Sun Bank APS 330 Pillar 3 Disclosure at 30 December 2024

Australia and New Zealand Banking Group Limited
9/833 Collins Street Docklands Victoria 3008 Australia
ABN 11 005 357 522
24 February 2025

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

Suncorp Bank APS 330 Pillar 3 Disclosure at 31 December 2024

Australia and New Zealand Banking Group Limited (ANZ) today released Suncorp Bank’s APS 330 Pillar
3 Disclosure as at 31 December 2024.

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

Suncorp Bank (Norfina Limited ABN 66 010 831 722 AFSL 229882 Australian Credit Licence 229882)
The SUNCORP brand and Sun Logo are used by Suncorp Bank (Norfina Limited) under licence and Suncorp Bank is not part of the Suncorp Group.





BASEL III
PILLAR 3
DISCLOSURE
AS AT 31 DECEMBER 2024
APS 330: PUBLIC DISCLOSURE

SUNCORP BANK
(NORFINA LIMITED)
ABN 66 010 831 722

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
2

Basis of Preparation
This document has been prepared by Norfina Limited and its wholly owned subsidiaries Norfina Advances
Corporation Pty Ltd (trading as Suncorp Equipment Finance) and SME Management Pty Ltd to meet the
disclosure obligations under the Australian Prudential Regulation Authority (APRA) Australian Prudential
Standard (APS) 330 Public Disclosure.
Suncorp Bank is the trading name of Norfina Limited ABN 66 010 831 722 (formerly Suncorp-Metway
Limited). Norfina Limited is an authorised deposit-taking institution (ADI) and a wholly owned subsidiary of
Australia and New Zealand Banking Group Limited (ANZBGL). The ultimate parent entity is ANZ Group
Holdings Limited (ANZ). ANZ and its subsidiaries are collectively referred to as the ANZ Group.
Other than statutory information required by a regulator (including APRA), all financial information is
measured in accordance with Australian Accounting Standards. All figures have been quoted in Australian
dollars and have been rounded to the nearest million.
Figures relate to the quarter ended 31 December 2024 (unless otherwise stated). This document has not
been audited nor reviewed in accordance with Australian Auditing Standards. It should be read in
conjunction with ANZ Group and Suncorp Bank’s consolidated annual and interim financial reports which
have been either audited or reviewed in accordance with Australian Auditing Standards.
This document is prepared in accordance with Basel III Prudential Capital requirements effective for
reporting periods beginning on or after 1 January 2023.


Disclaimer
This report contains general information which is current as at 24 February 2025. It is information given in
summary form and does not purport to be complete.
It is not a recommendation or advice in relation to Norfina Limited, its wholly owned subsidiaries or the ANZ
Group or any product or service offered by their entities or intended to be relied upon as advice.
The information in this report is for general information only. To the extent that the information may
constitute forward-looking statements, the information reflects Suncorp Bank's intent, belief or current
expectations with respect to our business and operations, market conditions, results of operations and
financial condition, capital adequacy, specific provisions and risk management practices at the date of this
report and undertakes no obligation to update any forward-looking statements. Such forward-looking
statements are not guarantees of future performance and involve known and unknown risks and
uncertainties, many of which are beyond Suncorp Bank's control, which may cause actual results to differ
materially from those expressed or implied.


Registered office Investor Relations
Level 9, 833 Collins Street Cameron Davis
Docklands, VIC 3008 Executive Manager, Investor Relations
suncorpbank.com.au +61 3 8654 7716
+61 421 613 819

cameron.davis@anz.com

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
3

Table of contents
Basis of Preparation ...................................................................................................................................................... 2
Overview ....................................................................................................................................................................... 4
Loans and advances ..................................................................................................................................................... 5
Impaired assets and 90+ days past due loans .............................................................................................................. 6
Provision for impairment ................................................................................................................................................ 7
Appendix 1 – APS 330 Tables....................................................................................................................................... 8
Appendix 2 – Definitions .............................................................................................................................................. 16

