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

Feb 14, 2013

Australia and New Zealand Banking Group Limited –

New Zealand Branch Disclosure Statement

FOR THE THREE MONTHS ENDED 31 DECEMBER 2012 | NUMBER 17 ISSUED FEBRUARY 2013

Australia and New Zealand Banking Group Limited - New Zealand Branch

Disclosure Statement

For the three months ended 31 December 2012

Contents

General Disclosures Income Statement Statement of Comprehensive Income Statement of Changes in Equity Balance Sheet Condensed Cash Flow Statement Notes to the Financial Statements Directors' and New Zealand Chief Executive Officer's Statement Independent Auditor’s Review Report

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 Funds Pty Limited, which is the immediate parent company of ANZ Holdings (New Zealand) Limited;

• (d) “Ultimate Parent Bank” means Australia and New Zealand Banking Group Limited;

• (e) “Overseas Banking Group” means the worldwide operations of Australia and New Zealand Banking Group Limited including its controlled entities;

• (f) “New Zealand business” means all business, operations, or undertakings conducted in or from New Zealand identified and treated as if it were conducted by a company formed and registered in New Zealand;

• (g) “NZ Branch” means the New Zealand business of the Ultimate Parent Bank;

• (h) “ANZ New Zealand” means the New Zealand business of the Overseas Banking Group;

• (i) “Registered Office” is Level 10, 170-186 Featherston Street, Wellington, New Zealand, which is also ANZ New Zealand’s address for service;

• (j) “RBNZ” means the Reserve Bank of New Zealand;

• (k) “APRA” means the Australian Prudential Regulation Authority;

• (l) “the Order” means the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order (No 2) 2012; and

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

2

General Disclosures

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

Credit Rating Information

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

The Ultimate Parent Bank’s credit ratings are:

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

Guarantors

As at the date of signing of this Disclosure Statement, no obligations of the NZ Branch are guaranteed.

New Zealand Guarantee Arrangements

The Crown guarantees specific issuances of wholesale funding of participating New Zealand financial institutions under the New Zealand Wholesale Funding Guarantee Facility. The Government closed this scheme to new debt securities on 30 April 2010. The NZ Branch does not have a guarantee under this scheme. However, a member of ANZ New Zealand, ANZ New Zealand (Int’l) Limited, has debt securities with a carrying value of $207 million for which the Crown has issued a Guarantee Eligibility Certificate.

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 December 2012 of $3,067 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 11.

Financial Statements of the Ultimate Parent Bank and Overseas Banking Group

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

Conditions of Registration

The conditions of registration applying to the Ultimate Parent Bank were amended on 21 December 2012 to reflect APRA’s adoption of the Basel III capital framework. Condition 6, which imposes minimum regulatory capital requirements on the Overseas Banking Group, was changed to increase the Overseas Banking Group’s minimum tier one capital ratio to 6% from 4% and require a minimum common equity tier one capital ratio of 4.5%. The change applies from 1 January 2013.

Directorate

There have been no changes to the Directors of Australia and New Zealand Banking Group Limited since 30 September 2012, the balance date of the last full year Disclosure Statement.

Auditor

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

3

Income Statement

Income Statement
		Unaudited	Unaudited	Audited
		3 months to	3 months to	Year to
$ millions	Note	31/12/2012	31/12/2011	30/09/2012
Interest income		1,639	1,647	6,568
Interest expense		984	969	3,859
Net interest income		655	678	2,709
Net trading gains		38	39	131
Net funds management and insurance income		66	82	298
Other operating income	2	85	219	472
Share of associates' profit		3	-	4
Operating income		847	1,018	3,614
Operating expenses	2	398	402	1,743
Profit before provision for credit impairment and income tax		449	616	1,871
Provision for credit impairment	6	44	46	202
Profit before income tax		405	570	1,669
Income tax expense		109	155	404
Profit after income tax		296	415	1,265

Statement of Comprehensive Income

		Unaudited	Unaudited	Audited
		3 months to	3 months to	Year to
$ millions		31/12/2012	31/12/2011	30/09/2012
Profit after income tax		296	415	1,265
Items that will not be reclassified to profit or loss
Actuarial loss on defined benefit schemes		-	-	(25)
Income tax credit / (expense) relating to items not reclassified		-	(1)	6
Total items that will not be reclassified to profit or loss		-	(1)	(19)
Items that may be reclassified subsequently to profit or loss
Unrealised gains / (losses) recognised directly in equity		(11)	62	46
Realised gains transferred to income statement		(6)	(4)	(95)
Income tax credit / (expense) relating to items that may be reclassified		5	(12)	-
Total items that may be reclassified subsequently to profit or loss		(12)	46	(49)
Total comprehensive income for the period		284	460	1,197

