ANZ BANK NEW ZEALAND LIMITEDREGISTERED BANK DISCLOSURE STATEMENTFOR THE SIX MONTHS ENDED 31 MARCH 2022
NUMBER 97 | ISSUED MAY 2022

CONTENTS
Glossary of terms

2

DISCLOSURE STATEMENTInterim Financial Statements
Condensed consolidated interim financial statements
Notes to the interim financial statements
Registered Bank Disclosures
Directors’ Statement
Independent Auditor’s Review Report

3
4
8
24
45
46

GLOSSARY OF TERMS
In this Registered Bank Disclosure Statement (Disclosure Statement) unless the context otherwise requires:
Bank means ANZ Bank New Zealand Limited.
Banking Group, We or Our means the Bank and all its controlled entities.
Immediate Parent Company means ANZ Holdings (New Zealand) Limited.
Ultimate Parent Bank means Australia and New Zealand Banking Group Limited.
Overseas Banking Group means the worldwide operations of Australia and New Zealand Banking Group Limited including its controlled
entities.
New Zealand business means all business, operations, or undertakings conducted in or from New Zealand identified and treated as if itwere conducted by a company formed and registered in New Zealand.
NZ Branch means the New Zealand business of the Ultimate Parent Bank.
ANZ New Zealand means the New Zealand business of the Overseas Banking Group.
Registered Office is Ground Floor, ANZ Centre, 23-29 Albert Street, Auckland, New Zealand, which is also the Banking Group’s address forservice.
RBNZ means the Reserve Bank of New Zealand.
APRA means the Australian Prudential Regulation Authority.
the Order means the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014.
Any term or expression which is defined in, or in the manner prescribed by, the Order shall have the meaning given in or prescribed by
the Order.

2

INTERIM FINANCIAL
STATEMENTS
Condensed consolidated interim financial statements
Income statement

4Statement of comprehensive income

4

Balance sheet

5

Cash flow statement

6

Statement of changes in equity

7

Notes to the condensed consolidated interim financial statements
Basis of preparation
1. About our interim financial statements

8

Financial performance
2. Other operating income

9

3. Operating expenses

9

4. Segment reporting

10

Financial and non-financial assets
5. Net loans and advances

11

6. Allowance for expected credit losses

12

7. Goodwill and other intangible assets

16

Financial and non-financial liabilities
8. Deposits and other borrowings

18

9. Other provisions

18

10. Debt issuances

18

Financial instrument disclosures
11. Credit risk

19

12. Fair value of financial assets and financial liabilities

21

Other disclosures
13. Commitments and contingent liabilities

22

14. Subsequent events

23

3

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDINTERIM FINANCIAL STATEMENTS
INCOME STATEMENT
2022
NZ$m

2021
NZ$m

Interest income

2,454

2,334

Interest expense

(685)

(661)

1,769

1,673

561

338

2,330

2,011

(826)

(772)

1,504

1,239

20

70

1,524

1,309

Income tax expense

(423)

(362)

Profit for the period

1,101

947

For the six months ended 31 March

2022
NZ$m

2021
NZ$m

Profit for the period

1,101

947

3

43

Unrealised losses recognised directly in equity

(58)

(3)

Realised losses / (gains) transferred to the income statement

(29)

4

Income tax attributable to the above items

23

(11)

Other comprehensive income after tax

(61)

33

1,040

980

For the six months ended 31 MarchNote

Net interest income
Other operating income

2

Operating income
Operating expenses

3

Profit before credit impairment and income tax
Credit impairment release
Profit before income tax

6

STATEMENT OF COMPREHENSIVE INCOME

Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Items that may be reclassified subsequently to profit or loss
Reserve movements:

Total comprehensive income for the period

The notes appearing on pages 8 to 23 form an integral part of these interim financial statements

4

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDBALANCE SHEET
31 Mar 22
NZ$m

30 Sep 21
NZ$m

11,178

7,844

Settlement balances receivable

913

237

Collateral paid

612

537

Trading securities

7,818

9,585

Derivative financial instruments

9,000

9,304

Investment securities

10,291

11,926

146,121

140,756

34

-

As at

Note

AssetsCash and cash equivalents

Net loans and advances

5

Current tax assets

327

390

3,103

3,091

Premises and equipment

485

509

Other assets

609

590

Total assets

190,491

184,769

4,592

2,704

Deferred tax assets
Goodwill and other intangible assets

7

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings

8

Derivative financial instruments
Current tax liabilities
Payables and other liabilities
Employee entitlements
Other provisions

9

Debt issuances

10

1,070

738

138,704

133,139

8,376

7,727

-

170

1,242

1,464

132

138

250

295

19,09721,502

Total liabilities

173,463

167,877

Net assets

17,02816,892

11,888

11,888770

Retained earnings

5,133

4,934

Total equity

17,02816,892EquityShare capital
Reserves

The notes appearing on pages 8 to 23 form an integral part of these interim financial statements

5

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDINTERIM FINANCIAL STATEMENTS
CASH FLOW STATEMENT
For the six months ended 31 March

2022
NZ$m

2021
NZ$m

Profit after income tax

1,101

947

63

63

Adjustments to reconcile to net cash flows from operating activities:
Depreciation and amortisation
Loss on sale and impairment of premises and equipment
Net derivatives/foreign exchange adjustment
Other non-cash movements

1

1

(106)

(776)

(9)

115

(75)

14

Net (increase)/decrease in operating assets:
Collateral paid
Trading securities

1,767

3,097

Net loans and advances(5,365)(4,790)

(666)

(124)

Deposits and other borrowings (excluding items included in financing activities)

5,065

3,799

Settlement balances payable

1,888

(76)

332

(73)

Other assets
Net increase/(decrease) in operating liabilities:

Collateral received
Other liabilities

(415)

22

Total adjustments

2,480

1,272

Net cash flows from operating activities1

3,581

2,219

Purchases(5,569)(4,046)

Proceeds from sale or maturity

6,879

1,509

Cash flows from investing activities
Investment securities:

(58)

(17)

1,252

(2,554)500-

Issue proceeds

2,680

-

Redemptions

Other assets
Net cash flows from investing activities
Cash flows from financing activities
Deposits and other borrowings2
Debt issuances3(3,753)(2,307)

Repayment of lease liabilities

(22)

(23)

Dividends paid

(904)

(4)

Net cash flows from financing activities(1,499)(2,334)

Net change in cash and cash equivalents

3,334(2,669)Cash and cash equivalents at beginning of period

7,844

8,248

Cash and cash equivalents at end of period

11,178

5,579

1
2
3

Net cash provided by operating activities includes income taxes paid of NZ$541 million (2021: NZ$582 million).
Movement in deposits and other borrowings includes repurchase transactions entered into with the RBNZ under the Funding for Lending Programme of NZ$500 million.
Movement in debt issuances (Note 10 debt issuances) also includes a NZ$705 million decrease (2021: NZ$1,089 million decrease) from the effect of foreign exchange rates, a NZ$643 million
decrease (2021: NZ$336 million decrease) from changes in fair value hedging instruments and a NZ$16 million increase (2021: NZ$45 million increase) from other changes.

The notes appearing on pages 8 to 23 form an integral part of these interim financial statements

6

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDSTATEMENT OF CHANGES IN EQUITY
SharecapitalNZ$m

Investment
securities
revaluation
reserve
NZ$m

Cash flow
hedging
reserve
NZ$m

Retainedearnings
NZ$m

Total
equityNZ$m11,888

8

110

3,863

15,869Profit or loss

-

-

-

947

947

Unrealised gains / (losses) recognised directly in equity

-

49

(52)

-

(3)

Realised losses / (gains) transferred to the income statement

-

(2)

6

-

4

Actuarial gain on defined benefit schemes

-

-

-

43

43

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

-

(13)

13

(11)

(11)

Total comprehensive income for the period

-

34

(33)

979

980

Preference dividends paid

-

-

-

(4)

(4)

Transactions with Immediate Parent Company in its capacity as owner

-

-

-

(4)

(4)

As at 31 March 2021

11,888

42

77

4,838

16,845As at 1 October 2021
Profit or loss

11,888

62

8

4,934

16,892

-

-

-

1,101

1,101

Unrealised losses recognised directly in equity

-

(24)

(34)

-

(58)

Realised losses / (gains) transferred to the income statement

-

(31)

2

-

(29)

Actuarial gain on defined benefit schemes

-

-

-

3

3

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

-

15

9

(1)

23

Total comprehensive income for the period

-

(40)

(23)

1,103

1,040

Ordinary dividends paid

-

-

-

(900)

(900)

Preference dividends paid

-

-

-

(4)

(4)

As at 1 October 2020

Transactions with Immediate Parent Company in its capacity as owner:

Transactions with Immediate Parent Company in its capacity as owner:

Transactions with Immediate Parent Company in its capacity as owner
As at 31 March 2022

-

-

-

(904)

(904)

11,888

22

(15)

5,133

17,028The notes appearing on pages 8 to 23 form an integral part of these interim financial statements

7

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
1.

ABOUT OUR INTERIM FINANCIAL STATEMENTS

BASIS OF PREPARATION
These are the condensed consolidated interim financial statements (financial statements) for ANZ Bank New Zealand Limited (the Bank) and its
controlled entities (together, the ‘Banking Group’) and should be read in conjunction with the Banking Group’s financial statements for the year ended
30 September 2021.
On 6 May 2022, the Directors resolved to authorise the issue of these financial statements.
These financial statements comply with:• New Zealand Generally Accepted Accounting Practice (NZ GAAP), as defined in the Financial Reporting Act 2013;• NZ IAS 34 Interim Financial Reporting and other applicable Financial Reporting Standards, as appropriate for publicly accountable for-profit
entities; and• IAS 34 Interim Financial Reporting.
The financial statements consolidate the financial statements of the Bank and its subsidiaries.
We present the financial statements in New Zealand dollars and have rounded values to the nearest million dollars (NZ$m), unless otherwise stated.
The accounting policies adopted by the Banking Group are consistent with those adopted and disclosed in the previous full year financial statements.

BASIS OF MEASUREMENT
We have prepared the financial information in accordance with the historical cost basis - except for the following assets and liabilities which we havestated at their fair value:• derivative financial instruments;• financial instruments measured at fair value through other comprehensive income; and• financial instruments measured at fair value through profit and loss.

KEY JUDGEMENTS AND ESTIMATES
The preparation of these financial statements requires the use of management judgement, estimates and assumptions that affect reported
amounts and the application of accounting policies. Discussion of the critical accounting estimates and judgements, which include complex
or subjective decisions or assessments, are provided in the previous full year financial statements. Such estimates and judgements arereviewed on an ongoing basis.
Whilst the course of the COVID-19 pandemic is moderating and its impact on economic activity and our customers is better understood, theresponses of consumers, business and governments remain uncertain. New external risks are also emerging, including mounting
geopolitical tensions, global supply chain disruptions, the conflict in Ukraine, and commodity price impacts. Thus there remains an elevatedlevel of estimation uncertainty involved in the preparation of these financial statements.
The Banking Group has made various accounting estimates in these financial statements based on forecasts of economic conditions whichreflect expectations and assumptions at 31 March 2022 about future events considered reasonable in the circumstances. There is aconsiderable degree of judgement involved in preparing these estimates. Actual economic conditions are likely to be different from those
forecast since anticipated events frequently do not occur as expected, and the effect of these differences may significantly impact
accounting estimates included in these financial statements. The significant accounting estimates impacted by these forecasts andassociated uncertainties are predominantly related to expected credit losses and recoverable amounts of non-financial assets.
The impact of these uncertainties on each of these accounting estimates is discussed further in the relevant notes in these financial
statements and/or in the relevant notes in the previous full year financial statements. Readers should consider these disclosures in light of
the inherent uncertainties described above.

8

ANZ BANK NEW ZEALAND LIMITED2.

OTHER OPERATING INCOME

For the six months ended 31 March(i) Fee and commission income
Lending fees
Non-lending fees
Commissions
Funds management income
Fee and commission income
Fee and commission expense
Net fee and commission income(ii) Other income
Net trading gains
Gain on sale of investment securities designated at fair value through other comprehensive income
Fair value gain / (loss) on hedging activities and financial liabilities designated at fair value
Net foreign exchange earnings and other financial instruments income
Sale of legacy insurance portfolio
Release of provisions for UDC Finance Ltd and Paymark Ltd disposal costs
Other
Other income
Other operating income

3.

