ANZ NZ Branch DS 30 September 2021

Annual Report10 November 2021ANZFinancials

Australia and New Zealand Banking Group Limited ABN 11 005 357 522
ANZ Centre Melbourne, Level 9A, 833 Collins Street, Docklands VIC 3008

11 November 2021

Market Announcements Office
ASX Limited
Level 4
20 Bridge Street
SYDNEY NSW 2000

Australia and New Zealand Banking Group Limited – ANZ New Zealand Branch
Registered Bank Disclosure Statement

Australia and New Zealand Banking Group Limited (ANZ) today released its ANZ New
Zealand Branch Registered Bank Disclosure Statement for the year ended 30 September
2021.

It has been approved for distribution by ANZ’s Board of Directors.

Yours faithfully

Simon Pordage
Company Secretary
Australia and New Zealand Banking Group Limited

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

FOR THE YEAR ENDED 30 SEPTEMBER 2021
NUMBER 45 | ISSUED NOVEMBER 2021

2
CONTENTS

Glossary of terms 2

DISCLOSURE STATEMENT

Financial Statements 3
Consolidated financial statements 4
Notes to the financial statements 8

Registered Bank Disclosures 70

Directors’ and New Zealand Chief Executive
Officer’s Statement
88

Independent Auditor’s Report
89

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.
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 (Overseas 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.

3
FINANCIAL
STATEMENTS

Financial statements

Income statement 4

Statement of comprehensive income
4

Balance sheet 5

Cash flow statement
6

Statement of changes in equity 7

Notes to the financial statements

Basis of preparation

Non-financial assets

1. About our financial statements 8 19. Goodwill and other intangible assets 54

Financial performance

Non-financial liabilities

2. Operating income 12 20. Other provisions 57

3. Operating expenses 14

4. Income tax 15
Equity

5. Dividends 16 21. Shareholders' equity 59

6. Segment reporting 16 22. Capital management 60

Financial assets

Consolidation and presentation

7. Cash and cash equivalents 18 23. Controlled entities 61

8. Trading securities 19 24. Structured entities 62

9. Derivative financial instruments 20 25. Transfers of financial assets 64

10. Investment securities 25

11. Net loans and advances 26
Other disclosures

12. Allowance for expected credit losses 27 26. Related party disclosures 65

27. Commitments and contingent liabilities 67

Financial liabilities
28. Compensation of auditors 69

13. Deposits and other borrowings 33

14. Debt issuances 34

Financial instrument disclosures

15. Financial risk management 36

16. Fair value of financial assets and financial liabilities 49

17. Assets charged as security for liabilities 52

and collateral accepted as security for assets

18. Offsetting 53

FINANCIAL STATEMENTS

The notes appearing on pages 8 to 69 form an integral part of these financial statements

5
BALANCE SHEET

2021 2020
As at 30 September Note NZ$m NZ$m
Assets

Cash and cash equivalents 7 7,844 8,248
Settlement balances receivable
237
378
Collateral paid 537 1,394
Trading securities 8
9,585
12,797
Derivative financial instruments 9
9,283
9,756
Investment securities 10 11,926 9,893
Net loans and advances 11
141,074
132,984
Investments in associates
5
-
Deferred tax assets 4 390 330
Goodwill and other intangible assets 19
3,091
3,092
Premises and equipment 509 590
Other assets
591
625
Total assets

185,072
180,087
Liabilities
Settlement balances payable
2,663
2,908
Collateral received
738
1,275
Deposits and other borrowings 13 135,986 127,997
Derivative financial instruments 9
7,680
8,166
Current tax liabilities 161 237
Payables and other liabilities
1,483
1,135
Employee entitlements
138
143
Other provisions 20 295 389
Debt issuances 14
20,852
23,827
Total liabilities (excluding head office account)

169,996
166,077
Net assets (excluding head office account)

15,076
14,010
Equity

Share capital and initial head office account 21 11,055 11,055
Reserves
70
118
Retained earnings
3,951
2,837
Total equity & head office account 15,076 14,010

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

FINANCIAL STATEMENTS

The notes appearing on pages 8 to 69 form an integral part of these financial statements

6
CASH FLOW STATEMENT

2021 2020
For the year ended 30 September NZ$m NZ$m
Profit after income tax 1,919 1,336

Adjustments to reconcile to net cash flows from operating activities:
Depreciation and amortisation
124
158
Loss on sale and impairment of premises and equipment
7
5
Goodwill impairment - 28
Net derivatives/foreign exchange adjustment
(951)
(1,053)
Proceeds from divestments net of intangibles disposed of, classified as investing activities
-
(533)
Other non-cash movements 150 23
Net (increase)/decrease in operating assets:

Collateral paid 857 930
Trading securities
3,212
(3,855)
Net loans and advances
(8,090)
280
Other assets 115 (371)
Net increase/(decrease) in operating liabilities:

Deposits and other borrowings (excluding items included in financing activities)
6,761
11,655
Settlement balances payable (245) 1,318
Collateral received
(537)
284
Other liabilities 209 (130)
Total adjustments

1,612
8,739
Net cash flows from operating activities
1

3,531
10,075
Cash flows from investing activities
Investment securities:

Purchases
(5,528)
(5,569)
Proceeds from sale or maturity 2,833 2,790
Proceeds from divestments
-
659
Other assets (39) (64)
Net cash flows from investing activities (2,734)
(2,184)
Cash flows from financing activities

Deposits and other borrowings (excluding borrowings from Immediate Parent and Ultimate Parent Bank)
2

1,300 -
Debt issuances
3

Issue proceeds

3,278
2,327
Redemptions

(4,899) (3,885)
Borrowings from Immediate Parent and Ultimate Parent Bank:
4

Loans drawn down

151 140
Repayments
(140)
(884)
Repayment of lease liabilities
(46)
(50)
Dividends paid (845) -
Net cash flows from financing activities (1,201)
(2,352)
Net change in cash and cash equivalents
(404)
5,539
Cash and cash equivalents at beginning of year 8,248 2,709
Cash and cash equivalents at end of year

7,844
8,248
1 Net cash provided by operating activities includes income taxes paid of NZ$871 million (2020: NZ$702 million).
2 Movement in deposits and other borrowings includes repurchase transactions entered into with the RBNZ under the Funding for Lending Programme of NZ$1,000 million and the Term
Lending Facility of NZ$300 million.
3 Movement in debt issuances (Note 14 Debt Issuances) also includes an NZ$998 million decrease (2020: NZ$557 million decrease) from the effect of foreign exchange rates, a NZ$398 million
decrease (2020: NZ$286 million increase) from changes in fair value hedging instruments and a NZ$42 million increase (2020: NZ$63 million increase) from other changes.
4 Movement in borrowings from Immediate Parent and Ultimate Parent Bank (Note 13 Deposit and Other Borrowings) also includes a NZ$41 million decrease (2020: NZ$50 million decrease)
from the effect of foreign exchange rates, a NZ$44 million decrease (2020: NZ$64 million increase) from changes in fair value hedging instruments and a NZ$2 million increase (2020: NZ$1
million increase) of other changes.

FINANCIAL STATEMENTS

The notes appearing on pages 8 to 69 form an integral part of these financial statements

7
STATEMENT OF CHANGES IN EQUITY

Share
capital
and initial
head
office
account
Investment
securities
revaluation
reserve
Cash flow
hedging
reserve
Retained
earnings
Total
equity
Note NZ$m NZ$m NZ$m NZ$m NZ$m
As at 1 October 2019

11,055 (6) 27 1,523 12,599
Impact on transition to NZ IFRS 16 Leases

- - - (17) (17)
As at 1 October 2019 (adjusted)
11,055 (6) 27 1,506 12,582
Profit or loss - - - 1,336 1,336
Unrealised gains recognised directly in equity - 19 103 - 122
Realised losses transferred to the income statement - - 12 - 12
Actuarial loss on defined benefit schemes - - - (6) (6)
Income tax credit / (expense) on items recognised directly in equity - (5) (32) 1 (36)
Total comprehensive income for the year - 14 83 1,331 1,428
As at 30 September 2020
11,055 8 110 2,837 14,010

As at 1 October 2020 11,055 8 110 2,837 14,010
Profit or loss
- - - 1,919 1,919
Unrealised gains / (losses) recognised directly in equity - 77 (152) - (75)
Realised losses / (gains) transferred to the income statement
- (2) 10 - 8
Actuarial gain on defined benefit schemes
- - - 56 56
Income tax credit / (expense) on items recognised directly in equity - (21) 40 (16) 3
Total comprehensive income for the year

- 54 (102) 1,959 1,911
Transactions with Immediate Parent Company in its capacity as owner:
Ordinary dividends paid 5
- - - (845) (845)
Transactions with Immediate Parent Company in its capacity as owner

- - - (845) (845)
As at 30 September 2021

11,055 62 8 3,951 15,076

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

8
1. ABOUT OUR FINANCIAL STATEMENTS
These are the financial statements for ANZ New Zealand for the year ended 30 September 2021. The Ultimate Parent Bank is incorporated in Australia
and is also registered in New Zealand (NZ Branch). The NZ Branch is domiciled in New Zealand, and the address of the NZ Branch’s registered office
and its principal place of business is Level 10, 171 Featherston Street, Wellington, New Zealand.
On 10 November 2021, the Directors resolved to authorise the issue of these financial statements.
Information in the financial statements is included only to the extent we consider it material and relevant to the understanding of the financial
statements. A disclosure is considered material and relevant if, for example:
• the amount is significant in size (quantitative factor);
• the information is significant by nature (qualitative factor);
• the user cannot understand ANZ New Zealand’s results without the specific disclosure (qualitative factor);
• the information is critical to a user’s understanding of the impact of significant changes in ANZ New Zealand’s business during the period – for
example: business acquisitions or disposals (qualitative factor);
• the information relates to an aspect of ANZ New Zealand’s operations that is important to its future performance (qualitative factor); or
• the information is required under legislative requirements of the Financial Markets Conduct Act 2013 or by ANZ New Zealand’s principal
regulator, RBNZ.
This section of the financial statements:
• outlines the basis upon which ANZ New Zealand’s financial statements have been prepared; and
• discusses any new accounting standards or regulations that directly impact the financial statements.
BASIS OF PREPARATION
These financial statements are general purpose (Tier 1) financial statements prepared by a ‘for profit’ entity, in accordance with the requirements of
the Financial Markets Conduct Act 2013. These financial statements comply with:
• New Zealand Generally Accepted Accounting Practice (NZ GAAP), as defined in the Financial Reporting Act 2013;
• New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and other applicable Financial Reporting Standards, as
appropriate for publicly accountable for-profit entities; and
• International Financial Reporting Standards (IFRS).
We present the financial statements of ANZ New Zealand in New Zealand dollars, which is ANZ New Zealand’s functional and presentation currency.
We have rounded values to the nearest million dollars (NZ$m), unless otherwise stated.
BASIS OF MEASUREMENT
We have prepared the financial information in accordance with the historical cost basis - except for the following assets and liabilities which we have
stated at their fair value:
• derivative financial instruments;
• financial instruments measured at fair value through other comprehensive income; and
• financial instruments measured at fair value through profit and loss.
BASIS OF CONSOLIDATION
The consolidated financial statements of ANZ New Zealand comprise the financial statements of the NZ Branch and all of the New Zealand businesses
of all the subsidiaries of the Ultimate Parent Bank. An entity, including a structured entity, is considered a subsidiary of ANZ New Zealand when we
determine that ANZ New Zealand has control over the entity. Control exists when ANZ New Zealand is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. We assess power by examining
existing rights that give ANZ New Zealand the current ability to direct the relevant activities of the entity. We have eliminated, on consolidation, the
effect of all transactions between entities in ANZ New Zealand.
FOREIGN CURRENCY TRANSLATION
TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the relevant functional currency at the exchange rate prevailing at the date of the transaction. At the
reporting date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the relevant spot rate.
Any foreign currency translation gains or losses that arise are included in profit or loss in the period they arise.
We measure translation differences on non-monetary items at fair value through profit or loss and report them as part of the fair value gain or loss on
these items. For non-monetary items classified as investment securities measured at fair value through other comprehensive income, translation
differences are included in the investment securities revaluation reserve in equity.
FIDUCIARY ACTIVITIES
ANZ New Zealand provides fiduciary services to third parties including custody, nominee and trustee services. This involves ANZ New Zealand holding
assets on behalf of third parties and making decisions regarding the purchase and sale of financial instruments. If ANZ New Zealand is not the
beneficial owner or does not control the assets, then we do not recognise these transactions in these financial statements, except when required by
accounting standards or another legislative requirement.

NOTES TO THE FINANCIAL STATEMENTS

9
1. ABOUT OUR FINANCIAL STATEMENTS (continued)

ACCOUNTING STANDARDS ADOPTED IN THE PERIOD
INTEREST RATE BENCHMARK REFORM
Interbank offered rates (IBORs), such as the London Interbank Offered Rate (LIBOR), have played a critical role in global financial markets, serving as
reference rates for derivatives, loans and securities, and in the valuation of financial instruments. Uncertainty surrounding the integrity of IBOR rates
has led regulators and industry to transition away from IBOR to alternative risk-free benchmark reference rates (RFRs).
As had been anticipated, in March 2021 the UK Financial Conduct Authority announced the dates on which IBORs will cease, after which
representative IBOR rates will no longer be available. The cessation of the majority of IBOR rates will occur on 31 December 2021, notably for the
Pound Sterling (GBP), Euro (EUR), Swiss Franc (CHF) and Japanese Yen (JPY) settings in their entirety, and the US Dollar (USD) 1-week and 2-month
LIBOR settings. ANZ New Zealand has ceased issuing new products referencing these rates. Other USD LIBOR settings will cease by 30 June 2023.
ANZ New Zealand has exposure to IBORs through its loan and derivative transactions with customers, issuance of debt and its asset and liability
management activities.
Other significant interest rate benchmarks applicable to ANZ New Zealand’s banking activities with customers and our own risk management
activities include the Euro Interbank Offered Rate (Euribor), the AUD Bank Bill Swap Rate (BBSW) and the NZ Bank Bill Market Rate (BKBM). These are not
impacted by IBOR reform and these benchmark rates are expected to remain for the foreseeable future.
ANZ New Zealand approach to interest rate benchmark reform
The development of new RFR products and the migration of ANZ New Zealand’s existing contracts that reference IBORs to RFRs exposes ANZ New
Zealand to financial, compliance, legal and operational risks. ANZ New Zealand is managing the transition to RFRs and these risks through a
Benchmark Transition Programme (the Programme), which is overseen by a formal Steering Committee of senior executives.
The IBOR reforms have a wide-ranging impact for ANZ New Zealand and our customers, given the fundamental differences between IBORs and RFRs.
RFRs are available both as backward-looking in arrears rates and, for some currencies, as forward-looking term rates. The key difference between IBORs
and RFRs is that IBOR rates include a term and bank credit risk premium, whereas RFRs do not. As a result of these differences, adjustments are
required to an RFR to ensure contracts referencing an IBOR rate, transition on an economically comparable basis.

KEY JUDGEMENTS AND ESTIMATES

In the process of applying ANZ New Zealand’s accounting policies, management has made a number of judgements and applied
estimates and assumptions about past and future events. Further information on the key judgements and estimates that we consider
material to the financial statements are contained within each relevant note to the financial statements.
Coronavirus (COVID-19) pandemic
The COVID-19 pandemic and its ongoing effects on the global economy have continued to impact our customers, operations and
ANZ New Zealand‘s performance. Governments have responded at unprecedented levels to protect the health of the population,
local economies and livelihoods. The course of the pandemic and vaccination levels have varied across the globe and government
responses have differed in their extent and timing. Economies are reopening at different rates whilst the risk of subsequent waves of
infection remain. Thus there remains an elevated level of estimation uncertainty involved in the preparation of these financial
statements including:
• the extent and duration of the disruption to business arising from the actions of governments, businesses and consumers in the
ongoing management of the virus;
• the impact and expected response of the economy (and forecasts of key economic factors including GDP, employment and
house prices). This includes the response of capital markets, and the impacts on credit quality, liquidity, unemployment,
consumer spending, as well as specific sector impacts; and
• the efficacy of vaccines against variants of the virus, and the effectiveness of government and central bank measures to support
businesses and consumers through this disruption.
ANZ New Zealand
has made various accounting estimates in these financial statements based on forecasts of economic conditions which
reflect expectations and assumptions as at 30 September 2021 about future events that the Directors believe are reasonable in the
circumstances. There is a considerable degree of judgement involved in preparing these estimates. The underlying assumptions are also
subject to uncertainties which are outside the control of ANZ New Zealand. Accordingly, actual economic conditions are likely to be
different from those forecast since anticipated events frequently do not occur as expected, and the effect of those differences may
significantly impact accounting estimates included in these financial statements.
The significant accounting estimates impacted by these forecasts and associated uncertainties are predominantly related to expected
credit losses and recoverable amounts of non-financial assets.
The impact of the COVID-19 pandemic on each of these estimates is discussed further in the relevant note of these financial statements.
Readers should carefully consider these disclosures in light of the inherent uncertainty described above.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT
NOTES TO THE FINANCIAL STATEMENTS
10
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
The Programme includes the identification of impacted IBOR contracts across ANZ New Zealand, actions necessary to develop product capability and
transition existing contracts to RFRs. This includes the assessment and mitigation of financial, legal and conduct risks arising from changes to pricing
and valuation (largely interest rate risk), compliance risks arising from any potential non-compliance with relevant regulatory requirements, legal risks
arising from changes to customer contracts, and operational risks including changes to IT systems, controls and reporting infrastructure. In
undertaking these changes, ANZ New Zealand is actively engaging RBNZ in respect of our IBOR transition readiness.
To date, ANZ New Zealand has commenced transitioning existing IBOR derivative trades to reference RFR benchmark rates and has established
processes to offer loans referencing RFR benchmark rates. ANZ New Zealand continues to extend and deliver its RFR product suite and pricing options
to be able support our customers in line with regulatory best practice guidelines.
The Programme also includes the management of the impact on customers. ANZ New Zealand is well-progressed in ensuring all customer transition
plans are finalised ahead of IBOR cessation dates, with the significant majority of our derivative counterparties with exposures referencing IBORs
agreeing to amend existing contracts by adhering to the industry developed ISDA 2020 IBOR Fallbacks Protocol (ISDA Protocol) to facilitate a
standardised and orderly transition to RFRs.
ANZ New Zealand has also adhered to the ISDA Protocol.
In relation to our loan and transaction banking customers, ANZ New Zealand has commenced a proactive outreach programme to ensure an orderly
and well-managed migration to RFRs. ANZ New Zealand’s customer arrangements reference USD LIBOR, which will continue to be published for the
most widely used settings until 30 June 2023.
Changes to accounting standards
In 2018, given the uncertainty with regards to the longer term viability of IBORs, the International Accounting Standards Board (IASB) commenced a
review of the financial reporting implications of the reforms, given the significant potential consequences for financial instrument accounting.
In November 2019, the External Reporting Board (XRB) issued XRB amending standard Interest Rate Benchmark Reform, which amended certain existing
hedge accounting requirements to provide relief from potential effects of the uncertainty caused by the interest rate benchmark reform. ANZ New
Zealand elected to early adopt the amendments from 1 October 2019, which have not had a significant impact on ANZ New Zealand.
In September 2020, the XRB issued Interest Rate Benchmark Refor m - Phase 2 (the Standard), which ANZ New Zealand early adopted from 1 April 2021.
This Standard addresses issues that may affect ANZ New Zealand at the point of transition from an existing IBOR to a RFR, including t
he effects of
changes to contractual cash flows or hedging relationships. The Standard includes amendments in respect of:
•Modification of a financial asset or a financial liability measured at amortised cost: IBOR reform is expected to result in a change to the basis for
determining contractual cash flows of impacted assets and liabilities of ANZ New Zealand. The Standard provides a practical expedient to
account for a change in the basis for determining the contractual cash flows by updating the effective interest rate. As a result, no immediate
gain or loss is recognised. This applies only when the change is a direct consequence of IBOR reform, and the new basis for determining the
contractual cash flows is economically equivalent to the previous basis;
•Additional relief for hedging relationships: the Standard amends a number of existing hedge accounting requirements such that ANZ New
Zealand will not have to discontinue any hedge accounting relationships solely because of changes made because of the reform if all other
hedge accounting criteria are met; and
•Additional disclosure requirements: the Standard amended NZ IFRS 7 Financial Instruments: Disclosures, which requires additional qualitative and
quantitative disclosures in relation to the impact of IBOR reforms on ANZ New Zealand. These disclosures are contained within this note.
Financial i mpacts of IBOR reform
The following sets out ANZ New Zealand’s impact assessment in relation to IBOR reforms as at 30 September 2021:
i)Impact for the year ended 30 September 2021
For the year ended 30 September 2021, the net impact of the reforms recognised in ANZ New Zealand’s net profit after tax is not material. The
impacts recognised in the current year include:
a)changes in the fair values of certain derivative financial instruments for which it is known at balance sheet date – as a result of regulatory
pronouncements confirming IBOR cessation – that the fair valuation will incorporate a change to an RFR at a future date; and
b)revenue from a small number of customers in the Institutional segment who have transitioned to derivative contracts referencing an RFR by 30
September.

NOTES TO THE FINANCIAL STATEMENTS

11
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
ii) Exposures subject to benchmark reform as at 30 September 2021
The table below shows ANZ New Zealand’s exposures to interest rate benchmarks subject to IBOR reform. These are financial instruments that
contractually reference an IBOR benchmark planned to transition to an RFR, and have a contractual maturity date beyond the planned IBOR
cessation date.

Financial instruments yet to
transition to RFRs

US dollar LIBOR Others
1

As at 30 September 2021 NZ$m NZ$m
Derivative asset (notional value)
3

63,293 2,237
Derivative liability (notional value)
3

41,793 808
Loan commitments
2,4
198 -
1 Comprises financial instruments referencing other significant benchmark rates subject to cessation yet to transition to alternative benchmarks.
2 Excludes Expected Credit Losses (ECL).
3 For cross-currency swaps, where both the receive and pay legs are in currencies subject to reform, ANZ New Zealand discloses the New Zealand dollar-equivalent notional amounts for both. Where
one leg of a swap is subject to reform, ANZ New Zealand discloses the notional amount of the receive leg.
4 For multi-currency IBOR referenced facilities, the undrawn balance has been allocated to the base currency of the facility. In the event the base currency interest rate is not subject to cessation, but
can be drawn in a currency subject to cessation, the allocation is based on most likely currency of drawdown.
iii) Hedge accounting exposures subject to IBOR reform
ANZ New Zealand has hedge-accounted relationships referencing IBORs, with the most significant being US dollar LIBOR, primarily due to ANZ
New Zealand’s fixed rate debt issuances denominated in US dollars that are designated in fair value hedge accounting relationships.
The table below details the carrying values of ANZ New Zealand's US dollar exposures designated in hedge accounting relationships referencing
LIBOR that will be impacted by reform The nominal value of the associated hedging instruments is also included:

As at 30 September 2021

US dollar LIBOR exposures
Hedged items

NZ$m
Deposits and other borrowings
967
Debt issuances
7,458

Notional designated up to
30 June 2023
Notional designated
beyond 30 June 2023
Total notional amount
Hedging Instruments NZ$m NZ$m NZ$m
Fair value hedges
2,109 6,107 8,216
As at 30 September 2021, ANZ New Zealand also has Swiss franc exposures designated in hedge accounting relationships of NZ$973 million
subject to IBOR reform.
Other hedge accounting relationships referencing the Euribor, BBSW and BKBM are not impacted by IBOR reform as these benchmark rates are
expected to remain for the foreseeable future.
iv) Future development
As the most widely referenced US dollar LIBOR benchmark tenors will continue to be published up to 30 June 2023, ANZ New Zealand’s transition
programme supporting our customers and ANZ New Zealand’s own risk management activities will continue beyond 2021.
REVISED CONCEPTUAL FRAMEWORK
On 1 October 2020, ANZ New Zealand adopted New Zealand Equivalent to the IASB Conceptual Framework for Financial Reporting (2018 Conceptual
Framework). The new framework includes updated definitions and criteria for the recognition and derecognition of assets and liabilities. Additionally, it
introduces new concepts on measurement, including factors to consider when selecting a measurement basis. The adoption of the conceptual
framework did not have a material impact on ANZ New Zealand.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

12
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
ACCOUNTING STANDARDS NOT EARLY ADOPTED
A number of new standards, amendments to standards and interpretations have been published but are not mandatory for the financial statements
for the year ended 30 September 2021, and have not been applied by ANZ New Zealand in preparing these financial statements. Further details of
these are set out below.

GENERAL HEDGE ACCOUNTING
NZ IFRS 9 Financial Instruments (NZ IFRS 9) introduces new hedge accounting requirements which more closely align accounting with risk
management activities undertaken when hedging both 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 Financial Instruments: Recognition and Measurement (NZ IAS 39) hedge accounting requirements until
the IASB’s ongoing project on macro hedge accounting is completed. ANZ New Zealand continues to apply the hedge accounting requirements of
NZ IAS 39.
DEFERRED TAX RELATED TO ASSETS AND LIABILITIES ARISING FROM A SINGLE TRANSACTION
Amendments to New Zealand Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction amends NZ IAS 12
Income Taxes and clarifies that entities are required to recognise deferred tax on transactions for which there is both an asset and a liability and that
give rise to equal taxable and deductible temporary differences. This may include transactions such as leases and decommissioning or restoration
obligations. This amendment is effective for ANZ New Zealand from 1 October 2023 and is not expected to have a significant impact.

2. OPERATING INCOME
2021 2020
NZ$m NZ$m
Net interest income

Interest income by type of financial asset

Financial assets at amortised cost

4,363
5,289
Trading securities 106 148
Investment securities

139 143
Interest income 4,608
5,580
Interest expense by type of financial liability

Financial liabilities at amortised cost
(1,175)
(2,315)
Financial liabilities designated at fair value through profit or loss
(28)
(34)
Interest expense

(1,203)
(2,349)
Net interest income

3,405
3,231

Other operating income

(i) Fee and commission income

Lending fees
30
33
Non-lending fees
678
673
Commissions
35
57
Funds management income
271
258
Fee and commission income

1,014
1,021
Fee and commission expense

(459) (463)
Net fee and commission income

555 558
(ii) Other income

Net foreign exchange earnings and other financial instruments income
1

175
244
Sale of legacy insurance portfolio
2

14
-
Sale of UDC Finance Limited (UDC)
-
(32)
Other
16
19
Other income

205
231
Other operating income 760 789

Share of associates' loss

(1)
-
Operating income

4,164
4,020
1 Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk
on funding instruments, ineffective portions of cashflow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit or loss.
2 The Bank sold and transferred its rights and obligations relating to servicing a legacy portfolio of insurance underwritten by Tower Limited (Tower) to Tower in March 2021.

NOTES TO THE FINANCIAL STATEMENTS

13
2. OPERATING INCOME (continued)

RECOGNITION AND MEASUREMENT
NET INTEREST INCOME
Interest income and expense
We recognise interest income and expense in net interest income for all financial instruments, including those classified as held for
trading, assets measured at fair value through other comprehensive income
or designated at fair value through profit or loss. We use the
effective interest rate method to calculate amortised cost of assets held at amortised cost and to recognise interest income on financial assets
measured at fair value through other comprehensive income. The effective interest rate is the rate that discounts the stream of estimated
future cash receipts or payments over the expected life of the financial instrument or, when appropriate, a shorter period, to the net
carrying amount of
the financial asset or liability. For assets subject to prepayment, we determine their expected life on the basis of
historical behaviour of the particular asset portfolio - taking into account contractual obligations and prepayment experience.
We recognise fees and costs, which form an integral part of the financial instruments (for example loan origination fees and costs), using
the effective interest rate method. This is presented as part of interest income or expense depending on whether the underlying financial
instrument is a financial asset or financial liability.
OTHER OPERATING INCOME
Fee and commission income
We recognise fee and commission revenue arising from contracts with customers (a) over time when the performance obligation is satisfied
across more than one reporting period or (b) at a point in time when the performance obligation is satisfied immediately or is satisfied within
one reporting period.
• lending fees exclude fees treated as part of the effective yield calculation of interest income. Lending fees include certain guarantee and
commitment fees where the loan or guarantee is not likely to be drawn upon, and other fees charged for providing customers a distinct
good or service that are recognised separately from the underlying lending product (including annual package fees that provide benefits
on our other products).
• non-lending fees includes fees associated with deposit and credit card accounts, interchange fees and fees charged for specific customer
transactions such as international money transfers. Where ANZ New Zealand provides multiple goods or services to a customer under the
same contract, ANZ New Zealand allocates the transaction price of the contract to distinct performance obligations based on the relative
stand-alone selling price of each performance obligation. Revenue is recognised as each performance obligation is satisfied.
• commissions represent fees from third parties where we act as an agent by arranging a third party (such as an insurance provider) to
provide goods and services to a customer. In such cases, we are not primarily responsible for providing the underlying good or service to
the customer. If the Group collects funds on behalf of a third party when acting as an agent, we only recognise the net commission it
retains as revenue. When the commission is variable based on factors outside our control (such as a trail commission), revenue is only
recognised if it is highly probable that a significant reversal of the variable amount will not be required in future periods.
• funds management income represents fees earned from customers for providing financial advice and fees for asset management services
and advice provided to investment funds. Revenue is recognised either at the point the financial advice is provided or over the period in
which the asset management services are delivered.
Net foreign exchange earnings and other financial instruments income
We recognise the following as net foreign exchange earnings and other financial instruments income:
• exchange rate differences arising on the settlement of monetary items and translation differences on monetary items translated at rates
different to those at which they were initially recognised;
• fair value movements (excluding realised and accrued interest) on derivatives that we use to manage interest rate and foreign exchange
risk on funding instruments not designated as accounting hedges;
• the ineffective portions of fair value hedges and cash flow hedges;
• immediately upon sale or repayment of a hedged item, the unamortised fair value adjustments in items designated as fair value hedges
and amounts accumulated in equity related to designated cash flow hedges;
• fair value movements on financial assets and financial liabilities designated at fair value through profit or loss or held for trading;
• amounts released from the investment securities revaluation reserve in equity when a debt instrument classified as FVOCI is sold; and
• the gain or loss on derecognition of financial assets or liabilities measured at amortised cost.
SHARE OF ASSOCIATES’ PROFIT / (LOSS)
The equity method is applied to accounting for associates. Under the equity method, ANZ New Zealand’s share of the after tax results of
associates is included in the income statement and the statement of comprehensive income.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

14

RECOGNITION AND MEASUREMENT
OPERATING EXPENSES
Operating expenses are recognised as services are provided to ANZ New Zealand, over the period in which an asset is consumed, or once a
liability is created.
SALARIES AND RELATED COSTS – ANNUAL LEAVE, LONG SERVICE LEAVE AND OTHER EMPLOYEE BENEFITS
Wages and salaries, annual leave, and other employee entitlements expected to be paid or settled within twelve months of employees
rendering service are measured at their nominal amounts using remuneration rates that ANZ New Zealand expects to pay when the liabilities
are settled.
We accrue employee entitlements relating to long service leave using an actuarial calculation. It includes assumptions regarding staff
departures, leave utilisation and future salary increases. The result is then discounted using market yields at the reporting date. The market yields
are determined from a blended rate of government bonds with terms to maturity that closely match the estimated future cash outflows.
If we expect to pay short term cash bonuses, then a liability is recognised when ANZ New Zealand has a present legal or constructive obligation
to pay this amount (as a result of past service provided by the employee) and the obligation can be reliably measured.

