ANZ Bank New Zealand Limited
Disclosure Statement
FOR THE THREE MONTHS ENDED 31 DECEMBER 2013 | NUMBER 72 ISSUED FEBRUARY 2014

ANZ Bank New Zealand Limited

Disclosure Statement
For the three months ended 31 December 2013

Contents
General Disclosures

2

Income Statement

3Statement of Comprehensive Income

3Statement of Changes in Equity

4

Balance Sheet

5

Condensed Cash Flow Statement

6

Notes to the Financial Statements

7

Directors' Statement

15

Glossary of Terms
In this Disclosure Statement 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, or undertakings conducted in or fromNew Zealand identified and treated as if it wereconducted by a company 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 Zealandbusiness of the Overseas Banking Group;(i) “Registered Office” is Ground Floor, ANZ Centre, 2329 Albert Street, Auckland, New Zealand, which isalso 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 (No 3) 2013; 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.

2

ANZ Bank New Zealand Limited

General Disclosures
This Disclosure Statement
accordance with the Order.

has

been

issuedin

Credit Rating Information
The 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 Bank’s credit ratings are:Rating Agency
Standard & Poor’s

Current Credit
Rating
Qualification
AAOutlook Stable

Moody’s Investors Service

Aa3

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Guarantors
No obligations of the Bank are guaranteed as at 14
February 2014.
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 (the “Covered Bond Guarantor”), solely in
its capacity as trustee of ANZNZ Covered Bond Trust.
The Covered Bond Guarantor has guaranteed thepayment of interest and principal of Covered Bonds witha carrying value as at 31 December 2013 of $4,041
million, pursuant to a guarantee which is secured over apool of assets. The Covered Bond Guarantor’s addressfor service is Level 35, 48 Shortland Street, Auckland,
New Zealand. The Covered Bond Guarantor is not amember of the Banking Group and has no credit ratings
applicable to its long term senior unsecured obligations
payable in New Zealand dollars. The Covered Bonds
have been assigned a long term rating of Aaa and AAA
by Moody’s Investors Service and Fitch Ratings
respectively. Details of the pool of assets that secure
this guarantee are provided in Note 7.

Changes to conditions of registration
The conditions of registration applying to the Bank wereamended effective 1 October 2013 to update crossreferences to updated versions of RBNZ documents andto add conditions 21 to 25 which restrict high loan-tovaluation residential mortgage lending.

Directorate
Nigel Williams was appointed as an alternate director for
Michael Smith on 8 January 2014. Mr Williams is theChief Risk Officer of the Ultimate Parent Bank.

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

3

ANZ Bank New Zealand Limited

Income Statement
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2013

31/12/2012

30/09/2013

Interest income

1,501

1,512

5,957

Interest expense

820

861

3,344

Net interest income

681

651

2,613

Net trading gains

64

38

163

Net funds management and insurance income

68

66

234

90

93

419

1

3

7

Operating income

904

851

3,436

Operating expenses

372

398

1,512

$ millions

Note

Other operating income2

Share of associates' profit

Profit before provision for credit impairment and income tax

Audited

532

453

1,924

(21)

42

63

Profit before income tax

553

411

1,861

Income tax expense

153

111

490

Profit after income tax

400

300

1,371

AuditedProvision for credit impairment

5

Statement of Comprehensive Income
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2013

31/12/2012

30/09/2013

400

300

1,371

Actuarial gain on defined benefit schemes

-

-

71

Income tax credit / (expense) relating to items not reclassified

-

-

(20)

Total items that will not be reclassified to profit or loss

-

-

51

Unrealised losses recognised directly in equity

(19)

(11)

(138)

Realised gains transferred to income statement

(11)

(6)

(21)

8

5

45

Total items that may be reclassified subsequently to profit or loss

(22)

(12)

(114)

Total comprehensive income for the period

378

288

1,308

$ millions

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

Items that may be reclassified subsequently to profit or loss

Income tax credit relating to items that may be reclassified

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

4

ANZ Bank New Zealand Limited

Statement of Changes in Equity$ millions

As at 1 October 2012 (Audited)
Restatement (Note 1)
As at 1 October 2012 (Restated)

Share capital

Availablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total equity

6,943

(3)

141

3,851

10,932

-

-

-

(21)

(21)

6,943

(3)

141

3,830

10,911

Profit after income tax

-

-

-

300

300

Unrealised gains / (losses) recognised directly in equity

-

1

(12)

-

(11)

