ANZ National Bank Limited
General Short Form Disclosure Statement
FOR THE THREE MONTHS ENDED 31 DECEMBER 2009 | NUMBER 56 ISSUED FEBRUARY 2010

ANZ National Bank Limited and Subsidiary Companies

General Disclosures

For the three months ended 31 December 2009This Short Form Disclosure Statement has been issued inaccordance with the Registered Bank Disclosure Statement(Off-Quarter – New Zealand Incorporated Registered Banks)
Order 2008 (“the Order”).
In this Disclosure Statement unless the context otherwise
requires:

Contents
General Disclosures
Income Statement
Statement of Comprehensive Income
Statement of Changes in Equity
Balance Sheet
Cash Flow Statement
Notes to the Financial Statements
Conditions of Registration
Credit Rating Information
Directors’ Statement
Independent Review Report

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9 - 3738 - 40414243a) “Banking Group” means ANZ National Bank Limited andall its subsidiaries; andb) any term or expression which is defined in, or in themanner prescribed by, the Registered Bank DisclosureStatement (Off-Quarter – New Zealand Incorporated
Registered Banks) Order 2008 shall have the meaning
given in or prescribed by that Order.

General Matters
The full name of the registered bank is ANZ National
Bank Limited (“the Bank”) and its address for service is Level
14, ANZ Tower, 215-229 Lambton Quay, Wellington, New
Zealand. From 1 March 2010, the address for service will be
Level 6, 1 Victoria Street, Wellington, New Zealand.
The Bank was incorporated under the Companies Act 1955
by virtue of the ANZ Banking Group (New Zealand) Act 1979
on 23 October 1979, and was reregistered under theCompanies Act 1993 on 13 June 1997.
The immediate parent company of the Bank is ANZ Holdings(New Zealand) Limited (incorporated in New Zealand). The
immediate parent company is owned by ANZ Funds Pty
Limited and Australia and New Zealand Banking Group
Limited (both incorporated in Australia).
The Ultimate Parent Bank is Australia and New Zealand
Banking Group Limited (“ANZ”), which is incorporated
in Australia, and its address for service is Level 14,
100 Queen Street, Melbourne, Australia.
The Bank is wholly owned by its immediate parent company
and ultimately the Ultimate Parent Bank. The immediate
parent company has the power under the Bank’s Constitution
to appoint any person as a Director of the Bank either tofill a casual vacancy or as an additional Director or to remove
any person from the office of Director, from time to timeby giving written notice to the Bank. No appointment of a
new Director may occur unless the Reserve Bank of
New Zealand (“RBNZ”) confirms that it does not object tothe appointment.
A New Zealand Branch (“NZ Branch”) of the Australia and
New Zealand Banking Group Limited was established on
5 January 2009. The full name of the NZ Branch is Australia
and New Zealand Banking Group Limited New Zealand
Branch and its address for service is Level 14, ANZ Tower,215-229 Lambton Quay, Wellington, New Zealand(Level 6, 1 Victoria Street, Wellington, New Zealand effective
1 March 2010).

1

General Short Form
Disclosure Statement

ANZ National Bank Limited and Subsidiary Companies

General Disclosures (continued)

Pending Proceedings or Arbitration

Nature Of Business

Other than disclosed in the General Short Form DisclosureStatement, there are no pending proceedings or arbitration
concerning any member of the Banking Group that
may have a material adverse effect on the Bank or the
Banking Group as at the date of the General Short Form
Disclosure Statement.

The principal activities of the Banking Group during theperiod were retail, corporate and rural banking, mortgage
lending, asset and general finance, and international andinvestment banking.

Material Financial Support
In accordance with the requirements issued by the Australian
Prudential Regulation Authority (“APRA”) pursuant to thePrudential Standards, Australia and New Zealand Banking
Group Limited, as the Ultimate Parent Bank, may not provide
material financial support to the Bank contrary to thefollowing:
•

•

•

•

•

the Ultimate Parent Bank should not undertake any third
party dealings with the prime purpose of supporting
the business of the Bank;
the Ultimate Parent Bank should not hold unlimited
exposures (should be limited as to specified time andamount) in the Bank (e.g. not provide a general guarantee
covering any of the Bank’s obligations);
the Ultimate Parent Bank should not enter into crossdefault clauses whereby a default by the Bank on an
obligation (whether financial or otherwise) is deemed
to trigger a default of the Ultimate Parent Bank in
its obligations;
the Board of the Ultimate Parent Bank in determining
limits on acceptable levels of exposure to the Bank
should have regard to:• the level of exposure that would be approved tothird parties of broadly equivalent credit status. In
this regard, prior consultation (and in some cases
approval) is required before entering exceptionallylarge exposures; and• the impact on the Ultimate Parent Bank’s capital andliquidity position and its ability to continue operatingin the event of a failure by the Bank;
the level of exposure to the Bank not exceeding:• 50% on an individual exposure basis; and• 150% in aggregate (being exposures to all similar
regulated entities related to the Ultimate ParentBank)of the Ultimate Parent Bank’s capital base.
Additionally, the Ultimate Parent Bank may not provide
material financial support in breach of the Australian
Banking Act (1959). This requires APRA to exercise its powers
and functions for the protection of a bank’s depositors andin the event of a bank becoming unable to meet its
obligations or suspending payment, the assets of the bankin Australia shall be available to meet that bank’s deposit
liabilities in Australia in priority to all other liabilities ofthe bank.
The Ultimate Parent Bank has not provided material
financial support to the Bank contrary to any of the above
requirements.

Further details on pending proceedings or arbitration are
set out in Note 25 Contingent Liabilities, Credit Related
Commitments and Market Related Contracts.

Other Material Matters
There are no matters relating to the business or affairs of the
Bank and the Banking Group which are not contained
elsewhere in the General Short Form Disclosure Statement
and which would, if disclosed, materially adversely affectthe decision of a person to subscribe for debt securities ofwhich the Bank or any member of the Banking Group is
the issuer.

Guarantors
The Bank has guarantees under the:a) New Zealand Deposit Guarantee Scheme (“Crown Retail
Guarantee”); andb) New Zealand Wholesale Funding Guarantee Facility(“Crown Wholesale Guarantee”).
This section provides a brief description of the Crown
Retail Guarantee and Crown Wholesale Guarantee andalso sets out from where further information may beobtained. As at the date of this General Short Form DisclosureStatement the only material obligations of the Bank that are
guaranteed are the debt securities (as defined in the RetailDeed) guaranteed under the Crown Retail Guarantee anddebt securities for which the Crown has issued a Guarantee
Eligibility Certificate under the Crown Wholesale Guarantee(copies of which are available on the Treasury website
www.treasury.govt.nz).

Crown Retail Guarantee
Prior to 1 January 2009 the Crown Retail Guarantee wasprovided under a Deed entered into by the Bank and the
Crown on 14 November 2008 and supplemented on 9
December 2008. From 1 January 2010 the Crown Retail
Guarantee was provided under a Deed entered into by the
Bank and the Crown on 18 December 2009 (“Retail Deed”).
The Crown Retail Guarantee does not extend to subordinateddebt securities issued by the Bank or debt securities that areissued by the Bank to Related Parties (as defined in the RetailDeed) of the Bank or to Financial Institutions.
As defined in the Retail Deed, “Financial Institutions” meansa financial institution, as defined in section 2 of the Reserve
Bank of New Zealand Act 1989, which carries on the businessof borrowing and lending money, such as a life insurancecompany, a building society or a registered bank, and,without limiting the generality of the foregoing, includes:

ANZ National Bank Limited and Subsidiary Companiesa) a “collective investment scheme” as that term isdefined in section 157B of the Reserve Bank of
New Zealand Act 1989 (including any “superannuationfund” or “superannuation scheme”);b) an “insurer” as that term is defined in section 2 of the
Insurance Companies (Rating and Inspections) Act 1994
or any other person carrying on the business of providing
insurance cover (of whatever nature);c) a person carrying on business as a sharebroker, aninvestment adviser or a fund manager (to the extent
that person is acting in that capacity); ord) a person who is a subsidiary of, or who is controlled by afinancial institution within a), b), or c) above.
The Crown Retail Guarantee applies for a period commencing
on 12 October 2008 and expiring on 12 October 2010(“Guarantee Period”).
Under the Crown Retail Guarantee the Crown absolutely
and irrevocably guarantees:a) all obligations of the Bank to pay money to a creditor
under Debt Securities (“Indebtedness”) that becomedue and payable during the Guarantee Period; andb) if a Default Event, as defined in the Retail Deed, occurs
during the Guarantee Period, all Indebtedness that exists
on the date of that Default Event (whether or not that
Indebtedness is due and payable during the Guarantee
Period); andc) all interest accruing on the amounts referred to in b)
after the occurrence of the Default Event.
The Crown undertakes that if the Bank does not pay anamount referred to in a), b) or c) above, the Crown will paythat amount to the creditor when it is due and payable(except to the extent that that Indebtedness or interest is
not paid solely as a result of an administrative error or
technical error and is subsequently paid within 7 days of its
due date).
The Crown’s obligation to pay any amount under the
Crown Retail Guarantee is subject to the Crown receivinga notice of claim from the creditor in respect of therelevant Indebtedness and to the Crown satisfying itself
as to the amount of the relevant Indebtedness andsuch other matters as the Crown reasonably considers
appropriate in order to ascertain the extent of its liability
under the Crown Retail Guarantee in respect of that
Indebtedness. Notice may be served on the Crown in respectof the Crown Retail Guarantee by service on The Treasury at
1 The Terrace, Wellington.
The maximum liability of the Crown to each creditor under
the Crown Retail Guarantee is one million New Zealanddollars ($1,000,000). For this purpose amounts owed tocreditors by the Bank under any debt security will beaggregated with other amounts owed to the same
creditor by the Bank which are supported by the Crown
Retail Guarantee.

Crown Wholesale Guarantee
The Crown Wholesale Guarantee is provided under the
Crown Wholesale Funding Guarantee in respect of the Bank
entered into by the Crown on 23 December 2008 andsupplemented on 19 February 2009 (“Wholesale Deed”).

Newly issued senior unsecured (except for covered bonds,
which are also eligible) negotiable or transferable debt
securities issued by the Bank, or issued by a subsidiary of the
Bank and guaranteed by the Bank, may be eligible to benefit
from the Crown Wholesale Guarantee. For the Crown
Wholesale Guarantee to apply, the Bank will need to apply
to the Crown for a Guarantee Eligibility Certificate (as definedin the Wholesale Deed) in respect of the issue of debt
securities. The decision to issue a Guarantee Eligibility
Certificate in respect of any issue of debt securities is at thesole and absolute discretion of the Crown.
If a Guarantee Eligibility Certificate is issued in respect ofany debt securities, the Crown (subject to any special
conditions specified in a Guarantee Eligibility Certificate
and provided the debt securities are not varied, amended,
waived, released, novated, supplemented, extended orrestated in any respect without the prior written consent of
the Crown) irrevocably:a) guarantees the payment by the Bank of any liability of
the Bank to pay principal and interest (excluding any
penalty interest or other amount only payable following
a default) in respect of the debt securities for which the
Crown has issued a Guarantee Eligibility Certificate; andb) undertakes that if the Bank does not pay any suchliability on the date on which it becomes due andpayable, the Crown shall, within five Business Days of ademand being made in accordance with the Wholesale
Deed and following the expiry of any applicable grace
period, pay such liability.
The Crown Wholesale Guarantee does not extend to debt
securities held by a Related Party (as defined in the Wholesale
Deed) of the Bank.
In the event of a claim made on the Crown, the Crown will
only pay the interest and principal due to the holders of thedebt security on the originally scheduled dates for payment
of interest and principal.
The Crown’s obligations in respect of any debt security
terminate on the date falling 30 days after the earlier of:a) the scheduled maturity date for the debt security underwhich the guaranteed liability arises; andb) the date falling five years after the date of issue of thedebt security under which the guaranteed liability arises,
unless valid demand has been made on the Crown prior
to that time.
Any demand on the Crown in respect of debt securities forwhich the Crown has issued a Guarantee Eligibility Certificate
may only be made in the prescribed form by delivery byhand to the Minister of Finance, Parliament Buildings,
Wellington, New Zealand or to one of the other addresses
specified in the Wholesale Deed.
No Guarantee Eligibility Certificate shall be issued by the
Crown in respect of any proposed debt security unless theaggregate amount of the proposed debt security and all of
the Bank’s outstanding liabilities to pay principal andinterest in respect of the debt securities for which the Crown
has issued a Guarantee Eligibility Certificate will not exceed
the maximum amount as the Crown may from time to time
determine and notify in writing to the Bank (which, at thedate of this General Short Form Disclosure Statement, is set
at $65 billion).

