ANZ Bank New Zealand Limited
Disclosure Statement
FOR THE NINE MONTHS ENDED 30 JUNE 2013 | NUMBER 70 ISSUED AUGUST 2013

ANZ Bank New Zealand Limited

Disclosure Statement
For the nine months ended 30 June 2013

Contents
General Disclosures
Income Statement
Statement of Comprehensive Income
Statement of Changes in Equity
Balance Sheet
Condensed Cash Flow Statement
Notes to the Interim Financial Statements
Directors' Statement

2
3
3
4
5
6
7
18

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 Level 10, 170-186 Featherston
Street, Wellington, New Zealand, which is also the
Banking Group’s address for service;(j) “RBNZ” means the Reserve Bank of New Zealand;(k) “APRA” means the Australian Prudential Regulation
Authority;(l) “the Order” means the Registered Bank DisclosureStatements (New Zealand Incorporated Registered
Banks) Order 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.
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
As at the date of signing of this Disclosure Statement,
no material obligations of the Bank are guaranteed.
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 30 June 2013 of $3,188 million,
pursuant to a guarantee which is secured over a pool ofassets.
The Covered Bond Guarantor’s address forservice is Level 10, 141 Willis Street, Wellington, New
Zealand. The Covered Bond Guarantor is not a memberof 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 twice since 31 March 2013. The conditions ofregistration have been reproduced in full from page 14.
Conditions 1 and 4 were amended with effect from 13
May 2013 to refer to updated versions of RBNZ
documents.
Conditions 17 to 20 were added with effect from 30 June2013 to put into effect the RBNZ’s Open Bank Resolution
Pre-positioning Requirements policy.

Directorate
Joan Withers became an independent Director of the
Bank on 1 July 2013. Ms Withers is the Chairperson of
Auckland International Airport Ltd and Mighty RiverPower Ltd, and is Deputy Chairperson of Television New
Zealand. She is the former CEO of Fairfax Media and The
Radio Network. She has an MBA from the University of
Auckland.
Norman Geary announced on 4 July 2013 that he will
retire on 30 September 2013.

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

9 months to

9 months toYear to30/06/2013

30/06/2012

30/09/2012

Interest income

4,472

4,490

6,017

Interest expense

2,534

2,481

3,335

Net interest income

1,938

2,009

2,682

Net trading gains

140

109

131

Net funds management and insurance income

176

222

298

347

438

573

6

3

4

Operating income

2,607

2,781

3,688

Operating expenses

1,153

1,268

1,742

1,454

1,513

1,946

45

142

193

1,409

1,371

1,753

374

359

428

1,035

1,012

1,325

Audited$ millions

Note

Other operating income2

Share of associates' profit

Profit before provision for credit impairment and income tax
Provision for credit impairment
Profit before income tax
Income tax expense
Profit after income tax

5

AuditedStatement of Comprehensive Income
Unaudited

Unaudited

9 months to

9 months toYear to30/06/2013

30/06/2012

30/09/2012

1,035

1,012

1,325

Actuarial gain / (loss) on defined benefit schemes

17

(2)

(25)

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

(5)

-

6

Total items that will not be reclassified to profit or loss

12

(2)

(19)

Unrealised gains / (losses) recognised directly in equity

(98)

50

46

Realised gains transferred to income statement

(21)

(8)

(95)

33

(3)

-

Total items that may be reclassified subsequently to profit or loss

(86)

39

(49)

Total comprehensive income for the period

961

1,049

1,257

$ 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 / (expense) relating to items that may be reclassified

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

4

ANZ Bank New Zealand Limited

Statement of Changes in Equity$ millions

SharecapitalAvailablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total equity

As at 1 October 2011

6,943

46

141

3,695

10,825

Profit after income tax

-

-

-

1,012

1,012

Unrealised gains recognised directly in equity

-

35

15

-

50

Realised gains transferred to the income statement

-

-

(8)

-

(8)

Actuarial loss on defined benefit schemes

-

-

-

(2)

(2)

Income tax expense on items recognised directly in equity

-

(1)

(2)

-

(3)

Total comprehensive income for the period

-

34

5

1,010

1,049

Ordinary dividend paid

-

-

-

(550)

(550)

As at 30 June 2012 (Unaudited)

6,943

80

146

4,155

11,324As at 1 October 2011

6,943

46

141

3,695

10,825

Profit after income tax

-

-

-

1,325

1,325

Unrealised gains recognised directly in equity

-

34

12

-

46

Realised gains transferred to the income statement

-

(83)

