ANZ Bank New Zealand Limited
Registered Bank Disclosure Statement
FOR THE SIX MONTHS ENDED 31 MARCH 2014 | NUMBER 73 ISSUED MAY 2014

ANZ Bank New Zealand Limited

Registered Bank Disclosure Statement
For the six months ended 31 March 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

27

Independent Auditor’s Review Report

28

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 30 March 2014 to refer to a revised version of
the RBNZ document BS19, which allows construction loans to
be exempted from the existing restrictions on high loan-tovalue residential mortgage lending. Certain definitions in theconditions were also updated to reflect the Financial
Reporting Act 2013 coming into force on 1 April 2014.

Directorate
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.

Guarantors

AuditorNo obligations of the Bank are guaranteed as at 13 May 2014.

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

ANZNZ Covered Bond Trust
Certain debt securities (Covered Bonds) issued by the Bank’s
wholly owned subsidiary, ANZ New Zealand (Int’l) Limited,
are guaranteed by ANZNZ Covered Bond Trust Limited (theCovered Bond Guarantor), solely in its capacity as trustee of
ANZNZ Covered Bond Trust. The Covered Bond Guarantor
has guaranteed the payment of interest and principal of
Covered Bonds with a carrying value as at 31 March 2014 of$3,828 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.

ANZ Bank New Zealand Limited

3

Income Statement
Unaudited

Unaudited

6 months to

6 months toYear to31/03/2014

31/03/2013 1

30/09/2013 1

Interest income

2,998

2,991

5,957

Interest expense

1,644

1,699

3,344

Net interest income

1,354

1,292

2,613

Net trading gains

94

112

163

149

134

234

278

171

419

1

4

7

Operating income

1,876

1,713

3,436

Operating expenses

727

773

1,512

1,149

940

1,924

(42)

40

63

1,191

900

1,861

Income tax expense

324

239

490

Profit after income tax

867

661

1,371

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

Profit before income tax

AuditedStatement of Comprehensive Income$ millions

Profit after income tax

Unaudited

Unaudited

6 months to

6 months toYear to31/03/2014

31/03/2013 1

30/09/2013 1

867

661

1,371

24

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

17

14

51

Unrealised losses recognised directly in equity

(16)

(39)

(138)

Realised gains transferred to income statement

(22)

(14)

(21)

Items that may be reclassified subsequently to profit or loss

Income tax credit relating to items that may be reclassified

10

15

45

Total items that may be reclassified subsequently to profit or loss

(28)

(38)

(114)

Total comprehensive income for the period

856

637

1,308

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

4

Statement of Changes in Equity$ millions

SharecapitalAvailablefor-salerevaluation
reserve

Cash flow
hedging
reserve

Retainedearnings

Total equity

As at 1 October 2012 (Audited)

6,943

(3)

141

3,851

10,932

-

-

-

(21)

(21)

Restatement (Note 1)
As at 1 October 2012 (Restated, audited)

6,943

(3)

141

3,830

10,911

Profit after income tax

-

-

-

661

661

Unrealised gains / (losses) recognised directly in equity

-

1

(40)

-

(39)

Realised gains transferred to the income statement

-

-

(14)

-

(14)

Actuarial gain on defined benefit schemes

-

-

-

20

20

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

-

-

15

(6)

9

Total comprehensive income for the period

-

1

(39)

675

637

Ordinary dividend paid

-

-

-

(465)

(465)

As at 31 March 2013 (Restated, unaudited)

6,943

(2)

102

4,040

11,083As at 1 October 2012 (Audited)

6,943

(3)

141

3,851

10,932

-

-

-

(21)

(21)

Restatement (Note 1)
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

-

-

-

867

867

Unrealised gains / (losses) recognised directly in equity

-

3

(19)

-

(16)

Realised gains transferred to the income statement

-

-

(22)

-

(22)

Actuarial gain on defined benefit schemes

-

-

-

24

24

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

-

(1)

11

(7)

3

Total comprehensive income for the period

-

2

(30)

884

856

Ordinary dividend paid

-

-

-

(540)

(540)

Preference dividend paid

-

-

-

(5)

(5)

7,243

-

(4)

4,526

11,765As at 31 March 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

Audited31/03/2014

31/03/2013 1

30/09/2013 1

1,717

3,459

2,206

705

700

514

Collateral paid

1,367

1,142

1,002

Trading securities

12,09010,41910,320$ millions

Note

AssetsCash
Settlement balances receivable

Investments backing insurance contract liabilities
Derivative financial instruments

165

161

172

8,744

9,012

9,518

Current tax assets

33

53

-

Available-for-sale assets

667

1,032

942

93,391

88,181

90,837

Other assets

604

593

567

Insurance contract assets

431

422

399

Investment in associates

89

98

98

-

81

45

373

339

376

3,449

3,502

3,448

Total assets

123,825

119,194

120,444

Interest earning and discount bearing assets

109,757

104,149

105,866

1,533

1,754

1,428

Net loans and advances

4

Deferred tax assets
Premises and equipment
Goodwill and other intangible assets

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings

8

452

267

438

81,45776,42478,816

9,645

10,173

10,243Current tax liabilities

-

-

3

Deferred tax liabilities

15

-

-

1,213

1,432

1,195

Derivative financial instruments

Payables and other liabilities
Provisions
Bonds and notes

211

272

229

16,405

16,611

15,494

1,129

1,178

1,144

Total liabilities

112,060

108,111

108,990

Net assets

11,765

11,083

11,454

7,243

6,943

7,243

(4)

100

24

Retained earnings

4,526

4,040

4,187

Total equity

11,765

11,083

11,454

Interest and discount bearing liabilities

94,18889,63391,061

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

6 months to

6 months toYear to31/03/2014

31/03/2013

30/09/2013

AuditedCash flows from operating activities
Interest received

2,955

2,960

5,916

Interest paid

(1,649)(1,716)(3,368)Other cash inflows provided by operating activities

505

436

877

Other cash outflows used in operating activities(1,012)(1,123)(1,940)Cash flows from operating profits before changes in operating assets and liabilities

799

557

1,485

Net changes in operating assets and liabilities

(631)

1,459

1,192

Net cash flows provided by operating activities

168

2,016

2,677

Cash flows from investing activities
Cash inflows provided by investing activities

10

1

69

Cash outflows used in investing activities

(44)

(56)

(142)

Net cash flows used in investing activities

(34)

(55)

(73)

Cash flows from financing activities
Cash inflows provided by financing activities

2,918

1,105

2,678

Cash outflows used in financing activities(3,178)(2,343)(5,676)

Net cash flows used in financing activities(260)(1,238)(2,998)Net increase / (decrease) in cash and cash equivalents

(126)

723

(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

2,735

3,978

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 six months ended 31 March 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)

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.
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.

