More annual reports from Australia and New Zealand Banking Group:
2023 ReportA
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ANZ 2022 Annual Report
Contents
Overview
Our 2022 reporting suite
2022 performance snapshot
Chairman’s message
CEO’s message
How we create value
How we create value
What matters most
to our stakeholders
Our operating environment
About our business
Achieving our strategy
2
3
4
6
8
10
11
12
13
Our approach to societal challenges 14
Our approach to climate change
Our divisions
Governance
Risk management
Performance overview
Remuneration report
Directors’ report
Financial report
KPMG assurance
16
18
26
36
44
62
104
107
234
Shareholder information
244
Glossary
253
Many paths.
One Purpose.
Since 1835, ANZ has been
building a better bank, increasingly
enabling customers to thrive. And
more than ever, we continue to
deliver our purpose creating even
greater opportunities through:
Propositions our customers love that
make it easier to develop and grow
in a sustainable way
Platforms that are flexible and resilient
and leverage the kind of innovative
technology that really makes a difference
in our lives
Partnerships that unlock new value
with a great foundation and network
to help our customers prosper
People that are great at what they do
and care about our customers and the
value we create
By giving individuals and businesses alike
the tools to grow, we help them achieve
a whole new level of financial wellbeing.
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ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
Our 2022
reporting suite
2022 Annual Report
anz.com/annualreport
2022 Corporate
Governance Statement
anz.com/corporategovernance
2022 Climate-related
Financial Disclosures
anz.com/annualreport
2022 ESG Supplement
anz.com/annualreport
Integrated reporting
This report includes information on Australia
and New Zealand Banking Group Limited’s1
financial and non-financial performance.
In preparing pages 1 to 60, we have drawn
on aspects of the International Integrated
Reporting Framework to describe how
our business model, strategy, governance
and risk management processes help us
manage risks and opportunities in our
operating environment and deliver value
for stakeholders. We outline our response
to external social and environmental
challenges, including how we are
continuing to support our customers,
employees and the community through
the COVID-19 pandemic and strengthening
our approach to climate change and
human rights.
Annual Report structure
The various elements of the Directors’
Report, including the Operating and
Financial Review, are covered on pages 1
to 60. Commentary on our performance
overview contained on pages 44 to 60
references information reported in the
Financial Report pages 107 to 233.
The Remuneration Report on pages 62
to 103 and the Financial Report on pages
107 to 247 have been audited by KPMG.
KPMG also provides limited assurance over
Environment, Social and Governance (ESG)
content within this Annual Report. A copy
of KPMG’s limited assurance report over
the ESG content is on pages 242–243.
This report covers all ANZ operations
worldwide over which, unless otherwise
stated, we had control for the financial year
1 October 2021 to 30 September 2022.
Monetary amounts in this document
are reported in Australian dollars, unless
otherwise stated.
Additional information
We produce a suite of reports to meet the
needs and requirements of a wide range
of stakeholders.
Our 2022 Corporate Governance Statement
discloses how we have complied with
the ASX Corporate Governance Council’s
‘Corporate Governance Principles and
Recommendations – 4th edition’ and is
available at anz.com/corporategovernance.
This year is our first reporting against the
4th edition.
We will release our 2022 Climate-related
Financial Disclosures report prior to our
Annual General Meeting.
Our ESG Supplement provides stakeholders
with detailed ESG disclosures, including
performance against our ESG targets.
The following documents are available at
anz.com/shareholder/centre:
• News Release
• Consolidated Financial Report, Dividend
Announcement & Appendix 4E
• Results Presentation and Investor
Discussion Pack
• Annual Review2
• Principal Risks and Uncertainties
Disclosure
• APS 330 Pillar III Disclosure
We are continually seeking to improve
our reporting suite and welcome
feedback on this report. Please address
any questions, comments or suggestions
to investor.relations@anz.com.
DISCLAIMER & IMPORTANT NOTICE:
The material in the Annual Report contains general background information about the Bank’s activities current as at 26 October 2022. It is information
given in summary form and does not purport to be complete. It is not intended to be and should not be relied upon as advice to investors or potential
investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered,
with or without professional advice when deciding if an investment is appropriate. The Annual Report may contain forward-looking statements or
opinions including statements regarding our intent, belief or current expectations with respect to ANZ’s business operations, market conditions, results
of operations and financial condition, capital adequacy, specific provisions and risk management practices. When used in the Annual Report, the words
‘forecast’, ‘estimate’, ‘project’, ‘intend’, ‘anticipate’, ‘believe’, ‘expect’, ‘may’, ‘probability’, ‘risk’, ‘will’, ‘seek’, ‘would’, ‘could’, ‘should’ and similar expressions,
as they relate to ANZ and its management, are intended to identify forward-looking statements or opinions. Those statements: are usually predictive in
character; or may be affected by inaccurate assumptions or unknown risks and uncertainties; or may differ materially from results ultimately achieved. As
such, these statements should not be relied upon when making investment decisions. These statements only speak as at the date of publication and no
representation is made as to their correctness on or after this date. Forward-looking statements constitute ‘forward-looking statements’ for the purposes
of the United States Private Securities Litigation Reform Act of 1995. ANZ does not undertake any obligation to publicly release the result of any revisions
to these forward-looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events.
1. Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the year end and from time to time during the financial year (together, the Group).
2. The 2022 Annual Review is comprised of pages 1 to 60, 248 to 249 and 257 to 258 of this Annual Report and a Remuneration Overview.
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
3
2022
performance
snapshot
146C
Total Dividend for 2022
per share
$6.5 B
Cash profit¹
84%
employee engagement
More than
58 K
participants in our financial
education programs²
$20.75
Net tangible assets per share³
228.8 C
Earnings per share (Basic)¹
12.3%
Common equity Tier 1 Capital⁴
Supported nearly
1.5 M
customers in saving regularly⁶
Over
$4.4 B
funded and facilitated to
deliver more affordable,
accessible and sustainable
homes to buy and rent
since 2018⁷
35.9%
of women in leadership⁵
10.4%
Cash return on equity¹
$40.04B
funded and facilitated in
sustainable solutions since 2019
1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in
understanding the result of the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45 . 2. Includes
individuals who have participated in more than one program (for example, people who have participated in MoneyMinded as part of Saver Plus are counted twice as they are
included in both the MoneyMinded and Saver Plus totals). 3. Equals total shareholders’ equity less total non-controlling interests, goodwill and other intangible assets divided
by the number of ordinary shares. 4. APRA Level 2. 5. Measures representation at the Senior Manager, Executive and Senior Executive levels. Includes all employees regardless
of leave status but not contractors (who are included in Full Time Equivalents (FTE)). 6. On average, across Australia and New Zealand. 7. In Australia and New Zealand.
4
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
During a period of significant
global uncertainty, all our divisions
contributed to a full-year statutory
profit of $7.12 billion, up 16% on the
prior year, driven by strong revenue
growth as well as disciplined cost
management.
As a result, we were pleased to pay a Total
Dividend of 146c, which was up 4c on 2021,
and meant more than $4.2 billion was
returned to you, our shareholders.
With the bank in good shape, we are also
prepared for a period of global uncertainty.
A key measure of strength, our
Common Equity Tier 1 Ratio of 12.3%¹
is well above the Australian Prudential
Regulation Authority’s “Unquestionably
Strong” benchmark of 10.5%.
We have maintained prudent reserves to
help weather any external shocks with a
collective provision balance of $3.9 billion,
while materially improving the shape and
composition of our lending book. An
example of this is how our investment
grade lending has increased by 50%
since 2016.
We also made good progress on the
continued digitisation of the bank with
the launch of ANZ Plus, where we have
effectively built a new retail banking
platform that will be the future foundation
of ANZ in Australia.
Another highlight for the year was the
agreement announced in July to acquire
Suncorp Bank.
While still subject to various Government
and regulatory approvals, this will provide
ANZ with a platform for growth for the
1. Pro forma CET1 of 11.1% when accounting for the recently
announced acquisition of Suncorp Bank.
Paul O’Sullivan
Chairman
Chairman’s
message
This was a year when we made significant
progress strengthening the bank for
the future while also delivering a solid
financial outcome for shareholders.
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
5
coming decades, particularly in the
fast-growing Queensland market.
We believe this acquisition will help ANZ
compete more effectively in Queensland
and ultimately provide better services to
customers across Australia.
The associated $3.5 billion capital
raising was well received despite volatile
market conditions. It was the world’s
largest equity raise this calendar year
for a Mergers and Acquisitions (M&A)
transaction, structured in a way to
ensure all ANZ shareholders were
treated equally, and I’d like to thank
shareholders for their support.
The annual report also sets out our
approach to climate change and we know
this is important to all our shareholders.
We want to be the leading Australia and
New Zealand-based bank in supporting
customers’ transition to net zero emissions
by 2050. We also recognise we can have
the most impact by working with our
customers to reduce their emissions.
Our policy is to support customers through
the transition, backing their plans by
providing more finance for less emissions.
We have high expectations, particularly
for our customers in the energy sector.
We expect our energy customers’ plans
to be net-zero aligned, public and specific.
We acknowledge some stakeholders have
suggested that ANZ immediately cease
lending to companies in carbon-intensive
sectors like energy.
This approach may reduce ANZ’s exposures
or ‘financed emissions’. However, it does not
reduce emissions in the ‘real world’ if the
company receives funding from an alternate
source. We are also then precluded from
actively supporting the development of
their net-zero aligned transition plans.
Non-Operating Holding Company
Board Renewal
Our core business is banking and that
won’t change.
However, to help us better compete
in the future we are introducing a new
corporate structure, known as a Non-
Operating Holding Company. This will be
subject to a shareholder vote in December.
Like other traditional banking businesses,
ANZ faces significant disruption, largely
from non-banking businesses competing
in financial services. Understandably, these
businesses are not regulated in the same
way as banks like ANZ.
The proposed structure will allow our
non-banking businesses to operate
on a more level playing field with non-
banking companies, while maintaining
an appropriate regulatory environment
for the bank as a whole.
These structures are not new and are
common for many financial institutions
around the world, including Barclays,
Lloyds Bank, DBS, Citigroup and HSBC
as well as Australian financial institutions
Macquarie and Suncorp.
This will help make our banking business
more efficient, providing us with greater
strategic and operational flexibility and,
importantly, allowing us to better meet
our customers’ needs.
All of your Directors intend to vote all the
ANZ shares they own or control in favour
of the Scheme. I would encourage you
to look at the detailed scheme booklet,
located at anz.com/schememeeting, which
sets out in more detail the benefits and the
costs of implementation of this proposal.
I’d like to acknowledge the enormous
contribution of Graeme Liebelt who is
retiring from the Board at the upcoming
Annual General Meeting.
Graeme has given tireless service over
the last nine years, particularly in his roles
chairing the Human Resources and Risk
committees. I will personally miss his wise
counsel, strategic insight and experience.
It has been an honour to serve on the Board
with him and on behalf of all shareholders
I wish him well with his future endeavours.
I am also pleased to formally welcome
Jeff Smith who joined the Board in August
and will stand for election at the upcoming
AGM. Jeff is an experienced global business
and technology executive having been
Chief Information Officer at several
organisations – including IBM, Suncorp
and Telstra – and has already made a
significant contribution for shareholders.
Finally, I’d like to also thank my fellow
shareholders for their support in what
has been a transformational year and
acknowledge the more than 39,000
people who work tirelessly each day
for their customers.
Paul O’Sullivan Chairman
6
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
CEO’s message
We go into the new year with solid
momentum and cash profit before
provisions excluding large/notable
items growing at 20% in the second
half, which is the fastest half-on-half
growth we have recorded in more
than a decade.
We also did what we said we would do.
We restored momentum in Australian home
loans with application approval times back
in line with industry peers. This was assisted
by our decision to bring Australia Retail
and Digital Transformation together as
one division.
We continued the re-platforming of
Australia Retail onto ANZ Plus, which is our
new digital bank, with deposits growing
at a rate faster than any new digital bank in
Australia. Around a third of those customers
joined ANZ for the first time.
In New Zealand, we maintained an industry
leading position across our key segments
while also reaching the final stages of BS11.
This was one of the largest regulatory
programs implemented in New Zealand
banking history. It now means we are well
positioned to focus on the future and
further build the franchise.
Institutional continues to benefit from
our multi-year transformation as rising
rates across the globe create favourable
conditions for the business.
The expansion of our platforms strategy,
where we lead the market in providing
banking services for other financial
institutions, resulted in the volume
of payments processed using ANZ’s
infrastructure growing by 85%. We also
continued to innovate in our approach
to digital assets, executing the first
ever Australian bank-issued Australian
dollar stablecoin.
Australia Commercial delivered a strong
first-up result as a stand-alone division
and is already benefiting from increased
focus and a refreshed strategy. A highlight
was the commencement of the ANZ
Worldline joint venture that will allow
us to provide business customers with
world-leading point-of-sale and online
payment technology.
We’ve achieved all this while also preparing
the bank for the future.
We agreed the acquisition of Suncorp
Bank which, if approved by government
and regulators, will provide an important
platform for growth, particularly in the
fast-growing and rapidly diversifying
Queensland economy.
Suncorp Bank is a well-run business that
will see more than one million new retail
customers join ANZ, sharing in the benefits
of a wider range of products and services.
It also means the Suncorp Group is able
to focus on its core mission of being the
best insurance company in Australia and
New Zealand.
The ‘non-operating holding company’
structure, which shareholders will have
the opportunity to vote on in December,
is another important step that will help
us further strengthen and grow our
core business.
We are a safer bank
We continued the systematic de-risking
of the bank, highlighted by the sale of our
margin lending business and the formal
separation of our Wealth businesses to
Insignia, formerly known as IOOF, and
Zurich last month.
Combined with the exit of Financial
Planning & Advice, as well as all the
associated remediation being at the
very final stage, we are the only major
bank in Australia to have removed the
risks associated with wealth management
for shareholders.
We further strengthened our loan portfolio,
particularly in Commercial and Institutional
banking, where we have deliberately exited
high-risk portfolios while increasing our
focus on investment grade lending.
During the year we invested significantly
to help prevent customers falling victim to
fraud as well as continually improving our
cyber defences.
A good example of this is the behavioural
biometrics capability we implemented
which has detected approximately 3,600
fraudulent applications, preventing nearly
$40 million of identity fraud.
While preventing cybercrime remains a
challenge for all businesses, we take our
role seriously and maintain a sophisticated,
24/7 internal Security Operations Centre,
analysing millions of events daily. As you
would expect, our team works closely with
other banks and government agencies
around the world to protect against the
ever-evolving cyber security threats.
ANZ Plus
As mentioned earlier, we launched this year
our new retail banking platform in Australia,
ANZ Plus.
ANZ Plus is effectively a new retail bank; one
that is focused on improving the financial
wellbeing of our customers. This is good for
customers and the early signs are promising
with solid deposit growth, particularly with
customers new to the bank.
A key feature of ANZ Plus is the ability
to easily save for multiple goals without
the need to open a new account. This is
important because we know a savings
habit is core to financial wellbeing.
We have seen strong growth in the number
of savings goals created with 45% of our
active customers taking advantage of the
functionality, compared with less than 5%
on our traditional platform.
ANZ Plus also has the very high levels
of security our customers and regulators
expect with market-leading fraud
prevention technology already having
a material impact.
We will begin moving existing customers
across to ANZ Plus while also piloting
a new digital home loan in the coming
weeks. This will see the introduction of a
fully automated digital home loan offering,
initially focused on the re-finance market,
later in 2023.
Sustainability
ANZ has been taking important steps to
not only reduce our own emissions but
also help our customers, particularly 100
of our largest emitting business customers,
reduce their emissions and enhance their
resilience to a changing climate.
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
7
During the year we formed a strategic
partnership with Pollination, a market-
leading global climate change investment
and advisory firm, that will focus on the
transition needs of ANZ’s customers globally
in the areas of Sustainable Finance, Project
& Export Finance, Carbon Markets and
Corporate Advisory, including mergers
and acquisitions.
An example is the partnership we announced
in Australia with INPEX Corporation and
Qantas to explore a carbon farming and
renewable biofuels project in the Wheatbelt
region of Western Australia. This is an exciting
opportunity with two important customers
that has the potential to develop a domestic,
sustainable aviation fuel industry in Australia.
In New Zealand, we launched our Good
Energy Home Loan which allows customers
to borrow up to $80,000 at a 3-year fixed
rate of 1% to make their homes more
energy efficient. We also introduced a
similar initiative for business and corporate
customers, allowing them to access up
to $3 million at a special floating interest
rate for up to five years to be used on
environmental initiatives.
There are economic risks ahead, but we
are entering 2023 in great shape and with
positive momentum.
We have a balanced portfolio of businesses,
leadership in intermediating trade and
capital flows, particularly aligned to
sustainability and a strong balance sheet
which means ANZ is better positioned
than most for the opportunities ahead.
Finally, I want to thank the entire team
at ANZ for their ongoing commitment
to our customers and the community.
Our culture is strong, we have industry
leading employee engagement and we
have an embedded sense of purpose –
to shape a world where people and
communities thrive.
Shayne Elliott Chief Executive Officer
Shayne Elliott
Chief Executive Officer
This has been a transformational year during
which we delivered a strong financial result
with all our divisions making a material
contribution, demonstrating the benefits of a
well-managed and diversified portfolio.
8
How we
create value
Value drivers
Our strategy and business model
Products and services
Loans, transaction banking services,
deposits and other financial products
developed for our customers.
Finance
Access to capital through customer
deposits, debt and equity investors,
and wholesale markets to support our
operations and execution of our strategy.
People
Engaged workforce with the skills
required to reinvent banking, in
line with our purpose and culture.
Technology, data and
risk management
Flexible, digital-ready infrastructure
to provide a great customer experience,
with systems and processes that are
less complex, less prone to error and
more secure.
Social
Trusted relationships with our
customers, business partners
and the community to strengthen
our brand and reputation.
Environment
Minimising the impact of our operations,
including through:
• The customers we choose to bank
• How we design and distribute
our products
• Collaboration with partners
Better access
to capital and
talent, driving
greater capacity
to invest well
Better customer
propositions that
are purposeful,
engaging, efficient
and safe
Better financial
outcomes
for shareholders
and staff
Better acquisition
and retention
rates, and higher
share of target
customers
Our customers will have
relatively better financial
wellbeing, more sustainable
practices and generate higher
average lifetime value
Better financial
wellbeing and
sustainability outcomes
for customers and
the community
Better reputation
among customers
and the community,
and higher workforce
engagement
Better data,
insights, risk
decisions and
pricing
Better customer
engagement,
and greater use
of our products
and services
To embrace the opportunities, address the risks presented by
the external environment and realise our vision, we are pursuing
four strategic imperatives to: create a simpler, better capitalised, better
balanced bank; build a superior experience for our people and customers
in order to compete in the digital age; focus our efforts on attractive
areas where we can carve out a winning position; and drive a purpose-
and values-led transformation of the bank.
ANZ 2022 Annual ReportOverviewHow we create valuePerformance overviewRemuneration reportDirectors’ reportFinancial reportShareholder information ...creating value for our stakeholders1
Shareholder value
Customer value
Employee value
We generate stronger long-term
financial results (in terms of sustainable
economic profits) enabling shareholders
to meet their goals.
Our customers are financially better
off over their lifetime and implement
more sustainable business practices
than others.
Our diverse teams are engaged
and optimised for success.
228.8 C
cash earnings per share (Basic)2
10.4%
cash return on equity2
Proposed final dividend
per share of
74C
and interim dividend
per share of 72 cents
84%
employee engagement
35.9%
Women in leadership
$5.3B
in employee salaries and benefits
$374 B
home loan portfolio, increase
of $6 billion in 2022 (Australia
and New Zealand)
Business lending balance3
$93 B
(Australia and New Zealand)
$357B
Retail & Business customer deposit
balances (Australia & New Zealand) and
$259 billion of Institutional deposits
Community value
Funded and facilitated over
Our practices and services
provide more opportunity for the
community and we have supported
and improved positive economic
development and transition.
$4.4B
More than
58 K
to deliver more affordable,
accessible and sustainable homes
to buy and rent since 20184
people reached through
our financial literacy programs
MoneyMinded and Saver Plus6
$3.4 B
in taxes paid to government5
$40.04B
Funded and facilitated
in sustainable solutions
since 2019
1. All figures below relate to the period 1 October 2021 – 30 September 2022 unless otherwise stated. 2. On a cash profit (continuing operations) basis. Excludes non-core
items included in statutory profit and discontinued operations and is provided to assist readers in understanding the result of the ongoing business activities of the Group.
For further information on adjustments between statutory and cash profit refer to page 45 . 3. Includes Private Bank. 4. In Australia and New Zealand. 5. Represents statutory
income tax expense (including discontinued operations), unrecovered GST/VAT, employee related taxes, and other taxes/duties. 6. Includes individuals who have participated
in more than one program (for example, people who have participated in MoneyMinded as part of Saver Plus are counted twice as they are included in both the MoneyMinded
and Saver Plus totals).
9ANZ 2022 Annual ReportOverviewHow we create valuePerformance overviewRemuneration reportDirectors’ reportFinancial reportShareholder information 10
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
What matters most
to our stakeholders
Through our materiality assessment,
we seek to identify those issues with
the most potential to impact our
ability to operate successfully and
create value for our shareholders
and other stakeholders. We
engage with internal and external
stakeholders to inform our
identification of and responses
to ESG risks and opportunities.
We use the results to inform our strategy,
ESG targets, group remuneration scorecard
and external reporting.
This year, our materiality assessment again
highlights the importance of continuing to
act on climate change. Greenwashing was
identified as an emerging topic.
The importance of information security
has increased commensurate to the scale
and sophistication of scams targeting
individuals. This is part of a broader
theme of payments system safety.
Innovation and technology is recognised
as foundational to providing customers
with a digitally connected experience,
while also ensuring the responsible
use of emerging technologies.
Customer experience is determined by
the products we offer customers and
the value they deliver, and ensuring we
have empathetic and helpful processes
for when things go wrong, such as
managing complaints and for customers
in financial difficulty. This is of particular
importance given the emerging impact
of macroeconomic conditions on the
cost of living and housing affordability.
As staff return to workplaces, employee
capability and wellbeing, including mental
health, was viewed as essential to maintain
an engaged and resilient workforce.
Top 5 material issues:
Climate change
Managing the business risks and
opportunities associated with climate
change. Includes the role we play in
supporting our customers to transition
to a low carbon economy.
Employee capability and wellbeing
Attracting and retaining a capable and
engaged workforce, that is diverse and
inclusive, helping us serve our customers
better and drive strong business performance
across the markets in which we operate.
Includes supporting the physical and
mental health and wellbeing of employees.
Information Security
Policies and processes in place to
protect our systems, data and customers
against scams and cyber attacks. Includes
customer access to personal data.
Insights from the assessment were
presented to our executive Ethics and
Responsible Business Committee and
Board Ethics, Environment, Social and
Governance Committee.
Innovation and technology
Keeping pace with digital innovation
to ensure we are offering our customers
reliable and convenient products and
services in a rapidly changing market.
Customer experience
Delivering value and improved customer
experience through appropriate financial
products and services for all customers,
small business and personal.
Our material ESG issues are ‘mapped’
to the bank’s Key Material Risks on
pages 40–42.
The full list of our material ESG issues
and key steps in the materiality
assessment process are discussed in
our 2022 ESG Supplement available
at anz.com/annualreport
Detailed information on other ways
in which we have engaged with
stakeholders is also included in the
2022 ESG Supplement.
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
11
Our operating
environment
CHALLENGE
Rising inflation
and interest rates,
and moderating
credit growth
• Consumers are facing abrupt cost
of living adjustments through rises
in prices of energy and other items,
and more recently, interest rates
• After a period of strong growth,
credit growth is moderating – driven
by lower demand for housing credit
Increased public
and regulatory
scrutiny
• Challenges arising from regulatory
expectations, and changing community
standards and expectations, particularly
as they relate to ESG
Increased
competition
• Ongoing competitive intensity,
from both ‘traditional’ and new,
digitally-enabled competitors
Cyber-security
threats
• Increased cyber-attacks,
scams and attempted fraud
Geopolitical
tension
• Heightened tension in our operating
regions and other nations, affecting
the global economy and creating
significant societal disruption
Climate change and
biodiversity loss
• Increasing regulatory, political and
societal focus on the transition risks
associated with climate change,
including financial risks associated
with lending to customers impacted
by climate change
OUR RESPONSE •Effectively assessing borrowers’ resilience to rising rates •Ensuring consumers are offered financially appropriate products and services •Dealing appropriately with customers experiencing financial hardship or needing extra care •Adjusting our staff salaries appropriately •Deploying new and improved digital services, products and processes to help meet customer needs for efficient and accessible banking •Investing in underlying technology and systems to establish more flexible and responsive platforms •Ensuring our products and services are appropriate for customers •Building trust by ‘doing what we say’ •Working cooperatively with regulators, government and NGOs •Strengthening our ESG policies and processes and ensuring we implement them effectively – transparently disclosing our progress •Providing sustainable banking and finance products and services, such as green and sustainability-linked loans and bonds, that drive the transition to a low carbon economy •Strengthening our strategy, policies, processes, products and services to manage the risks and opportunities associated with climate change and biodiversity loss •Contingency plans have been developed for our medium-to-higher risk jurisdictions with trigger events identified and monitored •Ongoing investment in cyber-security and scams detection capabilities and raising customer awareness as to the relevant risks 12
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
About our
business
Our divisions
Australia Retail – serves retail customers
across Australia through our branch
network, ATMs, digital and mobile
banking applications including ANZ Plus.
Australia Commercial – serves commercial
and private banking customers across
Australia through our business centres,
digital and mobile banking applications.
Institutional – serves institutional and
business customers across Transaction
Banking, Loans and Specialised Finance
and Markets.
New Zealand – serves retail and commercial
banking customers in New Zealand and is
one of the largest New Zealand companies
based on profit and assets.
Pacific – provides products and services to
retail and commercial customers located in
the Pacific Islands, where our history dates
back 139 years.
Group Centre – provides support to the
operating divisions, including technology,
property, risk management, financial
management, strategy, marketing,
human resources and corporate affairs.
Our purpose and strategy
Our purpose is to shape a world where
people and communities thrive. It explains
‘why’ we exist and drives everything we
do at ANZ, including the choices we make
each day about those we serve and how
we operate.
We bring our purpose to life through our
strategy; to improve the financial wellbeing
and sustainability of customers through
excellent services, tools and insights that
engage and retain them, and help positively
change their behaviour.
Through our purpose we have elevated
areas facing significant societal challenges
aligned with our strategy and our reach
which include commitments to:
• Improving the financial wellbeing of
our people, customers and communities
by helping them make the most of their
money throughout their lives;
• Supporting household, business
and financial practices that improve
environmental sustainability; and
• Improving the availability of suitable
and affordable housing options for
all Australians and New Zealanders.
In particular, we want to
help customers:
$
Save for, buy and own
a liveable home
$
Start or buy and sustainably
grow their business
$
Move capital and goods around
the region and sustainably grow
their business
Fundamental to our approach is a
commitment to fair and responsible
banking – keeping pace with the
expectations of our customers, employees
and the community, behaving fairly
and responsibly and maintaining high
standards of conduct, as well as addressing
issues identified through our annual
materiality assessment.
We provide banking
and financial products
and services to around 8.5
million retail and business
customers, and operate
across 32 markets.
Our expertise, products
and services make us a
bank. Our people, purpose,
values and culture make
us ANZ.
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13
Achieving
our strategy
Integrating ESG and purpose into our strategy has created an
opportunity for us to better serve our customers and generate
long-term shareholder value.
We will achieve our strategy
through…
Propositions our customers love... with
easy-to-use services that evolve to meet
their changing needs.
Through better use of data we will be able to
provide valuable insights about our customers
and how they can improve their financial
wellbeing and sustainability over their lifetime,
enabling us to create superior propositions.
Flexible and resilient digital banking
platforms... powering our customers
and made available for others to power
the industry.
Platforms underpin our own propositions
and will increasingly underpin those of
our customers, notably other banks or
institutional corporations.
Partnerships that unlock new value...
with ecosystems that help customers
further improve their financial wellbeing
and sustainability.
We recognise that no one institution can do
everything or innovate at the pace necessary
to satisfy customers’ needs – strong
relationships with partners are therefore vital.
Purpose- and values-led people... who
drive value by caring about our customers
and the outcomes we create.
Our people listen, learn, adapt and
do the right thing the first time – delivering
the outcomes that address financial and
sustainability challenges.
Building the financial wellbeing
and sustainability of our customers
creates a positive cycle of benefits. It
directly benefits customers and also
grows shareholder returns; it leads to
a strong and positive reputation; it
ultimately means it costs less to acquire
customers; and it grows loyalty, which in
turn generates better returns – delivering
more capital so we can invest in building
a better bank and continue to improve
the lives of our customers.
Our values
Our values shape how we deliver
our purpose-led strategy. They are the
foundation of ‘how’ we work – living our
values every day enables us to deliver
on our strategy and purpose, strengthen
stakeholder relationships and earn the
community’s trust. All employees and
contractors must comply with our Code of
Conduct, which sets down the expected
standards of professional behaviour
and guides us in applying our values.
Our values are:
Integrity
Collaboration
Accountability
Respect
Excellence
Supporting sustainable development We are committed to the United Nations Sustainable Development Goals (SDGs) and believe that business has an important role to play in their achievement. Our 2022 ESG targets supported 12 of the 17 SDGs. In 2019 we became a founding signatory to the UN Principles for Responsible Banking. Under the Principles we are required to set at least two targets that address our most significant (potential) positive and negative impacts, aligned with the SDGs and the Paris Climate Agreement. Further information on our progress towards implementing the Principles, including targets we have set, is in our 2022 ESG Supplement. 14
ANZ 2022 Annual Report
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Performance
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Our approach
to societal challenges
We’re focused on bringing our
purpose to life through helping
tackle complex issues that are core
to our business strategy and matter
to society. This work is underpinned
by our commitment to fair and
responsible banking and informed
through our materiality assessment.
Performance against our Environment,
Social and Governance (ESG) targets and
further information on our ESG approach
can be located in our ESG Supplement
available at anz.com/annualreport
Improving the availability of
affordable and sustainable
housing, and supporting customers
through a changing economy
We remain committed to helping improve
the availability of suitable and affordable
housing options for all Australians and
New Zealanders. Our work spans many
sub-sectors of the market such as affordable
housing, specialist disability accommodation,
aged care and homelessness, as well as
working with community partners to
provide housing for people in need of
additional support.
We have targets to:
• Fund and facilitate $10 billion of
investment by 2030 to deliver more
affordable, accessible and sustainable
homes to buy and rent in Australia and
New Zealand. Since 2018 we have funded
and facilitated over $4.4 billion towards
the target.
• Support more customers into healthier
homes in New Zealand by 2025.
Since 2020 we have supported
1,446 households in New Zealand.
We strive to support our customers to
achieve their home ownership goals in
a way that also improves their financial
wellbeing. This includes ensuring home
Image: Assemble Kensington resident Sophie.
loan customers are financially informed
about the details of their mortgage, have
borrowed within their means, and are
resilient to potential future events.
During the pandemic, our default response
was to keep repayments at the same level
to help Australian customers get ahead
on their mortgage, meaning we did not
automatically reduce minimum repayments
as interest rates decreased. This assisted
customers to build repayment buffers
ahead of rising interest rates in Australia.
With interest rates on an upwards trajectory
across many geographies and costs for both
discretionary and non-discretionary items
growing, staying on top of household
budgets and mortgage repayments has
been a key issue for our customers. We are
using real-time transaction data to adopt
a proactive approach to identifying and
contacting customers heading towards
difficulty to discuss how we can help
them before they get into trouble.
To help our customers buy and
own a home, this year in Australia
we increased our home loan balance
by $6 billion to $284 billion
and our home loan balance in
New Zealand grew NZ$8 billion
this year to NZ$101 billion.
Improving the financial
wellbeing of our people,
customers and communities
Financial wellbeing is at the heart of
the bank we’re building to create better
financial outcomes and resilience for our
customers. This is particularly important
as our customers navigate an economic
environment with rising interest rates and
cost of living challenges.
We are committed to improving the
financial wellbeing of our people, customers
and communities by helping them make
the most of their money throughout their
lives. We continue to work closely with
our partners to ensure we are supporting
customers and the community in a
respectful, fair and appropriate way.
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15
This year we launched the
first ANZ Plus retail banking
proposition, taking a digital-first
approach to designing banking
products which drive positive
financial wellbeing outcomes
for customers.
At the heart of ANZ Plus
are nine financial wellbeing
principles which aim to impart
knowledge, provide clarity and
empower customers to make
better financial decisions:
1 Spend less than you earn
2 Put money aside
for a rainy day
3 Save regularly
towards your goals
4 Protect what you
can’t afford to lose
5 Borrow within your means
6 Pay your most
expensive debt first
7 Build towards
your retirement
8 Invest in things that grow
9 Give back to family, friends
and the community
when you can
We play a key role in the
community by leading
considerations into what is
influencing financial wellbeing
and applying insights from
research to our financial education
programs, Saver Plus and
MoneyMinded. These programs
involve close collaboration with
partners from the community
and government sectors.
Supporting employee
capability and wellbeing
ANZ’s strong and inclusive culture, built
over decades, has supported our people to
maintain a strong alignment to our strategy
and purpose while the majority of our
workforce continued to work flexibly as the
impacts of the pandemic lingered in some
geographies. This strong culture supported
team connectivity and contributed towards
a high level of engagement despite a period
of significant change.
As employees have started to return to the
office, we’ve evolved and simplified the
behaviours that will continue to build our
future success. Our new behaviour framework
was introduced in February 2022.
Our behaviours:
Create opportunities
Deliver what matters
Succeed together
Peoples’ needs and expectations of when
and where they work have changed, and
we know that our employees are seeking
value from their day-to-day work.
Responding effectively to this is a key
enabler of a stable, future-fit workforce.
For many years, we have successfully
operated a workforce based across multiple
geographies and supported flexibility for all
roles. We are committed to hybrid working
and the pandemic has uplifted our flexible
working capacity and capability. Key to this
is how we support our people leaders and
teams to create opportunities, deliver what
matters and succeed together while working
in a hybrid, flexible manner. We continued
to provide psychological and ergonomic
support to our workforce, who have worked
from home for the majority of the year.
We are future proofing our workforce in the
face of a turbulent external environment
and a volatile talent market by focusing on
the most important capabilities that will
drive our strategic agenda. This year we
have continued to invest in key capabilities
such as Engineering, Cloud, Data and
Digital, and Customer Coaching.
ANZ is well positioned to attract and retain
talent, and our people tell us that they join
and stay because we offer challenging,
interesting and complex work that matters.
They are empowered to work in a way that
suits them and ANZ, and because they want
to belong to a community that celebrates
the value of diversity.
Our focus on employee wellbeing and how
we are future-proofing our workforce builds
on our long history of support for employee
diversity, underpinned by a strong culture.
We help our people thrive in an internal
environment that continues to adapt and
evolve to ever-changing external demands.
Fair and responsible banking
Underpinning everything we do is a
commitment to fair and responsible
banking. Keeping pace with the
expectations of customers, employees
and the wider community, while behaving
fairly, responsibly and maintaining high
standards of conduct. We are committed
to supporting customers in times of need
and ensuring our products and services
are accessible and inclusive to all.
We continue to make progress implementing
our strategy to assist customers who may
require extra care and those facing financial
difficulty in Australia. We are focused on
delivering better customer outcomes by
strengthening frontline capability and
proactive external engagement, as well as
improving product design and data use to
improve accessibility and limit harm.
We have improved support for customers
by changing the way we manage and think
about customer complaints. We have been
embedding a culture where complaints are
valued as an opportunity to learn, improving
products and services, and delivering better
customer outcomes. We strive to deliver
excellent products and services to our
customers but if we get things wrong,
we want to know, and seek to resolve
complaints with empathy and fairness.
The expanded use of digital and real
time payments has made it easier for
criminals to move funds quickly and easily
through various accounts, and ultimately
offshore, making recall and recovery
increasingly difficult. We are investing
in new technology and tools to protect
our customers from scammers looking
to steal their data and money.
16
ANZ 2022 Annual Report
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Performance
overview
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report
Financial
report
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information
Our approach to climate change
We want to be the leading Australia-
and New Zealand-based bank in
supporting customers’ transition
to net zero emissions by 2050.
• Reducing emissions from our operations
including a target to increase renewable
energy use to 100% by 2025 and setting
updated targets for our environmental
footprint;
• Engaging constructively with
stakeholders on our approach through
Environmental, Social and Governance
(ESG) market briefings, investor
roundtables, civil society engagement
and other avenues.
Refer to our ESG Supplement
available at anz.com/annualreport
for an update on our ESG Targets.
• Implementing strategic partnerships,
for example with climate advisory and
investment firm, Pollination;
• Actively participating in recognised
industry associations to help shape
policy development and settings to
enable the development of taxonomy
and standards; and
Our environmental sustainability strategy
identifies priority sectors, technologies and
financing opportunities to help achieve our
ambition. Our climate change commitment
provides the framework for our strategy and
our commitment to enable the transition by
aligning our lending portfolio with net zero
emissions by 2050. We joined the Net-Zero
Banking Alliance (NZBA) in 2021, reflecting
that commitment.
The most important role we can play in
meeting the Paris Agreement goals is to
help our customers reduce emissions and
enhance their resilience to a changing
climate. We support an orderly transition that
recognises and responds to social impacts.
This aligns with our purpose to shape a world
in which people and communities thrive.
To achieve our environmental sustainability
strategy we are:
• Directing our finance into key priority
areas (as per diagram to the right);
• Aligning our lending decisions to
the Paris Agreement goals and have
disclosed metrics and targets for
our power generation portfolio and
large-scale commercial buildings;
• Progressively developing metrics and
targets for key sectors, in line with our
NZBA commitment, which is aimed at
ensuring the majority of our portfolio
emissions are covered by end 2024;
• Funding and facilitating $50 billion of
sustainable solutions by 2025, to support
customers in their efforts to achieve
improved environmental outcomes,
including the reduction of their
greenhouse gas emissions. This year,
140 transactions worth $18.09 billion
have been completed, bringing our
progress towards our $50 billion target
to $40.04 billion since October 2019;
• Equipping our employees with a deeper
understanding of climate risks and
opportunities focusing on our Institutional
bankers in key customer segments such
as resources, energy and Agribusiness;
Our 2022 Climate-related Financial Disclosures will be released prior to our
Annual General Meeting (AGM). This will be our sixth report using the Task Force
on Climate-related Financial Disclosures, (TCFD) recommendations and will be
available at anz.com/annualreport. This report will provide a more detailed update
on our approach to climate change including our customer engagement program.