(12)

-

(95)

Actuarial loss on defined benefit schemes

-

-

-

(25)

(25)

Income tax credit on items recognised directly in equity

-

-

-

6

6

Total comprehensive income for the period

-

(49)

-

1,306

1,257

Ordinary dividend paid

-

-

-

(1,150)(1,150)

6,943

(3)

141

3,851

10,932As at 30 September 2012 (Audited)
Profit after income tax

-

-

-

1,035

1,035

Unrealised losses recognised directly in equity

-

(1)

(97)

-

(98)

Realised gains transferred to the income statement

-

-

(21)

-

(21)

Actuarial gain on defined benefit schemes
Income tax credit / (expense) on items recognised directly inequity

-

-

-

17

17

-

-

33

(5)

28

Total comprehensive income for the period

-

(1)

(85)

1,047

961

Ordinary dividend paid

-

-

-

(465)

(465)

6,943

(4)

56

4,433

11,428As at 30 June 2013 (Unaudited)

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

5

ANZ Bank New Zealand Limited

Balance Sheet
Unaudited

Unaudited

Audited30/06/2013

30/06/2012

30/09/2012

Liquid assets

3,004

2,693

2,831

Due from other financial institutions

3,625

2,216

1,722

Trading securities

10,128

12,234

12,338Derivative financial instruments

10,88912,36312,753

74

125

15

1,235

250

57

88,62985,17886,678Investments backing insurance policy liabilities

169

158

142

Insurance policy assets

299

260

301

Investments in associates

98

100

99

668

1,357

592

$ millions

Note

AssetsCurrent tax assets
Available-for-sale assets
Net loans and advances

4

Other assets
Deferred tax assets

70

71

93

342

322

323

3,469

3,504

3,505

Total assets

122,699

120,831

121,449

Interest earning and discount bearing assets

106,545

101,915

103,341

Premises and equipment
Goodwill and other intangible assets

Liabilities
Due to other financial institutions
Deposits and other borrowings
Due to Immediate Parent Company

8

3,511

4,010

1,759

76,026

72,86673,652

689

160

740

10,467

12,954

13,930

1,631

2,136

1,685

271

308

339

17,514

15,333

17,244

1,162

1,740

1,168

111,271

109,507

110,517

11,428

11,324

10,932

6,943

6,943

6,943

52

226

138

4,433

4,155

3,851

Total equity

11,428

11,324

10,932

Interest and discount bearing liabilities

92,93089,12489,299Derivative financial instruments
Payables and other liabilities
Provisions
Bonds and notes
Loan capital
Total liabilities
Net assets
Represented by:
Share capital
Reserves
Retained earnings

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

6

ANZ Bank New Zealand Limited

Condensed Cash Flow Statement$ millions

Unaudited

Unaudited

9 months to

9 months to

AuditedYear to30/06/2013

30/06/2012

30/09/2012

Cash flows from operating activities
Interest received
Interest paid
Other cash inflows provided by operating activities

4,446

4,466

5,991

(2,492)(2,436)(3,301)

655

625

845

(1,595)(1,696)(2,023)

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

1,014

959

1,512

Net changes in operating assets and liabilities

3,068

610

(2,545)

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

4,082

1,569

(1,033)

Other cash outflows used in operating activities

Cash flows from investing activities
Cash inflows provided by investing activities

70

16

16

Cash outflows used in investing activities

(90)

(64)

(95)

Net cash flows used in investing activities

(20)

(48)

(79)

Cash flows from financing activities
Cash inflows provided by financing activities

1,105

2,417

6,244

Cash outflows used in financing activities(2,463)(5,829)(7,411)

Net cash flows used in financing activities(1,358)(3,412)(1,167)

Net increase / (decrease) in cash and cash equivalents

2,704(1,891)(2,279)Cash and cash equivalents at beginning of the period

3,255

5,534

5,534

Cash and cash equivalents at end of the period

5,959

3,643

3,255

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

7

ANZ Bank New Zealand Limited

Notes to the Interim Financial Statements
1.

Significant Accounting Policies(i)Reporting entity and statement of compliance
These interim financial statements are for the
Banking Group for the nine months ended 30 June
2013. They have been prepared in accordance withNew Zealand Generally Accepted Accounting Practice
as appropriate for profit oriented entities, therequirements of NZ IAS 34 Interim Financial
Reporting, IAS 34 Interim Financial Reporting and theOrder, and should be read in conjunction with the
Banking Group’s financial statements for the year
ended 30 September 2012.