UNAUDITED

2022
NZ$m

2021
NZ$m

13
341
16
130
500
(242)
258

16
341
18
131
506
(230)
276

75
31
179
285
14
4
303
561

66
2
(28)
40
14
8
62
338

2022
NZ$m

2021
NZ$m

469
15
7
491

421
14
9
444

8
41
18
67

9
40
20
69

22
76
16
114

23
62
18
103

17
33
19
67
18
154
826

17
31
21
53
34
156
772

OPERATING EXPENSES

For the six months ended 31 March
Personnel
Salaries and related costs
Superannuation costs
Other
Personnel
PremisesRent
Depreciation
Other
Premises
Technology
Depreciation and amortisation
Subscription licences and outsourced services
Other
Technology
Other
Advertising and public relations
Professional fees
Freight, stationery, postage and communication
Charges from Ultimate Parent Bank
Other
Other
Operating expenses

9ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
4. SEGMENT REPORTING
The Banking Group is organised into three major business segments for segment reporting purposes - Personal, Business and Institutional. Centralised
back office and corporate functions support these segments. These segments are consistent with internal reporting provided to the chief operating
decision maker, being the Bank’s Chief Executive Officer.
During the year ended 30 September 2021, the Banking Group reorganised into the following business segments: Personal (comprising the Personaland Funds Management business units), Business, and Institutional. These are intended to better align the Banking Group’s internal business with theneeds of its primary customer groups, home owners and business owners. These changes were implemented from August 2021 and have beenaccounted for prospectively. During the six months ended 31 March 2022, there were net movements of approximately NZ$2.0 billion of loans andadvances and NZ$1.4 billion of customer deposits from Business to Personal. Comparative amounts have not been restated because the overall
impact on the financial performance and financial position of the affected segments, Personal and Business, is not considered material.
Personal
Personal provides a full range of banking and wealth management services to consumer and private banking customers. We deliver our services via
our internet and app-based digital solutions and network of branches, mortgage specialists, relationship managers and contact centres.
Business
Business provides a full range of banking services including small business lending, through our digital, branch and contact centres channels, andtraditional relationship banking and sophisticated financial solutions through dedicated managers. These cover privately owned small, medium andlarge enterprises, the agricultural business segment, government and government related entities.
Institutional
The Institutional division services governments, global institutional and corporate customers via the following business units:• Transaction Banking provides customers with working capital and liquidity solutions including documentary trade, supply chain financing,commodity financing as well as cash management solutions, deposits, payments and clearing.
• Corporate Finance provides customers with loan products, loan syndication, specialised loan structuring and execution, project and export
finance, debt structuring and acquisition finance and corporate advisory services.
• Markets provide customers with risk management services on foreign exchange, interest rates, credit, commodities and debt capital markets inaddition to managing the Banking Group’s interest rate exposure and liquidity position.
Other
Other includes treasury and back office support functions, none of which constitutes a separately reportable segment.
Personal

Business

Institutional

Other

Total

For the six months
ended 31 March

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

Net interest income

1,020

983

575

503

158

168

16

19

1,769

1,673

4

7

1

-

8

9

-

-

13

16

196

308

122

5

23

28

-

-

341

341

Net fee and commission income- Lending fees
- Non-lending fees
- Commissions

15

17

-

-

1

1

-

-

16

18

- Funds management income

130

131

-

-

-

-

-

-

130

131

- Fee and commission expense

(144)

(230)

(98)

-

-

-

-

-

(242)

(230)

Net fee and commission income

201

233

25

5

32

38

-

-

258

276

Other income
Other operating income
Operating income

1

15

-

-

79

75

223

(28)

303

62

202

248

25

5

111

113

223

(28)

561

338

1,222

1,231

600

508

269

281

239

(9)

2,330

2,011

Operating expenses

(585)

(547)

(131)

(118)

(96)

(94)

(14)

(13)

(826)

(772)

Profit before credit impairment
and income tax

637

684

469

390

173

187

225

(22)

1,504

1,239

Credit impairment release /(charge)

(26)

32

48

31

(2)

7

-

-

20

70

Profit / (loss) before income tax
Income tax expense

611

716

517

421

171

194

225

(22)

1,524

1,309

(171)

(197)

(145)

(118)

(48)

(54)

(59)

7

(423)

(362)

Profit after income tax

440

519

372

303

123

140

166

(15)

1,101

947

10

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

Personal

Business

Institutional

Other

Total

31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21
As at

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

NZ$m

Financial position
1,042

1,042

895

895

1,069

1,069

-

-

3,006

3,006

Net loans and advances

101,370

95,06137,79739,158

6,954

6,535

-

2

146,121

140,756

Customer deposits

84,03978,592

23,671

23,744

21,661

22,793--

129,371

125,129

Goodwill

Other segment
The Other segment profit/(loss) after tax comprises:
For the six months ended 31 March

2022
NZ$m

2021
NZ$m

Personal and Business central functions
Group Centre
Economic hedges
Total

20
20
126
166

1
8
(24)
(15)

31 Mar 22
NZ$m
887
1,169
102,798
41,439146,293(34)
435
146,694(573)
146,12130 Sep 21
NZ$m
799
1,127
98,51340,528140,967(29)
403
141,341(585)
140,756

5.

NET LOANS AND ADVANCES
Note

Overdrafts
Credit cards
Term loans - housing
Term loans - non-housing
Subtotal
Unearned income
Capitalised brokerage and other origination costs
Gross loans and advances
Allowance for expected credit losses
Net loans and advances

6

The Banking Group has reviewed the historic accounting treatment of a transaction product arrangement comprised of both overdraft and deposit
balances and concluded that, under NZ IAS 32 Financial Instruments: Presentation, the deposit amounts cannot be netted against the overdraft
balances drawn under the arrangement. The application of netting reduced the amounts presented for overdrafts (above) and customer deposits(Note 8 deposits and other borrowings) by NZ$163 million as at 30 September 2021. Comparative amounts have not been restated as the impact is
not considered material.
The Bank has sold residential mortgages to the NZ Branch with a net carrying value of NZ$276 million as at 31 March 2022 (30 September 2021:
NZ$318 million). These assets qualify for derecognition as the Bank does not retain a continuing involvement in the transferred assets.

11

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
6. ALLOWANCE FOR EXPECTED CREDIT LOSSES
This note should be read in conjunction with the estimates, assumptions and judgements included in Note 1 about our interim financial statements.

Net loans and advances at amortised cost
Off-balance sheet commitments
Total

31 Mar 22

30 Sep 21

Collectively Individuallyassessedassessed
NZ$m
NZ$m
511
62
105
14
616
76

Total
NZ$m
573
119
692

Collectively Individuallyassessedassessed
NZ$m
NZ$m
525
60
107
15
632
75

Total
NZ$m
585
122
707

Stage 2
NZ$m
314
(12)
(10)
292

Stage 3
Collectively Individuallyassessedassessed
NZ$m
NZ$m
56
60
(1)
(3)
1
39
(22)
(15)
3
56
62

Total
NZ$m
585
22
(22)
(15)
3
573

4
4

122
(3)
119

The following tables present the movement in the allowance for expected credit losses (ECL).
Net loans and advances
Allowance for ECL is included in net loans and advances.

As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Write-backs
Bad debts written-off (excluding recoveries)
Discount unwind reversal
As at 31 March 2022

Stage 1
NZ$m
155
16
(8)
163

Off-balance sheet credit related commitments - undrawn and contingent facilities
Allowance for ECL is included in other provisions.
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
As at 31 March 2022

64
5
(4)
65

39
(5)
2
36

15
(1)
14

CREDIT IMPAIRMENT CHARGE – INCOME STATEMENT
For the six months ended 31 March
New and increased provisions- Collectively assessed- Individually assessed
Write-backs
Recoveries of amounts previously written-off
Total credit impairment release

12

2022
NZ$m

2021
NZ$m

(16)
35
(22)
(17)
(20)

(60)
36
(36)
(10)
(70)

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDKEY JUDGEMENTS AND ESTIMATES
The Banking Group measures the allowance for ECL using an expected credit loss impairment model as required by NZ IFRS 9 Financial
Instruments.
COVID-19 risks are moderating however the economy continues to transition to a setting with less government stimulus and some uncertainty
as to how customers will respond to expected interest rate rises and inflationary pressure, heightened geopolitical tensions across the globe,
the conflict in Ukraine and global supply chain issues, commodity price impacts, and how governments, businesses and consumers respondalso remains uncertain. This uncertainty is reflected in the Banking Group’s assessment of expected credit losses, which are subject to a numberof management judgements and estimates.
Individually assessed allowance for expected credit losses
In estimating individually assessed ECL, the Banking Group makes judgements and assumptions in relation to expected repayments, therealisable value of collateral, business prospects for the customer, competing claims and the likely cost and duration of the work-out process.
Judgements and assumptions in respect of these matters have been updated to reflect amongst other things, the continuing uncertainties
described above.
Collectively assessed allowance for expected credit losses
In estimating collectively assessed ECL, the Banking Group makes judgements and assumptions in relation to:• the selection of an estimation technique or modelling methodology; and• the selection of inputs for those models, and the interdependencies between those inputs.
The following table summarises the key judgements and assumptions in relation to the model inputs and the interdependencies between
those inputs, and highlights significant changes during the current period.
The judgements and associated assumptions have been made in the context of the uncertainty of how various factors might impact the global
economy, and reflect historical experience and other factors that are considered to be relevant, including expectations of future events that are
believed to be reasonable under the circumstances. The Banking Group’s ECL estimates are inherently uncertain and, as a result, actual results
may differ from these estimates.
Judgement /assumption
Determining
when asignificant
increase incredit risk
(SICR) has
occurred

Description
In the measurement of ECL, judgement is involved insetting the rules and trigger points to determine
whether there has been a SICR since initial recognitionof a loan, which would result in the financial asset
moving from Stage 1 to Stage 2. This is a key area ofjudgement since transition from Stage 1 to Stage 2
increases the ECL from an allowance based on theprobability of default in the next 12 months, to anallowance for lifetime expected credit losses.
Subsequent decreases in credit risk resulting intransition from Stage 2 to Stage 1 may similarly result insignificant changes in the ECL allowance.

Considerations for the six months ended
31 March 2022
The Banking Group has retained a portion of ECL toprovide for expected delinquencies that may havebeen obscured by COVID-19 support measures.
Although these measures have ceased, uncertainty
remains on their ongoing impact on portfolio
delinquency.

The setting of precise trigger points requires judgement
which may have a material impact upon the size of the
ECL allowance. The Banking Group monitors theeffectiveness of SICR criteria on an ongoing basis.
Measuringboth 12-monthand lifetime
credit losses

The probability of default (PD), loss given default (LGD)
and exposure at default (EAD) credit risk parameters
used in determining ECL are point-in-time measuresreflecting the relevant forward-looking information
determined by management. Judgement is involved indetermining which forward-looking information
variables are relevant for particular lending portfolios
and for determining each portfolio’s point-in-time
sensitivity.

The PD, LGD and EAD models are subject to the
Banking Group’s model risk policy that stipulates
periodic model monitoring, periodic re-validationand defines approval procedures and authorities
according to model materiality.

In addition, judgement is required where behaviouralcharacteristics are applied in estimating the lifetime of a
facility to be used in measuring ECL.

There were no material changes to the policies
during the six months ended 31 March 2022.

The modelled outcome includes an amount torecognise increased model uncertainties as a resultof COVID-19.

13

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS

KEY JUDGEMENTS AND ESTIMATES
Judgement /assumption

Description

Considerations for the six months ended
31 March 2022

Base caseeconomic
forecast

The Banking Group derives a forward-looking “basecase” economic scenario which reflects our view of
future macro-economic conditions.

There have been no changes to the types of forwardlooking variables (key economic drivers) used asmodel inputs in the current period.
As at 31 March 2022, the base case assumptions havebeen updated to reflect the economic impacts of theOmicron variant, supply chain pressures, andincreasing inflation and expected interest rate rises. In
determining the expected path of the economy,
assessments of the impact of central bank policies,
government actions, and the response of businesses
and consumers were considered.

Probability
weighting ofeach economic
scenario (basecase, upside,
downside andseveredownsidescenarios)1,2Management
temporaryadjustments

Probability weighting of each economic scenario is
determined by management considering the risks anduncertainties surrounding the base case economic
scenario at each measurement date.

The expected outcomes of key economic drivers forthe base case scenario as at 31 March 2022 aredescribed below under the heading “Base caseeconomic forecast assumptions”.
The key considerations for probability weightings in
the current period include the ongoing but
increasingly known impacts of COVID-19, uncertainty
as to how customers will respond to expectedinterest rate rises and inflationary pressures, theconflict in Ukraine, commodity price impacts andglobal supply chain issues.
Weightings for current and prior periods are as
detailed in the section on “Probability weightings”
below.

Management temporary adjustments to the ECL
allowance are used in circumstances where it is judgedthat our existing inputs, assumptions and modeltechniques do not capture all the risk factors relevant toour lending portfolios. Emerging local or global
macroeconomic, microeconomic or political events,
and natural disasters that are not incorporated into ourcurrent parameters, risk ratings, or forward-looking
information are examples of such circumstances. The
use of management temporary adjustments may
impact the amount of ECL recognised.

The assigned probability weightings are subject to ahigh degree of inherent uncertainty and therefore
the actual outcomes may be significantly different tothose projected.
Management have continued to apply a number ofadjustments to the modelled ECL primarily due to theuncertainty associated with continuing but
moderating COVID-19 impacts.
Management overlays (including COVID-19 overlays)
which add to the modelled ECL provision have been
made for risks particular to personal and businessbanking.
Management temporary adjustments total NZ$157
million (September 2021: NZ$177 million).

The uncertainty associated with the ongoing but
moderating COVID-19 pandemic, and the extent towhich the actions of governments, businesses andconsumers influence credit outcomes are not fully
incorporated into existing ECL models which are basedon historical underlying data. Accordingly, management
overlays have been applied to ensure credit provisions
are appropriate.
1.
2.

14

The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the economic conditions prevailing at balance date) and are
based on a combination of more optimistic (in the case of the upside) and pessimistic (in the case of the downside) economic conditions.
The severe downside scenario is fixed by reference to average economic cycle conditions and accounts for the potentially severe downside impact of less likely extremely adverse economic
conditions.

