Guarantee for the Guarantee Scheme.

Financial Statements of the Ultimate Parent Bank and Overseas Banking Group
Copies of the most recent publicly available financial statements of the Ultimate Parent Bank and Overseas Banking Groupwill be provided immediately, free of charge, to any person requesting a copy where the request is made at Level 6, 1
Victoria Street, Wellington, New Zealand. The most recent publicly available financial statements for the Ultimate Parent
Bank and Overseas Banking Group can also be accessed at the internet address anz.com.

Directorate
Since the authorisation date of the previous General Disclosure Statement on 23 November 2010, there have been nochanges to the Directors of Australia and New Zealand Banking Group Limited.

Australia and New Zealand Banking Group Limited - New Zealand Branch

7

Income Statement
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2010

31/12/2009

30/09/2010

Interest income

1,769

1,577

6,447

Interest expense

1,121

975

3,952

Net interest income

648

602

2,495

Net trading gains

40

19

39

Funds management and insurance income

56

36

218

Other operating income

80

151

446

-

36

42

Operating income

824

844

3,240

Operating expenses

418

375

1,565

406

469

1,675

34

152

456

372

317

1,219

112

64

352

260

253

867

Audited$ millions
Note

Share of profit of equity accounted associates and joint ventures

Profit before provision for credit impairment
Provision for credit impairment

11

Profit before income tax
Income tax expense

3

Profit after income tax

AuditedStatement of Comprehensive Income
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2010

31/12/2009

30/09/2010

260

253

867

Valuation gain / (loss) before tax

(6)

22

53

Cumulative gain transferred to the income statement on sale of financial assets

12

-

(12)

$ millions

Profit after income tax
Available-for-sale revaluation reserve

Cash flow hedging reserve
Valuation gain / (loss) before tax

(39)

4

89

Transferred to income statement

2

13

21

Other items recognised directly in equity
Actuarial gain on defined benefit schemes

-

-

27

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

7

(5)

(48)

Net income / (expense) recognised directly in equity

(24)

34

130

Total comprehensive income for the year

236

287

997

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

8Statement of Changes in Equity
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2010

31/12/2009

30/09/2010

6,424

6,424

6,424

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)

60

47

58

Balance at beginning of the period

102

23

23

Valuation gain recognised after tax

(27)

3

64

1

9

15

76

35

102

136

82

160

1,236

843

843

260

253

867

1,496

1,096

1,710

-

-

18

Preference dividends paid

(53)

-

(492)

Balance at end of the period

1,443

1,096

1,236

$ millions

AuditedShare capital and head office accountBalance at beginning and end of period
Available-for-sale revaluation reserve

Balance at end of the period
Cash flow hedging reserve

Transferred to income statement after tax
Balance at end of the period
Total reserves
Retained earnings
Balance at beginning of the period
Profit after income tax attributable to parent
Total available for appropriation
Actuarial gain on defined benefit schemes after tax

Non-controlling interests
Balance at beginning of the period

1

-

-

Acquired in a business combination

-

1

1

Balance at end of the period

1

1

1

7,315

Total equity and head office accountBalance at beginning of the period

7,821

7,315

Total comprehensive income for the period

236

287

997

Transactions with head office

(53)

-

(492)

-

1

1

8,004

7,603

7,821

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

9Balance Sheet$ millions

Note

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

AssetsLiquid assets

5

2,168

2,870

2,239

Due from other financial institutions

6

2,722

4,562

3,496

Trading securities

7

7,395

5,910

6,757

9,404

7,970

10,854

Derivative financial instruments
Available-for-sale assets

8

1,773

2,458

2,210

Net loans and advances

9

95,71095,51996,015Investments relating to insurance business

24

40

28

Insurance policy assets

149

81

138

Shares in associates and jointly controlled entities

144

148

144

48

24

18

Other assets

951

896

970

Deferred tax assets

208

434

304

Premises and equipment

316

298

311

3,529

3,543

3,545

124,541

124,753

127,029

Current tax assets

Goodwill and other intangible assets
Total assets
Liabilities
Due to other financial institutions

12

12,008

11,347

12,293

Deposits and other borrowings

13

69,95972,97070,295Derivative financial instruments

9,704

8,857

10,727

Payables and other liabilities

1,423

1,559

1,506

266

375

315

19,016

17,671

19,899Term funding

1,766

1,766

1,766

Loan capital

2,395

2,605

2,407

116,537

117,150

119,208

8,004

7,603

7,821

6,424

6,424

6,424

136

82

160

Retained earnings

1,443

1,096

1,236

Parent shareholder's equity and head office account

8,003

7,602

7,820

1

1

1

8,004

7,603

7,821

Provisions
Bonds and notes

Total liabilities (excluding head office account)
Net assets (excluding head office account)Represented by:
Share capital and head office accountReserves