(ii) Basis of measurement
These interim financial statements have been
prepared on a going concern basis in accordance withhistorical cost concepts except that the following
assets and liabilities are stated at their fair value:2.

•

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;and•financial instruments designated at fair value
through profit and loss.

Insurance policy assets are measured using Margin on
Services principles, and defined benefit obligations
are measured using the Projected Unit Credit method.
(iii) Changes in accounting policies
The accounting policies adopted by the Banking
Group are consistent with those adopted anddisclosed in the previous full year DisclosureStatement.
(iv) Presentation currency and rounding
The amounts contained in the interim financial
statements are presented in millions of New Zealanddollars, unless otherwise stated.
(v) Comparatives
Certain amounts in the comparative information havebeen reclassified to ensure consistency with thecurrent period's presentation.
This includes
reclassifying, in the Balance Sheet as at 30 June
2012, collateral received of $567 million fromderivative financial instruments asset to due to otherfinancial institutions and collateral paid of $982
million from derivative financial instruments liability
to due from other financial institutions.
(vi) Scope of consolidation
The interim financial statements consolidate theinterim financial statements of the Bank and its
subsidiaries.

Other Operating Income$millions

Net fee income
Fair value gain on hedging activities and financial liabilities designated at fair value
Net gain on available for sale equity securities transferred to income statement
Other income
Total other operating income

Unaudited

Unaudited

Audited9 months to

9 months toYear to30/06/2013

30/06/2012

30/09/2012

335

342

455

1

80

14

-

-

83

11

16

21

347

438

573

8

ANZ Bank New Zealand Limited

Notes to the Interim 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 OnePathwealth management and 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

Institutional

Other 2

Total

33

653

(826)

2,607

110

(181)

877

-

143

472

51

2,607

42

317

11

1,409

85

601

(744)

2,781

105

(110)

908

-

190

491

164

2,781

80

332

42

1,371

804

(990)

3,688

(168)

1,192

-

636

202

3,688

425

(18)

1,753

RetailCommercial

WealthExternal revenues

731

2,016

Intersegment revenues

134

(940)

Total revenues

865

1,076

Profit before income tax

327

712

External revenues

776

2,063

Intersegment revenues

77

(980)

Total revenues

853

1,083

Profit before income tax

304

613

1,019

2,744

111

126

(1,293)

143

1,145

1,451

254

421

817

108

Unaudited 9 months to 30/06/2013

Unaudited 9 months to 30/06/2012

Audited year to 30/09/2012

External revenues
Intersegment revenues
Total revenues
Profit before income tax
1
2

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

9

ANZ Bank New Zealand Limited

Notes to the Interim Financial Statements
4.

Net Loans and Advances
Unaudited

Unaudited

Audited30/06/2013

30/06/2012

30/09/2012

Overdrafts

1,741

1,915

1,881

Credit card outstandings

1,442

1,408

1,395

Term loans - housing

47,86444,822

46,123

Term loans - non-housing

37,88037,57237,749Finance lease receivables

818

803

806

89,74586,52087,954(888)(1,094)(1,054)

(272)

(263)

(258)

Fair value hedge adjustment

(34)

(3)

(2)

Deferred fee revenue and expenses

(61)

(57)

(60)

Capitalised brokerage/mortgage origination fees

139

75

98

88,62985,17886,678$ 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 $9,916 million as at 30 June 2013
(30/06/2012 $9,843 million, 30/09/2012 $9,396 million). These assets qualify for derecognition as the Bank does notretain a continuing involvement in the transferred assets.

5.

Provision for Credit Impairment
Retailmortgages

Other retail
exposures

Non retail
exposures

Total

Collective provision

100

115

354

569

Individual provision

96

15

208

319

Total provision for credit impairment

196

130

562

888

Collective provision credit

(4)

(10)

(21)

(35)

Individual provision charge

13

47

20

80

9

37

(1)

45

Collective provision

110

125

385

620

Individual provision

118

26

330

474

Total provision for credit impairment

228

151

715

1,094

Collective provision credit

(10)

(22)

(10)

(42)

Individual provision charge

25

49

110

184

Total charge to income statement

15

27

100

142

Collective provision

104

125

375

604

Individual provision

119

25

306

450

Total provision for credit impairment

223

150

681

1,054

Collective provision credit

(16)

(22)

(20)

(58)

Individual provision charge

36

55

160

251

Total charge to income statement

20

33

140

193

$ millions
Unaudited 30/06/2013

Total charge to income statement
Unaudited 30/06/2012

Audited 30/09/2012

10

ANZ Bank New Zealand Limited

Notes to the Interim Financial Statements
6.

