ANZ Bank New Zealand Limited
Registered Bank Disclosure Statement
FOR THE NINE MONTHS ENDED 30 JUNE 2014 | NUMBER 74 ISSUED AUGUST 2014

ANZ Bank New Zealand Limited

Registered Bank Disclosure Statement
For the nine months ended 30 June 2014

Contents
General Disclosures

2

Income Statement

3Statement of Comprehensive Income

3Statement of Changes in Equity

4

Balance Sheet

5

Condensed Cash Flow Statement

6

Notes to the Financial Statements

7

Directors' Statement

16

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

ANZ Bank New Zealand Limited

2

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

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

Qualification
Outlook Stable

Moody’s Investors Service

Aa3

Outlook Stable

Fitch Ratings

AA-

Outlook Stable

Rating Agency
Standard & Poor’s

Changes to Conditions of Registration
The conditions of registration applying to the Bank wereamended on 1 July 2014 to refer to a revised version of the
RBNZ document Capital Adequacy Framework (Internal Models
Based Approach) (BS2B), following the RBNZ’s review ofcapital adequacy requirements for residential mortgage
lending. Other minor updates have also been made to referto revised versions of certain RBNZ documents, which havebeen updated to reflect the Financial Reporting Act 2013
coming into force on 1 April 2014.

Directorate

Guarantors

Nigel Williams was appointed as an alternate director for
Michael Smith on 8 January 2014. Mr Williams is the Chief
Risk Officer of the Ultimate Parent Bank.

No obligations of the Bank are guaranteed as at 13 August
2014.

AuditorANZNZ Covered Bond Trust
Certain debt securities (Covered Bonds) issued by the Bank’s
wholly owned subsidiary, ANZ New Zealand (Int’l) Limited,
are guaranteed by ANZNZ Covered Bond Trust Limited (theCovered Bond Guarantor), solely in its capacity as trustee of
ANZNZ Covered Bond Trust. The Covered Bond Guarantor
has guaranteed the payment of interest and principal of
Covered Bonds with a carrying value as at 30 June 2014 of$3,757 million, pursuant to a guarantee which is secured overa pool of assets. The Covered Bond Guarantor’s address forservice is Level 35, 48 Shortland Street, Auckland, New
Zealand. The Covered Bond Guarantor is not a member ofthe Banking Group and has no credit ratings applicable to its
long term senior unsecured obligations payable in New
Zealand dollars. The Covered Bonds have been assigned along term rating of Aaa and AAA by Moody’s InvestorsService and Fitch Ratings respectively. Details of the pool ofassets that secure this guarantee are provided in Note 7.

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

ANZ Bank New Zealand Limited

3

Income Statement
Unaudited

Unaudited

9 months to

9 months toYear to30/06/2014

30/06/2013 1

30/09/2013 1

Interest income

4,588

4,472

5,957

Interest expense

2,551

2,534

3,344

Net interest income

2,037

1,938

2,613

Net trading gains

145

140

163

232

176

234

381

347

419

3

6

7

Operating income

2,798

2,607

3,436

Operating expenses

1,095

1,155

1,512

1,703

1,452

1,924

(26)

45

63

1,729

1,407

1,861

$ millions

Note

Net funds management and insurance income
Other operating income2

Share of associates' profit

Profit before credit impairment and income tax
Credit impairment charge / (release)5

Profit before income tax

AuditedIncome tax expense

473

373

490

Profit after income tax

1,256

1,034

1,371

AuditedStatement of Comprehensive Income$ millions

Profit after income tax

Unaudited

Unaudited

9 months to

9 months toYear to30/06/2014

30/06/2013 1

30/09/2013 1

1,256

1,034

1,371

25

20

71

Items that will not be reclassified to profit or loss
Actuarial gain on defined benefit schemes
Income tax expense relating to items that will not be reclassified

(7)

(6)

(20)

Total items that will not be reclassified to profit or loss

18

14

51

Unrealised losses recognised directly in equity

(7)

(98)

(138)

Realised gains transferred to income statement

(33)

(21)

(21)

Items that may be reclassified subsequently to profit or loss

Income tax credit relating to items that may be reclassified

11

33

45

Total items that may be reclassified subsequently to profit or loss

(29)

(86)

(114)

1,245

962

1,308

Total comprehensive income for the period

1Comparative amounts have changed. Refer to notes 1 and 16 for details.

