ANZ Bank New Zealand Limited
Registered Bank Disclosure Statement
FOR THE THREE MONTHS ENDED 31 DECEMBER 2014 | NUMBER 76 ISSUED FEBRUARY 2015

ANZ Bank New Zealand Limited

Registered Bank Disclosure Statement
For the three months ended 31 December 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

Guarantors
No obligations of the Bank are guaranteed as at 13 February
2015.
ANZNZ Covered Bond Trust
Certain debt securities (Covered Bonds) issued by the Bank’s
wholly owned subsidiary, ANZ New Zealand (Int’l) Limited,
are guaranteed by ANZNZ Covered Bond Trust Limited (theCovered Bond Guarantor), solely in its capacity as trustee of
ANZNZ Covered Bond Trust. The Covered Bond Guarantor
has guaranteed the payment of interest and principal of
Covered Bonds with a carrying value as at 31 December 2014of $3,743 million, pursuant to a guarantee which is secured
over a pool of assets. The Covered Bond Guarantor’s addressfor service is Level 35, Vero Centre, 48 Shortland Street,
Auckland, New Zealand. The Covered Bond Guarantor is nota member of the Banking Group and has no credit ratings
applicable to its long term senior unsecured obligations
payable in New Zealand dollars. The Covered Bonds havebeen assigned a long term rating of Aaa and AAA by Moody’s
Investors Service and Fitch Ratings respectively. Details of thepool of assets that secure this guarantee are provided in Note
7.

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

Directorate
As at 13 February 2015 there have been not changes to the
Directors of the Bank since 30 September 2014, the balancedate of the last full year disclosure statement.

Auditor
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

3 months to

3 months toYear to31/12/2014

31/12/2013

30/09/2014

Interest income

1,733

1,501

6,272

Interest expense

1,014

820

3,529

Net interest income

719

681

2,743

Net trading gains

64

64

210

101

68

325

103

90

547

1

1

3

Operating income

988

904

3,828

Operating expenses

384

372

1,489

604

532

2,339

12

(21)

(16)

Profit before income tax

592

553

2,355

Income tax expense

163

153

639

Profit after income tax

429

400

1,716

Audited$ 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

AuditedStatement of Comprehensive Income
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2014

31/12/2013

30/09/2014

429

400

1,716

Actuarial gain on defined benefit schemes

-

-

35

Income tax expense relating to items that will not be reclassified

-

-

(10)

Total items that will not be reclassified to profit or loss

-

-

25

Unrealised gains / (losses) recognised directly in equity

14

(19)

(2)

Realised gains transferred to income statement

(12)

(11)

(41)

Income tax credit / (expense) relating to items that may be reclassified

(1)

8

12

Total items that may be reclassified subsequently to profit or loss

1

(22)

(31)

430

378

1,710

$ millions

Profit after income tax
Items that will not be reclassified to profit or loss

Items that may be reclassified subsequently to profit or loss

Total comprehensive income

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

SharecapitalAvailablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total
equityAs at 1 October 2013 (Audited)

7,243

(2)

26

4,187

11,454

Profit after income tax

-

-

-

400

400

Unrealised gains / (losses) recognised directly in equity

-

3

(22)

-

(19)

Realised gains transferred to the income statement

-

-

(11)

-

(11)

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

-

(1)

9

-

8

Total comprehensive income

-

2

(24)

400

378

As at 31 December 2013 (Unaudited)

7,243

-

2

4,587

11,832As at 1 October 2013 (Audited)

7,243

(2)

26

4,187

11,454

Profit after income tax

-

-

-

1,716

1,716

Unrealised gains / (losses) recognised directly in equity

-

3

(5)

-

(2)

Realised gains transferred to the income statement

-

-

(41)

-

(41)

Actuarial gain on defined benefit schemes

-

-

-

35

35

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

-

(1)

13

(10)

2

Total comprehensive income

-

2

(33)

1,741

1,710

Ordinary shares issued

970

-

-

-

970

Ordinary dividend paid

-

-

-

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

-

-

-

(13)

(13)

8,213

-

(7)

3,575

11,781

Profit after income tax

-

-

-

429

429

Unrealised gains recognised directly in equity

-

-

14

-

14

Realised gains transferred to the income statement

-

-

(12)