Impaired and Past Due Assets
Retailmortgages

Other retail
exposures

Non retail
exposures

Total

239

40

745

1,024

96

51

95

242

Total impaired assets

342

45

1,067

1,454

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

99

34

92

225

Total impaired assets

313

44

1,009

1,366

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

91

33

86

210

$ millions
Unaudited 30/06/2013

Total impaired assets
Loans that are at least 90 days past due but not impaired
Unaudited 30/06/2012

Audited 30/09/2012

7. Financial Assets Pledged as Collateral$ millions

Cash collateral given on derivative financial instruments

Unaudited

Unaudited

Audited30/06/2013

30/06/2012

30/09/2012

1,256

615

982

Trading securities encumbered through repurchase agreements

1,152

2,126

252

Residential mortgages pledged as security for covered bonds

5,529

3,909

4,977

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

2,129

2,164

2,103

Total financial assets pledged as collateral

9,425

9,181

8,588

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

Audited30/06/2013

30/06/2012

30/09/2012

1,866

3,014

2,156

Term deposits

33,641

32,51533,922

Demand deposits bearing interest

29,04925,49025,815

5,562

4,773

4,838

1,492

1,515

1,476

4,416

5,559

5,445

76,026

72,86673,652

Unaudited

Unaudited

Audited30/06/2013

30/06/2012

30/09/2012

Total due from related parties

3,294

2,699

3,131

Total due to related parties

5,678

5,841

5,990

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

9.

7

Related Party Transactions$ millions

11

ANZ Bank New Zealand Limited

Notes to the Interim 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 1 capital, an increase in capitalisation rates(including prescribed minimum capital buffers, fully effective 1 January 2014), tighter requirements around new tier 1
and tier 2 securities and transitional arrangements for existing tier 1 and tier 2 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)
30/06/2013

30/06/2012

30/09/2012

Basel III

Basel II

Basel II

Common equity tier one capital

10.7%

n/a

n/a

Tier one capital

10.7%

11.5%

10.8%

Total capital

12.4%

13.6%

12.5%

Buffer ratio

4.4%

n/a

n/a

RBNZ minimum ratios:
Common equity tier one capital

4.5%

n/a

n/a

Tier one capital

6.0%

4.0%

4.0%

Total capital

8.0%

8.0%

8.0%

Capital of the Banking Group
Unaudited$ millions

30/06/2013

Common equity tier one capital before deductions

11,428Less deductions from common equity tier one capital(3,853)

Common equity tier one capital

7,575

Additional tier one capital-

Total tier one capital

7,575

Tier two capital

1,150

Total capital

8,725

Capital requirements of the Banking Group (unaudited)

Exposure atdefault

Risk weighted
exposure or
implied risk
weighted
exposure1

Total capitalrequirement

Corporate exposures

44,552

26,8782,150

Sovereign exposures

9,297

99

8

Bank exposures

12,942

4,392

351

Retail mortgage exposures

52,141

13,487

1,080

9,299

6,554

524

128,231

51,410

4,113

8,065

7,767

621

Exposures subject to standardised approach

755

288

23

Equity exposures

101

428

34

Other exposures

3,015

982

79

Total credit risk

$ millions

Other retail exposures
Exposures subject to internal ratings based approach
Specialised lending exposures subject to slotting approach

140,167

60,875

4,870

Operational risk

n/a

5,553

444

Market risk

n/a

4,109

329

140,167

70,537

5,643

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 Interim Financial Statements
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 $412 million (30/06/2012 $325 million;
30/09/2012 $338 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 fixed asset risk and business risk) were applied in November
2012 and the prior period 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 30/06/2013

On-balancesheet

Off-balance
sheet

Total

0% - 59%

16,4603,074

19,53460% - 69%

7,688

798

8,486

70% - 79%

11,501

983

12,484

Less than 80%$ millions

LVR range

35,6494,855

40,50480% - 89%

6,455

584

7,039

Over 90%

3,680

399

4,079

45,784

5,838

51,622Total

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

30/06/2013

1,908
942
619
5,575
666
4,846
14,556

13

ANZ Bank New Zealand Limited

Notes to the Interim 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 nine months ended 30 June 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. Insurance business
The Banking Group conducts insurance business through companies in the OnePath Insurance Holdings (NZ) Limitedgroup. The aggregate amount of insurance business in this group comprises assets totalling $598 million (30/06/2012:$549 million; 30/09/2012 $564 million), which is 0.5% (30/06/2012: 0.5%; 30/09/2012 0.5%) of the total consolidated
assets of the Banking Group.