Supporting sustainability
in resource extraction¹,
basic materials² and
new technologies³
Banking the
decarbonisation and
electrification of
the transportation
value chain
Increasing our
support for
companies'
transition to
low carbon
Enabling the
transition towards
lower emissions
buildings⁴
Assisting
sustainable food,
beverage and
commodities
practices and
supply chains
Offering solutions to,
and partnering with,
sustainability-focused
financial institutions⁵
1. Supporting sustainable resource extraction in areas such as iron ore, lithium, nickel, cobalt, rare earths, copper and bauxite. 2. Supporting basic materials production including green
steel and low-carbon aluminium production. 3. Supporting new technology projects focused on upstream hydrogen and carbon capture use and storage. 4. Initial focus on financing
high-efficiency residential buildings and retrofits. 5. Supplying green investment options for environmental sustainability-focused funds/insurers and partnering with financial institutions
to deliver alternative capital.
Supporting our customers to transition to net zeroKey priority areas and sectors we’ll pursue
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17
Our progress on the task force on Climate-related Financial Disclosures
Disclosures on our ESG Targets are outlined in our ESG Supplement and our detailed 2022 Climate-related Financial Disclosures
will be released prior to our AGM and will be available at anz.com/annualreport
e
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M
OUR PROGRESS TO DATE
FOCUS AREAS – 2022/23
• Board Risk Committee oversees management of climate-related risks
• Board Ethics, Environment, Social and Governance (EESG) Committee
approves climate-related objectives, policy and targets
• Ethics and Responsible Business Committee (ERBC) consisting of executive
management oversees our approach to climate-related risks and opportunities
• Climate Advisory Forum, chaired by our Group Executive Institutional,
supports execution of our climate-related policy, opportunities and
disclosures, subject to approval by ERBC and EESG
• Enhance alignment with Australian Prudential Regulation
Authority (APRA) CPG229 guidance on Climate Change
Financial Risks and the New Zealand Financial Sector
(Climate-related Disclosures and Other Matters)
Amendment Act 2021
• ANZ’s Environmental Sustainability Strategy and Climate Change
• Continue to engage with 100 of our largest emitting business
Commitment (available at anz.com.au/about-us/esg/environmental-
sustainability/climate-change/) confirms our support for the Paris
Agreement goals, our priority sectors, technologies and financing
opportunities via products and services to help achieve our ambition and
our focus in supporting customers’ transition to net zero emissions by 2050
customers to support them to, by end 2024:
– implement and strengthen their low carbon transition plans and
– enhance their efforts to protect biodiversity.
• Continue to enhance banker capability to identify climate risks
and opportunities
• Extend transition plan engagement with other large emitting
business customers into our regular customer assessments
• Pilot the Taskforce on Nature-related Financial Disclosures (TNFD)
•
Included climate risk in our Risk Appetite Statements for Institutional
bank, and lending criteria in the Australian Retail, Commercial and
New Zealand portfolios
• Enhanced credit approval process applied to new Agribusiness customers
and agricultural property purchases in regions of low average rainfall or
measured variability
• Reviewed and assessed current and emerging regulatory requirements
across the jurisdictions in which we operate
• Developed and piloted Climate Change Risk Assessment methodology
in our Project Finance business (Australia)
• Participated in the Australia Prudential Regulation Authority’s (APRA)
climate vulnerability assessment which assessed the potential impact
of transition and physical risks to parts of our portfolio
• Completed analysis of physical and financial risks of flooding for home
loan customers in a major regional location of Australia and of coastal
flooding (nationwide) and inland flooding (Auckland) for the Reserve
Bank of New Zealand’s climate sensitivity analysis (New Zealand)
• Prepare a set of climate risk standards, based on regulatory
obligations to be applied across all jurisdictions where ANZ operates
• Extend our Climate Change Risk Assessment methodology beyond
our Project Finance business, starting with Institutional customers
in higher emitting sectors such as resources and energy
• Develop a data strategy to inform our approach to sourcing and
integrating climate data into sectoral pathways, scenario analysis,
stress testing and analytics. This will include learning from the
New Zealand climate risk program
• Enhance risk assessment capability for our bankers through
extending our Climate Change Risk Assessment
• Extend analysis of physical climate risks of fire and flood to segments
of Australian retail customers
• Conduct scenario analysis for key New Zealand sectors
• Conduct analysis of drought vulnerability for our Agricultural
portfolio (Australia and New Zealand) and the impacts of a
change in carbon price (New Zealand)
• Transition Risk: Continued engaging 100 of our largest emitting business
• Expand our metrics, pathways and targets for ‘financed
customers, to support them towards a ‘well developed’ or ‘advanced’ stage
of transition planning; and enhance their efforts to protect biodiversity,
by end 2024
emissions’ to other key sectors
• Develop financed emissions reporting across majority of the
New Zealand portfolio
• Capital Deployment: $50 billion target to fund and facilitate sustainable
• Consider the use of emerging metrics to track our progress
solutions by 2025, $40.04 billion achieved to date
in helping to minimise biodiversity loss
• Greenhouse gas (GHG) emissions: Develop metrics, pathways and targets
to enable progress tracking as we reduce ‘financed emissions1’. Announced
targets for large-scale commercial property and power generation (November
2021) in line with our commitment to the Net Zero Banking Alliance
• GHG emissions: Target to procure 100% renewable electricity for ANZ’s
operations by 20252, and reduce emissions in line with Paris Agreement goals
• Management incentives for delivering our climate change strategy
are in place at the most senior levels of the organisation including our
Group Executive Committee and senior leaders. Our Group Performance
Framework incorporates whether we have: Strengthened our position
as a leading Sustainability bank in the region, and our performance
against the S&P Global corporate sustainability assessment. Refer to
page 79 of the Remuneration Report
1. Scope 3 emissions attributable to lending. 2. Self-generated renewable electricity, direct procurement from offsite grid-connected generators e.g. Power Purchase Agreement (PPA)
and default delivered renewable electricity from the grid, supported by credible attributes in accordance with RE100 technical guidelines.
18
Our divisions
Australia Retail
Financial Performance Cash continuing1
Cash profit ($m)
Net Loans & Advances ($b)
FY22
FY21
2,140
2,316
Growth
-8%
FY22
FY21
290.3
284.0
Growth
2%
Return on Avg. RWAs (%)
Customer Deposits ($b)
FY22
FY21
1.8%
2.1%
FY22
FY21
150.0
141.4
Growth
6%
This year we’ve delivered strong
returns by growing momentum
in our home loans and deposits
business. We’ve invested in the
foundation of our future bank, ANZ
Plus and helped more customers
with simple banking needs switch
to mobile and digital channels.
Maile Carnegie
Group Executive Australia Retail
Operating environment
Economic activity recovered in 2022,
in part due to a strong housing market
and employment growth, however high
inflation and increasing cost-of-living
pressures are front of mind for our Retail
customers. Competition for home loans
has intensified further with Retail customers
across the sector proactively engaging
with mortgage providers and third-party
originators leading to increased levels
of refinance activity in the industry.
Our Retail customers continue to display
positive financial wellbeing behaviours –
offset accounts continue to grow; a large
portion of our home loan customers
remain ahead in their repayments; and
savings have increased for those without a
mortgage. Faced with a higher interest rate
environment, support established through
the peak of the COVID pandemic remains in
place for our customers who are navigating
uncertainty or having difficulty managing
their loans. Comfort with and trust of digital
and mobile banking channels continues to
increase among customers.
Looking ahead to 2023, we face a more
subdued lending environment and
increased demands on customer cashflows.
We remain focused on growing revenue
responsibly and committed to our
automation and simplification initiatives
to help reshape our business, deliver easy,
personalised services to our customers
and sustainably grow returns for our
shareholders over the long-term.
Strategy and focus
Our strategy in Australia Retail is to support
our customers to achieve their financial
goals, in a way that also helps improve
their overall financial wellbeing.
For our one million home loan customers,
this means making sure they are financially
informed about their mortgage, that it’s
within their means and they are resilient
to potential future events.
This year we’ve built momentum in
our home loans business by improving
turnaround times, enhancing our
processing capacity, and simplifying
our home loan product offering.
We’ve also invested in tools like the
home loan calculator to help our
customers understand how changes to
interest rates will impact their repayments,
and a free home loan check-in to help them
find ways to fine-tune their home loan so
it continues to meet their needs.
We’ve invested in building the foundation
of our future business, ANZ Plus, with 20
modern cloud-based technology platforms
now in place and working at scale. We have
launched the first ANZ Plus transaction
and savings product with deposits growth
outpacing any new digital bank in Australia.
Efforts to migrate our current ‘transact and
save’ account customers from ANZ to ANZ
Plus will continue to be a focus into 2023
and beyond.
We’ve been helping customers make
the move to digital and mobile channels,
so they can bank when and where it is
most convenient for them. We launched
the Message Us feature in the ANZ App –
a secure way for our customers to ask
questions regarding their personal
accounts, including Home Loans, inside
the app. Customers can now receive
comprehensive help through a messaging
experience without having to call or
visit a branch. We also introduced Broker
Chat, a real-time ‘live chat’ function via
the ANZ Broker Portal for brokers to easily
obtain an expected credit response date
on an application, check on the assessment
for applications and organise call backs
from assessors.
1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the result
of the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45.
ANZ 2022 Annual ReportOverviewHow we create valuePerformance overviewRemuneration reportDirectors’ reportFinancial reportShareholder information Ongoing customer remediation work
continues to progress well, and we remain
committed to growing our revenue
responsibly and reinvigorating our product
offering to ensure we get things right for
our customers the first time.
Looking ahead, we want to be the leading
destination for homeowners and for people
who are serious about one day owning a
home. We’ll be the bank customers trust to
better anticipate their needs and help them
make the most of their money throughout
their lives – whether they are just starting
to save, ready to purchase their first home
or paying off the family home quicker than
planned. Progressing our ANZ Plus home
loan offering will be a key factor in this and
is a core priority for 2023.
Performance highlights
The Retail and Digital businesses were
combined in Australia this year, creating a
new Australia Retail Division to increase focus
on customers’ needs and better position the
business for future opportunities. With an
emphasis on responsible growth, amidst
a challenging operating environment,
the Australia Retail Division delivered
Cash Profit of $2.1 billion.
Improvements in operational capacity
and resilience helped restore Home Loan
momentum, with volume growing $5.9
billion in the second half. This was achieved
while balancing margins and returns in
an extremely competitive environment.
Customer deposits were up $8.5 billion
in the year, representing a 6% increase
on the prior year. Many customers are still
demonstrating a cautious approach and
increasing their savings buffers. In the
rising-rate environment, customers are
also moving their money from at-call
products back to term deposits.
Disciplined cost management saw a
reduction in run-the-bank expenses, while
the Division continued to invest for the future.
This saw substantial progress on ANZ Plus,
as well as the modernisation of the contact
centre and physical branches to better
support our digital transformation journey.
Enhancing the branch experience
Image: Open layout in one of ANZ’s award-winning new branches.The changing face of customer serviceOur customers continue to expect convenient, flexible and comprehensive digital banking options, many shifting towards higher levels of self-service, with just eight per cent of our customers relying solely on branches for their everyday banking needs. Over-the-counter cash and cheque transactions declined 20 per cent YOY for the past two years and ATM transactions declined by 18 per cent in FY22, while the number of customers using digital channels increased steadily – 43 million transactions were completed in digital channels and digital logins increased 15.4 per cent.This increased uptake of digital channels and services has shifted the expectations of customers when it comes to face-to-face interactions with our bankers. The role of bankers has changed significantly and we’re responding by adapting our bricks and mortar presence to enable staff and customers to focus on digital adoption and financial wellbeing conversations, rather than just transactions. We’ve rolled out new branch formats across 32 locations and are piloting two ANZ Plus stores to meet the demand from our customers who now often visit a branch by appointment when they want help with more complex needs, like home loans or improving financial wellbeing. It is at these times that relationships and coaching are critical.We have also built the principle of self-service into ANZ Plus, with a comprehensive support section housed in the app. Customers can query suspicious transactions; lock, block, cancel or reorder their card; search years of transaction history and change their email address, postal address, Tax File Number, PIN and more – all in the app. We will continue to build-in convenient self-service options as the ANZ Plus product suite expands.19ANZ 2022 Annual ReportOverviewHow we create valuePerformance overviewRemuneration reportDirectors’ reportFinancial reportShareholder information 20
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
Our divisions
Australia Commercial
Financial Performance Cash continuing1
Cash profit ($m)
Net Loans & Advances ($b)
FY22
FY21
1,510
1,107
Growth
36%
FY22
FY21
59.7
57.2
Growth
4%
Return on Avg. RWAs (%)
Customer Deposits ($b)
FY22
FY21
2.9%
2.1%
FY22
FY21
112.2
111.1
Growth
1%
This year we announced Australia
Commercial as a new division to
better prepare it for future growth
opportunities. Improving the
visibility, focus and accountability
of Commercial enables us to better
support customers striving to
start, run, or grow their businesses.
Shayne Elliott
CEO/Interim Group Executive,
Australia Commercial
Operating environment
Australia’s small-to-medium business
(SME) sector experienced moderate
growth against a backdrop of intermittent
COVID-19 related shutdowns, high inflation,
increasing input costs, supply chain issues,
and workforce shortages. Adapting to the
operating conditions, we continued to see
many customers invest, better manage
costs, and pivot their businesses towards
new market opportunities.
With the unemployment rate reaching
a 50-year low, employee vacancies were
an ongoing issue for many customers
particularly for businesses in regional
Australia. This downward trend is expected
to continue until early 2023 which will likely
put upward pressure on wages, further
increasing costs for some businesses.
While inflation and interest rate rises
lowered consumer confidence, consumer
spending remained relatively strong
creating buoyancy across the sector. Higher
mortgage payments, and price increases for
essential goods and services could inhibit
future spending although savings buffers,
population growth and accelerating wages
should limit any impacts.
Strategy and focus
Australia Commercial provides banking
products and services to ~630,550
Australian small and medium businesses,
as well as high net-worth, private banking
customers across Australia. Our ~2,800
Commercial employees include bankers
and specialists working across all industry
sectors who assist customers manage
working capital, optimise cash-flow and
support growth with business loans, asset
finance, and transaction banking. Australia
Commercial also works closely with
ANZ’s Retail and Broker teams to deliver
customers’ home lending needs.
Through our direct customer relationships
and a strong broker network, our
Commercial lending increased by 4%
during FY22. This result was also driven
by the introduction of several self-service
features and enhancements to both
internet banking and the ANZ App. In
a first for a major Australian bank, eligible
customers can join ANZ and open a
business transaction account in just a few
minutes via ANZ’s app using a driver’s
licence or passport, and an ABN, creating a
fast and simple onboarding experience.
We also expanded our suite of business
management tools and personalised digital
experiences to help our customers be
financially ready. This includes investment
in online business lending platforms such as
ANZ GoBiz which uses customer accounting
data to enable online applications for
unsecured overdrafts up to $300,000 and
term loans up to $500,000, with lending
approvals issued in less than 48-hours.
The platform assists customers with both
cash-flow and investment opportunities.
This work resulted in ANZ being awarded
Canstar’s 2022 Bank of the Year – Small
Business, which recognised our business
banking products, services, and customer
satisfaction relative to peers.
Aligned with building our digital
capabilities, in April we commenced
ANZ Worldline Payment Solutions, a
joint venture with leading European
payments provider Worldline.
The new joint venture will provide ANZ
Commercial and Institutional customers in
Australia access to market-leading point-
of-sale and online payment technology.
1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the result
of the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45.
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Customer story
As customers refocused and rebuilt
following the COVID-19 pandemic, we
continued to look for ways to further
support investment. This included an
increase in our maximum loan term for
eligible small business customers from
15-years to 30-years for facilities secured
by standard commercial property.
In addition, we simplified our refinance
process for business lending up to $1m for
eligible customers, creating quicker loan
approvals and access to appropriate capital.
Performance highlights
Australia Commercial delivered a strong
first set of financial results as a standalone
division, increasing cash profit by 36%
and revenue by 18% year-on-year. This
result was driven by volume growth and
disciplined margin management, assisted
by the rising rate environment. Expenses
were also tightly managed.
Net loans and advances grew 4% driven
by strong lending growth in our specialist
segments which include agribusiness,
health, and property. Our larger Commercial
customers had the strongest credit appetite,
while smaller business customers continued
to prioritise financial solutions to aid
cash-flow.
Customer deposit growth of 1% was more
subdued this year, following unprecedented
government support during COVID-19 in
the prior year. An improvement in our risk
adjusted returns also demonstrated the
continued strength in the credit quality
of our Commercial loans.
Building a gem of a business with help from ANZ GoBiz Brisbane jeweller and Managing Director Ashley Portas is funding the next growth chapter of his successful jewellery store, Diamondport, with help from an ANZ GoBiz loan.Founded in 2015 with an initial import focus, the family business expanded four years later when it established its own workshop to enhance its design and production services. This led to 65% year-on-year growth and opened the door to new opportunities.“When you grow this fast, you need more money to grow. Suddenly, we found ourselves needing more diamonds, new tools, more rings to market and sell,” said Ashley.To support the next growth phase Ashley decided to apply for a $200,000 business loan. After approaching an online lender and his existing bank, Ashley discovered ANZ GoBiz offered a more convenient digital-enabled alternative.“I found the ANZ GoBiz offer online and really liked what I saw. It only took me 20 minutes to apply,” said Ashley.“I applied on a Wednesday and was approved by Friday,” Ashley said. “I had no problems sharing my accounting details and banking information with ANZ, and I found it so refreshing to see a bank like ANZ put their trust in us.”Now, with finances in place, Diamondport is expanding its portfolio of engagement rings. Alongside traditional designs like solitaire and halo, the team is creating more unique and bespoke engagement ring designs to appeal to a wider customer base. 22
ANZ 2022 Annual Report
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Performance
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report
Financial
report
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information
Our divisions
Institutional
Financial Performance Cash continuing1
Cash profit ($m)
Net Loans & Advances ($b)
FY22
FY21
1,761
1,887
Growth
-7%
FY22
FY21
196.8
158.2
Growth
24%
Return on Avg. RWAs (%)
Customer Deposits ($b)
FY22
FY21
0.9%
1.1%
FY22
FY21
259.4
239.6
Growth
8%
In the past year, some of the
headwinds facing Institutional
started to pivot to tailwinds, driving
momentum in key businesses.
Customer lending was robust,
and we made significant progress
delivering on our strategy – including
through our digital offering, platforms
and sustainability partnerships.
Mark Whelan
Group Executive Institutional
Operating environment
In 2022, Institutional customers remained
resilient despite economic challenges,
market volatility and geopolitical issues.
In a clear signal that investment is
strengthening, we saw significant demand
for lending even as inflation and interest
rates rose and consumer sentiment
declined. Our business was well positioned
for the market conditions, underpinning a
solid performance in Payments and Cash
Management, Trade and Corporate Finance.
A sharp climb in energy prices brought
issues such as climate change and
energy policy to the forefront of the
global economic debate, intensifying our
strategic focus on supporting customers
in their transition to net zero. Geopolitical
uncertainty continued, highlighting
the importance of a reliable banking
partner with a strong international trade
network and a deep understanding of
global markets.
Strategy and focus
ANZ Institutional Bank is focused on
supporting companies moving goods
and capital around the region. Our past
efforts to build a simpler, more efficient
Division positioned us well to respond
quickly to our customers’ needs through
the pandemic and provide support during
a challenging period.
In 2022, we made significant progress in
delivering strategic initiatives, including
growing the Markets' customer-franchise
business, maximising benefits from our
international network, implementing
an improved customer coverage model,
building on our digital self-service offering,
rolling out more efficient digital credit
processes and establishing a market-leading
Digital Asset Services Team.
We also focused on extending our platforms
as a service to customers. The volume of
agency payments, processed by financial
institutions for their customers, using ANZ’s
infrastructure, grew 85% year-on-year.
Overall payments volumes grew 52%, as
we continued to invest in digital platforms.
We continued to build our position
as a regional leader in environmental
sustainability, participating in $155 billion
of sustainable finance deals in FY22
while rolling out sustainability education
programs internally. Looking ahead,
we see increasing opportunities for our
customers as a result of the super cycle
of activity that is underway.
Performance highlights
ANZ Institutional delivered a strong
performance, with a cash profit of
$1.8 billion while revenues were up 1%
for the year and 10% half-on-half. The
high-quality result was achieved despite
challenging market conditions, reflecting
strong customer momentum and effective
margin management. In addition, lending
momentum remained robust, up 24%
year-on-year.
ANZ also maintained our position as the
region’s leading Institutional bank in key
markets where we operate. In Australia,
we were named #1 Lead Institutional bank
for overall market penetration for the 7th
consecutive year by Peter Lee Associates2.
In New Zealand, Peter Lee Associates
recognised ANZ as #1 for Overall Market
Penetration and Lead Bank Penetration,
and #1 for Relationship Strength.3
1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the result
of the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45. 2. Peter Lee Associates, Australia Large Corporate
Relationship Banking 2016–2022. 3. Peter Lee Associates, New Zealand Large Corporate Relationship Banking 2022.
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In International, we held our top ranking
for overall relationship quality in Asia for
the fifth consecutive year according to the
Coalition Greenwich 2021 Asian Large
Corporate Banking Study.
Our focus on environmental sustainability
was recognised in the market, with ANZ
named market leader in Environmental,
Social and Governance (ESG)/Sustainable
Finance in Australia4 for the second
consecutive year and ESG Bank of Choice
in New Zealand5, according to Peter Lee
Associates.
In addition, ANZ formed a strategic
collaboration with INPEX Corporation
and Qantas Airways Limited to enter into
a Memorandum of Understanding, for a
project bringing together carbon farming
and renewable biofuels in the Wheatbelt
region of Western Australia. We also
launched a comprehensive hydrogen
guide to support customers in exploring
opportunities associated with the emerging
sector’s rapid commercialisation.
ANZ led the market in our approach
to digital assets, successfully
executing the first ever Australian
bank issued Australian dollar
stablecoin (A$DC) payment through
a public permissionless blockchain
transaction. The team delivered the
stablecoin for Victor Smorgon Group,
closely followed by the purchase of
tokenised Australian carbon credits
using the new stablecoin.
4. Peter Lee Associates, Australia Large Corporate
Relationship Banking 2021–2022. 5. Peter Lee Associates,
New Zealand Large Corporate Relationship Banking 2022.
A milestone transaction and partnership
ANZ leads landmark tokenised carbon credits transactionANZ has taken an important next step in progressing its digital asset strategy, supporting long-standing customer Victor Smorgon Group in successfully purchasing tokenised Australian carbon credits (BCAU) using the ANZ-issued stablecoin A$DC.This is an important step for ANZ as the bank explores greater circulation of the stablecoin. In this transaction, Victor Smorgon Group used A$DC as a medium of exchange to purchase the BCAU carbon tokens from Zerocap, an Australian digital asset investment platform. Zerocap sourced the BCAU from BetaCarbon, which tokenises Australian Carbon Credit Units (ACCUs) into digital tokens, with each representing 1kg of carbon captured. This transaction is also significant as it provided A$DC/BCAU liquidity, while offering both Victor Smorgon Group and Zerocap redemption rights for A$DC.This latest A$DC transaction came after ANZ successfully executed the first Australian-bank issued Australian-dollar stablecoin payment through a public permissionless blockchain transaction in March. A$DC remains fully collateralised by the Australian dollar and is redeemable at par with funds held in an ANZ-managed reserve account.Victor Smorgon Group CEO Peter Edwards said: “Victor Smorgon Group is one of Australia’s most established and successful family offices, operating across multiple asset classes, including digital assets. Through the Zerocap platform and continuing our multi-generational working relationship with the ANZ Bank, we are excited to now have an Australian dollar stablecoin giving us a safe and secure gateway to the digital economy.” ANZ Banking Services Lead Nigel Dobson said: “This milestone transaction brings together two key focus areas for ANZ, sustainability and digital assets. We’re seeing increasing customer appetite to use A$DC to enter the digital economy, and will continue to partner with our clients to explore how this technology can help them achieve their goals.” 24
ANZ 2022 Annual Report
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create value
Performance
overview
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Directors’
report
Financial
report
Shareholder
information
Our divisions
New Zealand
Financial Performance Cash continuing1
Cash profit (NZ$m)
Net Loans & Advances (NZ$b)
FY22
FY21
1,768
1,607
Growth
10%
FY22
FY21
140.4
134.5
Growth
4%
Return on Avg. RWAs (%)
Customer Deposits (NZ$b)
FY22
FY21
2.3%
2.2%
FY22
FY21
108.0
102.3
Growth
5%
We are proud of our many
achievements over this year and the
role we will continue to play to help
Kiwis navigate the months ahead.
With the pace and scale of change
across the world, it will be essential
to continue to adapt and help
our personal and business
customers stay focused on
long-term financial wellbeing.
Antonia Watson
CEO of New Zealand
Operating environment
Rapidly rising interest rates, inflation
and heightened commodity prices have
become a reality at home and around the
globe. Economic disruption fuelled by
the war in Ukraine and continued supply
chain issues add to the challenges that we
knew would linger as long as COVID-19
was around.
While we successfully navigated the year
alongside our customers, there’s been a
noticeable shift in consumer sentiment
and it’s clear the broader environment has
become increasingly challenging for many.
The data tells us many customers are more
resilient than many may think – making
the right moves by prioritising home loan
repayments, savings and paying down
credit card debt. We continue to work
with our business customers on sustainable
financing solutions – where borrowing
more is often not the answer. Being well
capitalised provides important assurance
for our customer base.
Strategy and focus
Despite the onslaught of COVID-19 and
being required to work from home for
much of the past two years, our accelerated
strategy work has progressed well. In that
time, we’ve delivered a number of projects
beneficial to customers and staff, such
as voice-identity confirming proof of a
bank account in goMoney, digital multi-
authorisation for payments, automated
customer communications, and digital
home loan rate refixing among others.
The speed of customers’ adoption of our
digital banking tools has continued at pace,
with an increase of 81,000 active users since
March 2020. The pandemic has accelerated
the decline in over-the-counter branch
transactions by 40%. Technology will
continue to be central to how we make
things easier for staff and customers.
We’re bringing forward a major project
to install a modern banking platform that
is “cloud-based”, providing us with more
flexibility to quickly add functions for our
customers and staff. By moving to a modern
banking platform we will have a new core
system which can continue to deliver
reliable, efficient and secure services for
our customers.
That’s why we’ve also lifted this program
above our strategic acceleration work
and given it a foundational title: “Ngā
Tapuwae o ANZ – The Footsteps of ANZ”.
Ngā Tapuwae is our statement about
ensuring quickness of feet either in the
depths of our intellectual pursuits or
physical prowess. Ngā Tapuwae calls
for us all to transform as a bank, in a
fleet footed manner, to serve the needs
of an ever-changing customer base and
Aotearoa New Zealand.
We recently launched our Good
Energy Home Loan, which allows
customers to borrow up to $80,000
at a 3-year fixed rate of 1% to make
their homes more energy efficient.
This was followed by our ANZ Business
Green Loan, the first product of its kind in
the market. Our Business and Corporate
customers with environmental initiatives
that meet eligibility criteria can access
funding of up to $3 million at a special
floating interest rate for up to five years.
Customers can also re-finance existing
business loans if they meet the criteria.
Importantly, it’s the only advertised
loan in market aligned to internationally-
recognised Green Loan Principles (GLP)
for assets that demonstrate a clear
environmental benefit.
1. On a cash profit (continuing operations) basis. Excludes non-core items included in statutory profit and discontinued operations and is provided to assist readers in understanding the result
of the ongoing business activities of the Group. For further information on adjustments between statutory and cash profit refer to page 45.
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ANZ’s People Agenda is critical to the
performance of our bank. This year
saw the launch of Tākiri Ā Rāngi – ANZ
New Zealand’s Te Ao Māori strategy out
to 2040. We are committed to growing
cultural competency and understanding
of Te Ao Māori (the Māori world view) with
our staff and enhancing the financial
wellbeing of Māori.
This year we released a report called
Watch Women Win, which examined the
motivations for, and obstacles preventing,
women’s success. A key finding was women
are inspired by seeing other women
celebrated for doing well. We undertook
a number of engagements throughout
the year meeting successful women and
hearing and sharing their stories.
In February we also launched our Equity,
Diversity and Inclusion Strategy, ‘Bringing
EDI to Life’. This supports our business to
create an equitable and inclusive workplace
where the diversity of our workforce in its
broadest sense can be leveraged to the
benefit of our customers and Aotearoa
New Zealand.
Performance highlights
New Zealand delivered another strong
year with Cash Profit of NZ$1.77 billion.
Home lending continues to be a key driver
for us. We increased our share of the New
Zealand home loan market over the year,
from 30.38% in September 2021 to 30.51%
in August 2022.
Lending to Business and Institutional
customers also grew, increasing by NZ$900
million over the first half. Overall, Business
and Institutional customers managed well
through the COVID-19 disruptions in the
first half of the financial year.
Our Contact Centre is experiencing
increasing demand. We’ve seen an increase
in customer calls, particularly related to
an uptick in fraud and scam cases, the
wind-up of Bonus Bonds, interest rates
and a surge in home loan rollovers.
Our Staff Foundation distributed over
NZ $1.1 million in donations to 93 charities
across New Zealand.
Customer story
Supporting a more sustainable and self-sufficient futureChanges to the social, physical and financial operating environment mean businesses must become more sustainable and energy-efficient.There is a growing sense that if they are to survive and thrive in a warmer world, they must adapt, invest in technology and become more self-sufficient and resilient.One Canterbury business demonstrates this in spades. Hagley Windows and Doors – set up by builder Geoff Ball – has grown from having just two employees in 1983 to more than 190 today. In recent years, Hagley has invested millions of dollars in computer-controlled robotic glass-cutting and double-glazing machines, giving it an edge over competitors. Its high-tech double-glazed window units are a growing part of its business, and now help make thousands of homes and businesses in the South Island warmer, dryer and more energy efficient.The company has also made substantial investments in solar power for its own premises.It takes considerable power to run a factory the size of two football fields, dozens of machines and an energy-hungry glass-toughening furnace.To meet some of these electricity demands, the company has put its abundant roof space to work, installing over 2900 solar panels.It is one of the largest solar arrays in the South Island, and now generates over 20 per cent of the company’s power requirements.As the country’s largest bank, we’re seeing our customers increasingly turning to us for support and help as they consider how best to adapt and invest in their future.As with any investment, making a business more sustainable comes at a price, but our Business Green loan removes some of that cost barrier.It is currently the only advertised green loan product in the market available to business customers and linked to the Green Loan Principles.ANZ has led the way with sustainable finance for our Institutional Business customers and we’re proud to now offer a Business Green Loan which will support many more businesses start down the road of becoming more sustainable, resilient and self-sufficient. 26
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Governance
Corporate governance framework
SHAREHOLDERS
BOARD OF DIRECTORS
Audit Committee
Ethics, Environment, Social
and Governance Committee
Risk Committee
Human Resources Committee
Digital Business and
Technology Committee
Nomination and Board
Operations Committee
BOARD RESERVED POWERS AND
DELEGATION OF AUTHORITY
CHIEF EXECUTIVE OFFICER
GROUP EXECUTIVE COMMITTEE
Board of
Directors
ANZ’s strong governance framework
provides a solid structure for
effective and responsible decision-
making within the organisation.
The Board is responsible for the oversight
of ANZ and its sound and prudent
management, with specific duties
as set out in its charter available at
anz.com/corporategovernance.
There are six principal Board Committees –
the Audit Committee, the Ethics,
Environment, Social and Governance
Committee, the Risk Committee, the
Human Resources Committee, the Digital
Business and Technology Committee and
the Nomination and Board Operations
Committee.
Each Committee has its own charter
setting out its roles and responsibilities. At
management level, the Group Executive
Committee comprises ANZ’s most senior
executives. There is a delegation of
authority framework that clearly outlines
those matters delegated to the CEO and
other members of senior management.
For further detail on ANZ’s governance
framework see our 2022 Corporate
Governance Statement available at
anz.com/corporategovernance.
Full biography details can be found
on our website at anz.com/directors
and on pages 31-35 of this report.
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Paul O’Sullivan Chairman, Independent Non-Executive DirectorShayne Elliott Chief Executive Officer, Executive DirectorIlana Atlas, AO Independent Non-Executive DirectorChristine O’Reilly Independent Non-Executive DirectorJeff Smith Independent Non-Executive DirectorJane Halton, AO PSM Independent Non-Executive DirectorRT Hon Sir John Key, GNZM ACIndependent Non-Executive DirectorGraeme Liebelt Independent Non-Executive DirectorJohn Macfarlane Independent Non-Executive Director 28
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Directors’ meetings
The number of Board, and Board Committee, meetings held during the year and each Directors’ attendance at
those meetings are set out below:
Board
Risk
Committee
Audit
Committee
Ethics,
Environment,
Social and
Governance
Committee
Digital
Business and
Technology
Committee
Human
Resources
Committee
Special
Committee
of the Board
Committee
of the Board¹
Nominations
and Board
Operations
Shares
Committee¹
Paul O’Sullivan
Ilana Atlas, AO
Paula Dwyer2
Shayne Elliott
A
18
18
4
18
Jane Halton, AO PSM 18
RT Hon Sir John Key,
GNZM AC
Graeme Liebelt
John Macfarlane
Christine O’Reilly3
Jeff Smith4
18
18
18
16
1
B
18
18
4
18
18
17
18
18
16
1
A
6
6
6
6
B
6
6
6
6
A
8
B
8
2
2
8
8
8
6
8
8
8
6
A
8
8
2
8
8
7
B
8
8
2
8
8
7
A
7
7
2
B
7
7
2
7
7
7
5
7
4
A
4
4
4
B
4
4
4
4
4
A
1
1
1
1
1
1
1
B
1
1
A
1
1
B
1
1
1
2
2
1
1
1
1
2
1
2
2
1
2
A
3
1
B
3
1
2
2
A
4
4
4
4
4
4
4
1
B
4
4
4
4
4
4
4
1
Column A Indicates the number of meetings the Director was eligible to attend as a member. Column B Indicates the number of meetings attended. With respect to Committee
meetings, the table above records attendance of Committee members. 1. The meetings of the Committee of the Board and Shares Committee as referred to in the table above include
those conducted by written resolution. 2. Paula Dwyer ceased as a Non-Executive Director on 16 December 2021. 3. Christine O’Reilly commenced as a Non-Executive Director on
1 November 2021. 4. Jeff Smith commenced as a Non-Executive Director on 1 August 2022.
“The Board continues to focus on immediate and longer-term strategic
matters. The Board closely monitored the rapidly changing operating
environment, including inflation and interest rates and the continuing
impact of COVID-19, together with ANZ’s approach to dealing with those
matters in alignment with ANZ’s purpose.”
Paul O’Sullivan
Chairman
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29
Executive Committee
Maile CarnegieGroup Executive Australia RetailJoined the Executive Committee on 27 June 2016Shayne ElliottChief Executive Officer (appointed CEO on 1 January 2016)Joined the Executive Committee on 1 June 2009Kevin CorballyGroup Chief Risk OfficerJoined the Executive Committee on 19 March 2018Gerard FlorianGroup Executive TechnologyJoined the Executive Committee on 30 January 2017Farhan FaruquiChief Financial Officer (appointed CFO on 11 October 2021)Joined the Executive Committee on 1 February 2016Kathryn van der MerweGroup Executive Talent & Culture and Service CentresJoined the Executive Committee on 1 May 2017Mark WhelanGroup Executive InstitutionalJoined the Executive Committee on 20 October 2014Antonia WatsonChief Executive Officer New ZealandJoined the Executive Committee on 17 June 2019Full biography details can be found on our website at anz.com/exco 30
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Board areas of focus
The Board and its Committees
engage in key strategic, governance
and oversight activities each year.
The topics below are illustrative
to provide stakeholders with an
insight into some of the key matters
considered by the Board and
its Committees during the 2022
financial year and is not intended
to be a comprehensive list.
Strategy and growth
During the financial year, the Board
and its Committees continued to focus
on longer-term strategic matters.
In addition to participating in regular
strategy sessions, the Board regularly
discussed and reviewed ANZ’s strategic
and growth priorities.
At each regular Board meeting, there
continued to be unstructured discussion
with the Chief Executive Officer in relation
to the progress of Management’s key
priorities as agreed with the Board.
The Board also received regular reports
on progress (from both a strategic/
operational viewpoint and a technology
viewpoint) in the design and build and
implementation, including customer
migration strategy, relating to ANZ Plus.
Mergers & Acquisitions was a key topic
of consideration during the year with
discussions taking place at both regular
and specially convened Board meetings
in relation to key potential transactions
that have been disclosed to the market,
including the acquisition of Suncorp Bank.
At the Interim Results in May, ANZ
announced its intention to apply for
approval to implement a non-operating
holding company structure. The Board
received regular reports throughout the
year on the strategic rationale and details of
how such a revised structure would work in
practice, including in relation to governance
and operations. The Board played a key role
in the ultimate design and application of
the proposed revised structure.
Risk, regulation and reputation
The Board Risk Committee and the Board
played a key role in reviewing the Group’s
approach to managing non-financial risk
and the design and implementation
of ANZ’s revised operational risk and
compliance framework.
The Board and its Committees continued
their oversight of the Group’s risk
appetite settings.
The Board continued to meet with ANZ’s
key Australian regulators during the course
of the year with the purpose of maintaining
constructive two-way dialogue.
The Board also received regular education and
briefing materials and held education sessions
on key areas such as sanctions, competition
law and cyber security, as well as participating
in Banking Executive Accountability Regime
(BEAR) scenario training.
Financial/Operational
While the Board and its Committees have
had a strong focus on the long-term future of
the Group, the Board (and its Committees)
maintained an equally strong focus on the
current performance of the Group, including:
• Reviewing and ultimately approving
ANZ’s revised structure for its Australia
Retail & Commercial businesses.
• Having regular and broad discussions
with the heads of each major business
regarding the performance of their
business, key issues being focused
on and the ongoing changes in the
operating environment.
• Receiving regular reports on the
performance of the Australian home loans
business against the backdrop of the
rapidly changing operating environment.
• Reviewing, challenging and ultimately
endorsing ANZ’s operating and strategic
plans, both annual and longer-term.
• Providing oversight of key capital
management matters, including the
approval of the recent renounceable
entitlement offer.
Changing operating environment
The Board and its Committees closely
monitored the rapidly changing operating
environment, including geopolitical matters,
inflation and interest rates and the continuing
impact of COVID-19, together with ANZ’s
approach to dealing with those matters.
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Directors’ qualifications,
experience and special
responsibilities
As at the date of this report, the Board comprises eight Non-Executive Directors
and one Executive Director, the Chief Executive Officer. The names of the current
Directors, together with details of their qualifications, experience and special
responsibilities are set out below. Jeff Smith joined the Board on 1 August 2022
as a Non-Executive Director and will stand for election as a Director at ANZ’s
AGM on 15 December 2022. Paula Dwyer ceased as Non-Executive Director
on 16 December 2021, after serving on the Board since 2012. Graeme Liebelt
will cease as a Non-Executive Director at the conclusion of the 2022 AGM.
