Australia and New Zealand Banking Group Ltd. — Interim / Quarterly Report 2011

Aug 18, 2011

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Australia and New Zealand Banking Group Limited – New Zealand Branch Disclosure Statement

FOR THE NINE MONTHS ENDED 30 JUNE 2011 | NUMBER 11 ISSUED AUGUST 2011

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Australia and New Zealand Banking Group Limited - New Zealand Branch

Disclosure Statement

For the nine months ended 30 June 2011

Contents

General Disclosures Income Statement and Statement of Comprehensive Income Statement of Changes in Equity Balance Sheet Condensed Cash Flow Statement Notes to the Financial Statements Directors’ Statement Auditors’ Report

Glossary of Terms

In this Disclosure Statement unless the context otherwise requires:

• (a) "Bank" means ANZ National Bank Limited;

• (b) "Banking Group" means ANZ National Bank Limited and all its controlled entities;

• (c) "Immediate Parent Company" means ANZ Funds Pty Limited, which is the immediate parent company of 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, or undertakings conducted in or from New Zealand identified and treated as if it were conducted by a company 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 Level 6, 1 Victoria Street, Wellington, New Zealand, which is also ANZ New Zealand’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 Disclosure Statements (Overseas Incorporated Registered Banks) Order (No 2) 2011; and

• (m) Any term or expression which is defined in, or in the manner prescribed by, the Order shall have the meaning given in or prescribed by the Order.

Australia and New Zealand Banking Group Limited - New Zealand Branch

2

General Disclosures

This Disclosure Statement has been issued in accordance with the Order.

Credit Rating Information

The Ultimate Parent Bank has three current credit ratings, which are applicable to its long-term senior unsecured obligations which are payable in New Zealand in New Zealand dollars.

The Ultimate Parent Bank's Credit Ratings are:

RatingAgency	Current Credit Rating	Qualification
Standard & Poor’s	AA	Outlook Stable
Moody’s Investors Service	Aa2	Outlook Stable
Fitch Ratings	AA-	Outlook Positive

Guarantors

As at the date of signing of this Disclosure Statement, the Ultimate Parent Bank benefits from certain guarantees from the Commonwealth of Australia under:

• a) in the case of certain deposits and other accounts up to A$1 million, a scheme pursuant to the Banking Act 1959 of the Commonwealth of Australia (the "Financial Claims Scheme"); and

• b) in the case of certain wholesale funding, a Deed of Guarantee executed by the Treasurer (and related scheme rules) (the "Wholesale Funding Guarantee").

The Financial Claims Scheme presently applies to the NZ Branch, as it is a foreign branch of Australia and New Zealand Banking Group Limited, an eligible Australian Authorised Deposit-taking Institution. From 12 October 2011, the Financial Claims Scheme will apply to Australian dollar deposits only, and is expected to be amended more generally in relation to its limit, scope and application. Of particular relevance to the NZ Branch, the Australian Government Treasury released a consultation paper in May 2011 which proposes to narrow the coverage of the Financial Claims Scheme to exclude deposit accounts of Authorised Deposit-taking Institutions that are held in foreign branches. Depending upon the outcome of the consultation paper, such changes may take effect from October 2011, and transitional arrangements may or may not apply.

On 31 March 2010, the Australian Government closed the Wholesale Funding Guarantee. Existing guaranteed liabilities will continue to be guaranteed to maturity for wholesale funding and term deposits and to October 2015 for at call deposits. The name of the Guarantor and the address for service is The Scheme Administrator, Australian Government Guarantee Scheme for Large Deposits and Wholesale funding, c/- The Secretary, Reserve Bank of Australia, 65 Martin Place, Sydney, New South Wales 2001, Australia.

Further information on the Financial Claims Scheme and the Wholesale Funding Guarantee is available at treasury.gov.au, apra.gov.au, guaranteescheme.gov.au and is provided in the General Disclosure Statement for the year ended 30 September 2010 which is available at no charge:

• a) on ANZ New Zealand’s website anz.com; and

• b) within two working days of a request, if a request is at the Registered Office or at any branch of ANZ or The National Bank of New Zealand.

Financial Statements of the Ultimate Parent Bank and Overseas Banking Group

Copies of the most recent publicly available financial statements of the Ultimate Parent Bank and Overseas Banking Group will be provided immediately, free of charge, to any person requesting a copy where the request is made at the Registered Office. The most recent publicly available financial statements for the Ultimate Parent Bank and Overseas Banking Group can also be accessed at the internet address anz.com.