2–3

General Disclosures (continued)

ANZ National Bank Limited and Subsidiary Companies

General Disclosures (continued)

Supplemental Disclosure Statement

Further information

The most recent Supplemental Disclosure Statement for
the three months ended 31 December 2009 is available atno charge:

Further information about the Crown Retail Guarantee
and the Crown Wholesale Guarantee, including a copyof the Retail Deed and Wholesale Deed, and any
Guarantee Eligibility Certificate issued by the Crown inrespect of the Bank, is available on The Treasury website
at www.treasury.govt.nz.
Further information about the Crown, including a copy of its
most recent audited financial statements can be obtainedat www.treasury.govt.nz.
The Crown’s credit ratings are available on the New Zealand
Debt Management Office website www.nzdmo.govt.nz.
The Crown’s long-term foreign-currency and domestic debt
credit ratings have not changed in the two years immediately
before the date of this General Short Form DisclosureStatement. The Crown’s credit ratings are:Foreign Currency
Rating Agency

Current
Credit Rating

Qualification

Standard & Poor’s

AA+

Outlook Stable

Moody’s
Investors Service

Aaa

Outlook Stable

Fitch Ratings

AA+

Outlook Negative

Rating Agency

Current
Credit Rating

Qualification

Standard & Poor’s

AAA

Outlook Stable

Moody’s
Investors Service

Aaa

Outlook Stable

Fitch RatingsAAA

Outlook Negative

Domestic Currency

Credit ratings are assigned to sovereigns and businessesby the international credit rating agencies. Credit ratings
provide investors with an indication of the credit-worthinessof an entity in which they are considering investing. There
are three major internationally recognised credit rating
agencies: Standard & Poor’s, Moody’s Investors Service andFitch Ratings. AAA is the highest rating level while a rating in
the AA range is also seen as a very high level of creditworthiness. Refer to “Credit Rating Information” for a fulldescription of credit rating scales.

a) on the Bank’s website www.anz.com;b) immediately if request is made at the Bank’s head office,located at Level 14, ANZ Tower, 215-229 Lambton Quay,
Wellington, New Zealand (at Level 6, 1 Victoria Street,
Wellington, New Zealand effective 1 March 2010); andc) within five working days of a request, if a request is madeat any branch of the ANZ or The National Bank of
New Zealand.
The Bank’s most recent Supplemental Disclosure Statement
contains a copy of the bilateral netting agreement (refer
Note 17) and a copy of the Crown Retail Guarantee andCrown Wholesale Guarantee.

Directorate
Since the authorisation date of the previous General
Disclosure Statement on 13 November 2009, there havebeen no changes to Directors of the Bank.

ANZ National Bank Limited and Subsidiary Companies
4–5

Income Statement
For the three months ended 31 December 2009
Consolidated
Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$m

Interest income

1,381

2,323

7,246

Interest expense

836

1,722

4,892

Net interest income

545

601

2,354

Net trading gains

19

70

187

Note

AuditedYear to30/09/2009$m

Funds management and insurance income

36

24

97

Other operating income

186

69

465

Share of profit of equity accounted associates and jointly controlled entities

36

6

13

Operating income

822

770

3,116

Operating expenses

374

380

1,477

Profit before provision for credit impairment and income tax

448

390

1,639

10

Provision for credit impairment
Profit before income tax

3

Income tax expense
Profit after income tax

145

94

874

303

296

765

60

86

467

243

210

298

Statement of Comprehensive Income
For the three months ended 31 December 2009
Consolidated
Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$m

AuditedYear to30/09/2009
$m

243

210

298

22

10

2

– Valuation gain (loss) taken to equity

4

25

(1)

– Transferred to income statement

Note

Profit after income tax
Available-for-sale revaluation reserve:– Valuation gain taken to equity
Cash flow hedging reserve:

13

(9)

(3)

Actuarial loss on defined benefit schemes

-

-

(25)

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

(5)

(7)

10

Net income (expense) recognised directly in equity

34

19

(17)

Total comprehensive income for the period

277

229

281

The notes on pages 9 to 37 form part of and should be read in conjunction with these financial statements

ANZ National Bank Limited and Subsidiary Companies

Statement of Changes In Equity
For the three months ended 31 December 2009
Consolidated

Note

Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$m

AuditedYear to30/09/2009
$m

6,943

5,943

5,943

Ordinary share capital
Balance at beginning of the period

-

-

1,000

6,943

5,943

6,943

Balance at beginning of the period

25

23

23

Valuation gain recognised after tax

22

7

2

Balance at end of the period

47

30

25

23

24

24

Ordinary share capital issued during the period
Balance at end of the period

15

Available-for-sale revaluation reserve

Cash flow hedging reserve
Balance at beginning of the period
Valuation gain recognised after tax

3

18

-

Transferred to income statement

9

(6)

(1)

Balance at end of the period

35

36

23

Total reserves

82

66

48

3,097

3,817

3,817

243

210

298

3,340

4,027

4,115

Actuarial loss on defined benefit schemes after tax

-

-

(18)

Interim ordinary dividend paid--

(1,000)

3,340

4,027

3,097

Retained earnings
Balance at beginning of the period
Profit after income tax attributable to parent
Total available for appropriation

Balance at end of the period
Minority interests
Balance at beginning of the period
Minority interests in acquired subsidiaries

26

Balance at end of the period

-

-

-

1

-

-

1

-

-

10,088

9,807

9,807

277

229

281

-

-

-

Total equity
Balance at beginning of the period
Total comprehensive income for the period
Transactions with shareholders
Other transactions
Balance at end of the period

The notes on pages 9 to 37 form part of and should be read in conjunction with these financial statements

26

1

-

-

10,366

10,036

10,088ANZ National Bank Limited and Subsidiary Companies
6–7

Balance Sheet
As at 31 December 2009
Consolidated

Note

Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$m

AuditedYear to30/09/2009$mLiquid assets

4

2,869

3,049

2,762

Due from other financial institutions

5

4,562

7,127

4,514

Trading securities

6

5,910

2,484

4,166

7,891

15,102

11,408Available-for-sale assets

7

2,458

101

1,513

Net loans and advances

8

85,97899,26888,259AssetsDerivative financial instruments

Investments relating to insurance business

40

-

-

Insurance policy assets

81

-

-

Shares in associates and jointly controlled entities

148

370

464

Current tax assets
Other assets

-

-

65

895

884

1,137

Deferred tax assets

427

167

-

Premises and equipment

298

247

278

3,546

3,328

3,325

115,103

132,127

117,891

Goodwill and other intangible assets
Total assets
Liabilities
Due to other financial institutions

11

1,678

6,395

3,725

Deposits and other borrowings

12

72,97074,14571,764

388

964

930

Derivative financial instruments

8,787

13,917

10,762

Payables and other liabilities

1,844

1,692

1,809

Current tax liabilities

17

91

-

Deferred tax liabilities

-

-

17

375

355

283
15,917

Due to parent company

Provisions
Bonds and notes

13

16,07321,706

Loan capital

14

2,605

2,826

2,596

Total liabilities

104,737

122,091

107,803

Net assets

10,366

10,036

10,088

6,943

5,943

6,943

82

66

48

EquityOrdinary share capital
Reserves

15

Retained earnings

3,340

4,027

3,097

Share capital and reserves attributable to shareholders

10,365

10,036

10,0881--

10,366

10,036

10,088

Minority interests
Total equity

The notes on pages 9 to 37 form part of and should be read in conjunction with these financial statements

ANZ National Bank Limited and Subsidiary Companies

Cash Flow Statement
For the three months ended 31 December 2009
Consolidated

Note

Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$m

AuditedYear to30/09/2009
$m

1,331

2,210

7,131

Cash Flows from Operating Activities
Interest received

-

-

3

Fees and other income received

342

325

1,017

Interest paid

(857)

(1,616)(4,884)

Operating expenses paid

(375)

(366)

(1,480)

Income taxes (paid) received

(368)

8

(425)

73

561

1,362

Decrease (increase) in due from other financial institutions – term

1,795

(1,420)(246)(Increase) decrease in trading securities(1,746)162(1,505)Decrease (increase) in derivative financial instruments

1,717

2,456

(3,936)(Increase) decrease in available-for-sale assets

(738)

17

(1,388)Decrease (increase) in loans and advances

243

(872)

(1,108)

1,740

-

9,863

Dividends received

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

Proceeds from sale of loans and advances to NZ Branch

276

115

(164)

(2,120)

3,083

509

(Decrease) increase in deposits

(455)

1,188

672

Increase (decrease) in other borrowings

1,350(5,178)(4,637)

49

(122)

165

2,184

(10)

(413)

Proceeds from sale of shares in associates and jointly controlled entities

1

-

-

Proceeds from sale of premises and equipment

1

33

33

Proceeds from sale of software

-

-

1
(92)

Decrease (increase) in other assets(Decrease) increase in due to other financial institutions

Increase (decrease) in payables and other liabilities
Net cash flows from (used in) operating activities

21

Cash Flows from Investing Activities

-

(1)

(247)

-

-

(2)

(19)

(20)

Purchase of premises and equipment

(32)

(30)

(95)

Net cash flows used in investing activities

(279)

(17)

(173)

Purchase of shares in associates and jointly controlled entities
Purchase of shares in subsidiary entities
Purchase of intangible assets

Cash Flows from Financing Activities
Proceeds from bonds and notes

2,121

135

5,012

Redemptions of bonds and notes(1,692)(1,868)(7,751)(225)

Redemptions of loan capital(Decrease) increase in due to parent company
Proceeds from share issue

560

526

-

-

1,000

-

-

(1,000)Net cash flows used in financing activities(113)(1,173)(2,438)Net cash flows from (used in) operating activities

2,184

(10)

(413)

Net cash flows used in investing activities

(279)

(17)

(173)

Net cash flows used in financing activities(113)(1,173)(2,438)Net increase (decrease) in cash and cash equivalents

1,792(1,200)(3,024)

Cash and cash equivalents at beginning of the period

4,765

7,789

7,789

Cash and cash equivalents at end of the period1

6,557

6,589

4,765

Dividends paid

1

(542)

A reconciliation of cash and cash equivalents to the Banking Group’s core liquidity portfolio is included in Note 21 Notes to the Cash Flow Statement.

The notes on pages 9 to 37 form part of and should be read in conjunction with these financial statements

ANZ National Bank Limited and Subsidiary Companies

1. Accounting Policies(i)Basis of preparation

	These financial statements have been prepared inaccordance with NZ IAS 34 Interim Financial Reporting
and the Registered Bank Disclosure Statement (OffQuarter – New Zealand Incorporated Registered Banks)
Order 2008. These financial statements should be readin conjunction with the consolidated financial
statements for the year ended 30 September 2009.
(ii) Basis of measurement

	The financial statements have been prepared on a going
concern basis in accordance with historical cost concepts
except that the following assets and liabilities are statedat their fair value:
•

•
•
•
•

derivative financial instruments, including in thecase of fair value hedging, the fair value of any
applicable underlying exposure,financial instruments held for trading,assets recognised as available-for-sale,financial instruments designated at fair value
through profit or loss, anddefined benefit scheme asset or liability.

(iii)	Changes in accounting policies

	NZ IFRS 8 Operating Segments (“NZ IFRS 8”), NZ IAS 1
Presentation of Financial Statements (revised) (“NZ IAS1”) and NZ IFRS 3 Business Combinations (revised) havebeen applied by the Banking Group for the three months
ended 31 December 2009.
	NZ IFRS 8 replaces NZ IAS 14 Segment Reporting andrequires the use of a “management approach” tosegment reporting. Segment information is therefore
presented on the same basis as that used for internalreporting purposes. Goodwill associated with theacquisition of NBNZ Holdings Limited Group is allocatedto the reportable segments in accordance with NZ IFRS
8. The Banking Group’s reportable operating segments
did not change on adoption of NZ IFRS 8.

	In accordance with NZ IAS 1 a “statement of comprehensive
income” has been disclosed showing net profit or loss
and revenues and expenses recognised directly inequity. In addition the revised “statement of changes inequity” shows all changes in equity.
	The application of these standards has not resulted in amaterial impact on the financial results or position of
the Banking Group.
	There have been no other changes in accounting
policies since the authorisation date of the previous
Disclosure Statement on 13 November 2009.
(iv) Presentation currency and rounding	The amounts contained in the financial statements arepresented in millions of New Zealand dollars, unlessotherwise stated.
(v)	Consolidation

	These financial statements consolidate the financial
statements of ANZ National Bank Limited (the “Bank”)
and its subsidiaries (the “Banking Group”).
(vi)	Comparatives

	To ensure consistency with the current period,
comparative figures have been reclassified whereappropriate.

2.	Risk Management Policies
A number of new and existing types of risk have beenrecognised following the consolidation of the ING (NZ)
Holdings Limited group (“ING NZ”) into the Banking Group.
The new risks relate to ING NZ’s insurance, real estate
management and funds management business. The newrisks identified are not considered material to the Banking
Group. At 31 December 2009 the ING NZ risk management
approaches have not been aligned or integrated with therest of the Banking Group. However, ING NZ identifies,
controls and monitors these risks through a set of policies
and a risk management framework which is broadly in linewith that in place across the Banking Group.

