AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED- ANZ NEW ZEALAND
REGISTERED BANK DISCLOSURE STATEMENTFOR THE SIX MONTHS ENDED 31 MARCH 2019
NUMBER 40 | ISSUED MAY 2019

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

REGISTERED BANK DISCLOSURE STATEMENTFOR THE SIX MONTHS ENDED 31 MARCH 2019

CONTENTSDISCLOSURE STATEMENT
Condensed Consolidated Interim Financial Statements (Interim Financial Statements)
Income Statement

3Statement of Comprehensive Income

3

Balance Sheet

4

Cash Flow Statement

5

Statement of Changes in Equity

6

Notes to the Interim Financial Statements

7

Registered Bank Disclosures
General Disclosures

14

Additional Financial Disclosures

15

Asset Quality

20

Credit and Market Risk Exposures and Capital Adequacy

22

Insurance Business22

Directors’ and New Zealand Chief Executive Officer’s Statement

23

Independent Auditor’s Review Report

24

SUPPLEMENTARY INFORMATIONBank Financial Strength Dashboard

26

Other Information

27

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 means the Bank and all its controlled entities.
Immediate Parent Company means ANZ Funds Pty Limited, which is the immediate parent company of 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 it wereconducted by a company formed and registered in New Zealand.
NZ Branch means the New Zealand business of the Ultimate Parent Bank.
ANZ New Zealand, We or Our means the New Zealand business of the Overseas Banking Group.
OnePath means OnePath Life (NZ) Limited.
Paymark means Paymark Limited.
UDC means UDC Finance Limited.
Registered Office is Level 10, 171 Featherston Street, Wellington, New Zealand, which is also ANZ New Zealand’s address for service.
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 the Order.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDINTERIM FINANCIAL STATEMENTS
INCOME STATEMENT
6 months to
NoteInterest income
Interest expense

31 Mar 19
NZ$m

31 Mar 18
NZ$m

3,322
(1,696)

3,248(1,676)

1,626

1,572

Other operating income

2

373

495

Net income from insurance business

12

27

81

4

1

Operating income

2,030

2,149

Operating expenses

(745)

(747)

1,285

1,402

(32)

(70)

Profit before income tax

1,253

1,332

Income tax expense

(324)

(368)

Profit for the period

929

964

Net interest income

Share of associates' profit

Profit before credit impairment and income tax
Credit impairment charge

5

STATEMENT OF COMPREHENSIVE INCOME
6 months to
31 Mar 19
NZ$m

31 Mar 18
NZ$m

929

964

(16)

2

Unrealised losses recognised directly in equity-(6)

Realised losses transferred to the income statement

43Profit for the period
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
Reserve movements:

Income tax attributable to the above items

3-

Other comprehensive income after tax

(9)

(1)

920

963

Total comprehensive income for the period

The notes appearing on pages 7 to 13 form an integral part of these financial statements

3

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDINTERIM FINANCIAL STATEMENTS
BALANCE SHEET
As at

Note

AssetsCash and cash equivalents
Settlement balances receivable

31 Mar 19
NZ$m

30 Sep 18
NZ$m

2,697

2,407

630

656

Collateral paid

2,370

1,919

Trading securities

7,543

8,024

Derivative financial instruments

9,118

8,072

Investment securities

6,348

6,502

Net loans and advances

4

131,788

128,677

Assets held for sale

12

-

897

Investments in associates-

6

Current tax assets

32

-

3,279

3,289

Premises and equipment

340

325

Other assets

807

642

Total assets

164,952

161,416

2,542

2,066

519

845

115,091

112,920

9,872

8,133

Current tax liabilities-

174

Deferred tax liabilities

6

23

-

334

945

955

310

196

Goodwill and other intangible assets

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings

7

Derivative financial instruments

Liabilities held for sale

12

Payables and other liabilities
Provisions

8

Debt issuances

923,93924,534

Total liabilities (excluding head office account)

153,224

150,180

Net assets (excluding head office account)

11,728

11,236EquityShare capital and initial head office account

11,055

11,055Reserves

36

33

Retained earnings

637

148

11,728

11,236

Total equity & head office accountThe notes appearing on pages 7 to 13 form an integral part of these financial statements

4

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDCASH FLOW STATEMENT
For the six months ended 31 March

Note

Profit after income tax

2019
NZ$m

2018
NZ$m

929

964

41

41

Adjustments to reconcile to net cash flows from operating activities:
Depreciation and amortisation
Loss on sale and impairment of premises and equipment

5-

Net derivatives/foreign exchange adjustment

(16)

(412)

Proceeds from divestments net of intangibles disposed of, classified as investing activities

(646)

-

Other non-cash movements

(146)

(13)

Collateral paid

(451)

(219)

Trading securities

481

(753)

(3,111)(1,359)

625

(338)

2,968

4,365

Settlement balances payable

476

40

Collateral received

(326)

147

Other liabilities

(421)

(67)

Total adjustments

(521)

1,432

Net cash flows from operating activities1

408

2,396

(1,054)(1,770)

1,288

1,530

747

-

Net (increase)/decrease in operating assets:

Net loans and advances
Other assets
Net increase/(decrease) in operating liabilities:
Deposits and other borrowings (excluding borrowings from Immediate Parent and Ultimate Parent Bank)

Cash flows from investing activities
Investment securities:
Purchases
Proceeds from sale or maturity
Proceeds from divestments

12

Other assets

(51)

17

Net cash flows from investing activities

930

(223)

Cash flows from financing activities
Debt issuances2
Issue proceeds

3,240

2,885

Redemptions(3,145)(3,020)Borrowings from Immediate Parent and Ultimate Parent Bank:
Loans drawn down
Repayments
Dividends paid
Net cash flows from financing activities

512

497

(1,280)(1,352)

(375)

(800)

(1,048)(1,790)290

383

Cash and cash equivalents at beginning of period

2,407

2,439

Cash and cash equivalents at end of period

2,697

2,822

Net change in cash and cash equivalents

1
2

3

Net cash provided by operating activities includes income taxes paid of NZ$519 million (2018: NZ$387 million).
Movement in debt issuances (Note 9 Debt Issuances) also includes a NZ$942 million decrease (2018: NZ$125 million increase) from the effect of foreign exchange rates, a NZ$341 million
increase (2018: NZ$174 million decrease) from changes in fair value hedging instruments and a NZ$89 million decrease (2018: NZ$5 million increase) from other changes.
Movement in borrowings from Immediate Parent and Ultimate Parent Bank (Note 7 Deposit and Other Borrowings) also includes a NZ$83 million decrease (2018: NZ$62 million decrease)from the effect of foreign exchange rates and a NZ$54 million increase (2018: NZ$32 million decrease) from changes in fair value hedging instruments.