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDKEY JUDGEMENTS AND ESTIMATES
Base case economic forecast assumptions
Continuing uncertainties described above increase the risk of the economic forecast resulting in an understatement or overstatement of the
ECL balance:
The economic drivers of the base case economic forecasts, reflective of our view of future macro-economic conditions, used at 31 March 2022
are set out below. For years beyond the near term forecasts below, the ECL models project future year economic conditions which include anassumption of eventual reversion to mid-cycle economic conditions.
Actual calendar year
Forecast calendar year
New Zealand

2021

2022

2023

Gross domestic product (GDP) (annual % change)
Unemployment rate
Residential property prices (annual % change)
Consumer price index (CPI) (annual % change)

5.5%
3.8%
26.5%
3.9%

2.4%
3.0%
-6.0%
5.3%

2.8%
3.0%
3.3%
3.2%

The base case economic forecasts above indicate a weakening in current economic conditions adding to inflation pressure for a time andweighing on economic activity.
Probability weightings
Probability weightings for each scenario are determined by management considering the risks and uncertainties surrounding the base caseeconomic scenario including the uncertainties described above.
The base case scenario represents a deterioration in the forecasts since September 2021. Given the uncertainties associated with a potential
ongoing recovery of the economy and external factors, the average base case weighting has been reduced to 40.0% (Sep 21: 50.0%) and thesevere downside scenario increased to 10.0% (Sep 21: 5.0%).
The assigned probability weightings are subject to a high degree of inherent uncertainty and therefore the actual outcomes may besignificantly different to those projected. The Banking Group considers these weightings to provide estimates of the possible loss outcomes
and taking into account short and long term inter-relationships within the Banking Group’s credit portfolios. The average weightings applied
are set out below:

Base
UpsideDownside
Severe downside

31 Mar 22

30 Sep 21

40.0%
5.0%
45.0%
10.0%

50.0%
4.5%
40.5%
5.0%

ECL - Sensitivity analysis
Given current economic uncertainties and the judgement applied to factors used in determining the expected default of borrowers in future
periods, expected credit losses reported by the Banking Group should be considered as a best estimate within a range of possible estimates.
The table below illustrates the sensitivity of the Banking Group’s allowance for collectively assessed ECL to key factors used in determining it asat 31 March 2022:
Profit andBalanceloss impact
NZ$m
NZ$m
If 1% of Stage 1 facilities were included in Stage 2
If 1% of Stage 2 facilities were included in Stage 1

622
615

6
(1)

100% upside scenario
100% base scenario
100% downside scenario
100% severe downside scenario

237
297
563
756

(379)
(319)
(53)
140

15

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
7.

GOODWILL AND OTHER INTANGIBLE ASSETS
31 Mar 22
NZ$m
3,006
76
21
3,103

GoodwillManagement rights
Software
Goodwill and other intangible assets

30 Sep 21
NZ$m
3,006
76
9
3,091

GOODWILL AND OTHER INTANGIBLE ASSETS ALLOCATED TO CASH-GENERATING UNITS (CGUs)
Goodwill arose on the acquisition of the NBNZ Holdings Limited group on 1 December 2003, and the carrying amount reflects amortisation
recognised before the application of NZ IFRS from 1 October 2004 and subsequent business disposals. Management rights, assessed as having
indefinite useful lives, arose on the acquisition of the ING Holdings (NZ) Limited (now ANZ New Zealand Investments Holdings Limited) group on 30
November 2009.
Goodwill and management rights are allocated to CGUs as follows:
Goodwill
31 Mar 22
30 Sep 21
NZ$m
NZ$m
980
980
62
62
1,042
1,042
895
895
1,069
1,069
3,006
3,006

Cash generating unit
Personal
Funds Management
Personal segment
Business
Institutional
Total

Management rights
31 Mar 22
30 Sep 21
NZ$m
NZ$m
76
76
76
76
76
76

Annual goodwill impairment test
The annual impairment test is performed as at the end of February each year. Goodwill is considered to be impaired if the carrying amount of therelevant CGU exceeds its recoverable amount. The recoverable amount of a CGU is the higher of its fair value less costs of disposal (FVLCOD) and its
value-in use (VIU). We use a value-in-use approach to estimate the recoverable amount of the CGU to which each goodwill component is allocated.
Based on this assessment no impairment was identified for any CGU, and therefore a FVLCOD calculation was not required.
VALUE-IN-USE
These calculations use cash flow projections based on a number of financial budgets within each CGU covering an initial forecast period. These
projections also incorporate economic assumptions including GDP, inflation, unemployment, residential and commercial property prices, the impactof the restriction imposed by RBNZ on the payment of ordinary dividends by all New Zealand incorporated registered banks, and the implementationof RBNZ’s new capital adequacy requirements. Cash flows beyond the forecast period are extrapolated using the terminal growth rate. These cash flow
projections are discounted using a discount rate derived using a capital asset pricing model.
Future changes in the assumptions upon which the calculation is based may materially impact this assessment, resulting in the potential impairmentof part or all of the goodwill balances.
Input / assumption

Values applied in the 28 February 2022 impairment test

Forecast period and projections

To 30 September 2028 - an extended forecast period was used to cover the implementation of RBNZ’s newcapital adequacy requirements over the transition period ending on 1 July 2028.

Revenue growth over forecast
periodComprises impacts of net interest margin and volume growth, arising from planned responses to known
regulatory and economic forecasts. Average annual forecast revenue growth rates are shown below.

Credit impairment over forecast
periodVaries by CGU, based on ECL modelling for 2022 to 2024, before returning to long run experience levels for2025 to 2028. Long run experience levels are based on the Banking Group’s bad debts written off, net ofrecoveries, since 2004 of 0.15% of gross loans and advances. Credit impairment for each CGU as apercentage of forecast gross loans and advances for 2025 to 2028 is shown below.

Terminal growth rate

2.0% - based on 2025 forecast inflation from RBNZ’s February 2022 Monetary Policy Statement.

Discount rate

Post tax: 10.7% (February 2021: 9.4%).
The main variables in the calculation of the discount rate used are the risk free rate, beta and the market risk
premium. The risk free rate was the monthly average traded 10 year New Zealand government bond yield
for February 2022 of 2.7%. The market risk premium was estimated using a range of methods incorporating
historical and forward looking market data. Beta was consistent with observable measures applied in theregional banking sector.

16

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDThe values of the average revenue growth, credit impairment as a percentage of forecast gross loans and advances, and pre-tax discount rates
assumptions by CGU are shown in the table below. The implied pre-tax discount rates are significantly higher than the post-tax discount rate above
because regulatory capital retention over the forecast period is not tax effected.
Cash generating unit
Personal (previously Retail and Business Banking)Funds Management (previously Wealth)Business (previously Commercial)
Institutional

Revenue growth
28 Feb 22 28 Feb 21
6.1%
5.1%
3.4%
6.4%
4.2%
5.3%
4.5%
3.6%

Credit impairment
28 Feb 22 28 Feb 21
0.13%
0.12%
0.10%
n/a
0.21%
0.21%
0.21%
0.22%

Pre-tax discount rate
28 Feb 22 28 Feb 21
17.5%
20.8%
16.4%
18.6%
17.8%
20.8%
17.3%
20.6%

We performed stress tests for key sensitivities in each CGU. A change, considered to be reasonably possible by management, in key assumptions
would not cause the carrying amount of any CGU to exceed its recoverable amount.

KEY JUDGEMENTS AND ESTIMATESManagement judgement is used to assess the recoverable value of goodwill and other intangible assets, and the useful economic life ofan asset, or if an asset has an indefinite life. We reassess the recoverability of the carrying value at each reporting date.
Goodwill
A number of key judgements are required in the determination of whether or not a goodwill balance is impaired:• the level at which goodwill is allocated – consistent with prior periods the CGUs to which goodwill is allocated are the Banking
Group’s four revenue generating segments that benefit from relevant historical business combinations generating goodwill.
• determination of the carrying amount of each CGU which includes an allocation, on a reasonable and consistent basis of corporate
assets and liabilities that are not directly attributable to the CGUs to which goodwill is allocated.
• assessment of the recoverable amount of each CGU used to determine whether the carrying amount of goodwill is supported isbased on judgements including the selection of the model and key assumptions used to calculate the recoverable amount.
The assessment of the recoverable amount of each CGU has been made within the context of the ongoing impact of COVID-19 and otherfactors outlined in Note 1 about our interim financial statements, and reflects expectations of future events that are believed to bereasonable under the circumstances. Changes in conditions could have a positive or adverse impact on the determination of recoverable
amounts.

17

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
8.

DEPOSITS AND OTHER BORROWINGS

Term deposits
On demand and short term deposits
Deposits not bearing interest
Total customer deposits
Certificates of deposit
Commercial paper
Securities sold under repurchase agreements
Deposits from Immediate Parent Company and NZ Branch
Deposits and other borrowings

31 Mar 22
NZ$m
41,89064,11923,362
129,371
2,171
4,892
2,226
44
138,70430 Sep 21
NZ$m
40,66862,64821,813
125,129
1,875
4,433
1,663
39
133,139

31 Mar 22
NZ$m
119
79
15
21
16
250

30 Sep 21
NZ$m
122
98
25
22
28
295

9. OTHER PROVISIONS

Allowance for ECL on undrawn and contingent facilities
Customer remediation
Restructuring costs
Leasehold make good
Other1
Total other provisions
1

Note
6

Other comprise various other provisions including losses arising from other legal action, operational issues, and warranties and indemnities provided in connection with various disposals of
businesses and assets.

10. DEBT ISSUANCESThe Banking Group uses a variety of funding programmes to issue unsubordinated debt (including senior debt and covered bonds) and subordinateddebt. The difference between unsubordinated debt and subordinated debt is that holders of unsubordinated debt take priority over holders ofsubordinated debt owed by the relevant issuer and subordinated debt will be repaid by the relevant issuer only after the repayment of claims ofdepositors, other creditors and the senior debt holders.
31 Mar 22
30 Sep 21
NZ$m
NZ$m
Senior debt
14,22012,589Covered bonds
4,248
3,973
18,468
Total unsubordinated debt
16,562
Subordinated debt
- Additional Tier 1 capital
2,441
1,941
- Tier 2 capital
593
594
Total subordinated debt
2,535
3,034
Total debt issued
19,09721,502
Covered bonds are guaranteed by ANZNZ Covered Bond Trust Limited (the Covered Bond Guarantor), solely in its capacity as trustee of ANZNZ
Covered Bond Trust (the Covered Bond Trust). The Covered Bond Trust is a member of the Banking Group, whereas the Covered Bond Guarantor is nota member of the Banking Group.
Substantially all of the assets of the Covered Bond Trust are made up of certain housing loans and related securities originated by the Bank which are
security for the guarantee by the Covered Bond Guarantor as trustee of the Covered Bond Trust of issuances of covered bonds by the Bank, or its
wholly owned subsidiary ANZ New Zealand (Int’l) Limited, from time to time. The assets of the Covered Bond Trust are not available to creditors of theBank, although the Bank (or its liquidator or statutory manager) may have a claim against the residual assets of the Covered Bond Trust (if any) after all
prior ranking creditors of the Covered Bond Trust have been satisfied.

18

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

11. CREDIT RISKThis note should be read in conjunction with the estimates, assumptions and judgements included in Note 1 about our interim financial statements
and Note 6 allowance for expected credit losses.
Maximum exposure to credit risk
For financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may
be differences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, thesedifferences arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject tomarket risk, or bank notes and coins.
For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount the Banking Group would have to pay if the instrument is called upon.
The table below shows our maximum exposure to credit risk of on-balance sheet and off-balance sheet positions before taking account of any
collateral held or other credit enhancements.
ReportedOn-balance sheet positions
Net loans and advances
Other financial assets:
Cash and cash equivalents
Settlement balances receivable
Collateral paid
Trading securities
Derivative financial instruments
Investment securities
Other financial assets2
Total other financial assets
Subtotal
Off-balance sheet commitments
Undrawn and contingent facilities3
Total
1
2
3

Maximum exposure tocredit risk

Excluded1

31 Mar 22
NZ$m

30 Sep 21
NZ$m

31 Mar 22
NZ$m

30 Sep 21
NZ$m

31 Mar 22
NZ$m

30 Sep 21
NZ$m

146,121

140,756--

146,121

140,756

11,178
913
612
7,818
9,000
10,291500
40,312
186,433

7,844
237
537
9,585
9,304
11,926496
39,929180,685

185
185
185

163
163
163

10,993
913
612
7,818
9,000
10,291500
40,127
186,248

7,681
237
537
9,585
9,304
11,926496
39,766
180,522

31,112
217,545

30,030210,715185

163

31,112
217,360

30,030210,552

Bank notes and coins and cash at bank within cash and cash equivalents.
Other financial assets mainly comprise accrued interest and acceptances.
Undrawn facilities and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for
expected credit losses.

Credit quality
We use the Banking Group’s internal customer credit rating (CCR) to manage the credit quality of financial assets. To enable wider comparisons, theBanking Group’s CCRs are mapped to external rating agency scales as follows:
Credit quality
description

Internal CCR

The Banking Group customer requirements

Moody’s
RatingS&P Global
Ratings

Strong

CCR 0+ to 4-

Demonstrated superior stability in their operating and financial
performance over the long-term, and whose earnings capacity is
not significantly vulnerable to foreseeable events.

Aaa – Baa3

AAA – BBB-

Satisfactory

CCR 5+ to 6-

Demonstrated sound operational and financial stability over the
medium to long-term even though some may be susceptible tocyclical trends or variability in earnings.

Ba1 – B1

BB+ – B+Weak

CCR 7+ to 8=

Demonstrated some operational and financial instability, withvariability and uncertainty in profitability and liquidity projected tocontinue over the short and possibly medium term.

