AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED- ANZ NEW ZEALAND
REGISTERED BANK DISCLOSURE STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2016
NUMBER 33 | ISSUED FEBRUARY 2017

Australia and New Zealand Banking Group Limited - ANZ New Zealand

REGISTERED BANK DISCLOSURE STATEMENTFOR THE THREE MONTHS ENDED 31 DECEMBER 2016

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' and New Zealand Chief Executive Officer's Statement

16

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 itwere conducted by a company formed and registered in New Zealand.
NZ Branch means the New Zealand business of the Ultimate Parent Bank.
ANZ New Zealand means the New Zealand business of the Overseas Banking Group.
UDC means UDC Finance Limited.
Registered Office is 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 (Overseas Incorporated Registered Banks) Order 2014.
Any term or expression which is defined in, or in the manner prescribed by, the Order shall have the meaning given in or prescribed by theOrder.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

2

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

Credit Rating Information
The Ultimate Parent Bank has three credit ratings, which areapplicable to its long-term senior unsecured obligations. The
Ultimate Parent Bank’s credit ratings are:Rating Agency
Standard & Poor’s

Current Credit
Rating
Qualification
AAOutlook Negative

Moody’s Investors Service

Aa2

Outlook Negative

Fitch Ratings

AA-

Outlook Stable

Guarantors
No material obligations of the NZ Branch are guaranteed as
at 16 February 2017.

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 2016of NZ$4,960 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. The Covered
Bonds have been assigned a long term rating of Aaa andAAA by Moody’s Investors Service and Fitch Ratings
respectively. Details of the pool of assets that secure thisguarantee are provided in note 7.

Financial Statements of the Ultimate Parent Bankand 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 the request is madeat the Registered Office. The most recent publicly available
financial statements for the Ultimate Parent Bank andOverseas Banking Group can also be accessed at the internet
address anz.com.

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 2016, the NZ Branch held approximately NZ$5.5
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 five year
transition period ending 31 December 2020.
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
Jane Halton, AO, PSM was appointed as a Non-Executive
Director on 21 October 2016.
Ian Macfarlane retired as a Non-Executive Director on 16
December 2016.

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

Australia and New Zealand Banking Group Limited - ANZ New Zealand

3

INCOME STATEMENT

Note

Unaudited

Unaudited

3 months to

3 months to

AuditedYear to31/12/2016

31/12/2015

30/09/2016

NZ$m

NZ$m

NZ$m

Interest income

1,619

1,761

6,770

Interest expense

846

1,013

3,741

Net interest income

773

748

3,029

Net trading gains / (losses)

72

(9)

12

21

69

414

98

65

401

1

-

5

Operating income

965

873

3,861

Operating expenses

369

378

1,600

Profit before credit impairment and income tax

596

495

2,261

Net funds management and insurance income
Other operating income2

Share of associates' profit

Credit impairment charge

37

27

147

Profit before income tax

5

559

468

2,114

Income tax expense

156

121

572

Profit after income tax

403

347

1,542

AuditedSTATEMENT OF COMPREHENSIVE INCOME
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2016
NZ$m

31/12/2015
NZ$m

30/09/2016
NZ$m

403

347

1,542

Actuarial gain on defined benefit schemes

-

-

18

Income tax expense relating to items that will not be reclassified

-

-

(5)

Total items that will not be reclassified to profit or loss

-

-

13

(15)

-

91

2

1

9
(28)

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

Items that may be reclassified subsequently to profit or loss
Unrealised gains / (losses) recognised directly in equity
Realised losses transferred to income statement
Income tax credit / (expense) relating to items that may be reclassified

3-

Total items that may be reclassified subsequently to profit or loss

(10)

1

72

Total comprehensive income for the period

393

348

1,627

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

Australia and New Zealand Banking Group Limited - ANZ New Zealand

4

BALANCE SHEET

Note

Unaudited

Unaudited

Audited31/12/2016

31/12/2015

30/09/2016

NZ$m

NZ$m

NZ$m

3,280

3,023

2,274

AssetsCash
Settlement balances receivable

498

235

396

Collateral paid

1,700

2,853

2,310

Trading securities

10,996

12,003

11,979

128

178

119

14,842

13,94920,969Investments backing insurance contract liabilities
Derivative financial instruments
Available-for-sale assets