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

ANZ Bank New Zealand Limited

4

Statement of Changes in Equity$ millions

Note

As at 1 October 2012 (Audited)
Restatement1

As at 1 October 2012 (Restated, audited)SharecapitalAvailablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total
equity

6,943

(3)

141

3,851

10,932

-

-

-

(21)

(21)

6,943

(3)

141

3,830

10,911

Profit after income tax

-

-

-

1,034

1,034

Unrealised losses recognised directly in equity

-

(1)

(97)

-

(98)

Realised gains transferred to the income statement

-

-

(21)

-

(21)

Actuarial gain on defined benefit schemes

-

-

-

20

20

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

-

-

33

(6)

27

Total comprehensive income for the period

-

(1)

(85)

1,048

962

Ordinary dividend paid

-

-

-

(465)

(465)

6,943

(4)

56

4,413

11,408

6,943

(3)

141

3,851

10,932

-

-

-

(21)

(21)

As at 30 June 2013 (Restated, unaudited)
As at 1 October 2012 (Audited)
Restatement1

As at 1 October 2012 (Restated, audited)

6,943

(3)

141

3,830

10,911

Profit after income tax

-

-

-

1,371

1,371

Unrealised gains / (losses) recognised directly in equity

-

1

(139)

-

(138)

Realised gains transferred to the income statement

-

-

(21)

-

(21)

Actuarial gain on defined benefit schemes

-

-

-

71

71

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

-

-

45

(20)

25

Total comprehensive income for the period

-

1

(115)

1,422

1,308

Ordinary dividend paid

-

-

-

(1,065)(1,065)Preference shares issued

300

-

-

-

300

As at 30 September 2013 (Restated, audited)

7,243

(2)

26

4,187

11,454

Profit after income tax

-

-

-

1,256

1,256

Unrealised gains / (losses) recognised directly in equity

-

3

(10)

-

(7)

Realised gains transferred to the income statement

-

-

(33)

-

(33)

Actuarial gain on defined benefit schemes

-

-

-

25

25

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

-

(1)

12

(7)

4

Total comprehensive income for the period

-

2

(31)

1,274

1,245

970

-

-

-

970

-

-

-

(1,510)(1,510)

-

-

-

(6)

(6)

8,213

-

(5)

3,945

12,153

Ordinary shares issued
Ordinary dividend paid
Preference dividend paid
As at 30 June 2014 (Unaudited)10

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

ANZ Bank New Zealand Limited

5

Balance Sheet
Unaudited

Unaudited

Audited30/06/2014

30/06/2013 1

30/09/2013 1

3,041

5,027

2,206

882

230

514

Collateral paid

1,304

615

1,002

Trading securities

12,492

10,128

10,320$ millions

Note

AssetsCash
Settlement balances receivable

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

169

172

10,889

9,518

95

74

-

1,056

1,854

942

94,19388,85590,837

Other assets

612

580

567

Insurance contract assets

454

401

399

Investment in associates

90

98

98

-

78

45

376

342

376

3,452

3,469

3,448

Total assets

125,874

122,809

120,444

Interest earning and discount bearing assets

112,740

106,545

105,866

1,539

1,623

1,428

Net loans and advances

4

174
7,653

Deferred tax assets
Premises and equipment
Goodwill and other intangible assets

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings

8

553

1,526

438

85,32977,57978,816

8,073

10,467

10,243Current tax liabilities

-

-

3

Deferred tax liabilities

50

-

-

1,267

1,259

1,195

Derivative financial instruments

Payables and other liabilities
Provisions
Bonds and notes

205

271

229

15,573

17,514

15,494

1,132

1,162

1,144

Total liabilities

113,721

111,401

108,990

Net assets

12,153

11,40811,454

8,213

6,943

7,243

(5)

52

24

Retained earnings

3,945

4,413

4,187

Total equity

12,153

11,40811,454

Interest and discount bearing liabilities

97,357

92,93091,061

Subordinated debt

EquityShare capital
Reserves

1

Comparative amounts have changed. Refer to notes 1 and 16 for details.