B2 – Caa

B - CCC

Defaulted

CCR 8- to 10

When doubt arises as to the collectability of a credit facility, thefinancial instrument (or ‘the facility’) is classified as defaulted.

n/a

n/a

19

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS

Stage 1
NZ$m
121,131
17,756316
139,203(163)
139,040
0.12%

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
2,232
2,701
1,430
577
150
6,363
577
150
(292)
(56)
(62)
6,071
521
88
4.59%
9.71%
41.33%

116,578
17,122
293
133,993(155)
133,838
0.12%

1,620
3,134
1,447
6,201
(314)
5,887
5.06%

Net loans and advances

As at 31 March 2022
StrongSatisfactory
Weak
Defaulted
Subtotal
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Unearned income
Capitalised brokerage and other origination costs
Net carrying amountAs at 30 September 2021
StrongSatisfactory
Weak
Defaulted
Subtotal
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Unearned income
Capitalised brokerage and other origination costs
Net carrying amountOff-balance sheet commitments - undrawn and contingent facilities

As at 31 March 2022
StrongSatisfactory
Weak
Defaulted
Gross undrawn and contingent facilities
Allowance for ECL included in other provisions (refer to Note 9)
Net undrawn and contingent facilities
Coverage ratio

Stage 1
NZ$m
25,7734,258
1730,048(65)
29,9830.22%

As at 30 September 2021
StrongSatisfactory
Weak
Defaulted
Gross undrawn and contingent facilities
Allowance for ECL included in other provisions (refer to Note 9)
Net undrawn and contingent facilities
Coverage ratio

25,0723,734
12
28,818(64)
28,754
0.22%

20

618
618
(56)
562
9.06%

155
155
(60)
95
38.71%

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
184
854
107
16
22
1,145
16
22
(36)
(4)
(14)
1,109
12
8
3.14%
25.00%
63.64%

142
1,037
100
1,279
(39)
1,240
3.05%

32
32
(4)
28
12.50%

23
23
(15)
8
65.22%

Total
NZ$m
123,363
20,457
1,746
727
146,293(573)
145,720
0.39%
(34)
435
146,121118,198
20,256
1,740
773
140,967(585)
140,382
0.41%
(29)
403
140,756

Total
NZ$m
25,957
5,112
124
38
31,231(119)
31,1120.38%

25,2144,771
112
55
30,152(122)
30,0300.40%

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED12. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIESFair value hierarchy
The Banking Group categorises assets and liabilities carried at fair value into a fair value hierarchy as required by NZ IFRS 13 Fair Value Measurement
based on the observability of inputs used to measure the fair value:• Level 1 – valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;• Level 2 – valuations using inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly
or indirectly; and• Level 3 – valuations where significant unobservable inputs are used to measure the fair value of the asset or liability.
The following table presents assets and liabilities carried at fair value in accordance with the fair value hierarchy:
Quoted market price(Level 1)
31 Mar 22
30 Sep 21
NZ$m
NZ$m
AssetsTrading securities
Derivative financial instruments
Investment securities
Total
Liabilities
Deposits and other borrowings
Derivative financial instruments
Other financial liabilities
Total

Fair value measurements
Using observable inputs
Using unobservable(Level 2)
inputs (Level 3)
31 Mar 22
30 Sep 21
31 Mar 22
30 Sep 21
NZ$m
NZ$m
NZ$m
NZ$m

Total
31 Mar 22
NZ$m

30 Sep 21
NZ$m

6,003
84
10,014
16,1018,276
19
11,925
20,220

1,815
8,916
276
11,007

1,309
9,284
10,593

1
1

1
1
2

7,818
9,000
10,291
27,1099,585
9,304
11,92630,815

5
478
483

5
676
681

4,892
8,367
13,2594,433
7,722
12,155

4
4

-

4,892
8,376
478
13,746

4,433
7,727
676
12,836

Financial assets and financial liabilities not measured at fair value
Below is a comparison of the carrying amounts as reported on the balance sheet and fair values of financial asset and financial liability categories otherthan those categories where the carrying amount is at fair value or considered a reasonable approximation of fair value.
The fair values below have been calculated using discounted cash flow techniques where contractual future cash flows of the instrument are
discounted using discount rates incorporating wholesale market rates or market borrowing rates of debt with similar maturities or a yield curve
appropriate for the remaining term to maturity.
Carrying amountFinancial assets
Net loans and advances1
Total
Financial liabilities
Deposits and other borrowings2
Debt issuances1
Total
1
2

Fair value

31 Mar 22
NZ$m

30 Sep 21
NZ$m

31 Mar 22
NZ$m

30 Sep 21
NZ$m

146,121
146,121

140,756
140,756

144,943
144,943

140,703
140,703

133,812
19,097
152,909

128,706
21,502150,208

133,725
19,221
152,946

128,726
21,902
150,628

Fair value hedging is applied to certain financial instruments within these categories. The resulting fair value adjustments mean that the carrying value differs from the amortised cost.
Excludes commercial paper (Note 8 deposits and other borrowings) designated at fair value through profit or loss.

21

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDNOTES TO THE INTERIM FINANCIAL STATEMENTS
13. COMMITMENTS AND CONTINGENT LIABILITIESCredit related commitments and contingencies
Contract amount of:
Undrawn facilities
Guarantees and letters of credit
Performance related contingencies
Total

31 Mar 22
NZ$m

30 Sep 21
NZ$m

28,3801,187
1,664
31,231

27,4201,181
1,551
30,152The Banking Group guarantees the performance of customers by issuing standby letters of credit and guarantees to third parties, including its
Ultimate Parent Bank. The risk involved is essentially the same as the credit risk involved in extending loan facilities to customers, therefore thesetransactions are subjected to the same credit origination, portfolio management and collateral requirements for customers applying for loans. As thefacilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements.
OTHER CONTINGENT LIABILITIESThere are outstanding court proceedings, claims and possible claims for and against the Banking Group. Where relevant, expert legal advice has beenobtained and, in the light of such advice, provisions (refer to Note 9 other provisions) and/or disclosures as deemed appropriate have been made. In
some instances we have not disclosed the estimated financial impact of the individual items either because it is not practicable to do so or becausesuch disclosure may prejudice seriously the interests of the Banking Group.
REGULATORY AND CUSTOMER EXPOSURESIn recent years there has been an increase in the number of matters on which the Banking Group engages with its regulators. There have also beensignificant increases in the nature and scale of regulatory investigations, surveillance and reviews, civil and criminal enforcement actions (whether bycourt action or otherwise), formal and informal inquiries, regulatory supervisory activities and the quantum of fines issued by regulators, particularly
against financial institutions both in New Zealand and globally. The Banking Group has received various notices and requests for information from its
regulators as part of both industry-wide and Banking Group-specific reviews, and has also made disclosures to its regulators at its own instigation. The
nature of these interactions can be wide ranging and, for example, may include a range of matters including responsible lending practices, regulated
lending requirements, product suitability and distribution, interest and fees and the entitlement to charge them, customer remediation, wealth advice,
insurance distribution, pricing, competition, conduct in financial markets and financial transactions, capital market transactions, anti-money launderingand counter-terrorism financing obligations, reporting and disclosure obligations and product disclosure documentation. There may be exposures tocustomers which are additional to any regulatory exposures. These could include class actions, individual claims or customer remediation orcompensation activities. The outcomes and total costs associated with such reviews and possible exposures remain uncertain.
The Bank self-identified three prescribed transaction reporting (PTR) matters to the RBNZ, where transaction reports had not been filed within theprescribed timeframe. The RBNZ has informed the Bank that it considers one of these matters (related to 6,409 transaction reports of a certain SWIFT
message type) to be a material breach, and the other two to be minor breaches, of the Anti-Money Laundering and Countering Financing of Terrorism(AML/CFT) Act 2009 relating to PTR. These matters have been referred to the RBNZ’s enforcement team for review. The potential outcome of thesematters remains uncertain at this time.
LOAN INFORMATION LITIGATIONIn September 2021, representative proceedings were brought against the Bank, alleging breaches of disclosure requirements under consumer credit
legislation in respect of variation letters sent to certain loan customers. The Bank is defending the allegations. The proceedings are still at an earlystage. A hearing of the plaintiff’s application for leave to bring representative proceedings is scheduled for May 2022.
WARRANTIES AND INDEMNITIESThe Banking Group has provided warranties, indemnities and other commitments in favour of the purchaser in connection with various disposals of
businesses and assets and other transactions, covering a range of matters and risks. It is exposed to potential claims under those warranties,
indemnities and commitments.
REVIEWS UNDER SECTION 95 OF THE RESERVE BANK OF NEW ZEALAND ACT 1989 (RBNZ ACT)
Following a RBNZ notice under section 95 of the RBNZ Act in July 2019, the Bank obtained two external reviews. The first review was on the Bank’s
compliance with certain aspects of the RBNZ Banking Supervision Handbook document Capital Adequacy Framework (Internal Models BasedApproach) (BS2B) (Capital Adequacy Review), and the second review was on the effectiveness of the Bank’s directors’ attestation and assurance
framework (Attestation Review).
A summary of the final Attestation Review was published in March 2022. The report found that the Bank has taken appropriate steps to address therecommendations from the 2019 Attestation Review report. The review noted that there has been a marked uplift in the overall capabilities within the
Bank in respect to the attestation process, with heightened focus and scrutiny from management, executives and the Bank’s board. The review also
noted while there are elements of the framework still in the process of being embedded, the key changes recommended in the 2019 Attestation
Review report have been appropriately addressed.
The final Capital Adequacy Review was completed in December 2021. The report found that the Bank had made significant progress to address noncompliance issues and improvement items identified by the 2019 Capital Adequacy Review report. In particular, all non-compliant capital models havebeen submitted to the RBNZ for approval. As at 31 March 2022, all but three non-compliant models have been approved by RBNZ.

22

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

14. SUBSEQUENT EVENTSThe Overseas Banking Group intends to lodge a formal application with APRA, the Federal Treasurer and other applicable regulators to establish a
non-operating holding company and create distinct banking and non-banking groups within the organisation. Following preliminary discussions,
APRA has advised they have no in-principle objection to the proposed restructure. The Overseas Banking Group has also consulted other key
Australian and New Zealand regulators and to date has not received any objections. Consultation and engagement remains ongoing. Further
information about the proposal can be found at http://shareholder.anz.com.
There have been no other significant events from 31 March 2022 to the date of signing the financial statements.

23

REGISTERED BANKDISCLOSURESThis section contains the additional disclosures required by theRegistered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014.

24

Section

Order reference

Page

B1.

General disclosures

Schedule 3

25

B2.

Additional financial disclosures

Schedule 5

27

B3.

Asset quality

Schedule 7

32

B4.

Capital adequacy under the internal models based approach,and regulatory liquidity ratios

Schedule 11

37

B5.

Concentration of credit exposures to individual counterparties

Schedule 13

44

B6.

Insurance business

Schedule 16

44

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
B1. GENERAL DISCLOSURES
Guarantees
The Bank has guaranteed the payment of interest and principal of covered bonds issued by its subsidiary ANZ New Zealand (Int’l) Limited. Thisobligation is guaranteed by ANZNZ Covered Bond Trust Limited (the Covered Bond Guarantor), solely in its capacity as trustee of ANZNZ Covered
Bond Trust. The Covered Bond Guarantor’s address for service is Level 16, SAP Tower, 151 Queen Street, Auckland 1010, New Zealand. The Covered
Bond Guarantor is not a member of the Banking Group and has no credit ratings applicable to its long term senior unsecured obligations. The coveredbonds have been assigned a long term rating of Aaa and AAA by Moody’s Investors Service and Fitch Ratings respectively. Refer to page 18 for further
details, and to page 27 for the amount of assets of the ANZ Covered Bond Trust pledged as security for covered bonds.
No other material obligations of the Bank are guaranteed as at 6 May 2022.
Changes in the Bank’s Board of Directors
Maile Carnegie resigned as a Non-Executive Director on 11 April 2022. As at 6 May 2022, there have been no other changes to the Directors of the
Bank since 30 September 2021, the balance date of the last full year disclosure statement.
Auditors
KPMG, 18 Viaduct Harbour Avenue, Auckland, New Zealand.
Conditions of registration
Changes to the Bank’s conditions of registration
The Bank’s conditions of registration have been amended to:• implement the new Banking Prudential Requirements (BPRs) which implement the capital review decisions (effective 1 October 2021);• include further changes on high loan-to-valuation residential mortgage lending to investors (effective 1 November 2021); and• increase the minimum core funding ratio to 75% (effective 1 January 2022).
Material non-compliance with conditions of registration: Condition of registration 1B – non-compliance with BPR120: Capital adequacy process requirements
As first reported in the disclosure statement for the year ended 30 September 2019, the Bank has not complied with condition of registration 1B in
relation to the implementation of changes to 17 rating models and processes that were not approved by RBNZ. Applying the last RBNZ approved
methodologies to the affected exposures as at 30 September 2019 would have decreased Risk Weighted Assets (RWA) by NZ$47 million (0.05%) in
aggregate, which was not sufficient to affect the reported capital ratios.
As at 31 March 2022, all non-compliant models had been submitted to RBNZ for approval, with all but three approved. The final model was submitted
to RBNZ on 16 December 2021. The three remaining unapproved models and the initial dates of non-compliance are:• Bank rating – 2008
• Project and structured finance - 2009
• Commercial property: special purpose asset investment - 2011
The Bank’s model compendium required under Part E1.5 of BPR120 was non-compliant as it included unapproved model changes. An updated modelcompendium was submitted to RBNZ in April 2021, and RBNZ confirmed the compendium as being compliant in October 2021.
Other matters relevant to the conditions of registration
There are other matters currently under review where there may be more than one valid interpretation of the respective policy wording or
requirement. Where there may be some uncertainty about the interpretation the Bank has applied, where appropriate it has sought guidance from,and will be liaising with, RBNZ on these matters.
Pending proceedings or arbitration
A description of any pending legal proceedings or arbitration concerning any member of the Banking Group that may have a material adverse effecton the Bank or the Banking Group is included in Note 13 commitments and contingent liabilities.