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

Unaudited

Unaudited

Audited30/06/2013

30/06/2012

30/09/2012

Credit related commitments
Commitments with certain drawdown due within one year

950

933

742

Commitments to provide financial services

24,212

24,001

24,698

Total credit related commitments

25,162

24,93425,440

885

755

731

46

49

44

1,054

1,016

913

81

98

117

2,066

1,918

1,805

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 October 2012, the Commerce Commission commenced an investigation, under the Fair Trading Act 1986, into thepromotion and sale of interest rate swaps by certain banks (including ANZ New Zealand) to rural customers. The
investigation is at an early stage and the possible outcome of the investigation cannot be determined with any certainty.
On 11 March 2013, litigation funder Litigation Lending Services (NZ) announced plans for a representative action againstbanks 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 thisstage.
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.

15. Subsequent Events
On 9 August 2013 the Bank’s Board resolved to pay an ordinary dividend of $600 million no later than 30 September
2013.
On 9 August 2013 the Bank’s Board also resolved to issue $300 million of preference shares to the Immediate Parent nolater than 30 September 2013. The preference shares will qualify as additional tier one capital for capital adequacy
purposes.

14

ANZ Bank New Zealand Limited

Conditions of Registration

The registration of ANZ Bank New Zealand Limited (“thebank”) as a registered bank is subject to the following
conditions:

0% - 0.625%

Percentage limit to
distributions of the
bank's earnings
0%>0.625 - 1.25%

20%>1.25 - 1.875%

40%

1.

>1.875% - 2.5%

60%

These conditions apply on and after 30 June 2013,
except as provided otherwise.

Banking group's
buffer ratio

That(a) the Total capital ratio of the banking group is notless than 8 percent;(b) prepare a capital plan to restore the banking
group’s buffer ratio to above 2.5% within any
timeframe determined by the Reserve Bank forrestoring the buffer ratio; and(b) the Tier 1 capital ratio of the banking group is notless than 6 percent;(c) the Common Equity Tier 1 capital ratio of thebanking group is not less than 4.5 percent; and(c) have the capital plan approved by the ReserveBank.

(d) the Total capital of the banking group is not lessthan $30 million; andFor the purposes of this condition of registration,“buffer ratio”, “distributions”, and “earnings” have thesame meaning as in Part 3 of the Reserve Bank of New
Zealand document: “Capital Adequacy Framework(Internal Models Based Approach)” (BS2B) dated May
2013.

(e) the process in Subpart 2H of the Reserve Bank of
New Zealand document: “Capital Adequacy
Framework (Internal Models Based Approach)”(BS2B) dated May 2013 is followed for therecognition and repayment of capital.

the scalar referred to in the Reserve Bank of New
Zealand document “Capital adequacy framework(Internal Models Based Approach)” (BS2B) dated May
2013 is 1.06.

For the purposes of this condition of registration,the scalar referred to in the Reserve Bank of New
Zealand document “Capital adequacy framework(Internal Models Based Approach)” (BS2B) dated May
2013 is 1.06.
“Total capital ratio”, “Tier 1 capital ratio”, “Common
Equity Tier 1 capital ratio”, and “Total capital” must be
calculated in accordance with the Reserve Bank of New
Zealand document “Capital adequacy framework(Internal Models Based Approach)” (BS2B) dated May
2013.

This condition of registration applies on and after 1
January 2014.
2.

In this condition of registration, the meaning of“material” is based on generally accepted accounting
practice.