3. OPERATING EXPENSES
2021 2020
NZ$m NZ$m
Personnel

Salaries and related costs
891
887
Superannuation costs 29 29
Other 15 73
Personnel

935
989
Premises

Rent
18
21
Depreciation
79
96
Other
37
40
Premises

134
157
Technology
Depreciation and amortisation 45 62
Subscription licences and outsourced services 140 138
Other
36
39
Technology

221
239
Other

Advertising and public relations
43
43
Professional fees
58
58
Freight, stationery, postage and communication 42 41
Goodwill impairment - 28
Charges from Ultimate Parent Bank 120 97
Other
69
102
Other

332
369
Operating expenses

1,622
1,754

NOTES TO THE FINANCIAL STATEMENTS

15

RECOGNITION AND MEASUREMENT
INCOME TAX EXPENSE
Income tax expense comprises both current and deferred taxes and is based on the accounting profit adjusted for differences in the accounting
and tax treatments of income and expenses (that is, taxable income). We recognise tax expense in profit or loss except when the tax relates to
items recognised directly in equity and other comprehensive income, in which case we recognise the tax directly in equity or other
comprehensive income respectively.
CURRENT TAX EXPENSE
Current tax is the tax we expect to pay on taxable income for the year, based on tax rates (and tax laws) which are enacted at the reporting date.
We recognise current tax as a liability (or asset) to the extent that it is unpaid (or refundable).
DEFERRED TAX ASSETS AND LIABILITIES
We account for deferred tax using the balance sheet method. Deferred tax arises because the accounting income is not always the same as the
taxable income. This creates temporary differences, which usually reverse over time. Until they reverse, we recognise a deferred tax asset, or
liability, on the balance sheet. We measure deferred taxes at the tax rates that we expect will apply to the period(s) when the asset is realised, or
the liability settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the reporting date.

We offset current and deferred tax assets and liabilities only to the extent that:
• they relate to income taxes imposed by the same taxation authority;
• there is a legal right and intention to settle on a net basis; and
• it is allowed under the tax law of the relevant jurisdiction.

4. INCOME TAX
INCOME TAX EXPENSE
Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in profit or loss:
2021 2020
NZ$m NZ$m
Profit before income tax

2,657
1,865
Prima facie income tax expense at 28%
744
522
Tax effect of permanent differences:
Sale of legacy insurance portfolio (4) -
Sale of UDC
-
9
Tax provisions no longer required
(3)
(3)
Non-assessable income and non-deductible expenditure
5
4
Subtotal

742
532
Income tax over provided in previous years
(4)
(3)
Income tax expense 738 529
Current tax expense 762 808
Adjustments recognised in the current year in relation to the current tax of prior years (4) (3)
Deferred tax income relating to the origination and reversal of temporary differences
(20)
(276)
Income tax expense 738
529
Effective tax rate

27.8%
28.4%

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

16
5. DIVIDENDS
ORDINARY SHARE DIVIDENDS

Amount
per share
Total
dividend
NZ$m
Dividends
Financial Year 2020

No dividends were paid during the year ended 30 September 2020 - -
Financial Year 2021

Dividend paid in June 2021
223.5 cents 845
Dividends paid during the year ended 30 September 2021
845

IMPUTATION CREDIT ACCOUNT

2021 2020

NZ$m NZ$m
Imputation credits available 7,221 6,443

A number of companies within ANZ New Zealand are members of the New Zealand resident imputation group. The imputation credit balance for
ANZ New Zealand includes the imputation credit balance in relation to both the New Zealand resident imputation group and other companies within
ANZ New Zealand that are not in the New Zealand resident imputation group. The imputation credit balance available includes imputation credits
that will arise from the payment of the amount of provision for income tax as at the reporting date.

6. SEGMENT REPORTING
DESCRIPTION OF SEGMENTS
ANZ New Zealand is organised into three major business segments for segment reporting purposes - Personal, Business and Institutional. Centralised
back office and corporate functions support these segments. These segments are consistent with internal reporting provided to the chief operating
decision maker, being the Bank’s Chief Executive Officer.
During the year ended 30 September 2021, the Banking Group reorganised into the following business segments: Personal (including Personal
Banking and Funds Management), Business, and Institutional. These are intended to better align the Banking Group’s internal business with the needs
of its primary customer groups, home owners and business owners. These changes were implemented from August 2021 and have been accounted
for prospectively. There were net movements of NZ$870 million of loans and advances and NZ$4,750 million of customer deposits from Retail to
Business, and NZ$31 million of goodwill from Commercial to Personal. The reorganisation is expected to be completed in the first half of 2022.
Comparative amounts have not been restated because the estimated impact on the financial performance and financial position of the affected
segments, Personal and Business, is not considered material.
Personal (previously Retail)
Personal provides a full range of banking and wealth management services to consumer and private 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.
Business (previously Commercial)
Business provides a full range of banking services including small business banking, through our digital, branch and contact centre channels, and
traditional relationship banking and sophisticated financial solutions through dedicated managers. These cover privately owned small, medium and
large enterprises, the agricultural business segment, government and government related entities.
Institutional
The Institutional division services governments, global institutional and corporate customers via the following business units:
• Transaction Banking provides customers with working capital and liquidity solutions including documentary trade, supply chain financing as
well as cash management solutions, deposits, payments and clearing.
• Corporate Finance provides customers with loan products, loan syndication, specialised loan structuring and execution, project and export
finance, debt structuring and acquisition finance and corporate advisory services.
• Markets provides customers with risk management services on foreign exchange, interest rates, credit, commodities and 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.

NOTES TO THE FINANCIAL STATEMENTS

17
6. SEGMENT REPORTING (continued)
OPERATING SEGMENTS
Personal Business
1
Institutional Other Total
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
For the year ended 30 September NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Net interest income
1,995
1,814
1,064
1,073
334
344
12
-
3,405
3,231
Net fee and commission income
- Lending fees
9
15
3
1
18
17
-
-
30
33
- Non-lending fees
612
610
10
10
56
53
-
-
678
673
- Commissions 34 57 - - 1 - - - 35 57
- Funds management income
271
258
-
-
-
-
-
-
271
258
- Fee and commission expense
(459)
(463)
-
-
-
-
-
-
(459)
(463)
Net fee and commission income
467
477
13
11
75
70
-
-
555
558
Other income
19
12
-
-
160
309
26
(90)
205
231
Share of associates' losses - - - - - - (1) - (1) -
Other operating income
486
489
13
11
235
379
25
(90)
759
789
Operating income
2,481
2,303
1,077
1,084
569
723
37
(90)
4,164
4,020
Operating expenses (1,147) (1,214) (262) (303) (185) (198) (28) (39) (1,622) (1,754)
Profit before credit impairment and income tax
1,334
1,089
815
781
384
525
9
(129)
2,542
2,266
Credit impairment release / (charge)
19
(143)
62
(223)
34
(35)
-
-
115
(401)
Profit before income tax 1,353
946
877
558
418
490
9
(129)
2,657
1,865
Income tax expense
(375)
(273)
(246)
(156)
(117)
(138)
-
38
(738)
(529)
Profit after income tax 978 673 631 402 301 352 9 (91) 1,919 1,336
Financial position

Goodwill
1,042
1,011
895
926
1,069
1,069
-
-
3,006
3,006
Net loans and advances 95,379 86,648 39,158 39,333 6,535 6,993 2 10 141,074 132,984
Customer deposits
78,592
79,867
23,744
18,437
22,793
22,559
-
-
125,129
120,863
1 UDC was part of the Business segment until the sale on 1 September 2020.

OTHER SEGMENT
The Other segment profit after income tax comprises:

2021 2020
Item

NZ$m NZ$m
Personal and Business central functions (2) 4
Group centre
1,2

(1)
(60)
Economic hedges
2

12
(35)
Total

9
(91)
1 Group centre’s other income for the year ended 30 September 2020 includes the NZ$32 million loss on sale of UDC (Note 2 Operating Income).
2 Amounts for the year ended 30 September 2020 include the transfer of NZ$23 million of accumulated after tax unrealised losses on economic hedges of UDC loans and advances to Group
centre. These losses were transferred upon the sale of UDC.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

18

CLASSIFICATION AND MEASUREMENT
Financial assets - general
There are three measurement classifications for financial assets under NZ IFRS 9: amortised cost, fair value through profit or loss (FVTPL) and fair
value through other comprehensive income (FVOCI). Financial assets are classified into these measurement classifications on the basis of two
criteria:
• the business model within which the financial asset is managed; and
• the contractual cash flow characteristics of the financial asset (specifically whether the contractual cash flows represent solely payments of
principal and interest).
The resultant financial asset classifications are as follows:
• Amortised cost: financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held in a
business model whose objective is to collect their cash flows;
• FVOCI: financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held in a business
model whose objective is to collect their cash flows or to sell the assets; and
• FVTPL: any other financial assets not falling into the categories above are measured at FVTPL.
Fair value option for financial assets
A financial asset may be irrevocably designated on initial recognition:
• at FVTPL when the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise; or
• at FVOCI for investments in equity securities, where that instrument is neither held for trading nor contingent consideration recognised by
an acquirer in a business combination.

FINANCIAL ASSETS

7. CASH AND CASH EQUIVALENTS

2021 2020
NZ$m NZ$m
Coins, notes and cash at bank
163
187
Securities purchased under agreements to resell in less than 3 months
610
782
Balances with central banks 6,697 7,108
Settlement balances receivable within 3 months 374 171
Cash and cash equivalents 7,844
8,248

NOTES TO THE FINANCIAL STATEMENTS

19
8. TRADING SECURITIES

2021 2020
NZ$m NZ$m
Government securities
7,985
11,251
Corporate and financial institution securities
1,600
1,546
Trading securities 9,585 12,797

KEY JUDGEMENTS AND ESTIMATES

Judgement is required when applying the valuation techniques used to measure the fair value of trading securities not valued using
quoted market prices. Refer to Note 16 Fair Value of Financial Assets and Financial Liabilities for further details.

RECOGNITION AND MEASUREMENT
Trading securities are financial instruments we either:
• acquire principally for the purpose of selling in the short-term; or
• hold as part of a portfolio we manage for short-term profit making.
We recognise purchases and sales of trading securities on trade date:
• initially, we measure them at fair value; and
• subsequently, we measure them in the balance sheet at their fair value with any revaluation recognised in the profit or loss.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

20
9. DERIVATIVE FINANCIAL INSTRUMENTS

Assets Liabilities Assets Liabilities

2021 2021 2020 2020
Fair value NZ$m NZ$m NZ$m NZ$m
Derivative financial instruments - held for trading 8,441 (6,954) 8,391 (6,801)
Derivative financial instruments - designated in hedging relationships 842 (726) 1,365 (1,365)
Derivative financial instruments 9,283 (7,680)
9,756 (8,166)
FEATURES
Derivative financial in struments are contracts:
• whose value is derived from an underlying price index (or other variable) defined in the contract – sometimes the value is derived from more
than one variable;
• that require little or no initial net investment; and
• that are settled at a future date.
Movements in the price of the underlying variables, which cause the value of the contract to fluctuate, are reflected in the fair value of the derivative.
PURPOSE
ANZ New Zealand’s derivative financial instruments have been categorised as follows:
Trading
Derivatives held in order to:
• meet customer needs for managing their own risks.
• manage risks in ANZ New Zealand that are not in a designated hedge accounting relationship (some elements
of balance sheet management).
• undertake market making and positioning activities to generate profits from short-term fluctuations in prices or
margins.
Designated in hedging
relationships
Derivatives designated into hedge accounting relationships in order to minimise profit or loss volatility by matching
movements in underlying positions relating to:
• hedges of ANZ New Zealand’s exposures to interest rate risk and currency risk.
• hedges of other exposures relating to non-trading positions.
TYPES
ANZ New Zealand offers or uses four different types of derivative financial instruments:
Forwards
A contract documenting the rate of interest, or the currency exchange rate, to be paid or received on a notional
principal amount at a future date.
Futures
An exchange traded contract in which the parties agree to buy or sell an asset in the future for a price agreed on the
transaction date, with a net settlement in cash paid on the future date without physical delivery of the asset.
Swaps
A contract in which one party exchanges one series of cash flows for another.
Options
A contract in which the buyer of the contract has the right - but not the obligation - to buy (known as a ‘call option’)
or to sell (known as a ‘put option’) an asset or instrument at a set price on a future date. The seller has the
corresponding obligation to fulfil the transaction to sell or buy the asset or instrument if the buyer exercises the
option.
RISKS MANAGED
ANZ New Zealand offers and uses the instruments described above to manage fluctuations in the following market factors:
Foreign exchange
Currencies at current or determined rates of exchange.
Interest rate
Fixed or variable interest rates applying to money lent, deposited or borrowed.
Commodity
Soft commodities (that is, agricultural products such as wheat, coffee, cocoa, and sugar) and hard commodities (that
is, mined products such as gold, oil and gas).
Credit
Risk of default by customer or third parties.

NOTES TO THE FINANCIAL STATEMENTS

21
9. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
ANZ New Zealand uses central clearing counterparties and exchanges to settle derivative transactions. Different arrangements for posting of collateral
exist with these exchanges:
• some transactions are subject to clearing arrangements which result in separate recognition of collateral assets and liabilities, with the carrying
values of the associated derivative assets and liabilities held at their fair value.
• other transactions are legally settled by the payment or receipt of collateral which reduces the carrying values of the related derivative
instruments by the amount paid or received.
In August 2021, ANZ New Zealand amended the terms of its legal agreements with one of its central clearing counterparties giving effect to this form
of legal settlement. As a result of this change, collateral paid and received by ANZ New Zealand under these agreements is no longer separately
recognised, instead settling ANZ New Zealand’s outstanding derivative exposures and reducing the associated carrying values of the derivative asset
and liability balances. The impact of this change as at 30 September 2021 is a reduction in derivative assets of NZ$3.9 billion and derivative liabilities of
NZ$4.1 billion, and a reduction in net collateral paid of NZ$0.2 billion.

DERIVATIVE FINANCIAL INSTRUMENTS – HELD FOR TRADING
The majority of ANZ New Zealand’s derivative financial instruments are held for trading. The fair value of derivative financial instruments held for
trading are:
Assets Liabilities Assets Liabilities
2021 2021 2020 2020
Fair value NZ$m NZ$m NZ$m NZ$m
Interest rate contracts

Forward rate agreements
1 (1)
7 (8)
Futures contracts
19 (5)
8 (4)
Swap agreements 4,464 (3,329) 5,917 (3,658)
Options purchased 1 - 3 (2)
Total 4,485 (3,335)
5,935 (3,672)
Foreign exchange contracts
Spot and forward contracts
2,193 (1,859)
989 (955)
Swap agreements
1,724 (1,711)
1,429 (2,125)
Options purchased
24 (2)
26 -
Options sold
2 (23)
- (27)
Total 3,943 (3,595) 2,444 (3,107)
Commodity contracts and credit default swaps 13 (24) 12 (22)
Derivative financial instruments - held for trading 8,441 (6,954)
8,391 (6,801)

DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS
ANZ New Zealand uses two types of hedge accounting relationships:
Fair value hedge Cash flow hedge
Objective of this
hedging
arrangement
To hedge our exposure to changes to the fair value of a
recognised asset or liability or unrecognised firm
commitment caused by interest rate or foreign currency
movements.
To hedge our exposure to variability in cash flows of a
recognised asset or liability, a firm commitment or a
highly probable forecast transaction caused by interest
rate, foreign currency and other price movements.
Recognition of
effective hedge
portion
The following are recognised in profit or loss at the same
time:
• all changes in the fair value of the underlying item
relating to the hedged risk; and
• the change in the fair value of the derivatives.
We recognise the effective portion of changes in the fair
value of derivatives designated as a cash flow hedge in
the cash flow hedge reserve.
Recognition of ineffective
hedge portion
Recognised immediately in other operating income.
If a hedging instrument
expires, or is sold,
terminated, or exercised;
or no longer qualifies for
hedge accounting
When we recognise the hedged item in profit or loss, we
recognise the related unamortised fair value adjustment
in profit or loss. This may occur over time if the hedged
item is amortised to profit or loss as part of the effective
yield over the period to maturity.
Only when we recognise the hedged item in profit or
loss is the amount previously deferred in the cash flow
hedge reserve transferred to profit or loss.
Hedged item sold or
repaid
We recognise the unamortised fair value adjustment
immediately in profit or loss.
Amounts accumulated in equity are transferred
immediately to profit or loss.
Under the policy choice provided by NZ IFRS 9 Financial Instruments, ANZ New Zealand has continued to apply the hedge accounting requirements of
NZ IAS 39 Financial Instruments: Recognition and Measurement.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

22
9. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
The fair value of derivative financial instruments designated in hedging relationships are:

2021 2020
Nominal Nominal
amount Assets Liabilities amount Assets Liabilities

NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Fair value hedges
Interest rate swap agreements 28,969 614 (512) 28,893 730 (818)
Cash flow hedges
Interest rate swap agreements
27,820 228 (214)
41,191 635 (547)
Derivative financial instruments - designated in
hedging relationships
56,789 842 (726) 70,084 1,365 (1,365)

The maturity profile of the nominal amounts of our hedging instruments held is:
Average Less than 3 3 to 12 1 to 5 After 5
interest months months years years Total
Nominal amount
rate NZ$m NZ$m NZ$m NZ$m NZ$m
As at 30 September 2021

Fair value hedges

Interest rate
1.57% 247 3,556 13,718 11,448 28,969
Cash flow hedges
Interest rate
1.51% 2,585 5,226 18,981 1,028 27,820

As at 30 September 2020

Fair value hedges
Interest rate 1.72% 79 3,196 16,221 9,397 28,893
Cash flow hedges
Interest rate 1.83% 5,195 12,890 21,477 1,629 41,191

The impacts of ineffectiveness from our designated hedge relationships by type of hedge re lationship and type of risk being hedged are:

Ineffectiveness Amount reclassified

Change in value
Hedge ineffectiveness from the cash flow
of hedging Change in value recognised in profit hedge reserve
instrument
2
of hedged item and loss to profit and loss
2021 2020 2021 2020 2021 2020 2021 2020

NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Fair value hedges
1

Interest rate
252
281
(246)
(278)
6
3
-
-
Cash flow hedges
1

.
Interest rate
(153)
103
152
(103)
(1)
-
10
12
1 All instruments are classified as derivative financial instruments.
2 Changes in value of hedging instruments is before any adjustments for Settle to Market.
Hedge ineffectiveness recognised is classified within other operating income. Reclassification adjustments to the statement of comprehensive income
are recognised within net interest income.

NOTES TO THE FINANCIAL STATEMENTS

23
9. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
The hedged items in relation to ANZ New Zealand’s fair value hedges are:

Accumulated fair value

hedge adjustments on

Carrying amount the hedged item
Balance sheet Assets Liabilities Assets Liabilities
presentation Hedged risk NZ$m NZ$m NZ$m NZ$m
As at 30 September 2021
Fixed rate loans and advances Net loans and advances Interest rate
- - - -
Fixed rate debt issuances Debt issuances Interest rate
- (17,271) - (271)
Fixed rate investment securities (FVOCI)
1
Investment securities Interest rate 11,915 - (361) -
Total 11,915 (17,271) (361) (271)

As at 30 September 2020

Fixed rate loans and advances Net loans and advances Interest rate
1,542 - 10 -
Fixed rate debt issuances Debt issuances Interest rate - (18,692) - (713)
Fixed rate investment securities (FVOCI)
1
Investment securities Interest rate 9,679 - 322 -
Total

11,221 (18,692) 332 (713)
1 The carrying amount of debt instruments at fair value through other comprehensive income does not include the fair value hedge adjustment since accounting for the hedge relationship
results in the transfer of the hedge adjustment out of other comprehensive income to the income statement to match the profit or loss on the hedging instrument.
The cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the balance sheet is NZ$2 million (2020:
NZ$11 million).

The hedged items in relation to ANZ New Zealand’s cash flow hedges are:

Continuing Discontinued
hedges hedges
2021 2020 2021 2020

Hedged risk NZ$m NZ$m NZ$m NZ$m
Floating rate loans and advances Interest rate
48
577
(1)
-
Floating rate customer deposits Interest rate
(36)
(421)
2
(4)

All cash flow hedges relate to hedges of interest rate risk and the movements in the cash flow hedge reserve are shown in the statement of changes
in equity on page 7.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

24
9. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

KEY JUDGEMENTS AND ESTIMATES

Judgement is required when we select the valuation techniques used to measure the fair value of derivatives, particularly the selection
of valuation inputs that are not readily observable, and the application of valuation adjustments to certain derivatives. Refer to Note 16
Fair Value of Financial Assets and Financial Liabilities for further details.

RECOGNITION AND MEASUREMENT
Recognition
Initially and at each reporting date, we recognise all derivatives at fair value. If the fair value of a derivative is
positive, then we carry it as an asset, but if its value is negative, then we carry it as a liability.
Valuation adjustments are integral in determining the fair value of derivatives. This includes:
• a credit valuation adjustment (CVA) to reflect the counterparty risk and/or event of default; and
• a funding valuation adjustment (FVA) to account for funding costs and benefits in the derivatives portfolio.
Derecognition of
assets and liabilities
We remove derivative assets from our balance sheet when the contracts expire or we have transferred
substantially all the risks and rewards of ownership. We remove derivative liabilities from our balance sheet
when ANZ New Zealand’s contractual obligations are discharged, cancelled or expired.
With respect to derivatives cleared through a central clearing counterparty or exchange, derivative assets or
liabilities may be derecognised in accordance with the principle above when collateral is settled, depending
on the legal arrangements in place for each instrument.
Impact on the
income statement
The recognition of gains or losses on derivative financial instruments depends on whether the derivative is
held for trading or is designated into a hedging relationship. For derivative financial instruments held for
trading, gains or losses from changes in the fair value are recognised in profit or loss.
For an instrument designated into a hedging relationship the recognition of gains or losses depends on the
nature of the item being hedged. Refer to the table on page 21 for profit or loss treatment for each hedge type.
Sources of hedge ineffectiveness may arise from differences in the interest rate reference rate, margins, or rate
set differences and differences in discounting between the hedged items and the hedging instruments. The
hedging instruments are discounted using Overnight Index Swaps discount curves which are not applied to
the hedged items.
Hedge effectiveness
To qualify for hedge accounting a hedge is expected to be highly effective. A hedge is highly effective only if
the following conditions are met:
• the hedge is expected to be highly effective in achieving offsetting changes in fair value or cash flows
attributable to the hedged risk during the period for which the hedge is designated (prospective
effectiveness); and
• the actual results of the hedge are within the range of 80-125% (retrospective effectiveness).
ANZ New Zealand monitors hedge effectiveness on a regular basis but at a minimum at least at each reporting
date.

NOTES TO THE FINANCIAL STATEMENTS

25
10. INVESTMENT SECURITIES

2021 2020

NZ$m NZ$m
Investment securities measured at fair value through other comprehensive income

Debt securities

11,925 9,892
Equity securities

1 1
Total 11,926
9,893

Less than 3 3 to 12 After No
months months 1 to 5 years 5 years maturity Total
As at 30 September 2021 NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Government securities
272 363 7,704 3,171 - 11,510
Corporate and financial institution securities
2 123 290 - - 415
Equity securities
- - - - 1 1
Total 274 486 7,994 3,171 1 11,926

As at 30 September 2020
Government securities 1,021 641 6,662 1,168 - 9,492
Corporate and financial institution securities 3 113 284 - - 400
Equity securities - - - - 1 1
Total
1,024 754 6,946 1,168 1 9,893

KEY JUDGEMENTS AND ESTIMATES

Judgement is required when we select valuation techniques used to measure the fair value of assets not valued using quoted market
prices, particularly the selection of valuation inputs that are not readily observable. Refer to Note 16 Fair Value of Financial Assets and
Financial Liabilities for further details.

RECOGNITION AND MEASUREMENT
Investment securities are those financial assets in security form (that is, transferable debt or equity instruments) that are not held for trading
purposes. By way of exception, bills of exchange (a form of security/transferable instrument) which are used to facilitate ANZ New Zealand’s
customer lending activities are classified as loans and advances (rather than investment securities) to better reflect the substance of the
arrangement.
Non-trading equity instruments may be designated at FVOCI on an instrument by instrument basis. If this election is made, gains or losses are
not reclassified from other comprehensive income to profit or loss on disposal of the investment. However, gains or losses may be reclassified
within equity.
Assets disclosed as investment securities are subject to the general classification and measurement policy for financial assets outlined on page
18. Additionally, expected credit losses associated with ‘Investment securities - debt securities at fair value through other comprehensive
income’ are recognised and measured in accordance with the accounting policy outlined in Note 12 Allowance for Expected Credit Losses, and
the allowance for Expected Credit Loss (ECL) is recognised in the FVOCI reserve in equity with a corresponding charge to profit or loss.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

26
11. NET LOANS AND ADVANCES
The following table provides details of net loans and advances for ANZ New Zealand:

2021 2020
Note NZ$m NZ$m
Overdrafts

799 659
Credit cards

1,127 1,300
Term loans - housing

98,831 89,544
Term loans - non-housing
40,528
41,882
Subtotal 141,285
133,385
Unearned income
(18)
(25)
Capitalised brokerage and other origination costs
392
319
Gross loans and advances

141,659
133,679
Allowance for expected credit losses 12 (585) (695)
Net loans and advances

141,074 132,984
Residual contractual maturity:

Within one year
32,730
35,188
More than one year
108,344
97,796
Net loans and advances 141,074
132,984

RECOGNITION AND MEASUREMENT
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are
facilities ANZ New Zealand provides directly to customers or through third party channels.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the issue of the loan or advance, which are
primarily brokerage and other origination costs which we amortise over the estimated life of the loan. Subsequently, we then measure loans
and advances at amortised cost using the effective interest rate method, net of any allowance for expected credit losses.
ANZ New Zealand enters into transactions in which it transfers financial assets that are recognised on its balance sheet. When ANZ New Zealand
retains substantially all of the risks and rewards of the transferred assets, the transferred assets remain on ANZ New Zealand’s balance sheet,
however if substantially all the risks and rewards are transferred, ANZ New Zealand derecognises the asset. If the risks and rewards are partially
retained and control over the asset is lost, then ANZ New Zealand derecognises the asset. If control over the asset is not lost, ANZ New Zealand
continues to recognise the asset to the extent of its continuing involvement.
We separately recognise the rights and obligations retained, or created, in the transfer as assets and liabilities as appropriate.
Assets disclosed as net loans and advances are subject to the general classification and measurement policy for financial assets outlined on
page 18. Additionally, expected credit losses associated with loans and advances at amortised cost are recognised and measured in accordance
with the accounting policy outlined in Note 12 Allowance for Expected Credit Losses.

NOTES TO THE FINANCIAL STATEMENTS

27
12. ALLOWANCE FOR EXPECTED CREDIT LOSSES

2021 2020
Collectively Individually Collectively Individually
assessed assessed Total assessed assessed Total
NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Net loans and advances at amortised cost
525 60 585
588 107 695
Off-balance sheet commitments
107 15 122
137 22 159
Total 632 75 707
725 129 854
The following tables present the movement in the allowance for ECL for the year.

Net loans and advances

Allowance for ECL is included in net loans and advances.

Stage 3

Stage 1 Stage 2
Collectively
assessed
Individually
assessed Total
NZ$m NZ$m NZ$m NZ$m NZ$m
As at 1 October 2019
164 194 43 98 499
Transfer between stages 25 (30) 4 1 -
New and increased provisions (net of collective provision releases) (3) 206 34 157 394
Write-backs - - - (35) (35)
Bad debts written-off (excluding recoveries) - - - (92) (92)
Discount unwind - - - (8) (8)
Sale of UDC (25) (23) (1) (14) (63)
As at 30 September 2020 161 347 80 107 695
Transfer between stages
16 (14) (2) - -
New and increased provisions (net of collective provision releases)
(22) (19) (22) 67 4
Write-backs
- - - (64) (64)
Bad debts written-off (excluding recoveries)
- - - (47) (47)
Discount unwind
- - - (3) (3)
As at 30 September 2021 155 314 56 60 585
Off-balance sheet credit related commitments - undrawn and contingent facilities
Allowance for ECL is included in other provisions.

As at 1 October 2019
60 24 2 11 97
Transfer between stages 3 (3) - - -
New and increased provisions (net of collective provision releases) 17 36 1 11 65
Sale of UDC (1) (2) - - (3)
As at 30 September 2020
79 55 3 22 159
Transfer between stages 3 (4) 1 - -
New and increased provisions (net of collective provision releases) (18) (12) - (7) (37)
As at 30 September 2021 64 39 4 15 122

The collectively assessed allowance for ECL decreased by NZ$93 million attributable to: a reduction of NZ$62 million from the improving economic
outlook offset by changes to the allowance for model uncertainty due to the continuing pandemic; and a reduction of NZ$31 million due to portfolio
credit risk profile improvements, offset by an increase in mortgage lending.
CREDIT IMPAIRMENT CHARGE – INCOME STATEMENT
2021 2020
NZ$m NZ$m
New and increased provisions (net of releases)

- Collectively assessed
(93)
290
- Individually assessed

60
169
Write-backs

(64) (35)
Recoveries of amounts previously written-off

(18) (23)
Total credit impairment charge / (release) (115)
401

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

28
12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

RECOGNITION AND MEASUREMENT
EXPECTED CREDIT LOSS MODEL
The measurement of expected credit losses reflects an unbiased, probability weighted prediction which evaluates a range of scenarios and
takes into account the time value of money, past events, current conditions and forecasts of future economic conditions.
Expected credit losses are either measured over 12 months or the expected lifetime of the financial asset, depending on credit deterioration
since origination, according to the following three-stage approach:
• Stage 1: At the origination of a financial asset, and where there has not been a Significant Increase in Credit Risk (SICR) since origination,
an allowance equivalent to 12 months ECL is recognised reflecting the expected credit losses resulting from default events that are
possible within the next 12 months from the reporting date. For instruments with a remaining maturity of less than 12 months,
expected credit losses are estimated based on default events that are possible over the remaining time to maturity.
• Stage 2: Where there has been a SICR since origination, an allowance equivalent to lifetime ECL is recognised reflecting expected credit
losses resulting from all possible default events over the expected life of a financial instrument. If credit risk were to improve in a
subsequent period such that the increase in credit ri sk since origination is no longer considered significant, the exposure returns to a
Stage 1 classification and a 12 month ECL applies.
• Stage 3: Where there is objective evidence of impairment, an allowance equivalent to lifetime ECL is recognised.
Expected credit losses are estimated on a collective basis for exposures in Stage 1 and Stage 2, and on either a collective or individual basis
when transferred to Stage 3.
MEASUREMENT OF EXPECTED CREDIT LOSS
ECL is calculated as the product of the following credit risk factors at a facility level, discounted to incorporate the time value of money:
• Probability of default (PD) – the estimate of the likelihood that a borrower will default over a given period;
• Exposure at default (EAD) – the expected balance sheet exposure at default taking into account repayments of principal and interest,
expected additional drawdowns and accrued interest; and
• Loss given default (LGD) – the expected loss in the event of the borrower defaulting, expressed as a percentage of the facility’s EAD,
taking into account direct and indirect recovery costs.
These credit risk factors are adjusted for current and forward-looking information through the use of macro-economic variables.
EXPECTED LIFE
When estimating ECL for exposures in Stage 2 and 3, ANZ New Zealand considers the expected lifetime over which it is exposed to credit risk.
For non-retail portfolios, ANZ New Zealand uses the maximum contractual period as the expected lifetime for non-revolving credit facilities.
For non-retail revolving credit facilities, such as corporate lines of credit, the expected life reflects ANZ New Zealand’s contractual right to
withdraw a facility as part of a contractually agreed annual review, after taking into account the applicable notice period.
For re tail portfolios, the expected lifetime is determined using a behavioural term, taking into account expected prepayment behaviour and
substantial modifications.
DEFINITION OF DEFAULT, CREDIT IMPAIRED AND WRITE-OFFS
The definition of default used in measuring expected credit losses is aligned to the definition used for internal credit risk management
purposes across all portfolios. This definition is also in line with the regulatory definition of default. Default occurs when there are indicators
that a debtor is unlikely to fully satisfy contractual credit obligations to ANZ New Zealand, or the exposure is 90 days past due.
Financial assets, including those that are well secured, are considered credit impaired for financial reporting purposes when they default.
When there is no realistic probability of recovery, loans are written off against the related impairment allowance on completion of ANZ New
Zealand’s internal processes and when all reasonably expected recoveries have been collected. In subsequent periods, any recoveries of
amounts previously written-off are credited to credit impairment charge in the income statement.
MODIFIED FINANCIAL ASSETS
If the terms of a financial asset are modified or an existing financial asset is replaced with a new one for either credit or commercial reasons, an
assessment is made to determine if the changes to the terms of the existing financial asset are considered substantial. This assessment
considers both changes in cash flows arising from the modified terms as well as changes in the overall instrument risk profile; for example,
changes in the principal (credit limit), term, or type of underlying collateral. Where a modification is considered non-substantial, the existing
financial asset is not derecognised and its date of origination continues to be used to determine SICR. Where a modification is considered
substantial, the existing financial asset is derecognised and a new financial asset is recognised at its fair value on the modification date, which
also becomes the date of origination used to determine SICR for this new asset.