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

ANZ Bank New Zealand Limited

6

Condensed Cash Flow Statement$ millions

Unaudited

Unaudited

9 months to

9 months toYear to30/06/2014

30/06/2013

30/09/2013

AuditedCash flows from operating activities
Interest received

4,530

4,446

5,916

Interest paid

(2,488)(2,492)(3,368)Other cash inflows provided by operating activities

706

655

877

Other cash outflows used in operating activities(1,505)(1,595)(1,940)Cash flows from operating profits before changes in operating assets and liabilities

1,243

1,014

1,485

Net changes in operating assets and liabilities

763

3,068

1,192

Net cash flows provided by operating activities

2,006

4,082

2,677

Cash flows from investing activities
Cash inflows provided by investing activities

13

69

69

Cash outflows used in investing activities

(84)

(89)

(142)

Net cash flows used in investing activities

(71)

(20)

(73)

Cash flows from financing activities
Cash inflows provided by financing activities

4,686

1,105

2,678

Cash outflows used in financing activities(5,876)(2,463)(5,676)

Net cash flows used in financing activities(1,190)(1,358)(2,998)Net increase / (decrease) in cash and cash equivalents

745

2,704

(394)

Cash and cash equivalents at beginning of the period

2,861

3,255

3,255

Cash and cash equivalents at end of the period

3,606

5,959

2,861

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

ANZ Bank New Zealand Limited

7

Notes to the Financial Statements
1.

Significant Accounting Policies(i)Reporting entity and statement of compliance

Adoption of these standards has not resulted in any
material change to the Banking Group’s reported result or
financial position.

These interim financial statements are for the Banking
Group for the nine months ended 30 June 2014. They havebeen prepared in accordance with New Zealand Generally
Accepted Accounting Practice as appropriate for profit
oriented entities, the requirements of NZ IAS 34 Interim
Financial Reporting, IAS 34 Interim Financial Reporting andthe Order, and should be read in conjunction with the
Banking Group’s financial statements for the year ended
30 September 2013.
(ii)

Amendments to NZ IAS 34 require certain fair value
disclosures which have been included in Note 12, howevercomparative information is not required in the first year of
application.

Basis of measurement
These financial statements have been prepared on a going
concern basis in accordance with historical cost concepts
except that the following assets and liabilities are stated attheir fair value:
•

•
•
•

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

(iii) Changes in accounting policies
The Banking Group has applied the following new
accounting standards and amendments in the preparationof these financial statements:
•
•
•
•
•

2.

NZ IAS 19 has been applied retrospectively, in accordancewith transitional provisions, with the net impact of initial
application recognised in retained earnings as at 30
September 2012 and shown in the statement of changes
in equity. The balances of payables and other liabilities
and the associated deferred tax asset have been restatedfor subsequent periods.

(iv) Presentation currency and rounding
The amounts contained in the financial statements arepresented in millions of New Zealand dollars, unlessotherwise stated.
(v)

Comparatives
In addition to restatements resulting from the initial
application of NZ IAS 19, certain amounts in thecomparative information have been reclassified to ensure
consistency with the current year’s presentation. Further
information on changes to comparative information is
included in note 16.

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

NZ IFRS 10 Consolidated Financial Statements;
NZ IFRS 13 Fair Value Measurement;
NZ IAS 19 Employee Benefits (amended 2011);
NZ IAS 28 Investments in Associates and Joint Ventures(amended 2011); andNZ IAS 34 Interim Financial Reporting (consequential
amendments).

