AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED- ANZ NEW ZEALAND
REGISTERED BANK DISCLOSURE STATEMENTFOR THE SIX MONTHS ENDED 31 MARCH 2016
NUMBER 30 | ISSUED MAY 2016

Australia and New Zealand Banking Group Limited - ANZ New Zealand

REGISTERED BANK DISCLOSURE STATEMENTFOR THE SIX MONTHS ENDED 31 MARCH 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

23

Independent Auditor’s Review Report24

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 Funds Pty
Limited, which is the immediate parent company of
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 Level 10, 171 Featherston Street,
Wellington, New Zealand, which is also ANZ New
Zealand’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 (Overseas 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.

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:
Current Credit
RatingAA-

Qualification
Outlook Stable

Moody’s Investors Service

Aa2

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Rating Agency
Standard & Poor’s

Guarantors
No obligations of the NZ Branch are guaranteed as at 30 May
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 March 2016 of
NZ$4,961 million, pursuant to a guarantee which is secured
over a pool of assets. The Covered Bond Guarantor’s addressfor service is Level 9, 34 Shortland Street, Auckland, New
Zealand. The Covered Bond Guarantor is not a member ofthe 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 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.

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
March 2016, the NZ Branch held approximately NZ$7.1
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
Michael Smith retired as Chief Executive Officer and an
Executive Director on 31 December 2015.
Shayne Elliott became Chief Executive Officer and an
Executive Director on 1 January 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
Unaudited

Unaudited

6 months to

6 months toYear to31/03/2016

31/03/2015

30/09/2015

Note

Audited

NZ$m

NZ$m

NZ$m

Interest income

3,455

3,707

7,417

Interest expense

1,962

2,285

4,537

Net interest income

1,493

1,422

2,880

Net trading gains

19

149

262

Net funds management and insurance income

193

211

385

215

217

505

-

1

5

1,920

2,000

4,037

Other operating income2

Share of associates' profit
Operating income
Operating expenses

2

822

756

1,513

1,098

1,244

2,524

50

31

76

Profit before income tax

1,048

1,213

2,448

Income tax expense

285

336

677

Profit after income tax

763

877

1,771

AuditedProfit before credit impairment and income tax
Credit impairment charge

5

STATEMENT OF COMPREHENSIVE INCOME
Unaudited

Unaudited

6 months to

6 months toYear to31/03/2016
NZ$m

31/03/2015
NZ$m

30/09/2015
NZ$m

763

877

1,771

Actuarial loss on defined benefit schemes

(5)

(27)

(33)

Income tax credit relating to items that will not be reclassified

2

8

9

Total items that will not be reclassified to profit or loss

(3)

(19)

(24)

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 recognised directly in equity

56

7

12

Realised losses / (gains) transferred to income statement

2

(13)

(16)

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

(17)

2

1

Total items that may be reclassified subsequently to profit or loss

41

(4)

(3)

Total comprehensive income for the period

801

854

1,744

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
Unaudited

Unaudited

Audited31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Cash

2,830

2,605

2,435

Settlement balances receivable

544

601

309

Collateral paid

2,114

2,123

1,929

Trading securities

12,49912,215

12,139

189

210

151

21,102

10,851

17,587

74

10

-

2,245

903

1,428

Note

AssetsInvestments backing insurance contract liabilities
Derivative financial instruments
Current tax assets
Available-for-sale assets
Net loans and advances

117,470

109,031

114,376

Other assets

4

765

689

740

Life insurance contract assets

552

567

554

Investments in associates

4

89

4

Premises and equipment

398

372

388

Goodwill and other intangible assets

3,416

3,462

3,492

Total assets

164,217

143,715

155,530

Interest earning and discount bearing assets

137,670

127,315

132,869

1,704

1,322

1,469

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings

8

Derivative financial instruments

919

364

1,687

105,826

96,95999,736
17,76922,548

13,204Current tax liabilities

-

-

81

Deferred tax liabilities

146

97

124

Payables and other liabilities

1,771

1,333

1,527

Provisions

187

189

191

17,547

17,686

19,403

Debt issuances

9

Subordinated debt

10

2,698

2,581

2,683

Total liabilities (excluding head office account)

153,346

133,735

144,670

Net assets (excluding head office account)

10,871

9,980

10,860

8,058

7,393

8,058

31

(11)

(10)

2,782

2,598

2,812

EquityShare capital and head office accountReserves
Retained earnings
Total equity and head office account10,871

9,980

10,860Interest and discount bearing liabilities

121,297

112,098

118,026

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

6 months to

6 months to

AuditedYear to31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Cash flows from operating activities
Interest received

3,436

3,652

7,357

Interest paid

(2,001)(2,309)(4,482)Other cash inflows provided by operating activities

467

448

958

Other cash outflows used in operating activities(1,979)(1,280)(1,140)Cash flows from operating profits before changes in operating assets and liabilities

622

651

1,854

Net changes in operating assets and liabilities

923(1,499)(1,876)

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

1,545

(848)

(22)

Cash inflows provided by investing activities

38

-

-

Cash outflows used in investing activities

(48)

(44)

(132)

Net cash flows used in investing activities

(10)

(44)

(132)

Cash flows from investing activities

Cash flows from financing activities
Cash inflows provided by financing activities

2,883

3,956

6,369

Cash outflows used in financing activities(4,005)(2,697)(5,945)

Net cash flows provided by / (used in) financing activities424(1,122)

1,259

Net increase in cash and cash equivalents

413

367

270

Cash and cash equivalents at beginning of the period

2,526

2,256

2,256

Cash and cash equivalents at end of the period

2,939

2,623

2,526

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

As at 1 October 2014 (Audited)

Share capitaland head
office account

Availablefor-salerevaluation
reserve

Cash flow
hedging
reserve

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

7,393

-

(7)