Non-controlling interests
Total equity & head office accountThe notes to the financial statements form part of and should be read in conjunction with these financial statements

Australia and New Zealand Banking Group Limited - New Zealand Branch

10

Cash Flow Statement$ millions

Note

Unaudited

Unaudited

3 months to

3 months to

AuditedYear to31/12/2010

31/12/2009

30/09/2010

1,731

1,530

6,217

-

-

2

35

36

137

Cash flows from operating activities
Interest received
Dividends received
Net funds management & insurance income
Fees and other income received
Interest paid

186

271

772

(1,002)(979)(3,880)Operating expenses paid

(483)

(375)

(1,473)

Income taxes paid

(31)

(368)

(579)

Cash flows from operating profits before changes in operating assets andliabilities

436

115

1,196

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

(341)

1,230

1,083

457

(738)

(435)

14

-

22

141

1,158

218

Change in available-for-sale assets
Change in insurance investment assets
Change in loans and advances
Change in other assets
Change in due to other financial institutions
Change in deposits

6

278

143

(229)

(1,353)

(914)

1,148

(455)

(1,493)(1,590)

1,350

(417)

(113)

8

(65)

(513)

1,642

(1,308)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)

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

19

Cash flows from investing activities

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)

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)(4,307)

Redemptions of loan capital

(1)

-

(200)

Preference dividends paid

(53)

-

(492)

Net cash flows provided by financing activities

1,336

429

482

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

(513)

1,642

(1,308)

(39)

(279)

(362)

1,336

429

482

Net increase / (decrease) in cash and cash equivalents

784

1,792

(1,188)Cash and cash equivalents at beginning of the period

3,578

4,766

4,766

4,362

6,558

3,578

Net cash flows used in investing activities
Net cash flows provided by financing activities

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

11

Notes to the Financial Statements
1. Significant Accounting Policies(i) Statement of compliance
These financial statements have been prepared in accordance with the requirements of NZ IAS 34 Interim Financial
Reporting and the Order. These financial statements should be read in conjunction with ANZ New Zealand’s financial
statements for the year ended 30 September 2010.
(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 at their fair value:•
derivative financial instruments, including in the case 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 ANZ New Zealand are consistent with those adopted and disclosed in the prior period.
(iv) Presentation currency and rounding
The amounts contained in the financial statements are presented in millions of New Zealand dollars, unless otherwise
stated.
(v) Comparatives
Prior to 30 September 2010 some fee income integral to the effective interest rate of financial assets was presented inother operating income. Since this date this income has been classified to interest income, to more accurately reflect thenature of the income.
Comparative data has been restated accordingly. For the period ended 31 December 2009 this reclassification has for
ANZ New Zealand, increased interest income by $30 million and reduced other operating income by a corresponding
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 the current
period's presentation.
(vi)
Basis of aggregation
The basis of aggregation is an addition of individual financial statements of the entities in ANZ New Zealand.
transactions between entities within ANZ New Zealand have been eliminated.

All

2. Risk Management Policies
There has been no material change to ANZ New Zealand’s policies for managing risk, or material exposures to new typesof risk since the authorisation of the previous General Disclosure Statement on 23 November 2010.

3. Income Tax Expense$ millions

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

Unaudited

Unaudited

3 months to

3 months to

AuditedYear to31/12/2010

31/12/2009

30/09/2010

110

112

361

Change in tax provisions

-

(48)

(54)

Effect of changes in tax legislation

2

-

45

112

64

352

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

29.6%

35.3%

29.6%

Effective tax rate (%)