25

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
Credit rating
The Bank has three credit ratings, which are applicable to its long-term senior unsecured obligations which are payable in New Zealand in New
Zealand dollars.
As at 6 May 2022, the Bank’s credit ratings are:Rating agency
S&P Global Ratings
Fitch Ratings
Moody’s Investors Service

Credit rating
AAA+
A1

Qualification
Outlook Stable
Outlook Stable
Outlook Stable

Other material matters
New RBNZ capital requirements
RBNZ has released new bank capital adequacy requirements applying to New Zealand locally incorporated registered banks, which are set out in
RBNZ’s Banking Prudential Requirements documents. The new capital adequacy requirements are being implemented in stages during a transition
period from October 2021 to July 2028. The key requirements are:
• The Banking Group’s total capital requirement will increase to 18% of RWA, including tier 1 capital of at least 16% of RWA. Up to 2.5% of the tier 1
capital requirement can be made up of additional tier 1 (AT1) capital, with the remainder of the tier 1 requirement made up of common equity
tier 1 (CET1) capital. The increased capital ratios requirement will be implemented progressively from 1 July 2022 to 1 July 2028. AT1 capital must
consist of perpetual preference shares, which may be redeemable. The total capital requirement can also include tier 2 capital of up to 2% of
RWA. Tier 2 capital must consist of long-term subordinated debt.
• The tier 1 capital requirement will include a CET1 prudential capital buffer of 9% of RWA. This will include: a 2% domestic, systemically importantbank capital buffer; a 1.5% 'early-set' counter-cyclical capital buffer (which can be temporarily reduced to 0% following a financial crisis, or
temporarily increased to prevent asset price bubbles from developing); and a 5.5% capital conservation buffer.
• Contingent capital instruments will no longer be treated as eligible regulatory capital. As at 30 September 2021, the Bank had approximately
NZ$2,741 million of AT1 instruments that will progressively lose eligible regulatory capital treatment over a six and a half year transition period
from 1 January 2022 to 1 July 2028, should these instruments remain outstanding. The Bank redeemed NZ$500 million of these AT1 instruments
in December 2021, and has NZ$2,241 million on issue as at 31 March 2022.
• As an internal ratings based approach accredited bank, the Banking Group’s RWA outcomes will be increased to approximately 90% of what
would be calculated under the standardised approach. This will be achieved by applying an 85% output floor, which took effect on 1 January2022, and increasing the credit RWA scalar from 1.06 to 1.20 from 1 October 2022.
• RBNZ has proposed requiring internal ratings based approach accredited banks to report RWA, and resulting capital ratios, using both theinternal models and the standardised approaches from 30 September 2022. RBNZ’s consultation process is in progress as at 6 May 2022.
RBNZ’s reforms will result in a material increase in the level of capital that the Banking Group is required to hold. The reforms could have a material
impact on the Banking Group and its business, including on its capital allocation and business planning.

26

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

B2. ADDITIONAL FINANCIAL DISCLOSURES
Additional information on the balance sheet
As at 31 March 2022
Total interest earning and discount bearing assets
Total interest and discount bearing liabilities
Total amounts due from related entities
Total amounts due to related entities

NZ$m
176,281
138,840
6,087
8,020

Assets charged as security for liabilities
The following disclosure excludes the amounts presented as collateral paid and received on the balance sheet that relate to derivative liabilities andderivative assets respectively. The terms and conditions of those collateral agreements are included in the standard Credit Support Annex that forms
part of the International Swaps and Derivatives Association Master Agreement under which most of our derivatives are executed.
Assets charged as security for liabilities include the following types of instruments:• securities provided as collateral for repurchase transactions. These transactions are governed by standard industry agreements;• specified residential mortgages provided as security for notes and bonds issued to investors as part of the Banking Group’s covered bondprogrammes; and• collateral provided to the RBNZ under the Term Lending Facility (TLF) and Funding for Lending Programme (FLP).
The carrying amounts of assets pledged as security are as follows:
As at 31 March 2022
Securities sold under agreements to repurchase
Residential mortgages pledged as security for repurchase agreements with RBNZ
Total assets of the ANZNZ Covered Bond Trust pledged as security for covered bonds

NZ$m
427
2,165
9,877

Additional information on the income statement
The amounts of net trading gains or losses and other fair value adjustments are included in Note 2 other operating income. The Banking Group does
not have any loans and advances designated at fair value through profit or loss. Other operating income for the purposes of the Order comprises net
fee and commission income, and all other items of other income (all in Note 2 other operating income).

27

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
Additional information on concentrations of credit risk
Analysis of financial assets by industry is based on Australian and New Zealand Standard Industrial Classification (ANZSIC) codes. The significant
categories shown are the level one New Zealand Standard Industry Output Categories (NZSIOC), except that Agriculture is shown separately as
required by the Order.
Composition of financial instruments that give rise to credit risk by industry group are presented below:
Loans andadvances
NZ$m

Other
financialassets
NZ$m

Off-balance
sheet credit
relatedcommitments
NZ$m

Total
NZ$m

15,912
658
2,457
933
1,201
1,357
2,655
991
1,070
317
38,631
823
75,052
2,109

3
1
92
312
1
71
8
51
15,026
9,874
1,597
3
4
114

1,272
121
1,824
1,573
853
2,172
761
782
1,867
806
3,073
450
13,761
1,823

17,187
780
4,373
2,818
2,055
3,600
3,424
1,824
17,963
10,99743,301
1,276
88,817
4,046

Subtotal
Overseas
Finance and insurance services
Households
All other non-NZ residents

144,166

27,157

31,138202,461

81
1,348
698

12,88585

93-

13,0591,348
783

Subtotal
Gross subtotal
Allowance for ECL
Subtotal
Unearned income
Capitalised brokerage and other origination costs
Maximum exposure to credit risk

2,127
146,293(573)
145,720(34)
435
146,121

12,97040,127
40,127
40,12793
31,231(119)
31,112
31,112

15,190217,651(692)
216,959(34)
435
217,360

As at 31 March 2022
New Zealand residents
Agriculture
Forestry and fishing, agriculture services
Manufacturing
Electricity, gas, water and waste services
Construction
Wholesale trade
Retail trade and accommodation
Transport, postal and warehousing
Finance and insurance services
Public administration and safety1
Rental, hiring & real estate services
Professional, scientific, technical, administrative and support services
Households
All other New Zealand residents2

1
2

28

Public administration and safety includes exposures to local government administration and central government administration, defence and public safety.
Other includes exposures to mining, information media and telecommunications, education and training, health care and social assistance and arts, recreation and other services.

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

Additional information on concentrations of funding
Analysis of funding liabilities by industry is based on ANZSIC codes. The significant categories shown are the level one NZSIOC.
As at 31 March 2022

Note

NZ$m

8

129,371

Funding composition
Customer deposits
Wholesale funding
Debt issuances

19,097

Certificates of deposit and commercial paper

7,063

Other borrowings

2,270

Total wholesale funding

28,430Total funding

157,801

Customer deposits by industry - New Zealand residents
Agriculture, forestry and fishing

4,786

Manufacturing

2,970

Construction

2,830

Wholesale trade

2,597

Retail trade and accommodation

2,425

Financial and insurance services

12,539Rental, hiring and real estate services

4,352

Professional, scientific, technical, administrative and support services

6,860

Public administration and safety

1,758

Arts, recreation and other services

2,171Households

71,053All other New Zealand residents1

5,721
120,062

Customer deposits by industry - overseas
Households
All other non-NZ residents

8,739
570
9,309

Total customer deposits

129,371

Wholesale funding (financial and insurance services industry)
New Zealand

8,254

Overseas

20,176

Total wholesale funding

28,430Total funding

157,801

Concentrations of funding by geography
New Zealand

128,316Australia

1,030

United States

12,883

Europe8,837

Other countries

6,735

Total funding

157,801

1

Other includes mining; electricity, gas, water and waste services; transport, postal and warehousing; information media and telecommunications; education and training; health care andsocial assistance.

29

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
Additional information on interest rate sensitivity
The following table represents the interest rate sensitivity of the Banking Group's assets, liabilities and off-balance sheet instruments by showing theperiods in which these instruments may reprice, that is, when interest rates applicable to each asset or liability can be changed.

As at 31 March 2022
AssetsCash and cash equivalents
Settlement balances receivable
Collateral paid
Trading securities
Derivative financial instruments
Investment securities
Net loans and advances
Other financial assets
Total financial assets
Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings
Derivative financial instruments
Debt issuances
Lease liabilities
Other financial liabilities
Total financial liabilities
Hedging instruments
Interest sensitivity gap
1

Total
NZ$m

Up to
3 months
NZ$m

Over 3 to
6 months
NZ$m

Over 6 to
12 months
NZ$m

Over 1 to
2 years
NZ$m

Over
2 years
NZ$m

Not bearing
interest1
NZ$m

11,178
913
612
7,818
9,000
10,291
146,121500
186,433

10,929612
1,478
1267,16880,199528
15,27915,807272
307
24,43425,013505
1,404
23,91225,821

5,035
8,567
15,83929,441

249
913
9,000
1
(511)
500
10,152

4,592
1,070
138,704
8,376
19,097234
806
172,879
13,5542,619
1,070
89,824
1,286
11
478
95,288(6,666)(21,755)

12,833
1,276
11
14,12015,123
16,81010,002
1,079
21
11,102364
14,275

1,666
5,439
80
7,185
(4,888)13,7481,017
10,017111
11,145(3,933)14,363

1,973
23,362
8,376
328
34,039(23,887)

Excludes non-coupon bearing discount financial assets and financial liabilities which are shown as repricing on their maturity date.

Additional information on liquidity risk
Maturity analysis of financial liabilities
The table below provides residual contractual maturity analysis of financial liabilities at 31 March 2022 within relevant maturity groupings. All
outstanding debt issuances are profiled on the earliest date on which the Banking Group may be required to pay. The amounts represent principal
and interest cash flows – so they may differ from equivalent amounts reported on the balance sheet.
OndemandNZ$mLess than
3 months
NZ$m

3 to 12months
NZ$m

1 to 5
years
NZ$m

After
5 years
NZ$m

Total
NZ$m

Collateral received

3,579
-

1,019
1,070

-

-

-

4,598
1,070

Deposits and other borrowings

87,482

24,337

23,201

4,472-

139,492

Derivative financial liabilities (trading)

-

8,286

-

-

-

8,286

Debt issuances1

-

25

2,618

13,215

4,733

20,591

Lease liabilities

-

13

38

180

30

261

Other financial liabilities

-

112

16

257

408

793

As at 31 March 2022
Settlement balances payable

Derivative financial instruments(balance sheet management)- gross inflows

-

726

1,454

5,298

298

7,776

- gross outflows

-

(724)

(1,524)(5,154)(235)(7,637)1

Any callable wholesale debt instruments have been included at their next call date.

At 31 March 2022, NZ$31,231 million of its credit related commitments and contingent liabilities mature in less than 1 year, based on the earliest dateon which the Banking Group may be required to pay.

30

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

Liquidity portfolio management
The Banking Group holds a diversified portfolio of cash and high quality liquid securities primarily to support liquidity risk management. The size of the
Banking Group’s liquidity portfolio is determined with consideration of the amount required to meet the requirements of its internal and regulatory
liquidity scenario metrics.
As at 31 March 2022
Central and local government bonds
Government treasury bills
Certificates of deposit
Other bonds
Securities eligible to be accepted as collateral in repurchase transactions
Cash and balances with central banks
Total liquidity portfolio

NZ$m
8,172
909
838
7,896
17,815
10,34628,161

Assets held in the Banking Group’s liquidity portfolio include short term cash held with RBNZ, New Zealand Government securities, securities issued bysupranational agencies, securities issued by highly rated banks and securities issued by State Owned Enterprises, Local Authorities and highly rated
New Zealand domestic corporates.
The Bank also held unencumbered internal residential mortgage backed securities (RMBS) which would be accepted as collateral by RBNZ in
repurchase transactions. These holdings would entitle the Bank to enter into repurchase transactions with RBNZ with a value of NZ$10,790 million at
31 March 2022.
RBNZ Term Lending Facility (TLF) and Funding for Lending Programme (FLP)• Between May 2020 and July 2021, RBNZ made funds available under the TLF to promote lending to businesses. The TLF is a five-year secured
funding facility for New Zealand banks at a fixed rate of 0.25%.
•

In November 2020, RBNZ announced the FLP which aims to lower the cost of borrowing for New Zealand businesses and households. The FLP isa three-year secured funding facility for New Zealand banks at a floating rate of the New Zealand Official Cash Rate (OCR). New Zealand banks
can obtain initial funding of up to 4% of their lending to New Zealand resident households, non-financial businesses and non-profit institutions
serving households as at 31 October 2020 (eligible loans). An additional allocation of up to 2% of eligible loans is available, subject to certain
conditions. The Bank’s initial allocation is NZ$5,223 million and its additional allocation is NZ$2,611 million. The additional allocation is available
until 6 December 2022, and the initial allocation is available until 6 June 2022.

As at 31 March 2022, the Bank had drawn NZ$300 million under the TLF and NZ$1,500 million under the FLP. These amounts are included in securities
sold under repurchase agreements in Note 8 deposits and other borrowings.
Reconciliation of mortgage related amounts
As at 31 March 2022
Term loans - housing1
Less: housing loans made to corporate customers
On-balance sheet residential mortgage exposures subject to the IRB approach (per asset quality and LVR analysis)
Add: off-balance sheet residential mortgage exposures subject to the IRB approach (per asset quality and LVR analysis)
Total residential mortgage exposures subject to the IRB approach (per LVR analysis)
1

Note
5
B3, B4B3, B4B4

NZ$m
102,798(1,333)
101,465
9,315
110,780

Term loans – housing includes loans secured over residential property for owner-occupier, residential property investment and business purposes.