Other Operating Income
Unaudited

Unaudited

9 months to

9 months toYear to30/06/2014

30/06/2013

30/09/2013

Net fee income

306

324

423

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

(6)

1

(35)

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

91

-

-

$millionsAuditedGain on sale of subsidiary and associate

-

13

13

Loss on sale of mortgages to NZ Branch

(23)

(13)

(14)

Other income

13

22

32

Total other operating income

381

347

419

ANZ Bank New Zealand Limited

8

Notes to the Financial Statements
3.

Segmental Analysis

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

services are offered to small enterprises (typically with annual
revenues of less than $5 million). Commercial & Agricustomers consist of primarily privately owned medium tolarge enterprises. The Banking Group's relationship withthese businesses ranges from simple banking requirementswith revenue from deposit and transactional facilities, andcash flow lending, to more complex funding arrangementswith revenue sourced from a wider range of products. UDC isprincipally involved in the financing and leasing of plant,
vehicles and equipment, mainly for small and medium sizedbusinesses, as well as investment products.
WealthWealth comprises the Private Wealth, Funds Management
and Insurance businesses, which provide private banking,investment, superannuation and insurance products andservices.
Institutional
Institutional provides financial services through a number of
specialised units to large multi-banked corporations, often
global, which require sophisticated product and risk
management solutions. Those financial services include loan
structuring, foreign exchange, wholesale money market
services and transaction banking.

Commercial

Other

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

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

Business segment analysis1$ millions

RetailCommercial

Wealth 2

Institutional

Other 3

Total

2,798

Unaudited 9 months to 30/06/2014

External revenues

753

2,085

179

591

(810)

Intersegment revenues

151(1,006)

121

(131)

865

-

Total revenues

904

1,079

300

460

55

2,798

Profit after income tax

298

543

148

236

31

1,256

External revenues

723

2,015

57

652

(840)

2,607

Intersegment revenues

133

(938)

111

(177)

871

-

Total revenues

856

1,077

168

475

31

2,607

Profit / (loss) after income tax

235

518

55

234

(8)

1,034
3,436

Unaudited 9 months to 30/06/2013

Audited year to 30/09/2013

External revenues

985

2,675

83

816

(1,123)

Intersegment revenues

173(1,248)

149

(208)

1,134

-

1,158

1,427

232

608

11

3,436

333

687

80

285

(14)

1,371

Total revenues
Profit / (loss) after income tax
1
2

3

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

ANZ Bank New Zealand Limited

9Notes to the Financial Statements
4.

Net Loans and Advances
Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Overdrafts

1,689

1,741

1,841

Credit card outstandings

1,546

1,442

1,458

Term loans - housing

51,53547,83049,521

Term loans - non-housing$ millions

Note

39,24037,93338,024

Lease receivables

103

135

128

Hire purchase

791

683

721

Other

124

135

125

95,02889,89991,818

Total gross loans and advances
5

(692)

(888)

(826)

Less: Unearned income

(361)

(333)

(342)

Add: Capitalised brokerage/mortgage origination fees

189

139

156

Add: Customer liability for acceptances

29

38

31

94,19388,85590,837

Less: Provision for credit impairment

Total net loans and advances

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of $9,743 million as at 30 June 2014 (30/06/2013$9,916 million, 30/09/2013 $9,256 million). These assets qualify for derecognition as the Bank does not retain a continuing
involvement in the transferred assets.

5.

Provision for Credit Impairment$ millions

Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

86

112

282

480

Unaudited 30/06/2014

Collective provision
Individual provision

53

22

137

212

Total provision for credit impairment

139

134

419

692

Collective credit impairment release

(15)

(5)

(42)

(62)

Individual credit impairment charge / (release)

(4)

63

(23)

36

Credit impairment charge / (release)

(19)

58

(65)

(26)

100

115

354

569

Unaudited 30/06/2013

Collective provision
Individual provision

96

15

208

319

Total provision for credit impairment

196

130

562

888

Collective credit impairment release

(4)

(10)

(21)

(35)

Individual credit impairment charge

13

47

20

80

Credit impairment charge / (release)

9

37

(1)

45

101

117

324

542

Audited 30/09/2013

Collective provision
Individual provision

74

22

188

284

Total provision for credit impairment

175

139

512

826

Collective credit impairment release

(3)

(8)

(51)

(62)

Individual credit impairment charge

10

67

48

125

Credit impairment charge / (release)

7

59

(3)

63

ANZ Bank New Zealand Limited

10Notes to the Financial Statements
6.