Realised gains transferred to the income statement

-

-

(6)

-

(6)

Income tax credit on items recognised directly in equity

-

-

5

-

5

Total comprehensive income for the period

-

1

(13)

300

288

As at 31 December 2012 (Unaudited)

6,943

(2)

128

4,130

11,199As at 1 October 2012 (Audited)

6,943

(3)

141

3,851

10,932

-

-

-

(21)

(21)

6,943

(3)

141

3,830

10,911

Restatement (Note 1)
As at 1 October 2012 (Restated)
Profit after income tax

-

-

-

1,371

1,371

Unrealised gains / (losses) recognised directly in equity

-

1

(139)

-

(138)

Realised gains transferred to the income statement

-

-

(21)

-

(21)

Actuarial gain on defined benefit schemes
Income tax credit / (expense) on items recognised directlyin equity

-

-

-

71

71

-

-

45

(20)

25

Total comprehensive income for the period

-

1

(115)

1,422

1,308

Ordinary dividend paid

-

-

-

(1,065)(1,065)

300

-

-

-

300

7,243

(2)

26

4,187

11,454Preference shares issued
As at 30 September 2013 (Audited)
Profit after income tax

-

-

-

400

400

Unrealised gains / (losses) recognised directly in equity

-

3

(22)

-

(19)

Realised gains transferred to the income statement
Income tax credit / (expense) on items recognised directlyin equity

-

-

(11)

-

(11)

-

(1)

9

-

8

Total comprehensive income for the period

-

2

(24)

400

378

As at 31 December 2013 (Unaudited)

7,243

-

2

4,587

11,832The notes to the financial statements form part of and should be read in conjunction with these financial statements

5

ANZ Bank New Zealand Limited

Balance Sheet
Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

AssetsLiquid assets

3,249

3,148

2,496

Due from other financial institutions

1,699

3,126

1,570

11,498

11,638

10,320Derivative financial instruments

7,699

10,7209,518

Available-for-sale assets

1,115

47

782

91,21988,22890,489Investments backing insurance policy liabilities

180

154

172

Insurance policy assets

408

416

399

Investments in associates

89

98

98

611

594

731

$ millions

Note

Trading securities

Net loans and advances

4

Other assets
Deferred tax assets

20

92

45

377

331

376

3,446

3,506

3,448

Total assets

121,610122,098

120,444

Interest earning and discount bearing assets

108,686

105,655

105,866

Premises and equipment
Goodwill and other intangible assets

Liabilities
Due to other financial institutions
Deposits and other borrowings

8

2,315

2,419

1,517

81,07477,08077,697

Due to Immediate Parent Company

31

622

939

Derivative financial instruments

7,837

11,566

10,243

Payables and other liabilities

1,755

1,796

1,724

33

3

3

218

308

229

15,381

15,935

15,494

1,134

1,170

1,144

109,778

110,899

108,990

11,832

11,19911,454

7,243

6,943

7,243

2

126

24

4,587

4,130

4,187

Total equity

11,832

11,19911,454

Interest and discount bearing liabilities

93,757

91,33091,061

Current tax liabilities
Provisions
Bonds and notes
Loan capital
Total liabilities
Net assets
Represented by:
Share capital
Reserves
Retained earnings

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

6

ANZ Bank New Zealand Limited

Condensed Cash Flow Statement
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2013

31/12/2012

30/09/2013

Interest received

1,469

1,493

5,916

Interest paid

(826)

(849)

(3,368)$ millions

AuditedCash flows from operating activities

Other cash inflows provided by operating activities
Other cash outflows used in operating activities
Cash flows from operating profits before changes in operating assets and liabilities

216

237

877

(517)

(556)

(1,940)

342

325

1,485

Net changes in operating assets and liabilities

2,251

3,341

1,192

Net cash flows provided by operating activities

2,593

3,666

2,677

Cash flows from investing activities
Cash inflows provided by investing activities

10

1

69

Cash outflows used in investing activities

(21)

(30)

(142)

Net cash flows used in investing activities

(11)

(29)

(73)

Cash flows from financing activities
Cash inflows provided by financing activities

1,179

-

2,678

Cash outflows used in financing activities(2,582)(1,965)(5,676)

Net cash flows used in financing activities(1,403)(1,965)(2,998)Net increase / (decrease) in cash and cash equivalents

1,179

1,672

(394)

Cash and cash equivalents at beginning of the period

2,861

3,255

3,255

Cash and cash equivalents at end of the period

4,040

4,927

2,861

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

7

ANZ Bank New Zealand Limited

Notes to the Financial Statements
1.

