Australia and New Zealand Banking Group Ltd. — Interim / Quarterly Report 2012

Feb 19, 2012

==> picture [596 x 243] intentionally omitted <==

ANZ National Bank Limited Disclosure Statement

FOR THE THREE MONTHS ENDED 31 DECEMBER 2011 | NUMBER 64 ISSUED FEBRUARY 2012

==> picture [596 x 286] intentionally omitted <==

ANZ National Bank Limited

Disclosure Statement

For the three months ended 31 December 2011

Contents

General Disclosures 2

Income Statement and Statement of Comprehensive Income 3 Statement of Changes in Equity 4 Balance Sheet 5 Condensed Cash Flow Statement 6 Notes to the Financial Statements 7 Directors’ Statement 15 Auditors’ Report 16

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 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 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 Disclosure Statements (New Zealand Incorporated Registered Banks) Order (No 4) 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.

ANZ National Bank Limited

General Disclosures

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

Credit Rating Information

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

On 1 December 2011, Standard and Poor’s downgraded the Bank’s long-term senior unsecured debt and deposit ratings from AA outlook stable to AA- outlook stable. This followed a similar one notch downgrade on the Ultimate Parent Bank and other major Australian banks.

On 30 January 2012, Fitch changed the Outlook on the Bank’s long-term senior unsecured debt and deposit ratings from positive to negative. This occurred simultaneously to a similar change in the outlook of ratings of the Ultimate Parent Bank and other major Australian banks.

The Bank’s Credit Ratings are:

==> picture [225 x 64] intentionally omitted <==

----- Start of picture text -----

Current
Rating Agency Credit Rating Qualifi cation
Standard & Poor’s AA- Outlook Stable
Moody’s Investors Service Aa3 Outlook Stable
Fitch Ratings AA- Outlook Negative
----- End of picture text -----

Conditions of Registration

The conditions of registration applying to the Bank have been amended with effect from 31 December 2011 to update references to RBNZ documents, and to include a new condition of registration that specifies both notification and non-objection thresholds for acquisitions or business combinations. The Bank is required to notify the RBNZ of intended acquisitions or business combinations that exceed the notification threshold at least 10 working days prior to the date that the acquisition or business combination takes effect. Acquisitions or business combinations that exceed the non-objection threshold also require a notice of nonobjection from the RBNZ before they may proceed.

Directorate

There have been no changes to directors since 30 September 2011, the balance date of the last full year Disclosure Statement.

Auditors

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

Guarantors

As at the date of signing of this Disclosure Statement the only material obligations of the Bank that are guaranteed are debt securities with a carrying value as at 31 December 2011 of $2,290 million for which the Crown has issued a Guarantee Eligibility Certificate under the New Zealand Wholesale Funding Guarantee Facility (“Crown Wholesale Guarantee”). The Crown closed the Crown Wholesale Guarantee to new debt securities on 30 April 2010. The closure did not affect debt securities previously issued with the benefit of Crown Wholesale Guarantee.

Copies of the Wholesale Deed, and any Guarantee Eligibility Certificate issued by the Crown in respect of the Bank, are available on the Treasury website treasury.govt.nz. The address for service for any demand on the Crown under the Crown Wholesale Guarantee is The Treasurer, New Zealand Debt Management Office, 1 The Terrace, Wellington. Further information on the Crown Wholesale Guarantee is provided in the Disclosure Statement for the year ended 30 September 2011 which is available at no charge:

• a) on the Bank’s websites anz.co.nz and nationalbank.co.nz; and

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

ANZ National Bank Limited

Income Statement

==> picture [471 x 227] intentionally omitted <==

----- Start of picture text -----

Unaudited Unaudited Audited
3 months to 3 months to Year to
$ millions Note 31/12/2011 31/12/2010 30/09/2011
Interest income 1,504 1,618 6,179
Interest expense 836 982 3,620
Net interest income 668 636 2,559
Net trading gains 39 40 228
Net funds management and insurance income 82 56 265
Other operating income 2 203 83 361
Share of profit of equity accounted associates and jointly controlled entities - - 2
Operating income 992 815 3,415
Operating expenses 402 418 1,686
Profit before provision for credit impairment 590 397 1,729
Provision for credit impairment 40 29 178
Profit before income tax 550 368 1,551
Income tax expense 150 110 452
Profit after income tax 400 258 1,099
----- End of picture text -----

