Australia and New Zealand Banking Group Ltd. — Interim / Quarterly Report 2019

May 20, 2019

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND REGISTERED BANK DISCLOSURE STATEMENT

FOR THE SIX MONTHS ENDED 31 MARCH 2019 NUMBER 40 | ISSUED MAY 2019

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

REGISTERED BANK DISCLOSURE STATEMENT FOR THE SIX MONTHS ENDED 31 MARCH 2019

CONTENTS

DISCLOSURE STATEMENT

Condensed Consolidated Interim Financial Statements (Interim Financial Statements)

Income Statement	3
Statement of Comprehensive Income	3
Balance Sheet	4
Cash Flow Statement	5
Statement of Changes in Equity	6
Notes to the Interim Financial Statements	7
Registered Bank Disclosures
General Disclosures	14
Additional Financial Disclosures	15
Asset Quality	20
Credit and Market Risk Exposures and Capital Adequacy	22
Insurance Business	22
Directors’ and New Zealand Chief Executive Officer’s Statement	23
Independent Auditor’s Review Report	24
SUPPLEMENTARY INFORMATION
Bank Financial Strength Dashboard	26
Other Information	27

GLOSSARY OF TERMS

In this Registered Bank Disclosure Statement (Disclosure Statement) unless the context otherwise requires:

Bank means ANZ Bank New Zealand Limited.

Banking Group means the Bank and all its controlled entities.

Immediate Parent Company means ANZ Funds Pty Limited, which is the immediate parent company of ANZ Holdings (New Zealand) Limited.

Ultimate Parent Bank means Australia and New Zealand Banking Group Limited.

Overseas Banking Group means the worldwide operations of Australia and New Zealand Banking Group Limited including its controlled entities.

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.

NZ Branch means the New Zealand business of the Ultimate Parent Bank.

ANZ New Zealand, We or Our means the New Zealand business of the Overseas Banking Group.

OnePath means OnePath Life (NZ) Limited.

Paymark means Paymark Limited.

UDC means UDC Finance Limited.

Registered Office is Level 10, 171 Featherston Street, Wellington, New Zealand, which is also ANZ New Zealand’s address for service.

RBNZ means the Reserve Bank of New Zealand.

APRA means the Australian Prudential Regulation Authority.

the Order means the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014.

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 - ANZ NEW ZEALAND

UNAUDITED

INTERIM FINANCIAL STATEMENTS

INCOME STATEMENT

INCOME STATEMENT
		6 months to
		31 Mar 19 31 Mar 18
	Note	NZ$m NZ$m
Interest income		3,322 3,248
Interest expense		(1,696) (1,676)
Net interest income		1,626 1,572
Other operating income	2	373 495
Net income from insurance business	12	27 81
Share of associates' profit		4 1
Operating income		2,030 2,149
Operatingexpenses		(745) (747)
Profit before credit impairment and income tax		1,285 1,402
Credit impairment charge	5	(32) (70)
Profit before income tax		1,253 1,332
Income tax expense		(324) (368)
Profit for theperiod		929 964

STATEMENT OF COMPREHENSIVE INCOME

STATEMENT OF COMPREHENSIVE INCOME
	6 months to
	31 Mar 19 31 Mar 18 NZ$m NZ$m
Profit for the period Other comprehensive income Items that will not be reclassified subsequently to profit or loss Items that may be reclassified subsequently to profit or loss Reserve movements: Unrealised losses recognised directly in equity Realised losses transferred to the income statement Income tax attributable to the above items	929 964 (16) 2 - (6) 4 3 3 -
Other comprehensive income after tax	(9) (1)
Total comprehensive income for the period	920 963

The notes appearing on pages 7 to 13 form an integral part of these financial statements

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

INTERIM FINANCIAL STATEMENTS

BALANCE SHEET

BALANCE SHEET
	Note
		31 Mar 19	30 Sep 18
As at		NZ$m	NZ$m
Assets
Cash and cash equivalents		2,697	2,407
Settlement balances receivable		630	656
Collateral paid		2,370	1,919
Trading securities		7,543	8,024
Derivative financial instruments		9,118	8,072
Investment securities		6,348	6,502
Net loans and advances Assets held for sale	4	131,788	128,677
	12	-	897
Investments in associates		-	6
Current tax assets		32	-
Goodwill and other intangible assets		3,279	3,289
Premises and equipment		340	325
Other assets		807	642
Total assets		164,952	161,416
Liabilities
Settlement balances payable		2,542	2,066
Collateral received		519	845
Deposits and other borrowings	7	115,091	112,920
Derivative financial instruments		9,872	8,133
Current tax liabilities		-	174
Deferred tax liabilities		6	23
Liabilities held for sale	12	-	334
Payables and other liabilities		945	955
Provisions	8	310	196
Debt issuances	9	23,939	24,534
Total liabilities (excludinghead office account)		153,224	150,180
Net assets (excludinghead office account)		11,728	11,236
Equity
Share capital and initial head office account		11,055	11,055
Reserves		36	33
Retained earnings		637	148
Total equity & head office account		11,728	11,236

The notes appearing on pages 7 to 13 form an integral part of these financial statements

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

CASH FLOW STATEMENT

CASH FLOW STATEMENT
		2019	2018
For the six months ended 31 March	Note	NZ$m	NZ$m
Profit after income tax		929	964
Adjustments to reconcile to net cash flows from operating activities:
Depreciation and amortisation		41	41
Loss on sale and impairment of premises and equipment		5	-
Net derivatives/foreign exchange adjustment		(16)	(412)
Proceeds from divestments net of intangibles disposed of, classified as investing activities		(646)	-
Other non-cash movements		(146)	(13)
Net (increase)/decrease in operating assets:
Collateral paid		(451)	(219)
Trading securities		481	(753)
Net loans and advances		(3,111)	(1,359)
Other assets		625	(338)
Net increase/(decrease) in operating liabilities:
Deposits and other borrowings (excluding borrowings from Immediate Parent and Ultimate Parent Bank)		2,968	4,365
Settlement balances payable		476	40
Collateral received		(326)	147
Other liabilities		(421)	(67)
Total adjustments		(521)	1,432
Net cash flows from operatingactivities1		408	2,396
Cash flows from investing activities
Investment securities:
Purchases		(1,054)	(1,770)
Proceeds from sale or maturity		1,288	1,530
Proceeds from divestments	12	747	-
Other assets		(51)	17
Net cash flows from investingactivities		930	(223)
Cash flows from financing activities
Debt issuances2
Issue proceeds		3,240	2,885
Redemptions		(3,145)	(3,020)
Borrowings from Immediate Parent and Ultimate Parent Bank:
Loans drawn down		512	497
Repayments		(1,280)	(1,352)
Dividends paid		(375)	(800)
Net cash flows from financingactivities		(1,048)	(1,790)
Net change in cash and cash equivalents		290	383
Cash and cash equivalents at beginning of period		2,407	2,439
Cash and cash equivalents at end ofperiod		2,697	2,822

1 Net cash provided by operating activities includes income taxes paid of NZ$519 million (2018: NZ$387 million). 2

2 Movement in debt issuances (Note 9 Debt Issuances) also includes a NZ$942 million decrease (2018: NZ$125 million increase) from the effect of foreign exchange rates, a NZ$341 million increase (2018: NZ$174 million decrease) from changes in fair value hedging instruments and a NZ$89 million decrease (2018: NZ$5 million increase) from other changes. 3

• Movement in borrowings from Immediate Parent and Ultimate Parent Bank (Note 7 Deposit and Other Borrowings) also includes a NZ$83 million decrease (2018: NZ$62 million decrease) from the effect of foreign exchange rates and a NZ$54 million increase (2018: NZ$32 million decrease) from changes in fair value hedging instruments.

