ANZ BANK NEW ZEALAND LIMITEDREGISTERED BANK DISCLOSURE STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2015
NUMBER 80 | ISSUED FEBRUARY 2016

ANZ Bank New Zealand Limited

REGISTERED BANK DISCLOSURE STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2015

CONTENTS
General Disclosures

2

Income Statement

3Statement of Comprehensive Income

3

Balance Sheet

4

Condensed Cash Flow Statement

5

Statement of Changes in Equity

6

Notes to the Financial Statements

7

Directors' Statement

15

GLOSSARY OF TERMS
In this Registered Bank Disclosure Statement (DisclosureStatement) unless the context otherwise requires:(a) Bank means ANZ Bank New Zealand Limited;(b) Banking Group means the Bank and all its controlled
entities;(c) Immediate Parent Company means ANZ Holdings (New
Zealand) Limited;(d) Ultimate Parent Bank means Australia and New Zealand
Banking Group Limited;(e) Overseas Banking Group means the worldwide
operations of Australia and New Zealand Banking Group
Limited including its controlled entities;(f) New Zealand business means all business, operations, orundertakings conducted in or from New Zealandidentified and treated as if it were conducted by acompany formed and registered in New Zealand;(g) NZ Branch means the New Zealand business of the
Ultimate Parent Bank;(h) ANZ New Zealand means the New Zealand business of
the Overseas Banking Group;(i) Registered Office is Ground Floor, ANZ Centre, 23-29
Albert Street, Auckland, New Zealand, which is also the
Banking Group’s address for service;(j) RBNZ means the Reserve Bank of New Zealand;(k) APRA means the Australian Prudential Regulation
Authority;(l) the Order means the Registered Bank DisclosureStatements (New Zealand Incorporated Registered
Banks) Order 2014; and(m) Any term or expression which is defined in, or in themanner prescribed by, the Order shall have themeaning given in or prescribed by the Order.

ANZ Bank New Zealand Limited

2

GENERAL DISCLOSURESThis Disclosure Statement has been issued in accordancewith the Order.

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

Qualification
Outlook Stable

Moody’s Investors Service

Aa3

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Rating Agency
Standard & Poor’s

Guarantors
No obligations of the Bank are guaranteed as at 12 February
2016.

ANZNZ Covered Bond Trust
Certain debt securities (Covered Bonds) issued by the Bank’s
wholly owned subsidiary, ANZ New Zealand (Int’l) Limited,
are guaranteed by ANZNZ Covered Bond Trust Limited (theCovered Bond Guarantor), solely in its capacity as trustee of
ANZNZ Covered Bond Trust. The Covered Bond Guarantor
has guaranteed the payment of interest and principal of
Covered Bonds with a carrying value as at 31 December 2015
of NZ$4,828 million, pursuant to a guarantee which issecured over a pool of assets. The Covered Bond Guarantor’s
address for service is Level 9, 34 Shortland Street, Auckland,
New Zealand. The Covered Bond Guarantor is not a memberof the Banking Group and has no credit ratings applicable toits long term senior unsecured obligations payable in New
Zealand dollars. The Covered Bonds have been assigned along term rating of Aaa and AAA by Moody’s InvestorsService and Fitch Ratings respectively. Details of the pool ofassets that secure this guarantee are provided in Note 7.

Changes to Conditions of Registration
The conditions of registration applying to the Bank wereamended on 1 November 2015 to refer to revised versions ofvarious RBNZ documents including:••

Capital Adequacy Framework (Internal Models BasedApproach) (BS2B) which includes changes to the capitaltreatment of reverse mortgages and residential
mortgage loans for property investment; and to thequalifying requirements for Additional tier 1 and tier 2
instruments;
Application requirements for capital recognition or
repayment and notification requirements in respect of
capital (BS16) which includes changes to the process toreceive a notice of non-objection in order to recognise
Additional tier 1 and tier 2 instruments as regulatory
capital, and to notification and repayment approvalrequirements in respect of instruments recognised as
regulatory capital; and•Framework for Restrictions on High-LVR Residential
Mortgage Lending (BS19) which includes changes to thehigh-LVR restrictions applying to different types ofresidential mortgage loans and categories that are
exempt from the speed limits.