The notes appearing on pages 7 to 13 form an integral part of these financial statements

5

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDINTERIM FINANCIAL STATEMENTS
STATEMENT OF CHANGES IN EQUITYNote
As at 1 October 2017
Profit or loss

Sharecapitaland initial Investment
head securities
office revaluationaccount
reserve
NZ$m
NZ$m

Cash flow
hedging
reserve
NZ$m

Retainedearnings
NZ$m

Total
equity
NZ$m

8,055
-

5
-

43
-

3,210
964

11,313964

Unrealised gains / (losses) recognised directly in equity

-

9

(15)

-

(6)

Realised losses transferred to the income statement

-

-

3

-

3

Actuarial gain on defined benefit schemes

-

-

-

2

2

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

-

(2)

3

(1)

-

Total comprehensive income for the period

-

7

(9)

965

963

-

-

-

(800)

(800)

Transactions with Immediate Parent Company in its capacity as owner:
Ordinary dividends paid
Transactions with Immediate Parent Company in its capacity as owner
As at 31 March 2018

As at 1 October 2018
NZ IFRS 9 transition adjustment
As at 1 October 2018 (adjusted)

1

-

-

-

(800)

(800)

8,055

12

34

3,375

11,476

11,055

11

22

148

11,236

-

-

-

(53)

(53)

11,0551122

95

11,183

Profit or loss

-

-

-

929

929

Unrealised gains / (losses) recognised directly in equity

-

(7)

7

-

-

Realised losses transferred to the income statement

-

-

4

-

4

Actuarial loss on defined benefit schemes

-

-

-

(16)

(16)

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

-

2

(3)

4

3

Total comprehensive income for the period

-

(5)

8

917

920

Ordinary dividends paid

-

-

-

(375)

(375)

Transactions with Immediate Parent Company in its capacity as owner

-

-

-

(375)

(375)

11,055630

637

11,728Transactions with Immediate Parent Company in its capacity as owner:

As at 31 March 2019

The notes appearing on pages 7 to 13 form an integral part of these financial statements

6

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
1.

SIGNIFICANT ACCOUNTING POLICIESStatement of compliance
These interim financial statements (financial statements) for ANZ New Zealand were issued on 20 May 2019 and should be read in conjunction with
ANZ New Zealand’s financial statements for the year ended 30 September 2018.
These financial statements comply with:• New Zealand Generally Accepted Accounting Practice (NZ GAAP), 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 for-profit
entities; and• IAS 34 Interim Financial Reporting.
Use of estimates, assumptions and judgements
The preparation of these financial statements requires the use of management judgement, estimates and assumptions that affect reported amounts
and the application of accounting policies. Discussion of the critical accounting estimates and judgements, which include complex or subjective
decisions or assessments, are provided in the previous full year financial statements. Such estimates and judgements are reviewed on an ongoingbasis.
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;• financial instruments measured at fair value through other comprehensive income;• financial instruments held for trading; and• financial instruments designated at fair value through profit and loss.
Changes in accounting policies
The accounting policies adopted by ANZ New Zealand are consistent with those adopted and disclosed in the previous full year financial statements,
except as disclosed below.
The following new standards relevant to ANZ New Zealand have been adopted from 1 October 2018 and have been applied in the preparation ofthese financial statements:
NZ IFRS 9 Financial Instruments (NZ IFRS 9)NZ IFRS 9 was effective for ANZ New Zealand from 1 October 2018. NZ IFRS 9 stipulates new requirements for the impairment of financial assets,
classification and measurement of financial assets and financial liabilities and general hedge accounting. Details of the key requirements andestimated impacts on ANZ New Zealand are outlined below.
Impairment
NZ IFRS 9 replaced the incurred loss impairment model under NZ IAS 39: Financial Instruments: Recognition and Measurement (NZ IAS 39) with an
expected credit loss (ECL) model incorporating forward looking information. The ECL model has been applied to all financial assets measured atamortised cost, debt instruments measured at fair value through other comprehensive income, lease receivables, certain loan commitments andfinancial guarantees. Under the ECL model, the following three-stage approach is applied to measuring ECL based on credit migration between thestages since origination:• Stage 1: At the origination of a financial asset, a provision equivalent to 12 months ECL is recognised.
• Stage 2: Where there has been a significant increase in credit risk since origination, a provision equivalent to lifetime ECL is recognised.
• Stage 3: Similar to the previous NZ IAS 39 requirements for individual impairment provisions, lifetime ECL is recognised for loans where there is
objective evidence of impairment.
Expected credit losses are probability weighted and determined by evaluating a range of possible outcomes, taking into account the time value ofmoney, past events, current conditions and forecasts of future economic conditions.
Classification and measurement
There are three measurement classifications under NZ IFRS 9: Amortised cost, Fair Value through Profit or Loss and Fair Value through Other
Comprehensive Income. Financial assets are classified into these measurement classifications taking into account the business model within which
they are managed, and their contractual cash flow characteristics.
The classification and measurement requirements for financial liabilities under NZ IFRS 9 are largely consistent with NZ IAS 39 with the exception thatfor financial liabilities designated as measured at fair value, gains or losses relating to changes in the entity’s own credit risk are included in othercomprehensive income. This part of the standard was early adopted by ANZ New Zealand on 1 October 2013.
General hedge accounting
NZ IFRS 9 introduces new hedge accounting requirements which more closely align accounting with risk management activities undertaken when
hedging financial and non-financial risks.
NZ IFRS 9 provides ANZ New Zealand with an accounting policy choice to continue to apply the NZ IAS 39 hedge accounting requirements until theInternational Accounting Standards Board’s ongoing project on macro hedge accounting is completed. ANZ New Zealand has continued to apply thehedge accounting requirements of NZ IAS 39.

7

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
Transition to NZ IFRS 9
Other than as noted above under classification and measurement of financial liabilities, NZ IFRS 9 had a date of initial application for ANZ New Zealandof 1 October 2018. The classification and measurement, and impairment requirements, are applied retrospectively by adjusting opening retained
earnings at 1 October 2018. ANZ New Zealand has not restated comparatives.
ImpactImpairment
The application of NZ IFRS 9 as at 1 October 2018 resulted in higher aggregate impairment provisions of approximately NZ$73 million, with anassociated decrease in deferred tax liabilities of approximately NZ$20 million. The net impact on total equity is a reduction of approximately NZ$53
million. These remain subject to change until ANZ New Zealand finalises its financial statements for the year ending 30 September 2019.
Classification and measurement of financial assets
There have been no changes in classification and measurement as a result of the application of the business model and contractual cash flow
characteristics tests.
NZ IFRS 15 Revenue from Contracts with Customers (NZ IFRS 15)
NZ IFRS 15 is effective for ANZ New Zealand from 1 October 2018 and replaces existing guidance on the recognition of revenue from contracts withcustomers. The standard requires identification of distinct performance obligations within a contract, and allocation of the transaction price of thecontract to those performance obligations. Revenue is then recognised as each performance obligation is satisfied. The standard also provides
guidance on whether an entity is acting as a principal or an agent which impacts the presentation of revenue on a gross or net basis.
ANZ New Zealand has assessed all revenue streams existing at the date of transition to the new standard and determined that the impact of NZ IFRS
15 is immaterial given the majority of ANZ New Zealand revenues are outside the scope of the standard. ANZ New Zealand has adopted NZ IFRS 15
retrospectively including restatement of prior period comparatives.
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 NZ Branch and all of the New Zealand businesses of all the subsidiaries of the
Ultimate Parent Bank.