Significant Accounting Policies(i)Reporting entity and statement of compliance
These interim financial statements are for the
Banking Group for the three months ended 31
December 2013.
They have been prepared inaccordance 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 the Order, and should be read in
conjunction with the Banking Group’s financial
statements for the year ended 30 September 2013.

NZ IAS 19 has been applied retrospectively, in
accordance with transitional provisions, with the net
impact of initial application recognised in retained
earnings as at 30 September 2012 and shown in thestatement of changes in equity. The balances of
payables and other liabilities and the associateddeferred tax asset have been restated for subsequent
periods.
Amendments to NZ IAS 34 require certain fair value
disclosures which have been included in Note 13,
however comparative information is not required in
the first year of application.
(iv) Presentation currency and rounding(ii) Basis of measurement
These financial statements have been prepared on agoing concern basis in accordance with historical cost
concepts except that the following assets andliabilities are stated at their fair value:
•

•
•
•

derivative financial instruments, including in thecase of 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
through profit and loss.

(iii) Changes in accounting policies
The Banking Group has applied the following new
accounting standards and amendments in the
preparation of these interim financial statements:
•
•
•
•
•

NZ IFRS 10 Consolidated Financial Statements;
NZ IFRS 13 Fair Value Measurement;
NZ IAS 19 Employee Benefits (amended 2011);
NZ IAS 28 Investments in Associates and Joint
Ventures (amended 2011); andNZ IAS 34 Interim Financial Reporting(consequential amendments).

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

The amounts contained in the financial statements
are presented in millions of New Zealand dollars,
unless otherwise stated.
(v) Comparatives
In addition to restatements resulting from the initial
application of NZ IAS 19, certain amounts in thecomparative information have been reclassified toensureconsistency
withthecurrent
year’spresentation.
(vi) Principles of consolidation
The financial statements consolidate the financial
statements of the Bank and its subsidiaries.

2.

Other Operating Income
Other operating income includes a fair value loss of$7 million (31/12/2012 $21 million; 30/09/2013 $35
million) on hedging activities and the revaluation offinancial liabilities designated at fair value. Other
operating income excluding these fair value
adjustments is $97 million (31/12/2012 $114 million;
30/09/2013 $454 million).

8

ANZ Bank New Zealand Limited

Notes to the Financial Statements
3.

(typically with annual revenues of less than $5 million).
Commercial & Agri customers consist of primarily
privately owned medium to large enterprises. The
Banking Group's relationship with these businesses
ranges from simple banking requirements with revenue
from deposit and transactional facilities, and cash flow
lending, to more complex funding arrangements withrevenue sourced from a wider range of products. UDC isprincipally involved in the financing and leasing of plant,
vehicles and equipment, mainly for small and medium
sized businesses, as well as investment products.

Segmental Analysis

For segment reporting purposes, the Banking Group isorganised into four major business segments - Retail,Commercial, Wealth and Institutional. Centralised backoffice 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.
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.

WealthWealth includes private banking and investment services
provided to high net worth individuals, the ANZ wealthmanagement and OnePath insurance businesses, andother investment products.

RetailRetail provides products and services to personalcustomers via the branch network, mortgage specialists,
the contact centre and a variety of self service channels(internet banking, phone banking, ATMs, website andmobile phone banking). Core products include current
and savings accounts, unsecured lending (credit cards,
personal loans and overdrafts) and home loans securedby mortgages over property.
Retail distributes
insurance and investment products on behalf of the
Wealth segment.

Institutional
Institutional provides financial services through anumber of specialised units to large multi-banked
corporations, often global, who require sophisticatedproduct and risk management solutions. Those financial
services include loan structuring, foreign exchange,wholesale money market services and transaction
banking.

Commercial

Other

Commercial provides services to Business Banking,Commercial & Agri, and UDC customers.
Business
Banking services are offered to small enterprises

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

Business segment analysis1$ millions

RetailInstitutional

Other 2

Total

23

215

(279)

904

38

(41)

277

-

361

61

174

(2)

904

252

27

134

(9)

553

Commercial

Wealth

264

681

46

(320)

Total operating income

310

Profit before income tax

149

Unaudited 3 months to 31/12/2013

External operating income
Intersegment operating income

Unaudited 3 months to 31/12/2012

External operating income

244

670

17

223

(303)

851

Intersegment operating income

35

(315)

37

(67)

310

-

Total operating income

279

355

54

156

7

851

Profit before income tax

102

203

20

98

(12)

411

Audited year to 30/09/2013

External operating income

997

2,676

45

818

(1,100)3,436Intersegment operating income

175(1,248)

148

(211)

1,136

-

Total operating income

1,172

1,428

193

607

36

3,436

Profit before income tax

465

953

59

388

(4)

1,861

1
2

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

9

ANZ Bank New Zealand Limited

Notes to the Financial Statements
4.