4,892

2,710

2,859

119,169

115,733

120,651

Other assets

609

700

701

Life insurance contract assets

549

510

630

Investments in associates

7

4

7

Premises and equipment

385

391

387

3,294

3,500

3,424

2,806

-

-

Total assets

163,155

155,789

166,706

Interest earning and discount bearing assets

143,084

136,741

140,524

Settlement balances payable

1,225

1,079

1,554

Collateral received

766

1,280

529

110,195

105,607

106,908

15,806

16,07822,398Current tax liabilities

32

21

22

Deferred tax liabilities

136

117

147

Payables and other liabilities

1,149

1,503

1,137

Net loans and advances

4

Goodwill and other intangible assets
UDC assets held for sale18

Liabilities

Deposits and other borrowings

8

Derivative financial instruments

Provisions

200

193

206

Debt issuances

917,962

16,05920,014

Subordinated debt

10

2,613

2,644

2,624

UDC liabilities held for sale

18

1,511

-

-

Total liabilities (excluding head office account)

151,595

144,581

155,539

Net assets (excluding head office account)

11,560

11,208

11,167

8,055

8,058

8,055

EquityShare capital and initial head office accountReserves
Retained earnings

52

(9)

62

3,453

3,159

3,050

Total equity and initial head office account11,560

11,208

11,167

Interest and discount bearing liabilities

125,332

119,559

123,145

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

Australia and New Zealand Banking Group Limited - ANZ New Zealand

5

CONDENSED CASH FLOW STATEMENT
Unaudited

Unaudited

3 months to

3 months to

AuditedYear to31/12/2016

31/12/2015

30/09/2016

NZ$m

NZ$m

NZ$m

Cash flows from operating activities
Interest received

1,618

1,751

6,794

Interest paid

(825)

(1,060)(3,753)

Other cash inflows provided by operating activities

221

241

958

Other cash outflows used in operating activities

(544)

(671)

(2,140)Cash flows from operating profits before changes in operating assets and liabilities

470

261

1,859

Net changes in operating assets and liabilities

2,725

1,950

(3,593)

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

3,195

2,211

(1,734)

Cash flows from investing activities
Cash inflows provided by investing activities

-

38

40

Cash outflows used in investing activities

(15)

(38)

(100)

Net cash flows used in investing activities

(15)

-

(60)

Cash flows from financing activities
Cash inflows provided by financing activities

250

-

7,380

Cash outflows used in financing activities(2,448)(1,681)(5,797)

Net cash flows provided by / (used in) financing activities(2,198)(1,681)

1,583

Net increase / (decrease) in cash and cash equivalents

982

530

(211)

Cash and cash equivalents at beginning of the period

2,315

2,526

2,526

Cash and cash equivalents at end of the period

3,297

3,056

2,315

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

Australia and New Zealand Banking Group Limited - ANZ New Zealand

6

STATEMENT OF CHANGES IN EQUITY
Share capitaland initialhead officeaccount

Availablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total
equity

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

8,058

-

(10)

2,812

10,860

Profit after income tax

-

-

-

347

347

Realised losses transferred to the income statement

-

-

1

-

1

As at 1 October 2015 (Audited)

Total comprehensive income for the period

-

-

1

347

348

As at 31 December 2015 (Unaudited)

8,058

-

(9)

3,159

11,208As at 1 October 2015 (Audited)

8,058

-

(10)

2,812

10,860

Profit after income tax

-

-

-

1,542

1,542

Unrealised gains / (losses) recognised directly in equity

-

(2)

93

-

91

Realised losses transferred to the income statement

-

2

7

-

9

Actuarial gain on defined benefit schemes

-

-

-

18

18

Income tax expense on items recognised directly in equity

-

-

(28)

(5)

(33)

Total comprehensive income for the period

-

-

72

1,555

1,627

Shares cancelled on amalgamation

(3)

-

-

3

-

Ordinary dividend paid

-

-

-

(1,320)(1,320)As at 30 September 2016 (Audited)

8,055

-

62

3,050

11,167

Profit after income tax

-

-

-

403

403

Unrealised gains / (losses) recognised directly in equity

-

7

(22)

-

(15)

Realised losses transferred to the income statement

-

-

2

-

2

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

-

(2)

5

-

3

Total comprehensive income for the period

-

5

(15)

403

393

8,055

5

47

3,453

11,560As at 31 December 2016 (Unaudited)

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

Australia and New Zealand Banking Group Limited - ANZ New Zealand

7

NOTES TO THE FINANCIAL STATEMENTS
1.