30.1%

20.2%

28.9%

Income tax expense

Australia and New Zealand Banking Group Limited - New Zealand Branch

12

Notes to the Financial Statements
4. Segmental Analysis
For segment reporting purposes, ANZ New Zealand is organised into three major business segments - 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.
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 andproducts. ANZ New Zealand'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 other profit centres supporting the Retail Banking segment.
Commercial
Commercial provides services to Business Banking, Rural, Commercial and UDC customers. Business banking services
are offered to small enterprises (typically with annual revenues of less than $5 million). Commercial customers consist of
primarily privately owned medium to large enterprises. ANZ New Zealand's relationship with these businesses ranges
from simple banking requirements with revenue from deposit and transactional facilities, and cash flow lending, to more
complex funding arrangements with revenue sourced from a wider range of products. UDC is principally involved in thefinancing and leasing of plant, vehicles and equipment, mainly for small and medium sized businesses, as well as
investment products.
Institutional
Institutional provides financial services to large multi-banked corporations, often global, who require sophisticated productand structuring solutions. The Institutional business unit includes the following specialised units:• Markets - provides foreign exchange, interest rate and commodity trading and sales-related services, origination,
underwriting, structuring, risk management and sale of credit and derivative products globally;• Transaction Banking - provides cash management, trade finance and international payments;• Specialised Lending - provides origination, credit analysis, structuring and execution of specific customer transactions.
Other
Other includes treasury and back office support functions, none of which constitutes a separately reportable segment.
Business segment analysis1$ millions

Retail2

Commercial Institutional 3

Other 3

Total

Unaudited 3 months to 31/12/2010
External revenues

466

765

109

(516)

824

(114)

(406)

40

480

-

Total revenues

352

359

149

(36)

824

Profit before income tax

121

204

113

(66)

372

Intersegment revenues

Unaudited 3 months to 31/12/2009
External revenues

475

759

(36)

(354)

844

Intersegment revenues

(213)

(436)

213

436

-

Total revenues

262

323

177

82

844

2

87

147

81

317

Profit before income tax
Audited year to 30/09/2010
External revenues

1,954

2,976

53

(1,743)3,240Intersegment revenues(672)(1,629)

548

1,753

-

Total revenues

1,282

1,347

601

10

3,240

248

510

496

(35)

1,219

Profit before income tax
1
2
3

Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.
The comparative periods results include a loss on acquisition of ING NZ of $82 million.
This segment has negative external revenues as this segment incurs funding costs on behalf of ANZ New Zealand and is reimbursed internally.

Australia and New Zealand Banking Group Limited - New Zealand Branch

13

Notes to the Financial Statements
5. Liquid assets$ millions

Cash and balances with central banks
Money at callBills receivable and remittances in transit
Total liquid assets

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

1,747

2,425

1,830

324

363

328

97

82

81

2,168

2,870

2,239

6. Due from other financial institutions$ millions

Able to be withdrawn without prior notice

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

73

164

457

1,461

339

346

229

-

-

Security settlements

22

128

1,535

Certificates of deposit

707

Securities purchased under agreement to resell
Securities purchased under agreement to resell with central banks

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

7. Trading securities$ millions

Government, local body stock and bonds

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

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

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
Other debt securities
Equity securities
Total available-for-sale assets

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

1,500

2,159

1,939

202

213

193

71

86

78

1,773

2,458

2,210

Australia and New Zealand Banking Group Limited - New Zealand Branch

14

Notes to the Financial Statements
9. Net Loans and Advances
Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

Overdrafts

1,756

1,954

2,131

Credit card outstandings

1,435

1,457

1,388

Term loans - housing

53,89853,48053,892

Term loans - non-housing

39,22439,06939,179Finance lease receivables

746

690

726

Gross loans and advances

97,05996,65097,316

Provision for credit impairment (Note 11)(1,352)(1,370)(1,420)

(272)

(258)

(273)

Fair value hedge adjustment

284

480

386

Deferred fee revenue and expenses

(55)

(55)

(50)

46

72

56

95,71095,51996,015$ millions

Unearned finance income

Capitalised brokerage/mortgage origination fees
Total net loans and advances

10. Impaired Assets, Past Due Assets and Other Assets Under Administration$ millions

RetailOther retail

Corporate

mortgages

exposures

exposures

Total

549

74

1,423

2,046

11

-

-

11

183

43

116

342

Other assets under administration

-

-

11

11

Undrawn facilities with impaired customers

-

-

31

31

427

73

829

1,329

7

-

-

7

223

57

106

386

Other assets under administration

1

-

8

9

Undrawn facilities with impaired customers

-

-

49

49

554

81

1,403

2,038

9

-

-

9

153

33

127

313

Other assets under administration

-

-

4

4

Undrawn facilities with impaired customers

-

-

32

32

Unaudited 31/12/2010
Individually impaired assets
Restructured items
Past due assets (90 days past due assets)1

Unaudited 31/12/2009
Individually impaired assets
Restructured items
Past due assets (90 days past due assets)1

Audited 30/09/2010
Individually impaired assets
Restructured items
Past due assets (90 days past due assets)1

1

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 beheld 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 concessionthat would 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 ANZ New Zealand’s cost of funds. An asset isclassified as an other individually impaired asset if, following the restructure, the yield on the asset is below ANZ New
Zealand’s cost of funds.
Assets acquired through enforcement of security
Assets acquired through enforcement of security are those assets which are legally owned by ANZ New Zealand as aresult of enforcing security, other than any buildings occupied by ANZ New Zealand. ANZ New Zealand 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.