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

4

Statement of Changes in Equity

Statement of Changes in Equity
$ millions Ordinary share capital and head office account		-
	Available
	for-sale		Cash flow
	revaluation		hedging		Retained
	reserve		reserve			Total equity
As at 1 October 2011 6,424	46		141		1,854	8,465
Profit after income tax -	-		-		415	415
Unrealised gains recognised directly in equity -	14		48		-	62
Realised gains transferred to the income statement -	-		(4)		-	(4)
Income tax expense on items recognised directly in equity -	-		(12)		(1)	(13)
Total comprehensive income for the period -	14		32		414	460
Preference dividend paid -	-		-		(51)	(51)
As at 31 December 2011 (Unaudited) 6,424	60		173		2,217	8,874
As at 1 October 2011 6,424	46		141		1,854	8,465
Profit after income tax -	-		-		1,265	1,265
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)		-		1,246	1,197
Ordinary dividend paid -	-		-		(400)	(400)
Preference dividend paid -	-		-		(85)	(85)
As at 30 September 2012 (Audited) 6,424	(3)		141		2,615	9,177
Profit after income tax -	-		-		296	296
Unrealised gains / (losses) recognised directly in equity -	1		(12)		-	(11)
Realised gains transferred to the income statement -	-		(6)		-	(6)
Income tax credit on items recognised directly in equity -	-		5		-	5
Total comprehensive income for the period -	1		(13)		296	284
As at 31 December 2012 (Unaudited) 6,424	(2)		128		2,911	9,461

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

5

Balance Sheet

Balance Sheet	Balance Sheet	Balance Sheet	Balance Sheet	Balance Sheet
Unaudited Unaudited Audited
$ millions Note 31/12/2012 31/12/2011 30/09/2012
Assets
Liquid assets 3,148 2,340 2,831
Due from other financial institutions 3,230 2,154 1,760
Trading securities 11,638 10,321 12,338
Derivative financial instruments 10,764 13,238 12,709
Current tax assets 7 - 24
Available-for-sale assets 47 255 57
Net loans and advances 4 96,820 93,501 96,094
Investments backing insurance policy liabilities 154 116 142
Insurance policy assets 308 231 301
Investments in associates 98 99 99
Other assets 598 666 596
Deferred tax assets 84 75 92
Premises and equipment 331 322 323
Goodwill and other intangible assets 3,503 3,505 3,502
Total assets 130,730 126,823 130,868
Interest earning and discount bearing assets 114,342 107,697 112,783
Liabilities
Due to other financial institutions 11,020 11,956 11,012
Deposits and other borrowings 7 77,080 69,387 73,652
Derivative financial instruments 11,649 13,534 14,085
Current tax liabilities - 37 -
Payables and other liabilities 1,394 1,214 1,481
Provisions 308 278 339
Bonds and notes 16,882 17,776 18,188
Term funding 1,766 1,766 1,766
Loan capital 1,170 2,001 1,168
Total liabilities (excluding head office account) 121,269 117,949 121,691
Net assets (excluding head office account) 9,461 8,874 9,177
Represented by:
Share capital and head office account 6,424 6,424 6,424
Reserves 126 233 138
Retained earnings 2,911 2,217 2,615
Total equity and head office account 9,461 8,874 9,177
Interest and discount bearing liabilities 102,035 97,532 100,543

