ANZ Bank New Zealand Limited
Registered Bank Disclosure Statement
FOR THE SIX MONTHS ENDED 31 MARCH 2015 | NUMBER 77 ISSUED MAY 2015

ANZ Bank New Zealand Limited

Registered Bank Disclosure Statement
For the six months ended 31 March 2015

Contents
General Disclosures

2

Income Statement

3Statement of Comprehensive Income

3Statement of Changes in Equity

4

Balance Sheet

5

Condensed Cash Flow Statement

6

Notes to the Financial Statements

7

Directors' Statement

28

Independent Auditor’s Review Report

29

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

ANZ Bank New Zealand Limited

2

General Disclosures
This Disclosure Statement has been issued in accordancewith the Order.

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

Qualification
Outlook Stable

Moody’s Investors Service

Aa3

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Rating Agency
Standard & Poor’s

Changes to Conditions of Registration
The conditions of registration applying to the Bank wereamended on 1 October 2014 to refer to revised versions of
the RBNZ documents Capital Adequacy Framework (Internal
Models Based Approach) (BS2B), Connected Exposures Policy(BS8) and Framework for Restrictions on High-LVR Residential
Mortgage Lending (BS19).

Directorate
As at 14 May 2015 there have been no changes to the
Directors of the Bank since 30 September 2014, the balancedate of the last full year disclosure statement.

Auditor
Guarantors
No obligations of the Bank are guaranteed as at 14 May 2015.
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 2015 of$4,382 million, pursuant to a guarantee which is secured overa pool of assets. The Covered Bond Guarantor’s address forservice 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.

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

ANZ Bank New Zealand Limited

3

Income Statement
Unaudited

Unaudited

6 months to

6 months toYear to31/03/2015

31/03/2014

30/09/2014

Interest income

3,445

2,998

6,272

Interest expense

2,022

1,644

3,529

Net interest income

1,423

1,354

2,743

Net trading gains

149

94

210

Net funds management and insurance income

211

149

325

230

278

547

1

1

3

2,014

1,876

3,828

$ millions

Other operating income

Note

2

Share of associates' profit
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment charge / (release)5

Profit before income tax

Audited

755

727

1,489

1,259

1,149

2,339

30

(42)

(16)

2,355

1,229

1,191

Income tax expense

340

324

639

Profit after income tax

889

867

1,716

AuditedStatement of Comprehensive Income$ millions

Profit after income tax

Unaudited

Unaudited

6 months to

6 months toYear to31/03/2015

31/03/2014

30/09/2014

889

867

1,716

(27)

24

35

8

(7)

(10)

(19)

17

25

7

(16)

(2)
(41)

Items that will not be reclassified to profit or loss
Actuarial gain / (loss) on defined benefit schemes
Income tax credit / (expense) relating to items that will not be reclassified
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss
Unrealised gains / (losses) recognised directly in equity

(13)

(22)

Income tax credit relating to items that may be reclassified

2

10

12

Total items that may be reclassified subsequently to profit or loss

(4)

(28)

(31)

866

856

1,710

Realised gains transferred to income statement

Total comprehensive income for the period

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

ANZ Bank New Zealand Limited

4

Statement of Changes in Equity$ millions

As at 1 October 2013 (Audited)

Share capital

Availablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total equity

7,243

(2)

26

4,187

11,454

Profit after income tax

-

-

-

867

867

Unrealised gains / (losses) recognised directly in equity

-

3

(19)

-

(16)

Realised gains transferred to the income statement

-

-

(22)

-

(22)

Actuarial gain on defined benefit schemes

-

-

-

24

24

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

-

(1)

11

(7)

3

Total comprehensive income for the period

-

2

(30)

884

856

Ordinary dividend paid

-

-

-

(540)

(540)

Preference dividend paid

-

-

-

(5)

(5)

As at 31 March 2014 (Unaudited)

7,243

-

(4)

4,526

11,765As at 1 October 2013 (Audited)

7,243

(2)

26

4,187

11,454
1,716

Profit after income tax

-

-

-

1,716

Unrealised gains / (losses) recognised directly in equity

-

3

(5)

-

(2)

Realised gains transferred to the income statement

-

-

(41)

-

(41)

Actuarial gain on defined benefit schemes

-

-

-

35

35

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

-

(1)

13

(10)

2

Total comprehensive income for the period

-

2

(33)

1,741

1,710

Ordinary dividend paid

-

-

-

(2,340)(2,340)Preference dividend paid

-

-

-

(13)

(13)

Ordinary shares issued

970

-

-

-

970

8,213

-

(7)

3,575

11,781889

As at 30 September 2014 (Audited)
Profit after income tax

-

-

-

889

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)

870

866

Ordinary dividend paid

-

-

-

(1,015)(1,015)Preference dividend paid
As at 31 March 2015 (Unaudited)

-

-

-

(7)

(7)

8,213

1

(12)

3,423

11,625The notes to the financial statements form part of and should be read in conjunction with these financial statements

ANZ Bank New Zealand Limited

5

Balance Sheet
Unaudited

Unaudited

Audited31/03/2015

31/03/2014

30/09/2014

2,457

1,717

1,822

601

705

855

Collateral paid

2,123

1,367

783

Trading securities

12,215

12,09011,750$ millions

Note

AssetsCash
Settlement balances receivable

Investments backing insurance contract liabilities
Derivative financial instruments
Current tax assets
Available-for-sale assets

165

190

8,744

11,404

4

33

-

903

667

772

100,695

93,391

96,299Other assets

711

604

648

Life insurance contract assets

554

431

470

Investments in associates

89

89

88

Premises and equipment

372

373

380

Net loans and advances

4

210
10,961

Goodwill and other intangible assets
Total assets
Interest earning and discount bearing assets

3,462

3,449

3,454

135,357
118,819

123,825
109,757

128,915
111,914

1,611

1,533

2,296

364

452

800

88,14281,45784,01912,007

9,645

10,205--

67

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings

8

Derivative financial instruments
Current tax liabilities
Deferred tax liabilities
Payables and other liabilities
Provisions
Debt issuances

15

60

1,213

1,297

189

211

204

17,686

16,40517,042

2,341

1,129

1,144

123,732
11,625

112,060
11,765

117,134
11,781

8,213

7,243

8,213

(11)

(4)

(7)

Retained earnings

3,423

4,526

3,575

Total equity

11,625

11,765

11,781

Interest and discount bearing liabilities

103,041

94,18897,809Subordinated debt

9

96
1,296

Total liabilities
Net assets
EquityShare capital
Reserves

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

ANZ Bank New Zealand Limited

6

Condensed Cash Flow Statement
Unaudited

Unaudited

6 months to

6 months toYear to31/03/2015

31/03/2014

30/09/2014

Interest received

3,384

2,955

6,189

Interest paid

(3,429)$ millions

AuditedCash flows from operating activities(2,072)(1,649)Other cash inflows provided by operating activities

450

505

951

Other cash outflows used in operating activities(1,085)(1,012)(1,898)Cash flows from operating profits before changes in operating assets and liabilities
Net changes in operating assets and liabilities
Net cash flows provided by / (used in) operating activities

677

799

1,813

(1,195)

(984)

(536)

(518)

(185)

1,277

Cash flows from investing activities
Cash inflows provided by investing activities

-

10

18

Cash outflows used in investing activities

(44)

(44)

(120)

Net cash flows used in investing activities

(44)

(34)

(102)

Cash flows from financing activities
Cash inflows provided by financing activities

3,971

2,918

5,401

Cash outflows used in financing activities(2,764)(3,178)(6,950)Net cash flows provided by / (used in) financing activities(1,549)

1,207

(260)

Net increase / (decrease) in cash and cash equivalents

645

(479)

(374)

Cash and cash equivalents at beginning of the period

1,830

2,204

2,204

Cash and cash equivalents at end of the period

2,475

1,725

1,830

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

ANZ Bank New Zealand Limited

7

Notes to the Financial Statements
1.