NOTES TO THE FINANCIAL STATEMENTS

29
12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

RECOGNITION AND MEASUREMENT
SIGNIFICANT INCREASE IN CREDIT RISK (SICR)
Stage 2 assets are those that have experienced a SICR since origination. In determining what constitutes a SICR, ANZ New Zealand
considers both qualitative and quantitative information:
i. Internal credit rating grade
For the majority of portfolios, the primary indicator of a SICR is a significant deterioration in the internal credit rating grade of a facility
since origination and is measured by application of thresholds.
For non-retail portfolios, a SICR is determined by comparing the Customer Credit Rating (CCR) applicable to a facility at reporting
date to the CCR at origination of that facility. A CCR is assigned to each borrower which reflects the probability of default of the
borrower and incorporates both borrower and non-borrower specific information, including forward-looking information. CCRs are
subject to review at least annually or more frequently when an event occurs which could affect the credit risk of the customer.
For retail portfolios, a SICR is determined, depending on the type of facility, by either comparing the scenario weighted lifetime
probability of default at the reporting date to that at origination, or by reference to customer behavioural score thresholds. The
scenario weighted lifetime probability of default may increase significantly if:
• there has been a deterioration in the economic outlook, or an increase in economic uncertainty; or
• there has been a deterioration in the customer’s overall credit position, or ability to manage their credit obligations.
ii. Backstop criteria
ANZ New Zealand uses 30 days past due arrears as a backstop criterion for both non-retail and retail portfolios. For retail portfolios
only, facilities are required to demonstrate three to six months of good payment behaviour prior to being allocated back to Stage 1.
iii. COVID-19 initiatives
Facilities previously subject to the COVID-19 payment deferral arrangements have been subsumed in to the normal loan portfolios
and SICR applied accordingly.

FORWARD-LOOKING INFORMATION
Forward-looking information is incorporated into both our assessment of whether a financial asset has experienced a SICR since its initial
recognition and in our estimate of ECL. In applying forward-looking information for estimating ECL, ANZ New Zealand considers four
probability-weighted forecast economic scenarios as follows:
i. Base case scenario
The base case scenario is our view of likely future macro-economic conditions. It reflects management’s assumptions used for
strategic planning and budgeting, and also informs the Banking Group’s Internal Capital Adequacy Assessment Process (ICAAP)
which is the process ANZ New Zealand applies in strategic and capital planning over a 3-year time horizon;
ii. Upside and iii. Downside scenarios
The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the
economic conditions prevailing at balance date) and are based on a combination of more optimistic (in the case of the upside) and
pessimistic (in the case of the downside) economic events and uncertainty over long term horizons; and
iv. Severe downside scenario
The severe downside scenario is fixed by reference to average economic cycle conditions and accounts for the potentially severe
impact of less likely extremely adverse economic conditions. It reflects macro-economic conditions of a downturn economic event
with a probability of occurrence once every 25 years.
The four scenarios are described in terms of macro-economic variables used in the PD, LGD and EAD models (collectively the ECL models)
depending on the lending portfolio and country of the borrower. Examples of the variables include unemployment rates, GDP growth
rates, house price indices, commercial property price indices and consumer price indices.
Probability weighting of each scenario is determined by management considering the risks and uncertainties surrounding the base case
economic scenario, as well as specific portfolio considerations where required.
Where applicable, temporary adjustments may be made to account for situations where known or expected risks have not been
adequately addressed in the modelling process.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

30
12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

KEY JUDGEMENTS AND ESTIMATES
In estimating collectively assessed ECL, ANZ New Zealand makes judgements and assumptions in relation to:
• the selection of an estimation technique or modelling methodology; and
• the selection of inputs for those models, and the interdependencies between those inputs.
The following table summarises the key judgements and assumptions in relation to the ECL model inputs and the interdependencies between
those inputs, and highlights significant changes during the current period.
The judgements and associated assumptions have been made within the context of the impact of COVID-19, and reflect historical experience
and other factors that are considered to be relevant, including expectations of future events that are believed to be reasonable under the
circumstances. ANZ New Zealand’s ECL estimates are inherently uncertain and, as a result, actual results may differ from these estimates.
Judgement /
assumption

Description
Considerations for the year ended
30 September 2021
Determining
when a SICR
has occurred
In the measurement of ECL, judgement is involved in
setting the rules and trigger points to determine
whether there has been a SICR since initial
recognition of a loan, which would result in the
financial asset moving from Stage 1 to Stage 2. This is
a key area of ju dgement since transition from Stage 1
to Stage 2 increases the ECL from an allowance based
on the probability of default in the next 12 months, to
an allowance for lifetime expected credit losses.
Subsequent decreases in credit risk resulting in
transition from Stage 2 to Stage 1 may similarly result
in significant changes in the ECL allowance.
The setting of precise trigger points requires
judgement which may have a material impact upon
the size of the ECL allowance. ANZ New Zealand
monitors the effectiveness of SICR criteria on an
ongoing basis.
The support packages offered to customers in
response to COVID-19 in 2020 and 2021 have ceased
with the majority of customers who took up the
support packages having reverted back to their
normal loan repayments. Given the recent cessation
of these packages, ANZ New Zealand has provided a
component of ECL for expected delinquencies that
may have been obscured by the support measures.
Measuring
both 12-month
and lifetime
credit losses
The probability of default (PD), loss given default
(LGD) and exposure at default (EAD) credit risk
parameters used in determining ECL are point-in -time
measures reflecting the relevant forward-looking
information determined by management. Judgement
is involved in determining which forward-looking
information variables are relevant for particular
lending portfolios and for determining each
portfolio’s point-in -time sensitivity.
The PD, EAD and LGD models are subject to ANZ New
Zealand’s model risk policy that stipulates periodic
model monitoring, periodic re -validation and defines
approval procedures and authorities according to
model materiality.
During the year ended 30 September 2021 an
adjustment was made to the modelled outcome to
account for increased model uncertainties as a result
of COVID-19.

In addition, judgement is required where behavioural
characteristics are applied in estimating the lifetime of
a facility to be used in measuring ECL.
There were no material changes to the policies during
the year ended 30 September 2021.
Base case
economic
forecast
ANZ New Zealand derives a forward-looking “base
case” economic scenario which reflects our view of
the most likely future macro-economic conditions.
There have been no changes to the types of forward-
looking variables (key economic drivers) used as
model inputs in the current year.
As at 30 September 2021, the base case assumptions
have been updated to reflect the evolving situation
with respect to COVID-19, including emergence from
lockdowns, government stimulus measures and roll-
out of vaccines. In determining the expected path of
the economy, assessments of the impact of central
bank policies, governments’ actions, the response of
business, and institution specific responses (such as
payment deferrals) were considered.
The expected outcomes of key economic drivers for
the base case scenario as at 30 September 2021 are
described below under the heading “Base case
economic forecast assumptions”.

NOTES TO THE FINANCIAL STATEMENTS

31
12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

KEY JUDGEMENTS AND ESTIMATES
Judgement /
assumption

Description
Considerations for the year ended
30 September 2021
Probability
weighting of
each scenario
(base case,
upside,
downside

and
severe
downside
scenarios)
1,2

Probability weighting of each economic scenario is
determined by management considering the risks
and uncertainties surrounding the base case scenario
at each measurement date.
The key consideration for probability weightings in
the current period is the continued uncertain
economic impacts of COVID-19.
ANZ New Zealand considers these weightings to
provide estimates of the possible loss outcomes
taking into account short and long-term inter-
relationships within ANZ New Zealand’s credit
portfolios.
As at 30 September 2021, a base case weighting of
50% has been applied, and more weight has been
applied to the downside scenario given ANZ New
Zealand’s assessment of downside risks.
The assigned probability weightings are subject to a
high degree of inherent uncertainty and therefore the
actual outcomes may be significantly different to
those projected.
Management
temporary
adjustments
Management temporary adjustments to the ECL
allowance are used in circumstances where it is
judged that our existing inputs, assumptions and
model techniques do not capture all the risk factors
relevant to our lending portfolios. Emerging lo cal or
global macroeconomic, microeconomic or political
events, and natural disasters that are not incorporated
into our current parameters, risk ratings, or forward-
looking information are examples of such
circumstances. The use of management temporary
adjustments may impact the amount of ECL
recognised.
The uncertainty associated with the COVID-19
pandemic, including the roll-out of vaccines and their
efficacy, and the extent to which the actions of
governments, businesses and consumers mitigate
against potentially adverse credit outcomes are not
fully incorporated into existing ECL models which are
based on historical underlying data. Accordingly,
management overlays have been applied to ensure
credit provisions are appropriate.
Management have applied a number of adjustments
to the modelled ECL primarily due to the uncertainty
associated with continuing COVID-19 impacts.
Management overlays (including COVID-19 overlays)
which add to the modelled ECL provision have been
made for risks particular to personal and business
banking.
Management temporary adjustments total NZ$177
million (2020: NZ$177 million).

1. The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the economic conditions prevailing at balance date) and are
based on a combination of more optimistic (in the case of the upside) and pessimistic (in the case of the downside) economic conditions.
2. The severe downside scenario is fixed by reference to average economic cycle conditions and accounts for the potentially severe downside impact of less likely extremely adverse economic
conditions.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

32
12. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)

KEY JUDGEMENTS AND ESTIMATES
Base case economic forecast assumptions
The uncertain evolution of the COVID-19 pandemic and associated government, business and consumer responses, increases the risk of the
economic forecast resulting in an understatement or overstatement of the ECL balance due to uncertainties around:
• the extent and duration of measures, including the roll-out of vaccines and the relaxation of containment measures, impacting the
spread of COVID-19;
• the expected impact on the economy, including the timing and speed of the economic response and differences between sectors; and
• the effects of progressive reductions in stimulus measures, in particular their impact on the extent and duration of economic recovery.
The economic drivers of the base case economic forecasts at 30 September 2021 are set out below. These reflect our view of future macro-
economic conditions at 30 September 2021. For years beyond the near term forecasts below, the ECL models project future year economic
conditions including an assumption to eventual reversion to mid-cycle economic conditions.

Forecast calendar year
New Zealand
2021 2022 2023
Gross domestic product (GDP) (annual % change) 4.3% 4.3% 2.9%
Unemployment rate 4.1% 3.9% 3.9%
Residential property prices (annual % change) 22.4% 0.4% 5.2%
Consumer price index (CPI) 3.3 2.9 1.9
The base case economic forecasts as at 30 September 2021 indicate a significant improvement in current and expected economic conditions
from the forecasts as at 30 September 2020 reflecting the ongoing progress and actions in responding to the COVID-19 pandemic.
Probability weightings
Probability weightings for each scenario are determined by management considering the risks and uncertainties surrounding the base case
economic scenario. The key consideration for probability weightings in the current period is the effectiveness of actions taken in response to
COVID-19 relaxation of containment measures by governments, and the take-up of vaccines limiting the impact of the virus.
The base case scenario represents a significant improvement in the forecasts since September 2020. Given the uncertainties associated with a
potential ongoing recovery of the economy, the base case weighting remains at 50% and the downside scenario has been increased to 40.5%
(2020: 32.0%).
The assigned probability weightings are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be
significantly different to those projected. ANZ New Zealand considers these weightings to provide estimates of the possible loss outcomes and
taking into account short and long term inter-relationships within ANZ New Zealand’s credit portfolios. The average weightings applied are set
out below:

2021 2020
Base 50.0% 50.0%
Upside 4.5% 8.0%
Downside 40.5% 32.0%
Severe downside 5.0% 10.0%
ECL - Sensitivity analysis
Given current economic uncertainties and the judgement applied to factors used in determining the expected default of borrowers in future
periods, expected credit losses reported by ANZ New Zealand should be considered as a best estimate within a range of possible estimates.
The table below illustrates the sensitivity of collectively assessed ECL to key factors used in determining it as at 30 September 2021:

ECL
NZ$m
Impact
NZ$m
If 1% of Stage 1 facilities were included in Stage 2 637 5
If 1% of Stage 2 facilities were included in Stage 1 631 (1)

100% upside scenario
100% base scenario
100% downside scenario
100% severe downside scenario
251
327
594
792
(381)
(305)
(38)
160

NOTES TO THE FINANCIAL STATEMENTS

33

CLASSIFICATION AND MEASUREMENT
Financial liabilities
Financial liabilities are measured at amortised cost, or fair value through profit or loss (FVTPL) when they are held for trading. Additionally, financial
liabilities can be designated at FVTPL where:
• the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise;
• a group of financial liabilities are managed and their performance is evaluated on a fair value basis, in accordance with a documented risk
management strategy; or
• the financial liability contains one or more embedded derivatives unless:
a) the embedded derivative does not significantly modify the cash flows that otherwise would be required by the contract; or
b) the embedded derivative is closely related to the host financial liability.
Where financial liabilities are 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, except where doing so would create or enlarge an accounting mismatch in profit or loss.

FINANCIAL LIABILITIES

13. DEPOSITS AND OTHER BORROWINGS
2021 2020
Note NZ$m NZ$m
Term deposits 40,668 50,069
On demand and short term deposits 62,648 53,910
Deposits not bearing interest 21,813 16,884
Total customer deposits
125,129
120,863
Certificates of deposit
1,875
1,782
Commercial paper
4,433
1,748
Securities sold under repurchase agreements
1,663
646
Borrowings from Ultimate Parent Bank and Immediate Parent Company 26
2,886
2,958
Deposits and other borrowings 135,986 127,997
Residual contractual maturity:

Within one year
130,430
122,128
More than one year
5,556
5,869
Deposits and other borrowings

135,986
127,997
Carried on balance sheet at:
Amortised cost 131,553 126,249
Fair value through profit or loss (designated on initial recognition) 4,433 1,748
Deposits and other borrowings

135,986
127,997

RECOGNITION AND MEASUREMENT
For deposits and other borrowings that:
• are not designated at fair value through profit or loss on initial recognition, we measure them at amortised cost and recognise their interest
expense using the effective interest rate method; and
• are managed on a fair value basis, reduce or eliminate an accounting mismatch or contain an embedded derivative, we designate them as
measured at fair value through profit or loss.
Refer to Note 16 Fair Value of Financial Assets and Financial Liabilities for further details.
For deposits and other borrowings designated at fair value we recognise the amount of fair value gain or loss attributable to changes in ANZ New
Zealand’s own credit risk in other comprehensive income in retained earnings. Any remaining amount of fair value gain or loss we recognise directly
in profit or loss. Once we have recognised an amount in other comprehensive income, we do not later reclassify it to profit or loss.
Securities sold under repurchase agreements represent a liability to repurchase the financial assets that remain on our balance sheet since the risks
and rewards of ownership remain with
ANZ New Zealand. Over the life of the repurchase agreement, we recognise the difference between the sale
price and the repurchase price and charge it to interest expense in the income statement.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

34
14. DEBT ISSUANCES
ANZ New Zealand uses a variety of funding programmes to issue unsubordinated debt and subordinated debt. The difference between
unsubordinated debt and subordinated debt is that holders of unsubordinated debt take priority over holders of subordinated debt owed by the
relevant issuer. In any liquidation event subordinated debt will be repaid by the relevant issuer only after the repayment of claims of depositors, other
creditors and the unsubordinated debt holders.

2021 2020

NZ$m NZ$m
Senior debt 14,220 17,476
Covered bonds 4,248 4,522
Total unsubordinated debt

18,468
21,998
Subordinated debt

- ANZ Capital Notes
1,513
1,543
- Other
871
286
Total subordinated debt

2,384
1,829
Total debt issued 20,852 23,827
TOTAL DEBT ISSUED BY CURRENCY
The table below shows ANZ New Zealand’s issued debt by currency of issue, which broadly represents the debt holders’ base location.
2021 2020

NZ$m NZ$m
AUD Australian dollars 1,336 1,378
EUR Euro
8,055
8,332
NZD New Zealand dollars
2,553
2,980
CHF Swiss Francs
984
1,053
USD United States dollars
7,924
10,084
Total debt issued 20,852
23,827
Residual contractual maturity:

Within one year 4,612 5,419
More than one year 16,240 18,408
Total debt issued 20,852
23,827
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 ANZ New Zealand, whereas the Covered Bond Guarantor is not
a member of ANZ New Zealand.
SUBORDINATED DEBT
Other subordinated debt instruments rank ahead of ANZ Capital Notes in any liquidation event impacting the issuer of the instruments. ANZ Capital
Notes 3 (ANZ CN3) rank equally with other additional tier 1 capital instruments issued by the Ultimate Parent Bank. ANZ New Zealand Capital Notes
(ANZ NZ CN) rank equally with the Bank’s other additional tier 1 capital instruments, including preference shares.
ANZ CAPITAL NOTES
ANZ Capital Notes are fully paid mandatorily convertible non-cumulative perpetual subordinated notes. Holders of ANZ Capital Notes do not have any
right to vote in general meetings of the Ultimate Parent Bank or the Bank.
ANZ Capital Notes are classified as debt given there are circumstances beyond ANZ New Zealand’s control where the principal is converted into a
variable number of ordinary shares of the Ultimate Parent Bank.
Distributions on ANZ CN3 and interest payments on ANZ NZ CN are non-cumulative and subject to the issuer’s absolute discretion and certain
payment conditions (including regulatory requirements). Distributions on ANZ CN3 are franked in line with the franking applied to the Ultimate Parent
Bank’s ordinary shares.
Where specified, ANZ Capital Notes provide the issuer with an early redemption or conversion option on a specified date and in certain other
circumstances (such as a tax or regulatory event). This option is subject to APRA’s and, in respect of early redemption of the ANZ NZ CN, APRA’s and
RBNZ’s prior written approval.

NOTES TO THE FINANCIAL STATEMENTS

35
14. DEBT ISSUANCES (continued)
ANZ Capital Notes will immediately convert into a variable number of ordinary shares of the Ultimate Parent Bank (based on the average market price
of the Ultimate Parent Bank’s ordinary shares immediately prior to conversion less a 1% discount, subject to a maximum conversion number of
Ultimate Parent Bank ordinary shares) if:
• the Overseas Banking Group’s Level 1 (ANZ CN3 only) or Level 2 common equity tier 1 capital ratio is equal to or less than 5.125% or, in the case
of the ANZ NZ CN, the Banking Group’s common equity tier 1 capital ratio is equal to or less than 5.125% - known as a Common Equity Capital
Trigger Event; or
• APRA notifies the Ultimate Parent Bank that, without the conversion or write-off of certain securities or a public injection of capital (or equivalent
support), it considers that the Ultimate Parent Bank would become non-viable or, in the case of the ANZ NZ CN, the RBNZ directs the Bank to
convert or write-off the notes or a statutory manager is appointed to the Bank and decides that the Bank must convert or write-off the notes –
known as a Non-Viability Trigger Event.
ANZ Capital Notes mandatorily convert into a variable number of ordinary shares of the Ultimate Parent Bank (based on the average market price of
the shares immediately prior to conversion less a 1% discount):
• on a specified mandatory conversion date; or
• on an earlier date under certain circumstances as set out in the terms.
However, the mandatory conversion is deferred for a specified period if certain conversion tests are not met.
The table below show the key details of the ANZ Capital Notes on issue at 30 September in both the current and the prior years:
ANZ CN 3 ANZ NZ CN
Issuer
NZ Branch The Bank
Issue date
5 March 2015 31 March 2015
Issue amount
AU$970 million NZ$500 million
Face value
AU$100 NZ$1
Distribution/interest frequency
Semi-annually in arrears Quarterly in arrears
Distribution/interest rate

Floating rate: (Australian 180 day
Bank Bill rate + 3.6%) x (1-
Australian corporate tax rate)
Floating rate: (New Zealand 3
month Bank Bill rate + 3.5%)
Issuer's early redemption
24 March 2023 n/a
1

Mandatory conversion date
24 March 2025 25 May 2022
Common equity capital trigger event
Yes Yes
Non-viability trigger event
Yes Yes
Carrying value (net of issue costs)
NZ$1,013 million NZ$500 million

(2020: NZ$1,043 million) (2020: NZ$500 million)
1 On 2 April 2020, RBNZ announced that locally incorporated banks, including the Bank, should not redeem capital notes at that time. Accordingly, the Bank was not permitted to, and did
not, redeem ANZ NZ CN on 25 May 2020 (the Optional Exchange Date). Further, the Bank did not exercise its option to convert ANZ NZ CN into ordinary shares of the Ultimate Parent Bank
on the Optional Exchange Date.
The RBNZ has released new capital adequacy requirements for New Zealand banks, which are being implemented from October 2021 to July 2028.
Under the new requirements, from 1 January 2022, the ANZ NZ CNs are subject to a 12.5% reduction in their regulatory capital recognition. As a result,
the Bank has determined that a regulatory event (as defined in the ANZ NZ CN Deed Poll) has occurred in respect of these notes. The occurrence of a
regulatory event means that the Bank may choose to redeem the ANZ NZ CNs at its discretion. A redemption of the ANZ NZ CNs is subject to certain
conditions, including approval from the RBNZ and APRA. As at 10 November 2021, no decision has been made on whether the Bank will redeem the
ANZ NZ CNs.

RECOGNITION AND MEASUREMENT
Debt issuances are measured at amortised cost. Where ANZ New Zealand enters into a fair value hedge accounting relationship, the fair value
attributable to the hedge risk is reflected in adjustments to the carrying value of the debt. Interest expense is recognised using the effective
interest rate method.
Subordinated debt with capital-based conversion features (i.e. Common Equity Capital Trigger Event or Non-Viability Trigger Events) are
considered to contain embedded derivatives that we account for separately at fair value through profit and loss. The embedded derivatives arise
because the amount of shares issued on conversion following any of those trigger events is subject to the maximum conversion number,
however they have no significant value as of the reporting date given the remote nature of those trigger events.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

36
15. FINANCIAL RISK MANAGEMENT
RISK MANAGEMENT FRAMEWORK AND MODEL
INTRODUCTION
The use of financial instruments is fundamental to ANZ New Zealand’s businesses of providing banking and other financial services to our customers.
The associated financial risks (primarily credit, market, and liquidity risks) are a significant portion of ANZ New Zealand’s key material risks.
This note details ANZ New Zealand’s financial risk management policies, processes and quantitative disclosures in relation to the key financial risks:
Key material financial risks Key sections applicable to this risk
Credit risk
The risk of financial loss resulting from:
• a counterparty failing to fulfil its obligations; or
• a decrease in credit quality of a counterparty resulting in financial loss.
Credit risk incorporates the risks associated with us lending to customers
who could be impacted by climate change or by changes to laws,
regulations, or other policies adopted by governments or regulatory
authorities, including carbon pricing and climate change adaptation or
mitigation policies.
• Credit risk overview, management and control responsibilities
• Maximum exposure to credit risk
• Credit quality
• Concentrations of credit risk
• Collateral management
Market risk
The risk to ANZ New Zealand’s earnings arising from:
• changes in interest rates, foreign exchanges rates, credit spreads,
volatility and correlations; or
• fluctuations in bond, commodity or equity prices.
• Market risk overview, management and control responsibilities
• Measurement of market risk
• Traded and non-traded market risk
• Foreign currency risk – structural exposure
Liquidity and funding risk
The risk that ANZ New Zealand is unable to meet its payment obligations as
they fall due, including:
• repaying depositors or maturing wholesale debt; or
• ANZ New Zealand having insufficient capacity to fund increases in assets.
• Liquidity risk overview, management and control responsibilities
• Key areas of measurement for liquidity risk
• Liquidity portfolio management
• Funding position
• Residual contractual maturity analysis of ANZ New Zealand’s
liabilities
OVERVIEW
AN OVERVIEW OF OUR RISK MANAGEMENT FRAMEWORK
This overview is provided to aid the users of the financial statements in understanding the context of the financial disclosures required under NZ IFRS
7 Financial Instruments: Disclosures (NZ IFRS 7).
The Board is responsible for establishing and overseeing ANZ New Zealand’s Risk Management Framework (RMF). The Board has delegated authority
to the Bank’s Board Risk Committee (BRC) to develop and monitor compliance with ANZ New Zealand’s risk management policies. The BRC reports
regularly to the Board on its activities.
The Board approves the strategic objectives of ANZ New Zealand including:
• the Risk Appetite Statement (RAS), which sets out the Board’s expectations regarding the degree of risk that ANZ New Zealand is prepared to
accept in pursuit of its strategic objectives and business plan; and
• the Risk Management Strategy (RMS), which describes ANZ New Zealand’s strategy for managing risks and the key elements of the RMF that
give effect to this strategy. This includes a description of each material risk, and an overview of how the RMF addresses each risk, with reference
to the relevant policies, standards and procedures. It also includes information on how ANZ New Zealand identifies, measures, evaluates,
monitors, reports and controls or mitigates material risks.
ANZ New Zealand, through its training and management standards and procedures, aims to maintain a disciplined and robust control environment in
which all employees understand their roles and obligations. At ANZ New Zealand, risk is everyone’s responsibility.
ANZ New Zealand has an independent risk management function, headed by the Chief Risk Officer who:
• is responsible for overseeing the risk profile and the risk management framework;
• can effectively challenge activities and decisions that materially affect ANZ New Zealand’s risk profile; and
• has an independent reporting line to the BRC to enable the appropriate escalation of issues of concern.
Internal Audit Function
Internal Audit is a function independent of management whose role is to provide the Board and management with an effective and independent
appraisal of the internal controls established by management. Operating under a Board approved Charter, the reporting line for the outcomes of work
conducted by Internal Audit is direct to the Chair of the Audit Committee, with a direct communication line to the Chief Executive Officer and the
external auditor. The Internal Audit Plan is developed using a risk based approach and is reviewed quarterly. The Audit Committee approves the plan.
All audit activities are conducted in accordance with local and international internal auditing standards, and the results of the activities are reported to
the Audit Committee and management. These results influence the performance assessment of business heads. Furthermore, Internal Audit monitors
the remediation of audit issues and reports the current status of any outstanding audits.

NOTES TO THE FINANCIAL STATEMENTS

37
15. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK
CREDIT RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Granting credit facilities to customers is one of ANZ New Zealand’s major sources of income. As this activity is also a key material risk, ANZ New
Zealand dedicates considerable resources to its management. ANZ New Zealand assumes credit risk in a wide range of lending and other activities in
diverse markets and in many jurisdictions. Credit risks arise from traditional lending to customers as well as from interbank, treasury, trade finance and
capital markets activities.
Our credit risk management framework ensures we apply a consistent approach across ANZ New Zealand when we measure, monitor and manage
the credit risk appetite set by the Board. The Board is assisted and advised by the BRC in discharging its duty to oversee credit risk. The BRC:
• sets the credit risk appetite and credit strategies; and
• approves credit transactions beyond the discretion of executive management.
The BRC delegates responsibility for day-to-day management of credit risk and compliance with credit risk policies to the Bank’s Credit Risk
Management Committee (CRMC).
We quantify credit risk through an internal credit rating system (Master Scale ) to ensure consistency across exposure types and to provide a consistent
framework for reporting and analysis. The system uses models and other tools to measure the following for customer exposures:
Probability of Default (PD) Expressed by a Customer Credit Rating (CCR), reflecting ANZ New Zealand’s assessment of a customer’s
ability to service and repay debt.
Exposure at Default (EAD) The expected balance sheet exposure at default taking into account repayments of principal and
interest, expected additional drawdowns and accrued interest at the time of default.
Loss Given Default (LGD) Expressed by a Security Indicator (SI) ranging from A to G. The SI is calculated by reference to the
percentage of loan covered by security which ANZ New Zealand can realise if a customer defaults. The
A-G scale is supplemented by a range of other SIs which cover such factors as cash cover and sovereign
backing. For retail and some small business lending, we group exposures into large homogeneous
pools – and the LGD is assigned at the pool level.
Our specialist credit risk teams develop and validate ANZ New Zealand’s PD and LGD rating models. The outputs from these models drive our day-to-
day credit risk management decisions including origination, pricing, approval levels, regulatory capital adequacy, internal capital allocation, and credit
provisioning.
All customers with whom ANZ New Zealand has a credit relationship are assigned a CCR at origination via either of the following assessment
approaches:
Large and more complex lending Retail and some small business lending
Rating models provide a consistent and structured assessment, with
judgement required around the use of out-of-model factors. We
handle credit approval on a dual approval basis, jointly with the
business writer and an independent credit officer.
Automated assessment of credit applications using a combination of
scoring (application and behavioural), policy rules and external credit
reporting information. If the application does not meet the automated
assessment criteria, then it is subject to manual assessment.
We use ANZ New Zealand’s internal CCR to manage the credit quality of financial assets. To enable wider comparisons, ANZ New Zealand’s CCRs are
mapped to external rating agency scales as follows:
Credit quality
description

Internal CCR

ANZ New Zealand customer requirements
Moody’s
Rating
S&P Global
Ratings
Strong CCR 0+ to 4- Demonstrated superior stability in their operating and financial
performance over the long-term, and whose earnings capacity is
not significantly vulnerable to foreseeable events.
Aaa – Baa3 AAA – BBB-
Satisfactory CCR 5+ to 6- Demonstrated sound operational and financial stability over the
medium to long-term even though some may be susceptible to
cyclical trends or variability in earnings.
Ba1 – B1 BB+ – B+
Weak CCR 7+ to 8= Demonstrated some operational and financial instability, with
variability and uncertainty in profitability and liquidity projected to
continue over the short and possibly medium term.
B2 – Caa B - CCC
Defaulted CCR 8- to 10 When doubt arises as to the collectability of a credit facility, the
financial instrument (or ‘the facility’) is classified as defaulted.
n/a n/a

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

38
15. FINANCIAL RISK MANAGEMENT (continued)
MAXIMUM EXPOSURE TO CREDIT RISK
For financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may
be differences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, these
differences arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject to
market risk, or bank notes and coins.
For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount ANZ New Zealand would have to pay if the instrument is called upon.
The table below shows our maximum exposure to credit risk of on-balance sheet and off-balance sheet positions before taking account of any
collateral held or other credit enhancements.

