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ANZ Bank New Zealand Disclosure Statement

Regulatory6 May 2022ANZFinancials

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


6 May 2022


Market Announcements Office

ASX Limited

Level 4

20 Bridge Street

SYDNEY NSW 2000






ANZ Bank New Zealand Limited

Registered Bank Disclosure Statement


Australia and New Zealand Banking Group Limited (ANZ) today released ANZ Bank New

Zealand Limited’s Registered Bank Disclosure Statement for the six months ended 31

March 2022.


It has been approved for distribution by ANZ’s Continuous Disclosure Committee.


Yours faithfully





Simon Pordage

Company Secretary

Australia and New Zealand Banking Group Limited




ANZ BANK NEW ZEALAND LIMITED

REGISTERED BANK DISCLOSURE STATEMENT





































FOR THE SIX MONTHS ENDED 31 MARCH 2022

NUMBER 97 | ISSUED MAY 2022

















2

CONTENTS


Glossary of terms 2






DISCLOSURE STATEMENT


Interim Financial Statements 3

Condensed consolidated interim financial statements 4

Notes to the interim financial statements 8



Registered Bank Disclosures 24


Directors’ Statement 45


Independent Auditor’s Review Report

46



























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, We or Our means the Bank and all its controlled entities.

Immediate Parent Company means 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 means the New Zealand business of the Overseas Banking Group.

Registered Office is Ground Floor, ANZ Centre, 23-29 Albert Street, Auckland, New Zealand, which is also the Banking Group’s address for

service.

RBNZ means the Reserve Bank of New Zealand.

APRA means the Australian Prudential Regulation Authority.

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

Any term or expression which is defined in, or in the manner prescribed by, the Order shall have the meaning given in or prescribed by

the Order.








3

INTERIM FINANCIAL

STATEMENTS






Condensed consolidated interim 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 condensed consolidated interim financial statements


Basis of preparation






1. About our interim financial statements 8









Financial performance







2. Other operating income 9




3. Operating expenses 9




4. Segment reporting 10







Financial and non-financial assets



5. Net loans and advances 11





6. Allowance for expected credit losses 12


7. Goodwill and other intangible assets 16





Financial and non-financial liabilities





8. Deposits and other borrowings 18




9. Other provisions 18




10. Debt issuances 18








Financial instrument disclosures





11. Credit risk 19





12. Fair value of financial assets and financial liabilities 21










Other disclosures





13. Commitments and contingent liabilities 22





14. Subsequent events 23








ANZ BANK NEW ZEALAND LIMITED UNAUDITED

INTERIM FINANCIAL STATEMENTS


INCOME STATEMENT


The notes appearing on pages 8 to 23 form an integral part of these interim financial statements


4


2022 2021

For the six months ended 31 March Note


NZ$m NZ$m

Interest income

2,454 2,334

Interest expense

(685)

(661)

Net interest income


1,769

1,673

Other operating income 2 561 338

Operating income


2,330

2,011

Operating expenses 3

(826)

(772)

Profit before credit impairment and income tax


1,504

1,239

Credit impairment release 6

20

70

Profit before income tax

1,524 1,309

Income tax expense

(423)

(362)

Profit for the period


1,101

947




STATEMENT OF COMPREHENSIVE INCOME

2022 2021

For the six months ended 31 March NZ$m NZ$m

Profit for the period

1,101 947





Other comprehensive income








Items that will not be reclassified subsequently to profit or loss 3

43



Items that may be reclassified subsequently to profit or loss




Reserve movements:

Unrealised losses recognised directly in equity

(58)

(3)

Realised losses / (gains) transferred to the income statement

(29)

4


Income tax attributable to the above items 23 (11)

Other comprehensive income after tax

(61)

33

Total comprehensive income for the period 1,040 980

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




The notes appearing on pages 8 to 23 form an integral part of these interim financial statements


5

BALANCE SHEET



31 Mar 22 30 Sep 21

As at Note NZ$m NZ$m

Assets




Cash and cash equivalents 11,178 7,844

Settlement balances receivable

913

237

Collateral paid 612 537

Trading securities

7,818

9,585

Derivative financial instruments

9,000

9,304

Investment securities 10,291 11,926

Net loans and advances 5

146,121

140,756

Current tax assets

34

-

Deferred tax assets 327 390

Goodwill and other intangible assets 7

3,103

3,091

Premises and equipment 485 509

Other assets

609

590

Total assets


190,491

184,769

Liabilities

Settlement balances payable

4,592

2,704

Collateral received

1,070

738

Deposits and other borrowings 8 138,704 133,139

Derivative financial instruments

8,376

7,727

Current tax liabilities - 170

Payables and other liabilities

1,242

1,464

Employee entitlements

132

138

Other provisions 9 250 295

Debt issuances 10

19,097

21,502

Total liabilities


173,463

167,877

Net assets


17,028

16,892

Equity




Share capital 11,888 11,888

Reserves

7

70

Retained earnings

5,133

4,934

Total equity 17,028 16,892

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

INTERIM FINANCIAL STATEMENTS



The notes appearing on pages 8 to 23 form an integral part of these interim financial statements


6

CASH FLOW STATEMENT




2022 2021

For the six months ended 31 March NZ$m NZ$m

Profit after income tax

1,101 947





Adjustments to reconcile to net cash flows from operating activities:




Depreciation and amortisation 63 63

Loss on sale and impairment of premises and equipment

1

1

Net derivatives/foreign exchange adjustment

(106)

(776)

Other non-cash movements

(9) 115





Net (increase)/decrease in operating assets:



Collateral paid

(75)

14

Trading securities

1,767 3,097

Net loans and advances

(5,365)

(4,790)

Other assets

(666)

(124)




Net increase/(decrease) in operating liabilities:

Deposits and other borrowings (excluding items included in financing activities)

5,065

3,799

Settlement balances payable

1,888

(76)

Collateral received

332 (73)

Other liabilities

(415)

22

Total adjustments


2,480

1,272

Net cash flows from operating activities

1



3,581

2,219

Cash flows from investing activities




Investment securities:

Purchases

(5,569)

(4,046)

Proceeds from sale or maturity

6,879

1,509

Other assets

(58) (17)

Net cash flows from investing activities

1,252

(2,554)

Cash flows from financing activities




Deposits and other borrowings

2



500 -

Debt issuances

3





Issue proceeds


2,680 -

Redemptions


(3,753)

(2,307)

Repayment of lease liabilities

(22)

(23)

Dividends paid

(904) (4)

Net cash flows from financing activities

(1,499)

(2,334)

Net change in cash and cash equivalents

3,334

(2,669)

Cash and cash equivalents at beginning of period 7,844 8,248

Cash and cash equivalents at end of period


11,178

5,579


1 Net cash provided by operating activities includes income taxes paid of NZ$541 million (2021: NZ$582 million).

2 Movement in deposits and other borrowings includes repurchase transactions entered into with the RBNZ under the Funding for Lending Programme of NZ$500 million.

3 Movement in debt issuances (Note 10 debt issuances) also includes a NZ$705 million decrease (2021: NZ$1,089 million decrease) from the effect of foreign exchange rates, a NZ$643 million

decrease (2021: NZ$336 million decrease) from changes in fair value hedging instruments and a NZ$16 million increase (2021: NZ$45 million increase) from other changes.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




The notes appearing on pages 8 to 23 form an integral part of these interim financial statements


7

STATEMENT OF CHANGES IN EQUITY


Share

capital

Investment

securities

revaluation

reserve

Cash flow

hedging

reserve

Retained

earnings

Total

equity

NZ$m NZ$m NZ$m NZ$m NZ$m

As at 1 October 2020

11,888 8 110 3,863 15,869

Profit or loss - - - 947 947

Unrealised gains / (losses) recognised directly in equity - 49 (52) - (3)

Realised losses / (gains) transferred to the income statement -

(2) 6 - 4

Actuarial gain on defined benefit schemes - - - 43 43

Income tax credit / (expense) on items recognised directly in equity -

(13) 13 (11) (11)

Total comprehensive income for the period - 34 (33) 979 980

Transactions with Immediate Parent Company in its capacity as owner:


Preference dividends paid - - - (4) (4)

Transactions with Immediate Parent Company in its capacity as owner

- - - (4) (4)

As at 31 March 2021

11,888 42 77 4,838 16,845


As at 1 October 2021 11,888 62 8 4,934 16,892

Profit or loss

- - - 1,101 1,101

Unrealised losses recognised directly in equity - (24) (34) - (58)

Realised losses / (gains) transferred to the income statement

- (31) 2 - (29)

Actuarial gain on defined benefit schemes

- - - 3 3

Income tax credit / (expense) on items recognised directly in equity - 15 9 (1) 23

Total comprehensive income for the period - (40) (23) 1,103 1,040

Transactions with Immediate Parent Company in its capacity as owner:

Ordinary dividends paid

- - - (900) (900)

Preference dividends paid

- - - (4) (4)

Transactions with Immediate Parent Company in its capacity as owner - - - (904) (904)

As at 31 March 2022 11,888 22 (15) 5,133 17,028

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS



8

1. ABOUT OUR INTERIM FINANCIAL STATEMENTS

BASIS OF PREPARATION

These are the condensed consolidated interim financial statements (financial statements) for ANZ Bank New Zealand Limited (the Bank) and its

controlled entities (together, the ‘Banking Group’) and should be read in conjunction with the Banking Group’s financial statements for the year ended

30 September 2021.

On 6 May 2022, the Directors resolved to authorise the issue of these financial statements.

These financial statements comply with:

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

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

entities; and

• IAS 34 Interim Financial Reporting.

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

We present the financial statements in New Zealand dollars and have rounded values to the nearest million dollars (NZ$m), unless otherwise stated.

The accounting policies adopted by the Banking Group are consistent with those adopted and disclosed in the previous full year financial statements.

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.




KEY JUDGEMENTS AND ESTIMATES


The preparation of these financial statements requires the use of management judgement, estimates and assumptions that affect reported

amounts and the application of accounting policies. Discussion of the critical accounting estimates and judgements, which include complex

or subjective decisions or assessments, are provided in the previous full year financial statements. Such estimates and judgements are

reviewed on an ongoing basis.

Whilst the course of the COVID-19 pandemic is moderating and its impact on economic activity and our customers is better understood, the

responses of consumers, business and governments re main uncertain. New external risks are also emerging, including mounting

geopolitical tensions, global supply chain disruptions, the conflict in Ukraine, and commodity price impacts. Thus there remains an elevated

level of estimation uncertainty involved in the preparation of these financial statements.

The Banking Group has made various accounting estimates in these financial statements based on forecasts of economic conditions which

reflect expectations and assumptions at 31 March 2022 about future events considered reasonable in the circumstances. There is a

considerable degree of judgement involved in preparing these estimates. Actual economic conditions are likely to be different from those

forecast since anticipated events frequently do not occur as expected, and the effect of these 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 these uncertainties on each of these accounting estimates is discussed further in the relevant notes in these financial

statements and/or in the relevant notes in the previous full year financial statements. Readers should consider these disclosures in light of

the inherent uncertainties described above.