2.

OTHER OPERATING INCOME

Note(i) Fee and commission revenue
Lending fees
Non-lending fees
Commissions
Funds management income
Fee and commission income
Fee and commission expense
Net fee and commission income(ii) Other income
Net trading gains
Fair value gain / (loss) on hedging activities and financial liabilities
designated at fair value
Net foreign exchange earnings and other financial instruments income
Gain on UDC terminated transaction
Insurance proceeds
Sale of OnePath
Sale of Paymark
Other
Other income
Other operating income

8

12
12

6 months to
31 Mar 19
31 Mar 18
NZ$m
NZ$m
16
407
23
127
573
(241)
332

15
398
21
122
556
(230)
326

73

96

(140)

22

(67)
59
39
10
41
373

118
20
20
11
169
495

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

3.

UNAUDITEDSEGMENT REPORTING

ANZ New Zealand 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.
Comparative data has been adjusted to reflect a change in the methodology for allocating earnings on capital to each segment. While neutral at the
ANZ New Zealand level, this change has impacted net interest income and profit after income tax at the segment level.
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 throughdedicated managers focusing on privately owned medium to large enterprises and the agricultural business segment.
Institutional
The Institutional division services global institutional and corporate customers across three product 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 and corporate advisory.
• Markets provide risk management services on foreign exchange, interest rates, credit, commodities, debt capital markets in addition to
managing ANZ New Zealand’s interest rate exposure and liquidity position.
Other
Other includes treasury and back office support functions, none of which constitutes a separately reportable segment.
Operating segment analysis
RetailFor the six months ended 31 March
Net interest income
Fee and commission revenue- Lending fees
- Non-lending fees

Commercial

Institutional

2019

2018

2019

2018

2019

2018

2019

Other
2018

2019

Total
2018

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

940

929

517

495

169

158

-

(10)

1,626

1,572

8

8

-

-

8

7

-

-

16

15

368

353

9

9

30

36

-

-

407

398

- Commissions

23

21

-

-

-

-

-

-

23

21

- Funds management fees

127

122

-

-

-

-

-

-

127

122

- Fee and commission expense

(241)

(230)

-

-

-

-

-

-

(241)

(230)

Net fee and commission income

285

274

9

9

38

43

-

-

332

326

Other income

5

4

1

-

75

104

(40)

61

41

169

Net income from insurance business

19

67

-

-

-

-

8

14

27

81

Share of associates' profits

4

1

-

-

-

-

-

-

4

1

1,253

1,275

527

504

282

305

(32)

65

2,030

2,149

510

525

286

279

140

120

(7)

40

929

964

Operating income
Profit / (loss) after income tax

Other segment
The Other segment profit after income tax comprises:
For the six months ended 31 MarchCentral functions1
Technology and Group Centre2, 3Economic hedges
Revaluation of insurance policies from changes in interest rates3
Total
1

2

3

2019
NZ$m
178
(104)
(81)
(7)

2018
NZ$m
14
3
13
10
40

Central functions’ other income for the six months ended 31 March 2018 includes the NZ$20 million insurance proceeds (Note 2 Other Operating Income) that were received from a memberof the Overseas Banking Group.
Technology and Group Centre’s other income for the six months ended 31 March 2019 includes the NZ$59 million gain on sale of OnePath and the NZ$39 million gain on sale of Paymark(Note 2 Other Operating Income).
Amounts for the six months ended 31 March 2019 include the transfer of NZ$86 million of accumulated after tax gains previously recognised in revaluation of insurance policies from changes
in interest rates to Technology and Group Centre. These gains were transferred upon the sale of OnePath.

9

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
4. NET LOANS AND ADVANCES
Note
Overdrafts
Credit cards
Term loans - housing
Term loans - non-housing
Finance lease and hire purchase receivables
Subtotal
Unearned income
Capitalised brokerage/mortgage origination fees
Gross loans and advances
Provision for credit impairment
Net loans and advances

5.

5

31 Mar 19
NZ$m
1,085
1,620
82,87444,803
1,830
132,212(246)
309
132,275(487)
131,788

30 Sep 18
NZ$m
905
1,644
80,60944,1691,791
129,118(239)
314
129,193(516)
128,677PROVISION FOR CREDIT IMPAIRMENTPROVISION FOR CREDIT IMPAIRMENT – BALANCE SHEET

Provision for credit impairment
Individual provision2
Collective provision3
Total provision for credit impairment
1
2
3

Net loans andadvances
31 Mar 19
30 Sep 18
NZ$m
NZ$m
132
112
312
375
487
444

Off-balance sheet credit
related commitments1
31 Mar 19
30 Sep 18
NZ$m
NZ$m
72
82
82
72

Total
31 Mar 19
30 Sep 18
NZ$m
NZ$m
132
112
384
457
569
516

Collective provision relating to off-balance sheet credit related commitments is included in provisions from 1 October 2018.
Individual provision comprises Stage 3 ECL assessed individually from 1 October 2018.
Collective provision comprises Stage 1, 2 and 3 ECL assessed collectively from 1 October 2018.

Collective provision reconciliation
As at 30 September 2018

Net loansandadvances
NZ$m

Off-balance
sheet credit
relatedcommitments
NZ$m

Total
NZ$m

312

72

384

NZ IFRS 9 transition adjustment

60

13

73

As at 1 October 2018

372

85

457

3

(3)

-

375

82

457

Collective credit impairment charge / (release)
As at 31 March 2019

CREDIT IMPAIRMENT CHARGE – INCOME STATEMENT
6 months to
Credit impairment charge
New and increased provisions
Write-backs
Recoveries of amounts previously written-off
Individual credit impairment charge
Collective credit impairment release
Total credit impairment charge

1031 Mar 19
NZ$m
64
(21)
(11)
32
32

31 Mar 18
NZ$m
132
(30)
(18)
84
(14)
70

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

6.

UNAUDITEDIMPAIRED AND PAST DUE LOANS
31 Mar 19

30 Sep 18

NZ$m

NZ$m

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

288

221

Impaired loans

292

323

31 Mar 19
NZ$m
53,10942,80010,836
783
107,528
912
256
2,240
4,155
115,091

30 Sep 18
NZ$m51,29841,602
10,224931
104,055
910
517
2,486
4,952
112,92031 Mar 19

30 Sep 18

Note

NZ$m

NZ$m

5

123
82

120
-

Other1

105

76

Provisions

310

196

31 Mar 19
NZ$m
17,995
4,164
22,15930 Sep 18
NZ$m
18,767
3,929
22,696

1,503
277
1,780
23,939

1,549
289
1,838
24,534

7.

DEPOSITS AND OTHER BORROWINGS

Term deposits
On demand and short term deposits
Deposits not bearing interest
UDC secured investments
Total customer deposits
Certificates of deposit
Deposits from banks and securities sold under repurchase agreements
Commercial paper
Borrowings from Ultimate Parent Bank and Immediate Parent Company
Deposits and other borrowings

8.