1A. That(a) the bank has an internal capital adequacy
assessment process (“ICAAP”) that accords withthe requirements set out in the document“Guidelines on a bank’s internal capital adequacy
assessment process (‘ICAAP’)” (BS12) dated
December 2007;(b) under its ICAAP the bank identifies and measures
its “other material risks” defined as all material
risks of the banking group that are not explicitly
captured in the calculation of the Common Equity
Tier 1 capital ratio, the Tier 1 capital ratio and the
Total capital ratio under the requirements set out
in the document “Capital adequacy framework(Internal Models Based Approach)” (BS2B) dated
May 2013; andThat the banking group does not conduct any nonfinancial activities that in aggregate are material
relative to its total activities.

3.

That the banking group’s insurance business is not
greater than 1% of its total consolidated assets.
For the purposes of this condition of registration, thebanking group’s insurance business is the sum of thefollowing amounts for entities in the banking group:(a)

if the business of an entity predominantly
consists of insurance business and the entity is
not a subsidiary of another entity in the banking
group whose business predominantly consists of
insurance business, the amount of the insurance
business to sum is the total consolidated assetsof the group headed by the entity; and(b)

if the entity conducts insurance business and its
business does not predominantly consist of
insurance business and the entity is not a
subsidiary of another entity in the banking groupwhose business predominantly consists of
insurance business, the amount of the insurance
business to sum is the total liabilities relating to
the entity’s insurance business plus the equity
retained by the entity to meet the solvency or
financial soundness needs of its insurance
business.

(c) the bank determines an internal capital allocationfor each identified and measured “other materialrisk”.
1B. That the banking group complies with all requirements
set out in the Reserve Bank of New Zealand document“Capital adequacy framework (Internal Models BasedApproach)” (BS2B) dated May 2013.
1C. That, if the buffer ratio of the banking group is 2.5%
or less, the bank must:(a) According to the following table, limit theaggregate distributions of the bank’s earnings to
the percentage limit to distributions that
corresponds to the banking group’s buffer ratio:

In determining the total amount of the banking
group’s insurance business(a)

all amounts must relate to on balance sheet
items only, and must comply with generally
accepted accounting practice; and(b)

if products or assets of which an insurance
business is comprised also contain a noninsurance component, the whole of such

15

ANZ Bank New Zealand Limited

Conditions of Registration
powers or performing duties as a director, to act
other than in what he or she believes is the bestinterests of the company (i.e. the bank).

products or assets must be considered part ofthe insurance business.
For the purposes of this condition of registration;

For the purposes of this condition of registration, “nonexecutive” and “independent” have the same meaning
as in the Reserve Bank of New Zealand document
entitled “Corporate Governance” (BS14) dated March2011.

“insurance business” means the undertaking orassumption of liability as an insurer under a contractof insurance:“insurer” and “contract of insurance” have the same
meaning as provided in sections 6 and 7 of the
Insurance (Prudential Supervision) Act 2010.
4.

That the aggregate credit exposures (of a non-capitalnature and net of any allowances for impairment) of
the banking group to all connected persons do not
exceed the rating-contingent limit outlined in thefollowing matrix:

Credit Rating of the bank

1

AA/Aa2 and above

6.

Connected exposure limit(% of the banking group’s
Tier 1 capital)
75

AA-/Aa3

70

A+/A1

60

A/A2

40

A-/A3

30

BBB+/Baa1 and below

15

1

5.

7.

That no appointment of any director, chief executive
officer, or executive who reports or is accountabledirectly to the chief executive officer, is made in
respect of the bank unless:(a) the Reserve Bank has been supplied with a copy ofthe curriculum vitae of the proposed appointee;
and(b) the Reserve Bank has advised that it has no
objection to that appointment.

8.

That a person must not be appointed as chairperson of
the board of the bank unless:(a) the Reserve Bank has been supplied with a copy ofthe curriculum vitae of the proposed appointee;
and(b) the Reserve Bank has advised that it has no
objection to that appointment.

This table uses the rating scales of Standard & Poor’s, Fitch Ratingsand Moody’s Investors Service. (Fitch Ratings’ scale is identical toStandard & Poor’s)

9.

That the bank has a board audit committee, or otherseparate board committee covering audit matters, thatmeets the following requirements:

Within the rating-contingent limit, credit exposures (ofa non-capital nature and net of any allowances for
impairment) to non-bank connected persons shall not
exceed 15 percent of the banking group’s tier 1
capital.

(a) the mandate of the committee must include:
ensuring the integrity of the bank’s financial
controls, reporting systems and internal audit
standards;

For the purposes of this condition of registration,compliance with the rating-contingent connected
exposure limit is determined in accordance with theReserve Bank of New Zealand document entitled“Connected Exposures Policy” (BS8) dated May 2013.