31

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
B3. ASSET QUALITY
This section should be read in conjunction with the estimates, assumptions and judgements included in Note 1 about our interim financial
statements, Note 6 allowance for expected credit losses and Note 11 credit risk.
Movements in components of loss allowance – total

Net loans and advances - total
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Write-backs
Recoveries of amounts previously written off
Credit impairment charge / (release)
Bad debts written-off (excluding recoveries)
Add back recoveries of amounts previously written off
Discount unwind
As at 31 March 2022
Off-balance sheet credit related commitments - total
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Credit impairment charge / (release)

Stage 1
NZ$m
155
16
(8)
8
163

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
314
56
60
(12)
(1)
(3)
(10)
1
39
(22)
(17)
(22)
(3)
(15)
17
3
292
56
62

Total
NZ$m
585
22
(22)
(17)
(17)
(15)
17
3
573

64
5
(4)

39
(5)
2

4
-

15
(1)

122
(3)

1
65

(3)
36

4

(1)
14

(3)
119

Gross loans and advances - total
As at 1 October 2021
Net transfers in to each stage
Amounts drawn from new or existing facilities
Additions
Net transfers out of each stage
Amounts repaid
Deletions
Amounts written off
As at 31 March 2022
Loss allowance as at 31 March 2022

133,993
109
21,87021,979(675)(16,094)(16,769)
139,203
163

6,201
582
607
1,189
(97)
(930)
(1,027)
6,363
292

618
93
15
108
(13)
(136)
(149)
577
56

155
2
90
92
(1)
(81)
(82)
(15)
150
62

140,967786
22,582
23,368(786)(17,241)(18,027)(15)
146,293573

Off-balance sheet credit related commitments - total
As at 1 October 2021
Net transfers in to each stage
New and increased facilities and drawn amounts repaid
Additions
Net transfers out of each stage
Reduced facilities and amounts drawn
Deletions
As at 31 March 2022
Loss allowance as at 31 March 2022

28,818
39
6,052
6,091
(20)
(4,841)(4,861)
30,048
65

1,279
18
84
102
(50)
(186)
(236)
1,145
36

32
3
3
6
(22)
(22)
16
4

23
10
(3)
7
(8)
(8)
22
14

30,152
70
6,136
6,206
(70)
(5,057)(5,127)
31,231119

As at 31 March 2022
Impacts of changes in gross financial assets on loss allowances - total

Explanation of how changes in the gross carrying amounts of gross loans and advances contributed to changes in loss allowance
Overall, loss allowances are 0.39% of gross balances as at 31 March 2022, down from 0.41% as at 30 September 2021. The NZ$15 million (2.1%)
decrease in loss allowances was driven by a decrease in the proportion of gross balances in Stage 2 and Stage 3, and changes in the forward looking
economic scenarios as described in Note 6 allowance for expected credit losses.

32

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

Movements in components of loss allowance - residential mortgages

Net loans and advances - residential mortgages
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Write-backs
Recoveries of amounts previously written off
Credit impairment charge
Bad debts written-off (excluding recoveries)
Add back recoveries of amounts previously written off
Discount unwind
As at 31 March 2022
Off-balance sheet credit related commitments - residential mortgages
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Credit impairment charge / (release)
As at 31 March 2022

Stage 1
NZ$m
23
6
6
29

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
53
17
9
(7)
1
16
5
2
(1)
9
6
1
62
23
10

Total
NZ$m
102
23
(1)
22
124

-

-

-

-

-

-

-

-

-

-

Impacts of changes in gross financial assets on loss allowances - residential mortgages
Gross loans and advances - residential mortgages
As at 1 October 2021
Net transfers in to each stage
Amounts drawn from new or existing facilities
Additions
Net transfers out of each stage
Amounts repaid
Deletions
Amounts written off
As at 31 March 2022
Loss allowance as at 31 March 2022

94,857
14,872
14,872(663)(10,477)(11,140)
98,589
29

1,846
578
273
851
(232)
(232)
2,465
62

356
86
86
(46)
(46)
396
23

19
3
3
(1)
(6)
(7)
15
10

97,078664
15,14815,812(664)(10,761)(11,425)
101,465
124

Off-balance sheet credit related commitments - residential mortgages
As at 1 October 2021
Net transfers in to each stage
New and increased facilities and drawn amounts repaid
Additions
Net transfers out of each stage
Reduced facilities and amounts drawn
Deletions
As at 31 March 2022
Loss allowance as at 31 March 2022

9,040
1,521
1,521
(17)
(1,288)(1,305)
9,256
-

40
17
7
24
(6)
(6)
58
-

1
1
-

-

9,081
17
1,528
1,545
(17)
(1,294)(1,311)
9,315-

Explanation of how changes in the gross carrying amounts of residential mortgages contributed to changes in loss allowance
The NZ$22 million (21.6%) increase in loss allowances on residential mortgage exposures is driven by a combination of these increases in grossbalances, including an increases in the proportion of gross balances in Stage 2 and Stage 3, and changes in the forward looking economic scenarios as
described in Note 6 allowance for expected credit losses. Overall loss allowances and individually impaired exposures remain low, reflecting thatapproximately 94% of on-balance sheet residential mortgage exposures have loan to valuation ratios not exceeding 80% (refer to page 41).

33

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
Movements in components of loss allowance - other retail exposures

Net loans and advances - other retail exposures
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Write-backs
Recoveries of amounts previously written off
Credit impairment charge / (release)
Bad debts written-off (excluding recoveries)
Add back recoveries of amounts previously written off
Discount unwind
As at 31 March 2022
Off-balance sheet credit related commitments - other retail exposures
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Credit impairment charge / (release)
As at 31 March 2022

Stage 1
NZ$m
10
5
(4)
1
11

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
49
17
6
(5)
1
2
15
(1)
(6)
(4)
2
8
(13)
6
45
19
7

Total
NZ$m
82
14
(1)
(6)
7
(13)
6
82

15
3
(4)

12
(3)
1

3
-

-

30
(3)

(1)
14

(2)
10

3

-

(3)
27

Impacts of changes in gross financial assets on loss allowances - other retail exposures
Gross loans and advances - other retail exposures
As at 1 October 2021
Net transfers in to each stage
Amounts drawn from new or existing facilities
Additions
Net transfers out of each stage
Amounts repaid
Deletions
Amounts written off
As at 31 March 2022
Loss allowance as at 31 March 2022

2,271
250
250
(12)
(332)
(344)
2,177
11

132
4
15
19
(29)
(29)
122
45

34
7
4
11
(11)
(11)
34
19

9
1
16
17
(2)
(2)
(13)
11
7

2,446
12
285
297
(12)
(374)
(386)
(13)
2,344
82

Off-balance sheet credit related commitments - other retail exposures
As at 1 October 2021
Net transfers in to each stage
New and increased facilities and drawn amounts repaid
Additions
Net transfers out of each stage
Reduced facilities and amounts drawn
Deletions
As at 31 March 2022
Loss allowance as at 31 March 2022

5,091
143
143
(3)
(299)
(302)
4,932
14

38
1
3
4
(7)
(7)
35
10

13
2
2
4
(7)
(7)
10
3

-

5,142
3
148
151
(3)
(313)
(316)
4,977
27

Explanation of how changes in the gross carrying amounts of other retail exposures contributed to changes in loss allowance
The NZ$3 million (2.7%) decrease in loss allowances is primarily driven by a decrease in the amount of gross balances in Stage 2.

34

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

Movements in components of loss allowance - corporate exposures1

Net loans and advances - corporate exposures
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Write-backs
Recoveries of amounts previously written off
Credit impairment charge / (release)
Bad debts written-off (excluding recoveries)
Add back recoveries of amounts previously written off
Discount unwind
As at 31 March 2022
Off-balance sheet credit related commitments - corporate exposures
As at 1 October 2021
Transfer between stages
New and increased provisions (net of collective provision releases)
Credit impairment charge / (release)
As at 31 March 2022

Stage 1
NZ$m
122
5
(4)
1
123

Stage 3
Collectively IndividuallyStage 2
assessedassessed
NZ$m
NZ$m
NZ$m
212
22
45
(2)
(3)
(27)
(6)
22
(20)
(11)
(27)
(8)
(12)
(2)
11
3
185
14
45

Total
NZ$m
401
(15)
(20)
(11)
(46)
(2)
11
3
367

49
2
-

27
(2)
1

1
-

15
(1)

92
-

2
51

(1)
26

1

(1)
14

92

Impacts of changes in gross financial assets on loss allowances - corporate exposures
Gross loans and advances - corporate exposures
As at 1 October 2021
Net transfers in to each stage
Amounts drawn from new or existing facilities
Additions
Net transfers out of each stage
Amounts repaid
Deletions
Amounts written off
As at 31 March 2022
Loss allowance as at 31 March 2022

36,865
109
6,748
6,857
(5,285)(5,285)38,437
123

4,223
319
319
(97)
(669)
(766)
3,776
185

228
11
11
(13)
(79)
(92)
147
14

127
1
71
72
(73)
(73)
(2)
124
45

41,443
110
7,149
7,259
(110)
(6,106)(6,216)(2)
42,484367

Off-balance sheet credit related commitments - corporate exposures
As at 1 October 2021
Net transfers in to each stage
New and increased facilities and drawn amounts repaid
Additions
Net transfers out of each stage
Reduced facilities and amounts drawn
Deletions
As at 31 March 2022
Loss allowance as at 31 March 2022

14,687
39
4,388
4,427
(3,254)(3,254)
15,860
51

1,201
74
74
(50)
(173)
(223)
1,052
26

18
1
1
2
(15)
(15)
5
1

23
10
(3)
7
(8)
(8)
22
14

15,929
50
4,460
4,510
(50)
(3,450)(3,500)16,93992

1

Also includes all other non-retail exposure classes in net loans and advances and off balance sheet credit related commitments to reconcile to the respective totals for the Banking Group.

Explanation of how changes in the gross carrying amounts of corporate exposures contributed to changes in loss allowance
The NZ$34 million (6.9%) decrease in loss allowances is primarily driven by a decrease in the proportion of gross balances in Stage 2 and Stage 3, andthe release of temporary adjustments partially offset by changes in the forward looking economic scenarios as described in Note 6 allowance for
expected credit losses.

35

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
Past due assets and other asset quality information
As at 31 March 2022
Past due assets
Less than 30 days past due
At least 30 days but less than 60 days past due
At least 60 days but less than 90 days past due
At least 90 days past due
Total past due but not individually impaired
Other asset quality information
Undrawn facilities with impaired customers
Other assets under administration
The Banking Group does not have any loans and advances designated at fair value.

36

Residential Other retailmortgages exposures
NZ$m
NZ$m

Corporate
exposures
NZ$m

Total
NZ$m

415
148
94
367
1,024

67
12
5
22
106

252
68
5
7
332

734
228
104
396
1,462

2

1

22
-

22
3

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

B4. CAPITAL ADEQUACY UNDER THE INTERNAL MODELS BASED APPROACH, AND REGULATORYLIQUIDITY RATIOSRBNZ capital ratios
As at 31 March
Common equity tier 1 capital
Tier 1 capital
Total capital
Prudential capital buffer ratio

Banking Group
RBNZ minimum
2022
4.5%
12.4%
6.0%
14.5%
8.0%
15.1%
2.5%
7.1%

2021
13.1%
15.9%
15.9%
7.9%

Bank
(Solo Consolidated)
2022
2021
12.2%
12.7%
14.3%
15.5%
14.9%
15.5%
n/a
n/a

Capital
As at 31 March 2022
Tier 1 capital
Common equity tier 1 (CET1) capital
Paid up ordinary shares issued by the Bank
Retained earnings (net of appropriations)
Accumulated other comprehensive income and other disclosed reserves1
Less deductions from common equity tier 1 capital
Goodwill and intangible assets, net of associated deferred tax liabilities
Deferred tax assets less deferred tax liabilities relating to temporary differences
Cash flow hedge reserve
Defined benefit superannuation plan surplus
Expected losses to the extent greater than total eligible allowances for impairment
Common equity tier 1 capital
Additional tier 1 (AT1) capital
Retained earnings of the Bonus Bonds Scheme2
Transitional AT1 capital instruments
Preference shares3
NZD 1,003m ANZ New Zealand Internal Capital Notes (ANZ NZ ICN)4NZD 938m ANZ New Zealand Internal Capital Notes (ANZ NZ ICN2)4
Less deductions from additional tier 1 capital
Surplus retained earnings of the Bonus Bonds Scheme2
Additional tier 1 capital
Total tier 1 capital
Tier 2 capital
NZD 600m subordinated notes4
Eligible impairment allowance in excess of expected loss
Tier 2 capital
Total capital
1
2
3
4

NZ$m

11,5885,133
7(3,103)
(353)
15
(8)
(62)
13,217
19
300
1,003
938
(19)
2,241
15,458600
4604
16,062

Includes the investment securities revaluation reserve of NZ$22 million less the cash flow hedging reserve of NZ$15 million as at 31 March 2022.
Bonus Bonds Scheme (the Scheme) is not consolidated on the balance sheet under NZ GAAP but its retained earnings are included in AT1 capital for capital adequacy purposes, subject toa cap of 8.5% of the consolidated RWA that relate to the Scheme, as set out in BPR110: Capital Definitions.
Classified as equity on the balance sheet under NZ GAAP.
Classified as a liability on the balance sheet under NZ GAAP.

37

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
Capital requirements of the Banking GroupAs at 31 March 2022
Total credit risk
Operational risk
Market risk
Supervisory adjustment2
Total
1
2

Total
exposure
after credit
risk
mitigation
NZ$m
212,932
n/a
n/a
n/a
n/a

Risk
weighted
exposure or
implied risk
weighted
exposure1
NZ$m
64,664
11,385
6,352
23,867106,268

Total capitalrequirement
NZ$m
5,173
911
508
1,910
8,502

The calculation of risk weighted credit exposures includes a scalar of 1.06 in accordance with the Bank's Conditions of Registration.
The supervisory adjustment includes RWA of NZ$5,079 million for corporate exposures, NZ$13,780 million for residential mortgage exposures and NZ$5,008 million for a standardised floor
adjustment.