Net Loans and Advances
Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

Overdrafts

1,496

1,789

1,841

Credit card outstandings

1,541

1,455

1,458

Term loans - housing

49,81947,602

49,563

Term loans - non-housing

38,51937,83537,832Finance lease receivables

868

816

849

92,24389,49791,543(776)(1,056)

(826)

(287)

(263)

(278)

Fair value hedge adjustment

(63)

(7)

(42)

Deferred fee revenue and expenses

(66)

(62)

(64)

Capitalised brokerage/mortgage origination fees

168

119

156

91,21988,22890,489$ millions

Note

Gross loans and advances
Provision for credit impairment

5

Unearned finance income

Total net loans and advances

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of $9,958 million as at 31 December
2013 (31/12/2012 $8,576 million, 30/09/2013 $9,256 million). These assets qualify for derecognition as the Bank does
not retain a continuing involvement in the transferred assets.

5.

Provision for Credit Impairment
Retailmortgages

Other retail
exposures

Non retail
exposures

Total

Collective provision

100

110

306

516

Individual provision

66

22

172

260

Total provision for credit impairment

166

132

478

776

Collective provision credit

(1)

(7)

(18)

(26)

Individual provision charge / (credit)

(9)

24

(10)

5

(10)

17

(28)

(21)

Collective provision

112

118

375

605

Individual provision

104

31

316

451

Total provision for credit impairment

216

149

691

1,056

Collective provision charge / (credit)

8

(7)

-

1

Individual provision charge

3

11

27

41

Total charge in income statement

11

4

27

42

Collective provision

101

117

324

542

Individual provision

74

22

188

284

Total provision for credit impairment

175

139

512

826

$ millions
Unaudited 31/12/2013

Total charge / (credit) in income statement
Unaudited 31/12/2012

Audited 30/09/2013

Collective provision credit

(3)

(8)

(51)

(62)

Individual provision charge

10

67

48

125

Total charge / (credit) in income statement

7

59

(3)

63

10

ANZ Bank New Zealand Limited

Notes to the Financial Statements
6.

Impaired and Past Due Assets
Retailmortgages

Other retail
exposures

Non retail
exposures

Total

163

49

599

811

89

37

65

191

Total impaired assets

302

48

923

1,273

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

105

38

64

207

Total impaired assets

179

49

666

894

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

92

40

76

208

$ millions
Unaudited 31/12/2013

Total impaired assets
Loans that are at least 90 days past due but not impaired
Unaudited 31/12/2012

Audited 30/09/2013

7. Financial Assets Pledged as Collateral
Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

Cash collateral given on derivative financial instruments

623

1,076

1,002

Trading securities encumbered through repurchase agreements

748

787

108

Residential mortgages pledged as security for covered bonds

6,364

4,896

5,857

Total assets of UDC Finance Limited pledged as collateral for secured stock

2,266

2,139

2,162

10,001

8,898

9,129

$ millions

Total financial assets pledged as collateral

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 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 the Bank, although the
Bank (or its liquidator or statutory manager) may have a claim against the residual assets of the Covered Bond Trust (ifany) 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 arepledged as security for covered bonds, the Bank retains substantially all the risks and rewards of ownership.

8.

Deposits and Other Borrowings$ millions

Note

Certificates of deposit

Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

1,594

2,369

2,364

Term deposits

34,25433,54533,862

Demand deposits bearing interest

30,94927,62929,688

6,135

5,737

5,526

1,575

1,457

1,492

6,567

6,343

4,765

81,07477,08077,697

Deposits not bearing interest
Secured debenture stock
Commercial paper
Total deposits and other borrowings

9.