Audit Committee
Ethics, Environment,
Social and Governance
Committee
Risk Committee
Human Resources
Committee
Digital Business and
Technology Committee
Nomination and Board
Operations Committee
Paul O’Sullivan
Chair
Member
Position
Chairman, Independent
Non-Executive Director
Qualifications
BA (Mod) Economics, Advanced
Management Program of Harvard
Responsibilities
Chairman since October 2020 and
a Non-Executive Director since
November 2019.
Paul is an ex-officio member of all Board
Committees and Chair of the Ethics,
Environment, Social and Governance
Committee and Nomination and Board
Operations Committee.
Career
Paul has experience in the
telecommunications and oil and gas
sectors, both in Australia and overseas.
He has held senior executive roles with
Singapore Telecommunications (Singtel)
and was previously the CEO of Optus. He
has also held management roles with the
Colonial Group and the Royal Dutch Shell
Group in Canada, the Middle East, Australia
and United Kingdom.
Relevant other directorships
Chairman: Singtel Optus Pty Limited (from
2014, Director from 2004) and Western
Sydney Airport Corporation (from 2017).
Director: St Vincent’s Health Australia (from
2019) and Australian Tower Network Pty Ltd
(from 2021).
Relevant former directorships
held in last three years include
Former Director: Telkomsel Indonesia
(2010–2020), Healthscope Limited (2016–
2019), National Disability Insurance Agency
(2017–2020) and Coca-Cola Amatil (2017–
2021).
Age
62 years
Residence Sydney, Australia
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Relevant other directorships
Chairman: Jawun (from 2017, Director
from 2014).
Director: Paul Ramsay Foundation (from
2017), Scentre Group (from 2021) and
Origin Energy Limited (from 2021).
Member: Panel of Adara Partners (from
2015) and Council of the National Gallery
of Australia (from 2021).
Relevant former directorships
held in last three years include
Former Chairman: Coca-Cola Amatil
Limited (2017-2021, Director from 2011).
Former Director: OneMarket Limited
(2018–2019).
Former Fellow: Senate of the University
of Sydney (2015–2019).
Age
68 years
Residence Sydney, Australia
Ilana Atlas, AO
Chair
Member
Position
Independent Non-Executive Director
Qualifications
BJuris (Hons), LLB (Hons), LLM
Responsibilities
Non-Executive Director since September
2014. Ilana is Chair of the Human Resources
Committee and is a member of the Audit
Committee, Ethics, Environment, Social and
Governance Committee and Nomination
and Board Operations Committee.
Career
Ilana brings a strong financial services
background and legal experience to the
Board. Ilana was a partner at law firm
Mallesons Stephen Jaques (now King
& Wood Mallesons), where in addition
to her practice in corporate law, she held
a number of management roles in the firm
including Executive Partner, People and
Information, and Managing Partner. She
also worked at Westpac for 10 years, where
her roles included Group Secretary and
General Counsel and Group Executive,
People, where she was responsible
for human resources, corporate affairs
and sustainability. Ilana has a strong
commitment to the community, in
particular the arts and education.
Shayne Elliott
Position
Chief Executive Officer
and Executive Director
Qualifications
BCom
Responsibilities
Chief Executive Officer and Executive
Director since 1 January 2016.
Career
Shayne has over 30 years’ experience in
banking in Australia and overseas, in all
aspects of the industry. Shayne joined ANZ
as CEO Institutional in June 2009, and was
appointed Chief Financial Officer in 2012.
Prior to joining ANZ, Shayne held senior
executive roles at EFG Hermes, the largest
investment bank in the Middle East, which
included Chief Operating Officer. He started
his career with Citibank New Zealand and
worked with Citibank/Citigroup for 20 years,
holding various senior positions across the
UK, USA, Egypt, Australia and Hong Kong.
Shayne is a Director of the Financial Markets
Foundation for Children and a member of
the Australian Banking Association, the
Business Council of Australia and the
Australian Customs Advisory Board.
Relevant other directorships
Director: ANZ Bank New Zealand Limited
(from 2009) and the Financial Markets
Foundation for Children (from 2016).
Member: Business Council of Australia
(from 2016), the Australian Banking
Association (from 2016, Chairman
2017–2019) and the Australian
Customs Advisory Board (from 2020).
Age
58 years
Residence Melbourne, Australia
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Jane Halton, AO PSM
Chair
Member
Position
Independent Non-Executive Director
Qualifications
BA (Hons) Psychology, FIPAA, Hon. FAAHMS,
Hon. FACHSE, Hon. DLitt, FAIM, FAICD, FAIIA
Responsibilities
Non-Executive Director since October 2016.
Jane is Chair of the Digital Business and
Technology Committee and is a member of
the Human Resources Committee, Ethics,
Environment, Social and Governance
Committee and Nomination and Board
Operations Committee.
Career
Jane’s 33-year career in the public service
includes the positions of Secretary of the
Australian Department of Finance, Secretary
of the Australian Department of Health,
Secretary for the Department of Health
and Ageing, and Executive Co-ordinator
(Deputy Secretary) of the Department of
the Prime Minister and Cabinet.
She brings to the Board extensive
experience in finance, insurance, risk
management, information technology,
human resources, health and ageing and
public policy. She also has significant
international experience.
Jane has contributed extensively to
community health through local and
international organisations including the
World Health Organisation and as co-chair
of the COVAX coordination mechanism.
Relevant other directorships
Chairman: Vault Systems (from 2017),
Coalition for Epidemic Preparedness
Innovations (Norway) (from 2018, Member
from 2016) and Council on the Ageing
Australia (from 2017).
Director: Clayton Utz (from 2017).
Member: Executive Board of the Institute
of Health Metrics and Evaluation at the
University of Washington (from 2007).
Honorary Professor: Australian National
University Research School of Psychology.
Adjunct Professor: University of Sydney
and University of Canberra.
Council Member: Australian Strategic
Policy Institute (from 2016).
Relevant former directorships
held in last three years include
Former Director: Crown Resorts Limited
(2018–2022) and Naval Group Australia
Pty Ltd (2021–2022).
Former Member: National COVID-19
Commission Advisory Board (2020–2021).
Age
62 years
Residence Canberra, Australia
RT Hon Sir John Key, GNZM AC
Member
Position
Independent Non-Executive Director
Qualifications
BCom, DCom (Honoris Causa)
Responsibilities
Non-Executive Director since February
2018. Sir John is a member of the Ethics,
Environment, Social and Governance
Committee, Risk Committee, Digital Business
and Technology Committee and Nomination
and Board Operations Committee.
Career
Sir John was Prime Minister of New Zealand
from 2008 to 2016, having commenced his
political career in 2002. Sir John had a long
career in international finance, primarily for
Bankers Trust in New Zealand and Merrill
Lynch in Singapore, London and Sydney.
He was previously a member of the Foreign
Exchange Committee of the Federal Reserve
Bank of New York (from 1999 to 2001).
Sir John was made a Knight Grand
Companion of the New Zealand Order of
Merit in the 2017 Queen’s Birthday Honours.
In 2017 Sir John became a Companion of
the Order of Australia for advancing the
Australia–New Zealand bilateral relationship.
Relevant other directorships
Chairman: ANZ Bank New Zealand Limited
(from 2018, Director from 2017).
Director: Palo Alto Networks (from 2019).
Relevant former directorships
held in last three years include
Former Director: Air New Zealand Limited
(2017–2020).
Age
61 years
Residence Auckland, New Zealand
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Graeme Liebelt
John Macfarlane
Christine O’Reilly
Chair
Member
Member
Chair
Member
Position
Independent Non-Executive Director
Position
Independent Non-Executive Director
Position
Independent Non-Executive Director
Qualifications
BEc (Hons), FAICD, FTSE, FIML
Qualifications
BCom, MCom (Hons)
Qualifications
BBus
Responsibilities
Non-Executive Director since July 2013.
Graeme is Chair of the Risk Committee
and is a member of the Audit Committee,
Human Resources Committee and
Nomination and Board Operations
Committee.
Career
Graeme brings to the Board his experience
of a 23-year executive career with Orica
Limited (including a period as Chief
Executive Officer), a global mining services
company with operations in more than 50
countries. He has extensive international
experience and a strong record of
achievement as a senior executive,
including in strategy development and
implementation. Graeme is committed
to global trade and cooperation, as well
as community education.
Relevant other directorships
Chairman: Amcor Limited (from 2013,
Director from 2012).
Director: Australian Foundation Investment
Company Limited (from 2012) and Carey
Baptist Grammar School (from 2012).
Relevant former directorships
held in last three years include
Former Chairman: DuluxGroup Limited
(2018–2019, Director from 2016).
Age
68 years
Residence Melbourne, Australia
Responsibilities
Non-Executive Director since May 2014.
John is a member of the Audit Committee,
Risk Committee, Digital Business and
Technology Committee and Nomination
and Board Operations Committee.
Career
John is one of Australia’s most experienced
international bankers having previously
served as Executive Chairman of Deutsche
Bank Australia and New Zealand, and CEO
of Deutsche Bank Australia. John has also
worked in the USA, Japan and PNG, and
brings to the Board a depth of banking
experience in ANZ’s key markets in Australia,
New Zealand and the Asia–Pacific. He is
committed to community health, and
is a Director of the Aikenhead Centre of
Medical Discovery Limited (from 2016).
Relevant other directorships
Director: Colmac Group Pty Ltd (from 2014),
AGInvest Holdings Limited (MyFarm
Limited) (from 2014, Chairman 2014–2016),
Balmoral Pastoral Investments (from 2017)
and L1 Long Short Fund (from 2018).
Relevant former directorships
held in last three years include
Former Director: Craigs Investment
Partners Limited (2013–2020).
Age
62 years
Residence Melbourne, Australia
Responsibilities
Non-Executive Director since November
2021. Christine is Chair of the Audit
Committee and a member of the Risk
Committee, Human Resources Committee
and Nomination and Board Operations
Committee.
Career
Christine is one of Australia’s leading
non-executive directors. Christine has
held executive roles in the infrastructure
and financial services industries. This
includes being CEO of GasNet Australia
and Co-Head of Unlisted Infrastructure
Investments at Colonial First State Global
Asset Management and follows an early
career including investment banking and
audit experience at Price Waterhouse.
Relevant other directorships
Director: The Baker Heart & Diabetes
Institute (from 2013), Stockland (from 2018)
and BHP Group Limited (from 2020).
Relevant former directorships
held in last three years include
Former Director: Medibank Private Limited
(2014–2021), CSL Limited (2011–2020)
and Transurban Group (2012–2020).
Age
61 years
Residence Melbourne, Australia
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Jeff Smith
Member
Position
Independent Non-Executive Director
Qualifications
BAppSc, MBA
Responsibilities
Non-Executive Director since August 2022.
Jeff is a member of the Nomination and
Board Operations Committee.
Career
Jeff is an experienced global business and
technology executive, with over 30 years
corporate experience which includes senior
executive roles in a number of companies
including Telstra, Honeywell and Toyota.
Jeff was previously Chief Information Officer
at IBM Corporation where he was globally
responsible for IT strategy, resources,
systems and infrastructure and also led the
company’s Agile transformation. Jeff was
also CEO of Suncorp Business Services and
Suncorp Chief Information Officer. Since
2017, Jeff has been Chief Operating Officer
of World Fuel Services Corporation, a role
he will step down from at the end of 2022.
Jeff also served on the Australian Fulbright
Commission awarding Australian post-
graduate scholarships to US universities.
He was previously a member of ANZ’s
International Technology and Digital
Business Advisory Panel until 2019.
Relevant other directorships
Director: Sonrai Security Inc (from 2021).
Advisor: Zoom Video Communications,
Inc (from 2018) and Box, Inc. (from 2018).
Relevant former directorships
held in last three years include
Former Member: ANZ International
Technology and Digital Business Advisory
Panel (2016–2019).
Age
Residence USA
60 years
Company Secretaries’ qualifications and experienceCurrently there are two people appointed as Company Secretaries of the Company. Details of their roles are contained in the Corporate Governance Statement. Their qualifications and experience are as followsKen AdamsPositionGroup General CounselQualificationsBA, LLB, LLMSimon PordagePositionCompany SecretaryQualificationsLLB (Hons), FGIA, FCG (CS, CGP)Ken joined ANZ as Group General Counsel in August 2019, having assisted ANZ with major legal issues for over 10 years. Prior to ANZ, Ken was a Partner of Freehills and later Herbert Smith Freehills for 21 years, and for six years was a member of the Herbert Smith Freehills Global Board. Ken is one of Australia’s leading commercial lawyers with significant experience in class actions and other complex legal issues. He holds a Master of Laws from the University of Melbourne and is a co-author of Class Actions in Australia.Simon joined ANZ in May 2016. He is a Chartered Secretary and Chartered Governance Practitioner and has extensive company secretarial and corporate governance experience. From 2009 to 2016 he was Company Secretary for Australian Foundation Investment Company Limited and a number of other listed investment companies. Other former roles include being Deputy Company Secretary for ANZ and Head of Board Support for Barclays PLC in the United Kingdom.He is a formal brand ambassador for, and is a former National President and Chairman of, Governance Institute of Australia. He is also a member of the Chartered Governance Institute’s Global Thought Leadership Committee. Simon is committed to the promotion and practice of good corporate governance, and regularly presents on governance issues. 36
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Risk management
The evolving macroeconomic
and geopolitical conditions have
continued to challenge our operating
environment. Our Risk Management
Framework (RMF) has remained
robust in the face of these challenges,
enabling the sound management
of our business.
Over the last year we have continued to
work towards a stronger and simpler risk
and governance framework. Our ability
to respond to changes in existing risks,
and to deal with emerging risks as they
arise has been strengthened, including
those discussed below.
Macroeconomic and
Geopolitical environment
The rising geopolitical tensions including
the conflict in Ukraine, trade tensions,
energy security issues in the European
Union accompanied with economic
challenges relating to rising interest rates,
inflation and real cost of living pressures,
are creating uncertainty for many of our
customers. The Board and management
continually monitor these developing
conditions, and maintain provisions and
strong capital levels for a range of potential
scenarios. In addition, we have focused on
the following to help support our customers
and their financial resilience:
Home Loans and Consumer Lending –
We continue to engage with our home
loans customers to help them better
manage their home loan and personal
finances. 70 per cent of our customers
have paid additional funds to reduce
their principal debt with over half of
those more than 2 years ahead on their
repayments. Measures such as interest
rate floors and higher interest rate buffers
when assessing home loans, and higher
household expenditure measures, have
contributed to customers being better
placed to service their loans.
We have proactively communicated with
our customers to provide reassurance that
where required, we have options available
to continue to support them.
Data Analytics – Data and analytics play
an important role in early identification
of customers heading towards financial
difficulty. We have invested in our retail risk
systems to provide quality data analytics to
assist our Collections and Hardship teams.
Our analytics have focused on customer
transaction data and the identification
of customers that may need additional
support. We are using data analytics to
look at savings, credit, and offset accounts
to better understand customers’ financial
behaviour and potential future outcomes.
The analysis considers interest rate changes,
increases in living expenses and cashflow.
In our Wholesale portfolio, we are using
external (e.g., ASIC’s insolvency register,
ATO arrears) and internal data sources
(e.g., stress sensitivities and savings levels)
to identify areas of systemic emerging
risks to proactively manage the portfolio.
Financial health and Wellbeing –
We have transformed our retail platform
by simplifying and rebuilding products,
systems and processes to improve the
financial wellbeing of our customers. Our
initial ‘transact and save’ product within the
ANZ Plus App has provided functionality to
enable customers to have better visibility
and control over their money.
The lessons we have learnt from COVID-19
and recent natural disasters, have been used
to develop financial hardship assistance
options that can be implemented quickly.
Portfolio management – Our new Head
of Geopolitical Risk provides additional
insights to support our customer
management and understand the
geopolitical impacts to our portfolio.
The introduction of this role has provided
focused analysis of global issues which
allows us to better inform and support
our customers and the Board.
Risk Culture
Risk culture is an important component of
our organisational culture and underpins the
shared values, behaviours and practices that
drive how risk is considered in decisions.
As part of ANZ’s ongoing focus on keeping communities safe, members of the ANZ financial crime team have security clearance to support intelligence initiatives. Leveraging lessons from previous operations involving fugitives and high-risk law enforcement targets, the team regularly checks internal and external intelligence sources for information.In 2022, a member of the Financial Crime team proactively reached out to law enforcement and regulatory partners to support a live child abduction case. The alleged perpetrator was on the run and actively being sought by law enforcement agencies. The team member checked our systems for the main perpetrators and any known associates, which led to the identification of accounts with activity outside of the account holder's normal spending behavior. Close examination of those accounts suggested the alleged perpetrator was using the account of a family member to avoid detection. This information was then shared with law enforcement. Law enforcement partners were able to follow up on ANZ’s leads and located the victim unharmed.Keeping our community safe ANZ 2022 Annual Report
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We have made progress in strengthening
risk culture through achieving greater
awareness of the approach to risk culture
and establishing strong leadership to deliver
on our risk culture plans. This will allow us to
achieve our defined target state.
We have defined key risk culture principles
that form the foundation of our risk culture
approach and have embedded a framework
for assessing each risk culture principle
across the organisation. This framework
incorporates desired risk behaviours
and business and risk outcomes. We
are monitoring risk culture through our
Risk Culture Dashboard which captures
risk management and business-related
information. Our annual Risk Culture Survey
informs us on the perceived and actual
effectiveness of our risk behaviours, policies
and processes, and decision making. Our
Board Risk Committee receives half-yearly
updates from management to assist the
Board in forming a view on risk culture
and the effectiveness of plans and actions.
Risk culture is included as a performance
objective for all Group Executives and risk
is a key element of the balanced scorecard
for our people’s performance and
remuneration. Behaviours supporting the
target risk culture are reinforced through the
Enterprise Accountability Group (page 90).
We acknowledge individuals who
role model outstanding risk behaviours
for their work to manage and mitigate
the organisation’s risks.
Financial crime
We continue to maintain an effective
financial crime risk management program
that anticipates and navigates criminal
threats supported by the right people with
the right tools. The Financial Crime team
continues to be responsible for the delivery
of enhanced detection, investigative and/or
intelligence capability that is focused on
identifying, mitigating and managing
financial crime risk and protecting the
community via:
• Partnering with AUSTRAC’s Fintel
Alliance, and similar programs globally.
• The development and maintenance
of a central data repository, intelligence
systems and tools.
• The creation and delivery of Dynamic
Algorithms to meet new threats.
Non-financial risk
We have made further inroads in our
non-financial risk management. We continue
to uplift our non-financial RMF (the I.AM –
Identify, Act, Monitor framework) to provide
a holistic approach to risk management
with insights that enable us to anticipate
and navigate a changing environment and
protect our customers, shareholders and
the community from harm.
We are improving how we manage
our non-financial risk by updating our
approach to be more standardised,
integrated, dynamic and automated, so
that it is both more effective and efficient.
Conduct Risk
The interests of our customers and
community are fundamental to our strategy.
We continue to responsibly manage our
Conduct Risk, including by identifying,
managing, and mitigating instances where
our activities, products and/or services may
result in unfair customer outcomes and/or
damage to market integrity. The articulation
of Conduct Risk as a Risk Theme under the
new Compliance and Operational Risk
model will help manage Conduct Risk as
a key material risk for ANZ. To support this,
we have developed a global Conduct Risk
Framework and Conduct Risk taxonomy
which facilitate a clear and consistent way
of managing and monitoring the risk, in
conjunction with the Compliance and
Operational Risk Framework (I.AM).
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Our 2022 Climate-related Financial
Disclosures will be released prior to our
Annual General Meeting (AGM) and will
be available at anz.com/annualreport
Biodiversity risk: Risks associated with
biodiversity loss, including as a result of
species extinction or decline, ecosystem
degradation and nature loss, are emerging
risks that we are seeking to understand
further. We acknowledge biodiversity risks
are closely linked to climate-related risks. In
relation to biodiversity, risks can arise from
lending to customers that are significantly
dependent on biodiversity and ecosystem
services, or who may have negative impacts
on biodiversity. In addition to physical risks
associated with biodiversity loss, risks can
also arise from changing societal preferences
and regulatory or policy changes (including
potential reforms to halt and reverse
forest loss, species extinctions and land
degradation). These changes may impact the
bank directly, but the greater impact is likely
to be through the impact of these changes
on some of the bank's customers. We
understand that failure to manage these risks
may lead to financial and non-financial risks
and adverse impacts to the Group’s Position.
Biodiversity and natural capital loss are
addressed in various ways by ANZ's risk
policies and processes. In line with our
Social and Environmental Risk Policy, we
expect our business customers to use
internationally accepted industry practices
to manage social, environmental and
economic impacts, including potential
results on biodiversity. This year we also
broadened our engagement with 100 of our
largest emitting business customers to
include a focus on biodiversity, encouraging
and supporting them to identify and
manage their potential impacts.
We welcome the establishment of the
Taskforce on Nature-related Financial
Disclosures (TNFD) and have joined the
TNFD Forum to support their work. We
recognise their important role in driving
widespread and improved disclosures of
biodiversity impacts.
Our Risk Management Framework
The Board is ultimately responsible for
establishing and overseeing the Group’s
RMF which is supported by the Group’s
underlying systems, structures, policies,
procedures, processes and people. The
Board has delegated authority to the
Board Risk Committee (BRC) to develop
and monitor compliance with the Group’s
Emerging risks
Risks that continue to evolve and that
we are paying particular attention to are:
Cyber security risk: We take the security of
our bank, our customers and our customers’
information very seriously. Cyber security
threats continue to be significant and our
approach to mitigating cyber security risk
involves a range of controls relying on
people, technology and process. We are
continually testing our defences internally
and through independent third parties. We
have a very sophisticated cyber security
protection capability and have invested
heavily in a range of recognised industry
practices and technologies, processes and
defences. We maintain a 24/7 sophisticated
internal Security Operations Centre,
analysing millions of data events daily
including unusual or infrequently seen
activities identified by our security team.
In addition, we are cooperating with our
counterparts, governments and associated
entities around the world to protect against
cyber security threats, which have increased
since COVID-19 and the consequent shift
to digital banking and remote working.
We provide continuing staff education and
run customer focused campaigns. We have
developed threat intelligence newsletters
and a ‘Simplifying Cyber for Business’ guide.
We have continued to sponsor the
Australian Computing Academy’s Schools
Cyber Security Challenges, contributing to
content and co-producing cyber security
modules for students and teachers as part
of the digital curriculum.
Climate change risk: The financial risks
associated with climate change remain a key
focus. Climate-related events can include
severe storms, drought, fires, cyclones,
hurricanes, floods and rising sea levels. The
impact of these events can be widespread.
The impact of these losses on the Group may
be exacerbated by a decline in the value
and liquidity of assets held as collateral,
which may impact the Group’s ability
to recover its funds when loans default.
Recent examples in Australia include severe
drought conditions, bushfires in 2019/2020,
and severe flooding in 2021 and 2022. In
addition, geological event impacts have
occurred in New Zealand in recent years.
We continue to improve our management
of climate risks through workstreams
focused on regulatory monitoring, policy
governance, risk appetite, data and analytics.
We have set a public ESG target to develop
an enhanced RMF that anticipates potential
climate-related impacts, and associated
regulatory requirements, by the end of 2022.
For details on our performance
against our ESG Targets refer to
our ESG Supplement available
at anz.com/annualreport
Our Climate Advisory Forum, chaired by the
Group Executive, Institutional and includes
the Group Chief Risk Officer, supports
execution of our climate policy, disclosures
and related matters across the Group.
We are focusing on: aligning our lending
portfolio with the goals of the Paris Agreement
and supporting customers to expand in low
or zero emission technologies; and factoring
climate change risk into lending decisions
for large business customers, assessing their
capacity to respond to climate change and
the evolving regulatory landscape.
We participated in APRA’s Climate Vulnerability
Assessment (CVA), which aims to examine
the material exposures and financial risks that
banks, the financial system and economy
may face due to climate risks. APRA’s CVA
comprised two stress tests, a counterparty
assessment and a data assessment. APRA
intends to disclose the outcomes of the
CVA in late 2022, which may also be used
to inform future supervisory guidance.
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39
risk management policies. The Committee
reports regularly to the Board on its
activities. The key pillars of the Group
RMF include:
• The Risk Management Strategy (RMS),
which describes the approach for
managing risk arising from the Group’s
purpose and strategy. The RMS includes:
how the risk function is structured to
support the Group’s purpose and strategy,
and the execution of the Group Chief Risk
Officer’s prescribed responsibilities as an
Accountable Person for the Group under
the Banking Executive Accountability
Regime; the values, attitudes and
behaviours required of employees
in delivering on strategic priorities; a
description of each material risk; and an
overview of how the RMF addresses each
risk, with reference to the relevant policies,
standards and procedures. It also includes
information on how the Group identifies,
measures, evaluates, monitors, reports
and then either controls or mitigates
material risks and the oversight
mechanism and/or committees in place.
• The Risk Appetite Statement (RAS),
which sets out the Board’s expectations
regarding, for each material risk, the
maximum level of risk that the Group
is willing to accept in pursuing its
strategic objectives and its operating
plans considering its shareholders’,
depositors’ and customers’ interests.
• The Risk Culture principles, which are a
subset of the Group’s organisational culture
and an intrinsic part of the Group’s RMF.
The Group operates a Three Lines-of-Defence
Model in regard to risk management,
helping to embed a culture where risk
is everyone’s responsibility.
The business has first line of defence
responsibility for day-to-day ownership
of risks and controls and accountability for
implementation and ongoing maintenance
of the RMF.
The Group Risk (including Compliance)
teams form the second line of defence,
providing independent oversight of the
Group’s risk profile and RMF.
Internal Audit is the third line of defence,
providing independent evaluation and
assurance on the appropriateness,
effectiveness and adequacy of the
Group’s RMF.
The governance and oversight of risk
management, while embedded in day-to-day
activities, is also the focus of committees and
regular forums across the bank (see diagram
next page). The committees and forums
discuss and monitor known and emerging
risks, review management plans and
monitor progress to address known issues.
Credit Ratings System Oversight CommitteeCapital and Stress Testing Oversight CommitteeFinancial Crime OREC Sub-CommitteeRegional or Country Risk Management CommitteesCountry Assets and Liability CommitteesCredit and Market Risk CommitteeAudit CommitteeGroup Asset and Liability CommitteeEthics, Environment, Social and Governance CommitteeOperational Risk Executive CommitteeRisk CommitteeEthics and Responsible Business CommitteeDigital Business and Technology CommitteeInvestment CommitteeGroup Executive People CommitteeNomination and Board Operations CommitteeRisk Governance and Oversight CommitteeHuman Resources CommitteeDivisional/Functional Accountability GroupsExecutive CommitteeANZ’s most senior executives meet regularly to discuss performance and review shared initiatives.Enterprise Accountability GroupGroup Performance Execution CommitteeANZ’s key Management Committee charged with oversight of the Group’s overall operational performance and position and execution of the operating plan.GroupPrincipal Board CommitteesCountryDivisionModelling Ratings Working Groups and Usage ForumsDivisional Initiatives Review Committees/Project Advisory CouncilsDivisional Risk Management CommitteesBOARD OF DIRECTORSKEY MANAGEMENT COMMITTEESVarious Divisional Specific Management CommitteesOperational Risk CommitteeProduct Committee 40
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Key material risks
The material risks facing the
Group per the Group’s RMS, and
how these risks are managed,
are summarised below.
As part of the annual review of our RMS
we have classified Financial Crime Risk
(previously captured under Operational Risk)
as a key material risk to enhance its profile.
We also specified the risk management
approach for: Money Laundering risk,
Terrorism Financing risk, Sanctions risk
and Fraud risk, complying with better
practice and align with the direction of the
Compliance and Operational Risk Strategy
to identify significant obligations and
material risks that matter to the Group.
For further information about the
principal risks and uncertainties
that the Group faces, see our “Principal
Risks and Uncertainties” disclosure
available at anz.com/shareholder/centre
Risk type
Description
Managing the risk
Capital
Adequacy
Risk
The risk of loss arising from the Group failing
to maintain the level of capital required by
prudential regulators and other key stakeholders
(shareholders, debt investors, depositors,
rating agencies, etc.) to support the Group’s
consolidated operations and risk appetite.
We pursue an active approach to Capital
Management, which is designed to protect the
interests of depositors, creditors and shareholders
through ongoing review, and Board approval,
of the level and composition of our capital base
against key policy objectives.
Material
ESG issues
Compliance
Risk
The risk of failure to act in accordance with
laws, regulations, industry standards and codes,
internal policies and procedures and principles
of good governance as applicable to the
Group’s businesses.
Credit
Risk
The risk of financial loss resulting from:
• A counterparty failing to fulfil its
obligations; or
• A decrease in credit quality of a counterparty
resulting in a financial loss
Credit Risk incorporates the risks associated with
our lending to business and retail customers
who could be impacted by climate change
or by changes to laws, regulations, or other
policies adopted by governments or regulatory
authorities, including carbon pricing and climate
change adaptation or mitigation policies.
Key features of how we manage Compliance Risk
as part of our Operational Risk and Compliance
Framework include:
• Centralised management of key obligations via
a Global Obligations Library, enable our change
management capability in relation to new and
revised obligations,
• An emphasis on the identification of changing
regulations and the business environment,
to enable proactive assessment of emerging
compliance risks.
• Recognition of incident management as a
separate element to enhance ANZ’s ability
to identify, manage and report on incidents/
breaches in a timely manner.
Our Credit Risk framework is top down, being
defined by credit principles and policies. Credit
policies, requirements and procedures cover all
aspects of the credit life cycle from initial approval
and risk grading, through ongoing management
and problem debt management.
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Risk type
Description
Managing the risk
Material
ESG issues
The risk that the Group is unable to
meet its payment obligations as they
fall due, including:
• Repaying depositors or maturing
wholesale debt; or
• The Group having insufficient
Key principles in managing our Liquidity and Funding
Risk include:
• ANZ’s short-term liquidity scenario modelling stresses
cash flow projections against multiple survival horizons’
over which the Group is required to remain cash
flow positive;
capacity to fund increases in assets.
• Longer term scenarios are in place that measure
the structural liquidity position of the balance sheet.
Liquidity
and
Funding
Risk
Market
Risk
The risk stems from our trading and
balance sheet activities and is the risk
to the Group’s earnings arising from:
• Changes in any interest rates, foreign
exchange rates, credit spreads,
volatility, and correlations; or
• Fluctuations in bond, commodity
or equity prices.
Operational
Risk
The risk of loss and/or non-compliance
with laws resulting from inadequate or
failed internal processes, people and/or
systems, or from external events. This
definition includes legal risk, and the
risk of reputation loss, but excludes
strategic risk.
Strategic
Risk
Risks that affect or are created by an
organisation’s business strategy and
strategic objectives. A possible source
of loss might arise from the pursuit of an
unsuccessful business plan. For example,
Strategic risk might arise from making
poor strategic business decisions, from
the sub-standard execution of decisions,
from inadequate resource allocation, or
from a failure to respond well to changes
in the business environment.
We have a detailed market risk management and control
framework to support our trading and balance sheet
activities, which incorporates an independent risk
measurement approach to quantify the magnitude
of market risk within the trading and balance sheet
portfolios. This approach, along with related analysis,
identifies the range of possible outcomes, that can be
expected over a given period of time, and establishes the
likelihood of those outcome and allocates an appropriate
amount of capital to support these activities.
We manage Compliance and Operational Risk in the
best interests of our customers and the community and
to meet expectations of the regulators. The Compliance
and Operational Risk Principles (Level 1) establish the
fundamental requirements at ANZ which inform policies,
processes, and procedure development of ANZ’s
management of Compliance and Operational Risk,
through timely and appropriate identification, action
and monitoring. It is part of ANZ’s RMF and ANZ’s I.AM
(Identify, Act, Monitor) Framework (Level 2). We take a
risk-based approach to the management of operational
risk and obligations. This enables the Group to be
consistent in proactively identifying, assessing, managing,
reporting and escalating operational risk-related risk
exposures, while respecting the specific obligations
of each jurisdiction in which the Group operates.
Day-to-day management of operational risk is the
responsibility of business unit line management and staff.
Risk management, supported by a strong Risk Culture, helps
to seek to ensure all staff are thinking about and managing
risk on a daily basis – “Risk is Everyone’s Responsibility”.
Strategic risks are discussed and managed through our
annual strategic planning process, managed by the
Executive Committee and approved by the Board. Where
the strategy leads to an increase in other Key Material
Risks (e.g. Credit Risk, Market Risk, Operational Risk) the
risk management strategies associated with these risks
form the primary controls.
42
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Risk type
Description
Managing the risk
Technology
Risk
The risk of loss and/or non-compliance with laws
from inadequate or failed internal processes,
people or systems that deliver Technology assets
and services to customers and staff. This risk
includes Technology assets and services delivered
or managed by third parties, and external events.
Our approach to manage Technology Risk is to
manage our operational risks caused by the use of
technology, including risks associated with cyber
security and third party providers, in a manner that
seeks to ensure customer information is secure
and service disruption is within acceptable levels.
Material
ESG issues
Approach to manage Conduct Risk is to seek to
ensure that risks to customers, community and
market integrity are identified, assessed, measured,
evaluated, treated, monitored and reported with
appropriate governance and oversight.
The articulation of Conduct Risk as a Level 1 Risk
Theme under the new NFR model will help manage
Conduct Risk as a key material risk for ANZ. To
support the NFR model (and our obligations under
Prudential Standard CPS 220 Risk Management), ANZ
has developed a global Conduct Risk Framework
and Conduct Risk taxonomy which facilitate a clear
and consistent way of managing and monitoring the
risk, and the risk is managed in conjunction with the
Compliance and Operational Risk Framework (I.AM).
Financial Crime Risk at ANZ is managed using
a risk-based approach in accordance with the
Conduct Risk Framework, and in conjunction
with the Compliance and Operational Risk
Framework (I.AM) and a three lines of defence
model. In additional to a risk-based approach
to risk management, for Sanctions there is a
rules-based lens to ensure compliance with
Sanctions legislation. For the Business to identify
and manage Financial Crime Risk, it must identify
its regulatory obligations and impacted business
activities and maintain and monitor key controls.
Conduct
Risk
Financial
Crime
Risk
The risk specifically includes Information
Security and Cyber Security and how
information held by the Group needs to be
protected from inappropriate modification,
loss, disclosure and unavailability.
The risk of loss or damage arising from the
failure of the Group, its employees or agents
to appropriately consider the interests of
customers, the integrity of the financial markets
and the expectations of the community in
conducting its business activities.
The Risk may arise not only from deliberate
or negligent actions of individual employees
but may also be inadvertent and caused by
inadequacies in the Group’s systems, processes
and procedures.
Financial Crime Risk covers the following risks
at ANZ:
• Money Laundering (ML) Risk – the risk that
we may reasonably face from our products
and/or services being misused to facilitate
the processing of the proceeds of crime to
conceal their illegal origins and make them
appear legitimate.
• Terrorism Financing (TF) Risk – the risk that
we may reasonably face from our products
and/or services being misused to facilitate
the provision or collection of funds with the
intention or knowledge that they be used
to carry out acts associated in support of
terrorists or terrorist organisations.
• Sanctions Risk – the risk of failing to
comply with laws and regulations relating
to sanctions imposed by governments
and multinational bodies as a result of our
products and services being misused to
facilitate prohibited sanctions activities.
• Fraud Risk – the risk that we may reasonably
face from our products and/or services being
misused to facilitate intentional acts by one or
more individuals, involving the use of deception
to obtain an unjust or illegal advantage
arising from internal or external sources.
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OUR PERFORMANCE (continued)
The results of the Group’s operations and financial position are set out on pages 44-59. Page 13 outlines the Group’s strategy and pages
11-25 describe in further detail the Group’s prospects in terms of future financial position and performance. Discussion of our approach
to risk management, including a summary of our key material risks, is outlined on pages 36-42.
GROUP PERFORMANCE
GROUP PROFIT RESULTS
Income Statement
Net interest income
Other operating income
Operating income
Operating expenses
Profit before income tax
Income tax expense
Non-controlling interests
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit for the year
2022
Statutory
$m
2021
Statutory
$m
Cash
$m
14,874
3,673
18,547
(9,579)
8,968
232
9,200
(2,684)
(1)
6,515
(19)
6,496
14,874
4,552
19,426
(9,579)
9,847
232
10,079
(2,940)
(1)
7,138
(19)
7,119
Cash
$m
14,161
3,286
17,447
(9,051)
8,396
567
8,963
(2,764)
(1)
6,198
(17)
6,181
14,161
3,259
17,420
(9,051)
8,369
567
8,936
(2,756)
(1)
6,179
(17)
6,162
Statutory profit after tax for the year ended 30 September 2022 increased 16% on the prior year to $7,119 million. Statutory return on equity is
11.4% and statutory earnings per share is 250.0 cents, an increase of 16% on prior year.
The Group uses cash profit, a non-IFRS measure, to assess the performance of its business activities. It is an industry-wide measure which
enables comparison with our peer group. We calculate cash profit by adjusting statutory profit for non-core items. In general, it represents the
financial performance of our core business activities. We use cash profit internally to set targets and incentivise our Senior Executives and
leaders through our remuneration plans. Refer to page 45 for adjustments between statutory and cash profit. The adjustments made in
arriving at cash profit are included in statutory profit which is subject to audit within the context of the external auditor’s audit of the 2022
Financial Report. Cash profit is not subject to audit by the external auditor. Our external auditor has informed the Audit Committee that
adjustments between statutory and cash profit have been determined on a consistent basis across each of the periods presented.
DISCONTINUED OPERATIONS
We completed the sale of our aligned dealer groups business and our OnePath pensions and investment business to IOOF Holdings Limited
(IOOF, now known as Insignia Financial Limited), and our life insurance business to Zurich Financial Services Australia (Zurich) across the 2020
and 2019 financial years. The financial results of these divested businesses are treated as discontinued operations from a financial reporting
perspective. The financial results after transaction completion primarily relate to residual operational costs on separation and partial recovery
of certain costs based on the respective Transition Service Agreements. The separation of the business sold to Zurich completed in early April
2022, and the businesses sold to IOOF completed in early October 2022. There were no material financial impacts from the discontinued
operations in each of the periods presented.
PENDING ORGANISATIONAL CHANGES WITH IMPACT TO FUTURE REPORTING PERIODS
Non-Operating Holding Company
On 4 May 2022, the Group announced its intention to lodge a formal application with APRA, the Federal Treasurer and other applicable
regulators to establish a non-operating holding company and create distinct bank and non-bank groups within the organisation to assist ANZ
to better deliver its strategy to strengthen and grow its core business further.