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
4

Overview
Suncorp Bank’s (the Bank) home lending portfolio grew $0.5 billion or 0.9% (3.6% annualised) through the
December quarter. The Bank remains focused on balancing growth and margin while optimising risk-
adjusted returns and maintaining a high-quality and conservatively positioned home lending portfolio. The
portfolio remains weighted towards owner occupiers, principal and interest repayment and loans with a
loan-to-valuation ratio (LVR) below 80%.
Business lending contracted $264 million or 2.1% (8.2% annualised). The commercial portfolio contracted
$143 million, predominantly driven by property finance, with intense pricing competition leading to
heightened external refinances. The small and medium enterprise (SME) portfolio reduced by $63 million,
also due to heightened external refinances. The agribusiness portfolio contracted $58 million, mainly driven
by higher customer repayments in line with seasonal trends.
The Bank grew household deposits across all portfolios, including retail term deposits (15.5% annualised),
retail transaction deposits (9.9% annualised), and savings account balances (8.6% annualised). The Bank
continued to strategically manage the portfolio within funding requirements.
The total provision for impairment increased by 3.5% to $235 million, reflecting an increase of $8 million in
specific provisions, a continued low level of write offs, and no change to the collective provision.
Gross impaired assets increased $36 million to $99 million, driven by the commercial lending portfolio, with
decreases across all other lending portfolios. Total 90+ days past due loans increased $32 million to $559
million or 78 basis points of GLA, up 4 basis points of GLA from the previous quarter.
The Liquidity Coverage Ratio (LCR) was maintained at an elevated level, above the target operating range,
averaging 145% over the quarter in line with the September quarterly average. The Net Stable Funding
Ratio (NSFR) ended the period at 124%, demonstrating the continued strength of Suncorp Bank’s funding
and liquidity position. The Bank’s capital levels remain sound, with a Common Equity Tier 1 ratio of 10.26%
(Sep 2024: 10.01%), within the target operating range of 10.00% to 10.50%.

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
5

Loans and advances

Dec-24Dec-24
Dec-24Sep-24Dec-23 vs Sep-24 vs Dec-23
$M$M$M%%
Hous ing loans - term
52,90052,02149,9751.75.9
Hous ing line of credit
341359435(5.0)(21.6)
Securitis ed hous ing loans and covered bonds
5,9146,2445,587(5.3)5.9
Total housing loans
59,155
58,62455,997
0.95.6
Pers onal loans
141725(17.6)(44.0)
Retail loans
59,169
58,64156,022
0.95.6
SME
2,5792,6422,636(2.4)(2.2)
Com m ercial
5,3235,4665,406(2.6)(1.5)
Agribus ines s
4,6634,7214,456(1.2)4.6
Total business loans
12,565
12,82912,498
(2.1)0.5
Total lending
71,734
71,47068,520
0.44.7
Provis ion for im pairm ent
(235)(227)(210)3.511.9
Total loans and advances
71,499
71,24368,310
0.44.7
Geographical breakdown - Total lending
Queens land
31,43131,70130,687(0.9)2.4
New South Wales
21,52821,16819,8341.78.5
Victoria
10,52410,36610,0801.54.4
Wes tern Aus tralia
4,5754,5924,474(0.4)2.3
South Aus tralia and other
3,6763,6433,4450.96.7
Outside of Queensland loans
40,30339,76937,8331.36.5
Total lending
71,734
71,47068,520
0.44.7

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
6

Impaired assets and 90+ days past due loans

(1)
Gross non-performing loans in the above table excludes loans that meet additional requirements under the revised APS 220 Credit Risk Management.
(2)
Net of increases in previously recognised impaired assets and impaired assets written off.

Dec-24Dec-24
Dec-24Sep-24Dec-23 vs Sep-24 vs Dec-23
$M$M$M%%
Gross balances of individually impaired loans
Retail lending25 27 29 (7.4) (13.8)
Agribus ines s lending11 11 17 - (35.3)
Com m ercial lending63 22 18 186.4 250.0
SME lending- 3 7 (100.0) (100.0)
Gross impaired assets99 63 71 57.1 39.4
Im pairm ent provis ion(21) (13) (21)61.5 -
Net impaired assets78 50 50 56.0 56.0
Impairment provisions expressed as a percentage of
gross impaired assets
21%21%30%
90+ days past due loans not shown as impaired assets559 527 425 6.0 31.5
Gross non-performing loans
(1)
658 590 496 11.5 32.7
Analysis of movements in gross individually impaired
assets
Balance at the beginning of the period63 73 76 (13.7) (17.1)
Recognition of new im paired as s ets 51 2 10 n/an/a
Other m ovem ents in im paired as s ets
(2)
1 - (4)n/a(128.2)
Im paired as s ets which have been reclas s ed as
perform ing as s ets or repaid
(16) (12) (11)30.7 42.6
Balance at the end of the period99 63 71 57.5 39.8
Quarter Ended