Significant Accounting Policies(i)Reporting entity and statement of compliance
These interim financial statements are for the Banking
Group for the six months ended 31 March 2015. They havebeen prepared in accordance with New Zealand Generally
Accepted Accounting Practice as appropriate for profit
oriented entities, the requirements of NZ IAS 34 Interim
Financial Reporting, IAS 34 Interim Financial Reporting andthe Order, and should be read in conjunction with the
Banking Group’s financial statements for the year ended
30 September 2014.

(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 thecase of fair value hedging, the fair value of any
applicable underlying exposure;financial instruments held for trading;financial assets treated as available-for-sale; andfinancial instruments designated at fair value
through profit and loss.

(iii) Changes in accounting policies
The accounting policies adopted by the Banking Groupare consistent with those adopted and disclosed in theprevious 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
Amounts in the cash flow statement for cash and cash
equivalents and net changes in operating assets andliabilities have been updated for the revised definition of
cash and cash equivalents applied in the previous full year
Disclosure Statement.

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

Other Operating Income$millions

Unaudited

Unaudited

6 months to

6 months to

AuditedYear to31/03/2015

31/03/2014

30/09/2014

203

207

408

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

7

(15)

35

Insurance settlement relating to ING Diversified Yield Fund and ING Regular Income Fund

-

91

91

Loss on sale of mortgages to NZ Branch

(2)

(14)

(23)

Other income

22

9

36

Total other operating income

230

278

547

Net fee income

ANZ Bank New Zealand Limited

8

Notes to the Financial Statements
3.

Segment Analysis

The Banking Group is organised into four major businesssegments for segment reporting purposes - Retail,Commercial, Wealth and Institutional. Centralised back officeand corporate functions support these segments. Thesesegments are consistent with internal reporting provided tothe chief operating decision maker, being the Bank’s Chief
Executive Officer.
Segmental reporting has been updated to reflect minorchanges to the Banking Group’s structure. Comparative data
has been adjusted to be consistent with the current period’s
segment definitions.
RetailRetail provides products and services to personal 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 phonebanking). Core products include current and savings
accounts, unsecured lending (credit cards, personal loans
and overdrafts) and home loans secured by mortgages overproperty. Retail distributes insurance and investment
products on behalf of the Wealth segment.

services are offered to small enterprises (typically with annual
revenues of less than $5 million). Commercial & Agricustomers consist of primarily privately owned medium tolarge enterprises. The Banking Group's relationship withthese businesses ranges from simple banking requirementswith revenue from deposit and transactional facilities, andcash flow lending, to more complex funding arrangementswith revenue 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 sizedbusinesses, as well as investment products.
WealthWealth comprises the Private Wealth, Funds Management
and Insurance businesses, which provide private banking,investment, superannuation and insurance products andservices.
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.

Commercial

Other

Commercial provides services to Business Banking,Commercial & Agri, and UDC customers. Business Banking

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

Business segment analysis1$ millions

RetailCommercial

Wealth2

Institutional

Other 3

Total

Unaudited 6 months to 31/03/2015

External revenues

476

1,556

72

461

(551)

2,014

Intersegment revenues

159

(789)

84

(127)

673

-

Total revenues

635

767

156

334

122

2,014

Profit after income tax

223

365

67

166

68

889

External revenues

513

1,356

152

397

(542)

1,876

Intersegment revenues

93

(642)

76

(79)

552

-

Total revenues

606

714

228

318

10

1,876

Profit after income tax

207

370

121

164

5

867

Unaudited 6 months to 31/03/2014

Audited year to 30/09/2014

External revenues

991

2,850

211

802

(1,026)

3,828Intersegment revenues

225(1,395)

165

(177)

1,182

-

1,216

1,455

376

625

156

3,828

412

717

181

320

86

1,716

Total revenues
Profit after income tax
1
2

3

Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.
Wealth external revenues for the six months to 31 March 2014 and year to 30 September 2014 includes the $91 million insurance settlement relating to the Bank’s
former involvement in the ING Diversified Yield fund and the ING Regular Income Fund.
This segment has negative external revenues as this segment incurs funding costs on behalf of the Banking Group and is reimbursed internally.

ANZ Bank New Zealand Limited

9Notes to the Financial Statements
4.

Net Loans and Advances
Unaudited

Unaudited

Audited31/03/2015

31/03/2014

30/09/2014

Overdrafts

1,640

1,789

1,744

Credit card outstandings

1,639

1,525

1,580

Term loans - housing

55,67951,39652,717

Term loans - non-housing

41,01738,521

39,622

Lease receivables

255

112

277

Hire purchase

878

768

837

Other

125

125

125

101,233

94,23696,902

(638)

(722)

(666)

Less: Unearned income

(215)

(351)

(212)

Add: Capitalised brokerage/mortgage origination fees

253

176

208

Add: Customer liability for acceptances

62

52

67

100,695

93,391

96,299$ millions

Note

Total gross loans and advances
Less: Provision for credit impairment

5

Total net loans and advances

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of $8,323 million as at 31 March 2015
(31/03/2014 $9,175 million, 30/09/2014 $9,176 million). These assets qualify for derecognition as the Bank does not retain acontinuing involvement in the transferred assets.

5.

Provision for Credit Impairment

Credit impairment charge / (release)
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

New and increased provisions

12

Write-backs

(16)

50

41

103

(9)

(31)

Recoveries of amounts written off previously

(56)

(1)

(10)

(1)

(12)

Individual credit impairment charge / (release)

(5)

31

9

35

Collective credit impairment release

-

(1)

(4)

(5)

Credit impairment charge / (release)

(5)

30

5

30

New and increased provisions

22

62

45

129

Write-backs

(26)

(10)

(60)

(96)

Recoveries of amounts written off previously

(1)

(9)

(5)

(15)

Individual credit impairment charge / (release)

(5)

43

(20)

18

Collective credit impairment release

(11)

(3)

(46)

(60)

Credit impairment charge / (release)

(16)

40

(66)

(42)

New and increased provisions

50

120

111

281

Write-backs

(44)

(21)

(112)

(177)

Recoveries of amounts written off previously

(2)

(20)

(7)

(29)

Individual credit impairment charge / (release)

4

79

(8)

75

Collective credit impairment charge / (release)

(23)

1

(69)

(91)

Credit impairment charge / (release)

(19)

80

(77)

(16)

$ millions
Unaudited 31/03/2015

Unaudited 31/03/2014

Audited 30/09/2014

ANZ Bank New Zealand Limited

10Notes to the Financial Statements
Movement in provision for credit impairment$ millions

Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

451

Unaudited 31/03/2015

Collective provision
78

118

255

Release to income statement

-

(1)

(4)

(5)

Balance at end of the period

78

117

251

446

Balance at beginning of the period

72

15

128

215

New and increased provisions net of write-backs

(4)

41

10

47

Bad debts written off

-

(44)

(21)

(65)

Balance at beginning of the period

Individual provision

Discount unwind

(2)

-

(3)

(5)