2,695

10,081877

Retainedearnings

Total
equityProfit after income tax

-

-

-

877

Unrealised gains recognised directly in equity

-

1

6

-

7

Realised gains transferred to the income statement

-

-

(13)

-

(13)

Actuarial loss on defined benefit schemes

-

-

-

(27)

(27)

Income tax credit on items recognised directly in equity

-

-

2

8

10

Total comprehensive income for the period

-

1

(5)

858

854

Ordinary dividend paid

-

-

-

(955)

(955)

As at 31 March 2015 (Unaudited)

7,393

1

(12)

2,598

9,980

As at 1 October 2014 (Audited)

7,393

-

(7)

2,695

10,081

Profit after income tax

-

-

-

1,771

1,771

Unrealised gains recognised directly in equity

-

-

12

-

12

Realised gains transferred to the income statement

-

-

(16)

-

(16)

Actuarial loss on defined benefit schemes

-

-

-

(33)

(33)

Income tax credit on items recognised directly in equity

-

-

1

9

10

Total comprehensive income for the period

-

-

(3)

1,747

1,744

Ordinary dividend paid

-

-

-

(1,630)(1,630)Preference shares issued

675

-

-

-

675

Preference shares redeemed

(10)

-

-

-

(10)

As at 30 September 2015 (Audited)

8,058

-

(10)

2,812

10,860

Profit after income tax

-

-

-

763

763

Unrealised gains recognised directly in equity

-

-

56

-

56

Realised losses transferred to the income statement

-

-

2

-

2

Actuarial loss on defined benefit schemes

-

-

-

(5)

(5)

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

-

-

(17)

2

(15)

Total comprehensive income for the period

-

-

41

760

801

-

-

-

(790)

(790)

8,058

-

31

2,782

10,871

Ordinary dividend paid
As at 31 March 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 six months ended 31 March 2016. They have been
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 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.

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.

(iii) Changes in accounting policies
With the exception of software changes in note 2, theaccounting 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.

(vi) Principles of consolidation
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 AND EXPENSES

Other operating income
Unaudited

Unaudited

6 months to

6 months toYear to31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

197

191

381

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

(2)

3

70

Other income

20

23

54

Total other operating income

215

217

505

Net fee income

AuditedOperating expenses
During the March 2016 half, ANZ New Zealand changed the application of its accounting policy for the capitalisation of expenditure on
internally generated software assets effective from 1 October 2015. The change aligns the accounting policy for software assets with therapidly changing technology landscape and ANZ New Zealand’s evolving digital strategy by increasing the threshold for capitalisation ofsoftware development costs and directly expensing more project related costs. The change does not affect ANZ New Zealand’s total
investment in technology but does affect the timing of recognition of costs in the profit and loss account. The impact of the change on
the March 2016 half was:•Higher amortisation of NZ$65 million relating to the accelerated amortisation of software assets where the original cost was below
the revised threshold at 1 October 2015. This brings forward amortisation which otherwise would have been recognised in future
periods.
•
Higher operating expenses of NZ$22 million relating to software development costs which otherwise would have been capitalised
and amortised in future periods.
The change in capitalised software treatment has no impact on regulatory capital ratios.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

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.

ANZ New Zealand 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.
During the year ended 30 September 2015, Business Banking
was integrated with Retail, having been included inCommercial previously. Segment reporting has been
updated to reflect this change and other minor changes to
ANZ New Zealand’s structure. Comparative data has beenadjusted to be consistent with the current period’s segment
definitions.

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

RetailRetail 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

Other2

Total

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

Unaudited 6 months to 31/03/2016

External revenues

1,330

963

80

221

(674)

1,920

Intersegment revenues

(317)

(510)

79

16

732

-

Total revenues

1,013

453

159

237

58

1,920

Profit / (loss) after income tax

395

221

68

98

(19)

763

External revenues

1,243

1,038

73

458

(812)

2,000

Intersegment revenues

(275)

(577)

84

(123)

891

-

Total revenues

968

461

157

335

79

2,000

Profit after income tax

365

242

67

168

35

877

Unaudited 6 months to 31/03/2015

Audited year to 30/09/2015

External revenues

2,541

2,070

159

851

(1,584)

4,037Intersegment revenues(583)(1,149)

164

(184)

1,752

-

Total revenues

1,958

921

323

667

168

4,037

Profit after income tax

734

479

136

333

89

1,771

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 ANZ New Zealand and is reimbursed internally.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

9

NOTES TO THE FINANCIAL STATEMENTS
4.

NET LOANS AND ADVANCES
Note

Unaudited

Unaudited

Audited31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

1,128

1,169

1,162

1,683

1,639

1,688

70,60764,502

67,93243,26741,01742,880

Lease receivables

229

255

236

Hire purchase

999

878

946

-

125

-

117,913

109,585

114,844

(604)

(659)

(629)

Less: Unearned income

(215)

(216)

(214)

Add: Capitalised brokerage/mortgage origination fees

346

259

323

Add: Customer liability for acceptances

30

62

52

117,470

109,031

114,376

Overdrafts1
Credit card outstandings
Term loans - housing

1

Term loans - non-housing

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

5

Total 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 (31/03/2015 NZ$471 million, 30/09/2015 NZ$476 million).

5.