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

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.

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

2.

Comparatives(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

6 months to

6 months toYear to31/03/2014

31/03/2013

30/09/2013

Net fee income

207

211

423

Fair value loss on hedging activities and financial liabilities designated at fair value

(15)

(46)

(35)

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

91

-

-

-

(1)

13

(14)

(9)

(14)

$millions

Gain / (loss) on sale of subsidiary and associate
Loss on sale of mortgages to NZ Branch
Other income
Total other operating income

Audited

9

16

32

278

171

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
RetailCommercial

Wealth2

Institutional

Other 3

Total

External revenues

514

1,354

151

397

(540)

1,876

Intersegment revenues

90

(644)

76

(81)

559

-

Total revenues

604

710

227

316

19

1,876

Profit after income tax

200

372

121

162

12

867

External revenues

479

1,331

41

460

(598)

1,713

Intersegment revenues

84

(622)

73

(126)

591

-

Total revenues

563

709

114

334

(7)

1,713

Profit / (loss) after income tax

156

329

38

167

(29)

661
3,436

$ millions
Unaudited 6 months to 31/03/2014

Unaudited 6 months to 31/03/2013

Audited year to 30/09/2013

External revenues

985

2,675

80

816

(1,120)Intersegment revenues

173(1,248)

149

(211)

1,137

-

1,158

1,427

229

605

17

3,436

333

689

81

283

(15)

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 revenues for the six months to 31 March 2014 includes the $91 million insurance settlement relating to the Bank’s former involvement in the ING
Diversified Yield fund and the ING Regular Income Fund.
This segment has negative external revenues as this segment incurs funding costs on behalf of the Banking Group and is reimbursed internally.

ANZ Bank New Zealand Limited

9Notes to the Financial Statements
4.

Net Loans and Advances
Unaudited

Unaudited

Audited31/03/2014

31/03/2013

30/09/2013

Overdrafts

1,789

1,718

1,841

Credit card outstandings

1,525

1,415

1,458

Term loans - housing

51,39647,43049,521

Term loans - non-housing$ millions

Note

38,52137,78238,024

Lease receivables

112

149

128

Hire purchase

768

668

721

Other

125

135

125

94,23689,297

91,818

Total gross loans and advances
5

(722)

(951)

(826)

Less: Unearned income

(351)

(326)

(342)

Add: Capitalised brokerage/mortgage origination fees

176

130

156

Add: Customer liability for acceptances

52

31

31

93,391

88,181

90,837

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 $9,175 million as at 31 March 2014
(31/03/2013 $9,491 million, 30/09/2013 $9,256 million). These assets qualify for derecognition as the Bank does not retain acontinuing involvement in the transferred assets.

5.

Provision for Credit Impairment

Credit impairment charge / (release)$ millions

Retailmortgages

Other retail
exposures

Non retail
exposures

Total

Unaudited 31/03/2014

New and increased provisions

22

62

45

129

Write-backs

(26)

(10)

(60)

(96)

Recoveries of amounts written off previously

(1)

(9)

(5)

(15)

Individual credit impairment charge / (release)

(5)

43

(20)

18

Collective credit impairment release

(11)

(3)

(46)

(60)

Credit impairment charge / (release)

(16)

40

(66)

(42)

Unaudited 31/03/2013

New and increased provisions

42

46

93

181

Write-backs

(29)

(11)

(58)

(98)

-

(8)

(2)

(10)

Recoveries of amounts written off previously
Individual credit impairment charge

13

27

33

73

Collective credit impairment release

-

(13)

(20)

(33)

13

14

13

40

New and increased provisions

87

113

157

357

Write-backs

(75)

(30)

(104)

(209)

Recoveries of amounts written off previously

(2)

(16)

(5)

(23)

Individual credit impairment charge

10

67

48

125

Collective credit impairment release

(3)

(8)

(51)

(62)

Credit impairment charge / (release)

7

59

(3)

63

Credit impairment charge
Audited 30/09/2013

ANZ Bank New Zealand Limited

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

Other retail
exposures

Non retail
exposures

Total

Balance at beginning of the period

101

117

324

542

Release to income statement

(11)

(3)

(46)

(60)

Balance at end of the period

90

114

278

482

Balance at beginning of the period

74

22

188

284

New and increased provisions net of write-backs

(4)

52

(15)

33

Bad debts written off

-

(55)

(25)

(80)

Discount unwind reversal / (discount unwind)

(2)

-

5

3

$ millions
Unaudited 31/03/2014

Collective provision

Individual provision

Balance at end of the period

68

19

153

240

Total provision for credit impairment

158

133

431

722

604

Unaudited 31/03/2013

Collective provision
Balance at beginning of the period

104

125

375

Release to income statement

-

(13)

(20)

(33)

Balance at end of the period

104

112

355

571

Balance at beginning of the period

119

26

305

450

New and increased provisions net of write-backs

13

35

35

83

Bad debts written off

(12)

(40)

(85)

(137)

Discount unwind

(4)

-

(12)

(16)

Balance at end of the period

116

21

243

380

Total provision for credit impairment

220

133

598

951

Balance at beginning of the year

104

125

375

604

Release to income statement

(3)

(8)

(51)

(62)

Balance at end of the year

101

117

324

542

Balance at beginning of the year

119

26

305

450

New and increased provisions net of write-backs

12

83

53

148

Bad debts written off

(49)

(87)

(150)

(286)

Individual provision

Audited 30/09/2013

Collective provision

Individual provision

Discount unwind

(8)

-

(20)

(28)

Balance at end of the year

74

22

188

284

Total provision for credit impairment

175

139

512

826

ANZ Bank New Zealand Limited

11

Notes to the Financial Statements
6.