PROVISIONS

Employee entitlementsCollective provision on undrawn commitments

1

Other provisions include provisions relating to customer remediation, make-good of leased premises and restructuring (including OnePath separation).

9. DEBT ISSUANCES
Senior debt
Covered bonds
Total unsubordinated debt
Subordinated debt
- ANZ Capital Notes- Other
Total subordinated debt
Total debt issued

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 nota 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 bonds by the Bank, or its
wholly owned subsidiary ANZ New Zealand (Int’l) Limited, from time to time. The assets of the Covered Bond Trust are not available to creditors of theBank, 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.

11

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
10. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIESFinancial assets and financial liabilities carried at fair value on the balance sheet
ANZ New Zealand categorises financial assets and financial 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 financial instruments;•

Level 2 – valuations using inputs other than quoted prices included within Level 1 that are observable for a similar financial asset or liability,
either directly or indirectly; and•Level 3 – valuations using inputs for the asset or liability that are not based on observable market date (unobservable inputs).

The table below summarises the attribution of financial instruments carried at fair value to the fair value hierarchy:
Fair value measurements
Using observable
Quoted market priceUsing unobservable
Total
inputsinputs (Level 3)(Level 1)(Level 2)
31 Mar 19 30 Sep 18 31 Mar 19 30 Sep 18 31 Mar 19 30 Sep 18 31 Mar 19 30 Sep 18
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
NZ$m
AssetsTrading securities
Derivative financial instruments
Investment securities
Investments backing insurance contract liabilities1
Total
Liabilities
Deposits and other borrowings
Derivative financial instruments
Other financial liabilities
Total
1

7,204
11
6,347
13,562

6,795
7
6,457
13,259

339
9,102
9,441

1,229
8,062
44
127
9,462

5
1
6

3
1
4

7,543
9,118
6,348
23,009

8,024
8,072
6,502
127
22,725

15
159
174

10
110
120

2,240
9,854
12,094

2,486
8,122
10,608

3
3

1
1

2,240
9,872
159
12,271

2,486
8,133
110
10,729Including items reclassified as held for sale.

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 financial liability categories otherthan 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 a yield curve
appropriate for the remaining term to maturity.
Carrying amount
31 Mar 19
30 Sep 18
NZ$m
NZ$m
Financial assets
Net loans and advances1
Total
Financial liabilities
Deposits and other borrowings2
Debt issuances1
Total
1
2

12

Fair value
31 Mar 19
30 Sep 18
NZ$m
NZ$m

131,788
131,788

128,677
128,677

132,235
132,235

128,959
128,959

112,851
23,939136,790

110,434
24,534
134,968

113,052
24,087137,139

110,643
24,724
135,367

Fair value hedging is applied to certain financial instruments within these categories. The resulting fair value adjustments mean that the carrying value differs from the amortised cost.
Excludes commercial paper (Note 7 Deposits and Other Borrowings) designated at fair value through profit or loss.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

11. COMMITMENTS AND CONTINGENT LIABILITIESCredit related commitments and contingencies
Contract amount of:
Undrawn facilities
Guarantees and letters of credit
Performance related contingencies
Total

31 Mar 19
NZ$m

30 Sep 18
NZ$m26,653
1,351
1,460
29,46426,995
1,531
1,329
29,855

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 in extending 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.
Other contingent liabilities
There are outstanding court proceedings, claims and possible claims for and against ANZ New Zealand. Where relevant, expert legal advice has beenobtained and, in the light of such advice, provisions and/or disclosures as deemed appropriate have been made. In some instances we have notdisclosed the estimated financial impact of the individual items either because it is not practicable to do so or because such disclosure may prejudice
the interests of ANZ New Zealand.
In recent years there has been an increase in the number of matters on which ANZ New Zealand engages with its regulators. There have beensignificant increases in the nature and scale of regulatory investigations and reviews, civil and criminal enforcement actions (whether by court action
or otherwise) and the quantum of fines issued by regulators, particularly against financial institutions globally. The nature of these investigations andreviews can be wide ranging and, for example, may include a range of matters including responsible lending practices, product suitability anddistribution, interest and fees and the entitlement to charge them, wealth advice, insurance distribution, pricing, competition, conduct in financial
markets and capital market transactions, reporting and disclosure obligations and product disclosure documentation. ANZ New Zealand has received
various notices and requests for information from its regulators as part of both industry-wide and ANZ New Zealand-specific reviews and has also
made disclosures to its regulators at its own instigation. There may be exposures to customers which are additional to any regulatory exposures. These
could include class actions, individual claims or customer remediation or compensation activities. The outcomes and total costs associated with such
reviews and possible exposures remain uncertain.
Warranties and indemnities
ANZ New Zealand has provided warranties, indemnities and other commitments in favour of the purchaser in connection with various disposals of
businesses and assets and other transactions, covering a range of matters and risks. It is exposed to potential claims under those warranties,
indemnities and commitments.

12. DIVESTMENTS
OnePath and Paymark
On 30 November 2018, ANZ New Zealand sold OnePath to Cigna Corporation and on 11 January 2019, ANZ New Zealand sold its 25% shareholding inPaymark to Ingenico Group. ANZ New Zealand recognised net gains on sale of NZ$59 million and NZ$39 million respectively, which are included inother operating income.
Assets and liabilities sold
NZ$m
Investments backing insurance contract liabilities
Other assets, net of amounts payable to the Bank

101
6

Life insurance contract assets

675

Investments in associates - Paymark

7

Goodwill and other intangible assets

101

Total assets

890

Deposits and other borrowings (deposits with the Bank)(50)

Current tax liabilities

18

Deferred tax liabilities

178

Payables and other liabilities

146

Provisions

2

Total liabilities

294

Net assets sold

596

13

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDREGISTERED BANK DISCLOSURES
B1. GENERAL DISCLOSURES
Guarantees
No material obligations of the NZ Branch are guaranteed as at 20 May 2019.
Covered bonds issued by ANZ New Zealand (Int’l) Limited, a subsidiary of the Bank, are guaranteed. Refer to page 11 for further details.
Changes in the Ultimate Parent Bank’s Board of Directors
Lee Hsien Yang retired as a Non-Executive Director on 19 December 2018. There have been no other changes to the Directors of the Ultimate Parent
Bank since 30 September 2018, the balance date of the last full year disclosure statement.
Auditors
KPMG, 18 Viaduct Harbour Avenue, Auckland, New Zealand.
Credit rating
As at 20 May 2019 the Ultimate Parent Bank has three credit ratings, which are applicable to its long-term senior unsecured obligations which arepayable in New Zealand in New Zealand dollars.
The Ultimate Parent Bank’s credit ratings are:Rating Agency
S&P Global Ratings
Fitch Ratings
Moody’s Investors Service

Credit Rating
AAAAAa3

Qualification
Outlook Negative
Outlook Stable
Outlook Stable

Directors’ and New Zealand Chief Executive Officer’s statements
The Directors' and New Zealand Chief Executive Officer's statement is included on page 23.
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 Group will be provided
immediately, free of charge, to any person requesting a copy where request is made at the Registered Office. The most recent publicly available
financial statements for the Ultimate Parent Bank and Overseas Banking Group can also be accessed at the website shareholder.anz.com.
Auditor’s review report
The auditor’s review report is included on page 24.