SIGNIFICANT ACCOUNTING POLICIES(i)

Reporting entity and statement of compliance
These interim financial statements are for ANZ New Zealandfor the three months ended 31 December 2016. 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 ANZ New
Zealand’s financial statements for the year ended 30
September 2016.

(ii)

The accounting policies adopted by ANZ New Zealand areconsistent 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.

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(vi) Principles of consolidation

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

The consolidated financial statements of ANZ New Zealandcomprise the financial statements of the NZ Branch and all
the New Zealand businesses of all the subsidiaries of the
Ultimate Parent Bank (those entities where it is determinedthat the Ultimate Parent Bank has capacity to control).

OTHER OPERATING INCOME
Unaudited

Unaudited

3 months to

3 months to

AuditedYear to31/12/2016

31/12/2015

30/09/2016

NZ$m

NZ$m

NZ$m

Net fee income

101

101

403

Fair value loss on hedging activities and financial liabilities designated at fair value

(11)

(45)

(41)

Other income

8

9

39

Total other operating income

98

65

401

Australia and New Zealand Banking Group Limited - ANZ New Zealand

8

NOTES TO THE FINANCIAL STATEMENTS
3.

SEGMENT ANALYSISANZ New Zealand is organised into three major businesssegments for segment reporting purposes - Retail,Commercial and Institutional. Centralised back office andcorporate functions support these segments. Thesesegments are consistent with internal reporting provided tothe chief operating decision maker, being the Bank’s Chief
Executive Officer.
During the year ended 30 September 2016, Wealth was
integrated with Retail, having been disclosed separately
previously. Segment reporting has been updated to reflect
this change and other minor changes to ANZ New Zealand’s
structure. Comparative data has been adjusted to beconsistent with the current period’s segment definitions.
RetailRetail provides products and services to Retail, Private
Banking, and Business Banking customers via the branch
network, mortgage specialists, relationship managers, thecontact centre and a variety of self service channels (internet
banking, phone banking, ATMs, website and mobile phonebanking). Retail and Private Banking customers have personalbanking requirements and Business Banking customers
consist primarily of small enterprises with annual revenues ofless than NZ$5 million. Core products and services include
current and savings accounts, unsecured lending (credit
cards, personal loans and overdrafts), home loans secured by
mortgages over property, investment products,
superannuation and insurance services.

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.
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

Institutional

Other

Total

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

965

Unaudited 3 months to 31/12/2016

External revenues

737

456

173

(401)

Intersegment revenues

(128)

(227)

16

339

-

Total revenues

609

229

189

(62)

965

Profit / (loss) after income tax

256

99

99

(51)

403
873

Unaudited 3 months to 31/12/2015

External revenues

697

491

91

(406)

Intersegment revenues

(119)

(263)

13

369

-

Total revenues

578

228

104

(37)

873

Profit / (loss) after income tax

227

107

38

(25)

347

External revenues

2,900

1,885

424

(1,348)3,861Intersegment revenues

(509)

(981)

60

1,430

-

Total revenues

2,391

904

484

82

3,861

Profit / (loss) after income tax

941

413

203

(15)

1,542

Audited year to 30/09/2016

1

Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

9

NOTES TO THE FINANCIAL STATEMENTS
4.

NET LOANS AND ADVANCES
Unaudited

Unaudited

Audited31/12/2016
NZ$m

31/12/2015
NZ$m

30/09/2016
NZ$m

Overdrafts1

836

1,012

1,133

Credit card outstandings

1,728

1,753

1,663

Term loans - housing1

73,926

69,07873,330Term loans - non-housing

43,651Note

44,42943,147

Lease receivables

222

232

226

Hire purchase

1,164

978

1,098

122,305

116,200

121,101

(648)

(623)

(632)

Less: Unearned income

(218)

(217)

(211)

Add: Capitalised brokerage/mortgage origination fees

361

342

366

Add: Customer liability for acceptances

31

31

27

121,831

115,733

120,651(2,662)--

119,169

115,733

120,651

Total gross loans and advances
Less: Provision for credit impairment

5

Net loans and advances (including assets classified as held for sale)Less: UDC net loans and advances held for sale18

Net loans and advances
1

Comparative amounts have been changed to reclassify revolving credit facilities secured by residential property provided to corporate customers from Overdrafts to Termloans – housing (31/12/2015 NZ$405 million).