Statement of Comprehensive Income

==> picture [471 x 114] intentionally omitted <==

----- Start of picture text -----

Unaudited Unaudited Audited
3 months to 3 months to Year to
$ millions 31/12/2011 31/12/2010 30/09/2011
Profit after income tax 400 258 1,099
Unrealised gains / (losses) recognised directly in equity 62 (45) 72
Realised losses / (gains) transferred to income statement (4) 14 (38)
Actuarial gain / (loss) on defined benefit schemes - - (64)
Income tax credit / (expense) on items recognised directly in equity (13) 7 11
Total comprehensive income for the period 445 234 1,080
----- End of picture text -----

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

ANZ National Bank Limited

Statement of Changes in Equity

==> picture [471 x 421] intentionally omitted <==

----- Start of picture text -----

Available- Total equity
Ordinary for-sale Cash fl ow attributable to Non-
share revaluation hedging Retained owners of the controlling
$ millions capital reserve reserve earnings parent entity entities Total equity
As at 1 October 2010 6,943 58 102 3,342 10,445 1 10,446
Profit after income tax attributable to parent - - - 258 258 - 258
Valuation loss recognised in other
- (6) (39) - (45) - (45)
comprehensive income
Losses transferred to income statement - 12 2 - 14 - 14
Income tax credit / (expense) on items
- (4) 11 - 7 - 7
recognised directly in equity
Total comprehensive income for the period - 2 (26) 258 234 - 234
As at 31 December 2010 (Unaudited) 6,943 60 76 3,600 10,679 1 10,680
As at 1 October 2010 6,943 58 102 3,342 10,445 1 10,446
Profit after income tax attributable to parent - - - 1,099 1,099 - 1,099
Valuation gain recognised in other
- 21 51 - 72 - 72
comprehensive income
Losses / (gains) transferred to income statement - (42) 4 - (38) - (38)
Actuarial loss on defined benefit schemes - - - (64) (64) - (64)
Income tax credit / (expense) on items
- 9 (16) 18 11 - 11
recognised directly in equity
Total comprehensive income for the period - (12) 39 1,053 1,080 - 1,080
Ordinary dividend paid - - - (700) (700) - (700)
Movement in non-controlling interests - - - - - (1) (1)
As at 30 September 2011 (Audited) 6,943 46 141 3,695 10,825 - 10,825
Profit after income tax attributable to parent - - - 400 400 - 400
Valuation gain recognised in other
- 14 48 - 62 - 62
comprehensive income
Gains transferred to income statement - - (4) - (4) - (4)
Income tax expense on items recognised
- - (12) (1) (13) - (13)
directly in equity
Total comprehensive income for the period - 14 32 399 445 - 445
As at 31 December 2011 (Unaudited) 6,943 60 173 4,094 11,270 - 11,270
----- End of picture text -----

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

ANZ National Bank Limited

Balance Sheet

==> picture [471 x 554] intentionally omitted <==

----- Start of picture text -----

Unaudited Unaudited Audited
$ millions Note 31/12/2011 31/12/2010 30/09/2011
Assets
Liquid assets 2,340 2,168 2,455
Due from other financial institutions 1,186 2,722 3,685
Trading securities 10,321 7,395 9,466
Derivative financial instruments 12,139 8,939 14,160
Current tax assets - 53 -
Available-for-sale assets 255 1,724 411
Net loans and advances 4 83,516 85,298 83,610
Investments backing insurance policyholder liabilities 116 73 97
Insurance policy assets 231 149 200
Due from Immediate Parent Company - 121 -
Shares in associates and jointly controlled entities 99 144 100
Other assets 663 949 854
Deferred tax assets 88 220 139
Premises and equipment 322 316 325
Goodwill and other intangible assets 3,508 3,532 3,510
Total assets 114,784 113,803 119,012
Interest earning and discount bearing assets 96,769 98,435 98,214
Liabilities
Due to other financial institutions 969 1,246 2,236
Deposits and other borrowings 8 69,387 69,959 69,238
Due to Immediate Parent Company 75 - 174
Derivative financial instruments 12,524 9,624 14,174
Current tax liabilities 42 - 17
Payables and other liabilities 1,504 1,682 2,645
Provisions 278 266 309
Bonds and notes 16,734 17,951 17,406
Loan capital 2,001 2,395 1,988
Total liabilities 103,514 103,123 108,187
Net assets 11,270 10,680 10,825
Represented by:
Share capital 6,943 6,943 6,943
Reserves 233 136 187
Retained earnings 4,094 3,600 3,695
Parent shareholder’s equity 11,270 10,679 10,825
Non-controlling interests - 1 -
Total equity 11,270 10,680 10,825
Interest and discount bearing liabilities 83,566 86,027 85,728
----- End of picture text -----