Adoption of these amendments has not resulted in any
material change to the Banking Group’s reported result or
financial position.

Other Matters
APRA has reviewed the level of exposures that can beprovided to the respective New Zealand banking subsidiaries
and branches (New Zealand operations) of the four
Australian parent banks, including the Ultimate Parent Bank.
APRA has confirmed that by 1 January 2021 no more than
5% of the Ultimate Parent Bank’s Level 1 Tier 1 capital cancomprise non-equity exposures to its New Zealandoperations during ordinary times. Exposures in excess of thislimit must be reduced in equal percentages over the five
year transition period and may not increase above theexposures as at 30 June 2015. This limit does not include
holdings of capital instruments or eligible secured
contingent funding support provided to the Bank during
times of financial stress.
The Ultimate Parent Bank established a New Zealand branchwhich was registered on 5 January 2009. The Bank sells, fromtime-to-time, residential loans and mortgages into the NZ
Branch to provide funding for the Bank’s business. As at 31
December 2015, the NZ Branch held approximately NZ$7.5
billion of residential loans. To satisfy APRA’s requirements
described above, the Bank intends to repay this funding at
approximately NZ$1.6 billion per annum over the next five
years.
APRA has also clarified that contingent funding support by
the Ultimate Parent Bank to the Bank during times offinancial stress must be provided on terms that are
acceptable to APRA and, in aggregate with all otherexposures to its New Zealand operations, must not exceed
50% of the Ultimate Parent Bank’s Level 1 Tier 1 capital. At
present, only covered bonds meet APRA’s criteria forcontingent funding. On this basis, we believe that the
Ultimate Parent Bank will continue to be able to provide
financial support to the Bank.

Directorate
Nigel Williams became a Director on 14 December 2015 andceased as alternate director for Michael Smith on 21
December 2015.
Michael Smith retired as a Director on 21 December 2015.

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

ANZ Bank New Zealand Limited

3

INCOME STATEMENT
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2015

31/12/2014

30/09/2015

Note

Audited

NZ$m

NZ$m

NZ$m

Interest income

1,661

1,733

6,926

Interest expense

920

1,014

4,051

Net interest income

741

719

2,875

Net trading gains / (losses)

(9)

64

262

Net funds management and insurance income

69

101

385

67

103

523

-

1

5

Operating income

868

988

4,050

Operating expenses

378

384

1,512

490

604

2,538

28

12

74

Profit before income tax

462

592

2,464

Income tax expense

120

163

681

Profit after income tax

342

429

1,783

Audited

Other operating income2

Share of associates' profit

Profit before credit impairment and income tax
Credit impairment charge

5

STATEMENT OF COMPREHENSIVE INCOME
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2015
NZ$m

31/12/2014
NZ$m

30/09/2015
NZ$m

342

429

1,783

Actuarial loss on defined benefit schemes

-

-

(32)

Income tax credit relating to items that will not be reclassified

-

-

9

Total items that will not be reclassified to profit or loss

-

-

(23)

Unrealised gains recognised directly in equity

-

14

12

Realised (gains) / losses transferred to income statement

1

(12)

(16)

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

-

(1)

1

Total items that may be reclassified subsequently to profit or loss

1

1

(3)