5.

PROVISION FOR CREDIT IMPAIRMENT
Retailmortgages
NZ$m

Other retail
exposures
NZ$m

Non-retail
exposures
NZ$m

Total
NZ$m

Collective provision

85

126

251

462

Individual provision

35

6

145

186

Total provision for credit impairment

120

132

396

648

Collective credit impairment release

-

(4)

(12)

(16)

Individual credit impairment charge / (release)

(4)

14

43

53

Credit impairment charge / (release)

(4)

10

31

37

87

124

254

465

Unaudited 31/12/2016

Unaudited 31/12/2015

Collective provision
Individual provision

55

7

96

158

Total provision for credit impairment

142

131

350

623

Collective credit impairment charge / (release)

-

(3)

1

(2)

Individual credit impairment charge / (release)

(5)

17

17

29

Credit impairment charge / (release)

(5)

14

18

27

Collective provision

85

130

263

478

Individual provision

40

6

108

154

Total provision for credit impairment

125

136

371

632

Audited 30/09/2016

Collective credit impairment charge / (release)

(2)

3

10

11

Individual credit impairment charge / (release)

(12)

70

78

136

Credit impairment charge / (release)

(14)

73

88

147

Australia and New Zealand Banking Group Limited - ANZ New Zealand

10

NOTES TO THE FINANCIAL STATEMENTS
6.

IMPAIRED ASSETS AND PAST DUE ASSETS
Retailmortgages
NZ$m

Other retail
exposures
NZ$m

Non-retail
exposures
NZ$m

Total
NZ$m

Total impaired assets

58

23

459

540

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

114

30

19

163

Total impaired assets

92

29

246

367

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

116

32

29

177

Total impaired assets

64

27

342

433

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

103

26

23

152

Unaudited 31/12/2016

Unaudited 31/12/2015

Audited 30/09/2016

7.

ASSETS CHARGED AS SECURITY FOR LIABILITIESThe carrying amounts of assets pledged as security are as follows. These amounts exclude the amounts disclosed as collateral paid in thebalance 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 Agreements.
Carrying Amount

Related Liability

Unaudited

Unaudited

AuditedUnaudited

Unaudited

Audited31/12/2016
NZ$m

31/12/2015
NZ$m

30/09/2016
NZ$m

31/12/2016
NZ$m

31/12/2015
NZ$m

30/09/2016
NZ$m

344

538

77

344

539

76

Residential mortgages pledged as security for covered bonds

10,7497,643

10,265

4,960

4,828

6,218

Assets pledged as collateral for UDC secured investments

2,763

2,498

2,665

1,460

1,726

1,592

Securities sold under agreements to repurchase

UDC Secured Investments are secured by a security interest granted under the Trust Deed over all of UDC Finance Limited's (UDC) present
and future assets and undertakings, to Trustees Executors Limited, as supervisor. The assets subject to the security interest comprisemainly loans to UDC's customers and certain plant and equipment. The security interest secures all amounts payable by UDC on the UDC
Secured Investments and all other moneys payable by UDC under the Trust Deed.
ANZNZ 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.
ANZ New Zealand 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
Unaudited

Unaudited

Audited31/12/2016
NZ$m

31/12/2015
NZ$m

30/09/2016
NZ$m

Term deposits

41,371

36,324

39,665On demand and short term deposits

42,94442,98442,323

Deposits not bearing interest

8,562

7,154

7,780

Note

UDC secured investments

1,460

1,726

1,592

Total customer deposits

7

94,33788,18891,360

Certificates of deposit

2,106

2,642

2,237

Commercial paper

7,466

5,858

5,364

Securities sold under agreements to repurchase

344

539

76

Borrowings from Ultimate Parent Bank and Immediate Parent Company

7,402

8,380

7,871

111,655

105,607

106,908(1,460)--110,195

105,607

106,908

Deposits and other borrowings (including liabilities classified as held for sale)Less: UDC secured investments held for sale
Deposits and other borrowings

18

Australia and New Zealand Banking Group Limited - ANZ New Zealand

11

NOTES TO THE FINANCIAL STATEMENTS
9.