The notes appearing on pages 7 to 13 form an integral part of these financial statements

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

INTERIM FINANCIAL STATEMENTS

STATEMENT OF CHANGES IN EQUITY

STATEMENT OF CHANGES IN EQUITY
		Share
		capital
		and initial	Investment
		head	securities	Cash flow
		office	revaluation	hedging	Retained	Total
		account	reserve	reserve	earnings	equity
	Note	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m
As at 1 October 2017		8,055	5	43	3,210	11,313
Profit or loss		-	-	-	964	964
Unrealised gains / (losses) recognised directly in equity		-	9	(15)	-	(6)
Realised losses transferred to the income statement		-	-	3	-	3
Actuarial gain on defined benefit schemes		-	-	-	2	2
Income tax credit / (expense) on items recognised directly in equity		-	(2)	3	(1)	-
Total comprehensive income for the period		-	7	(9)	965	963
Transactions with Immediate Parent Company in its capacity as owner:
Ordinarydividendspaid		-	-	-	(800)	(800)
Transactions with Immediate Parent Companyin its capacityas owner		-	-	-	(800)	(800)
As at 31 March 2018		8,055	12	34	3,375	11,476
As at 1 October 2018		11,055	11	22	148	11,236
NZ IFRS 9 transition adjustment	1	-	-	-	(53)	(53)
As at 1 October 2018 (adjusted)		11,055	11	22	95	11,183
Profit or loss		-	-	-	929	929
Unrealised gains / (losses) recognised directly in equity		-	(7)	7	-	-
Realised losses transferred to the income statement		-	-	4	-	4
Actuarial loss on defined benefit schemes		-	-	-	(16)	(16)
Income tax credit / (expense) on items recognised directly in equity		-	2	(3)	4	3
Total comprehensive income for the period		-	(5)	8	917	920
Transactions with Immediate Parent Company in its capacity as owner:
Ordinary dividends paid		-	-	-	(375)	(375)
Transactions with Immediate Parent Companyin its capacityas owner		-	-	-	(375)	(375)
As at 31 March 2019		11,055	6	30	637	11,728

The notes appearing on pages 7 to 13 form an integral part of these financial statements

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

These interim financial statements (financial statements) for ANZ New Zealand were issued on 20 May 2019 and should be read in conjunction with ANZ New Zealand’s financial statements for the year ended 30 September 2018.

These financial statements comply with:

• New Zealand Generally Accepted Accounting Practice (NZ GAAP), as defined in the Financial Reporting Act 2013;

• NZ IAS 34 Interim Financial Reporting and other applicable Financial Reporting Standards, as appropriate for publicly accountable for-profit entities; and

• IAS 34 Interim Financial Reporting .

Use of estimates, assumptions and judgements

The preparation of these financial statements requires the use of management judgement, estimates and assumptions that affect reported amounts and the application of accounting policies. Discussion of the critical accounting estimates and judgements, which include complex or subjective decisions or assessments, are provided in the previous full year financial statements. Such estimates and judgements are reviewed on an ongoing basis.

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;

• financial instruments measured at fair value through other comprehensive income;

• financial instruments held for trading; and

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

Changes in accounting policies

The accounting policies adopted by ANZ New Zealand are consistent with those adopted and disclosed in the previous full year financial statements, except as disclosed below.

The following new standards relevant to ANZ New Zealand have been adopted from 1 October 2018 and have been applied in the preparation of these financial statements:

NZ IFRS 9 Financial Instruments (NZ IFRS 9)

NZ IFRS 9 was effective for ANZ New Zealand from 1 October 2018. NZ IFRS 9 stipulates new requirements for the impairment of financial assets, classification and measurement of financial assets and financial liabilities and general hedge accounting. Details of the key requirements and estimated impacts on ANZ New Zealand are outlined below.

Impairment

NZ IFRS 9 replaced the incurred loss impairment model under NZ IAS 39: Financial Instruments: Recognition and Measurement (NZ IAS 39) with an expected credit loss (ECL) model incorporating forward looking information. The ECL model has been applied to all financial assets measured at amortised cost, debt instruments measured at fair value through other comprehensive income, lease receivables, certain loan commitments and financial guarantees. Under the ECL model, the following three-stage approach is applied to measuring ECL based on credit migration between the stages since origination:

• Stage 1: At the origination of a financial asset, a provision equivalent to 12 months ECL is recognised.

• Stage 2: Where there has been a significant increase in credit risk since origination, a provision equivalent to lifetime ECL is recognised.

• Stage 3: Similar to the previous NZ IAS 39 requirements for individual impairment provisions, lifetime ECL is recognised for loans where there is objective evidence of impairment.

Expected credit losses are probability weighted and determined by evaluating a range of possible outcomes, taking into account the time value of money, past events, current conditions and forecasts of future economic conditions.

Classification and measurement

There are three measurement classifications under NZ IFRS 9: Amortised cost, Fair Value through Profit or Loss and Fair Value through Other Comprehensive Income. Financial assets are classified into these measurement classifications taking into account the business model within which they are managed, and their contractual cash flow characteristics.

The classification and measurement requirements for financial liabilities under NZ IFRS 9 are largely consistent with NZ IAS 39 with the exception that for financial liabilities designated as measured at fair value, gains or losses relating to changes in the entity’s own credit risk are included in other comprehensive income. This part of the standard was early adopted by ANZ New Zealand on 1 October 2013.

General hedge accounting

NZ IFRS 9 introduces new hedge accounting requirements which more closely align accounting with risk management activities undertaken when hedging financial and non-financial risks.

NZ IFRS 9 provides ANZ New Zealand with an accounting policy choice to continue to apply the NZ IAS 39 hedge accounting requirements until the International Accounting Standards Board’s ongoing project on macro hedge accounting is completed. ANZ New Zealand has continued to apply the hedge accounting requirements of NZ IAS 39.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS

Transition to NZ IFRS 9

Other than as noted above under classification and measurement of financial liabilities, NZ IFRS 9 had a date of initial application for ANZ New Zealand of 1 October 2018. The classification and measurement, and impairment requirements, are applied retrospectively by adjusting opening retained earnings at 1 October 2018. ANZ New Zealand has not restated comparatives.

Impact

Impairment

The application of NZ IFRS 9 as at 1 October 2018 resulted in higher aggregate impairment provisions of approximately NZ$73 million, with an associated decrease in deferred tax liabilities of approximately NZ$20 million. The net impact on total equity is a reduction of approximately NZ$53 million. These remain subject to change until ANZ New Zealand finalises its financial statements for the year ending 30 September 2019.

Classification and measurement of financial assets

There have been no changes in classification and measurement as a result of the application of the business model and contractual cash flow characteristics tests.

NZ IFRS 15 Revenue from Contracts with Customers (NZ IFRS 15)

NZ IFRS 15 is effective for ANZ New Zealand from 1 October 2018 and replaces existing guidance on the recognition of revenue from contracts with customers. The standard requires identification of distinct performance obligations within a contract, and allocation of the transaction price of the contract to those performance obligations. Revenue is then recognised as each performance obligation is satisfied. The standard also provides guidance on whether an entity is acting as a principal or an agent which impacts the presentation of revenue on a gross or net basis.

ANZ New Zealand has assessed all revenue streams existing at the date of transition to the new standard and determined that the impact of NZ IFRS 15 is immaterial given the majority of ANZ New Zealand revenues are outside the scope of the standard. ANZ New Zealand has adopted NZ IFRS 15 retrospectively including restatement of prior period comparatives.

