Australia and New Zealand Banking Group Ltd. — Interim / Quarterly Report 2013

May 13, 2013

ANZ Bank New Zealand Limited Disclosure Statement FOR THE SIX MONTHS ENDED 31 MARCH 2013 | NUMBER 69 ISSUED MAY 2013

ANZ Bank New Zealand Limited

Disclosure Statement

For the six months ended 31 March 2013

Contents

Contents
General Disclosures	2
Income Statement	3
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	25
Independent Auditor’s Review Report	26

Glossary of Terms

In this Disclosure Statement 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, 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 10, 170-186 Featherston 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 2013; 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 Bank New Zealand Limited

2

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. The Bank’s credit ratings are:

Bank’s credit ratings are:
	Current Credit
Rating Agency	Rating	Qualification
Standard & Poor’s	AA-	Outlook Stable
Moody’s Investors Service	Aa3	Outlook Stable
Fitch Ratings	AA-	Outlook Stable

Guarantors

As at the date of signing of this Disclosure Statement the Banking Group has debt securities with a carrying value as at 31 March 2013 of $204 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 2012 which is available at no charge:

Changes to conditions of registration

The conditions of registration applying to the Bank were amended on 27 March 2013 to put into effect the RBNZ’s Basel III enhanced risk coverage policy as set out in the RBNZ document “Capital Adequacy Framework (Internal Models Based Approach)” issued in March 2013. This policy introduces new requirements affecting counterparty credit risk and central counterparty exposures.

Directorate

As at 13 May 2013 there have been no changes to the Directors of the Bank since 30 September 2012, the balance date of the last full year Disclosure Statement.

On 11 March 2013 the Bank announced that Joan Withers would become an independent Director, effective from 1 July 2013. The appointment has been approved by the Reserve Bank of New Zealand. Ms Withers is the former CEO of Fairfax Media and The Radio Network and is the Chairperson of Auckland International Airport Ltd and Mighty River Power Ltd, and is Deputy Chairperson of Television New Zealand. She has an MBA from the University of Auckland.

Auditor

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

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

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

Certain debt securities (“Covered Bonds”) issued by the Bank or its wholly owned subsidiary, ANZ New Zealand (Int’l) Limited, are guaranteed by ANZNZ Covered Bond Trust Limited (the “Covered 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 2013 of $2,926 million, pursuant to a guarantee which is secured over a pool of assets. The Covered Bond Guarantor’s address for service is Level 10, 141 Willis Street, Wellington, New Zealand. The Covered Bond Guarantor is not a member of the Banking Group and has no credit ratings applicable to its long term senior unsecured obligations payable in New Zealand dollars. The Covered Bonds have been assigned a long term rating of Aaa and AAA by Moody’s Investors Service and Fitch Ratings respectively. Details of the pool of assets that secure this guarantee are provided in Note 7.

ANZ Bank New Zealand Limited

3

Income Statement

Income Statement
		Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
$ millions	Note	31/03/2013	31/03/2012	30/09/2012
Interest income		2,991	2,995	6,017
Interest expense		1,699	1,649	3,335
Net interest income		1,292	1,346	2,682
Net trading gains		112	79	131
Net funds management and insurance income		134	139	298
Other operating income	2	171	268	573
Share of associates' profit		4	2	4
Operating income		1,713	1,834	3,688
Operating expenses		771	863	1,742
Profit before provision for credit impairment and income tax		942	971	1,946
Provision for credit impairment	6	40	95	193
Profit before income tax		902	876	1,753
Income tax expense		239	233	428
Profit after income tax		663	643	1,325

Statement of Comprehensive Income

		Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
$ millions		31/03/2013	31/03/2012	30/09/2012
Profit after income tax		663	643	1,325
Items that will not be reclassified to profit or loss
Actuarial gain / (loss) on defined benefit schemes		16	(2)	(25)
Income tax credit / (expense) relating to items not reclassified		(5)	-	6
Total items that will not be reclassified to profit or loss		11	(2)	(19)
Items that may be reclassified subsequently to profit or loss
Unrealised gains / (losses) recognised directly in equity		(39)	11	46
Realised gains transferred to income statement		(14)	(7)	(95)
Income tax credit relating to items that may be reclassified		15	5	-
Total items that may be reclassified subsequently to profit or loss		(38)	9	(49)
Total comprehensive income for the period		636	650	1,257

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

Statement of Changes in Equity	Statement of Changes in Equity
Ordinary share
		Available-
		for-sale	Cash flow
		revaluation	hedging Retained
$ millions capital reserve			reserve earnings Total equity
As at 1 October 2011 6,943 46			141 3,695 10,825
Profit after income tax - -			- 643 643
Unrealised gains / (losses) recognised directly in equity - 26			(15) - 11
Realised gains transferred to the income statement - -			(7) - (7)
Actuarial loss on defined benefit schemes - -			- (2) (2)
Income tax credit / (expense) on items recognised directly in
	- (1) 6 - 5
equity
Total comprehensive income for the period - 25 (16) 641 650
Ordinary dividend paid - - - (550) (550)
As at 31 March 2012 (Unaudited) 6,943 71 125 3,786 10,925
As at 1 October 2011 6,943 46 141 3,695 10,825
Profit after income tax - - - 1,325 1,325
Unrealised gains recognised directly in equity - 34 12 - 46
Realised gains transferred to the income statement - (83) (12) - (95)
Actuarial loss on defined benefit schemes - - - (25) (25)
Income tax credit on items recognised directly in equity - - - 6 6
Total comprehensive income for the period - (49) - 1,306 1,257
Ordinary dividend paid - - - (1,150) (1,150)
As at 30 September 2012 (Audited) 6,943 (3) 141 3,851 10,932
Profit after income tax - - - 663 663
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 - - - 16 16
Income tax credit / (expense) on items recognised directly in
	- - 15 (5) 10
equity
Total comprehensive income for the period - 1 (39) 674 636
Ordinary dividend paid - - - (465) (465)
As at 31 March 2013 (Unaudited) 6,943 (2) 102 4,060 11,103