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
7

Provision for impairment


Dec-24Dec-24
Dec-24Sep-24Dec-23 vs Sep-24 vs Dec-23
$M$M$M%%
Collective provision
Balance at the beginning of the period2152001907.513.2
Charge agains t im pairm ent los s es-15-(100.0)n/a
Balance at the end of the period215215190-13.2
Specific provision
Balance at the beginning of the period121422(14.3)(45.5)
Charge/(releas e) agains t im pairm ent los s es9(1)3n/a200.0
Im pairm ent provis ion written off
(1)
(1)(1)(5)-(80.0)
Balance at the end of the period20122066.7-
Total provision for impairment - Banking activities 2352272103.511.9
(1)
Includes unwind of dis count.
Provision for impairment expressed as a percentage of gross
loans and advances are as follows:
%%%
Collective provis ion0.30 0.30 0.28
Specific provis ion0.03 0.02 0.03
Total provision
0.33 0.32 0.31
Quarter Ended

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
8

Appendix 1 – APS 330 Tables
 Table 1: Capital disclosure template – not applicable for this reporting period. This table was
disclosed in the June 2024 reporting period.
 Table 2: Main features of capital instruments
 Table 3: Capital adequacy
 Table 4: Credit risk
 Table 5: Securitisation exposures
 Table 20: Liquidity Coverage Ratio Disclosure

Table 2: Main Features of Capital Instruments
Attachment B of Prudential Standard APS 330 details the continuous disclosure requirements for the main
features of all capital instruments included in Suncorp Bank’s regulatory capital.
The Suncorp Bank’s main features of capital instruments are updated on an ongoing basis and are
available at https://www.suncorpbank.com.au/about-us/investors/regulatory-disclosures-current.html.

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
9


Table 3: Capital Adequacy



Dec-24Sep-24
$M$M
On-balance sheet credit risk-weighted assets
Claim s s ecured by res idential m ortgage19,31819,106
Other retail7579
Bank9180
Governm ent--
Corporates
(1)
8,4488,641
Securis ation56
All other expos ures218242
Total on-balance sheet assets28,15528,154
Off-balance sheet exposures
Non-m arket related off-balance s heet expos ures2,4682,426
Market related off-balance s heet expos ures6351
Securitis ation 108
Total off-balance sheet exposures2,5412,485
Total on-balance sheet assets and off-balance sheet positions30,69630,639
Market risk capital charge13295
Operational risk capital charge2,6882,688
Total risk-weighted assets33,51633,422
Dec-24Sep-24
%%
Com m on Equity Tier 1 10.2610.01
Tier 111.9411.68
Tier 22.472.53
Total risk-weighted capital ratio 14.4114.21
Capital Ratios
Risk Weighted Assets
(1)
Includes co mm ercial pro pert y and land acquisitio n, develo pment, and c o nstructio n expo sures.

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
10

Table 4: Credit Risk
Table 4A: Credit risk by gross credit exposure





Notes:
(1)
Gross credit exposures and Average gross credit exposures reflect on balance sheet exposures and credit equivalent amounts for off balance sheet
exposures.
(2)
Receivables due from other Banks include collateral deposits provided to derivative counterparties.
(3)
Off-balance sheet exposures represent the credit equivalent amount in accordance with APS 112 Capital Adequacy: Standardised Approach to Credit
Risk.
(4)
Total credit risk excludes cash at bank and other money market placements.
(5)
Securitisation exposures for December 2024 include $2,601 million in Loans and advances, $28 million in Investment Securities, $35 million in
Derivatives and $300 million in Off-balance sheet exposures. The securitisation exposures for Loans and advances qualify for regulatory capital relief
under APS 120 Securitisation and therefore do not contribute to the Bank’s total gross credit risk. The remaining securitisation exposures carry credit
risk commensurate with their respective asset classes in accordance with APS 120 Securitisation.
(6)
Includes commercial property and land acquisition, development, and construction exposures.