ANZ BANK NEW ZEALAND LIMITED UNAUDITED




9

2. OTHER OPERATING INCOME

2022 2021

For the six months ended 31 March NZ$m NZ$m

(i) Fee and commission income



Lending fees


13 16

Non-lending fees


341 341

Commissions


16 18

Funds management income

130

131

Fee and commission income

500

506

Fee and commission expense

(242)

(230)

Net fee and commission income 258

276

(ii) Other income




Net trading gains 75 66

Gain on sale of investment securities designated at fair value through other comprehensive income


31 2

Fair value gain / (loss) on hedging activities and financial liabilities designated at fair value


179 (28)

Net foreign exchange earnings and other financial instruments income

285

40

Sale of legacy insurance portfolio

-

14

Release of provisions for UDC Finance Ltd and Paymark Ltd disposal costs

14

-

Other

4

8

Other income


303

62

Other operating income 561 338



3. OPERATING EXPENSES

2022 2021

For the six months ended 31 March NZ$m NZ$m

Personnel




Salaries and related costs

469

421

Superannuation costs

15

14

Other

7

9

Personnel 491 444

Premises

Rent

8

9

Depreciation

41

40

Other

18

20

Premises


67

69

Technology




Depreciation and amortisation

22

23

Subscription licences and outsourced services 76 62

Other 16 18

Technology


114

103

Other




Advertising and public relations

17

17

Professional fees

33

31

Freight, stationery, postage and communication

19

21

Charges from Ultimate Parent Bank

67

53

Other


18 34

Other 154 156

Operating expenses


826

772

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS



10

4. SEGMENT REPORTING

The Banking Group 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 (comprising the Personal

and Funds Management business units), 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. During the six months ended 31 March 2022, there were net movements of approximately NZ$2.0 billion of loans and

advances and NZ$1.4 billion of customer deposits from Business to Personal. Comparative amounts have not been restated because the overall

impact on the financial performance and financial position of the affected segments, Personal and Business, is not considered material.

Personal

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

Business provides a full range of banking services including small business lending, through our digital, branch and contact centres 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,

commodity 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 provide customers with risk management services on foreign exchange, interest rates, credit, commodities and debt capital markets in

addition to managing the Banking Group’s interest rate exposure and liquidity position.

Other

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

Personal Business Institutional Other Total

For the six months

2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

ended 31 March NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m

Net interest income

1,020

983

575

503

158

168

16

19

1,769

1,673

Net fee and commission income

- Lending fees

4

7

1

-

8

9

-

-

13

16

- Non-lending fees

196

308

122

5

23

28

-

-

341

341

- Commissions 15 17 - - 1 1 - - 16 18

- Funds management income

130

131

-

-

-

-

-

-

130

131

- Fee and commission expense

(144)

(230)

(98)

-

-

-

-

-

(242)

(230)

Net fee and commission income 201 233 25 5 32 38 - - 258 276

Other income

1

15

-

-

79

75

223

(28)

303

62

Other operating income 202 248 25 5 111 113 223 (28) 561 338

Operating income

1,222

1,231

600

508

269

281

239

(9)

2,330

2,011

Operating expenses

(585)

(547)

(131)

(118)

(96)

(94)

(14)

(13)

(826)

(772)

Profit before credit impairment

and income tax

637 684 469 390 173 187 225 (22) 1,504 1,239

Credit impairment release /

(charge)

(26) 32 48 31 (2) 7 - - 20 70

Profit / (loss) before income tax 611

716

517

421

171

194

225

(22)

1,524

1,309

Income tax expense

(171)

(197)

(145)

(118)

(48)

(54)

(59)

7

(423)

(362)

Profit after income tax 440 519 372 303 123 140 166 (15) 1,101 947

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




11

Personal Business Institutional Other Total

31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21

As at NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m

Financial position











Goodwill 1,042 1,042 895 895 1,069 1,069 - - 3,006 3,006

Net loans and advances

101,370

95,061

37,797

39,158

6,954

6,535

-

2

146,121

140,756

Customer deposits

84,039

78,592

23,671

23,744

21,661

22,793

-

-

129,371

125,129


Other segment

The Other segment profit/(loss) after tax comprises:



2022 2021

For the six months ended 31 March


NZ$m NZ$m

Personal and Business central functions 20 1

Group Centre

20

8

Economic hedges

126

(24)

Total


166

(15)



5. NET LOANS AND ADVANCES

31 Mar 22 30 Sep 21

Note NZ$m NZ$m

Overdrafts


887

799

Credit cards


1,169

1,127

Term loans - housing


102,798 98,513

Term loans - non-housing


41,439 40,528

Subtotal 146,293

140,967

Unearned income

(34)

(29)

Capitalised brokerage and other origination costs

435

403

Gross loans and advances 146,694

141,341

Allowance for expected credit losses 6

(573)

(585)

Net loans and advances


146,121

140,756


The Banking Group has reviewed the historic accounting treatment of a transaction product arrangement comprised of both overdraft and deposit

balances and concluded that, under NZ IAS 32 Financial Instruments: Presentation, the deposit amounts cannot be netted against the overdraft

balances drawn under the arrangement. The application of netting reduced the amounts presented for overdrafts (above) and customer deposits

(Note 8 deposits and other borrowings) by NZ$163 million as at 30 September 2021. Comparative amounts have not been restated as the impact is

not considered material.

The Bank has sold residential mortgages to the NZ Branch with a net carrying value of NZ$276 million as at 31 March 2022 (30 September 2021:

NZ$318 million). These assets qualify for derecognition as the Bank does not retain a continuing involvement in the transferred assets.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS



12

6. ALLOWANCE FOR EXPECTED CREDIT LOSSES

This note should be read in conjunction with the estimates, assumptions and judgements included in Note 1 about our interim financial statements.


31 Mar 22 30 Sep 21

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

511 62 573

525 60 585

Off-balance sheet commitments

105 14 119

107 15 122

Total 616 76 692

632 75 707

The following tables present the movement in the allowance for expected credit losses (ECL).



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 2021 155 314 56 60 585

Transfer between stages

16 (12) (1) (3) -

New and increased provisions (net of collective provision releases)

(8) (10) 1 39 22

Write-backs - - - (22) (22)

Bad debts written-off (excluding recoveries) - - - (15) (15)

Discount unwind reversal

- - - 3 3

As at 31 March 2022 163 292 56 62 573

Off-balance sheet credit related commitments - undrawn and contingent facilities

Allowance for ECL is included in other provisions.



As at 1 October 2021 64 39 4 15 122

Transfer between stages 5 (5) - - -

New and increased provisions (net of collective provision releases) (4) 2 - (1) (3)

As at 31 March 2022 65 36 4 14 119


CREDIT IMPAIRMENT CHARGE – INCOME STATEMENT

2022 2021

For the six months ended 31 March NZ$m NZ$m

New and increased provisions



- Collectively assessed

(16)

(60)

- Individually assessed

35

36

Write-backs

(22)

(36)

Recoveries of amounts previously written-off


(17)

(10)

Total credit impairment release


(20) (70)

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




13




KEY JUDGEMENTS AND ESTIMATES

The Banking Group measures the allowance for ECL using an expected credit loss impairment model as required by NZ IFRS 9 Financial

Instruments.

COVID-19 risks are moderating however the economy continues to transition to a setting with less government stimulus and some uncertainty

as to how customers will respond to expected interest rate rises and inflationary pressure, heightened geopolitical tensions across the globe,

the conflict in Ukraine and global supply chain issues, commodity price impacts, and how governments, businesses and consumers respond

also remains uncertain. This uncertainty is reflected in the Banking Group’s assessment of expected credit losses, which are subject to a number

of management judgements and estimates.

Individually assessed allowance for expected credit losses

In estimating individually assessed ECL, the Banking Group makes judgements and assumptions in relation to expected repayments, the

realisable value of collateral, business prospects for the customer, competing claims and the likely cost and duration of the work-out process.

Judgements and assumptions in respect of these matters have been updated to reflect amongst other things, the continuing uncertainties

described above.

Collectively assessed allowance for expected credit losses

In estimating collectively assessed ECL, the Banking Group 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 model inputs and the interdependencies between

those inputs, and highlights significant changes during the current period.

The judgements and associated assumptions have been made in the context of the uncertainty of how various factors might impact the global

economy, 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. The Banking Group’s ECL estimates are inherently uncertain and, as a result, actual results

may differ from these estimates.


Judgement /

assumption


Description

Considerations for the six months ended

31 March 2022

Determining

when a

significant

increase in

credit risk

(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

judgement 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. The Banking Group monitors the

effectiveness of SICR criteria on an ongoing basis.

The Banking Group has retained a portion of ECL to

provide for expected delinquencies that may have

been obscured by COVID-19 support measures.

Although these measures have ceased, uncertainty

remains on their ongoing impact on portfolio

delinquency.

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, LGD and EAD models are subject to the

Banking Group’s model risk policy that stipulates

periodic model monitoring, periodic re -validation

and defines approval procedures and authorities

according to model materiality.

The modelled outcome includes an amount to

recognise 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 six months ended 31 March 2022.



ANZ BANK NEW ZEALAND LIMITED UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS



14




KEY JUDGEMENTS AND ESTIMATES

Judgement /

assumption


Description

Considerations for the six months ended

31 March 2022

Base case

economic

forecast

The Banking Group derives a forward-looking “base

case” economic scenario which reflects our view of

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 period.

As at 31 March 2022, the base case assumptions have

been updated to reflect the economic impacts of the

Omicron variant, supply chain pressures, and

increasing inflation and expected interest rate rises. In

determining the expected path of the economy,

assessments of the impact of central bank policies,

government actions, and the response of businesses

and consumers were considered.

The expected outcomes of key economic drivers for

the base case scenario as at 31 March 2022 are

described below under the heading “Base case

economic forecast assumptions”.

Probability

weighting of

each economic

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 economic

scenario at each measurement date.

The key considerations for probability weightings in

the current period include the ongoing but

increasingly known impacts of COVID-19, uncertainty

as to how customers will respond to expected

interest rate rises and inflationary pressures, the

conflict in Ukraine, commodity price impacts and

global supply chain issues.

Weightings for current and prior periods are as

detailed in the section on “Probability weightings”

below.

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 local 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 ongoing but

moderating COVID-19 pandemic, and the extent to

which the actions of governments, businesses and

consumers influence 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 continued to apply a number of

adjustments to the modelled ECL primarily due to the

uncertainty associated with continuing but

moderating 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$157

million (September 2021: 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.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




15




KEY JUDGEMENTS AND ESTIMATES

Base case economic forecast assumptions

Continuing uncertainties described above increase the risk of the economic forecast resulting in an understatement or overstatement of the

ECL balance:

The economic drivers of the base case economic forecasts, reflective of our view of future macro-economic conditions, used at 31 March 2022

are set out below. For years beyond the near term forecasts below, the ECL models project future year economic conditions which include an

assumption of eventual reversion to mid-cycle economic conditions.

Actual calendar year Forecast calendar year

New Zealand 2021 2022 2023

Gross domestic product (GDP) (annual % change) 5.5% 2.4% 2.8%

Unemployment rate 3.8% 3.0% 3.0%

Residential property prices (annual % change) 26.5% -6.0% 3.3%

Consumer price index (CPI) (annual % change) 3.9% 5.3% 3.2%

The base case economic forecasts above indicate a weakening in current economic conditions adding to inflation pressure for a time and

weighing on economic activity.

Probability weightings

Probability weightings for each scenario are determined by management considering the risks and uncertainties surrounding the base case

economic scenario including the uncertainties described above.

The base case scenario represents a deterioration in the forecasts since September 2021. Given the uncertainties associated with a potential

ongoing recovery of the economy and external factors, the average base case weighting has been reduced to 40.0% (Sep 21: 50.0%) and the

severe downside scenario increased to 10.0% (Sep 21: 5.0%).

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. The Banking Group considers these weightings to provide estimates of the possible loss outcomes

and taking into account short and long term inter-relationships within the Banking Group’s credit portfolios. The average weightings applied

are set out below:


31 Mar 22 30 Sep 21

Base 40.0% 50.0%

Upside 5.0% 4.5%

Downside 45.0% 40.5%

Severe downside 10.0% 5.0%

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 the Banking Group should be considered as a best estimate within a range of possible estimates.