Presentation currency and rounding

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

Comparatives

Certain amounts in the comparative information have been reclassified to ensure consistency with the current period’s presentation.

Principles of consolidation

The financial statements consolidate the financial statements of the NZ Branch and all of the New Zealand businesses of all the subsidiaries of the Ultimate Parent Bank.

2. OTHER OPERATING INCOME

2. OTHER OPERATING INCOME
			6 months to
			31 Mar 19 31 Mar 18
		Note	NZ$m NZ$m
(i) Fee and commission revenue Lending fees Non-lending fees Commissions Funds management income			16 15 407 398 23 21 127 122
Fee and commission income Fee and commission expense			573 556 (241) (230)
Net fee and commission income			332 326
(ii) Other income Net trading gains Fair value gain / (loss) on hedging activities and financial liabilities designated at fair value			73 96 (140) 22
Net foreign exchange earnings and other financial instruments income Gain on UDC terminated transaction Insurance proceeds Sale of OnePath Sale of Paymark Other		12 12	(67) 118 - 20 - 20 59 - 39 - 10 11
Other income			41 169
Other operatingincome			373 495

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

3. SEGMENT REPORTING

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

Comparative data has been adjusted to reflect a change in the methodology for allocating earnings on capital to each segment. While neutral at the ANZ New Zealand level, this change has impacted net interest income and profit after income tax at the segment level.

Retail

Retail provides a full range of banking and wealth management services to consumer, private banking and small business banking customers. We deliver our services via our internet and app-based digital solutions and network of branches, mortgage specialists, relationship managers and contact centres.

Commercial

Commercial provides a full range of banking services including traditional relationship banking and sophisticated financial solutions through dedicated managers focusing on privately owned medium to large enterprises and the agricultural business segment.

Institutional

The Institutional division services global institutional and corporate customers across three product sets: Transaction Banking, Loans & Specialised Finance and Markets.

• Transaction Banking provides working capital and liquidity solutions including documentary trade, supply chain financing as well as cash management solutions, deposits, payments and clearing.

• Loans & Specialised Finance provides loan products, loan syndication, specialised loan structuring and execution, project and export finance, debt structuring and acquisition finance and corporate advisory.

• Markets provide risk management services on foreign exchange, interest rates, credit, commodities, debt capital markets in addition to managing ANZ New Zealand’s interest rate exposure and liquidity position.

Other

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

Operating segment analysis
For the six months ended 31 March	Retail Commercial Institutional Other Total
	2019 2018 2019 2018 2019 2018 2019		2018 2019 2018
	NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m		NZ$m NZ$m NZ$m
Net interest income Fee and commission revenue - Lending fees - Non-lending fees - Commissions - Funds management fees - Fee and commission expense	940 929 517 495 169 158 8 8 - - 8 7 368 353 9 9 30 36 23 21 - - - - 127 122 - - - - (241) (230) - - - -	- - - - - -	(10) 1,626 1,572 - 16 15 - 407 398 - 23 21 - 127 122 - (241) (230)
Net fee and commission income Other income Net income from insurance business Share of associates' profits	285 274 9 9 38 43 5 4 1 - 75 104 19 67 - - - - 4 1 - - - -	- (40) 8 -	- 332 326 61 41 169 14 27 81 - 4 1
Operating income Profit / (loss) after income tax	1,253 1,275 527 504 282 305 510 525 286 279 140 120	(32) (7)	65 2,030 2,149 40 929 964
Other segment
The Other segment profit after income tax comprises:
			2019	2018
For the six months ended 31 March			NZ$m	NZ$m
Central functions1			-	14
Technology and Group Centre2, 3			178	3
Economic hedges			(104)	13
Revaluation of insurancepolicies from changes in interest rates3			(81)	10
Total			(7)	40

Other segment The Other segment profit after income tax comprises:
	2019	2018
For the six months ended 31 March	NZ$m	NZ$m
Central functions1	-	14
Technology and Group Centre2, 3	178	3
Economic hedges	(104)	13
Revaluation of insurancepolicies from changes in interest rates3	(81)	10
Total	(7)	40

• 1 Central functions’ other income for the six months ended 31 March 2018 includes the NZ$20 million insurance proceeds (Note 2 Other Operating Income) that were received from a member of the Overseas Banking Group.

• 2 Technology and Group Centre’s other income for the six months ended 31 March 2019 includes the NZ$59 million gain on sale of OnePath and the NZ$39 million gain on sale of Paymark (Note 2 Other Operating Income).

• 3 Amounts for the six months ended 31 March 2019 include the transfer of NZ$86 million of accumulated after tax gains previously recognised in revaluation of insurance policies from changes in interest rates to Technology and Group Centre. These gains were transferred upon the sale of OnePath.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS

4. NET LOANS AND ADVANCES

4. NET LOANS AND ADVANCES
		31 Mar 19	30 Sep 18
	Note	NZ$m	NZ$m
Overdrafts		1,085	905
Credit cards		1,620	1,644
Term loans - housing		82,874	80,609
Term loans - non-housing		44,803	44,169
Finance lease and hirepurchase receivables		1,830	1,791
Subtotal		132,212	129,118
Unearned income		(246)	(239)
Capitalised brokerage/mortgage origination fees		309	314
Gross loans and advances		132,275	129,193
Provision for credit impairment	5	(487)	(516)
Net loans and advances		131,788	128,677

5. PROVISION FOR CREDIT IMPAIRMENT

PROVISION FOR CREDIT IMPAIRMENT – BALANCE SHEET

	Net loans and	Net loans and	Net loans and	Off-balance sheet credit	Off-balance sheet credit
	advances			related commitments1		Total
	31 Mar 19	30	Sep 18	31 Mar 19	30 Sep 18	31 Mar 19	30 Sep 18
Provision for credit impairment	NZ$m		NZ$m	NZ$m	NZ$m	NZ$m	NZ$m
Individual provision2	112		132	-	-	112	132
Collectiveprovision3	375		312	82	72	457	384
Totalprovision for credit impairment	487		444	82	72	569	516

1 Collective provision relating to off-balance sheet credit related commitments is included in provisions from 1 October 2018.

2 Individual provision comprises Stage 3 ECL assessed individually from 1 October 2018.

3 Collective provision comprises Stage 1, 2 and 3 ECL assessed collectively from 1 October 2018.

1Collective provision relating to off-balance sheet credit related commitments is included in provisions from 1 October 2018. 2Individual provision comprises Stage 3 ECL assessed individually from 1 October 2018. 3Collective provision comprises Stage 1, 2 and 3 ECL assessed collectively from 1 October 2018.
		Off-balance
	Net loans	sheet credit
	and	related
	advances	commitments	Total
Collective provision reconciliation	NZ$m	NZ$m	NZ$m
As at 30 September 2018	312	72	384
NZ IFRS 9 transition adjustment	60	13	73
As at 1 October 2018	372	85	457
Collective credit impairment charge / (release)	3	(3)	-
As at 31 March 2019	375	82	457

CREDIT IMPAIRMENT CHARGE – INCOME STATEMENT

CREDIT IMPAIRMENT CHARGE – INCOME STATEMENT
	6 months to
	31 Mar 19	31 Mar 18
Credit impairment charge	NZ$m	NZ$m
New and increased provisions	64	132
Write-backs	(21)	(30)
Recoveries of amountspreviouslywritten-off	(11)	(18)
Individual credit impairment charge	32	84
Collective credit impairment release	-	(14)
Total credit impairment charge	32	70

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

6. IMPAIRED AND PAST DUE LOANS

6. IMPAIRED AND PAST DUE LOANS
	31 Mar 19	30 Sep 18
	NZ$m	NZ$m
Loans that are at least 90 days past due but not impaired	288	221
Impaired loans	292	323

7. DEPOSITS AND OTHER BORROWINGS

7. DEPOSITS AND OTHER BORROWINGS
	31 Mar 19	30 Sep 18
	NZ$m	NZ$m
Term deposits	53,109	51,298
On demand and short term deposits	42,800	41,602
Deposits not bearing interest	10,836	10,224
UDC secured investments	783	931
Total customer deposits	107,528	104,055
Certificates of deposit	912	910
Deposits from banks and securities sold under repurchase agreements	256	517
Commercial paper	2,240	2,486
Borrowings from Ultimate Parent Bank and Immediate Parent Company	4,155	4,952
Deposits and other borrowings	115,091	112,920

8. PROVISIONS

8. PROVISIONS
		31 Mar 19	30 Sep 18
	Note	NZ$m	NZ$m
Employee entitlements		123	120
Collective provision on undrawn commitments	5	82	-
Other1		105	76
Provisions		310	196

1 Other provisions include provisions relating to customer remediation, make-good of leased premises and restructuring (including OnePath separation).