PROVISION FOR CREDIT IMPAIRMENT

Credit impairment charge / (release)
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

NZ$m

NZ$m

NZ$m

NZ$m

New and increased provisions

12

57

39

108

Write-backs

(20)

(9)

(16)

(45)

Recoveries of amounts written off previously

-

(11)

(2)

(13)

Individual credit impairment charge / (release)

(8)

37

21

50

Collective credit impairment charge / (release)

(3)

4

(1)

-

Credit impairment charge / (release)

(11)

41

20

50

New and increased provisions

19

50

41

110

Write-backs

(21)

(9)

(31)

(61)

Recoveries of amounts written off previously

(1)

(10)

(1)

(12)

Individual credit impairment charge / (release)

(3)

31

9

37

Collective credit impairment release

(1)

(1)

(4)

(6)

Credit impairment charge / (release)

(4)

30

5

31

New and increased provisions

45

107

76

228

Write-backs

(48)

(19)

(59)

(126)

Recoveries of amounts written off previously

(1)

(20)

(8)

(29)

Individual credit impairment charge / (release)

(4)

68

9

73

Collective credit impairment charge / (release)

(4)

9

(2)

3

Credit impairment charge / (release)

(8)

77

7

76

Unaudited 31/03/2016

Unaudited 31/03/2015

Audited 30/09/2015

Australia and New Zealand Banking Group Limited - ANZ New Zealand

10

NOTES TO THE FINANCIAL STATEMENTS
Movement in provision for credit impairment
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

NZ$m

NZ$m

NZ$m

NZ$m

87

127

253

467

Unaudited 31/03/2016

Collective provision
Balance at beginning of the period
Charge / (release) to income statement

(3)

4

(1)

-

Balance at end of the period

84

131

252

467
162

Individual provision
Balance at beginning of the period

62

9

91

New and increased provisions net of write-backs

(8)

48

23

63

Bad debts written off

(3)

(50)

(29)

(82)

Discount unwind

(2)

-

(4)

(6)

Balance at end of the period

49

7

81

137

Total provision for credit impairment

133

138

333

604

Balance at beginning of the period

91

118

255

464

Release to income statement

(1)

(1)

(4)

(6)

Balance at end of the period

90

117

251

458

Balance at beginning of the period

81

15

128

224

New and increased provisions net of write-backs

(2)

41

10

49

Bad debts written off

(2)

(44)

(21)

(67)

Unaudited 31/03/2015

Collective provision

Individual provision

Discount unwind

(2)

-

(3)

(5)

Balance at end of the period

75

12

114

201

Total provision for credit impairment

165

129

365

659

Balance at beginning of the year

91

118

255

464

Charge / (release) to income statement

(4)

9

(2)

3

Balance at end of the year

87

127

253

467

Balance at beginning of the year

81

15

128

224

New and increased provisions net of write-backs

(3)

88

17

102

Bad debts written off

(10)

(94)

(54)

(158)

Audited 30/09/2015

Collective provision

Individual provision

Discount unwind

(6)

-

-

(6)

Balance at end of the year

62

9

91

162

Total provision for credit impairment

149

136

344

629

Australia and New Zealand Banking Group Limited - ANZ New Zealand

11

NOTES TO THE FINANCIAL STATEMENTS
6.

IMPAIRED ASSETS AND PAST DUE ASSETS
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

NZ$m

NZ$m

NZ$m

NZ$m

Balance at beginning of the period

119

32

253

404

Transfers from productive

40

67

107

214

Transfers to productive

(23)

(3)

(4)

(30)

Assets realised or loans repaid

(47)

(15)

(113)

(175)

Write offs

(3)

(50)

(29)

(82)

Total impaired assets

86

31

214

331

Undrawn facilities with impaired customers

-

-

12

12

Balance at beginning of the period

223

35

410

668

Transfers from productive

56

61

59

176

Transfers to productive

(51)

(4)

(33)

(88)

Assets realised or loans repaid

(69)

(13)

(105)

(187)

Write offs

(2)

(44)

(21)

(67)

157

35

310

502

1

-

19

20

Unaudited 31/03/2016

Unaudited 31/03/2015

Total impaired assets
Undrawn facilities with impaired customers
Audited 30/09/2015

Balance at beginning of the year

223

35

410

668

Transfers from productive

121

126

155

402

Transfers to productive

(80)

(7)

(46)

(133)

Assets realised or loans repaid

(135)

(28)

(212)

(375)

Write offs

(10)

(94)

(54)

(158)

Total impaired assets

119

32

253

404

1

-

14

15

Undrawn facilities with impaired customers

Credit quality of financial assets that are past due but not impaired
A large portion of retail credit exposures, such as residential mortgages, are generally well secured. That is, the fair value of associatedsecurity should be sufficient to ensure that ANZ New Zealand will recover the entire amount owing over the life of the facility and there isreasonable assurance that collection efforts will result in payment of the amounts due in a timely manner.
Ageing analysis of loans that are past due but not impaired
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

NZ$m

NZ$m

NZ$m

NZ$m

1 to 5 days

354

124

457

935

6 to 29 days

275

92

77

444

1 to 29 days

629

216

534

1,379

30 to 59 days

173

37

120

330

60 to 89 days

133

21

2

156

90 days or over

136

33

51

220

1,071

307

707

2,085

Unaudited 31/03/2016

Australia and New Zealand Banking Group Limited - ANZ New Zealand

12

NOTES TO THE FINANCIAL STATEMENTS
7.

ASSETS PLEDGED AS COLLATERAL FOR LIABILITIES
Carrying Amount
Unaudited

Unaudited

Audited31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Cash collateral given on derivative financial instruments

2,114

2,123

1,929

Securities sold under agreements to repurchase

140

43

47

Residential mortgages pledged as security for covered bonds

10,065

7,010

7,547

Assets pledged as collateral for UDC secured investments

2,571

2,423

2,441

Total financial assets pledged as collateral

14,89011,599

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.
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

Note

Unaudited

Unaudited

Audited31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Term deposits

37,57434,85534,982On demand and short term deposits

43,56937,591

41,436

Deposits not bearing interest

7,268

6,263

6,716

1,737

1,629

1,736

Total customer deposits

90,14880,33884,870

Certificates of deposit

1,859

1,462

745

Commercial paper

5,451

6,273

4,964

UDC secured investments

7

Deposits from banks

140

43

47

Borrowings from Ultimate Parent Bank and Immediate Parent Company

8,228

8,843

9,110

105,826

96,95999,736

Total deposits and other borrowings

9.