The table below illustrates the sensitivity of the Banking Group’s allowance for collectively assessed ECL to key factors used in determining it as

at 31 March 2022:




Balance

NZ$m

Profit and

loss impact

NZ$m

If 1% of Stage 1 facilities were included in Stage 2 622 6

If 1% of Stage 2 facilities were included in Stage 1 615 (1)


100% upside scenario

100% base scenario

100% downside scenario

100% severe downside scenario

237

297

563

756

(379)

(319)

(53)

140


ANZ BANK NEW ZEALAND LIMITED UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS



16

7. GOODWILL AND OTHER INTANGIBLE ASSETS



31 Mar 22 30 Sep 21

NZ$m NZ$m

Goodwill


3,006 3,006

Management rights 76 76

Software

21 9

Goodwill and other intangible assets


3,103

3,091


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. Management rights, assessed as having

indefinite useful lives, arose on the acquisition of the ING Holdings (NZ) Limited (now ANZ New Zealand Investments Holdings Limited) group on 30

November 2009.

Goodwill and management rights are allocated to CGUs as follows:


Goodwill Management rights


31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21

Cash generating unit NZ$m NZ$m NZ$m NZ$m

Personal


980 980 - -

Funds Management


62 62 76 76

Personal segment


1,042

1,042

76

76

Business


895

895

-

-

Institutional


1,069

1,069

-

-

Total


3,006

3,006

76

76


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.

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 RBNZ on the payment of ordinary dividends by all New Zealand incorporated registered banks, and the implementation

of RBNZ’s new capital adequacy 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 the 28 February 2022 impairment test

Forecast period and projections To 30 September 2028 - an extended forecast period was used to cover the implementation of RBNZ’s new

capital adequacy requirements over the transition period ending on 1 July 2028.

Revenue growth over forecast

period

Comprises impacts of net interest margin and volume growth, arising from planned responses to known

re gulatory 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 2022 to 2024, before returning to long run experience levels for

2025 to 2028. Long run experience levels are based on the Banking Group’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 2025 to 2028 is shown below.

Terminal growth rate 2.0% - based on 2025 forecast inflation from RBNZ’s February 2022 Monetary Policy Statement.

Discount rate

Post tax: 10.7% (February 2021: 9.4%).

The main variables in the calculation of the discount rate used are the risk free rate, beta and the market risk

premium. The risk free rate was the monthly average traded 10 year New Zealand government bond yield

for February 2022 of 2.7%. 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.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




17

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 22 28 Feb 21 28 Feb 22 28 Feb 21 28 Feb 22 28 Feb 21

Personal (previously Retail and Business Banking)

5.1%

6.1%

0.12%

0.13%

20.8%

17.5%

Funds Management (previously Wealth)


6.4%

3.4%

n/a

0.10%

18.6%

16.4%

Business (previously Commercial)


5.3%

4.2%

0.21%

0.21%

20.8%

17.8%

Institutional


3.6%

4.5%

0.22%

0.21%

20.6%

17.3%

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 carrying amount of any CGU to exceed its recoverable amount.






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 if 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:

• the level at which goodwill is allocated – consistent with prior periods the CGUs to which goodwill is allocated are the Banking

Group’s four 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 other

factors outlined in Note 1 about our interim financial statements, and reflects expectations of future events that are believed to be

reasonable under the circumstances. Changes in conditions could have a positive or adverse impact on the determination of recoverable

amounts.



ANZ BANK NEW ZEALAND LIMITED UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS



18

8. DEPOSITS AND OTHER BORROWINGS

31 Mar 22 30 Sep 21

NZ$m NZ$m

Term deposits 41,890 40,668

On demand and short term deposits 64,119 62,648

Deposits not bearing interest 23,362 21,813

Total customer deposits

129,371

125,129

Certificates of deposit

2,171

1,875

Commercial paper

4,892

4,433

Securities sold under repurchase agreements

2,226

1,663

Deposits from Immediate Parent Company and NZ Branch

44

39

Deposits and other borrowings 138,704 133,139



9. OTHER PROVISIONS



31 Mar 22 30 Sep 21

Note NZ$m NZ$m

Allowance for ECL on undrawn and contingent facilities 6

119

122

Customer remediation

79

98

Restructuring costs

15

25

Leasehold make good

21

22

Other

1

16 28

Total other provisions 250 295

1 Other 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.



10. DEBT ISSUANCES

The Banking Group uses a variety of funding programmes to issue unsubordinated debt (including senior debt and covered bonds) 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 and subordinated debt will be repaid by the relevant issuer only after the repayment of claims of

depositors, other creditors and the senior debt holders.


31 Mar 22 30 Sep 21


NZ$m NZ$m

Senior debt

12,589

14,220

Covered bonds

3,973

4,248

Total unsubordinated debt


16,562

18,468

Subordinated debt



- Additional Tier 1 capital

1,941

2,441

- Tier 2 capital

594

593

Total subordinated debt 2,535 3,034

Total debt issued 19,097 21,502

Covered bonds are guaranteed by ANZNZ Covered Bond Trust Limited (the Covered Bond Guarantor), solely in its capacity as trustee of ANZNZ

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

a member of the Banking Group.

Substantially all of the assets of the Covered Bond Trust are made up of certain housing loans and related securities originated by the Bank which are

security for the guarantee by the Covered Bond Guarantor as trustee of the Covered Bond Trust of issuances of covered bonds by the Bank, or its

wholly owned subsidiary ANZ New Zealand (Int’l) Limited, from time to time. The assets of the Covered Bond Trust are not available to creditors of the

Bank, although the Bank (or its liquidator or statutory manager) may have a claim against the residual assets of the Covered Bond Trust (if any) after all

prior ranking creditors of the Covered Bond Trust have been satisfied.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




19

11. CREDIT RISK

This note should be read in conjunction with the estimates, assumptions and judgements included in Note 1 about our interim financial statements

and Note 6 allowance for expected credit losses.

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 the Banking Group 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



31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21


NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m

On-balance sheet positions

Net loans and advances 146,121 140,756 - - 146,121 140,756

Other financial assets:







Cash and cash equivalents

11,178

7,844

185

163

10,993

7,681

Settlement balances receivable

913

237

-

-

913

237

Collateral paid

612

537

-

-

612

537

Trading securities

7,818

9,585

-

-

7,818

9,585

Derivative financial instruments 9,000 9,304 - - 9,000 9,304

Investment securities

10,291 11,926 - - 10,291 11,926

Other financial assets

2

500 496 - - 500 496

Total other financial assets 40,312

39,929

185

163

40,127

39,766

Subtotal 186,433

180,685

185

163

186,248

180,522

Off-balance sheet commitments






Undrawn and contingent facilities

3


31,112

30,030

-

-

31,112

30,030

Total 217,545

210,715

185

163

217,360

210,552

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 facilities and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for

expected credit losses.


Credit quality

We use the Banking Group’s internal customer credit rating (CCR) to manage the credit quality of financial assets. To enable wider comparisons, the

Banking Group’s CCRs are mapped to external rating agency scales as follows:

Credit quality

description


Internal CCR


The Banking Group 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

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS



20



Net loans and advances

Stage 3


Stage 1 Stage 2

Collectively

assessed

Individually

assessed Total

As at 31 March 2022 NZ$m NZ$m NZ$m NZ$m NZ$m

Strong

121,131 2,232 - - 123,363

Satisfactory

17,756 2,701 - - 20,457

Weak

316 1,430 - - 1,746

Defaulted - - 577 150 727

Subtotal 139,203 6,363 577 150 146,293

Allowance for ECL

(163) (292) (56) (62) (573)

Net loans and advances at amortised cost 139,040 6,071 521 88 145,720

Coverage ratio 0.12% 4.59% 9.71% 41.33% 0.39%

Unearned income

(34)

Capitalised brokerage and other origination costs

435

Net carrying amount 146,121


As at 30 September 2021

Strong 116,578 1,620 - - 118,198

Satisfactory 17,122 3,134 - - 20,256

Weak 293 1,447 - - 1,740

Defaulted - - 618 155 773

Subtotal

133,993 6,201 618 155 140,967

Allowance for ECL (155) (314) (56) (60) (585)

Net loans and advances at amortised cost 133,838 5,887 562 95 140,382

Coverage ratio 0.12% 5.06% 9.06% 38.71% 0.41%

Unearned income (29)

Capitalised brokerage and other origination costs 403

Net carrying amount

140,756


Off-balance sheet commitments - undrawn and contingent facilities

Stage 3


Stage 1 Stage 2

Collectively

assessed

Individually

assessed Total

As at 31 March 2022 NZ$m NZ$m NZ$m NZ$m NZ$m

Strong

25,773 184 - - 25,957

Satisfactory 4,258 854 - - 5,112

Weak 17 107 - - 124

Defaulted - - 16 22 38

Gross undrawn and contingent facilities 30,048 1,145 16 22 31,231

Allowance for ECL included in other provisions (refer to Note 9)

(65) (36) (4) (14) (119)

Net undrawn and contingent facilities 29,983 1,109 12 8 31,112

Coverage ratio 0.22% 3.14% 25.00% 63.64% 0.38%



As at 30 September 2021

Strong 25,072 142 - - 25,214

Satisfactory 3,734 1,037 - - 4,771

Weak 12 100 - - 112

Defaulted - - 32 23 55

Gross undrawn and contingent facilities 28,818 1,279 32 23 30,152

Allowance for ECL included in other provisions (refer to Note 9) (64) (39) (4) (15) (122)

Net undrawn and contingent facilities

28,754 1,240 28 8 30,030

Coverage ratio

0.22% 3.05% 12.50% 65.22% 0.40%

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




21

12. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Fair value hierarchy

The Banking Group categorises assets and liabilities carried at fair value into a fair value hierarchy as required by NZ IFRS 13 Fair Value Measurement

based on the observability of inputs used to measure 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

31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21

NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m

Assets








Trading securities

6,003

8,276

1,815

1,309

-

-

7,818

9,585

Derivative financial instruments

84

19

8,916

9,284

-

1

9,000

9,304

Investment securities

10,014

11,925

276

-

1

1

10,291

11,926

Total 16,101

20,220

11,007

10,593

1

2

27,109

30,815

Liabilities

Deposits and other borrowings - - 4,892 4,433 - - 4,892 4,433

Derivative financial instruments

5 5 8,367 7,722 4 - 8,376 7,727

Other financial liabilities

478

676

-

-

-

-

478

676

Total 483

681

13,259

12,155

4

-

13,746

12,836


Financial assets and financial liabilities not measured at fair value

Below is a comparison of the carrying amounts as reported on the balance sheet and fair values of financial asset and financial liability categories other

than those categories where the carrying amount is at fair value or considered a reasonable approximation of fair value.

The fair values below have been calculated using discounted cash flow techniques where contractual future cash flows of the instrument are

discounted using discount rates incorporating wholesale market rates or market borrowing rates of debt with similar maturities or a yield curve

appropriate for the remaining term to maturity.