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

Balance Sheet	Balance Sheet	Balance Sheet	Balance Sheet	Balance Sheet
Unaudited Unaudited Audited
$ millions Note 31/03/2013 31/03/2012 30/09/2012
Assets
Liquid assets 3,371 2,355 2,831
Due from other financial institutions 2,045 3,102 1,722
Trading securities 10,419 10,904 12,338
Derivative financial instruments 9,012 10,563 12,753
Current tax assets 53 76 15
Available-for-sale assets 873 252 57
Net loans and advances 4 87,882 84,467 86,678
Investments backing insurance policy liabilities 161 165 142
Insurance policy assets 313 231 301
Investments in associates 98 100 99
Other assets 936 935 592
Deferred tax assets 73 91 93
Premises and equipment 339 320 323
Goodwill and other intangible assets 3,502 3,500 3,505
Total assets 119,077 117,061 121,449
Interest earning and discount bearing assets 104,149 100,354 103,341
Liabilities
Due to other financial institutions 1,795 1,528 1,759
Deposits and other borrowings 8 75,224 70,914 73,652
Due to Immediate Parent Company 709 555 740
Derivative financial instruments 10,173 11,462 13,930
Payables and other liabilities 2,012 2,040 1,685
Provisions 272 338 339
Bonds and notes 16,611 17,562 17,244
Loan capital 1,178 1,737 1,168
Total liabilities 107,974 106,136 110,517
Net assets 11,103 10,925 10,932
Represented by:
Share capital 6,943 6,943 6,943
Reserves 100 196 138
Retained earnings 4,060 3,786 3,851
Total equity 11,103 10,925 10,932
Interest and discount bearing liabilities 89,633 87,425 89,299

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

Condensed Cash Flow Statement
		Unaudited	Unaudited	Audited
		6 months to	6 months to	Year to
$ millions		31/03/2013	31/03/2012	30/09/2012
Cash flows from operating activities
Interest received		2,960	2,964	5,991
Interest paid		(1,716)	(1,659)	(3,301)
Other cash inflows provided by operating activities		436	439	845
Other cash outflows used in operating activities		(1,123)	(1,148)	(2,023)
Cash flows from operating profits before changes in operating assets and liabilities		557	596	1,512
Net changes in operating assets and liabilities		1,459	(2,524)	(2,545)
Net cash flows provided by / (used in) operating activities		2,016	(1,928)	(1,033)
Cash flows from investing activities
Cash inflows provided by investing activities		1	16	16
Cash outflows used in investing activities		(56)	(38)	(95)
Net cash flows used in investing activities		(55)	(22)	(79)
Cash flows from financing activities
Cash inflows provided by financing activities		1,105	2,798	6,244
Cash outflows used in financing activities		(2,343)	(2,426)	(7,411)
Net cash flows provided by / (used in) financing activities		(1,238)	372	(1,167)
Net increase / (decrease) in cash and cash equivalents		723	(1,578)	(2,279)
Cash and cash equivalents at beginning of the period		3,255	5,534	5,534
Cash and cash equivalents at end of the period		3,978	3,956	3,255

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

ANZ Bank New Zealand Limited

7

Notes to the Financial Statements

1. Significant Accounting Policies

(i) Reporting entity and statement of compliance

These interim financial statements are for the Banking Group for the six months ended 31 March 2013. They have been 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 and the Order, and should be read in conjunction with the Banking Group’s financial statements for the year ended 30 September 2012.

(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 Margin on Services principles, 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, in the Balance Sheet as at 31 March 2012, collateral received of $604 million from derivative financial instruments asset to due to other financial institutions and collateral paid of $1,144 million from derivative financial instruments liability to due from other financial institutions.

(vi) Principles of consolidation

The financial statements consolidate the financial statements of the Bank and its subsidiaries.

2. Other Operating Income

	Unaudited	Unaudited	Audited
	6 months to	6 months to	Year to
$millions	31/03/2013	31/03/2012	30/09/2012
Net fee income	219	232	455
Fair value gain / (loss) on hedging activities and financial liabilities designated at fair value	(46)	29	14
Net gain on available for sale equity securities transferred to income statement	-	-	83
Other income	(2)	7	21
Total other operating income	171	268	573

ANZ Bank New Zealand Limited

8

Notes to the Financial Statements

3. Segmental Analysis

For segment reporting purposes, the Banking Group is organised into four major business segments - Retail, Commercial, Wealth 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 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 phone banking). Core products include current and savings accounts, unsecured lending (credit cards, personal loans and overdrafts) and home loans secured by mortgages over property. Retail distributes insurance and investment products on behalf of the Wealth 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.