Impaired Assets and Past Due Assets
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

Total impaired assets

168

39

423

630

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

101

36

77

214

Total impaired assets

239

40

745

1,024

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

96

51

95

242

Total impaired assets

179

49

666

894

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

92

40

76

208

$ millions
Unaudited 30/06/2014

Unaudited 30/06/2013

Audited 30/09/2013

7.

Financial Assets Pledged as Collateral
Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Cash collateral given on derivative financial instruments

1,304

615

1,002

Trading securities encumbered through repurchase agreements

1,350

1,152

108

Residential mortgages pledged as security for covered bonds

6,858

5,529

5,857

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

2,310

2,129

2,162

Total financial assets pledged as collateral

11,822

9,425

9,129

$ millions

ANZNZ Covered Bond Trust (the Covered Bond Trust)
Substantially all of the assets of the Covered Bond Trust are made up of certain housing loans and related securities originated by
the Bank which are security for the guarantee by ANZNZ Covered Bond Trust Limited as trustee of the Covered Bond Trust of
issuances of covered bonds by the Bank, or its wholly owned subsidiary ANZ New Zealand (Int’l) Limited, from time to time. The
assets of the Covered Bond Trust are not available to creditors of the Bank, although the Bank (or its liquidator or statutory manager)
may have a claim against the residual assets of the Covered Bond Trust (if any) after all prior ranking creditors of the Covered Bond
Trust have been satisfied.
The Banking Group continues to recognise the assets of the Covered Bond Trust on its balance sheet as, although they are pledged
as security for covered bonds, the Bank retains substantially all the risks and rewards of ownership.

8.

Deposits and Other Borrowings$ millions

Note

Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Certificates of deposit

2,236

1,866

2,364

Term deposits

33,916

33,64133,862Other deposits bearing interest and other borrowings

33,31429,04829,687

Deposits not bearing interest

5,812

5,562

5,526

Deposits from banks

1,575

864

180

Commercial paper

6,951

4,416

4,765

1,519

1,492

1,492

6

690

940

85,32977,57978,816

UDC secured investments
Deposits from other members of ANZ New Zealand
Total deposits and other borrowings

9.

7

Related Party Transactions
Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Total due from related parties

2,932

3,294

2,193

Total due to related parties

3,559

5,678

5,132

$ millions

ANZ Bank New Zealand Limited

11

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

Banking Group
30/06/2014

30/06/2013

30/09/2013

Common equity tier 1 capital

11.3%

10.7%

10.4%

Tier 1 capital

11.8%

10.7%

10.8%

Total capital

13.0%

12.4%

12.4%

Buffer ratio

5.0%

4.4%

4.4%

Common equity tier 1 capital

4.5%

4.5%

4.5%

Tier 1 capital

6.0%

6.0%

6.0%

Total capital

8.0%

8.0%

8.0%

Buffer requirement

2.5%

n/a

n/a

Unaudited

RBNZ minimum ratios:

Capital of the Banking Group
Unaudited$ millions

30/06/2014

Common equity tier 1 capital before deductions

11,853

Less deductions from common equity tier 1 capital(3,644)