8–9

Notes to the
Financial Statements

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
3. Income Tax Expense
Consolidated
Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$m

Income tax expense before tax provisions

108

86

227

(Release of)/additional tax provisions

(48)

-

240

AuditedYear to30/09/2009
$m

60

86

467

Effective tax rate (%) before release of tax provisions

35.6%

29.1%

29.7%

Effective tax rate (%)

19.8%

29.1%

61.0%

Income tax expense

4. Liquid Assets
Consolidated

Cash and balances with central banks
Money at callBills receivable and remittances in transit
Total liquid assets

Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$m

AuditedYear to30/09/2009
$m

2,424

2,386

2,373

363

586

341

82

77

48

2,869

3,049

2,762

2,141

2,112

2,207

Included within liquid assets is the following balance:
Overnight balances with central banks

5. Due from Other Financial Institutions
Consolidated
Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$mAble to be withdrawn without prior notice

164

254

172

Securities purchased under agreement to resell

339

592

1,083

AuditedYear to30/09/2009$m

Security settlements

128

-

370

Certificates of deposit

1,122

4,891

2,338

Reserve Bank bills

100

-

398

Term loans and advances

2,709

1,390

153

Total due from other financial institutions

4,562

7,127

4,514

929

-

-

Included within due from other financial institutions is the following related party balance:
Ultimate Parent Bank

6.	Trading Securities
Consolidated

Government, Local Body stock and bonds

Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$m

AuditedYear to30/09/2009
$m

2,599

430

1,389
191

Certificates of deposit

587

392

Promissory notes

56

177

28

Other bank bonds

2,592

1,369

2,475

Other
Total trading securities

76

116

83

5,910

2,484

4,166

101

131

159

Included within trading securities is the following balance:
Assets encumbered through repurchase agreements

ANZ National Bank Limited and Subsidiary Companies
10 – 11

Notes to the Financial Statements (continued)
7. Available-for-Sale Assets
Consolidated
Unaudited
31/12/2009$m

Government, Local Body stock and bonds
Other debt securities
Equity securities
Total available-for-sale assets

Unaudited
31/12/2008$m

Audited30/09/2009
$m

2,159

3

1,394

213

34

48

86

64

71

2,458

101

1,513

8. Net Loans and Advances
Consolidated
Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009
$m

2,087

Overdrafts

1,954

1,855

Credit card outstandings

1,457

1,488

1,402

Term loans – housing1

43,96553,49844,763

Term loans – non-housing

39,07041,50640,231

Finance lease receivables

690

769

683

Gross loans and advances

87,136

99,116

89,166

Provision for credit impairment (Note 10)(1,356)(725)(1,272)

Unearned finance income

(258)

(330)

(262)

Fair value hedge adjustment

453

1,163

615

Deferred fee revenue and expenses

(54)

(58)

(51)

Capitalised brokerage/mortgage origination fees

57

102

63

85,97899,26888,259Total net loans and advances

On 27 February 2009 and 28 July 2009, $4,877 million and $4,986 million, respectively, of residential mortgage assets were soldto the NZ Branch. These existing tranches of residential mortgages are regularly topped up with additional mortgages. Further
sales of $1,740m of residential mortgages occurred during the three months ended 31 December 2009. These assets qualify forde-recognition as the Banking Group does not retain a continuing involvement in the transferred assets. Net loans andadvances in the Banking Group have decreased as a result of selling these assets.

1

The Banking Group has entered into repurchase agreements for residential mortgage-backed securities with the RBNZ with a book value of $200 million(31/12/2008 $1,370 million; 30/09/2009 $1,806 million). The underlying collateral accepted by the RBNZ under this transaction are mortgages to the value of$246 million (31/12/2008 $1,711 million; 30/09/2009 $2,250 million).

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
9. Impaired Assets, Past Due Assets and Other Assets Under Administration
Consolidated
Retailmortgages$mOther retail
exposures$m

Corporate
exposures
$m

Total
$m

Balance at beginning of the period

377

59

740

1,176

Unaudited 31/12/2009
Transfers from productive

151

56

226

433

Transfers to productive

(5)

-

(28)

(33)
(205)

Assets realised or loans repaid

(96)

(11)

(98)

Write offs

(14)

(31)

(11)

(56)

Individually impaired asset balance at end of the period

413

73

829

1,315

Restructured assets

7

-

-

7

Total impaired assets

420

73

829

1,322

Balance at beginning of the period

83

30

214

327

Transfers from productive

71

82

27

180

Transfers to productive

(5)

(14)

(15)

(34)

Assets realised or loans repaid

(17)

(22)

(12)

(51)

Write offs

(2)

(33)

(4)

(39)

Individually impaired asset balance at end of the period

130

43

210

383

Restructured assets

-

-

-

-

Total impaired assets

130

43

210

383

Unaudited 31/12/2008

Audited 30/09/2009
Balance at beginning of the year

83

30

214

327

Transfers from productive

576

243

882

1,701

Transfers to productive

(22)

(20)

(25)

(67)

Assets realised or loans repaid

(232)

(45)

(230)

(507)

Write offs

(28)

(149)

(101)

(278)

Individually impaired asset balance at end of the year

1,176

377

59

740

Restructured assets

-

2

-

2

Total impaired assets

377

61

740

1,178

A restructured asset is an impaired asset for which the terms have been changed to grant the counterparty a concession thatwould not otherwise have been available, due to the counterparty’s difficulty in complying with the original terms, and where
the yield on the asset following restructuring is still above the Banking Group’s cost of funds. An asset is classified as an otherindividually impaired asset if following the restructure the yield on the asset is below the Banking Group’s cost of funds.
At 31 December 2009, loans and advances of $571 million were renegotiated in the Banking Group (31/12/2008 $45 million;
30/09/2009 $250 million).

ANZ National Bank Limited and Subsidiary Companies
12 – 13

Notes to the Financial Statements (continued)
9. Impaired Assets, Past Due Assets and Other Assets Under Administration (continued)
Consolidated
Retailmortgages$mOther retail
exposures$m

Corporate
exposures
$m

Total
$m

215

57

106

378

1

-

8

9

Unaudited 31/12/2009
Balance at end of period
Past due assets (90 days past due assets)1
Other assets under administration
Undrawn facilities with impaired customers

-

-

49

49

Interest not recognised on impaired assets

7

3

18

28

312

61

57

430

Unaudited 31/12/2008
Balance at end of period
Past due assets (90 days past due assets)1
Other assets under administration

-

-

7

7

Undrawn facilities with impaired customers

-

-

10

10

Interest not recognised on impaired assets

3

1

4

8

265

59

111

435

-

-

-

-

Audited 30/09/2009
Balance at end of year
Past due assets (90 days past due assets)1
Other assets under administration
Undrawn facilities with impaired customers

-

-

32

32

Interest not recognised on impaired assets

18

3

35

56

There are no undrawn facilities with 90 day past due customers or customers within the other assets under administration
category as at 31 December 2009 (31/12/2008 $nil; 30/09/2009 $nil).

1

 0 day past due assets are not classified as impaired assets as they are either 90 days or more past due and well secured, or are portfolio managed facilities that9can be held for up to 180 days past due.

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
10. Provision for Credit Impairment
Consolidated
Retailmortgages$mOther retail
exposures$m

Corporate
exposures
$m

Total
$m

Unaudited 31/12/2009
Collective provision
Balance at beginning of the period

121

159

518

798

(Credit) charge to income statement

(7)

(1)

4

(4)

Balance at end of the period

114

158

522

794

Balance at beginning of the period

153

40

281

474

Charge to income statement

56

28

65

149

Recoveries of amounts previously written off

1

4

-

5

Bad debts written off

(14)

(31)

(11)

(56)

Discount unwind1

(3)

(1)

(6)

(10)

Individual provision (individually impaired assets)

Balance at end of the period

193

40

329

562

Total provision for credit impairment

307

198

851

1,356

81

164

289

534

Unaudited 31/12/2008
Collective provision
Balance at beginning of the period
Charge (credit) to income statement

1

(1)

22

22

Balance at end of the period

82

163

311

556

Balance at beginning of the period

28

10

94

132

Charge to income statement

12

37

23

72

Recoveries of amounts previously written off

-

5

-

5

Bad debts written off

(4)

(32)

(3)

(39)

Individual provision (individually impaired assets)

Discount unwind1

-

-

(1)

(1)

Balance at end of the period

36

20

113

169

Total provision for credit impairment

118

183

424

725

Balance at beginning of the year

81

164

289

534

Charge (credit) to income statement

40

(5)

229

264

Balance at end of the year

121

159

518

798

Audited 30/09/2009
Collective provision

Individual provision (individually impaired assets)
Balance at beginning of the year

28

10

94

132

Charge to income statement

152

161

297

610

1

18

1

20

(28)

(149)

(101)

(278)

-

-

(10)

(10)

Recoveries of amounts previously written off
Bad debts written off
Discount unwind1

1

Balance at end of the year

153

40

281

474

Total provision for credit impairment

274

199

799

1,272

T he impairment loss on an impaired asset is calculated as the difference between the asset’s carrying amount and the estimated future cash flows discounted
to its present value using the original effective interest rate for the asset. This discount unwinds over the period the asset is held as interest income.

ANZ National Bank Limited and Subsidiary Companies
14 – 15

Notes to the Financial Statements (continued)
10. Provision for Credit Impairment (continued)
Consolidated
Retailmortgages$mOther retail
exposures$m

Corporate
exposures
$m

Total
$m

New and increased provisions

63

Provision releases

(6)

32

93

188

-

(28)

(34)
154

Provision movement analysis
Unaudited 31/12/2009

57

32

65

Recoveries of amounts previously written off

(1)

(4)

-

(5)

Individual provision charge

56

28

65

149

Collective provision charge

(7)

(1)

4

(4)

Charge to income statement

49

27

69

145

12

42

25

79

Unaudited 31/12/2008
New and increased provisions
Provision releases

-

-

(2)

(2)

12

42

23

77

Recoveries of amounts previously written off

-

(5)

-

(5)

Individual provision charge

12

37

23

72

Collective provision charge

1

(1)

22

22

Charge to income statement

13

36

45

94

162

182

316

660

Audited 30/09/2009
New and increased provisions
Provision releases
Recoveries of amounts previously written off

(9)

(3)

(18)

(30)

153

179

298

630

(1)

(18)

(1)

(20)

Individual provision charge

152

161

297

610

Collective provision charge

40

(5)

229

264

Charge to income statement

192

156

526

874

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
11. Due to Other Financial Institutions
Consolidated
Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009$m

Australia and New Zealand Banking Group Limited (Ultimate Parent Bank)

492

3,125

497

Securities sold under agreements to repurchase from other financial institutions

101

31

159

Securities sold under agreements to repurchase from central banks

200

1,720

1,806

Other financial institutions

885

1,519

1,263

1,678

6,395

3,725

483

3,125

485

1

Total due to other financial institutions
Included within due to other financial institutions is the following balance:
Balances owing to the Ultimate Parent Bank by ANZ National (Int’l) Limited guaranteed by the Bank

Balances owing to the Ultimate Parent Bank are due within twelve months. Interest is paid at variable bank rates.

1

The Banking Group has entered into repurchase agreements for residential mortgage-backed securities with the RBNZ with a book value of $200 million(31/12/2008 $1,370 million; 30/09/2009 $1,806 million). The underlying collateral accepted by the RBNZ under this transaction are mortgages to the value of$246 million (31/12/2008 $1,711 million; 30/09/2009 $2,250 million).
These assets do not qualify for derecognition as the Bank retains a continuing involvement in the transferred assets, therefore the Banking Group’s financial
statements do not change as a result of establishing these facilities. The net effect on the Banking Group is to reflect additional cash or liquid assets and aliability being Securities sold under agreements to repurchase from central banks.

ANZ National Bank Limited and Subsidiary Companies
16 – 17

Notes to the Financial Statements (continued)
12. Deposits and Other Borrowings
Consolidated
Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009
$m

3,028

6,493

4,441

Amortised cost
Certificates of deposit
Term deposits

34,23230,71432,997

Demand deposits bearing interest

20,482

22,662

21,024

Deposits not bearing interest

4,821

4,127

4,373

Secured debenture stock

1,383

1,796

1,537

Total deposits and other borrowings recognised at amortised cost

63,946

65,79264,372

Commercial paper

9,024

8,353

7,392

Total deposits and other borrowings recognised at fair value

9,024

8,353

7,392

Total deposits and other borrowings

72,97074,14571,764

Fair value through the profit or loss

The Banking Group has not defaulted on any principal, interest or redemption amounts on its borrowed funds during the threemonths ended 31 December 2009 (31/12/2008 $nil; 30/09/2009 $nil). Deposits from customers are unsecured and rank equallywith other unsecured liabilities of the Banking Group. In the unlikely event that the Bank was put into liquidation or ceased to
trade, secured creditors and those creditors set out in the Seventh Schedule of the Companies Act 1993 would rank ahead of
the claims of unsecured creditors.
Consolidated
Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009
$m

9,021

8,321

7,388

1,912

2,102

1,877

Included within deposits and other borrowings are the following balances:
Commercial paper issued by ANZ National (Int’l) Limited
guaranteed by the Bank at amortised cost
UDC Finance Limited secured debentures
Carrying value of total tangible assets

Registered secured debenture stock is constituted and secured by a trust deed between UDC Finance Limited and its
independent trustee, Trustees Executors Limited. The trust deed creates floating charges over all the assets, primarily loans
and advances, of UDC Finance Limited.

13. Bonds and Notes
Consolidated

Total bonds and notes

Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009$m

16,07321,706

15,917

Included within bonds and notes are the following related party balances:
Subsidiaries of the Australia and New Zealand Banking Group Limited

2,221

2,658

2,233

Bonds and notes issued by ANZ National (Int’l) Limited guaranteed by the Bank

14,53920,222

14,401

Bonds and notes are unsecured and rank equally with other unsecured liabilities of the Banking Group.