Wealth

Wealth includes private banking and investment services provided to high net worth individuals, the OnePath wealth management and insurance businesses, and other investment products.

Institutional

Institutional provides financial services through a number of specialised units to large multi-banked corporations, often global, who require sophisticated product and risk management solutions. Those financial services include loan structuring, foreign exchange, wholesale money market services and transaction banking.

Other

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

Business segment analysis[1 ]

$ millions	Retail	Commercial	Wealth	Institutional	Other2	Total
Unaudited 6 months to 31/03/2013
External revenues	486	1,331	39	462	(605)	1,713
Intersegment revenues	83	(622)	72	(128)	595	-
Total revenues	569	709	111	334	(10)	1,713
Profit before income tax	217	458	42	227	(42)	902
Unaudited 6 months to 31/03/2012
External revenues	524	1,389	50	404	(533)	1,834
Intersegment revenues	41	(652)	70	(66)	607	-
Total revenues	565	737	120	338	74	1,834
Profit before income tax	203	415	45	235	(22)	876
Audited year to 30/09/2012
External revenues	1,019	2,744	111	804	(990)	3,688
Intersegment revenues	126	(1,293)	143	(168)	1,192	-
Total revenues	1,145	1,451	254	636	202	3,688
Profit before income tax	421	817	108	425	(18)	1,753

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 Bank New Zealand Limited

9

Notes to the Financial Statements

4. Net Loans and Advances

		Unaudited	Unaudited	Audited
$ millions	Note	31/03/2013 31/03/2012 30/09/2012
Overdrafts		1,718 1,986 1,881
Credit card outstandings		1,415 1,410 1,395
Term loans - housing		47,445 44,340 46,123
Term loans - non-housing		37,649 37,321 37,749
Finance lease receivables		817 800 806
Gross loans and advances		89,044 85,857 87,954
Provision for credit impairment	6	(951) (1,119) (1,054)
Unearned finance income		(266) (259) (258)
Fair value hedge adjustment		(15) (8) (2)
Deferred fee revenue and expenses		(60) (55) (60)
Capitalised brokerage/mortgage origination fees		130 51 98
Total net loans and advances		87,882 84,467 86,678

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of $9,491 million as at 31 March 2013 (31/03/2012 $9,303 million, 30/09/2012 $9,396 million). These assets qualify for derecognition as the Bank does not retain a continuing involvement in the transferred assets.

5. Impaired Assets, Past Due Assets and Other Assets Under Administration

$ millions	Retail	Other retail	Non retail
	mortgages	exposures	exposures	Total
Unaudited 31/03/2013
Balance at the beginning of the period	313	44	1,009	1,366
Transfers from productive	165	58	151	374
Transfers to productive	(1)	(1)	(30)	(32)
Assets realised or loans repaid	(151)	(15)	(207)	(373)
Write offs	(12)	(40)	(85)	(137)
Total impaired assets	314	46	838	1,198
Other assets under administration	-	-	-	-
Undrawn facilities with impaired customers	-	-	17	17
Unaudited 31/03/2012
Balance at the beginning of the period	471	61	1,194	1,726
Transfers from productive	155	61	341	557
Transfers to productive	(28)	(1)	(92)	(121)
Assets realised or loans repaid	(176)	(26)	(243)	(445)
Write offs	(32)	(43)	(47)	(122)
Total impaired assets	390	52	1,153	1,595
Other assets under administration	-	-	9	9
Undrawn facilities with impaired customers	-	-	28	28
Audited 30/09/2012
Balance at the beginning of the period	471	61	1,194	1,726
Transfers from productive	285	110	572	967
Transfers to productive	(61)	(1)	(111)	(173)
Assets realised or loans repaid	(327)	(43)	(515)	(885)
Write offs	(55)	(83)	(131)	(269)
Total impaired assets	313	44	1,009	1,366
Other assets under administration	-	-	-	-
Undrawn facilities with impaired customers	-	-	24	24

ANZ Bank New Zealand Limited

10

Notes to the Financial Statements

Other assets under administration

Other assets under administration are any loans, not being impaired or 90 days or more past due, where the customer is in any form of voluntary or involuntary administration, including receivership, liquidation, bankruptcy or statutory management.

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.

timely manner.
Ageing analysis of loans that are past due but not impaired
$ millions	Retail Other retail Non retail
	mortgages exposures exposures Total
Unaudited 31/03/2013
1 to 5 days	370 133 496 999
6 to 29 days	342 111 155 608
1 to 29 days	712 244 651 1,607
30 to 59 days	165 49 82 296
60 to 89 days	66 28 16 110
90 days or over	103 55 55 213
	1,046 376 804 2,226

6. Provision for Credit Impairment

Provision movement analysis	Retail	Other retail	Non retail
$ millions	mortgages	exposures	exposures	Total
Unaudited 31/03/2013
New and increased provisions	42	46	93	181
Write-backs	(29)	(11)	(58)	(98)
Recoveries of amounts written off previously	-	(8)	(2)	(10)
Individual provision charge	13	27	33	73
Collective provision credit	-	(13)	(20)	(33)
Total charge to income statement	13	14	13	40
Unaudited 31/03/2012
New and increased provisions	59	42	137	238
Write-backs	(38)	(8)	(43)	(89)
Recoveries of amounts written off previously	(1)	(8)	(5)	(14)
Individual provision charge	20	26	89	135
Collective provision credit	(12)	(20)	(8)	(40)
Total charge to income statement	8	6	81	95
Audited 30/09/2012
New and increased provisions	110	87	267	464
Write-backs	(73)	(15)	(100)	(188)
Recoveries of amounts written off previously	(1)	(17)	(7)	(25)
Individual provision charge	36	55	160	251
Collective provision credit	(16)	(22)	(20)	(58)
Total charge to income statement	20	33	140	193