DEBT ISSUANCES
Unaudited

Unaudited

Audited31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Domestic bonds

4,000

3,325

3,525

U.S. medium term notes1

5,944

6,138

6,831

Euro medium term notes1

2,535

3,711

3,598

Covered bonds1

4,961

4,382

5,335

Index linked notes

36

35

35

17,476

17,591

19,324

Fair value hedge adjustment

206

148

175

Less debt issuances held by the Bank

(135)

(53)

(96)

17,547

17,686

19,403

Total debt issuances

Total debt issuances
1

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.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

13

NOTES TO THE FINANCIAL STATEMENTS
10. SUBORDINATED DEBT
Unaudited

Unaudited

Audited31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

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

1,063

973

1,052

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

495

494

494

NZD 835m perpetual subordinated bond3

835

835

835

AUD 10m perpetual subordinated floating rate loan

11

10

11

AUD 265m subordinated floating rate loan

294

270

291

Total subordinated debt issued

2,698

2,582

2,683

-

(1)

-

2,698

2,581

2,683

ANZ Capital Notes1

Perpetual subordinated debt

Dated subordinated debt

Less subordinated debt instruments held by the Bank
Total subordinated debt
1
2
3

These instruments qualify as additional tier 1 capital of the Overseas Banking Group.
These instruments are listed on the Australian Stock Exchange.
These instruments are listed on the New Zealand Debt Market (NZDX). The Market Surveillance Panel of the NZX granted the Bank a waiver from the requirements of Listing
Rules 10.3 (relating to the provision of preliminary announcements of half yearly and annual results to the NZX) and 10.4 (relating to preparing and providing a copy of half
yearly and annual reports to the NZX).

Subordinated debt is subordinated in right of payment in theevent of liquidation or wind up to the claims of depositors
and all creditors of the relevant issuer or drawer of the debt.
ANZ Capital Notes••

On 5 March 2015, the NZ Branch issued 9.7 million
convertible notes (ANZ CN3) at A$100 each, raising
A$970 million before issue costs.
On 31 March 2015, the Bank issued 500 million
convertible notes (ANZ NZ CN) at NZ$1 each, raising
NZ$500 million before issue costs.

ANZ Capital Notes (the notes) are fully paid mandatorily
convertible non-cumulative perpetual subordinated notes.
As at 31 March 2016 ANZ NZ CN carried a BBB- credit ratingfrom Standard and Poor’s.
The notes are classified as debt given there arecircumstances beyond ANZ New Zealand’s control where
the principal is converted into a variable number of shares of
the Ultimate Parent Bank.
Distributions and interest
Distributions on ANZ CN3 and interest on ANZ NZ CN arerecorded as interest expense in the statement ofcomprehensive income. Distributions and interest on thenotes are non-cumulative and payable as follows:••

ANZ CN3: payable semi-annually in arrears in March and
September in each year and will be franked in line withthe franking applied to ordinary shares of the Ultimate
Parent Bank. The distributions are based on a floating
rate equal to the aggregate of the Australian 6 monthbank bill rate plus a 360 basis point margin, multipliedby one minus the Australian company tax rate. Should
the distribution not be fully-franked, the terms of thenotes provide for a cash gross-up for the amount of thefranking benefit not provided.
ANZ NZ CN: payable quarterly in arrears in February,
May, August and November in each year. The interest
rate is fixed at 7.2% per annum until 25 May 2020, andthereafter will be based on a floating rate equal to theaggregate of the New Zealand 3 month bank bill rateplus a 350 basis point margin.
Distributions and interest payments are subject to the
Ultimate Parent Bank’s (ANZ CN3) and the Bank’s (ANZ NZCN) absolute discretion and certain payment conditions
being satisfied (including APRA and RBNZ (ANZ NZ CN only)
requirements). If distributions or interest are not paid on thenotes, the Ultimate Parent Bank (ANZ CN3) or the Bank (ANZNZ CN) may not, except in limited circumstances, pay
dividends or undertake a share buy-back or other capital
reduction on its ordinary shares until the distributions orinterest are next paid.
Conversion features
On 24 March 2025 (ANZ CN3) or 25 May 2022 (ANZ NZ CN) or
an earlier date under certain circumstances, the relevant
notes will mandatorily convert into a variable number ofordinary shares of the Ultimate Parent Bank based on the
average market price of the Ultimate Parent Bank’s ordinary
shares over a specified period prior to conversion less a 1%
discount, subject to a maximum conversion number.
The mandatory conversion will be deferred for a specified
period if the conversion tests are not met.
If a common equity capital trigger event, an APRA nonviability trigger event or an RBNZ non-viability trigger event(as defined in the RBNZ document Capital Adequacy
Framework (Internal Models Based Approach) (BS2B)) (ANZNZ CN only) occurs, some or all of the notes will be required
to be immediately converted into ordinary shares of the
Ultimate Parent Bank, subject to a maximum conversion
number.
A common equity capital trigger event occurs if the:••Overseas Banking Group’s Level 1 (ANZ CN3 only) orLevel 2 common equity tier 1 capital ratio is equal to orless than 5.125%; orBanking Group’s common equity tier 1 capital ratio is
equal to or less than 5.125% (ANZ CN only).