Dec-24 Sep-24 Dec-24 Sep-24
$M$M$M$M
Revers e repurchas e agreem ents 9001,3001,1001,466
Receivables due from other Banks
(2)
790909850824
Trading Securities 1,7391,8431,7911,999
Derivatives
(3)
86637579
Inves tm ent Securities 10,2519,76810,0109,776
Loans and Advances 68,68468,10168,39367,439
Off-balance s heet expos ures
(3)
5,9635,9615,9625,883
Total gross credit risk
(4)
88,41387,94588,18187,466
Securitis ation expos ures
(5)
2,9643,3143,1393,458
Total including securitisation exposures 91,37791,25991,32090,924
Im pairm ent provis ion(235)(227)(231)(221)
Total91,14291,03291,08990,703
Gross Credit Exposure
(1)
Exposure Type
Average Gross Credit Exposure
(1)
Dec-24 Sep-24 Dec-24 Sep-24
$M$M$M$M
Claim s s ecured by res idential m ortgage 61,82160,96561,39360,211
Other retail as s ets 98959797
Bank 1,2521,5141,3831,639
Governm ent 12,43312,18412,30912,357
Corporates
(6)
12,69412,97612,83512,986
All other expos ures115211164176
Total gross credit risk
(4)
88,41387,94588,18187,466
Securitis ation expos ures
(5)
2,9643,3143,1393,458
Total including securitisation exposures 91,37791,25991,32090,924
Im pairm ent provis ion(235)(227)(231)(221)
Total91,14291,03291,08990,703
Portfolios Subject to the Standardised Approach
Gross Credit Exposure
(1)
Average Gross Credit Exposure
(1)

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
11

Table 4: Credit Risk (Continued)
Table 4B: Credit risk by portfolio

(1)
The specific provisions of $20 million represents the specific provisions for accounting purposes. It excludes the ineligible collective provisions of $61
million which in accordance with APS 220 Credit Risk Management are regulatory specific provisions. The regulatory specific provisions under APS
220 Credit Risk Management are $81 million.
(2)
Includes commercial property and land acquisition, development, and construction exposures.



(1)
The specific provisions of $12 million represents the specific provisions for accounting purposes. It excludes the ineligible collective provisions of $46
million which in accordance with APS 220 Credit Risk Management are regulatory specific provisions. The regulatory specific provisions under APS
220 Credit Risk Management are $58 million.
(2)
Includes commercial property and land acquisition, development, and construction exposures.





Non-performing
loans
Specific
Provisions
(1)
Charges/(Releases)
for Specific
Provisions &
Write Offs
Dec-24Dec-24Dec-24
$M$M$M
Claim s s ecured by res idential m ortgage 6085-
Other retail as s ets 411
Bank ---
Governm ent ---
Corporates
(2)
199148
All other expos ures---
Total gross credit risk811209
Securitis ation expos ures 20-
Total including securitisation exposures 83120
Im pairm ent provis ion (17)-
Total81420
Portfolios Subject to the Standardised Approach
Non-performing
loans
Specific
Provisions
(1)
Charges/(Releases)
for Specific
Provisions &
Write Offs
Sep-24Sep-24 Sep-24
$M$M$M
Claim s s ecured by res idential m ortgage 6225-
Other retail as s ets 411
Bank ---
Governm ent ---
Corporates
(2)
1576(1)
All other expos ures---
Total gross credit risk78312-
Securitis ation expos ures 22-
Total including securitisation exposures 80512
Im pairm ent provis ion(11) -
Total79412
Portfolios Subject to the Standardised Approach

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
12

Table 4: Credit Risk (Continued)
Table 4C: Provisions eligible for inclusion in Tier 2 capital
(1)


(1)
Provisions held against performing exposures that represent a purely forward-looking amount for future losses that are presently unidentified.
(2)
Ineligible collective provisions represent the collective provision for impairment on Stage 3 ECL loans and advances and Stage 2 ECL loans and
advances with any level of arrears. Ineligible collective provision is considered a specific provision for regulatory purposes under APS 220 Credit Risk
Management.
(3)
Following removal of the ERCL (equity reserve for credit losses) requirement in APS 220 Credit Risk Management from 1 January 2022, the general
equity reserve has been established in its place. The general equity reserve will be maintained at this level ($76 million) pending further consideration
of its future treatment.