Impaired Assets and Past Due Assets
Retailmortgages

Other retail
exposures

Non-retail
exposures

Total

Balance at the beginning of the period

179

49

666

894

Transfers from productive

88

78

129

295

Transfers to productive

(19)

(1)

(60)

(80)

Assets realised or loans repaid

(68)

(19)

(171)

(258)

$ millions
Unaudited 31/03/2014

-

(55)

(25)

(80)

180

52

539

771

-

1

34

35

Balance at the beginning of the period

313

44

1,009

1,366

Transfers from productive

165

58

151

374

Write offs
Total impaired assets
Undrawn facilities with impaired customers
Unaudited 31/03/2013

Transfers to productive

(1)

(1)

(30)

(32)

(151)

(15)

(207)

(373)

Write offs

(12)

(40)

(85)

(137)

Total impaired assets

314

46

838

1,198

-

-

17

17
1,366

Assets realised or loans repaid

Undrawn facilities with impaired customers
Audited 30/09/2013

Balance at the beginning of the period

313

44

1,009

Transfers from productive

268

134

401

803

Transfers to productive

(91)

(5)

(194)

(290)

Assets realised or loans repaid

(262)

(37)

(400)

(699)

Write offs

(49)

(87)

(150)

(286)

Total impaired assets

179

49

666

894

-

1

24

25

Undrawn facilities with impaired customers

Credit quality of financial assets that are past due but not impaired
A large portion of retail credit exposures, such as residential mortgages, are generally well secured. That is, the fair value of
associated security should be sufficient to ensure that the Banking Group will recover the entire amount owing over the life of the
facility and there is reasonable assurance that collection efforts will result in payment of the amounts due in a timely manner.
Ageing analysis of loans that are past due but not impaired
Retailmortgages

Other retail
exposures

Non retail
exposuresTotal

1 to 5 days

348

135

559

1,042

6 to 29 days

217

102

84

403

1 to 29 days

565

237

643

1,445

30 to 59 days

153

38

240

431

60 to 89 days

57

19

18

94

90 days or over

110

39

66

215

885

333

967

2,185

$ millions
Unaudited 31/03/2014

ANZ Bank New Zealand Limited

12

Notes to the Financial Statements
7.

Financial Assets Pledged as Collateral$ millions

Unaudited

Unaudited

Audited31/03/2014

31/03/2013

30/09/2013

1,367

1,142

1,002

Trading securities encumbered through repurchase agreements

32

343

108

Residential mortgages pledged as security for covered bonds

6,780

5,548

5,857

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

2,272

2,125

2,162

Total financial assets pledged as collateral

10,451

9,158

9,129

Cash collateral given on derivative financial instruments

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

8.

Deposits and Other Borrowings$ millions

Note

Unaudited

Unaudited

Audited31/03/2014

31/03/2013

30/09/2013

Certificates of deposit

1,604

1,624

2,364

Term deposits

34,86933,73233,862Other deposits bearing interest and other borrowings

31,833

28,347

29,687

Deposits not bearing interest

5,833

5,717

5,526

361

491

180

5,401

4,336

4,765

1,534

1,467

1,492

22

710

940

81,45776,42478,816

Unaudited

Unaudited

Audited31/03/2014

31/03/2013

30/09/2013

Total due from related parties

2,921

1,992

2,193

Total due to related parties

4,999

5,134

5,132

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

9.

7

Related Party Transactions$ millions

ANZ Bank New Zealand Limited

13

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

Banking GroupBank

31/03/2014

31/03/2013

30/09/2013

31/03/2014

31/03/2013

30/09/2013

Common equity tier 1 capital

10.7%

10.2%

10.4%

9.3%

9.0%

9.2%

Tier 1 capital

11.1%

10.2%

10.8%

9.8%

9.0%

9.7%

Total capital

12.4%

11.8%

12.4%

11.1%

10.7%

11.3%

Buffer ratio

4.4%

3.8%

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

31/03/2014

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

6,943

Retained earnings (net of appropriations)

4,526

Accumulated other comprehensive income and other disclosed reserves(4)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(3,449)(38)

4

Expected losses to the extent greater than total eligible allowances for impairment(207)

Common equity tier 1 capital

7,775

Additional tier 1 capital
Total tier 1 capital

300
8,075

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

668

AUD 265,740,000 perpetual subordinated loan

268

Total tier 2 capital

936

Total capital

9,011

Terms of ordinary share capital
All ordinary shares share equally in dividends and any proceeds available to ordinary shareholders on the winding up of the Bank. On
a show of hands every member who is present at a meeting in person or by proxy or by representative is entitled to one vote, andupon a poll every member shall have one vote for each share held.
Terms of additional tier 1 capital (preference shares)
All preference shares were issued on 25 September 2013 by the Bank to the Immediate Parent and do not carry any voting rights.
The preference shares are wholly classified as equity instruments as there is no contractual obligation for the Bank to either deliver
cash or another financial instrument or to exchange financial instruments on a potentially unfavourable basis. The key terms of thepreference shares are as follows:
Dividends
Dividends are payable at the discretion of the Directors of the Bank and are non-cumulative. The Bank must not resolve to pay any
dividend or make any other distribution on its ordinary shares until the next preference dividend payment date if the Directors electto not pay a dividend on the preference shares.

ANZ Bank New Zealand Limited

14

Notes to the Financial Statements
Should the Bank elect to pay a dividend, the dividend is payable at 72% of BKBM + 3.25% p.a., with dividend payments due on 1
March and 1 September each year.
Redemption features
The preference shares are redeemable, subject to prior written approval of the RBNZ, by the Bank providing notice in writing toholders of the preference shares:
on any date on or after a change to laws or regulations that adversely affects the regulatory capital or tax treatment of thepreference shares; oron any dividend payment date on or after 1 March 2019; oron any date after 1 March 2019 if the Bank has ceased to be a wholly owned subsidiary of the Ultimate Parent Bank.