9. DEBT ISSUANCES

9. DEBT ISSUANCES
	31 Mar 19	30 Sep 18
	NZ$m	NZ$m
Senior debt	17,995	18,767
Covered bonds	4,164	3,929
Total unsubordinated debt	22,159	22,696
Subordinated debt
- ANZ Capital Notes	1,503	1,549
- Other	277	289
Total subordinated debt	1,780	1,838
Total debt issued	23,939	24,534

Covered bonds 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 Trust). The Covered Bond Trust is a member of the Banking Group, whereas the Covered Bond Guarantor is not a member of the Banking Group.

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 the Covered Bond Guarantor 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.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS

10. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Financial assets and financial liabilities carried at fair value on the balance sheet

ANZ New Zealand categorises financial assets and financial liabilities carried at fair value into a fair value hierarchy as required by NZ IFRS 13 Fair Value Measurement based on the observability of inputs used to measure fair value:

• Level 1 – valuations based on quoted prices (unadjusted) in active markets for identical financial instruments;

• Level 2 – valuations using inputs other than quoted prices included within Level 1 that are observable for a similar financial asset or liability, either directly or indirectly; and

• Level 3 – valuations using inputs for the asset or liability that are not based on observable market date (unobservable inputs).

The table below summarises the attribution of financial instruments carried at fair value to the fair value hierarchy:

	Fair value measurements
	Quoted market price (Level 1) Using observable inputs (Level 2) Using unobservable inputs (Level 3) Total 31 Mar 19 30 Sep 18 31 Mar 19 30 Sep 18 31 Mar 19 30 Sep 18 31 Mar 19 30 Sep 18 NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Assets Trading securities Derivative financial instruments Investment securities Investments backinginsurance contract liabilities1	7,204 6,795 339 1,229 - - 7,543 8,024 11 7 9,102 8,062 5 3 9,118 8,072 6,347 6,457 - 44 1 1 6,348 6,502 - - - 127 - - - 127
Total	13,562 13,259 9,441 9,462 6 4 23,009 22,725
Liabilities Deposits and other borrowings Derivative financial instruments Other financial liabilities	- - 2,240 2,486 - - 2,240 2,486 15 10 9,854 8,122 3 1 9,872 8,133 159 110 - - - - 159 110
Total	174 120 12,094 10,608 3 1 12,271 10,729

1 Including items reclassified as held for sale.

Financial assets and financial liabilities not measured at fair value

Below is a comparison of the carrying amounts as reported on the balance sheet and fair values of financial asset and financial liability categories other than those categories where the carrying amount is at fair value or considered a reasonable approximation of fair value.

The fair values below have been calculated using discounted cash flow techniques where contractual future cash flows of the instrument are discounted using discount rates incorporating wholesale market rates or market borrowing rates of debt with similar maturities or a yield curve appropriate for the remaining term to maturity.

appropriate for the remaining term to maturity.
	Carrying amount		Fair	value
	31 Mar 19	30 Sep 18	31 Mar 19	30 Sep 18
	NZ$m	NZ$m	NZ$m	NZ$m
Financial assets
Net loans and advances1	131,788	128,677	132,235	128,959
Total	131,788	128,677	132,235	128,959
Financial liabilities
Deposits and other borrowings2	112,851	110,434	113,052	110,643
Debt issuances1	23,939	24,534	24,087	24,724
Total	136,790	134,968	137,139	135,367

1 Fair value hedging is applied to certain financial instruments within these categories. The resulting fair value adjustments mean that the carrying value differs from the amortised cost.

2 Excludes commercial paper (Note 7 Deposits and Other Borrowings) designated at fair value through profit or loss.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

11. COMMITMENTS AND CONTINGENT LIABILITIES

11. COMMITMENTS AND CONTINGENT LIABILITIES
	31 Mar 19 30 Sep 18 NZ$m NZ$m
Credit related commitments and contingencies
Contract amount of:
Undrawn facilities	26,653 26,995
Guarantees and letters of credit	1,351 1,531
Performance related contingencies	1,460 1,329
Total	29,464 29,855

ANZ New Zealand guarantees the performance of customers by issuing standby letters of credit and guarantees to third parties, including its Ultimate Parent Bank. The risk involved is essentially the same as the credit risk involved in extending loan facilities to customers, therefore these transactions are subjected to the same credit origination, portfolio management and collateral requirements for customers applying for loans. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements.

Other contingent liabilities

There are outstanding court proceedings, claims and possible claims for and against ANZ New Zealand. Where relevant, expert legal advice has been obtained and, in the light of such advice, provisions and/or disclosures as deemed appropriate have been made. In some instances we have not disclosed the estimated financial impact of the individual items either because it is not practicable to do so or because such disclosure may prejudice the interests of ANZ New Zealand.

In recent years there has been an increase in the number of matters on which ANZ New Zealand engages with its regulators. There have been significant increases in the nature and scale of regulatory investigations and reviews, civil and criminal enforcement actions (whether by court action or otherwise) and the quantum of fines issued by regulators, particularly against financial institutions globally. The nature of these investigations and reviews can be wide ranging and, for example, may include a range of matters including responsible lending practices, product suitability and distribution, interest and fees and the entitlement to charge them, wealth advice, insurance distribution, pricing, competition, conduct in financial markets and capital market transactions, reporting and disclosure obligations and product disclosure documentation. ANZ New Zealand has received various notices and requests for information from its regulators as part of both industry-wide and ANZ New Zealand-specific reviews and has also made disclosures to its regulators at its own instigation. There may be exposures to customers which are additional to any regulatory exposures. These could include class actions, individual claims or customer remediation or compensation activities. The outcomes and total costs associated with such reviews and possible exposures remain uncertain.

Warranties and indemnities

ANZ New Zealand has provided warranties, indemnities and other commitments in favour of the purchaser in connection with various disposals of businesses and assets and other transactions, covering a range of matters and risks. It is exposed to potential claims under those warranties, indemnities and commitments.

12. DIVESTMENTS

OnePath and Paymark

On 30 November 2018, ANZ New Zealand sold OnePath to Cigna Corporation and on 11 January 2019, ANZ New Zealand sold its 25% shareholding in Paymark to Ingenico Group. ANZ New Zealand recognised net gains on sale of NZ$59 million and NZ$39 million respectively, which are included in other operating income.