Balance at end of the period

66

12

114

192

Total provision for credit impairment

144

129

365

638

Balance at beginning of the period

101

117

324

542

Release to income statement

(11)

(3)

(46)

(60)

Balance at end of the period

90

114

278

482
284

Unaudited 31/03/2014

Collective provision

Individual provision
Balance at beginning of the period

74

22

188

New and increased provisions net of write-backs

(4)

52

(15)

33

Bad debts written off

-

(55)

(25)

(80)

Discount unwind reversal / (discount unwind)

(2)

-

5

3

Balance at end of the period

68

19

153

240

Total provision for credit impairment

158

133

431

722

Balance at beginning of the year

101

117

324

542

Charge / (release) to income statement

(23)

1

(69)

(91)

Balance at end of the year

78

118

255

451

Balance at beginning of the year

74

22

188

284

New and increased provisions net of write-backs

6

99

(1)

104

Bad debts written off

(3)

(106)

(67)

(176)

Discount unwind reversal / (discount unwind)

(5)

-

8

3

Audited 30/09/2014

Collective provision

Individual provision

Balance at end of the year

72

15

128

215

Total provision for credit impairment

150

133

383

666

ANZ Bank New Zealand Limited

11

Notes to the Financial Statements
6.

Impaired Assets and Past Due Assets
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

Balance at beginning of the period

189

35

410

634

Transfers from productive

39

61

59

159

Transfers to productive

(46)

(4)

(33)

(83)

Assets realised or loans repaid

(53)

(13)

(105)

(171)

$ millions
Unaudited 31/03/2015

-

(44)

(21)

(65)

129

35

310

474

1

-

19

20

Balance at beginning of the period

179

49

666

894

Transfers from productive

88

78

129

295

Transfers to productive

(19)

(1)

(60)

(80)

Assets realised or loans repaid

(68)

(19)

(171)

(258)

Write offs
Total impaired assets
Undrawn facilities with impaired customers
Unaudited 31/03/2014

Write offs
Total impaired assets
Undrawn facilities with impaired customers

-

(55)

(25)

(80)

180

52

539

771

-

1

34

35

Audited 30/09/2014

Balance at beginning of the year

179

49

673

901

Transfers from productive

178

138

299

615

Transfers to productive

(41)

(4)

(153)

(198)

Assets realised or loans repaid

(124)

(42)

(342)

(508)

(3)

(106)

(67)

(176)

189

35

410

634

1

-

38

39

Write offs
Total impaired assets
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
associated security should be sufficient to ensure that the Banking Group will recover the entire amount owing over the life of the
facility and there is reasonable 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
exposuresTotal

1 to 5 days

351

116

569

1,036

6 to 29 days

212

99

80

391

1 to 29 days

563

215

649

1,427

30 to 59 days

158

37

103

298

60 to 89 days

65

17

38

120

90 days or over

115

37

50

202

901

306

840

2,047

$ millions
Unaudited 31/03/2015

ANZ Bank New Zealand Limited

12

Notes to the Financial Statements
7.

Financial Assets Pledged as Collateral$ millions

Unaudited

Unaudited

Audited31/03/2015

31/03/2014

30/09/2014

2,123

1,367

783

Trading securities encumbered through repurchase agreements

43

32

47

Residential mortgages pledged as security for covered bonds

7,010

6,780

7,283

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

2,423

2,272

2,354

Total financial assets pledged as collateral

11,59910,451

10,467

Cash collateral given on derivative financial instruments

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 (if any) after all prior ranking creditors of the Covered Bond
Trust have been satisfied.
The Banking Group continues to recognise the assets of the Covered Bond Trust on its balance sheet as, although they are pledged
as security for covered bonds, the Bank retains substantially all the risks and rewards of ownership.

8.

Deposits and Other Borrowings$ millions

Note

Unaudited

Unaudited

Audited31/03/2015

31/03/2014

30/09/2014

Certificates of deposit

1,462

1,604

1,376

Term deposits

34,85534,86934,758Other deposits bearing interest and other borrowings

37,591

31,83334,027

Deposits not bearing interest

6,263

5,833

6,001

Deposits from banks

43

361

226

Commercial paper

6,273

5,401

6,057

1,629

1,534

1,569

26

22

5

88,14281,45784,019UDC secured investments
Deposits from other members of ANZ New Zealand
Total deposits and other borrowings

7

ANZ Bank New Zealand Limited

13

Notes to the Financial Statements
9.

Subordinated Debt

$ millions

Unaudited

Unaudited

Audited31/03/2015

31/03/2014

30/09/2014

1,003

-

-

494

-

-

ANZ Capital Notes1
ANZ New Zealand Internal Capital Notes (ANZ NZ ICN)2ANZ New Zealand Capital Notes (ANZ NZ CN)
Perpetual subordinated debt

NZD 835,000,000 perpetual subordinated bond 2,3

835

835

835

AUD 265,740,000 perpetual subordinated floating rate loan3,4

-

283

298

AUD 10,000,000 perpetual subordinated floating rate loan

10

11

11

2,342

1,129

1,144

(1)

-

-

2,341

1,129

1,144

Total subordinated debt issued
Less subordinated debt instruments held by the Bank
Total subordinated debt
1

These instruments qualify as additional tier 1 capital.
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 ofListing 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).
3
These instruments qualify as tier 2 capital under RBNZ’s transitional rules. Refer to Note 11 for further details.
4This loan was repaid on 16 March 2015. Interest was payable half yearly in arrears at BBSW + 0.95% p.a.

2

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 Bank.
ANZ Capital Notes••

On 5 March 2015, the Bank issued 10.0 million
convertible notes (ANZ NZ ICN) to the NZ Branch at$100 each, raising $1,003 million.
On 31 March 2015, the Bank issued 500 million
convertible notes (ANZ NZ CN) at $1 each, raising $500
million before issue costs.

ANZ Capital Notes (the notes) are fully paid mandatorily
convertible non-cumulative perpetual subordinated notes.

or undertake a share buy-back or other capital reduction
until interest is next paid.
Conversion features
On 24 March 2025 (ANZ NZ ICN) 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:••As at 31 March 2015, ANZ NZ CN carried a BBB- credit ratingfrom Standard and Poor’s.
The notes are classified as debt given there are circumstanceswhere the principal is converted into a variable number ofshares of the Bank (ANZ NZ ICN) or the Ultimate Parent Bank
(ANZ NZ CN) beyond the Bank’s control.
Interest
Interest on the notes is non-cumulative and payable asfollows:••

ANZ NZ ICN: payable semi-annually in arrears in Marchand September in each year. The interest rate is basedon a floating rate equal to the aggregate of the New
Zealand 6 month bank bill rate plus a 380 basis point
margin.
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.

Interest payments are subject to the Bank’s absolute
discretion and certain payment conditions being satisfied(including RBNZ and APRA (ANZ NZ CN only) requirements).
If interest is not paid on the notes the Bank may not, except
in limited circumstances, pay dividends on its ordinary shares

Bank based on the net assets per share in the Bank’s
most recently published Disclosure Statement (ANZ NZICN); orUltimate Parent Bank based on the average market
price of the Ultimate Parent Bank’s ordinary shares overa specified period prior to conversion less a 1%
discount, subject to a maximum conversion number(ANZ NZ CN).