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
14. Loan Capital
Consolidated
Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009
$m

-

248

-

AUD 265,740,000 perpetual subordinated floating rate loan

328

317

324

AUD 207,450,000 term subordinated floating rate loan
AUD 186,100,000 term subordinated floating rate loan

230

222

227

AUD 43,767,507 term subordinated floating rate loan

54

52

53

AUD 169,520,000 term subordinated floating rate loan

209

202

207

Term subordinated fixed rate bonds

950

950

950

Perpetual subordinated bond

835

835

835

2,606

2,826

2,596

(1)

-

-

2,605

2,826

2,596

821

1,041

811

Total loan capital issued
Less loan capital instruments held by the Banking Group
Total loan capital
Included within loan capital is the following related party balance:
Australia and New Zealand Banking Group Limited (Ultimate Parent Bank)

AUD 207,450,000 loan
This loan was drawn down on 31 August 2004 and had an ultimate maturity date of 31 August 2014. On 31 August 2009 theBank repaid the loan. All interest is payable half yearly in arrears, with interest payments due 28 February and 31 August.
Interest was based on BBSW + 0.40% p.a. up until, and including, 31 August 2009.

AUD 265,740,000 loan
This loan was drawn down on 27 September 1996 and has no fixed maturity. Interest is payable half yearly in arrears based on
BBSW + 0.95% p.a., with interest payments due 15 March and 15 September.

AUD 186,100,000 loan
This loan was drawn down on 19 April 2005 with an ultimate maturity date of 20 April 2015. The Bank may elect to repay
the loan on 19 April each year commencing from 2010 through to 2015. All interest is payable half yearly in arrears, withinterest payments due 19 April and 19 October. Interest is based on BBSW + 0.32% p.a. to 19 April 2010 and increases to BBSW
+ 0.82% p.a. thereafter.

AUD 43,767,507 loan
This loan was drawn down on 15 September 2006 with an ultimate maturity date of 15 September 2016. The Bank may elect torepay the loan on 15 September each year commencing from 2011 through to 2016. All interest is payable half yearly in arrears,
with interest payments due 15 March and 15 September. Interest is based on BBSW + 0.29% p.a. to 15 September 2011 andincreases to BBSW + 0.79% p.a. thereafter.

AUD 169,520,000 loan
This loan was drawn down on 17 September 2007 with an ultimate maturity date of 17 September 2017. The Bank may elect torepay the loan on 17 September each year commencing from 2012 through to 2016. All interest is payable half yearly in arrears,
with interest payments due 17 March and 17 September. Interest is based on BBSW + 0.68% p.a. to 17 September 2012 andincreases to BBSW + 1.18% p.a. thereafter.

ANZ National Bank Limited and Subsidiary Companies
18 – 19

Notes to the Financial Statements (continued)
14. Loan Capital (continued)
NZD subordinated bonds
The terms and conditions of the term subordinated fixed rate bonds are as follows:
Term subordinated fixed rate bonds
Issue dateAmount $m 	Coupon rate	Call date	Maturity date

15 September 2006

350

7.16%

15 September 201115 September 2016

2 March 2007

250

7.60%

2 March 2012

2 March 201723 July 2007

350

8.23%

23 July 201223 July 2017

As at 31 December 2009, these bonds carried an AA- rating by Standard & Poor’s.
The Bank may elect to redeem the bonds on their call date. If the bonds are not called the Bank will continue to pay interest to
maturity at the five year interest rate swap rate plus 0.75% p.a., 0.76% p.a. and 0.62% p.a. for the 15 September 2006;
2 March 2007 and 23 July 2007 bonds respectively. Interest is payable half yearly in arrears based on the fixed coupon rate.
The terms and conditions of the perpetual subordinated bond are as follows:
Perpetual subordinated bond				Issue dateAmount $m 	Coupon rate

18 April 2008

835

9.66%

1st Call date

2nd Call date

18 April 201318 April 2018

The Bank may elect to redeem the bonds on 18 April 2013, 18 April 2018 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, beginning on 18 October 2008, up to andincluding the Second Call Date and then quarterly thereafter. If the bonds are not called at the First Call Date, the coupon rate
will reset to the five year interest swap rate plus 2.00%. Should the bonds not be called at the Second Call Date, the Coupon
Rate from the Second Call Date onwards will be set on a quarterly basis to the three month FRA rate plus 3.00%.
As at 31 December 2009, these bonds carried an A+ rating by Standard and Poor’s.
Interest may not necessarily be paid on each interest payment date as under the terms of the Bonds, the Bank has a generalright and in certain specified circumstances an obligation, to defer payment of interest on the Bonds.
All of the NZD subordinated bonds are listed on the NZX. The Market Surveillance Panel of the NZX granted the Bank a waiverfrom the requirements of Listing Rules 10.4 and 10.5. Rule 10.4 relates to the provision of preliminary announcements of half
yearly and annual results to the NZX. Rule 10.5 relates to preparing and providing a copy of half yearly and annual reports to
the NZX. The Bank has been granted a waiver from these rules on the conditions that the Bank’s quarterly General DisclosureStatement (“GDS”) is available on the Bank’s website, at any branch and at the NZX; that bondholders are advised by letter that
copies of the GDS are available at the above locations; that all bondholders are notified on an ongoing basis, by way of asentence included on the notification of interest payments, that the latest GDS is available for review at the above locations;and that a copy of the GDS is sent to the NZX on an ongoing basis.
Loan capital is subordinated in right of payment in the event of liquidation or wind up to the claims of depositors and all
creditors of the Bank.
All subordinated debt qualifies as Lower Level Tier Two Capital for capital adequacy purposes except for the perpetual
subordinated debt which qualifies as Upper Level Tier Two Capital.

15.	Ordinary Share Capital
Consolidated

Ordinary share capital at beginning of the period
Ordinary share capital issued during the period
Ordinary share capital at end of the period

Unaudited
31/12/2009$m

Unaudited
31/12/2008
$m

6,943

5,943

5,943

-

-

1,000

6,943

5,943

6,943

Audited30/09/2009$m

Voting rights
At a meeting: on a show of hands or vote by voice every member who is present in person or by proxy or by representative shallhave one vote.
On a poll: every member who is present in person or by proxy or by representative shall have one vote for every share of whichsuch member is the holder.

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
16.	Capital Adequacy
Capital Adequacy Ratios under the Basel II Internal Models Based Approach
Consolidated

Tier One Capital

Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Unaudited
30/09/2009
$m

9.62%

8.19%

9.03%

RBNZ minimum Tier One Capital ratio

4.00%

4.00%

4.00%

Minimum Tier One Capital ratio under Crown Wholesale Guarantee

6.00%

6.00%

6.00%

Total Capital

13.31%

11.68%

12.67%

RBNZ minimum Total Capital ratio

8.00%

8.00%

8.00%

Capital of The Banking Group as at 31 December 2009 (Unaudited)$mTier One Capital
Ordinary share capital

6,943

Revenue and similar reserves

3,179

Current period’s profit after tax

243

Minority interest

1Less deductions from Tier One Capital– Goodwill

3,265– Provisional value of goodwill and intangible assets relating to ING NZ (refer note 26)

221– Software and other intangible assets

60– Future income tax benefits

20– Cash flow hedging reserve35– 50% of total expected loss to the extent greater than total eligible allowances for impairment

26

Total Tier One Capital

6,739

Tier Two Capital – Upper Level Tier Two Capital
Perpetual subordinated debt

1,163

Tier Two Capital – Lower Level Tier Two Capital
Term subordinated debt

1,442
2,605

Less deductions from Tier Two Capital– 50% of total expected loss to the extent greater than total eligible allowances for impairment

26

Total Tier Two Capital

2,579

Total Capital

9,318

Total Required Capital of the Banking Group as at 31 December 2009 (unaudited)
Risk weighted
exposure or
implied risk
Exposure atweighted Total capitaldefault
exposure requirement
$m
$m
$m

Exposures subject to internal ratings based approach

121,951

49,956

3,996

6,660

6,840

547

Exposures subject to standardised approach

576

473

38

Equity exposures

236

911

73

Specialised lending exposures subject to slotting approach

Other exposures

3,187

809

65

Total credit risk

132,610

58,9894,719

Operational risk

n/a

5,178

414

Market risk

n/a

4,253

340

Supervisory adjustment1

n/a

1,602

128

132,61070,022

5,601

Total capital requirement

 The supervisory adjustment includes an adjustment of 15% of risk-weighted retail mortgages and an adjustment, if required, in order to maintain the Basel II
minimum capital requirements at no less than 90% of the Basel I minimum capital requirements, in accordance with the Bank’s Conditions of Registration.
No adjustment was required to maintain the Basel II minimum capital requirements at no less than 90% of the Basel I minimum capital requirements at
31 December 2009.

1

ANZ National Bank Limited and Subsidiary Companies
20 – 21

Notes to the Financial Statements (continued)
16.	Capital Adequacy (continued)
Capital Adequacy Ratios under the Basel I Approach
Consolidated

Registered Bank

Unaudited
31/12/2009

Unaudited
31/12/2008

Unaudited
30/09/2009

Unaudited
31/12/2009

Unaudited
31/12/2008

Unaudited
30/09/2009

Tier One Capital

9.06%

7.71%

8.43%

8.96%

7.62%

8.34%

Total Capital

12.55%

11.09%

11.82%

12.37%

10.94%

11.66%

Total risk-weighted exposures ($m)

74,627

83,71876,46773,02181,79374,665RBNZ minimum ratios:Tier One Capital

4.00%

4.00%

4.00%

4.00%

4.00%

4.00%

Total Capital

8.00%

8.00%

8.00%

8.00%

8.00%

8.00%

Basel I capital adequacy in respect of the Banking Group and Registered Bank has been derived in accordance with the RBNZ
document entitled ‘Capital Adequacy Framework (Basel I Approach)’ (BS2) dated March 2008.

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 entitled ‘Capital Adequacy Framework (Internal Models Based Approach)’ (“BS2B”), dated
March 2008.
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 atloan origination and for ongoing monitoring. For Retail Mortgage exposures the Banking Group is required to adopt the RBNZ
prescribed exposure weighted minimum PD of 1.25%;
Exposure at Default (“EAD”) – the expected facility exposure at default; andLoss Given Default (“LGD”) – an estimate of the potential economic loss on a credit exposure, incurred as a consequence ofobligor 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 the Loan to Value (“LVR”) band as set out in BS2B. For Rural Banking exposures the Banking
Group is required to adopt RBNZ prescribed downturn LGDs which are more conservative than internal estimates.

For exposures classified under Specialised Lending, the Banking Group uses slotting tables supplied by the RBNZ rather thaninternal estimates.
The exceptions to IRB treatment are five minor portfolios where, due to systems constraints or other reasons, 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 entitled ‘Capital Adequacy Framework (Standardised Approach)’ (BS2A).
Refer to the Banking Group’s 30 September 2009 General Disclosure Statement for a more detailed description of the Banking
Group’s implementation of the IRB approach.

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
16.	Capital Adequacy (continued)
Credit Risk Exposures subject to the Internal Ratings Based Approach
The following tables analyse the capital requirements by asset class under the IRB approach:
Consolidated as at 31/12/2009 (Unaudited)
Total
exposureor principal
amount$m

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

Exposureweighted
risk
weight%Riskweighted
exposure2$m

Total capitalrequirement
$m

1,912

On-balance sheet exposures
Corporate

35,35335,35337

64

23,894

Sovereign

6,717

6,717

5

1

68

5

Bank

6,301

5,983

63

13

817

65

Retail mortgages

41,08041,08021

23

10,191

815

Other retail

4,246

4,246

57

68

3,075

246

Total on-balance sheet exposures

93,697

93,37930

38

38,045

3,043

Corporate

14,013

11,948

47

52

6,623

530

Sovereign

79

79

5

1

-

-

Bank

745

655

47

16

108

9

Retail mortgages

5,388

5,006

20

21

1,130

90

Other retail

4,472

4,487

69

46

2,201

176

Total off-balance sheet exposures

24,697

22,17545

43

10,062805

59,365

1,463

55

56

862

69

Off-balance sheet exposures

Market related contracts
Corporate

8,542

423

5

1

5

-

Bank

578,458

4,511

65

21

982

79

Total market related contracts

646,365

6,397

59

27

1,849

148

Total credit risk exposures subject to theinternal ratings based approach

764,759

121,95134

39

49,956

3,996

Sovereign2

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

ANZ National Bank Limited and Subsidiary Companies
22 – 23

Notes to the Financial Statements (continued)
16.	Capital Adequacy (continued)
Consolidated as at 31/12/2009 (Unaudited)

Probabilityof default%

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

Exposureweighted
risk
weight%Riskweighted
exposure2$m

Total capitalrequirement$m

Corporate
CCR rating
0-2

0.05

4,744

60

21

1,056

84

3-4

0.32

20,259

37

37

7,951

636

5

1.01

10,561

36

63

7,040

564

6

2.33

6,955

38

85

6,282

503

7-8

7.60

5,177

41

124

6,801

544

Default

100.00

1,068

50

199

2,249

180

3.69

48,76440

61

31,379

2,511

0

0.01

7,219

5

1

73

5

1

n/a

-

-

-

-

-

2

n/a

-

-

-

-

-

3

n/a

-

-

-

-

-

4-8

n/a

-

-

-

-

-

Default

n/a

-

-

-

-

-

Total sovereign credit risk exposures

0.01

7,219

5

1

73

5

Total corporate credit risk exposures
Sovereign
CCR ratingBank
CCR rating
0

0.01

8,357

65

15

1,342

108

1

0.02

2,306

58

17

423

34

2-4

0.11

420

42

24

105

8

5-6

1.02

30

65

106

34

3

7-8

5.52

2

65

198

3

-

Default

100.00

34

65

-

-

-

0.32

11,149

63

16

1,907

153

Total bank credit risk exposures
Retail mortgages
CCR rating
0-3

0.16

4,592

22

7

353

28

4

0.43

26,919

20

14

3,956

316
225

5

1.20

8,957

21

30

2,811

6

2.65

3,094

22

51

1,674

134

7-8

14.69

1,730

24

115

2,116

169

Default

100.00

794

29

49

411

33

2.95

46,08621

23

11,321

905

0-2

0.11

15

58

15

2

-

Total residential mortgage credit risk exposures
Other retail
CCR rating
3-4

0.30

4,377

67

32

1,504

121

5

1.15

1,781

64

68

1,279

102

6

2.68

1,447

51

69

1,065

85

7-8

11.42

956

65

112

1,138

91

Default

100.00

157

59

173

288

23

3.88

8,733

63

57

5,276

422

Total other retail credit risk exposures

Credit risk exposures subject to the IRB approach have been derived in accordance with the RBNZ document BS2B and otherrelevant correspondence from the RBNZ setting out prescribed credit risk estimates.
2