Conditions of Registration

The conditions of registration applying to the NZ Branch have been amended with effect from 1 July 2011 for some wording changes, intended to clarify the meaning of the term “registered bank” in the case of overseas incorporated banks operating in New Zealand. None of the changes change the intent of the conditions.

Directorate

Since the authorisation date of the previous full year General Disclosure Statement on 23 November 2010, there have been no changes to the Directors of Australia and New Zealand Banking Group Limited. On 18 April 2011 F J Brown was appointed Chief Executive Officer of the NZ Branch to replace S R Peterson in that role.

Auditors

ANZ New Zealand’s auditors are KPMG, Chartered Accountants, Level 9, 10 Customhouse Quay, Wellington, New Zealand.

Australia and New Zealand Banking Group Limited - New Zealand Branch Income Statement

3

Income Statement
		Unaudited		Unaudited		Audited
$ millions		9 months to		9 months to		Year to
	Note	30/06/2011		30/06/2010		30/09/2010
Interest income		5,115		4,745		6,447
Interest expense		3,181		2,900		3,952
Net interest income		1,934		1,845		2,495
Net trading gains		197		47		39
Funds management and insurance income		202		139		218
Other operating income	2	149		350		446
Share of profit of equity accounted associates and joint ventures		1		37		42
Operating income		2,483		2,418		3,240
Operating expenses	2	1,304		1,137		1,565
Profit before provision for credit impairment		1,179		1,281		1,675
Provision for credit impairment	6	132		408		456
Profit before income tax		1,047		873		1,219
Income tax expense		312		253		352
Profit after income tax		735		620		867

Statement of Comprehensive Income

		Unaudited	Unaudited	Unaudited	Unaudited	Audited
$ millions		9 months to		9 months to		Year to
		30/06/2011		30/06/2010		30/09/2010
Profit after income tax		735		620		867
Unrealised gains recognised directly in equity		23		97		142
Realised (gains) / losses transferred to income statement		(35)		23		9
Actuarial gain on defined benefit schemes		8		14		27
Income tax credit / (expense) on items recognised directly in equity		2		(36)		(48)
Total comprehensive income for the period		733		718		997

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

Australia and New Zealand Banking Group Limited - New Zealand Branch Statement of Changes in Equity

4

	$ millions	Share							Total equity attributable to owners				Total equity
			Available-
		capital and	for-sale		Cash flow				of the		Non-
		head office	revaluation		hedging		Retained		parent		controlling
		account	reserve		reserve		earnings		entity		entities
	As at 1 October 2009	6,424	25		23		843		7,315		-		7,315
	Profit after income tax attributable to parent	-	-		-		620		620		-		620
	Unrealised gains recognised directly in equity	-	44		53		-		97		-		97
	Realised losses transferred to income statement	-	-		23		-		23		-		23
	Actuarial gain on defined benefit schemes	-	-		-		14		14		-		14
	Income tax expense on items recognised directly in equity	-	(10)		(22)		(4)		(36)		-		(36)
	Total comprehensive income for the period	-	34		54		630		718		-		718
	Preference dividends paid	-	-		-		(441)		(441)		-		(441)
	Acquired in a business combination	-	-		-		-		-		1		1
	As at 30 June 2010 (Unaudited)	6,424	59		77		1,032		7,592		1		7,593
	As at 1 October 2009	6,424	25		23		843		7,315		-		7,315
	Profit after income tax attributable to parent	-	-		-		867		867		-		867
	Unrealised gains recognised directly in equity	-	53		89		-		142		-		142
	Realised (gains) / losses transferred to income statement	-	(12)		21		-		9		-		9
	Actuarial gain on defined benefit schemes	-	-		-		27		27		-		27
	Income tax expense on items recognised directly in equity	-	(8)		(31)		(9)		(48)		-		(48)
	Total comprehensive income for the period	-	33		79		885		997		-		997
	Preference dividends paid	-	-		-		(492)		(492)		-		(492)
	Acquired in a business combination	-	-		-		-		-		1		1
	As at 30 September 2010 (Audited)	6,424	58		102		1,236		7,820		1		7,821
	Profit after income tax attributable to parent	-	-		-		735		735		-		735
	Unrealised gains recognised directly in equity	-	15		8		-		23		-		23
	Realised (gains) / losses transferred to income statement	-	(42)		7		-		(35)		-		(35)
	Actuarial gain on defined benefit schemes	-	-		-		8		8		-		8
	Income tax credit / (expense) on items recognised directly in equity	-	8		(4)		(2)		2		-		2
	Total comprehensive income for the period	-	(19)		11		741		733		-		733
	Ordinary dividends paid	-	-		-		(215)		(215)		-		(215)
	Preference dividends paid	-	-		-		(155)		(155)		-		(155)
	As at 30 June 2011 (Unaudited)	6,424	39		113		1,607		8,183		1		8,184