343

430

1,757

Profit after income tax
Items that will not be reclassified to profit or loss

Items that may be reclassified subsequently to profit or loss

Total comprehensive income for the period

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

ANZ Bank New Zealand Limited

4

BALANCE SHEET
Unaudited

Unaudited

Audited31/12/2015

31/12/2014

30/09/2015

NZ$m

NZ$m

NZ$m

Assets
Cash

3,023

3,386

2,380

Settlement balances receivable

235

193

309

Collateral paid

2,853

1,269

1,929

Trading securities

12,003

12,023

12,139

178

199

151

Derivative financial instruments

14,031

8,574

17,658Available-for-sale assets

2,710

708

1,428

108,231

98,370106,357

Other assets

700

685

740

Life insurance contract assets

510

513

552

4

89

4

Note

Investments backing insurance contract liabilities

Net loans and advances

4

Investments in associates
Premises and equipment

391

378

388

Goodwill and other intangible assets

3,500

3,458

3,492

148,369
129,231

129,845
116,137

147,527
124,785

Settlement balances payable

1,408

1,248

1,844

Collateral received

1,280

207

1,687

97,264

88,15390,67815,415

9,318

17,230Current tax liabilities

24

52

87

Deferred tax liabilities

117

86

124

Payables and other liabilities

1,470

1,292

1,487

Total assets
Interest earning and discount bearing assets
Liabilities

Deposits and other borrowings
Derivative financial instruments

Provisions
Debt issuances

8

193

183

191

16,05915,972

19,403

Subordinated debt

2,343

1,123

2,343

Total liabilities
Net assets

135,573
12,796

117,634
12,211135,074
12,453

8,888

8,213

8,888

(9)

(6)

(10)

EquityShare capital
Reserves
Retained earnings

3,917

4,004

3,575

Total equity

12,796

12,211

12,453

Interest and discount bearing liabilities

110,916

99,802

108,629

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

ANZ Bank New Zealand Limited

5

CONDENSED CASH FLOW STATEMENT
Unaudited

Unaudited

3 months to

3 months to

AuditedYear to31/12/2015

31/12/2014

30/09/2015

NZ$m

NZ$m

NZ$m

Cash flows from operating activities
Interest received

1,650

1,686

6,857

Interest paid

(931)

(1,018)(3,985)

Other cash inflows provided by operating activities

268

230

1,054

Other cash outflows used in operating activities

(668)

(478)

(1,974)

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

319

420

1,952

Net changes in operating assets and liabilities

1,970

1,777

(1,498)Net cash flows provided by operating activities

2,289

2,197

454

Cash inflows provided by investing activities

15

-

-

Cash outflows used in investing activities

(38)

(24)

(132)

Net cash flows used in investing activities

(23)

(24)

(132)

Cash flows from investing activities

Cash flows from financing activities
Cash inflows provided by financing activities

-

325

6,384

Cash outflows used in financing activities(1,681)(908)(6,065)

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

319(1,681)(583)

Net increase in cash and cash equivalents

585

1,590

641

Cash and cash equivalents at beginning of the period

2,471

1,830

1,830

Cash and cash equivalents at end of the period

3,056

3,420

2,471

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

ANZ Bank New Zealand Limited

6

STATEMENT OF CHANGES IN EQUITY
Share capital

Cash flow
hedging
reserve

Retainedearnings

Total
equity

NZ$m

NZ$m

NZ$m

NZ$m

8,213

(7)

3,575

11,781

Profit after income tax

-

-

429

429

Unrealised gains recognised directly in equity

-

14

-

14

Realised gains transferred to the income statement

-

(12)

-

(12)

Income tax expense on items recognised directly in equity

-

(1)

-

(1)

Total comprehensive income for the period

-

1

429

430

As at 31 December 2014 (Unaudited)

8,213

(6)

4,004

12,211As at 1 October 2014 (Audited)

As at 1 October 2014 (Audited)

8,213

(7)

3,575

11,781

Profit after income tax

-

-

1,783

1,783

Unrealised gains recognised directly in equity

-

12

-

12

Realised gains transferred to the income statement

-

(16)

-

(16)

Actuarial loss on defined benefit schemes

-

-

(32)

(32)

Income tax credit on items recognised directly in equity

-

1

9

10

Total comprehensive income for the period

-

(3)

1,760

1,757

Ordinary shares issued

675

-

-

675

Ordinary dividend paid--

(1,745)(1,745)Preference dividend paid

-

-

(15)

(15)

8,888

(10)

3,575

12,453

Profit after income tax

-

-

342

342

Realised losses transferred to the income statement

-

1

-

1

Total comprehensive income for the period

-

1

342

343

8,888

(9)

3,917

12,796As at 30 September 2015 (Audited)

As at 31 December 2015 (Unaudited)

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

ANZ Bank New Zealand Limited

7

NOTES TO THE FINANCIAL STATEMENTS
1.