Carrying amount Fair value

31 Mar 22 30 Sep 21 31 Mar 22 30 Sep 21

NZ$m NZ$m NZ$m NZ$m

Financial assets


Net loans and advances

1


146,121

140,756

144,943

140,703

Total


146,121

140,756

144,943

140,703

Financial liabilities



Deposits and other borrowings

2

133,812 128,706 133,725 128,726

Debt issuances

1

19,097 21,502 19,221 21,902

Total

152,909

150,208

152,946

150,628

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

2 Excludes commercial paper (Note 8 deposits and other borrowings) designated at fair value through profit or loss.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

NOTES TO THE INTERIM FINANCIAL STATEMENTS



22

13. COMMITMENTS AND CONTINGENT LIABILITIES



31 Mar 22 30 Sep 21

Credit related commitments and contingencies NZ$m NZ$m

Contract amount of:



Undrawn facilities

28,380

27,420

Guarantees and letters of credit 1,187 1,181

Performance related contingencies 1,664 1,551

Total 31,231

30,152


The Banking Group guarantees the performance of customers by issuing standby letters of credit and guarantees to third parties, including its

Ultimate Parent Bank. The risk involved is essentially the same as the credit risk involved in extending loan facilities to customers, therefore these

transactions are subjected to the same credit origination, portfolio management and collateral requirements for customers applying for loans. As the

facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements.

OTHER CONTINGENT LIABILITIES

There are outstanding court proceedings, claims and possible claims for and against the Banking Group. Where relevant, expert legal advice has been

obtained and, in the light of such advice, provisions (refer to Note 9 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 the Banking Group.

REGULATORY AND CUSTOMER EXPOSURES

In recent years there has been an increase in the number of matters on which the Banking Group 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. The Banking Group has received various notices and requests for information from its

regulators as part of both industry-wide and Banking Group-specific reviews, and has also made disclosures to its re gulators 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, representative proceedings were 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. The proceedings are still at an early

stage. A hearing of the plaintiff’s application for leave to bring representative proceedings is scheduled for May 2022.

WARRANTIES AND INDEMNITIES

The Banking Group 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. 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).

A summary of the final Attestation Review was published in March 2022. The report found that the Bank has taken appropriate steps to address the

recommendations from the 2019 Attestation Review report. The review noted that there has been a marked uplift in the overall capabilities within the

Bank in respect to the attestation process, with heightened focus and scrutiny from management, executives and the Bank’s board. The review also

noted while there are elements of the framework still in the process of being embedded, the key changes recommended in the 2019 Attestation

Review report have been appropriately addressed.


The final Capital Adequacy Review was completed in December 2021. The report found that the Bank had made significant progress to address non-

compliance issues and improvement items identified by the 2019 Capital Adequacy Review report. In particular, all non-compliant capital models have

been submitted to the RBNZ for approval. As at 31 March 2022, all but three non-compliant models have been approved by RBNZ.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




23

14. SUBSEQUENT EVENTS

The Overseas Banking Group intends to lodge a formal application with APRA, the Federal Treasurer and other applicable regulators to establish a

non-operating holding company and create distinct banking and non-banking groups within the organisation. Following preliminary discussions,

APRA has advised they have no in -principle objection to the proposed restructure. The Overseas Banking Group has also consulted other key

Australian and New Zealand regulators and to date has not received any objections. Consultation and engagement remains ongoing. Further

information about the proposal can be found at http://shareholder.anz.com

.

There have been no other significant events from 31 March 2022 to the date of signing the financial statements.






24

REGISTERED BANK

DISCLOSURES




This section contains the additional disclosures required by the

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







Section Order reference Page

B1. General disclosures Schedule 3 25

B2. Additional financial disclosures Schedule 5 27

B3. Asset quality Schedule 7 32

B4. Capital adequacy under the internal models based approach, Schedule 11 37

and regulatory liquidity ratios

B5. Concentration of credit exposures to individual counterparties Schedule 13 44

B6. Insurance business Schedule 16 44

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



25

B1. GENERAL DISCLOSURES

Guarantees

The Bank has guaranteed the payment of interest and principal of covered bonds issued by its subsidiary ANZ New Zealand (Int’l) Limited. This

obligation is guaranteed by ANZNZ Covered Bond Trust Limited (the Covered Bond Guarantor), solely in its capacity as trustee of ANZNZ Covered

Bond Trust. The Covered Bond Guarantor’s address for service is Level 16, SAP Tower, 151 Queen Street, Auckland 1010, New Zealand. The Covered

Bond Guarantor is not a member of the Banking Group and has no credit ratings applicable to its long term senior unsecured obligations. The covered

bonds have been assigned a long term rating of Aaa and AAA by Moody’s Investors Service and Fitch Ratings respectively. Refer to page 18 for further

details, and to page 27 for the amount of assets of the ANZ Covered Bond Trust pledged as security for covered bonds.


No other material obligations of the Bank are guaranteed as at 6 May 2022.

Changes in the Bank’s Board of Directors

Maile Carnegie resigned as a Non-Executive Director on 11 April 2022. As at 6 May 2022, there have been no other changes to the Directors of the

Bank since 30 September 2021, the balance date of the last full year disclosure statement.

Auditors

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

Conditions of registration

Changes to the Bank’s conditions of registration

The Bank’s conditions of registration have been amended to:

• implement the new Banking Prudential Requirements (BPRs) which implement the capital review decisions (effective 1 October 2021);

• include further changes on high loan-to-valuation residential mortgage lending to investors (effective 1 November 2021); and

• increase the minimum core funding ratio to 75% (effective 1 January 2022).

Material non-compliance with conditions of registration: Condition of registration 1B – non-compliance with BPR120: Capital adequacy process requirements

As first reported in the disclosure statement for the year ended 30 September 2019, the Bank has not complied with condition of registration 1B in

relation to the implementation of changes to 17 rating models and processes that were not approved by RBNZ. Applying the last RBNZ approved

methodologies to the affected exposures as at 30 September 2019 would have decreased Risk Weighted Assets (RWA) by NZ$47 million (0.05%) in

aggregate, which was not sufficient to affect the reported capital ratios.

As at 31 March 2022, all non-compliant models had been submitted to RBNZ for approval, with all but three approved. The final model was submitted

to RBNZ on 16 December 2021. The three remaining unapproved models and the initial dates of non-compliance are:

• Bank rating – 2008

• Project and structured finance - 2009

• Commercial property: special purpose asset investment - 2011

The Bank’s model compendium required under Part E1.5 of BPR120 was non-compliant as it included unapproved model changes. An updated model

compendium was submitted to RBNZ in April 2021, and RBNZ confirmed the compendium as being compliant in October 2021.

Other matters relevant to the conditions of registration

There are other matters currently under review where there may be more than one valid interpretation of the respective policy wording or

requirement. Where there may be some uncertainty about the interpretation the Bank has applied, where appropriate it has sought guidance from,

and will be liaising with, RBNZ on these matters.

Pending proceedings or arbitration

A description of any pending legal proceedings or arbitration concerning any member of the Banking Group that may have a material adverse effect

on the Bank or the Banking Group is included in Note 13 commitments and contingent liabilities.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



26

Credit rating

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

Zealand dollars.

As at 6 May 2022, the 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 A1 Outlook Stable

Other material matters

New RBNZ capital requirements

RBNZ has released new bank capital adequacy requirements applying to New Zealand locally incorporated registered banks, which are set out in

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 remainder 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, should these instruments remain outstanding. The Bank re deemed NZ$500 million of these AT1 instruments

in December 2021, and has NZ$2,241 million on issue as at 31 March 2022.

• 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, which took effect on 1 January

2022, and increasing the credit RWA scalar from 1.06 to 1.20 from 1 October 2022.

• RBNZ has proposed requiring internal ratings based approach accredited banks to report RWA, and resulting capital ratios, using both the

internal models and the standardised approaches from 30 September 2022. RBNZ’s consultation process is in progress as at 6 May 2022.

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.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




27

B2. ADDITIONAL FINANCIAL DISCLOSURES

Additional information on the balance sheet


As at 31 March 2022


NZ$m

Total interest earning and discount bearing assets


176,281

Total interest and discount bearing liabilities


138,840

Total amounts due from related entities


6,087

Total amounts due to related entities


8,020


Assets charged as security for liabilities

The following disclosure excludes the amounts presented as collateral paid and received on 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 Credit Support Annex that forms

part of the International Swaps and Derivatives Association Master Agreement under which most of our derivatives are executed.

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 the Banking Group’s covered bond

programmes; and

• collateral provided to the RBNZ under the Term Lending Facility (TLF) and Funding for Lending Programme (FLP).

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

As at 31 March 2022

NZ$m

Securities sold under agreements to repurchase

427

Residential mortgages pledged as security for repurchase agreements with RBNZ

2,165

Total assets of the ANZNZ Covered Bond Trust pledged as security for covered bonds

9,877


Additional information on the income statement

The amounts of net trading gains or losses and other fair value adjustments are included in Note 2 other operating income. The Banking Group does

not have any loans and advances designated at fair value through profit or loss. Other operating income for the purposes of the Order comprises net

fee and commission income, and all other items of other income (all in Note 2 other operating income).

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



28

Additional information on concentrations of credit risk

Analysis of financial assets by industry is based on Australian and New Zealand Standard Industrial Classification (ANZSIC) codes. The significant

categories shown are the level one New Zealand Standard Industry Output Categories (NZSIOC), except that Agriculture is shown separately as

required by the Order.


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


Loans and

advances

Other

financial

assets

Off-balance

sheet credit

related

commitments Total

As at 31 March 2022 NZ$m NZ$m NZ$m NZ$m

New Zealand residents

Agriculture 15,912 3 1,272 17,187

Forestry and fishing, agriculture services 658 1 121 780

Manufacturing 2,457 92 1,824 4,373

Electricity, gas, water and waste services 933 312 1,573 2,818

Construction 1,201 1 853 2,055

Wholesale trade

1,357 71 2,172 3,600

Retail trade and accommodation

2,655 8 761 3,424

Transport, postal and warehousing

991 51 782 1,824

Finance and insurance services

1,070 15,026 1,867 17,963

Public administration and safety

1


317 9,874 806 10,997

Rental, hiring & real estate services

38,631 1,597 3,073 43,301

Professional, scientific, technical, administrative and support services

823 3 450 1,276

Households

75,052 4 13,761 88,817

All other New Zealand residents

2


2,109 114 1,823 4,046

Subtotal 144,166 27,157 31,138 202,461

Overseas


Finance and insurance services

81 12,885 93 13,059

Households

1,348 - - 1,348

All other non-NZ residents

698 85 - 783

Subtotal 2,127 12,970 93 15,190

Gross subtotal 146,293 40,127 31,231 217,651

Allowance for ECL

(573) - (119) (692)

Subtotal 145,720 40,127 31,112 216,959

Unearned income

(34) - - (34)

Capitalised brokerage and other origination costs

435 - - 435

Maximum exposure to credit risk 146,121 40,127 31,112 217,360

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.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




29

Additional information on concentrations of funding

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



As at 31 March 2022 Note NZ$m

Funding composition


Customer deposits 8

129,371

Wholesale funding



Debt issuances

19,097

Certificates of deposit and commercial paper

7,063

Other borrowings 2,270

Total wholesale funding

28,430

Total funding 157,801




Customer deposits by industry - New Zealand residents



Agriculture, forestry and fishing 4,786

Manufacturing

2,970

Construction

2,830

Wholesale trade

2,597

Retail trade and accommodation

2,425

Financial and insurance services 12,539

Rental, hiring and real estate services

4,352

Professional, scientific, technical, administrative and support services

6,860

Public administration and safety 1,758

Arts, recreation and other services

2,171

Households

71,053

All other New Zealand residents

1


5,721


120,062

Customer deposits by industry - overseas

Households

8,739

All other non-NZ residents

570

9,309

Total customer deposits

129,371

Wholesale funding (financial and insurance services industry)

New Zealand

8,254

Overseas

20,176

Total wholesale funding 28,430

Total funding


157,801


Concentrations of funding by geography



New Zealand

128,316

Australia 1,030

United States

12,883

Europe 8,837

Other countries

6,735

Total funding


157,801

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.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



30

Additional information on interest rate sensitivity

The following table represents the interest rate sensitivity of the Banking Group's assets, liabilities and off-balance sheet instruments by showing the

periods in which these instruments may reprice, that is, when interest rates applicable to each asset or liability can be changed.