The mandatory conversion will be deferred for a specified
period if the conversion tests are not met.
The Bank may be required to convert some or all of the notes
if a common equity capital trigger event, or an RBNZ or APRA(ANZ NZ CN only) non-viability trigger event occurs. The ANZ
ICN will convert into ordinary shares of the Bank and the ANZ
CN will convert into ordinary shares of the Ultimate Parent
Bank.
A common equity capital trigger event occurs if the:••Banking Group’s common equity tier 1 capital ratio is
equal to or less than 5.125%; orOverseas Banking Group’s Level 2 common equity tier 1
capital ratio is equal to or less than 5.125% (ANZ CN
only).

An RBNZ non-viability trigger event occurs if the RBNZ directs
the Bank to convert or write off the notes or a statutory
manager is appointed to the Bank and decides the Bank must
convert or write off the notes. 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 apublic sector injection of capital (or equivalent support), it

ANZ Bank New Zealand Limited

14

Notes to the Financial Statements
considers that the Ultimate Parent Bank would become nonviable.

NZD 835,000,000 bond

On 25 May 2020 the Bank has the right to, subject tosatisfying certain conditions, redeem (subject to receiving
RBNZ’s and APRA’s prior approval), or convert into ordinary
shares of the Ultimate Parent Bank, all or some of the ANZ NZ
CN at its discretion on similar terms as mandatory
conversion.

The Bank may elect to redeem the bond on 18 April 2018 (theCall Date) or any interest payment date subsequent to 18
April 2018. Interest is payable half yearly in arrears on 18 April
and 18 October each year, up to and including the Call Dateand then quarterly thereafter. Should the bond not be calledat the Call Date, the Coupon Rate from the Call Date onwards
will be set on a quarterly basis to the three month FRA rateplus 3.00%.

On 24 March 2023 the Bank has the right to, subject tosatisfying certain conditions, redeem (subject to receiving
RBNZ’s prior approval), or convert into ordinary shares of theBank, all or some of the ANZ NZ ICN at its discretion on
similar terms as mandatory conversion.
Rights of holders in event of liquidation
The notes rank equally with each other and with the Bank’s
preference shares and lower than perpetual subordinateddebt. Holders of the notes do not have any right to vote ingeneral meetings of 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.
Certain of these instruments have interrelationships thathave been considered in this assessment.

This bond was issued by the Bank on 18 April 2008.

As at 31 March 2015, this bond carried a BBB+ rating byStandard and Poor's and an A3 rating by Moody’s.
The coupon interest on the bond was 9.66% until 18 April
2013 when it reset to 5.28% for the five year period to 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 half yearly inarrears 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 BBSW + 2.4% p.a., increasing to BBSW +4.4% p.a. from 15 September 2018.

10. Related Party Balances
Unaudited

Unaudited

Audited31/03/2015

31/03/2014

30/09/2014

Total due from related parties

2,960

2,921

4,116

Total due to related parties

4,173

4,999

4,834

$ millions

ANZ Bank New Zealand Limited

15

Notes to the Financial Statements
11. Capital Adequacy
Basel III capital ratios

Banking GroupBank

31/03/2015

31/03/2014

30/09/2014

31/03/2015

31/03/2014

30/09/2014

Common equity tier 1 capital

10.1%

10.7%

Tier 1 capital

12.4%

11.1%

10.7%

8.8%

9.3%

9.4%

11.1%

11.2%

9.8%

Total capital

13.3%

9.8%

12.4%

12.3%

12.2%

11.1%

11.1%

Buffer ratio

5.3%

4.4%

4.3%

Common equity tier 1 capital

4.5%

4.5%

4.5%

Tier 1 capital

6.0%

6.0%

6.0%

Total capital

8.0%

8.0%

8.0%

Buffer requirement

2.5%

2.5%

2.5%

Unaudited

RBNZ minimum ratios:

Capital of the Banking Group
Unaudited$ millions

31/03/2015

Tier 1 capital
Common equity tier 1 capital
Paid up ordinary shares issued by the Bank

7,913

Retained earnings (net of appropriations)

3,423

Accumulated other comprehensive income and other disclosed reserves(11)Less deductions from common equity tier 1 capital
Goodwill and intangible assets, net of associated deferred tax liabilities
Cash flow hedge reserve(3,449)12

Expected losses to the extent greater than total eligible allowances for impairment(229)

Common equity tier 1 capital

7,659

Additional tier 1 capitalPreference shares

300

ANZ Capital Notes2

1,503

Additional tier 1 capital

1,803

Total tier 1 capital

9,462

Tier 2 capital
Qualifying tier 2 capital instruments subject to phase-out under RBNZ Basel III transition arrangements
NZD 835,000,000 perpetual subordinated bond2

835

Less deductions from tier 2 capitalBasel III transition adjustment1
Total tier 2 capital
Total capital

1

2

(133)
702
10,164

Certain instruments issued by the Bank qualify as tier 2 capital instruments subject to phase-out under RBNZ Basel III transition arrangements. Fixing the base at thenominal amount of such instruments outstanding at 31 December 2012, their recognition is capped at 60% of that base from 1 January 2015; 40% from 1 January 2016;
20% from 1 January 2017; and from 1 January 2018 onwards these instruments will not be included in regulatory capital.
A summary of the terms of these instruments is included in note 9.

ANZ Bank New Zealand Limited

16

Notes to the Financial Statements
Terms of ordinary share capital
All ordinary shares share equally in dividends and any proceeds available to ordinary shareholders on the winding up of the Bank. On
a show of hands every member who is present at a meeting in person or by proxy or by representative is entitled to one vote, andupon a poll every member shall have one vote for each share held.
Terms of preference shares
All preference shares were issued on 25 September 2013 by the Bank to the Immediate Parent and do not carry any voting rights.
The preference shares are wholly classified as equity instruments as there is no contractual obligation for the Bank to either deliver
cash or another financial instrument or to exchange financial instruments on a potentially unfavourable basis. The key terms of thepreference shares are as follows:
Dividends
Dividends are payable at the discretion of the Directors of the Bank and are non-cumulative. The Bank must not resolve to pay any
dividend or make any other distribution on its ordinary shares until the next preference share dividend payment date if the Directors
elect to not pay a dividend on the preference shares.
Should the Bank elect to pay a dividend, the dividend is payable at 72% of BKBM + 3.25% p.a., with dividend payments scheduled tobe made in March and September each year.
Redemption features
The preference shares are redeemable, subject to prior written approval of the RBNZ, by the Bank providing notice in writing toholders of the preference shares:
on any date on or after a change to laws or regulations that adversely affects the regulatory capital or tax treatment of thepreference shares; oron any dividend payment date on or after 1 March 2019; oron any date after 1 March 2019 if the Bank has ceased to be a wholly owned subsidiary of the Ultimate Parent Bank.

•••

The preference shares may be redeemed for nil consideration should an RBNZ non-viability trigger event, as defined in the RBNZ
document Capital Adequacy Framework (Internal Models Based Approach) (BS2B), occur.
Rights of holders in event of liquidation
In the event of a liquidation of the Bank, holders of preference shares are entitled to available subscribed capital per share, pari passu
with all holders of existing preference shares and ANZ Capital notes but in priority to all holders of ordinary shares. They have noentitlement to participate in further distribution of profits or assets.