SIGNIFICANT ACCOUNTING POLICIES(i)

Reporting entity and statement of compliance
These interim financial statements are for the Banking Groupfor the three months ended 31 December 2015. They havebeen prepared in accordance with New Zealand Generally
Accepted Accounting Practice as appropriate for profit
oriented entities, the requirements of NZ IAS 34 Interim
Financial Reporting, IAS 34 Interim Financial Reporting and theOrder, and should be read in conjunction with the Banking
Group’s financial statements for the year ended 30
September 2015.

(ii)

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

2.

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

Comparatives
Certain amounts in the comparative information have been
reclassified to ensure consistency with the current period’s
presentation.

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

derivative financial instruments, including in the caseof fair value hedging, the fair value of any applicable
underlying exposure;financial instruments held for trading;financial assets treated as available-for-sale; andfinancial instruments designated at fair value throughprofit and loss.

OTHER OPERATING INCOME
Unaudited

Unaudited

3 months to

3 months to

AuditedYear to31/12/2015

31/12/2014

30/09/2015

NZ$m

NZ$m

NZ$m

Net fee income

106

103

404

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

64

(48)

(9)

Gain / (loss) on sale of mortgages to NZ Branch

-

(3)

1

Other income

9

12

54

Total other operating income

67

103

523

ANZ Bank New Zealand Limited

8

NOTES TO THE FINANCIAL STATEMENTS
3.

SEGMENT ANALYSIS

Commercial
Commercial provides services to Commercial & Agri(CommAgri) and UDC customers. CommAgri customers
consist of primarily privately owned medium to large
enterprises. Commercial's relationship with these businesses
ranges from simple banking requirements with revenue from
deposit and transactional facilities, and cash flow lending, tomore complex funding arrangements with revenue sourced
from a wider range of products. UDC is principally involved in
the financing and leasing of plant, vehicles and equipment,
mainly for small and medium sized businesses, as well as
investment products.

The Banking Group is organised into four major businesssegments for segment reporting purposes - Retail,Commercial, Wealth and Institutional. Centralised back officeand corporate functions support these segments. Thesesegments are consistent with internal reporting provided tothe chief operating decision maker, being the Bank’s Chief
Executive Officer.
Segmental reporting has been updated to reflect minorchanges to the Banking Group’s structure. Comparative data
has been adjusted to be consistent with the current period’s
segment definitions.

WealthRetail

Wealth comprises the Private Wealth, Funds Management
and Insurance businesses, which provide private banking,investment, superannuation and insurance products andservices.

Retail provides products and services to Retail and BusinessBanking customers via the branch network, mortgage
specialists, the contact centre and a variety of self service
channels (internet banking, phone banking, ATMs, website
and mobile phone banking). Retail customers have personalbanking requirements and Business Banking customers
consist primarily of small enterprises with annual revenues ofless than NZ$5 million. Core products include current andsavings accounts, unsecured lending (credit cards, personalloans and overdrafts) and home loans secured by mortgages
over property. The Retail segment distributes insurance andinvestment products on behalf of the Wealth segment.

Institutional
Institutional provides financial services through a number of
specialised units to large multi-banked corporations, often
global, which require sophisticated product and risk
management solutions. Those financial services include loan
structuring, foreign exchange, wholesale money market
services and transaction banking.
Other
Other includes treasury and back office support functions,none of which constitutes a separately reportable segment.