-

(12)

Income tax expense on items recognised directly in equity

-

-

(1)

-

(1)

-

-

1

429

430

8,213

-

(6)

4,004

12,211As at 30 September 2014 (Audited)

Total comprehensive income
As at 31 December 2014 (Unaudited)

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

Audited31/12/2014

31/12/2013 1

30/09/2014

3,386

3,337

1,822

193

613

855

Collateral paid

1,269

623

783

Trading securities

12,023

11,49811,750$ millions

Note

AssetsCash
Settlement balances receivable

Investments backing life insurance contract liabilities
Derivative financial instruments

199

180

190

8,574

7,699

11,404

708

1,115

772

98,37091,66396,299Other assets

685

542

648

Life insurance contract assets

513

408

470

Investments in associates

89

89

88

-

20

-

378

377

380

Available-for-sale assets
Net loans and advances

4

Deferred tax assets
Premises and equipment

3,458

3,446

3,454

Total assets

129,845

121,610

128,915Interest earning and discount bearing assets

116,137

108,686

111,914

1,248

1,345

2,296

207

805

800

88,15381,85184,019Goodwill and other intangible assets

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings

8

9,318

7,837

10,205Current tax liabilities

52

33

67

Deferred tax liabilities

86

-

60

1,292

1,174

1,297

Derivative financial instruments

Payables and other liabilities
Provisions
Debt issuances

183

218

204

15,972

15,381

17,042

1,123

1,134

1,144

Total liabilities

117,634

109,778

117,134

Net assets

12,211

11,832

11,781

8,213

7,243

8,213

(6)

2

(7)

Retained earnings

4,004

4,587

3,575

Total equity

12,211

11,832

11,781

Interest and discount bearing liabilities

99,80293,75797,809Subordinated 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
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2014

31/12/2013 1

30/09/2014

Interest received

1,686

1,469

6,189

Interest paid

(1,018)(826)(3,429)$ millions

AuditedCash flows from operating activities

Other cash inflows provided by operating activities

230

216

951

Other cash outflows used in operating activities

(478)

(517)

(1,898)

1,813

420

342

Net changes in operating assets and liabilities

1,777

2,288

(536)

Net cash flows provided by operating activities

2,197

2,630

1,277

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

Cash flows from investing activities
Cash inflows provided by investing activities

-

10

18

Cash outflows used in investing activities

(24)

(21)

(120)

Net cash flows used in investing activities

(24)

(11)

(102)

Cash flows from financing activities
Cash inflows provided by financing activities

325

1,179

5,401

Cash outflows used in financing activities(908)(2,582)(6,950)Net cash flows used in financing activities(583)(1,403)(1,549)Net increase / (decrease) in cash and cash equivalents

1,590

1,216

(374)

Cash and cash equivalents at beginning of the period

1,830

2,204

2,204

Cash and cash equivalents at end of the period

3,420

3,420

1,830

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

7

Notes to the Financial Statements
1.

Significant Accounting Policies(i)Reporting entity and statement of compliance
These interim financial statements are for the Banking
Group for the three months ended 31 December 2014.
They have been prepared in accordance with New
Zealand Generally Accepted Accounting Practice asappropriate for profit oriented entities, the requirementsof NZ IAS 34 Interim Financial Reporting, IAS 34 Interim
Financial Reporting and the Order, and should be read in
conjunction with the Banking Group’s financial statements
for the year ended 30 September 2014.

(ii)

Basis of measurement
These financial statements have been prepared on a going
concern basis in accordance with historical cost concepts
except that the following assets and liabilities are stated attheir fair value:•
derivative financial instruments, including in thecase of fair value hedging, the fair value of any
applicable underlying exposure;•financial instruments held for trading;

2.

•
•

financial assets treated as available-for-sale; andfinancial instruments designated at fair value
through profit and loss.

(iii) Changes in accounting policies
The accounting policies adopted by Banking Group are
consistent with those adopted and disclosed in theprevious full year Disclosure Statement.
(iv) Presentation currency and rounding
The amounts contained in the financial statements arepresented in millions of New Zealand dollars, unlessotherwise stated.
(v)

Comparatives
Certain amounts in the comparative information havebeen reclassified to ensure consistency with the current
period’s presentation. Further information on changes tocomparative information is included in note 16.