Assets and liabilities sold

Assets and liabilities sold
		NZ$m
Investments backing insurance contract liabilities		101
Other assets, net of amounts payable to the Bank		6
Life insurance contract assets		675
Investments in associates - Paymark		7
Goodwill and other intangible assets		101
Total assets		890
Deposits and other borrowings (deposits with the Bank)		(50)
Current tax liabilities		18
Deferred tax liabilities		178
Payables and other liabilities		146
Provisions		2
Total liabilities		294
Net assets sold		596

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

REGISTERED BANK DISCLOSURES

B1. GENERAL DISCLOSURES

Guarantees

No material obligations of the NZ Branch are guaranteed as at 20 May 2019.

Covered bonds issued by ANZ New Zealand (Int’l) Limited, a subsidiary of the Bank, are guaranteed. Refer to page 11 for further details.

Changes in the Ultimate Parent Bank’s Board of Directors

Lee Hsien Yang retired as a Non-Executive Director on 19 December 2018. There have been no other changes to the Directors of the Ultimate Parent Bank since 30 September 2018, the balance date of the last full year disclosure statement.

Auditors

KPMG, 18 Viaduct Harbour Avenue, Auckland, New Zealand.

Credit rating

As at 20 May 2019 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:

The Ultimate Parent Bank’s credit ratings are:
RatingAgency	Credit Rating	Qualification
S&P Global Ratings	AA-	Outlook Negative
Fitch Ratings	AA-	Outlook Stable
Moody’s Investors Service	Aa3	Outlook Stable

Directors’ and New Zealand Chief Executive Officer’s statements

The Directors' and New Zealand Chief Executive Officer's statement is included on page 23.

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 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 website shareholder.anz.com.

Auditor’s review report

The auditor’s review report is included on page 24.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

B2. ADDITIONAL FINANCIAL DISCLOSURES

Additional information on the balance sheet

As at 31 March 2019		NZ$m
Total interest earning and discount bearing assets		150,770
Total interest and discount bearing liabilities		129,656
Total amounts due from related entities		4,202
Total amounts due to related entities		8,738
Total liabilities of the NZ Branch less amounts due to related entities		1,058

Assets charged as security for liabilities

These amounts exclude the amounts disclosed as collateral paid on the balance sheet that relate to derivative liabilities. The terms and conditions of the collateral agreements are included in the standard Credit Support Annex that forms part of the International Swaps and Derivatives Association Master Agreement.

Assets charged as security for liabilities include the following types of instruments:

• Securities provided as collateral for repurchase transactions. These transactions are governed by standard industry agreements.

• UDC secured investments are secured by a security interest granted under the trust deed over all of UDC’s present and future assets and undertakings, to Trustees Executors Limited, as supervisor. The assets subject to the security interest comprise mainly loans to UDC's customers and certain plant and equipment. The security interest secures all amounts payable by UDC on the UDC secured investments and all other moneys payable by UDC under the trust deed.

• Specified residential mortgages provided as security for notes and bonds issued to investors as part of the Bank’s covered bond programme.

The carrying amounts of assets pledged as security are as follows:

As at 31 March 2019	NZ$m
Securities sold under agreements to repurchase	151
Assets pledged as collateral for UDC secured investments	3,374
Residential mortgagespledged as securityfor covered bonds	10,330

Additional information on the income statement

The amounts of net trading gains or losses and other fair value adjustments are included in Note 2 Other Operating Income. ANZ New Zealand does not have any loans and advances designated at fair value through profit or loss. Other operating income for the purposes of the Order comprises net fee and commission income, all other items of other income (all in Note 2 Other Operating Income), net income from insurance business and share of associates’ profit (both shown on the income statement).

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

REGISTERED BANK DISCLOSURES

Additional information on concentrations of credit risk

Analysis of financial assets by industry is based on Australian and New Zealand Standard Industrial Classification (ANZSIC) codes. The significant categories shown are the level one New Zealand Standard Industry Output Categories (NZSIOC), except that Agriculture is shown separately as required by the Order.

Composition of financial instruments that give rise to credit risk by industry group are presented below:

			Off-balance
		Other	sheet credit
	Loans and	financial	related
	advances3	assets	commitments4	Total
As at 31 March 2019	NZ$m	NZ$m	NZ$m	NZ$m
New Zealand residents
Agriculture	17,907	85	1,502	19,494
Forestry and fishing, agriculture services	1,392	7	261	1,660
Manufacturing	2,936	197	1,709	4,842
Electricity, gas, water and waste services	1,306	437	1,600	3,343
Construction	1,866	28	977	2,871
Wholesale trade	1,496	59	1,736	3,291
Retail trade and accommodation	2,971	31	1,034	4,036
Transport, postal and warehousing	1,336	94	755	2,185
Finance and insurance services	827	5,344	1,396	7,567
Public administration and safety1	248	8,606	1,070	9,924
Rental, hiring & real estate services	33,157	737	3,466	37,360
Professional, scientific, technical, administrative and support services	1,229	9	582	1,820
Households	60,394	199	11,317	71,910
All other New Zealand residents2	2,423	195	1,942	4,560
Subtotal	129,488	16,028	29,347	174,863
Overseas
Finance and insurance services	283	13,017	117	13,417
Households	1,595	5	-	1,600
All other non-NZ residents	846	91	-	937
Subtotal	2,724	13,113	117	15,954
Gross subtotal	132,212	29,141	29,464	190,817
Provision for credit impairment	(487)	-	(82)	(569)
Subtotal	131,725	29,141	29,382	190,248
Unearned income	(246)	-	-	(246)
Capitalised brokerage / mortgage origination fees	309	-	-	309
Maximum exposure to credit risk	131,788	29,141	29,382	190,311

1 Public administration and safety includes exposures to local government administration and central government administration, defence and public safety. 2

2 Other includes exposures to mining, information media and telecommunications, education and training, health care and social assistance and arts, recreation and other services. 3

Excludes individual and collective provisions for credit impairment held in respect of off-balance sheet credit related commitments.

4

Off-balance sheet credit related commitments comprise undrawn facilities, customer contingent liabilities and letters of offer.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

Additional information on concentrations of funding

Analysis of funding liabilities by industry is based on ANZSIC codes. The significant categories shown are the level one NZSIOC.

As at 31 March 2019	Note	NZ$m
Funding composition
Customer deposits	7	107,528
Wholesale funding
Debt issuances		23,939
Certificates of deposit and commercial paper		3,152
Other borrowings		4,411
Total wholesale funding		31,502
Total funding		139,030
Customer deposits by industry - New Zealand residents
Agriculture, forestry and fishing		3,935
Manufacturing		2,128
Construction		2,128
Wholesale trade		1,573
Retail trade and accommodation		1,618
Financial and insurance services		12,136
Rental, hiring and real estate services		3,058
Professional, scientific, technical, administrative and support services		5,377
Public administration and safety		1,286
Arts, recreation and other services		1,966
Households		57,902
All other New Zealand residents1		4,043
		97,150
Customer deposits by industry - overseas
Households		9,821
All other		557
		10,378
Total customer deposits		107,528
Wholesale funding (financial and insurance services industry)
New Zealand		5,514
Overseas		25,988
Total wholesale funding		31,502
Total funding		139,030
Concentrations of funding by geography
New Zealand		102,664
Australia		5,355
United States		13,360
Europe		10,360
Other countries		7,291
Total funding		139,030

1 Other includes mining; electricity, gas, water and waste services; transport, postal and warehousing; information media and telecommunications; education and training; health care and social assistance.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

REGISTERED BANK DISCLOSURES

Additional information on interest rate sensitivity

The following tables represent the interest rate sensitivity of ANZ New Zealand'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.