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


As at 31 March 2022 NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m

Assets

Cash and cash equivalents 11,178 10,929 - - - - 249

Settlement balances receivable

913 - - - - - 913

Collateral paid 612 612 - - - - -

Trading securities 7,818 1,478 528 272 505 5,035 -

Derivative financial instruments 9,000 - - - - - 9,000

Investment securities 10,291 12 - 307 1,404 8,567 1

Net loans and advances 146,121 67,168 15,279 24,434 23,912 15,839 (511)

Other financial assets

500 - - - - - 500

Total financial assets

186,433 80,199 15,807 25,013 25,821 29,441 10,152

Liabilities

Settlement balances payable

4,592 2,619 - - - - 1,973

Collateral received

1,070 1,070 - - - - -

Deposits and other borrowings

138,704 89,824 12,833 10,002 1,666 1,017 23,362

Derivative financial instruments

8,376 - - - - - 8,376

Debt issuances

19,097 1,286 1,276 1,079 5,439 10,017 -

Lease liabilities

234 11 11 21 80 111 -

Other financial liabilities

806 478 - - - - 328

Total financial liabilities

172,879 95,288 14,120 11,102 7,185 11,145 34,039

Hedging instruments - (6,666) 15,123 364 (4,888) (3,933) -

Interest sensitivity gap

13,554 (21,755) 16,810 14,275 13,748 14,363 (23,887)

1 Excludes non-coupon bearing discount financial assets and financial liabilities which are shown as repricing on their maturity date.


Additional information on liquidity risk

Maturity analysis of financial liabilities

The table below provides residual contractual maturity analysis of financial liabilities at 31 March 2022 within relevant maturity groupings. All

outstanding debt issuances are profiled on the earliest date on which the Banking Group 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.



On

demand

Less than

3 months

3 to 12

months

1 to 5

years

After

5 years Total

As at 31 March 2022 NZ$m NZ$m NZ$m NZ$m NZ$m NZ$m

Settlement balances payable

3,579 1,019 - - - 4,598

Collateral received - 1,070 - - - 1,070

Deposits and other borrowings

87,482 24,337 23,201 4,472 - 139,492

Derivative financial liabilities (trading) - 8,286 - - - 8,286

Debt issuances

1


- 25 2,618 13,215 4,733 20,591

Lease liabilities

- 13 38 180 30 261

Other financial liabilities - 112 16 257 408 793

Derivative financial instruments

(balance sheet management)


- gross inflows

- 726 1,454 5,298 298 7,776

- gross outflows - (724) (1,524) (5,154) (235) (7,637)

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


At 31 March 2022, NZ$31,231 million of its credit related commitments and contingent liabilities mature in less than 1 year, based on the earliest date

on which the Banking Group may be required to pay.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




31

Liquidity portfolio management

The Banking Group holds a diversified portfolio of cash and high quality liquid securities primarily to support liquidity risk management. The size of the

Banking Group’s liquidity portfolio is determined with consideration of the amount required to meet the requirements of its internal and regulatory

liquidity scenario metrics.




As at 31 March 2022 NZ$m

Central and local government bonds

8,172

Government treasury bills

909

Certificates of deposit

838

Other bonds

7,896

Securities eligible to be accepted as collateral in repurchase transactions

17,815

Cash and balances with central banks

10,346

Total liquidity portfolio 28,161

Assets held in the Banking Group’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$10,790 million at

31 March 2022.

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 31 March 2022, the Bank had drawn NZ$300 million under the TLF and NZ$1,500 million under the FLP. These amounts are included in securities

sold under repurchase agreements in Note 8 deposits and other borrowings.

Reconciliation of mortgage related amounts



As at 31 March 2022


Note NZ$m

Term loans - housing

1

5

102,798

Less: housing loans made to corporate customers

(1,333)

On-balance sheet residential mortgage exposures subject to the IRB approach (per asset quality and LVR analysis) B3, B4

101,465

Add: off-balance sheet residential mortgage exposures subject to the IRB approach (per asset quality and LVR analysis) B3, B4

9,315

Total residential mortgage exposures subject to the IRB approach (per LVR analysis)

B4

110,780

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

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



32

B3. ASSET QUALITY

This section should be read in conjunction with the estimates, assumptions and judgements included in Note 1 about our interim financial

statements, Note 6 allowance for expected credit losses and Note 11 credit risk.


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 2021 155 314 56 60 585

Transfer between stages

16 (12) (1) (3) -

New and increased provisions (net of collective provision releases)

(8) (10) 1 39 22

Write-backs - - - (22) (22)

Recoveries of amounts previously written off - - - (17) (17)

Credit impairment charge / (release)

8 (22) - (3) (17)

Bad debts written-off (excluding recoveries)

- - - (15) (15)

Add back recoveries of amounts previously written off

- - - 17 17

Discount unwind

- - - 3 3

As at 31 March 2022 163 292 56 62 573


Off-balance sheet credit related commitments - total

As at 1 October 2021 64 39 4 15 122

Transfer between stages

5 (5) - - -

New and increased provisions (net of collective provision releases) (4) 2 - (1) (3)

Credit impairment charge / (release)

1 (3) - (1) (3)

As at 31 March 2022 65 36 4 14 119


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




Gross loans and advances - total

As at 1 October 2021 133,993 6,201 618 155 140,967

Net transfers in to each stage 109 582 93 2 786

Amounts drawn from new or existing facilities 21,870 607 15 90 22,582

Additions 21,979 1,189 108 92 23,368

Net transfers out of each stage

(675) (97) (13) (1) (786)

Amounts repaid

(16,094) (930) (136) (81) (17,241)

Deletions

(16,769) (1,027) (149) (82) (18,027)

Amounts written off

- - - (15) (15)

As at 31 March 2022 139,203 6,363 577 150 146,293

Loss allowance as at 31 March 2022 163 292 56 62 573



Off-balance sheet credit related commitments - total

As at 1 October 2021 28,818 1,279 32 23 30,152

Net transfers in to each stage

39 18 3 10 70

New and increased facilities and drawn amounts repaid 6,052 84 3 (3) 6,136

Additions 6,091 102 6 7 6,206

Net transfers out of each stage (20) (50) - - (70)

Reduced facilities and amounts drawn (4,841) (186) (22) (8) (5,057)

Deletions (4,861) (236) (22) (8) (5,127)

As at 31 March 2022 30,048 1,145 16 22 31,231

Loss allowance as at 31 March 2022 65 36 4 14 119

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

Overall, loss allowances are 0.39% of gross balances as at 31 March 2022, down from 0.41% as at 30 September 2021. The NZ$15 million (2.1%)

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 6 allowance for expected credit losses.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




33

Movements in components of loss allowance - residential mortgages




Stage 3


Stage 1 Stage 2

Collectively

assessed

Individually

assessed Total

Net loans and advances - residential mortgages NZ$m NZ$m NZ$m NZ$m NZ$m

As at 1 October 2021 23 53 17 9 102

Transfer between stages 6 (7) 1 - -

New and increased provisions (net of collective provision releases) - 16 5 2 23

Write-backs - - - (1) (1)

Recoveries of amounts previously written off

- - - - -

Credit impairment charge

6 9 6 1 22

Bad debts written-off (excluding recoveries)

- - - - -

Add back recoveries of amounts previously written off

- - - - -

Discount unwind

- - - - -

As at 31 March 2022 29 62 23 10 124


Off-balance sheet credit related commitments - residential mortgages

As at 1 October 2021 - - - - -

Transfer between stages

- - - - -

New and increased provisions (net of collective provision releases) - - - - -

Credit impairment charge / (release)

- - - - -

As at 31 March 2022 - - - - -


Impacts of changes in gross financial assets on loss allowances - residential mortgages




Gross loans and advances - residential mortgages

As at 1 October 2021 94,857 1,846 356 19 97,078

Net transfers in to each stage - 578 86 - 664

Amounts drawn from new or existing facilities 14,872 273 - 3 15,148

Additions

14,872 851 86 3 15,812

Net transfers out of each stage

(663) - - (1) (664)

Amounts repaid

(10,477) (232) (46) (6) (10,761)

Deletions

(11,140) (232) (46) (7) (11,425)

Amounts written off

- - - - -

As at 31 March 2022 98,589 2,465 396 15 101,465

Loss allowance as at 31 March 2022 29 62 23 10 124



Off-balance sheet credit related commitments - residential mortgages

As at 1 October 2021 9,040 40 1 - 9,081

Net transfers in to each stage

- 17 - - 17

New and increased facilities and drawn amounts repaid 1,521 7 - - 1,528

Additions 1,521 24 - - 1,545

Net transfers out of each stage (17) - - - (17)

Reduced facilities and amounts drawn (1,288) (6) - - (1,294)

Deletions (1,305) (6) - - (1,311)

As at 31 March 2022 9,256 58 1 - 9,315

Loss allowance as at 31 March 2022 - - - - -


Explanation of how changes in the gross carrying amounts of residential mortgages contributed to changes in loss allowance

The NZ$22 million (21.6%) in crease in loss allowances on residential mortgage exposures is driven by a combination of these increases in gross

balances, including an increases in the proportion of gross balances in Stage 2 and Stage 3, and changes in the forward looking economic scenarios as

described in Note 6 allowance for expected credit losses. Overall loss allowances and individually impaired exposures remain low, reflecting that

approximately 94% of on-balance sheet residential mortgage exposures have loan to valuation ratios not exceeding 80% (refer to page 41).

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



34

Movements in components of loss allowance - other retail exposures




Stage 3


Stage 1 Stage 2

Collectively

assessed

Individually

assessed Total

Net loans and advances - other retail exposures NZ$m NZ$m NZ$m NZ$m NZ$m

As at 1 October 2021 10 49 17 6 82

Transfer between stages 5 (5) - - -

New and increased provisions (net of collective provision releases) (4) 1 2 15 14

Write-backs - - - (1) (1)

Recoveries of amounts previously written off

- - - (6) (6)

Credit impairment charge / (release)

1 (4) 2 8 7

Bad debts written-off (excluding recoveries)

- - - (13) (13)

Add back recoveries of amounts previously written off

- - - 6 6

Discount unwind

- - - - -

As at 31 March 2022 11 45 19 7 82


Off-balance sheet credit related commitments - other retail exposures

As at 1 October 2021 15 12 3 - 30

Transfer between stages

3 (3) - - -

New and increased provisions (net of collective provision releases) (4) 1 - - (3)

Credit impairment charge / (release)

(1) (2) - - (3)

As at 31 March 2022 14 10 3 - 27


Impacts of changes in gross financial assets on loss allowances - other retail exposures




Gross loans and advances - other retail exposures

As at 1 October 2021 2,271 132 34 9 2,446

Net transfers in to each stage - 4 7 1 12

Amounts drawn from new or existing facilities 250 15 4 16 285

Additions

250 19 11 17 297

Net transfers out of each stage

(12) - - - (12)

Amounts repaid

(332) (29) (11) (2) (374)

Deletions

(344) (29) (11) (2) (386)

Amounts written off

- - - (13) (13)