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

6

Condensed Cash Flow Statement

Condensed Cash Flow Statement
		Unaudited	Unaudited	Audited
		3 months to	3 months to	Year to
$ millions		31/12/2012	31/12/2011	30/09/2012
Cash flows from operating activities
Interest received		1,621	1,609	6,549
Interest paid		(993)	(981)	(3,845)
Other cash inflows provided by operating activities		231	217	819
Other cash outflows used in operating activities		(556)	(560)	(2,009)
Cash flows from operating profits before changes in operating assets and liabilities		303	285	1,514
Net changes in operating assets and liabilities		3,311	(1,471)	(2,556)
Net cash flows provided by / (used in) operating activities		3,614	(1,186)	(1,042)
Cash flows from investing activities
Cash inflows provided by investing activities		1	4	16
Cash outflows used in investing activities		(30)	(15)	(95)
Net cash flows used in investing activities		(29)	(11)	(79)
Cash flows from financing activities
Cash inflows provided by financing activities		-	867	5,678
Cash outflows used in financing activities		(1,847)	(1,677)	(6,746)
Net cash flows used in financing activities		(1,847)	(810)	(1,068)
Net increase / (decrease) in cash and cash equivalents		1,738	(2,007)	(2,189)
Cash and cash equivalents at beginning of the period		3,293	5,482	5,482
Cash and cash equivalents at end of the period		5,031	3,475	3,293

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

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

1. Significant Accounting Policies

(i) Reporting entity and statement of compliance

These interim financial statements are for ANZ New Zealand for the three months ended 31 December 2012. 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 ANZ New Zealand’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 the Margin on Services model, and defined benefit

obligations are measured using the Projected Unit Credit method.

(iii) Changes in accounting policies

The accounting policies adopted by ANZ New Zealand are consistent with those adopted and disclosed in the previous full year 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 December 2011, collateral received of $695 million from derivative financial instruments asset to due to other financial institutions and collateral paid of $1,019 million from derivative financial instruments liability to due from other financial institutions.

(vi) Principles of consolidation

The consolidated financial statements of ANZ New Zealand comprise the financial statements of the NZ Branch and all the New Zealand businesses of all the subsidiaries of the Ultimate Parent Bank (those entities where it is determined that the Ultimate Parent Bank has capacity to control).

2. Other Operating Income and Expenses

Other operating income Unaudited Unaudited Audited	Other operating income Unaudited Unaudited Audited
3 months to 3 months to Year to
$millions 31/12/2012 31/12/2011 30/09/2012
Net fee income 101 115 430
Fair value gain / (loss) on hedging activities and financial liabilities designated at fair
value	(23) 97 (62)
Net gain on available for sale equity securities transferred to income statement - - 83
Other income 7 7 21
Total other operating income 85 219 472

Operating expenses

Operating expenses include costs for the three months ended 31 December 2012 of $18 million (31/12/2011 $14 million; 30/09/2012 $192 million) incurred in relation to the move to a single banking technology platform, which is expected to deliver operational efficiencies and improved service levels and business outcomes.

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

3. Segmental Analysis

For segment reporting purposes, ANZ New Zealand is organised into 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 reflect minor changes to ANZ New Zealand’s structure. Comparative data has been adjusted to be consistent with the current period’s segment definitions.

Retail

Retail provides 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. ANZ New Zealand's relationship with these businesses ranges from simple banking requirements with revenue from deposit and transactional facilities, and cash flow lending, to more complex funding arrangements with revenue sourced from a wider range of products. UDC is principally involved in the financing and leasing of plant, vehicles and equipment, mainly for small and medium sized businesses, as well as investment products.

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 3 months to 31/12/2012
External revenues	353	686	17	218	(427)	847
Intersegment revenues	(56)	(328)	37	(62)	409	-
Total revenues	297	358	54	156	(18)	847
Profit before income tax	119	206	20	98	(38)	405
Unaudited 3 months to 31/12/2011
External revenues	402	709	38	186	(317)	1,018
Intersegment revenues	(96)	(347)	36	(14)	421	-
Total revenues	306	362	74	172	104	1,018
Profit before income tax	128	200	36	118	88	570
Audited year to 30/09/2012
External revenues	1,531	2,790	111	769	(1,587)	3,614
Intersegment revenues	(295)	(1,331)	143	(130)	1,613	-
Total revenues	1,236	1,459	254	639	26	3,614
Profit before income tax	505	825	108	428	(197)	1,669

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 ANZ New Zealand and is reimbursed internally.