Australia and New Zealand Banking Group Limited - New Zealand Branch

15

Notes to the Financial Statements
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
form of voluntary or involuntary administration, including receivership, liquidation, bankruptcy or statutory management.

11. Provision for Credit Impairment
RetailOther retail

Corporate

mortgages

exposures

exposures

Balance at beginning of the period

122

149

533

804

Charge / (credit) to income statement

(7)

(5)

(42)

(54)

Balance at end of the period

115

144

491

750

$ millions

Total

Unaudited 31/12/2010
Collective provision

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

218

50

348

616

Charge to income statement

7

22

59

88

Recoveries of amounts previously written off

-

4

1

5

(19)

(27)

(42)

(88)

Discount unwind1

(5)

-

(14)

(19)

Balance at end of the period

201

49

352

602

Total provision for credit impairment

316

193

843

1,352

Bad debts written off

Unaudited 31/12/2009
Collective provision
Balance at beginning of the period

127

159

518

804

Charge to income statement

(3)

(1)

4

-

Balance at end of the period

124

158

522

804

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

156

40

281

477

Charge to income statement

59

28

65

152

Recoveries of amounts previously written off

1

4

-

5

Bad debts written off

(16)

(31)

(11)

(58)

Discount unwind1

(3)

(1)

(6)

(10)

Balance at end of the period

197

40

329

566

Total provision for credit impairment

321

198

851

1,370

Audited 30/09/2010
Collective provision
Balance at beginning of the year

127

159

518

804

Charge to income statement

(5)

(10)

15

-

Balance at end of the year

122

149

533

804

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

156

40

281

477

Charge to income statement

139

120

197

456

2

17

2

21

Bad debts written off

(62)

(124)

(92)

(278)

Discount unwind1

(17)

(3)

(40)

(60)

Balance at end of the year

218

50

348

616

Total provision for credit impairment

340

199

881

1,420

Recoveries of amounts previously written off

1

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 toits present value using the original effective interest rate for the asset. This discount unwinds as interest income over the period the asset is held.

Australia and New Zealand Banking Group Limited - New Zealand Branch

16

Notes to the Financial Statements
Provision movement analysis$ millions

RetailOther retail

Corporate

mortgages

exposures

exposures

Total

Unaudited 31/12/2010
New and increased provisions
Provision releases

Recoveries of amounts previously written off
Individual provision charge

47

31

85

163

(40)

(5)

(25)

(70)

7

26

60

93

-

(4)

(1)

(5)

7

22

59

88

(7)

(5)

(42)

(54)

-

17

17

34

New and increased provisions

66

32

93

191

Provision releases

(6)

-

(28)

(34)

Collective provision charge / (credit)
Charge to income statement
Unaudited 31/12/2009

60

32

65

157

Recoveries of amounts previously written off

(1)

(4)

-

(5)

Individual provision charge

59

28

65

152

Collective provision charge

(3)

(1)

4

-

Charge to income statement

56

27

69

152

New and increased provisions

206

160

338

704

Provision releases

(65)

(23)

(139)

(227)

141

137

199

477

(2)

(17)

(2)

(21)

Individual provision charge

139

120

197

456

Collective provision charge

(5)

(10)

15

-

Charge to income statement

134

110

212

456

Audited 30/09/2010

Recoveries of amounts previously written off

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 banks1
Total due to other financial institutions
1

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

11,90911,046

12,071

99

101

222

-

200

-

12,008

11,347

12,293As at 31 December 2010 ANZ New Zealand 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).

Australia and New Zealand Banking Group Limited - New Zealand Branch

17

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

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

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

64,162

63,946

62,988Commercial paper

5,797

9,024

7,307

Total deposits and other borrowings recognised at fair value

5,797

9,024

7,307

69,95972,97070,295

2,162

1,912

2,111

Total deposits and other borrowings recognised at amortised cost
Fair value through profit or loss

Total deposits and other borrowings

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

14. Related Party Transactions
Balances with related parties$ millions

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

640

3,150

1,507

2,528

1,540

2,548

145

161

151

30

37

36

144

148

144

55

32

37

3,542

5,068

4,423

10,781

10,161

10,482

Due from 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 associates
Due from joint ventures
Shares in associates and joint ventures
Other assets
Due from Ultimate Parent Bank and subsidiaries not part of ANZ New Zealand
Total due from related parties
Due to other financial institutions
Due to Ultimate Parent Bank
Deposits and other borrowings
Due to associates
Term funding due to Immediate Parent Company