Overview
Should the proposed restructure proceed, ANZ will establish a non-operating holding company, ANZ Group Holdings Limited, as the new
create value
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Performance
Remuneration
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Financial
Shareholder
listed parent holding company of the ANZ Group by a scheme of arrangement and to separate ANZ’s banking and certain non-banking
businesses into the ANZ Bank Group and ANZ Non-Bank Group. The ANZ Bank Group would comprise the current Australia and New Zealand
Banking Group Limited and the majority of its present-day subsidiaries. The ANZ Non-Bank Group would house banking-adjacent businesses
developed or acquired by ANZ Group, as we continue to seek ways to bring the best new technology and banking-adjacent services to our
OUR PERFORMANCE (continued)
customers.
The Explanatory Memorandum has been registered with the Australian Securities and Investments Commission and ANZ shareholders will be
asked to vote on the scheme on 15 December 2022. A copy of the Explanatory Memorandum will be made available on ANZ’s website
OUR PERFORMANCE (continued)
(www.anz.com/schememeeting).
Suncorp Bank Acquisition
Suncorp Bank Acquisition
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding
44 ANZ 2022 ANNUAL REPORT
company of Suncorp Bank. The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding
Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State
company of Suncorp Bank. The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal
Financial Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions is
Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State
24 months after signing (after which either party may terminate the agreement). The final purchase price is subject to completion adjustments
Financial Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions is
and may be more or less than $4.9 billion. In addition, ANZ will also acquire Suncorp Bank’s Additional Tier I capital notes at face value ($0.6
24 months after signing (after which either party may terminate the agreement). The final purchase price is subject to completion adjustments
billion as at June 2022). Completion is expected in the second half of calendar year 2023.
and may be more or less than $4.9 billion. In addition, ANZ will also acquire Suncorp Bank’s Additional Tier I capital notes at face value ($0.6
billion as at June 2022). Completion is expected in the second half of calendar year 2023.
CONTINUING OPERATIONS
CONTINUING OPERATIONS
Key measures of our financial performance are set out below.
Key measures of our financial performance are set out below.
NNeett iinntteerreesstt mmaarrggiinn ––
NNeett iinntteerreesstt mmaarrggiinn ––
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2022
ccaasshh11 ((%%))
RReettuurrnn oonn eeqquuiittyy ––
ccaasshh11 ((%%))
RReettuurrnn oonn eeqquuiittyy ––
ccaasshh11 ((%%))
2022
2021
2022
2021
2021
2022
2021
1.63
1.64
1.63
1.64
10.4
9.9
10.4
9.9
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ooppeerraattiinngg iinnccoommee ––
OOppeerraattiinngg eexxppeennsseess ttoo
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ooppeerraattiinngg iinnccoommee ––
2022
ccaasshh11 ((%%))
EEaarrnniinnggss ppeerr sshhaarree ––
ccaasshh11 ((cceennttss))
EEaarrnniinnggss ppeerr sshhaarree ––
ccaasshh11 ((cceennttss))
2022
2021
2022
2021
2021
2022
2021
51.6
51.9
51.6
51.9
CCrreeddiitt iimmppaaiirrmmeenntt cchhaarrggee
//((rreelleeaassee)) –– ccaasshh11 (($$mm))
CCrreeddiitt iimmppaaiirrmmeenntt cchhaarrggee
2022
//((rreelleeaassee)) –– ccaasshh11 (($$mm))
(232)
2021
2022
(567)
(232)
2021
(567)
CCoommmmoonn eeqquuiittyy
ttiieerr 11 ((%%))
CCoommmmoonn eeqquuiittyy
228.8
ttiieerr 11 ((%%))
2022
216.5
228.8
216.5
2021
2022
2021
12.3
12.3
12.3
12.3
CCaasshh pprrooffiitt11
(($$mm))
CCaasshh pprrooffiitt11
(($$mm))
2022
2021
2022
2021
((cceennttss))
((cceennttss))
2022
2021
2022
2021
DDiivviiddeenndd ppeerr sshhaarree
DDiivviiddeenndd ppeerr sshhaarree
6,515
6,198
6,515
6,198
146
142
146
142
1. Information has been presented on a cash profit from continuing operations basis.
1. Information has been presented on a cash profit from continuing operations basis.
ADJUSTMENTS BETWEEN STATUTORY PROFIT AND CASH PROFIT ($m)
ADJUSTMENTS BETWEEN STATUTORY PROFIT AND CASH PROFIT ($m)
7,138
7,138
2022 Statutory
profit -
2022 Statutory
continuing
operations
profit -
continuing
operations
(569)
(569)
Economic
hedges
Economic
hedges
(54)
(54)
Revenue and
expense hedges
Revenue and
expense hedges
6,515
6,515
2022 Cash
profit -
continuing
2022 Cash
operations
profit -
continuing
operations
Adjustments between continuing operations statutory profit and cash profit are summarised below:
Adjustments between continuing operations statutory profit and cash profit are summarised below:
Adjustment
Reason for the adjustment
Economic hedges
Adjustment
2022: ($569) million
Economic hedges
2021: ($77) million
2022: ($569) million
2021: ($77) million
Revenue and
expense hedges
Revenue and
2022: ($54) million
expense hedges
2021: $96 million
2022: ($54) million
2021: $96 million
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in
Reason for the adjustment
accordance with accounting standards, result in fair value gains and losses being recognised within the Income
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in
Statement. We remove the fair value adjustments from cash profit since the profit or loss resulting from the hedge
accordance with accounting standards, result in fair value gains and losses being recognised within the Income
transactions will reverse over time to match with the profit or loss from the economically hedged item as part of
Statement. We remove the fair value adjustments from cash profit since the profit or loss resulting from the hedge
cash profit. This includes gains and losses arising from derivatives not designated in accounting hedge
transactions will reverse over time to match with the profit or loss from the economically hedged item as part of
relationships but which are considered to be economic hedges, including hedges of foreign currency debt
cash profit. This includes gains and losses arising from derivatives not designated in accounting hedge
issuances and foreign exchange denominated revenue and expense streams, primarily NZD and USD (and USD
relationships but which are considered to be economic hedges, including hedges of foreign currency debt
correlated), as well as ineffectiveness from certain designated accounting hedges.
issuances and foreign exchange denominated revenue and expense streams, primarily NZD and USD (and USD
correlated), as well as ineffectiveness from certain designated accounting hedges.
ANZ 2022 ANNUAL REPORT 45
ANZ 2022 ANNUAL REPORT 45
44
44
ANZ 2022 Annual Report
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Performance overview
GROUP PERFORMANCE
The results of the Group’s operations and financial position are set out on pages 44-59. Page 13 outlines the Group’s strategy and pages
11-25 describe in further detail the Group’s prospects in terms of future financial position and performance. Discussion of our approach
to risk management, including a summary of our key material risks, is outlined on pages 36-42.
GROUP PROFIT RESULTS
Income Statement
Net interest income
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense
Non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit for the year
2022
Statutory
$m
14,874
4,552
19,426
(9,579)
9,847
232
10,079
(2,940)
(1)
7,138
(19)
7,119
Cash
$m
14,874
3,673
18,547
(9,579)
8,968
232
9,200
(2,684)
(1)
6,515
(19)
6,496
2021
Statutory
$m
14,161
3,259
17,420
(9,051)
8,369
567
8,936
(2,756)
(1)
6,179
(17)
6,162
Cash
$m
14,161
3,286
17,447
(9,051)
8,396
567
8,963
(2,764)
(1)
6,198
(17)
6,181
Statutory profit after tax for the year ended 30 September 2022 increased 16% on the prior year to $7,119 million. Statutory return on equity is
11.4% and statutory earnings per share is 250.0 cents, an increase of 16% on prior year.
The Group uses cash profit, a non-IFRS measure, to assess the performance of its business activities. It is an industry-wide measure which
enables comparison with our peer group. We calculate cash profit by adjusting statutory profit for non-core items. In general, it represents the
financial performance of our core business activities. We use cash profit internally to set targets and incentivise our Senior Executives and
leaders through our remuneration plans. Refer to page 45 for adjustments between statutory and cash profit. The adjustments made in
arriving at cash profit are included in statutory profit which is subject to audit within the context of the external auditor’s audit of the 2022
Financial Report. Cash profit is not subject to audit by the external auditor. Our external auditor has informed the Audit Committee that
adjustments between statutory and cash profit have been determined on a consistent basis across each of the periods presented.
DISCONTINUED OPERATIONS
We completed the sale of our aligned dealer groups business and our OnePath pensions and investment business to IOOF Holdings Limited
(IOOF, now known as Insignia Financial Limited), and our life insurance business to Zurich Financial Services Australia (Zurich) across the 2020
and 2019 financial years. The financial results of these divested businesses are treated as discontinued operations from a financial reporting
perspective. The financial results after transaction completion primarily relate to residual operational costs on separation and partial recovery
of certain costs based on the respective Transition Service Agreements. The separation of the business sold to Zurich completed in early April
2022, and the businesses sold to IOOF completed in early October 2022. There were no material financial impacts from the discontinued
operations in each of the periods presented.
PENDING ORGANISATIONAL CHANGES WITH IMPACT TO FUTURE REPORTING PERIODS
Non-Operating Holding Company
On 4 May 2022, the Group announced its intention to lodge a formal application with APRA, the Federal Treasurer and other applicable
regulators to establish a non-operating holding company and create distinct bank and non-bank groups within the organisation to assist ANZ
to better deliver its strategy to strengthen and grow its core business further.
Should the proposed restructure proceed, ANZ will establish a non-operating holding company, ANZ Group Holdings Limited, as the new
listed parent holding company of the ANZ Group by a scheme of arrangement and to separate ANZ’s banking and certain non-banking
businesses into the ANZ Bank Group and ANZ Non-Bank Group. The ANZ Bank Group would comprise the current Australia and New Zealand
Banking Group Limited and the majority of its present-day subsidiaries. The ANZ Non-Bank Group would house banking-adjacent businesses
developed or acquired by ANZ Group, as we continue to seek ways to bring the best new technology and banking-adjacent services to our
customers.
The Explanatory Memorandum has been registered with the Australian Securities and Investments Commission and ANZ shareholders will be
asked to vote on the scheme on 15 December 2022. A copy of the Explanatory Memorandum will be made available on ANZ’s website
(www.anz.com/schememeeting).
44 ANZ 2022 ANNUAL REPORT
OUR PERFORMANCE (continued)
The results of the Group’s operations and financial position are set out on pages 44-59. Page 13 outlines the Group’s strategy and pages
11-25 describe in further detail the Group’s prospects in terms of future financial position and performance. Discussion of our approach
to risk management, including a summary of our key material risks, is outlined on pages 36-42.
GROUP PERFORMANCE
GROUP PROFIT RESULTS
Income Statement
Net interest income
Other operating income
Operating income
Operating expenses
Profit before income tax
Income tax expense
Non-controlling interests
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit for the year
2022
Statutory
$m
2021
Statutory
$m
Cash
$m
14,874
3,673
18,547
(9,579)
8,968
232
9,200
(2,684)
(1)
6,515
(19)
6,496
14,874
4,552
19,426
(9,579)
9,847
232
10,079
(2,940)
(1)
7,138
(19)
7,119
Cash
$m
14,161
3,286
17,447
(9,051)
8,396
567
8,963
(2,764)
(1)
6,198
(17)
6,181
14,161
3,259
17,420
(9,051)
8,369
567
8,936
(2,756)
(1)
6,179
(17)
6,162
Statutory profit after tax for the year ended 30 September 2022 increased 16% on the prior year to $7,119 million. Statutory return on equity is
11.4% and statutory earnings per share is 250.0 cents, an increase of 16% on prior year.
The Group uses cash profit, a non-IFRS measure, to assess the performance of its business activities. It is an industry-wide measure which
enables comparison with our peer group. We calculate cash profit by adjusting statutory profit for non-core items. In general, it represents the
financial performance of our core business activities. We use cash profit internally to set targets and incentivise our Senior Executives and
leaders through our remuneration plans. Refer to page 45 for adjustments between statutory and cash profit. The adjustments made in
arriving at cash profit are included in statutory profit which is subject to audit within the context of the external auditor’s audit of the 2022
Financial Report. Cash profit is not subject to audit by the external auditor. Our external auditor has informed the Audit Committee that
adjustments between statutory and cash profit have been determined on a consistent basis across each of the periods presented.
DISCONTINUED OPERATIONS
We completed the sale of our aligned dealer groups business and our OnePath pensions and investment business to IOOF Holdings Limited
(IOOF, now known as Insignia Financial Limited), and our life insurance business to Zurich Financial Services Australia (Zurich) across the 2020
and 2019 financial years. The financial results of these divested businesses are treated as discontinued operations from a financial reporting
perspective. The financial results after transaction completion primarily relate to residual operational costs on separation and partial recovery
of certain costs based on the respective Transition Service Agreements. The separation of the business sold to Zurich completed in early April
2022, and the businesses sold to IOOF completed in early October 2022. There were no material financial impacts from the discontinued
operations in each of the periods presented.
PENDING ORGANISATIONAL CHANGES WITH IMPACT TO FUTURE REPORTING PERIODS
Non-Operating Holding Company
On 4 May 2022, the Group announced its intention to lodge a formal application with APRA, the Federal Treasurer and other applicable
regulators to establish a non-operating holding company and create distinct bank and non-bank groups within the organisation to assist ANZ
to better deliver its strategy to strengthen and grow its core business further.
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Should the proposed restructure proceed, ANZ will establish a non-operating holding company, ANZ Group Holdings Limited, as the new
listed parent holding company of the ANZ Group by a scheme of arrangement and to separate ANZ’s banking and certain non-banking
businesses into the ANZ Bank Group and ANZ Non-Bank Group. The ANZ Bank Group would comprise the current Australia and New Zealand
Banking Group Limited and the majority of its present-day subsidiaries. The ANZ Non-Bank Group would house banking-adjacent businesses
developed or acquired by ANZ Group, as we continue to seek ways to bring the best new technology and banking-adjacent services to our
customers.
OUR PERFORMANCE (continued)
Shareholder
information
Financial
report
45
45
OUR PERFORMANCE (continued)
The Explanatory Memorandum has been registered with the Australian Securities and Investments Commission and ANZ shareholders will be
asked to vote on the scheme on 15 December 2022. A copy of the Explanatory Memorandum will be made available on ANZ’s website
(www.anz.com/schememeeting).
Suncorp Bank Acquisition
Suncorp Bank Acquisition
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding
company of Suncorp Bank. The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding
Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State
44 ANZ 2022 ANNUAL REPORT
company of Suncorp Bank. The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal
Financial Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions is
Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State
24 months after signing (after which either party may terminate the agreement). The final purchase price is subject to completion adjustments
Financial Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions is
and may be more or less than $4.9 billion. In addition, ANZ will also acquire Suncorp Bank’s Additional Tier I capital notes at face value ($0.6
24 months after signing (after which either party may terminate the agreement). The final purchase price is subject to completion adjustments
billion as at June 2022). Completion is expected in the second half of calendar year 2023.
and may be more or less than $4.9 billion. In addition, ANZ will also acquire Suncorp Bank’s Additional Tier I capital notes at face value ($0.6
billion as at June 2022). Completion is expected in the second half of calendar year 2023.
CONTINUING OPERATIONS
CONTINUING OPERATIONS
Key measures of our financial performance are set out below.
Key measures of our financial performance are set out below.
NNeett iinntteerreesstt mmaarrggiinn ––
ccaasshh11 ((%%))
NNeett iinntteerreesstt mmaarrggiinn ––
2022
ccaasshh11 ((%%))
2021
2022
2021
RReettuurrnn oonn eeqquuiittyy ––
ccaasshh11 ((%%))
RReettuurrnn oonn eeqquuiittyy ––
ccaasshh11 ((%%))
2022
2021
2022
2021
1.63
1.64
1.63
1.64
10.4
9.9
10.4
9.9
OOppeerraattiinngg eexxppeennsseess ttoo
ooppeerraattiinngg iinnccoommee ––
OOppeerraattiinngg eexxppeennsseess ttoo
ccaasshh11 ((%%))
ooppeerraattiinngg iinnccoommee ––
2022
ccaasshh11 ((%%))
2021
2022
2021
EEaarrnniinnggss ppeerr sshhaarree ––
ccaasshh11 ((cceennttss))
EEaarrnniinnggss ppeerr sshhaarree ––
ccaasshh11 ((cceennttss))
2022
2021
2022
2021
CCrreeddiitt iimmppaaiirrmmeenntt cchhaarrggee
//((rreelleeaassee)) –– ccaasshh11 (($$mm))
CCrreeddiitt iimmppaaiirrmmeenntt cchhaarrggee
2022
//((rreelleeaassee)) –– ccaasshh11 (($$mm))
(232)
CCaasshh pprrooffiitt11
(($$mm))
CCaasshh pprrooffiitt11
2022
(($$mm))
2021
2022
(567)
(232)
2021
2022
(567)
2021
CCoommmmoonn eeqquuiittyy
ttiieerr 11 ((%%))
CCoommmmoonn eeqquuiittyy
2022
ttiieerr 11 ((%%))
2021
2022
2021
2021
DDiivviiddeenndd ppeerr sshhaarree
((cceennttss))
DDiivviiddeenndd ppeerr sshhaarree
2022
((cceennttss))
2021
2022
2021
12.3
12.3
12.3
12.3
51.6
51.9
51.6
51.9
228.8
216.5
228.8
216.5
6,515
6,198
6,515
6,198
146
142
146
142
enables comparison with our peer group. We calculate cash profit by adjusting statutory profit for non-core items. In general, it represents the
ADJUSTMENTS BETWEEN STATUTORY PROFIT AND CASH PROFIT ($m)
1. Information has been presented on a cash profit from continuing operations basis.
1. Information has been presented on a cash profit from continuing operations basis.
ADJUSTMENTS BETWEEN STATUTORY PROFIT AND CASH PROFIT ($m)
7,138
7,138
2022 Statutory
profit -
continuing
2022 Statutory
operations
profit -
continuing
operations
(569)
(569)
Economic
hedges
Economic
hedges
(54)
(54)
Revenue and
expense hedges
Revenue and
expense hedges
6,515
6,515
2022 Cash
profit -
continuing
2022 Cash
operations
profit -
continuing
operations
Adjustments between continuing operations statutory profit and cash profit are summarised below:
Adjustments between continuing operations statutory profit and cash profit are summarised below:
Adjustment
Economic hedges
Adjustment
2022: ($569) million
Economic hedges
2021: ($77) million
2022: ($569) million
2021: ($77) million
Revenue and
expense hedges
Revenue and
2022: ($54) million
expense hedges
2021: $96 million
2022: ($54) million
2021: $96 million
Reason for the adjustment
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in
Reason for the adjustment
accordance with accounting standards, result in fair value gains and losses being recognised within the Income
The Group enters into economic hedges to manage its interest rate and foreign exchange risk which, in
Statement. We remove the fair value adjustments from cash profit since the profit or loss resulting from the hedge
accordance with accounting standards, result in fair value gains and losses being recognised within the Income
transactions will reverse over time to match with the profit or loss from the economically hedged item as part of
Statement. We remove the fair value adjustments from cash profit since the profit or loss resulting from the hedge
cash profit. This includes gains and losses arising from derivatives not designated in accounting hedge
transactions will reverse over time to match with the profit or loss from the economically hedged item as part of
relationships but which are considered to be economic hedges, including hedges of foreign currency debt
cash profit. This includes gains and losses arising from derivatives not designated in accounting hedge
issuances and foreign exchange denominated revenue and expense streams, primarily NZD and USD (and USD
relationships but which are considered to be economic hedges, including hedges of foreign currency debt
correlated), as well as ineffectiveness from certain designated accounting hedges.
issuances and foreign exchange denominated revenue and expense streams, primarily NZD and USD (and USD
correlated), as well as ineffectiveness from certain designated accounting hedges.
ANZ 2022 ANNUAL REPORT 45
ANZ 2022 ANNUAL REPORT 45
ANZ 2022 Annual Report
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
The results of the Group’s operations and financial position are set out on pages 44-59. Page 13 outlines the Group’s strategy and pages
11-25 describe in further detail the Group’s prospects in terms of future financial position and performance. Discussion of our approach
to risk management, including a summary of our key material risks, is outlined on pages 36-42.
GROUP PERFORMANCE
GROUP PROFIT RESULTS
Income Statement
Net interest income
Other operating income
Operating income
Operating expenses
Profit before income tax
Income tax expense
Non-controlling interests
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit for the year
2022
Statutory
$m
2021
Statutory
$m
Cash
$m
14,874
3,673
18,547
(9,579)
8,968
232
9,200
(2,684)
(1)
6,515
(19)
6,496
14,874
4,552
19,426
(9,579)
9,847
232
10,079
(2,940)
(1)
7,138
(19)
7,119
Cash
$m
14,161
3,286
17,447
(9,051)
8,396
567
8,963
(2,764)
(1)
6,198
(17)
6,181
14,161
3,259
17,420
(9,051)
8,369
567
8,936
(2,756)
(1)
6,179
(17)
6,162
Statutory profit after tax for the year ended 30 September 2022 increased 16% on the prior year to $7,119 million. Statutory return on equity is
11.4% and statutory earnings per share is 250.0 cents, an increase of 16% on prior year.
The Group uses cash profit, a non-IFRS measure, to assess the performance of its business activities. It is an industry-wide measure which
financial performance of our core business activities. We use cash profit internally to set targets and incentivise our Senior Executives and
leaders through our remuneration plans. Refer to page 45 for adjustments between statutory and cash profit. The adjustments made in
arriving at cash profit are included in statutory profit which is subject to audit within the context of the external auditor’s audit of the 2022
Financial Report. Cash profit is not subject to audit by the external auditor. Our external auditor has informed the Audit Committee that
adjustments between statutory and cash profit have been determined on a consistent basis across each of the periods presented.
DISCONTINUED OPERATIONS
We completed the sale of our aligned dealer groups business and our OnePath pensions and investment business to IOOF Holdings Limited
(IOOF, now known as Insignia Financial Limited), and our life insurance business to Zurich Financial Services Australia (Zurich) across the 2020
and 2019 financial years. The financial results of these divested businesses are treated as discontinued operations from a financial reporting
perspective. The financial results after transaction completion primarily relate to residual operational costs on separation and partial recovery
of certain costs based on the respective Transition Service Agreements. The separation of the business sold to Zurich completed in early April
2022, and the businesses sold to IOOF completed in early October 2022. There were no material financial impacts from the discontinued
operations in each of the periods presented.
PENDING ORGANISATIONAL CHANGES WITH IMPACT TO FUTURE REPORTING PERIODS
Non-Operating Holding Company
On 4 May 2022, the Group announced its intention to lodge a formal application with APRA, the Federal Treasurer and other applicable
regulators to establish a non-operating holding company and create distinct bank and non-bank groups within the organisation to assist ANZ
to better deliver its strategy to strengthen and grow its core business further.
Should the proposed restructure proceed, ANZ will establish a non-operating holding company, ANZ Group Holdings Limited, as the new
listed parent holding company of the ANZ Group by a scheme of arrangement and to separate ANZ’s banking and certain non-banking
businesses into the ANZ Bank Group and ANZ Non-Bank Group. The ANZ Bank Group would comprise the current Australia and New Zealand
Banking Group Limited and the majority of its present-day subsidiaries. The ANZ Non-Bank Group would house banking-adjacent businesses
developed or acquired by ANZ Group, as we continue to seek ways to bring the best new technology and banking-adjacent services to our
The Explanatory Memorandum has been registered with the Australian Securities and Investments Commission and ANZ shareholders will be
asked to vote on the scheme on 15 December 2022. A copy of the Explanatory Memorandum will be made available on ANZ’s website
customers.
(www.anz.com/schememeeting).
44 ANZ 2022 ANNUAL REPORT
46
46
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
OUR PERFORMANCE (continued)
GROUP CASH PROFIT PERFORMANCE FROM CONTINUING OPERATIONS
LARGE/NOTABLE ITEMS INCLUDED IN CASH PROFIT FROM CONTINUING OPERATIONS
Cash profit performance and the analysis thereof has been presented on a cash profit from continuing operations basis.
Within continuing cash profit, the Group recognised a number of large/notable items. The impact of these items on a post-tax basis is
as follows:
Gain/(Loss) from divestments/closures
ANZ Worldline partnership
ANZ Share Investing business
Financial planning and advice business
Legal entity rationalisation
Other divestments
Completed divestment business results
ANZ Worldline partnership
Financial planning and advice business
Other large/notable items
Customer remediation
Litigation settlements
Restructuring
Withholding tax
Lease modification
Merger and acquisition related costs
Asian associate items
2022
$m
335
-
(60)
(65)
(13)
42
4
(166)
(10)
(68)
(126)
(17)
(10)
-
2021
$m
(251)
-
-
-
13
86
6
(221)
(48)
(92)
-
-
-
(347)
CASH PROFIT FROM CONTINUING OPERATIONS ($m)
387
713
(528)
80
6,515
(335)
Net interest
income
Other
operating
income
Operating
expenses
Credit
impairment
Income tax
expense &
non-controlling
interests
2022 Cash
profit -
continuing
operations
6,198
2021 Cash
profit -
continuing
operations
Net interest income
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense
Non-controlling interests
Cash profit from continuing operations
2022
$m
14,874
3,673
18,547
(9,579)
8,968
232
9,200
(2,684)
(1)
6,515
2021
$m
14,161
3,286
17,447
(9,051)
8,396
567
8,963
(2,764)
(1)
6,198
Movt
5%
12%
6%
6%
7%
-59%
3%
-3%
0%
5%
Cash profit from continuing operations increased $317 million (5%) compared with the 2021 financial year.
Net interest income increased $713 million (5%) driven by a $46.3 billion (5%) increase in average interest earning assets, partially offset by a 1
bps decrease in net interest margin. The increase in average interest earning assets was driven by higher central bank balances, higher average
net loans and advances, partially offset by lower trading assets and investment securities. The decrease of 1 bps was driven by home loan
pricing competition in the Australia Retail and New Zealand divisions, growth in lower yielding liquid assets, unfavourable asset and funding
mix, and lower average yield in Markets averages earning assets. This was partially offset by improvement in deposit margins from a rising
interest rate environment, and higher earnings on capital and replicating deposits.
Other operating income increased $387 million (12%) driven by a $326 million increase from business divestments/closures, including a $307
million gain on completion of the ANZ Worldline partnership, a $251 million loss on divestment of ANZ Share Investing business in the prior
year, and an increase in share of associates’ profit of $353 million. This was partially offset by a decrease of $270 million in Markets other
operating income as Balance Sheet and Derivative Valuation Adjustments were impacted by high volatility and yield curve movements, and a
$156 million decrease in net fee and commission income primarily driven by Breakfree package changes in the Australia Retail division.
Operating expenses increased $528 million (6%) driven by investment spend to develop digital capabilities, meet regulatory and compliance
obligations and drive volume growth. The inclusion of Cashrewards Limited (Cashrewards) after obtaining control in December 2021 and
wage inflation also contributed to the increase.
Credit impairment release decreased $335 million (-59%) driven by a decrease in the collectively assessed credit impairment release, partially
offset by a decrease in the individually assessed credit impairment charge.
Income tax expense decreased $80 million (-3%). The effective tax rate decreased by 160 bps to 29.2% primarily from the non-tax assessable
gain on completion of the Worldline partnership.
46 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 47
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
47
47
OUR PERFORMANCE (continued)
GROUP CASH PROFIT PERFORMANCE FROM CONTINUING OPERATIONS
LARGE/NOTABLE ITEMS INCLUDED IN CASH PROFIT FROM CONTINUING OPERATIONS
Cash profit performance and the analysis thereof has been presented on a cash profit from continuing operations basis.
CASH PROFIT FROM CONTINUING OPERATIONS ($m)
Within continuing cash profit, the Group recognised a number of large/notable items. The impact of these items on a post-tax basis is
as follows:
Gain/(Loss) from divestments/closures
ANZ Worldline partnership
ANZ Share Investing business
Financial planning and advice business
Legal entity rationalisation
Other divestments
Completed divestment business results
ANZ Worldline partnership
Financial planning and advice business
Other large/notable items
Customer remediation
Litigation settlements
Restructuring
Withholding tax
Lease modification
Merger and acquisition related costs
Asian associate items
2022
$m
335
-
(60)
(65)
(13)
42
4
(166)
(10)
(68)
(126)
(17)
(10)
-
2021
$m
-
(251)
-
-
13
86
6
(221)
(48)
(92)
-
-
-
(347)
387
713
6,198
2021 Cash
profit -
continuing
operations
Net interest income
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense
Non-controlling interests
Cash profit from continuing operations
(528)
80
6,515
(335)
Net interest
income
Other
operating
income
Operating
expenses
Credit
impairment
Income tax
expense &
non-controlling
interests
2022 Cash
profit -
continuing
operations
2022
$m
14,874
3,673
18,547
(9,579)
8,968
232
9,200
(2,684)
(1)
6,515
2021
$m
14,161
3,286
17,447
(9,051)
8,396
567
8,963
(2,764)
(1)
6,198
Movt
5%
12%
6%
6%
7%
-59%
3%
-3%
0%
5%
Cash profit from continuing operations increased $317 million (5%) compared with the 2021 financial year.
Net interest income increased $713 million (5%) driven by a $46.3 billion (5%) increase in average interest earning assets, partially offset by a 1
bps decrease in net interest margin. The increase in average interest earning assets was driven by higher central bank balances, higher average
net loans and advances, partially offset by lower trading assets and investment securities. The decrease of 1 bps was driven by home loan
pricing competition in the Australia Retail and New Zealand divisions, growth in lower yielding liquid assets, unfavourable asset and funding
mix, and lower average yield in Markets averages earning assets. This was partially offset by improvement in deposit margins from a rising
interest rate environment, and higher earnings on capital and replicating deposits.
Other operating income increased $387 million (12%) driven by a $326 million increase from business divestments/closures, including a $307
million gain on completion of the ANZ Worldline partnership, a $251 million loss on divestment of ANZ Share Investing business in the prior
year, and an increase in share of associates’ profit of $353 million. This was partially offset by a decrease of $270 million in Markets other
operating income as Balance Sheet and Derivative Valuation Adjustments were impacted by high volatility and yield curve movements, and a
$156 million decrease in net fee and commission income primarily driven by Breakfree package changes in the Australia Retail division.
Operating expenses increased $528 million (6%) driven by investment spend to develop digital capabilities, meet regulatory and compliance
obligations and drive volume growth. The inclusion of Cashrewards Limited (Cashrewards) after obtaining control in December 2021 and
wage inflation also contributed to the increase.
Credit impairment release decreased $335 million (-59%) driven by a decrease in the collectively assessed credit impairment release, partially
offset by a decrease in the individually assessed credit impairment charge.
Income tax expense decreased $80 million (-3%). The effective tax rate decreased by 160 bps to 29.2% primarily from the non-tax assessable
gain on completion of the Worldline partnership.
46 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 47
48
48
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Description of large/notable items:
Item
Description
Gain/(Loss) from
divestments/closures
The 2022 financial year included a gain on completion of the ANZ Worldline partnership, a loss on disposal of the
financial planning and advice business, and losses associated with legal entity rationalisation from release of
foreign currency translation reserves, and impacts from other divestments.
Completed
divestment business
results
Merger and
acquisition (M&A)
related costs
Customer
remediation
Litigation
settlements
Restructuring
Withholding tax
The 2021 financial year included a loss on divestment of ANZ Share Investing business, and a gain on sale of a
legacy insurance portfolio.
Completed divestment business results relate to the ANZ Worldline partnership and financial planning and advice
business, which completed during the 2022 financial year.
164
(2)
3
164
1
163
(5)
(2)
During the 2022 financial year, the Group incurred transaction related external legal and advisor costs of $10
million after tax associated with M&A activities during the period, including the Suncorp Bank acquisition.
(8)
Customer remediation includes provisions for expected refunds to customers, remediation project costs and
related customer and regulatory claims, penalties and litigation costs and outcomes.
During the 2022 financial year, the Group entered into an agreement to settle a United States class action related
to the trading of products based on certain benchmark reference rates and recognised expenses of $10 million
after tax in relation to the proposed settlement and related costs. The settlement is without admission of liability
and remains subject to negotiation and execution of complete settlement terms as well as court approval.
During the 2021 financial year, the Group reached an agreement to settle a separate United States class action
related to other benchmark-based products and activities and recognised expenses of $48 million after tax. The
settlement is without admission of liability and remains subject to court approval.
In addition to the restructuring expenses of $18 million after tax included within business divestments/closures
(2021: nil), the Group recognised restructuring expenses of $68 million after tax in 2022 (2021: $92 million) relating
to operational changes across multiple divisions.
During the 2022 financial year, a dividend payment of $714 million (net of withholding tax) was made by ANZ
Papua New Guinea (ANZ PNG) to Australia and New Zealand Banking Group Limited (ANZBGL) in order to
rebalance capital positions within the Group in response to APRA’s changes in the capital requirements for
subsidiaries. ANZBGL made a capital injection into ANZ PNG equivalent to the dividend, net of withholding tax. As
a result of the dividend payment, a dividend withholding tax expense of $126 million was recognised during the
period.
Lease modification
During the 2022 financial year, the Group early terminated the head lease on the 55 Collins Street Melbourne
building and recognised a net loss after tax of $17 million. The loss comprised a $31 million gain in Other
operating income on lease modification arising from remeasurement of the lease liability and right-of-use asset
net of a $8 million lease termination payment, a $47 million loss in Operating expenses associated with lease exit
costs including accelerated depreciation and asset write-offs, and an income tax benefit of $7 million.
Asian associate items During the 2021 financial year, the Group recognised a $347 million reduction in equity accounted earnings after
tax, comprising $212 million reflecting its share of the settlement provision following AMMB Holdings Berhad’s
(AmBank) agreement with the Malaysian Ministry of Finance to resolve potential claims relating to its involvement
with 1Malaysia Development Berhad (1MDB), and $135 million reflecting its share of the impairment of AmBank
goodwill.
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
OUR PERFORMANCE (continued)
ANALYSIS OF CASH PROFIT PERFORMANCE
Net interest income
GROUP NET INTEREST MARGIN (bps)
12
2021 Cash
net interest
margin
Asset
pricing
Deposit
pricing &
wholesale
funding
Asset and
funding mix
Liquidity
Capital and
replicating
portfolio
2022 Cash
net interest
margin
subtotal
Markets
Balance
Sheet
activities
1
Large/
notable
items
2022 Cash
net interest
margin
1. Markets Balance Sheet activities includes the impact of discretionary liquid asset holdings and other Balance Sheet activities.
Net interest income1
Net interest margin (%) - cash1
Average interest earning assets
Average deposits and other borrowings
1. Includes the major bank levy of -$340 million (2021: -$346 million).
2022
$m
14,874
1.63
910,037
780,373
2021
$m
14,161
1.64
863,691
712,540
Movt
5%
-1 bps
5%
10%
Net interest income increased $713 million (5%) driven by a $46.3 billion (5%) increase in average interest earning assets, partially offset by 1
bps decrease in net interest margin.
Net interest margin decreased 1 bps driven by home loan pricing competition in the Australia Retail and New Zealand divisions, growth in
lower yielding liquid assets to replace Committed Liquidity Facility (CLF) which, consistent with APRA requirements, will reduce to $0 on 1
January 2023, unfavourable asset and funding mix primarily from customers switching from variable to fixed home loans and lower unsecured
lending, and lower average yield in Markets averages earning assets as a results of portfolio rebalancing in the prior year. This was partially
offset by improvement in deposit margins from a rising interest rate environment, favourable deposit mix with growth in at-call deposits, and
higher earnings on capital and replicating deposits.
Average interest earning assets increased $46.3 billion (5%) driven by higher central bank balances, lending growth in the Institutional and
Australia Commercial divisions, and home loan growth in the New Zealand division. This was partially offset by lower trading assets and
investment securities, lower reverse repurchase agreements, and decline in the Australia Retail division.
Average deposits and other borrowings increased $67.8 billion (10%) driven by growth in at-call deposits across all divisions and increases in
commercial paper, partially offset by lower term deposits and certificates of deposit.
48 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 49
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Description of large/notable items:
Item
Description
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
49
49
OUR PERFORMANCE (continued)
Gain/(Loss) from
The 2022 financial year included a gain on completion of the ANZ Worldline partnership, a loss on disposal of the
divestments/closures
financial planning and advice business, and losses associated with legal entity rationalisation from release of
foreign currency translation reserves, and impacts from other divestments.
ANALYSIS OF CASH PROFIT PERFORMANCE
Net interest income
GROUP NET INTEREST MARGIN (bps)
The 2021 financial year included a loss on divestment of ANZ Share Investing business, and a gain on sale of a
12
legacy insurance portfolio.
Completed
Completed divestment business results relate to the ANZ Worldline partnership and financial planning and advice
divestment business
business, which completed during the 2022 financial year.
(5)
(2)
164
(2)
3
164
1
163
Merger and
During the 2022 financial year, the Group incurred transaction related external legal and advisor costs of $10
acquisition (M&A)
million after tax associated with M&A activities during the period, including the Suncorp Bank acquisition.
(8)
2021 Cash
net interest
margin
Asset
pricing
Deposit
pricing &
wholesale
funding
Asset and
funding mix
Liquidity
Capital and
replicating
portfolio
2022 Cash
net interest
margin
subtotal
Markets
Balance
Sheet
activities
1
Large/
notable
items
2022 Cash
net interest
margin
1. Markets Balance Sheet activities includes the impact of discretionary liquid asset holdings and other Balance Sheet activities.
Net interest income1
Net interest margin (%) - cash1
Average interest earning assets
Average deposits and other borrowings
1. Includes the major bank levy of -$340 million (2021: -$346 million).
2022
$m
14,874
1.63
910,037
780,373
2021
$m
14,161
1.64
863,691
712,540
Movt
5%
-1 bps
5%
10%
Net interest income increased $713 million (5%) driven by a $46.3 billion (5%) increase in average interest earning assets, partially offset by 1
bps decrease in net interest margin.
Net interest margin decreased 1 bps driven by home loan pricing competition in the Australia Retail and New Zealand divisions, growth in
lower yielding liquid assets to replace Committed Liquidity Facility (CLF) which, consistent with APRA requirements, will reduce to $0 on 1
January 2023, unfavourable asset and funding mix primarily from customers switching from variable to fixed home loans and lower unsecured
lending, and lower average yield in Markets averages earning assets as a results of portfolio rebalancing in the prior year. This was partially
offset by improvement in deposit margins from a rising interest rate environment, favourable deposit mix with growth in at-call deposits, and
higher earnings on capital and replicating deposits.
Average interest earning assets increased $46.3 billion (5%) driven by higher central bank balances, lending growth in the Institutional and
Australia Commercial divisions, and home loan growth in the New Zealand division. This was partially offset by lower trading assets and
investment securities, lower reverse repurchase agreements, and decline in the Australia Retail division.
Average deposits and other borrowings increased $67.8 billion (10%) driven by growth in at-call deposits across all divisions and increases in
commercial paper, partially offset by lower term deposits and certificates of deposit.
results
related costs
Customer
remediation
Litigation
settlements
Customer remediation includes provisions for expected refunds to customers, remediation project costs and
related customer and regulatory claims, penalties and litigation costs and outcomes.