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

Australia and New Zealand Banking Group Limited - New Zealand Branch Balance Sheet

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Balance Sheet	Balance Sheet	Balance Sheet	Balance Sheet	Balance Sheet
Unaudited Unaudited Audited
$ millions Note 30/06/2011 30/06/2010 30/09/2010
Assets
Liquid assets 2,205 1,907 2,239
Due from other financial institutions 2,356 1,103 3,496
Trading securities 9,652 7,164 6,757
Derivative financial instruments 10,594 9,085 10,854
Available-for-sale assets 352 1,778 2,151
Net loans and advances 4 94,627 95,637 96,015
Investments backing insurance policyholder liabilities 86 87 87
Insurance policy assets 191 129 138
Shares in associates and jointly controlled entities 102 145 144
Current tax assets 77 40 18
Other assets 1,046 1,056 970
Deferred tax assets 162 359 304
Premises and equipment 324 307 311
Goodwill and other intangible assets 3,515 3,562 3,545
Total assets 125,289 122,359 127,029
Interest earning and discount bearing assets 108,300 106,867 108,325
Liabilities
Due to other financial institutions 11,955 10,619 12,293
Deposits and other borrowings 8 68,469 71,839 70,295
Derivative financial instruments 11,598 9,068 10,727
Payables and other liabilities 1,889 1,378 1,506
Provisions 320 325 315
Bonds and notes 18,711 17,403 19,899
Term funding 1,766 1,766 1,766
Loan capital 2,397 2,368 2,407
Total liabilities (excluding head office account) 117,105 114,766 119,208
Net assets (excluding head office account) 8,184 7,593 7,821
Represented by:
Share capital and head office account 6,424 6,424 6,424
Reserves 152 136 160
Retained earnings 1,607 1,032 1,236
Parent shareholder's equity and head office account 8,183 7,592 7,820
Non-controlling interests 1 1 1
Total equity & head office account 8,184 7,593 7,821
Interest and discount bearing liabilities 98,363 99,378 100,335

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

Australia and New Zealand Banking Group Limited - New Zealand Branch Condensed Cash Flow Statement

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Condensed Cash Flow Statement
		Unaudited		Unaudited		Audited
		9 months to		9 months to		Year to
$ millions	Note	30/06/2011		30/06/2010		30/09/2010
Cash flows from operating activities
Interest received		5,038		4,577		6,217
Interest paid		(3,106)		(2,910)		(3,880)
Other cash inflows provided by operating activities		637		697		911
Other cash outflows used in operating activities		(1,458)		(1,620)		(2,052)
Cash flows from operating profits before changes in operating assets and
liabilities		1,111		744		1,196
Net changes in operating assets and liabilities		(2,044)		(1,427)		(2,504)
Net cash flows used in operating activities	13	(933)		(683)		(1,308)
Cash flows from investing activities
Cash inflows provided by investing activities		48		2		8
Cash outflows used in investing activities		(74)		(346)		(370)
Net cash flows used in investing activities		(26)		(344)		(362)
Cash flows from financing activities
Cash inflows provided by financing activities		3,867		3,098		5,481
Cash outflows used in financing activities		(2,224)		(4,332)		(4,999)
Net cash flows provided by / (used in) financing activities		1,643		(1,234)		482
Net increase / (decrease) in cash and cash equivalents		684		(2,261)		(1,188)
Cash and cash equivalents at beginning of the period		3,578		4,766		4,766
Cash and cash equivalents at end of the period	13	4,262		2,505		3,578

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

1. Significant Accounting Policies

(i) Reporting entity and statement of compliance

These financial statements are for ANZ New Zealand for the nine months ended 30 June 2011. They have been prepared in accordance with the requirements of NZ IAS 34 Interim Financial Reporting and the Order, and should be read in conjunction with ANZ New Zealand’s financial statements for the year ended 30 September 2010.

(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 at their fair value:

• derivative financial instruments, including in the case of fair value hedging, the fair value of any applicable underlying exposure;

• financial instruments held for trading;

• financial assets treated as available-for-sale; and

• financial instruments designated at fair value through profit and loss.