85

85

85

1,766

1,766

1,766

2,738

2,112

2,658

128

105

105

2,260

2,221

3,605

619

821

630

18,377

17,271

19,331

Derivative financial liabilities
Due to related entities
Payables and other liabilities
Due to Ultimate Parent Bank and subsidiaries not part of ANZ New ZealandBonds and notes
Due to Ultimate Parent Bank and subsidiaries not part of ANZ New Zealand
Loan capitalDue to Ultimate Parent Bank and subsidiaries not part of ANZ New Zealand
Total due to related parties

Australia and New Zealand Banking Group Limited - New Zealand Branch

18

Notes to the Financial Statements
Balances due from / to related parties are unsecured other than that ANZ New Zealand and the Bank have provided
guarantees and commitments to related parties as follows:$ millions

Financial guarantees provided to the Ultimate Parent Bank

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

1,361

1,694

1,660

15. Interest Earning and Discount Bearing Assets and Liabilities$ millions

Interest earning and discount bearing assets
Interest and discount bearing liabilities

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

108,701

110,489

108,325

99,620101,477

10 0,335

Australia and New Zealand Banking Group Limited - New Zealand Branch

19

Notes to the Financial Statements
16. Capital Adequacy
Overseas Banking Group Basel II capital adequacy ratio (unaudited)
Overseas Bank (Extended
Licensed Entity)

Overseas Banking Group
31/12/2010

31/12/2009

30/09/2010

30/09/2010

30/09/2009

Tier One Capital

10.4%

10.5%

10.1%

11.0%

11.6%

Total Capital

11.9%

13.4%

11.9%

12.3%

14.2%

Basel II came into force on 1 January 2008. The Overseas Banking Group received accreditation from APRA to apply the
Advanced Internal Ratings Based ("Advanced IRB") methodology for credit risk weighted assets and the Advanced
Measurement Approach ("AMA") for operational risk weighted asset equivalents.
The Overseas Banking Group has Advanced IRB accreditation under Basel II rules. The Overseas Banking Group met therequirements imposed by APRA during the three months ended 31 December 2010 and for the comparative periods
shown.
Further details of the Overseas Banking Group's capital adequacy requirements and credit risk management processes canbe found in its 2010 Annual Report.
Risk Weighted Credit Risk Exposures
Risk weighted exposures for ANZ New Zealand and NZ Branch have been derived in accordance with the RBNZ document
entitled 'Capital Adequacy Framework (Basel I Approach)' ("BS2") dated October 2010. The credit equivalent amounts formarket related contracts are calculated using the current exposure method.
Total Risk Weighted Exposures of ANZ New Zealand as at 31 December 2010 (unaudited)
Principal
amountOn-balance sheet exposures

Risk weight$m

Risk weighted
exposure$mCash and short term claims on Government

4,183

0%

-

Long term claims on Government

4,219

10%

422

Claims on banks

4,629

20%

926

843

20%

169

Residential mortgages

53,60950%

26,805

Other44,128100%

44,128

Non risk weighted assets

12,930n/a-Claims on public sector entities

124,541

72,449Creditconversion
factorCreditequivalentamountAveragecounterparty Risk weighted
exposurerisk weight

1,778

100%

1,778

39%

697

Commitments with certain drawdown

507

100%

507

57%

287

Transaction related contingent items

677

50%

338

68%

229

80

20%

16

100%

16

4,448

50%

2,224

100%

2,224

17,286

0%

-

n/a

-

Off-balance sheet exposures

Principal
amount$m

Direct credit substitutes

Short term, self liquidating trade related contingencies
Other commitments to provide financial services whichhave an original maturity of 1 year or more
Other commitments with an original maturity of lessthan 1 year or which can be unconditionally cancelled
at any time$m$mMarket related contracts- Foreign exchange

152,616

7,638

22%

1,686

- Interest rate495,259

7,951

23%

1,860

167

22

59%

13

672,818

20,474- Other

7,012

Australia and New Zealand Banking Group Limited - New Zealand Branch

20

Notes to the Financial Statements
Total Risk Weighted Exposures of the NZ Branch as at 31 December 2010 (Unaudited)
Principal
amountOn-balance sheet exposures