During the 2022 financial year, the Group entered into an agreement to settle a United States class action related
to the trading of products based on certain benchmark reference rates and recognised expenses of $10 million
after tax in relation to the proposed settlement and related costs. The settlement is without admission of liability
and remains subject to negotiation and execution of complete settlement terms as well as court approval.
During the 2021 financial year, the Group reached an agreement to settle a separate United States class action
related to other benchmark-based products and activities and recognised expenses of $48 million after tax. The
settlement is without admission of liability and remains subject to court approval.
Restructuring
In addition to the restructuring expenses of $18 million after tax included within business divestments/closures
(2021: nil), the Group recognised restructuring expenses of $68 million after tax in 2022 (2021: $92 million) relating
to operational changes across multiple divisions.
Withholding tax
During the 2022 financial year, a dividend payment of $714 million (net of withholding tax) was made by ANZ
Papua New Guinea (ANZ PNG) to Australia and New Zealand Banking Group Limited (ANZBGL) in order to
rebalance capital positions within the Group in response to APRA’s changes in the capital requirements for
subsidiaries. ANZBGL made a capital injection into ANZ PNG equivalent to the dividend, net of withholding tax. As
a result of the dividend payment, a dividend withholding tax expense of $126 million was recognised during the
period.
Lease modification
During the 2022 financial year, the Group early terminated the head lease on the 55 Collins Street Melbourne
building and recognised a net loss after tax of $17 million. The loss comprised a $31 million gain in Other
operating income on lease modification arising from remeasurement of the lease liability and right-of-use asset
net of a $8 million lease termination payment, a $47 million loss in Operating expenses associated with lease exit
costs including accelerated depreciation and asset write-offs, and an income tax benefit of $7 million.
Asian associate items During the 2021 financial year, the Group recognised a $347 million reduction in equity accounted earnings after
tax, comprising $212 million reflecting its share of the settlement provision following AMMB Holdings Berhad’s
(AmBank) agreement with the Malaysian Ministry of Finance to resolve potential claims relating to its involvement
with 1Malaysia Development Berhad (1MDB), and $135 million reflecting its share of the impairment of AmBank
goodwill.
48 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 49
50
50
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Other operating income
OTHER OPERATING INCOME ($m)
3,286
353
(156)
(270)
460
3,673
155
9,579
350
16
33
(26)
2021 Cash
other
operating
income
Net fee and
commission
income
1
Markets
other
operating
income
Share of
associates’
profit/(loss)
Other
1
2022 Cash
other
operating
income
Personnel
Premises
Technology
Restructuring
Other
Net fee and commission income1
Markets other operating income
Share of associates' profit/(loss)
Other1
Total cash other operating income
1. Excluding the Markets business unit.
2022
$m
1,907
860
177
729
3,673
2021
$m
2,063
1,130
(176)
269
3,286
Movt
-8%
-24%
large
large
12%
Net fee and commission income decreased $156 million (-8%) driven by Breakfree package fee changes in the Australia Retail division, lower
divested business results, and removal or reduction of funds under management fees in the New Zealand division. This was partially offset by
lower customer remediation, higher cards revenue due to recovery in consumer spending, and higher volume-related fees in the Institutional
division.
Markets other operating income decreased $270 million (-24%) as Balance Sheet and Derivative Valuation Adjustments were impacted by
high volatility and yield curve movements, and lower income in Credit and Capital Markets was driven by less favourable credit trading
conditions and lower levels of customer issuances amid more volatile market conditions. This was partially offset by higher Foreign Exchange,
Rates and Commodities income driven by customer demand and more favourable trading conditions.
Share of associates' profit increased $353 million driven by the Group’s equity accounted share of AmBank 1MDB settlement and goodwill
impairment of $347 million in 2021 and increase in other equity accounted share of profits.
Other increased $460 million primarily driven by a gain on completion of the ANZ Worldline partnership and a loss on divestment of the ANZ
Share Investing business in 2021, partially offset by a loss on sale of the financial planning and advice business.
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
OUR PERFORMANCE (continued)
Operating expenses
OPERATING EXPENSES ($m)
9,051
2021 Cash
operating
expenses
Personnel
Premises
Technology
Restructuring
Other
2022 Cash
operating
expenses
2022
$m
5,296
721
1,621
101
1,840
9,579
38,987
39,546
2021
$m
4,946
705
1,588
127
1,685
9,051
39,684
38,043
Movt
7%
2%
2%
-20%
9%
6%
-2%
4%
Total cash operating expenses
Full time equivalent staff from continuing operations1
Average full time equivalent staff from continuing operations1
1. Excludes FTE of the consolidated investments managed by 1835i Group Pty Ltd.
Personnel expenses increased $350 million (7%) driven by higher average resourcing supporting investments to develop digital capabilities,
meet regulatory and compliance obligations and drive volume growth. The inclusion of Cashrewards after obtaining control in December
2021 and wage inflation also contributed to the increase. This was partially offset by benefits from customers continuing to embrace digital
channels, productivity improvements arising from technology and back-office optimisation, higher employee leave utilisation and lower
customer remediation.
optimisation of property footprint.
partially offset by lower amortisation.
Premises expenses increased $16 million (2%) driven by the modification of a significant lease arrangement, partially offset by ongoing
Technology expenses increased $33 million (2%) driven by higher software licence costs and increased spend on investment initiatives,
Restructuring expenses decreased $26 million (-20%) primarily driven by lower charges in the Group Centre and Australia Retail divisions.
Other expenses increased $155 million (9%) driven by increased spend on investment initiatives to develop digital capabilities and meet
regulatory and compliance obligations.
50 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 51
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Other operating income
OTHER OPERATING INCOME ($m)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
51
51
OUR PERFORMANCE (continued)
Operating expenses
OPERATING EXPENSES ($m)
3,286
353
(156)
(270)
460
3,673
155
9,579
350
16
33
(26)
2021 Cash
other
operating
income
Net fee and
commission
income
1
Markets
other
operating
income
Share of
associates’
profit/(loss)
Other
1
2022 Cash
other
operating
income
9,051
2021 Cash
operating
expenses
Personnel
Premises
Technology
Restructuring
Other
2022 Cash
operating
expenses
Net fee and commission income1
Markets other operating income
Share of associates' profit/(loss)
Other1
Total cash other operating income
1. Excluding the Markets business unit.
Net fee and commission income decreased $156 million (-8%) driven by Breakfree package fee changes in the Australia Retail division, lower
divested business results, and removal or reduction of funds under management fees in the New Zealand division. This was partially offset by
lower customer remediation, higher cards revenue due to recovery in consumer spending, and higher volume-related fees in the Institutional
division.
Markets other operating income decreased $270 million (-24%) as Balance Sheet and Derivative Valuation Adjustments were impacted by
high volatility and yield curve movements, and lower income in Credit and Capital Markets was driven by less favourable credit trading
conditions and lower levels of customer issuances amid more volatile market conditions. This was partially offset by higher Foreign Exchange,
Rates and Commodities income driven by customer demand and more favourable trading conditions.
Share of associates' profit increased $353 million driven by the Group’s equity accounted share of AmBank 1MDB settlement and goodwill
impairment of $347 million in 2021 and increase in other equity accounted share of profits.
Other increased $460 million primarily driven by a gain on completion of the ANZ Worldline partnership and a loss on divestment of the ANZ
Share Investing business in 2021, partially offset by a loss on sale of the financial planning and advice business.
2022
$m
1,907
860
177
729
3,673
2021
$m
2,063
1,130
(176)
269
3,286
Movt
-8%
-24%
large
large
12%
Personnel
Premises
Technology
Restructuring
Other
Total cash operating expenses
Full time equivalent staff from continuing operations1
Average full time equivalent staff from continuing operations1
1. Excludes FTE of the consolidated investments managed by 1835i Group Pty Ltd.
2022
$m
5,296
721
1,621
101
1,840
9,579
38,987
39,546
2021
$m
4,946
705
1,588
127
1,685
9,051
39,684
38,043
Movt
7%
2%
2%
-20%
9%
6%
-2%
4%
Personnel expenses increased $350 million (7%) driven by higher average resourcing supporting investments to develop digital capabilities,
meet regulatory and compliance obligations and drive volume growth. The inclusion of Cashrewards after obtaining control in December
2021 and wage inflation also contributed to the increase. This was partially offset by benefits from customers continuing to embrace digital
channels, productivity improvements arising from technology and back-office optimisation, higher employee leave utilisation and lower
customer remediation.
Premises expenses increased $16 million (2%) driven by the modification of a significant lease arrangement, partially offset by ongoing
optimisation of property footprint.
Technology expenses increased $33 million (2%) driven by higher software licence costs and increased spend on investment initiatives,
partially offset by lower amortisation.
Restructuring expenses decreased $26 million (-20%) primarily driven by lower charges in the Group Centre and Australia Retail divisions.
Other expenses increased $155 million (9%) driven by increased spend on investment initiatives to develop digital capabilities and meet
regulatory and compliance obligations.
50 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 51
52
52
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
OUR PERFORMANCE (continued)
Credit impairment
GROSS IMPAIRED ASSETS BY DIVISION ($m)
Collectively assessed credit impairment charge/(release) ($m)
Individually assessed credit impairment charge/(release) ($m)
Credit impairment charge/(release) ($m)
Gross impaired assets ($m)
Credit risk weighted assets ($b)
Total allowance for expected credit losses (ECL) ($m)
Individually assessed as % of gross impaired assets
Collectively assessed as % of credit risk weighted assets
COLLECTIVELY ASSESSED CREDIT IMPAIRMENT CHARGE/(RELEASE) ($m)
2022
(311)
79
(232)
1,445
359.4
4,395
37.5%
1.07%
2021
(823)
256
(567)
1,965
342.5
4,882
35.0%
1.22%
Movt
-62%
-69%
-59%
-26%
5%
-10%
1,965
13
96
172
(34)
(4)
(311)
102
180
(823)
2021 Collectively
assessed credit
impairment
release
Australia
Retail
Australia
Commercial
Institutional
New Zealand
Pacific
Group Centre
2022 Collectively
assessed credit
impairment
release
The collectively assessed impairment release of $311 million for the 2022 financial year was driven by improvements in credit risk, favourable
changes in portfolio composition, and a net release of management temporary adjustments. This was partially offset by an increase for the
downside risks associated with the economic outlook. The collectively assessed impairment release of $823 million for the 2021 financial year
was driven by improving economic outlook, lower lending volumes, favourable changes in portfolio composition, and improvements in credit
risk. This was partially offset by an increase in management temporary adjustments.
INDIVIDUALLY ASSESSED CREDIT IMPAIRMENT CHARGE/(RELEASE) ($m)
256
(82)
(36)
16
7
19
79
2021 Individually
assessed credit
impairment
charge
Australia
Retail
Australia
Commercial
(101)
Institutional
New Zealand
Pacific
Group Centre
2022 Individually
assessed credit
impairment
charge
The decrease in individually assessed allowance for expected credit losses was driven by decreases in the Institutional division with no material
impairments during the 2022 financial year, and the Australia Retail and Australia Commercial due to underlying delinquency and impairment
flows remaining subdued with the benefit from previous government and bank COVID-19 support packages persisting.
The individually assessed credit impairment charge decreased by $177 million (-69%) driven by decreases in the Institutional division with no
material impairments during the 2022 financial year, and the Australia Retail and Australia Commercial divisions with underlying delinquency
and impairment flows remaining subdued with the benefit from previous government and bank COVID-19 support packages persisting.
52 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 53
(304)
(319)
(31)
121
0
1,445
2021 Gross
impaired assets
Australia
Retail
Australia
Commercial
Institutional
New Zealand
Pacific
Group Centre
2022 Gross
impaired assets
Gross impaired assets decreased $520 million (-26%) driven by decreases in the Institutional division driven by the upgrade and repayments of
several single name exposures, and the Australia Commercial division due to underlying delinquency flows remaining subdued with the
benefit from previous government and bank COVID-19 support packages persisting and the upgrade and repayments of several single name
exposures. This was partially offset by the Pacific division driven by exposures rolling off local COVID-19 support packages being classified as
TOTAL ALLOWANCE FOR EXPECTED CREDIT LOSSES ($m)
restructures.
4,882
(210)
(283)
Australia
Retail
Australia
Commercial
2021 Total
allowance
for expected
credit losses
16
0
(8)
(2)
Institutional
New Zealand
Pacific
Group Centre
4,395
2022 Total
allowance
for expected
credit losses
The decrease in total allowance for expected credit losses was driven by a $342 million decrease in the collectively assessed expected credit
loss, and a $145 million decrease in the individually assessed allowance for expected credit losses.
The decrease in collectively assessed allowance for expected credit losses was driven by reduction of $344 million from improvements in
credit risk, $258 million from changes in portfolio composition, $24 million in lower management temporary adjustments, and $31 million
from foreign currency translation and other impacts. This was partially offset by an increase of $315 million for the downside risks associated
with the economic outlook.
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
53
53
OUR PERFORMANCE (continued)
Credit impairment
GROSS IMPAIRED ASSETS BY DIVISION ($m)
Collectively assessed credit impairment charge/(release) ($m)
Individually assessed credit impairment charge/(release) ($m)
Credit impairment charge/(release) ($m)
Gross impaired assets ($m)
Credit risk weighted assets ($b)
Total allowance for expected credit losses (ECL) ($m)
Individually assessed as % of gross impaired assets
Collectively assessed as % of credit risk weighted assets
COLLECTIVELY ASSESSED CREDIT IMPAIRMENT CHARGE/(RELEASE) ($m)
2022
(311)
79
(232)
1,445
359.4
4,395
37.5%
1.07%
2021
(823)
256
(567)
1,965
342.5
4,882
35.0%
1.22%
Movt
-62%
-69%
-59%
-26%
5%
-10%
1,965
13
(304)
(319)
(31)
121
0
1,445
96
172
(34)
(4)
(311)
102
180
2021 Gross
impaired assets
Australia
Retail
Australia
Commercial
Institutional
New Zealand
Pacific
Group Centre
2022 Gross
impaired assets
Gross impaired assets decreased $520 million (-26%) driven by decreases in the Institutional division driven by the upgrade and repayments of
several single name exposures, and the Australia Commercial division due to underlying delinquency flows remaining subdued with the
benefit from previous government and bank COVID-19 support packages persisting and the upgrade and repayments of several single name
exposures. This was partially offset by the Pacific division driven by exposures rolling off local COVID-19 support packages being classified as
restructures.
TOTAL ALLOWANCE FOR EXPECTED CREDIT LOSSES ($m)
2021 Collectively
assessed credit
Australia
Retail
Australia
Commercial
Institutional
New Zealand
Pacific
Group Centre
2022 Collectively
assessed credit
impairment
release
4,882
(210)
(283)
Australia
Retail
Australia
Commercial
2021 Total
allowance
for expected
credit losses
16
0
(8)
(2)
Institutional
New Zealand
Pacific
Group Centre
4,395
2022 Total
allowance
for expected
credit losses
The decrease in total allowance for expected credit losses was driven by a $342 million decrease in the collectively assessed expected credit
loss, and a $145 million decrease in the individually assessed allowance for expected credit losses.
The decrease in collectively assessed allowance for expected credit losses was driven by reduction of $344 million from improvements in
credit risk, $258 million from changes in portfolio composition, $24 million in lower management temporary adjustments, and $31 million
from foreign currency translation and other impacts. This was partially offset by an increase of $315 million for the downside risks associated
with the economic outlook.
2021 Individually
assessed credit
Australia
Retail
Australia
Commercial
impairment
charge
assessed credit
impairment
charge
The decrease in individually assessed allowance for expected credit losses was driven by decreases in the Institutional division with no material
impairments during the 2022 financial year, and the Australia Retail and Australia Commercial due to underlying delinquency and impairment
flows remaining subdued with the benefit from previous government and bank COVID-19 support packages persisting.
52 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 53
(823)
impairment
release
256
The collectively assessed impairment release of $311 million for the 2022 financial year was driven by improvements in credit risk, favourable
changes in portfolio composition, and a net release of management temporary adjustments. This was partially offset by an increase for the
downside risks associated with the economic outlook. The collectively assessed impairment release of $823 million for the 2021 financial year
was driven by improving economic outlook, lower lending volumes, favourable changes in portfolio composition, and improvements in credit
risk. This was partially offset by an increase in management temporary adjustments.
INDIVIDUALLY ASSESSED CREDIT IMPAIRMENT CHARGE/(RELEASE) ($m)
(82)
(36)
16
7
19
79
(101)
Institutional
New Zealand
Pacific
Group Centre
2022 Individually
The individually assessed credit impairment charge decreased by $177 million (-69%) driven by decreases in the Institutional division with no
material impairments during the 2022 financial year, and the Australia Retail and Australia Commercial divisions with underlying delinquency
and impairment flows remaining subdued with the benefit from previous government and bank COVID-19 support packages persisting.
54
54
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
OUR PERFORMANCE (continued)
DIVISIONAL PERFORMANCE
On 1 March 2022, the Group announced a structural change to the existing Australia Retail and Commercial division, and the digital
businesses in the Group Centre division (formerly known as the Technology, Services & Operations (TSO) and Group Centre division). This
involved the integration of the Australian retail and digital businesses, and the separation of the Australian commercial business into a new
division to improve productivity and accountability within the organisation. As a result of these changes there are now six divisions: Australia
Retail, Australia Commercial, Institutional, New Zealand, Pacific and Group Centre, aligned to distinct strategies and opportunities within the
Group. Comparative information has been restated accordingly.
Other than those described above, there have been no other significant changes.
2022
Net interest margin
Operating expenses to operating income
Cash profit from continuing
operations ($m)
Net loans and advances ($b)1
Customer deposits ($b)
Number of FTE
2021
Net interest margin
Operating expenses to operating income
Cash profit from continuing
operations ($m)
Net loans and advances ($b)
Customer deposits ($b)
Number of FTE
Australia
Australia
Retail Commercial
Institutional
New
Zealand
2.25%
52.2%
2,140
290.3
150.0
11,846
2.10%
41.8%
1,510
59.7
112.2
2,799
0.85%
49.6%
1,761
196.8
259.4
6,236
2.47%
36.5%
1,633
123.7
95.1
6,873
Australia
Australia
Retail Commercial
Institutional
New
Zealand
2.27%
48.0%
2,316
284.0
141.4
11,764
1.98%
49.4%
1,107
57.2
111.1
3,095
0.81%
49.1%
1,887
158.2
239.6
6,196
2.33%
39.7%
1,508
128.5
97.7
7,060
Pacific
2.82%
93.3%
Group
Centre
n/a
n/a
Group
1.63%
51.6%
9
(538)
6,515
1.8
3.8
1,086
0.1
(0.1)
10,147
672.4
620.4
38,987
Pacific
2.98%
89.4%
Group
Centre
n/a
n/a
Group
1.64%
51.9%
(3)
(617)
6,198
1.8
3.8
1,089
-
-
10,480
629.7
593.6
39,684
1. During 2022, the Group revised its treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of
expected future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,226 million for the
Australia Retail division and $94 million for the Australia Commercial division. Comparative information has not been restated.
DIVISIONAL PERFORMANCE
Australia Retail
Lending volumes increased driven by home loan growth, partially offset by lower unsecured lending. Net interest margin
decreased driven by asset margin contraction from competitive pressure and unfavourable lending mix from stronger growth in
lower margin fixed rate home loans. This was partially offset by improvement in deposit margins from rising interest rate
environment and favourable deposit mix. Other operating income increased driven by the loss on divestment of ANZ Share
Investing business in the prior year and higher cards revenue due to recovery in consumer spending, partially offset by Breakfree
package fee changes. Operating expenses increased driven by higher investment spend on ANZ Plus and home loans momentum,
partially offset by lower restructuring expenses. Credit impairment release decreased driven by a lower collectively assessed credit
impairment release, partially offset by lower individually assessed credit impairment charge with underlying delinquency and
impairment flows remaining subdued with the benefit from previous government and bank COVID-19 support packages persisting.
Australia Commercial
Lending volumes increased driven by Specialist Business lending growth. Net interest margin increased driven by improvement in
deposit margins from a rising interest rate environment and favourable deposit mix. This was partially offset by unfavourable lending
mix with stronger growth in lower margin large commercial customers, and asset margin contraction from competitive pressure.
Other operating income increased driven by the gain on sale relating to the ANZ Worldline partnership. This was partially offset by
the loss on sale of the financial planning and advice business and divested business results impact following ANZ Worldline
partnership. Operating expenses decreased driven by lower restructuring expenses and lower impact of divested business results.
Credit impairment release decreased driven by a lower collectively assessed credit impairment release, partially offset by lower
individually assessed credit impairment charge with underlying delinquency and impairment flows remaining subdued with the
benefit from previous government and bank COVID-19 support packages persisting.
Institutional
Lending volumes increased across Corporate Finance, Markets and Transaction Banking following strong core lending and
customer flows during the period. Customer deposits increased predominantly in Transaction Banking. Net interest margin ex-
Markets increased primarily driven by improvement in deposit margins from a rising interest rate environment. Other operating
income decreased driven by lower Markets revenues as Balance Sheet and Derivative Valuation Adjustments were impacted by high
volatility and yield curve movements. Operating expenses increased driven by higher technology costs, partially offset by lower
litigation settlements. Credit impairment release decreased driven by collectively assessed credit impairment release in the prior
period, partially offset by release of individually assessed credit impairment charges in Transaction Banking. Income tax expense
increased driven by the dividend withholding tax on the dividend payment from ANZ PNG to ANZBGL, partially offset by tax rate
differentials on profits earned in International, and tax refunds and write-backs.
Lending volumes increased driven by home loan growth. Net interest margin increased driven by improvement in deposit margins
from a rising interest rate environment, partially offset by lower home loan margins due to competition, and a higher mix of fixed
rate home loans. Other operating income is flat as gains on sale of government securities was offset by lower fees from the removal
or reduction of funds under management fees. Operating expenses increased driven by higher investment spend and inflation
impacts, partially offset by productivity gains and other savings. Credit impairment charge increased primarily driven by collectively
assessed credit impairment charge in the current year as opposed to a release in the prior year.
Financial performance for the Pacific division is largely consistent with the prior year.
The 2022 financial year included the recycling of foreign currency translation reserves from Other comprehensive income to profit or
loss on dissolution of Minerva Holdings Limited and ANZ Asia Limited, and a net charge on lease modification impacts of a
signification lease arrangement.
The 2021 financial year included the losses from the Group’s share of AmBank 1MDB settlement and goodwill impairment.
New Zealand
Pacific
Group Centre
54 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 55
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
55
55
OUR PERFORMANCE (continued)
DIVISIONAL PERFORMANCE
On 1 March 2022, the Group announced a structural change to the existing Australia Retail and Commercial division, and the digital
businesses in the Group Centre division (formerly known as the Technology, Services & Operations (TSO) and Group Centre division). This
involved the integration of the Australian retail and digital businesses, and the separation of the Australian commercial business into a new
division to improve productivity and accountability within the organisation. As a result of these changes there are now six divisions: Australia
Retail, Australia Commercial, Institutional, New Zealand, Pacific and Group Centre, aligned to distinct strategies and opportunities within the
Group. Comparative information has been restated accordingly.
Other than those described above, there have been no other significant changes.
Australia
Australia
Retail Commercial
Institutional
Zealand
Pacific
2022
Net interest margin
Operating expenses to operating income
Cash profit from continuing
operations ($m)
Net loans and advances ($b)1
Customer deposits ($b)
Number of FTE
2021
Net interest margin
Operating expenses to operating income
Cash profit from continuing
operations ($m)
Net loans and advances ($b)
Customer deposits ($b)
Number of FTE
2.25%
52.2%
2,140
290.3
150.0
11,846
2.27%
48.0%
2,316
284.0
141.4
11,764
2.10%
41.8%
1,510
59.7
112.2
2,799
1.98%
49.4%
1,107
57.2
111.1
3,095
0.85%
49.6%
1,761
196.8
259.4
6,236
0.81%
49.1%
1,887
158.2
239.6
6,196
New
2.47%
36.5%
1,633
123.7
95.1
6,873
New
2.33%
39.7%
1,508
128.5
97.7
7,060
1,086
10,147
38,987
Group
Centre
n/a
n/a
Group
1.63%
51.6%
(538)
6,515
0.1
(0.1)
672.4
620.4
Group
Centre
n/a
n/a
Group
1.64%
51.9%
(617)
6,198
-
-
629.7
593.6
2.82%
93.3%
9
1.8
3.8
2.98%
89.4%
(3)
1.8
3.8
1,089
10,480
39,684
Australia
Australia
Retail Commercial
Institutional
Zealand
Pacific
1. During 2022, the Group revised its treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of
expected future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,226 million for the
Australia Retail division and $94 million for the Australia Commercial division. Comparative information has not been restated.
DIVISIONAL PERFORMANCE
Australia Retail
Lending volumes increased driven by home loan growth, partially offset by lower unsecured lending. Net interest margin
decreased driven by asset margin contraction from competitive pressure and unfavourable lending mix from stronger growth in
lower margin fixed rate home loans. This was partially offset by improvement in deposit margins from rising interest rate
environment and favourable deposit mix. Other operating income increased driven by the loss on divestment of ANZ Share
Investing business in the prior year and higher cards revenue due to recovery in consumer spending, partially offset by Breakfree
package fee changes. Operating expenses increased driven by higher investment spend on ANZ Plus and home loans momentum,
partially offset by lower restructuring expenses. Credit impairment release decreased driven by a lower collectively assessed credit
impairment release, partially offset by lower individually assessed credit impairment charge with underlying delinquency and
impairment flows remaining subdued with the benefit from previous government and bank COVID-19 support packages persisting.
Australia Commercial
Lending volumes increased driven by Specialist Business lending growth. Net interest margin increased driven by improvement in
deposit margins from a rising interest rate environment and favourable deposit mix. This was partially offset by unfavourable lending
mix with stronger growth in lower margin large commercial customers, and asset margin contraction from competitive pressure.
Other operating income increased driven by the gain on sale relating to the ANZ Worldline partnership. This was partially offset by
the loss on sale of the financial planning and advice business and divested business results impact following ANZ Worldline
partnership. Operating expenses decreased driven by lower restructuring expenses and lower impact of divested business results.
Credit impairment release decreased driven by a lower collectively assessed credit impairment release, partially offset by lower
individually assessed credit impairment charge with underlying delinquency and impairment flows remaining subdued with the
benefit from previous government and bank COVID-19 support packages persisting.
Institutional
Lending volumes increased across Corporate Finance, Markets and Transaction Banking following strong core lending and
customer flows during the period. Customer deposits increased predominantly in Transaction Banking. Net interest margin ex-
Markets increased primarily driven by improvement in deposit margins from a rising interest rate environment. Other operating
income decreased driven by lower Markets revenues as Balance Sheet and Derivative Valuation Adjustments were impacted by high
volatility and yield curve movements. Operating expenses increased driven by higher technology costs, partially offset by lower
litigation settlements. Credit impairment release decreased driven by collectively assessed credit impairment release in the prior
period, partially offset by release of individually assessed credit impairment charges in Transaction Banking. Income tax expense
increased driven by the dividend withholding tax on the dividend payment from ANZ PNG to ANZBGL, partially offset by tax rate
differentials on profits earned in International, and tax refunds and write-backs.
New Zealand
Lending volumes increased driven by home loan growth. Net interest margin increased driven by improvement in deposit margins
from a rising interest rate environment, partially offset by lower home loan margins due to competition, and a higher mix of fixed
rate home loans. Other operating income is flat as gains on sale of government securities was offset by lower fees from the removal
or reduction of funds under management fees. Operating expenses increased driven by higher investment spend and inflation
impacts, partially offset by productivity gains and other savings. Credit impairment charge increased primarily driven by collectively
assessed credit impairment charge in the current year as opposed to a release in the prior year.
Pacific
Financial performance for the Pacific division is largely consistent with the prior year.
Group Centre
The 2022 financial year included the recycling of foreign currency translation reserves from Other comprehensive income to profit or
loss on dissolution of Minerva Holdings Limited and ANZ Asia Limited, and a net charge on lease modification impacts of a
signification lease arrangement.
The 2021 financial year included the losses from the Group’s share of AmBank 1MDB settlement and goodwill impairment.
54 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 55
56
56
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
FINANCIAL POSITION OF THE GROUP
Condensed balance sheet
Assets
Cash / Settlement balances owed to ANZ / Collateral paid
Trading assets and investment securities
Derivative financial instruments
Net loans and advances
Other
Total assets
Liabilities
Settlement balances owed by ANZ / Collateral received
Deposits and other borrowings
Derivative financial instruments
Debt issuances
Other
Total liabilities
Total equity
As at
2021
$b
2022
$b
185.6
121.4
90.2
672.4
16.0
1,085.6
30.0
797.3
85.1
93.7
13.2
1,019.3
66.4
168.0
127.8
38.7
629.7
14.7
978.9
23.1
743.1
36.0
101.1
11.9
915.2
63.7
Movt
10%
-5%
large
7%
9%
11%
30%
7%
large
-7%
11%
11%
4%
Cash / Settlement balances owed to ANZ / Collateral paid increased $17.6 billion (10%) driven by increases in balances with central banks.
Trading assets and investment securities decreased $6.4 billion (-5%) primarily driven by lower revaluations in Markets as a result of interest
rate increases.
Derivative financial assets and liabilities increased $51.5 billion and $49.1 billion respectively driven by the impact of market rate
movements, primarily the significant strengthening of the USD.
Net loans and advances increased $42.7 billion (7%) driven by higher lending volumes in the Institutional ($34.6 billion) and Australia
Commercial ($2.5 billion) divisions and increased home loan growth in the Australia Retail ($6.4 billion) and New Zealand ($5.2 billion)
divisions, partially offset by the impact of foreign currency translation movements.
Settlement balances owed by ANZ / Collateral received increased $6.9 billion (30%) driven by higher collateral received, partially offset by
lower cash clearing account balances.
Deposits and other borrowings increased $54.2 billion (7%) driven by increases in customer deposits across the Institutional ($11.6 billion),
Australia Retail ($8.5 billion) and New Zealand ($5.0 billion) divisions, increases in deposits from banks and repurchase agreements ($14.5
billion) and commercial paper ($13.9 billion), and the impact of foreign currency translation movements. This was partially offset by decreases
in certificates of deposit ($3.9 billion).
Debt issuances decreased $7.4 billion (-7%) primarily driven by the maturity of unsubordinated debt and movement in hedge revaluations.
Total equity increased $2.7 billion (4%) primarily driven by a share entitlement offer of $3.5 billion.
Overview
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OUR PERFORMANCE (continued)
Liquidity
Total liquid assets ($b) 1
Liquidity Coverage Ratio (LCR) 1
Average
2022
241.7
131%
2021
225.9
137%
1. Full year average, calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements.
The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed
environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent
with Basel III LCR:
central banks to provide same-day liquidity.
Highest-quality liquid assets: cash, highest credit quality government, central bank or public sector securities eligible for repurchase with
High-quality liquid assets: high credit quality government, central bank or public sector securities, high quality corporate debt securities
and high quality covered bonds eligible for repurchase with central banks to provide same-day liquidity.
Alternative liquid assets: assets qualifying as collateral for the CLF and other eligible securities listed by the RBNZ.
The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory
requirements and the risk appetite set by the Board.
Committed Liquidity Facility
As part of meeting LCR requirements, the Group has a CLF with the Reserve Bank of Australia (RBA). The CLF was established to offset the
shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative form of contingent liquidity. The CLF is
collateralised by assets, including internal residential mortgage backed securities, that are eligible to be pledged as security with the RBA. In
September 2021, APRA wrote to ADI’s to advise that APRA and the RBA consider there to be sufficient HQLA for ADI’s to meet their LCR
requirements, and therefore the use of the CLF should no longer be required beyond 2022 calendar year.
Consistent with APRA’s requirement to reduce the $10.7 billion CLF with four equal reductions during the 2022 calendar year to $0 on 1
January 2023, ANZ’s CLF was $2.7 billion as at 30 September 2022 (2021: $10.7 billion).
The LCR remained above the regulatory minimum of 100% throughout this period.
Funding
Customer liabilities (funding)
Wholesale funding
Shareholders’ equity
Total funding
Net Stable Funding Ratio
2022
$b
628.4
300.3
66.4
995.1
119%
2021
$b
601.7
274.3
63.7
939.7
124%
The Group targets a diversified funding base, avoiding undue concentration by investor type, maturity, market source and currency.
Net Stable Funding Ratio remained above the regulatory minimum of 100% throughout this period.
$15.7 billion of term wholesale debt funding (excluding Additional Tier 1 Capital) with a remaining term greater than one year as at 30
September 2022 was issued during the year. In addition, the Group issued $1.3 billion of Additional Tier 1 Capital during the year (excluding
ANZ Bank New Zealand Limited perpetual preference shares, which is classified as a non-controlling interest in the Group).
RBA Term Funding Facility
As an additional source of funding, in March 2020, the RBA announced a Term Funding Facility (TFF) for the banking system to support
lending to Australian businesses. The TFF is a three-year secured funding facility to ADIs at a fixed rate of 0.25% for drawdowns up to 4
November 2020, and reduced to 0.10% for new drawdowns from 4 November 2020 onwards. The TFF was closed to drawdowns on 30 June
2021.
As at 30 September 2022, ANZ had drawn $20.1 billion under the RBA’s TFF.
56 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 57
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
FINANCIAL POSITION OF THE GROUP
Condensed balance sheet
Assets
Cash / Settlement balances owed to ANZ / Collateral paid
Trading assets and investment securities
Derivative financial instruments
Net loans and advances
Settlement balances owed by ANZ / Collateral received
Deposits and other borrowings
Derivative financial instruments
Other
Total assets
Liabilities
Debt issuances
Other
Total liabilities
Total equity
rate increases.
As at
2021
$b
2022
$b
185.6
121.4
90.2
672.4
16.0
1,085.6
30.0
797.3
85.1
93.7
13.2
1,019.3
66.4
168.0
127.8
38.7
629.7
14.7
978.9
23.1
743.1
36.0
101.1
11.9
915.2
63.7
Movt
10%
-5%
large
7%
9%
11%
30%
7%
large
-7%
11%
11%
4%
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57
57
OUR PERFORMANCE (continued)
Liquidity
Total liquid assets ($b) 1
Liquidity Coverage Ratio (LCR) 1
Average
2022
241.7
131%
2021
225.9
137%
1. Full year average, calculated as prescribed per APRA Prudential Regulatory Standard (APS 210 Liquidity) and consistent with APS 330 requirements.
The Group holds a portfolio of high quality unencumbered liquid assets in order to protect the Group’s liquidity position in a severely stressed
environment, as well as to meet regulatory requirements. High Quality Liquid Assets comprise three categories, with the definitions consistent
with Basel III LCR:
Highest-quality liquid assets: cash, highest credit quality government, central bank or public sector securities eligible for repurchase with
central banks to provide same-day liquidity.
High-quality liquid assets: high credit quality government, central bank or public sector securities, high quality corporate debt securities
and high quality covered bonds eligible for repurchase with central banks to provide same-day liquidity.
Alternative liquid assets: assets qualifying as collateral for the CLF and other eligible securities listed by the RBNZ.
The Group monitors and manages the size and composition of its liquid assets portfolio on an ongoing basis in line with regulatory
requirements and the risk appetite set by the Board.
Committed Liquidity Facility
As part of meeting LCR requirements, the Group has a CLF with the Reserve Bank of Australia (RBA). The CLF was established to offset the
shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative form of contingent liquidity. The CLF is
collateralised by assets, including internal residential mortgage backed securities, that are eligible to be pledged as security with the RBA. In
September 2021, APRA wrote to ADI’s to advise that APRA and the RBA consider there to be sufficient HQLA for ADI’s to meet their LCR
requirements, and therefore the use of the CLF should no longer be required beyond 2022 calendar year.
Consistent with APRA’s requirement to reduce the $10.7 billion CLF with four equal reductions during the 2022 calendar year to $0 on 1
January 2023, ANZ’s CLF was $2.7 billion as at 30 September 2022 (2021: $10.7 billion).
The LCR remained above the regulatory minimum of 100% throughout this period.
Derivative financial assets and liabilities increased $51.5 billion and $49.1 billion respectively driven by the impact of market rate
movements, primarily the significant strengthening of the USD.
Net loans and advances increased $42.7 billion (7%) driven by higher lending volumes in the Institutional ($34.6 billion) and Australia
Funding
Commercial ($2.5 billion) divisions and increased home loan growth in the Australia Retail ($6.4 billion) and New Zealand ($5.2 billion)
divisions, partially offset by the impact of foreign currency translation movements.
Customer liabilities (funding)
Wholesale funding
Shareholders’ equity
Total funding
Net Stable Funding Ratio
2022
$b
628.4
300.3
66.4
995.1
119%
2021
$b
601.7
274.3
63.7
939.7
124%
The Group targets a diversified funding base, avoiding undue concentration by investor type, maturity, market source and currency.
Net Stable Funding Ratio remained above the regulatory minimum of 100% throughout this period.
$15.7 billion of term wholesale debt funding (excluding Additional Tier 1 Capital) with a remaining term greater than one year as at 30
September 2022 was issued during the year. In addition, the Group issued $1.3 billion of Additional Tier 1 Capital during the year (excluding
ANZ Bank New Zealand Limited perpetual preference shares, which is classified as a non-controlling interest in the Group).
RBA Term Funding Facility
As an additional source of funding, in March 2020, the RBA announced a Term Funding Facility (TFF) for the banking system to support
lending to Australian businesses. The TFF is a three-year secured funding facility to ADIs at a fixed rate of 0.25% for drawdowns up to 4
November 2020, and reduced to 0.10% for new drawdowns from 4 November 2020 onwards. The TFF was closed to drawdowns on 30 June
2021.
As at 30 September 2022, ANZ had drawn $20.1 billion under the RBA’s TFF.
Cash / Settlement balances owed to ANZ / Collateral paid increased $17.6 billion (10%) driven by increases in balances with central banks.
Trading assets and investment securities decreased $6.4 billion (-5%) primarily driven by lower revaluations in Markets as a result of interest
Settlement balances owed by ANZ / Collateral received increased $6.9 billion (30%) driven by higher collateral received, partially offset by
lower cash clearing account balances.
Deposits and other borrowings increased $54.2 billion (7%) driven by increases in customer deposits across the Institutional ($11.6 billion),
Australia Retail ($8.5 billion) and New Zealand ($5.0 billion) divisions, increases in deposits from banks and repurchase agreements ($14.5
billion) and commercial paper ($13.9 billion), and the impact of foreign currency translation movements. This was partially offset by decreases
in certificates of deposit ($3.9 billion).
Debt issuances decreased $7.4 billion (-7%) primarily driven by the maturity of unsubordinated debt and movement in hedge revaluations.