Reported Excluded
1

Maximum exposure to
credit risk

2021 2020 2021 2020 2021 2020

NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
On-balance sheet positions

Net loans and advances
141,074
132,984
-
-
141,074
132,984
Other financial assets:

Cash and cash equivalents
7,844
8,248
163
187
7,681
8,061
Settlement balances receivable
237
378
-
-
237
378
Collateral paid
537
1,394
-
-
537
1,394
Trading securities 9,585 12,797 - - 9,585 12,797
Derivative financial instruments 9,283 9,756 - - 9,283 9,756
Investment securities 11,926 9,893 - - 11,926 9,893
Other financial assets
2

497
547
-
-
497
547
Total other financial assets 39,909
43,013
163
187
39,746
42,826
Subtotal 180,983
175,997
163
187
180,820
175,810
Off-balance sheet commitments

Undrawn and contingent facilities
3

29,780
30,607
-
-
29,780
30,607
Total 210,763 206,604 163 187 210,600 206,417
1 Bank notes and coins and cash at bank within cash and cash equivalents.
2 Other financial assets mainly comprise accrued interest and acceptances.
3 Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expected
credit losses.

NOTES TO THE FINANCIAL STATEMENTS

39
15. FINANCIAL RISK MANAGEMENT (continued)
CREDIT QUALITY
An analysis of ANZ New Zealand’s credit risk exposure is presented in the following tables based on ANZ New Zealand’s internal credit quality rating
by stage without taking account of the effects of any collateral or other credit enhancements.

Net loans and advances
Stage 3

Stage 1 Stage 2
Collectively
assessed
Individually
assessed Total
As at 30 September 2021 NZ$m NZ$m NZ$m NZ$m NZ$m
Strong
116,875 1,625 - - 118,500
Satisfactory
17,133 3,136 - - 20,269
Weak
294 1,447 - - 1,741
Defaulted
- - 620 155 775
Subtotal 134,302 6,208 620 155 141,285
Allowance for ECL (155) (314) (56) (60) (585)
Net loans and advances at amortised cost 134,147 5,894 564 95 140,700
Coverage ratio 0.12% 5.06% 9.03% 38.71% 0.41%
Unearned income
(18)
Capitalised brokerage and other origination costs
392
Net carrying amount 141,074

As at 30 September 2020
Strong 98,495 5,524 - - 104,019
Satisfactory 21,470 4,581 - - 26,051
Weak 406 1,736 - - 2,142
Defaulted - - 810 363 1,173
Subtotal 120,371 11,841 810 363 133,385
Allowance for ECL (161) (347) (80) (107) (695)
Net loans and advances at amortised cost
120,210 11,494 730 256 132,690
Coverage ratio
0.13% 2.93% 9.88% 29.48% 0.52%
Unearned income (25)
Capitalised brokerage and other origination costs 319
Net carrying amount
132,984

Other financial assets

2021 2020
NZ$m NZ$m
Strong 39,682 42,329
Satisfactory 49 447
Weak 15 50
Defaulted
-
-
Total carrying amount

39,746
42,826

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

40
15. FINANCIAL RISK MANAGEMENT (continued)
Off-balance sheet commitments - undrawn and contingent facilities
Stage 3

Stage 1 Stage 2
Collectively
assessed
Individually
assessed Total
As at 30 September 2021 NZ$m NZ$m NZ$m NZ$m NZ$m
Strong 24,822 142 - - 24,964
Satisfactory 3,734 1,037 - - 4,771
Weak
12 100 - - 112
Defaulted
- - 32 23 55
Gross undrawn and contingent facilities 28,568 1,279 32 23 29,902
Allowance for ECL included in Other provisions (refer to Note 20)
(64) (39) (4) (15) (122)
Net undrawn and contingent facilities 28,504 1,240 28 8 29,780
Coverage ratio 0.22% 3.05% 12.50% 65.22% 0.41%

As at 30 September 2020
Strong 25,275 302 - - 25,577
Satisfactory 3,949 974 - - 4,923
Weak 27 179 - - 206
Defaulted - - 19 41 60
Gross undrawn and contingent facilities
29,251 1,455 19 41 30,766
Allowance for ECL included in Other provisions (refer to Note 20) (79) (55) (3) (22) (159)
Net undrawn and contingent facilities
29,172 1,400 16 19 30,607
Coverage ratio 0.27% 3.78% 15.79% 53.66% 0.52%

NOTES TO THE FINANCIAL STATEMENTS

41
15. FINANCIAL RISK MANAGEMENT (continued)
CONCENTRATIONS OF CREDIT RISK
Credit risk becomes concentrated when a number of customers are engaged in similar activities, have similar economic characteristics, or have similar
activities within the same geographic region – therefore, they may be similarly affected by changes in economic or other conditions. ANZ New
Zealand monitors its credit portfolio to manage risk concentration and rebalance the portfolio. ANZ New Zealand also applies single customer
counterparty limits to protect against unacceptably large exposures to one single customer.
Analysis of financial assets by industry sector 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:

Loans
and advances
Other financial
assets
Off-balance sheet
credit related
commitments Total
2021 2020 2021 2020 2021 2020 2021 2020

NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
New Zealand residents

Agriculture
16,316
17,049
43
70
854
862
17,213
17,981
Forestry and fishing, agriculture services
659
678
5
5
137
113
801
796
Manufacturing
2,342
2,407
162
161
2,126
2,350
4,630
4,918
Electricity, gas, water and waste services
946
1,098
337
567
1,828
1,991
3,111
3,656
Construction
1,165
1,150
9
26
909
955
2,083
2,131
Wholesale trade 1,264 1,243 51 69 1,790 1,797 3,105 3,109
Retail trade and accommodation 2,473 2,415 12 27 848 992 3,333 3,434
Transport, postal and warehousing 943 839 55 159 708 738 1,706 1,736
Finance and insurance services 1,040 948 10,907 11,110 1,524 1,550 13,471 13,608
Rental, hiring & real estate services 37,504 35,589 1,627 1,270 2,357 2,314 41,488 39,173
Professional, scientific, technical,
administrative and support services
831
924
5
7
480
545
1,316
1,476
Public administration and safety
1

305
283
12,453
16,395
808
883
13,566
17,561
Households
71,518
64,738
156
167
13,564
13,757
85,238
78,662
All other New Zealand residents
2

1,906
2,058
96
153
1,869
1,796
3,871
4,007
Subtotal 139,212 131,419 25,918 30,186 29,802 30,643 194,932 192,248
Overseas

Finance and insurance services
104
127
13,797
12,623
100
123
14,001
12,873
Households
1,265
1,176
3
3
-
-
1,268
1,179
All other non-NZ residents
704
663
28
14
-
-
732
677
Subtotal 2,073 1,966 13,828 12,640 100 123 16,001 14,729
Gross total 141,285 133,385 39,746 42,826 29,902 30,766 210,933 206,977
Allowance for ECL
(585)
(695)
-
-
(122)
(159)
(707)
(854)
Subtotal 140,700
132,690
39,746
42,826
29,780
30,607
210,226
206,123
Unearned income
(18)
(25)
-
-
-
-
(18)
(25)
Capitalised brokerage and other origination
costs
392
319
-
-
-
-
392
319
Maximum exposure to credit risk 141,074
132,984
39,746
42,826
29,780
30,607
210,600
206,417
1 Public administration and safety includes exposures to local government administration and central government administration, defence and public safety.
2 Other includes exposures to mining, information media and telecommunications, education and training, health care and social assistance and arts, recreation and other services.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

42
15. FINANCIAL RISK MANAGEMENT (continued)
COLLATERAL MANAGEMENT
We use collateral for on and off-balance sheet exposures to mitigate credit risk if a counterparty cannot meet its repayment obligations. Where there is
sufficient collateral, an expected credit loss is not recognised. This is largely the case for certain lending products that are secured by corresponding
investment for which margin loans are utilised and for reverse repurchase agreements. For some products, the collateral provided by customers is
fundamental to the product’s structuring, so it is not strictly the secondary source of repayment - for example, lending secured by trade receivables is
typically repaid by the collection of those receivables. During the period there was no change in our collateral policies.
The nature of collateral or security held for the relevant classes of financial assets is as follows:
Net loans and advances
Loans – housing and personal Housing loans are secured by mortgage(s) over property and additional security may take the form of
guarantees and deposits.
Personal lending (including credit cards and overdrafts) is predominantly unsecured. If we take
security, then it is restricted to eligible vehicles, motor homes and other assets.
Loans – business Business loans may be secured, partially secured or unsecured. Typically, we take security by way of a
mortgage over property and/or a charge over the business or other assets.
If appropriate, we may take other security to mitigate the credit risk, such as guarantees, standby letters
of credit or derivative protection.
Other financial assets
Trading securities, investment
securities, derivatives and other
financial assets
For trading securities, we do not seek collateral directly from the issuer or counterparty. However, the
collateral may be implicit in the terms of the instrument (for example, with an asset-backed security).
The terms of debt securities may include collateralisation.
For derivatives, we typically terminate all contracts with the counterparty and settle on a net basis at
market levels current at the time of a counterparty default under International Swaps and Derivatives
Association (ISDA) Master Agreements.
Our preferred practice is to use a Credit Support Annex (CSA) to the ISDA so that open derivative
positions with the counterparty are aggregated and cash collateral (or other forms of eligible collateral)
is exchanged daily. The collateral is provided by the counterparty when their position is out of the
money (or provided to the counterparty by ANZ New Zealand when our position is out of the money).
Off-balance sheet positions
Undrawn and contingent liabilities Collateral for off-balance sheet positions is mainly held against undrawn facilities, and they are typically
performance bonds or guarantees. Undrawn facilities that are secured include housing loans secured
by mortgages over residential property and business lending secured by commercial real estate and/or
charges over business assets.
The table below shows the estimated value of collateral we hold and the net unsecured portion of credit exposures:

Credit exposure Total value of collateral
Unsecured portion of credit
exposure

2021 2020 2021 2020 2021 2020

NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Net loans and advances 141,074 132,984 134,119 126,053 6,955 6,931
Other financial assets
39,746
42,826
1,878
2,761
37,868
40,065
Off-balance sheet positions
29,780
30,607
16,241
15,291
13,539
15,316
Total 210,600
206,417
152,238
144,105
58,362
62,312

NOTES TO THE FINANCIAL STATEMENTS

43
15. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISK
MARKET RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Market risk stems from ANZ New Zealand’s trading and balance sheet management activities and the impact of changes and correlations between
interest rates, foreign exchange rates, credit spreads and volatility in bond, commodity or equity prices.
The BRC delegates responsibility for day-to-day management of both market risk and compliance with market risk policies to the Bank’s Asset &
Liability Committee (ALCO).
Within overall strategies and policies established by the BRC, business units and risk management have joint responsibility for the control of market
risk at the ANZ New Zealand level. The Market Risk team (a specialist risk management unit independent of the business) allocates market risk limits at
various levels and monitors and reports on them daily. This detailed framework allocates individual limits to manage and control exposures using risk
factors and profit and loss limits.
Management, measurement and reporting of market risk is undertaken in two broad categories:
Traded market risk Non-traded market risk
Risk of loss from changes in the value of financial instruments due
to movements in price factors for both physical and derivative
trading positions. Principal risk categories monitored are:
• Currency risk – potential loss arising from changes in foreign
exchange rates or their implied volatilities.
• Interest rate risk – potential loss from changes in market
interest rates or their implied volatilities.
• Credit spread risk – potential loss arising from a movement
in margin or spread relative to a benchmark.
• Commodity risk – potential loss arising from changes in
commodity prices or their implied volatilities.
• Equity risk – potential loss arising from changes in equity
prices.
Risk of loss associated with the management of non-traded interest rate risk,
liquidity risk and foreign exchange exposures. This includes interest rate risk
in the banking book. This risk of loss arises from adverse changes in the
overall and relative level of interest rates for different tenors, differences in
the actual versus expected net interest margin, and the potential valuation
risk associated with embedded options in financial instruments and bank
products.

MEASUREMENT OF MARKET RISK
We primarily manage and control market risk using Value at Risk (VaR), sensitivity analysis and stress testing.
VaR measures ANZ New Zealand’s possible daily loss based on historical market movements.
ANZ New Zealand’s VaR approach for both traded and non-traded risk is historical simulation. We use historical changes in market rates, prices and
volatilities over:
• the previous 500 business days, to calculate standard VaR; and
• a 1-year stressed period, to calculate stressed VaR.
We calculate traded and non-traded VaR using a one-day holding period. For stressed VaR we use a ten-day period. Back testing is used to ensure our
VaR models remain accurate.
ANZ New Zealand measures VaR at a 99% confidence interval which means there is a 99% chance that a loss will not exceed the VaR for the relevant
holding period.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

44
15. FINANCIAL RISK MANAGEMENT (continued)
TRADED AND NON-TRADED MARKET RISK
Traded market risk
The table below shows the traded market risk VaR on a diversified basis by risk categories:

2021 2020
High for Low for Average High for Low for Average
As at year year for year As at year year for year
NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Traded value at risk 99% confidence

Foreign exchange
0.6 2.3 0.2 1.0
0.7 2.0 0.2 0.7
Interest rate
2.9 7.4 2.0 4.4
6.1 8.7 1.0 3.2
Credit
0.5 1.5 0.3 0.8
1.2 1.6 0.4 0.8
Diversification benefit
1

(1.0) n/a n/a (1.3)
(1.3) n/a n/a (0.9)
Total VaR 3.0 9.4 2.2 4.9
6.7 10.3 1.1 3.8
1 The diversification benefit reflects risks that offset across categories. The high and low VaR figures reported for each factor did not necessarily occur on the same day as the high and low VaR reported for
ANZ New Zealand as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.

Non-traded market risk
Balance sheet risk management
The principal objectives of balance sheet risk management are to maintain acceptable levels of interest rate and liquidity risk to mitigate the negative
impact of movements in interest rates on the earnings and market value of ANZ New Zealand’s banking book, while ensuring ANZ New Zealand
maintains sufficient liquidity to meet its obligations as they fall due.
Interest rate risk management
Non-traded interest rate risk relates to the potential adverse impact of changes in market interest rates on ANZ New Zealand’s future net interest
income. This risk arises from two principal sources, namely mismatches between the repricing dates of interest bearing assets and liabilities; and the
investment of capital and other non-interest bearing liabilities in interest bearing assets. Interest rate risk is reported using VaR and scenario analysis
(based on the impact of a 1% rate shock). The table below shows VaR figures for non-traded interest rate risk for ANZ New Zealand.

2021 2020
As at
High for
year
Low for
year
Average
for year As at
High for
year
Low for
year
Average
for year
NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Non-traded value at risk 99% confidence
Total VaR 22.5 38.4 22.3 30.5 29.1 29.1 9.5 16.6

We undertake scenario analysis to stress test the impact of extreme events on ANZ New Zealand’s market risk exposures. We model a 1% overnight
parallel positive shift in the yield curve to determine the potential impact on our net interest income over the next 12 months. This is a standard risk
measure which assumes the parallel shift is reflected in all wholesale and customer rates.
The table below shows the outcome of this risk measure for the current and previous financial years, expressed as a percentage of reported net
interest income.

2021 2020
Impact of 1% rate shock

As at period end -1.4% -0.6%
Maximum exposure
0.2%
1.5%
Minimum exposure -2.1% -0.6%
Average exposure (in absolute terms)
-1.0%
0.5%
FOREIGN CURRENCY RISK – STRUCTURAL EXPOSURES
Where it is considered appropriate, ANZ New Zealand takes out economic hedges against larger foreign exchange denominated revenue streams
(primarily Australian Dollar, US Dollar and US Dollar correlated). The primary objective of hedging is to ensure that, if practical, the effect of changes in
foreign exchange rates on the consolidated capital ratios are minimised.

NOTES TO THE FINANCIAL STATEMENTS

45
15. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK
LIQUIDITY RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Liquidity risk is the risk that ANZ New Zealand is either:
• unable to meet its payment obligations (including repaying depositors or maturing wholesale debt) when they fall due; or
• does not have the appropriate amount, tenor and composition of funding and liquidity to fund increases in its assets.
Management of liquidity and funding is overseen by ALCO. ANZ New Zealand’s liquidity and funding risks are governed by a set of principles
approved by the Risk Committees of the Bank’s and Ultimate Parent Bank’s Boards and include:
• maintaining the ability to meet all payment obligations in the immediate term;
• ensuring that ANZ New Zealand has the ability to meet ‘survival horizons’ under ANZ New Zealand specific and general market liquidity stress
scenarios to meet cash flow obligations over the short to medium term;
• maintaining strength in ANZ New Zealand’s balance sheet structure to ensure long term resilience in the liquidity and funding risk profile;
• ensuring the liquidity management framework is compatible with local regulatory requirements;
• preparing daily liquidity reports and scenario analysis to quantify ANZ New Zealand’s positions;
• targeting a diversified funding base to avoid undue concentrations by investor type, maturity, market source and currency;
• holding a portfolio of high quality liquid assets to protect against adverse funding conditions and to support day-to-day operations; and
• establishing a detailed contingency plan to cover different liquidity crisis events.
KEY AREAS OF MEASUREMENT FOR LIQUIDITY RISK
Supervision and regulation
The RBNZ requires the Bank to have a comprehensive Board approved liquidity strategy defining: policy, systems and procedures for measuring,
assessing, reporting and managing liquidity. This also includes a formal contingency plan for dealing with a liquidity crisis. The Banking Group is
required to meet one week and one month liquidity mismatch ratios and a one year core funding ratio each day.
Scenario modelling
A key component of ANZ New Zealand’s liquidity management framework is scenario modelling.
Potential severe liquidity crisis scenarios which model the behaviour of cash flows where there is a problem (real or perceived) may include, but are
not limited to, operational issues, doubts about the solvency of ANZ New Zealand, or adverse rating changes. Under these scenarios ANZ New
Zealand may have significant difficulty rolling over or replacing funding. ANZ New Zealand’s liquidity policy requires sufficient high quality liquid
assets to be held to meet its liquidity needs for the following 30 calendar days under the modelled scenarios.
As of 30 September 2021 ANZ New Zealand was in compliance with the above scenarios.
Structural balance sheet metrics
ANZ New Zealand’s liquidity management framework also encompasses structural balance sheet metrics such as the RBNZ core funding ratio. These
metrics are designed to limit the amount of wholesale funding required to be rolled over within a 1 year timeframe and so interact with the liquidity
scenarios to maintain ANZ New Zealand‘s liquidity position.
Wholesale funding
ANZ New Zealand’s wholesale funding strategy is designed to deliver a sustainable portfolio of wholesale funds that balances cost efficiency with
targeting diversification by markets, investors, currencies, maturities and funding structures. Short-term and long-term wholesale funding is managed
and executed by Treasury operations.
ANZ New Zealand also uses maturity concentration limits under the wholesale funding and liquidity management framework. Maturity concentration
limits ensure that ANZ New Zealand is not required to issue large volumes of new wholesale funding within a short time period to replace maturing
wholesale funding. Funding instruments used to meet the wholesale borrowing requirement must be on a pre-established list of approved products.
Funding capacity and debt issuance planning
ANZ New Zealand adopts a conservative approach to determine its funding capacity. Annually, a funding plan is approved by the Bank’s Board. The
plan is supplemented by regular updates and is linked to ANZ New Zealand’s three-year strategic planning cycle.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

46
15. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY PORTFOLIO MANAGEMENT
ANZ New Zealand holds a diversified portfolio of cash and high quality liquid securities primarily to support liquidity risk management. The size of ANZ
New Zealand’s liquidity portfolio is determined with consideration of the amount required to meet the requirements of its internal and regulatory
liquidity scenario metrics.
Total liquidity portfolio

2021 2020
NZ$m NZ$m
Central and local government bonds
10,312
10,729
Government treasury bills
899
3,909
Certificates of deposit 959 389
Other bonds 8,913 7,525
Securities eligible to be accepted as collateral in repurchase transactions
21,083
22,552
Cash and balances with central banks
7,013
7,385
Total liquidity portfolio 28,096
29,937

Assets held in ANZ New Zealand’s liquidity portfolio include short term cash held with RBNZ, New Zealand Government securities, securities issued by
supranational agencies, securities issued by highly rated banks and securities issued by State Owned Enterprises, Local Authorities and highly rated
New Zealand domestic corporates.
The Bank also held unencumbered internal residential mortgage backed securities (RMBS) which would be accepted as collateral by RBNZ in
repurchase transactions. These holdings would entitle the Bank to enter into repurchase transactions with RBNZ with a value of NZ$9,647 million at 30
September 2021 (2020: NZ$8,184 million).
RBNZ Term Lending Facility (TLF) and Funding for Lending Programme (FLP)
• Between May 2020 and July 2021, RBNZ made funds available under the TLF to promote lending to businesses. The TLF is a five-year secured
funding facility for New Zealand banks at a fixed rate of 0.25%.
• In November 2020, RBNZ announced the FLP which aims to lower the cost of borrowing for New Zealand businesses and households. The FLP is
a three-year secured funding facility for New Zealand banks at a floating rate of the New Zealand Official Cash Rate (OCR). New Zealand banks
can obtain initial funding of up to 4% of their lending to New Zealand resident households, non-financial businesses and non-profit institutions
serving households as at 31 October 2020 (eligible loans). An additional allocation of up to 2% of eligible loans is available, subject to certain
conditions. The Bank’s initial allocation is NZ$5,223 million and its additional allocation is NZ$2,611 million. The additional allocation is available
until 6 December 2022, and the initial allocation is available until 6 June 2022.
As at 30 September 2021, the Bank had drawn NZ$300 million (2020: nil) under the TLF and NZ$1,000 million (2020: nil) under the FLP. These amounts
are included in securities sold under repurchase agreements in Note 13 Deposits and Other Borrowings.
Liquidity crisis contingency planning
ANZ New Zealand maintains a liquidity crisis contingency plan to define an approach for analysing and responding to a liquidity-threatening event on
a group wide basis. The framework includes:
• the establishment of crisis severity/stress levels;
• clearly assigned crisis roles and responsibilities;
• early warning signals indicative of an approaching crisis, and mechanisms to monitor and report these signals;
• outlined action plans, and courses of action for altering asset and liability behaviour;
• procedures for crisis management reporting, and covering cash-flow shortfalls; and
• assigned responsibilities for internal and external communications.

NOTES TO THE FINANCIAL STATEMENTS

47
15. FINANCIAL RISK MANAGEMENT (continued)
FUNDING POSITION
ANZ New Zealand actively uses balance sheet disciplines to prudently manage the funding mix. ANZ New Zealand employs funding metrics to ensure
that an appropriate proportion of its assets are funded from stable sources, including customer liabilities, longer-dated wholesale debt (with
remaining term exceeding one year) and equity.
Analysis of funding liabilities by industry is based on ANZSIC codes. The significant categories shown are the level one NZSIOC.

2021 2020

Note NZ$m NZ$m
Funding composition

Customer deposits 13
125,129
120,863
Wholesale funding

Debt issuances
20,852
23,827
Certificates of deposit and commercial paper 6,308 3,530
Other borrowings
4,549
3,604
Total wholesale funding
31,709
30,961
Total funding

156,838
151,824
Customer deposits by industry - New Zealand residents

Agriculture, forestry and fishing 4,485 4,109
Manufacturing
2,707
2,863
Construction
2,884
2,750
Wholesale trade 2,688 2,407
Retail trade and accommodation
2,177
2,280
Financial and insurance services 13,836 14,491
Rental, hiring and real estate services
4,260
3,691
Professional, scientific, technical, administrative and support services
6,560
5,748
Public administration and safety 1,813 2,043
Arts, recreation and other services
2,226
2,199
Households
67,196
64,203
All other New Zealand residents
1
4,807 4,280

115,639
111,064
Customer deposits by industry - overseas
Households
8,693
9,219
All other non-NZ residents
797
580
9,490 9,799
Total customer deposits
125,129
120,863
Wholesale funding (financial and insurance services industry)
New Zealand
5,911
4,851
Overseas
25,798
26,110
Total wholesale funding 31,709 30,961
Total funding

156,838
151,824
Concentrations of funding by geography
New Zealand
121,550
115,915
Australia
4,194
4,478
United States 12,791 12,223
Europe
11,335
12,028
Other countries
6,968
7,180
Total funding

156,838
151,824
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.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

48
15. FINANCIAL RISK MANAGEMENT (continued)
RESIDUAL CONTRACTUAL MATURITY ANALYSIS OF ANZ NEW ZEALAND’S FINANCIAL LIABILITIES
The tables below provide residual contractual maturity analysis of financial liabilities at 30 September 2021 and 30 September 2020 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.
It should be noted that this is not how ANZ New Zealand manages its liquidity risk. The management of this risk is detailed on page 45.

On demand
Less than
3 months
3 to 12
months
1 to 5
years
After
5 years Total
2021 NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Settlement balances payable
2,383 282 - - - 2,665
Collateral received
- 738 - - - 738
Deposits and other borrowings 84,461 21,627 24,810 6,005 - 136,903
Derivative financial liabilities (trading)
- 7,619 - - - 7,619
Debt issuances
1

- 38 4,601 12,216 4,907 21,762
Lease liabilities - 13 39 165 70 287
Other financial liabilities
- 198 48 382 268 896
Derivative financial instruments
(balance sheet management)

- gross inflows - 462 3,144 4,795 296 8,697
- gross outflows
- (480) (3,141) (4,753) (251) (8,625)

2020
Settlement balances payable 2,378 531 - - - 2,909
Collateral received - 1,275 - - - 1,275
Deposits and other borrowings 70,794 25,850 26,326 5,374 1,055 129,399
Derivative financial liabilities (trading) - 6,292 - - - 6,292
Debt issuances
1
- 450 5,069 15,109 3,902 24,530
Lease liabilities - 13 39 178 99 329
Other financial liabilities - 82 6 98 68 254
Derivative financial instruments
(balance sheet management)

- gross inflows - 406 1,970 6,904 413 9,693
- gross outflows - (508) (2,079) (6,711) (319) (9,617)
1 Any callable wholesale debt instruments have been included at their next call date. Refer to Note 14 Debt Issuances for subordinated debt call dates.

At 30 September 2021, NZ$29,902 million (2020: NZ$30,766 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.

NOTES TO THE FINANCIAL STATEMENTS

49
16. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
ANZ New Zealand carries a significant number of financial instruments on the balance sheet at fair value. The fair value is the best estimate of the price
that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
VALUATION
ANZ New Zealand has an established control framework, including appropriate segregation of duties, to ensure that fair values are accurately
determined, reported and controlled. The framework includes the following features:
• products are approved for transacting with external customers and counterparties only where fair values can be appropriately determined;
• quoted market prices used to value financial instruments are independently verified with information from external pricing providers;
• fair value methodologies and inputs are evaluated and approved by a function independent of the party that undertakes the transaction;
• movements in fair values are independently monitored and explained by reference to underlying factors relevant to the fair value; and
• valuation adjustments (such as funding valuation adjustments, credit valuation adjustments and bid-offer adjustments) are independently
validated and monitored.
If ANZ New Zealand holds offsetting risk positions, then ANZ New Zealand uses the portfolio exemption in NZ IFRS 13 Fair Value Measurement (NZ IFRS
13) to measure the fair value of such groups of financial assets and financial liabilities. We measure the portfolio based on the price that would be
received to sell a net long position (an asset) for a particular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.
FAIR VALUE APPROACH AND VALUATION TECHNIQUES
We use valuation techniques to estimate the fair value of assets and liabilities for recognition, measurement and disclosure purposes where no quoted
price in an active market exists for that asset or liability. This includes the following:
Asset or liability Fair value approach
Financial instruments classified as:
- Trading securities
- Derivative financial assets and financial liabilities
- Investment securities
Valuation techniques are used that incorporate observable market inputs for financial
instruments with similar credit risk, maturity and yield characteristics.
Financial instruments classified as:
- Net loans and advances
- Deposits and other borrowings
- Debt issuances
Discounted cash flow techniques are used whereby contractual future cash flows of the
instrument are discounted using wholesale market interest rates, or market borrowing rates
for debt with similar maturities or with a yield curve appropriate for the remaining term to
maturity.
CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The following tables set out the classification of financial asset and liability categories according to measurement bases together with the carrying
amounts as re corded on the balance sheet.
2021 2020

At
amortised
cost
At fair
value Total
At
amortised
cost
At fair
value Total
Note NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Financial assets

Cash and cash equivalents 7
7,844 - 7,844
8,248 - 8,248
Settlement balances receivable
237 - 237
378 - 378
Collateral paid
537 - 537
1,394 - 1,394
Trading securities 8
- 9,585 9,585
- 12,797 12,797
Derivative financial instruments 9 - 9,283 9,283 - 9,756 9,756
Investment securities 10 - 11,926 11,926 - 9,893 9,893
Net loans and advances 11
141,074 - 141,074
132,984 - 132,984
Other financial assets
497 - 497
547 - 547
Total

150,189 30,794 180,983
143,551 32,446 175,997
Financial liabilities

Settlement balances payable
2,663 - 2,663
2,908 - 2,908
Collateral received
738 - 738
1,275 - 1,275
Deposits and other borrowings 13 131,553 4,433 135,986 126,249 1,748 127,997
Derivative financial instruments 9 - 7,680 7,680 - 8,166 8,166
Debt issuances 14
20,852 - 20,852
23,827 - 23,827
Other financial liabilities
591 676 1,267
698 158 856
Total

156,397 12,789 169,186
154,957 10,072 165,029

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

50
16. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FAIR VALUE HIERARCHY
ANZ New Zealand categorises assets and liabilities carried at fair value into a fair value hierarchy as required by NZ IFRS 13 based on the observability
of inputs used to measure the fair value:
• Level 1 – valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 – valuations using inputs other than quoted prices included within Level 1 that are observable for a similar asset or liability, either directly
or indirectly; and
• Level 3 – valuations where significant unobservable inputs are used to measure the fair value of the asset or liability.
The following table presents assets and liabilities carried at fair value in accordance with the fair value hierarchy:

Fair value measurements

Quoted market price
(Level 1)
Using observable
inputs
(Level 2)
Using unobservable
inputs (Level 3)
Total
2021 2020 2021 2020 2021 2020 2021 2020
NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Assets

Trading securities
8,276
8,848
1,309
3,949
-
-
9,585
12,797
Derivative financial instruments 19 8 9,263 9,745 1 3 9,283 9,756
Investment securities 11,925 9,892 - - 1 1 11,926 9,893
Total 20,220 18,748 10,572 13,694 2 4 30,794 32,446
Liabilities

Deposits and other borrowings
-
-
4,433
1,748
-
-
4,433
1,748
Derivative financial instruments
5
4
7,675
8,162
-
-
7,680
8,166
Other financial liabilities
676
158
-
-
-
-
676
158
Total 681
162
12,108
9,910
-
-
12,789
10,072
Fair value designation
We designate commercial paper (included in deposits and other borrowings) as fair value through profit or loss where they are managed on a fair
value basis to align the measurement with how the instruments are managed.