Risk weight

Risk weighted
exposure

20%

53

10,466

50%

5,233

54

100%

54

499

n/a

-

$m

Claims on banks

265

Residential mortgages
Other
Non risk weighted assets

Principal
amountOff-balance sheet exposures

Creditconversion
factor11,284

5,340

CreditequivalentamountAveragecounterparty Risk weighted
exposurerisk weight

$m

$m

$m

Other commitments to provide financial services whichhave an original maturity of 1 year or more

82

50%

$m

41

100%

41

Market related contracts- Foreign exchange

10,783

524

20%

105

- Interest rate

18,619

139

20%

28

29,484704

174

Market risk
The aggregate market risk exposures below have been calculated in accordance with the RBNZ document ‘Capital
Adequacy Framework (Standardised Approach)’ dated October 2010 (“BS2A”).
The peak end-of-day market risk exposures for the quarter are measured over the Overseas Banking Group’s equity as at
30 September 2010 (31/12/2009: 30 September 2009; 30/09/2010: 30 September 2010) at the end of the quarter andare 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
Unaudited

Aggregate capital charge as apercentage of the Overseas
Banking Group's Equity

Aggregate capital charge

As at

Peak

As at

Peak

As at

Peak

$m

$m

$m

$m

%

%

0.7%

0.7%

0.0%

0.0%

31/12/2010

Interest rate risk

4,079

4,079

326

326

Foreign currency risk

12

98

1

8

Equity risk

71

78

6

6

0.0%

0.0%

0.9%

1.0%

0.0%

0.0%
0.0%

4,162

333

31/12/2009

Interest rate risk

3,719

4,053

298

324

Foreign currency risk

11

89

1

7

Equity risk

86

86

7

7

0.0%

0.7%

0.7%

0.0%

0.0%

0.0%

0.0%

3,816

306

30/09/2010

Interest rate risk

3,733

3,733

299

299

Foreign currency risk

25

101

2

8

Equity risk

78

81

6

6

3,836

307

Retail mortgages by loan-to-valuation ("LVR") ratio
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the
Bank’s valuation of the security property at origination of the exposure. The exposure amount used to calculate LVR
excludes commitments to lend.

Australia and New Zealand Banking Group Limited - New Zealand Branch

21

Notes to the Financial Statements
Retail mortgages by LVR for ANZ New Zealand as at 31 December 2010 (Unaudited)

Exposure Amount$m

LVR range
0% - 80%

43,11180% - 90%6,453Over 90%

5,472
55,036

During the three months ended 31 December 2010 ANZ New Zealand 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 of underlying source data.

17. Liquidity Portfolio
Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

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

12,283

11,081

10,212$ millions

Certificates of deposit

Total liquidity portfolio

18. Concentrations of Credit Risk
ANZ New Zealand has no credit exposures, on the basis of limits, to individual counterparties or groups of closely related
counterparties (whether bank or non-bank exposures) which equal or exceed 10% of the Overseas Banking Group's equity
as at 31/12/2010, 31/12/2009, or 30/09/2010, or at any time for the quarter ended 31/12/2010 in respect of peak endof-day aggregate credit exposures. The peak end-of-day exposures have been calculated using the Overseas Banking
Group’s equity as at 31/12/2010. These calculations exclude credit exposures to the central government of any country
with a long term credit rating of A- or A3 or above, or its equivalent.

Australia and New Zealand Banking Group Limited - New Zealand Branch

22

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

Unaudited

Unaudited

3 months to

3 months to

AuditedYear to31/12/2010

31/12/2009

30/09/2010

Reconciliation of profit after income tax to net cash flows provided by / (used in) operating activities
Profit after income tax

260

253

867

Non-cash items:
Depreciation, amortisation and impairment

47

12

71

Provision for credit impairment

34

152

456

Deferred fee revenue and expenses

11

-

(5)

5

5

21

17

12

45
(2,518)

Share-based payments expense
Amortisation of capitalised brokerage/ mortgage origination fees
Deferrals or accruals of past or future operating cash receipts or payments:
Change in operating assets and liabilities

(949)

1,527

Change in interest receivable

4

(10)

6

Change in interest payable

93

(33)

(37)

Change in accrued income

4

(4)

(6)

Change in accrued expenses

(71)

2

54

Change in provisions

(63)

(49)

(14)

Amortisation of premiums and discounts

18

3

39

Change in insurance policy assets

(3)

-

(49)

Change in insurance investment assets

(10)

-

(10)

73

(314)

(235)

Share of profit of equity accounted associates and jointly controlled entities

-

(36)