•••

The preference shares may be redeemed for nil consideration should a non-viability trigger event occur.
Rights of holders in event of liquidation
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 but in priority to all holders of ordinary shares. They have no entitlement to participate infurther distribution of profits or assets.
Terms of tier 2 capital instruments
Tier 2 capital instruments are subordinated in right of payment in the event of liquidation or wind up to the claims of depositors andall creditors of the Bank.
These instruments qualify as tier 2 capital under the RBNZ’s transitional rules. Fixing the base at the nominal amount of such
instruments outstanding at 31 December 2012, their recognition is capped at 80% of that base from 1 January 2014; 60% from 1
January 2015; 40% from 1 January 2016; 20% from 1 January 2017; and from 1 January 2018 onwards these instruments will not be
included in regulatory capital.
NZD 835,000,000 bondThis bond was issued by the Bank on 18 April 2008. The Bank may elect to redeem the bond on 18 April 2018 (the Call Date) or any
interest payment date subsequent to 18 April 2018. Interest is payable half yearly in arrears on 18 April and 18 October each year, up
to and including the Call Date and then quarterly thereafter. Should the bond not be called at the Call Date, the Coupon Rate fromthe Call Date onwards will be set on a quarterly basis to the three month FRA rate plus 3.00%.
As at 31 March 2014, this bond carried a BBB+ rating by Standard and Poor's and an A3 rating by Moody’s.
The coupon interest on the bond is 5.28% for the five year period to 18 April 2018.
This bond is listed on the New Zealand Exchange (NZX). The Market Surveillance Panel of the NZX granted the Bank a waiver fromthe requirements of Listing Rules 10.4 (relating to the provision of preliminary announcements of half yearly and annual results to
the NZX) and 10.5 (relating to preparing and providing a copy of half yearly and annual reports to the NZX).
AUD 265,740,000 loan
This loan was drawn down by the Bank on 27 September 1996 and has no fixed maturity. Interest is payable half yearly in arrears
based on BBSW + 0.95% p.a., with interest payments due 15 March and 15 September.
Capital requirements of the Banking Group$ millions