Australia and New Zealand Banking Group Limited - ANZ New Zealand

14

NOTES TO THE FINANCIAL STATEMENTS
An APRA non-viability trigger event occurs if APRA notifies
the Ultimate Parent Bank that, without the conversion or
write-off of certain securities or a public sector injection ofcapital (or equivalent support), it considers that the Ultimate
Parent Bank would become non-viable. An RBNZ nonviability trigger event occurs if the RBNZ directs the Bank toconvert or write off the notes or a statutory manager isappointed to the Bank and decides the Bank must convert or
write off the notes.
On 25 May 2020 the Bank has the right, subject to satisfying
certain conditions, to redeem (subject to receiving RBNZ’sand APRA’s prior approval), or to convert into ordinary sharesof the Ultimate Parent Bank, all or some of the ANZ NZ CN at
its discretion on similar terms as mandatory conversion.
On 24 March 2023 the Ultimate Parent Bank has the right,
subject to receiving APRA’s prior approval and satisfying
certain conditions, to redeem, or to convert into ordinary
shares of the Ultimate Parent Bank, all or some of the ANZ
CN3 at its discretion on similar terms as mandatory
conversion.
Rights of holders in event of liquidation
In a liquidation of the Ultimate Parent Bank, ANZ CN3 rank
equally with other additional tier 1 capital instruments issued
by the Ultimate Parent Bank. In a liquidation of the Bank, ANZ
NZ CN rank equally with the Bank’s other additional tier 1
capital instruments, including preference shares, and lower
than the Bank’s perpetual subordinated debt. Holders of thenotes do not have any right to vote in general meetings of
the Ultimate Parent Bank or the Bank.
Perpetual subordinated debt
Perpetual subordinated debt instruments are classified as
debt reflecting an assessment of the key terms andconditions of the instruments, and an assessment of theability, and likelihood of interest payments being deferred.
These instruments have interrelationships that have been
considered in this assessment.
NZD 835,000,000 bond

11.

This bond was issued by the Bank on 18 April 2008.
The Bank may elect to redeem the bond on 18 April 2018(the Call Date) or any interest payment date subsequent to18 April 2018. Interest is payable semi-annually in arrears on
18 April and 18 October each year, up to and including theCall Date and then quarterly thereafter. Should the bond not
be called at the Call Date, the Coupon Rate from the Call
Date onwards will be based on a floating rate equal to theaggregate of the 3 month bank bill rate plus a 300 basis
point margin.
As at 31 March 2016, this bond carried a BBB+ rating byStandard and Poor's and an A3 rating by Moody’s.
The coupon interest on the bond is 5.28% per annum until
18 April 2018.
AUD 10,000,000 loan
This loan was drawn down by the Bank on 27 March 2013and has no fixed maturity. Interest is payable semi-annuallyin arrears on 15 March and 15 September each year. The
Bank may repay the loan on any interest payment date after
the NZD 835,000,000 bond has been repaid in full.
Coupon interest is based on a floating rate equal to theaggregate of the Australian 6 month bank bill rate plus a 240
basis point margin, increasing to the Australian 6 monthbank bill rate plus a 440 basis point margin from 15
September 2018.
Dated subordinated debt
AUD 265,017,668 loan
This loan was drawn down by ANZ Holdings (New Zealand)
Limited on 25 September 2013. The loan matures on 1
September 2023, but ANZ Holdings (New Zealand) Limited
may elect to repay the loan on any interest payment datefrom 1 September 2018. Interest is payable semi-annually inarrears on 1 March and 1 September in each year and isbased on a floating rate equal to the aggregate of theAustralian 6 month bank bill rate plus a 260 basis point
margin.

RELATED PARTY BALANCES
Unaudited

Unaudited

Audited31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Total due from related parties

5,368

2,975

4,179

Total due to related parties

13,945

13,191

14,093

Australia and New Zealand Banking Group Limited - ANZ New Zealand

15

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

Ultimate Parent Bank
(Extended Licensed Entity)

Overseas Banking Group
Unaudited

31/03/2016

31/03/2015

30/09/2015

31/03/2016

31/03/2015

Common equity tier 1 capital

9.8%

8.7%

9.6%

10.2%

8.8%

30/09/2015

9.6%

Tier 1 capital

11.6%

10.6%

11.3%

12.2%

10.9%

11.6%

Total capital

13.7%

12.6%

13.3%

14.4%

13.1%

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 March 2016 and for the comparative prior periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 March 2016. The Overseas Banking
Group’s Pillar 3 disclosure document for the quarter ended 31 March 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.
Implied risk
weighted
exposure

Notional
capital charge

NZ$m

NZ$m

Unaudited 31/03/2016

Interest rate risk

7,372

590

Foreign currency risk

71

6

Equity risk

2

-

7,445

596

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.
31/03/2016
On-balancesheet

Off-balance
sheet

Total

NZ$m

NZ$m

NZ$m

Does not exceed 60%

26,256

4,348

30,604

Exceeds 60% and not 70%

14,051

1,452

15,503

Exceeds 70% and not 80%

19,853

1,877

21,730

Does not exceed 80%

60,1607,677

67,837

Exceeds 80% and not 90%

5,273

223

5,496

Unaudited

LVR range

Exceeds 90%

2,419

251

2,670

Total

67,852

8,151

76,003

Australia and New Zealand Banking Group Limited - ANZ New Zealand

16

NOTES TO THE FINANCIAL STATEMENTS
Reconciliation of mortgage related amounts
Unaudited
31/03/2016

Term loans - housing

Note

NZ$m

4

70,607

Less: fair value hedging adjustment(233)

Less: housing loans made to corporate customers(2,522)On-balance sheet retail mortgage exposures

12

67,852

12

76,003

Add: off-balance sheet retail mortgage exposures

8,151

Total retail mortgage exposures as per LVR analysis

13. FINANCIAL RISK MANAGEMENT
Concentrations of credit risk
Concentrations of credit risk arise when a number of customers are engaged in similar business activities or activities within the samegeographic region, or when they have similar risk characteristics that would cause their ability to meet contractual obligations to be
similarly affected by changes in economic or other conditions.
Analysis of financial assets by industry sector is based on Australian and New Zealand Standard Industrial Classification (ANZSIC) codes.
Cash,
Tradingsettlements securities andreceivable and available-forsale assets
collateral paid
Unaudited 31/03/2016