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

Other Operating Income
Unaudited

Unaudited

3 months to

3 months toYear to31/12/2014

31/12/2013

30/09/2014

Net fee income

103

105

408

Fair value gain / (loss) on hedging activities

(9)

(7)

35

$millionsAuditedInsurance settlement relating to ING Diversified Yield Fund and ING Regular Income Fund

-

-

91

Loss on sale of mortgages to NZ Branch

(3)

(13)

(23)

Other income

12

5

36

Total other operating income

103

90

547

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

988

Unaudited 3 months to 31/12/2014

External revenues

239

786

34

217

(288)

Intersegment revenues

80

(397)

42

(63)

338

-

Total revenues

319

389

76

154

50

988

Profit after income tax

118

190

31

67

23

429
904

Unaudited 3 months to 31/12/2013

External revenues

264

682

30

215

(287)

Intersegment revenues

47

(318)

38

(40)

273

-

Total revenues

311

364

68

175

(14)

904

Profit / (loss) after income tax

117

180

26

98

(21)

400
3,828

Audited year to 30/09/2014

External revenues

991

2,850

211

802

(1,026)

Intersegment revenues

225(1,395)

165

(177)

1,182

-

1,216

1,455

376

625

156

3,828

412

717

181

320

86

1,716

Total revenues
Profit after income tax
1
2

3

Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.
Wealth external revenue for the year ended 30 September 2014 includes the $91 million insurance settlement relating to the Bank’s former involvement in the ING
Diversified Yield Fund and the ING Regular Income Fund.
This segment has negative external 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

Audited31/12/2014

31/12/2013

30/09/2014

Overdrafts

1,489

1,496

1,744

Credit card outstandings

1,664

1,541

1,580

Term loans - housing

53,97249,75652,717

Term loans - non-housing

40,58938,434

39,622

Lease receivables

261

335

277

Hire purchase

857

746

837

Other

139

125

125

98,971

92,43396,902

(660)

(776)

(666)

Less: Unearned income

(218)

(215)

(212)

Add: Capitalised brokerage/mortgage origination fees

231

168

208

Add: Customer liability for acceptances

46

53

67

98,37091,66396,299$ millions

Note

Total gross loans and advances
Less: Provision for credit impairment

5

Total net loans and advances

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of $8,747 million as at 31 December 2014
(31/12/2013 $9,958 million, 30/09/2014 $9,176 million). These assets qualify for derecognition as the Bank does not retain acontinuing involvement in the transferred assets.

5.

Provision for Credit Impairment

Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

Collective provision

77

114

261

452

Individual provision

68

14

126

208

Total provision for credit impairment

145

128

387

660

Collective credit impairment charge / (release)

(1)

(4)

6

1

Individual credit impairment charge / (release)

(3)

15

(1)

11

Credit impairment charge / (release)

(4)

11

5

12

100

110

306

516

$ millions
Unaudited 31/12/2014

Unaudited 31/12/2013

Collective provision
Individual provision

66

22

172

260

Total provision for credit impairment

166

132

478

776

Collective credit impairment release

(1)

(7)

(18)

(26)

Individual credit impairment charge / (release)

(9)

24

(10)

5

Credit impairment charge / (release)

(10)

17

(28)

(21)

78

118

255

451

Audited 30/09/2014

Collective provision
Individual provision

72

15

128

215

Total provision for credit impairment

150

133

383

666

Collective credit impairment charge / (release)

(23)

1

(69)

(91)

4

79

(8)

75

(19)

80

(77)

(16)

Individual credit impairment charge / (release)
Credit impairment charge / (release)

ANZ Bank New Zealand Limited

10Notes to the Financial Statements
6.

Impaired and Past Due Assets
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

Total impaired assets

140

34

354

528

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

94

34

60

188

Total impaired assets

163

49

599

811

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

89

37

65

191

Total impaired assets

189

35

410

634

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

88

30

32

150

$ millions
Unaudited 31/12/2014

Unaudited 31/12/2013

Audited 30/09/2014

7.