Dec-24Sep-24
$M$M
Collective provis ion for im pairm ent215215
Ineligible collective provis ions
(2)
(61)(46)
Eligible collective provis ions154169
General equity res erve
(3)
7676
230245Provisions eligible for inclusion in Tier 2 capital (Standardised approach)

Suncorp Bank Basel III Pillar 3 Disclosure December 2024
13

Table 5: Securitisation Exposures
Table 5A: Summary of securitisation activity for the period
There was no new securitisation activity undertaken during the quarter ending 31 December 2024 (quarter
ending 30 September 2024: Nil).



Table 5B(i): Aggregate of on-balance sheet securitisation exposures by exposure type



Table 5B(ii): Aggregate of off-balance sheet securitisation exposures by exposure type







Dec-24Sep-24Dec-24Sep-24
$M$M$M$M
Res idential m ortgages----
Total exposures securitised during the period----
Exposures
Securitised
Recognised Gain or
(Loss) on Sale
Dec-24Sep-24
Exposure type$M$M
2829
2829Total on-balance sheet securitisation exposures
Debt s ecurities
Dec-24Sep-24
Exposure type$M$M
1618
3528
Total off-balance sheet securitisation exposures5146
Liquidity facilities
Derivative expos ures

Suncorp Bank Basel III Pillar 3 Disclosure


December 2024


14
Table 20: Liquidity Coverage Ratio Disclosure



Dec-24
Dec-24
Sep-24
Sep-24
Jun-24
Jun-24
$M
$M
$M
$M
$M
$M
Liquid assets, of which:
High-quality liquid assets (
HQLA
)
13,324


13,037


13,874


Alternative liquid assets (
ALA
)
-


-


-


Cash outflows
Retail deposits and deposits from small business cu
stomers, of which:
37,438
3,726

36,632
3,621
36,140

3,579
stable deposits
23,500


1,175


23,216


1,161


22,919


1,146


less stable deposits
13,938


2,551


13,416


2,460


13,221


2,433


Unsecured wholesale funding, of which:
5,085


3,341


4,796


3,132


5,132


3,298


operational deposits (all counterparties) and depos
its in network s for cooperative bank s
-

-
-
-
-

-
non-operational deposits (all counterparties)
3,550


1,806


3,605


1,941


3,635


1,801


unsecured debt
1,535


1,535


1,191


1,191


1,497


1,497


Secured wholesale funding
103


93


450


Additional requirements, of which:
10,011


1,434


9,577


1,288


9,815


1,607


outflows related to derivatives exposures and other
collateral requirements
975


975


841


841


1,164


1,164


outflows related to loss of funding on debt product
s
-


-


-


-


-


-


credit and liquidity facilities
9,036


459


8,736


447


8,651


443


Other contractual funding obligations
1,344


987


1,372


1,064


1,107


797


Other contingent funding obligations
7,734


670


8,689


833


8,251


706


Total cash outflows
10,261


10,031


10,437


Cash inflows
Secured lending (e.g. reverse repos)
938


-


768


-


754


-


Inflows from fully performing exposures
745


388


650


341


675


364


Other cash inflows
700


700


692


692


1,118


1,118


Total cash inflows
2,383


1,088


2,110


1,033


2,547


1,482


Total liquid assets
13,324
13,037

13,874
Total net cash outflows
9,173
8,998

8,955
Liquidity Coverage Ratio (%)
145
14
5
155
Number of data points used
64
66
63