7

Related Party Transactions
Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

Total due from related parties

1,680

2,332

2,193

Total due to related parties

4,538

5,785

5,132

$ millions

11

ANZ Bank New Zealand Limited

Notes to the Financial Statements
10. Capital Adequacy
Adoption of Basel III capital framework
Effective 1 January 2013, RBNZ has adopted the majority of Basel III capital reforms in New Zealand. The Basel III
reforms include: increased capital deductions from common equity tier one capital, an increase in capitalisation rates(including prescribed minimum capital buffers, fully effective 1 January 2014), tighter requirements around new tier one
and tier two securities and transitional arrangements for existing tier one and tier two securities that do not conform to
the new regulations. Other changes include capital requirements for counterparty credit risk and an increase in the asset
value correlation with respect to exposures to large and unregulated financial institutions.
Capital ratios of the Banking Group under the internal models based approach (unaudited)
31/12/2013

31/12/2012

30/09/2013

Basel III

Basel II

Basel III

Common equity tier one capital

10.7%

n/a

10.4%

Tier one capital

11.1%

11.2%

10.8%

Total capital

12.7%

12.8%

12.4%

Buffer ratio

4.7%

n/a

4.4%

RBNZ minimum ratios:
Common equity tier one capital

4.5%

n/a

4.5%

Tier one capital

6.0%

4.0%

6.0%

Total capital

8.0%

8.0%

8.0%

Capital of the Banking Group
Unaudited$ millions

31/12/2013

Common equity tier one capital before deductions

11,532Less deductions from common equity tier one capital(3,695)

Common equity tier one capital

7,837

Additional tier one capital - preference shares

300

Total tier one capital

8,137

Tier two capital

1,123

Total capital

9,260

Capital requirements of the Banking Group (unaudited)

Exposure atdefault

Risk weighted
exposure or
implied risk
weighted
exposure1

Total capitalrequirement

Corporate exposures

43,99826,154

2,092

Sovereign exposures

10,511

117

9

8,256

2,498

200

54,25015,646

1,252

9,533

7,752

620

$ millions

Bank exposures
Retail mortgage exposures
Other retail exposures
Exposures subject to internal ratings based approach

126,548

52,167

4,173

Specialised lending exposures subject to slotting approach

8,215

8,116

649

Exposures subject to standardised approach

1,598

292

23

Equity exposures

91

386

31

Other exposures

3,411

1,448

116

Total credit risk

139,863

62,4094,992

Operational risk

n/a

5,430

434

Market risk

n/a

5,199

416

139,863

73,038

5,842

Total
1

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

12

ANZ Bank New Zealand Limited

Notes to the Financial Statements
Tier two capital instruments
The amount of the tier two loan capital instruments eligible to be included in regulatory capital will reduce by 20% peryear from 1 January 2014 and will not be included in regulatory capital from 1 January 2018.
Pillar II capital for other material risks
The Banking Group has an Internal Capital Adequacy Assessment Process ("ICAAP") which complies with the requirementsof 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 thatare not explicitly captured in the calculation of the Banking Group's tier one 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 $333 million (31/12/2012 $326 million;
30/09/2013 $343 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) were applied in November 2013 and priorperiods restated accordingly.
Residential mortgages by loan-to-valuation ratio (“LVR”)
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the
Banking Group's valuation of the security property at origination of the exposure. Off balance sheet exposures include
undrawn and partially drawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal
offers for housing lending which have been accepted by the customer.
Unaudited 31/12/2013

On-balancesheet

Off-balance
sheet

Total

0% - 59%

17,0193,165

20,18460% - 69%

8,246

825

9,071

70% - 79%

12,7281,064

13,792Less than 80%$ millions

LVR range

37,993

5,054

43,04780% - 89%

6,408

452

6,860

Over 90%

3,499

307

3,806

47,9005,813

53,713Total

11. 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 cash equivalents and those classified as operating assets in theCondensed Cash Flow Statement.
Unaudited$ millions

Balances with central banks
Securities purchased under agreement to resell
Certificates of deposit
Government, local body stock and bonds
Government treasury bills
Other bonds
Total liquidity portfolio

31/12/2013

1,703
236
180
7,076
373
5,091
14,659

13

ANZ Bank New Zealand Limited

Notes to the Financial Statements
12. Concentrations of Credit Risk to Individual Counterparties
The Banking Group measures its concentration of credit risk in respect to bank counterparties on the basis of approved
exposures, and in respect to non bank counterparties on the basis of limits.
For the three months ended 31 December 2013 there were no individual counterparties (excluding connected parties,
governments and banks with long term credit ratings of A- or above) where the Banking Group’s period end or peak endof-day credit exposure equalled or exceeded 10% of the Banking Group’s equity (as at the end of the period).