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

ANZ National Bank Limited

Condensed Cash Flow Statement

==> picture [471 x 297] intentionally omitted <==

----- Start of picture text -----

Unaudited Unaudited Audited
3 months to 3 months to Year to
$ millions 31/12/2011 31/12/2010 30/09/2011
Cash flows from operating activities
Interest received 1,466 1,576 6,074
Interest paid (832) (869) (3,573)
Other cash inflows provided by operating activities 262 263 1,103
Other cash outflows used in operating activities (543) (513) (1,828)
Cash flows from operating profits before changes in operating assets and liabilities 353 457 1,776
Net changes in operating assets and liabilities (2,098) (907) 1,458
Net cash flows provided by / (used in) operating activities (1,745) (450) 3,234
Cash flows from investing activities
Cash inflows provided by investing activities 4 - 69
Cash outflows used in investing activities (15) (39) (119)
Net cash flows used in investing activities (11) (39) (50)
Cash flows from financing activities
Cash inflows provided by financing activities 867 2,782 4,172
Cash outflows used in financing activities (1,725) (1,508) (4,793)
Net cash flows provided by / (used in) financing activities (858) 1,274 (621)
Net increase / (decrease) in cash and cash equivalents (2,614) 785 2,563
Cash and cash equivalents at beginning of the period 6,140 3,577 3,577
Cash and cash equivalents at end of the period 3,526 4,362 6,140
----- End of picture text -----

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

ANZ National Bank Limited

Notes to the Financial Statements

1. Significant Accounting Policies

(i) Reporting entity and statement of compliance

These financial statements are for the Banking Group for the three months ended 31 December 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 the Banking Group’s financial statements for the year ended 30 September 2011.

(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 the Banking Group are consistent with those adopted and disclosed in the previous full year 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

• Certain 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 for which the assets are held.

(vi) Principles of consolidation

• The financial statements consolidate the financial statements of the Bank and its controlled entities.

2. Operating Income

Other operating income includes a fair value gain of $79 million (31/12/2010 $38 million loss; 30/09/2011 $99 million loss) 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 $124 million (31/12/2010 $121 million; 30/09/2011 $460 million).

ANZ National Bank Limited

Notes to the Financial Statements

3. Segmental Analysis

For segment reporting purposes, the Banking Group 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.

Segmental reporting has been updated to reflect minor changes to the Banking Group’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 the Banking Group’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. The Banking Group’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]

==> picture [471 x 224] intentionally omitted <==

----- Start of picture text -----

$ millions Retail Commercial Institutional Other [2] Total
Unaudited 3 months to 31/12/2011
External revenues 292 711 195 (206) 992
Intersegment revenues 55 (349) (30) 324 -
Total revenues 347 362 165 118 992
Profit before income tax 133 202 115 100 550
Unaudited 3 months to 31/12/2010
External revenues 286 778 120 (369) 815
Intersegment revenues 16 (405) 30 359 -
Total revenues 302 373 150 (10) 815
Profit before income tax 83 208 115 (38) 368
Audited year to 30/09/2011
External revenues 1,176 2,945 613 (1,319) 3,415
Intersegment revenues 148 (1,483) 19 1,316 -
Total revenues 1,324 1,462 632 (3) 3,415
Profit before income tax 418 827 482 (176) 1,551
----- End of picture text -----

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

• 2 This segment has negative external revenues as this segment incurs funding costs on behalf of the Banking Group and is reimbursed internally.

ANZ National Bank Limited

Notes to the Financial Statements

4. Net Loans and Advances

==> picture [471 x 190] intentionally omitted <==

----- Start of picture text -----

Unaudited Unaudited Audited
$ millions Note 31/12/2011 31/12/2010 30/09/2011
Overdrafts 1,603 1,756 1,698
Credit card outstandings 1,439 1,435 1,367
Term loans - housing 43,539 43,580 43,785
Term loans - non-housing 37,546 39,224 37,398
Finance lease receivables 792 746 768
Gross loans and advances 84,919 86,741 85,016
Provision for credit impairment 6 (1,133) (1,326) (1,156)
Unearned finance income (260) (272) (256)
Fair value hedge adjustment 7 173 22
Deferred fee revenue and expenses (57) (54) (51)
Capitalised brokerage/mortgage origination fees 40 36 35
Total net loans and advances 83,516 85,298 83,610
----- End of picture text -----

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of $9,915 million as at 31 December 2011 (31/12/2010 $10,336 million, 30/09/2011 $9,931 million). These assets qualify for derecognition as the Bank does not retain a continuing involvement in the transferred assets.