Derivative
financial Net loans andadvances3
instruments

Otherfinancial Credit related
assets commitments4

Total

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

Agriculture

-

-

23

18,41671

1,481

19,991

Forestry, fishing and mining

-

-

37

882

3

906

1,828

Business and property services

-

-

46

11,17243

2,874

14,135Construction

-

-

17

1,469

6

844

2,336

Industry

Entertainment, leisure and tourism

-

-

31

1,256

5

244

1,536

Finance and insurance

3,703

7,681

18,792

1,347

383

1,164

33,070Government and local authority1

12,259

1,785

6,965

1,111

1,180

5

1,213

Manufacturing

-

34

212

3,173

12

2,209

5,640

Personal lending

-

-

-

71,981

252

19,49991,732Retail trade

-

-

58

1,909

7

949

2,923

Transport and storage

-

4

89

1,672

6

731

2,502

Wholesale trade

-

-

22

1,419

6

1,447

2,894

Other2

-

60

664

2,067

8

1,755

4,554

5,488
-

14,744-

21,102-

117,943
(525)

807
-

35,316(79)

195,400(604)

Less: Unearned income

-

-

-

(215)

-

-

(215)

Add: Capitalised brokerage / mortgage
origination fees

-

-

-

346

-

-

346

5,488

14,744

21,102

117,549807

35,237

194,927

New Zealand

3,184

9,538

3,713

114,882797

35,074

167,188

Overseas

2,304

5,206

17,389

2,667

10

163

27,739Total financial assets

5,488

14,744

21,102

117,549807

35,237

194,927

Less: Provision for credit impairment

Total financial assets
Geography

12
3
4

Government and local authority includes exposures to government administration and defence, education and health and community services.
Other includes exposures to electricity, gas and water, communications and personal services.
Excludes individual and collective provisions for credit impairment held in respect of credit related commitments.
Credit related commitments comprise undrawn facilities, customer contingent liabilities and letters of offer.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

17

NOTES TO THE FINANCIAL STATEMENTS
Interest rate sensitivity gap
The following tables represent the interest rate sensitivity of ANZ New Zealand's assets, liabilities and off balance sheet instruments byshowing the periods in which these instruments may reprice, that is, when interest rates applicable to each asset or liability can bechanged.

Unaudited 31/03/2016

Total
NZ$m

Up to
3 months
NZ$m

Over 3 to
6 months
NZ$m

Over 6 to
12 months
NZ$m

Over 1 to
2 years
NZ$m

Over
2 years
NZ$m

Not bearing
interest
NZ$m

2,830

2,566

-

-

-

-

264

AssetsCash
Settlement balances receivable

544

121

-

-

-

-

423

Collateral paid

2,114

2,114

-

-

-

-

-

Trading securities

12,499

1,185

412

492

3,428

6,982

-

Derivative financial instruments

21,102

-

-

-

-

-

21,102Available-for-sale assets

2,245

1,794

171

30

160

88

2

Net loans and advances

117,470

63,246

9,269

16,574

20,639

8,209

(467)

Other financial assets

807

-

-

177

13

-

617

Total financial assets

159,61171,026

9,852

17,27324,24015,27921,941

Settlement balances payable

1,704

785

-

-

-

-

919

Collateral received

919

919

-

-

-

-

-

Deposits and other borrowings

105,826

75,38010,949

8,612

2,216

1,401

7,268

Derivative financial instruments

22,548

-

-

-

-

-

22,548Debt issuances

17,547

3,703

300

1,231

3,927

8,386

-

Subordinated debt

2,698

-

1,368

-

-

1,330

-

Payables and other liabilities

1,311

142

-

-

20

628

521

Total financial liabilities

152,553

80,92912,617

9,843

6,163

11,74531,256

Hedging instruments-

12,038

5,023(3,233)(14,574)746-Interest sensitivity gap

7,058

2,135

2,258

4,197

3,503

4,280

(9,315)

Liabilities

Liquidity portfolio
ANZ New Zealand holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The size of
ANZ New Zealand’s liquidity portfolio is based on the amount required to meet its liquidity policy and includes both items classified as
cash and those classified as operating assets in the Condensed Cash Flow Statement.
Unaudited
31/03/2016
NZ$m

Cash and balances with central banks

2,052

Certificates of deposit

378

Government, local body stock and bonds

5,932

Government treasury bills

833

Reserve Bank bills

1,082

Other bonds

6,216

Total liquidity portfolio

16,493

The 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$6,482 million at 31 March 2016.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

18

NOTES TO THE FINANCIAL STATEMENTS
Funding Composition
ANZ New Zealand actively uses balance sheet disciplines to prudently manage the funding mix. ANZ New Zealand employs funding
metrics to ensure that an appropriate proportion of its assets are funded from stable sources, including customer liabilities, longer-dated
wholesale debt (with remaining term exceeding one year) and equity.
Analysis of funding liabilities by industry sector is based on ANZSIC codes.
Unaudited
31/03/2016
NZ$m

Funding composition
Customer deposits1
New Zealand

80,512

Overseas

9,636

Total customer deposits

90,148Wholesale funding
Debt issuances

17,547

Subordinated debt

2,698

Certificates of deposit

1,859

Commercial paper

5,451

Other borrowings

8,368

Total wholesale funding

35,923

Total funding

126,071

Concentrations of funding by industry
Households

57,969Agriculture

3,105

Forestry, fishing and mining

551

Manufacturing

1,791Entertainment, leisure and tourism

1,041

Finance and insurance

45,169Retail trade

1,136

Wholesale trade

1,360

Business and property services

6,835

Transport and storage

697

Construction

1,463

Government and local authority

3,186

Other2
Total funding

1,768
126,071

Concentrations of funding by geography
New Zealand

87,212Australia

10,666

United States

11,236

Europe9,740

Other countries

7,217

Total funding

126,07112

Comprises term deposits, other deposits bearing interest and other borrowings, deposits not bearing interest and UDC secured investments
Other includes exposures to electricity, gas and water, communications and personal services.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