NOTES TO THE FINANCIAL STATEMENTS

51
16. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
The following table sets out ANZ New Zealand’s basis of estimating the fair values of financial assets and financial liabilities carried at amortised cost
where the carrying value is not typically a reasonable approximation of fair value.
Financial asset and liability Fair value approach
Net loans and advances to banks Discounted cash flows using prevailing market rates for loans with similar credit quality.
Net loans and advances to customers Present value of future cash flows, discounted using a curve that incorporates changes in
wholesale market rates, ANZ New Zealand’s cost of wholesale funding and the customer margin,
as appropriate.
Deposit liability without a specified maturity or
at call
The amount payable on demand at the reporting date. We do not adjust the fair value for any
value we expect ANZ New Zealand to derive from retaining the deposit for a future period.
Interest bearing fixed maturity deposits and
other borrowings and acceptances with
quoted market rates
Market borrowing rates of interest for debt with a similar maturity are used to discount contractual
cash flows to derive the fair value.
Debt issuances Calculated based on quoted market prices or observable inputs as applicable. If quoted market
prices are not available, we use a discounted cash flow model using a yield curve appropriate for
the remaining term to maturity of the debt instrument. The fair value reflects adjustments to credit
spreads applicable to ANZ New Zealand for that instrument.
The financial assets and financial liabilities listed in the table below are carried at amortised cost on ANZ New Zealand’s balance sheet. While this is the
value at which we expect the assets will be realised and the liabilities settled, ANZ New Zealand provides an estimate of the fair value of the financial
assets and financial liabilities at balance date in the table below.

Categorised into fair value hierarchy

Carrying amount
Quoted market price
(Level 1)
Using observable
inputs
(Level 2)
With significant non-
observable inputs
(Level 3) Fair value (total)
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Financial assets

Net loans and advances 141,074 132,984 - - 106 133 140,915 133,459 141,021 133,592
Total 141,074 132,984 - - 106 133 140,915 133,459 141,021 133,592
Financial liabilities

Deposits and other
borrowings
131,553 126,249 - - 131,713 126,498 - - 131,713 126,498
Debt issuances
20,852
23,827
3,671
3,713
17,437
20,336
-
-
21,108
24,049
Total 152,405
150,076
3,671
3,713
149,150
146,834
-
-
152,821
150,547

KEY JUDGEMENTS AND ESTIMATES

ANZ New Zealand evaluates the material accuracy of the valuations incorporated in the financial statements as they can involve a high degree
of judgement and estimation in determining the carrying values of financial assets and financial liabilities at the balance sheet date.
The majority of valuation models ANZ New Zealand uses employ only observable market data as inputs. This has not changed as a result of
COVID-19, however ANZ New Zealand has considered the impact of related economic and market disruptions on fair value measurement
assumptions and the appropriateness of valuation inputs, notably valuation adjustments, as well as th e impact of COVID-19 on the classification of
exposures in the fair value hierarchy.
For certain financial instruments, we may use data that is not readily observable in current markets. If we use unobservable market data, then
we need to exercise more judgement to determine fair value depending on the significance of the unobservable input to the overall
valuation. Generally, we derive unobservable inputs from other relevant market data and compare them to observed transaction prices where
available.
When establishing the fair value of a financial instrument using a valuation technique, ANZ New Zealand considers valuation adjustments in
determining the fair value. We may apply adjustments (such as bid/offer spreads, credit valuation adjustments and funding valuation
adjustments – refer Note 9 Derivative Financial Instruments) to reflect ANZ New Zealand’s assessment of factors that market participants
would consider in determining fair value.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

52
17. ASSETS CHARGED AS SECURITY FOR LIABILITIES AND COLLATERAL ACCEPTED AS
SECURITY FOR ASSETS
The following disclosure excludes the amounts presented as collateral paid and received in the balance sheet that relate to derivative liabilities and
derivative assets respectively. The terms and conditions of those collateral agreements are included in the standard CSA that forms part of the ISDA
Master Agreement under which most of our derivatives are executed.
ASSETS CHARGED AS SECURITY FOR LIABILITIES
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;
• specified residential mortgages provided as security for notes and bonds issued to investors as part of ANZ New Zealand’s covered bond
programmes; and
• collateral provided to the RBNZ under the TLF and FLP.
The carrying amounts of assets pledged as security are as follows:

2021 2020
NZ$m NZ$m
Securities sold under agreements to repurchase
1

362
646
Residential mortgages pledged as security for repurchase agreements with the RBNZ
1,556
-
Total assets of the ANZNZ Covered Bond Trust pledged as security for covered bonds
11,406
11,474
1 The amounts disclosed as securities sold under arrangements to repurchase include both:
• assets pledged as security which continue to be recognised on ANZ New Zealand’s balance sheet; and
• assets repledged, which are included in the disclosure below.

COLLATERAL ACCEPTED AS SECURITY FOR ASSETS
ANZ New Zealand has received collateral associated with various financial transactions. Under certain arrangements ANZ New Zealand has the right to
sell, or to repledge, the collateral received. These arrangements are governed by standard industry agreements.
The fair value of collateral we have received and that we have sold or repledged is as follows:
2021 2020
NZ$m NZ$m
Fair value of assets which can be sold or repledged
610
790
Fair value of assets sold or repledged
565
290

NOTES TO THE FINANCIAL STATEMENTS

53
18. OFFSETTING
We offset financial assets and financial liabilities in the balance sheet (in accordance with NZ IAS 32 Financial Instruments: Presentation) when there is:
• a current legally enforceable right to set off the recognised amounts in all circumstances; and
• an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously.
If the above conditions are not met, the financial assets and financial liabilities are presented on a gross basis.
ANZ New Zealand does not have any arrangements that satisfy the conditions necessary to offset financial assets and financial liabilities within the
balance sheet. The following table identifies financial assets and financial liabilities which have not been offset but are subject to enforceable master
netting agreements (or similar arrangements) and the related amounts not offset in the balance sheet. We have not taken into account the effect of
over collateralisation.

Amount subject to master netting agreement or similar

Total amounts
recognised
in the
balance sheet
Amounts not
subject to
master
netting
agreement or
similar Total
Financial
instruments
Financial
collateral
(received)/
pledged Net amount
2021 NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Derivative financial instruments
1

9,283 (1,924) 7,359 (6,003) (129) 1,227
Reverse repurchase agreements
2

610 - 610 - (610) -
Total financial assets 9,893 (1,924) 7,969 (6,003) (739) 1,227
Derivative financial instruments
(7,680) 1,250 (6,430) 6,003 81 (346)
Repurchase agreements
3

(1,663) - (1,663) - 1,663 -
Total financial liabilities (9,343) 1,250 (8,093) 6,003 1,744 (346)

2020
Derivative financial instruments 9,756 (3,339) 6,417 (4,403) (342) 1,672
Reverse repurchase agreements
2
782 - 782 - (782) -
Total financial assets
10,538 (3,339) 7,199 (4,403) (1,124) 1,672
Derivative financial instruments (8,166) 2,890 (5,276) 4,403 417 (456)
Repurchase agreements
3
(646) - (646) - 646 -
Total financial liabilities (8,812) 2,890 (5,922) 4,403 1,063 (456)
1

In August 2021, ANZ New Zealand amended the terms of its legal agreements with one of its central clearing counterparties whereby payment and receipt of collateral results in a legal
settlement of associated derivative assets and liabilities, and an associated reduction in the carrying values of the related derivative instruments. These derivatives remain subject to a master
netting agreement. The impact of this change as at 30 September 2021 is a decrease in the derivative assets of NZ$3.9 billion and a decrease in derivative liabilities of NZ$4.1 billion and
reduction in net collateral paid of NZ$0.2 billion. Refer to Note 9 Derivative Financial Instruments for further information.
2 Reverse repurchase agreements are presented in the balance sheet within cash and cash equivalents.
3

Repurchase agreements are presented in the balance sheet within deposits and other borrowings.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

54
19. GOODWILL AND OTHER INTANGIBLE ASSETS

2021 2020
NZ$m NZ$m
Goodwill

3,006 3,006
Management rights

76 76
Software

9 10
Goodwill and other intangible assets

3,091
3,092
GOODWILL AND OTHER INTANGIBLE ASSETS ALLOCATED TO CASH-GENERATING UNITS (CGUs)
Goodwill arose on the acquisition of the NBNZ Holdings Limited group on 1 December 2003, and the carrying amount reflects amortisation
recognised before the application of NZ IFRS from 1 October 2004 and subsequent business disposals. Funds management rights, assessed as having
indefinite useful lives, arose on the acquisition of the ING Holdings (NZ) Limited (now ANZ Wealth New Zealand Limited) group on 30 November 2009.
Goodwill and funds management rights are allocated to CGUs as follows:

Goodwill Management rights

2021 2020 2021 2020
Cash generating unit NZ$m NZ$m NZ$m NZ$m
Personal banking (previously Retail and business banking)
980
893
-
-
Funds management (previously Wealth)

62
118
76
76
Personal segment (previously Retail segment)

1,042
1,011
76
76
Business (previously Commercial)

895
926
-
-
Institutional

1,069
1,069
-
-
Total

3,006 3,006 76 76

Goodwill was assessed for indicators of impairment as at 30 September 2021, taking into account the results of the February 2021 impairment test and
associated sensitivity and scenario analysis performed, the forecast impact of the business segment changes outlined in Note 6 Segment Reporting,
and recent economic events. There were no indicators of impairment therefore, in accordance with NZ IAS 36 Impairment of Assets, no further
impairment test was required.
The following information is for the annual goodwill impairment test, and reflects the CGUs and goodwill allocations (which were unchanged from 30
September 2020), as at 28 February 2021.
Annual goodwill impairment test
The annual impairment test is performed as at the end of February each year. Goodwill is considered to be impaired if the carrying amount of the
relevant CGU exceeds its recoverable amount. The recoverable amount of a CGU is the higher of its fair value less costs of disposal (FVLCOD) and its
value-in use (VIU). We use a value-in -use approach to estimate the recoverable amount of the CGU to which each goodwill component is allocated.
Based on this assessment no impairment was identified for any CGU, and therefore a FVLCOD calculation was not required.

NOTES TO THE FINANCIAL STATEMENTS

55
19. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

VALUE-IN-USE
These calculations use cash flow projections based on a number of financial budgets within each CGU covering an initial forecast period. These
projections also incorporate economic assumptions including GDP, inflation, unemployment, residential and commercial property prices, the impact
of the restriction imposed by the RBNZ on the payment of ordinary dividends by all New Zealand incorporated registered banks, and the
implementation of the RBNZ’s increased capital requirements. Cash flows beyond the forecast period are extrapolated using the terminal growth rate.
These cash flow projections are discounted using a discount rate derived using a capital asset pricing model.
Future changes in the assumptions upon which the calculation is based may materially impact this assessment, resulting in the potential impairment
of part or all of the goodwill balances.
Input / assumption
Values applied in 28 February 2021 impairment test
Forecast period and projections To 30 September 2028 - an extended forecast period was used to cover the implementation period of the
RBNZ’s increased capital requirements.
Revenue growth over forecast
period
Comprises impacts of net interest margin and volume growth, arising from planned responses to known
regulatory and economic forecasts. Average annual forecast revenue growth rates are shown below.
Credit impairment over forecast
period
Varies by CGU, based on ECL modelling for 2021 to 2023, before returning to long run experience levels for
2024 to 2028. Long run experience levels are based on ANZ New Zealand’s bad debts written off, net of
recoveries, since 2004 of 0.15% of gross loans and advances. Credit impairment for each CGU as a
percentage of forecast gross loans and advances for 2024 to 2028 is shown below.
Terminal growth rate 2.0% - based on 2023 forecast inflation from the RBNZ’s February 2021 Monetary Policy Statement.
Discount rate
Post tax: 9.4% (September 2020: 9.3%).
The main variables in the calculation of the discount rate used are the ri sk free rate, beta and the market risk
premium. The risk free rate was the traded 10 year New Zealand government bond yield as at 28 February
2021 of 1.9%. The market risk premium was estimated using a range of methods incorporating historical
and forward-looking market data. Beta was consistent with observable measures applied in the regional
banking sector.
The values of the average revenue growth, credit impairment as a percentage of forecast gross loans and advances, and pre-tax discount rates
assumptions by CGU are shown in the table below. The implied pre-tax discount rates are significantly higher than the post-tax discount rate above
because regulatory capital retention over the forecast period is not tax effected.

Revenue growth Credit impairment Pre-tax discount rate
Cash generating unit

28 Feb 21 30 Sep 20 28 Feb 21 30 Sep 20 28 Feb 21 30 Sep 20
Retail and business banking
6.1%
5.8%
0.13%
0.13%
17.5%
16.7%
Wealth

3.4%
2.7%
0.10%
0.01%
16.4%
16.0%
Commercial

4.2%
4.8%
0.21%
0.22%
17.8%
17.1%
Institutional

4.5%
0.6%
0.21%
0.12%
17.3%
17.0%
We performed stress tests for key sensitivities in each CGU. A change, considered to be reasonably possible by management, in key assumptions
would not cause the recoverable amounts of the Retail & business banking and Wealth CGUs to exceed their carrying amounts, but would do so for
the Commercial and Institutional CGUs.
A summary of the amounts by which key assumptions for Commercial and Institutional must change in order for their recoverable amounts to equal
their carrying amounts is shown below.
Recoverable amounts and carrying amounts are those at the Banking Group level as no further goodwill or other intangible assets with indefinite
useful lives exist in ANZ New Zealand entities outside the Banking Group.

Commercial

Institutional

Forecast Change Forecast Change
Value required Value required
Amount by which recoverable amount exceeds carrying amount (NZ$m) 513 n/a 386 n/a
Value of assumption and change (in basis points) required to reduce recoverable amount to nil:

Average annual revenue growth over forecast period 4.2% -87 bp 4.5% -113 bp
Average annual credit impairment FY24-FY28 0.21% +17 bp 0.21% +73 bp
Discount rate 9.4% +63 bp 9.4% +80 bp
Terminal growth rate 2.0% -106 bp 2.0% -140 bp

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

56
19. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

KEY JUDGEMENTS AND ESTIMATES

Management judgement is used to assess the recoverable value of goodwill and other intangible assets, and the useful economic life of
an asset, or whether an asset has an indefinite life. We reassess the recoverability of the carrying value at each reporting date.
Goodwill
A number of key judgements are required in the determination of whether or not a goodwill balance is impaired including:
• the level at which goodwill is allocated – consistent with prior periods the CGUs to which goodwill is allocated are the ANZ New
Zealand’s revenue generating segments that benefit from relevant historical business combinations generating goodwill.
• determination of the carrying amount of each CGU which includes an allocation, on a reasonable and consistent basis of corporate
assets and liabilities that are not directly attributable to the CGUs to which goodwill is allocated.
• assessment of the recoverable amount of each CGU used to determine whether the carrying amount of goodwill is supported is
based on judgements including the selection of the model and key assumptions used to calculate the recoverable amount.
The assessment of the recoverable amount of each CGU has been made within the context of the ongoing impact of COVID-19, and
reflects expectations of future events that are believed to be reasonable under the circumstances. The rapidly evolving consequences of
COVID-19 and government, business and consumer responses create heightened uncertainty in these estimates and any variations could
have a positive or adverse impact on the determination of recoverable amounts.

RECOGNITION AND MEASUREMENT
The table below details how we re cognise and measure different intangible assets:
Intangible Goodwill Software Management rights
Definition
Excess amount ANZ New
Zealand has paid in acquiring a
business over the fair value less
costs of disposal of the
identifiable assets and liabilities
acquired.
Purchased software owned by ANZ
New Zealand is capitalised.
Internal and external costs incurred
in building software and computer
systems costing more than NZ$20
million are capitalised as assets.
Those less than NZ$20 million are
expensed in the year in which the
costs are incurred.
Management fee rights arising from
acquisition of funds management
business.
Carrying value
Cost less any accumulated
impairment losses.
Allocated to the CGU to which
the acquisition relates.
Initially, measured at cost.
Subsequently, carried at cost less
accumulated amortisation and
impairment losses.
Costs incurred in planning or
evaluating software proposals or in
maintaining systems after
implementation are not capitalised.
Initially, measured at fair value at
acquisition.
Subsequently, carried at cost less
impairment losses.
Useful life
Indefinite.
Goodwill is reviewed for
impairment at least annually or
when there is an indication of
impairment.
Except for major core
infrastructure, amortised over
periods between 2-5 years;
however major core infrastructure
may be amortised up to 7 years
subject to approval by the Audit
Committee.
Purchased software is amortised
over 2 years unless it is considered
integral to other assets with a
longer useful life.
Management fee rights have an
indefinite life and are reviewed for
impairment at least annually or
when there is an indication of
impairment.
Amortisation
method
Not applicable. Straight-line method. Not applicable.

NOTES TO THE FINANCIAL STATEMENTS

57
20. OTHER PROVISIONS

2021 2020
Note NZ$m NZ$m
ECL allowance on undrawn facilities 12 122 159
Customer remediation 98 141
Restructuring costs 25 36
Leasehold make good 22 23
Other
28
30
Total other provisions 295
389

Movements in other provisions

Customer Restructuring Leasehold

remediation costs make good Other

NZ$m NZ$m NZ$m NZ$m
Balance at start of year
141 36 23 30
New and increased provisions made during the year
26 23 3 1
Provisions used during the year
(60) (28) (4) (3)
Unused amounts reversed during the year
(9) (6) - -
Balance at end of year 98 25 22 28

Customer remediation
Customer remediation includes provisions for expected refunds to customers and other counterparties, remediation project costs and related
customer, counterparty and regulatory claims, penalties and litigation outcomes.
Restructuring costs
Provisions for restructuring costs arise from activities related to material changes in the scope of business undertaken by ANZ New Zealand, including
the OnePath Life (NZ) Limited separation, or the manner in which that business is undertaken and include employee termination benefits. Costs
relating to on-going activities are not provided for and are expensed as incurred.
Leasehold make good
Provisions associated with leased premises where, at the end of a lease, ANZ New Zealand is required to remove any fixtures and fittings installed in
the leased property. This obligation arises immediately upon installation. Estimated make good costs are added to the leasehold improvement asset
(within premises and equipment) upon installation and amortised over the lease term.
Other
Other provisions comprise various other provisions including losses arising from other legal action, operational issues, and warranties and indemnities
provided in connection with various disposals of businesses and assets.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

58
20. OTHER PROVISIONS (continued)

KEY JUDGEMENTS AND ESTIMATES

ANZ New Zealand holds provisions for various obligations including customer remediation, restructuring costs, leasehold make good and
litigation related claims. These provisions involve judgements regarding the outcome of future events, including estimates of expenditure
required to satisfy such obligations. Where re levant, expert legal advice has been obtained and, in light of such advice, provisions and/or
disclosures as deemed appropriate have been made.
In relation to customer remediation, determining the amount of the provisions, which represent management’s best estimate of the cost
of settling the identified matters, requires the exercise of significant judgement. It will often be necessary to form a view on a number of
different assumptions, including the number of impacted customers, the average refund per customer, the associated remediation costs,
and the implications of regulatory exposures and customer claims having regard to their specific facts and circumstances. Consequently,
the appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence
including expert legal advice and adjustments are made to the provisions where appropriate.

RECOGNITION AND MEASUREMENT
ANZ New Zealand recognises provisions where there is a present obligation arising from a past event, an outflow of economic resources is
probable, and the amount of the provision can be measured reliably.
The amount recognised is the best estimate of the consideration required to settle the present obligation at reporting date, taking into
account the risks and uncertainties surrounding the timing and amount of the obligation. Where a provision is measured using the estimated
cash flows required to settle the present obligation, its carrying amount is the present value of those cash flows.

NOTES TO THE FINANCIAL STATEMENTS

59
21. SHAREHOLDERS' EQUITY

Number of issued shares NZ$ millions

2021 2020 2021 2020
Ordinary shares
378,155,112
378,155,112
1,450
1,450
Redeemable preference shares
1

8,354,563,940
8,354,563,940
9,594
9,594
Total share capital 8,732,719,052
8,732,719,052
11,044
11,044
NZ Branch initial head office account
-
-
11
11
Total share capital & initial head office account 8,732,719,052
8,732,719,052
11,055
11,055
1

Includes 44,990 (2020: 44,990) uncalled NZ$1.00 shares.

Redeemable preference shares
All redeemable preference shares (RPS) were issued by ANZ Holdings (New Zealand) Limited to the Immediate Parent Company.
There are eight classes of RPS, relating to issues in 1988, 2005, 2007, 2008, 2009, 2014, 2015 and 2018. ANZ Holdings (New Zealand) Limited did not
pay any dividends on RPS during the years ended 30 September 2021 and 30 September 2020.

RECOGNITION AND MEASUREMENT
Ordinary shares
Ordinary shares have no par value. They entitle holders to receive dividends, or proceeds available on winding
up of ANZ Holdings (New Zealand) Limited, in proportion to the number of fully paid ordinary shares held.
They are recognised at the amount paid per ordinary share net of directly attributable costs. Every holder of
fully paid ordinary shares present at a meeting in person, or by proxy, is entitled to:
• on a show of hands, one vote; and
• on a poll, one vote, for each share held.
Redeemable
preference shares
Redeemable preference shares do not carry any voting rights and are redeemable by ANZ Holdings (New
Zealand) Limited providing notice in writing to holders of the redeemable preference shares. Dividends are
payable at the discretion of the Directors of ANZ Holdings (New Zealand) Limited and are non-cumulative.
In the event of liquidation, holders of redeemable preference shares are entitled to available subscribed capital
per share, pari passu with all holders of existing redeemable preference shares but in priority to all holders of
ordinary shares. They have no entitlement to participate in further distribution of profits or assets.
Reserves:

Cash flow hedge
reserve
Includes fair value gains and losses associated with the effective portion of designated cash flow hedging
instruments together with any tax effect.
Investment securities
revaluation reserve
Includes the changes in fair value of investment securities together with any tax effect.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

60
22. CAPITAL MANAGEMENT
CAPITAL MANAGEMENT STRATEGY
ANZ New Zealand’s core capital objectives are to:
• protect the interests of depositors, creditors and shareholders;
• ensure the safety and soundness of ANZ New Zealand’s capital position; and
• ensure that the capital base supports ANZ New Zealand’s risk appetite, and strategic business objectives, in an efficient and effective manner.
Most of ANZ New Zealand’s capital is held in, and managed by, the Banking Group. The Bank’s Board holds ultimate responsibility for ensuring that
capital adequacy of the Banking Group is maintained. This includes: setting, monitoring and obtaining assurance for the Banking Group’s Internal
Capital Adequacy Assessment Process (ICAAP) policy and framework; standardised risk definitions for all material risks; materiality thresholds; capital
adequacy targets; internal risk capital principles; and risk appetite.
The Banking Group has minimum and trigger levels for capital that ensure sufficient capital is maintained to:
• meet minimum prudential requirements imposed by the Bank’s regulators;
• ensure consistency with the Banking Group’s overall risk profile and financial positions, taking into account its strategic focus and business plan;
and
• support the internal risk capital requirements of the business.
ALCO and its related Capital Management Forum are responsible for developing, implementing and maintaining the Banking Group's ICAAP
framework, including ongoing monitoring, reporting and compliance. The Banking Group’s ICAAP is subject to independent and periodic review.
REGULATORY ENVIRONMENT
The Ultimate Parent Bank is a registered bank in New Zealand, and conducts business in New Zealand through the NZ Branch. While RBNZ requires
the Ultimate Parent Bank to comply with the minimum capital adequacy requirements as administered by APRA, there are no regulatory capital
requirements that apply specifically to the NZ Branch or ANZ New Zealand.
MANAGED CAPITAL
The Banking Group is subject to its own regulatory capital requirements as administered by RBNZ. The following table provides details of the capital of
ANZ New Zealand which is managed outside the Banking Group.

2021 2020

NZ$m NZ$m
ANZ New Zealand shareholder's equity
15,076
14,010
Subordinated loan from the Ultimate Parent Bank used to purchase preference shares issued by the Bank
278
286
Borrowings from the Immediate Parent Company used to purchase ordinary shares issued by the Bank
1,766
1,766
less: Banking Group shareholder's equity (16,892) (15,869)
Capital of ANZ New Zealand managed outside the Banking Group

228 193
Total assets of ANZ New Zealand held outside the Banking Group 366 376
Ratio 62.3% 51.3%

NOTES TO THE FINANCIAL STATEMENTS
61
23.CONTROLLED ENTITIES
The following table lists the subsidiaries of ANZ New Zealand. All subsidiaries are 100% owned and incorporated in New Zealand unless stated
otherwise.
Nature of business
Australia and New Zealand Banking Group Limited (New Zealand Branch)
2,3
Registered bank
ANZ Capel Court Limited (New Zealand Branch)
2,3
Securitisation services
ANZ Holdings (New Zealand) Limited
3
Holding company
ANZ Bank New Zealand Limited Registered bank
ANZ Custodial Services New Zealand Limited Custodian and nominee
ANZ Investment Services (New Zealand) Limited Funds management
ANZ National Staff Superannuation Limited Staff superannuation scheme trustee
ANZ New Zealand (Int'l) Limited Finance
ANZ New Zealand Securities Limited Non-operating
ANZ Wealth New Zealand Limited Holding company
ANZ New Zealand Investments Limited Funds management
ANZ New Zealand Investments Nominees Limited Custodian and nominee

OneAnswer Nominees Limited Wrap services provider
ANZNZ Covered Bond Trust
1
Securitisation entity
Arawata Assets Limited Property
Endeavour Finance Limited Investment
Kingfisher NZ Trust 2008-1
1
Securitisation entity
ANZ Nominees Pty Limited (New Zealand Branch)
2,3
Nominee
1 ANZ New Zealand does not own ANZNZ Covered Bond Tr ust and Kingfisher NZ Trust 2008-1. Control exists as ANZ New Zealand retains substantially all the risks and rewards of the
operations. Details of ANZ New Zealand’s interest in consolidated structured entities is included in Note 24 Structured Entities.
2 Incorporated in Australia and registered in New Zealand as an Overseas ASIC Company.
3 These companies are included in the Relevant Members of ANZ New Zealand referred to in the Directors’ and New Zealand Chief Executive Officer’s Statement on page 88.

RECOGNITION AND MEASUREMENT
ANZ New Zealand subsidiaries are those entities it controls through:
•being exposed to, or having rights to, variable returns from the entity; and
•being able to affect those returns through its power over the entity.
ANZ New Zealand assesses whether it has power over those entities by examining ANZ New Zealand’s existing rights to direct the relevant
activities of the entity.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

62
24. STRUCTURED ENTITIES
A Structured Entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in deciding who controls the
entity. SEs are generally established with restrictions on their ongoing activities in order to achieve narrow and well defined objectives.
SEs are classified as subsidiaries and consolidated when control exists. If ANZ New Zealand does not control a SE, then it is not consolidated. This note
provides information on both consolidated and unconsolidated SEs.
ANZ New Zealand’s involvement with SEs is as follows:
Type Details
Securitisation
ANZ New Zealand uses the Kingfisher NZ Trust 2008-1 (the Kingfisher Trust) to securitise residential mortgages that
it has originated, in order to diversify sources of funding for liquidity management. The Kingfisher Trust is an
internal securitisation (bankruptcy remote) vehicle we created for the purpose of structuring assets that are eligible
for repurchase under agreements with RBNZ (these are known as ‘Repo eligible’).
ANZ New Zealand is exposed to variable returns from its involvement with the Kingfisher Trust and has the ability
to affect those returns through its power over the Kingfisher Trust’s activities. The Kingfisher Trust is therefore
consolidated.
As at 30 September 2021, ANZ New Zealand had entered into repurchase agreements with RBNZ in relation to the
TLF and FLP (30 September 2020: nil).
Additionally, ANZ New Zealand may acquire interests in securitisation vehicles set up by third parties through
providing lending facilities to, or holding securities issued by, such entities.
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 is exposed to variable returns from its involvement with the Covered Bond Trust and has the
ability to affect those returns through its power over the Covered Bond Trust’s activities. The Covered Bond Trust is
therefore consolidated.
Structured finance
arrangements

ANZ New Zealand is involved with SEs established:
• in connection with structured lending transactions to facilitate debt syndication and/or to ring-fence
collateral; and
• to own assets that are leased to customers in structured leasing transactions.
ANZ New Zealand may provide risk management products (derivatives) to the SE.
In all instances, ANZ New Zealand does not control these SEs. Further, ANZ New Zealand’s involvement does not
establish more than a passive interest in decisions about the relevant activities of the SE, and accordingly we do
not consider that interest disclosable.
Funds management activities
ANZ New Zealand is the scheme manager for a number of Managed Investment Schemes (MIS). These MIS include
the ANZ and OneAnswer branded KiwiSaver, retail and wholesale schemes and the Bonus Bonds Scheme. These
MIS are financed through the issue of units to investors and ANZ New Zealand considers them to be SEs. ANZ New
Zealand’s interests in these MIS are limited to receiving fees for services or providing risk management products
(derivatives). These interests do not create significant exposures to the MIS that would allow ANZ New Zealand to
control the funds. Therefore, these MIS are not consolidated.