		Up to	Over 3 to	Over 6 to	Over 1 to	Over	Not bearing
	Total	3 months	6 months	12 months	2 years	2 years	interest
As at 31 March 2019	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m
Assets
Cash and cash equivalents	2,697	2,355	-	-	-	-	342
Settlement balances receivable	630	-	-	-	-	-	630
Collateral paid	2,370	2,370	-	-	-	-	-
Trading securities	7,543	503	107	388	928	5,617	-
Derivative financial instruments	9,118	-	-	-	-	-	9,118
Investment securities	6,348	253	15	149	1,210	4,720	1
Net loans and advances	131,788	64,605	11,602	25,373	22,724	7,851	(367)
Other financial assets	728	-	-	-	-	-	728
Total financial assets	161,222	70,086	11,724	25,910	24,862	18,188	10,452
Liabilities
Settlement balances payable	2,542	784	-	-	-	-	1,758
Collateral received	519	519	-	-	-	-	-
Deposits and other borrowings	115,091	74,763	14,102	10,602	2,469	2,319	10,836
Derivative financial instruments	9,872	-	-	-	-	-	9,872
Debt issuances	23,939	2,325	2,018	443	4,969	14,184	-
Other financial liabilities	700	159	-	-	-	-	541
Total financial liabilities	152,663	78,550	16,120	11,045	7,438	16,503	23,007
Hedginginstruments	-	21,534	(8,670)	(7,689)	(12,226)	7,051	-
Interest sensitivity gap	8,559	13,070	(13,066)	7,176	5,198	8,736	(12,555)

Additional information on liquidity risk

Maturity analysis of financial liabilities

The table below provides residual contractual maturity analysis of financial liabilities at 31 March 2019 within relevant maturity groupings. All outstanding debt issuances are profiled on the earliest date on which ANZ New Zealand may be required to pay. The amounts represent principal and interest cash flows – so they may differ from equivalent amounts reported on the balance sheet.

		Less than	3 to 12	1 to 5	After
	On demand	3 months	months	years	5 years	Total
As at 31 March 2019	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m
Settlement balances payable	1,470	1,087	-	-	-	2,557
Collateral received	-	519	-	-	-	519
Deposits and other borrowings	53,845	28,976	28,623	4,652	1,120	117,216
Derivative financial liabilities (trading)	-	7,623	-	-	-	7,623
Debt issuances1	-	58	2,318	19,948	3,227	25,551
Other financial liabilities	-	95	6	138	22	261
Derivative financial instruments
(balance sheet management)
- gross inflows	-	1,453	3,134	9,145	937	14,669
- gross outflows	-	(1,572)	(3,540)	(9,870)	(994)	(15,976)

1 Any callable wholesale debt instruments have been included at their next call date.

At 31 March 2019, NZ$67 million of ANZ New Zealand’s NZ$409 million of non-credit related commitments and all NZ$29,464 million of its credit related commitments and contingent liabilities mature in less than 1 year, based on the earliest date on which ANZ New Zealand may be required to pay.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

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 internal and regulatory liquidity scenario metrics.

Zealand’s liquidity portfolio is based on the amount required to meet its internal and regulatory liquidity scenario metrics.
As at 31 March 2019	NZ$m
Cash and balances with central banks	2,273
Certificates of deposit	144
Government, local body stock and bonds	7,645
Reserve Bank bills	55
Other bonds	5,663
Total liquidity portfolio	15,780

The Bank also held unencumbered internal residential mortgage backed securities which would entitle ANZ New Zealand to enter into repurchase transactions with a value of NZ$7,434 million at 31 March 2019.

Reconciliation of mortgage related amounts

Reconciliation of mortgage related amounts
As at 31 March 2019	Note	NZ$m
Term loans - housing1	4	82,874
Less: fair value hedging adjustment		(8)
Less: housingloans made to corporate customers		(2,179)
On-balance sheet residential mortgage exposures	B4	80,687
Add: off-balance sheet residential mortgage exposures	B4	8,242
Total residential mortgage exposures asper LVR analysis	B4	88,929

1 Term loans – housing includes loans secured over residential property for owner-occupier, residential property investment and business purposes.

Overseas Banking Group Profitability and Size
	31 Mar 19
Net Profit for the six months ended 31 March 2019 (AUDm)1	3,182
Net profit after tax for the year ended 31 March 2019 as a percentage of average total assets	0.65%
Total assets (AUDm)	980,244
Percentage change in total assets in the 12 months to 31 March 2019	4.76%

1 Net profit after tax for the period includes AUD 9 million of profit attributable to non-controlling interests.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

REGISTERED BANK DISCLOSURES

B3. ASSET QUALITY

Movements in components of loss allowance - total

Movements in components of loss allowance - total
			Stage 3
	Stage 1 NZ$m	Stage 2 NZ$m	Collectively assessed Individually assessed NZ$m NZ$m	Total NZ$m
Net loans and advances - total
As at 1 October 2018	160	171	41 132	504
Transfer between stages	19	(20)	2 (1)	-
New and increased provisions (net of collective provision releases)	(22)	22	2 65	67
Write-backs	-	-	- (21)	(21)
Recoveries of amountspreviouslywritten off	-	-	- (11)	(11)
Credit impairment charge / (release)	(3)	2	4 32	35
Bad debts written-off (excluding recoveries)	-	-	- (58)	(58)
Add back recoveries of amounts previously written off	-	-	- 11	11
Discount unwind	-	-	- (5)	(5)
As at 31 March 2019	157	173	45 112	487
Off-balance sheet credit related commitments - total
As at 1 October 2018	60	23	2 -	85
Transfer between stages	3	(3)	- -	-
New and increased provisions (net of collective provision releases)	(8)	5	- -	(3)
Write-backs	-	-	- -	-
Recoveries of amountspreviouslywritten off	-	-	- -	-
Credit impairment charge / (release)	(5)	2	- -	(3)
Bad debts written-off (excluding recoveries)	-	-	- -	-
Add back recoveries of amounts previously written off	-	-	- -	-
Discount unwind	-	-	- -	-
As at 31 March 2019	55	25	2 -	82
Impacts of changes in gross financial assets on loss allowances - total
			Stage 3
Stage 1 Gross loans and advances - total NZ$m		Stage 2 NZ$m	Collectively assessed Individually assessed NZ$m NZ$m	Total NZ$m
As at 1 October 2018 120,971		7,550	349 323	129,193
Additions 11,485		1,298	202 129	13,114
Deletions (9,252)		(551)	(69) (102)	(9,974)
Amounts written off -		-	- (58)	(58)
As at 31 March 2019 123,204		8,297	482 292	132,275
Loss allowance as at 31 March 2019 157		173	45 112	487
Off-balance sheet credit related commitments - total
As at 1 October 2018 28,632		1,198	11 14	29,855
Additions 282		1,284	60 7	1,633
Deletions (1,933)		(80)	(3) (8)	(2,024)
Amounts written off -		-	- -	-
As at 31 March 2019 26,981		2,402	68 13	29,464
Loss allowance as at 31 March 2019 55		25	2 -	82

Impacts of changes in gross financial assets on loss allowances - total
			Stage 3
			Collectively	Individually
	Stage 1	Stage 2	assessed	assessed	Total
Gross loans and advances - total	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m
As at 1 October 2018	120,971	7,550	349	323	129,193
Additions	11,485	1,298	202	129	13,114
Deletions	(9,252)	(551)	(69)	(102)	(9,974)
Amounts written off	-	-	-	(58)	(58)
As at 31 March 2019	123,204	8,297	482	292	132,275
Loss allowance as at 31 March 2019	157	173	45	112	487
Off-balance sheet credit related commitments - total
As at 1 October 2018	28,632	1,198	11	14	29,855
Additions	282	1,284	60	7	1,633
Deletions	(1,933)	(80)	(3)	(8)	(2,024)
Amounts written off	-	-	-	-	-
As at 31 March 2019	26,981	2,402	68	13	29,464
Loss allowance as at 31 March 2019	55	25	2	-	82

Explanation of how changes in the gross carrying amounts of gross loans and advances contributed to changes in loss allowance

Overall, loss allowances on gross loans and advances have remained stable at approximately 0.4% of gross loans and advances. Loss allowances have decreased by NZ$17 million (3%) driven by NZ$58 million of amounts written off. The remaining NZ$41 million increase in loss allowances is driven by an increase in past due but not impaired assets, which have increased from 1.5% to 1.8% of gross exposures.