Total equity increased $2.7 billion (4%) primarily driven by a share entitlement offer of $3.5 billion.
56 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 57
58
58
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Overview
How we
create value
Performance
overview
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OUR PERFORMANCE (continued)
RBNZ Funding for Lending Programme and Term Lending Facility
Between May 2020 and July 2021, the RBNZ made funds available under a Term Lending Facility (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 the RBNZ announced a Funding for Lending Programme (FLP) which aimed 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 were able to 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). The initial allocation
closed on 6 June 2022. An additional allocation of up to 2% of eligible loans is available, subject to certain conditions until 6 December 2022.
As at 30 September 2022, ANZ Bank New Zealand Limited had drawn $0.3 billion under the TLF and $2.3 billion under the FLP.
Capital management
Common Equity Tier 1 (Level 2)
- APRA Basel III
Credit risk weighted assets ($b)
Total risk weighted assets ($b)
APRA Leverage Ratio
2022
2021
Movt
12.3%
359.4
454.7
5.4%
12.3%
342.5
416.1
5.5%
5%
9%
APRA, under the authority of the Banking Act 1959, sets minimum regulatory requirements for banks including what is acceptable as
regulatory capital and provides methods of measuring the risks incurred by the Bank.
The Group’s Common Equity Tier 1 ratio was 12.29% based on APRA Basel III standards, exceeding APRA’s minimum requirements. It
decreased 5 bps driven by the impact of dividends paid during the year, higher underlying CRWA and non-CRWA usage and the impact of the
completed share buy-back. This was partially offset by cash earnings and the equity raising to support the acquisition of Suncorp Bank.
At 30 September 2022, the Group’s APRA leverage ratio was 5.4% which is above the 3.5% proposed minimum for internal ratings-based
approach ADI (IRB ADI), which includes ANZ.
Dividends
Our financial performance allowed us to propose that a final dividend of 74 cents be paid on each eligible fully paid ANZ ordinary share,
bringing the total dividend for the year ended 30 September 2022 to 146 cents per share. This represents a dividend payout ratio of 64.9% of
cash profit from continuing operations.
The proposed 2022 final dividend of 74 cents per share will be fully franked for Australian taxation purposes, and carry New Zealand
imputation credits of NZD 9 cents per ordinary share. It will be paid on 15 December 2022 to owners of ordinary shares at the close of business
on 8 November 2022 (record date).
ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the proposed 2022 final dividend.
For the 2022 final dividend, ANZ intends to provide shares under the DRP and BOP through the issue of new shares.
Further details on dividends provided for or paid during the year ended 30 September 2022 are set out in Note 6 Dividends in the Financial
Report.
Shareholders returns
EEaarrnniinnggss ppeerr sshhaarree ––
ccaasshh11 ((cceennttss))
DDiivviiddeenndd ppeerr sshhaarree
((cceennttss))
DDiivviiddeenndd ppaayyoouutt
rraattiioo11 ((%%))
TToottaall sshhaarreehhoollddeerr
rreettuurrnn ((%%))
2022
2021
228.8
216.5
2022
2021
146
142
2022
2021
64.8
64.9
2022
(14.0)
2021
70.7
1. Information has been presented on a cash profit from continuing operations basis.
FIVE YEAR SUMMARY
Financial performance - cash1
Net interest income
Other operating income
Operating expenses
Credit impairment charge
Income tax expense
Non-controlling interests
Profit before credit impairment and income tax
Cash profit from continuing operations1
Cash profit/(loss) from discontinued operations1
Cash profit1
Adjustments to arrive at statutory profit1
Profit attributable to shareholders of the Company
Financial position
Assets
Net assets
Common Equity Tier 1
Common Equity Tier 1 – Internationally
Comparable Basel III2
Return on average ordinary equity (statutory)3
Return on average assets (statutory)
Cost to income ratio (cash)1
Shareholder value – ordinary shares
plus dividends)
Market capitalisation
Dividend (cents)
Franked portion
– interim
– final
Share price
– high (dollars)
– low (dollars)
– closing (dollars)
Share information
(per fully paid ordinary share)
Earnings per share (cents) (statutory)4
Dividend payout ratio (statutory)
Net tangible assets per ordinary share5
No. of fully paid ordinary shares issued (millions)
Dividend reinvestment plan (DRP) issue price
– interim
– final
Other information
No. of employees (full time equivalents)
No. of shareholders
1,085,729
978,857
1,042,286
2022
$m
14,874
3,673
(9,579)
8,968
232
(2,684)
(1)
6,515
(19)
6,496
623
7,119
66,401
12.3%
19.2%
11.4%
0.7%
52.0%
68,170
146
100%
100%
$28.98
$20.95
$22.80
250.0
59.3%
$20.75
2,990
$25.52
-
2021
$m
14,161
3,286
(9,051)
8,396
567
(2,764)
(1)
6,198
(17)
6,181
(19)
6,162
63,676
12.3%
18.3%
9.9%
0.6%
52.2%
79,483
142
100%
100%
$29.64
$16.97
$28.15
215.3
65.3%
$21.09
2,824
$27.91
$27.68
2020
$m
14,049
3,703
(9,383)
8,369
(2,738)
(1,872)
(1)
3,758
(98)
3,660
(83)
3,577
61,297
11.3%
16.7%
5.9%
0.3%
53.8%
48,839
60
100%
100%
$28.67
$14.10
$17.22
125.3
47.6%
$20.04
2,840
$18.06
$22.19
2019
$m
14,339
4,690
(9,071)
9,958
(795)
(2,678)
(15)
6,470
(309)
6,161
(208)
5,953
981,137
60,794
11.4%
16.4%
10.0%
0.6%
49.5%
80,842
160
100%
70%
$29.30
$22.98
$28.52
208.2
76.2%
$19.59
2,835
$27.79
$25.03
2018
$m
14,514
4,853
(9,401)
9,966
(688)
(2,775)
(16)
6,487
(682)
5,805
595
6,400
943,182
59,405
11.4%
16.8%
10.9%
0.7%
52.0%
80,979
160
100%
100%
$30.80
$26.08
$28.18
219.7
72.1%
$18.47
2,874
$27.76
$26.03
39,196
541,788
40,221
534,166
38,579
553,171
39,060
506,847
39,924
509,238
1. Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the result of the ongoing business activities of the Group. Cash profit is not
audited; however, the external auditor has informed the Audit Committee that the adjustments have been determined on a consistent basis across each period presented.
2. Internationally Comparable Methodology aligns with APRA’s information paper entitled ‘International Capital Comparison Study’ (13 July 2015). Basel Internationally Comparable ratios do not
include an estimate of the Basel l capital floor requirement.
3. Average ordinary equity excludes non-controlling interests.
4. Earnings per share has been restated to reflect the bonus element of the share entitlement issue made in 2022, in accordance with AASB 133 Earnings per Share.
5. Equals shareholders’ equity less total non-controlling interests, goodwill and other intangible assets, divided by the number of ordinary shares.
Total return to shareholders (share price movement
-14.0%
70.7%
-36.9%
9.2%
0.6%
58 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 59
ANZ 2022 Annual Report / Performance overview
ANZ 2022 Annual Report
OUR PERFORMANCE (continued)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
59
59
OUR PERFORMANCE (continued)
RBNZ Funding for Lending Programme and Term Lending Facility
Between May 2020 and July 2021, the RBNZ made funds available under a Term Lending Facility (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 the RBNZ announced a Funding for Lending Programme (FLP) which aimed 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 were able to 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). The initial allocation
closed on 6 June 2022. An additional allocation of up to 2% of eligible loans is available, subject to certain conditions until 6 December 2022.
As at 30 September 2022, ANZ Bank New Zealand Limited had drawn $0.3 billion under the TLF and $2.3 billion under the FLP.
Capital management
Common Equity Tier 1 (Level 2)
- APRA Basel III
Credit risk weighted assets ($b)
Total risk weighted assets ($b)
APRA Leverage Ratio
2022
2021
Movt
12.3%
359.4
454.7
5.4%
12.3%
342.5
416.1
5.5%
5%
9%
APRA, under the authority of the Banking Act 1959, sets minimum regulatory requirements for banks including what is acceptable as
regulatory capital and provides methods of measuring the risks incurred by the Bank.
The Group’s Common Equity Tier 1 ratio was 12.29% based on APRA Basel III standards, exceeding APRA’s minimum requirements. It
decreased 5 bps driven by the impact of dividends paid during the year, higher underlying CRWA and non-CRWA usage and the impact of the
completed share buy-back. This was partially offset by cash earnings and the equity raising to support the acquisition of Suncorp Bank.
At 30 September 2022, the Group’s APRA leverage ratio was 5.4% which is above the 3.5% proposed minimum for internal ratings-based
approach ADI (IRB ADI), which includes ANZ.
Dividends
Our financial performance allowed us to propose that a final dividend of 74 cents be paid on each eligible fully paid ANZ ordinary share,
bringing the total dividend for the year ended 30 September 2022 to 146 cents per share. This represents a dividend payout ratio of 64.9% of
cash profit from continuing operations.
The proposed 2022 final dividend of 74 cents per share will be fully franked for Australian taxation purposes, and carry New Zealand
imputation credits of NZD 9 cents per ordinary share. It will be paid on 15 December 2022 to owners of ordinary shares at the close of business
on 8 November 2022 (record date).
ANZ has a Dividend Reinvestment Plan (DRP) and a Bonus Option Plan (BOP) that will operate in respect of the proposed 2022 final dividend.
For the 2022 final dividend, ANZ intends to provide shares under the DRP and BOP through the issue of new shares.
Further details on dividends provided for or paid during the year ended 30 September 2022 are set out in Note 6 Dividends in the Financial
Shareholders returns
Report.
2022
2021
((cceennttss))
2022
2021
228.8
216.5
1. Information has been presented on a cash profit from continuing operations basis.
EEaarrnniinnggss ppeerr sshhaarree ––
ccaasshh11 ((cceennttss))
DDiivviiddeenndd ppeerr sshhaarree
DDiivviiddeenndd ppaayyoouutt
rraattiioo11 ((%%))
TToottaall sshhaarreehhoollddeerr
rreettuurrnn ((%%))
146
142
2022
2021
64.8
64.9
2022
(14.0)
2021
70.7
FIVE YEAR SUMMARY
Financial performance - cash1
Net interest income
Other operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment charge
Income tax expense
Non-controlling interests
Cash profit from continuing operations1
Cash profit/(loss) from discontinued operations1
Cash profit1
Adjustments to arrive at statutory profit1
Profit attributable to shareholders of the Company
Financial position
Assets
Net assets
Common Equity Tier 1
Common Equity Tier 1 – Internationally
Comparable Basel III2
Return on average ordinary equity (statutory)3
Return on average assets (statutory)
Cost to income ratio (cash)1
Shareholder value – ordinary shares
Total return to shareholders (share price movement
plus dividends)
Market capitalisation
Dividend (cents)
Franked portion
– final
Share price
– interim
– high (dollars)
– low (dollars)
– closing (dollars)
Share information
(per fully paid ordinary share)
Earnings per share (cents) (statutory)4
Dividend payout ratio (statutory)
Net tangible assets per ordinary share5
No. of fully paid ordinary shares issued (millions)
Dividend reinvestment plan (DRP) issue price
– interim
– final
Other information
No. of employees (full time equivalents)
No. of shareholders
2022
$m
14,874
3,673
(9,579)
8,968
232
(2,684)
(1)
6,515
(19)
6,496
623
7,119
1,085,729
66,401
12.3%
19.2%
11.4%
0.7%
52.0%
2021
$m
14,161
3,286
(9,051)
8,396
567
(2,764)
(1)
6,198
(17)
6,181
(19)
6,162
978,857
63,676
12.3%
18.3%
9.9%
0.6%
52.2%
2020
$m
14,049
3,703
(9,383)
8,369
(2,738)
(1,872)
(1)
3,758
(98)
3,660
(83)
3,577
1,042,286
61,297
11.3%
16.7%
5.9%
0.3%
53.8%
2019
$m
14,339
4,690
(9,071)
9,958
(795)
(2,678)
(15)
6,470
(309)
6,161
(208)
5,953
981,137
60,794
11.4%
16.4%
10.0%
0.6%
49.5%
2018
$m
14,514
4,853
(9,401)
9,966
(688)
(2,775)
(16)
6,487
(682)
5,805
595
6,400
943,182
59,405
11.4%
16.8%
10.9%
0.7%
52.0%
-14.0%
70.7%
-36.9%
9.2%
0.6%
68,170
146
100%
100%
$28.98
$20.95
$22.80
250.0
59.3%
$20.75
2,990
$25.52
-
79,483
142
100%
100%
$29.64
$16.97
$28.15
215.3
65.3%
$21.09
2,824
$27.91
$27.68
48,839
60
100%
100%
$28.67
$14.10
$17.22
125.3
47.6%
$20.04
2,840
$18.06
$22.19
80,842
160
100%
70%
$29.30
$22.98
$28.52
208.2
76.2%
$19.59
2,835
$27.79
$25.03
80,979
160
100%
100%
$30.80
$26.08
$28.18
219.7
72.1%
$18.47
2,874
$27.76
$26.03
39,196
541,788
40,221
534,166
38,579
553,171
39,060
506,847
39,924
509,238
58 ANZ 2022 ANNUAL REPORT
ANZ 2022 ANNUAL REPORT 59
1. Cash profit excludes non-core items included in statutory profit and is provided to assist readers in understanding the result of the ongoing business activities of the Group. Cash profit is not
audited; however, the external auditor has informed the Audit Committee that the adjustments have been determined on a consistent basis across each period presented.
2. Internationally Comparable Methodology aligns with APRA’s information paper entitled ‘International Capital Comparison Study’ (13 July 2015). Basel Internationally Comparable ratios do not
include an estimate of the Basel l capital floor requirement.
3. Average ordinary equity excludes non-controlling interests.
4. Earnings per share has been restated to reflect the bonus element of the share entitlement issue made in 2022, in accordance with AASB 133 Earnings per Share.
5. Equals shareholders’ equity less total non-controlling interests, goodwill and other intangible assets, divided by the number of ordinary shares.
60
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
FIVE YEAR SUMMARY (CONTINUED)
Fair and responsible banking
Net Promoter Score Ranking (relative to peers)
Australia Retail¹
Australia Commercial²
Australia Institutional³
New Zealand Retail⁴
New Zealand Commercial and Agricultural⁵
New Zealand Institutional6
Code of Conduct
Breaches
Investigations resulting in termination
Whistleblower reports
Financial wellbeing
2022
2021
2020
2019
2018
4
4
2
4
5
1
518
95
142
4
4
2
4
5
1
573
114
157
3
4
1
4
5
1
569
93
157
4
3
1
4
5
1
784
151
156
3
3
1
4
5
1
1,114
226
137
People reached by our financial inclusion programs7
>58,000
>67,600
>61,352
>90,850
>88,224
Employees
Employee Engagement (%)
Total Women in Leadership (%)8
Recruitment of people from under-represented groups9
Community
Total community investment ($million)¹0
Volunteer hours
Employee volunteering participation rate (%)
Sustainable finance
Total funded or facilitated towards:
Environmentally sustainable solutions (AU$ billion)
Housing (AU$ billion)¹¹
Other social (AU$ billion)¹²
Environmental sustainability
Environmental footprint
Total scope 1 & 2 (tCO2e)
Total scope 1, 2 & 3 GHG emissions (tCO2e)
Project finance portfolio13
Renewables (%)
Coal (%)
Gas (%)
84
35.9
320
136.4
52,444
13.8
16.18
0.53
1.37
81
35.3
255
139.7
54,645
15.5
9.18
1.40
2.29
86
33.4
185
139.5
66,402
20.5
7.57
1.45
0.06
77
32.5
224
142.2
134,930
42.4
73
32.0
260
136.9
124,113
34.6
7.60
4.65
101,879
140,514
111,409
153,697
134,093
203,700
156,568
250,857
171,012
266,906
90
2
8
88
3
9
87
5
7
83
9
8
76
13
10
Project finance commitment to renewable energy ($million)
1,505
1,425
1,501
1,371
1,076
1. Roy Morgan Single Source, Australian population aged 14+, Main Financial Institution, six-month rolling average to Sep’18, Sep’19, Sep’20, Sep’21 & Sep’22. Ranking based on the four
major Australian banks. 2. DBM Atlas (Business). Base: Commercial (<$100 million annual turnover) Main Financial Institution customers. Six-month average to Sep’18, Sep’19, Sep’20, Sep’21
& Sep’22. Ranking based on the four major Australian banks. 3. Peter Lee Associates, 2018–2022 Large Corporate and Institutional Relationship Banking surveys, Australia. Ranking based on
the four major Australian banks. 4. Retail Market Monitor, Camorra Research, six month rolling average to Sep’18, Sep’19, Sep’20, Sep’21 & Sep’22. 5. Business Finance Monitor, Kantar Research.
Base: Commercial ($3 million–$150 million annual turnover) and Agricultural (>500K annual turnover) customers. Four quarter rolling average to Q3’18, Q3’19, Q3’20, Q3’21 & Q2’22. 6. Peter Lee
Associates Large Corporate Relationship Banking Survey, New Zealand 2018–2022. 7. Includes individuals who have participated in more than one program or product (for example, people
who have participated in MoneyMinded as part of Saver Plus are counted twice as they are included in both the MoneyMinded and Saver Plus totals. 8. Measures representation at the Senior
Manager, Executive and Senior Executive levels. Includes all employees regardless of leave status but not contractors (which are included in FTE). 9. Including Aboriginal and Torres Strait
Islander peoples, people with disability and refugees. Total may have duplicates as employees can identify with more than one under-represented group. 10. Figure includes forgone revenue,
being the cost of providing low or fee free accounts to a range of customers such as government benefit recipients, not-for-profit organisations, students and the elderly. International transfer
fees were waived for funds sent from Australia and New Zealand to the Pacific to support communities impacted by COVID-19. 11. Commenced reporting in 2020. 12. Commenced reporting
in 2020. Includes transactions eligible for inclusion in $50 billion target but unable to be allocated to environmentally sustainable solutions, housing or financial wellbeing. 13. Breakdowns for
2020 and 2018 do not total to 100% due to rounding.
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
61
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62
ANZ 2022 Annual Report
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
2022 Remuneration Report – audited
Dear Shareholder,
As outlined in the Chairman’s message,
ANZ delivered a strong financial outcome
for shareholders particularly in the second
half of the year.
This was achieved as we supported our
customers through the lingering effects of
COVID in an inflationary environment, while
at the same time investing for the future.
While the environment remains volatile,
our margin performance along with our
disciplined focus on ‘run the bank’ costs
enabled us to invest at record levels in new
initiatives that will benefit shareholders,
customers and our employees in the
long term.
A particular highlight this year was the
agreement to acquire Suncorp Bank.
Suncorp Bank is a quality business and
strategically aligned to ANZ. While still
subject to government and regulatory
approvals, Suncorp Bank will add more than
one million retail customers and provide a
platform for growth in the fast-growing
Queensland market.
Similarly, there was good progress made on
the establishment of a new Non-Operating
Holding Company (NOHC) structure. If
approved by shareholders at the upcoming
Scheme Meeting, following our 2022 Annual
General Meeting (AGM), this will create
distinct banking and non-banking groups
within the organisation, providing greater
flexibility to create value for shareholders.
During the year we also made changes to
improve productivity and accountability
within the organisation. As part of these
changes, we combined Australia Retail with
our Digital Division, while also separating
Commercial Australia as a stand-alone
business. Together with New Zealand and
Institutional, we now have four core
business lines with distinct strategies and
opportunities.
Operational improvements within Australia
Retail have already resulted in home loan
processing times being back in-line with
market.
Ilana Atlas, AO
Chair – Human Resources Committee
Remuneration
report
1. Who is covered by this report
2. 2022 outcomes at a glance
3. Overview of ANZ’s remuneration structure
4. 2022 outcomes
5. 2022 executive remuneration structure and delivery
6. Accountability and Consequence Framework
7. Non-Executive Director (NED) remuneration
8. Remuneration governance
9. Other information
64
65
66
71
84
90
92
94
96
ANZ 2022 Annual Report
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
63
63
Our technology continues to be
modernised and we exceeded our target
of 9,000 systems migrated to the Cloud
or decommissioned with 31% of ANZ
applications now hosted in the Cloud.
maximum opportunity). This reflects the
assessment of ‘slightly below expectations’
within the ANZ Group Performance
Framework and their individual and
Divisional performance.
The successful launch of our new retail
banking platform in Australia, ANZ Plus, was
a key milestone for the Group. While uptake
was initially tracking slower than planned,
momentum has improved following
the commencement of marketing and
branch activity.
From a risk perspective, there were no
material credit events, no major regulatory
breaches and no overdue regulatory
issues. While we are progressed on the
development of our Group wide non-
financial risk framework we are behind
schedule with some elements and a
$500m capital overlay remains in place.
Improvements in this area will be a key
focus for the Board and management
over the next 12-months.
2022 variable remuneration
outcomes
As a Board, we believe we have struck
a balance between rewarding good
performance while also holding
management to account for areas
that did not achieve expectations.
Our Chief Executive Officer (CEO) performed
well this year. In the Board’s view he met
expectations in relation to his personal
objectives. He also has accountability
for the Group’s performance which
was slightly below expectations.
The Board determined the appropriate
2022 Short Term Variable Remuneration
(STVR) outcome was 74% of his maximum
opportunity.
There was no 2022 Long Term Variable
Remuneration (LTVR) award made as
we transition to awarding LTVR at the
beginning of the year rather than the
end. The CEO’s proposed 2023 LTVR of
$3.375m ($3.5m in 2021) will be subject to
a shareholder vote at the upcoming AGM.
For Disclosed Executives, the Board
determined their 2022 STVR outcomes at
an average outcome of 78% of maximum
opportunity (ranging from 71% to 96% of
51.6% of the performance rights granted
in 2018 to the CEO and Disclosed Executives
(excluding the Chief Risk Officer (CRO))
vested when their performance was
tested in November 2021 against their
performance hurdles. The remaining 48.4%
of rights lapsed and executives received no
value from this proportion of the awards.
Changes to the way we
remunerate executives
The introduction of a new remuneration
Prudential Standard (CPS 511 Remuneration)
by our regulator APRA has driven a review
of how we reward our executives.
While the new regulatory standard does
not come into effect until 1 January 2023,
a range of changes were implemented
in 2022.
Importantly, these changes were designed
not only to meet both the letter and spirit of
APRA’s new prudential standard, but also to
maintain our strong focus on performance
and risk management, and attract, motivate
and keep great people.
In line with CPS 511, the key structural
changes for the CEO and Disclosed
Executives include:
• Restructuring long term variable
remuneration to now provide material
weight to non-financial measures
through the LTVR restricted rights award.
• Longer deferral (up to 6 years for
CEO) with around 80% of variable
remuneration deferred to ensure
long-term focus.
• The ability to ‘clawback’ vested cash
and equity variable remuneration
where appropriate.
Additionally, we:
• Separated STVR and LTVR for Disclosed
Executives, bringing them in-line with
the structure for our CEO.
• Determined a fixed remuneration (FR)
structural increase of approximately 4%
for Disclosed Executives (excluding the
CEO) so as to not materially disadvantage
Disclosed Executives as a result of the
structural changes. Note the Board
decided to defer the payment of this
increase to 2023, and also decided
that the 2022 STVR opportunity would
be based on the FR had the structural
increase been effective for 2022.
As the likelihood of vesting is higher for
the LTVR restricted rights for the CEO and
Disclosed Executives, we have significantly
reduced their total remuneration opportunity.
It is important to note that the change in
structure, and in particular, the change in
the award of LTVR from the end of the year
to the beginning of the year (i.e., resulting
in no 2022 LTVR), makes comparisons with
prior year difficult. A summary of the new
remuneration structure for 2022 can be
found in section 3.
Fixed remuneration
A market FR adjustment was provided for
the CRO, effective 1 October 2021.
There were no other changes to FR, noting
that the ~4% structural adjustment for
Disclosed Executives as part of the structural
changes will only apply from 1 October 2022.
Following a market review, the Non-
Executive Director (NED) base fee remained
unchanged however fees were increased for
the Chairman and for the Chairs/members
of most Committees from 1 April 2022.
Finally, while there is more to be done, this
was a year where we made good progress
towards our strategic ambition. Thank you
to all our employees for their commitment
and contribution this year.
On behalf of the Board, I invite you to
consider our Remuneration Report which
will be presented to shareholders at the
2022 AGM.
Ilana Atlas, AO
Chair – Human Resources Committee
6464
64
ANZ 2022 Annual Report / Remuneration report
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
The Remuneration Report for the Group outlines our remuneration strategy and structure
and the remuneration practices that apply to Key Management Personnel (KMP). This
report has been prepared, and audited, as required by the Corporations Act 2001. It forms
part of the Directors’ Report.
1. Who is covered by this report
KMP are Directors of Australia and New Zealand Banking Group Limited (ANZBGL) (whether executive directors or otherwise),
and those personnel with a key responsibility for the strategic direction and management of the Group (i.e., members of the
Group Executive Committee (ExCo)) who have Banking Executive Accountability Regime (BEAR) accountability and who report
to the Chief Executive Officer (CEO) (referred to as Disclosed Executives).
1.1 Disclosed Executive
and NED changes
There were several changes to our KMP
during the 2022 year:
• Christine O’Reilly commenced as
a Non-Executive Director (NED) on
1 November 2021.
• Paula Dwyer retired as a NED on
16 December 2021, at the conclusion of
the 2021 Annual General Meeting (AGM).
1.2 Key Management Personnel (KMP)
The KMP whose remuneration is disclosed in this year’s report are:
2022 Non-Executive Directors (NEDs) – Current
P O’Sullivan
Chairman
I Atlas
J Halton
J Key
G Liebelt
Director
Director
Director
Director
• Jeff Smith commenced as a NED on
J Macfarlane
Director
1 August 2022.
• Farhan Faruqui commenced as ANZ’s
Chief Financial Officer (CFO) in October
2021. Shane Buggle concluded acting
at this time.
• ANZ’s Digital and Australia Retail
businesses were combined, with Maile
Carnegie commencing in the new Group
Executive, Australia Retail role on 1 March
2022, and Mark Hand concluding in the
Group Executive, Australia Retail and
Commercial Banking role on 28 February
2022. As part of these changes the
commercial business in Australia is now
a separate Division. While this Division
will report into the CEO in the future, the
CEO has also been acting as the Group
Executive for this business.
C O’Reilly
Director from 1 November 2021
J Smith
Director from 1 August 2022
2022 Non-Executive Directors (NEDs) – Former
P Dwyer
Former Director – retired 16 December 2021
2022 Chief Executive Officer (CEO) and Disclosed Executives – Current
S Elliott
CEO and Executive Director
M Carnegie
Group Executive, Australia Retail from 1 March 2022 (previously Group
Executive, Digital and Australia Transformation to 28 February 2022)
K Corbally
Chief Risk Officer (CRO)
F Faruqui
G Florian
K van der
Merwe
CFO from 11 October 2021
Group Executive, Technology
Group Executive, Talent & Culture and Service Centres (GE T&C)
A Watson
Group Executive and CEO, New Zealand
M Whelan
Group Executive, Institutional
2022 Disclosed Executives – Former
S Buggle
M Hand
Former acting CFO – concluded in role 10 October 2021
Former Group Executive, Australia Retail and Commercial Banking –
concluded in role 28 February 2022
Changes to KMP since the end of 2022 up to the date of signing the Directors’ Report,
as announced:
• Gerard Florian appointed to the expanded role of Group Executive, Technology &
Group Services, and Antony Strong appointed to ExCo as Group Executive, Strategy
& Transformation, effective 1 November 2022.
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2. 2022 outcomes at a glance
Chief Executive Officer
(CEO) remuneration
Disclosed Executive
remuneration
FOR 2022, OUR CEO:
FOR 2022:
• Had no increase to fixed
remuneration (FR).
• Was awarded Short Term Variable
Remuneration (STVR) of 74% of
maximum opportunity, having
met most but not all performance
expectations (see section 4).
• No Long Term Variable Remuneration
(LTVR) award was made for 2022, as
we transition to awarding LTVR at the
beginning of the year rather than at the
end. Instead, shareholder approval will
be sought at the 2022 AGM for a 2023
LTVR award of $3.375m.
• Received total remuneration of $6m
in 2022 (i.e., includes the value of prior
equity awards which vested in 2022 as
per section 4.1).
• There were no increases to FR for
Disclosed Executives effective for 2022
except for the CRO who received a
market adjustment on 1 October 2021.
• Disclosed Executives’ STVR outcomes
averaged 78% of maximum opportunity,
with individual outcomes ranging from
71% to 96% of maximum opportunity.
• Consistent with the CEO, no 2022 LTVR
awards have been made to Disclosed
Executives, as we transition to awarding
LTVR at the start of the 2023 year
under the new executive remuneration
structure (see section 5.2).
Performance rights outcomes
(CEO and Disclosed
Executives)
51.6% of the 2018 performance rights
(PR) granted in late 2018 to the CEO
and Disclosed Executives (excluding
the CRO) vested and the remaining
48.4% lapsed when tested against the
performance hurdles at the end of the
performance period in November 2021
(see section 4.4.3).
Non-Executive Director (NED)
Following a market review, the NED base
fee remained unchanged (see section
7.1), however fees were increased for the
Chairman and for the Chairs/members
of most Committees from 1 April 2022.
The Chairman’s shareholding
requirement increased to $850,000,
100% of the Chairman fee (from
$480,000, 200% of NED base fee),
to better align to market.
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3. Overview of ANZ’s remuneration structure
3.1 Context for change
As communicated in our 2021 Remuneration Report, the introduction of a new Prudential Standard CPS 511
Remuneration by our regulator APRA drove a detailed review of how we reward our CEO and Disclosed Executives.
As a result, the Board approved changes to the executive remuneration structure in line with the following design
principles, with those changes being effective for the 2022 financial year.
Meet the letter and spirit of the
new APRA Prudential Standard
• Structure promotes effective
management of financial and
non-financial risks
• APRA requires material weight to
non-financial metrics for variable
remuneration outcomes
• Introduction of clawback
• Longer deferral
Shareholder alignment
• A significant proportion of variable
remuneration is deferred over a long
period with ~80% delivered as deferred
equity to ensure long-term focus
• Total shareholder return (TSR)
Attract, motivate and keep great people
• Balance meeting the CPS 511
requirements and having a market
competitive remuneration structure
• Maintain reasonably comparable value1
so that individuals are not materially
advantaged or disadvantaged by the
structural changes
• Simplify by having CEO and Disclosed
Executives on a more aligned structure
performance continues to be a key
LTVR performance metric
Maintain a strong focus on performance
and risk management
• All components of variable remuneration
linked to performance and sound risk
management
• Focus on long-term outcomes by
ensuring consequences may be applied
for risk issues even if they emerge several
years after the event
• Remuneration outcomes continue
to be subject to Board discretion with
supporting decision-making frameworks
1. Takes into consideration the differences between the new and former remuneration structures (including aspects such as expected vesting of variable remuneration awards, and changes to
reward opportunity and deferral periods).
3.2 Key changes at a glance
1. Variance in CEO vs Disclosed Executives reduction due to differences in previous structure where maximum opportunity for Disclosed Executives was 150% of combined Variable
Remuneration (VR) component, compared to only the STVR component for CEO. In the new structure, maximum opportunity has reduced to 125% of target, and applies to STVR component only.
See charts in section 3.4 for individual change in remuneration opportunity.
Significantly reduced remuneration opportunityMaximum remuneration opportunity down reflecting improved probability of LTVR vesting: •CEO: -$1.375m / -14% •Disclosed Executives: -30%1 (CRO -16%)SimplifiedAligned CEO and Disclosed Executive structures by moving Disclosed Executives onto separate STVR and LTVR (previously combined variable remuneration)Modified deferral periodsMore balanced vesting over short and long term: •STVR over years 2 to 3 •LTVR over years 4 to 5/6Redesigned LTVRTo now provide material weight to non-financial measures (as per APRA requirement), with two equally weighted LTVR components •Restricted rights (RR): Pre grant and pre vest assessments focused on risk measures •Performance rights (PR): TSR hurdlesIntroduced clawbackStrengthened risk and remuneration consequences, with clawback now applicable for two years post the payment/vesting of variable remuneration ANZ 2022 Annual Report / Remuneration report
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3.3 Overview of new remuneration structure
CEO and Disclosed Executives (DEs) (excluding CRO1)
Fixed Remuneration (FR)
Short Term Variable
Remuneration (STVR)
Long Term Variable Remuneration (LTVR)
Maximum
opportunity
Delivery
Timing/
deferral
Maximum mix
30%
30%
100% of FR
100% of FR
40%
135% of FR
CEO No change to FR
DE ~4% structural increase
50% Cash
50% Deferred
shares (DS)
50% Restricted
rights (RR)
50% Performance
rights (PR)
YEAR 1
Cash 100%
Awarded at end of year based on
Group and individual performance
YEAR 1
Cash 50%
YEAR 2
DS 25%
YEAR 3
DS 25%
• Awarded at start of year subject to
– RR: Pre grant assessment (risk-based measures)
– RR & PR: Shareholder approval at AGM for
CEO award
• Performance condition tested at end of 4-year
performance period
– RR: Pre vest assessment (risk-based measures)
– PR: Relative and absolute TSR hurdles
For both RR and PR:
Deferral period = 4-year Performance Period + Holding Period (HP)
4-year Performance Period
~1 yr HP
~2 yr HP
YEAR 4
CEO: 33% / DE: 50%
YEAR 5
CEO: 33% / DE: 50%
YEAR 6
CEO: 34%
All variable remuneration is subject to the Board’s ongoing discretion
to apply in-year adjustments, malus and clawback
1. CRO mix: 33.3% FR / 33.3% STVR / 33.3% LTVR. STVR maximum opportunity: the same as CEO/DE at 100% of FR, LTVR maximum opportunity: 100% of FR and delivered as 100% RR (consistent
with former structure) to support independence.
Key differences from FORMER structure
Mix:
CEO and Disclosed Executives now on separate STVR and LTVR (previously Disclosed Executives were on combined VR).
CEO and Disclosed Executives now have the same STVR and LTVR maximum opportunity of 100% and 135% of FR respectively.
CEO previously had STVR maximum opportunity of 150% of FR and LTVR maximum opportunity of 140% of FR/Disclosed
Executives previously had a combined VR maximum opportunity of 402% of FR.
Maximum
opportunity:
Previously, the opportunity to earn above target (up to 150% of target) applied to just the STVR for the CEO, and to the combined
VR for Disclosed Executives. Under the new structure, the maximum opportunity has been reduced to 125% of STVR target
(i.e., 100% of FR) and applies to just the STVR for both the CEO and Disclosed Executives.
FR:
STVR:
LTVR:
A ~4% structural FR adjustment (uplift) applies to Disclosed Executives (not CEO), so as to not materially disadvantage Disclosed
Executives as part of the structural changes. The Board decided to exercise its discretion and deferred the ‘structural’ FR adjustment
to 2023 rather than 2022 when the other remuneration structure changes were made, however they determined that the STVR
opportunity would be based on the FR had the structural increase been effective for 2022.
Shares now deferred evenly over years 2 and 3 (rather than staggered vesting over years 2 to 5).
Now awarded at start of financial year rather than end of financial year.
Half now delivered as RR, subject to pre grant and pre vest assessments (based on risk measures) and the balance as PR (previously
100% PR).
LTVR still tested after 4-year performance period and now also subject to additional holding periods up to the 4th, 5th and 6th (for the
CEO) anniversary of grant. Former LTVR equivalent deferred for four years from grant.
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3.4 2022 maximum remuneration opportunity
The chart below illustrates the reduction in the maximum remuneration opportunity for the CEO and Disclosed Executives.
Maximum remuneration opportunity
CEO AND DISCLOSED EXECUTIVES (EXCLUDING CRO)
New maximum opportunity
30%
15%
15%
20%
20%
FR
Cash STVR
Deferred shares STVR
RR LTVR
PR LTVR
70% is at risk variable remuneration – of this
approximately 80% is subject to deferral
CEO
The chart below illustrates that the CEO’s maximum remuneration opportunity has decreased from $9.75m to $8.375m (-$1.375m or -14%),
largely due to the reduction in the STVR maximum opportunity from 150% to 100% of FR, and the reduction in the LTVR opportunity from
140% to 135% of FR. These reductions (which maintain a strong weighting on LTVR), reflect the increased certainty of the LTVR RR, while
seeking to ensure the total remuneration opportunity remains market competitive.
Maximum remuneration opportunity – CEO ($m)
S ELLIOTT
New maximum opportunity
8.375
Former maximum opportunity
9.750
2.500
2.500
1.250
1.250
1.688
1.688
1.875
1.875
3.500
FR
Cash STVR
Deferred shares STVR
RR LTVR
PR LTVR
Disclosed Executives
The charts below illustrate the significant reduction in maximum remuneration opportunity for Disclosed Executives, primarily due to the
reduction in their maximum variable remuneration opportunity from 402% to 235% of FR. This reduction reflects the various structural
changes – particularly the increased certainty of the LTVR RR component and the ~4% FR structural adjustment.
While the new structure applied for 2022, the Board determined that the structural FR adjustment would not be effective until 2023, and that
the 2022 STVR opportunity would be based on FR had the structural increase been effective for 2022. The Board will consider any market FR
adjustments (where appropriate) in due course.
FR in the ‘former maximum opportunity’ remuneration structures in the charts is as at 1 October 2021.
Maximum remuneration opportunity – Group Executive, Australia Retail ($m)
M CARNEGIE
New maximum opportunity
4.188
Former maximum opportunity
6.024
1.250
0.625
0.625
0.844
0.844
1.200
1.188
1.188
2.448
FR
Cash STVR
Deferred shares STVR
RR LTVR
PR LTVR
Maximum remuneration opportunity – CFO ($m)
F FARUQUI
New maximum opportunity
4.188
Former maximum opportunity
6.024
1.250
0.625
0.625
0.844
0.844
1.200
1.188
1.188
2.448
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Maximum remuneration opportunity – Group Executive, Technology ($m)
G FLORIAN
New maximum opportunity
3.853
Former maximum opportunity
5.522
1.150
0.575
0.575
0.776
0.776
1.100
1.089
1.089
2.244
Maximum remuneration opportunity – Group Executive, Talent & Culture and Service Centres ($m)
K VAN DER MERWE
New maximum opportunity
3.484
Former maximum opportunity
5.020
1.040
0.520
0.520
0.702
0.702
1.000
0.990
0.990
2.040
Maximum remuneration opportunity – Group Executive and CEO, New Zealand ($m)
A WATSON
New maximum opportunity
3.718
Former maximum opportunity
5.415
1.110
0.555
0.555
0.749
0.749
1.079
1.068
1.068
2.201
Maximum remuneration opportunity – Group Executive, Institutional ($m)
M WHELAN
New maximum opportunity
4.891
Former maximum opportunity
7.028
1.460
1.400
CRO
0.730
0.730
0.986
0.986
1.386
1.386
2.856
To preserve the independence of the role and to minimise any conflicts of interest in carrying out the risk control function across the
organisation, the CRO’s remuneration arrangements differ to other Disclosed Executives. While the STVR opportunity (100% of FR) is the same
as the CEO and Disclosed Executives, the LTVR opportunity is different (100% of FR instead of 135% of FR) reflecting the delivery of LTVR as
100% RR (instead of 50% RR and 50% PR). Maximum variable remuneration opportunity has reduced from 270% to 200% of FR for the CRO.