Capital structure
Ordinary shares– CET1 capital
All ordinary shares share equally in dividends and any proceeds available to ordinary shareholders on winding up of the Bank. On a show of hands
every member who is present at a meeting in person or by proxy or by representative is entitled to one vote, and upon a poll every member shallhave one vote for each share held.
Transitional AT1 capital instruments
Certain instruments issued by the Bank qualify as transitional AT1 capital instruments and are subject to phase-out under BPR110. Fixing the base at
the aggregate nominal amount of such instruments outstanding as at 30 September 2021 (NZ$2,741 million), their recognition is capped at 87.5% ofthat base from 1 January 2022; 75% from 1 January 2023; 62.5% from 1 January 2024; 50% from 1 January 2025; 37.5% from 1 January 2026; 25% from 1
January 2027; 12.5% from 1 January 2028; and from 1 July 2028 onwards these instruments will not be included in regulatory capital.
Preference shares – transitional AT1 capital instrument
All preference shares were issued by the Bank to the Immediate Parent Company and do not carry any voting rights. The preference shares are whollyclassified as equity instruments as there is no contractual obligation for the Bank to either deliver cash or another financial instrument or to exchange
financial instruments on a potentially unfavourable basis.
The key terms of the preference shares are as follows:
Dividends are payable at the discretion of the directors of the Bank and are non-cumulative. The Bank must not resolve to pay any dividend or makeany other distribution on its ordinary shares until the next preference dividend payment date if the dividend on the preference shares is not paid.
Should the Bank elect to pay a dividend, the dividend is based on a floating rate equal to the aggregate of the New Zealand 6 month bank bill rateplus a 325 basis point margin, multiplied by one minus the New Zealand company tax rate, with dividend payments due on 1 March and 1 September
each year.
The preference shares are redeemable, subject to prior written approval of the RBNZ, by the Bank providing notice in writing to holders of thepreference shares. As a result of being transitional AT1 instruments subject to phase-out under RBNZ’s new capital requirements, the Bank has
determined that a regulatory event has occurred in respect of the preference shares. The occurrence of a regulatory event means that the Bank may
choose to redeem the preference shares at its discretion. As at 6 May 2022, no decision has been made on whether the Bank will redeem thepreference shares.
The preference shares may be redeemed for nil consideration should a non-viability trigger event occur.
In the event of liquidation, holders of preference shares are entitled to available subscribed capital per share, pari passu with all holders of existing
preference shares and AT1 capital notes but in priority to all holders of ordinary shares. They have no entitlement to participate in further distributionof profits or assets.
AT1 capital notes – transitional AT1 capital instruments
AT1 capital notes are fully paid convertible non-cumulative perpetual subordinated notes. Holders of AT1 capital notes do not have any right to votein general meetings of the Bank.
AT1 capital notes are classified as debt given there are circumstances beyond the Bank’s control where the principal is converted into a variable
number of ordinary shares of the Bank.
Interest payments on the AT1 capital notes are non-cumulative and subject to the issuer’s absolute discretion and certain payment conditions(including regulatory requirements).
Where specified, AT1 capital notes provide the Bank with an early redemption or conversion option on a specified date and in certain othercircumstances (such as a tax or regulatory event). Early redemption is subject to RBNZ’s prior written approval.

38

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

Each of the AT1 capital notes will immediately convert into a variable number of ordinary shares of the Bank based on the net assets per share in the
Bank’s most recently published Disclosure Statement if:• the Banking Group’s, common equity tier 1 capital ratio is equal to or less than 5.125% - known as a Common Equity Capital Trigger Event; or• RBNZ directs the Bank to convert or write-off the notes or a statutory manager is appointed to the Bank and decides that the Bank must convert
or write-off the notes.
Where specified, AT1 capital notes mandatorily convert into a variable number of ordinary shares of the Bank (based on the net assets per share in the
Bank’s most recently published Disclosure Statement):• on a specified mandatory conversion date; or• on an earlier date under certain circumstances as set out in the terms.
However, the mandatory conversion is deferred for a specified period if certain conversion tests are not met.
As a result of being transitional AT1 instruments subject to phase-out under RBNZ’s new capital requirements, the Bank has determined that aregulatory event has occurred in respect of these notes. The occurrence of a regulatory event means that the Bank may choose to redeem any of theAT1 capital notes at its discretion. A redemption of the AT1 capital notes is subject to certain conditions, including regulatory approvals. As at 6 May
2022, no decision has been made on whether the Bank will redeem the AT1 capital notes.
The table below shows the key details of the AT1 capital notes on issue at 31 March 2022:
Issue dateIssue amount
Face value
Interest frequency
Interest rate

ANZ NZ ICN
5 March 2015
NZ$1,003 million
NZ$100Semi-annually in arrears

ANZ NZ ICN2
15 June 2016
NZ$938 million
NZ$100Semi-annually in arrears

Floating rate: (New Zealand
6 month Bank Bill rate +3.8%)

Floating rate: (New Zealand
6 month Bank Bill rate +6.29%)

Issuer's early redemption or conversion option

24 March 2023

Mandatory conversion dateCommon equity capital trigger event
Non-viability trigger event

24 March 2025
Yes
Yes

15 June 2026 and each 5th
anniversary
n/a
Yes
Yes

Tier 2 capital
Tier 2 capital notes are fully paid unsecured subordinated notes. As at 31 March 2022 the notes carried an A- credit rating from S&P Global Ratings.
Interest payments are subject to the Bank being solvent at the time of, and immediately following, the payment. Unpaid interest accumulates, and will
be paid at the earlier of when the Bank is solvent again or at maturity. The Bank may repay the notes early on the dates specified below, or in certain
other circumstances (such as a tax or regulatory event). Early repayment is subject to certain conditions, including approval from RBNZ.
Issue dateIssue amount and carrying value
Face value
Interest frequency
Interest rate
Issuer's early redemption
Maturity

17 September 2021
Issue amount: NZ$600 million; Carrying value (net of issue costs): NZ$594 million
NZ$1
Quarterly in arrears
Fixed at 2.999% p.a. until 17 September 2026. Resets on 17 September 2026 to a floating
rate: New Zealand 3 month Bank bill rate + 1.25%
17 September 2026 or any interest payment date thereafter
17 September 2031

39

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
Credit risk subject to the Internal Ratings Based (IRB) approach
IRB credit exposures by exposure class and customer credit rating

As at 31 March 2022
Corporate
0-2
3-4
5
6
7-8
Default
Total corporate exposures1
Residential mortgages
0-3
4
5
6
7-8
Default
Total residential mortgages exposures2
Other retail
0-2
3-4
5
6
7-8
Default
Total other retail exposures
Total credit risk exposures subject
to the IRB approach3
123

Exposureweighted
LGD used
for thecapitalcalculation%

Exposureweighted
risk weight%Riskweighted
assetsNZ$m

Minimum
capitalrequirement
NZ$m

Probabilityof default%

Total value
NZ$m

Exposureat default
NZ$m

0.05
0.31
1.00
2.22
16.20
100.001.47

73,607
46,62813,396
2,654
1,261
247
137,793

6,863
24,374
10,837
2,444
1,181
244
45,943

62
37
32
33
39
36
40

32
41
55
73
165
80
48

2,315
10,621
6,270
1,890
2,066
208
23,370

185
850
502
151
165
17
1,870

0.20
0.44
0.88
1.96
4.88
100.000.86

41,21144,96021,216
2,808
165
420
110,780

41,60545,09521,288
2,811
165
421
111,385

12
19
24
25
25
13
18

5
15
31
59
86
6
16

2,361
7,403
7,087
1,751
152
28
18,782

189
592
567
140
12
2
1,502

0.10
0.23
0.99
2.79
8.42
100.00
2.00

539
4,014
1,448
573
700
47
7,321

541
4,060
1,484
600
726
47
7,458

77
77
79
83
87
81
79

49
54
79
109
137
48
71

283
2,327
1,236
690
1,054
24
5,614

23
186
99
55
84
2
449

1.08

255,894

164,78627

27

47,766

3,821

The supervisory adjustment on page 38 includes NZ$5,079 million of RWA for corporate exposures. This increases the pre-scalar exposure–weighted risk weight to 58% and the minimum
capital requirement to NZ$2,276 million.
The supervisory adjustment on page 38 includes NZ$13,780 million of RWA for residential mortgage exposures. This increases the pre-scalar exposure-weighted risk weight to 28% and theminimum capital requirement to NZ$2,604 million.
The supervisory adjustment on page 38 of NZ$23,867 million of RWA (including NZ$5,008 million for a standardised floor) increases the pre-scalar IRB exposure-weighted risk weight to 41%
and the related minimum capital requirement to NZ$5,731 million.

IRB credit exposures include the following undrawn commitments and other off-balance sheet contingent liabilities:

As at 31 March 2022
Undrawn commitments and other off-balance sheet contingent liabilities
Corporate
Residential mortgages
Other retailCounterparty credit risk on derivatives and securities financing transactions
Corporate
Residential mortgages
Other retail40

Total value
NZ$m

Exposureat default
NZ$m

13,3199,315
4,977

12,463
9,763
5,058

92,247-

1,369-

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

Additional mortgage information
As required by RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the Banking Group's valuation of the
security property at origination of the exposure. Off-balance sheet exposures include undrawn and partially drawn residential mortgage loans as wellas commitments to lend. Commitments to lend are formal offers for housing lending which have been accepted by the customer.

As at 31 March 2022
LVR range
Does not exceed 60%
Exceeds 60% and not 70%
Exceeds 70% and not 80%
Does not exceed 80%
Exceeds 80% and not 90%
Exceeds 90%
Total
Specialised lending subject to the slotting approach

As at 31 March 2022
On-balance sheet exposures
StrongGood
Satisfactory
Weak
Default

As at 31 March 2022
Off-balance sheet exposures
Undrawn commitments and other off-balance sheet exposures

Total
exposures
after
credit risk
mitigation
NZ$m
6,526
5,471
302
93
47

Onbalance
sheet
NZ$m

Offbalance
sheet
NZ$m

Total
NZ$m

55,011
20,063
20,26995,343
4,496
1,626
101,465

6,803
1,151
1,070
9,024
105
186
9,315

61,814
21,214
21,339104,367
4,601
1,812
110,780

Riskweight%Riskweighted
assetsNZ$m

Minimum
Pillar 1
capitalrequirement
NZ$m

70
90
115
250
-

4,842
5,219
368
249
-

387
418
29
21
-

Exposureat default
NZ$m

Averagerisk weight%Riskweighted
assetsNZ$m

Minimum
Pillar 1
capitalrequirement
NZ$m

1,550

84

1,379

110

The supervisory categories of specialised lending above are associated with specific risk-weights. These categories broadly correspond to thefollowing external credit assessments using S&P Global Ratings' rating scale, Strong: BBB- or better, Good: BB+ or BB, Satisfactory: BB- or B+ and Weak:
B to C-.

41

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
Credit risk exposures subject to the standardised approach

Total
exposureafter
credit risk
mitigation
NZ$m

Averagerisk
weight%Riskweighted
exposure
NZ$m

Minimum
Pillar 1
capitalrequirement
NZ$m

185
18,630
4,339
1,639
2,257
61
1,182

20
44
104
100

348
1,041
67
1,253

28
83
5
100

AveragecreditCreditconversion equivalent
factoramount%
NZ$m

Averagerisk
weight%Riskweighted
exposure
NZ$m

Minimum
Pillar 1
capitalrequirement
NZ$m

As at 31 March 2022
On-balance sheet exposures
Cash and gold bullion
Sovereign and central banks
Multilateral development banks and other international organisations
Public sector entities
Banks
Corporate
Residential mortgages
Past due assets
Other assets

As at 31 March 2022
Off-balance sheet exposures
Total off balance sheet exposures subject to the standardised
approachCounterparty credit risk for counterparties subject to thestandardised approach
Foreign exchange contracts
Interest rate contracts
Other1
1

Total
exposureor
principal
amount
NZ$m
1,903

53

1,000

56

594

48

239,778
1,727,957
1,387

n/a
n/a
n/a

2,526
2,012
325

24
15
29

633
317
584

51
25
47

Risk weighted exposure includes an additional NZ$483 million for credit valuation adjustment.

Credit risk mitigation
Information on the total value of exposures covered by financial guarantees and eligible financial collateral is not disclosed, as the effect of theseguarantees and collateral on the underlying credit risk exposures is not considered to be material.

As at 31 March 2022

For portfolios subject tothe standardised approach:total value of exposurescovered by eligible financial
collateral (after haircut)
NZ$m

For all portfolios:
total value of exposurescovered by guarantees
or credit derivatives1
NZ$m

-

435
-

Exposure class
Sovereign
Bank
Corporate (including specialised lending)Residential mortgage
Other
1

Covered by guarantees where the presence of the guarantees was judged to reduce the underlying credit risk of the exposures.