DEBT ISSUANCES
Unaudited

Unaudited

Audited31/12/2016
NZ$m

31/12/2015
NZ$m

30/09/2016
NZ$m

Domestic bonds

3,875

3,525

3,975

U.S. medium term notes1

7,182

5,253

6,883

Euro medium term notes

1,989

2,434

2,792

Covered bonds1

4,960

4,828

6,218

-

36

-

18,006

16,076

19,868

(10)

117

192

1

Index linked notes
Total debt issuances
Fair value hedge adjustment
Less debt issuances held by the Bank
Total debt issuances
1

(34)

(134)

(46)

17,962

16,05920,014

These debt issuances are issued by ANZ New Zealand (Int’l) Limited and are guaranteed by the Bank.

Debt issuances, other than covered bonds, are unsecured and rank equally with other unsecured liabilities of ANZ New Zealand.
Domestic bonds includes two series of bonds quoted on the NZX Debt Market which mature on 2 September 2021 and 1 September
2023 respectively (the Bonds). NZX Regulation has granted the Bank a waiver in respect of the Bonds from the requirement in Main
Board/Debt Market Listing Rule 5.2.3 (as modified by NZX’s ruling on Rule 5.2.3 issued on 29 September 2015) to enable the Bank to apply
for quotation of the Bonds on the NZX Debt Market even though the Bonds may not initially be held by at least 100 members of the
public holding at least 25% of the Bonds issued. The waiver has been granted for a period of 6 months from the relevant dates of
quotation of the Bonds on the NZX Debt Market. The effect of the waiver from NZX Listing Rule 5.2.3 is that initially the Bonds may not be
widely held and there may be reduced liquidity in the Bonds. To the extent that there is a material reduction in the spread of the Bonds,
the Bank will notify NZX accordingly.

10. SUBORDINATED DEBT
Unaudited

Unaudited

Audited31/12/2016
NZ$m

31/12/2015
NZ$m

30/09/2016
NZ$m

AUD 970m ANZ Capital Notes 3 (ANZ CN3)2

997

1,020

1,005

NZD 500m ANZ New Zealand Capital Notes (ANZ NZ CN)3

496

495

496

NZD 835m perpetual subordinated bond3

835

835

835

AUD 10m perpetual subordinated floating rate loan

10

11

10

ANZ Capital Notes1

Perpetual subordinated debt

Dated subordinated debt
AUD 265m subordinated floating rate loan

275

283

278

Total subordinated debt

2,613

2,644

2,624

1
2
3

These instruments qualify as additional tier 1 capital of the Overseas Banking Group.
These instruments are quoted on the Australian Stock Exchange.
These instruments are quoted on the NZX Debt Market.

11.

RELATED PARTY BALANCES
Unaudited

Unaudited

Audited31/12/2016

31/12/2015

30/09/2016

NZ$m

NZ$m

NZ$m

Total due from related parties

4,048

3,815

4,903

Total due to related parties

12,242

12,995

13,614

Australia and New Zealand Banking Group Limited - ANZ New Zealand

12

NOTES TO THE FINANCIAL STATEMENTS
12. CAPITAL ADEQUACY
Basel III capital ratios
Overseas Banking Group
31/12/2016
31/12/2015
30/09/2016

Ultimate Parent Bank
(Extended Licensed Entity)
30/09/2016
30/09/2015

Unaudited

Common equity tier 1 capital

9.5%

9.4%

9.6%

9.7%

9.6%

Tier 1 capital

11.4%

11.2%

11.8%

12.1%

11.6%

Total capital

14.0%

13.3%

14.3%

14.7%

13.7%

For calculation of minimum capital requirements under Pillar 1 (Capital Requirements) of the Basel Accord, APRA has accredited theOverseas Banking Group to use the Advanced Internal Ratings Based (AIRB) methodology for calculation of credit risk weighted assets andthe Advanced Measurement Approach (AMA) for the operational risk weighted asset equivalent.
Under prudential regulations, the Overseas Banking Group is required to maintain a Prudential Capital Ratio (PCR) as determined by APRA.
The Overseas Banking Group exceeded the PCR set by APRA as at 31 December 2016 and for the comparative prior periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 December 2016. The Overseas Banking
Group’s Pillar 3 disclosure document for the quarter ended 31 December 2016, 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
ANZ New Zealand’s aggregate market risk exposures below have been calculated in accordance with the RBNZ document BS2B.