• Insurance policy assets are measured using the Margin on Services basis, and defined benefit obligations are measured using the Projected Unit Credit method.

(iii) Changes in accounting policies

The accounting policies adopted by ANZ New Zealand are consistent with those adopted and disclosed in the previous full year General Disclosure Statement.

(iv) Presentation currency and rounding

The amounts contained in the financial statements are presented in millions of New Zealand dollars, unless otherwise stated.

(v) Comparatives

Prior to 30 September 2010 some fee income integral to the effective interest rate of financial assets was presented in other operating income. Since that date this income has been classified to interest income, to more accurately reflect the nature of the income. Comparative data has been restated accordingly. For the period ended 30 June 2010 this reclassification has, for ANZ New Zealand, increased interest income by $94 million and reduced other operating income by a corresponding amount.

Certain other amounts in the comparative information have been reclassified to ensure consistency with the current period's presentation. This includes reclassifying certain investment assets that relate to the insurance business from due from other financial institutions and available-for-sale assets to investments backing insurance policyholder liabilities to better reflect the purpose the assets are held for.

(vi) Basis of aggregation

The basis of aggregation is an addition of individual financial statements of the entities in ANZ New Zealand. All transactions between entities within ANZ New Zealand have been eliminated.

2. Operating Income and Expenses

Other operating income includes a fair value loss of $168 million (30/06/2010 $46 million gain; 30/09/2010 $61 million gain) on the revaluation of financial assets and liabilities designated at fair value and on hedging activities. Other operating income excluding these fair value adjustments is $315 million (30/06/2010 $304 million; 30/09/2010 $385 million).

Operating expenses include a one-off cost for the nine months ended 30 June 2011 of $147 million incurred in relation to the planned move to a single banking technology platform and a simplified regional management structure, which is expected to deliver further operational efficiencies and improved service levels and business outcomes.

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

3. Segmental Analysis

For segment reporting purposes, ANZ New Zealand is organised into three major business segments - Retail, Commercial and Institutional. Centralised back office and corporate functions support these segments. These segments are consistent with internal reporting provided to the chief operating decision maker, being the Bank’s Chief Executive Officer.

During the nine months ended 30 June 2011 a specialist Business Banking unit was created within the Commercial segment. Segmental reporting has been updated to reflect this and other minor changes to ANZ New Zealand’s structure. Comparative data has been adjusted to be consistent with the current period’s segment definitions.

Retail

Retail provides banking products and services to individuals through separate ANZ and The National Bank of New Zealand branded distribution channels. Personal banking customers have access to a wide range of financial services and products. Retail contains ANZ New Zealand's wealth businesses which includes private banking and investment services provided to high net worth individuals, the OnePath wealth management and insurance businesses, and other investment products. This segment also includes other profit centres supporting the Retail segment.

Commercial

Commercial provides services to Business Banking, Commercial & Agri, and UDC customers. Business Banking services are offered to small enterprises (typically with annual revenues of less than $5 million). Commercial & Agri customers consist of primarily privately owned medium to large enterprises. ANZ New Zealand's relationship with these businesses ranges from simple banking requirements with revenue from deposit and transactional facilities, and cash flow lending, to more complex funding arrangements with revenue sourced from a wider range of products. UDC is principally involved in the financing and leasing of plant, vehicles and equipment, mainly for small and medium sized businesses, as well as investment products.

Institutional

Institutional provides financial services to large multi-banked corporations, often global, who require sophisticated product and structuring solutions. The Institutional business unit includes the following specialised units:

• Markets - provides foreign exchange, interest rate and commodity trading and sales-related services, origination, underwriting, structuring, risk management and sale of credit and derivative products globally;

• Transaction Banking - provides cash management, trade finance and international payments;

• Specialised Lending - provides origination, credit analysis, structuring and execution of specific customer transactions.

Other

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

Business segment analysis[1 ]

$ millions	Retail2	Retail2	Commercial	Commercial	Institutional	Institutional	Other3	Other3	Total
Unaudited 9 months to 30/06/2011
External revenues	1,412		2,188		406		(1,523)		2,483
Intersegment revenues	(284)		(1,138)		72		1,350		-
Total revenues	1,128		1,050		478		(173)		2,483
Profit before income tax	410		602		361		(326)		1,047
Unaudited 9 months to 30/06/2010
External revenues	1,498		2,209		(3)		(1,286)		2,418
Intersegment revenues	(543)		(1,231)		486		1,288		-
Total revenues	955		978		483		2		2,418
Profit before income tax	191		303		396		(17)		873
Audited year to 30/09/2010
External revenues	1,954		2,976		53		(1,743)		3,240
Intersegment revenues	(672)		(1,629)		548		1,753		-
Total revenues	1,282		1,347		601		10		3,240
Profit before income tax	248		510		496		(35)		1,219

• 1 Intersegment transfers are accounted for and determined on an arm's length or cost recovery basis.