ANZ Bank New Zealand Limited

11

Notes to the Financial Statements

Movement in provision for credit impairment	Retail	Other retail	Non retail
$ millions	mortgages	exposures	exposures	Total
Unaudited 31/03/2013
Collective provision
Balance at beginning of the period	104	125	375	604
Credit to income statement	-	(13)	(20)	(33)
Balance at end of the period	104	112	355	571
Individual provision
Balance at beginning of the period	119	25	306	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	20	244	380
Total provision for credit impairment	220	132	599	951
Unaudited 31/03/2012
Collective provision
Balance at beginning of the period	120	147	395	662
Credit to income statement	(12)	(20)	(8)	(40)
Balance at end of the period	108	127	387	622
Individual provision
Balance at beginning of the period	148	36	310	494
New and increased provisions net of write-backs	21	34	94	149
Bad debts written off	(32)	(43)	(47)	(122)
Discount unwind	(7)	(1)	(16)	(24)
Balance at end of the period	130	26	341	497
Total provision for credit impairment	238	153	728	1,119
Audited 30/09/2012
Collective provision
Balance at beginning of the year	120	147	395	662
Credit to income statement	(16)	(22)	(20)	(58)
Balance at end of the year	104	125	375	604
Individual provision
Balance at beginning of the year	148	36	310	494
New and increased provisions net of write-backs	37	72	167	276
Bad debts written off	(55)	(83)	(131)	(269)
Discount unwind	(11)	-	(40)	(51)
Balance at end of the year	119	25	306	450
Total provision for credit impairment	223	150	681	1,054

ANZ Bank New Zealand Limited

12

Notes to the Financial Statements

7. Financial Assets Pledged as Collateral

		Unaudited	Unaudited	Audited
$ millions		31/03/2013	31/03/2012	30/09/2012
Cash collateral given on derivative financial instruments		1,142	1,144	1,256
Trading securities encumbered through repurchase agreements		343	23	252
Residential mortgages pledged as security for covered bonds		5,548	3,982	4,977
Total tangible assets of UDC Finance Limited pledged as collateral for secured stock		2,125	2,105	2,103
Total financial assets pledged as collateral		9,158	7,254	8,588

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

Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited
$ millions Note 31/03/2013 31/03/2012 30/09/2012
Certificates of deposit 1,624 2,277 2,156
Term deposits 33,732 33,738 33,922
Demand deposits bearing interest 28,348 24,198 25,815
Deposits not bearing interest 5,717 4,787 4,838
Secured debenture stock 7 1,467 1,456 1,476
Commercial paper 4,336 4,458 5,445
Total deposits and other borrowings 75,224 70,914 73,652

9. Related Party Transactions

9. Related Party Transactions
	Unaudited	Unaudited	Audited
$ millions	31/03/2013	31/03/2012	30/09/2012
Total due from related parties	1,992	2,212	3,131
Total due to related parties	5,134	6,839	5,990

ANZ Bank New Zealand Limited

13

Notes to the Financial Statements

10. Capital Adequacy

Adoption of Basel III capital framework

Effective 1 January 2013, RBNZ and APRA have adopted the majority of Basel III capital reforms in New Zealand and Australia respectively. The Basel III reforms include: increased capital deductions from common equity tier 1 capital, an increase in capitalisation rates (including prescribed minimum capital buffers, fully effective 1 January 2014 in New Zealand and 1 January 2016 in Australia), tighter requirements around new tier 1 and tier 2 securities and transitional arrangements for existing tier 1 and tier 2 securities that do not conform to the new regulations. Other changes include capital requirements for counterparty credit risk and an increase in the asset value correlation with respect to exposures to large and unregulated financial institutions.

Capital ratios (unaudited)

Capital ratios (unaudited)
		Banking Group			Bank
	31/03/2013	31/03/2012	30/09/2012	31/03/2013	31/03/2012	30/09/2012
	Basel III	Basel II	Basel II	Basel III	Basel I	Basel I
Common equity tier one capital	10.2%	n/a	n/a	9.0%	n/a	n/a
Tier one capital	10.2%	10.9%	10.8%	9.0%	9.7%	9.5%
Total capital	11.8%	13.4%	12.5%	10.7%	11.4%	10.3%
Buffer ratio	5.7%	n/a	n/a
RBNZ minimum ratios:
Common equity tier one capital	4.5%	n/a	n/a
Tier one capital	6.0%	4.0%	4.0%
Total capital	8.0%	8.0%	8.0%

Capital of the Banking Group

Capital of the Banking Group	Capital of the Banking Group	Capital of the Banking Group
					Unaudited
$ millions					31/03/2013
Tier one capital
Common equity tier one capital
Paid up ordinary shares issued by the Bank					6,943
Retained earnings (net of appropriations)					4,060
Accumulated other comprehensive income and other disclosed reserves					100
Less deductions from common equity tier one capital
Goodwill and intangible assets, net of associated deferred tax liabilities					(3,502)
Deferred tax assets less deferred tax liabilities relating to temporary differences					(136)
Cash flow hedge reserve					(102)
Expected losses to extent greater than total eligible allowances for impairment					(186)
Common equity tier one capital					7,177
Additional tier one capital					-
Total tier one capital					7,177
Tier two capital
NZD 835,000,000 perpetual subordinated bond					835
AUD 265,740,000 perpetual subordinated loan					331
Total tier two capital					1,166
Total capital					8,343

ANZ Bank New Zealand Limited

14

Notes to the Financial Statements

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, and upon a poll every member shall have one vote for each share held.