Total adjusted
value
Total adjusted
value
Total adjusted
value
Total
unweighted
value
(average)
Total
weighted
value
(average)
Total
unweighted
value
(average)
Total
weighted
value
(average)
Total
unweighted
value
(average)
Total
weighted
value
(average)

Suncorp Bank Basel III Pillar 3 Disclosure December 2024

15

Overview
The Liquidity Coverage Ratio (LCR) promotes shorter-term resilience by requiring ADIs to maintain
sufficient qualifying High Quality Liquid Assets (HQLA) to meet expected net cash outflows (NCO) under
an APRA prescribed 30 calendar day stress scenario. Suncorp Bank manages its LCR on a daily basis and
maintains a buffer over the regulatory minimum of 100%.
Liquidity and Funding Risk Management Framework
The Suncorp Bank (Norfina Limited) Board is responsible for the sound and prudent management of
liquidity risk across the Bank, with authority delegated to the Suncorp Bank Board Risk Committee.
Executive management of liquidity and funding risk is overseen through the Suncorp Bank Asset and
Liability Committee (SBALCO) which reviews risk measures and limits, endorses and monitors funding and
liquidity strategies and ensures stress tests, the Contingency Funding Plan (CFP) and holdings of HQLA
are effective and appropriate. Operational management of liquidity risk is delegated to a centralised
function in the Suncorp Bank Treasury division.
The Bank's stress testing framework includes several scenarios designed to test the Bank's response to
liquidity stress under different criteria and understand the range of mitigating actions available. The Bank
integrates stress test outcomes and liquidity metrics into the Bank’s overall risk management framework
and strategic planning, thereby undertaking comprehensive risk management.
Liquidity and Funding Management
The quantum of liquid assets held considers the amount needed to meet prudential and internal
requirements (including a variety of internal stress scenarios as part of the risk management framework)
and suitable buffers as appropriate.
Liquid assets included in the LCR consist of HQLA (such as cash, Australian Semi-Government and
Commonwealth Government securities).
Other contractual funding obligations and other net inflows represent gross flows not included elsewhere in
the LCR. Over time, key balances in these categories can be material to the Bank’s net cash outflow.
During the December quarter, the material balances of net other cashflows were due to forecast loan
disbursements, regulatory liquidity held against the NCD portfolio as well as settlement periods for liquid
assets and funding transactions (such as the $250m private placement). On average, the Bank's
contingent funding obligations decreased from the September quarter to the December quarter due to a
reduction in liquid asset purchases and the size of funding transactions undertaken.
Contingency Funding Plan
Suncorp Bank maintains a CFP which outlines funding and management strategies to address liquidity
shortfalls under stressed conditions. The CFP establishes clear lines of responsibility and provides a
comprehensive list of liquidity options to enable swift, decisive action to support the mitigation of any
potential liquidity risks.
Suncorp Bank also monitors several Early Warning Indicators that serve as metrics complementary to its
other liquidity risk limits, to identify the emergence of increased risk or vulnerabilities and support in the
decision-making around any activation of the CFP.
Liquidity Coverage Ratio
Suncorp Bank calculates its LCR position on a daily basis, ensuring a buffer is maintained over the
regulatory requirement of 100% and the Board’s approved Risk Appetite. Over the December quarter, the
average LCR remained steady at 145% and excess liquid assets were $4bn on average.
There was approximately $625m in domestic term funding maturities across the December quarter. These
were partially replaced by a $250m private placement in November. On average, unsecured debt exposure
was higher through the quarter driven mainly by an increase in US Commercial Paper in the LCR 30-day
window. The Bank saw a decrease in net derivative flows over the quarter.
Additional liquidity was held over the end of year period contributing to an LCR of 152% on 31st December
2024. During the quarter the lowest point of the LCR was 132% on 27 November, coinciding with a high
point in the NCO which was driven by an increased volume of wholesale funding maturities in the 30-day
window.