As at 31 March 2022 2,177 122 34 11 2,344

Loss allowance as at 31 March 2022 11 45 19 7 82



Off-balance sheet credit related commitments - other retail exposures

As at 1 October 2021 5,091 38 13 - 5,142

Net transfers in to each stage

- 1 2 - 3

New and increased facilities and drawn amounts repaid 143 3 2 - 148

Additions 143 4 4 - 151

Net transfers out of each stage (3) - - - (3)

Reduced facilities and amounts drawn (299) (7) (7) - (313)

Deletions (302) (7) (7) - (316)

As at 31 March 2022 4,932 35 10 - 4,977

Loss allowance as at 31 March 2022 14 10 3 - 27


Explanation of how changes in the gross carrying amounts of other retail exposures contributed to changes in loss allowance

The NZ$3 million (2.7%) decrease in loss allowances is primarily driven by a decrease in the amount of gross balances in Stage 2.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




35

Movements in components of loss allowance - corporate exposures

1





Stage 3


Stage 1 Stage 2

Collectively

assessed

Individually

assessed Total

Net loans and advances - corporate exposures NZ$m NZ$m NZ$m NZ$m NZ$m

As at 1 October 2021 122 212 22 45 401

Transfer between stages 5 - (2) (3) -

New and increased provisions (net of collective provision releases) (4) (27) (6) 22 (15)

Write-backs - - - (20) (20)

Recoveries of amounts previously written off

- - - (11) (11)

Credit impairment charge / (release)

1 (27) (8) (12) (46)

Bad debts written-off (excluding recoveries)

- - - (2) (2)

Add back recoveries of amounts previously written off

- - - 11 11

Discount unwind

- - - 3 3

As at 31 March 2022 123 185 14 45 367


Off-balance sheet credit related commitments - corporate exposures

As at 1 October 2021 49 27 1 15 92

Transfer between stages

2 (2) - - -

New and increased provisions (net of collective provision releases) - 1 - (1) -

Credit impairment charge / (release)

2 (1) - (1) -

As at 31 March 2022 51 26 1 14 92


Impacts of changes in gross financial assets on loss allowances - corporate exposures




Gross loans and advances - corporate exposures

As at 1 October 2021 36,865 4,223 228 127 41,443

Net transfers in to each stage 109 - - 1 110

Amounts drawn from new or existing facilities 6,748 319 11 71 7,149

Additions

6,857 319 11 72 7,259

Net transfers out of each stage

- (97) (13) - (110)

Amounts repaid

(5,285) (669) (79) (73) (6,106)

Deletions

(5,285) (766) (92) (73) (6,216)

Amounts written off

- - - (2) (2)

As at 31 March 2022 38,437 3,776 147 124 42,484

Loss allowance as at 31 March 2022 123 185 14 45 367



Off-balance sheet credit related commitments - corporate exposures

As at 1 October 2021 14,687 1,201 18 23 15,929

Net transfers in to each stage

39 - 1 10 50

New and increased facilities and drawn amounts repaid 4,388 74 1 (3) 4,460

Additions 4,427 74 2 7 4,510

Net transfers out of each stage - (50) - - (50)

Reduced facilities and amounts drawn (3,254) (173) (15) (8) (3,450)

Deletions (3,254) (223) (15) (8) (3,500)

As at 31 March 2022 15,860 1,052 5 22 16,939

Loss allowance as at 31 March 2022 51 26 1 14 92

1 Also includes all other non-retail exposure classes in net loans and advances and off balance sheet credit related commitments to reconcile to the respective totals for the Banking Group.


Explanation of how changes in the gross carrying amounts of corporate exposures contributed to changes in loss allowance

The NZ$34 million (6.9%) decrease in loss allowances is primarily driven by a decrease in the proportion of gross balances in Stage 2 and Stage 3, and

the release of temporary adjustments partially offset by changes in the forward looking economic scenarios as described in Note 6 allowance for

expected credit losses.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



36

Past due assets and other asset quality information


Residential

mortgages

Other retail

exposures

Corporate

exposures Total

As at 31 March 2022 NZ$m NZ$m NZ$m NZ$m

Past due assets

Less than 30 days past due 415 67 252 734

At least 30 days but less than 60 days past due 148 12 68 228

At least 60 days but less than 90 days past due 94 5 5 104

At least 90 days past due

367 22 7 396

Total past due but not individually impaired 1,024 106 332 1,462

Other asset quality information

Undrawn facilities with impaired customers - - 22 22

Other assets under administration

2 1 - 3

The Banking Group does not have any loans and advances designated at fair value.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




37

B4. CAPITAL ADEQUACY UNDER THE INTERNAL MODELS BASED APPROACH, AND REGULATORY

LIQUIDITY RATIOS

RBNZ capital ratios


Banking Group

Bank

(Solo Consolidated)

As at 31 March RBNZ minimum 2022 2021


2022 2021

Common equity tier 1 capital 4.5% 12.4% 13.1% 12.2% 12.7%

Tier 1 capital 6.0% 14.5% 15.9% 14.3% 15.5%

Total capital 8.0% 15.1% 15.9% 14.9% 15.5%

Prudential capital buffer ratio 2.5% 7.1% 7.9% n/a n/a


Capital


As at 31 March 2022 NZ$m

Tier 1 capital

Common equity tier 1 (CET1) capital


Paid up ordinary shares issued by the Bank

11,588

Retained earnings (net of appropriations)

5,133

Accumulated other comprehensive income and other disclosed reserves

1


7

Less deductions from common equity tier 1 capital


Goodwill and intangible assets, net of associated deferred tax liabilities

(3,103)

Deferred tax assets less deferred tax liabilities relating to temporary differences

(353)

Cash flow hedge reserve

15

Defined benefit superannuation plan surplus

(8)

Expected losses to the extent greater than total eligible allowances for impairment

(62)

Common equity tier 1 capital

13,217

Additional tier 1 (AT1) capital

Retained earnings of the Bonus Bonds Scheme

2

19

Transitional AT1 capital instruments

Preference shares

3

300

NZD 1,003m ANZ New Zealand Internal Capital Notes (ANZ NZ ICN)

4

1,003

NZD 938m ANZ New Zealand Internal Capital Notes (ANZ NZ ICN2)

4

938

Less deductions from additional tier 1 capital



Surplus retained earnings of the Bonus Bonds Scheme

2


(19)

Additional tier 1 capital

2,241

Total tier 1 capital

15,458

Tier 2 capital



NZD 600m subordinated notes

4


600

Eligible impairment allowance in excess of expected loss

4

Tier 2 capital

604

Total capital


16,062

1 Includes the investment securities revaluation reserve of NZ$22 million less the cash flow hedging reserve of NZ$15 million as at 31 March 2022.

2 Bonus Bonds Scheme (the Scheme) is not consolidated on the balance sheet under NZ GAAP but its retained earnings are included in AT1 capital for capital adequacy purposes, subject to

a cap of 8.5% of the consolidated RWA that relate to the Scheme, as set out in BPR110: Capital Definitions.

3 Classified as equity on the balance sheet under NZ GAAP.

4 Classified as a liability on the balance sheet under NZ GAAP.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



38

Capital requirements of the Banking Group


Total

exposure

after credit

risk

mitigation

Risk

weighted

exposure or

implied risk

weighted

exposure

1


Total capital

requirement

As at 31 March 2022 NZ$m NZ$m NZ$m

Total credit risk

212,932 64,664 5,173

Operational risk

n/a 11,385 911

Market risk

n/a 6,352 508

Supervisory adjustment

2


n/a 23,867 1,910

Total n/a 106,268 8,502

1 The calculation of risk weighted credit exposures includes a scalar of 1.06 in accordance with the Bank's Conditions of Registration.

2 The supervisory adjustment includes RWA of NZ$5,079 million for corporate exposures, NZ$13,780 million for residential mortgage exposures and NZ$5,008 million for a standardised floor

adjustment.


Capital structure

Ordinary shares– CET1 capital

All ordinary shares share equally in dividends and any proceeds available to ordinary shareholders on winding up of the Bank. On a show of hands

every member who is present at a meeting in person or by proxy or by representative is entitled to one vote, and upon a poll every member shall

have one vote for each share held.

Transitional AT1 capital instruments

Certain instruments issued by the Bank qualify as transitional AT1 capital instruments and are subject to phase-out under BPR110. Fixing the base at

the aggregate nominal amount of such instruments outstanding as at 30 September 2021 (NZ$2,741 million), their recognition is capped at 87.5% of

that base from 1 January 2022; 75% from 1 January 2023; 62.5% from 1 January 2024; 50% from 1 January 2025; 37.5% from 1 January 2026; 25% from 1

January 2027; 12.5% from 1 January 2028; and from 1 July 2028 onwards these instruments will not be included in regulatory capital.

Preference shares – transitional AT1 capital instrument

All preference shares were issued by the Bank to the Immediate Parent Company and do not carry any voting rights. The preference shares are wholly

classified as equity instruments as there is no contractual obligation for the Bank to either deliver cash or another financial instrument or to exchange

financial instruments on a potentially unfavourable basis.

The key terms of the preference shares are as follows:

Dividends are payable at the discretion of the directors of the Bank and are non-cumulative. The Bank must not resolve to pay any dividend or make

any other distribution on its ordinary shares until the next preference dividend payment date if the dividend on the preference shares is not paid.

Should the Bank elect to pay a dividend, the dividend is based on a floating rate equal to the aggregate of the New Zealand 6 month bank bill rate

plus a 325 basis point margin, multiplied by one minus the New Zealand company tax rate, with dividend payments due on 1 March and 1 September

each year.

The preference shares are redeemable, subject to prior written approval of the RBNZ, by the Bank providing notice in writing to holders of the

preference shares. As a result of being transitional AT1 instruments subject to phase-out under RBNZ’s new capital requirements, the Bank has

determined that a regulatory event has occurred in respect of the preference shares. The occurrence of a regulatory event means that the Bank may

choose to redeem the preference shares at its discretion. As at 6 May 2022, no decision has been made on whether the Bank will redeem the

preference shares.

The preference shares may be redeemed for nil consideration should a non-viability trigger event occur.

In the event of liquidation, holders of preference shares are entitled to available subscribed capital per share, pari passu with all holders of existing

preference shares and AT1 capital notes but in priority to all holders of ordinary shares. They have no entitlement to participate in further distribution

of profits or assets.

AT1 capital notes – transitional AT1 capital instruments

AT1 capital notes are fully paid convertible non-cumulative perpetual subordinated notes. Holders of AT1 capital notes do not have any right to vote

in general meetings of the Bank.

AT1 capital notes are classified as debt given there are circumstances beyond the Bank’s control where the principal is converted into a variable

number of ordinary shares of the Bank.

Interest payments on the AT1 capital notes are non-cumulative and subject to the is suer’s absolute discretion and certain payment conditions

(including regulatory requirements).

Where specified, AT1 capital notes provide the Bank with an early redemption or conversion option on a specified date and in certain other

circumstances (such as a tax or regulatory event). Early redemption is subject to RBNZ’s prior written approval.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




39

Each of the AT1 capital notes will immediately convert into a variable number of ordinary shares of the Bank based on the net assets per share in the

Bank’s most re cently published Disclosure Statement if:

• 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

• 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.

Where specified, AT1 capital notes mandatorily convert into a variable number of ordinary shares of the Bank (based on the net assets per share in the

Bank’s most recently published Disclosure Statement):

• 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.

As a result of being transitional AT1 instruments subject to phase-out under RBNZ’s new capital requirements, the Bank has determined that a

regulatory event has occurred in respect of these notes. The occurrence of a regulatory event means that the Bank may choose to redeem any of the

AT1 capital notes at its discretion. A redemption of the AT1 capital notes is subject to certain conditions, including regulatory approvals. As at 6 May

2022, no decision has been made on whether the Bank will redeem the AT1 capital notes.