NOTES TO THE FINANCIAL STATEMENTS

63
24. STRUCTURED ENTITIES (continued)
CONSOLIDATED STRUCTURED ENTITIES
Financial or other support provided to Consolidated Structured Entities
The Bank provides lending facilities, derivatives and commitments to the Kingfisher Trust and the Covered Bond Trust and/or holds debt instruments
that they have issued. The Bank did not provide any non-contractual support to consolidated SEs during the year (2020: nil).
UNCONSOLIDATED STRUCTURED ENTITIES
ANZ New Zealand’s interest in Unconsolidated Structured Entities
An ‘interest’ in an unconsolidated SE is any form of contractual or non-contractual involvement with a SE that exposes ANZ New Zealand to variability
of returns from the performance of that SE. These interests include, but are not limited to: holdings of debt or equity securities; derivatives that pass on
risks specific to the performance of the SE; lending; loan commitments; financial guarantees; and fees from funds management activities.
For the purpose of disclosing interests in unconsolidated SEs:
• no disclosure is made if ANZ New Zealand’s involvement is not more than a passive interest - for example: when ANZ New Zealand’s
involvement constitutes a typical customer-supplier relationship. On this basis, exposures to unconsolidated SEs that arise from lending, trading
and investing activities are not considered disclosable interests - unless the design of the structured entity allows ANZ New Zealand to
participate in decisions about the relevant activities (being those that significantly affect the entity’s returns).
• ‘interests’ do not include derivatives intended to expose ANZ New Zealand to market risk (rather than performance risk specific to the SE) or
derivatives through which ANZ New Zealand creates, rather than absorbs, variability of the unconsolidated SE (such as purchase of credit
protection under a credit default swap).
ANZ New Zealand earned funds management fees from its MIS of NZ$205 million (2020: NZ$197 million) during the year. As at 30 September 2021
ANZ New Zealand had total funds under management of NZ$39.0 billion (2020: NZ$35.2 billion) of which NZ$23.2 billion (2020: NZ$21.2 billion)
related to its MIS, with the largest individual fund being approximately NZ$4.3 billion (2020: NZ$3.5 billion).
ANZ New Zealand did not provide any non-contractual support to unconsolidated SEs during the year (2020: nil): nor does it have any current
intention to provide financial or other support to unconsolidated SEs.
SPONSORED UNCONSOLIDATED STRUCTURED ENTITIES
ANZ New Zealand may also sponsor unconsolidated SEs in which it has no disclosable interest.
For the purposes of this disclosure, ANZ New Zealand considers itself the ‘sponsor’ of an unconsolidated SE if it is the primary party involved in the
design and establishment of that SE and:
• ANZ New Zealand is the major user of that SE; or
• ANZ New Zealand’s name appears in the name of that SE, or on its products; or
• ANZ New Zealand provides implicit or explicit guarantees of that SE’s performance.
The Bank has sponsored the ANZ PIE Fund, which invests only in deposits with the Bank. ANZ New Zealand does not provide any implicit or explicit
guarantees of the capital value or performance of investments in the ANZ PIE Fund. There was no income received from, nor assets transferred to, this
entity during the year.

KEY JUDGEMENTS AND ESTIMATES

Significant judgement is required in assessing whether ANZ New Zealand has control over Structured Entities. Judgement is required to
determine the existence of:
• power over th e relevant activities (being those that significantly affect the entity’s returns); and
• exposure to variable returns of that entity; and
• the ability to use its power over the entity to affect ANZ New Zealand’s returns.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

64
25. TRANSFERS OF FINANCIAL ASSETS
In the normal course of business ANZ New Zealand enters into transactions where it transfers financial assets directly to third parties. These transfers
may give rise to ANZ New Zealand fully, or partially, derecognising those financial assets - depending on ANZ New Zealand’s exposure to the risks and
rewards or control over the transferred assets. If ANZ New Zealand retains substantially all of the risk and rewards of a transferred asset, the transfer
does not qualify for derecognition and the asset remains on ANZ New Zealand’s balance sheet in its entirety.
Covered bonds
ANZ New Zealand operates a covered bond programme to raise funding. Refer to Note 24 Structured Entities for further details. The covered bonds
issued externally are included within debt issuances.
Repurchase agreements
When ANZ New Zealand sells securities subject to repurchase agreements under which we retain substantially all the risks and rewards of ownership,
then those assets do not qualify for derecognition. An associated lia bility is recognised for the consideration received from the counterparty.
The table below sets out the balance of assets transferred that do not qualify for derecognition, along with the associated liabilities:

Covered bonds Repurchase agreements
2021 2020 2021 2020

NZ$m NZ$m NZ$m NZ$m
Current carrying amount of assets transferred
11,406
11,474
1,918
650
Carrying amount of associated liabilities
4,248
4,522
1,663
646

NOTES TO THE FINANCIAL STATEMENTS

65
26. RELATED PARTY DISCLOSURES
Key management personnel and their related parties
Key management personnel (KMP) are defined as directors and those executives having authority and responsibility for planning, directing and
controlling the activities of ANZ New Zealand. Executive roles included in KMP are the Bank’s Chief Executive Officer (CEO), all executives reporting
directly to the Bank’s CEO, and the CEO – NZ Branch.

2021 2020
Key management personnel compensation
1
NZ$000 NZ$000
Salaries and short-term employee benefits
11,256
10,521
Post-employment benefits
192
256
Other long-term benefits
2

68
107
Termination benefits
3

1,308
1,155
Share-based payments
2,395
2,679
Total 15,219 14,718
1 Includes former disclosed KMPs until the end of their employment, and close family members of KMP employed by the Banking Group. Comparative amounts have been updated to
include amounts for close family members of KMP that were previously shown separately.
2 Comprises long service leave accrued during the year.
3 Includes payments for accrued annual leave, long service leave and pay in lieu of notice in accordance with contract, payable on cessation.

2021 2020
Transactions and balances with key management personnel and their related parties
1
NZ$m NZ$m
Secured loans and advances
26
22
Credit related commitments (undrawn loan facilities) 3 3
Interest income 1 1
Customer deposits
2
19 17
Payables and other liabilities (share-based payments liability)
2
2
1 Includes KMP, close family members of KMP and entities that are controlled or jointly controlled by KMP or their close family members, of ANZ New Zealand and its parent companies.
2 Includes holdings of units in the ANZ PIE Fund (a sponsored unconsolidated structured entity) which are invested solely in deposits of the Bank.
Loans made to KMP and their related parties are made in the ordinary course of business on normal commercial terms and conditions no more
favourable than those given to other employees or customers, including the term of the loan, security required and the interest rate. No amounts
have been written off or forgiven, or individually assessed allowances for expected credit losses raised in respect of these balances (2020: nil).
All other transactions with KMP and their related parties are made on terms and conditions no more favourable than those given to other employees
or customers. These transactions generally involve the provision of financial and investment services. In addition to the amounts above:
• Aggregate amounts for each of unsecured loans and advances, interest expense, fee income, debt issuances and collectively assessed credit
impairment charge and allowance for expected credit losses were less than NZ$1 million for both years presented.
• KMP and their related parties also hold units in MIS managed by ANZ New Zealand. Transactions and balances in respect of these MIS holdings
are not disclosed because those MIS are unconsolidated structured entities and not included in the financial statements of ANZ New Zealand.
• Some KMP pay ANZ New Zealand for the use of carparks in premises owned or leased by ANZ New Zealand. These amounts were less than
NZ$0.1 million (2020: less than NZ$0.1 million).
Transactions with other members of the Overseas Banking Group and associates
The NZ Branch and ANZ New Zealand undertake transactions with the Immediate Parent Company, the Ultimate Parent Bank, other members of the
Overseas Banking Group and associates.
These transactions principally consist of funding and hedging transactions, the provision of other financial and investment services, technology and
process support, and compensation for share based payments made to ANZ New Zealand employees. Other than noted on the following page,
transactions with related parties outside of ANZ New Zealand are conducted on an arm’s length basis and on normal commercial terms.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

66
26. RELATED PARTY DISCLOSURES (continued)
2021 2020
Transactions NZ$m NZ$m
Immediate Parent Company
Interest expense
33
39
Dividends paid
845
-
Ultimate Parent Bank and other subsidiaries not part of ANZ New Zealand

Interest income - 7
Interest expense 57 81
Other operating income 15 18
Operating expenses
120
97
Associates

Operating expenses
2
1
Share of associates' loss
1
-

2021 2020
Outstanding balances NZ$m NZ$m
Ultimate Parent Bank and other subsidiaries not part of ANZ New Zealand

Cash and cash equivalents
152
166
Derivative financial instruments 5,331 2,907
Other assets 41 48
Investments in associates 5 -
Total due from related parties

5,529
3,121
Immediate Parent Company

Deposits and other borrowings
1,766
1,766
Payables and other liabilities
12
15
Ultimate Parent Bank and subsidiaries not part of ANZ New Zealand

Settlement balances payable 74 44
Collateral received 242 -
Deposits and other borrowings 1,195 1,354
Derivative financial instruments
4,972
2,791
Payables and other liabilities
39
34
Debt issuances
279
317
Associates

Deposits and other borrowings
1
1
Total due to related parties 8,580 6,322

Balances due from / to other members of the Overseas Banking Group and associates are unsecured. The Bank has provided guarantees and
commitments to, and received guarantees from, these entities as follows.

2021 2020
NZ$m NZ$m
Financial guarantees provided by the Ultimate Parent Bank
219
264
Financial guarantees provided to the Ultimate Parent Bank
100
123
Undrawn credit commitments provided to associates 1 1

NOTES TO THE FINANCIAL STATEMENTS

67
27. COMMITMENTS AND CONTINGENT LIABILITIES
CREDIT RELATED COMMITMENTS AND CONTINGENCIES

2021 2020

NZ$m NZ$m
Contract amount of:

Undrawn facilities
27,170
28,023
Guarantees and letters of credit
1,181
1,309
Performance related contingencies
1,551
1,434
Total 29,902
30,766

UNDRAWN FACILITIES
The majority of undrawn facilities are subject to customers maintaining specific credit and other requirements or conditions. Many of these facilities
are expected to be only partially used, and others may never be used at all. As such, the total of the nominal principal amounts is not necessarily
representative of future liquidity risks or future cash requirements. Based on the earliest date on which ANZ New Zealand may be required to pay, the
full amount of undrawn facilities mature within 12 months.
GUARANTEES, LETTERS OF CREDIT AND PERFORMANCE RELATED CONTINGENCIES
Guarantees, letters of credit and performance related contingencies relate to transactions that ANZ New Zealand has entered into as principal –
including: guarantees, standby letters of credit and documentary letters of credit.
Documentary letters of credit involve ANZ New Zealand issuing letters of credit guaranteeing payment in favour of an exporter. They are secured
against an underlying shipment of goods or backed by a confirmatory letter of credit from another bank.
Performance related contingencies are liabilities that oblige ANZ New Zealand to make payments to a third party if the customer fails to fulfil its non-
monetary obligations under the contract.
To reflect the risk associated with these transactions, we apply the same credit origination, portfolio management and collateral requirements that we
apply to loans. The contract amount represents the maximum potential amount that we could lose 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. Based
on the earliest date on which ANZ New Zealand may be required to pay, the full amount of total guarantees and letters of credit and performance
related contingencies mature within 12 months.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

NOTES TO THE FINANCIAL STATEMENTS

68
27. COMMITMENTS AND CONTINGENT LIABILITIES (continued)
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 (refer to Note 20 Other 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 seriously the interests of ANZ New Zealand.
REGULATORY AND CUSTOMER EXPOSURES
In recent years there has been an increase in the number of matters on which ANZ New Zealand engages with its regulators. There have also been
significant increases in the nature and scale of regulatory investigations, surveillance and reviews, civil and criminal enforcement actions (whether by
court action or otherwise), formal and informal inquiries, regulatory supervisory activities and the quantum of fines issued by regulators, particularly
against financial institutions both in New Zealand and globally. 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.
The nature of these interactions can be wide ranging and, for example, may include a range of matters including responsible lending practices,
regulated lending requirements, product suitability and distribution, interest and fees and the entitlement to charge them, customer remediation,
wealth advice, insurance distribution, pricing, competition, conduct in financial markets and financial transactions, capital market transactions, anti-
money laundering and counter-terrorism financing obligations, reporting and disclosure obligations and product disclosure documentation. 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.
The Bank self-identified three prescribed transaction reporting (PTR) matters to the RBNZ, where transaction reports had not been filed within the
prescribed timeframe. The RBNZ has informed the Bank that it considers one of these matters (related to 6,409 transaction reports of a certain SWIFT
message type) to be a material breach, and the other two to be minor breaches, of the Anti-Money Laundering and Countering Financing of Terrorism
(AML/CFT) Act 2009 relating to PTR. These matters have been referred to the RBNZ’s enforcement team for review. The potential outcome of these
matters remains uncertain at this time.
LOAN INFORMATION LITIGATION
In September 2021, a representative proceeding was brought against the Bank, alleging breaches of disclosure requirements under consumer credit
legislation in respect of variation letters sent to certain loan customers. The Bank is defending the allegations.
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.
REVIEWS UNDER SECTION 95 OF THE RESERVE BANK OF NEW ZEALAND ACT 1989 (RBNZ ACT)
Following a RBNZ notice under section 95 of the RBNZ Act in July 2019, the Bank obtained two external reviews (together, the Reviews). The first review
was on the Bank’s compliance with certain aspects of the RBNZ Banking Supervision Handbook document Capital Adequacy Framework (Internal
Models Based Approach) (BS2B) (Capital Adequacy Review), and the second review was on the effectiveness of the Bank’s directors’ attestation and
assurance framework (Attestation Review).
The Bank is committed to implementing the recommendations and addressing the issues raised by the Reviews, including a broader programme of
improving the Bank's processes covered by those Reviews.
In mid-2021, the Bank obtained external interim reviews of the remediation activities being undertaken in re spect of the Reviews. The external
reviewer reported that the Bank has made significant progress to address non-compliance issues and improvement areas identified by the Reviews.
The programme of work for the Attestation Review has been completed. The final external review of the remediation activities for the Attestation
Review is expected to be completed in December 2021.
The programme of work for the Capital Adequacy Review is expected to be completed in December 2021. The final external review of the remediation
activities for the Capital Adequacy Review is underway.

NOTES TO THE FINANCIAL STATEMENTS

69
28. COMPENSATION OF AUDITORS

2021 2020

NZ$000 NZ$000
KPMG New Zealand
Audit or review of financial statements
1

2,250
2,030
Audit related services:

Prudential and regulatory services
2

333
308
Offer documents assurance or review
117
94
Other assurance services
3

47
116
Total audit related services 497 518
Total compensation of auditors relating to ANZ New Zealand 2,747 2,548

Fees related to certain managed funds not recharged
4

244
222
Total compensation of auditors 2,991
2,770
1 Includes fees for both the audit of annual financial statements and reviews of interim financial statements.
2 Includes fees for reviews and controls reports required by regulations.
3 Includes fees for other reviews and agreed upon procedures engagements.
4 Amounts relate to the ANZ PIE Fund, ANZ Investments Private Scheme and SIL Mutual Funds, and include fees for audits of annual financial statements, registry audits, supervisor reporting
and other agreed upon procedures engagements. Comparative information has been updated to include amounts relating to the SIL Mutual Funds.

ANZ New Zealand’s Policy allows KPMG New Zealand to provide assurance and other audit related services that, while outside the scope of the
statutory audit, are consistent with the role of an external auditor. These include regulatory and prudential reviews requested by regulators such as
RBNZ. Any other services that are not audit or audit-related services are non-audit services. The Policy allows certain non-audit services to be provided
where the service would not contravene auditor independence requirements. KPMG New Zealand may not provide services that are perceived to be
in conflict with the role of the external auditor or breach auditor independence. These include consulting advice and subcontracting of operational
activities normally undertaken by management, and engagements where the external auditor may ultimately be required to express an opinion on its
own work.

70
REGISTERED BANK
DISCLOSURES

This section contains the additional disclosures required by the
Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014.

Section Order reference Page
B1. General disclosures Schedule 2 71
B2. Additional financial disclosures Schedule 4 78
B3. Asset quality Schedule 7 79
B4. Credit and market risk exposures and capital adequacy Schedule 9 82
B5. Insurance business, securitisation, funds management, other fiduciary activities, Schedule 11 83
and marketing and distribution of insurance products
B6. Risk management policies Schedule 13 85

REGISTERED BANK DISCLOSURES

71
B1. GENERAL DISCLOSURES (UNAUDITED)
Details of registered bank, ultimate parent bank and ultimate holding company
The registered bank, which is also the ultimate parent bank and ultimate parent holding company, is Australia and New Zealand Banking Group
Limited (Ultimate Parent Bank). The principal office and place of business outside New Zealand, and address for service of the Ultimate Parent Bank, is
ANZ Centre, Melbourne, Level 9, 833 Collins Street, Docklands, Victoria 3008, Australia.
Subordination of claims of creditors
Certain creditors of the Ultimate Parent Bank are given a statutory priority under Australian law. Unsecured creditors of the NZ Branch could be
expected to rank behind such claims.
Specifically, pursuant to subsection 13A(3) of the Banking Act of the Commonwealth of Australia (the Banking Act), if an Authorised Deposit-Taking
Institution (ADI) (which includes the Ultimate Parent Bank) becomes unable to meet its obligations or suspends payment, the assets of the ADI in
Australia are to be available to meet the ADI's liabilities in the following order:
(a) first, the ADI's liabilities (if any) to APRA because of the rights APRA has against the ADI because of section 16AI or 16AIC of the Banking Act;
(b) second, the ADI's debts (if any) to APRA under section 16AO of the Banking Act;
(c) third, the ADI's liabilities (if any) in Australia in relation to protected accounts that account-holders keep with the ADI. Broadly, this means
accounts (including deposit accounts) kept with the Ultimate Parent Bank that are situated in Australia and recorded in Australian dollars;
(d) fourth, the ADI’s debts (if any) to the Reserve Bank of Australia;
(e) fifth, the ADI’s liabilities (if any) under an industry support contract that is certified by APRA under section 11CB of the Banking Act; and
(f) sixth, the ADI's other liabilities in the order of their priority (apart from subsection 13A(3)).
Unsecured creditors of the NZ Branch could be expected to rank as a creditor pursuant to the sixth paragraph, together with other unsecured
creditors of the Ultimate Parent Bank that do not otherwise have a priority claim under preceding paragraphs.
Subsections 16(1) and (2) of the Banking Act provide that, despite anything contained in any law relating to the winding-up of companies, but subject
to subsection 13A(3) of the Banking Act, the debts of an ADI to APRA in respect of APRA's costs (including costs in the nature of remuneration and
expenses) of being in control of the ADI's business, or of having an administrator in control of the ADI's business, are a debt due to APRA and have
priority in a winding-up of the ADI over all other unsecured debts.
Section 86 of the Reserve Bank Act 1959 of the Commonwealth of Australia provides that notwithstanding anything contained in any law relating to
the winding-up of companies, but subject to subsection 13A(3) of the Banking Act, debts due to the Reserve Bank of Australia by any ADI shall, in a
winding-up, have priority over all other debts.
This description of the liabilities which are mandatorily preferred by law is not exhaustive.
These provisions affect all of the unsecured liabilities of the NZ Branch, which as at 30 September 2021, amounted to NZ$1,048m (2020: NZ$1,076m).
Requirement to maintain sufficient assets to cover ongoing obligation to pay deposit liabilities
Subsection 13A(4) of the Banking Act states that it is an offence for an ADI not to hold assets (excluding goodwill and any assets or other amount
excluded by the prudential standards for the purposes of that subsection) in Australia of a value that is equal to or greater than the total amount of its
deposit liabilities in Australia, unless APRA has authorised the ADI to hold assets of a lesser value. This requirement has the potential to impact on the
management of the liquidity of the NZ Branch.
APRA’s powers
The Ultimate Parent Bank is subject to extensive prudential regulation by APRA.
The Banking Act requires APRA to exercise its powers and functions for the protection of the depositors of Australian ADIs and for the promotion of
financial system stability in Australia.
Where APRA considers that an ADI may become unable to meet its obligations or suspends payment (among other circumstances), APRA can take
control of the ADI's business (including by appointment of an ADI statutory manager). APRA also has power to direct the ADI not to make payments in
respect of its indebtedness and to compulsorily transfer some or all of the ADI’s assets and liabilities to another ADI in certain circumstances and to
increase its capital in specified circumstances. A counterparty to a contract with an ADI cannot rely solely on the fact that an ADI statutory manager is
in control of the ADI's business or on the making of a direction or compulsory transfer order as a basis for denying any obligations to the ADI or for
accelerating any debt under that contract or closing out any transaction relating to that contract.
The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 (the Crisis Management Act) amended the
Banking Act (among other statutes applicable to financial institutions in Australia) and was intended to enhance APRA’s powers. Specifically, the Crisis
Management Act enhanced APRA’s powers to facilitate resolution of the entities it regulates (and their subsidiaries) in times of distress. Additional
powers which could impact the Overseas Banking Group include greater oversight, management and directions powers in relation to the Ultimate
Parent Bank and other Overseas Banking Group entities which were previously not regulated by APRA, increased statutory management powers over
regulated entities within the Overseas Banking Group and changes which are designed to give statutory recognition to the conversion or write-off of
regulatory capital instruments.
The requirements of the Banking Act and the exercise by APRA of its powers have the potential to impact the management of the liquidity of ANZ
New Zealand.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

REGISTERED BANK DISCLOSURES

72
B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Restrictions on the Ultimate Parent Bank’s ability to provide financial support
Effect of APRA’s Prudential Standards
APRA Prudential Standard APS 222 Associations with Related Entities (APS222) sets minimum requirements for ADIs in Australia, including the Ultimate
Parent Bank, in relation to the monitoring, management and control of risks which arise from associations with related entities and also includes
maximum limits on intra-group financial exposures.
Under APS222, the Ultimate Parent Bank’s ability to provide financial support to the Bank is subject to the following restrictions:
• the Ultimate Parent Bank should not undertake any third party dealings with the prime purpose of supporting the business of the Bank;
• the Ultimate Parent Bank must not hold unlimited exposures (i.e. should be limited as to specified time or amount) in the Bank (e.g. not provide
a general guarantee covering any of the Bank’s obligations);
• the Ultimate Parent Bank must not enter into cross-default clauses whereby a default by the Bank on an obligation (whether financial or
otherwise) triggers or is deemed to trigger a default by the Ultimate Parent Bank on its obligations; and
• the level of exposure, net of exposures deducted from capital, of the Ultimate Parent Bank’s Level 1 total capital base to the Bank should not
exceed: (A) 50% on an individual exposure basis; or (B) 150% in aggregate (being exposures to all similar regulated ADI equivalent entities
related to the Ultimate Parent Bank).
In December 2020, APRA amended APS222 to reduce the limits for Australian ADIs’ individual entity exposure to related ADIs (or overseas equivalents)
from 50% of Level 1 total capital to 25% of Level 1 Tier 1 capital, and aggregate exposures from 150% of Level 1 total capital to 75% of Level 1 Tier 1
capital. These changes are effective from 1 January 2022. As exposures are measured net of capital deductions, the changes to APS111 Capital
Adequacy: Measurement of Capital (APS111) outlined below will affect the measurement of ADI exposures.
In September 2021, APRA amended APS111. The most material change is in relation to the treatment of capital investments for each banking and
insurance subsidiary at Level 1, with the tangible component of the investment changing from a 400% risk weighting to:
• 250% risk weighting up to an amount equal to 10% of the Ultimate Parent Bank’s net Level 1 Common Equity Tier 1 (CET1) capital; and
• the remainder of the investment will be treated as a CET1 capital deduction.
Until the new APS111 is implemented from 1 January 2022, APRA requires any new or additional equity investments in banking and insurance
subsidiaries, where the amount of that new or additional investments takes the aggregate value of the investment above 10 per cent of an ADI’s CET1
capital, to be fully funded by equity capital at the ADI parent company level. This treatment would apply to the proportion of the new or additional
investment that is above 10 per cent of an ADI’s CET1 capital.
The Ultimate Parent Bank continues to review the implications for its current investments. The net impact on the Overseas Banking Group is unclear
and will depend upon a number of factors including the capitalisation of the affected subsidiaries at the time of implementation, and the effect of
management actions being pursued that have the potential to materially offset the impact of these proposals. Based on the Ultimate Parent Bank’s
current investment as at 30 September 2021 in its affected subsidiaries and in the absence of any offsetting management actions, the above proposals
imply a reduction in the Ultimate Parent Bank’s Level 1 CET1 capital of up to approximately AUD 2 billion (~60 basis points). There would be no impact
on the Overseas Banking Group's Level 2 CET1 capital ratio arising from these proposed changes. In addition, since 1 January 2021, no more than 5%
of the Ultimate Parent Bank’s Level 1 Tier 1 capital base can comprise non-equity exposures to its New Zealand operations (including its subsidiaries
incorporated in New Zealand, such as the Banking Group, and the New Zealand Branch) during ordinary times. This limit does not include holdings of
capital instruments or eligible secured
contingent funding support provided to the Bank during times of financial stress.
APRA has also confirmed that contingent funding support by the Ultimate Parent Bank to the Bank during times of financial stress must be provided
on terms that are acceptable to APRA. At present, only covered bonds meet APRA’s criteria for contingent funding.
Effect of the Level 3 framework
In addition, certain requirements of APRA’s Level 3 framework relating to, among other things, group governance and risk exposures became effective
on 1 July 2017. This framework also re quires that the Ultimate Parent Bank must limit its financial and operational exposures to subsidiaries (including
the Bank).
In determining the acceptable level of exposure to a subsidiary, the Board of the Ultimate Parent Bank should have regard to:
• the exposures that would be approved for third parties of broadly equivalent credit status;
• the potential impact on the Ultimate Parent Bank’s capital and liquidity positions; and
• the Ultimate Parent Bank’s ability to continue operating in the event of a failure by the Bank.
These requirements are not expected to place additional restrictions on the Ultimate Parent Bank’s ability to provide financial or operational support
to the Bank.
Other APRA powers
The Ultimate Parent Bank may not provide financial support in breach of the Banking Act, as described under ‘APRA’s powers’ above.
Guarantees
No material obligations of the NZ Branch are guaranteed as at 10 November 2021.

REGISTERED BANK DISCLOSURES

73
B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Directors, New Zealand Chief Executive Officer and Responsible Person
Any document or communication may be sent to any Director or the Chief Executive Officer – NZ Branch at the Registered Office. The document or
communication should be marked for the attention of that Director or the Chief Executive Officer – NZ Branch as applicable.
Directors of the Ultimate Parent Bank as at 10 November 2021

Paul O’Sullivan Shayne Elliott Ilana Atlas, AO
Position
Chairman and Director Chief Executive Officer and Director Director
Occupation
Company Director Chief Executive Officer – Australia and
New Zealand Banking Group
Company Director
Qualifications
BA (Mod) Economics, Advanced
Management Program of Harvard
BCom BJuris (Hons), LLB (Hons), LLM
Resides
Sydney, Australia Melbourne, Australia Sydney, Australia
Executive
No Yes No
Independent
Yes No Yes
Other company
directorships
Australian Tower Network Pty Ltd,
St Vincent’s Health Australia, Singtel Optus
Pty Ltd, Western Sydney Airport
Corporation
Financial Markets Foundation for
Children
Origin Energy Ltd, Scentre Group Ltd

Paula Dwyer Jane Halton, AO PSM Rt Hon Sir John Key, GNZM AC
Position
Director Director Director
Occupation
Company Director Company Director Company Director
Qualifications
BCom, FCA, SF Fin, FAICD BA (Hons) Psychology, FIPAA,
Hon. FAAHMS, Hon. FACHSE, Hon. DLitt,
FAIM, FAICD
BCom, DCom (Honoris Causa)
Resides
Melbourne, Australia Canberra, Australia Auckland, New Zealand
Executive
No No No
Independent
Yes Yes Yes
Other company
directorships
Allianz Australia Ltd, Elenium
Automation Pty Ltd, Lion Pty Ltd
Vault Systems, Clayton Utz,
Crown Resorts Ltd, Naval Group Australia
Pty Ltd
Dairy Investment Fund Ltd,
Kyro Capital Ltd, Palo Alto Networks Inc,
Sashimi Holdings Ltd, Thirty Eight JK Ltd

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

REGISTERED BANK DISCLOSURES

74
B1. GENERAL DISCLOSURES (UNAUDITED) (continued)

Graeme Liebelt John Macfarlane Christine O’Reilly
Position
Director Director Director (from 1 November 2021)
Occupation
Company Director Company Director Company Director
Qualifications
BEc (Hons), FAICD, FTSE, FIML BCom, MCom (Hons) BBus
Resides
Melbourne, Australia Melbourne, Australia Melbourne, Australia
Executive
No No No
Independent
Yes Yes Yes
Other company
directorships
Amcor Ltd, Australian Foundation
Investment Company Ltd
Colmac Group Pty Ltd, AGInvest
Holdings Ltd (MyFarm), Aikenhead
Centre for Medical Discovery Ltd,
Collins Farms Ltd, Collins Farms No 2
Ltd, Dumbarton Land Company Ltd,
Melior Genetics Ltd, Melior Venison Ltd,
The Boundary Ltd, Balmoral Pastoral
Investments Pty Ltd, L1 Long Short
Fund
BHP Group Ltd, BHP Group Plc,
Medibank Private Ltd, Stockland
Corporation Ltd

Chief Executive Officer – NZ Branch and Responsible Person as at 10 November 2021

Chris O’Neale Antonia Watson
Position
Chief Executive Officer – NZ Branch Responsible Person
1

Occupation
Chief Executive Officer, Australia and
New Zealand Banking Group – New
Zealand Branch
Chief Executive Officer New Zealand
Qualifications
BCA BCom (Hons), GAICD
Resides
Wellington, New Zealand Auckland, New Zealand
Other company
directorships
None Not applicable
1

Authorised in writing by the Directors to sign the Disclosure Statement in accordance with section 82 of the Reserve Bank Act 1989.
Transactions with Directors
There are no transactions entered into by any Director, the Chief Executive Officer – NZ Branch, or any immediate relative or close business associate
of any Director or the Chief Executive Officer – NZ Branch, with any part of ANZ New Zealand which has been either entered into on terms other than
those which would in the ordinary course of business be given to any other person of like circumstances or means or which could otherwise be
reasonably likely to influence materially the exercise of the Directors' or Chief Executive Officer – NZ Branch duties in respect of the NZ Branch and
ANZ New Zealand.
Board Audit Committee
There is a board Audit Committee which covers audit matters. The committee has five members. Each member is a non-executive independent
Director.

REGISTERED BANK DISCLOSURES

75
B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Policy of the board of directors for avoiding or dealing with conflicts of interest
The Board of the Ultimate Parent Bank has adopted procedures to ensure that conflicts and potential conflicts of interest between a Director’s duties
to the Ultimate Parent Bank and their own interests are avoided or dealt with. Pursuant to these procedures:
• each Director should disclose to all Directors any material personal interest they have in any matter which relates to the affairs of the Ultimate
Parent Bank and any other interest which the Director believes is appropriate to disclose in order to avoid an actual conflict of interest or the
perception of a conflict of interest. This disclosure should be made as soon as practicable after the Director becomes aware of their interest or
the need to make a disclosure.
• any Director who has an interest of the type referred to above in a matter that is to be considered at a Directors' meeting, must not vote on the
matter nor be present while the matter is considered at the meeting, unless a majority of Directors who do not have such an interest in the
matter agree that the interest should not disqualify such Director from being present while the matter is being considered and from voting on
the matter. The minutes of the meeting should record the decision taken by the Directors who do not have an interest in the matter.
In addition, Standing Notices about Interests are maintained for each Director. If the Director's interests change, the Director shall disclose the change
as soon as practicable and an updated Standing Notice shall be tabled at the next Board meeting and recorded in the minutes of that meeting.

Auditors
KPMG, 18 Viaduct Harbour Avenue, Auckland, New Zealand.
Conditions of registration
The following conditions of registration were applicable as at 30 September 2021, and have applied from 1 November 2015.