14

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

B2. ADDITIONAL FINANCIAL DISCLOSURES
Additional information on the balance sheet
As at 31 March 2019
Total interest earning and discount bearing assets
Total interest and discount bearing liabilities
Total amounts due from related entities
Total amounts due to related entities
Total liabilities of the NZ Branch less amounts due to related entities

NZ$m
150,770
129,656
4,202
8,738
1,058

Assets charged as security for liabilities
These amounts exclude the amounts disclosed as collateral paid on the balance sheet that relate to derivative liabilities. The terms and conditions of
the collateral agreements are included in the standard Credit Support Annex that forms part of the International Swaps and Derivatives 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 andundertakings, 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 othermoneys 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 bond programme.
The carrying amounts of assets pledged as security are as follows:
As at 31 March 2019
Securities sold under agreements to repurchase
Assets pledged as collateral for UDC secured investments
Residential mortgages pledged as security for covered bonds

NZ$m
151
3,374
10,330Additional information on the income statement
The amounts of net trading gains or losses and other fair value adjustments are included in Note 2 Other Operating Income. ANZ New Zealand 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, all other items of other income (all in Note 2 Other Operating Income), net income from insurance business and share of
associates’ profit (both shown on the income statement).

15

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDREGISTERED BANK DISCLOSURES
Additional information on concentrations of credit risk
Analysis of financial assets by industry is based on Australian and New Zealand Standard Industrial Classification (ANZSIC) codes. The significant
categories shown are the level one New Zealand Standard Industry Output Categories (NZSIOC), except that Agriculture is shown separately as
required by the Order.
Composition of financial instruments that give rise to credit risk by industry group are presented below:

As at 31 March 2019
New Zealand residents
Agriculture
Forestry and fishing, agriculture services
Manufacturing
Electricity, gas, water and waste services
Construction
Wholesale trade
Retail trade and accommodation
Transport, postal and warehousing
Finance and insurance services
Public administration and safety1
Rental, hiring & real estate services
Professional, scientific, technical, administrative and support services
Households
All other New Zealand residents2

Loans andadvances3
NZ$m

Off-balance
Othersheet credit
financialrelatedassets commitments4
NZ$m
NZ$m

Total
NZ$m

17,907
1,392
2,936
1,306
1,866
1,496
2,971
1,336
827
248
33,157
1,229
60,394
2,423

85
7
197
437
28
59
31
94
5,344
8,606
737
9
199
195

1,502
261
1,709
1,600
977
1,736
1,034
755
1,396
1,070
3,466
582
11,317
1,942

19,494
1,660
4,842
3,343
2,871
3,291
4,036
2,185
7,567
9,924
37,3601,820
71,9104,560

Subtotal
Overseas
Finance and insurance services
Households
All other non-NZ residents

129,488

16,02829,347

174,863

283
1,595
846

13,017
5
91

117-

13,4171,600
937

Subtotal
Gross subtotal
Provision for credit impairment
Subtotal
Unearned income
Capitalised brokerage / mortgage origination fees
Maximum exposure to credit risk

2,724
132,212(487)
131,725(246)
309
131,788

13,11329,141
29,141
29,141

117
29,464(82)
29,382
29,382

15,954
190,817(569)
190,248(246)
309
190,311

1
2
3
4

16

Public administration and safety includes exposures to local government administration and central government administration, defence and public safety.
Other includes exposures to mining, information media and telecommunications, education and training, health care and social assistance and arts, recreation and other services.
Excludes individual and collective provisions for credit impairment held in respect of off-balance sheet credit related commitments.
Off-balance sheet credit related commitments comprise undrawn facilities, customer contingent liabilities and letters of offer.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

Additional information on concentrations of funding
Analysis of funding liabilities by industry is based on ANZSIC codes. The significant categories shown are the level one NZSIOC.
As at 31 March 2019

Note

NZ$m

7

107,528

Funding composition
Customer deposits
Wholesale funding
Debt issuances

23,939Certificates of deposit and commercial paper

3,152

Other borrowings

4,411

Total wholesale funding

31,502

Total funding

139,030

Customer deposits by industry - New Zealand residents
Agriculture, forestry and fishing

3,935

Manufacturing

2,128

Construction

2,128

Wholesale trade

1,573

Retail trade and accommodation

1,618

Financial and insurance services

12,136

Rental, hiring and real estate services

3,058

Professional, scientific, technical, administrative and support services

5,377

Public administration and safety

1,286

Arts, recreation and other services

1,966Households

57,902All other New Zealand residents1

4,043
97,150

Customer deposits by industry - overseas
Households
All other

9,821
557
10,378

Total customer deposits

107,528

Wholesale funding (financial and insurance services industry)
New Zealand

5,514

Overseas

25,988

Total wholesale funding

31,502

Total funding

139,030

Concentrations of funding by geography
New Zealand

102,664

Australia

5,355

United States

13,360Europe10,360

Other countries

7,291

Total funding

139,030

1

Other includes mining; electricity, gas, water and waste services; transport, postal and warehousing; information media and telecommunications; education and training; health care andsocial assistance.

17

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDREGISTERED BANK DISCLOSURES
Additional information on interest rate sensitivity
The following tables represent the interest rate sensitivity of ANZ New Zealand's assets, liabilities and off balance sheet instruments by showing theperiods in which these instruments may reprice, that is, when interest rates applicable to each asset or liability can be changed.

As at 31 March 2019
AssetsCash and cash equivalents
Settlement balances receivable
Collateral paid
Trading securities
Derivative financial instruments
Investment securities
Net loans and advances
Other financial assets
Total financial assets
Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings
Derivative financial instruments
Debt issuances
Other financial liabilities
Total financial liabilities
Hedging instruments
Interest sensitivity gap

Total
NZ$m

Up to
3 months
NZ$m

Over 3 to
6 months
NZ$m

Over 6 to
12 months
NZ$m

Over 1 to
2 years
NZ$m

Over Not bearing
2 years
interest
NZ$m
NZ$m

2,697
630
2,370
7,543
9,118
6,348
131,788728
161,222

2,355
2,370
503
253
64,60570,086107
15
11,602
11,724388
149
25,37325,910928
1,210
22,724
24,862

5,617
4,720
7,851
18,188

342
630
9,118
1
(367)
728
10,4522,542
519
115,091
9,872
23,939700
152,663
8,559

784
519
74,7632,325
159
78,55021,534
13,07014,102
2,018
16,120(8,670)(13,066)

10,602443
11,045(7,689)
7,176

2,469
4,969
7,438
(12,226)
5,198

2,319
14,184
16,503
7,051
8,736

1,758
10,836
9,872
541
23,007(12,555)

Additional information on liquidity risk
Maturity analysis of financial liabilities
The table below provides residual contractual maturity analysis of financial liabilities at 31 March 2019 within relevant maturity groupings. All
outstanding debt issuances are profiled on the earliest date on which ANZ New Zealand may be required to pay. The amounts represent principal andinterest cash flows – so they may differ from equivalent amounts reported on the balance sheet.