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

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
16.	Capital Adequacy (continued)
Specialised Lending subject to the Slotting Approach
Consolidated as at 31/12/2009 (Unaudited)
Exposureamount$m

Risk Risk weighted
weightexposure2$m%

Total capitalrequirement$mOn-balance sheet exposures3
Strong

1,474

70

1,093

87

Good

2,452

90

2,339

187

Satisfactory

1,769

115

2,157

173

Weak

291

250

772

62

Default

187

-

-

-

6,173

97

6,361

509

Average risk Risk weighted
weightexposure2$m%

Total capitalrequirement$m

Total on-balance sheet exposures subject to the slotting approach
Exposureamount$m

Exposure atdefault
$m

504

401

92

Off-balance sheet exposures
Undrawn commitments and other off balance sheet exposures

391

31

Market related contracts

2,057

86

97

88

7

Total off-balance sheet exposures subject to the slotting approach

2,561

487

93

479

38

Specialised lending exposures subject to the slotting approach have been derived in accordance with the RBNZ document BS2B.
Credit Risk Exposures subject to the Standardised Approach
Consolidated as at 31/12/2009 (Unaudited)
Exposureamount$m

Risk Risk weighted
weightexposure2$m%

Total capitalrequirement$mOn-balance sheet exposures
189

Corporates

100

201

16

Sovereign

22

-

-

-

Banks

64

20

14

1

Residential mortgages

60

39

25

2

Other Retail

68

100

72

6

Past due assets

7

150

11

1

410

74

323

26

Average risk Risk weighted
weightexposure2$m%

Total capitalrequirement$m

Total on-balance sheet exposures subject to the standardised approach

Exposureamount$m

Average credit
conversion
factor%Creditequivalentamount
$m

586

28

166

Off-balance sheet exposures
Undrawn commitments and other offbalance sheet exposures

85

150

12

Credit risk exposures subject to the standardised approach have been calculated in accordance with the RBNZ document BS2A.
Equity Exposures
Consolidated as at 31/12/2009 (Unaudited)
Exposureamount$m

All other equity holdings (not deducted from capital)

236

Risk Risk weighted
weightexposure2
$m
%

364

911

Total capitalrequirement$m73

Equity exposures have been calculated in accordance with the RBNZ document BS2B.

2
3

Total credit risk-weighted exposures include a scalar of 1.06 in accordance with the Bank’s Conditions of Registration.
The supervisory categories of Specialised Lending above are associated with a specific risk-weight. These categories broadly correspond to the following
external credit assessments using the Standard & Poor’s rating scale: Strong BBB- or better, Good BB+ or BB, Satisfactory BB- or B+ and Weak B to C-.

ANZ National Bank Limited and Subsidiary Companies
24 – 25

Notes to the Financial Statements (continued)
16.	Capital Adequacy (continued)
Other Exposures
Consolidated as at 31/12/2009 (Unaudited)
Exposureamount$m

Risk Risk weighted
weightexposure2$m%Cash and gold bullion

283

New Zealand dollar denominated claims on the Crown and the RBNZ

2,141

-

-

-

Other assets

763

100

809

65

3,187

24

809

65

Total other IRB credit risk exposures--

Total capitalrequirement$m-

Other exposures have been calculated in accordance with the RBNZ document BS2B.
A risk weight of 100% applies to premises and equipment and all other exposures not otherwise defined in the BS2B document,
except for cash, gold, New Zealand dollar denominated claims on the Crown and the RBNZ, which receive a 0% risk weight.
Operational Risk
Implied risk
weighted
exposure$m

Total
operationalrisk capitalrequirement
$m

5,178

414

Operational risk capital requirement as at 31 December 2009 (Unaudited)
Advanced Measurement Approach for operational risk

The Banking Group uses the Advanced Measurement Approach for determining its regulatory capital requirement for
operational risk calculated in accordance with the RBNZ document BS2B.
Market Risk
Implied risk
weighted
exposure$m

Aggregate
capitalcharge
$m

4,155

332

Market risk capital requirement as at 31 December 2009 (Unaudited)
Interest rate risk
Foreign currency risk

121

Equity risk

86

7

4,253

340

The aggregate market risk exposures have been calculated in accordance with RBNZ document 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 isgenerally unsecured.
As at 31 December 2009, under the IRB approach, the Banking Group had $1,424m of Corporate exposures covered byguarantees and $nil of Corporate exposures covered by credit derivatives, where the presence of the guarantees or credit
derivatives was judged to reduce the underlying credit risk of the exposures. Information on the total value of exposurescovered by financial guarantees and eligible financial collateral is not disclosed, as the effect of these guarantees and collateralon the underlying credit risk exposures is not considered to be material.

2

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

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
16.	Capital Adequacy (continued)
Retail 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 Bank’svaluation of the security property at origination of the exposure. The exposure amount used to calculate LVR excludes
commitments to lend.
Exposure amount
Unaudited
31/12/2009$m

LVR range
0% - 59%

21,072

60% - 69%6,621

70% - 79%

7,883

80% - 89%4,696Over 90%

4,580

Total retail mortgage exposures subject to the internal ratings based approach

44,852

Pillar II Capital for Other Material Risks
The Banking Group has an Internal Capital Adequacy Assessment Process (“ICAAP”) which complies with the requirements of
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 that are notexplicitly 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 premises and equipment risk and capitalised origination fees risk.
The Banking Group’s internal capital allocation for these other material risks is:
Total capital requirement

Internal capital allocation for other material risks

Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Unaudited
30/09/2009
$m

147

143

148

ANZ National Bank Limited and Subsidiary Companies
26 – 27

Notes to the Financial Statements (continued)
17.	Concentrations of Credit Risk
Concentrations of credit risk to individual counterparties
The number of individual counterparties other than banks or groups of closely related counterparties of which a bank is aparent (excluding OECD Governments and connected persons), where the quarter end and peak end-of-day credit exposure
equals or exceeds 10% of equity (as at the end of the quarter) in ranges of 10% of equity, on the basis of limits:
Unaudited 31/12/2009
Number ofCounterparties

10% to 20% of equity

Unaudited 31/12/2008
Number ofCounterparties

Audited 30/09/2009
Number ofCounterparties

As at

Peak forthe quarter

As at

Peak forthe quarter

As at

Peak forthe quarter

1

1

1

1

1

1

The number of individual counterparties disclosed within the various equity ranges is based on counterparty limits rather thanactual exposures outstanding. No account is taken of security and/or guarantees which the Banking Group may hold in respectof the various counterparty limits.
The amount and percentage of quarter end credit exposures to individual counterparties other than banks or groups of closely
related counterparties of which a bank is a parent (excluding OECD Governments and connected persons), where the quarterend credit exposure equals or exceeds 10% of equity (as at the end of the quarter), by credit rating:
Unaudited 31/12/2009

Unaudited 31/12/2008

Amount$m% of Total
CreditExposureAmount$m% of Total
CreditExposureAmount$m% of Total
CreditExposure

1,192

100.0%

1,662

100.0%

1,194

100.0%

Audited 30/09/2009

As at
Investment grade credit rating1

Concentrations of credit risk to bank counterparties
The number of bank counterparties or groups of closely related counterparties of which a bank is the parent (excluding OECD
Governments and connected persons), where the quarter end and peak end-of-day credit exposure equals or exceeds 10% of
equity (as at the end of the quarter) in ranges of 10% of equity, on the basis of actual exposures:
Unaudited 31/12/2009
Number ofCounterparties
As at

Peak forthe quarter

Unaudited 31/12/2008
Number ofCounterparties
As at

Peak forthe quarter

Audited 30/09/2009
Number ofCounterparties
As at

Peak forthe quarter

10% to 20% of equity

1

2

2

3

3

2

20% to 30% of equity

-

1

2

1

1

2

30% to 40% of equity

-

-

-

1

-

-

The amount and percentage of quarter end credit exposures to bank counterparties or groups of closely related counterpartiesof which a bank is a parent (excluding OECD Governments and connected persons), where the quarter end credit exposuresequals or exceeds 10% of equity (as at the end of the quarter), by credit rating:
Unaudited 31/12/2009

Unaudited 31/12/2008

Amount$m% of Total
CreditExposureAmount$m% of Total
CreditExposureAmount$m% of Total
CreditExposure

1,964

100.0%

7,609

100.0%

6,201

100.0%

Audited 30/09/2009

As at
Investment grade credit rating1

The number of individual counterparties disclosed within the various equity ranges and the total exposure as at the end of thequarter are gross exposures. No account is taken of collateral, security and/or netting agreements which the Banking Groupmay hold in respect of the various counterparty exposures. The peak number is calculated separately for each individual
counterparty and the peak for all counterparties may not have occurred at the same time.

1All of the individual and bank counterparties included in the above tables have an investment grade credit rating. An investment grade credit rating meansa credit rating of BBB or Baa3 or above, or its equivalent. In the case of a group of closely related counterparties, the credit rating applicable is that of the entity
heading the group of closely related counterparties. The credit rating is applicable to an entity’s long term senior unsecured obligations payable in New
Zealand, in New Zealand dollars, or to an entity’s long term senior unsecured foreign currency obligations.

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
17.	Concentrations of Credit Risk (continued)
Concentrations of credit risk to connected persons
Credit exposures to connected persons reported in the table below have been calculated partially on a bilateral net basis, andpartially on a gross basis. With effect from 11 August 2008, netting has occurred in respect of certain transactions which are thesubject of a bilateral netting agreement disclosed in the Bank’s most recent Supplemental Disclosure Statement for the period
ended 31 December 2009. The amount of gross credit exposures to connected persons netted off must not be greater than
125% of the Banking Group’s Tier One Capital.
Unaudited 31/12/2009
Amount$m

Unaudited 31/12/2008

Audited 30/09/2009% of Tier
One Capital

Amount$m% of Tier
One Capital

Amount$m% of Tier
One Capital

Aggregate at end of period4
Other connected persons (on gross basis, before netting)2

4,003

59.4%

4,657

73.6%

4,503

69.9%

Other connected persons (amount netted off)2

2,666

39.6%

3,433

54.3%

3,010

46.7%

Other connected persons (on partial bilateral net basis)2

1,337

19.8%

1,224

19.3%

1,493

23.2%

-

0.0%

-

0.0%

-

0.0%

Non-bank connected persons3Peak end-of-day for the quarter4
Other connected persons (on gross basis, before netting)

4,923

73.1%

5,889

93.1%

5,490

85.2%

Other connected persons (amount netted off)

2,787

41.4%

3,962

62.6%

2,693

41.8%

Other connected persons (on partial bilateral net basis)

2,136

31.7%

1,927

30.5%

2,797

43.4%

-

0.0%

-

0.0%

-

0.0%

Other connected persons

n/a

70.0%

n/a

70.0%

n/a

70.0%

Non-bank connected persons

n/a

15.0%

n/a

15.0%

n/a

15.0%

Non-bank connected persons
Rating-contingent limit5

The credit exposure concentrations disclosed for connected persons are on the basis of actual gross exposures and exclusiveof exposures of a capital nature. The peak end-of-day credit exposures for the quarter to connected persons are measured overTier One Capital as at the end of the quarter. There were no individual provisions provided against credit exposures toconnected persons as at 31 December 2009 (31/12/2008 $nil; 30/09/2009 $nil). The Banking Group had no contingent exposuresarising from risk lay-off arrangements to connected persons as at 31 December 2009 (31/12/2008 $nil; 30/09/2009 $nil).

The Banking Group has amounts due from its Parent Company and Ultimate Parent Bank and other entities within the Ultimate Parent Group arising in theordinary course of business. These balances arise primarily from unrealised gains on trading and hedging derivative financial instruments with the Ultimate
Parent Bank. As at 31 December 2009, the gross exposures to the Bank’s Parent Company were $19 million (31/12/2008 $nil; 30/09/2009 $522 million). As at
31 December 2009, the gross exposures to the Bank’s Ultimate Parent Bank were $3,984 million (31/12/2008 $4,657 million; 30/09/2009 $3,981 million).
3
Non-bank connected persons exposures consist of loans to directors of the Bank. Any loans are made in the ordinary course of business of the Bank, on an arm’s
length basis and on normal commercial terms and conditions.
4The Banking Group has complied with the limits on aggregate credit exposure (of a non-capital nature and net of individual provisions) to connected persons
and non-bank connected persons, as set out in the Conditions of Registration, at all times during the quarter.
5
Represents the maximum peak end-of-day aggregate credit exposures limit (of a non-capital nature and net of individual provisions) to all connected persons.
This limit is based on the ratings applicable to the Bank’s long term senior unsecured obligations payable in New Zealand in New Zealand dollars. Within theoverall limit a sub-limit of 15% of Tier One Capital applies to aggregate credit exposures (exclusive of exposures of a capital nature and net of individual
provisions) to non-bank connected persons.
2

ANZ National Bank Limited and Subsidiary Companies
28 – 29

Notes to the Financial Statements (continued)
18.	Market Risk
The aggregate market risk exposures below have been calculated in accordance with the RBNZ document entitled “Market risk
guidance notes” (BS6).
The peak end-of-day market risk exposures for the quarter are measured over equity at the end of the quarter and are calculated
separately for each category of exposure. The peak for all categories of exposure may not have occurred at the same time.