• 2 The comparative periods’ results include a loss on acquisition of ING (NZ) Holdings Limited of $82 million.

3 This segment has negative external revenues as this segment incurs funding costs on behalf of ANZ New Zealand and is reimbursed internally.

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

4. Net Loans and Advances

		Unaudited	Unaudited	Audited
$ millions	Note	30/06/2011 30/06/2010 30/09/2010
Overdrafts		1,760 2,217 2,131
Credit card outstandings		1,392 1,400 1,388
Term loans - housing		53,978 53,575 53,892
Term loans - non-housing		38,054 39,095 39,179
Finance lease receivables		755 705 726
Gross loans and advances		95,939 96,992 97,316
Provision for credit impairment	6	(1,225) (1,483) (1,420)
Unearned finance income		(258) (265) (273)
Fair value hedge adjustment		180 384 386
Deferred fee revenue and expenses		(51) (51) (50)
Capitalised brokerage/mortgage origination fees		42 60 56
Total net loans and advances		94,627 95,637 96,015
5. Impaired and Past Due Assets
$ millions	Retail	Other retail Non retail
mortgages exposures exposures Total
Unaudited 30/06/2011
Total individually impaired assets 560 65 1,281 1,906
Loans that are at least 90 days past due but not impaired 184 39 131 354
Unaudited 30/06/2010
Total individually impaired assets 513 82 1,229 1,824
Loans that are at least 90 days past due but not impaired 182 44 149 375
Audited 30/09/2010
Total individually impaired assets 554 81 1,403 2,038
Loans that are at least 90 days past due but not impaired 153 33 127 313

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

6. Provision for Credit Impairment

$ millions	Retail	Retail	Other retail	Other retail	Non retail	Non retail
	mortgages		exposures		exposures		Total
Unaudited 30/06/2011
Collective provision	117		141		439		697
Individual provision	181		42		305		528
Total provision for credit impairment	298		183		744		1,225
Collective provision credit	(5)		(8)		(94)		(107)
Individual provision charge	32		62		145		239
Total charge in income statement	27		54		51		132
Unaudited 30/06/2010
Collective provision	121		151		582		854
Individual provision	221		45		363		629
Total provision for credit impairment	342		196		945		1,483
Collective provision charge / (credit)	(6)		(8)		64		50
Individual provision charge	120		92		146		358
Total charge in income statement	114		84		210		408
Audited 30/09/2010
Collective provision	122		149		533		804
Individual provision	218		50		348		616
Total provision for credit impairment	340		199		881		1,420
Collective provision charge / (credit)	(5)		(10)		15		-
Individual provision charge	139		120		197		456
Total charge in income statement	134		110		212		456

7. Financial Assets Pledged as Collateral

		Unaudited	Unaudited	Unaudited	Unaudited	Audited
$ millions		30/06/2011		30/06/2010		30/09/2010
Trading securities encumbered through repurchase agreements		645		168		222
Total tangible assets of UDC Finance Limited pledged as collateral for secured
stock		2,066		1,942		2,111
Total financial assets pledged as collateral		2,711		2,110		2,333

8. Deposits and Other Borrowings

Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited
$ millions Note 30/06/2011 30/06/2010 30/09/2010
Certificates of deposit 2,304 3,278 3,245
Term deposits 35,297 33,049 34,687
Demand deposits bearing interest 20,819 19,151 18,714
Deposits not bearing interest 5,046 4,675 4,964
Secured debenture stock 7 1,583 1,371 1,378
Commercial paper 3,420 10,315 7,307
Total deposits and other borrowings 68,469 71,839 70,295

9. Related Party Transactions

		Unaudited	Unaudited	Audited
		30/06/2011 30/06/2010 30/09/2010
Total due from related parties		3,366 2,126 4,451
Total due to related parties		18,234 16,877 19,303

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

10. Liquidity Portfolio

ANZ New Zealand holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The size of ANZ New Zealand’s liquidity portfolio is based on the amount required to meet its liquidity policy.