(c) every member of the committee must be a nonexecutive director of the bank;That exposures to connected persons are not on morefavourable terms (e.g. as relates to such matters as
credit assessment, tenor, interest rates, amortisation
schedules and requirement
for collateral) thancorresponding exposures to non-connected persons.

(e) the chairperson of the committee must be
independent and must not be the chairperson of
the bank.

That the bank complies with the following corporate
governance requirements:(a) the board of the bank must have at least five
directors;(b) the majority of the board members must be nonexecutive directors;(c) at least half of the board members must be
independent directors;(d) an alternate director,—(i)for a non-executive director must be nonexecutive; and(ii)

for an independent
independent;

directormustbe(e) at least half of the independent directors of thebank must be ordinarily resident in New Zealand;(f) the chairperson of the board of the bank must be
independent; and(g) the bank’s constitution must not include any
provision permitting a director, when exercising(b) the committee must have at least three members;(d) the majority of the members of the committee
must be independent; andFor the purposes of this condition of registration, “nonexecutive” and “independent” have the same meaning
as in the Reserve Bank of New Zealand document
entitled “Corporate Governance” (BS14) dated March
2011.
10. That a substantial proportion of the bank’s business isconducted in and from New Zealand.
11. That the bank has legal and practical ability to control
and execute any business, and any functions relating
to any business, of the bank that are carried on by aperson other than the bank, sufficient to achieve,
under normal business conditions and in the event ofstress or failure of the bank or of a service provider tothe bank, the following outcomes:(a) that the bank’s clearing and settlement obligations
due on a day can be met on that day;(b) that the bank’s financial risk positions on a day
can be identified on that day;(c) that the bank’s financial risk positions can bemonitored and managed on the day following any
failure and on subsequent days; and16

ANZ Bank New Zealand Limited

Conditions of Registration(d) that the bank’s existing customers can be given
access to payments facilities on the day following
any failure and on subsequent days.

“total assets” means all assets of the banking groupplus any assets held by any SPV that are not includedin the banking group’s assets:

For the purposes of this condition of registration, theterm “legal and practical ability to control andexecute” is explained in the Reserve Bank of New
Zealand document entitled “Outsourcing Policy”(BS11) dated January 2006.

“SPV” means a person-

12. That:(a) the business and affairs of the bank are managedby, or under the direction and supervision of, theboard of the bank;(b) the employment contract of the chief executive
officer of the bank or person in an equivalent
position (together “CEO”) is with the bank, and theterms and conditions of the CEO’s employment
agreement are determined by, and any decision
relating to the employment or termination of
employment of the CEO are made by, the board of
the bank; and(c) all staff employed by the bank shall have theirremuneration determined by (or under thedelegated authority of) the board or the CEO ofthe bank and be accountable (directly or
indirectly) to the CEO of the bank.

(a) to whom any member of the banking group has
sold, assigned, or otherwise transferred any asset;(b) who has granted, or may grant, a security interest
in its assets for the benefit of any holder of any
covered bond; and(c) who carries on no other business except for thatnecessary or incidental to guarantee theobligations of any member of the banking group
under a covered bond:“covered bond” means a debt security issued by any
member of the banking group, for which repayment toholders is guaranteed by a SPV, and investors retain
an unsecured claim on the issuer.
16. That(a) no member of the banking group may give effectto a qualifying acquisition or business combinationthat meets the notification threshold, and does notmeet the non-objection threshold, unless:(i)

13. That the banking group complies with the following
quantitativerequirementsforliquidity-riskmanagement:(a) the one-week mismatch ratio of the banking groupis not less than zero per cent at the end of eachbusiness day;(b) the one-month mismatch ratio of the banking
group is not less than zero per cent at the end ofeach business day; and(c) the one-year core funding ratio of the banking
group is not less than 75 per cent at the end ofeach business day.
For the purposes of this condition of registration, theratios identified must be calculated in accordance with
the Reserve Bank of New Zealand documents entitled“Liquidity Policy” (BS13) dated March 2011 and“Liquidity Policy Annex: Liquid Assets” (BS13A) dated
December 2011.
14. That the bank has an internal framework for liquidity
risk management that is adequate in the bank’s viewfor managing the bank’s liquidity risk at a prudent
level, and that, in particular:(a) is clearly documented and communicated to all
those in the organisation with responsibility for
managing liquidity and liquidity risk;(b) identifies responsibility for approval, oversight andimplementation of the framework and policies forliquidity risk management;(c) identifies the principal methods that the bank will
use for measuring, monitoring and controlling
liquidity risk; and(d) considers the material sources of stress that thebank might face, and prepares the bank tomanage stress through a contingency fundingplan.
15. That no more than 10% of total assets may bebeneficially owned by a SPV.
For the purposes of this condition,-