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

4. Net Loans and Advances

		Unaudited	Unaudited	Audited
$ millions	Note	31/12/2012 31/12/2011 30/09/2012
Overdrafts		1,789 1,740 1,881
Credit card outstandings		1,455 1,439 1,395
Term loans - housing		56,191 53,306 55,526
Term loans - non-housing		37,835 37,546 37,749
Finance lease receivables		816 792 806
Gross loans and advances		98,086 94,823 97,357
Provision for credit impairment	6	(1,082) (1,164) (1,081)
Unearned finance income		(263) (260) (258)
Fair value hedge adjustment		19 114 34
Deferred fee revenue and expenses		(62) (58) (60)
Capitalised brokerage/mortgage origination fees		122 46 102
Total net loans and advances		96,820 93,501 96,094

5. Impaired and Past Due Assets

	Retail	Other retail	Non retail
$ millions	mortgages	exposures	exposures	Total
Unaudited 31/12/2012
Total individually impaired assets	310	48	787	1,145
Loans that are at least 90 days past due but not impaired	125	38	64	227
Unaudited 31/12/2011
Total individually impaired assets	446	49	1,204	1,699
Loans that are at least 90 days past due but not impaired	139	38	89	266
Audited 30/09/2012
Total individually impaired assets	324	44	874	1,242
Loans that are at least 90 days past due but not impaired	107	33	86	226

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

6. Provision for Credit Impairment

	Retail	Other retail	Non retail
$ millions	mortgages	exposures	exposures	Total
Unaudited 31/12/2012
Collective provision	128	118	375	621
Individual provision	114	31	316	461
Total provision for credit impairment	242	149	691	1,082
Collective provision charge / (credit)	8	(7)	-	1
Individual provision charge	5	11	27	43
Total charge in income statement	13	4	27	44
Unaudited 31/12/2011
Collective provision	133	142	390	665
Individual provision	151	29	319	499
Total provision for credit impairment	284	171	709	1,164
Collective provision charge / (credit)	2	(5)	(4)	(7)
Individual provision charge	4	12	37	53
Total charge in income statement	6	7	33	46
Audited 30/09/2012
Collective provision	120	125	375	620
Individual provision	130	25	306	461
Total provision for credit impairment	250	150	681	1,081
Collective provision credit	(10)	(22)	(20)	(52)
Individual provision charge	39	55	160	254
Total charge in income statement	29	33	140	202

7. Deposits and Other Borrowings

Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited	Unaudited Unaudited Audited
$ millions Note 31/12/2012 31/12/2011 30/09/2012
Certificates of deposit 2,369 2,690 2,156
Term deposits 33,545 32,949 33,922
Demand deposits bearing interest 27,629 23,631 25,815
Deposits not bearing interest 5,737 5,044 4,838
Secured debenture stock 11 1,457 1,393 1,476
Commercial paper 6,343 3,680 5,445
Total deposits and other borrowings 77,080 69,387 73,652

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

8. Related Party Transactions

8. Related Party Transactions
	Unaudited	Unaudited	Audited
$ millions	31/12/2012	31/12/2011	30/09/2012
Total due from related parties	2,480	3,228	3,125
Total due to related parties	16,281	19,408	17,153

9. Capital Adequacy

Overseas Banking Group Basel II capital adequacy ratio (Unaudited)

					Ultimate P	arent Bank
	Ove	rseas Banking Group
					(Extended Lic	ensed Entity)
	31/12/2012 31/12/2011 30/09/2012				30/09/2012 30/09/2011
Tier One Capital	10.9% 11.0% 10.8%				11.4% 11.5%
Total Capital	12.1% 12.0% 12.2%				12.7% 12.3%

For calculation of minimum capital requirements under Pillar 1 of the Basel II Accord, APRA has accredited the Overseas Banking Group to use the Advanced Internal Ratings Based ("AIRB") methodology for calculation of credit risk weighted assets and the Advanced Measurement Approach ("AMA") for the operational risk weighted asset equivalent.

Under prudential regulations, the Overseas Banking Group is required to hold a minimum Prudential Capital Ratio ("PCR") as determined by APRA. The APRA minimum PCR is at least equal to the levels specified under the Basel II (internal models based) approach. The Overseas Banking Group exceeded the minimum capital adequacy requirements set by APRA as at 31 December 2012 and for the comparative prior periods.

The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 December 2012. The Overseas Banking Group’s Pillar 3 disclosure document for the quarter ended 31 December 2012, in accordance with APS 330, discloses capital adequacy ratios calculated under the Basel II methodology. This document can be accessed at the website anz.com.

Market risk

ANZ New Zealand’s aggregate market risk exposures below have been calculated in accordance with the RBNZ document BS2B.