Capital requirements of the Banking Group$ millions

Exposure atdefault

Risk weighted
exposure or
implied risk
weighted
exposure1

Total capitalrequirement

Unaudited 31/03/2015

136,72253,614

4,289

Specialised lending exposures subject to slotting approach

9,479

8,812

705

Exposures subject to standardised approach

1,731

337

27

91

386

31

Exposures subject to internal ratings based approach

Equity exposures
Other exposures

3,736

1,602

128

Total credit risk

151,759

64,751

5,180

Operational risk

n/a

5,496

440

Market risk

n/a

5,946

475

151,759

76,193

6,095

Total
1

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

ANZ Bank New Zealand Limited

17

Notes to the Financial Statements
Implementation of the advanced internal ratings based approach to credit risk measurement
The Banking Group adheres to the standards of risk grading and risk quantification as set out for Internal Ratings Based (IRB) banks in
the RBNZ document Capital Adequacy Framework (Internal Models Based Approach) (BS2B).
Under this IRB Framework banks use their own measures for calculating the level of credit risk associated with customers andexposures, by way of the primary components of:
Probability of Default (PD): An estimate of the level of risk of borrower default graded by way of rating models used both at loan
origination and for ongoing monitoring;
Exposure at Default (EAD): The expected facility exposure at default. Total credit risk-weighted exposures include a scalar of 1.06 in
accordance with the Bank’s Conditions of Registration; andLoss Given Default (LGD): An estimate of the potential economic loss on a credit exposure, incurred as a consequence of obligor
default and expressed as a percentage of the facility’s EAD. For Retail Mortgage exposures the Bank is required to apply the
downturn LGDs according to loan to value (LVR) bands as set out in BS2B. For farm lending exposures the Banking Group is required
to adopt RBNZ prescribed downturn LVR based LGDs, along with a minimum maturity of 2.5 years and the removal of the firm-size
adjustment.
For exposures classified under Specialised Lending, the Banking Group uses slotting tables supplied by the RBNZ rather than internal
estimates.
The exceptions to IRB treatment are three minor portfolios where, due to systems constraints, determining these IRB risk estimates is
not currently feasible or appropriate. Risk weights for these exposures are calculated under a separate treatment as set out in the
RBNZ document Capital Adequacy Framework (Standardised Approach) (BS2A).

Capital requirements by asset class under the IRB approach

Unaudited 31/03/2015

Total exposure
or principal
amount$m

Exposureweighted LGD
used for the
Exposure at
capitaldefault
calculation$m%

Exposureweighted risk Risk weighted
weightexposure%$m

Total capitalrequirement$mOn-balance sheet exposures
Corporate

34,49734,4083654

19,663

Sovereign

10,328

10,152

5

1

112

8

Bank

4,695

3,353

60

26

922

74

Retail mortgages

53,693

53,951

21

25

14,195

1,136

Other retail

4,859

4,962

76

98

5,135

411

108,072

106,826

28

35

40,0273,202

12,396

10,218

50

49

5,357

429

Total on-balance sheet exposures

1,573

Off-balance sheet exposures
Corporate

73

34

5

1

-

-

Bank

1,376

967

50

16

161

13

Retail mortgages

7,307

7,651

18

17

1,367

109

Other retail

5,665

5,315

79

56

3,151

252

Total off-balance sheet exposures

26,81724,18546

39

10,036803

Corporate

93,567

2,030

61

83

1,793

143

Sovereign

10,355

391

5

32

131

11

Bank

611,692

3,290

62

47

1,627

130

Total market related contracts

715,614

5,711

58

59

3,551

284

Total credit risk exposures subject to the IRB approach

850,503

136,72232

37

53,614

4,289

SovereignMarket related contracts

ANZ Bank New Zealand Limited

18

Notes to the Financial Statements
IRB exposures by customer credit rating

Unaudited 31/03/2015

Probability ofdefault%

Exposureweighted LGD
used for the
Exposure at
capitaldefault
calculation$m%

Exposureweighted risk Risk weighted
weightexposure%$m

Total capitalrequirement$m

Corporate
0-2

0.05

5,353

63

35

1,963

157

3-4

0.31

24,84137

41

10,859

869

5

1.01

10,368

37

66

7,234

579

6

2.23

4,367

38

82

3,812

305

7-8

7.58

1,283

42

145

1,972

158

Default

100.00

444

48

207

973

77

1.77

46,65640

54

26,813

2,145

0

0.01

10,463

5

2

241

19

1-8

0.02

114

5

2

2

-

Total sovereign exposures

0.01

10,577

5

2

243

19

0

0.03

31

65

12

4

-

1

0.03

6,223

59

31

2,052

164

2-4

0.08

1,336

61

45

631

50

5-8

1.26

20

65

108

23

3

Total bank exposures

0.04

7,610

60

34

2,710

217

0-3

0.20

13,784

12

5

702

56

4

0.46

21,383

19

15

3,319

265

5

0.92

20,351

25

33

7,152

572

6

2.03

5,158

29

65

3,566

285

7-8

5.28

517

29

110

602

48

Default

100.00

409

25

51

221

19

1.39

61,60220

24

15,562

1,245

Total corporate exposures
SovereignBank

Retail mortgages

Total retail mortgages exposures
Other retail
0-2

0.10

652

78

48

334

27

3-4

0.26

4,398

78

55

2,544

203

5

0.99

1,880

72

72

1,428

114

6

2.36

1,782

77

96

1,813

145

7-8

8.92

1,478

86

132

2,068

165

Default

100.00

87

80

105

99

9

Total other retail exposures

2.84

10,277

78

76

8,286

663

Total credit risk exposures subject to the IRB approach

1.44

136,72232

37

53,614

4,289

Credit risk exposures subject to the IRB approach have been derived in accordance with BS2B and other relevant correspondencewith RBNZ setting out prescribed credit risk estimates.

ANZ Bank New Zealand Limited

19

Notes to the Financial Statements
Specialised lending subject to the slotting approach
Exposure atdefault

Risk weight

Risk weighted
exposure

Total capitalrequirement

$m

%

$m

$m

Strong

2,666

70

1,978

158

Good

4,823

90

4,601

368

Satisfactory

668

115

815

65

Weak

149

250

394

32

Unaudited 31/03/2015

On-balance sheet exposures

Default
Total on-balance sheet exposures

97

-

-

-

8,403

87

7,788

623

Average risk Risk weighted
weightexposure

Total capitalrequirement

ExposureamountExposure atdefault$m$m

Undrawn commitments and other off balance sheet exposures

1,328

Market related contracts

2,241

Total off-balance sheet exposures

3,569

%

$m

$m

987

87

911

73

89

120

113

9

1,076

90

1,024

82

Off-balance sheet exposures

Specialised lending exposures subject to the slotting approach have been calculated in accordance with BS2B.
The supervisory categories of specialised lending above are associated with specific risk-weights. These categories broadly
correspond to the following external credit assessments using Standard & Poor's rating scale, Strong: BBB- or better, Good: BB+ or
BB, Satisfactory: BB- or B+ and Weak: B to C-.
Credit risk exposures subject to the standardised approach
Exposure atdefault$m

Risk weight%

Risk weighted
exposure$m

Total capitalrequirement$m

Corporates

58

100

61

5

Default

1

150

1

-

Total on-balance sheet exposures

59

101

62

5

Average risk Risk weighted
weightexposure%$m

Total capitalrequirement$m

Unaudited 31/03/2015

On-balance sheet exposures

Exposureamount$m

Averagecreditconversion
factor%Exposure atdefault$m

Off-balance sheet exposures
545

48

260

89

244

20

Market related contracts

395,774

-

1,412

2

31

2

Total off balance sheet

396,319

n/a

1,672

16

275

22

Exposure atdefault$m

Risk weight%

Risk weighted
exposure$m

Total capitalrequirement
$m

91

400

386

31

Undrawn commitments and other off balance sheet exposures

Credit exposures subject to the Standardised Approach have been calculated in accordance with BS2A.
Equity exposures

Unaudited 31/03/2015

All equity holdings not deducted from capital

Equity exposures have been calculated in accordance with BS2B.