Terms of tier two capital instruments

Loan capital is subordinated in right of payment in the event of liquidation or wind up to the claims of depositors and all creditors of the Bank and qualifies as tier two capital under the RBNZ’s transitional rules. The amount eligible to be included in regulatory capital will reduce by 20% per year from 1 January 2014 and will not be included in regulatory capital from 1 January 2018.

NZD 835,000,000 bond

This bond was issued by the Bank on 18 April 2008. The Bank did not elect to redeem the bond on 18 April 2013 (the “First Call Date”). The Bank may elect to redeem the bond on 18 April 2018 (the “Second 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 Second Call Date and then quarterly thereafter. Should the bond not be called at the Second Call Date, the Coupon Rate from the Second Call Date onwards will be set on a quarterly basis to the three month FRA rate plus 3.00%.

As at 31 March 2013, this bond carried a BBB+ rating by Standard and Poor's and an A3 rating by Moody’s.

The coupon interest on the bond was 9.66% until 18 April 2013 when it reset to 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 from the 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 (unaudited)

					Risk weighted
					exposure or
					implied risk
$ millions				Exposure at default	weighted exposure1	Total capital requirement
Exposures subject to internal ratings based approach				124,719	51,008	4,081
Specialised lending exposures subject	to slotting approach			8,213	7,864	629
Exposures subject to standardised approach				312	287	22
Equity exposures				100	426	34
Other exposures				3,197	1,039	83
Total credit risk				136,541	60,624	4,849
Operational risk				n/a	5,553	444
Market risk				n/a	4,295	343
Total				136,541	70,472	5,636

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

ANZ Bank New Zealand Limited

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 BS2B.

Under this IRB Framework banks use their own measures for calculating the level of credit risk associated with customers and exposures, 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; and

Loss 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 entitled ‘Capital Adequacy Framework (Standardised Approach)’ (“BS2A”), dated March 2013.

Capital requirements by asset class under the IRB approach

	Total exposure or	Exposure at	capital weighted risk Risk weighted Total capital
Banking Group	principal amount	default	calculation weight exposure requirement
As at 31/03/2013 (Unaudited)	$m $m % % $m $m
On-balance sheet exposures
Corporate	32,498 32,037 36 59 19,911 1,592
Sovereign	8,817 8,886 5 1 101 8
Bank	4,120 3,954 58 21 880 71
Retail mortgages	45,325 45,560 22 26 12,549 1,004
Other retail	4,443 4,545 64 83 3,991 320
Total on-balance sheet exposures	95,203 94,982 29 37 37,432 2,995
Off-balance sheet exposures
Corporate	13,501 10,291 51 49 5,371 430
Sovereign	45 45 5 1 1 -
Bank	1,154 1,053 48 15 172 14
Retail mortgages	6,790 5,957 18 15 945 76
Other retail	4,744 4,713 75 51 2,565 204
Total off-balance sheet exposures	26,234 22,059 47 39 9,054 724
Market related contracts
Corporate	68,919 2,154 60 90 2,045 164
Sovereign	11,294 358 5 2 6 1
Bank	657,572 5,166 64 45 2,471 197
Total market related contracts	737,785 7,678 60 56 4,522 362
Total credit risk exposures subject to
the IRB approach	859,222 124,719 34 39 51,008 4,081

ANZ Bank New Zealand Limited

16

Notes to the Financial Statements

IRB exposures by customer credit rating

	Probability of	Exposure at	capital weighted risk Risk weighted Total capital
Banking Group	default	default	calculation weight exposure requirement
As at 31/03/2013 (Unaudited)	%	$m % % $m $m
Corporate
0 - 2	0.05	5,065 62 32 1,726 138
3 - 4	0.31	23,290 38 43 10,527 842
5	1.01	8,766 36 64 5,957 477
6	2.23	4,102 39 90 3,922 314
7 - 8	7.77	2,177 43 152 3,501 280
Default	100.00	1,082 42 148 1,694 135
Total corporate exposures	3.39	44,482 41 58 27,327 2,186
Sovereign
0	0.01	9,284 5 1 108 9
1 - 8	0.17	5 5 1 - -
Total sovereign exposures	0.01	9,289 5 1 108 9
Bank
0	0.03	4,492 65 29 1,393 111
1	0.03	5,118 56 35 1,877 150
2 - 4	0.13	553 58 41 241 19
5 - 8	1.49	10 60 114 12 2
Total bank exposures	0.04	10,173 60 33 3,523 282
Retail mortgages
0 - 3	0.20	10,608 11 5 523 42
4	0.46	16,411 18 14 2,381 190
5	0.93	17,730 26 31 5,830 466
6	2.12	5,507 30 62 3,594 287
7 - 8	5.33	635 31 105 704 56
Default	100.00	626 29 70 462 39
Total residential mortgages exposures 2.02		51,517 21 25 13,494 1,080
Other retail
0 - 2 0.10		661 77 48 338 27
3 - 4 0.30		4,407 72 51 2,375 190
5 1.14		1,474 64 68 1,057 85
6 2.69		1,482 65 83 1,302 104
7 - 8 12.00		1,090 71 114 1,312 105
Default 100.00		144 70 113 172 13
Total other retail exposures 3.73		9,258 70 67 6,556 524
Total credit risk exposures subject to
the IRB approach	2.32	124,719 34 39 51,008 4,081