The table below shows the key details of the AT1 capital notes on issue at 31 March 2022:

ANZ NZ ICN ANZ NZ ICN2

Issue date 5 March 2015 15 June 2016

Issue amount NZ$1,003 million NZ$938 million

Face value NZ$100 NZ$100

Interest frequency Semi-annually in arrears Semi-annually in arrears

Interest rate

Floating rate: (New Zealand

6 month Bank Bill rate +

3.8%)

Floating rate: (New Zealand

6 month Bank Bill rate +

6.29%)

Issuer's early redemption or conversion option 24 March 2023

15 June 2026 and each 5th

anniversary

Mandatory conversion date 24 March 2025 n/a

Common equity capital trigger event Yes Yes

Non-viability trigger event Yes Yes

Tier 2 capital

Tier 2 capital notes are fully paid unsecured subordinated notes. As at 31 March 2022 the notes carried an A- credit rating from S&P Global Ratings.

Interest payments are subject to the Bank being solvent at the time of, and immediately following, the payment. Unpaid interest accumulates, and will

be paid at the earlier of when the Bank is solvent again or at maturity. The Bank may repay the notes early on the dates specified below, or in certain

other circumstances (such as a tax or regulatory event). Early repayment is subject to certain conditions, including approval from RBNZ.

Issue date 17 September 2021

Issue amount and carrying value Issue amount: NZ$600 million; Carrying value (net of issue costs): NZ$594 million

Face value

NZ$1

Interest frequency

Quarterly in arrears

Interest rate

Fixed at 2.999% p.a. until 17 September 2026. Resets on 17 September 2026 to a floating

rate: New Zealand 3 month Bank bill rate + 1.25%

Issuer's early redemption

17 September 2026 or any interest payment date thereafter

Maturity

17 September 2031

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



40

Credit risk subject to the Internal Ratings Based (IRB) approach



IRB credit exposures by exposure class and customer credit rating


Probability

of default Total value

Exposure

at default

Exposure-

weighted

LGD used

for the

capital

calculation

Exposure-

weighted

risk weight

Risk

weighted

assets

Minimum

capital

requirement

As at 31 March 2022 % NZ$m NZ$m % % NZ$m NZ$m

Corporate

0 - 2 0.05 73,607 6,863 62 32 2,315 185

3 - 4

0.31 46,628 24,374 37 41 10,621 850

5

1.00 13,396 10,837 32 55 6,270 502

6

2.22 2,654 2,444 33 73 1,890 151

7 - 8

16.20 1,261 1,181 39 165 2,066 165

Default

100.00 247 244 36 80 208 17

Total corporate exposures

1

1.47 137,793 45,943 40 48 23,370 1,870

Residential mortgages

0 - 3 0.20 41,211 41,605 12 5 2,361 189

4

0.44 44,960 45,095 19 15 7,403 592

5

0.88 21,216 21,288 24 31 7,087 567

6

1.96 2,808 2,811 25 59 1,751 140

7 - 8

4.88 165 165 25 86 152 12

Default

100.00 420 421 13 6 28 2

Total residential mortgages exposures

2

0.86 110,780 111,385 18 16 18,782 1,502

Other retail

0 - 2 0.10 539 541 77 49 283 23

3 - 4

0.23 4,014 4,060 77 54 2,327 186

5

0.99 1,448 1,484 79 79 1,236 99

6

2.79 573 600 83 109 690 55

7 - 8

8.42 700 726 87 137 1,054 84

Default

100.00 47 47 81 48 24 2

Total other retail exposures 2.00 7,321 7,458 79 71 5,614 449

Total credit risk exposures subject

to the IRB approach

3


1.08 255,894 164,786 27 27 47,766 3,821

1 The supervisory adjustment on page 38 includes NZ$5,079 million of RWA for corporate exposures. This increases the pre-scalar exposure–weighted risk weight to 58% and the minimum

capital requirement to NZ$2,276 million.

2 The supervisory adjustment on page 38 includes NZ$13,780 million of RWA for residential mortgage exposures. This increases the pre-scalar exposure-weighted risk weight to 28% and the

minimum capital requirement to NZ$2,604 million.

3 The supervisory adjustment on page 38 of NZ$23,867 million of RWA (including NZ$5,008 million for a standardised floor) increases the pre-scalar IRB exposure-weighted risk weight to 41%

and the related minimum capital requirement to NZ$5,731 million.


IRB credit exposures include the following undrawn commitments and other off-balance sheet contingent liabilities:


Total value

Exposure

at default

As at 31 March 2022 NZ$m NZ$m

Undrawn commitments and other off-balance sheet contingent liabilities

Corporate 13,319 12,463

Residential mortgages 9,315 9,763

Other retail 4,977 5,058

Counterparty credit risk on derivatives and securities financing transactions

Corporate 92,247 1,369

Residential mortgages - -

Other retail - -

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




41

Additional mortgage information

As required by RBNZ, LVRs are calculated as the current exposure secured by a residential mortgage divided by the Banking Group's valuation of the

security property at origination of the exposure. Off-balance sheet exposures include undrawn and partially drawn residential mortgage loans as well

as commitments to lend. Commitments to lend are formal offers for housing lending which have been accepted by the customer.

On-

balance

sheet

Off-

balance

sheet Total

As at 31 March 2022 NZ$m NZ$m NZ$m

LVR range

Does not exceed 60%

55,011 6,803 61,814

Exceeds 60% and not 70% 20,063 1,151 21,214

Exceeds 70% and not 80% 20,269 1,070 21,339

Does not exceed 80%

95,343 9,024 104,367

Exceeds 80% and not 90%

4,496 105 4,601

Exceeds 90%

1,626 186 1,812

Total 101,465 9,315 110,780


Specialised lending subject to the slotting approach


Total

exposures

after

credit risk

mitigation

Risk

weight

Risk

weighted

assets

Minimum

Pillar 1

capital

requirement

As at 31 March 2022 NZ$m % NZ$m NZ$m

On-balance sheet exposures

Strong

6,526 70 4,842 387

Good

5,471 90 5,219 418

Satisfactory

302 115 368 29

Weak

93 250 249 21

Default

47 - - -




Exposure

at default

Average

risk weight

Risk

weighted

assets

Minimum

Pillar 1

capital

requirement

As at 31 March 2022 NZ$m % NZ$m NZ$m

Off-balance sheet exposures

Undrawn commitments and other off-balance sheet exposures 1,550 84 1,379 110


The supervisory categories of specialised lending above are associated with specific risk-weights. These categories broadly correspond to the

following external credit assessments using S&P Global Ratings' rating scale, Strong: BBB- or better, Good: BB+ or BB, Satisfactory: BB- or B+ and Weak:

B to C-.

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



42

Credit risk exposures subject to the standardised approach


Total

exposure

after

credit risk

mitigation

Average

risk

weight

Risk

weighted

exposure

Minimum

Pillar 1

capital

requirement

As at 31 March 2022


NZ$m % NZ$m NZ$m

On-balance sheet exposures

Cash and gold bullion

185 - - -

Sovereign and central banks

18,630 - - -

Multilateral development banks and other international organisations

4,339 - - -

Public sector entities

1,639 20 348 28

Banks

2,257 44 1,041 83

Corporate

61 104 67 5

Residential mortgages - - - -

Past due assets - - - -

Other assets 1,182 100 1,253 100




Total

exposure

or

principal

amount

Average

credit

conversion

factor

Credit

equivalent

amount

Average

risk

weight

Risk

weighted

exposure

Minimum

Pillar 1

capital

requirement

As at 31 March 2022 NZ$m % NZ$m % NZ$m NZ$m

Off-balance sheet exposures

Total off balance sheet exposures subject to the standardised

approach

1,903 53 1,000 56 594 48

Counterparty credit risk for counterparties subject to the

standardised approach


Foreign exchange contracts

239,778 n/a 2,526 24 633 51

Interest rate contracts

1,727,957 n/a 2,012 15 317 25

Other

1


1,387 n/a 325 29 584 47

1 Risk weighted exposure includes an additional NZ$483 million for credit valuation adjustment.


Credit risk mitigation

Information on the total value of exposures covered by financial guarantees and eligible financial collateral is not disclosed, as the effect of these

guarantees and collateral on the underlying credit risk exposures is not considered to be material.


For portfolios subject to

the standardised approach:

total value of exposures

covered by eligible financial

collateral (after haircut)

For all portfolios:

total value of exposures

covered by guarantees

or credit derivatives

1


As at 31 March 2022 NZ$m NZ$m

Exposure class

Sovereign - -

Bank - -

Corporate (including specialised lending) - 435

Residential mortgage - -

Other - -

1 Covered by guarantees where the presence of the guarantees was judged to reduce the underlying credit risk of the exposures.


Equity exposures


Exposure

at default

Risk

weight

Risk

weighted

exposure

Minimum

Pillar 1

capital

requirement

As at 31 March 2022 NZ$m % NZ$m NZ$m

Equity holdings (not deducted from capital) that are publicly traded

- 300 - -

All other equity holdings (not deducted from capital)

1 400 5 -

ANZ BANK NEW ZEALAND LIMITED UNAUDITED




43

Operational risk

As required by its conditions of registration, the Banking Group uses the standardised approach to the calculation of its operational risk capital

requirement. As at 31 March 2022, the Banking Group had an implied risk weighted exposure of NZ$11,385 million for operational risk and an

operational risk capital requirement of NZ$911 million.

Market risk

The aggregate market risk exposures below have been calculated in accordance with BPR140: Market Risk. The peak end-of-day market risk exposures

are for the six months ended 31 March 2022.


Implied risk weighted

exposure Aggregate capital charge

Period end Peak Period end Peak

As at 31 March 2022 NZ$m NZ$m NZ$m NZ$m

Interest rate risk

6,305 7,398 504 592

Foreign currency risk 46 84 4 7

Equity risk 1 1 - -


Capital for other material risks

The Banking Group has an Internal Capital Adequacy Assessment Process (ICAAP) which complies with the requirements of the Bank's Conditions of

Registration. Under the Banking Group's ICAAP it identifies and measures all "other material risks", which are those material risks that are not explicitly

captured in the calculation of the Banking Group's tier 1 and total capital ratios. The other material risks identified by the Banking Group include fixed

asset risk and deferred acquisition cost risk. As at 31 March 2022, the Banking Group's internal capital allocation for these other material risks is NZ$326

million (March 2021: NZ$330 million, updated from NZ$274 million for revised methodology).

Information about Ultimate Parent Bank and Overseas Banking Group

APRA Basel III capital ratios


Overseas Banking Group

Ultimate Parent Bank

(Extended Licensed Entity)

As at 31 March 2022 2021 2022 2021

Common equity tier 1 capital

11.5%

12.4%

11.1%

12.2%

Tier 1 capital

13.2%

14.3%

13.1%

14.2%

Total capital

16.6%

18.3%

17.1%

18.6%


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 31 March 2022 and for the comparative prior periods.

The Overseas Banking Group is required to publicly disclose Pillar 3 financial information as at 31 March 2022. The Overseas Banking Group’s Pillar 3

disclosure document for the quarter ended 31 March 2022, 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.

Regulatory liquidity ratios

RBNZ requires banks to hold minimum amounts of liquid assets to help ensure that they are effectively managing their liquidity risks. The mismatch

ratio is a measure of a bank’s liquid assets, adjusted for expected cash inflows and outflows during a 1-month or 1-week period of stress. It is expressed

as a ratio over the bank’s total funding. The Banking Group must maintain its 1-month and 1-week mismatch ratios above zero on a daily basis. The 1-

month and 1-week mismatch ratios are averaged over the quarter.