Exposure atdefault

Risk weighted
exposure or
implied risk
weighted
exposure1

Total capitalrequirement

Unaudited 31/03/2014

128,787

52,791

4,223

Specialised lending exposures subject to slotting approach

8,155

7,736

619

Exposures subject to standardised approach

28

Exposures subject to internal ratings based approach

1,912

344

Equity exposures

91

387

31

Other exposures

3,146

1,743

139

Total credit risk

142,091

63,001

5,040

Operational risk

n/a

5,378

430

Market risk
Total
1

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

n/a

4,340

347

142,091

72,7195,817

ANZ Bank New Zealand Limited

15

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

Unaudited 31/03/2014

Total exposure
or principal
amount$m

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

Exposureweighted risk Risk weighted
exposure
weight%$m

Total capitalrequirement$mOn-balance sheet exposures
Corporate

32,47032,681

Sovereign

10,536

10,062

Bank

4,328

3,306

Retail mortgages

49,36949,608Other retail

4,624

4,729

56

19,389

5

1

108

9

59

28

989

78

21

28

14,510

1,161

76

97

4,869

390

101,327

100,386

28

37

39,865

3,189

Corporate
Sovereign

13,352

10,726

52

48

5,458

437

83

51

5

1

-

-

Bank

1,379

1,247

50

20

258

21

Retail mortgages

6,043

6,349

18

17

1,128

90

Other retail

5,242

4,971

79

56

2,934

234

Total off-balance sheet exposures

26,09923,344

48

40

9,778

782

Corporate

79,191

1,839

61

94

1,834

147

Sovereign

9,585

320

5

27

93

7

Bank

714,440

2,898

64

40

1,221

98

Total market related contracts

803,216

5,057

59

59

3,148

252

Total credit risk exposures subject to the IRB approach

930,642

128,787

33

39

52,791

4,223

Total on-balance sheet exposures

35

1,551

Off-balance sheet exposures

Market related contracts

ANZ Bank New Zealand Limited

16

Notes to the Financial Statements
IRB exposures by customer credit rating

Unaudited 31/03/2014

Probability ofdefault%

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

Exposureweighted risk Risk weighted
weightexposure%$m

Total capitalrequirement$m

Corporate
0-2

0.05

4,631

63

30

1,616

129

3-4

0.31

24,68837

41

10,682

855

5

1.00

9,779

37

65

6,746

540

6

2.19

4,005

38

81

3,444

276

7-8

7.51

1,419

43

148

2,231

178

Default

100.00

724

45

256

1,962

157

2.42

45,24640

56

26,681

2,135

0

0.01

9,277

5

2

180

14

1-8

0.02

1,156

5

2

21

2

Total sovereign exposures

0.01

10,433

5

2

201

16

Total corporate exposures
Sovereign

Bank
0

0.03

42

65

11

5

-

1

0.03

5,565

58

27

1,565

125

2-4

0.10

1,785

62

41

777

62

5-8

4.53

59

65

195

121

10

Total bank exposures

0.08

7,451

59

31

2,468

197

0-3

0.20

12,085

12

5

618

49

4

0.46

18,865

19

15

3,021

242

5

0.93

18,767

26

36

7,064

565

6

2.07

5,201

30

72

3,967

317

7-8

5.36

576

31

120

734

59

Default

100.00

463

26

48

234

19

1.59

55,95721

26

15,6381,251

Retail mortgages

Total retail mortgages exposures
Other retail
0-2

0.10

655

78

48

335

27

3-4

0.30

4,671

78

56

2,760

221

5

1.14

1,516

72

76

1,229

98

6

2.72

1,739

78

101

1,864

149

7-8

11.31

1,008

85

136

1,450

116

Default

100.00

111

80

141

165

13

Total other retail exposures

3.14

9,700

78

76

7,803

624

Total credit risk exposures subject to the IRB approach

1.78

128,787

33

39

52,791

4,223

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

ANZ Bank New Zealand Limited

17

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

Risk weight

Risk weighted
exposure

Total capitalrequirement

$m

%

$m

$m

Strong

2,240

70

1,662

133

Good

3,794

90

3,619

290

Satisfactory

950

115

1,158

93

Weak

179

250

474

37

Unaudited 31/03/2014

On-balance sheet exposures

Default
Total on-balance sheet exposures

126

-

-

-

7,289

89

6,913

553

Average risk Risk weighted
weightexposure

Total capitalrequirement

ExposureamountExposure atdefault

$m

$m

%

$m

$m

Undrawn commitments and other off balance sheet exposures

1,111

831

87

769

62

Market related contracts

1,397

35

145

54

4

Total off-balance sheet exposures

2,508

866

89

823

66

Off-balance sheet exposures

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

Risk weight%

Risk weighted
exposure$m

Total capitalrequirement
$m

48

100

51

4

Default

1

150

1

-

Total on-balance sheet exposures

49

101

52

4

Average risk Risk weighted
weightexposure%$m

Total capitalrequirement$m

Unaudited 31/03/2014

On-balance sheet exposures
Corporates

Exposureamount$m

Averagecreditconversion
factor%Exposure atdefault$m

Off-balance sheet exposures
471

50

234

99

246

20

Market related contracts

161,207

1

1,629

3

46

4

Total off balance sheet

161,678

n/a

1,863

15

292

24

Exposure atdefault$m

Risk weight%

Risk weighted
exposure$m

Total capitalrequirement
$m

91

400

387

31

Undrawn commitments and other off balance sheet exposures

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

Unaudited 31/03/2014

All equity holdings not deducted from capital

Equity exposures have been calculated in accordance with BS2B.

ANZ Bank New Zealand Limited

18

Notes to the Financial Statements
Other exposures
Unaudited 31/03/2014

Exposure at default$mRisk weight%

Risk weighted
exposure$m

Total capitalrequirement
$m

206

-

-

-

New Zealand dollar denominated claims on the Crown and the RBNZ

1,295

-

-

-

Other assets

1,645

100

1,743

139

Total other IRB credit risk exposures

3,146

52

1,743

139

Cash

Other exposures have been calculated in accordance with BS2B.
Credit risk mitigation
The Banking Group assesses the integrity and ability of counterparties to meet their contractual financial obligations for repayment.
The Banking Group generally takes collateral security in the form of real property or a security interest in personal property, except
for major government, bank and corporate counterparties of strong financial standing. Longer term consumer finance, in the form of
housing loans, is generally secured against real estate while short term revolving consumer credit is generally unsecured.
As at 31 March 2014, under the IRB approach, the Banking Group had $1,719 million of Corporate exposures covered by guarantees
where the presence of the guarantees was judged to reduce the underlying credit risk of the exposures. Information on the total
value of exposures covered by financial guarantees and eligible financial collateral is not disclosed, as the effect of these guarantees
and collateral on the underlying credit risk exposures is not considered to be material.
Operational risk
The Banking Group uses the Advanced Measurement Approach for determining its regulatory capital requirement for operationalrisk calculated in accordance with BS2B. As at 31 March 2014 the Banking Group had an implied risk weighted exposure of $5,378
million for operational risk and an operational risk capital requirement of $430 million.
Market risk
The aggregate market risk exposures below have been calculated in accordance with BS2B. The peak end-of-day market risk
exposures are for the half-year ended 31 March 2014.
Implied risk weighted exposure$ millions

Aggregate capital charge

Peak

Period end

Peak

Period end

Peakoccurred on

4,204

5,418

336

433

30/12/2013

134

167

11

13

20/03/2014

2

2

-

-

1/10/2013

Unaudited 31/03/2014

Interest rate risk
Foreign currency risk
Equity risk

4,340

347

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 $356 million (31/03/2013 $374 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 pension risk and business retention risk) were applied in November 2013 andprior periods restated accordingly.

ANZ Bank New Zealand Limited

19

Notes to the Financial Statements
Capital adequacy of the Ultimate Parent Bank
Basel III capital ratios
Overseas Banking Group
31/03/2014
31/03/2013

30/09/2013

Ultimate Parent Bank
(Extended Licensed Entity)
31/03/2013
31/03/2014
30/09/2013

Unaudited

Common equity tier 1 capital

8.3%

8.2%

8.5%

8.3%

8.4%

8.5%

Tier 1 capital

10.3%

9.8%

10.4%

10.6%

10.3%

10.6%

Total capital

12.1%

11.7%

12.2%

12.5%

12.2%

12.5%

For calculation of minimum capital requirements under Pillar 1 (Capital Requirements) of the Basel Accord, APRA has accredited theOverseas Banking Group to use the Advanced Internal Ratings Based (AIRB) methodology for calculation of credit risk weighted
assets and the Advanced Measurement Approach (AMA) for the operational risk weighted asset equivalent.
Under prudential regulations, the Overseas Banking Group is required to maintain a Prudential Capital Ratio (PCR) as determined by
APRA. The Overseas Banking Group exceeded the PCR set by APRA as at 31 March 2014 and for the comparative prior periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 March 2014. The Overseas Banking
Group’s Pillar 3 disclosure document for the quarter ended 31 March 2014, in accordance with APS 330: Public Disclosure ofPrudential Information, discloses capital adequacy ratios and other prudential information. This document can be accessed at thewebsite anz.com.
Residential mortgages by loan-to-valuation ratio
As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the Banking
Group's valuation of the security property at origination of the exposure. Off balance sheet exposures include undrawn and partiallydrawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing lending whichhave been accepted by the customer. For this financial period, the Banking Group has altered the banding of exposures in the LVR
table below to align presentation with the new RBNZ LVR commitment reporting. Updated corresponding amounts as at 30
September 2013 have been provided for comparative purposes.
31/03/2014
Unaudited$ millions