19

NOTES TO THE FINANCIAL STATEMENTS
Contractual maturity analysis of financial assets and liabilities
The following tables present ANZ New Zealand's financial assets and liabilities within relevant contractual maturity groupings, based on
the earliest date on which ANZ New Zealand may be required to realise an asset or settle a liability. The amounts disclosed in the tables
represent undiscounted future principal and interest cash flows and may differ to the amounts reported on the balance sheet.
The contractual maturity analysis for off-balance sheet commitments and contingent liabilities has been prepared using the earliest date
at which ANZ New Zealand can be called upon to pay. The liquidity risk of credit related commitments and contingent liabilities may beless than the contract amount, and does not necessarily represent future cash requirements as many of these facilities are expected to be
only partially used or to expire unused.
ANZ New Zealand does not manage its liquidity risk on this basis.
Total

At callUp to
3 months

Over 3 to
12 months

Over 1 to
5 yearsOver
5 years

No maturity
specified

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

Cash

2,830

2,049

781

-

-

-

-

Settlement balances receivable

544

143

401

-

-

-

-

Collateral paid

2,114

-

2,114

-

-

-

-

Trading securities

13,400

-

315

1,412

10,598

1,075-

Derivative financial assets (trading)

19,665-

19,665----

Available-for-sale assets

2,266

-

1,726

213

325

-

2

Net loans and advances

Unaudited 31/03/2016

Financial assets

153,093

191

16,081

16,68851,987

68,146-

Other financial assets

377

-

188

176

13

-

-

Total financial assets

194,289

2,383

41,271

18,48962,923

69,221

2

Settlement balances payable

1,704

1,093

611

-

-

-

-

Collateral received

919

-

919

-

-

-

-

Deposits and other borrowings

107,696

51,10323,82924,240

8,524

-

-

Derivative financial liabilities (trading)

19,501-

19,501----

Debt issuances

18,402

-

1,093

3,041

12,637

1,631-

Subordinated debt

3,280

-

15

45

740

1,634

846

Financial liabilities

Other financial liabilities

1,028

-

32

23

398

575

-

Total financial liabilities

152,530

52,19646,00027,34922,299

3,840

846
-

Derivative financial instruments used for balance sheet management- gross inflows

20,994

-

1,700

6,072

11,1182,104- gross outflows
Net financial assets / (liabilities) after balance
h tt(22,197)-(1,875)(6,792)(11,391)(2,139)-40,556(49,813)(4,904)(9,580)40,351

65,346(844)

Contractual maturity of off-balance sheet commitments and contingent liabilities
Less than

BeyondTotal

1 year

1 year

NZ$m

NZ$m

NZ$m

486

99

387

Credit related commitments

32,88432,884-

Contingent liabilities

2,432
35,802

2,432
35,415387

Unaudited 31/03/2016

Non-credit related commitments

Total

Australia and New Zealand Banking Group Limited - ANZ New Zealand

20

NOTES TO THE FINANCIAL STATEMENTS
14. 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

31/03/2016
Carrying
amountFair value

Audited31/03/2015
Carrying
amountFair value

30/09/2015
Carrying
amountFair value

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

117,470

118,018

109,031

109,395

114,376

114,899

Deposits and other borrowings2

105,826

106,02196,95997,136

99,73699,947

Debt issuances1

17,547

17,656

17,686

17,862

19,403

19,516

Subordinated debt

2,698

2,614

2,581

2,606

2,683

2,640

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.
Valuation hierarchy
Unaudited

Unaudited

31/03/2016
Level 1 Level 2 Level 3
NZ$m NZ$m NZ$m

Audited31/03/2015
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

12,364135

14 21,083

259- 12,139

5 21,102- 12,499 12,153

12 10,835

62

4 10,851- 12,215 11,880

12 17,569

6 17,587

1,885

358

2

2,245

581

321

1

903

900

526

2

1,428

Investments backing insurance contract
liabilities

-

189

-

189

3

207

-

210

2

149

-

151

Total financial assets held at fair value

14,263 21,765

7 36,035 12,749 11,425

5 24,179 12,794 18,503

8 31,305

Financial liabilities
Deposits and other borrowings-

Derivative financial instruments

47 22,501

5,451- 22,548

Payables and other liabilities

760-

Total financial liabilities held at fair value

807 27,952

-

-

5,451
760

- 28,759-

6,273

6 13,196221-

227 19,469

-

6,273

-

4,964

2 13,204

18 17,749

-

309

221

2 19,698-

327 22,713

-

4,964

2 17,769-

309

2 23,042

Australia and New Zealand Banking Group Limited - ANZ New Zealand

21

NOTES TO THE FINANCIAL STATEMENTS
15. CONCENTRATIONS OF CREDIT RISK TO INDIVIDUAL COUNTERPARTIESANZ New Zealand 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 six months ended 31 March 2016 there were no individual counterparties, excluding connected parties, governments and bankswith 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.

16. 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$943 million (31/03/2015:
NZ$958 million; 30/09/2015 NZ$884 million), which is 0.6% (31/03/2015: 0.7%; 30/09/2015 0.6%) of the total consolidated assets of ANZ
New Zealand.

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

Unaudited

Audited31/03/2016

31/03/2015

30/09/2015

NZ$m

NZ$m

NZ$m

Credit related commitments
Commitments with certain drawdown due within one year

1,166

1,348

1,130

Commitments to provide financial services

31,71829,092

31,063

Total credit related commitments

32,88430,44032,193Financial guarantees

727

906

920

Standby letters of credit

91

52

82

1,483

1,245

1,385

Guarantees and contingent liabilities

Transaction related contingent items
Trade related contingent liabilities

131

93

67

Total guarantees and contingent liabilities

2,432

2,296

2,454

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
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.
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.

Australia and New Zealand Banking Group Limited - ANZ New Zealand

22

NOTES TO THE FINANCIAL STATEMENTS
18. ADDITIONAL DISCLOSURESNZ Branch Funding

Unaudited
31/03/2016
NZ$m

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

1,121
Unaudited
31/03/2016
AUDm

Profit for the six months ended 31/03/20161
Net profit after tax for the year to 31/03/2016 as a percentage of average total assets
Total assets
Percentage change in total assets in the year to 31/03/2016
1

2,742
0.76%
895,278
4.09%

Net profit after tax for the period includes AUD 4 million of profit attributable to non-controlling interests.