Suncorp Bank Basel III Pillar 3 Disclosure December 2024

16

Appendix 2 - Definitions
AASB 9 AASB 9 Financial Instruments was issued in December 2014. It addresses recognition and
measurement requirements for financial assets and financial liabilities, impairment requirements that
introduce a forward-looking expected credit loss impairment model, and general hedge accounting
requirements which more closely align with risk management activities undertaken when hedging
financial and non-
financial risks. This standard became mandatory for the annual reporting period from
1 July 2018.
Capital adequacy ratio Capital base divided by total assessed risk, as defined by APRA.
Collective provision A collective provision is established to determine expected credit losses (see also Expected Credit
Losses definition below) for loan exposures which are not specifically provisioned and can be in the
performing or non-performing portfolios. For business banking exposures, a ratings-based approach is
applied using estimates of probability of default and loss given default, at a customer level. For
portfolio managed exposures, the portfolios are split into pools with homogenous risk profiles and pool
estimates of probability of default and loss given default are used to calculate the collective provision.
Common Equity Tier 1 (CET1) Common Equity Tier 1 capital comprises accounting equity plus adjustments for intangible assets and
regulatory reserves.
Common Equity Tier 1 ratio Common Equity Tier 1 divided by total risk weighted assets, as defined by APRA.
Credit value adjustment (CVA) A capital charge that covers the risk of mark-to-market losses on the counterparty credit risk.
Eligible collective provisions Primarily represents the collective provision for impairment on loans and advances in Stage 1
(performing and/or newly originated assets) and Stage 2 (without any arrears). Provisions for loans
and advances in Stage 1 are established to provide for expected credit losses (ECL) for a period of 12
months. Forward-looking provisions for future, presently unidentified losses are also
included within the
Eligible collective provision balance.
Expected credit losses (ECL) Expected credit losses (ECL) are calculated as the probability of default (PD) x loss given default
(LGD) x exposure at default. The credit models are calibrated to reflect PD and LGD estimates based
on historical observed experience, as well as reflecting unbiased forward-looking views of
macroeconomic conditions, through macroeconomic variables that influence credit losses, for example
unemployment rates and changes in house prices.
Ineligible collective provisions Represents the collective provision for impairment on loans and advances in Stage 2 (with any level of
arrears) or Stage 3. Stage 3 assets within ineligible collective provisions include ‘past due but not
impaired’ and ‘impaired assets’ (non-performing loans, other than those for which a specific provision
is held under AASB 9). Collective provisions for loans and advances in Stage 2 and Stage 3 are
established to provide for ECL for the remaining term of the loans and advances (lifetime ECL).
Ineligible collective provision is considered as specific provision for regulatory purposes under APS
220 Credit Risk Management.
Liquidity coverage ratio (LCR) An APRA requirement to maintain a sufficient level of qualifying high-quality liquid assets to meet
liquidity needs under an APRA-defined significant stress event lasting for 30 calendar days. Absent of
a situation of financial stress, the LCR must not be less than 100%. The LCR is calculated as the ratio
of qualifying high-quality liquid assets relative to net cash outflows in a modelled APRA-defined 30-
day
stress scenario.
Loan-to-value ratio (LVR) Ratio of a loan to the value of the asset purchased.
Non-performing exposure An exposure that is in default. A default is considered to have occurred with regard to a particular
borrower when either, or both, of the events in sub-paragraphs (i) or (ii) have taken place: (i) the ADI
considers that the borrower is unlikely to pay its credit obligations to
the ADI in full, without recourse by
the ADI to actions such as realising available security;
(ii) the borrower is 90 days or more past-due on a credit obligation to the ADI or, in the case of
subsidiaries in jurisdictions where a different number of days past-due is set for exposures to
individuals (i.e. natural persons) or public sector entities by the national regulator, the borrower is past-
due by the number of days (or more) specified by that national regulator.
Past due loans An exposure for which any amount due under a contract (interest, principal, fee or other amount) has
not been paid in full at the date when it was due. An exposure is considered past-
due from the first day
of missed payment.
Risk weighted assets Total of the carrying value of each asset class multiplied by their assigned risk weighting, as defined by
APRA.
Specific provision
A specific provision for impairment is recognised where there is objective evidence of impairment and
full recovery of principal and interest is considered doubtful. The present value of the expected future
cash flows is compared to the carrying amount of the loan to determine the specific provision required.
Total assessed risk Credit risk-weighted assets, off-balance sheet positions, market risk capital charge and operational risk
charge, as defined by APRA.