On demand
NZ$mLess than
3 months
NZ$m

3 to 12months
NZ$m

1 to 5
years
NZ$m

After
5 years
NZ$m

Total
NZ$m

Settlement balances payable
Collateral received

1,470
-

1,087
519

-

-

-

2,557
519

Deposits and other borrowings

53,84528,976

28,623

4,652

1,120

117,216

Derivative financial liabilities (trading)

-

7,623

-

-

-

7,623

Debt issuances1

-

58

2,318

19,9483,227

25,551Other financial liabilities

-

95

6

138

22

261

As at 31 March 2019

Derivative financial instruments(balance sheet management)- gross inflows

-

1,453

3,134

9,145

937

14,669- gross outflows-(1,572)(3,540)(9,870)(994)(15,976)

1

Any callable wholesale debt instruments have been included at their next call date.

At 31 March 2019, NZ$67 million of ANZ New Zealand’s NZ$409 million of non-credit related commitments and all NZ$29,464 million of its credit
related commitments and contingent liabilities mature in less than 1 year, based on the earliest date on which ANZ New Zealand may be required to
pay.

18

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

Liquidity portfolio
ANZ New Zealand holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The size of ANZ New
Zealand’s liquidity portfolio is based on the amount required to meet its internal and regulatory liquidity scenario metrics.
As at 31 March 2019
Cash and balances with central banks
Certificates of deposit
Government, local body stock and bonds
Reserve Bank bills
Other bonds
Total liquidity portfolio

NZ$m
2,273
144
7,645
55
5,663
15,780

The Bank also held unencumbered internal residential mortgage backed securities which would entitle ANZ New Zealand to enter into repurchasetransactions with a value of NZ$7,434 million at 31 March 2019.
Reconciliation of mortgage related amounts
As at 31 March 2019
Term loans - housing1
Less: fair value hedging adjustment
Less: housing loans made to corporate customers
On-balance sheet residential mortgage exposures
Add: off-balance sheet residential mortgage exposures
Total residential mortgage exposures as per LVR analysis
1

Note
4

B4
B4
B4

NZ$m
82,874(8)(2,179)80,687
8,242
88,929Term loans – housing includes loans secured over residential property for owner-occupier, residential property investment and business purposes.

Overseas Banking Group Profitability and Size
Net Profit for the six months ended 31 March 2019 (AUDm)1
Net profit after tax for the year ended 31 March 2019 as a percentage of average total assets
Total assets (AUDm)
Percentage change in total assets in the 12 months to 31 March 20191

31 Mar 19
3,182
0.65%
980,244
4.76%

Net profit after tax for the period includes AUD 9 million of profit attributable to non-controlling interests.

19

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDREGISTERED BANK DISCLOSURES
B3. ASSET QUALITY
Movements in components of loss allowance - total

Net loans and advances - total
As at 1 October 2018
Transfer between stages
New and increased provisions (net of collective provision releases)
Write-backs
Recoveries of amounts previously written off
Credit impairment charge / (release)
Bad debts written-off (excluding recoveries)
Add back recoveries of amounts previously written off
Discount unwind
As at 31 March 2019

Stage 1
NZ$m
160
19
(22)
(3)
157

Off-balance sheet credit related commitments - total
As at 1 October 2018
Transfer between stages
New and increased provisions (net of collective provision releases)
Write-backs
Recoveries of amounts previously written off
Credit impairment charge / (release)
Bad debts written-off (excluding recoveries)
Add back recoveries of amounts previously written off
Discount unwind
As at 31 March 2019

60
3
(8)
(5)
55

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
171
41
132
(20)
2
(1)
22
2
65
(21)
(11)
2
4
32
(58)
11
(5)
173
45
112

23
(3)
5
2
25

2
2

Total
NZ$m
504
67
(21)
(11)
35
(58)
11
(5)
487

-

85
(3)
(3)
82

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
7,550
349
323
1,298
202
129
(551)
(69)
(102)
(58)
8,297
482
292
173
45
112

Total
NZ$m
129,193
13,114(9,974)(58)
132,275487

Impacts of changes in gross financial assets on loss allowances - total

Gross loans and advances - total
As at 1 October 2018
Additions
Deletions
Amounts written off
As at 31 March 2019
Loss allowance as at 31 March 2019

Stage 1
NZ$m
120,971
11,485(9,252)
123,204
157

Off-balance sheet credit related commitments - total
As at 1 October 2018
Additions
Deletions
Amounts written off
As at 31 March 2019
Loss allowance as at 31 March 2019

28,632282(1,933)
26,981
55

1,198
1,284
(80)
2,402
25

11
60
(3)
68
2

14
7
(8)
13
-

29,855
1,633(2,024)29,46482

Explanation of how changes in the gross carrying amounts of gross loans and advances contributed to changes in loss allowance
Overall, loss allowances on gross loans and advances have remained stable at approximately 0.4% of gross loans and advances. Loss allowances havedecreased by NZ$17 million (3%) driven by NZ$58 million of amounts written off. The remaining NZ$41 million increase in loss allowances is driven by
an increase in past due but not impaired assets, which have increased from 1.5% to 1.8% of gross exposures.

20

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

Past due assets and other asset quality information
As at 31 March 2019
Past due assets
Less than 30 days past due
At least 30 days but less than 60 days past due
At least 60 days but less than 90 days past due
At least 90 days past due
Total past due but not impaired
Other asset quality information
Undrawn facilities with impaired customers
Other assets under administration

Total
NZ$m
1,647
340
165
288
2,440
13
11

ANZ New Zealand does not have any loans and advances designated at fair value.
Overseas Banking Group asset quality
As at 31 March 2019
Gross impaired assets (AUDm)
Gross impaired assets as a percentage of total assets
Individual provision (AUDm)
Individual provision as a percentage of gross impaired assets
Collective provision (AUDm)

2,022
0.2%
891
44.1%
3,378

21

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDREGISTERED BANK DISCLOSURES
B4. CREDIT AND MARKET RISK EXPOSURES AND CAPITAL ADEQUACYAPRA Basel III capital ratios
As at 31 March
Common equity tier 1 capital
Tier 1 capital
Total capital

Ultimate Parent Bank
Overseas Banking Group (Extended Licensed Entity)
2019
2018
2019
2018
11.0%
10.9%
11.5%
11.2%
13.4%
12.9%
13.2%
12.9%
15.3%
14.9%
15.3%
15.1%

The Ultimate Parent Bank and the Overseas Banking Group are required to hold minimum capital as determined by APRA, which is at least equal tothat specified under the Basel III capital framework.
APRA has authorised the Ultimate Parent Bank and the Overseas Banking Group to use:
• the Advanced Internal Ratings Based (AIRB) methodology for calculation of credit risk weighted assets. There are however small portfolios(mainly retail and local corporates in Asia Pacific) where the Overseas Banking Group applies the standardised approach.
• the Advanced Measurement Approach (AMA) for the operational risk weighted asset equivalent.
The Overseas Banking Group exceeded the minimum capital requirements set by APRA as at 31 March 2019 and for the comparative prior periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 March 2019. The Overseas Banking Group’s Pillar 3
disclosure document for the quarter ended 31 March 2019, in accordance with APS 330: Public Disclosure of Prudential Information, discloses capital
adequacy ratios and other prudential information. This document can be accessed at the website anz.com.
Market risk
The aggregate market risk exposures below have been calculated in accordance with the RBNZ Banking Supervision Handbook document Capital
Adequacy Framework (Standardised Approach) BS2A. The peak end-of-day market risk exposures are for the six months ended 31 March 2019.