Financial Assets Pledged as Collateral$ millions

Unaudited

Unaudited

Audited31/12/2014

31/12/2013

30/09/2014

1,269

623

783

Trading securities encumbered through repurchase agreements

764

748

47

Residential mortgages pledged as security for covered bonds

7,631

6,364

7,283

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

2,372

2,266

2,354

Total financial assets pledged as collateral

12,036

10,001

10,467

Cash collateral given on derivative financial instruments

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

8.

Deposits and Other Borrowings$ millions

Note

Unaudited

Unaudited

Audited31/12/2014

31/12/2013

30/09/2014

Certificates of deposit

2,154

1,594

1,376

Term deposits

34,201

34,25434,758Other deposits bearing interest and other borrowings

35,72930,94834,027

Deposits not bearing interest

6,001

6,371

6,135

Deposits from banks

757

746

226

Commercial paper

7,378

6,567

6,057

1,562

1,575

1,569

1

32

5

88,15381,85184,019UDC secured investments
Deposits from other members of ANZ New Zealand
Total deposits and other borrowings

9.

7

Related Party Transactions
Unaudited

Unaudited

Audited31/12/2014

31/12/2013

30/09/2014

Total due from related parties

3,210

1,680

4,116

Total due to related parties

3,960

4,569

4,834

$ millions

ANZ Bank New Zealand Limited

11

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

Banking Group
31/12/2014

31/12/2013

30/09/2014

Common equity tier 1 capital

11.0%

10.7%

10.7%

Tier 1 capital

11.4%

11.1%

11.1%

Total capital

12.6%

12.7%

12.3%

Buffer ratio

4.6%

4.7%

4.3%

Common equity tier 1 capital

4.5%

4.5%

4.5%

Tier 1 capital

6.0%

6.0%

6.0%

Total capital

8.0%

8.0%

8.0%

Buffer requirement

2.5%

n/a

2.5%

Unaudited

RBNZ minimum ratios:

Capital of the Banking Group
Unaudited$ millions

31/12/2014

Common equity tier 1 capital before deductions

11,911Less deductions from common equity tier 1 capital(3,653)

Common equity tier 1 capital

8,258
300

Additional tier 1 capital - preference shares

8,558

Total tier 1 capital
Tier 2 capital

936

Total capital

9,494

Capital requirements of the Banking Group

Exposure atdefault

Risk weighted
exposure or
implied risk
weighted
exposure1

Total capitalrequirement

Corporate exposures

46,141

26,603

2,128

Sovereign exposures

9,646

225

18

Bank exposures

9,198

2,988

239

Retail mortgage exposures

59,41015,112

1,209

Other retail exposures

10,112

8,145

652

Exposures subject to internal ratings based approach$ millions
Unaudited 31/12/2014

134,50753,073

4,246

Specialised lending exposures subject to slotting approach

9,355

8,801

704

Exposures subject to standardised approach

3,774

375

30

91

384

31

Equity exposures
Other exposures

3,950

1,426

114

Total credit risk

151,677

64,0595,125

Operational risk

n/a

5,194

416

Market risk

n/a

5,963

477

151,677

75,216

6,018

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
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 $350 million (31/12/2013 $333 million; 30/09/2014$369 million).
Residential mortgages by loan-to-valuation ratio
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the Banking
Group's valuation of the security property at origination of the exposure. Off balance sheet exposures include undrawn and partiallydrawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing lending whichhave been accepted by the customer.
31/12/2014
UnauditedOn-balancesheet

Off-balance
sheet

Total

Does not exceed 60%

19,607

3,725

23,332

Exceeds 60% and not 70%

9,780

1,055

10,835

Exceeds 70% and not 80%

15,841

1,610

17,451

Does not exceed 80%

45,2286,390

51,618

Exceeds 80% and not 90%

4,366

232

4,598

Exceeds 90%

2,372

253

2,625

Total

51,966

6,875

58,841$ 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 31/12/2014$ millions

Balances with central banks

Cash

Trading
Securities

Available-forsale assets

Total

1,999

-

-

1,999

Certificates of deposit

-

478

100

578

Government, local body stock and bonds

-

5,392

518

5,910

Government treasury bills

-

271

-

271

Other bonds

-

4,956

-

4,956

1,999

11,097618

13,714

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 $5,791 million at 31 December 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.
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.