Credit risk exposures subject to the IRB approach have been derived in accordance with BS2B and other relevant correspondence with 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 at		Risk weighted Total capital
Banking Group			default	Risk weight exposure requirement
As at 31/03/2013 (Unaudited)			$m % $m $m
On-balance sheet exposures
Strong			2,224 70 1,650 132
Good			3,898 90 3,719 298
Satisfactory			941 115 1,148 92
Weak			189 250 499 39
Default			195 - - -
Total on-balance sheet exposures			7,447 89 7,016 561
			Exposure at Average risk Risk weighted Total capital
		Exposure amount	default weight exposure requirement
		$m $m % $m $m
Off-balance sheet exposures
Undrawn commitments and other off balance sheet
exposures		868 689 96 702 56
Market related contracts		1,597 77 179 146 12
Total off-balance sheet exposures		2,465 766 111 848 68

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: BBBbetter, Good: BB+ or BB, Satisfactory: BB- or B+ and Weak: B to C-.

Credit risk exposures subject to the standardised approach

			Exposure at Risk weighted Total capital
Banking Group			default Risk weight exposure requirement
As at 31/03/2013 (Unaudited)			$m % $m $m
On-balance sheet exposures
Corporates			50 100 53 4
Default			- 150 1 -
Total on-balance sheet exposures			50 100 54 4
		Average credit	Exposure at Average risk Risk weighted Total capital
	Exposure amount	conversion factor	default weight exposure requirement
	$m %		$m % $m $m
Off-balance sheet exposures
Undrawn commitments and other off
balance sheet exposures	520 47		246 88 230 18
Market related contracts	1,934 n/a 16 20 3 -
Total off balance sheet	2,454 n/a 262 84 233 18

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

Equity exposures
	Exposure at		Risk weighted	Total capital
Banking Group	default	Risk weight	exposure	requirement
As at 31/03/2013 (Unaudited)	$m	%	$m	$m
All equity holdings not deducted from capital	100	400	426	34

Equity exposures have been calculated in accordance with BS2B.

ANZ Bank New Zealand Limited

18

Notes to the Financial Statements

Other exposures

			Exposure at		Risk weighted Total capital
Banking Group			default	Risk weight exposure requirement
As at 31/03/2013 (Unaudited)			$m % $m $m
Cash			218 - - -
New Zealand dollar denominated claims on the Crown and the RBNZ			1,999 - - -
Other assets			980 100 1,039 83
Total other IRB credit risk exposures			3,197 31 1,039 83

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 2013, under the IRB approach, the Banking Group had $1,628 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 operational risk calculated in accordance with BS2B. As at 31 March 2013 the Banking Group had an implied risk weighted exposure of $5,553 million for operational risk and an operational risk capital requirement of $444 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 2013.

Banking Group	Implied risk weighted exposure	Implied risk weighted exposure	Aggregate capital charge	Aggregate capital charge		Peak
31/03/2013 (Unaudited)	Period end	Peak	Period end		Peak	occurred on
	$m	$m	$m		$m
Interest rate risk	4,275	5,594	342		448	4/02/2013
Foreign currency risk	17	72	1		6	17/01/2013
Equity risk	3	3	-		-	31/10/2012
	4,295		343

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, 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 $405 million (31/03/2012 $325 million;

30/09/2012 $338 million).

The Banking Group regularly reviews the methodologies used to calculate the economic capital allocated to other material risks. Updated capital methodologies (particularly relating to fixed asset risk and business risk) were applied in November 2012 and the prior period restated accordingly.

ANZ Bank New Zealand Limited

19

Notes to the Financial Statements

Capital adequacy of the Ultimate Parent Bank

	Overseas	Banking Group	Banking Group		Ultimate Parent Bank (Extended Licensed Entity)	Ultimate Parent Bank (Extended Licensed Entity)
	31/03/2013	31/03/2012		30/09/2012	31/03/2012	30/09/2012
	Basel III	Basel II		Basel II	Basel II	Basel II
Common equity tier one capital	8.2%	n/a		n/a	n/a	n/a
Tier one capital	9.8%	11.3%		10.8%	11.3%	11.4%
Total capital	11.7%	12.6%		12.2%	12.9%	12.7%

For calculation of minimum capital requirements under Pillar 1 (Capital Requirements) of the Basel 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 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 2013 and for the comparative prior periods.

The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 March 2013. The Overseas Banking Group’s Pillar 3 disclosure document for the quarter ended 31 March 2013, in accordance with APS 330: Public Disclosure of Prudential Information, discloses capital adequacy ratios and other prudential information. This document can be accessed at the website anz.com.

Residential 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.