Maximum remuneration opportunity
CRO
New maximum opportunity
33%
17%
17%
33%
67% is at risk variable remuneration – of this approximately 75% is subject to deferral
Maximum remuneration opportunity – CRO ($m)
K CORBALLY
New maximum opportunity
3.750
Former maximum opportunity
4.440
1.250
0.625
0.625
1.250
1.200
1.069
1.069
1.102
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3.5 Remuneration framework overview
The following overview highlights how the executive remuneration framework supports ANZ’s purpose
and strategy, reinforces ANZ’s focus on risk management, and aligns to shareholder value.
ANZ’s purpose and strategy1
Is underpinned by our Remuneration Policy which includes our Reward Principles:
Attract, motivate
and keep great
people
Reward our people for
doing the right thing having
regard to our customers
and shareholders
Focus on how things are
achieved as much as what
is achieved
Fair and simple to understand
With remuneration delivered to our CEO and Disclosed Executives through:
See section 3.3 for overview of remuneration
Fixed remuneration (FR)
Variable remuneration
Short Term Variable Remuneration (STVR)
Long Term Variable Remuneration (LTVR)
Reinforced by aligning remuneration and risk:
Assessing behaviours
based on ANZ’s values
and risk/compliance
standards (including
the BEAR)
Determining variable
remuneration
outcomes with risk
as a multiplier –
impacting outcomes
at both a pool and
individual level
Weighting
remuneration toward
the longer-term with a
significant proportion
at risk
Emphasising risk in
the determination
and vesting of LTVR RR
(see section 5.2.4)
Providing material
weight to non-financial
metrics (particularly
risk) in line with APRA
requirements
Ensuring risk measures
are considered over
a long time horizon
(up to 5 and 6 years)
Determining
accountability and
applying consequences
where appropriate
Strengthening
risk consequences
with clawback
(see section 5.3)
Reinforcing the
importance of risk
culture in driving
sustainable long-term
performance in the
LTVR design
Prohibiting the hedging
of unvested equity
While supporting the alignment of executives and shareholders through:
Substantial
shareholding
requirements
Significant variable
remuneration deferral
up to 5 and 6 years in
ANZ equity
Use of relative and
absolute TSR hurdles
Consideration of cash
profit and economic
profit in determining
the ANZ Incentive
Plan (ANZIP) variable
remuneration pool
Consideration of the
shareholder experience
(in respect of the share
price and dividend) in
determining ANZIP pool
and individual outcomes
While governed by:
The Human Resources (HR) Committee and the Board determining FR and the variable remuneration outcomes for the CEO
and each Disclosed Executive. Additionally, the CEO’s LTVR outcome is also subject to shareholder approval at the AGM.
Board discretion is applied when determining performance and remuneration outcomes (including grant of short and long-term
variable remuneration awards), before any scheduled release of previously deferred remuneration (see section 5.3), before the
vesting of LTVR RR (see section 5.2.4), and in applying any required consequences (see section 6).
1. See the ‘About our business’ and ‘Achieving our strategy’ sections of the Annual Report. ANZ 2022 Annual Report / Remuneration report70 ANZ 2022 Annual Report
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4. 2022 outcomes
Variable remuneration is ’at risk’ remuneration and can range from zero to maximum opportunity. Annual performance objectives are set at the
Group and also at the Divisional/individual level at the start of each year. They are designed to be stretching yet achievable. The HR Committee
and the Board make variable remuneration outcome decisions for the CEO and Disclosed Executives following lengthy and detailed discussions
and assessment, supported by comprehensive analysis of performance from a number of sources. Where expectations are met, STVR is likely
to be awarded around 80% of maximum opportunity. Where performance is below expectations, STVR will be less (potentially down to zero),
and where above expectations, STVR will be more (potentially up to maximum opportunity). LTVR will be awarded at the beginning of the year,
based on maximum opportunity unless the LTVR RR pre grant assessment results in any reduction (and also subject to shareholder approval for
the CEO).
Remuneration outcomes have been presented in the following three ways:
i. Actual remuneration received (see section 4.1): Reflects the actual remuneration received in 2022 (i.e., cash paid and the value of prior
equity awards which vested in 2022).
ii. Year-on-year STVR awarded (see section 4.2): Reflects actual cash and deferred shares components of STVR (or Annual Variable
Remuneration (AVR)/Variable Remuneration (VR) in prior years) awarded in respect of the relevant financial year. As non-cash
components are subject to future vesting outcomes, the awarded value may be higher or lower than the future realised value.
iii. Statutory remuneration (see section 9.1): Reflects remuneration in accordance with Australian Accounting Standards which includes
FR and the amortised accounting value of variable remuneration (not the actual awarded or received value in respect of the relevant
financial year).
4.1 2022 actual remuneration received
This table shows the remuneration the CEO and Disclosed Executives actually received in relation to the 2022 financial year as cash, or in the
case of prior equity awards, the value which vested in 2022. The final column also shows the value of prior equity awards which lapsed/were
forfeited in 2022 (these are the 2018 PR awards which partially met their performance hurdles when tested in November 2021).
FR was increased for the CRO on 1 October 2021 from $1.1m to $1.2m to improve alignment with the market. There were no other market
adjustments to FR for Disclosed Executives in 2022.
Actual remuneration received in 2022 – CEO and Disclosed Executives:
Received value includes the value of prior equity awards which vested in that year
Fixed
remuneration
$
Cash variable
remuneration
$
Deferred variable
remuneration which
vested during the year1,2
$
Actual
remuneration
received3
$
Deferred variable
remuneration which lapsed/
forfeited during the year1,4
$
Total cash
$
CEO and Current Disclosed Executives
S Elliott
M Carnegie
K Corbally
F Faruqui5
G Florian
K van der Merwe
A Watson6
M Whelan
2,500,000
1,200,000
1,200,000
1,164,000
1,100,000
1,000,000
1,062,629
1,400,000
Former Disclosed Executives
930,000
3,430,000
2,570,069
6,000,069
460,000
1,660,000
1,213,496
2,873,496
442,500
1,642,500
775,802
2,418,302
579,575
1,743,575
1,747,173
3,490,748
442,500
1,542,500
400,000
1,400,000
422,742
1,485,371
788,778
831,518
426,037
2,331,278
2,231,518
1,911,408
535,000
1,935,000
1,697,449
3,632,449
S Buggle5
M Hand5
33,000
492,000
n/a
n/a
33,000
492,000
–
33,000
770,215
1,262,215
(1,476,258)
(557,157)
–
(731,262)
(348,210)
(383,026)
(40,188)
(757,400)
–
(348,210)
1. The point in time value of previously deferred remuneration granted as deferred shares/deferred share rights and/or performance rights is based on the one day Volume Weighted Average
Price (VWAP) of the Company’s shares traded on the ASX on the date of vesting or lapsing/forfeiture multiplied by the number of deferred shares/deferred share rights and/or performance rights.
2. The vested value includes 51.6% of the performance rights awarded in November/December 2018 which vested in November/December 2021, noting that for the CEO they were settled
by delivery of shares, which remain subject to a further one-year restriction period. 3. The sum of fixed remuneration, cash variable remuneration and deferred variable remuneration which
vested during the year. 4. The lapsed/forfeited values relate to 48.4% of the performance rights awarded in November/December 2018 which lapsed in November/December 2021 due to the
performance hurdles not being fully met. 5. FR prorated for time as a Disclosed Executive. 6. Paid in NZD and converted to AUD. Year to date average exchange rate used to convert NZD to AUD
as at 30 September for the relevant year.
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4.2 Year-on-year STVR awarded
These tables show a year-on-year comparison of STVR awarded to the CEO (previously referred to as AVR), and Disclosed Executives for the
2021 and 2022 performance periods (noting that for Disclosed Executives the STVR equivalent in previous periods relates to the cash and
deferred shares component of variable remuneration).
2022 remuneration outcomes reflect both the overall performance of the Group and the performance of each individual/Division.
CEO
Year-on-year comparisons of maximum opportunity on a percentage basis (as shown in the below table) are not comparable – as the maximum
opportunity has been reduced from 150% to 125% of STVR target in 2022. However when comparing outcomes as a percentage of target, the
table highlights that despite the CEO’s 2022 STVR outcome being higher as a % of target than 2021 (reflecting his better performance in 2022),
his actual 2022 STVR dollar outcome is lower due to the reduced STVR opportunity in the new remuneration structure.
Year-on-year STVR awarded in the relevant financial year – CEO
Actual STVR
STVR as % of
STVR
maximum
opportunity
$
Total STVR
$
STVR cash
$
STVR deferred
shares
$
Target
opportunity
Maximum
opportunity
2,500,000
1,860,000
930,000
930,000
3,750,000
2,000,000
1,000,000
1,000,000
93%
80%
74%
53%
Financial
year
2022
2021
CEO
S Elliott
Disclosed Executives
• The average STVR outcome for current Disclosed Executives is 78% of maximum opportunity, reflecting the overall ANZ Group
performance assessment of ‘slightly below expectations’ (see section 4.5.3). Outcomes as a percentage of maximum opportunity range
from 71% to 96%, with the variability at the lower end of the range largely due to being behind schedule on building a Group wide non-
financial risk framework (currently more Divisionally focused), weaker than expected revenue performance in Markets and some below
target customer outcomes (in particular delays in the delivery of our digital innovation product ANZ Plus and home loan performance
across the full year), and at the higher end, recognition of the successful execution of the Suncorp Bank purchase agreement and the
progress made on the establishment of the new Non-Operating Holding Company (NOHC) structure.
• For the 2022 Disclosed Executives who were in role for full year 2021 and 2022, the year-on-year STVR dollar outcome has reduced on
average by 31%, primarily due to the lower STVR opportunity in the new structure. For example as shown below, even where performance
as a percentage of target is similar year-on-year, Disclosed Executives are receiving substantially reduced dollar outcomes. However, the
outcomes as a percentage of maximum opportunity appear higher year-on-year because the maximum opportunity has been reduced
from 150% to 125% of target in the new structure.
• Variable remuneration continues to differ both year-on-year and between different executives demonstrating the at risk nature of
this element of remuneration and the variability in Group and individual performance year-on-year. See section 4.4 for details.
Year-on-year comparisons of maximum opportunity on a percentage basis (as shown in the below table) are not comparable – as the maximum
opportunity has been reduced from 150% of the combined variable remuneration target under the previous structure, to 125% of just the STVR
target under the new structure. The 2022 STVR opportunity is significantly lower in 2022 due to the changes in the remuneration structure.
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Year-on-year STVR awarded in the relevant financial year – Disclosed Executives
Actual STVR
(STVR equivalent for 2021)
STVR as % of
STVR
maximum
opportunity1
$
Financial
year
Total STVR
$
STVR cash
$
STVR deferred
shares
$
Target
opportunity
Maximum
opportunity
Current Disclosed Executives
M Carnegie
K Corbally
F Faruqui2
G Florian
K van der Merwe
A Watson3
M Whelan
Former Disclosed Executives
S Buggle2,4
M Hand2
2022
2021
2022
2021
2022
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
1,250,000
920,000
460,000
460,000
2,376,000
1,138,500
569,250
569,250
1,250,000
885,000
442,500
442,500
1,960,200
1,227,600
613,800
613,800
1,212,500
1,159,150
1,150,000
885,000
579,575
442,500
579,575
442,500
2,147,310
1,353,000
676,500
676,500
1,040,000
800,000
400,000
400,000
1,795,860
1,188,000
594,000
594,000
1,108,830
845,483
422,742
422,742
2,135,790
1,374,335
687,167
687,167
1,460,000
1,070,000
535,000
535,000
2,526,480
1,620,300
810,150
810,150
41,250
n/a
n/a
n/a
1,393,920
924,000
462,000
462,000
615,000
n/a
n/a
n/a
2,376,000
1,089,000
544,500
544,500
92%
72%
89%
94%
120%
96%
95%
96%
99%
95%
97%
92%
96%
n/a
99%
n/a
69%
74%
48%
71%
63%
96%
77%
63%
77%
66%
76%
64%
73%
64%
n/a
66%
n/a
46%
1. The 2022 maximum STVR opportunity is based on the Disclosed Executive's new FR (as shown in charts in section 3.4). 2. STVR prorated for time as a Disclosed Executive. 3. Paid in NZD and
converted to AUD. Year to date average exchange rate used to convert NZD to AUD as at 30 September for the relevant year. 4. S Buggle's 2021 and 2022 STVR reflects the period he acted as CFO.
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4.3 Application of Reward
Principles
In considering variable remuneration
outcomes the HR Committee and
Board reflect on the application of ANZ’s
Reward Principles:
• Reward our people for doing the right
thing having regard to our customers
and shareholders: Variable remuneration
should be primarily based on ‘outcomes’
rather than ‘effort’ and proportionate
relative to performance. It also needs to
consider the experience and expectations
of a range of stakeholders (including
shareholders, customers, employees,
community and regulators).
• Attract, motivate and keep great
people: In determining remuneration
outcomes, the Board acknowledge the
importance of balancing performance
with being market competitive to ensure
retention of key talent – particularly in a
competitive talent landscape.
• Focus on how things are achieved as
much as what is achieved: The Board
ensures that appropriate consideration
and weight is given to performance
against objectives (which includes a risk
modifier), a risk standards assessment
(capturing financial and non-financial
risks), and how that performance was
achieved (i.e., in accordance with our
values and purpose).
• Fair and simple to understand:
Variable remuneration should be fair
and consistent through the cycle and
have regard to external influences
outside of management’s control.
4.4 Variable remuneration –
detail
4.4.1 CEO PERFORMANCE,
STVR AND LTVR
Performance
With regard to STVR, the CEO is assessed 50%
on the ANZ Group Performance Framework
and 50% on achievement of individual
strategic objectives aligned to ANZ’s
strategy. Both the ANZ Group Performance
Framework and individual strategic
objectives are agreed by the Board at the
start of the financial year and are stretching.
WEIGHTING OF
FINANCIAL METRICS
STVR
The CEO’s STVR is not formulaic –
outcomes are moderated by the Risk
element of the ANZ Group Performance
Framework and the Board’s judgement
on the appropriate STVR considering all
aspects of performance.
LTVR
TSR (both relative and absolute) continue
to determine the outcome of LTVR PR
(50% LTVR weighting). However, LTVR now
also includes a 50% weighted RR award
that is primarily focused on risk-based
measures (as part of the pre grant and
pre vest assessments – see section 5.2.4).
This ensures LTVR has a material weight
to non-financial measures as required
under the new APRA Prudential Standard
CPS 511 Remuneration.
At the end of the financial year, ANZ’s
performance is assessed against the ANZ
Group Performance Framework, and the
CEO’s performance is also assessed against
this, along with his individual strategic
objectives, the ANZ values (behaviours),
delivery of the BEAR obligations and ANZ’s
risk and compliance standards. In conducting
the CEO’s performance assessment, the HR
Committee seeks input from the Chairman,
CRO (on risk management), CFO (on financial
performance), GE T&C (on talent and culture
matters) and Group General Manager
Internal Audit (GGM IA) (on internal audit
matters). Material risk, audit and conduct
events that have either occurred or come to
light in the year are also considered together
with input from both the Audit Committee
and the Risk Committee of the Board.
The Board has assessed the CEO’s 2022
performance as follows:
ANZ Group
Performance
Framework
Individual
strategic
objectives
=
=
Slightly below
expectations (see
section 4.5.3)
Met expectations
(see Board
assessment below)
ANZ values
= Above expectations
Individual
risk/
compliance
assessment
= Met expectations
Overall
=
Met most but not
all expectations
The Board has considered the CEO’s
performance in determining the
appropriate STVR outcome for 2022.
The Board determined that an STVR
outcome of 74% of maximum
opportunity was appropriate.
•Lead and role model the culture and accountability required to transform ANZ •Enhance the reputation of ANZ across all stakeholder groups •Drive the strategic direction of the organisation with a particular focus on growth, restore Home Lending momentum in Australia and embed our digital transformation, Sustainability, Platforms and Ecosystems • Focus on sound risk management, operational excellence and resilience including system stability, to ensure ANZ has robust and reliable platforms to support long-term growth •Materially progress the productivity initiatives to improve customer and staff experience while driving the bank operating costs towards a materially reduced run rate • Continue to build ExCo effectiveness and succession pipelines for ExCo and CEO 2022 CEO individual strategic objectives ANZ 2022 Annual Report / Remuneration report
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Board assessment of performance on individual strategic objectives:
The CEO, supported by his executive team,
performed well in a challenging
environment. In particular, the CEO led the
team in the achievement of a number of
important outcomes which will transform
and position ANZ for long-term sustainable
performance and growth. These include:
• Successful execution of an agreement
to purchase Suncorp Bank (which is now
subject to regulatory approval), with a
well-supported adjacent capital raising
designed to provide the fairest possible
outcome for all shareholders
• Taking a lead role in developing a new
Australia Commercial strategy – while
also driving operational improvements
in the business
• Launching and consistently
demonstrating the new cultural
behaviours (aligned to our strategy)
• Launching ANZ Plus – a significant step
forward in ANZ’s digital transformation,
laying the foundations for the future of
the retail bank
• Achieving meaningful progress on
environmental sustainability strategies
• De-risking of the business – exiting
non-core customers and products,
improving the quality of our processes
and tightening risk appetite, a major
achievement which sets us up well for
the uncertain future
• Progressing the implementation of a
NOHC structure – including the relevant
regulatory approvals and ensuring ANZ
is ready for implementation early in
the new year (subject to shareholder
approval at the Scheme Meeting
following the 2022 AGM)
While there were some challenges
impacting what was an overall strong
performance year, the CEO ensured the
necessary steps were taken to position
ANZ well for 2023, as evidenced by:
• Driving a reset of our delivery approach
for a new Group wide non-financial risk
framework designed to drive a more
integrated approach across the Group
• Further improvements to home loan
processing capability and capacity, which
contributed to quality growth with a
focus on risk adjusted returns
The CEO role models ANZ’s values. His
focus on reshaping ANZ, leading by
example, contributed to another strong
year of employee engagement at 84%
(compared to the Finance & Insurance
Benchmark of 79%).
He has communicated clearly and
with authenticity, maintained strong
and positive relationships with regulators
and government, and been proactive in
managing our external reputation. As part
of the broader focus on our Group purpose
he has engaged regularly with non-profit
partners, and environmental and other
community groups.
The CEO has a key role in the management
of risk, including active engagement in a
range of risk forums and committees to set
a clear tone in driving a strong risk culture.
There have been ongoing strong outcomes
from risk metrics including the long run loss
rate, however, there were some delivery
challenges which slowed down the
implementation of a Group wide non-
financial risk framework.
The CEO’s risk focus encompasses ensuring
ANZ has stable systems, and robust and
reliable platforms. ANZ’s performance in this
area in 2022 has been solid, with no major
regulatory breaches, positioning us well for
long-term growth (see section 4.5.3
for details).
His continued focus on strong cost
management discipline (i.e., ‘run the bank’
costs were broadly flat), along with
productivity initiatives, has enabled ANZ
to invest at record levels and improve the
customer experience (e.g., simpler home
loan offering in Australia, simpler process
for refinancing loans for small businesses),
and the employee experience (e.g., new
technology platform to enable more
effective and efficient workforce execution).
Executive development continued with the
movement of Farhan Faruqui into the CFO
role in October 2021, and Maile Carnegie to
the position of Group Executive, Australia
Retail in March 2022, following the
separation of the Australia Retail and
Australia Commercial businesses.
Financial performance included strong
revenue momentum across all Divisions and
strong performance on net interest margin
and cost management.
While not all initiatives progressed as
quickly as we would have liked, there were
many positive achievements, and from a
long-term strategy perspective, the CEO has
significantly moved the dial in support of
our future performance and growth.
STVR and LTVR
At the end of the financial year, the HR
Committee makes a recommendation to
the Board for their approval in respect of
the CEO’s STVR outcome.
The CEO’s STVR will vary up or down year-
on-year, it is not guaranteed, and may range
from zero to a maximum opportunity.
The Board determined that an STVR
outcome of $1.86m (74% of maximum
opportunity) was appropriate for 2022
having regard to both the overall
performance of the CEO and also the
overall performance of the Group.
No LTVR award was made for 2022 for the
CEO, as we transition to awarding LTVR
at the beginning of the year rather than
the end. The CEO’s proposed 2023 LTVR
of $3.375m ($3.5m in 2021) is subject to
shareholder approval at the 2022 AGM.
Summary of total remuneration
Awarded remuneration shown below is
significantly lower than 2021 due to nil LTVR
award in 2022 year as we transitioned to the
new remuneration structure and also the
lower STVR award.
Received remuneration is higher in 2022
due to the increased value at vesting of
previously awarded deferred shares which
vested in 2022 and the 51.6% LTVR vesting
outcome in 2022 compared to 43.3% in
2021, noting that the PR which vested in
2022 were settled by delivery of shares
which remain subject to a further one-year
restriction period.
Statutory remuneration reflects the
accounting expense value for 2022 and is
thus different to the remuneration received
in 2022 (which includes prior year awards
which vested).
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Summary of total remuneration – CEO
Awarded
Received1
Statutory2
Fixed
remuneration
$
2,500,000
2,500,000
STVR
$
1,860,000
2,000,000
LTVR
(full face value)
$
n/a3
3,500,000
Total
remuneration
$
4,360,000
8,000,000
Total
remuneration
$
6,000,069
5,752,821
Total
remuneration
$
5,489,133
5,473,399
2022
2021
1. Includes the value of previously awarded STVR deferred shares and LTVR performance rights at the date of vesting. 2. Includes the value of STVR and LTVR that has been expensed in the year.
3. No 2022 LTVR award due to change of awarding LTVR at the start (rather than end) of the year. 2023 LTVR proposal is $3.375m.
Historical STVR and LTVR
This table shows the STVR as a % of maximum opportunity and LTVR vesting outcomes for the CEO over the last five years.
In prior years the maximum STVR opportunity for the CEO was 150% of target, however under the new 2022 structure this has been
reduced to 125% of target, therefore the 2022 STVR % of maximum opportunity shown below of 74% is not comparable with prior years.
If the maximum opportunity had remained at 150% of target, then the 2022 STVR outcome for the CEO (on a like for like basis) would
have equated to 62% of maximum opportunity.
Historical STVR and LTVR – CEO
STVR1 outcome (% of maximum opportunity)
LTVR vesting outcome (% vested)
1. Previously referred to as AVR pre-2022.
4.4.2 DISCLOSED EXECUTIVE
PERFORMANCE
Performance
At the start of each year, stretching
performance objectives are set in the form
of Divisional Performance Frameworks
for each of our Disclosed Executives, in
alignment with the ANZ Group Performance
Framework approved by the Board.
At the end of the financial year, the
performance of each Disclosed Executive1
is assessed against the ANZ Group
Performance Framework (25% to 50%
weighting), their Divisional Performance
Framework, ANZ’s values (behaviours),
delivery of BEAR obligations and ANZ’s
risk and compliance standards.
The ANZ Group Performance Framework
weighting for Disclosed Executives
reinforces the importance of collective
accountability and contribution to Group
outcomes. The respective 2022 weighting
varies based on role focus:
• 50% Group performance weighting:
CFO, GE T&C, and GE Technology
• 25% Group performance weighting:
CRO, GE Australia Retail, GE & CEO
New Zealand, GE Institutional
2018
2019
2020
(post 50%
COVID-19 reduction)
2021
2022
56%
0%
48%
21.8%
33%
0%
53%
43.3%
74%
51.6%
Similar to the ANZ Group Performance
Framework, the Divisional Performance
Frameworks include the key elements
of Financial Discipline and Operational
Resilience, Customer, and People and
Culture, with Risk acting as a modifier.2
The weighting of each element varies
to reflect the responsibilities of each
individual’s role. The Financial Discipline
and Operational Resilience element
weightings range from 20% to 35%.
The HR Committee seeks input from the
CEO, and independent reports from Risk,
Finance, Talent and Culture, and Internal
Audit, and also reviews material risk, audit
and conduct events, and seeks input from
both the Audit Committee and the Risk
Committee of the Board.
The HR Committee reviews and
recommends to the Board for approval
the overall performance outcomes for
each Disclosed Executive.
STVR and LTVR
At the end of the financial year, the CEO
and HR Committee determine STVR
recommendations for each Disclosed
Executive, which are ultimately approved
by the Board3. STVR varies year-on-year in
line with performance – it is not guaranteed
and may be adjusted up or down ranging
from zero to a maximum opportunity.
As highlighted in section 4, performance
against objectives impacts STVR outcomes
(e.g., where expectations are met, STVR is
likely to be awarded around target which
equates to 80% of maximum opportunity).
The degree of variance in individual STVR
outcomes reflect the weighting of the
Group component (i.e., roles with 50%
Group weighting will generally have less
differentiation), and relative performance
of the different areas/individuals,
ensuring appropriate alignment between
performance and reward. The outcomes
demonstrate the at risk nature of STVR, and
that outcomes vary across the Disclosed
Executives and also from year to year. The
average 2022 STVR for Disclosed Executives
is 78% of maximum opportunity (ranging
from 71% to 96%).
Consistent with the CEO, no 2022 LTVR
awards have been made to Disclosed
Executives, as we transition to awarding
LTVR at the start of the 2023 year under the
new executive remuneration structure.
1. Performance arrangements for the CRO are addressed additionally by the Risk Committee. Performance arrangements for the Group Executive and CEO, New Zealand are determined and
approved by the ANZ NZ HR Committee/ANZ NZ Board in consultation with and endorsed by the HR Committee/Board, consistent with their respective regulatory obligations. 2. Except for the
CRO who has a percentage weighting assigned to risk measures. 3. Remuneration arrangements for the Group Executive and CEO, New Zealand are determined and approved by the ANZ NZ
Board in consultation with and endorsed by the Board, consistent with their respective regulatory obligations.
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Historical Disclosed Executive VR
This table shows the VR as a % of maximum opportunity for the executives who were disclosed over the last five years.
In prior years the maximum VR opportunity for Disclosed Executives was 150% of combined VR target, however under the new 2022
structure this has been reduced to 125% of STVR target component only, therefore the 2022 STVR % of maximum opportunity shown
below of 78% is not comparable with prior years.
If the maximum opportunity had remained at 150% of target, then the average 2022 STVR outcome for Disclosed Executives (on a like
for like basis) would have equated to 65% of maximum opportunity (and a range of 59% to 80%).
Historical Disclosed Executive VR
2018
2019
2020
(post 50%
COVID-19 reduction)
2021
2022
STVR1 outcome (average % of maximum opportunity2)
51%
45%
36%
60%
78%
STVR1 outcome (range % of maximum opportunity2)
40% – 60%
0% – 74%
31% – 44%
46% – 66%
71% – 96%
VR PR vesting outcome (% vested)
0%
21.8%
0%
43.3%
51.6%
1. Previously referred to as VR pre-2022. 2. Pre 2022, % of maximum opportunity applied to the full VR due to the combined VR structure for Disclosed Executives in those years.
4.4.3 PR OUTCOMES (CEO AND DISCLOSED EXECUTIVES)
PR granted to the CEO in December 2018 and Disclosed Executives (excluding the CRO) in November 2018 reached the end of their
performance period in November 2021. Based on performance against hurdles, 51.6% of these rights vested (noting that for the CEO they remain
subject to a further one-year restriction period), the remaining 48.4% lapsed and executives received no value for this portion of the award.
PR outcomes
Hurdle
75% relative TSR
Select Financial Services (SFS)
comparator group3
Grant date1
First date
exercisable1
ANZ TSR/
CAGR2 TSR
Over three years
Median TSR/
CAGR2 TSR
threshold target
Upper quartile
TSR/CAGR2 TSR
maximum target % vested
22-Nov-18
22-Nov-21
17.49%
5.60%
41.02%
68.85%
25% absolute CAGR2 TSR
22-Nov-18
22-Nov-21
5.52%
10%
15%
0%
Overall
PR outcome
51.6% vested4
and 48.4%
lapsed
1. Grant date for the CEO was 19 December 2018, and date first exerciseable was 19 December 2021. The CEO’s performance period was the same as the performance period for Disclosed
Executives. 2. Compound Annual Growth Rate (CAGR). 3. See section 5.2.5 for details of the SFS comparator group. 4. For the CEO, remain subject to a further one-year restriction period.
4.5 ANZIP variable remuneration pool and Group performance
4.5.1 ANZIP VARIABLE
REMUNERATION
The ANZ Incentive Plan (ANZIP) is the
variable remuneration plan operating
across ANZ.
With the exception of the CEO’s STVR,
individual variable remuneration outcomes
for all other employees including STVR for
Disclosed Executives are funded under
ANZIP. The Board decides the CEO’s variable
remuneration outcomes separately to help
mitigate potential conflicts of interest.
See section 8.1.3.
At the end of each financial year the Board
exercise their judgement to determine a fair
and reasonable ANZIP pool. An assessment
of financial performance guides the pool
range but it is not a formulaic outcome. The
Board considers a range of factors including:
• The ANZ Group Performance Framework
assessment (see section 4.5.3).
• The quality of earnings and operating
environment.
• The shareholder experience during 2022
(e.g., shareholder returns and dividend
comparison with prior periods).
• Our Reward Principles (e.g., attract,
motivate and keep great people).
4.5.2 ANZ GROUP PERFORMANCE
FRAMEWORK
The ANZ Group Performance Framework
is approved by the Board at the start of
each year. The key objective of our Group
Performance Framework is to enable
aligned focus across the organisation on
delivering the critical outcomes that matter
most in delivering on our strategy. It plays a
key role to:
• message internally what matters most;
• reinforce the importance of sound
management in addition to risk, customer,
people and financial outcomes; and
• inform focus of effort, prioritisation
and decision-making across ANZ.
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4.5.3 ASSESSMENT AGAINST THE ANZ GROUP
PERFORMANCE FRAMEWORK FOR 2022
As managing risk appropriately is fundamental to the way ANZ
operates, risk forms an integral part of the assessment, directly
impacting the overall ANZ Group Performance Framework
outcome (a modifier ranging from 0% to 110% of the ANZ Group
Performance assessment).
Overall, this was another volatile year
with a lot of economic uncertainty.
COVID continued to provide challenges
operationally and for our customers. The
hard work de-risking and simplifying the
Bank over the previous 5 years and the
lessons from COVID in 2020 and 2021
meant ANZ was well positioned to manage
through a fast-changing environment.
Despite these challenging circumstances,
the achievement of many important
initiatives position us well for 2023 and
beyond (e.g., the agreement to acquire
Suncorp Bank which will add more than
one million retail customers and provide
a platform for growth in the fast-growing
Queensland market, the progress made
on establishing the NOHC structure
which if approved by shareholders will
provide greater flexibility to grow value for
shareholders, the new Australia Commercial
strategy, sustainability investments),
Australia home lending has also been
returned to quality growth.
Despite many achievements, we assess
our 2022 performance as slightly below
expectations primarily due to the
slower than expected progress on the
build of a Group wide non-financial risk
framework (the current framework is more
Divisionally focused), and the later than
expected launch of our digital innovation
product ANZ Plus.
The below table outlines ANZ’s
performance objectives in 2022 and
provides a summary of outcomes for each
of the key performance categories to inform
the overall assessment for 2022.
Performance against expectations is
evaluated for each category using a
holistic assessment of progress and
outcomes delivered in line with our
Group strategic priorities and annual
focus areas.
A range of objective indicators and
subjective factors are considered including
management input on work undertaken,
evidence of outcomes realised and lessons
learned, and with consideration given to
the operating, regulatory and competitive
environment.
RISK modifier 0 to 110%Overall assessmentSlightly belowOVERALL Group PerformanceAssessmentSlightly below expectations – but many objectives met or above targetCUSTOMER 35% weightOverall assessmentBelowPEOPLE & CULTURE30% weightOverall assessmentMetFINANCIAL DISCIPLINE & OPERATIONAL RESILIENCE 35% weightOverall assessmentSlightly above ANZ 2022 Annual Report / Remuneration report
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Risk overall assessment:
Slightly below
Performance against
objectives
Below
Met
Above
Performance against
objectives
Below
Met
Above
Risk
(modifier 0% to 110%)
Performance commentary
GROUP STRATEGIC PRIORITY:
Maintain risk discipline focused on good customer and regulatory outcomes.
With a constantly evolving economic, health, regulatory and political environment, our continued focus on strong risk
discipline has become even more important, as evidenced by:
•
•
the integration of Geo-Political Risk Capability into ANZ to inform of emerging risks, including development of contingency
plans for medium to higher risk jurisdictions with trigger events;
the strengthening of our climate risk management capabilities (e.g., improving our credit counterparty climate risk assessments
to fulfil APRA’s Climate Vulnerability Assessment);
• solid progress on implementing the Royal Commission recommendations (on track) and the Group wide capital efficiency program.
There were no major regulatory, credit, audit or market breaches. The de-risking of the business continued with further
strengthening of the balance sheet and exiting non-core businesses. We continued to improve our risk infrastructure and
processes, although did not make the progress we had hoped with regards to a new Group wide non-financial risk framework
which we consider to be an important foundation for the future. The APRA imposed operational risk overlay of $500m remained.
We rightly hold ourselves to a very high standard with respect to risk in particular, and therefore as we didn’t achieve all
expectations we have evaluated our Risk performance as slightly below target.
ANZ was measured by S&P’s 2022 Corporate Sustainability Assessment1, and was ranked in the 96th percentile globally in
the banking sector (as at 23 September 2022) and commended in areas including financial wellbeing and social and
environmental reporting.
2022 focus areas
Performance commentary
Deliver major
regulatory
commitments
• Strong progress has been made against major compliance regulatory commitments
(e.g., APRA Risk Governance, Culture and Accountability Self-Assessment Attestation, ongoing
enhancement of our Anti-Money Laundering program, APRA Capital Reforms Program, Reserve
Bank of New Zealand standard BS11), however the complexity and magnitude of change with
programs such as BS11 has impacted meeting some of our stretch delivery timeframes.
• While each Division manages its operational risks and there has been investment in de-risking the
businesses, we did not make the progress we had hoped with regards to building and embedding
a new Group wide non-financial risk framework which we consider to be an important foundation
for the future.
Strengthen risk
culture and progress
towards target state
• There were a number of positive actions influencing risk culture including embedding the
ANZ behaviours and raising awareness of risk culture through various channels and longer-term
strategic activities. While we have advanced with the delivery of our Group wide non-financial
risk framework this is not yet complete and so the target risk culture was not met in 2022.
Deliver more
effective controls
to better protect
the confidentiality,
integrity and
availability
of systems
Continue to
strengthen our
reputation with
the community
and regulators
• The technology risk rating has improved through an enhanced control environment and
uplifting capability. This has improved availability of systems and prevention, detection and
mitigation of internal and external security threats.
• A significant level of training support on how to manage technology risk was provided to
>1,000 employees across all Divisions.
• Cloud initiatives have supported the migration of ANZ applications to Cloud technologies in
a safe and compliant manner, and the strengthening of ANZ’s Cloud policy and framework.
• Our regulatory and community reputation remains strong.
• ANZ – particularly the CEO – engages regularly with non-profit partners, environmental groups
and other community groups/leaders in line with our purpose to ‘shape a world where people
and communities thrive’.
• Released fifth Reconciliation Action Plan focused on improving economic participation,
supporting organisations to build capacity and individuals to achieve financial wellbeing.
• ANZ’s ‘Speak Up’ index from the August 2022 Engagement Survey continued to be high at 83%,
reflecting sustained efforts over several years to encourage a speak up and risk culture where
people feel they can challenge each other respectfully.
1. Evaluates the sustainability performance of thousands of companies trading publicly, operated under a strategic partnership between S&P Dow Jones Indices and RobecoSAM (Sustainable
Asset Management).
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Customer
(35% weight)
Performance commentary
Customer overall
assessment:
Below
Performance against
objectives
GROUP STRATEGIC PRIORITY:
Deliver great customer outcomes, focused on improving the financial wellbeing and experience of priority segments.
Below
Met
Above
Performance against
objectives
Below
Met
Above
We continued to demonstrate our commitment to improve the financial wellbeing (FWB) of our customers
(a core component of our business strategy), as evidenced by:
• greater than 850,000 FWB hub visits in Australia and New Zealand in 2022;
• a number of major campaigns to drive FWB (e.g., 2022 Australian Open campaign, the launch of a new brand
platform ‘For Financial Wellbeings’, and new KiwiSaver ‘Long term plans’ campaign to get people thinking about
their long term FWB), and the launch of ANZ Plus which has been designed around FWB.
Underlying performance in New Zealand and Institutional continued to be strong as we further embedded leading
market positions (e.g., New Zealand Brand Consideration at all-time highs at >53%, and Australia Institutional
continued to achieve various #1 customer ratings). Our Australia Commercial strategy detailing how ANZ is going
to be the best bank for those who want to start and run a small business in Australia, was endorsed by the Board.
Following a reduction in market share in the first half of the financial year, Australian home loan capability and capacity
was rebuilt during the year while retaining a focus on risk and return. Performance was solid and we exit 2022 with
decent momentum. Our launch of a new retail banking platform ANZ Plus has attracted ~50,000 customers since the
formal marketing launch in July 2022. We are on track to launch our ANZ Plus Home Loan in 2023. Despite this success,
it is later than we had hoped as we grappled with resourcing challenges due to COVID. We therefore evaluate our
overall performance with respect to Customer as below target.
While not included in the 2022 objectives, there were a number of important initiatives in 2022 designed to deliver
great customer outcomes in the future (e.g., agreement to acquire Suncorp Bank).
2022 focus areas
Performance commentary
Improve time to first
decision for home
loans in Australia
• Progress made on our home loan processing challenges in Australia – with median time
to first decision for Broker and Mobile Lending applications reduced from 7.4 days in 2021
to 3.4 days in 2022.
• However, we recognise more needs to be done in 2023 to deliver faster and more consistent
application response times for our customers.
Embed customer
digital innovation
propositions
• Manage My Money: ANZ Plus was launched in July 2022 and is now available in the Apple
and Android app stores. Post a low key start, momentum improved towards the end of 2022
as marketing and Branch activity commenced.
• Buy and Own a Home: Good progress made in delivering the supporting software.
Strengthen and
sustain complaints
management
practices
• AU: All actions arising from ASIC’s 2019 review and 2021 regulatory changes completed, with
a continuous improvement approach from 2023 (focusing on complaint capture at frontline,
quality and fairness of complaint management, and the use of complaint data).