Common equity tier 1 capital

8,209
300

Additional tier 1 capital

8,509

Total tier 1 capital
Tier 2 capital

936

Total capital

9,445

Capital requirements of the Banking Group

Exposure atdefault

Risk weighted
exposure or
implied risk
weighted
exposure1

Total capitalrequirement

Corporate exposures

45,261

26,304

2,104

Sovereign exposures

10,826201

16

Bank exposures

8,274

2,654

212

Retail mortgage exposures

56,332

15,234

1,219

Other retail exposures

9,811

7,869

630

$ millions
Unaudited 30/06/2014

130,504

52,262

4,181

Specialised lending exposures subject to slotting approach

8,269

7,869

629

Exposures subject to standardised approach

2,148

355

29

92

389

31

Exposures subject to internal ratings based approach

Equity exposures
Other exposures

3,695

1,315

105

Total credit risk

144,708

62,1904,975

Operational risk

n/a

5,378

430

Market risk

n/a

4,845

387

144,708

72,413

5,792

Total
1

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

ANZ Bank New Zealand Limited

12

Notes to the Financial Statements
Ordinary share capital issued
The Bank issued $970 million of ordinary shares to the Immediate Parent Company on 20 June 2014. The shares are included incommon equity tier 1 capital and were issued at the same time as payment of a dividend of the same amount by the Bank to the
Immediate Parent Company. Total common equity tier 1 capital and capital ratios were unchanged after these transactions.
All ordinary shares share equally in dividends and any proceeds available to ordinary shareholders on winding up. On a show ofhands 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 shall have one vote for each share held.
Pillar II capital for other material risks
The Banking Group has an Internal Capital Adequacy Assessment Process (ICAAP) which complies with the requirements of theBank's Conditions of Registration.
Under the Banking Group's ICAAP it identifies and measures all "other material risks", which are those material risks that are notexplicitly captured in the calculation of the Banking Group's tier 1 and total capital ratios. The other material risks identified by the
Banking Group include business risk, pension risk, insurance risk, funds management risk, lapse risk, premises and equipment risk
and capitalised origination fees risk.
The Banking Group's internal capital allocation for these other material risks is $336 million (30/06/2013 $379 million; 30/09/2013$343 million).
The Banking Group regularly reviews the methodologies used to calculate the economic capital allocated to other material risks.
Updated capital methodologies (particularly relating to pension risk and business retention risk) were applied in November 2013and prior periods were restated accordingly.
Residential mortgages by loan-to-valuation ratio
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the Banking
Group's valuation of the security property at origination of the exposure. Off balance sheet exposures include undrawn and partiallydrawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing lending whichhave been accepted by the customer.
30/06/2014
UnauditedOn-balancesheet

Off-balance
sheet

Total

Does not exceed 60%

18,131

3,379

21,510Exceeds 60% and not 70%

9,035

935

9,970

Exceeds 70% and not 80%

14,596

1,446

16,042

Does not exceed 80%

41,762

5,760

47,522

Exceeds 80% and not 90%

4,717

224

4,941

Exceeds 90%

3,041

278

3,319

Total

49,5206,262

55,782$ millions

LVR range

11. Liquidity Portfolio
The Banking Group holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The
size of the Banking Group’s liquidity portfolio is based on the amount required to meet its liquidity policy and includes both items
classified as cash and those classified as operating assets in the Condensed Cash Flow Statement.
Unaudited 30/06/2014$ millions

Cash

Trading
Securities

Available-forsale securities

Total

2,000

2,000

-

-

Certificates of deposit

-

-

477

477

Government, local body stock and bonds

-

5,771

518

6,289

Government treasury bills

-

107

21

128

Other bonds

-

5,397

-

5,397

2,000

11,275

1,016

14,291

Balances with central banks

Total liquidity portfolio

The Bank also held unencumbered internal residential mortgage backed securities which would entitle the Banking Group to enter
into repurchase transactions with a value of $5,445 million at 30 June 2014.

ANZ Bank New Zealand Limited

13

Notes to the Financial Statements
12. Fair Value Measurements
Financial assets and financial liabilities not measured at fair value
Below is a comparison of the carrying amounts as reported on the balance sheet and fair value of financial asset and liability
categories other than those categories where the carrying amount is at fair value or considered a reasonable approximation of fairvalue:

Unaudited

30/06/2014$ millions

Carrying amount

Fair value

94,193

94,203

Deposits and other borrowings2

85,32985,320Bonds and notes1

15,573

15,742

Subordinated debt

1,132

1,113

AssetsNet loans and advances1
Liabilities

1

2

Fair value hedging is applied to certain financial instruments within these categories. The resulting fair value adjustments mean that the carrying value differs from theamortised cost.
Includes commercial paper designated at fair value through profit or loss of $6,951million.