Implied risk weighted
exposure

Aggregate
capital charge
as a percentageof the Banking
Group’s Equity

Aggregate
capital charge

As at
$m

Peak
$m

As at
$m

Peak
$m

As at

Peak

Unaudited 31/12/2009
4,155

4,218

332

337

3.2%

3.3%

Foreign currency risk

12

89

1

7

0.0%

0.1%

Equity risk

86

86

7

7

0.1%

0.1%

Interest rate risk

Unaudited 31/12/2008
3,959

3,975

317

318

3.2%

3.2%

Foreign currency risk

37

58

3

5

0.0%

0.0%

Equity risk

63

66

5

5

0.1%

0.1%

3,824

3,824

306

306

3.0%

3.0%

Foreign currency risk

5

301

0

24

0.0%

0.2%

Equity risk

69

82

6

7

0.1%

0.1%

Interest rate risk

Audited 30/09/2009
Interest rate risk

19. Interest Earning and Discount Bearing Assets and Liabilities
Consolidated
Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009$mInterest earning and discount bearing assets

101,038

112,009

100,935

Interest and discount bearing liabilities

88,832102,175

90,491

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
20. Segmental Analysis
For segment reporting purposes, the Banking Group is organised into three major business segments – Retail, Commercial andInstitutional. Centralised back office and corporate functions support these segments.
A summarised description of each business segment is provided below:
RetailProvides banking products and services to individuals and small businesses through separate ANZ and The National Bank of
New Zealand branded distribution channels. Personal banking customers have access to a wide range of financial services andproducts. Small business banking services are offered to enterprises with annual revenues of less than $5 million. Included in thissegment is Private Banking, which offers a fully inclusive banking and investment service to high net worth individuals. This
segment also includes the ING NZ and other profit centres supporting the Retail Banking segment.
Commercial
This segment provides services to Rural, Corporate, Commercial and UDC customers. A full range of banking products and services
are provided to Rural customers. Corporate and Commercial customers consist of primarily privately owned medium to large
businesses with annual revenues of $2 million and greater. 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 with revenue sourced from a wider range of products. UDC is primarily involved in the financing and leasingof plant, vehicles and equipment, primarily for small and medium sized businesses, as well as investment products.
Institutional
Comprises businesses that provide a full range of financial services to the Banking Group’s client base. The Institutional business
unit is made up of the following specialised units:•••

Markets – provides foreign exchange and commodity trading and sales-related services, origination, underwriting,structuring, risk management and sale of credit and derivative products globally.
Transaction Banking – provides cash management, trade finance, international payments and clearing services.
Specialised Lending – provides origination, credit analysis, structuring and execution of specific customer transactions.

Other
Includes Treasury and back office support functions, none of which constitutes a separately reportable segment.
As the composition of segments has changed over time, prior period comparatives have been adjusted to be consistent with the
31 December 2009 segment definitions.
Business Segment Analysis1,2
Consolidated
Retail3$mCommercial$m

Net operating income3

319

217

Profit before income tax3

2

58

273

188

(41)

95

Net operating income3

1,345

Profit before income tax3

39

Institutional
$m

Other
$m

Total
$m

171

115

822

142

101

303

216

93

770

168

74

296

863

766

142

3,116

170

500

56

765

Unaudited 3 months to 31/12/2009

Unaudited 3 months to 31/12/2008
Net operating income3
Profit before income tax

3

Audited year to 30/09/2009

Results are equity standardised.
Intersegment transfers are accounted for and determined on an arm’s length or cost recovery basis.
3
Includes a loss of $82 million (30/09/2009 nil; 31/12/2008 nil) on acquisition of ING NZ and a charge of $nil (30/09/2009 $211 million; 31/12/2008 $161 million) in
relation to ING NZ funds.
1
2

ANZ National Bank Limited and Subsidiary Companies
30 – 31

Notes to the Financial Statements (continued)
21. Notes to the Cash Flow Statement
Consolidated
Unaudited
3 months to
31/12/2009$m

Unaudited
3 months to
31/12/2008$m

AuditedYear to30/09/2009
$m

243

210

298

Depreciation and amortisation

12

12

50

Provision for credit impairment

874

Reconciliation of profit after income tax to net cash flows used in operating activities
Profit after income tax
Non-cash items:
145

94

Deferred fee revenue and expenses

-

1

(8)

Share-based payments expense

5

4

18

Amortisation of capitalised brokerage/ mortgage origination fees

9

14

50

2,111

(571)

(1,874)

Deferrals or accruals of past or future operating cash receipts or payments:
Decrease (increase) in net operating assets and liabilities(Increase) decrease in interest receivable

(10)

1

138

Decrease in interest payable

(50)

(15)

(295)

(Increase) decrease in accrued income

(4)

(3)

1

Increase (decrease) in accrued expenses

1

(11)

42

(14)

165

100

(Decrease) increase in provisions

3

13

76

(318)

94

141

Share of profit of equity accounted associates and jointly controlled entities

(36)

(6)

(11)

Loss on remeasuring existing equity interests to fair value

82

-

-

Loss (gain) on disposal of premises and equipment

5

(12)

(13)

Net cash flows from (used in) operating activities

2,184

(10)

(413)

Amortisation of premiums and discounts(Increase) decrease in net income tax assets and liabilities
Items classified as investing/financing:

Reconciliation of core liquidity portfolio to cash and cash equivalents
The Banking Group’s core liquidity portfolio held for managing liquidity risk comprises:
Consolidated

Cash and balances with central banks

Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009
$m

2,141

2,044

2,207

339

563

1,075

Certificates of deposit

1,430

4,975

2,736

Government, Local Body stock and bonds

2,401

284

1,102

Available-for-sale assets

2,134

-

1,435

Other bank bonds

2,636

1,335

2,522

11,0819,201

11,077

Securities purchased under agreement to resell

Total liquidity portfolio

1

Reconciliation to cash and cash equivalents:
Other cash items not included within liquidity portfolio:
728

1,003

555

2,964

897

550

Trading securities(5,345)(1,140)(3,624)

Available-for-sale assets(2,134)-(1,435)Due from other financial institutions – greater than 90 days

(737)

(3,372)(2,358)

Total cash and cash equivalents

6,557

6,589

4,765

Liquid assets not with central banks
Due from other financial institutions – less than 90 days
Non-cash items included within liquidity portfolio

Reconciliation of cash and cash equivalents to the balance sheets1

Liquid assets

2,869

3,049

2,762

Due from other financial institutions – less than 90 days

3,688

3,540

2,003

Total cash and cash equivalents

6,557

6,589

4,765

Assets held for managing liquidity risk includes short term cash held with the RBNZ or other banks, government securities and other securities that are readily
acceptable in repurchase agreements with the RBNZ and other New Zealand banks and securities issued by offshore Supranational and highly rated banks.

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
22. Parent Company and Ultimate Parent Bank
The Parent Company is ANZ Holdings (New Zealand) Limited which is incorporated in New Zealand. The Ultimate Parent Bank
is Australia and New Zealand Banking Group Limited which is incorporated in Australia.

23. Securitisation, Funds Management, other Fiduciary Activities and the Marketing and Distribution of
Insurance Products
Securitisation
The Bank enters into transactions in the normal course of business by which it transfers financial assets directly to third parties orto special purpose entities. These transfers may give rise to the full or partial derecognition of those financial assets.
••

Full derecognition occurs when the Bank transfers its contractual right to receive cash flows from the financial assets, or
retains the right but assumes an obligation to pass on the cash flows from the asset, and transfers substantially all the risks
and rewards of ownership. These risks include credit, interest rate, currency, prepayment and other price risks.
Partial derecognition occurs when the Bank sells or otherwise transfers financial assets in such a way that some but not
substantially all of the risks and rewards of ownership are transferred but control is retained. These financial assets arerecognised on the balance sheet to the extent of the Bank’s continuing involvement.

In May 2008 the RBNZ expanded the range of acceptable collateral that banks can pledge and borrow against as part ofchanges to its liquidity management arrangement designed to help ensure adequate liquidity for New Zealand financial
institutions in the event that global market disruption was to intensify. From 31 July 2008, acceptable collateral includes
residential mortgage backed securities (“RMBS”) that satisfy RBNZ criteria.
On 10 October 2008, the Banking Group established an in-house RMBS facility that could issue securities meeting the RBNZ
criteria. The establishment of the facility resulted in the Parent financial statements recognising a payable and receivable ofequal amount totalling $3,721 million to Kingfisher NZ Trust 2008-1 (“the Trust”), a newly established consolidated entity. On
12 December 2008, a further tranche totalling $5,521 million was also sold to the Trust, creating a second payable and receivableof equal amount. These assets do not qualify for derecognition as the Bank retains a continuing involvement in the transferredassets, therefore the Banking Group’s financial statements do not change as a result of establishing these facilities.
The RMBS facility is dynamic in nature reflecting the underlying movement in loan balances. To the extent that any loans arefound to be ineligible in terms of the RBNZ criteria, they are automatically removed from the facility. Additional lending toexisting RMBS customers is added into the facility on a quarterly basis.
The establishment of this facility increases the Banking Group’s contingent funding ability from the RBNZ.
Funds management
Certain subsidiaries of the Bank act as trustee and/or manager for a number of unit trusts and investment and superannuation
funds. The Bank provides private banking services and investment advisory services to a number of clients, including investment
advice and portfolio management. The Banking Group is not responsible for any decline in performance of the underlying
assets of the investors due to market forces.
As funds under management are not controlled by the Banking Group, they are not included in these financial statements. The
Banking Group derives fee and commission income from the sale and management of investment funds and superannuation
bonds, unit trusts and the provision of private banking services and investment advisory services to a number of clients. The
Banking Group derives commission income from the sale of third party funds management products.
Custodial services
The Banking Group provides custodial services to customers in respect of assets that are beneficially owned by thosecustomers.

Insurance business
The Banking Group conducts insurance business through subsidiaries of ING NZ – the assets, liabilities and operations of which
are fully consolidated into the Banking Group since its acquisition. Previously the Banking Group did not conduct any insurance
business directly, although it held a 49% ownership share in ING NZ. The Banking Group also markets and distributes a range
of insurance products which are underwritten by subsidiaries of ING NZ, as well as, third party insurance companies.
The insurance business comprises risk transfer and investment contract life insurance products. The aggregate insurance
business conducted by companies in the Banking Group comprises assets totalling $297 million (31/12/2008 $nil; 30/09/2009$nil) which is 0.3% (31/12/2008 0.0%; 30/09/2009 0.0%) of the total consolidated assets of the Banking Group.

ANZ National Bank Limited and Subsidiary Companies

23. Securitisation, Funds Management, other Fiduciary Activities and the Marketing and Distribution of
Insurance Products (continued)
Provision of financial services
Financial services provided by the Banking Group to entities which are involved in trust, custodial, funds management andother fiduciary activities, and to affiliated insurance companies which conduct marketing or distribution of insurance products,
or on whose behalf the marketing or distribution of insurance products are conducted, are provided on arm’s length terms andconditions and at fair value. Any assets purchased from such entities have been purchased on an arm’s length basis and atfair value.
The Banking Group has not provided any funding to entities except standard lending facilities provided in the normal
course of business on arm’s length terms which conduct any of the following activities: trust, custodial, funds management orother fiduciary activities established, marketed and/or sponsored by a member of the Banking Group (31/12/2008 $nil;
30/09/2009 $nil).
Risk management
The Bank and subsidiaries of the Banking Group participating in the activities identified above have in place policies andprocedures to ensure that those activities are conducted in an appropriate manner. Should adverse conditions arise, it isconsidered that these policies and procedures will minimise the possibility that these conditions will adversely impact theBank. The policies and procedures include comprehensive and prominent disclosure of information regarding products, andformal and regular review of operations and policies by management.
In addition, the following measures have been taken to manage any risk to the Bank of marketing and distributing insurance
products provided by third party insurance companies:
Investment statements, prospectuses and brochures for insurance products include disclosures that the Bank and its
subsidiaries do not guarantee the insurer, nor the insurer’s subsidiaries, nor any of the products issued by the insurer or the
insurer’s subsidiaries.
Where the insurance products are subject to the Securities Act 1978, investment statements, prospectuses and brochures
additionally include disclosures that:• the policies do not represent deposits or other liabilities of the Bank or its subsidiaries;• the policies are subject to investment risk, including possible loss of income and principal; and• the Bank and its subsidiaries do not guarantee the capital value or performance of the policies.
	Application forms for insurance products contain acknowledgements to be signed by a purchaser which are consistent
with the disclosures for insurance products noted above.
In addition, the following measures have been taken to manage any risk to the Bank of marketing and distributing fundmanagement products:
Prospectuses, investment statements and brochures for funds management products include disclosures:• that the securities do not represent deposits or other liabilities of the Bank;• that the securities are subject to investment risk including possible loss of income and principal invested; and• that the Bank does not guarantee the capital value or performance of the securities.
	Application forms for funds management products contain acknowledgements to be signed by a purchaser which areconsistent with the disclosures for funds management products noted above.