Liquidity Portfolio

Liquidity Portfolio
			Unaudited
$ millions			30/06/2011
Balances with central banks			1,356
Securities purchased under agreement to resell			1,882
Certificates of deposit			697
Government, local body stock and bonds			4,838
Government treasury bills			211
Other bonds			3,155
Total liquidity portfolio			12,139

11. Capital Adequacy

Overseas Banking Group Basel II capital adequacy ratio (unaudited)

				Ultimate Parent Bank
	Overseas Banking Group
				(Extended Licensed Entity)
	30/06/2011 30/06/2010 30/09/2010 31/03/2011 31/03/2010 30/09/2010
	10.6% 10.3% 10.1% 11.4% 11.9% 11.0% 11.8% 12.6% 11.9% 12.6% 13.7% 12.3%
Tier One Capital
Total Capital

For calculation of minimum capital requirements under Pillar I of the Basel II Accord, APRA has accredited the Overseas 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 Ultimate Parent Bank is required to hold a minimum Prudential Capital Ratio ("PCR") as determined by APRA. The Overseas Banking Group exceeded the minimum capital adequacy requirements set by APRA as at 30 June 2011 and for the comparative prior periods.

The Overseas Banking Group is required to publicly disclose Pillar III financial information as at 30 June 2011. The Overseas Banking Group's Basel II Pillar 3 Disclosure document for the nine months ended to 30 June 2011, in accordance with APS 330, discloses capital adequacy ratios calculated under the Basel II methodology. These documents can be accessed at the website anz.com.

Risk weighted credit risk exposures

Risk weighted exposures for ANZ New Zealand and NZ Branch have been derived in accordance with the RBNZ document entitled 'Capital Adequacy Framework (Basel I Approach)' ("BS2") dated June 2011. The credit equivalent amounts for market related contracts are calculated using the current exposure method.

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

Total Risk Weighted Exposures of ANZ New Zealand as at 30 June 2011 (Unaudited)

				Principal	Risk weighted
On-balance sheet exposures				amount Risk weight	exposure
				$m $m
Cash and short term claims on Government				2,988 0% -
Long term claims on Government				6,077 10% 608
Claims on banks				4,700 20% 940
Claims on public sector entities				746 20% 149
Residential mortgages				53,488 50% 26,744
Other				43,181 100% 43,181
Non risk weighted assets				14,109 n/a -
Total on balance sheet exposures				125,289 71,622
			Credit Credit Average
		Principal conversion equivalent counterparty Risk weighted
Off-balance sheet exposures		amount factor amount risk weight exposure
		$m $m $m
Direct credit substitutes		1,970 100% 1,970 42% 831
Commitments with certain drawdown		472 100% 472 62% 291
Transaction related contingent items		687 50% 344 67% 231
Short term, self liquidating trade related contingencies		80 20% 16 100% 16

Market risk

The aggregate market risk exposures below have been calculated in accordance with the RBNZ document ‘Capital Adequacy Framework (Standardised Approach)’ dated June 2011 (“BS2A”).

The peak end-of-day market risk exposures for the period are calculated separately for each category of exposure and may not have occurred at the same time.

	Implied risk weighted
	exposure	Aggregate capital charge
Unaudited	As at Peak As at Peak
30/06/2011	$m $m $m $m
Interest rate risk	3,818 4,232 305 339
Foreign currency risk	43 67 3 5
Equity risk	79 80 6 6
	3,940 314

Australia and New Zealand Banking Group Limited - New Zealand Branch

13

Notes to the Financial Statements

Retail mortgages by loan-to-valuation ratio (“LVR”)

As required by the RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by ANZ New Zealand's valuation of the security property at origination of the exposure. Off balance sheet lending includes undrawn and partially drawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing lending which may or may not be accepted by the customer.

Retail mortgages by LVR for ANZ New Zealand as	Retail mortgages by LVR for ANZ New Zealand as	at 30 June 2011 (Unaudited)	at 30 June 2011 (Unaudited)	On-balance	Off-balance
$ millions				sheet	sheet	Total
LVR range
0% - 80%				39,981	4,959	44,940
80% - 90%				6,425	626	7,051
Over 90%				4,926	275	5,201
Total				51,332	5,860	57,192

12. Concentrations of Credit Risk to Individual Counterparties

ANZ New Zealand 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 three month period ending 30 June 2011 there were no individual counterparties (excluding connected parties, governments and banks with long term credit ratings of A- or above) where ANZ New Zealand’s period end or peak endof-day credit exposure equalled or exceeded 10% of the Overseas Banking Group’s equity (as at the end of the period).