ANZ Bank New Zealand Limited

20

Notes to the Financial Statements
Other exposures
Unaudited 31/03/2015

Exposure atdefault$m

Risk weight%

Risk weighted
exposure$m

Total capitalrequirement
$m

271

-

-

-

New Zealand dollar denominated claims on the Crown and the RBNZ

1,953

-

-

-

Other assets

1,512

100

1,602

128

Total other IRB credit risk exposures

3,736

40

1,602

128

Cash

Other exposures have been calculated in accordance with BS2B.
Credit risk mitigation
The Banking Group assesses the integrity and ability of counterparties to meet their contractual financial obligations for repayment.
The Banking Group generally takes collateral security in the form of real property or a security interest in personal property, except
for major government, bank and corporate counterparties of strong financial standing. Longer term consumer finance, in the form of
housing loans, is generally secured against real estate while short term revolving consumer credit is generally unsecured.
As at 31 March 2015, under the IRB approach, the Banking Group had $1,042 million of Corporate exposures covered by guarantees
where the presence of the guarantees was judged to reduce the underlying credit risk of the exposures. Information on the total
value of exposures covered by financial guarantees and eligible financial collateral is not disclosed, as the effect of these guarantees
and collateral on the underlying credit risk exposures is not considered to be material.
Operational risk
The Banking Group uses the Advanced Measurement Approach for determining its regulatory capital requirement for operationalrisk calculated in accordance with BS2B. As at 31 March 2015 the Banking Group had an implied risk weighted exposure of $5,496
million for operational risk and an operational risk capital requirement of $440 million.
Market risk
The aggregate market risk exposures below have been calculated in accordance with BS2B. The peak end-of-day market risk
exposures are for the half-year ended 31 March 2015.
Implied risk weighted exposure$ millions

Aggregate capital charge

Peak

Period end

Peak

Period end

Peakoccurred on

5,863

7,615

469

609

12/11/2014

81

132

6

11

9/12/2014

2

2

-

-

28/01/2015

Unaudited 31/03/2015

Interest rate risk
Foreign currency risk
Equity risk

5,946

475

Pillar II capital for other material risks
The Banking Group has an Internal Capital Adequacy Assessment Process (ICAAP) which complies with the requirements of theBank's Conditions of Registration.
Under the Banking Group's ICAAP it identifies and measures all "other material risks", which are those material risks that are notexplicitly captured in the calculation of the Banking Group's tier 1 and total capital ratios. The other material risks identified by the
Banking Group include pension risk, insurance risk, strategic equity risk, fixed asset risk, deferred acquisition cost risk, value in-force
risk, business retention risk and software risk.
The Banking Group's internal capital allocation for these other material risks is $437 million (31/03/2014 $471 million; 30/09/2014$485 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 software, strategic equity and value in-force risk) were applied in March 2015
and prior periods restated accordingly.

ANZ Bank New Zealand Limited

21

Notes to the Financial Statements
Capital adequacy of the Ultimate Parent Bank
Basel III capital ratios
Overseas Banking Group
31/03/2015
31/03/2014
30/09/2014

Ultimate Parent Bank
(Extended Licensed Entity)
31/03/2015
31/03/2014
30/09/2014

Unaudited

Common equity tier 1 capital

8.7%

8.3%

8.8%

8.8%

8.3%

9.1%

Tier 1 capital

10.6%

10.3%

10.7%

10.9%

10.6%

11.3%

Total capital

12.6%

12.1%

12.7%

13.1%

12.5%

13.4%

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 and the 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 2015 and for the comparative prior periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 March 2015. The Overseas Banking
Group’s Pillar 3 disclosure document for the quarter ended 31 March 2015, in accordance with APS 330: Public Disclosure ofPrudential Information, discloses capital adequacy ratios and other prudential information. This document can be accessed at thewebsite anz.com.
Residential mortgages by loan-to-valuation ratio
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the Banking
Group's valuation of the security property at origination of the exposure. Off balance sheet exposures include undrawn and partiallydrawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing lending whichhave been accepted by the customer.
31/03/2015
UnauditedOn-balancesheet

Off-balance
sheet

Total

Does not exceed 60%

20,241

3,823

24,064

Exceeds 60% and not 70%

10,102

1,139

11,241

Exceeds 70% and not 80%

16,711

1,858

18,569Does not exceed 80%

47,0546,820

53,874

Exceeds 80% and not 90%

4,378

242

4,620

Exceeds 90%

2,261

245

2,506

Total

53,6937,307

61,000Note

31/03/2015

455,679$ millions

LVR range

Reconciliation of mortgage related amounts
Unaudited$ millions

Term loans - housing
Less: fair value hedging adjustment(65)

Add: short-term housing loans classified as overdrafts

471(2,431)

Less: housing loans made to corporate customers

39

Add: Unsettled re-purchases of mortgages from the NZ BranchOn-balance sheet retail mortgage exposures subject to the IRB approach

11

53,69311

61,0007,307

Add: off-balance sheet retail mortgage exposures subject to the IRB approach
Total retail mortgage exposures subject to the IRB approach (as per LVR analysis)

ANZ Bank New Zealand Limited

22

Notes to the Financial Statements
12. 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 thesame geographic 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.

Unaudited 31/03/2015$ millions

Cash,settlements
receivable andcollateral paid

Tradingsecurities andavailable-forsale assets

Derivative
financial
instruments

Net loans andadvances 3

Otherfinancial Credit related
assets commitments 4

Total

Industry
Agriculture

-

-

12

17,71479

1,556

19,361

Forestry, fishing and mining

-

-

15

1,087

5

903

2,010

Business and property services

-

1

19

9,748

43

2,815

12,626

Construction

-

-

2

1,389

6

931

2,328

Entertainment, leisure and tourism

-

-

32

1,097

5

215

1,349

Finance and insurance

3,228

5,765

9,430

1,154

355

1,387

21,319Government and local authority1

1,953

7,302

605

1,204

5

1,139

12,208Manufacturing

-

-

201

3,415

15

1,733

5,364

Personal lending

-

-

-

57,742257

17,83075,829Retail trade

-

-

37

1,930

9

988

2,964

Transport and storage

-

2

64

1,434

6

653

2,159

Wholesale trade

-

-

15

1,473

7

1,232

2,727

Other2

-

48

529

1,908

8

1,577

4,070

5,181
-

13,118-

10,961-

101,295
(557)

800
-

32,959(81)

164,314(638)

Less: Unearned income

-

-

-

(215)

-

-

(215)

Add: Capitalised brokerage / mortgage
origination fees

-

-

-

253

-

-

253

5,181

13,118

10,961

100,776

800

32,878

163,714

New Zealand

3,161

8,681

2,410

98,684791

32,715

146,442

Overseas

2,020

4,437

8,551

2,092

9

163

17,272

Total financial assets

5,181

13,118

10,961

100,776

800

32,878

163,714

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.

ANZ Bank New Zealand Limited

23

Notes to the Financial Statements
Interest rate sensitivity gap
The following tables represent the interest rate sensitivity of the Banking Group's assets, liabilities and off balance sheet instruments
by showing the periods in which these instruments may reprice, that is, when interest rates applicable to each asset or liability canbe changed.