(42)

Re-measuring existing equity interests to fair value

-

82

82

Impairment of associates

-

-

7

Loss on disposal of premises and equipment

3

5

9

(513)

1,642

(1,308)Change in income tax assets
Items classified as investing/financing:

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

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

Liquid assets

2,168

2,870

2,239

Due from other financial institutions - less than 90 days

2,194

3,688

1,339

Total cash and cash equivalents

4,362

6,558

3,578

$ millions

Reconciliation of cash and cash equivalents to the balance sheets

20. Securitisations, Funds Management, Other Fiduciary Activities and Insurance
Securitisation
In October 2008, ANZ New Zealand 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 the rights 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 ANZ New Zealand’s financial statements do notchange as a result of establishing these facilities.
Funds management
Certain entities that form part of ANZ New Zealand act as trustee and/or manager for a number of unit trusts andinvestment and superannuation funds. ANZ New Zealand provides private banking services to a number of clients,
including investment advice and portfolio management. ANZ New Zealand is not responsible for any decline inperformance of the underlying assets of the investors due to market forces.
As funds under management are not controlled by ANZ New Zealand, they are not included in these financial statements.
ANZ New Zealand derives fee and commission income from the sale and management of investment funds andsuperannuation bonds, unit trusts and the provision of private banking services to a number of clients. ANZ New Zealandderives commission income from the sale of third party funds management products.

Australia and New Zealand Banking Group Limited - New Zealand Branch

23

Notes to the Financial Statements
Custodial services
ANZ New Zealand provides custodial services to customers in respect of assets that are beneficially owned by thosecustomers.
Provision of financial services
Financial services provided by ANZ New Zealand to entities which are involved in trust, custodial, funds management andother fiduciary 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, ANZ New Zealandhas not provided 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 ANZ New Zealand (31/12/2009 $nil;
30/09/2010 $nil).
Insurance business
ANZ New Zealand 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 ANZ New Zealand.
OnePath Insurance provides risk transfer and investment contract life insurance products. In addition, other entities
within ANZ New Zealand 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 ANZ New Zealand.

21. Credit Related Commitments and Contingent Liabilities
Face or contract value$ millions

Unaudited

Unaudited

Audited31/12/2010

31/12/2009

30/09/2010

Credit related commitments
Commitments with certain drawdown due within one year

503

549

493

Commitments to provide financial services

21,71522,051

20,352

Total credit related commitments

22,21822,60020,845

1,852

1,751

1,686

68

384

60

Transaction related contingent items

841

1,015

898

Trade related contingent liabilities

79

70

97

2,840

3,220

2,741

Contingent liabilities
Financial guarantees
Standby letters of credit

Total contingent liabilities

ANZ New Zealand guarantees the performance of customers by issuing standby letters of credit and guarantees to third
parties, including its Ultimate Parent Bank. The risk involved is essentially the same as the credit risk involved inextending loan facilities to customers, 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.
Commerce Commission
ANZ New Zealand is aware that the Commerce Commission is looking at credit contract fees under the Credit Contracts
and Consumer 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 ANZ New Zealand 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 fees cannot be determined with any certainty.

Australia and New Zealand Banking Group Limited - New Zealand Branch

24

Notes to the Financial Statements
Other contingent liabilities
ANZ New Zealand has other contingent liabilities in respect of actual and potential claims and proceedings. An
assessment of ANZ New Zealand’s likely loss in respect of these matters has been made on a case-by-case basis andprovision made where appropriate. 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 the
Bank. The total cost of these announcements is estimated at around $160 million operating expense and around $60
million capital expense.
In February 2011 ANZ New Zealand 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.

Australia and New Zealand Banking Group Limited - New Zealand Branch

25

Conditions of Registration
Conditions of Registration, applicable as at 21 February 2011. These conditions have applied since 5 January
2009.
There have been no changes in the NZ Branch’s conditions of registration since the issuance of the last General DisclosureStatement dated 23 November 2010.
The registration of the NZ Branch as a registered bank is subject to the following conditions:1.

That the New Zealand 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 definedin the Financial Reporting Act 1993.

2.

That the New Zealand Banking Group’s insurance business is not greater than 1% of its total consolidated assets. For
the purposes of this condition:i.
Insurance business means any business of the nature referred to in section 4 of the Insurance Companies(Ratings and Inspections) 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 New Zealand 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 thesolvency 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-insurancecomponent, the whole of such products or assets shall be considered part of the insurance business.

3.

That the business of the registered bank in New Zealand does not constitute a predominant proportion of the businessof the Australia and New Zealand Banking Group Limited.