5. Impaired and Past Due Assets

==> picture [471 x 148] intentionally omitted <==

----- Start of picture text -----

Retail Other retail Non retail
$ millions mortgages exposures exposures Total
Unaudited 31/12/2011
Total individually impaired assets 390 49 1,204 1,643
Loans that are at least 90 days past due but not impaired 120 38 89 247
Unaudited 31/12/2010
Total individually impaired assets 498 74 1,423 1,995
Loans that are at least 90 days past due but not impaired 160 43 116 319
Audited 30/09/2011
Total individually impaired assets 451 61 1,194 1,706
Loans that are at least 90 days past due but not impaired 133 38 117 288
----- End of picture text -----

ANZ National Bank Limited

Notes to the Financial Statements

6. Provision for Credit Impairment

==> picture [471 x 316] intentionally omitted <==

----- Start of picture text -----

Retail Other retail Non retail
$ millions mortgages exposures exposures Total
Unaudited 31/12/2011
Collective provision 116 142 390 648
Individual provision 137 29 319 485
Total provision for credit impairment 253 171 709 1,133
Collective provision credit (5) (5) (4) (14)
Individual provision charge 5 12 37 54
Total charge in income statement - 7 33 40
Unaudited 31/12/2010
Collective provision 103 144 491 738
Individual provision 187 50 351 588
Total provision for credit impairment 290 194 842 1,326
Collective provision credit (8) (5) (42) (55)
Individual provision charge 3 22 59 84
Total charge in income statement (5) 17 17 29
Audited 30/09/2011
Collective provision 120 147 395 662
Individual provision 148 37 309 494
Total provision for credit impairment 268 184 704 1,156
Collective provision charge / (credit) 9 (2) (138) (131)
Individual provision charge 24 79 206 309
Total charge in income statement 33 77 68 178
----- End of picture text -----

ANZ National Bank Limited

Notes to the Financial Statements

7. Financial Assets Pledged as Collateral

==> picture [471 x 78] intentionally omitted <==

----- Start of picture text -----

Unaudited Unaudited Audited
$ millions 31/12/2011 31/12/2010 30/09/2011
Trading securities encumbered through repurchase agreements 244 99 1,219
Residential mortgages pledged as security for covered bonds 2,511 - -
Total tangible assets of UDC Finance Limited pledged as collateral for secured stock 2,121 2,162 2,007
Total financial assets pledged as collateral 4,876 2,261 3,226
----- End of picture text -----

8. Deposits and Other Borrowings

==> picture [471 x 120] intentionally omitted <==

----- Start of picture text -----

Unaudited Unaudited Audited
$ millions Note 31/12/2011 31/12/2010 30/09/2011
Certificates of deposit 2,690 1,843 2,454
Term deposits 32,949 36,147 33,799
Demand deposits bearing interest 23,397 19,031 21,589
Deposits not bearing interest 5,278 5,539 5,118
Secured debenture stock 7 1,393 1,602 1,488
Commercial paper 3,680 5,797 4,790
Total deposits and other borrowings 69,387 69,959 69,238
----- End of picture text -----

9. Related Party Transactions

==> picture [471 x 50] intentionally omitted <==

----- Start of picture text -----

Unaudited Unaudited Audited
$ millions 31/12/2011 31/12/2010 30/09/2011
Total due from related parties 2,875 3,198 3,028
Total due to related parties 6,705 6,020 8,435
----- End of picture text -----

10. 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 cash equivalents and those classified as operating assets in the Statement of Cash Flows.