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UNAUDITED

Past due assets and other asset quality information

	Total
As at 31 March 2019	NZ$m
Past due assets
Less than 30 days past due	1,647
At least 30 days but less than 60 days past due	340
At least 60 days but less than 90 days past due	165
At least 90 dayspast due	288
Totalpast due but not impaired	2,440
Other asset quality information
Undrawn facilities with impaired customers	13
Other assets under administration	11

ANZ New Zealand does not have any loans and advances designated at fair value.

Overseas Banking Group asset quality

As at 31 March 2019
Gross impaired assets (AUDm)	2,022
Gross impaired assets as a percentage of total assets	0.2%
Individual provision (AUDm)	891
Individual provision as a percentage of gross impaired assets	44.1%
Collectiveprovision (AUDm)	3,378

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

REGISTERED BANK DISCLOSURES

B4. CREDIT AND MARKET RISK EXPOSURES AND CAPITAL ADEQUACY

APRA Basel III capital ratios

APRA Basel III capital ratios
			Ultimate Parent Bank
	Overseas Banking Group		(Extended Licensed Entity)
As at 31 March	2019	2018	2019	2018
Common equity tier 1 capital	11.5%	11.0%	11.2%	10.9%
Tier 1 capital	13.4%	12.9%	13.2%	12.9%
Total capital	15.3%	14.9%	15.3%	15.1%

The Ultimate Parent Bank and the Overseas Banking Group are required to hold minimum capital as determined by APRA, which is at least equal to that specified under the Basel III capital framework.

APRA has authorised the Ultimate Parent Bank and the Overseas Banking Group to use:

• the Advanced Internal Ratings Based (AIRB) methodology for calculation of credit risk weighted assets. There are however small portfolios (mainly retail and local corporates in Asia Pacific) where the Overseas Banking Group applies the standardised approach.

• the Advanced Measurement Approach (AMA) for the operational risk weighted asset equivalent.

The Overseas Banking Group exceeded the minimum capital requirements set by APRA as at 31 March 2019 and for the comparative prior periods.

The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 March 2019. The Overseas Banking Group’s Pillar 3 disclosure document for the quarter ended 31 March 2019, 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.

Market risk

The aggregate market risk exposures below have been calculated in accordance with the RBNZ Banking Supervision Handbook document Capital Adequacy Framework (Standardised Approach) BS2A. The peak end-of-day market risk exposures are for the six months ended 31 March 2019.

_Adequacy Framework (Standardised Approach)_BS2A. The peak end-of-day market risk exposu	res are for the six months en	res are for the six months en	ded 31 March	2019.
	Implied risk weighted
	exposure		Notional capital charge
	Period end	Peak	Period end	Peak
As at 31 March 2019	NZ$m	NZ$m	NZ$m	NZ$m
Interest rate risk	4,586	6,605	367	528
Foreign currency risk	111	157	9	13
Equityrisk	1	1	-	-

Additional mortgage information

As required by RBNZ, loan-to-valuation-ratios (LVR) 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 have been accepted by the customer.

the customer.
	On-balance	Off-balance
	sheet	sheet	Total
As at 31 March 2019	NZ$m	NZ$m	NZ$m
LVR range
Does not exceed 60%	40,201	5,623	45,824
Exceeds 60% and not 70%	18,309	1,339	19,648
Exceeds 70% and not 80%	17,933	969	18,902
Does not exceed 80%	76,443	7,931	84,374
Exceeds 80% and not 90%	2,993	139	3,132
Exceeds 90%	1,251	172	1,423
Total	80,687	8,242	88,929

B5. INSURANCE BUSINESS

ANZ New Zealand previously conducted insurance business through its subsidiary OnePath. OnePath was sold to Cigna Corporation on 30 November 2018, and as at 31 March 2019, ANZ New Zealand does not conduct any insurance business. ANZ New Zealand continues to market and distribute life insurance products provided by OnePath.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

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:

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

• The Disclosure Statement is not false or misleading.

Over the six months ended 31 March 2019, after due enquiry, each Director of the Ultimate Parent Bank and the Chief Executive Officer – NZ Branch believes that:

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

• The NZ Branch and the Bank had systems in place to monitor and control adequately the material risks of Relevant Members of ANZ New Zealand 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.

Signed by the Chief Executive Officer – NZ Branch

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Penny Dell Chief Executive Officer – NZ Branch 20 May 2019

Signed on behalf of all the Directors of the Ultimate Parent Bank

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David Hisco Responsible Person 20 May 2019

on behalf of the Directors of the Ultimate Parent Bank:

Ilana Atlas Paula Dwyer Shayne Elliott David Gonski, AC Jane Halton, AO, PSM Rt Hon Sir John Key, GNZM AC Graeme Liebelt John Macfarlane

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE DIRECTORS OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

REPORT ON THE HALF YEAR DISCLOSURE STATEMENT

CONCLUSION

Based on our review of the interim financial statements and registered bank disclosures (together referred to as ‘the disclosure statement’) of the New Zealand business of Australia and New Zealand Banking Group Limited and its subsidiaries (ANZ New Zealand) on pages 3 to 22, nothing has come to our attention that causes us to believe that:

• the interim financial statements on pages 3 to 13 do not present fairly in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting , in all material respects, ANZ New Zealand’s financial position as at 31 March 2019 and its financial performance and cash flows for the 6 month period ended on that date;

• the registered bank disclosures in sections B2, B3 and B5 disclosed in accordance with schedules 5, 7, 12 and 14 of the Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014 (as amended) (the Order) respectively, do not fairly state, in all material respects, the matters to which they relate in accordance with those schedules; and

• the registered bank disclosures relating to credit and market risk exposures and capital adequacy in section B4 are not, in all material respects, disclosed in accordance with schedule 9 of the Order.

We have completed a review of the accompanying half year disclosure statement which comprises:

• the interim financial statements formed of:

• the consolidated balance sheet as at 31 March 2019;

• the consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the year then 6 month period then ended; and

• notes, including a summary of significant accounting policies and other explanatory information.

• the registered bank disclosures prescribed in Schedules 5, 7, 9, 12 and 14 of the Order.

BASIS FOR CONCLUSION

A review of the half year disclosure statement in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity (NZ SRE 2410) is a limited assurance engagement. The auditor performs procedures, consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

As the auditor of ANZ New Zealand, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial statements.

Our firm has also provided other services to ANZ New Zealand in relation to review and other assurance engagements. Subject to certain restrictions, 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 reviewer of ANZ New Zealand. The firm has no other relationship with, or interest in, ANZ New Zealand.

USE OF THE INDEPENDENT REVIEW REPORT

This independent review report is made solely to the directors as a body of ANZ New Zealand. Our review work has been undertaken so that we might state to the directors those matters we are required to state to them in the independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the directors as a body for our work, this independent review report, or any of the opinions we have formed.