4.

That no appointment to the position of the New Zealand chief executive officer of the registered bank shall be madeunless: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.

5.

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

6.

That Australia and New Zealand Banking Group Limited complies with the following minimum capital adequacy
requirements, as administered by the Australian Prudential Regulation Authority:• tier one capital of the Australia and New Zealand Banking Group Limited is not less than 4 percent of risk
weighted exposures;• capital of Australia and New Zealand Banking Group Limited is not less than 8 percent of risk weighted
exposures.

7.

That the business of the registered bank in New Zealand is restricted to:i.
acquiring for fair value, and holding, mortgages originated by ANZ National Bank Limited; andii. any other business for which the prior written approval of the Reserve Bank of New Zealand has been obtained;
andiii. activities that are necessarily incidental to the business specified in paragraphs (i) and (ii).

8.

That the value of the mortgages held by the registered bank in New Zealand must not exceed $15 billion inaggregate.

9.

That the registered bank in New Zealand may not incur any liabilities except:i.
to the government of New Zealand in respect of taxation and other charges; andii. to other branches or the head office of the registered bank; andiii. to trade creditors and staff; andiv. to ANZ National Bank Limited in respect of activities, other than borrowing, that are necessarily incidental to thebusiness specified in paragraphs (i) and (ii) of condition 7; andv. any other liabilities for which the prior written approval of the Reserve Bank has been obtained.

Australia and New Zealand Banking Group Limited - New Zealand Branch

26

Conditions of Registration
For the purposes of these Conditions of Registration, the term "Banking Group" means the New Zealand operations ofAustralia and New Zealand Banking Group Limited whose business is required to be reported in the financial statements
for the Group's New Zealand business, prepared in accordance with section 9(2) of the Financial Reporting Act 1993.

Independent Review Report to the Directors of Australia and New Zealand Banking Group Limited - New Zealand Branch
We have reviewed the interim financial statements on pages 7 to 24 prepared and disclosed in accordance with Clause 19 of the Registered
Bank Disclosure Statement (Off-Quarter – Overseas Incorporated Registered Banks) Order 2008 (the ‘Order’) and the supplementary
information prescribed in Schedules 2 to 6. The interim financial statements, and supplementary information, provide information about
the past financial performance and cash flows of Australia and New Zealand Banking Group Limited - New Zealand Branch and its related
entities (‘ANZ New Zealand’) and their financial position as at 31 December 2010. This information is stated in accordance with theaccounting policies set out on page 11.
Directors’ responsibilities
The Directors of Australia and New Zealand Banking Group Limited - New Zealand Branch are responsible for the preparation andpresentation of interim financial statements in accordance with Clause 19 of the Order which give a true and fair view of the financial
position of ANZ New Zealand 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 the Order, of thematters to which it relates; and complies with Schedules 2 to 6 of the Order.
Reviewers’ responsibilities
We are responsible for reviewing the interim financial statements, including the supplementary information disclosed in accordance with
Schedules 3, 5 to 6, and Clause 15 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 to state whether, the supplementary information relating to credit and market risk
exposures and capital adequacy that is required to be disclosed under Schedule 4 of the Order, is in all material respects prepared anddisclosed in accordance with Capital Adequacy Framework (Basel 1 Approach) and Capital Adequacy Framework (Standardised
Approach) (BS2A) and disclosed in accordance with Schedule 4 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 ANZ New Zealand 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 ANZ New Zealand in relation to other audit related services. Partners and employees of ourfirm may also deal with ANZ New Zealand on normal terms within the ordinary course of trading activities of the business of ANZ New
Zealand. There are, however, certain restrictions on borrowings which the partners and employees of our firm can have with ANZ New
Zealand. These matters have not impaired our independence as auditors of ANZ New Zealand. The firm has no other relationship with, orinterest in, ANZ New Zealand.
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 not present a trueand fair view of the financial position of ANZ New Zealand as at 31 December 2010 and its financial performance and cash flows forthe three months ended on that date;b. the supplementary information disclosed in Notes 15, 18 and 20 prescribed by Schedules 3, 5 to 6 and Clause 15 of Schedule 2 of theOrder 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 4 of the Order, is not in all material respects prepared in accordance with Capital Adequacy Framework (Basel 1 Approach)(BS2) and Capital Adequacy Framework (Standardised Approach) (BS2A), and disclosed in accordance with Schedule 4 of the Order.

Our review was completed on 21 February 2011 and our review opinion is expressed as at that date.

Wellington