This credit exposure information does not include exposures to counterparties if they are booked outside New Zealand.

13. Notes to the Condensed Cash Flow Statement

Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited
$ millions 9 months to 9 months to Year to
30/06/2011 30/06/2010 30/09/2010
Reconciliation of profit after income tax to net cash flows used in operating activities
Profit after income tax 735 620 867
Non-cash items 245 499 588
Deferrals or accruals of past or future operating cash receipts or payments (1,944) (1,844) (2,819)
Items classified as investing/financing 31 42 56
Net cash flows used in operating activities (933) (683) (1,308)
Unaudited Unaudited Audited
$ millions 30/06/2011 30/06/2010 30/09/2010
Reconciliation of cash and cash equivalents to the balance sheet
Liquid assets 2,205 1,907 2,239
Due from other financial institutions - less than 90 days 2,057 598 1,339
Total cash and cash equivalents 4,262 2,505 3,578

14. Insurance business

ANZ New Zealand conducts insurance business through companies in the OnePath Insurance Holdings (NZ) Limited group. The aggregate amount of insurance business in this group comprises assets totalling $390 million (30/06/2010: $349 million; 30/09/2010 $337 million), which is 0.3% (30/06/2010: 0.3%; 30/09/2010 0.3%) of the total consolidated assets of ANZ New Zealand.

Australia and New Zealand Banking Group Limited - New Zealand Branch

14

Notes to the Financial Statements

15. Credit Related Commitments and Contingent Liabilities

		Face or contract value	Face or contract value	Face or contract value	Face or contract value
		Unaudited		Unaudited		Audited
$ millions		30/06/2011		30/06/2010		30/09/2010
Credit related commitments
Commitments with certain drawdown due within one year		472		582		493
Commitments to provide financial services		21,745		21,327		20,352
Total credit related commitments		22,217		21,909		20,845
Contingent liabilities
Financial guarantees		1,919		1,666		1,686
Standby letters of credit		51		53		60
Transaction related contingent items		921		878		898
Trade related contingent liabilities		80		97		97
Total contingent liabilities		2,971		2,694		2,741

ANZ New Zealand 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 amount represents the maximum potential amount that could be lost if the counterparty fails to meet its financial obligations. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements.

Other contingent liabilities

ANZ New Zealand has other contingent liabilities in respect of actual and possible claims and court proceedings. An assessment of ANZ New Zealand’s likely loss in respect of these matters has been made on a case-by-case basis and provision made where deemed necessary.

16. Additional Disclosures

NZ Branch Funding	NZ Branch Funding	NZ Branch Funding
Unaudited
$ millions 30/06/2011
Total liabilities of the NZ Branch less amounts due to related parties 64
Overseas Banking Group Profitability and Size
Unaudited
AUD millions 31/03/2011
Net profit after tax for the 6 months ended 31/03/2011 2,669
Net profit after tax for the 12 months ended 31/03/2011 as a percentage of average total assets 1.0%
Total assets as at 31/03/2011 537,478
Percentage change in total assets in the 12 months ended 31/03/2011 6.1%
Overseas Banking Group asset quality
Unaudited
AUD millions 31/03/2011
Gross impaired assets 6,221
Gross impaired assets as a percentage of total assets 1.2%
Total individually assessed provisions for impairment 1,717
Individually assessed provisions for impairment as a percentage of gross impaired assets 27.6%
Collective provision for credit impairment 3,177

Australia and New Zealand Banking Group Limited - New Zealand Branch

15

Notes to the Financial Statements

17. Subsequent Events

On 12 August 2011 the Bank’s Board resolved to repay, on 15 September 2011, a subordinated loan of AUD 44 million and subordinated fixed rate bonds of $350 million, which had original maturities of 15 September 2016.

Australia and New Zealand Banking Group Limited - New Zealand Branch

16

Directors’ and New Zealand Chief Executive Officer’s Statement

As at the date on which this Disclosure Statement is signed, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive Officer – NZ Branch believes, that:

• (i) The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order (No 2) 2011;

• (ii) The Disclosure Statement is not false or misleading.

Over the nine months ended 30 June 2011, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive Officer – NZ Branch believes that:

• (i) The Ultimate Parent Bank has complied with all Conditions of Registration that applied during that period;

• (ii) The Ultimate Parent Bank had systems in place to monitor and control adequately ANZ New Zealand’s material risks, including credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk and other business risks, and that those systems were being properly applied.