The registration of Australia and New Zealand Banking Group Limited (the registered bank) in New Zealand is subject to the following conditions:
1. That the banking group does not conduct any non-financial activities that in aggregate are material relative to its total activities.
In this condition of registration, the meaning of “material” is based on generally accepted accounting practice.
2. That the banking group’s insurance business is not greater than 1% of its total consolidated assets.
For the purposes of this condition of registration, the banking group’s insurance business is the sum of the following amounts for entities in the banking group:
a) if the business of an entity predominantly consists of insurance business and the entity is not a subsidiary of another entity in the banking group whose
business predominantly consists of insurance business, the amount of the insurance business to sum is the total consolidated assets of the group headed by
the entity; and
b) if the entity conducts insurance business and its business does not predominantly consist of insurance business and the entity is not a subsidiary of another
entity in the banking group whose business predominantly consists of insurance business, the amount of the insurance business to sum is the total liabilities
relating to the entity’s insurance business plus the equity retained by the entity to meet the solvency or financial soundness needs of its insurance business.
In determining the total amount of the banking group’s insurance business—
a) all amounts must relate to on balance sheet items only, and must comply with generally accepted accounting practice; and
b) if pr oducts or assets of which an insurance business is comprised also contain a non-insurance component, the whole of such products or assets must be
considered part of the insurance business.
For the purposes of this condition of registration,—
“insurance business” means the undertaking or assumption of liability as an insurer under a contract of insurance:
“insurer” and “contract of insurance” have the same meaning as provided in sections 6 and 7 of the Insurance (Prudential Supervision) Act 2010.
3. That the business of the registered bank in New Zealand does not constitute a predominant proportion of the total business of the registered bank.
4. That no appointment to the position of the New Zealand chief executive officer of the registered bank shall be made unless:
a) the Reserve Bank has been supplied with a copy of the curriculum vitae of the proposed appointee; and
b) the Reserve Bank has advised that it has no objection to that appointment.
5. That Australia and New Zealand Banking Group Limited complies with the requirements imposed on it by the Australian Prudential Regulation Authority.
6. That Australia and New Zealand Banking Group Limited complies with the following minimum capital adequacy requirements, as administered by the Australian
Prudential Regulation Authority:
a) Common Equity Tier 1 capital of Australia and New Zealand Banking Group Limited is not less than 4.5 percent of risk weighted exposures;
b) Tier 1 capital of Australia and New Zealand Banking Group Limited is not less than 6 percent of risk weighted exposures;
c) Total capital of Australia and New Zealand Banking Group Limited is not less than 8 percent of risk weighted exposures.
7. That the business of the registered bank in New Zealand is restricted to:
a) acquiring for fair value, and holding, mortgages originated by ANZ Bank New Zealand Limited; and
b) any other business for which the prior written approval of the Reserve Bank has been obtained; and
c) activities that are necessarily incidental to the business specified in paragraphs (a) and (b).
8. That the value of the mortgages held by the registered bank in New Zealand must not exceed $15 billion in aggregate.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

REGISTERED BANK DISCLOSURES

76
B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
9. That the registered bank in New Zealand does not incur any liabilities except:
a) to the government of New Zealand in respect of taxation and other charges;
b) to other branches or the head office of the registered bank;
c) to trade creditors and staff;
d) to ANZ Bank New Zealand Limited in respect of activities, other than borrowing, that are necessarily incidental to the business specified in paragraphs (a) and
(b) of condition 7; and
e) any other liabilities for which the prior written approval of the Reserve Bank has been obtained.

In these conditions of registration,—
“banking group” means the New Zealand business of the registered bank and its subsidiaries as required to be reported in group financial statements for the group’s
New Zealand business under section 461B(2) of the Financial Markets Conduct Act 2013.
“business of the registered bank in New Zealand” means the New Zealand business of the registered bank as defined in the requirement for financial statements for New
Zealand business in section 461B(1) of the Financial Markets Conduct Act 2013.
“generally accepted accounting practice” has the same meaning as in section 8 of the Financial Reporting Act 2013.

Pending proceedings or arbitration
A description of any pending legal proceedings or arbitration concerning any member of ANZ New Zealand that may have a material adverse effect
on the NZ Branch or ANZ New Zealand is included in Note 27 Commitments and Contingent Liabilities.
Credit rating
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.
Fitch Ratings changed the rating on the Ultimate Parent Bank from AA- to A+ on 7 April 2020. S&P Global Ratings changed the outlook on the
Ultimate Parent Bank from Stable to Negative on 8 April 2020. Fitch Ratings changed the outlook on the Ultimate Parent Bank from Negative to Stable
on 12 April 2021. S&P Global Ratings changed the outlook on Ultimate Parent Bank from Negative to Stable on 7 June 2021.
As at 10 November 2021, the Ultimate Parent Bank’s credit ratings are:
Rating agency Credit rating Qualification
S&P Global Ratings
AA- Outlook Stable
Fitch Ratings
A+ Outlook Stable
Moody’s Investors Service
Aa3 Outlook Stable
The following table describes the credit rating grades available. The descriptions are from S&P Global Ratings. Credit ratings from S&P Global Ratings
and Fitch Ratings may be modified by the addition of "+" or "-" to show the relative standing within the “AA” to “B” categories. Moody's Investors
Service applies numerical modifiers 1, 2, and 3 to each of the “Aa” to “Caa” classifications, with 1 indicating the higher end and 3 the lower end of the
rating category.

S&P Global
Ratings
Moody's
Investors
Service Fitch Ratings
Investment grade:
Extremely strong capacity to meet financial commitments. Highest rating. AAA Aaa AAA
Very strong capacity to meet financial commitments. AA Aa AA
Strong ability to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes
in circumstances.
A A A
Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
BBB Baa BBB
Speculative grade:
Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic
conditions.
BB Ba BB
More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet
financial commitments.
B B B
Currently vulnerable and dependent on favourable business, financial and economic conditions to meet financial
commitments.
CCC Caa CCC
Highly vulnerable; default has not yet occurred, but is expected to be a virtual certainty.
CC to C Ca CC to C
Payment default on a financial commitment or breach of an imputed promise; also used when a bankruptcy petition
has been filed or similar action taken.
D C RD & D
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.

REGISTERED BANK DISCLOSURES

77
B1. GENERAL DISCLOSURES (UNAUDITED) (continued)
Historical summary of financial statements

Income statement

2021 2020 2019 2018 2017
For the year ended 30 September NZ$m NZ$m NZ$m NZ$m NZ$m
Interest income
4,608
5,580 6,508 6,550 6,434
Interest expense
(1,203)
(2,349) (3,276) (3,373) (3,356)
Net interest income
3,405
3,231 3,232 3,177 3,078
Non-interest income
759
789 966 1,143 916
Operating income
4,164
4,020 4,198 4,320 3,994
Operating expenses (1,622) (1,754) (1,609) (1,517) (1,469)
Credit impairment charge 115 (401) (99) (53) (60)
Profit before income tax 2,657
1,865 2,490 2,750 2,465
Income tax expense
(738)
(529) (665) (764) (685)
Profit after income tax 1,919
1,336 1,825 1,986 1,780

Balance sheet
2021 2020 2019 2018 2017
As at 30 September NZ$m NZ$m NZ$m NZ$m NZ$m
Total assets
185,072
180,087 170,492 161,416 158,185
Total individually impaired assets
155
363 287 323 361
Total impaired assets (i.e. Stage 3)
775
1,173 739 n/a n/a
Total liabilities 169,996 166,077 157,893 150,180 146,872
Equity & head office account 15,076 14,010 12,599 11,236 11,313

Other items included in Equity & head office account

Dividends paid
(845)
- (375) (4,600) (1,635)
NZ Branch retained earnings repatriated

- - - (450) -
Share capital issued - - - 3,000 -

The amounts included in this summary have been taken from the audited financial statements of ANZ New Zealand.

Other material matters
New RBNZ capital requirements
The RBNZ has released new bank capital adequacy requirements applying to New Zealand locally incorporated registered banks, which are set out in
the RBNZ’s Banking Prudential Requirements documents. The new capital adequacy requirements are being implemented in stages during a
transition period from October 2021 to July 2028. The key requirements are:
• The Banking Group’s total capital requirement will increase to 18% of RWA, including tier 1 capital of at least 16% of RWA. Up to 2.5% of the tier 1
capital requirement can be made up of additional tier 1 (AT1) capital, with the re mainder of the tier 1 requirement made up of common equity
tier 1 (CET1) capital. The increased capital ratios requirement will be implemented progressively from 1 July 2022 to 1 July 2028. AT1 capital must
consist of perpetual preference shares, which may be redeemable. The total capital requirement can also include tier 2 capital of up to 2% of
RWA. Tier 2 capital must consist of long-term subordinated debt.
• The tier 1 capital requirement will include a CET1 prudential capital buffer of 9% of RWA. This will include: a 2% domestic, systemically important
bank capital buffer; a 1.5% 'early-set' counter-cyclical capital buffer, which can be temporarily reduced to 0% following a financial crisis, or
temporarily increased to prevent asset price bubbles from developing; and a 5.5% capital conservation buffer.
• Contingent capital instruments will no longer be treated as eligible regulatory capital. As at 30 September 2021, the Bank had approximately
NZ$2,741 million of AT1 instruments that will progressively lose eligible regulatory capital treatment over a six and a half year transition period
from 1 January 2022 to 1 July 2028.
• As an internal ratings based approach accredited bank, the Banking Group’s RWA outcomes will be increased to approximately 90% of what
would be calculated under the standardised approach. This will be achieved by applying an 85% output floor from 1 January 2022, and
increasing the credit RWA scalar from 1.06 to 1.20 from 1 October 2022.
• The Banking Group will be required to report RWA, and resulting capital ratios, using both the internal models and the standardised approaches
from 30 September 2022.
The RBNZ’s reforms will result in a material increase in the level of capital that the Banking Group is required to hold. The reforms could have a material
impact on the Banking Group and its business, including on its capital allocation and business planning.
Since 30 September 2018, the Banking Group’s CET1 capital has increased by NZ$3.9 billion to NZ$13.0 billion at 30 September 2021 and total capital
has increased by NZ$4.5 billion to NZ$16.4 billion, in preparation for these changes and due to the RBNZ’s COVID-19 related dividend restrictions.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

REGISTERED BANK DISCLOSURES

78
B2. ADDITIONAL FINANCIAL DISCLOSURES
Additional information on the balance sheet
2021 2020

NZ$m NZ$m
Total interest earning and discount bearing assets 171,167 165,618
Total interest and discount bearing liabilities 138,509 138,360
Total liabilities of the NZ Branch less amounts due to related entities
1,048
1,076
Additional information on interest rate sensitivity
The following table represents 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.

Total
Up to
3 months
Over 3 to
6 months
Over 6 to
12 months
Over 1 to
2 years
Over
2 years
Not bearing
interest
1

2021 NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m
Assets
Cash and cash equivalents
7,844 7,523 - - - - 321
Settlement balances receivable 237 - - - - - 237
Collateral paid
537 537 - - - - -
Trading securities
9,585 1,027 907 342 1,765 5,544 -
Derivative financial instruments
9,283 - - - - - 9,283
Investment securities
11,926 174 219 272 2,257 9,003 1
Net loans and advances
141,074 62,533 14,718 35,520 17,613 11,213 (523)
Other financial assets
497 - - - - - 497
Total financial assets
180,983 71,794 15,844 36,134 21,635 25,760 9,816
Liabilities
Settlement balances payable
2,663 1,808 - - - - 855
Collateral received
738 738 - - - - -
Deposits and other borrowings
135,986 85,200 12,621 11,795 2,133 2,424 21,813
Derivative financial instruments
7,680 - - - - - 7,680
Debt issuances
20,852 1,211 4,417 224 3,452 11,548 -
Lease liabilities
262 12 12 24 86 128 -
Other financial liabilities 1,005 676 - - - - 329
Total financial liabilities 169,186 89,645 17,050 12,043 5,671 14,100 30,677
Hedging instruments - 18,415 (6,333) (4,618) (9,542) 2,078 -
Interest sensitivity gap 11,797 564 (7,539) 19,473 6,422 13,738 (20,861)
1 Excludes non-coupon bearing discounted financial assets and financial liabilities which are shown as repricing on their maturity date.

Overseas Banking Group Profitability and Size

2021
Net Profit for the year ended 30 September 2021 (AUDm)
1

6,163
Net profit after tax for the year ended 30 September 2021 as a percentage of average total assets
0.59%
Total assets (AUDm)
978,857
Percentage change in total assets in the 12 months to 30 September 2021
-6.09%
1 Net profit after tax for the year includes AUD 1 million of profit attributable to non-controlling interests.

Reconciliation of mortgage related amounts

As at 30 September 2021

Note NZ$m
Term loans - housing
1
11
98,831
Less: fair value hedging adjustment
(2)
Less: housing loans made to corporate customers
(1,433)
On-balance sheet residential mortgage exposures (per LVR analysis) B4 97,396
Add: off-balance sheet residential mortgage exposures (per LVR analysis) B4

9,081
Total residential mortgage exposures (per LVR analysis)
B4
106,477
1 Term loans – housing includes loans secured over residential property for owner-occupier, residential property investment and business purposes.

REGISTERED BANK DISCLOSURES

79
B3. ASSET QUALITY
This section should be read in conjunction with the estimates, assumptions and judgements relating to COVID-19 and ECL included in Note 1, Note 12
and Note 15 to the financial statements.

Movements in components of loss allowance – total

Stage 3

Stage 1 Stage 2
Collectively
assessed
Individually
assessed Total
Net loans and advances - total NZ$m NZ$m NZ$m NZ$m NZ$m
As at 1 October 2020 161 347 80 107 695
Transfer between stages
16 (14) (2) - -
New and increased provisions (net of collective provision releases)
(22) (19) (22) 67 4
Write-backs - - - (64) (64)
Recoveries of amounts previously written off - - - (18) (18)
Credit impairment charge
(6) (33) (24) (15) (78)
Bad debts written-off (excluding recoveries)
- - - (47) (47)
Add back recoveries of amounts previously written off
- - - 18 18
Discount unwind
- - - (3) (3)
As at 30 September 2021 155 314 56 60 585

Off-balance sheet credit related commitments - total
As at 1 October 2020 79 55 3 22 159
Transfer between stages 3 (4) 1 - -
New and increased provisions (net of collective provision releases)
(18) (12) - (7) (37)
Credit impairment charge
(15) (16) 1 (7) (37)
As at 30 September 2021 64 39 4 15 122

Impacts of changes in gross financial assets on loss allowances - total

Gross loans and advances - total
As at 1 October 2020 120,371 11,841 810 363 133,385
Net transfers in to each stage
3,342 - 25 8 3,375
Amounts drawn from new or existing facilities
45,506 1,140 86 139 46,871
Additions
48,848 1,140 111 147 50,246
Net transfers out of each stage
(2) (3,243) (17) (113) (3,375)
Amounts repaid (34,915) (3,530) (284) (195) (38,924)
Deletions (34,917) (6,773) (301) (308) (42,299)
Amounts written off - - - (47) (47)
As at 30 September 2021 134,302 6,208 620 155 141,285
Loss allowance as at 30 September 2021 155 314 56 60 585

Off-balance sheet credit related commitments - total
As at 1 October 2020 29,251 1,455 19 41 30,766
Net transfers in to each stage
28 - 11 1 40
New and increased facilities and drawn amounts repaid 8,796 314 12 1 9,123
Additions 8,824 314 23 2 9,163
Net transfers out of each stage
(9) (31) - - (40)
Reduced facilities and amounts drawn
(9,498) (459) (10) (20) (9,987)
Deletions
(9,507) (490) (10) (20) (10,027)
As at 30 September 2021 28,568 1,279 32 23 29,902
Loss allowance as at 30 September 2021 64 39 4 15 122
Explanation of how changes in the gross carrying amounts of gross loans and advances contributed to changes in loss allowance
Overall, loss allowances are 0.41% of gross balances as at 30 September 2021, down from 0.52% as at 30 September 2020. The NZ$147 million (17.2%)
decrease in loss allowances was driven by a decrease in the proportion of gross balances in Stage 2 and Stage 3, and changes in the forward-looking
economic scenarios as described in Note 12 Allowance for Expected Credit Losses.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

REGISTERED BANK DISCLOSURES

80
B3. ASSET QUALITY (continued)
Movements in components of loss allowance – total

Stage 3

Stage 1 Stage 2
Collectively
assessed
Individually
assessed Total
Net loans and advances - total NZ$m NZ$m NZ$m NZ$m NZ$m
As at 1 October 2019
164 194 43 98 499
Transfer between stages 25 (30) 4 1 -
New and increased provisions (net of collective provision releases) (3) 206 34 157 394
Write-backs - - - (35) (35)
Recoveries of amounts previously written off - - - (23) (23)
Credit impairment charge 22 176 38 100 336
Bad debts written-off (excluding recoveries) - - - (92) (92)
Add back recoveries of amounts previously written off - - - 23 23
Discount unwind - - - (8) (8)
Sale of UDC (25) (23) (1) (14) (63)
As at 30 September 2020 161 347 80 107 695

Off-balance sheet credit related commitments - total
As at 1 October 2019
60 24 2 11 97
Transfer between stages 3 (3) - - -
New and increased provisions (net of collective provision releases) 17 36 1 11 65
Credit impairment charge 20 33 1 11 65
Sale of UDC (1) (2) - - (3)
As at 30 September 2020 79 55 3 22 159

Impacts of changes in gross financial assets on loss allowances - total

Gross loans and advances - total
As at 1 October 2019
123,979 9,045 452 287 133,763
Net transfers in to each stage 12 4,505 472 211 5,200
Amounts drawn from new or existing facilities 34,287 1,377 120 191 35,975
Additions 34,299 5,882 592 402 41,175
Net transfers out of each stage (5,154) (45) (1) - (5,200)
Amounts repaid (29,875) (2,594) (230) (213) (32,912)
Deletions (35,029) (2,639) (231) (213) (38,112)
Amounts written off - - - (92) (92)
Sale of UDC (2,878) (447) (3) (21) (3,349)
As at 30 September 2020
120,371 11,841 810 363 133,385
Loss allowance as at 30 September 2020 161 347 80 107 695

Off-balance sheet credit related commitments - total
As at 1 October 2019
28,241 837 3 19 29,100
Net transfers in to each stage 3 387 7 7 404
New and increased facilities and drawn amounts repaid 9,272 600 16 25 9,913
Additions 9,275 987 23 32 10,317
Net transfers out of each stage (398) (6) - - (404)
Reduced facilities and amounts drawn (7,489) (198) (7) (10) (7,704)
Deletions (7,887) (204) (7) (10) (8,108)
Sale of UDC (378) (165) - - (543)
As at 30 September 2020
29,251 1,455 19 41 30,766
Loss allowance as at 30 September 2020
79 55 3 22 159
Explanation of how changes in the gross carrying amounts of gross loans and advances contributed to changes in loss allowance
Overall, loss allowances are 0.52% of gross balances as at 30 September 2020, up from 0.37% as at 30 September 2019. The NZ$258 million (43.3%)
increase in loss allowances was driven by an increase in the proportion of gross balances in Stage 2 and Stage 3, and changes in the forward-looking
economic scenarios and changes in probability weightings.

REGISTERED BANK DISCLOSURES

81
B3. ASSET QUALITY (continued)
Past due assets

2021 2020
NZ$m NZ$m
Less than 30 days past due
716
952
At least 30 days but less than 60 days past due
292
206
At least 60 days but less than 90 days past due
175
132
At least 90 days past due 374 525
Total past due but not individually impaired 1,557
1,815

Other asset quality information
2021 2020
NZ$m NZ$m
Undrawn facilities with impaired customers

23 41
Other assets under administration

3 4

Asset quality for financial assets designated at fair value
ANZ New Zealand does not have any loans and advances designated at fair value.

Overseas Banking Group asset quality

As at 30 September 2021

Gross impaired assets (AUDm) 1,965
Gross impaired assets as a percentage of total assets
0.2%
Individual provision (AUDm)
687
Individual provision as a percentage of gross impaired assets
35.0%
Collective provision (AUDm)
4,195

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

REGISTERED BANK DISCLOSURES

82
B4. CREDIT AND MARKET RISK EXPOSURES AND CAPITAL ADEQUACY (UNAUDITED)
APRA Basel III capital ratios

Overseas Banking Group
Ultimate Parent Bank
(Extended Licensed Entity)
2021 2020 2021 2020
Common equity tier 1 capital
12.3%
11.3%
12.0%
11.2%
Tier 1 capital
14.3%
13.2%
14.1%
13.2%
Total capital 18.4% 16.4% 18.6% 16.7%

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. Where the Overseas Banking Group is not
accredited to use the AIRB methodology 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 30 September 2021 and for the comparative prior
periods.
The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 30 September 2021. The Overseas Banking Group’s Pillar
3 disclosure document for the quarter ended 30 September 2021, 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
ANZ New Zealand’s aggregate market risk exposures below have been calculated in accordance with the RBNZ document BS2A. The peak end-of-day
market risk exposures are for the six months ended 30 September 2021.
Period end Peak Period end Peak
As at 30 September 2021 NZ$m NZ$m NZ$m NZ$m
Interest rate risk
6,357 10,884 509 871
Foreign currency risk
21 21 2 2
Equity risk
1 1 - -
Additional mortgage information
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 have been accepted by the customer.

On-balance
sheet
Off-balance
sheet Total
As at 30 September 2021 NZ$m NZ$m NZ$m
LVR range
Does not exceed 60% 50,881 6,507 57,388
Exceeds 60% and not 70%
19,967 1,198 21,165
Exceeds 70% and not 80%
21,008 1,025 22,033
Does not exceed 80%
91,856 8,730 100,586
Exceeds 80% and not 90%
3,906 123 4,029
Exceeds 90%
1,634 228 1,862
Total 97,396 9,081 106,477

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83
B5. INSURANCE BUSINESS, SECURITISATION, FUNDS MANAGEMENT, OTHER FIDUCIARY ACTIVITIES
AND MARKETING AND DISTRIBUTION OF INSURANCE PRODUCTS
Insurance business
ANZ New Zealand does not conduct any insurance business.
Non-consolidated insurance and non-financial activities
The Ultimate Parent Bank does not carry on any insurance business or non-financial activities in New Zealand that are outside ANZ New Zealand.

ANZ New Zealand’s involvement in securitisation, funds management, other fiduciary activities, and marketing and distribution of insurance
products
a) ANZ New Zealand’s involvement in the establishment, marketing, or sponsorship of trust, custodial, funds management, and other fiduciary activities
Activity Details
Custodial
ANZ New Zealand operates two custodians as at 30 September 2021:
• ANZ Custodial Services New Zealand Limited, which is the appointed custodian for private banking’s (ANZ Private)
Discretionary Investment Management Service, Wholesale Investment Services and Trading Service; and
• ANZ New Zealand Investments Nominees Limited, which is the appointed custodian for direct holdings of securities by
various wholesale customer portfolios managed by ANZ New Zealand Investments Limited (ANZ Investments).
Funds
management

The Banking Group provides the following funds management services:
• Managed Investment Schemes (MIS): ANZ New Zealand’s subsidiaries ANZ Investments and ANZ Investment Services (New
Zealand) Limited (ANZIS) act as manager for a number of managed investment schemes. ANZ Investments holds an MIS
Manager licence, with ANZIS being an authorised body under that licence. ANZ Investments is the issuer and manager of
ANZ and OneAnswer-branded KiwiSaver, retail and wholesale schemes. ANZIS is the issuer and manager of the Bonus
Bonds Scheme and the ANZ PIE Fund. ANZ National Staff Superannuation Limited, also a subsidiary of ANZ New Zealand,
is the trustee and manager of the ANZ National Retirement Scheme, which is a restricted workplace savings scheme.
• Discretionary Investment Management Service (DIMS): The Bank is a licensed DIMS provider. This service is offered to ANZ
Private customers.
• Other investment portfolios: ANZ Investments also manages investment portfolios for a number of schemes where the
scheme manager or trustee has outsourced investment management services to ANZ Investments. These schemes are
typically corporate superannuation schemes.
Other fiduciary
activities
ANZ Investments, through its subsidiary OneAnswer Nominees Limited, offers the OneAnswer Portfolio Service. The associated
administration and custody services are provided by FNZ Limited and FNZ Custodians Limited respectively (together FNZ).
FNZ is not a member or related party of ANZ New Zealand.
b) ANZ New Zealand’s involvement in the origination of securitised assets, and the marketing or servicing of securitisation schemes
ANZ New Zealand originates securitised assets in the form of residential mortgage backed securities held for potential repurchase transactions with
the RBNZ, and covered bonds. Refer to Note 24 Structured Entities for further details on these programmes. Other than these activities, ANZ New
Zealand is not involved in the marketing or servicing of securitisation schemes.

c) ANZ New Zealand’s involvement in marketing and distribution of insurance products
ANZ New Zealand markets and distributes life insurance, other personal and business insurance products provided by or arranged through a number
of insurance partners. None of these insurance partners are affiliated insurance entities or affiliated insurance groups. Our insurance partners are:
• Vero Insurance New Zealand Limited for home, contents, motor vehicle, boat and lifestyle block insurance;
• AWP Services New Zealand Limited, trading as Allianz Partners, for travel insurance. Policies are underwritten by Allianz Australia Insurance
Limited (incorporated in Australia) trading as Allianz New Zealand;
• Cigna Life Insurance New Zealand Limited for life & living insurance; and
• Crombie Lockwood (NZ) Limited is our business insurance broker.
Arrangements to ensure no adverse impacts arising from the above activities
Arrangements have been put in place to ensure that difficulties arising from the activities in a), b) and c) above would not impact adversely on ANZ
New Zealand. The policies and procedures in place include comprehensive and prominent disclosure of in formation regarding products, and formal
and regular review of operations and policies by management.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

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84
B5. INSURANCE BUSINESS, SECURITISATION, FUNDS MANAGEMENT, OTHER FIDUCIARY ACTIVITIES
AND MARKETING AND DISTRIBUTION OF INSURANCE PRODUCTS
(continued)
Amounts represented by funds management and securitisation activities
2021 2020
NZ$m NZ$m
Funds under management:
KiwiSaver
1
19,051 16,417
Bonus Bonds Scheme
2
872 2,071
Other managed funds
1
3,842 2,701
ANZ PIE Fund
2

1,724
2,309
DIMS
3

8,868
8,087
Other investment portfolios
4

4,686
3,638
Total funds under management 39,043
35,223
Funds under custodial arrangements
8,942
8,353
Other funds held or managed subject to fiduciary responsibilities
5
1,811 1,491
Outstanding securitised assets originated by ANZ New Zealand - carrying amount of covered bonds 4,248 4,522
1 Managed by ANZ Investments.
2 Managed by ANZIS.
3 Managed by the Bank.
4 Comprises portfolios managed by ANZ Investments, and the ANZ National Retirement Scheme managed by ANZ National Staff Superannuation Limited.
5 Not included in funds under management.

REGISTERED BANK DISCLOSURES

85
B6. RISK MANAGEMENT POLICIES
Information about risk
The COVID-19 pandemic has continued to impact our operating environment. Our Risk Management Framework has underpinned our response
during this challenging time and has enabled us to maintain sound risk management practices.
The Board is ultimately responsible for establishing and overseeing ANZ New Zealand’s Risk Management Framework (RMF), which is
supported by ANZ New Zealand’s underlying systems, structures, policies, procedures, processes and people. The Board has delegated
authority to the Bank’s Board Risk Committee (BRC) to develop and monitor compliance with ANZ New Zealand’s risk management policies.
The Committee reports regularly to the Board on its activities. The key pillars of ANZ New Zealand’s RMF include:
• The Risk Management Strategy (RMS), which describes ANZ New Zealand’s strategy for managing risks arising from ANZ New
Zealand’s purpose and strategy and the key elements of the RMF that give effect to that strategy. The RMS includes: how the risk
function is structured to support ANZ New Zealand’s purpose and strategy; the values, attitudes and behaviours required of
employees in delivering on strategic priorities; a description of each material risk; and an overview of how the RMF addresses each
risk, with reference to the relevant policies, standards and procedures. It also includes information on how ANZ New Zealand
identifies, measures, evaluates, monitors, reports and then either controls or mitigates material risks.
• The Risk Appetite Statement (RAS), which sets out the Board’s expectations regarding, for each material risk, the maximum level of
risk ANZ New Zealand is willing to accept in pursuing its strategic objectives and its operating plans considering its stakeholders’,
depositors’ and customers’ interests.
• Risk Culture, an important component of ANZ New Zealand’s organizational culture and an intrinsic part of ANZ New Zealand’s RMF.

The material risks facing ANZ New Zealand per our RMS, and how these risks are managed, are summarised below.
Key Material Risks
Each key material risk has an associated RAS component, and where applicable, is measured by appropriate metric(s) and associated tolerance(s)
representing the maximum level of risk appropriate to execute ANZ New Zealand’s strategic agenda. Metrics are prepared and reviewed at least
monthly. A risk appetite dashboard is prepared and reviewed by senior management monthly, and presented to the BRC at each meeting.

Risk Type Description Managing the Risk
Strategic
Risk
Risks that affect or are created by an organisation’s business
strategy and strategic objectives. A possible source of loss
might arise from the pursuit of an unsuccessful business
plan. For example, Strategic risk might arise from making
poor strategic business decisions, from the sub-standard
execution of decisions, or from a failure to respond well to
changes in a business environment.
We consider and manage strategic risks through our annual strategic
planning process, managed by the Executive Committee and
approved by the Board. Where the strategy leads to an increase in
Key Material Risks (e.g. Credit Risk, Market Risk, Operational Risk) the
risk management strategies associated with these risks form the
primary controls.
Capital
Adequacy
Risk
The risk of loss arising from ANZ New Zealand failing to
maintain the level of capital required by prudential
regulators and other key stakeholders (shareholders, debt
investors, depositors, rating agencies, etc.) to support ANZ
New Zealand’s consolidated operations and risk appetite.
We pursue an active approach to Capital Management, which is
designed to protect the interests of depositors, creditors and
stakeholders through ongoing review, and Board approval, of the
level and composition of our capital base against key policy
objectives. The ICAAP also operates as part of the management
framework for this risk.
Credit
Risk
The risk of financial loss resulting from a counterparty failing
to fulfil its obligations, or from a decrease in credit quality of
a counterparty resulting in a financial loss.
Credit Risk incorporates the risks associated with us lending
to customers who could be impacted by climate change or
by changes to laws, regulations, or other policies adopted
by governments or regulatory authorities, including carbon
pricing and climate change adaptation or mitigation
policies.
Includes:
• concentrations of credit risk;
• intra-day credit risk;
• credit risk to bank counterparties; and
• related party credit risk.
Our Credit Risk framework is top down, being defined by credit
principles and policies. Credit policies, requirements and procedures
cover all aspects of the credit life cycle from initial approval and risk
grading, through ongoing management and problem debt
management.