BS2B.
Unaudited 31/12/2012			Implied risk weighted	Aggregate
$ millions			exposure	capital charge
Interest rate risk			4,535	363
Foreign currency risk			9	1
Equity risk			3	-
			4,547	364

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 ANZ New Zealand'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 31/12/2012				On-balance	Off-balance
$ millions				sheet	sheet	Total
LVR range
0% - 59%				20,114	3,432	23,546
60% - 69%				8,350	926	9,276
70% - 79%				12,524	1,193	13,717
Less than 80%				40,988	5,551	46,539
80% - 89%				7,940	943	8,883
Over 90%				5,027	412	5,439
Total				53,955	6,906	60,861

Australia and New Zealand Banking Group Limited - New Zealand Branch

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Notes to the Financial Statements

10. Liquidity Portfolio

ANZ New Zealand holds a diversified portfolio of cash and high quality liquid securities to support liquidity risk management. The size of ANZ New Zealand’s liquidity portfolio is based on the amount required to meet its liquidity policy and includes both items classified as cash and cash equivalents and those classified as operating assets in the Condensed Cash Flow Statement.

	Unaudited
$ millions	31/12/2012
Balances with central banks	1,715
Securities purchased under agreement to resell	942
Certificates of deposit	120
Government, local body stock and bonds	7,151
Government treasury bills	3
Other bonds	3,940
Total liquidity portfolio	13,871

11. Financial Assets Pledged as Collateral

		Unaudited	Unaudited	Audited
$ millions		31/12/2012	31/12/2011	30/09/2012
Cash collateral given on derivative financial instruments		1,076	1,019	1,256
Trading securities encumbered through repurchase agreements		787	244	252
Residential mortgages pledged as security for covered bonds		4,896	2,609	4,977
Total tangible assets of UDC Finance Limited pledged as collateral for secured stock		2,139	2,121	2,103
Total financial assets pledged as collateral		8,898	5,993	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.

ANZ New Zealand 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.

12. Concentrations of Credit Risk to Individual Counterparties

ANZ New Zealand measures its concentration of credit risk in respect to bank counterparties on the basis of approved exposures and in respect to non-bank counterparties on the basis of limits.

For the three months ended 31 December 2012 there were no individual counterparties (excluding connected parties, governments and banks with long term credit ratings of A- or above) where ANZ New Zealand’s period end or peak endof-day credit exposure equalled or exceeded 10% of the Overseas Banking Group’s equity (as at the end of the period).

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

13. Insurance business

ANZ New Zealand conducts insurance business through companies in the OnePath Insurance Holdings (NZ) Limited group. The aggregate amount of insurance business in this group comprises assets totalling $584 million (31/12/2011: $470 million; 30/09/2012 $564 million), which is 0.4% (31/12/2011: 0.4%; 30/09/2012 0.4%) of the total consolidated assets of ANZ New Zealand.

Australia and New Zealand Banking Group Limited - New Zealand Branch

13

Notes to the Financial Statements

14. Credit Related Commitments, Guarantees and Contingent Liabilities

		Face or contract value	Face or contract value	Face or contract value
		Unaudited	Unaudited		Audited
$ millions		31/12/2012	31/12/2011		30/09/2012
Credit related commitments
Commitments with certain drawdown due within one year		856	655		742
Commitments to provide financial services		24,837	22,186		24,551
Total credit related commitments		25,693	22,841		25,293
Guarantees and contingent liabilities
Financial guarantees		696	1,820		731
Standby letters of credit		50	76		44
Transaction related contingent items		888	850		913
Trade related contingent liabilities		136	78		117
Total guarantees and contingent liabilities		1,770	2,824		1,805

ANZ New Zealand guarantees the performance of customers by issuing standby letters of credit and guarantees to third parties, including its Ultimate Parent Bank. To reflect the risk associated with these transactions, they are subjected to the same credit origination, portfolio management and collateral requirements as for customers that apply for loans. The contract amount represents the maximum potential amount that could be lost if the counterparty fails to meet its financial obligations. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements.