As at 31 March 2019
Interest rate risk
Foreign currency risk
Equity risk

Implied risk weighted
exposure
Period end
Peak
NZ$m
NZ$m
4,586
6,605
111
157
1
1

Notional capital charge
Period end
Peak
NZ$m
NZ$m
367
528
9
13
-

Additional mortgage information
As required by RBNZ, loan-to-valuation-ratios (LVR) are calculated as the current exposure secured by a residential mortgage divided by ANZ New
Zealand's valuation of the security property at origination of the exposure. Off balance sheet exposures include undrawn and partially drawn
residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing lending which have been accepted by
the customer.
On-balance Off-balance
sheet
sheet
Total
As at 31 March 2019
NZ$m
NZ$m
NZ$m
LVR range
Does not exceed 60%
40,201
5,623
45,824
Exceeds 60% and not 70%
18,3091,339
19,648
Exceeds 70% and not 80%
17,933969
18,902
Does not exceed 80%
76,443
7,931
84,374
Exceeds 80% and not 90%
2,993
139
3,132
Exceeds 90%
1,251
172
1,423
Total
80,687
8,242
88,929B5. INSURANCE BUSINESSANZ New Zealand previously conducted insurance business through its subsidiary OnePath. OnePath was sold to Cigna Corporation on 30 November
2018, and as at 31 March 2019, ANZ New Zealand does not conduct any insurance business. ANZ New Zealand continues to market and distribute life
insurance products provided by OnePath.

22

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALANDDIRECTORS' AND NEW ZEALAND CHIEF EXECUTIVE OFFICER'S STATEMENT
As at the date on which this Disclosure Statement is signed, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive
Officer – NZ Branch believes that:•

The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements (Overseas Incorporated
Registered Banks) Order 2014; and•The Disclosure Statement is not false or misleading.

Over the six months ended 31 March 2019, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive Officer – NZ Branchbelieves that:•

The Ultimate Parent Bank has complied with all Conditions of Registration that applied during that period; and•The NZ Branch and the Bank had systems in place to monitor and control adequately the material risks of Relevant Members of ANZ New
Zealand including credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk and other business risks, and thatthose systems were being properly applied.

Signed by the Chief Executive Officer – NZ Branch

Penny Dell
Chief Executive Officer – NZ Branch
20 May 2019
Signed on behalf of all the Directors of the Ultimate Parent BankDavid Hisco
Responsible Person
20 May 2019
on behalf of the Directors of the Ultimate Parent Bank:
Ilana Atlas
Paula Dwyer
Shayne ElliottDavid Gonski, AC
Jane Halton, AO, PSM
Rt Hon Sir John Key, GNZM AC
Graeme Liebelt
John Macfarlane

23

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

INDEPENDENT AUDITOR’S REVIEW REPORTTO THE DIRECTORS OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITEDREPORT ON THE HALF YEAR DISCLOSURE STATEMENTCONCLUSION
Based on our review of the interim financial statements and registered bank disclosures (together referred to as ‘the disclosure statement’) of the
New Zealand business of Australia and New Zealand Banking Group Limited and its subsidiaries (ANZ New Zealand) on pages 3 to 22, nothing hascome to our attention that causes us to believe that:•the interim financial statements on pages 3 to 13 do not present fairly in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34
Interim Financial Reporting, in all material respects, ANZ New Zealand’s financial position as at 31 March 2019 and its financial performanceand cash flows for the 6 month period ended on that date;•

the registered bank disclosures in sections B2, B3 and B5 disclosed in accordance with schedules 5, 7, 12 and 14 of the Registered Bank
Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014 (as amended) (the Order) respectively, do not fairly state, in allmaterial respects, the matters to which they relate in accordance with those schedules; and•the registered bank disclosures relating to credit and market risk exposures and capital adequacy in section B4 are not, in all material
respects, disclosed in accordance with schedule 9 of the Order.

We have completed a review of the accompanying half year disclosure statement which comprises:••

the interim financial statements formed of:•the consolidated balance sheet as at 31 March 2019;•the consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the year then 6month period then ended; and•notes, including a summary of significant accounting policies and other explanatory information.

the registered bank disclosures prescribed in Schedules 5, 7, 9, 12 and 14 of the Order.

BASIS FOR CONCLUSION
A review of the half year disclosure statement in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of
the Entity (NZ SRE 2410) is a limited assurance engagement. The auditor performs procedures, consisting of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures.
As the auditor of ANZ New Zealand, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial
statements.
Our firm has also provided other services to ANZ New Zealand in relation to review and other assurance engagements. Subject to certain restrictions,partners and employees of our firm may also deal with ANZ New Zealand on normal terms within the ordinary course of trading activities of thebusiness of ANZ New Zealand. These matters have not impaired our independence as reviewer of ANZ New Zealand. The firm has no otherrelationship with, or interest in, ANZ New Zealand.

USE OF THE INDEPENDENT REVIEW REPORTThis independent review report is made solely to the directors as a body of ANZ New Zealand. Our review work has been undertaken so that we mightstate to the directors those matters we are required to state to them in the independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the directors as a body for our work, this independent review
report, or any of the opinions we have formed.

24

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

INDEPENDENT AUDITOR’S REVIEW REPORTRESPONSIBILITIES OF THE DIRECTORS FOR THE HALF YEAR DISCLOSURE STATEMENTThe Directors, on behalf of ANZ New Zealand, are responsible for:•the preparation and fair presentation of the half year disclosure statement in accordance with IAS 34, NZ IAS 34 and Schedules 3, 5, 7, 12 and 14of the Order;•

the preparation and fair presentation of ANZ New Zealand’s disclosures in regards to credit and market risk exposures and capital adequacy inaccordance with Schedule 9 of the Order;•

implementing necessary internal controls to enable the preparation of a half year disclosure statement that is fairly presented and free frommaterial misstatement, whether due to fraud or error; and•assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless they either intend to liquidate or to cease operations, or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE REVIEW OF THE HALF YEAR DISCLOSURE STATEMENT
Our responsibility is to express a conclusion on the half year disclosure statement based on our review. We conducted our review in accordance with
NZ SRE 2410. NZ SRE 2410 requires us to conclude whether anything has come to attention that causes us to believe that:•the interim financial statements do not present fairly in all material respects ANZ New Zealand’s financial position as at 31 March 2019 and its
financial performance and cash flows for the 6 month period ended on that date;•the interim financial statements do not, in all material respects, comply with IAS 34 and NZ IAS 34;•

the registered bank disclosures in sections B2, B3, and B5 do not, fairly state, in all material respects, the matters to which it relates in accordancewith Schedules 5, 7, 12 and 14 of the Order; and•the registered bank disclosures relating to credit and market risk exposures and capital adequacy in section B4 is not, in all material respects,
disclosed in accordance with Schedule 9 of the Order.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards
on Auditing (New Zealand). Accordingly we do not express an audit opinion on the half year disclosure statement. This description forms part of our
independent review report.