On-balancesheet

Off-balance
sheet

17,6933,245

30/09/2013
Total

On-balancesheet

Off-balance
sheet

Total

20,938

16,761

3,074

19,835

LVR range
Does not exceed 60%
Exceeds 60% and not 70%

8,833

901

9,734

7,994

783

8,777

Exceeds 70% and not 80%

14,205

1,434

15,63912,479

1,174

13,653

Does not exceed 80%

40,731

5,580

46,311

37,234

5,031

42,265

Exceeds 80% and not 90%

5,268

181

5,449

6,225

276

6,501

Exceeds 90%

3,370

282

3,652

3,923

341

4,264

Total

49,3696,043

55,41247,382

5,648

53,030Note

31/03/2014

30/09/2013

4

51,39649,521

Reconciliation of mortgage related amounts
Unaudited$ millions

Term loans - housing
Add: fair value hedging adjustment

5242

Add: short-term housing loans classified as overdrafts

486

499

(2,606)(2,716)

Less: housing loans made to corporate customers
Add: Unsettled re-purchases of mortgages from the NZ BranchOn-balance sheet retail mortgage exposures subject to the IRB approach

10

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

10

41

36

49,36947,382

6,043

5,648

55,41253,030ANZ Bank New Zealand Limited

20

Notes to the Financial Statements
11. Financial risk management
Concentrations of credit risk
Concentrations of credit risk arise when a number of customers are engaged in similar business activities or activities within thesame geographic region, or when they have similar risk characteristics that would cause their ability to meet contractual obligations
to be similarly affected by changes in economic or other conditions.
Analysis of financial assets by industry sector is based on Australian and New Zealand Standard Industrial Classification (ANZSIC)
codes.
Cash,settlements
receivable andcollateral paid

Tradingsecurities andavailable-forsale assets

Derivative
financial
instruments

Net loans andadvances 3Agriculture

-

-

22

17,07272

2,124

19,290Forestry, fishing and mining

-

-

13

983

4

1,133

2,133

Business and property services

-

-

18

9,167

38

2,617

11,840Construction

-

-

-

1,122

5

849

1,976

Entertainment, leisure and tourism

-

-

22

1,047

4

351

1,424

Finance and insurance

2,494

5,015

7,698

922

285

1,292

17,706

Government and local authority1

Unaudited 31/03/2014$ millions

Other
financial Credit related
assets commitments 4

Total

Industry

1,295

7,595

244

1,184

5

1,320

11,643

Manufacturing

-

35

70

3,038

13

2,273

5,429

Personal lending

-

-

-

53,551

224

12,31066,085Retail trade

-

-

38

1,926

8

948

2,920

Transport and storage

-

7

48

1,472

6

875

2,408

Wholesale trade

-

-

11

1,227

5

1,275

2,518

Other2

-

105

560

1,577

7

1,855

4,104

3,789
-

12,757-

8,744-

94,288
(630)

676
-

29,222(92)

149,476
(722)

-

-

-

(351)

-

-

(351)

-

-

-

176

-

-

176

3,789

12,757

8,744

93,483676

29,130148,579

New Zealand

2,756

9,240

2,036

91,245667

28,967

134,911

Overseas

1,033

3,517

6,708

2,238

9

163

13,668

Total financial assets

3,789

12,757

8,744

93,483676

29,130148,579

Less: Provision for credit impairment
Less: Unearned income
Add: Capitalised brokerage / mortgage
origination fees
Total financial assets
Geography

12
3
4

Government and local authority includes exposures to government administration and defence, education and health and community services.
Other includes exposures to electricity, gas and water, communications and personal services.
Excludes individual and collective provisions for credit impairment held in respect of credit related commitments.
Credit related commitments comprise undrawn facilities, customer contingent liabilities and letters of offer.

ANZ Bank New Zealand Limited

21

Notes to the Financial Statements
Interest rate sensitivity gap
The following tables represent the interest rate sensitivity of the Banking Group's assets, liabilities and off balance sheet instruments
by showing the periods in which these instruments may reprice, that is, when interest rates applicable to each asset or liability canbe changed.
Unaudited 31/03/2014
Total

Up to
3 months

Over 3 to
6 months

Over 6 to
12 months

Over 1 to
2 yearsOver
2 years

Not bearing
interest

1,717

1,511

-

-

-

-

206

705

86

-

-

-

-

619

Collateral paid

1,367

1,367

-

-

-

-

-

Trading securities

12,090

1,007

556

512

3,271

6,744

-

Derivative financial instruments

8,744

-

-

-

-

-

8,744

$ millions

AssetsCash
Settlement balances receivable

Available-for-sale assets

667

129

-

30

258

248

2

Net loans and advances

93,391

57,746

6,109

10,653

11,771

7,594

(482)

Other financial assets

676

134

14

14

3

-

511

Total financial assets

119,357

61,980

6,679

11,20915,303

14,586

9,600

1,533

305

-

-

-

-

1,228

452

452

-

-

-

-

-

81,45754,562

10,619

7,583

1,667

1,192

5,834

Liabilities
Settlement balances payable
Collateral received
Deposits and other borrowings
Derivative financial instruments

9,645

-

-

-

-

-

9,645

Bonds and notes

16,405

4,964

15

1,019

4,394

6,013

-

Subordinated debt

1,129

-

294

-

-

835

-

780

99

-

-

5

170

506

Total financial liabilities

111,401

60,382

10,928

8,602

6,066

8,210

17,213

Hedging instruments

-

6,199

12,274(12,123)(5,659)(691)-

Interest sensitivity gap

7,956

7,797

8,025

(9,516)

3,578

5,685

(7,613)

Payables and other liabilities

Liquidity portfolio
The Banking Group holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The
size of the Banking Group’s liquidity portfolio is based on the amount required to meet its liquidity policy and includes both items
classified as cash and those classified as operating assets in the Condensed Cash Flow Statement.
Unaudited 31/03/2014$ millions

Cash

Trading
Securities

Available-forsale securities

Total

1,295

-

-

1,295

14

-

-

14

Certificates of deposit

-

-

100

100

Government, local body stock and bonds

-

6,948

526

7,474

Government treasury bills

-

-

1

1

Other bonds

-

4,891

-

4,891

1,309

11,839627

13,775

Balances with central banks
Securities purchased under agreement to resell

Total liquidity portfolio

ANZ Bank New Zealand Limited

22

Notes to the Financial Statements
Funding Composition
The Banking Group actively uses balance sheet disciplines to prudently manage the funding mix. The Banking Group employs
funding metrics to ensure that an appropriate proportion of its assets are funded from stable sources, including customer liabilities,
longer-dated wholesale debt (with remaining term exceeding one year) and equity.
Analysis of funding liabilities by industry sector is based on ANZSIC codes.
Unaudited$ millions