The effectiveness of the Credit Risk framework is assessed through
various compliance and monitoring processes. These, together with
portfolio selection, define and guide the credit process, organisation
and staff.
Liquidity
and
Funding
Risk
The risk that the Banking Group is unable to meet its
payment obligations as they fall due, including:
• repaying depositors or maturing wholesale debt; or
• ANZ New Zealand having insufficient capacity to fund
increases in assets.
Key principles in managing our Liquidity and Funding Risk include:
• ANZ New Zealand’s short term liquidity scenario modelling
stresses cash flow projections against multiple survival horizons
over which ANZ New Zealand is required to remain cash flow
positive; and
• Longer-term scenarios are in place that measure the structural
liquidity position of the balance sheet.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

REGISTERED BANK DISCLOSURES

86
B6. RISK MANAGEMENT POLICIES (continued)
Risk Type Description Managing the Risk
Market
Risk
The risk to ANZ New Zealand’s earnings arising from:
• changes in any interest rates, foreign exchange rates,
credit spreads, volatility, and correlations; or
• fluctuations in bond, commodity or equity prices.
We have a detailed risk management and control framework to
support our trading and balance sheet activities, which
incorporates an independent risk measurement approach to
quantify the magnitude of market risk within the trading and
balance sheet portfolios. This approach, along with related analysis,
identifies the range of possible outcomes, that can be expected
over a given period of time, and establishes the likelihood of those
outcomes and allocates an appropriate amount of capital to
support these activities.
ANZ New Zealand’s key tools to measure and manage Market Risk
on a daily basis include value at risk, earnings at risk, interest rate
sensitivities, market value loss limits and stress testing.
Operational
Risk
The risk of loss and/or non-compliance with laws resulting
from inadequate or failed internal processes, people
and/or systems, or from external events. This definition
includes legal risk, and the risk of reputation loss, or
damage arising from inadequate or failed internal
processes, people and/or systems; but excludes strategic
risk.
ANZ New Zealand foundational operational risk policy is the
Operational Risk Approach. The Operational Risk Approach and its
supporting requirements includes management and
measurement of operational risks and compliance with laws,
regulations, industry standards, codes and principles of good
governance, and in ternal policies and procedures. ANZ New
Zealand takes a risk-based approach to the management of
operational risk and obligations. This enables ANZ New Zealand to
be consistent in proactively identifying, assessing, managing,
reporting and escalating operational risk-related risk exposures.

Compliance Risk
The risk of failure to act in accordance with laws,
regulations, industry standards and codes, internal policies
and procedures and principles of good governance as
applicable to ANZ New Zealand’s businesses.

Key features of how we manage Compliance Risk as part of our
Operational Risk and Compliance Framework include:
• centralised management of key obligations, and emphasis on
identification of changing regulations and the business
environment, to enable proactive assessment of emerging
compliance risk; and
• recognition of incident management as a separate element to
enhance ANZ New Zealand’s ability to identify, manage and
report on incidents/breaches in a timely manner.

Conduct Risk
The risk of loss or damage arising from the failure of ANZ
New Zealand, its employees or agents to appropriately
consider the interests of customers, the integrity of the
financial markets and the expectations of the community
in conducting its business activities. The risk may arise not
only from deliberate or negligent actions of individual
employees, but may also be inadvertent and caused by
inadequacies in ANZ New Zealand’s systems, processes
and procedures.
Our approach to managing Conduct Risk is to seek to ensure that
risks to customers, community and market integrity are identified,
assessed, treated, monitored and reported in a structured
environment with appropriate governance oversight.

Technology Risk
The risk of loss and/or non-compliance with laws from
inadequate or failed internal processes, people or systems
that deliver technology assets and services to customers
and staff. This risk includes technology assets and services
delivered or managed by third parties, and external events.
The risk specifically in cludes information security and cyber
security and how information held by ANZ New Zealand
needs to be protected from inappropriate modification,
loss, disclosure and unavailability.
Our approach to managing Technology Risk is to manage our
operational risks caused by the use of technology, including risks
associated with cyber security and third party providers, in a
manner that seeks to ensure customer information is secure and
service disruption is within acceptable levels.
Refer to Note 15 Financial Risk Management for the disclosures required under NZ IFRS 7 Financial Instruments: Disclosures.

REGISTERED BANK DISCLOSURES

87
B6. RISK MANAGEMENT POLICIES (continued)
Other Material Risks
Other Material Risks do not require the same degree of active or transactional management as the Key Material Risks and are managed and monitored
as part of ANZ New Zealand’s business, strategic and capital management process. The maximum level of risk is set as part of the Banking Group’s
ICAAP. Refer to Note 22 Capital Management for more information about the Banking Group’s ICAAP.
Pension
Risk
The risk of the value of investments in a defined benefit pension fund being insufficient to meet liabilities, resulting in additional
funds being required to match pension liabilities.
Strategic
Equity Risk
The risk of financial loss arising from the unexpected reduction in value of ANZ New Zealand equity investments not held in the
trading book, including ANZ New Zealand’s joint ventures and associates.
Fixed Asset
Risk
The risk of financial loss arising from the negative revaluation of fixed assets owned and leased by ANZ New Zealand, caused by
adverse changes in business and/or economic conditions. Residual Value Risk is included in the definition of Fixed Assets, which is
the risk that the market value of the underlying assets of operating leases may fall below the anticipated residual value.
Deferred
Acquisition
Costs Risk
The risk of loss arising from the failure of the benefits associated with the acquisition of interest earning assets to arise due to
impairment, transfer, or prepayment.
Software
Risk
The risk of financial loss arising from the unexpected accelerated write down of capitalised software expenditure due to diminished
future economic benefits caused by adverse business or economic conditions.
Goodwill
Risk
The risk of financial loss caused by the reduction in the net carrying value of acquired business resulting from lower than expected
future economic benefits due to adverse business and economic conditions.
Reviews of ANZ New Zealand’s risk management systems
Refer to Note 15 Financial Risk Management for details of the Internal Audit Functions reviews of ANZ New Zealand’s RMF. These reviews are not
conducted by a party external to ANZ New Zealand, the Overseas Banking Group, or the Ultimate Parent Bank.
Internal Audit Function of ANZ New Zealand
ANZ New Zealand has an Internal Audit Function, refer to Note 15 Financial Risk Management for details.
The nature and scope of the responsibilities of the Bank’s Audit Committee responsibilities, to which Internal Audit reports, are to assist the Bank’s
Board of Directors by providing oversight and review of:
• ANZ New Zealand's financial reporting principles and policies, controls, systems and procedures;
• the effectiveness of ANZ New Zealand’s internal control and risk management framework;
• the work and internal audit standards of Internal Audit which reports directly and solely to the Chair of the Bank’s Audit Committee;
• the integrity of ANZ New Zealand's financial statements and the independent audit thereof, and ANZ New Zealand’s compliance with legal and
regulatory requirements in relation thereto;
• any due diligence procedures;
• prudential supervision procedures and other regulatory requirements to the extent relating to financial reporting; and
• any other matters referred to it by the Bank’s Board.
The Bank’s Audit Committee is also responsible for:
• the appointment, annual evaluation and oversight of the external auditor;
• annual review of the independence, fitness and propriety, and qualifications of the external auditor;
• compensation of the external auditor; and
• where deemed appropriate, replacement of the external auditor.
In carrying out its responsibilities and duties, the Bank’s Audit Committee will aim to seek fair customer outcomes and financial market integrity in its
deliberations.
Access to parental disclosures
Disclosures made by the Ultimate Parent Bank in relation to capital adequacy requirements and risk management processes implemented by the
Ultimate Parent Bank are included in the Ultimate Parent Bank’s Annual Report and APS 330 Basel III Pillar 3 Capital Disclosures documents which can
be accessed at the website shareholder.anz.com.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

DIRECTORS' AND NEW ZEALAND CHIEF EXECUTIVE OFFICER'S STATEMENT

88
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 year ended 30 September 2021, 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 in all material respects with each condition of registration that applied during that period
1
; 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.
1. In accordance with the Order, Australia and New Zealand Banking Group Limited - ANZ New Zealand has complied in all material respects with each of its conditions of registration that
applied during the period if the RBNZ has not published any information about a breach on its website, and has not notified Australia and New Zealand Banking Group Limited - ANZ New
Zealand of any material breach.

Signed by the Chief Executive Officer – NZ Branch

Chris O‘Neale
Chief Executive Officer – NZ Branch
10 November 2021

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

Antonia Watson
Responsible Person
10 November 2021

on behalf of the Directors of the Ultimate Parent Bank:
Ilana Atlas, AO
Paula Dwyer
Shayne Elliott
Jane Halton, AO PSM
Rt Hon Sir John Key, GNZM AC
Graeme Liebelt
John Macfarlane
Christine O’Reilly
Paul O’Sullivan

INDEPENDENT AUDITOR’S REPORT

89

TO THE DIRECTORS OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED

REPORT ON THE AUDIT OF THE ANZ NEW ZEALAND DISCLOSURE STATEMENT

BASIS FOR OPINION
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)). We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of ANZ New Zealand in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance
Practitioners (including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance Standards Board
and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International
Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA
Code.
Our responsibilities under ISA’s (NZ) are further described in the auditor’s responsibilities for the audit of the consolidated financial statements and
registered bank disclosures in section B2, B3, B5 and B6 section of our report.
Our firm has also provided other services to ANZ New Zealand in relation to review of regulatory returns, internal controls reports, prospectus
assurance or reviews and agreed upon procedures 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 auditor of ANZ New Zealand. The firm has no other relationship with, or interest in, ANZ New Zealand.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial
statements in the current period. We summarise below those matters and our key audit procedures to address those matters in order that the
Directors as a body may better understand the process by which we arrived at our audit opinion. Our procedures were undertaken in the context of
and solely for the purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not express discrete opinions
on separate elements of the consolidated financial statements.

OPINION
We have audited the accompanying consolidated financial statements and registered bank disclosures of Australia and New Zealand Banking
Group Limited - ANZ Bank New Zealand and its related entities (ANZ New Zealand) in section B2, B3, B5 and B6 which comprise:
• the consolidated balance sheet as at 30 September 2021;
• the consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the year then ended;
• notes, including a summary of significant accounting policies and other explanatory information; and
• the information that is required to be disclosed in accordance with Schedules 4, 7, 11 and 13 of the Registered Bank Disclosure Statements
(Overseas Incorporated Registered Banks) Order 2014 (as amended) (the Order).
In our opinion, the accompanying consolidated financial statements on pages 4 to 69:
• give a true and fair view of ANZ New Zealand’s financial position as at 30 September 2021 and its financial performance and cash flows for
the year ended on that date; and
• comply with New Zealand Generally Accepted Accounting Practice, which in this instance means New Zealand Equivalents to International
Financial Reporting Standards (NZ IFRS) and International Financial Reporting Standards.
In our opinion, the Registered Bank disclosures that are re quired to be disclosed in accordance with Schedules 4, 7, 11 and 13 of the Order are
included in section B2, B3, B5 and B6 of the Disclosure Statement:
• have been prepared, in all material respects, in accordance with the guidelines issued pursuant to section 78(3) of the Reserve Bank of New
Zealand Act 1989 and any conditions of registration;
• are in accordance with the books and records of ANZ New Zealand in all material respects; and
• fairly state the matters to which they re late in accordance with those Schedules.
In accordance with the requirements of clauses 2(1)(d) and 2(1)(e) of Schedule 1 of the Order, we report that:
• we have obtained all the information and explanations we have required; and
• in our opinion, proper accounting records have been kept by ANZ New Zealand, as far as appears from our examination of those records.

AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED - ANZ NEW ZEALAND 2021 DISCLOSURE STATEMENT

INDEPENDENT AUDITOR’S REPORT

90
Key changes in the assessment of audit risks
COVID-19
The COVID-19 pandemic continues to have an unprecedented and ongoing impact on global markets and the local economy, with effects on ANZ
New Zealand’s customers, operations and performance. There is an elevated level of estimation uncertainty in the preparation of the consolidated
financial statements, where certain accounting estimates are based on forecasts of economic conditions and forward-looking assumptions. There is a
considerable degree of judgement involved in preparing these estimates. The significant accounting estimates impacted by these forecasts and
associated uncertainties are predominantly related to the “Allowance for Expected Credit Losses” and the “Carrying Value of Goodwill”, both detailed
below. The elevated level of estimation uncertainty in these areas has informed our assessment of a continued and heightened underlying audit risk in
these areas and an increase in the extent and nature of audit evidence that we had to gather.
ALLOWANCE FOR EXPECTED CREDIT LOSSES ($707 MILLION)
Refer to the critical accounting estimates, judgements and disclosures in relation to the allowance for expected credit losses in Note 12 to the Consolidated
Financial Statements.
The key audit matter
Allowance for expected credit losses is a key audit matter due to the significance of the loans and advances balance to the consolidated financial
statements and the inherent complexity of ANZ New Zealand’s Expected Credit Loss (ECL) models used to measure ECL allowances. These models are
reliant on data and a number of estimates including impacts of multiple economic scenarios, and other assumptions such as defining a Significant
Increase in Credit Risk (SICR) which in a COVID-19 environment have greater uncertainties.
NZ IFRS 9 requires ANZ New Zealand to measure ECL on a forward-looking basis reflecting a ra nge of future economic conditions, of which GDP and
unemployment levels are considered key assumptions. Post-model adjustments to the ECL results are also made by ANZ New Zealand to address
known ECL model limitations or emerging trends in the loan portfolios. We exercise significant judgement in challenging both the economic
scenarios used and the judgemental overlays that ANZ New Zealand applies to the ECL results.
ANZ New Zealand’s criteria selected to identify a SICR, such as a decrease in customer credit rating (CCR), are key areas of judgement within ANZ New
Zealand’s ECL methodology as these criteria determine if a forward-looking 12 month or lifetime allowance is recorded.
The COVID-19 pandemic has meant that assumptions regarding the economic outlook are more uncertain which, combined with varying
government responses, increases the level of judgement required by ANZ New Zealand in calculating the ECL, and the associated audit risk.

Additionally, the determination of an allowance for individually assessed impairment on Business and Institutional (wholesale) loans requires
significant judgement in estimating the expected future cash repayments and proceeds from the value of the collateral held in respect of the loans.
How the matter was addressed in our audit
Our audit procedures for the allowance for ECL and disclosures included assessing ANZ New Zealand’s significant accounting policies against the
requirements of the accounting standard. KPMG Financial Risk Management and Economic specialists were used in ECL audit procedures as a core
part of our audit team.
We tested key controls in relation to:
• ANZ New Zealand’s ECL model governance and validation processes which involved assessment of model performance;
• ANZ New Zealand’s assessment and approval of the forward-looking macroeconomic assumptions and scenario weightings through challenge
applied by ANZ New Zealand’s internal governance processes;
• Reconciliation of the data used in the ECL calculation process to gross balances recorded within the general ledger as well as source systems;
• Counterparty risk grading for wholesale loans (larger customer exposures are monitored individually). We tested the approval of new lending
facilities against ANZ New Zealand’s lending policies, and controls over the monitoring of counterparty credit quality; and
• ANZ New Zealand’s oversight of the portfolios, with a focus on controls over delinquency monitoring.
We also tested relevant General Information Technology Controls over the key IT applications used by ANZ New Zealand in measuring ECL
allowances, as detailed in the IT Systems and Controls key audit matter below.
In addition to controls testing, our procedures included:
• Re-performing credit assessments of a sample of wholesale loans controlled by ANZ New Zealand’s specialist workout and recovery team, who
assessed these as higher risk or impaired, and a sample of other loans, focusing on larger exposures assessed by ANZ New Zealand as showing
signs of deterioration, or in areas of emerging risk (assessed against external market conditions and in particular considered the impacts of
COVID-19). For each loan sampled, we challenged ANZ New Zealand’s CCR and Security Indicator, assessment of loan recoverability, valuation of
security and the impact on the credit allowance. To do this, we reviewed the information on ANZ New Zealand’s loan file, understood the facts
and circumstances of the case with the relationship manager, and performed our own assessment of recoverability. Exercising our judgement,
our procedures included using our understanding of relevant industries and the macroeconomic environment, and comparing data and
assumptions used by ANZ New Zealand in recoverability assessments to externally sourced evidence, such external property sale information;
• Obtaining an understanding of ANZ New Zealand’s processes to determine ECL allowances, evaluating ANZ New Zealand’s ECL model
methodologies against established market practices and criteria in the accounting standards;
• Working with KPMG Financial Risk Management specialists, we assessed the accuracy of ANZ New Zealand’s ECL model estimates by re -
performing, for a sample of loans, the ECL allowance using our independently driven calculation tools and comparing this to the amount
recorded by ANZ New Zealand;
• Working with our KPMG Economic specialists, we challenged ANZ New Zealand’s forward-looking macroeconomic assumptions and scenarios
incorporated in ANZ New Zealand’s ECL models. We compared ANZ New Zealand’s forecast GDP and unemployment rates, to relevant publicly
available macro-economic information, and considered other known variables and information obtained through our other audit procedures to
identify contradictory indicators;

INDEPENDENT AUDITOR’S REPORT

91
• Testing ANZ New Zealand’s SICR methodology by re -performing the staging calculation for a sample of loans taking into consideration
movements in the CCR from loan origination CCR and comparing our expectation to actual staging applied on an individual account level in
ANZ New Zealand’s ECL model; and
• Assessing the accuracy of the data used in the ECL models by confirming a sample of data fields such as account balance and CCR to relevant
source systems.
We also challenged key assumptions in the components of ANZ New Zealand’s post-model adjustments to the ECL allowance balance. This included:
• Assessing the requirement for additional allowances considering ANZ New Zealand’s ECL model and data deficiencies identified by ANZ New
Zealand’s ECL model validation processes, particularly in light of the extreme volatility in economic scenarios caused by COVID-19 and
government responses;
• Evaluating underlying data used in concentration risk and economic cycle allowances by comparing underlying portfolio characteristics to loss
experience, current market conditions and specific risks inherent in ANZ New Zealand’s loan portfolios;
• Assessing the impacts on the modelled ECL and the requirement for out of model adjustments. We also assessed assumptions used to
determine whether a SICR event has occurred; and
• Assessing the completeness of additional allowance overlays by checking the consistency of risks we identified in the portfolios against ANZ
New Zealand’s assessment.
We assessed the appropriateness of ANZ New Zealand’s disclosures in the consolidated financial statements using our understanding obtained from
our testing and against the requirements of NZ IFRS.
VALUATION OF FINANCIAL INSTRUMENTS
Fair value of Level 2 financial instruments in asset positions $10,572 million
Fair value of Level 2 financial instruments in liability positions $12,108 million
Refer to the critical accounting estimates, judgements and disclosures of fair values in Note 16 to the Consolidated Financial Statements.
The key audit matter
The fair value of ANZ New Zealand’s financial instruments is determined by ANZ New Zealand through the application of valuation techniques which
often involve the exercise of judgement and the use of assumption and estimates.
The valuation of Level 2 financial instruments held at fair value is a key audit matter due to the complexity associated with the valuation methodology
and models of certain more complex Level 2 financial instruments leading to an increase in subjectivity and estimation uncertainty. Level 2 financial
instruments represent 34% of ANZ New Zealand’s financial assets carried at fair value and 95% of ANZ New Zealand’s financial liabilities carried at fair
value.
How the matter was addressed in our audit
Our audit procedures for the valuation of financial instruments held at fair value included:
Performing an assessment of the population of financial instruments held at fair value to identify portfolios that have a higher risk of misstatement
arising from significant judgment over valuation either due to unobservable inputs or complex models.
We tested the design and operating effectiveness of key controls relating specifically to these financial instruments, including:
• ANZ New Zealand’s data validation controls in relation to Independent Price Verification, including completeness of portfolios and valuation
inputs;
• Controls in relation to model validation at inception and periodically, including assessment of model limitation and assumptions;
• Controls in relation to the review and challenge of daily profit and loss by a control function;
• Control over the collateral management process, including review of margin reconciliations with clearing houses; and
• Controls over fair value adjustments (FVAs), including exit price and portfolio level adjustments.
With the assistance of KPMG valuation specialists, we independently revalued a selection of financial instruments and FVAs on level 2 instruments. This
involved sourcing independent inputs from market data providers or external sources and using our own valuation models. We challenged ANZ New
Zealand where our revaluations significantly differed from ANZ New Zealand’s.
We assessed ANZ New Zealand’s consolidated financial statement disclosures, including key judgements and assumptions using our understanding
obtained from our testing and against NZ IFRS.
IT SYSTEMS AND CONTROLS
The key audit matter
As a major New Zealand bank, ANZ New Zealand’s businesses utilise a large number of complex, interdependent Information Technology (IT) systems
to process and record a high volume of transactions. Controls over access and changes to IT systems are critical to the recording of financial
information and the preparation of a financial report which provides a true and fair view of ANZ New Zealand’s financial position and performance.
The IT systems and controls, as they impact the financial recording and reporting of transactions, is a key audit matter and our audit approach could
significantly differ depending on the effective operation of ANZ New Zealand’s IT controls.
How the matter was addressed in our audit
We tested the control environment for key IT applications used in processing significant transactions and recording balances in the general ledger. We
also tested automated controls embedded within these systems which support the effective operation of technology-enabled business processes.
KPMG IT specialists were used throughout the engagement as a core part of our audit team.
Our audit procedures included:
• Assessing the governance and higher-level controls in place across the IT environment, including the approach to ANZ New Zealand policy

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design, review and awareness;
• Design and operating effectiveness testing of controls across the User Access Management Lifecycle, including how users are on-boarded,
reviewed, and removed on a timely basis from critical IT applications and supporting in frastructure. We also examined how privileged roles and
functions are managed across each IT application and the supporting infrastructure;
• Design and operating effectiveness testing of controls in place over change management, including how changes are in itiated, documented,
approved, tested and authorised prior to migration into the production environment of critical IT applications. We also assessed the
appropriateness of users with access to make changes to IT applications across ANZ New Zealand;
• Design and operating effectiveness testing of controls used by ANZ New Zealand’s technology teams to schedule system jobs and monitor
system integrity;
• Design and operating effectiveness testing of controls related to significant IT application programs per the ANZ Delivery Framework; and
• Design and operating effectiveness testing of automated business process controls including those that enforce segregation of duties between
conflicting roles within IT applications, configurations in place to perform calculations, mappings, and flagging of financial transactions,
automated reconciliation controls (both between systems, and intra-system) and data integrity of critical system reporting used by us in our
audit to select samples and analysis data used by management to generate financial reporting.
PROVISION FOR CUSTOMER REMEDIATION ($98 MILLION)
Refer to the critical accounting estimates, judgements and disclosures in Note 20 to the Consolidated Financial Statements.
The key audit matter
ANZ New Zealand has assessed the need to recognise provisions in relation to certain customer remediation activities arising from both internal and
external investigations, and reviews. This includes provisions for expected refunds to customers and other counterparties, remediation project costs
and related customer, counterparty and regulatory claims, penalties, and litigation outcomes.
The provision for customer remediation is a key audit matter due to the judgements required in assessing ANZ New Zealand’s determination of:
• The existence of a present legal or constructive obligation arising from a past event using the conditions of the event against the criteria in the
accounting standards;
• The number of investigations and the quantum of amounts being paid arising from the present obligations;
• Reliable estimates of the amounts that may be paid arising from investigations, including estimates of related costs; and
• The potential for legal proceedings, further investigations, and reviews from its regulators leading to a wider range of estimation outcomes for
us to consider.
How the matter was addressed in our audit
Our audit procedures for customer remediation provisions included:
• Obtaining an understanding of ANZ New Zealand’s processes for identifying and assessing the potential impact of the investigations into
customer remediation payments, related project costs and legal proceedings associated with compliance matters, investigations and reviews
from its regulators;
• Enquiring with ANZ New Zealand regarding ongoing legal, and regulatory matters, and investigation into other remediation activities;
• Enquiring with external legal counsel;
• Reading the minutes and other relevant documentation of ANZ Bank New Zealand Limited’s Board of Directors and various management
committees, and attending ANZ Bank New Zealand Limited’s Audit and Risk Committee meetings;
• Inspecting correspondence with relevant regulatory bodies;
• For a sample of individual matters, assessing the basis for recognition and measurement of a provision and associated costs against the
requirements of the accounting standards. We did this by understanding and challenging the provisioning methodologies and underlying
assumptions;
• Testing completeness by evaluating all current customer remediation matters identified by ANZ New Zealand and checking the features of
these exposures against the criteria defining a provision or a contingency in the accounting standards; and
• Evaluating the related disclosures using our understanding obtained from our testing and against the requirements of NZ IFRS.
CARRYING VALUE OF GOODWILL ($3,006 MILLION)
Refer to the critical accounting estimates, judgements and disclosures in Note 19 to the Consolidated Financial Statements.
The key audit matter
Carrying value of goodwill is a key audit matter where there are a number of judgements required in the determination of the recoverable amount of
goodwill, and where the carrying value of goodwill is financially significant at the reporting date.
ANZ New Zealand uses a value-in -use (VIU) approach to estimate the recoverable amount of each Cash Generating Unit (CGU) to which goodwill is
allocated. The reasonableness of the recoverable amounts was assessed using an implied market-multiples approach.
The ongoing effects and uncertainties associated with the COVID-19 pandemic continue to increase the potential for impairment and our audit effort
in this area remains elevated. There is increased judgement in forecasting cash flows and assumptions used in the discounted cash flow models and
market-multiples used in the reasonableness assessment.
We focused on the significant forward-looking assumptions ANZ New Zealand applied as part of its annual impairment test as at 28 February 2021,
including:
• Revenue growth rates, and terminal growth rates in the VIU model. Available headroom for some CGUs is sensitive to small changes in these
assumptions, reducing available headroom or indicating possible impairment. This drives additional audit effort specific to their feasibility and
consistency of application to ANZ New Zealand’s strategy; and
• Discount rates in the VIU model and the control premium in the market-multiples reasonableness assessment. These are complicated in nature
and vary according to the conditions and environment the specific CGU is subject to from time to time.

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How the matter was addressed in our audit
We involved valuation specialists to supplement our senior team members in assessing this key audit matter.
Working with our valuation specialists, our procedures included:
• In accordance with accounting standards, assessing the reasonableness of the amounts allocated to the CGUs to which ANZ New Zealand
allocated goodwill;
• Considering the appropriateness of the valuation method applied by ANZ New Zealand to perform their annual test for impairment against the
requirements of the accounting standards;
• Assessing the integrity of the VIU model used by ANZ New Zealand, including the accuracy of the underlying calculation formulae;
• Assessing the accuracy of previous Banking Group forecasts to inform our evaluation of forecasts incorporated in the VIU model;
• For each CGU, assessing ANZ New Zealand’s key assumptions used in the VIU model, including discount rates, revenue growth rates, and
terminal growth rates by comparing to external observable metrics, historical experience, our knowledge of the markets and current market
practice;
• Stress testing key VIU assumptions to consider reasonably possible alternatives;
• Comparing the forecast cash flows contained in the model to the revised Operational forecast, reflecting the continued low interest rate
environment, the increased regulatory minimum capital requirements and COVID-19 impacts;
• Assessing key assumptions used in the market-multiples reasonableness assessment, which we assessed as being equivalent to a fair value less
costs of disposal approach. These assumptions included future maintainable earnings, the control premium comparing the implied multiples
from comparable market transactions to the implied multiples used in the VIU model;
• Determining whether there is sufficient appropriate evidence to support ANZ New Zealand’s conclusion that there is no impairment in goodwill
associated with any CGU;
• Assessing the reasonableness of ANZ New Zealand’s review for potential internal and external indicators of impairment. This review considered
the period from the annual impairment test as at 28 February 2021 up to financial year end; and
• Assessing the disclosures in the financial statements against the requirements of the accounting standards.
OTHER INFORMATION
The Directors, on behalf of ANZ New Zealand, are responsible for the general disclosures required to be included in ANZ New Zealand’s Disclosure
Statement in accordance with Schedule 2 of the Order (section B1).
Our opinion on the consolidated financial statements does not cover section B1 (referred to as ‘other information’) and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or
otherwise appears materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
RESPONSIBILITIES OF DIRECTORS FOR THE CONSOLIDATED FINANCIAL STATEMENTS AND REGISTERED BANK
DISCLOSURES IN SECTION B1, B2, B3, B5 AND B6
The Directors, on behalf of ANZ New Zealand, are responsible for:
• the preparation and fair presentation of the consolidated financial statements in accordance with Clause 25 of the Order, NZ IFRS and
International Financial Reporting Standards;
• the preparation and fair presentation of supplementary information, in accordance with Schedules 2, 4, 7, 11 and 13 of the Order;
• implementing necessary internal control to enable the preparation of consolidated financial statements that are 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 AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS AND
REGISTERED BANK DISCLOSURES IN SECTION B2, B3, B5 AND B6
Our objective is:
• to obtain reasonable assurance about whether the Disclosure Statement, including the consolidated financial statements prepared in
accordance with Clause 25 of the Order, and registered bank disclosures in section B2, B3, B5 and B6, prepared in accordance with Schedules 4,
7, 11 and 13 of the Order as a whole is free from material misstatement, whether due to fraud or error; and
• to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect a
material misstatement when it exists.

Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the consolidated financial statements.

A further description of our responsibilities for the audit of these consolidated financial statements is located at the External Reporting Board (the XRB)
website at:

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.

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BASIS FOR CONCLUSION ON THE REGISTERED BANK DISCLOSURES IN SECTION B4
A review of the registered bank disclosures in section B4 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, primarily consisting of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. Our responsibilities under
that standard are further described in the Auditor’s Responsibilities for the Review of the registered bank disclosures in section B4 of our report.
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.
RESPONSIBILITIES OF DIRECTORS FOR THE REGISTERED BANK DISCLOSURES IN SECTION B4
The Directors, on behalf of ANZ New Zealand, are responsible for the preparation of the registered bank disclosures in section B4, that is required to be
prepared in accordance with Schedule 9 of the Order.
AUDITOR’S RESPONSIBILITIES FOR THE REVIEW OF THE REGISTERED BANK DISCLOSURES IN SECTION B4
Our responsibility is to express a conclusion on the registered bank disclosures in section B4 based on our review. We conducted our review in
accordance with NZ SRE 2410 issued by the New Zealand External Reporting Board. 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, and plan and perform the review to obtain limited
assurance about whether the registered bank disclosures in section B4 is, in all material respects, disclosed in accordance with Schedule 9 of the Order.

A review of the registered bank disclosures in section B4 in accordance with NZ SRE 2410 is a limited assurance engagement. The auditor performs
procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical
and other review procedures.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with ISAs (NZ). Accordingly we
do not express an audit opinion on the registered bank disclosures in section B4.

USE OF THIS INDEPENDENT AUDITOR’S REPORT
This independent auditor’s report is made solely to the Directors as a body. Our work has been undertaken so that we might state to the Directors
those matters we are required to state to them in the independent auditor’s 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 auditor’s report, or any of the
opinions or conclusions we have formed.
The engagement partner on the audit resulting in this independent auditor's report is Jamie Munro.

For and on behalf of

KPMG
Auckland
10 November 2021

REVIEW CONCLUSION ON THE REGISTERED BANK DISCLOSURES IN SECTION B4 RELATING TO CREDIT AND
MARKET RISK EXPOSURES AND CAPITAL ADEQUACY (SECTION B4)
Based on our review, nothing has come to our attention that causes us to believe that the registered bank disclosures relating to credit and
market risk exposures and capital adequacy as disclosed in section B4 of the Disclosure Statement, is not, in all material respects disclosed in
accordance with Schedule 9 of the Order.
We have reviewed the registered bank disclosures, as disclosed in section B4 of the Disclosure Statement for the year ended 30 September 2021,
which are required to be disclosed in accordance with Schedule 9 of the Order.

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