$ millions

Unaudited

Unaudited

Audited31/12/2014

31/12/2013

30/09/2014

Carrying amount

Fair value Carrying amount

Fair value Carrying amount

Fair value

98,37098,62591,66391,677

96,29996,397

Deposits and other borrowings2

88,153

88,207

81,851

81,86084,01984,042

Debt issuances1

15,972

16,127

15,381

15,584

17,042

17,225Subordinated debt

1,123

1,120

1,134

1,049

1,144

1,137

AssetsNet loans and advances1
Liabilities

1

2

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

Financial assets and financial liabilities measured at fair value in the balance sheet
The Banking Group uses a valuation method within the following hierarchy to determine the carrying amount of assets and liabilities
held at fair value, all of which are recurring fair value measurements. There are no assets or liabilities measured at fair value on a nonrecurring basis.
•

Level 1 – Financial instruments that have been valued by reference to unadjusted quoted prices in active markets for identicalfinancial instruments. This category includes financial instruments valued using quoted yields where available for specific debt
securities.

•

Level 2 – Financial instruments that have been valued through valuation techniques incorporating inputs other than quoted
prices within Level 1 that are observable for a similar financial asset or liability, either directly or indirectly.
Level 2 fair value measurements in the following table are derived by using modelled valuation techniques (including
discounted cash flow models) that incorporate market prices / yields for securities with similar credit risk, maturity and yieldcharacteristics; and/or current market yields for similar instruments.

•

Level 3 – Financial instruments that have been valued using valuation techniques which incorporate significant inputs that are
not based on observable market data (unobservable inputs).

There have been no substantial changes in the valuation techniques applied to different classes of financial instruments during theperiod.
Valuation hierarchy
Unaudited 31/12/2014$ millions

Level 1

Unaudited

Unaudited

Audited31/12/2014
Level 2 Level 3

31/12/2013
Level 2 Level 3

30/09/2014
Level 2 Level 3

Total

Level 1

Total

Level 1

Total

Financial assets
12,018

5

4

8,570

-

8,574

12

7,687

-

7,699

706

-

2

708

1,113

-

2

1,115

712

58

2

772

136

63

-

199

125

55

-

180

129

61

-

190

12,8648,638

2 21,504 12,636

7,854

2 20,492 12,502 11,612

2 24,116

Deposits and other borrowings

-

7,378

-

7,378

-

6,567

-

6,567

-

-

Derivative financial instruments

3

9,315

-

9,318

4

7,833

-

7,837

5 10,200

Payables and other liabilities

177

-

-

177

201

-

-

201

Total financial liabilities held at fair value

180 16,693

Trading securities
Derivative financial instruments
Available-for-sale assets
Investments backing life insurance contract
liabilities
Total financial assets held at fair value- 12,023 11,386

112- 11,498 11,659

91

2 11,402- 11,750- 11,404

Financial liabilities- 16,873

205 14,400- 14,605

226

6,057
-

231 16,257

6,057- 10,205-

226- 16,488

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 31 December 2014 there were no individual counterparties, excluding connected parties, governments
and banks with long term credit ratings of A- or above, where the Banking Group’s period end or peak 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 subsidiary OnePath Life (NZ) Limited. OnePath Insurance Services (NZ)
Limited, which was a subsidiary of OnePath Life (NZ) Limited, also conducted insurance business until it amalgamated with OnePath
Life (NZ) Limited on 30 November 2014.
The Banking Group’s aggregate amount of insurance business comprises the total consolidated assets of OnePath Life (NZ) Limitedof $902 million (31/12/2013: $796 million; 30/09/2014 $850 million), which is 0.7% (31/12/2013: 0.7%; 30/09/2014 0.7%) of the total
consolidated assets of the Banking Group.

15.