Business segment analysis1
RetailCommercial

WealthInstitutional

Other 2

Total

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

868

Unaudited 3 months to 31/12/2015

External revenues

560

491

33

101

(317)

Intersegment revenues

(67)

(263)

40

2

288

-

Total revenues

493

228

73

103

(29)

868

Profit / (loss) after income tax

186

107

31

38

(20)

342
988

Unaudited 3 months to 31/12/2014

External revenues

499

527

34

217

(289)

Intersegment revenues

(24)

(292)

42

(63)

337

-

Total revenues

475

235

76

154

48

988

Profit after income tax

180

129

31

66

23

429
4,050

Audited year to 30/09/2015

External revenues

2,071

2,070

159

864

(1,114)

Intersegment revenues(166)(1,149)

164

(200)

1,351

-

Total revenues

1,905

921

323

664

237

4,050

Profit after income tax

698

478

136

331

140

1,783

1
2

Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.
This segment has negative external revenues as this segment incurs funding costs on behalf of the Banking Group and is reimbursed internally.

ANZ Bank New Zealand Limited

9

NOTES TO THE FINANCIAL STATEMENTS
4.

NET LOANS AND ADVANCES
Note

Overdrafts

Unaudited

Unaudited

Audited31/12/2015

31/12/2014

30/09/2015

NZ$m

NZ$m

NZ$m

1,417

1,489

1,638

Credit card outstandings

1,753

1,664

1,688

Term loans - housing

61,162

53,97259,428Term loans - non-housing

43,14740,58942,880

Lease receivables

232

261

236

Hire purchase

978

857

946

-

139

-

108,689

98,971

106,816

Other
Total gross loans and advances
Less: Provision for credit impairment

(607)

(660)

(611)

Less: Unearned income

5

(216)

(218)

(214)

Add: Capitalised brokerage/mortgage origination fees

334

231

314

Add: Customer liability for acceptances

31

46

52

108,231

98,370106,357

Total net loans and advances

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of NZ$7,496 million as at 31 December 2015(31/12/2014 NZ$8,747 million, 30/09/2015 NZ$8,011 million). These assets qualify for derecognition as the Bank does not retain acontinuing involvement in the transferred assets.

5.

PROVISION FOR CREDIT IMPAIRMENT
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

NZ$m

NZ$m

NZ$m

NZ$m

Collective provision

78

124

254

456

Individual provision

48

7

96

151

Total provision for credit impairment

126

131

350

607

Unaudited 31/12/2015

Collective credit impairment charge / (release)

1

(3)

1

(1)

Individual credit impairment charge / (release)

(5)

17

17

29

Credit impairment charge / (release)

(4)

14

18

28

77

114

261

452

Unaudited 31/12/2014

Collective provision
Individual provision

68

14

126

208

Total provision for credit impairment

145

128

387

660

Collective credit impairment charge / (release)

(1)

(4)

6

1

Individual credit impairment charge / (release)

(3)

15

(1)

11

Credit impairment charge / (release)

(4)

11

5

12

Collective provision

77

127

253

457

Individual provision

54

9

91

154

Total provision for credit impairment

131

136

344

611

Audited 30/09/2015

Collective credit impairment charge / (release)

(1)

9

(2)

6

Individual credit impairment charge / (release)

(9)

68

9

68

Credit impairment charge / (release)

(10)

77

7

74

ANZ Bank New Zealand Limited

10

NOTES TO THE FINANCIAL STATEMENTS
6.

IMPAIRED AND PAST DUE ASSETS
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

NZ$m

NZ$m

NZ$m

NZ$m

Total impaired assets

73

29

246

348

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

93

32

29

154

Total impaired assets

140

34

354

528

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

94

34

60

188

Total impaired assets

97

32

253

382

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

103

32

62

197

Unaudited 31/12/2015

Unaudited 31/12/2014

Audited 30/09/2015

7.