Financial assets and financial liabilities measured at fair value in the balance sheet
The Banking Group uses a valuation method within the following hierarchy to determine the carrying amount of assets and liabilities
held at fair value, all of which are recurring fair value measurements. There are no assets or liabilities measured at fair value on a nonrecurring basis.
Level 1 - Quoted market price
Where an active market exists fair value is based on quoted market prices for identical financial instruments. The quoted market
price is not adjusted for any potential impact that may be attributed to a large holding of the financial instrument.
Level 2 - Valuation technique using observable inputs
In the event that there is no quoted market price for the instruments, fair values are based on present value estimates or othermarket accepted valuation techniques which include data, including interest and exchange rates, from observable markets wherever
possible.
Level 3 - Valuation technique with significant non observable inputs
The Banking Group holds units in an unlisted fund which does not trade in an active market. The fair value of these units is based on
the estimated cashflows from the realisation of the underlying assets.
The Banking Group recognises transfers between Level 1, Level 2 and Level 3 as of the beginning of the reporting period during
which the transfer has occurred. There have been no transfers between levels during the period.
Valuation hierarchy
Unaudited 30/06/2014$ millions

Level 1

Level 2

Level 3

Total

12,487

5-

12,492

4

7,649

-

7,653

1,054

-

2

1,056

119

55

-

174

13,6647,709

2

21,375

-

6,951

-

6,951

Derivative financial instruments

5

8,068

-

8,073

Payables and other liabilities

194

-

-

194

Total financial liabilities held at fair value

199

15,019-15,218Financial assets
Trading securities
Derivative financial instruments
Available-for-sale assets
Investments backing insurance policy liabilities
Total financial assets held at fair value
Financial liabilities
Deposits and other borrowings

ANZ Bank New Zealand Limited

14

Notes to the Financial Statements
13. Concentrations of Credit Risk to Individual Counterparties
The Banking Group measures its concentration of credit risk in respect of bank counterparties on the basis of approved exposures,and in respect of non bank counterparties on the basis of limits.
For the three months ended 30 June 2014 there were no individual counterparties, excluding connected parties, governments andbanks with long term credit ratings of A- or above, where the Banking Group’s period end or peak end-of-day credit exposure
equalled or exceeded 10% of the Banking Group’s equity as at the end of the period.

14. Insurance business
The Banking Group conducts insurance business through its subsidiaries OnePath Life (NZ) Limited and OnePath Insurance Services(NZ) Limited. The aggregate amount of insurance business in this group comprises assets totalling $827 million (30/06/2013: $774
million; 30/09/2013 $779 million), which is 0.7% (30/06/2013: 0.6%; 30/09/2013 0.6%) of the total consolidated assets of the Banking
Group.