32 – 33

Notes to the Financial Statements (continued)

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
24.	Commitments
Consolidated
Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009$m

Not later than 1 year

11

27

19

Total capital expenditure commitments

11

27

19

Capital expenditure
Contracts for outstanding capital expenditure:
Premises and equipment

Lease rentals
Future minimum lease payments under non-cancellable operating leases:
Premises and equipment
Not later than 1 year

88

85

82

Later than 1 year but not later than 5 years

166

168

155

Later than 5 years

40

34

31

Total lease rental commitments

294

287

268

Total commitments

305

314

287

25.	Contingent Liabilities, Credit Related Commitments and Market Related Contracts
For contingent exposures, the maximum exposure to credit risk is the maximum amount that the Banking Group would haveto pay if the contingent item is called upon. For undrawn facilities, the maximum exposure to credit risk is the full amount of
the committed facilities.
Consolidated
Face or contract value
Unaudited
31/12/2009$m

Unaudited
31/12/2008$m

Audited30/09/2009
$m

549

481

735

Commitments to provide financial services

22,01822,88222,094

Total credit related commitments

22,56723,363

22,8291,753

Credit related commitments
Commitments with certain drawdown due within one year

Contingent liabilities
Financial guarantees

1,751

1,972

Standby letters of credit

384

413

341

Transaction related contingent items

1,015

1,031

982

Trade related contingent liabilities
Total contingent liabilities

70

74

89

3,220

3,490

3,165

Foreign exchange, interest rate and commodity contracts
Exchange rate contracts

113,171

103,412102,435

Interest rate contracts

535,218

451,472

485,664

Commodity contracts
Total foreign exchange, interest rate and commodity contracts

33

76

36

648,422554,960

588,135ANZ National Bank Limited and Subsidiary Companies

25.	Contingent Liabilities, Credit Related Commitments and Market Related Contracts (continued)
The Banking Group guarantees the performance of customers by issuing standby letters of credit and guarantees to third
parties, including the Ultimate Parent Bank. The risk involved is essentially the same as the credit risk involved in extending
loan facilities to customers, therefore these transactions are subjected to the same credit origination, portfolio management
and collateral requirements for customers applying for loans. As the facilities may expire without being drawn upon, thenotional amounts do not necessarily reflect future cash requirements.
A summary of contingent liabilities is set out below.
Settlement with Inland Revenue Department
The New Zealand Inland Revenue Department (“IRD”) has been reviewing a number of structured finance transactions as partof an audit of the 2000 to 2005 tax years.
On 23 December 2009, the Bank announced that it had reached a settlement with the IRD in respect of six of the seventransactions in dispute. As part of an industry-wide settlement, the Bank paid the IRD $414 million in primary tax and interest,with the parties agreeing to discontinue relevant legal proceedings. The settlement includes an amount of $106 million related
to three transactions for which the Bank holds an indemnity from Lloyds Banking Group plc associated with The National Bankof New Zealand acquisition. This liability, net of amounts receivable from Lloyds, was met from existing tax provisions.
Of seven transactions undertaken by the Bank and The National Bank of New Zealand which were in dispute, one residualtransaction involving $27 million in primary tax remains in dispute with the IRD. A provision is held for this remaining transaction.
Commerce Commission
The Bank is aware that the Commerce Commission is looking at credit contract fees under the Credit Contracts and Consumer
Finance Act 2003 (“CCCFA”). In its 2009-2012 Statement of Intent the Commission stated that:“Compliance with the Credit Contracts and Consumer Finance Act is a priority area for the Commission, given the deterioration in
consumer confidence in the financial sector and the important role that a competitive lending market can play in strengthening the
New Zealand economy.”
In particular the Bank is aware that the Commerce Commission is investigating the level of default fees charged on credit cards
and the level of currency conversion charges on overseas transactions using credit cards under the CCCFA. The Commission is
also investigating early repayment charges on fixed rate mortgages. At this stage the possible outcome of these investigations
and any liability or impact on fees cannot be determined with any certainty.
ING NZ Funds
The Bank markets and distributes a range of wealth management products in New Zealand. The products are manufactured
and managed by ING NZ, which is a wholly owned subsidiary of the Bank following the purchase of ING Groep’s 51% interest in
ING NZ on 30 November 2009. Trading in two of the products, the ING Diversified Yield Fund and the ING Regular Income Fund(together, “the Funds”), was suspended on 13 March 2008, due to deterioration in the liquidity and credit markets. Units in theFunds were sold by the Bank to its customers.
On 5 June 2009, ING NZ AUT Investments Limited, a subsidiary of ING NZ, made an offer to investors in the Funds. The offerclosed on 13 July 2009. Investors holding approximately 99% of the Funds accepted the offer to purchase their units and havereceived a payment of 60 cents per unit in the ING Diversified Yield Fund or 62 cents per unit in the ING Regular Income Fund,
as applicable, either (i) in cash, or (ii) by way of deposit in an on-call account with the Bank, paying 8.30% per annum fixed for
up to five years.
Although acceptance of this offer included a waiver of claims, Bank customers were offered an additional opportunity toaccess the Bank customer complaints team (and, where still unsatisfied, the New Zealand Banking Ombudsman) even where
the investors had accepted the offer. This opportunity was available until 31 July 2009 and approximately 1,300 customers
requested for their circumstances to be considered, and over half of these requests have been resolved. As a result of the offer
and transactions concluded as part of the purchase of ING Groep’s interest in ING NZ, the Banking Group now owns over 99%
of the units in the Funds.
The Commerce Commission is separately investigating both the Bank and ING NZ in respect of their roles in manufacturing,
managing and selling of the Funds. At this stage it is not possible to predict the outcome of either of the investigations.
The ultimate cost to the Bank will depend on the final value of units in the Funds, any recoveries under insurance, the assessmentand outcome of the customer complaints and the results of any litigation and regulatory investigations or proceedings that
may be brought in connection with the Funds or their sale. The Banking Group considers it has adequately provided for thesematters at this time.
Other contingent liabilities
The Banking Group has other contingent liabilities in respect of actual and potential claims and proceedings. An assessmentof the Banking Group’s likely loss in respect of these matters has been made on a case-by-case basis and provision madewhere appropriate. As at 31 December 2009, there were no other contingent assets or liabilities required to be disclosed(31/12/2008 nil; 30/09/2009 nil).

34 – 35

Notes to the Financial Statements (continued)

ANZ National Bank Limited and Subsidiary Companies

Notes to the Financial Statements (continued)
26. Business Combinations
On 30 November 2009, the Banking Group purchased ING Groep’s 51% interest in ING NZ, which was the holding company for
the ANZ-ING wealth management and life insurance joint venture in New Zealand. The transaction was undertaken tostrengthen the Banking Group’s position in wealth management and more closely integrate its retail banking and wealthbusinesses. The acquisition takes the Banking Group’s ownership interest in ING NZ to 100%.
As part of the transaction the Banking Group also purchased ING Groep’s 51% interests in two fixed income unit trusts, the ING
Diversified Yield Fund and the ING Regular Income Fund (“the Funds”), taking its ownership interest to over 99% of
the Funds.
Consolidated
Unaudited
31/12/2009$m

Fair values of assets acquired and liabilities assumed as at acquisition date (provisional)
Due from financial institutions

142

Available-for-sale assets

173

Investments relating to insurance business40

Insurance policy assets

81

Shares in associates

1

Other assets

25

Deferred tax assets

28

Premises and equipment

4

1

Total assets

494

Due to financial institutions

30

Payables and other liabilities

25

Current tax liabilities

27

Provisions2

116

Total liabilities

198

Net assets

296
1

Minority interests in the Funds3
Net assets attributable to the Banking Group

295
351

Book value of existing equity interests
Loss on re-measuring existing equity interests to fair value

4

(82)

Acquisition date fair value of existing equity interests

269

Cash consideration transferred

247

Total consideration

516

Provisonal value of goodwill and intangible assets5

221

I ncludes receivables with a fair value of $16m and a gross contractual amount receivable of $17m. The best estimate at the acquisition date of the contractual
cash flows not expected to be collected on these receivables is $1m.
2Includes employee related provisions and the fair value of contingent liabilities, which relate to possible claims by investors in the Funds and investigations byregulatory bodies and other actual and potential claims and proceedings (refer to Note 25). The expected timing and ultimate cost of contingent liabilities tothe Banking Group will depend on the assessment and outcome of customer complaints, and the results of any litigation and regulatory investigations orproceedings that may be brought.
3
Minority interests are measured as their proportionate share of the identifiable net assets of the Funds.
4
The loss on re-measuring equity interests has been recognised in Other Operating Income in the Income Statement.
5Upon finalisation of fair value procedures, including recognition of intangible assets acquired, the remaining balance will be recognised as either goodwill ora discount on acquisition as appropriate. Goodwill, if recognised, is not expected to be deductible for income tax purposes.
1

ANZ National Bank Limited and Subsidiary Companies

26. Business Combinations (continued)
Included in the consolidated Income Statement and Statement of Comprehensive Income since 30 November 2009 is net
operating income of $12 million and a loss before tax of $8 million, including integration costs, contributed by ING NZ and theFunds. Had ING NZ and the Funds been consolidated from 1 October 2009, the consolidated Income Statement and Statementof Comprehensive Income would have included, for the three months ended 31 December 2009, net operating income of$39 million and a loss before tax of $3 million. Acquisition costs were paid by the Ultimate Parent Bank.
The initial accounting for the business combination, including the fair values of the assets acquired and liabilities assumed andthe calculation of goodwill, is provisional while valuations of the assets acquired and liabilities assumed are finalised.

27. Subsequent Events
On 29 January 2010, the Bank agreed to sell a further $1,078 million of residential mortgage assets to the NZ Branch.

36 – 37

Notes to the Financial Statements (continued)

ANZ National Bank Limited and Subsidiary Companies

Conditions of Registration
Conditions of Registration, applicable as at 11 February 2010. These Conditions of Registration have applied
from 22 October 2009.
The Bank’s Conditions of Registration were revised on 22 October 2009 in order to implement a new set of liquidity risk
management conditions. Condition 11 was amended and conditions 13 and 14 were added.
The registration of ANZ National Bank Limited (“the Bank”) as a registered bank is subject to the following conditions:1.

That the Banking Group complies with the following requirements:(a) 	the total capital ratio of the Banking Group calculated in accordance with the Reserve Bank of New Zealand document“Capital adequacy framework (internal models based approach)” (BS2B) dated March 2008 is not less than 8%;(b) 	the tier one capital ratio of the Banking Group calculated in accordance with the Reserve Bank of New Zealand document“Capital adequacy framework (internal models based approach)” (BS2B) dated March 2008 is not less than 4%; and(c) 	the capital of the Banking Group calculated in accordance with the Reserve Bank of New Zealand document “Capital
adequacy framework (internal models based approach)” (BS2B) dated March 2008 is not less than $30 million.
	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 March 2008 is 1.06.
	For the purposes of this condition of registration, the supervisory adjustment referred to in the Reserve Bank of New
Zealand document “Capital adequacy framework (internal models based approach)” (BS2B) dated March 2008 is the sum of:(a) 15% of risk-weighted exposures secured by residential mortgages as defined in the Reserve Bank of New Zealanddocument “Capital adequacy framework (internal models based approach)” (BS2B) dated March 2008; and(b) 12.5 times the greater of: zero; and 90% of adjusted Basel I capital, less adjusted Basel II capital; where(i) “adjusted Basel I capital” means 8% of total risk-weighted exposures, plus deductions from tier one capital, plus
deductions from total capital, all calculated in accordance with the Reserve Bank of New Zealand document “Capital
adequacy framework (Basel I approach)” (BS2) dated March 2008;(ii) “adjusted Basel II capital” means 8% of total Basel II risk-weighted exposures plus deductions from tier one capital,plus deductions from total capital, less any amount included in tier two capital arising from the excess of eligible
allowances for impairment over EL (expected losses), all calculated in accordance with the Reserve Bank of New
Zealand document “Capital adequacy framework (internal models based approach)” (BS2B) dated March 2008; and(iii) “total Basel II risk-weighted exposures” means scalar x (risk-weighted on and off balance sheet credit exposures)+ 12.5 x total capital charge for market risk exposure + 12.5 x total capital requirement for operational risk + 15% ofrisk-weighted exposures secured by residential mortgages as defined in the Reserve Bank of New Zealanddocument “Capital adequacy framework (internal models based approach)” (BS2B) dated March 2008.
1A. That(a) 	the Bank has an internal capital adequacy assessment process (“ICAAP”); that with effect from 31 August 2008 theBank’s ICAAP accords with the requirements set out in the document “Guidelines on a Bank’s internal capital adequacy
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 tier one and total capital ratios under the requirements set
out in the document “Capital adequacy framework (internal models based approach)” (BS2B) dated March 2008; and(c) 	the Bank determines an internal capital allocation for each identified and measured “other material risk”.
1B.	That the Banking Group complies with all requirements set out in the Reserve Bank of New Zealand document “Capital
adequacy framework (internal models based approach)” (BS2B) dated March 2008.
1C. That the Bank complies with the following requirements:
The total capital ratio of the Bank is not less than 8%.
The tier one capital ratio of the Bank is not less than 4%.
For the purposes of this condition of registration:• the total capital ratio is defined as capital as a percentage of risk-weighted exposures where capital and risk-weighted
exposures are as defined in the Reserve Bank of New Zealand document “Capital adequacy framework (Basel I approach)”(BS2) dated March 2008; and• the tier one capital ratio is defined as tier one capital as a percentage of risk-weighted exposures where tier one capitaland risk-weighted exposures are as defined in the Reserve Bank of New Zealand document “Capital adequacy framework(Basel I approach)” (BS2) dated March 2008.