Unaudited 31/03/2013				On-balance	Off-balance
$ millions				sheet	sheet	Total
LVR range
0% - 59%				16,816	3,335	20,151
60% - 69%				7,300	934	8,234
70% - 79%				10,882	1,187	12,069
Less than 80%				34,998	5,456	40,454
80% - 89%				6,409	914	7,323
Over 90%				3,918	420	4,338
Total				45,325	6,790	52,115

Reconciliation of mortgage related amounts

		Unaudited
$ millions	Note	31/03/2013
Term loans - housing	4	47,445
Plus: short-term housing loans classified as overdrafts		488
Less: housing loans made to corporate customers		(2,654)
Plus: Unsettled re-purchases of mortgages from the NZ Branch		46
On-balance sheet retail mortgage exposures subject to the IRB approach	10	45,325
Plus: off-balance sheet retail mortgage exposures subject to the IRB approach		6,790
Total retail mortgage exposures subject to the IRB approach (as per LVR analysis)	10	52,115

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 the same 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.

(“ANZSIC”) codes.	(“ANZSIC”) codes.
Unaudited 31/03/2013 Liquid assets and due from other financial Trading securities and available-for- Derivative financial Net loans and Other financial Credit related
$ millions institutions sale assets instruments advances assets commitments3 Total
Industry
Agriculture - - 34 17,300 137 1,935 19,406
Forestry, fishing and mining 17 - 9 861 7 496 1,390
Business and property services 19 - 39 8,943 71 2,525 11,597
Construction - - - 1,016 8 1,042 2,066
Entertainment, leisure and tourism - - 33 1,109 9 448 1,599
Finance and insurance 3,125 4,671 7,755 728 306 1,211 17,796
Government and local authority1 2,014 6,522 376 1,318 10 1,067 11,307
Manufacturing 43 - 75 2,902 23 2,410 5,453
Personal lending - - - 49,048 388 10,364 59,800
Retail trade 85 5 28 1,680 13 1,231 3,042
Transport and storage 25 33 65 1,493 12 568 2,196
Wholesale trade 52 - 15 1,214 10 1,470 2,761
Other2 36 61 583 1,432 11 2,855 4,978
5,416 11,292 9,012 89,044 1,005 27,622 143,391
Provision for credit impairment - - - (951) - - (951)
Fair value hedge adjustment - - - (15) - - (15)
Unearned finance income and
deferred / capitalised fees	- - - (196) - - (196)
Total financial assets 5,416 11,292 9,012 87,882 1,005 27,622 142,229
Geography
New Zealand 5,399 8,390 2,710 86,220 992 27,622 131,333
Overseas 17 2,902 6,302 1,662 13 - 10,896
Total financial assets 5,416 11,292 9,012 87,882 1,005 27,622 142,229

1 Government and local authority includes exposures to government administration and defence, education and health and community services.

2 Other includes exposures to electricity, gas and water, communications and personal services.

3 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 can be changed).

Unaudited 31/03/2013		Less than	3 to 6	6 to 12	1 to 2	Beyond	Not bearing
$ millions	Total	3 months	months	months	years	2 years	interest
Assets
Liquid assets	3,371	3,138	-	-	-	-	233
Due from other financial institutions	2,045	1,760	-	-	-	-	285
Trading securities	10,419	1,871	155	510	1,083	6,800	-
Derivative financial instruments	9,012	-	-	-	-	-	9,012
Available-for-sale assets	873	275	379	205	-	11	3
Net loans and advances	87,882	61,797	3,607	8,262	9,505	4,630	81
Other financial assets	1,005	133	8	18	2	-	844
Total financial assets	114,607	68,974	4,149	8,995	10,590	11,441	10,458
Liabilities
Due to other financial institutions	1,795	1,293	-	-	-	122	380
Deposits and other borrowings	75,224	49,477	9,157	8,019	1,753	1,101	5,717
Due to Immediate Parent Company	709	709	-	-	-	-	-
Derivative financial instruments	10,173	-	-	-	-	-	10,173
Bonds and notes	16,611	4,714	2,392	46	1,235	8,224	-
Loan capital	1,178	835	343	-	-	-	-
Other financial liabilities	1,631	62	-	-	-	151	1,418
Total financial liabilities	107,321	57,090	11,892	8,065	2,988	9,598	17,688
Hedging instruments	-	(3,750)	1,859	4,191	(3,955)	1,655	-
Interest sensitivity gap	7,286	8,134	(5,884)	5,121	3,647	3,498	(7,230)

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 Condensed Cash Flow Statement.

Condensed Cash Flow Statement.
	Unaudited
$ millions	31/03/2013
Balances with central banks	1,999
Certificates of deposit	160
Government, local body stock and bonds	5,939
Government treasury bills	836
Other bonds	4,628
Total liquidity portfolio	13,562

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		31/03/2013
Funding composition
Customer deposits1
New Zealand		61,574
Overseas		7,690
Total customer deposits		69,264
Wholesale funding
Bonds and notes		16,611
Loan capital		1,178
Certificates of deposit		1,624
Commercial paper		4,336
Due to Immediate Parent Company		709
Due to other financial institutions		1,795
Total wholesale funding		26,253
Total funding		95,517
Concentrations of funding by industry
Households		44,166
Agriculture		2,488
Forestry, fishing and mining		553
Manufacturing		1,524
Entertainment, leisure and tourism		756
Finance and insurance		34,693
Retail trade		917
Wholesale trade		1,774
Business and property services		3,744
Transport and storage		755
Construction		885
Government and local authority		2,098
Other2		1,164
Total funding		95,517
Concentrations of funding by geography3
New Zealand		67,725
Australia		1,458
United States		11,937
Europe		8,660
Other countries		5,737
Total funding		95,517

1 Represents term deposits, demand deposits bearing interest, deposits not bearing interest and secured debenture stock.

2 Other includes exposures to electricity, gas and water, communications and personal services.

3 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 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 these facilities are expected to be only partially used or to expire unused.