ASSETS CHARGED AS SECURITY FOR LIABILITIES
Carrying Amount
Unaudited

Unaudited

Audited31/12/2015

31/12/2014

30/09/2015

NZ$m

NZ$m

NZ$m

Cash collateral given on derivative financial instruments

2,853

1,269

1,929

Securities sold under agreements to repurchase

538

764

47

Residential mortgages pledged as security for covered bonds

7,643

7,631

7,547

Assets pledged as collateral for UDC secured investments

2,498

2,372

2,441

Total financial assets pledged as collateral

13,532

12,036

11,964ANZNZ Covered Bond Trust (the Covered Bond Trust)
Substantially all of the assets of the Covered Bond Trust are made up of certain housing loans and related securities originated by the Bank
which are security for the guarantee by ANZNZ Covered Bond Trust Limited as trustee of the Covered Bond Trust of issuances of coveredbonds by the Bank, or its wholly owned subsidiary ANZ New Zealand (Int’l) Limited, from time to time. The assets of the Covered Bond
Trust are not available to creditors of the Bank, although the Bank (or its liquidator or statutory manager) may have a claim against theresidual assets of the Covered Bond Trust (if any) after all prior ranking creditors of the Covered Bond Trust have been satisfied.
The Banking Group continues to recognise the assets of the Covered Bond Trust on its balance sheet as, although they are pledged as
security for covered bonds, the Bank retains substantially all the risks and rewards of ownership.

8.

DEPOSITS AND OTHER BORROWINGS

Note

Unaudited

Unaudited

Audited31/12/2015

31/12/2014

30/09/2015

NZ$m

NZ$m

NZ$m

Term deposits

36,32434,201

34,982Other deposits bearing interest and other borrowings

42,98435,72941,436

Deposits not bearing interest

7,154

6,371

6,716

1,726

1,562

1,736

Total customer deposits

88,18877,86384,870

Certificates of deposit

2,642

2,154

745

Commercial paper

5,858

7,378

4,964

Deposits from banks

539

757

47

Deposits from other members of ANZ New Zealand

37

1

52

97,264

88,15390,678

UDC secured investments

Total deposits and other borrowings

9.

7

RELATED PARTY BALANCES
Unaudited

Unaudited

Audited31/12/2015

31/12/2014

30/09/2015

NZ$m

NZ$m

NZ$m

Total due from related parties

3,896

3,210

4,195

Total due to related parties

4,994

3,960

5,487

ANZ Bank New Zealand Limited

11

NOTES TO THE FINANCIAL STATEMENTS
10. CAPITAL ADEQUACY
Basel III capital ratios

Banking Group
31/12/2015

31/12/2014

30/09/2015

Common equity tier 1 capital

10.7%

11.0%

10.5%

Tier 1 capital

13.0%

11.4%

12.7%

Total capital

13.8%

12.6%

13.6%

Buffer ratio

5.8%

4.6%

5.6%

Common equity tier 1 capital

4.5%

4.5%

4.5%

Tier 1 capital

6.0%

6.0%

6.0%

Total capital

8.0%

8.0%

8.0%

Buffer requirement

2.5%

2.5%

2.5%

Unaudited

RBNZ minimum ratios:

Capital of the Banking Group
Unaudited
31/12/2015
NZ$m

Common equity tier 1 capital before deductions

12,496

Less deductions from common equity tier 1 capital(3,701)