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

Unaudited

Unaudited

Audited30/06/2014

30/06/2013

30/09/2013

Credit related commitments
990

950

817

Commitments to provide financial services

26,621

24,212

24,446

Total credit related commitments

27,611

25,16225,263Financial guarantees

841

885

997

Standby letters of credit

61

46

32

Transaction related contingent items

1,199

1,054

1,059

Trade related contingent liabilities

91

81

113

2,192

2,066

2,201

Commitments with certain drawdown due within one year

Guarantees and contingent liabilities

Total guarantees and contingent liabilities

The Banking Group guarantees the performance of customers by issuing standby letters of credit and guarantees to third parties,
including its Ultimate Parent Bank. To reflect the risk associated with these transactions, they are subjected to the same credit
origination, portfolio management and collateral requirements as for customers that apply for loans. The contract amountrepresents the maximum potential amount that could be lost if the counterparty fails to meet its financial obligations. As thefacilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements.
Other contingent liabilities
In December 2013, the Commerce Commission announced that it intended to file proceedings against the Bank (and two otherbanks) under the Fair Trading Act 1986 in relation to the sale of interest rate swaps to rural customers. On 2 April 2014, theCommission stated that it anticipates making a further announcement after it has progressed discussions with each bank. The
Financial Markets Authority has also commenced an investigation into this matter. The potential outcome of the investigations or
any proceedings which may be issued cannot be determined with any certainty at this stage.
In June 2013, litigation funder Litigation Lending Services (NZ) Limited filed a representative action against the Bank regarding
certain fees charged to New Zealand customers. The potential outcome of this litigation cannot be determined with any certainty at
this stage.
The Banking Group has other contingent liabilities in respect of actual and possible claims and court proceedings. An assessment of
the Banking Group’s likely loss in respect of these matters has been made on a case-by-case basis and provision made where
deemed necessary.

ANZ Bank New Zealand Limited

15

Notes to the Financial Statements
16. Changes to Comparatives
Certain amounts in the comparative information have been reclassified to conform with current period financial statement
presentations.
During the period, the classification of the balance sheet has been changed to reflect the nature of the financial assets and liabilities
reported. Prior to the reclassification, the balance sheet was classified according to counterparty. This has resulted in the followingchanges to previously reported balance sheet classifications. Minor changes in the overall total assets and total liabilities have also
occurred due to the adoption of IAS19 Employee Benefits and to gross up net insurance assets for the present value of reinsurance
premiums payable.
Associated amounts in the income statement, statement of comprehensive income and cash flow statement have been restatedaccordingly, and the impact of the changes to these statements is not material.
30/06/2013
Unaudited$ millions

30/09/2013

ChangeCurrently
reported

Previously
reported

ChangeCurrently
reported

3,004(3,004)-2,496(2,496)-

3,625(3,625)-

1,570(1,570)

-

Cash

-

5,027

5,027

-

2,206

2,206

Settlement balances receivable

-

230

230

-

514

514

Collateral paid

-

615

615

-

1,002

1,002

Available-for-sale assets

1,235

619

1,854

782

160

942

Net loans and advances

88,629226

88,85590,489348

90,837

Insurance policy assets

299

102

401

399

-

399

Other assets

668

(88)

580

731

(164)

567

Deferred tax assets

70

8

78

39

6

45

All other assets

25,169-25,16923,932-23,932

Total assets

122,699

110

122,809

120,438

6

120,444

3,511(3,511)-

1,517(1,517)-

Settlement balances payable

-

1,623

1,623

-

1,428

1,428

Collateral received

-

1,526

1,526

-

438

438

76,026

1,553

77,57977,697

1,119

78,816

689

(689)

-

939

(939)

-

1,631

(372)

1,259

1,705

(510)

1,195

Previously
reported

Liquid assets
Due from other financial institutions

AssetsLiabilities
Due to other financial institutions

Deposits and other borrowings
Due to immediate parent company
Payables and other liabilities
All other liabilities

29,414-

29,414

27,113-

27,113

Total liabilities

111,271130

111,401

108,97119

108,990

Equity11,428(20)

11,408

11,467(13)

11,454

17. Subsequent Events
On 8 August 2014 the Bank’s Board resolved to pay a preference dividend of $7 million on 1 September 2014 and to pay an ordinary
dividend of $830 million no later than 30 September 2014.

ANZ Bank New Zealand Limited

16

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

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

The Disclosure Statement is not false or misleading.

Over the nine months ended 30 June 2014, after due enquiry, each Director believes that:(i)

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

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

including credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operational risk andother business risks, and that those systems were being properly applied.
This Disclosure Statement is dated, and has been signed by or on behalf of all Directors of the Bank on, 13 August 2014.

Antony Carter

Shayne Elliott

John Judge(also on behalf of David Hisco and Michael Smith)Mark Verbiest

Nigel Williams(alternate director for Michael Smith)

Joan Withers