KPMG
Auckland
20 May 201925

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDBANK FINANCIAL STRENGTH DASHBOARD
Background
This section does not form part of the Disclosure Statement. It contains information in respect of ANZ New Zealand included on the Bank Financial
Strength Dashboard (Dashboard) published on RBNZ’s website. There is no requirement for the Directors to review or approve this information.
Amounts below may differ slightly from those published by RBNZ due to rounding differences. The tables include reconciliations to amounts includedin the Disclosure Statement where there are classification differences between the financial statements and the Dashboard.

D1. ASSET QUALITY
As at 31 March 2019
Total loans

Housing
NZ$m

Consumer
NZ$mBusiness
NZ$m

Agriculture
NZ$m

All other
NZ$m

Total
NZ$m

80,432

3,524

29,533

17,483

1,306

132,278

Impaired loans

36

12

44

156

44

292

Loans 90 days past due but not impaired

200

25

50

13

-

288

Total non-performing loans

236

37

94

169

44

580

Non-performing loans ratio (%)

0.29%

1.05%

0.32%

0.97%

3.37%

0.44%

Individual provisions

11

6

29

31

35

112

Collective provisions

54

68

188

61

4

375

On-balance sheet residential mortgage exposures with LVRs that:
Exceeds 80% and not 90%

3.7%

Exceeds 90%

1.6%

A reconciliation of the amounts in this table to the financial statements is included in the Other Information on page 27.

D2. PROFITABILITY / PERFORMANCE
Financial statements
For the6 months ended
31 March 2019

Dashboard
Less: for the
For the3 months ended
3 months ended
31 December 2018
31 March 2019

NZ$m

NZ$m

NZ$m

Interest income

3,322(1,675)

1,647Interest expense

1,696

(854)

842

Net interest income

1,626

(821)

805

Gains/losses on trading and hedging

(67)

62

(5)

Fee and commission income

332

(162)

170

All other income

139

(89)

50

Operating expenses

745

(385)

360

32

(13)

19

1,253

(612)

641

Tax expense

324

(156)

168

Profit after tax

929

(456)

Impaired asset expense
Profit before tax

473

Return on assets (%)

1.2%

Return on equity (%)

16.3%

Net interest margin (%)

2.2%

The Supplementary Information does not form part of the Disclosure Statement

26

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITEDBANK FINANCIAL STRENGTH DASHBOARD
D3. FINANCIAL POSITION

Financialstatements
NZ$m

As at 31 March 2019

Classification differences
Securities
Other bank purchased under Subordinateddeposits andloan fromagreements
other assets
to re-sell
related party
NZ$m
NZ$m
NZ$m

Dashboard
NZ$m

Cash and bank deposits1

5,067

(83)

(336)

-

4,648

Debt securities held2

13,891---

13,891

Net loans and advances

131,788---

131,788

Derivatives in an asset position

9,118

-

-

-

9,118

All other assets

5,088

83

336

-

5,507

Total assets

164,952---

164,952

Deposits

107,528---

107,528

Debt securities issued3

27,091

-

-

(277)

26,814

Other borrowings

4,930

1,469

-

277

6,676

Derivatives in a liability position

9,872

-

-

-

9,872

All other liabilities

3,803(1,469)

-

-

2,334

Total liabilities (excluding head office account)

153,224---

153,224

Equity11,728---

11,728412
34Comprises cash and cash equivalents and collateral paid
Comprises trading securities and investment securities
Comprises debt issuances plus certificates of deposit and commercial paper from deposits and other borrowings
Comprises collateral received and the remaining items of deposits and other borrowings

OTHER INFORMATION
Reconciliation of total loans by industry and sector
The financial statements and Dashboard include amounts for total loans which are based on different definitions. The table below reconciles thevarious amounts. This information does not form part of the Disclosure Statement.
Housing loans and residential mortgage definitions
Housing loans comprise loans for owner occupier property use and residential investor property use. Owner occupiers are borrowers who own or arein the process of buying or building the house or flat they will live in as their principal place of residence. An owner can occupy more than one
property e.g. a family home and a holiday home. Only households can have owner occupier property use loans. Investors are entities or persons
borrowing for the purpose of building or purchasing residential property to rent. This includes ‘Mum and dad’ investor loans and any person(s) thathave a separate residential investor property use loan which is not for their normal business purpose.
Residential mortgage exposures used in the loan-to-valuation ratio analysis are based on the definition of residential mortgage loans as defined in the
Banking Supervision Handbook document Capital Adequacy Framework (internal models based approach) (BS2B). This metric is based on a collateraldefinition and may include some other lending that is not defined as Housing lending in the asset quality section of the Dashboard. See the Banking
Supervision Handbook for a more detailed definition.

Note

Housing
NZ$m

Consumer
NZ$mBusiness
NZ$m

Agriculture
NZ$m

All other1
NZ$m

Total
NZ$m

4

82,874

n/a

n/a

n/a

49,338132,212

(8)

-

-

-

8

-

Business loans secured by residential property(2,434)

-

-

326

2,108

-

Residential investor property(21,967)--

53

21,914-As at 31 March 2019
Total loans per Balance Sheet
Fair value hedge adjustment

-

3,524

-

17,528(21,052)-

58,465

3,524-

17,90752,316132,212Fair value hedge adjustments

-

-

-

-

(8)

(8)

Unearned income on finance leases

-

-

-

-

(203)

(203)

Other household and agriculture industry loans
Concentration of loans by industry2

B2

Deposit components of overdraft productResidential investor property
Business lending
Loans by purpose (RBNZ series S31)
Other business loans secured by residential property
Total loans per Dashboard
1
2

D1

-

-

-

-

277

277

21,967--(53)(21,914)---

29,166(45)(29,121)-80,432

3,524

29,166

17,8091,347

132,278

-

-

367

(326)

(41)

-

80,432

3,524

29,533

17,483

1,306

132,278

All other in RBNZ series S31 and the Dashboard comprises: Depository and other financial institutions, Central and Local Government, Non-profit institutions serving households.
Household exposures (resident and non-resident) in Note B2 comprise Housing and Consumer.

The Supplementary Information does not form part of the Disclosure Statement27