The Banking Group does not manage its liquidity risk on this basis.

Unaudited 31/03/2013 Less than 3 to 12 1 to 5 Beyond No maturity	Unaudited 31/03/2013 Less than 3 to 12 1 to 5 Beyond No maturity
$ millions Total At call 3 months months years 5 years specified
Financial assets
Liquid assets 3,377 2,566 811 - - - -
Due from other financial institutions 2,046 607 1,439 - - - -
Trading securities 11,539 - 632 1,139 8,308 1,460 -
Derivative financial assets (trading) 8,159 - 8,159 - - - -
Available-for-sale assets 889 - 283 557 46 - 3
Net loans and advances 118,224 - 16,482 15,413 37,630 48,699 -
Other financial assets 616 - 588 26 2 - -
Total financial assets 144,850 3,173 28,394 17,135 45,986 50,159 3
Financial liabilities
Due to other financial institutions 1,824 884 772 5 45 118 -
Deposits and other borrowings 76,553 33,677 21,565 18,055 3,256 - -
Due to Immediate Parent Company 709 - 709 - - - -
Derivative financial liabilities
(trading)	9,462 - 9,462 - - - -
Bonds and notes 17,590 - 126 4,318 12,478 668 -
Loan capital 1,842 - 24 71 474 95 1,178
Other financial liabilities 1,188 - 957 7 44 180 -
Total financial liabilities 109,168 34,561 33,615 22,456 16,297 1,061 1,178
Net financial assets / (liabilities) 35,682 (31,388) (5,221) (5,321) 29,689 49,098 (1,175)
Derivative financial instruments used for balance sheet management
- gross inflows 16,139 - 1,646 5,413 8,778 302 -
- gross outflows (15,760) - (1,547) (5,376) (8,534) (303) -
Net financial assets / (liabilities)
after balance sheet management	36,061 (31,388) (5,122) (5,284) 29,933 49,097 (1,175)

Contractual maturity of off-balance sheet commitments and contingent liabilities
Unaudited 31/03/2013 Less than Beyond
$ millions Total 1 year 1 year
Non-credit related commitments 426 117 309
Credit related commitments 25,865 25,865 -
Contingent liabilities 1,757 1,757 -
Total 28,048 27,739 309

ANZ Bank New Zealand Limited

24

Notes to the Financial Statements

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 six months ended 31 March 2013 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 endof-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 $602 million (31/03/2012: $525 million; 30/09/2012 $564 million), which is 0.5% (31/03/2012: 0.4%; 30/09/2012 0.5%) of the total consolidated assets of the Banking Group.

14. Credit Related Commitments, Guarantees and Contingent Liabilities

		Face or contract value	Face or contract value	Face or contract value
		Unaudited	Unaudited		Audited
$ millions		31/03/2013	31/03/2012		30/09/2012
Credit related commitments
Commitments with certain drawdown due within one year		859	904		742
Commitments to provide financial services		25,006	23,074		24,698
Total credit related commitments		25,865	23,978		25,440
Guarantees and contingent liabilities
Financial guarantees		650	1,752		731
Standby letters of credit		53	55		44
Transaction related contingent items		976	829		913
Trade related contingent liabilities		78	96		117
Total guarantees and contingent liabilities		1,757	2,732		1,805

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

In October 2012 the Commerce Commission commenced an investigation, under the Fair Trading Act 1986, into the promotion and sale of interest rate swaps by certain banks (including the Bank) to rural customers. The investigation is at an early stage and the possible outcome of the investigation cannot be determined with any certainty.

On 11 March 2013, litigation funder Litigation Lending Services (NZ) announced plans for a representative action against banks in New Zealand for certain fees charged to New Zealand customers over the past six years. As at 13 May 2013, the Bank is not aware of any proceedings being issued against it or any other bank in New Zealand.

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

25

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 2013; and

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

Over the six months ended 31 March 2013, 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 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, 13 May 2013.

Antony Carter

==> picture [141 x 38] intentionally omitted <==

Norman Geary, CBE

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John Judge

also on behalf of Shayne Elliott, David Hisco and Michael Smith, OBE

ANZ Bank New Zealand Limited

26

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Independent Auditor’s Review Report

To the Shareholder of ANZ Bank New Zealand Limited

We have reviewed pages 3 to 24 of the interim financial statements of ANZ Bank New Zealand 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 2013 (the ‘Order’) and the supplementary information prescribed in Schedules 3, 5, 7, 11, 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 March 2013.

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 2013 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 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, 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 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 March 2013 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) 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 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 the procedures described below, anything has come to our attention that would cause us to believe that the information disclosed in accordance with Schedule 11 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 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 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 March 2013 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; and

• c. 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 operational risk 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 2013 and our review opinion is expressed as at that date.

Wellington