Common equity tier 1 capital

8,795

Additional tier 1 capital

1,841

Total tier 1 capital

10,636Tier 2 capital

702

Total capital

11,338

Capital requirements of the Banking Group

Exposure atdefault

Risk weighted
exposure or
implied risk
weighted
exposure1

Total capitalrequirement

NZ$m

NZ$m

NZ$m

Corporate exposures

48,41429,044

2,324

Sovereign exposures

11,405294

24

Bank exposures

12,0383,499

280

Retail mortgage exposures

67,404

16,1691,293

Other retail exposures

10,682

8,592

687

Exposures subject to internal ratings based approach

149,943

57,598

4,608

Specialised lending exposures subject to slotting approach

10,480

9,671

774

Exposures subject to standardised approach

2,069

358

29

Equity exposures

6

27

2

Other exposures

3,676

1,515

121

Total credit risk

166,174

69,1695,534

Operational risk

n/a

5,649

452

Market risk

n/a

7,240

579

166,174

82,058

6,565

Unaudited 31/12/2015

Total
1

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

ANZ Bank New Zealand Limited

12

NOTES TO THE FINANCIAL STATEMENTS
Capital for other material risks
The Banking Group has an Internal Capital Adequacy Assessment Process (ICAAP) which complies with the requirements of the Bank's
Conditions of Registration.
Under the Banking Group's ICAAP it identifies and measures all "other material risks", which are those material risks that are not explicitly
captured in the calculation of the Banking Group's tier 1 and total capital ratios. The other material risks identified by the Banking Group
include business risk, pension risk, insurance risk, funds management risk, lapse risk, premises and equipment risk, and capitalised
origination fees risk.
The Banking Group's internal capital allocation for these other material risks is NZ$504 million (31/12/2014 NZ$464 million; 30/09/2015
NZ$479 million).
The Banking Group regularly reviews the methodologies used to calculate the economic capital allocated to other material risks. Updated
capital methodologies (particularly relating to pension risk and business retention risk) were applied in March 2015 and prior periods
restated accordingly.
Residential mortgages by loan-to-valuation ratio
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the Banking Group'svaluation 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.
31/12/2015
On-balancesheet

Off-balance
sheet

Total

Unaudited

NZ$m

NZ$m

NZ$m

LVR range
Does not exceed 60%

22,673

4,259

26,932

Exceeds 60% and not 70%

12,081

1,321

13,402

Exceeds 70% and not 80%

17,8991,785

19,684

Does not exceed 80%

52,6537,365

60,018

Exceeds 80% and not 90%

4,315

214

4,529

Exceeds 90%

2,001

254

2,255

Total

58,9697,833

66,80211.

LIQUIDITY PORTFOLIO

The Banking Group holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The size of
the Banking Group’s liquidity portfolio is based on the amount required to meet its liquidity policy and includes both items classified as
cash and those classified as operating assets in the Condensed Cash Flow Statement.
Unaudited 31/12/2015

NZ$m

Cash and balances with central banks

2,255

Certificates of deposit

1,368

Government, local body stock and bonds

5,399

Government treasury bills

876

Reserve Bank bills

792

Other bonds

5,902

Total liquidity portfolio

16,592The Bank also held unencumbered internal residential mortgage backed securities which would entitle the Banking Group to enter into
repurchase transactions with a value of NZ$5,874 million at 31 December 2015.

ANZ Bank New Zealand Limited

13

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

Unaudited

Unaudited

31/12/2015
Carrying
amountFair value

Audited31/12/2014
Carrying
amountFair value

30/09/2015
Carrying
amountFair value

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

108,231108,698

98,37098,625

106,357

106,854

Deposits and other borrowings2

97,264

97,39688,153

88,207

90,67890,832

Debt issuances1

16,05916,152

15,972

16,127

19,403

19,516

Subordinated debt

2,343

2,326

1,123

1,120

2,343

2,288

AssetsNet loans and advances1
Liabilities

1

2

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

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

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

•

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

•

Level 3 – Financial instruments that have been valued using valuation techniques which incorporate significant inputs that are notbased on observable market data (unobservable inputs).

There have been no substantial changes in the valuation techniques applied to different classes of financial instruments during the period.