Unaudited 31/03/2015
Total

Up to
3 months

Over 3 to
6 months

Over 6 to
12 months

Over 1 to
2 yearsOver
2 years

Not bearing
interest

2,457

2,186

-

-

-

-

271

601

43

-

-

-

-

558

Collateral paid

2,123

2,123

-

-

-

-

-

Trading securities

12,215

1,285

1,056

564

620

8,690

-

Derivative financial instruments

10,961$ millions

AssetsCash
Settlement balances receivable

10,961

-

-

-

-

-

Available-for-sale assets

903

586

10

57

-

248

2

Net loans and advances

100,695

55,390

6,583

9,784

19,994

9,390

(446)

Other financial assets

800

175

23

7

-

5

590

Total financial assets

130,755

61,788

7,672

10,412

20,614

18,333

11,936

1,611

488

-

-

-

-

1,123

364

364

-

-

-

-

-

Deposits and other borrowings

88,14260,312

9,466

7,733

2,698

1,669

6,264

Derivative financial instruments

12,007

-

-

-

-

-

12,007

Debt issuances

17,686

4,218

2,000

2,866

1,083

7,519

-

Subordinated debt

2,341

-

1,014

-

-

1,327

-

811

42

-

-

2

240

527

Total financial liabilities

122,962

65,424

12,48010,5993,783

10,75519,921

Hedging instruments-

28,764(12,360)760(16,082)(1,082)-

Interest sensitivity gap

7,793

25,128(17,168)

573

749

6,496

(7,985)

Liabilities
Settlement balances payable
Collateral received

Payables and other liabilities

Liquidity portfolio
The Banking Group holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The
size of the Banking Group’s liquidity portfolio is based on the amount required to meet its liquidity policy and includes both items
classified as cash and those classified as operating assets in the Condensed Cash Flow Statement.
Unaudited 31/03/2015$ millions

Cash

Trading
Securities

Available-forsale securities

Total

Cash and balances with central banks

2,235

-

-

2,235

186

-

-

186

Securities purchased under agreement to resell
Certificates of deposit

-

17

263

280

Government, local body stock and bonds

-

4,896

524

5,420

Government treasury bills

-

1,390

26

1,416

Other bonds

-

5,460

-

5,460

2,421

11,763813

14,997

Total liquidity portfolio

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 $5,731 million at 31 March 2015.

ANZ Bank New Zealand Limited

24

Notes to the Financial Statements
Funding Composition
The Banking Group actively uses balance sheet disciplines to prudently manage the funding mix. The Banking Group 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$ millions

31/03/2015

Funding composition
Customer deposits1
New Zealand

71,294

Overseas

9,044

Total customer deposits

80,338Wholesale funding
Debt issuances

17,686

Subordinated debt

2,341

Certificates of deposit

1,462

Commercial paper

6,273

Other borrowings

69

Total wholesale funding

27,831

Total funding

108,169

Concentrations of funding by industry
Households

51,025Agriculture

3,025

Forestry, fishing and mining
ManufacturingEntertainment, leisure and tourism

625
1,439
985

Finance and insurance

36,572Retail trade

1,025

Wholesale trade

1,423

Business and property services

5,922

Transport and storage735

Construction

1,114

Government and local authority

2,748

Other

2

Total funding

1,531
108,169

Concentrations of funding by geography3
New Zealand

78,084Australia

1,081

United States

13,036

Europe9,357

Other countries

6,611

Total funding

108,169

1
2
3

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.
Funding via ANZ New Zealand (Int’l) Limited is classified as either from the United States or Europe, as the company conducts overseas funding activities through its
London branch which is passed through to the Bank.

ANZ Bank New Zealand Limited

25

Notes to the Financial Statements
Contractual maturity analysis of financial assets and liabilities
The following tables present the Banking Group's financial assets and liabilities within relevant contractual maturity groupings,
based on the earliest date on which the Banking Group 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 the Banking Group can be called upon to pay. The liquidity risk of credit related commitments and contingent
liabilities may be less than the contract amount, and does not necessarily represent future cash requirements as many of thesefacilities are expected to be only partially used or to expire unused.
The Banking Group does not manage its liquidity risk on this basis.

Unaudited 31/03/2015
Total

At callUp to
3 months

Over 3 to
12 months

Over 1 to
5 yearsOver
5 years

No maturity
specified

2,458

2,224

234

-

-

-

-

601

43

558

-

-

-

-

Collateral paid

2,123

-

2,123

-

-

-

-

Trading securities

13,592

-

626

1,992

9,096

1,878

-

Derivative financial assets (trading)

10,280-10,280----Available-for-sale assets

942

-

518

49

373

-

2

Net loans and advances-$ millions

Financial assets
Cash
Settlement balances receivable

139,711223

16,387

14,64849,15859,295

Other financial assets

350

-

315

30

5

-

-

Total financial assets

170,057

2,490

31,041

16,71958,632

61,173

2

1,611

729

882

-

-

-

-

Financial liabilities
Settlement balances payable

364

-

364

-

-

-

-

Deposits and other borrowings

89,772

44,132

21,31919,465

4,856

-

-

Derivative financial liabilities (trading)

10,063-

10,063----

Debt issuances

18,420

-

368

5,588

11,167

1,297-

Subordinated debt

3,991

-

39

117

644

850

2,341

Collateral received

Other financial liabilities

450

-

97

14

213

126

-

Total financial liabilities

124,671

44,86133,132

25,184

16,880

2,273

2,341

Derivative financial instruments used for balance sheet management- gross inflows

15,091

-

853

3,771

8,757

1,710

-

- gross outflows
Net financial assets / (liabilities) after balance
sheet management(16,115)-(821)(3,875)(9,623)(1,796)-44,362(42,371)(2,059)(8,569)40,88658,814(2,339)Contractual maturity of off-balance sheet commitments and contingent liabilities
Unaudited 31/03/2015$ millions

Non-credit related commitments
Credit related commitments
Contingent liabilities
Total

Less than

BeyondTotal

1 year

1 year472
30,663
2,296
33,431

63
30,663
2,296
33,022409
409

ANZ Bank New Zealand Limited

26

Notes to the Financial Statements
13. Fair Value Measurements
Financial assets and financial liabilities not measured at fair value
Below is a comparison of the carrying amounts as reported on the balance sheet and fair 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 fairvalue.
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 a yield curve appropriate for the remaining term to maturity.
Unaudited

Unaudited

Audited31/03/2015
Carrying
amountFair value

31/03/2014
Carrying
amountFair value

30/09/2014
Carrying
amountFair value

100,695

101,043

93,391

93,38396,29996,397

Deposits and other borrowings2

88,142

88,21581,457

81,46884,01984,042

1

Debt issuances

17,686

17,862

16,405

16,583

17,042

17,225Subordinated debt

2,341

2,343

1,129

1,098

1,144

1,137

$ millions

AssetsNet loans and advances1
Liabilities

1

2

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

Financial assets and financial liabilities measured at fair value in the balance sheet
The Banking Group uses a valuation method within the following hierarchy to determine the carrying amount of assets and liabilities
held at fair value, all of which are recurring fair value measurements. There are no assets or liabilities measured at fair value on a nonrecurring 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
not based on observable market data (unobservable inputs).