Liquidity Portfolio

==> picture [471 x 120] intentionally omitted <==

----- Start of picture text -----

Unaudited
$ millions 31/12/2011
Balances with central banks 1,382
Securities purchased under agreement to resell 806
Certificates of deposit 140
Government, local body stock and bonds 6,652
Government treasury bills 17
Other bonds 3,529
Total liquidity portfolio 12,526
----- End of picture text -----

ANZ National Bank Limited

Notes to the Financial Statements

11. Capital Adequacy

Capital ratios of the Banking Group under the Basel II internal models based approach (Unaudited)

==> picture [471 x 175] intentionally omitted <==

----- Start of picture text -----

31/12/2011 31/12/2010 30/09/2011
Tier One Capital 11.27% 10.05% 10.02%
RBNZ minimum Tier One Capital ratio 4.00% 4.00% 4.00%
Total Capital 14.22% 13.43% 12.74%
RBNZ minimum Total Capital ratio 8.00% 8.00% 8.00%
Capital as at 31 December 2011 (Unaudited) $m
Tier One Capital 11,270
Less deductions from Tier One Capital 3,726
Total Tier One Capital 7,544
Tier Two Capital 2,001
Less deductions from Tier Two Capital 27
Total Capital 9,518
----- End of picture text -----

==> picture [471 x 249] intentionally omitted <==

----- Start of picture text -----

Total required capital as at 31 December 2011 (Unaudited)
Risk weighted
exposure or implied
Exposure risk weighted Total capital
$ millions at default exposure [1] requirement
Corporate exposures 44,737 29,230 2,338
Sovereign exposures 9,361 88 7
Bank exposures 10,252 2,066 165
Retail mortgage exposures 46,638 11,746 940
Other retail exposures 8,963 5,833 467
Total exposures subject to internal ratings based approach 119,951 48,963 3,917
Specialised lending exposures subject to slotting approach 7,524 7,401 592
Exposures subject to standardised approach 268 254 20
Equity exposures 236 971 78
Other exposures 2,405 778 62
Total credit risk 130,384 58,367 4,669
Operational risk n/a 5,088 407
Market risk n/a 3,485 279
Total capital requirement 130,384 66,940 5,355
----- End of picture text -----

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

The Banking Group previously recorded a Supervisory adjustment to the risk weighted exposures of its residential mortgage portfolio as required under the Conditions of Registration applying at the time. Following RBNZ approval of the Bank’s mortgage capital model this Supervisory adjustment is no longer required.

ANZ National Bank Limited

Pillar II capital for other material risks

The Banking Group has an Internal Capital Adequacy Assessment Process (“ICAAP”) which complies with the requirements of the Bank’s Conditions of Registration.

Under the Banking Group’s ICAAP it identifies and measures all “other material risks”, which are those material risks that are not explicitly captured in the calculation of the Banking Group’s tier one and total capital ratios. The other material risks identified by the Banking Group include business risk, pension risk, insurance risk, premises and equipment risk and capitalised origination fees risk.

The Banking Group’s internal capital allocation for these other material risks is $368 million (31/12/2010: $332 million; 30/09/2011: $317 million).

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 the Banking Group’s valuation of the security property at origination of the exposure. Off balance sheet exposures include undrawn and partially drawn residential mortgage loans as well as commitments to lend. Commitments to lend are formal offers for housing lending which may or may not be accepted by the customer.

As at 31/12/2011 (Unaudited)

==> picture [471 x 112] intentionally omitted <==

----- Start of picture text -----

$ millions On-balance sheet Off -balance sheet Total
LVR range
0% - 59% 17,183 3,152 20,335
60% - 69% 6,817 854 7,671
70% - 79% 9,159 1,141 10,300
80% - 89% 4,574 633 5,207
Over 90% 3,390 281 3,671
Total 41,123 6,061 47,184
----- End of picture text -----

12. 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 three month period ending 31 December 2011 there were no individual counterparties (excluding connected parties, governments and banks with long term credit ratings of A- or above) where the Banking Group’s period end or peak end-of-day credit exposure equalled or exceeded 10% of the Banking Group’s equity (as at the end of the period).

13. Insurance business

The Banking Group 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 $470 million (31/12/2010: $335 million; 30/09/2011 $438 million), which is 0.4% (31/12/2010: 0.3%; 30/09/2011 0.4%) of the total consolidated assets of the Banking Group.

ANZ National Bank Limited

14. Credit Related Commitments and Contingent Liabilities

==> picture [471 x 176] intentionally omitted <==

----- Start of picture text -----

Face or contract value
Unaudited Unaudited Audited
$ millions 31/12/2011 31/12/2010 30/09/2011
Credit related commitments
Commitments with certain drawdown due within one year 655 503 527
Commitments to provide financial services 22,339 21,883 22,526
Total credit related commitments 22,994 22,386 23,053
Contingent liabilities
Financial guarantees 1,820 1,852 1,753
Standby letters of credit 76 68 60
Transaction related contingent items 850 841 882
Trade related contingent liabilities 78 79 110
Total contingent liabilities 2,824 2,840 2,805
----- End of picture text -----

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 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

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.