Unaudited 31/12/2016

Implied risk
weighted
exposure

Notional
capital charge

NZ$m

NZ$m

5,192

415

Foreign currency risk

222

Equity risk

1

-

5,215

417

Interest rate risk

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 ANZ New Zealand'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.
On-balance
sheet
NZ$m

Off-balance
sheet
NZ$m

Total
NZ$m

Does not exceed 60%

30,996

4,956

35,952

Exceeds 60% and not 70%

15,766

1,419

17,185

Exceeds 70% and not 80%

18,686

1,475

20,161

Does not exceed 80%

65,4487,850

73,298

Exceeds 80% and not 90%

4,095

175

4,270

Exceeds 90%

1,852

207

2,059

Total

71,395

8,232

79,627

Unaudited 31/12/2016

LVR range

Australia and New Zealand Banking Group Limited - ANZ New Zealand

13

NOTES TO THE FINANCIAL STATEMENTS
Liquidity portfolio management
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.
Unaudited
31/12/2016
NZ$m

Cash and balances with central banks

2,899

Certificates of deposit

809

Government, local body stock and bonds

6,409

Government treasury bills

850

Reserve Bank bills

1,253

Other bonds

6,688

Total liquidity portfolio

18,908The 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$7,305 million at 31 December 2016.

13. 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 values of financial asset and liability categories
other than those categories where the carrying amount is at fair value or considered a reasonable approximation of fair value.
The fair values below have been calculated using discounted cash flow techniques where contractual future cash flows of the instrument
are discounted using discount rates incorporating wholesale market rates or market borrowing rates of debt with similar maturities or ayield curve appropriate for the remaining term to maturity.
Unaudited
31/12/2016

Unaudited
31/12/2015

Audited30/09/2016

Carrying
amountNZ$mFair value
NZ$m

Carrying
amountNZ$mFair value
NZ$m

Carrying
amountNZ$mFair value
NZ$m

121,831

121,929

115,733

116,299

120,651

120,931

Deposits and other borrowings2

111,655

111,839

105,607

105,780

106,908

107,106

Debt issuances1

17,962

18,094

16,05916,15220,014

20,148Subordinated debt

2,613

2,644

2,644

2,638

2,624

2,636

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
ANZ New Zealand 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.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

14

NOTES TO THE FINANCIAL STATEMENTS
Valuation hierarchy
Unaudited

Unaudited

Audited31/12/2016

31/12/2015

30/09/2016

Level 1 Level 2 Level 3
NZ$m NZ$m NZ$m

Total Level 1 Level 2 Level 3
NZ$m NZ$m NZ$m NZ$m

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

10,880116

25 14,811- 10,996 11,804
6 14,842

199

19 13,925- 12,003 11,937
5 13,94942- 11,979

3 20,959

7 20,969

3,981

910

1

4,892

1,384

1,324

2

2,710

1,671

1,187

1

2,859

5

123

-

128

3

175

-

178

5

114

-

119

14,891 15,960

7 30,858 13,210 15,623

7 28,840 13,616 22,302

8 35,926

Financial liabilities
Deposits and other borrowings-

Derivative financial instruments

27 15,775

7,466

4 15,806

Payables and other liabilities

292-

Total financial liabilities held at fair value

319 23,241

-

-

7,466
292

4 23,564-

5,858

2 16,073
467-

469 21,931

-

5,858

-

5,364

-

5,364

3 16,078

46 22,350

2 22,398

-

157

-

467

3 22,403-

203 27,714

157

2 27,919

14. CONCENTRATIONS OF CREDIT RISK TO INDIVIDUAL COUNTERPARTIESANZ New Zealand measures its concentration of credit risk to bank counterparties on the basis of actual exposures, and to non-bankcounterparties on the basis of limits.
For the three months ended 31 December 2016 there were no individual counterparties, excluding connected parties, governments andbanks with long term credit ratings of A- or above, where ANZ New Zealand’s period end or peak end-of-day credit exposure equalled or
exceeded 10% of the Overseas Banking Group’s equity as at the end of the period.
This credit exposure information does not include exposures to counterparties if they are booked outside New Zealand.