There have been no substantial changes in the valuation techniques applied to different classes of financial instruments during theperiod.
Valuation hierarchy
Unaudited 31/03/2015
Unaudited$ millions

31/03/2015
Level 1 Level 2 Level 3

Total

Level 1

Unaudited

Audited31/03/2014
Level 2 Level 3

30/09/2014
Level 2 Level 3

Total

Level 1

- 12,090

11,659Total

Financial assets
62- 12,215

12,06228

Derivative financial instruments

12 10,949- 10,961

7

8,737

-

8,744

Available-for-sale assets1

581

321

1

903

665

-

2

667

712

58

2

772

Investments backing insurance contract
liabilities1

3

207

-

210

114

51

-

165

129

61

-

190

Total financial assets held at fair value

12,749 11,539

1 24,289

12,8488,816

2 21,666

-

5,401

-

5,401

4

9,641

-

9,645

222

-

-

222

Trading securities

12,15391

2 11,402

12,502 11,612- 11,750- 11,404

2 24,116

Financial liabilities
Deposits and other borrowings
Derivative financial instruments

-

6,273

6 12,001

Payables and other liabilities

221

Total financial liabilities held at fair value

227 18,274

1

-

-

6,273

- 12,007-

221- 18,501

226 15,042- 15,268-

6,057

5 10,200226-

231 16,257

-

6,057

- 10,205-

226- 16,488

During the period, available-for-sale assets of $159 million and Investments backing insurance contract liabilities of $126 million were reclassified from Level 1 to Level
2 following a reassessment of available pricing information. Transfers into and out of Level 1 and Level 2 are deemed to have occurred as of the beginning of thereporting period in which the transfer occurred.

ANZ Bank New Zealand Limited

27

Notes to the Financial Statements
14. 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 six months ended 31 March 2015 there were no individual counterparties, excluding connected parties, governments andbanks with long term credit ratings of A- or above, where the Banking Group’s period end or peak end-of-day credit exposure
equalled or exceeded 10% of the Banking Group’s equity as at the end of the period.

15. Insurance Business
The Banking Group conducts insurance business through its subsidiary OnePath Life (NZ) Limited. OnePath Insurance Services (NZ)
Limited, which was a subsidiary of OnePath Life (NZ) Limited, also conducted insurance business until it amalgamated with OnePath
Life (NZ) Limited on 30 November 2014.
The Banking Group’s aggregate amount of insurance business comprises the total consolidated assets of OnePath Life (NZ) Limitedof $958 million (31/03/2014: $787 million; 30/09/2014 $850 million), which is 0.7% (31/03/2014: 0.6%; 30/09/2014 0.7%) of the total
consolidated assets of the Banking Group.

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

Unaudited

Unaudited

Audited31/03/2015

31/03/2014

30/09/2014

Credit related commitments
Commitments with certain drawdown due within one year

1,348

1,073

764

Commitments to provide financial services

29,31525,81627,378

Total credit related commitments

30,663

26,88928,142Financial guarantees

906

985

925

Standby letters of credit

52

60

79

Transaction related contingent items

1,245

1,222

1,321

Trade related contingent liabilities

93

66

111

2,296

2,333

2,436

Guarantees and contingent liabilities

Total guarantees and contingent liabilities

The Banking Group guarantees the performance of customers by issuing standby letters of credit and guarantees to third parties,
including its Ultimate Parent Bank. To reflect the risk associated with these transactions, they are subjected to the same credit
origination, portfolio management and collateral requirements as for customers that apply for loans. The contract amountrepresents the maximum potential amount that could be lost if the counterparty fails to meet its financial obligations. As thefacilities 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 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 this stage.
The Banking Group has other contingent liabilities in respect of actual and possible claims and court proceedings.
On 3 December 2014, the Commerce Commission and the Financial Markets Authority (FMA) announced settlements with the Bank
relating to the Commission's and the FMA's investigations into the promotion, sale and offer of interest rate swaps to rural customers
from 2005 to 2009; the settlement includes a payment fund of $18.5 million and a contribution to the Commission’s and the FMA's
costs.
An assessment of the Banking Group’s likely loss in respect of these matters has been made on a case-by-case basis and provision
made where deemed necessary.

ANZ Bank New Zealand Limited

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

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

The Disclosure Statement is not false or misleading.

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

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

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

including credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operational risk andother business risks, and that those systems were being properly applied.
This Disclosure Statement is dated, and has been signed by or on behalf of all Directors of the Bank on, 14 May 2015.

Antony Carter

Shayne ElliottDavid Hisco

Mark Verbiest(also on behalf of John Judge, Michael Smith and Joan Withers)

Nigel Williams(alternate director for Michael Smith)28

ANZ Bank New Zealand Limited

29

Independent Auditor’s Review Report
To the Shareholder of ANZ Bank New Zealand Limited
We have reviewed pages 3 to 27 of the interim financial statements of ANZ Bank New Zealand Limited (the Bank) and its subsidiarycompanies (the Banking Group) prepared and disclosed in accordance with the Registered Bank Disclosure Statements (New Zealand
Incorporated Registered Banks) Order 2014 (the Order) and the supplementary information prescribed in Schedules 3, 5, 7, 11, 13, 16 and 18of the Order. The interim financial statements, and supplementary information, provide information about the past financial performanceand cash flows of the Banking Group and its financial position as at 31 March 2015.
Directors' responsibility for the disclosure statement
The Directors of ANZ Bank New Zealand Limited are responsible for the preparation and presentation of the Disclosure Statement, which
includes interim financial statements prepared in accordance with Clause 25 of the Order which give a true and fair view of the financial
position of the Banking Group as at 31 March 2015 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 towhich it relates in accordance with Schedules 3, 5, 7, 11, 13, 16 and 18 of the Order.
Reviewer’s responsibility
We are responsible for reviewing the interim financial statements and the supplementary information, disclosed in accordance with Clause
25, Schedules 5, 7, 11, 13, 16 and 18 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 ourreview. 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 financial
statements are not prepared, in all material respects, in accordance with NZ IAS 34: Interim Financial Reporting. As the auditor of the Banking
Group, 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) inorder to report to you whether, in our opinion on the basis of the procedures described below, anything has come to our attention thatwould cause us to believe that the supplementary information does not fairly state the matters to which it relates in accordance with
Schedules 5, 7, 13, 16 and 18 of the Order.
We are responsible for reviewing the supplementary information relating to capital adequacy in order to state whether, on the basis of theprocedures described below, anything has come to our attention that would cause us to believe that the information disclosed inaccordance with Schedule 11 is not in all material respects prepared in accordance with the Bank’s Conditions of Registration and with theBank’s internal models for credit risk and operational risk as accredited by the Reserve Bank of New Zealand and disclosed in accordancewith Schedule 11 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 other review 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 thosefinancial statements.
KPMG has also provided other audit related services to the Banking Group. In addition, certain partners and employees of our firm may also
deal with the Banking Group on normal terms within the ordinary course of trading activities of the Banking Group. These matters have not
impaired our independence as auditors of the Banking Group. We have no other relationship with, or interest in, the Banking Group.
Review opinion
We have examined the interim financial statements including the supplementary information and based on our review, which is not anaudit, 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 the Banking Group as at 31 March 2015 and its financial performance and cash flows for the six months ended on that datein accordance with NZ IAS 34: Interim Financial Reporting;b.
the supplementary information prescribed by Schedules 5, 7, 13, 16 and 18 of the Order does not fairly state the matters to which it
relates in accordance with those Schedules; andc.
the supplementary information relating to capital adequacy as required by Schedule 11 of the Order, is not in all material respects
prepared in accordance with the Bank’s Conditions of Registration and with the Bank’s internal models for credit risk and operationalrisk as accredited by the Reserve Bank of New Zealand, and disclosed in accordance with Schedule 11 of the Order.
Our review was completed on 14 May 2015 and our review opinion is expressed as at that date.

14 May 2015
Wellington