15. Subsequent Events

On 2 February 2012 the Bank exercised its option to repay, on 2 March 2012, $250 million of loan capital with an original maturity of 2 March 2017.

On 14 February 2012 the Bank’s Board resolved to pay an ordinary dividend of $550 million no later than 31 March 2012.

Work to move to a single banking platform, as announced in November 2010, is well advanced, with testing and integration work expected to be completed later this calendar year. The Board of Directors of the Bank has approved additional expenditure for completion of the programme of around $110 million in technology and related costs.

ANZ National Bank Limited

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 (No 4) 2011; and

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

Over the three months ended 31 December 2011, after due enquiry, each Director believes that:

• (i) ANZ National Bank 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 National Bank Limited had systems in place to monitor and control adequately the Banking Group’s material risks, including credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operational risk and other business risks, and that 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, 17 February 2012. On that date, the Directors of the Bank were:

A J Carter

S C Elliott

==> picture [137 x 36] intentionally omitted <==

==> picture [62 x 52] intentionally omitted <==

==> picture [31 x 52] intentionally omitted <==

N M T Geary, CBE

D D Hisco

J F Judge

P R Marriott

==> picture [67 x 9] intentionally omitted <==

----- Start of picture text -----

M R P Smith, OBE
----- End of picture text -----

==> picture [87 x 37] intentionally omitted <==

==> picture [30 x 37] intentionally omitted <==

==> picture [103 x 51] intentionally omitted <==

==> picture [35 x 51] intentionally omitted <==

==> picture [64 x 46] intentionally omitted <==

==> picture [64 x 46] intentionally omitted <==

==> picture [71 x 44] intentionally omitted <==

==> picture [36 x 44] intentionally omitted <==

==> picture [58 x 59] intentionally omitted <==

==> picture [59 x 59] intentionally omitted <==

==> picture [82 x 9] intentionally omitted <==

----- Start of picture text -----

Sir Dryden Spring, Kt
----- End of picture text -----

==> picture [70 x 40] intentionally omitted <==

==> picture [70 x 40] intentionally omitted <==

Independent Auditors’ Review Report

To the Shareholder of ANZ National Bank Limited

We have reviewed pages 3 to 13 of the interim financial statements of ANZ National Bank Limited (the ‘Bank’) and its subsidiary companies (the ‘Banking Group’) prepared and disclosed in accordance with the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order (No 4) 2011 (the ‘Order’) and the supplementary information prescribed in Schedules 3, 6, 8, 12, 13, 16 and 18 of the Order. The interim financial statements, and supplementary information, provide information about the past financial performance and cash flows of the Banking Group and its financial position as at 31 December 2011.

Directors’ responsibilities

The Directors of ANZ National Bank 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 December 2011 and its financial performance and cash flows for the three months ended on that date. The Directors are also responsible for such internal controls as they 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, 12, 13, 16 and 18 of the Order.

Reviewers’ responsibilities

We are responsible for reviewing the interim financial statements and the supplementary information, disclosed in accordance with Clause 25, Schedules 3, 6, 8, 12, 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 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 the Banking Group as at 31 December 2011 and its financial performance and cash flows for the three 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, 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 the procedures described below, anything has come to our attention that cause us to believe that the information disclosed in accordance with Schedule 12 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 operational risk as accredited by the Reserve Bank of New Zealand and disclosed in accordance with Schedule 12 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 New Zealand Institute of Chartered Accountants. 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 services to the Banking Group in relation to other audit related services. 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 business 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 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 the Banking Group as at 31 December 2011 and its financial performance and cash flows for the three months ended on that date;

• b. the supplementary information prescribed by Schedules 6, 8, 13, 16 and 18 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 Capital Adequacy as required by Schedule 12 of the Order, is not in all material respects prepared in accordance with the Bank’s Conditions of Registration, with the Reserve Bank of New Zealand document Capital Adequacy Framework (Internal Models Based Approach) (BS2B), and with the Banking Group’s internal models for credit risk and operational risk as accredited by the Reserve Bank of New Zealand, and disclosed in accordance with Schedule 12 of the Order.

Our review was completed on 17 February 2012 and our review opinion is expressed as at that date.

==> picture [57 x 22] intentionally omitted <==

Wellington

==> picture [596 x 78] intentionally omitted <==

==> picture [34 x 31] intentionally omitted <==

anz.co.nz