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

INDEPENDENT AUDITOR’S REVIEW REPORT

RESPONSIBILITIES OF THE DIRECTORS FOR THE HALF YEAR DISCLOSURE STATEMENT

The Directors, on behalf of ANZ New Zealand, are responsible for:

• the preparation and fair presentation of the half year disclosure statement in accordance with IAS 34, NZ IAS 34 and Schedules 3, 5, 7, 12 and 14 of the Order;

• the preparation and fair presentation of ANZ New Zealand’s disclosures in regards to credit and market risk exposures and capital adequacy in accordance with Schedule 9 of the Order;

• implementing necessary internal controls to enable the preparation of a half year disclosure statement that is fairly presented and free from material misstatement, whether due to fraud or error; and

• assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate or to cease operations, or have no realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE REVIEW OF THE HALF YEAR DISCLOSURE STATEMENT

Our responsibility is to express a conclusion on the half year disclosure statement based on our review. We conducted our review in accordance with NZ SRE 2410. NZ SRE 2410 requires us to conclude whether anything has come to attention that causes us to believe that:

• the interim financial statements do not present fairly in all material respects ANZ New Zealand’s financial position as at 31 March 2019 and its financial performance and cash flows for the 6 month period ended on that date;

• the interim financial statements do not, in all material respects, comply with IAS 34 and NZ IAS 34;

• the registered bank disclosures in sections B2, B3, and B5 do not, fairly state, in all material respects, the matters to which it relates in accordance with Schedules 5, 7, 12 and 14 of the Order; and

• the registered bank disclosures relating to credit and market risk exposures and capital adequacy in section B4 is not, in all material respects, disclosed in accordance with Schedule 9 of the Order.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on the half year disclosure statement. This description forms part of our independent review report.

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KPMG Auckland

20 May 2019

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

BANK FINANCIAL STRENGTH DASHBOARD

Background

This section does not form part of the Disclosure Statement. It contains information in respect of ANZ New Zealand included on the Bank Financial Strength Dashboard (Dashboard) published on RBNZ’s website. There is no requirement for the Directors to review or approve this information.

Amounts below may differ slightly from those published by RBNZ due to rounding differences. The tables include reconciliations to amounts included in the Disclosure Statement where there are classification differences between the financial statements and the Dashboard.

D1. ASSET QUALITY

D1. ASSET QUALITY
	Housing	Consumer	Business	Agriculture	All other	Total
As at 31 March 2019	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m
Total loans	80,432	3,524	29,533	17,483	1,306	132,278
Impaired loans	36	12	44	156	44	292
Loans 90 days past due but not impaired	200	25	50	13	-	288
Total non-performing loans	236	37	94	169	44	580
Non-performing loans ratio (%)	0.29%	1.05%	0.32%	0.97%	3.37%	0.44%
Individual provisions	11	6	29	31	35	112
Collective provisions	54	68	188	61	4	375
On-balance sheet residential mortgage exposures with LVRs that:
Exceeds 80% and not 90%						3.7%
Exceeds 90%						1.6%

A reconciliation of the amounts in this table to the financial statements is included in the Other Information on page 27.

D2. PROFITABILITY / PERFORMANCE

D2. PROFITABILITY / PERFORMANCE
	Financial statements	Dashboard
	For the 6 months ended 31 March 2019	Less: for the 3 months ended 31 December 2018 For the 3 months ended 31 March 2019
	NZ$m NZ$m NZ$m
Interest income	3,322	(1,675) 1,647
Interest expense	1,696	(854) 842
Net interest income	1,626	(821) 805
Gains/losses on trading and hedging	(67)	62 (5)
Fee and commission income	332	(162) 170
All other income	139	(89) 50
Operating expenses	745	(385) 360
Impaired asset expense	32	(13) 19
Profit before tax	1,253	(612) 641
Tax expense	324	(156) 168
Profit after tax	929	(456) 473
Return on assets (%)		1.2%
Return on equity (%)		16.3%
Net interest margin (%)		2.2%

The Supplementary Information does not form part of the Disclosure Statement

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AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND

UNAUDITED

BANK FINANCIAL STRENGTH DASHBOARD

D3. FINANCIAL POSITION

D3. FINANCIAL POSITION
Financial statements As at 31 March 2019 NZ$m	Classification differences Other bank deposits and other assets Securities purchased under agreements to re-sell Subordinated loan from related party Dashboard NZ$m NZ$m NZ$m NZ$m
Cash and bank deposits1 5,067 Debt securities held2 13,891 Net loans and advances 131,788 Derivatives in an asset position 9,118 All other assets 5,088	(83) (336) - 4,648
	- - - 13,891
	- - - 131,788
	- - - 9,118
	83 336 - 5,507
Total assets 164,952	- - - 164,952
Deposits 107,528 Debt securities issued3 27,091 Other borrowings4 4,930 Derivatives in a liability position 9,872 All other liabilities 3,803	- - - 107,528
	- - (277) 26,814
	1,469 - 277 6,676
	- - - 9,872
	(1,469) - - 2,334
Total liabilities(excludinghead office account) 153,224	- - - 153,224
Equity 11,728	- - - 11,728

1 Comprises cash and cash equivalents and collateral paid

2 Comprises trading securities and investment securities 3

3 Comprises debt issuances plus certificates of deposit and commercial paper from deposits and other borrowings

4 Comprises collateral received and the remaining items of deposits and other borrowings

OTHER INFORMATION

Reconciliation of total loans by industry and sector

The financial statements and Dashboard include amounts for total loans which are based on different definitions. The table below reconciles the various amounts. This information does not form part of the Disclosure Statement.

Housing loans and residential mortgage definitions

Housing loans comprise loans for owner occupier property use and residential investor property use. Owner occupiers are borrowers who own or are in the process of buying or building the house or flat they will live in as their principal place of residence. An owner can occupy more than one property e.g. a family home and a holiday home. Only households can have owner occupier property use loans. Investors are entities or persons borrowing for the purpose of building or purchasing residential property to rent. This includes ‘Mum and dad’ investor loans and any person(s) that have a separate residential investor property use loan which is not for their normal business purpose.

Residential mortgage exposures used in the loan-to-valuation ratio analysis are based on the definition of residential mortgage loans as defined in the Banking Supervision Handbook document Capital Adequacy Framework (internal models based approach) (BS2B). This metric is based on a collateral definition and may include some other lending that is not defined as Housing lending in the asset quality section of the Dashboard. See the Banking Supervision Handbook for a more detailed definition.

		Housing	Consumer	Business	Agriculture	All other1	Total
As at 31 March 2019	Note	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m	NZ$m
Total loans per Balance Sheet	4	82,874	n/a	n/a	n/a	49,338	132,212
Fair value hedge adjustment		(8)	-	-	-	8	-
Business loans secured by residential property		(2,434)	-	-	326	2,108	-
Residential investor property		(21,967)	-	-	53	21,914	-
Other household and agriculture industry loans		-	3,524	-	17,528	(21,052)	-
Concentration of loans byindustry2	B2	58,465	3,524	-	17,907	52,316	132,212
Fair value hedge adjustments		-	-	-	-	(8)	(8)
Unearned income on finance leases		-	-	-	-	(203)	(203)
Deposit components of overdraft product		-	-	-	-	277	277
Residential investor property		21,967	-	-	(53)	(21,914)	-
Business lending		-	-	29,166	(45)	(29,121)	-
Loans by purpose (RBNZ series S31)		80,432	3,524	29,166	17,809	1,347	132,278
Other business loans secured by residential property		-	-	367	(326)	(41)	-
Total loans per Dashboard	D1	80,432	3,524	29,533	17,483	1,306	132,278

1 All other in RBNZ series S31 and the Dashboard comprises: Depository and other financial institutions, Central and Local Government, Non-profit institutions serving households.

2 Household exposures (resident and non-resident) in Note B2 comprise Housing and Consumer.

The Supplementary Information does not form part of the Disclosure Statement

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