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

Unaudited

Unaudited

Audited31/12/2014

31/12/2013

30/09/2014

Credit related commitments
884

724

764

Commitments to provide financial services

29,20425,26827,378

Total credit related commitments

30,08825,99228,142Financial guarantees

878

982

925

Standby letters of credit

67

40

79

Transaction related contingent items

1,300

1,179

1,321

Trade related contingent liabilities

87

97

111

2,332

2,298

2,436

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
On 11 March 2013, litigation funder Litigation Lending Services (NZ) Limited announced plans for a representative action againstbanks in New Zealand for certain fees charged to New Zealand customers over the past six years. Proceedings were filed against the
Bank on 25 June 2013. The potential outcome of this litigation cannot be determined with any certainty at this stage.
The Banking Group has other contingent liabilities in respect of actual and possible claims and court proceedings.
On 3 December 2014, the Commerce Commission and the Financial Markets Authority (FMA) announced settlements with the Bank
relating to the Commission's and the FMA's investigations into the promotion, sale and offer of interest rate swaps to rural customers
from 2005 to 2009; the settlement includes a payment fund of $18.5 million and a contribution to the Commission’s and the FMA's
costs.
An assessment of the Banking Group’s likely loss in respect of these matters has been made on a case-by-case basis and provision
made where deemed necessary.

ANZ Bank New Zealand Limited

15

Notes to the Financial Statements
16. Changes to Comparatives
Comparative information for the period ended 31 December 2013 has been reclassified to conform with current period financial
statement presentations that were previously applied in the 30 September 2014 financial statements.
•

Balance sheet classifications: The classification of the balance sheet was changed during the year ended 30 September 2014 tomore consistently reflect the nature of the financial assets and liabilities. Prior to this reclassification, the balance sheet wasclassified according to both nature and counterparty.

•

Cash and cash equivalents: Loans and advances with financial institution counterparties with original maturities of less than 90days and remittances in transit have been removed from the definition of cash equivalents. These balances are now included in
net loans and advances and settlement balances receivable respectively. The associated cash inflows/outflows form part ofcash flows from operating activities.

The table below shows the impact of these changes on the balance sheet, together with the impact of the change in the definition of
cash and cash equivalents. Associated amounts in the income statement, statement of comprehensive income and cash flow
statement have been restated accordingly, and the impact of the changes to these statements is not material.
31/12/2013
Unaudited$ millions

Previously
reported

ChangeCurrently
reported

Liquid assets

3,249(3,249)-Due from other financial institutions

1,699(1,699)

-

Cash

-

3,337

3,337

Settlement balances receivable

-

613

613

Collateral paid

-

623

623

AssetsAvailable-for-sale assets

1,115

-

1,115

Net loans and advances

91,219444

91,663

Other assets

611

(69)

542

All other assets

23,717-23,717

Total assets

121,610-

121,6102,315(2,315)

-

-

1,345

1,345

-

805

805

81,074

777

81,851

Liabilities
Due to other financial institutions
Settlement balances payable
Collateral received
Deposits and other borrowings
Due to immediate parent company

31

(31)

-

Payables and other liabilities

1,755

(581)

1,174

All other liabilities

24,603-24,603

Total liabilities

109,778-

109,778

Equity11,832-

11,832

Cash and cash equivalents in cash flow statement

4,040

(620)

3,420

17. Subsequent Events
On 21 January 2015, the Bank’s Board resolved to issue New Zealand dollar securities to the NZ Branch. These securities will qualify
as additional tier 1 capital for the Bank. The amount of securities issued will be the New Zealand Dollar equivalent of the ANZ Capital
Notes 3 (A$850 million, with the ability to issue more or less) expected to be issued on 5 March 2015 by the NZ Branch.
On 13 February 2015, the Bank’s Board:•

resolved to pay a preference dividend of $7.5 million on 2 March 2015 and an ordinary dividend of $500 million on or about 6
March 2015.

•

resolved to pay a further ordinary dividend of $515 million on or about 6 March 2015, subject to the issue of the additional tier1 capital securities approved on 21 January 2015.

•

resolved to repay an A$265,740,000 perpetual subordinated floating rate loan from the Ultimate Parent Bank on 16 March2015. This loan previously qualified as transitional tier 2 capital under the RBNZ’s Basel III capital requirements.

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 three months ended 31 December 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 February 2015.

Antony Carter

Shayne ElliottDavid Hisco

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

Nigel Williams(alternate director for Michael Smith)

Joan Withers