Valuation hierarchy
Unaudited

Unaudited

31/12/2015
Level 1 Level 2 Level 3
NZ$m NZ$m NZ$m

Audited31/12/2014
Total Level 1 Level 2 Level 3
NZ$m NZ$m NZ$m NZ$m

30/09/2015
Total Level 1 Level 2 Level 3
NZ$m NZ$m NZ$m NZ$m

Total
NZ$m

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

11,824179

19 14,012- 12,003 11,912

111- 12,023 11,880- 14,031

4

8,570

-

8,574

12 17,646

259- 12,139- 17,658

1,384

1,324

2

2,710

548

158

2

708

900

526

2

1,428

3

175

-

178

3

196

-

199

2

149

-

151

2 28,922 12,467

9,035

2 21,504 12,794 18,580

2 31,376--

13,230 15,690

Financial liabilities
Deposits and other borrowings-

Derivative financial instruments

2 15,413

5,858

Payables and other liabilities

467-

Total financial liabilities held at fair value469 21,271

5,858

-

7,378

-

7,378

-

- 15,415

3

9,315

-

9,318

19 17,211- 17,230

177

-

-

177

309

-

-

467

- 21,740

180 16,693- 16,873

4,964-

328 22,175

4,964
309

- 22,503

ANZ Bank New Zealand Limited

14

NOTES TO THE FINANCIAL STATEMENTS
13. CONCENTRATIONS OF CREDIT RISK TO INDIVIDUAL COUNTERPARTIESThe Banking Group measures its concentration of credit risk to bank counterparties on the basis of approved exposures, and to non-bankcounterparties on the basis of limits.
For the three months ended 31 December 2015 there were no individual counterparties, excluding connected parties, governments andbanks with long term credit ratings of A- or above, where the Banking Group’s period end or peak end-of-day credit exposure equalled or
exceeded 10% of the Banking Group’s equity as at the end of the period.

14. INSURANCE BUSINESSThe Banking Group conducts insurance business through its subsidiary OnePath Life (NZ) Limited (OnePath Life).
The Banking Group’s aggregate amount of insurance business comprises the total assets of OnePath Life of NZ$881 million (31/12/2014:
NZ$902 million; 30/09/2015 NZ$884 million), which is 0.6% (31/12/2014: 0.7%; 30/09/2015 0.6%) of the total consolidated assets of the
Banking Group.

15. CREDIT RELATED COMMITMENTS, GUARANTEES AND CONTINGENT LIABILITIES
Face or contract value

Credit related commitments
Commitments with certain drawdown due within one year

Unaudited

Unaudited

Audited31/12/2015

31/12/2014

30/09/2015

NZ$m

NZ$m

NZ$m

835

884

1,130

Commitments to provide financial services

31,80929,204

31,291

Total credit related commitments

32,64430,08832,421

Financial guarantees

828

878

920

Standby letters of credit

60

67

82

Transaction related contingent items

1,399

1,300

1,385

Trade related contingent liabilities

71

87

67

2,358

2,332

2,454

Guarantees and contingent liabilities

Total guarantees and contingent liabilities

The Banking Group guarantees the performance of customers by issuing standby letters of credit and guarantees to third parties,
including its Ultimate Parent Bank. The risk involved is essentially the same as the credit risk involved in extending loan facilities tocustomers, therefore these transactions are subjected to the same credit origination, portfolio management and collateral requirements
for customers applying for loans. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect
future cash requirements.
Other contingent liabilities
On 11 March 2013, litigation funder Litigation Lending Services (NZ) Limited announced plans for a representative action against banks in
New Zealand for certain fees charged to New Zealand customers over the past six years. Proceedings were filed against the Bank on 25
June 2013. The potential outcome of this litigation cannot be determined with any certainty at this stage.
The Banking Group has other contingent liabilities in respect of actual and possible claims and court proceedings.
An assessment of the Banking Group’s likely loss in respect of these matters has been made on a case-by-case basis and provision madewhere deemed necessary.

16. SUBSEQUENT EVENTSOn 12 February 2016, the Bank’s Board resolved to pay a preference dividend of NZ$6.6 million on 1 March 2016 and to pay an ordinary
dividend of NZ$800 million no later than 31 March 2016.

ANZ Bank New Zealand Limited

15

DIRECTORS' STATEMENT
As at the date on which this Disclosure Statement is signed, after due enquiry, each Director believes that:(i)

The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements (New Zealand
Incorporated Registered Banks) Order 2014; and(ii)

The Disclosure Statement is not false or misleading.

Over the three months ended 31 December 2015, after due enquiry, each Director believes that:(i)

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

Credit exposures to connected persons were not contrary to the interests of the Banking Group;(iii) ANZ Bank New Zealand Limited had systems in place to monitor and control adequately the Banking Group’s material risks, including

credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operational risk and other business risks,
and that those systems were being properly applied.
This Disclosure Statement is dated, and has been signed by or on behalf of all Directors of the Bank on, 12 February 2016.

Antony Carter

Shayne ElliottDavid Hisco

John Judge

Mark Verbiest

Nigel Williams

Joan Withers