Equity exposures

As at 31 March 2022
Equity holdings (not deducted from capital) that are publicly traded
All other equity holdings (not deducted from capital)
42

Exposureat default
NZ$m
1

Risk
weight
%
300
400

Risk
weighted
exposure
NZ$m
5

Minimum
Pillar 1
capitalrequirement
NZ$m-

ANZ BANK NEW ZEALAND LIMITEDUNAUDITED

Operational risk
As required by its conditions of registration, the Banking Group uses the standardised approach to the calculation of its operational risk capitalrequirement. As at 31 March 2022, the Banking Group had an implied risk weighted exposure of NZ$11,385 million for operational risk and an
operational risk capital requirement of NZ$911 million.
Market risk
The aggregate market risk exposures below have been calculated in accordance with BPR140: Market Risk. The peak end-of-day market risk exposures
are for the six months ended 31 March 2022.
Implied risk weighted
exposure
Aggregate capital charge
Period end
Peak Period end
Peak
As at 31 March 2022
NZ$m
NZ$m
NZ$m
NZ$m
Interest rate risk
6,305
7,398
504
592
Foreign currency risk
46
84
4
7
Equity risk
1
1Capital 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 ofRegistration. Under the Banking Group's ICAAP it identifies and measures all "other material risks", which are those material risks that are not explicitly
captured in the calculation of the Banking Group's tier 1 and total capital ratios. The other material risks identified by the Banking Group include fixed
asset risk and deferred acquisition cost risk. As at 31 March 2022, the Banking Group's internal capital allocation for these other material risks is NZ$326
million (March 2021: NZ$330 million, updated from NZ$274 million for revised methodology).
Information about Ultimate Parent Bank and Overseas Banking Group
APRA Basel III capital ratios

As at 31 March
Common equity tier 1 capital
Tier 1 capital
Total capital

Ultimate Parent Bank
Overseas Banking Group (Extended Licensed Entity)
2022
2021
2022
2021
12.4%
12.2%
11.5%
11.1%
14.3%
14.2%
13.2%
13.1%
18.3%
18.6%
16.6%
17.1%

The Ultimate Parent Bank and the Overseas Banking Group are required to hold minimum capital as determined by APRA, which is at least equal tothat specified under the Basel III capital framework.
APRA has authorised the Ultimate Parent Bank and the Overseas Banking Group to use:
• the Advanced Internal Ratings Based (AIRB) methodology for calculation of credit risk weighted assets. Where the Overseas Banking Group is notaccredited to use the AIRB methodology the Overseas Banking Group applies the standardised approach.
• the Advanced Measurement Approach (AMA) for the operational risk weighted asset equivalent.
The Overseas Banking Group exceeded the minimum capital requirements set by APRA as at 31 March 2022 and for the comparative prior periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 March 2022. The Overseas Banking Group’s Pillar 3
disclosure document for the quarter ended 31 March 2022, in accordance with APS 330: Public Disclosure of Prudential Information, discloses capital
adequacy ratios and other prudential information. This document can be accessed at the website anz.com.
Regulatory liquidity ratios
RBNZ requires banks to hold minimum amounts of liquid assets to help ensure that they are effectively managing their liquidity risks. The mismatch
ratio is a measure of a bank’s liquid assets, adjusted for expected cash inflows and outflows during a 1-month or 1-week period of stress. It is expressed
as a ratio over the bank’s total funding. The Banking Group must maintain its 1-month and 1-week mismatch ratios above zero on a daily basis. The 1month and 1-week mismatch ratios are averaged over the quarter.
RBNZ requires banks to get a minimum amount of funding from stable sources called core funding. From 1 January 2022, the minimum amount ofcore funding was increased from 50% to 75% of a bank’s total loans. The Banking Group must maintain its core funding ratio above the regulatory
minimum on a daily basis. This measure of the core funding ratio is averaged over the quarter.
For the three months ended
Quarterly average 1-week mismatch ratio
Quarterly average 1-month mismatch ratio
Quarterly average core funding ratio

31 Mar 22
7.6%
7.0%
91.4%

31 Dec 21
8.7%
7.9%
91.3%

43

ANZ BANK NEW ZEALAND LIMITEDUNAUDITEDREGISTERED BANK DISCLOSURES
B5. CONCENTRATION OF CREDIT EXPOSURES TO INDIVIDUAL COUNTERPARTIESThe Banking Group measures its concentration of credit exposures to individual counterparties at the reporting date on the basis of actual exposures.
Peak end-of-day aggregate credit exposures are measured on the basis of internal limits that were not materially exceeded between the reporting
date for the previous disclosure statement and the reporting date for the Disclosure Statement.
The exposure information in the table below excludes exposures to:• connected persons (i.e. other members of the Overseas Banking Group and Directors of the Bank);• the central government or central bank of any country with a long-term credit rating of A- or A3 or above, or its equivalent; and• any supranational or quasi-sovereign agency with a long-term credit rating of A- or A3 or above, or its equivalent.

Exposures to banks
Total number of exposures to banks that are greater than 10% of CET1 capitalwith a long-term credit rating of A- or A3 or above, or its equivalent- 10% to less than 15% of CET1 capitalwith a long-term credit rating of at least BBB- or Baa3, or its equivalent, and at most BBB+ or Baa1, or its equivalent
Exposures to non-banks
Total number of exposures to non-banks that are greater than 10% of CET1 capitalwith a long-term credit rating of A- or A3 or above, or its equivalent- 10% to less than 15% of CET1 capitalwith a long-term credit rating of at least BBB- or Baa3, or its equivalent, and at most BBB+ or Baa1, or its equivalent

B6. INSURANCE BUSINESSAs at 31 March 2022, the Banking Group does not conduct any insurance business.

44

As at
31 Mar 22

Peak end of
day over 6
months to
31 Mar 22

-

1
1
1
-

2
2
2
-

2
2
2
-

ANZ BANK NEW ZEALAND LIMITED

DIRECTORS' STATEMENT
As at the date on which this Disclosure Statement is signed, after due enquiry, each Director believes that:•

The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements (New Zealand Incorporated
Registered Banks) Order 2014; and•The Disclosure Statement is not false or misleading.

Over the six months ended 31 March 2022, after due enquiry, each Director believes that:1.

•

ANZ Bank New Zealand Limited has complied in all material respects with each condition of registration that applied during that period except
as noted on page 251;•

Credit exposures to connected persons were not contrary to the interests of the Banking Group; and•ANZ Bank New Zealand Limited had systems in place to monitor and control adequately the Banking Group’s material risks, including credit risk,
concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operational risk and other business risks, and that thosesystems were being properly applied.
In accordance with the Order, ANZ Bank New Zealand Limited has complied in all material respects with each of its conditions of registration that applied during the period if the RBNZ has
not published any information about a breach on its website, and has not notified ANZ Bank New Zealand Limited of any material breach.

This Disclosure Statement is dated, and has been signed by all Directors of the Bank on, 6 May 2022.

Shayne Elliott

Alison GerryRt Hon Sir John Key, GNZM AC

Scott St JohnMark Verbiest

Antonia Watson

Joan Withers

45

ANZ BANK NEW ZEALAND LIMITEDINDEPENDENT AUDITOR’S REVIEW REPORTTO THE SHAREHOLDER OF ANZ BANK NEW ZEALAND LIMITEDREPORT ON THE HALF YEAR DISCLOSURE STATEMENTREPORT ON THE INTERIM FINANCIAL STATEMENTS AND REGISTERED BANK DISCLOSURES IN SECTIONS B2, B3,
B5, B6

CONCLUSION
Based on our review of the interim financial statements and the registered bank disclosures (together referred to as ‘the half year disclosurestatement’) of ANZ Bank New Zealand Limited and its subsidiaries (the Banking Group) on pages 4 to 44, nothing has come to our attention thatcauses us to believe that:••the interim financial statements on pages 4 to 23 do not present fairly in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34
Interim Financial Reporting, in all material respects, the Banking Group’s financial position as at 31 March 2022 and its financial performanceand cash flows for the six month period ended on that date; andthe registered bank disclosures in sections B2, B3, B5 and B6 disclosed in accordance with Schedules 5, 7, 13, 16 and 18 of the Registered
Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014 (as amended) (the Order) respectively, do not fairly
state, in all material respects, the matters to which they relate in accordance with those schedules.

We have completed a review of the accompanying half year disclosure statement which comprises:••

the interim financial statements formed of:• the consolidated balance sheet as at 31 March 2022;• the consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the six month period
then ended; and• notes, including a summary of significant accounting policies and other explanatory information.
the registered bank disclosures prescribed in Schedules 5, 7, 13, 16 and 18 of the Order.

BASIS FOR CONCLUSION
A review of the half year disclosure statement in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of
the Entity (NZ SRE 2410) is a limited assurance engagement. The auditor performs procedures, consisting of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures.
As the auditor of the Banking Group, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial
statements.
Our firm has also provided other services to the Banking Group in relation to review of regulatory returns, internal controls reports, prospectus
assurance, agreed upon procedures and other assurance engagements. Subject to certain restrictions, partners and employees of our firm may also
deal with the Banking Group on normal terms within the ordinary course of trading activities of the business of the Banking Group. These mattershave not impaired our independence as reviewer of the Banking Group. The firm has no other relationship with, or interest in, the Banking Group.
EMPHASIS OF MATTER – NON-COMPLIANCE WITH CERTAIN CONDITIONS OF REGISTRATION
We draw attention to section B1 of the half year disclosure statement, in which the Banking Group discloses that it has identified non-compliance withaspects of its Conditions of Registration relating to capital adequacy.
Further details of the matters relating to capital adequacy are described below in our qualified review conclusion on the registered bank disclosures in
section B4 relating to capital adequacy and regulatory liquidity ratios.
Our conclusion on the interim financial statements and registered bank disclosures in sections B2, B3, B5, and B6 is not modified in respect of thesematters.
RESPONSIBILITIES OF THE DIRECTORS FOR THE INTERIM FINANCIAL STATEMENTS AND REGISTERED BANKDISCLOSURES IN SECTIONS B1, B2, B3, B5, AND B6The Directors, on behalf of the Banking Group, are responsible for:• the preparation and fair presentation of the interim financial statements and registered bank disclosures in accordance with IAS 34, NZ IAS 34
and Schedules 3, 5, 7, 13, 16 and 18 of the Order;• implementing necessary internal controls to enable the preparation of interim financial statements that are fairly presented and free frommaterial misstatement, whether due to fraud or error; and• assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using thegoing concern basis of accounting unless they either intend to liquidate or to cease operations, or have no realistic alternative but to do so.
46

INDEPENDENT AUDITOR’S REPORT

AUDITOR’S RESPONSIBILITIES FOR THE REVIEW OF THE INTERIM FINANCIAL STATEMENTS AND REGISTEREDBANK DISCLOSURES IN SECTIONS B2, B3, B5, AND B6
Our responsibility is to express a conclusion on the interim financial statements and registered bank disclosure statements in sections B2, B3, B5, andB6 based on our review. We conducted our review in accordance with NZ SRE 2410. NZ SRE 2410 requires us to conclude whether anything has cometo attention that causes us to believe that:• the interim financial statements do not present fairly in all material respects the Banking Group’s financial position as at 31 March 2022 and its
financial performance and cash flows for the six month period ended on that date;• the interim financial statements do not, in all material respects, comply with IAS 34 and NZ IAS 34; and• the registered bank disclosures in sections B2, B3, B5 and B6 does not, fairly state, in all material respects, the matters to which it relates inaccordance with Schedules 5, 7, 13, 16 and 18 of the Order.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards
on Auditing (New Zealand). Accordingly we do not express an audit opinion on the interim financial statements and the registered bank disclosures in
sections B2, B3, B5, and B6. This description forms part of our independent review report.
REPORT ON THE REGISTERED BANK DISCLOSURES IN SECTION B4 RELATING TO CAPITAL ADEQUACY ANDREGULATORY LIQUIDITY RATIOS (SECTION B4)QUALIFIED REVIEW CONCLUSION
We have reviewed the registered bank disclosures, as disclosed in section B4 of the half year disclosure statement for the six month period ended
31 March 2022, which are required to be disclosed in accordance with Schedule 11 of the Order.
Based on our review, with the exception of the matter described below, nothing has come to our attention that causes us to believe that the
information relating to Capital Adequacy and Regulatory Liquidity Ratios, disclosed in section B4 of the half year disclosure statement, is not, in allmaterial respects disclosed in accordance with Schedule 11 of the Order.

BASIS FOR QUALIFIED CONCLUSION ON THE REGISTERED BANK DISCLOSURES IN SECTION B4
A review of the registered bank disclosures in section B4 in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent
Auditor of the Entity (NZSRE 2410) is a limited assurance engagement. The auditor performs procedures, consisting of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review procedures. Our responsibilities under thatstandard are further described in the ‘Auditor’s Responsibilities for the review of the registered bank disclosures in section B4’ section of our report.
As the auditor of the Banking Group, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial
statements.
As described in section B1, the Banking Group has identified that it was not compliant with Condition of Registration 1B in relation to the operation ofversions of the following rating models and processes, which were not approved by the Reserve Bank of New Zealand (in some cases since 2008):•••

Bank Rating;
Project and Structured Finance; andCommercial Property: Special Purpose Asset Investment.

In this respect, the Capital Adequacy Ratios disclosed in section B4 of the half year disclosure statement have not been disclosed in accordance with
Schedule 11 of the Order, with section B1 disclosing the Banking Group’s calculation of the corresponding impact on risk weighted assets. The
Banking Group has remediated these models and submitted all affected models to the Reserve Bank of New Zealand for approval.
The above matters do not affect the Regulatory Liquidity information, which is also disclosed in section B4.
RESPONSIBILITIES OF THE DIRECTORS FOR THE REGISTERED BANK DISCLOSURES IN SECTION B4
The Directors, on behalf of the Banking Group, are responsible for the preparation and fair presentation of the registered bank disclosures in section B4of the half year disclosure statement in accordance with the registered bank’s Conditions of Registration, the Reserve Bank of New Zealand’s Banking
Prudential Requirements and Schedule 11 of the Order.
AUDITOR’S RESPONSIBILITIES FOR THE REVIEW OF THE REGISTERED BANK DISCLOSURES IN SECTION B4
Our responsibility is to express a conclusion on the registered bank disclosures in section B4 based on our review. We conducted our review inaccordance with NZ SRE 2410 issued by the New Zealand External Reporting Board. NZ SRE 2410 requires us to conclude whether anything has cometo our attention that causes us to believe that the registered bank disclosures in section B4 is not, in all material respects, disclosed in accordance with
Schedule 11 of the Order.
The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards
on Auditing (New Zealand). Accordingly we do not express an audit opinion on the registered bank disclosures in section B4. This description forms
part of our independent review report.

47

ANZ BANK NEW ZEALAND LIMITEDINDEPENDENT AUDITOR’S REVIEW REPORTUSE OF THIS INDEPENDENT REVIEW REPORTThis independent review report is made solely to the shareholder of the Banking Group. Our review work has been undertaken so that we might state
to the shareholder those matters we are required to state to them in the independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the shareholder as a body for our review work, this independent
review report, or any of the opinions we have formed.

KPMG
Auckland6 May 2022

48

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