13. Fair Value of Financial Assets and Financial Liabilities
Comparison of fair values and carrying amounts
The following table shows the fair values and carrying amounts for financial assets and financial liabilities that are notcarried at fair value and the carrying amount is not a reasonable approximation of fair value.

Unaudited

31/12/2013$ millions

Carrying amount

Fair value

91,21991,233

Deposits and other borrowings

81,07481,083

Bonds and notes

15,381

15,584

1,134

1,049

AssetsNet loans and advances
Liabilities

Loan capital

Valuation hierarchy for financial instruments held at fair value
The Banking Group uses a valuation method within the following hierarchy to determine the carrying amount of assets
and liabilities held at fair value, all of which are recurring fair value measurements:“Level 1” - Quoted market price
Where an active market exists fair value is based on quoted market prices for identical financial instruments. The quoted
market price is not adjusted for any potential impact that may be attributed to a large holding of the financial instrument.
“Level 2” - Valuation technique using observable inputs
In the event that there is no quoted market price for the instruments, fair values are based on present value estimates orother market accepted valuation techniques which include data, including interest and exchange rates, from observable
markets wherever possible.
“Level 3” - Valuation technique with significant non observable inputs
The Banking Group holds units in an unlisted fund which does not trade in an active market. The fair value of these units
is based on the estimated cashflows from the realisation of the underlying assets.
Valuation hierarchy$millionsLevel 1

Level 2

Level 3

Total

11,386

112-

11,498

12

7,687

-

7,699

1,113

-

2

1,115

125

55

-

180

12,6367,854

220,492

Unaudited 31/12/2013

Trading securities
Derivative financial instruments
Available-for-sale assets
Investments backing insurance policy liabilities
Total financial assets held at fair value
Due to other financial institutions

41

-

-

41

Deposits and other borrowings

-

6,567

-

6,567

Derivative financial instruments

4

7,833

-

7,837

Payables and other liabilities

160

-

-

160

Total financial liabilities held at fair value

205

14,400-14,605

14

ANZ Bank New Zealand Limited

Notes to the Financial Statements
14. Insurance business
The Banking Group conducts insurance business through its subsidiaries OnePath Life (NZ) Limited and OnePath Insurance
Services (NZ) Limited. The aggregate amount of insurance business in this group comprises assets totalling $796 million(31/12/2012: $785 million; 30/09/2013 $779 million), which is 0.7% (31/12/2012: 0.6%; 30/09/2013 0.6%) of the total
consolidated assets of the Banking Group.

15. Credit Related Commitments, Guarantees, Contingent Asset and Liabilities
Face or contract value$ millions

Unaudited

Unaudited

Audited31/12/2013

31/12/2012

30/09/2013

Credit related commitments
Commitments with certain drawdown due within one year

724

856

817

Commitments to provide financial services

25,26825,01424,446

Total credit related commitments

25,99225,87025,263

982

696

997

40

50

32

1,179

888

1,059

97

136

113

2,298

1,770

2,201

Guarantees and contingent liabilities
Financial guarantees
Standby letters of credit
Transaction related contingent items
Trade related 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. To reflect the risk associated with these transactions, they are subjected tothe same credit origination, portfolio management and collateral requirements as for customers that apply for loans. The
contract amount represents the maximum potential amount that could be lost if the counterparty fails to meet its financial
obligations. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future
cash requirements.
Other contingent liabilities
In December 2013, the Commerce Commission advised the Bank that it intends to issue proceedings against the Bank
(and two other banks) under the Fair Trading Act 1986 in relation to the marketing and sale of interest rate swaps to rural
customers. The Commission has said that it aims to file proceedings in March 2014. The potential outcome of any
proceedings which may be issued cannot be determined with any certainty at this stage.
In 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 in 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 andprovision made where deemed necessary.
Contingent asset
In December 2013, the Bank reached a conditional agreement with insurers to settle its claim in relation to the Bank’s
former involvement in the ING Diversified Yield Fund and the ING Regular Income Fund for payment of AUD85 million,
subject to taxation.

16. Subsequent Events
On 14 February 2014 the Bank’s Board resolved to pay a preference dividend of $5 million on 3 March 2014 and to pay an
ordinary dividend of $540 million no later than 31 March 2014.

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 (No 3) 2013; and(ii) The Disclosure Statement is not false or misleading.
Over the three months ended 31 December 2013, 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, 14
February 2014. On that date, the Directors of the Bank were:

Antony Carter

Shayne ElliottDavid Hisco

John Judge

Michael Smith, OBE

Mark Verbiest

Joan Withers