This Disclosure Statement is dated 18 August 2011, and has been signed by the Chairman of the Ultimate Parent Bank, as agent for all Directors, and by the Chief Executive Officer – NZ Branch.

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J P Morschel Chairman

F J Brown Chief Executive Officer – NZ Branch

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Independent Auditors’ Review Report

To the Directors of Australia and New Zealand Banking Group Limited - New Zealand Branch

We have reviewed pages 3 to 15 of the interim financial statements of Australia and New Zealand Banking Group Limited – New Zealand Branch and its related entities („ANZ New Zealand‟) prepared and disclosed in accordance with the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order (No 2) 2011 (the „Order‟) and the supplementary information prescribed in Schedules 3, 6, 8, 9, 10, 12 and 14 of the Order. The interim financial statements, and supplementary information, provide information about the past financial performance and cash flows of ANZ New Zealand and its financial position as at 30 June 2011.

Directors’ responsibilities

The Directors of Australia and New Zealand Banking Group Limited - New Zealand Branch are responsible for the preparation and presentation of the Disclosure Statement, which includes interim financial statements prepared in accordance with Clause 26 of the Order which give a true and fair view of the financial position of ANZ New Zealand as at 30 June 2011 and its financial performance and cash flows for the nine 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 Disclosure Statement 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 to which it relates in accordance with Schedules 3, 6, 8, 9, 10, 12 and 14 of the Order.

Reviewers’ responsibilities

We are responsible for reviewing the interim financial statements and the supplementary information, disclosed in accordance with Schedules 3, 6, 8, 9, 10, 12 and 14 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 believe that the interim financial statements have not been prepared, in all material respects, in accordance with New Zealand Equivalent to International Accounting Standard 34 (“NZ IAS 34”): Interim Financial Reporting and do not present a true and fair view of the financial position of ANZ New Zealand as at 30 June 2011 and its financial performance and cash flows for the nine months ended on that date.

We are responsible for reviewing the supplementary information (excluding the supplementary information relating to capital adequacy) 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 believe that the supplementary information does not fairly state the matters to which it relates in accordance with Schedules 6, 8, 10, 12 and 14 of the Order.

We are responsible for reviewing the supplementary information relating to credit and market risk exposures and capital adequacy in order to state whether, on the basis of the procedures described below, anything has come to our attention that would cause us to believe that the information disclosed in accordance with Schedule 9 is not in all material respects prepared in accordance with the Capital Adequacy Framework (Basel I Approach) (BS2) and Capital Adequacy Framework (Standardised Approach) (BS2A); and disclosed in accordance with Schedule 9.

We have performed our review in accordance with the review engagement standard RS-1 Statement of Review Engagement Standards issued by the New Zealand Institute of Chartered Accountants. A review is limited primarily to enquiries of ANZ New Zealand personnel and analytical review procedures applied to the financial data, and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Our firm has also provided other services to ANZ New Zealand in relation to other audit related services. Partners and employees of our firm may also deal with ANZ New Zealand on normal terms within the ordinary course of trading activities of the business of ANZ New Zealand. There are, however, certain restrictions on borrowings which the partners and employees of our firm can have with ANZ New Zealand. These matters have not impaired our independence as auditors of ANZ New Zealand. The firm has no other relationship with, or interest in, ANZ New Zealand.

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Review Opinion

We have examined the interim financial statements including the supplementary information and based on our review, which is not an audit, nothing has come to our attention that causes us to believe that:

• a. the interim financial statements (excluding the supplementary information) have not been prepared, in all material respects, in accordance with NZ IAS 34: Interim Financial Reporting and do not present a true and fair view of the financial position of ANZ New Zealand as at 30 June 2011 and its financial performance and cash flows for the nine months ended on that date;

• b. the supplementary information prescribed by Schedules 6, 8, 10, 12 and 14 of the Order does not fairly state the matters to which it relates in accordance with those Schedules; and

• c. the supplementary information relating to credit and market risk exposures and capital adequacy prescribed by Schedule 9 of the Order, is not in all material respects prepared in accordance with Capital Adequacy Framework (Basel 1 Approach) (BS2) and Capital Adequacy Framework (Standardised Approach) (BS2A), and disclosed in accordance with Schedule 9 of the Order.

Our review was completed on 18 August 2011 and our review opinion is expressed as at that date.

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Wellington