the bank has notified the Reserve Bank inwriting of the intended acquisition or businesscombination and at least 10 working days
have passed; and(ii) at the time of notifying the Reserve Bank oftheintendedacquisitionorbusiness
combination, the bank provided the Reserve
Bank with the information required under theReserve Bank of New Zealand Banking
Supervision Handbook document “Significant
Acquisitions Policy” (BS15) dated December
2011; and(b) no member of the banking group may give effectto a qualifying acquisition or business combinationthat meets the non-objection threshold unless:(i)the bank has notified the Reserve Bank inwriting of the intended acquisition or businesscombination;(ii) at the time of notifying the Reserve Bank oftheintendedacquisitionorbusiness
combination, the bank provided the Reserve
Bank with the information required under theReserve Bank of New Zealand Banking
Supervision Handbook document “Significant
Acquisitions Policy” (BS15) dated December
2011; and(iii) the Reserve Bank has given the bank a noticeof non-objection to the significant acquisitionor business combination.
For the purposes of this condition of registration,“qualifying acquisition or business combination”,“notification threshold” and “non-objection threshold”
have the same meaning as in the Reserve Bank of New
Zealand Banking Supervision Handbook document“Significant
Acquisitions
Policy”(BS15)
dated
December 2011.
17. That the registered bank is pre-positioned for OpenBank Resolution and in accordance with a direction
from the Reserve Bank, the registered bank can(a) close promptly at any time of the day and on any
day of the week and that effective upon theappointment of the statutory manager-

17

ANZ Bank New Zealand Limited

Conditions of Registration(i)all liabilities are frozen in full; and(ii) no further access by customers andcounterparties to their accounts (deposits,
liabilities or other obligations) is possible;(b) apply a de minimus to relevant customer liability
accounts;(c) apply a partial freeze to the customer liability
account balances;(d) reopen by no later than 9am the next business
day following the appointment of a statutory
manager and provide customers access to theirunfrozen funds;(e) maintain a full freeze on liabilities not prepositioned for open bank resolution; and(f) reinstate customers’ access to some or all of theirresidual frozen funds.
18. That the registered bank has an Implementation Planthat(a) is up-to-date; and(b) demonstrates
thattheregisteredbank’sprepositioning for Open Bank Resolution meets therequirements set out in the Reserve Bank
document: “Open Bank Resolution Pre-positioning
Requirements Policy” (BS17).
19. That the registered bank has a compendium ofliabilities that(a) at the product-classindicating which are(i)

level

lists

all

liabilities,

pre-positioned for Open Bank Resolution; and(ii) not pre-positioned for Open Bank Resolution;(b) is agreed to by the Reserve Bank; and(c) if the Reserve Bank’s agreement is conditional,
meets the Reserve Bank’s conditions.
20. That on an annual basis the registered bank test all
the component parts of its OBR solution that
demonstrates the registered bank’s prepositioning forOpen Bank Resolution as specified in their
Implementation Plan.
For the purposes of this condition of registration, “deminimus”,“partial
freeze”,“customer
liability
account”,“frozenandunfrozenfunds”,“Implementation Plan”, “compendium of liabilities”,
and “pre-positioned and non pre-positioned liabilities”
have the same meaning as in the Reserve Bank
document entitled “Open Bank Resolution (OBR) Prepositioning Requirements Policy” (BS17) dated June
2013.

In these conditions of registration:“banking group” means ANZ Bank New Zealand
Limited’s financial reporting group (as defined in
section 2(1) of the Financial Reporting Act 1993):“generally accepted accounting practice” has the same
meaning as in section 2 of the Financial Reporting Act
1993.

ANZ Bank New Zealand Limited

18

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 2013; and(ii) The Disclosure Statement is not false or misleading.
Over the nine months ended 30 June 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, 9August 2013.

Antony Carter

Shayne Elliott

Norman Geary, CBEDavid Hisco

John Judge

Michael Smith, OBE

Joan Withers