31/03/2014

Funding composition
Customer deposits1
New Zealand

65,442

Overseas

8,627

Total customer deposits

74,069Wholesale funding
Bonds and notes

16,405Subordinated debt

1,129

Certificates of deposit

1,604

Commercial paper

5,401

Settlement balances payable

1,533

Collateral received

452

Other borrowings

383

Total wholesale funding

26,907

Total funding

100,976

Concentrations of funding by industry
Households

45,160Agriculture

2,729

Forestry, fishing and mining
ManufacturingEntertainment, leisure and tourism
Finance and insurance
Retail trade

644
1,550
909
36,435906

Wholesale trade

1,048

Business and property services

5,660

Transport and storage

668

Construction

933

Government and local authority
Other2
Total funding

2,547
1,787
100,976

Concentrations of funding by geography3
New Zealand

71,847Australia

1,396

United States

9,216

Europe12,357

Other countries

6,160

Total funding

100,9761
2
3Comprises term deposits, other deposits bearing interest and other borrowings, deposits not bearing interest and UDC secured investments
Other includes exposures to electricity, gas and water, communications and personal services.
Funding via ANZ New Zealand (Int’l) Limited is classified as either from the United States or Europe, as the company conducts overseas funding activities through its
London branch which is passed through to the Bank.

ANZ Bank New Zealand Limited

23

Notes to the Financial Statements
Contractual maturity analysis of financial assets and liabilities
The following tables present the Banking Group's financial assets and liabilities within relevant contractual maturity groupings,
based on the earliest date on which the Banking Group may be required to realise an asset or settle a liability. The amounts disclosed
in the tables represent undiscounted future principal and interest cash flows and may differ to the amounts reported on the balance
sheet.
The contractual maturity analysis for off-balance sheet commitments and contingent liabilities has been prepared using the earliest
date at which the Banking Group can be called upon to pay. The liquidity risk of credit related commitments and contingent
liabilities may be less than the contract amount, and does not necessarily represent future cash requirements as many of thesefacilities are expected to be only partially used or to expire unused.
The Banking Group does not manage its liquidity risk on this basis.
Unaudited 31/03/2014
Total

At callUp to
3 months

Over 3 to
12 months

Over 1 to
5 yearsOver
5 years

No maturity
specified

1,717

1,501

216

-

-

-

-

705

84

621

-

-

-

-

Collateral paid

1,367

-

1,367

-

-

-

-

Trading securities

13,614

-

378

1,680

10,1001,456-

Derivative financial assets (trading)

7,789

-

7,789

-

-

-

-

Available-for-sale assets

729

-

117

18

592

-

2

Net loans and advances$ millions

Financial assets
Cash
Settlement balances receivable

129,251-

16,34817,01940,62855,256-

Other financial assets

281

-

250

28

3

-

-

Total financial assets

155,453

1,585

27,086

18,74551,32356,712

2

1,533

584

949

-

-

-

-

452

-

452

-

-

-

-

Deposits and other borrowings

82,80627,19633,33819,078

3,191

3

-

Derivative financial liabilities (trading)

9,142

-

9,142

-

-

-

-

Bonds and notes

17,325

-

1,482

1,898

13,334

611-

Subordinated debt

1,406

-

14

41

178

44

1,129

Other financial liabilities

447

-

139

10

139

159

-

Total financial liabilities

113,11127,78045,51621,027

16,842817

1,129

Financial liabilities
Settlement balances payable
Collateral received

Derivative financial instruments used for balance sheet management- gross inflows

15,581

-

1,555

4,504

8,776

746

-

- gross outflows
Net financial assets / (liabilities) after balance
sheet management(14,971)-(1,524)(4,223)(8,487)(737)-

42,952(26,195)(18,399)(2,001)

34,77055,904(1,127)

Contractual maturity of off-balance sheet commitments and contingent liabilities
Unaudited 31/03/2014$ millions

Non-credit related commitments
Credit related commitments
Contingent liabilities
Total

Less than

BeyondTotal

1 year

1 year472
26,8892,333
29,694122
26,8892,333
29,344350
350

ANZ Bank New Zealand Limited

24

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

31/03/2014$ millions

Carrying amount

Fair value

93,391

93,383

Deposits and other borrowings2

81,457

81,468

Bonds and notes1

16,405

16,583

Subordinated debt

1,129

1,098

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 $5,401 million.

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 31/03/2014$ millions

Level 1

Level 2

Level 3

Total

12,06228-

12,090

7

8,737

-

8,744

Available-for-sale assets

665

-

2

667

Investments backing insurance policy liabilities

114

51

-

165

12,8488,816

221,666

-

5,401

-

5,401

Derivative financial instruments

4

9,641

-

9,645

Payables and other liabilities

222

-

-

222

Total financial liabilities held at fair value

226

15,042-

15,268Financial assets
Trading securities
Derivative financial instruments

Total financial assets held at fair value
Financial liabilities
Deposits and other borrowings

ANZ Bank New Zealand Limited

25

Notes to the Financial Statements
13. Concentrations of Credit Risk to Individual Counterparties
The Banking Group measures its concentration of credit risk in respect to bank counterparties on the basis of approved exposures,and in respect to non bank counterparties on the basis of limits.
For the six months ended 31 March 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 $787 million (31/03/2013 $793
million; 30/09/2013 $779 million), which is 0.6% (31/03/2013 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

Audited31/03/2014

31/03/2013

30/09/2013

Credit related commitments
Commitments with certain drawdown due within one year

1,073

859

817

Commitments to provide financial services

25,81625,00624,446

Total credit related commitments

26,88925,86525,263Financial guarantees

985

650

997

Standby letters of credit

60

53

32

Transaction related contingent items

1,222

976

1,059

Trade related contingent liabilities

66

78

113

2,333

1,757

2,201

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 in mid-2014 after it has progressed discussions with eachbank. The potential outcome of 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