Overseas Banking Group asset quality

Unaudited
31/03/2016
AUDm

Gross impaired assets

2,883

Gross impaired assets as a percentage of total assets

0.3%

Individual provision

1,238

Individual provision as a percentage of gross impaired assets

42.9%

Collective provision

2,862

Australia and New Zealand Banking Group Limited - ANZ New Zealand

23

DIRECTORS' AND NEW ZEALAND CHIEF EXECUTIVEOFFICER'S STATEMENT
As at the date on which this Disclosure Statement is signed, after due enquiry, each Director of the Ultimate Parent Bank and the Chief
Executive Officer – NZ Branch believes that:(i)

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

The Disclosure Statement is not false or misleading.

Over the six months ended 31 March 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 30 May 2016, and has been signed by the Chairman of the Ultimate Parent Bank, on behalf 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
Lee Hsien Yang
Graeme Liebelt
Ian Macfarlane, ACJohn Macfarlane

Anthony Bradshaw
Chief Executive Officer – NZ BranchAustralia and New Zealand Banking Group Limited - ANZ New Zealand

24

INDEPENDENT AUDITOR’S REVIEW REPORTTo the Directors of Australia and New Zealand Banking Group Limited
We have reviewed pages 3 to 22 of the interim financial statements of Australia and New Zealand Banking Group Limited – ANZ New Zealand andits related entities (ANZ New Zealand) prepared and disclosed in accordance with the Registered Bank Disclosure Statements (Overseas
Incorporated Registered Banks) Order 2014 (the Order) and the supplementary information prescribed in Schedules 3, 5, 7, 9, 10, 12 and 14 of theOrder. The interim financial statements, and supplementary information, provide information about the past financial performance and cash flows
of ANZ New Zealand and its financial position as at 31 March 2016.
This report is made solely to the Directors as a body. Our review work has been undertaken so that we might state to the company’s Directors
those matters we are required to state to them in the auditor's review report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the company’s Directors as a body, for our review work, this report or any of theopinions we have formed.
Directors' responsibility for the disclosure statement
The Directors of Australia and New Zealand Banking Group Limited are responsible for the preparation and presentation of the DisclosureStatement, which includes interim financial statements prepared in accordance with Clause 26 of the Order which give a true and fair view of thefinancial position of ANZ New Zealand as at 31 March 2016 and its financial performance and cash flows for the six months ended on that date.
The Directors are also responsible for such internal controls as the Directors determine are necessary to enable the preparation of the DisclosureStatement that is free from material misstatement, whether due to fraud or error.
They are also responsible for the preparation of supplementary information in the Disclosure Statement which fairly states the matters to which it
relates in accordance with Schedules 3, 5, 7, 9, 10, 12 and 14 of the Order.
Reviewer’s responsibility
We are responsible for reviewing the interim financial statements and the supplementary information, disclosed in accordance with Clause 26,
Schedules 5, 7, 9, 10, 12 and 14 of the Order and presented to us by the Directors.
Our responsibility is to express a conclusion on the interim financial statements (excluding the supplementary information) based on our review.
We conducted our review in accordance with NZ SRE 2410: Review of Financial Statements Performed by the Independent Auditor of the Entity. NZ SRE
2410 requires us to conclude whether anything has come to our attention that causes us to believe that the interim financial statements are notprepared, in all material respects, in accordance with NZ IAS 34: Interim Financial Reporting. As the auditor of ANZ New Zealand, NZ SRE 2410
requires that we comply with the ethical requirements relevant to the audit of the annual financial statements.
We are responsible for reviewing the supplementary information (excluding the supplementary information relating to capital adequacy) in orderto report to you whether, in our opinion on the basis of the procedures described below, anything has come to our attention that would cause us
to believe that the supplementary information does not fairly state the matters to which it relates in accordance with Schedules 5, 7, 10, 12 and 14of the Order.
We are responsible for reviewing the supplementary information relating to credit and market risk exposures and capital adequacy in order tostate whether, on the basis of the procedures described below, anything has come to our attention that would cause us to believe that the
information disclosed in accordance with Schedule 9 is not in all material respects prepared in accordance with the Capital Adequacy Framework(Standardised Approach) (BS2A); and disclosed in accordance with Schedule 9 of the Order.
A review of interim financial statements in accordance with NZ SRE 2410 is a limited assurance engagement. The auditor performs procedures,primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and otherreview procedures. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with
International Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on those financial statements.
KPMG has also provided other audit related services to ANZ New Zealand. In addition, certain partners and employees of our firm may also deal
with ANZ New Zealand on normal terms within the ordinary course of trading activities of ANZ New Zealand. These matters have not impaired our
independence as auditors of ANZ New Zealand. We have no other relationship with, or interest in, ANZ New Zealand.
Review opinion
We have examined the interim financial statements including the supplementary information and based on our review, which is not an audit,
nothing has come to our attention that causes us to believe that:a.
the interim financial statements (excluding the supplementary information) do not present fairly, in all material respects, the financial
position of ANZ New Zealand as at 31 March 2016 and its financial performance and cash flows for the six months ended on that date inaccordance with NZ IAS 34: Interim Financial Reporting;b.
the supplementary information prescribed by Schedules 5, 7, 10, 12 and 14 of the Order does not fairly state the matters to which it relates
in accordance with those Schedules; andc.
the supplementary information relating to credit and market risk exposures and capital adequacy prescribed by Schedule 9 of the Order, is
not in all material respects prepared in accordance with Capital Adequacy Framework (Standardised Approach) (BS2A), and disclosed inaccordance with Schedule 9 of the Order.
Our review was completed on 30 May 2016 and our review opinion is expressed as at that date.

Wellington