Other contingent liabilities

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

15. Additional Disclosures

NZ Branch Funding Unaudited	NZ Branch Funding Unaudited
$ millions 31/12/2012
Total liabilities of the NZ Branch less amounts due to related parties 70
Overseas Banking Group Profitability and Size Unaudited
AUD millions 30/09/2012
Profit for the year1 5,667
Net profit after tax for the year as a percentage of average total assets 0.91%
Total assets 642,127
Percentage change in total assets over the year 6.3%

1 Net profit after tax for the year includes $6 million of profit attributable to non-controlling interests.

Overseas Banking Group asset quality Unaudited	Overseas Banking Group asset quality Unaudited
AUD millions 30/09/2012
Gross impaired assets 5,196
Gross impaired assets as a percentage of total assets 0.81%
Individual provision 1,773
Individual provision as a percentage of gross impaired assets 34.1%
Collective provision 2,765

Australia and New Zealand Banking Group Limited - New Zealand Branch

14

Directors’ and New Zealand Chief Executive Officer’s Statement

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

• (i) The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order (No 2) 2012; and

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

Over the three months ended 31 December 2012, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive Officer – NZ Branch believes that:

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

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

This Disclosure Statement is dated 14 February 2013, and has been signed by the Chairman of the Ultimate Parent Bank, on behalf of all Directors, and by the Chief Executive Officer – NZ Branch.

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J P Morschel Chairman, on behalf of the Directors:

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A J Bradshaw

Chief Executive Officer – NZ Branch

Mr M R P Smith, OBE Dr G J Clark Ms P J Dwyer Mr P A F Hay Mr H Y Lee Mr I J Macfarlane, AC Mr D E Meiklejohn, AM Ms A M Watkins

Australia and New Zealand Banking Group Limited - New Zealand Branch

15

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Independent Auditor’s Review Report

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

We have reviewed pages 3 to 13 of the interim financial statements of Australia and New Zealand Banking Group Limited – New Zealand Branch and its related entities (‘ANZ New Zealand’) prepared and disclosed in accordance with the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order (No 2) 2012 (the ‘Order’) and the supplementary information prescribed in Schedules 3, 6, 8, 9, 10, 12 and 14 of the Order. The interim financial statements, and supplementary information, provide information about the past financial performance and cash flows of ANZ New Zealand and its financial position as at 31 December 2012.

Directors' responsibility for the disclosure statement

The Directors of Australia and New Zealand Banking Group Limited - New Zealand Branch are responsible for the preparation and presentation of the Disclosure Statement, which includes interim financial statements prepared in accordance with Clause 26 of the Order which give a true and fair view of the financial position of ANZ New Zealand as at 31 December 2012 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 the Directors determine are necessary to enable the preparation of the Disclosure Statement that is free from material misstatement, whether due to fraud or error.

They are also responsible for the preparation of supplementary information in the Disclosure Statement which fairly states the matters to which it relates in accordance with Schedules 3, 6, 8, 9, 10, 12 and 14 of the Order.

Reviewer’s responsibility

We are responsible for reviewing the interim financial statements and the supplementary information, disclosed in accordance with Clause 26, Schedules 3, 6, 8, 9, 10, 12 and 14 of the Order and presented to us by the Directors.

We are responsible for reviewing the interim financial statements (excluding the supplementary information) in order to report to you whether, in our opinion on the basis of the procedures described below, anything has come to our attention that would cause us to believe that the interim financial statements have not been prepared, in all material respects, in accordance with New Zealand Equivalent to International Accounting Standard 34 (“NZ IAS 34”): Interim Financial Reporting and do not present a true and fair view of the financial position of ANZ New Zealand as at 31 December 2012 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, 10, 12 and 14 of the Order.

We are responsible for reviewing the supplementary information relating to credit and market risk exposures and capital adequacy in order to state whether, on the basis of the procedures described below, anything has come to our attention that would cause us to believe that the information disclosed in accordance with Schedule 9 is not in all material respects prepared in accordance with the Capital Adequacy Framework (Basel I Approach) (BS2) and Capital Adequacy Framework (Standardised Approach) (BS2A); and disclosed in accordance with Schedule 9 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 ANZ New Zealand personnel and analytical review procedures applied to the financial data, and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

KPMG has also provided other audit related services to ANZ New Zealand. In addition, certain partners and employees of our firm may also deal with ANZ New Zealand on normal terms within the ordinary course of trading activities of the business of ANZ New Zealand. These matters have not impaired our independence as auditors of ANZ New Zealand. We have no other relationship with, or interest in, ANZ New Zealand.

Review opinion

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

• a. the interim financial statements (excluding the supplementary information) have not been prepared, in all material respects, in accordance with NZ IAS 34: Interim Financial Reporting and do not present a true and fair view of the financial position of ANZ New Zealand as at 31 December 2012 and its financial performance and cash flows for the three months ended on that date;

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

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

Our review was completed on 14 February 2013 and our review opinion is expressed as at that date.

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Wellington