26

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.
31/03/2013
Unaudited$ millions

Previously
reported

Liquid assets
Due from other financial institutions

30/09/2013

ChangeCurrently
reported

Previously
reported

ChangeCurrently
reported

3,371(3,371)-

2,496(2,496)-2,045(2,045)-

1,570(1,570)

-

Cash

-

3,459

3,459

-

2,206

2,206

Settlement balances receivable

-

700

700

-

514

514

Collateral paid

-

1,142

1,142

-

1,002

1,002

Available-for-sale assets

873

159

1,032

782

160

942

Net loans and advances

87,882299

88,181

90,489348

90,837

Insurance policy assets

313

109

422

399

-

399

Other assets

936

(343)

593

731

(164)

567

Deferred tax assets

73

8

81

39

6

45

All other assets

23,584-

23,58423,932-23,932

Total assets

119,077

117

119,194

120,438

6

120,444

1,795(1,795)-

1,517(1,517)-

Settlement balances payable

-

1,754

1,754

-

1,428

1,428

Collateral received

-

267

267

-

438

438

75,224

1,200

76,424

77,697

1,119

78,816

709

(709)

-

939

(939)

-

2,012

(580)

1,432

1,705

(510)

1,195

AssetsLiabilities
Due to other financial institutions

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

28,234-28,234

27,113-

27,113

Total liabilities

107,974137

108,111

108,97119

108,990

Equity11,103(20)

11,083

11,467(13)

11,454

ANZ Bank New Zealand Limited

27

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

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

The Disclosure Statement is not false or misleading.

Over the six months ended 31 March 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 May 2014.

Antony Carter

Shayne ElliottDavid Hisco

John Judge

Michael Smith

Mark Verbiest

Joan Withers

ANZ Bank New Zealand Limited

28

Independent Auditor’s Review Report
To the Shareholder of ANZ Bank New Zealand Limited
We have reviewed pages 3 to 25 of the interim financial statements of ANZ Bank New Zealand Limited (the Bank) and its subsidiarycompanies (the Banking Group) prepared and disclosed in accordance with the Registered Bank Disclosure Statements (New Zealand
Incorporated Registered Banks) Order 2014 (the Order) and the supplementary information prescribed in Schedules 3, 5, 7, 11, 13, 16 and 18of the Order. The interim financial statements, and supplementary information, provide information about the past financial performanceand cash flows of the Banking Group and its financial position as at 31 March 2014.
Directors' responsibility for the disclosure statement
The Directors of ANZ Bank New Zealand Limited are responsible for the preparation and presentation of the Disclosure Statement, which
includes interim financial statements prepared in accordance with Clause 25 of the Order which give a true and fair view of the financial
position of the Banking Group as at 31 March 2014 and its financial performance and cash flows for the six months ended on that date. The
Directors are also responsible for such internal controls as the Directors determine are necessary to enable the preparation of the DisclosureStatement that is free from material misstatement whether due to fraud or error.
They are also responsible for the preparation of supplementary information in the Disclosure Statement which fairly states the matters towhich it relates in accordance with Schedules 3, 5, 7, 11, 13, 16 and 18 of the Order.
Reviewer’s responsibility
We are responsible for reviewing the interim financial statements and the supplementary information, disclosed in accordance with Clause
25, Schedules 3, 5, 7, 11, 13, 16 and 18 of the Order and presented to us by the Directors.
We are responsible for reviewing the interim financial statements (excluding the supplementary information) in order to report to you
whether, in our opinion on the basis of the procedures described below, anything has come to our attention that would cause us to believethat the interim financial statements have not been prepared, in all material respects, in accordance with New Zealand Equivalent toInternational Accounting Standard 34 (NZ IAS 34): Interim Financial Reporting and do not present a true and fair view of the financial positionof the Banking Group as at 31 March 2014 and its financial performance and cash flows for the six months ended on that date.
We are responsible for reviewing the supplementary information (excluding the supplementary information relating to capital adequacy) inorder to report to you whether, in our opinion on the basis of the procedures described below, anything has come to our attention thatwould cause us to believe that the supplementary information does not fairly state the matters to which it relates in accordance with
Schedules 5, 7, 13, 16 and 18 of the Order.
We are responsible for reviewing the supplementary information relating to capital adequacy in order to state whether, on the basis of theprocedures described below, anything has come to our attention that would cause us to believe that the information disclosed inaccordance with Schedule 11 is not in all material respects prepared in accordance with the Bank’s Conditions of Registration and with theBank’s internal models for credit risk and operational risk as accredited by the Reserve Bank of New Zealand and disclosed in accordancewith Schedule 11 of the Order.
We have performed our review in accordance with the review engagement standard RS-1: Statement of Review Engagement Standards issued
by the External Reporting Board. A review is limited primarily to enquiries of Banking Group personnel and analytical review procedures
applied to the financial data, and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not
express an audit opinion.
KPMG has also provided other audit related services to the Banking Group. In addition, certain partners and employees of our firm may also
deal with the Banking Group on normal terms within the ordinary course of trading activities of the Banking Group. These matters have not
impaired our independence as auditors of the Banking Group. We have no other relationship with, or interest in, the Banking Group.
Review opinion
We have examined the interim financial statements including the supplementary information and based on our review, which is not anaudit, nothing has come to our attention that causes us to believe that:a.

the interim financial statements (excluding the supplementary information) have not been prepared, in all material respects, inaccordance with NZ IAS 34: Interim Financial Reporting and do not present a true and fair view of the financial position of the Banking
Group as at 31 March 2014 and its financial performance and cash flows for the six months ended on that date;b.

the supplementary information prescribed by Schedules 5, 7, 13, 16 and 18 of the Order does not fairly state the matters to which it
relates in accordance with those Schedules; andc.

the supplementary information relating to capital adequacy as required by Schedule 11 of the Order, is not in all material respects
prepared in accordance with the Bank’s Conditions of Registration and with the Bank’s internal models for credit risk and operationalrisk as accredited by the Reserve Bank of New Zealand, and disclosed in accordance with Schedule 11 of the Order.

Our review was completed on 13 May 2014 and our review opinion is expressed as at that date.

Wellington