15. INSURANCE BUSINESSANZ New Zealand conducts insurance business through its subsidiary OnePath Life (NZ) Limited (OnePath Life).
ANZ New Zealand’s aggregate amount of insurance business comprises the total assets of OnePath Life of NZ$857 million (31/12/2015:
NZ$881 million; 30/09/2016 NZ$926 million), which is 0.5% (31/12/2015: 0.6%; 30/09/2016 0.6%) of the total consolidated assets of ANZ
New Zealand.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

15

NOTES TO THE FINANCIAL STATEMENTS
16. CREDIT RELATED COMMITMENTS, GUARANTEES AND CONTINGENT LIABILITIES
Unaudited

Unaudited

Audited31/12/2016
NZ$m

31/12/2015
NZ$m

30/09/2016
NZ$m

27,14327,04027,046

Guarantees and letters of credit

874

888

850

Performance related contingencies

1,550

1,470

1,611

Total guarantees and contingent liabilities

2,424

2,358

2,461

Total Credit Related Commitments, Guarantees and Contingent Liabilities

29,56729,39829,507

Contract amount of:
Credit related commitments - facilities provided
Undrawn facilities1
Guarantees and contingent liabilities¹ The comparative amount for undrawn facilities as at 31 December 2015 has been reduced by NZ$5,353 million following a review of the composition of commitments.

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 forcustomers 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
ANZ New Zealand has other contingent liabilities in respect of actual and possible claims and court proceedings.
An assessment of ANZ New Zealand’s likely loss in respect of these matters has been made on a case-by-case basis and provision madewhere deemed necessary.

17. ADDITIONAL DISCLOSURESNZ Branch Funding

Unaudited
31/12/2016
NZ$m

Total liabilities of the NZ Branch less amounts due to related parties
Overseas Banking Group Profitability and Size

1,094
Unaudited
30/09/2016
AUDm

Profit for the year ended 30/09/20161
Net profit after tax for the 12 months to 30/09/2016 as a percentage of average total assets
Total assets
Percentage change in total assets in the 12 months to 30/09/2016
1

5,720
0.63%
914,869
2.81%

Net profit after tax for the period includes AUD 11 million of profit attributable to non-controlling interests.

Overseas Banking Group asset quality

Unaudited
30/09/2016
AUDm

Gross impaired assets

3,173

Gross impaired assets as a percentage of total assets

0.3%

Individual provision

1,307

Individual provision as a percentage of gross impaired assets

41.2%

Collective provision

2,876

18. SUBSEQUENT EVENTSOn 11 January 2017, the Bank announced that it had entered into a conditional agreement to sell UDC to HNA Group for approximately
NZ$660 million. Completion is expected late in the second half of the 2017 calendar year. The assets and liabilities of UDC are classified asheld for sale as at 31 December 2016.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

16

DIRECTORS' AND NEW ZEALAND CHIEF EXECUTIVE OFFICER'S
STATEMENTAs 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:(i)

The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements (Overseas
Incorporated Registered Banks) Order 2014

(ii)

The Disclosure Statement is not false or misleading.

Over the three months ended 31 December 2016, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive
Officer – NZ Branch believes that:(i)

The Ultimate Parent Bank has complied with all Conditions of Registration that applied during that period(ii)

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 otherbusiness risks, and that those systems were being properly applied.

This Disclosure Statement is dated 16 February 2017, and has been signed by the Chairman of the Ultimate Parent Bank, onbehalf of all Directors, and by the Chief Executive Officer – NZ Branch.

David Gonski, AC
Chairman,on behalf of the Directors:
Ilana Atlas
Paula Dwyer
Shayne ElliottDavid Gonski, AC
Jane Halton, AO, PSM
Lee Hsien Yang
Graeme Liebelt
John Macfarlane

Anthony Bradshaw
Chief Executive Officer – NZ Branch