RBNZ requires banks to get a minimum amount of funding from stable sources called core funding. From 1 January 2022, the minimum amount of

core funding was increased from 50% to 75% of a bank’s total loans. The Banking Group must maintain its core funding ratio above the regulatory

minimum on a daily basis. This measure of the core funding ratio is averaged over the quarter.

For the three months ended 31 Mar 22 31 Dec 21

Quarterly average 1-week mismatch ratio 7.6% 8.7%

Quarterly average 1-month mismatch ratio 7.0% 7.9%

Quarterly average core funding ratio

91.4%

91.3%

ANZ BANK NEW ZEALAND LIMITED UNAUDITED

REGISTERED BANK DISCLOSURES



44

B5. CONCENTRATION OF CREDIT EXPOSURES TO INDIVIDUAL COUNTERPARTIES

The Banking Group measures its concentration of credit exposures to individual counterparties at the reporting date on the basis of actual exposures.

Peak end-of-day aggregate credit exposures are measured on the basis of internal limits that were not materially exceeded between the reporting

date for the previous disclosure statement and the reporting date for the Disclosure Statement.

The exposure information in the table below excludes exposures to:

• connected persons (i.e. other members of the Overseas Banking Group and Directors of the Bank);

• the central government or central bank of any country with a long-term credit rating of A- or A3 or above, or its equivalent; and

• any supranational or quasi-sovereign agency with a long-term credit rating of A- or A3 or above, or its equivalent.

As at

Peak end of

day over 6

months to

31 Mar 22 31 Mar 22

Exposures to banks

Total number of exposures to banks that are greater than 10% of CET1 capital

- 1

with a long-term credit rating of A- or A3 or above, or its equivalent

- 1

- 10% to less than 15% of CET1 capital


- 1

with a long-term credit rating of at least BBB- or Baa3, or its equivalent, and at most BBB+ or Baa1, or its equivalent - -

Exposures to non-banks

Total number of exposures to non-banks that are greater than 10% of CET1 capital

2 2

with a long-term credit rating of A- or A3 or above, or its equivalent

2 2

- 10% to less than 15% of CET1 capital

2 2

with a long-term credit rating of at least BBB- or Baa3, or its equivalent, and at most BBB+ or Baa1, or its equivalent

- -



B6. INSURANCE BUSINESS

As at 31 March 2022, the Banking Group does not conduct any insurance business.

ANZ BANK NEW ZEALAND LIMITED

DIRECTORS' STATEMENT



45

As at the date on which this Disclosure Statement is signed, after due enquiry, each Director believes that:

• The Disclosure Statement contains all the information that is required by the Registered Bank Disclosure Statements (New Zealand Incorporated

Registered Banks) Order 2014; and

• The Disclosure Statement is not false or misleading.

Over the six months ended 31 March 2022, after due enquiry, each Director believes that:

• ANZ Bank New Zealand Limited has complied in all material respects with each condition of registration that applied during that period


except

as noted on page 25

1

;

• Credit exposures to connected persons were not contrary to the interests of the Banking Group; and

• ANZ Bank New Zealand Limited had systems in place to monitor and control adequately the Banking Group’s material risks, including credit risk,

concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operational risk and other business risks, and that those

systems were being properly applied.

1. In accordance with the Order, ANZ Bank New Zealand Limited 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 ANZ Bank New Zealand Limited of any material breach.


This Disclosure Statement is dated, and has been signed by all Directors of the Bank on, 6 May 2022.





Shayne Elliott





Alison Gerry





Rt Hon Sir John Key, GNZM AC





Scott St John





Mark Verbiest





Antonia Watson





Joan Withers

ANZ BANK NEW ZEALAND LIMITED

INDEPENDENT AUDITOR’S REVIEW REPORT



46



TO THE SHAREHOLDER OF ANZ BANK NEW ZEALAND LIMITED


REPORT ON THE HALF YEAR DISCLOSURE STATEMENT


REPORT ON THE INTERIM FINANCIAL STATEMENTS AND REGISTERED BANK DISCLOSURES IN SECTIONS B2, B3,

B5, B6

























BASIS FOR CONCLUSION

A review of the half year disclosure statement in accordance with NZ SRE 2410 Review of Financial Statements Performed by the Independent Auditor of

the Entity (NZ SRE 2410) is a limited assurance engagement. The auditor performs procedures, consisting of making enquiries, primarily of persons

responsible for financial and accounting matters, and applying analytical and other re view procedures.

As the auditor of the Banking Group, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial

statements.

Our firm has also provided other services to the Banking Group in relation to review of regulatory returns, internal controls reports, prospectus

assurance, agreed upon procedures and other assurance engagements. Subject to certain restrictions, partners and employees of our firm may also

deal with the Banking Group on normal terms within the ordinary course of trading activities of the business of the Banking Group. These matters

have not impaired our independence as reviewer of the Banking Group. The firm has no other relationship with, or interest in, the Banking Group.

EMPHASIS OF MATTER – NON-COMPLIANCE WITH CERTAIN CONDITIONS OF REGISTRATION

We draw attention to section B1 of the half year disclosure statement, in which the Banking Group discloses that it has identified non-compliance with

aspects of its Conditions of Registration relating to capital adequacy.

Further details of the matters relating to capital adequacy are described below in our qualified review conclusion on the registered bank disclosures in

section B4 relating to capital adequacy and regulatory liquidity ratios.

Our conclusion on the interim financial statements and registered bank disclosures in sections B2, B3, B5, and B6 is not modified in respect of these

matters.

RESPONSIBILITIES OF THE DIRECTORS FOR THE INTERIM FINANCIAL STATEMENTS AND REGISTERED BANK

DISCLOSURES IN SECTIONS B1, B2, B3, B5, AND B6

The Directors, on behalf of the Banking Group, are responsible for:

• the preparation and fair presentation of the interim financial statements and registered bank disclosures in accordance with IAS 34, NZ IAS 34

and Schedules 3, 5, 7, 13, 16 and 18 of the Order;

• implementing necessary internal controls to enable the preparation of interim 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.


CONCLUSION

Based on our review of the interim financial statements and the registered bank disclosures (together referred to as ‘the half year disclosure

statement’) of ANZ Bank New Zealand Limited and its subsidiaries (the Banking Group) on pages 4 to 44, nothing has come to our attention that

causes us to believe that:

• the interim financial statements on pages 4 to 23 do not present fairly in accordance with NZ IAS 34 Interim Financial Reporting and IAS 34

Interim Financial Reporting, in all material respects, the Banking Group’s financial position as at 31 March 2022 and its financial performance

and cash flows for the six month period ended on that date; and

• the registered bank disclosures in sections B2, B3, B5 and B6 disclosed in accordance with Schedules 5, 7, 13, 16 and 18 of the Registered

Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014 (as amended) (the Order) respectively, do not fairly

state, in all material respects, the matters to which they relate in accordance with those schedules.

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

• the interim financial statements formed of:

• the consolidated balance sheet as at 31 March 2022;

• the consolidated income statement, statements of comprehensive income, changes in equity and cash flows for the six month period

then ended; and

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

• the registered bank disclosures prescribed in Schedules 5, 7, 13, 16 and 18 of the Order.

INDEPENDENT AUDITOR’S REPORT




47

AUDITOR’S RESPONSIBILITIES FOR THE REVIEW OF THE INTERIM FINANCIAL STATEMENTS AND REGISTERED

BANK DISCLOSURES IN SECTIONS B2, B3, B5, AND B6

Our responsibility is to express a conclusion on the interim financial statements and registered bank disclosure statements in sections B2, B3, B5, and

B6 based on our review. We conducted our review in accordance with NZ SRE 2410. NZ SRE 2410 requires us to conclude whether anything has come

to attention that causes us to believe that:

• the interim financial statements do not present fairly in all material respects the Banking Group’s financial position as at 31 March 2022 and its

financial performance and cash flows for the six month period ended on that date;

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

• the registered bank disclosures in sections B2, B3, B5 and B6 does not, fairly state, in all material respects, the matters to which it relates in

accordance with Schedules 5, 7, 13, 16 and 18 of the Order.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards

on Auditing (New Zealand). Accordingly we do not express an audit opinion on the interim financial statements and the registered bank disclosures in

sections B2, B3, B5, and B6. This description forms part of our independent review report.


REPORT ON THE REGISTERED BANK DISCLOSURES IN SECTION B4 RELATING TO CAPITAL ADEQUACY AND

REGULATORY LIQUIDITY RATIOS (SECTION B4)











BASIS FOR QUALIFIED 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 (NZSRE 2410) is a limited assurance engagement. The auditor performs procedures, consisting of making enquiries, primarily of

persons responsible for financial and accounting matters, and applying analytical and other review procedures. Our responsibilities under that

standard are further described in the ‘Auditor’s Responsibilities for the review of the registered bank disclosures in section B4’ section of our report.

As the auditor of the Banking Group, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial

statements.

As described in section B1, the Banking Group has identified that it was not compliant with Condition of Registration 1B in relation to the operation of

versions of the following rating models and processes, which were not approved by the Reserve Bank of New Zealand (in some cases since 2008):

• Bank Rating;

• Project and Structured Finance; and

• Commercial Property: Special Purpose Asset Investment.

In this respect, the Capital Adequacy Ratios disclosed in section B4 of the half year disclosure statement have not been disclosed in accordance with

Schedule 11 of the Order, with section B1 disclosing the Banking Group’s calculation of the corresponding impact on risk weighted assets. The

Banking Group has remediated these models and submitted all affected models to the Reserve Bank of New Zealand for approval.

The above matters do not affect the Regulatory Liquidity information, which is also disclosed in section B4.

RESPONSIBILITIES OF THE DIRECTORS FOR THE REGISTERED BANK DISCLOSURES IN SECTION B4

The Directors, on behalf of the Banking Group, are responsible for the preparation and fair presentation of the registered bank disclosures in section B4

of the half year disclosure statement in accordance with the registered bank’s Conditions of Registration, the Reserve Bank of New Zealand’s Banking

Prudential Requirements and Schedule 11 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. NZ SRE 2410 requires us to conclude whether anything has come

to our attention that causes us to believe that the registered bank disclosures in section B4 is not, in all material respects, disclosed in accordance with

Schedule 11 of the Order.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards

on Auditing (New Zealand). Accordingly we do not express an audit opinion on the registered bank disclosures in section B4. This description forms

part of our independent review report.




QUALIFIED REVIEW CONCLUSION

We have reviewed the registered bank disclosures, as disclosed in section B4 of the half year disclosure statement for the six month period ended

31 March 2022, which are required to be disclosed in accordance with Schedule 11 of the Order.

Based on our review, with the exception of the matter described below, nothing has come to our attention that causes us to believe that the

information relating to Capital Adequacy and Regulatory Liquidity Ratios, disclosed in section B4 of the half year disclosure statement, is not, in all

material respects disclosed in accordance with Schedule 11 of the Order.

ANZ BANK NEW ZEALAND LIMITED

INDEPENDENT AUDITOR’S REVIEW REPORT



48

USE OF THIS INDEPENDENT REVIEW REPORT

This independent review report is made solely to the shareholder of the Banking Group. Our review work has been undertaken so that we might state

to the shareholder those matters we are required to state to them in the independent review report and for no other purpose. To the fullest extent

permitted by law, we do not accept or assume responsibility to anyone other than the shareholder as a body for our review work, this independent

review report, or any of the opinions we have formed.






KPMG

Auckland

6 May 2022


































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