ANZ National Bank Limited and Subsidiary Companies

2. 	That the Banking Group does not conduct any non-financial activities that in aggregate are material relative to its total
activities, where the term material is based on generally accepted accounting practice, as defined in the Financial ReportingAct 1993.
3.

T hat the Banking Group’s insurance business is not greater than 1% of its total consolidated assets. For the purposes ofthis condition:(i) Insurance business means any business of the nature referred to in section 4 of the Insurance Companies (Ratings andInspections) Act 1994 (including those to which the Act is disapplied by sections 4(1)(a) and (b) and 9 of that Act), or any
business of the nature referred to in section 3(1) of the Life Insurance Act 1908;(ii) In measuring the size of the Banking Group’s insurance business:(a) where insurance business is conducted by any entity whose business predominantly consists of insurance business,the size of that insurance business shall be:• The total consolidated assets of the group headed by that entity;• Or if the entity is a subsidiary of another entity whose business predominantly consists of insurance business,
the total consolidated assets of the group headed by the latter entity;(b) otherwise, the size of each insurance business conducted by any entity within the Banking Group shall equal the
total liabilities relating to that insurance business, plus the equity retained by the entity to meet the solvency or
financial soundness needs of the insurance business;(c) the amounts measured in relation to parts a) and b) shall be summed and compared to the total consolidated
assets of the Banking Group. All amounts in parts a) and b) shall relate to on balance sheet items only, and shallbe determined in accordance with generally accepted accounting practice, as defined in the Financial ReportingAct 1993;(d) where products or assets of which an insurance business is comprised also contain a non-insurance component,
the whole of such products or assets shall be considered part of the insurance business.

4.	That aggregate credit exposures (of a non-capital nature and net of any allowances for impairment) of the Banking Groupto all connected persons do not exceed the rating-contingent limit outlined in the following matrix:

Credit Rating1

Connected exposure limit(% of the Banking Group’s
Tier 1 capital)

AA/Aa2 and above

75

AA-/Aa3

70

A+/A1

60

A/A2

40

A-/A3

30

BBB+/Baa1 and below

15

Within the rating-contingent limit, credit exposures (of a 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 One capital.
For the purposes of this condition of registration, compliance with the rating-contingent connected exposure limit isdetermined in accordance with the Reserve Bank of New Zealand document entitled ‘Connected Exposure Policy’ (BS8)
dated March 2008.
5. 	That exposures to connected persons are not on more favourable terms (e.g. as relates to such matters as credit assessment,
tenor, interest rates, amortisation schedules and requirement for collateral) than corresponding exposures to non-connected
persons.
6. 	That the board of the Bank contains at least two independent directors and that alternates for those directors, if any, arealso independent. In this context an independent director (or alternate) is a director (or alternate) who is not an employeeof the Bank, and who is not a director, trustee, or employee of any holding company (as that term is defined in section 5 of
the Companies Act 1993) of the Bank, or any other entity capable of controlling or significantly influencing the Bank.
7.

That the chairperson of the Bank’s board is not an employee of the Bank.

8. 	That the Bank’s constitution does not include any provision permitting a director, when exercising powers or performing
duties as a director, to act other than in what he or she believes is the best interests of the company (i.e. the Bank).
9.

That a substantial proportion of the Bank’s business is conducted in and from New Zealand.

10.	That no appointment of any director, chief executive officer, or executive who reports or is accountable directly to the chief
executive officer, shall be made in respect of the Bank unless:(i) The Reserve Bank has been supplied with a copy of the curriculum vitae of the proposed appointee, and(ii) The Reserve Bank has advised that it has no objection to that appointment.

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

38 – 39

Conditions of Registration (continued)

ANZ National Bank Limited and Subsidiary Companies

Conditions of Registration (continued)
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 a person other than the Bank, sufficient to achieve, under normal business conditions
and in the event of stress or failure of the Bank or of a service provider to the 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 be monitored and managed on the day following any failure and on
subsequent days; and(d) that the Bank’s existing customers can be given access to payments facilities on the day following any failure and on
subsequent days.
For the purposes of this condition of registration, the term “legal and practical ability to control and execute” is explained in
the Reserve Bank of New Zealand document entitled ‘Outsourcing Policy’ (BS11) dated January 2006.
12. (a) 	That the business and affairs of the Bank are managed by, or under the direction and supervision of, the board of
the Bank.
(b) 	That the employment contract of the chief executive officer of the Bank or person in an equivalent position (together“CEO”) is with the Bank, and the terms 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.
(c) 	That all staff employed by the Bank shall have their remuneration determined by (or under the delegated authority of )the board or the CEO of the Bank and be accountable (directly or indirectly) to the CEO of the Bank.
13. That the Banking Group complies with the following quantitative requirements for liquidity-risk management with effectfrom 1 April 2010:(a) the one-week mismatch ratio of the Banking Group is not less than zero percent at the end of each business day;(b) the one-month mismatch ratio of the Banking Group is not less than zero percent at the end of each business day;and(c) the one-year core funding ratio of the Banking Group is not less than 65 percent at the end of each business day.
For the purposes of this condition of registration, the ratios identified must be calculated in accordance with the Reserve
Bank of New Zealand documents entitled ‘Liquidity Policy’ (BS13) dated 20 October 2009 and ‘Liquidity Policy Annex: Liquid
Assets’ (BS13A) dated October 2009.
14.	That, with effect from 1 April 2010, the Registered Bank has an internal framework for liquidity risk management that is
adequate in the Registered Bank’s view for 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 and implementation of the framework and policies for liquidity 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 the Bank might face, and prepares the Bank to manage stress through acontingency funding plan.
For the purposes of these conditions of registration, the term ‘Banking Group’ means ANZ National Bank Limited’s financial
reporting group (as defined in section 2(1) of the Financial Reporting Act 1993).

ANZ National Bank Limited and Subsidiary Companies
40 – 41

Credit Rating Information
Credit Ratings applicable as at 11 February 2010
The Bank has three current credit ratings, which are applicable to its long-term senior unsecured obligations which are payable
in New Zealand in New Zealand dollars. The credit ratings are:Rating Agency

Current Credit Rating

Qualification

Standard & Poor’s

AA

Outlook Stable

Moody’s Investors Service

Aa2

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

During the two-year period ended 31 December 2009, the Standard & Poor’s credit rating and qualification remained at AA
and Outlook Stable.
During the two-year period ended 31 December 2009, the Moody’s Investors Service credit rating and qualification remainedat Aa2 and Outlook Stable.
During the two-year period ended 31 December 2009, the Fitch Ratings credit rating and qualification remained at AA- andOutlook Stable. Fitch Ratings were formally engaged by the Bank on 18 March 2008 to provide credit rating services. Previously
Fitch Ratings had rated the Bank on an unsolicited basis as AA-.
Standard & Poor's

Moody's InvestorsService

Fitch
Ratings

Ability to repay principal and interest is extremely strong. This is thehighest investment category.

AAA

Aaa

AAA

Very strong ability to repay principal and interest.

AA

Aa

AA

Strong ability to repay principal and interest although somewhat
susceptible to adverse changes in economic, business or financial
conditions.

A

A

A

Adequate ability to repay principal and interest. More vulnerable toadverse changes.

BBB

Baa

BBB

Significant uncertainties exist which could affect the payment ofprincipal and interest on a timely basis.

BB

Ba

BB

Greater vulnerability and therefore greater likelihood of default.

B

B

BB

Likelihood of default now considered high. Timely repayment ofprincipal and interest is dependent on favourable financial conditions.

CCC

Caa

CCC

Highest risk of default.

CC to CCa to CCC to CD-

RD & DThe following grades display investment grade characteristics:

The following grades have predominantly speculative characteristics:

Obligations currently in default.

Credit ratings from Standard & Poor’s and Fitch Ratings may be modified by the addition of “+” or “-” to show the relative
standing within the ‘AA’ to ‘B’ categories. Moody’s Investors Service applies numerical modifiers 1, 2, and 3 to each of the ‘Aa’
to ‘Caa’ classifications, with 1 indicating the higher end and 3 the lower end of the rating category.

ANZ National Bank Limited and Subsidiary Companies

Directors’ Statement
As at the date on which this General Short Form Disclosure Statement is signed, after due enquiry, each Director believes that:(i) The Short Form Disclosure Statement contains all the information that is required by the Registered Bank DisclosureStatement (Off-Quarter – New Zealand Incorporated Registered Banks) Order 2008;(ii) The Short Form Disclosure Statement is not false or misleading.
Over the three months ended 31 December 2009, after due enquiry, each Director believes that:(i)	ANZ National Bank Limited has complied with the Conditions of Registration;(ii) Credit exposures to connected persons were not contrary to the interests of the Banking Group;(iii)	ANZ National Bank 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, operationalrisk and other business risks, and that those systems were being properly applied.
This General Short Form Disclosure Statement is dated, and has been signed by or on behalf of all Directors of the Bankon, 11 February 2010. On that date, the Directors of the Bank were:

Dr D T Brash

S C Elliott

J A Fagg

N M T Geary, CBEJ F Judge

P R Marriott

M R P Smith, OBE

Sir Dryden Spring

ANZ National Bank Limited and Subsidiary Companies
42 – 43

Independent Review Report for the Three Months Ended
31 December 2009
Independent Review Report to the Directors of ANZ National Bank Limited
We have reviewed the interim financial statements on pages 5 to 37 prepared and disclosed in accordance with Clause 19 of
the Registered Bank Disclosure Statement (Off-Quarter – New Zealand Incorporated Registered Banks) Order 2008 (the ‘Order’)and the supplementary information prescribed in Schedules 2 to 8. The interim financial statements, and supplementary
information, provide information about the past financial performance and cash flows of ANZ National Bank Limited and its
subsidiary companies (the ‘Banking Group’) and their financial position as at 31 December 2009. This information is stated inaccordance with the accounting policies set out on page 9.

Directors’ responsibilities
The Directors of ANZ National Bank Limited are responsible for the preparation and presentation of interim financial statementsin accordance with Clause 19 of the Order which give a true and fair view of the financial position of the Banking Group as at
31 December 2009 and its financial performance and cash flows for the three months ended on that date.
They are also responsible for the preparation of supplementary information which gives a fair view, in accordance with theOrder, of the matters to which it relates; and complies with Schedules 2 to 8 of the Order.

Reviewers’ responsibilities
We are responsible for reviewing the interim financial statements, including the supplementary information disclosed inaccordance with Schedules 3, 5 to 8, and Clause 13 of Schedule 2 of the Order presented to us by the Directors and reporting
our findings to you.
It is also our responsibility to express a review opinion on the supplementary information as required by Schedule 4B of theOrder in order to state whether, on the basis of the procedures described below, anything has come to our attention thatwould indicate that the information disclosed in accordance with Schedule 4B is not in all material respects prepared inaccordance with the Bank’s Conditions of Registration and with the Bank’s internal models for credit risk and operational risk
as accredited by the Reserve Bank of New Zealand and disclosed in accordance with Schedule 4B and for reporting our findings
to you.

Basis of review opinion
We have performed our review in accordance with the review engagement standard RS-1 Statement of Review Engagement
Standards issued by the New Zealand Institute of Chartered Accountants. A review is limited primarily to enquiries of Banking
Group personnel and analytical review procedures applied to the financial data, and thus provides less assurance than an
audit. We have not performed an audit and, accordingly, we do not express an audit opinion.
Our firm has also provided other services to the Banking Group in relation to other audit related services. Partners andemployees of our firm may also deal with the Banking Group on normal terms within the ordinary course of trading activitiesof the business of the Banking Group. There are, however, certain restrictions on borrowings which the partners and employees
of our firm can have with the Banking Group. These matters have not impaired our independence as auditors of the Banking
Group. The firm has no other relationship with, or interest in, the Banking Group.

Review Opinion
Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that:a.

the interim financial statements (excluding the supplementary information disclosed in Notes 16, 17, 18, 19 and 23) do notpresent a true and fair view of the financial position of the Banking Group as at 31 December 2009 and its financial
performance and cash flows for the three months ended on that date;b. the supplementary information disclosed in Notes 17, 18, 19 and 23 prescribed by Schedules 3, 5 to 8 and Clause 13 of
Schedule 2 of the Order is not fairly stated in accordance with those Schedules; andc. the supplementary information relating to Capital Adequacy disclosed in Note 16 of the interim financial statements, as
required by Schedule 4B of the Order, derived from the Banking Group’s interim financial statements and sources other thanthe Banking Group’s accounting records, is not in all material respects derived in accordance with the Bank’s Conditions ofRegistration, with the Reserve Bank of New Zealand document Capital Adequacy Framework (Internal Models BasedApproach) (BS2B), and with the Banking Group’s internal models for credit risk and operational risk as accredited by the
Reserve Bank of New Zealand, and disclosed in accordance with Schedule 4B of the Order.
Our review was completed on 11 February 2010 and our review opinion is expressed as at that date.

Wellington

ANZ, part of ANZ National Bank Limited anzacc883 02/10

anz.co.nz