• NZ: Complaint numbers consistent over 2022, however problem resolution satisfaction
declined. Service complaints due to wait times (in both the Fraud and Online Store teams)
increased, as volumes elevated in a challenging resourcing environment.
Accelerate platforms,
markets and
sustainability
strategies within
Institutional
• Platforms: Strong progress on Platforms as a service including digital assets: AUD/NZD
clearing services is a key pillar with continued customer onboarding and implementation
of SWIFT Global Payments Invitation (GPI). Our Platform propositions (Agency, Clearing and
Cash Management) continued to deliver high returns. Successful proof of concepts with
our A$DC Stablecoin, including tokenised carbon trading in the digital assets space.
• Markets: Commencement of in-house US Private Placements resulting in delivery of
additional revenue.
• Sustainability: Strong progress on delivering multi-billion dollar sustainable financing, with
continued customer recognition for delivering sustainability solutions: Established a strategic
partnership with Pollination, while commencing Project Wheatbelt (carbon farming and
community regeneration).
Strengthen position
as a leading
Sustainability bank
• Peter Lee2 #1 Lead Sustainability Provider for Australia and New Zealand and Kanga News
Global Coverage House of the Year – Sustainability and Australian Sustainability Debt
House of Year.
2. Peter Lee Associates 2022 Large Corporate and Institutional Relationship Banking surveys, Australia and New Zealand.
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People & Culture
overall assessment:
Met
Performance against
objectives
Below
Met
Above
Performance against
objectives
Below
Met
Above
People & Culture
(30% weight)
Performance commentary
GROUP STRATEGIC PRIORITY:
Build a culture where our diverse teams are engaged and optimised for success.
Our purposeful and continued focus on leadership and culture in one of the most challenging labour market
environments in many years, is evidenced by our engaged workforce and recognition as a great place to work:
• 84% engagement index3 outcome (compared to Global Finance & Insurance average of 79%).
• Awarded most popular graduate program in Australia at AFR’s “Top 100 Graduate Employers” awards and #1 globally
in SWOOP Analytics’ 2021 Yammer Benchmarking for large firms.
• Equal #1 position amongst major bank peers in Glassdoor4 ratings.
2022 was another successful year, and our focus on purpose and values delivered strong outcomes with regards to
talent retention and further building key skills required for the future. Gender diversity continued to improve although
not at the same strong pace we experienced in previous years. Overall, we delivered People & Culture on target.
Strategic initiative highlights include:
• Launching and embedding our simplified culture behaviours.
• Piloting a new leadership program to improve leadership capability.
• Supporting employees to build new learning habits, with ~9,600 employees using our key digital learning platform
each month.
• Strong progress on our Talent & Culture (T&C) technology uplift program to improve and simplify how our people
interact with T&C services and systems.
2022 focus areas
Performance commentary
Drive a culture of
performance
Our focus was on simplifying expectations, and supporting our teams, whilst refining where
and how we work through the:
Attract, retain and
develop people
with the critical
skills we need to
reinvent banking
Build the foundations
for long-term,
sustainable
improvement in
gender diversity
• launch of a simplified set of culture behaviours to help us achieve our purpose and strategy –
with support for our people to understand them in practice.
• provision of ongoing COVID support, including delivery of programs to facilitate a safe
and effective return to office, and targeted webinars and content aligned to wellbeing and
mental health.
Developing
• Executive Leadership Series launched to upskill leaders on critical topics linked to the Bank
we’re Building.
• Customer Coaching program pilot commenced with 300 participants across Australia and
New Zealand.
• A more holistic Career Programs strategy developed.
Attracting
• Recruitment of >750 permanent engineers critical to delivering our strategy and active
management of plans to strengthen data, digital and delivery expertise.
• Leveraging campaigns, talent market places and other strategic sourcing techniques to
attract in demand talent.
Retaining
• Retention hotspots identified. A range of interventions implemented to address attrition
rates driven by an extremely tight labour market.
• Overall women in leadership (WIL) was at 35.9%, up slightly (0.6%) on last year (with intense
competition for talent and tight discipline over FTE impacting the degree of uplift). Positively,
WIL in revenue generating roles increased from 28% to 30%.
• Good progress was made in 2022 in building the foundations to improve gender diversity
outcomes over the long-term, including:
– Progress against Gender Action Plan and roll out of the Diversity & Inclusion playbook.
– Recruitment of 57% females into the Australian graduate program.
– Update of executive promotion process to improve gender diversity.
– Achievement of Family Inclusive Workplace certification.
3. Based on a new research-based engagement index. 4. Glassdoor is a website where employees and former employees anonymously review companies and their management.
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Financial Discipline &
Operational Resilience
overall assessment:
Slightly above
Performance against
objectives
Below
Met
Above
Performance against
objectives
Below
Met
Above
Financial Discipline & Operational Resilience
(35% weight)
Performance commentary
GROUP STRATEGIC PRIORITY:
Run core businesses well, focused on delivering sustainable growth and operational improvements.
Despite the ongoing challenges in the environment, ANZ delivered strong financial outcomes which reflect the
execution of our long-term strategy and the benefits of our diversified portfolio of businesses.
Strong margin and lending momentum was evident across all Divisions, with a disciplined focus on quality growth and
risk-adjusted returns. Within the Australian Home Loans business, further improvements to operational capacity and
process resilience helped deliver consistently faster turnaround times and led to strong volume growth momentum
in the second half of the financial year.
Costs were again well managed. Despite the emergence of inflationary pressures, ‘run the bank’ costs were broadly flat as
we continued to reduce operational complexity and simplify the business. This enabled continued high levels of investment
in the business, allowing for progress on growth and productivity initiatives, such as ANZ Plus and Cloud migration.
We continued to prudently manage risk. The low level of individual provisions is a function of ongoing portfolio credit
quality improvements, while the collective provision balance appropriately factors in the uncertain domestic and
global economic outlook. Our capital position remains strong, enabling us to profitably grow the balance sheet and
fund the acquisition of Suncorp Bank.
Overall, the performance on Financial Discipline & Operational Resilience was slightly above target.
2022 focus areas
Performance commentary
Deliver Group
Economic Profit to
plan or better in a
high-quality manner
• On a cash continuing basis, Economic Profit5 of $1,080m was generated in 2022, up 81% on prior
year. Additionally, cash profit from continuing operations increased 5%, profit before provisions
increased 7% and ROE increased 47 bps reflecting a strong outcome for shareholders.
• Excluding large/notable items6, revenue grew 2% for the financial year benefiting from
disciplined volume growth and margin management across all our businesses. While our
Markets customer franchise performed strongly, lower balance sheet trading income caused
by volatile market conditions saw total Markets revenue fall. For second half, revenue grew
10% with strong exit rate momentum.
• Cost management remained disciplined despite inflationary pressures, with ‘run the bank’
costs broadly flat year-on-year. Overall costs increased, a factor of continued high levels of
investment to grow and simplify the business and meet our regulatory and compliance
obligations, and a higher proportion of investment spend being directly expensed.
• The credit quality of our lending portfolio remains strong, with long-run loss rates continuing
to decline and low levels of individual provisions in 2022.
• Capital and liquidity continued to be well managed. CET1 (level 2) of 12.3% remains above
regulatory minimums, while enabling profitable balance sheet growth and completing a
$3.5bn capital raise to partially fund the acquisition of Suncorp Bank.
Drive BAU
productivity
improvements
• Incremental ‘run the bank’ cost savings of $250m were delivered in 2022 via the Accelerated
Strategy program, enabling ‘run the bank’ costs to remain broadly flat.
• The savings were achieved via a series of initiatives focusing on the continued move to a
modern Cloud-based technology architecture, greater digital adoption for customers and
employees and more streamlined business processes.
Restore Australia
home lending
momentum
• Australia home lending volumes +4.9bn (or +1.8%) in 2022. Additional operational capacity
and process resilience has seen home loan application volumes improve over the course of
the year, with the majority of FUM growth delivered in the second half of the year, and the
strongest FUM growth in the month of September.
Progress further on
Cloud migration
journey
• Our technology continues to be modernised and we have exceeded targets with more
than 12,000 systems migrated to Cloud or decommissioned (target 9,000), with 31% of
applications now on Cloud.
Demonstrate progress
towards improving
our legal structure
• Well progressed on the NOHC legal restructure with preparation activities on track to
implement in 2023, subject to receipt of all regulatory and shareholder approvals.
5. Economic profit is a risk adjusted profit measure used to evaluate business unit performance and is not subject to audit by the external auditor. Economic profit is calculated via a series of
adjustments to cash profit with the economic credit cost adjustment replacing the accounting credit loss charge; the inclusion of the benefit of imputation credits (measured at 70% of Australian
tax) and an adjustment to reflect the cost of capital. 6. Large/notable items include the impact of divestments, merger and acquisition related items, customer remediation, litigation, restructuring,
withholding tax, lease modification and Asian Associate items.
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Overall
Despite a strong outcome in Financial Discipline & Operational Resilience, and on target performance for People &
Culture, some areas for improvement in Customer and slower than expected progress in regards to building a Group
wide non-financial risk framework in line with our high expectations, resulted in an overall Board assessment of slightly
below target. However, the Board recognised that many objectives were met or exceeded in difficult circumstances,
and several important achievements (e.g., Suncorp Bank purchase agreement, NOHC, Cloud) have positioned us well
for the long-term.
ANZ Group Performance
assessment:
Slightly below expectations
Below
Met
Above
4.5.4 ANZ PERFORMANCE OUTCOMES
ANZ’s financial performance 2018–2022
As highlighted in section 4.5.1, when determining variable remuneration outcomes for the CEO, Disclosed Executives and employees a range
of different financial indicators are considered. The Group uses cash profit1 as a measure of performance for the Group’s ongoing business
activities, as this provides a basis to assess Group and Divisional performance against earlier periods and against peer institutions. The
adjustments made in arriving at cash profit are included in statutory profit which is subject to audit. Although cash profit is not audited, the
external auditor has informed the Audit Committee that the cash profit adjustments have been determined on a consistent basis across each
period presented.
Statutory profit has increased 16% compared to the prior financial year, while cash profit from continuing operations has increased 5%. Part
of the improvement has been driven by fewer one-off charges and divestment losses in the prior financial year. Underlying performance
reflects stronger revenue, a focus on investing for growth.
During 2022 the Group completed a $1.5bn share buy-back to return surplus capital to its shareholders and announced the proposed
acquisition of Suncorp Bank to accelerate the growth of our Australia Retail and Australia Commercial businesses, anticipated to complete
in calendar year 2023 (subject to regulatory approval). The expected acquisition will be partly funded by the $3.5bn equity raise in 2022.
See ‘Note 24 Shareholders’ Equity’ of the Annual Report.
The table below provides ANZ’s financial performance, including cash profit, over the last five years.
Statutory profit attributable to ordinary shareholders ($m)
Cash profit1 ($m, unaudited)
Cash profit – Continuing operations ($m, unaudited)
Cash profit before provisions – Continuing operations ($m,
unaudited)
Cash ROE (%) – Continuing operations (unaudited)
Cash EPS – Continuing operations (unaudited)2
Share price at 30 September ($)
(On 1 October 2017, opening share price was $29.60)
Total dividend (cents per share)
Total shareholder return (12 month %)
2018
6,400
5,805
6,487
9,966
11.0
243.5
28.18
160
0.6
2019
5,953
6,161
6,470
9,958
10.9
220.2
28.52
160
9.2
2020
3,577
3,660
3,758
8,369
6.2
128.7
17.22
60
(36.9)
2021
6,162
6,181
6,198
8,396
9.9
216.5
28.15
142
70.7
2022
7,119
6,496
6,515
8,968
10.4
228.8
22.80
146
(14.0)
1. Cash profit excludes non-core items included in statutory profit with the net after tax adjustment a reduction to statutory profit of $623m for 2022, made up of several items. It is provided to
assist readers understand the results of the core business activities of the Group. 2. Cash earnings per share has been restated to reflect the bonus element of the share entitlement issue in 2022,
in accordance with AASB 133 Earnings per Share.
ANZ TSR performance (1 to 10 years)
The table below compares ANZ’s TSR performance against the median TSR and upper quartile TSR of the PR Select Financial Services (SFS)
comparator group1 over one to ten years, noting that for this table TSR is measured over a different timeframe (i.e., to 30 September 2022)
to the performance period for our PR.
• ANZ’s TSR performance was above the median TSR of the SFS comparator group1 when comparing over three and five years; and
• below the median over one year and ten years.
ANZ (%)
Median TSR SFS (%)
Upper quartile TSR SFS (%)
Years to 30 September 2022
1
(14.0)
(12.6)
8.4
32
(7.3)
(14.1)
25.5
5
0.2
(2.0)
51.2
10
59.5
88.4
166.6
1. See section 5.2.5 for details of the SFS comparator group. 2. The outcomes for PR granted in November/December 2018 and tested in November 2021 are detailed in section 4.4.3.
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5. 2022 executive remuneration structure and delivery
There are two core components
of remuneration at ANZ – FR and
at risk variable remuneration.
In structuring remuneration, the Board
aims to find the right balance between
fixed and variable remuneration (at risk),
the way it is delivered (cash versus deferred
remuneration) and appropriate deferral
time frames (the short, medium and
long-term).
The Board sets (and reviews annually) the
CEO and Disclosed Executives’ FR based
on financial services market relativities and
reflecting their responsibilities, performance,
qualifications and experience. The annual
market review of FR initially scheduled
for September 2022 has been deferred
until early 2023 to ensure the Board has
a clearer picture of the impact of any
remuneration changes in the market as a
result of APRA’s new Prudential Standard
CPS 511 Remuneration.
The CEO and Disclosed Executives’
variable remuneration is comprised of
STVR and LTVR consistent with external
market practice.
Variable remuneration is designed to
focus our CEO and Disclosed Executives
on stretching performance objectives
supporting our business strategy, risk
management and the delivery of long-
term stakeholder value.
Variable remuneration outcomes are based
on a range of measures (as illustrated
below), with material weight provided to
non-financial measures in accordance with
Prudential Standard CPS 511 Remuneration.
Our variable remuneration approach
has a strong focus on driving long-term
sustainable outcomes for shareholders. For
example, STVR outcomes include a number
of objectives that are considered key drivers
of shareholder value, and the significant
weighting to the LTVR component (>60%
of VR) as well as 50% of STVR delivered as
ANZ shares, aligns a large proportion of
executive remuneration to the shareholder
experience (in respect of the share price
and dividend).
STVR
Mix of financial and non-financial measures
LTVR RR
Mostly non-financial
LTVR PR
Financial
Additional financial and
non-financial overlays
considered by the Board
in determining Group and
individual performance
and the size of the ANZIP
pool include:
• Broader financial
performance (beyond
scorecard measures)
• The quality of earnings
and operating
environment
• The shareholder
experience (e.g.,
share price growth
and dividend
comparison with
prior periods)
ALIGNED TO SHAREHOLDER EXPERIENCE
Prudential Soundness
TSR
• 75% relative TSR
Rewards for performance
relative to that of SFS
comparator group
• 25% absolute TSR
Ensures there is a
continued focus on
providing positive
growth – even when
market is declining
Measures absolute CAGR
• Capital ratio and liquidity
prudential minimums
Risk Measures
• Material risk outcomes
Considers all risk types
including capital adequacy
risk, compliance risk,
credit risk, liquidity and
funding risk, market risk,
operational risk, strategic
risk, technology risk and
conduct risk
• APRA active supervision
• Risk culture
Key Individual Assessment Inputs
ANZ values
Behaviours
Risk/compliance
Including material events
BEAR obligations
ANZ Group
Performance
Framework
25%-50% weighting
Individual strategic
objectives/Divisional
Performance Framework
50%-75% weighting
Control
function input
Risk, Finance,
T&C, Audit
FY22 ANZ Group Performance Framework
Objectives below are examples of key drivers of shareholder value
RISK (MODIFIER)
• Deliver major regulatory
Maintain risk discipline focused on good
customer and regulatory outcomes
commitments
• Strengthen risk culture
CUSTOMER (35%)
Deliver great customer outcomes,
focused on improving financial
wellbeing and experience of
priority segments
•
Improve time to first decision for
Australia home loans
• Embed digital value propositions
• Accelerate platforms, markets and
sustainability strategies within
Institutional
PEOPLE & CULTURE (30%)
Build a culture where our diverse
teams are engaged and optimised
for success
• Drive a culture of performance
• Attract, retain and develop
people with critical skills to
reinvent banking
FINANCIAL DISCIPLINE
& OPERATIONAL
RESILIENCE (35%)
Run core businesses well,
delivering sustainable growth
and operational improvements
• Deliver economic profit to plan or
better in a high-quality manner
with sustainable returns
• Restore Australia home lending
momentum and sustainably grow
market share in target segments
STVR and LTVR provide material weight to non-financial measures as per CPS 511
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By deferring a significant portion of variable remuneration (79% of maximum opportunity for the CEO and Disclosed Executives and 75%
for the CRO), we seek to ensure alignment with shareholder interests, to deliver on ANZ’s strategic objectives, and to ensure a focus on
long-term value creation. Deferred variable remuneration has significant retention elements, and most importantly, can be adjusted
downwards, including to zero, allowing the Board to hold executives accountable, individually or collectively, for the longer-term impacts
of their decisions and actions.
Board discretion is applied when determining all CEO and Disclosed Executive variable remuneration outcomes including:
• STVR and LTVR outcomes for each financial year;
• LTVR vesting outcomes (pre vest assessment);
• Consideration of malus or further deferral before any scheduled release of previously deferred remuneration;
• Consideration of clawback for up to two years post payment or vesting of variable remuneration from 2022 onwards. See section 5.3.
5.1 Remuneration mix
As highlighted in section 3, the CEO and Disclosed Executives now have an aligned remuneration mix (30% FR, 30% STVR and 40% LTVR
at maximum opportunity), and structure (with the exception of longer deferral for the CEO in line with APRA’s deferral requirements).
CEO
This chart below highlights that despite the reduction in total remuneration opportunity, the LTVR component has only reduced slightly
to reinforce the long-term focus and alignment to the shareholder experience.
Remuneration mix – CEO ($m)
Remuneration mix – CEO ($m)
Minimum opportunity
2.500
New maximum opportunity
8.375 (45% cash, 55% equity)
Former maximum opportunity
9.750 (45% cash, 55% equity)
2.500
2.500
30%
2.500
26%
1.250
30%
1.875
38%
1.250
1.688
40%
1.688
1.875
3.500
36%
FR
Cash STVR
Deferred shares STVR
RR LTVR
PR LTVR
Disclosed Executives
The chart below highlights the significant (~30%) reduction in maximum opportunity for Disclosed Executives (i.e., -$1.837m in this
example). Under the former combined VR structure the maximum opportunity of 150% was applied to the combined VR, while under
the new structure the maximum opportunity has been reduced to 125% and is applied to the STVR only.
Remuneration mix – CEO ($m)
Remuneration mix – Disclosed Executives1 ($m)
Minimum opportunity
1.250
New maximum opportunity
4.188 (45% cash, 55% equity)
Former maximum opportunity
6.024 (40% cash, 60% equity)
1. Excluding CRO.
1.250
1.250
30%
1.200
20%
0.625
30%
1.188
39%
0.625
0.844
40%
0.844
1.188
2.448
41%
FR
Cash STVR/VR
Deferred shares STVR/VR
RR LTVR
PR LTVR/VR
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CRO
To preserve the independence of the role
and to minimise any conflicts of interest in
carrying out the risk control function across
the organisation, the CRO’s remuneration
arrangements differ to other Disclosed
Executives.
While the STVR opportunity (100% of FR)
is the same as the CEO and Disclosed
Executives, the LTVR opportunity is
different (100% of FR instead of 135% of FR)
reflecting the delivery of LTVR as 100% RR
(instead of 50% RR and 50% PR). Maximum
variable remuneration opportunity has
reduced from 270% to 200% of FR for
the CRO. The remuneration mix is 33.3%
FR/33.3% STVR/33.3% LTVR.
Note for both Disclosed Executives and
the CRO, as the Board decided to defer
payment of the ~4% FR structural increase
for Disclosed Executives to 2023, excluding
the FR increase, the 2022 actual maximum
opportunity remuneration mix for Disclosed
Executives is 29% FR/30% STVR/41%
LTVR (and for the CRO 32% FR/34%
STVR/34% LTVR).
5.2 Variable remuneration
delivery
Variable remuneration for the CEO and the
Disclosed Executives (excluding the CRO)
is delivered as follows:
• STVR as 50% cash and 50% shares
deferred equally over years 2 and 3; and
• LTVR as RR and PR deferred over:
– year 4 (33%), year 5 (33%) and year 6
(34%) for the CEO; and
– year 4 (50%) and year 5 (50%) for
Disclosed Executives.
Both RR and PR are tested against the
relevant performance condition (see
section 5) at the end of the four-year
Element
Detail
performance period and are then
subject to additional holding period(s)
until the completion of the respective
deferral periods.
At target performance, 63% of variable
remuneration for the CEO and Disclosed
Executives, and 56% of variable
remuneration for the CRO will be deferred
for at least four years (from the date the
Board approved the variable remuneration
in October (and the date shareholders
approve the CEO’s LTVR)), noting that this
complies with the BEAR minimum deferral
requirement of 60% for the CEO and 40%
for Disclosed Executives. If the CEO receives
above target STVR, the amount above
target will be delivered as 40% cash and
60% deferred shares (20% year 4, 20% year
5, 20% year 6) to ensure compliance with
the minimum deferral requirements with
respect to BEAR and APRA’s Prudential
Standard CPS 511 Remuneration.
Before any scheduled release of deferred
remuneration, the Board considers whether
malus should be applied to previously
deferred remuneration (or further deferral
of vesting) for the CEO and Disclosed
Executives. The Board will also consider
whether clawback should be applied to
variable remuneration granted for the 2022
financial year and beyond. See section 5.3.
5.2.1 STVR CASH – CEO AND
DISCLOSED EXECUTIVES
The cash component of STVR is paid
to executives at the end of the annual
Performance and Remuneration Review
(December 2022), and from 2022 is subject
to clawback for two years post payment.
5.2.2 STVR DEFERRED SHARES –
CEO AND DISCLOSED EXECUTIVES
By deferring 50% of an executives’ STVR
as deferred shares over years two and
three (and it remaining subject to malus
and clawback), we enable a substantial
amount of their STVR to be directly linked
to delivering shareholder value. We grant
deferred shares in respect of performance
for the 1 October to 30 September financial
year in late November each year.
For deferred variable remuneration for the
CEO and Disclosed Executives, we calculate
the number of deferred shares to be
granted based on the VWAP of the shares
traded on the ASX in the five trading days
leading up to and including 1 October (i.e.,
in line with the beginning of the financial
year). Allocations prior to the 2022 financial
year are based on the VWAP in the five
trading days leading up to and including
the date of grant. The VWAP used for
allocation varies from the fair value VWAP
used for disclosure and expensing purposes
(i.e., one-day VWAP at the date of grant).
In some cases, we may grant deferred share
rights to executives instead of deferred
shares. Each deferred share right entitles
the holder to one ordinary share.
5.2.3 LTVR – CEO AND
DISCLOSED EXECUTIVES
LTVR reinforces the focus on achieving
longer term strategic objectives, driving
outperformance relative to peers, and
creating long-term sustained value for all
stakeholders. The following table details
design features common to both LTVR
RR and PR.
As part of the transition to the new
remuneration structure there is no 2022 LTVR
grant, however this section details the LTVR
approach that will apply to the 2023 LTVR
award to be granted around November/
December 2022.
Description
RR and PR provide a right to acquire one ordinary ANZ share at nil cost – as long as applicable time and performance
conditions are met. Their future value may range from zero to an indeterminate value. The value depends on
performance against the applicable performance condition and on the share price at the time of exercise.
Performance
period
Both RR and PR have a four-year performance period commencing from 1 October and ending four years later
on 30 September (e.g., 1 October 2022 to 30 September 2026 for the 2023 grant), noting that LTVR will now be
awarded at the start of the financial year (rather than the end).
A four-year performance period provides sufficient time for longer term performance to be reflected.
Deferral periods
The deferral period is the sum of the four-year performance period and the applicable holding period.
The holding period commences the day after the end of the four-year performance period (e.g., 1 October 2026
in the case of the 2023 LTVR award), and finishes on the 4th, 5th or 6th anniversary of grants.
Exercise period
Rights can only be exercised at the end of the relevant deferral period (4, 5 or 6 years) when the rights vest and
become exercisable.
There is a two-year exercise period which commences at the end of the relevant deferral period for RR and PR.
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Element
Expensing
Dividends
Allocation
basis
Detail
ANZ engages PricewaterhouseCoopers to independently determine the fair value of RR and PR, which is only used
for expensing purposes. They consider factors including: the market performance conditions, share price volatility,
life of the instrument, dividend yield, and share price at grant date.
A dividend equivalent payment (DEP) is paid in cash at the end of the relevant deferral period, but is only made
to the extent that all or part of the underlying rights meet the relevant performance condition and vest to the
individual. Dividend equivalents accrue over the full deferral period for RR, and only during the holding period for PR.
The value the Board uses to determine the number of RR and PR to be allocated to the CEO and Disclosed
Executives is the face value of the Company’s shares traded on the ASX in the five trading days leading up to and
including 1 October (beginning of the financial year and LTVR performance period).
LTVR will be awarded around the start of the financial year in late November/early December for Disclosed
Executives and December for the CEO (subject to shareholder approval).
5.2.4 LTVR RESTRICTED RIGHTS – CEO AND DISCLOSED EXECUTIVES
The introduction of RR ensures that LTVR provides material weight to non-financial measures (as required under APRA’s Prudential Standard
CPS 511 Remuneration), as well as supporting long-term alignment with shareholders.
The Board was very considered in working through the appropriate measures for RR. A holistic assessment of measures across STVR and
LTVR components was considered to reduce the risk of a ‘double impact’ to remuneration outcomes. Having a risk-based focus reflects the
intent of the new Prudential Standard CPS 511 Remuneration in ensuring remuneration arrangements appropriately incentivise individuals to
prudently manage risks. The performance conditions have been designed to ensure there is focus on both material risk events and building
a strong risk culture over the longer term.
Element
Performance condition detail
RR pre grant
and pre vest
assessments
Pre grant assessment purpose: Determines whether any reduction should be made to RR award value and is primarily
based on outcomes in the prior financial year.
Pre vest assessment purpose: Determines whether the RR amount awarded should vest in full and is based on
outcomes over the four-year performance period.
The pre grant and pre vest assessments also take into consideration any adjustments already applied for the same event/
outcomes in either the current or prior years (i.e., adjustments to STVR and LTVR, malus and clawback), to ensure the
overall impact is fair and proportionate to the severity of the outcome. Therefore, given other remuneration adjustments
are likely to be considered first, and as the award of RR is future focused, it is anticipated that RR will be allocated at
maximum value in most years – unless the outcome of the following three assessment steps determines otherwise.
STEP 1
Assess Prudential soundness
STEP 2
Assess risk measures
STEP 3
Apply Board discretion
• Nil award if ANZ does
not meet capital ratio
and liquidity prudential
minimums.
• Consideration of any Material
Risk Outcomes from executive
actions or inactions which is
expected to/or has resulted in
significant impacts.
• Consideration of any significant
adverse change in APRA’s Active
Supervision level.
• Consideration of Risk Culture
(additional measure for pre vest)
that examines whether or not
ANZ has maintained (or made
progress towards) a sound
risk culture, considering both
executive actions or inactions.
• Board to determine whether any
reduction should be made to LTVR RR
outcome based on consideration of a
range of factors, including:
– the outcomes from steps 1 and 2;
– the impact, if any, of the issue/s on ANZ’s
reputation/standing in the market;
– whether the issue was specific to
ANZ, the banking industry or the
broader market;
– any impacts already applied (e.g., re
downward adjustment mechanisms, pre
grant assessment impact to LTVR RR);
– whether any impact should be made
on an individual or collective basis.
The assessments are not intended to be formulaic given the circumstances requiring the application of Board
discretion will typically be different or unique, however a Board decision making framework is in place to guide
the Board in applying discretion.
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Performance condition detail
Material risk
outcomes process
The consideration of material risk outcomes is a key process that forms part of our broader Accountability and
Consequence Framework (A&CF) (see section 6), and is a comprehensive bottom-up process designed to ensure
that all relevant events are surfaced and considered appropriately. Key steps include:
• Risk, conduct and audit events are reported in ANZ’s Compliance & Operational Risk System.
• Divisional Accountability Groups review serious audit events, and conduct themes and trends, and provide
recommendations regarding accountability and consequences.
• Enterprise Accountability Group (EAG) reviews recommendations of the Divisional Accountability Groups and
make final determination.
• HR Committee reviews most serious risk, conduct and audit events (as part of independent report from CRO)
and determines impacts at the Group, Division and individual level for the CEO and ExCo.
5.2.5 LTVR PERFORMANCE RIGHTS – CEO AND DISCLOSED EXECUTIVES EXCLUDING THE CRO
Element
Performance condition detail
Performance
rights hurdles
The PR have TSR performance hurdles reflecting the importance of focusing on achieving longer term strategic
objectives and aligning executives’ and shareholders’ interests. We will apply two TSR performance hurdles for the
2023 grants of PR:
• 75% will be measured against a relative TSR hurdle, tranche 1.
• 25% will be measured against an absolute TSR hurdle, tranche 2.
TSR represents the change in value of a share plus the value of reinvested dividends paid. We regard it as the most
appropriate long-term measure – it focuses on the delivery of shareholder value and is a well understood and tested
mechanism to measure performance. The combination of relative and absolute TSR hurdles provides balance to
the plan by:
• Relative: rewarding executives for performance that exceeds that of comparator companies; and
• Absolute: ensuring there is a continued focus on providing positive growth – even when the market is declining.
The two hurdles measure separate aspects of performance:
• the relative TSR hurdle measures our TSR compared to that of the Select Financial Services (SFS) comparator
group, made up of core local and global competitors. This comparator group is chosen to broadly reflect the
geographies and business segments in which ANZ competes for revenue; and
• the absolute CAGR TSR hurdle provides executives with a more direct line of sight to the level of shareholder
return to be achieved. It also provides a tighter correlation between the executives’ rewards and the shareholders’
financial outcomes.
We will measure ANZ’s TSR against each hurdle at the end of the four-year performance period to determine
whether each tranche of PR becomes exercisable. We measure each tranche independently from the other –
for example one tranche may vest fully or partially but the other tranche may not vest.
Relative TSR
hurdle for PR
The relative TSR hurdle is an external hurdle that measures our TSR against that of the SFS comparator group over
four years. The SFS comparator group (unchanged from prior years) is made up of: Bank of Queensland Limited;
Bendigo and Adelaide Bank Limited; Commonwealth Bank of Australia Limited; DBS Bank Limited; Macquarie Group
Limited; National Australia Bank Limited; Standard Chartered PLC; Suncorp Group Limited; and Westpac Banking
Corporation.
If our TSR when compared to the TSR of
the comparator group
then the percentage of PR that vest
is less than the 50thth percentile
is nil
reaches at least the 50thth percentile, but is less
than the 75thth percentile
is 50% plus 2% for every one percentile
increase above the 50thth percentile
reaches or exceeds the 75thth percentile
is 100%
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Element
Performance condition detail
Absolute TSR
hurdle for PR
The absolute CAGR TSR hurdle is an internal hurdle as to whether ANZ achieves or exceeds a threshold level of
growth the Board sets at the start of the performance period. The Board reviews and approves the absolute TSR
targets each year for the PR award. When reviewing the targets, the Board references ANZ’s assessed Cost of Capital.
The Cost of Capital is determined using methodologies including the Capital Asset Pricing Model (CAPM). The Cost
of Capital is regularly reviewed and updated to reflect current market conditions. Due to the prospective nature of
the 2023 PR and given the increased volatility in the 10-year bond rate, the Board determined it was appropriate to
use the 2H average Cost of Capital as the CAGR TSR target for the 2023 PR.
If the absolute CAGR of our TSR
then the percentage of PR that vest
is less than 9.125%
is 9.125%
is nil
is 50%
reaches at least 9.125%, but is less than 13.688%
is progressively increased on a pro-rata, straight-line,
basis from 50% to 100%
reaches or exceeds 13.688%
is 100%
Calculating
TSR performance
When calculating performance against TSR, we:
• reduce the impact of share price volatility – by using an averaging calculation over a 90-trading day period for
start and end values;
• ensure an independent measurement – by engaging the services of an external organisation, Mercer Consulting
(Australia) Pty Ltd, to calculate ANZ’s performance against the TSR hurdles; and
• test the performance against the relevant hurdle once only at the end of the four-year performance period –
the rights lapse if the performance hurdle is not met – there is no retesting.
5.3 Downward adjustment – Board discretion
The Board can exercise its discretion to apply a number of downward adjustment options as part of consequence management (in
accordance with applicable law and any terms and conditions provided). The Board may choose to exercise the following options or a
combination of these at any time, but will always consider their use if any of the circumstances specified by Prudential Standard CPS 511
Remuneration occur. The downward adjustment options specified in #1 to #3 below are applicable to all employees, while clawback (#4) in
2022 is currently limited to select employees (primarily the CEO, Disclosed Executives and some senior employees in jurisdictions where
clawback regulations apply):
1. In year adjustment, the most common type of downward adjustment, which reduces the amount of variable remuneration an employee
may have otherwise been awarded for that year.
2. Further deferral/freezing delays the decision to pay/allocate variable remuneration, or further defers the vesting of deferred remuneration
or freezes vested/unexercised shares and rights. This would typically only be considered where an investigation is pending/underway.
3. Malus is an adjustment to reduce the value of all or part of deferred remuneration before it has vested. Malus is used in cases of more
serious performance or behaviour issues. Any and all variable remuneration we award or grant to an employee is subject to ANZ’s on-going
and absolute discretion to apply malus and adjust variable remuneration downward (including to zero) at any time before the relevant
variable remuneration vests.
4. Clawback is the recovery of variable remuneration that has already vested or been paid. This would typically only be considered if the
other types of downward adjustment/other consequences are considered inadequate given the severity of the situation.
Before any scheduled vesting of deferred remuneration, the Board (for the CEO, Disclosed Executives and other specified roles) and/or
the EAG (for other employees) considers whether any further deferral, malus, or clawback should be applied. See section 6 for details.
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6. Accountability and Consequence Framework
Throughout 2022 we continued to
strengthen and evolve ANZ’s Accountability
and Consequence Framework (A&CF). The
Enterprise Accountability Group (EAG) is
the primary governance mechanism for
the operation of the A&CF.
6.1 Role of the EAG
The EAG is chaired by the CEO and
members include the CRO, CFO and GE T&C.
It operates under the delegated authority
of the HR Committee and is responsible for:
• supporting the Board in monitoring
the implementation and ongoing
effectiveness of ANZ’s A&CF;
• reviewing the most material risk, conduct
and audit events, accountability and
the application of consequences, where
appropriate;
• providing guidance to the Divisions and
considering initiatives across the Divisions
to strengthen risk behaviours;
• acknowledging material positive risk
events (new in 2022) and recognising risk
role models, whose achievements are
profiled across the organisation; and
• approving the release or application
of downward adjustment for deferred
variable remuneration (noting that for
the CEO and Disclosed Executives this
is approved by the Board).
6.2 Material positive risk events
In 2022, the EAG broadened its scope to
include the review of material positive
risk decisions and events – times when
our proactive approach to identifying and
mitigating risk have had a material positive
outcome. Reviewing these examples
provides an opportunity to acknowledge
the importance of these events and share
learnings across the enterprise.
6.3 Risk role models
In 2022, 59 individuals were recognised by
the EAG for role modelling outstanding
risk behaviours through their efforts to
manage and mitigate the organisation’s
risks and contribute to our strong risk
culture. The recognition provided included
a personalised e-mail from the CEO, and
having their achievement profiled on
our intranet and in internal newsletters.
6.4 Implementation of Prudential
Standard CPS 511 Remuneration
As part of the implementation of
APRA’s new Prudential Standard CPS
511 Remuneration, we conducted a
comprehensive review of our A&CF and
related processes to ensure alignment with
the new Standard. Whilst it was assessed
that the enterprise already complies with
most of the new requirements, we have
taken the opportunity to enhance our
existing A&CF and processes.
We introduced clawback provisions for the
CEO and our Disclosed Executives effective
2022, in addition to existing adjustment
tools such as in year adjustment, further
deferral and malus, which continue to apply.
Other enhancements included further
raising employee awareness with respect to
accountability and consequences through
more explicit references to the A&CF
(including remuneration consequences)
in employee training and communications,
and simplification of our performance
and remuneration policy documents.
6.5 Consideration of
consequences for material risk,
audit and conduct events
The EAG has processes in place to
ensure that we mitigate the risk of
conflicts of interest in reviewing events
and determining accountability and
consequences. For example, when
undertaking accountability reviews, a
recommendation regarding the review
leader and scope must be sent to the
CRO or (in the case of an event involving
Group Risk) the CEO, for review and
approval to ensure the individual is
capable of undertaking an impartial
and unbiased review.
Considerations regarding accountability
and consequences for our most senior
executives are considered and determined
by the HR Committee and Board.
Reports on the most material risk, audit
and conduct issues were presented to
the HR, Risk and Audit Committees at a
concurrent meeting. This information was
taken into consideration by the Board when
considering the performance of the Group
and the 2022 ANZIP variable remuneration
pool for all employees and determining the
performance and remuneration outcomes
of the CEO and Disclosed Executives.
The HR Committee and Board consider
accountability and consequences for the
CEO and Disclosed Executives, including the
application of malus to previously deferred
remuneration. No malus was applied to the
previously deferred remuneration of the
CEO and Disclosed Executives during 2022.
When determining consequences,
consideration is given to the level of
accountability, and the severity of the issue,
including customer impacts. Consequences
may include, for example, one or more of
the following: counselling, formal warnings,
impacts to in year performance and
remuneration outcomes or application of
malus to previously deferred remuneration
and ultimately termination of employment
or clawback for the most serious issues.
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6.6 Evolving the A&CF
6.8 Application of consequences
Our ongoing focus on accountability,
consequences and driving a strong risk
culture supports our customer commitment
that when things go wrong, we fix them
quickly and hold executives, current
(and former where we can), to account
where appropriate. We are also focused
on ensuring that we learn from the cause
of the event, mitigate the risk of future
recurrences and continuously seek to
strengthen our risk culture. We review
the effectiveness of the A&CF every year
and implement enhancements to further
strengthen the A&CF based on regulatory
and internal stakeholder input.
6.7 Speak up culture
We continue to raise employee awareness
of, and promote the various ways
employees can speak up and raise issues
and ideas for improvement including
through initiatives such as:
• Whistleblower awareness training sessions;
• digital communications designed to build
confidence and trust in the Whistleblower
Program and process; and
through monitoring responses in our
employee engagement surveys.
In addition, key risk and speak-up
scores, including ‘Leaders demonstrate
accountability for risk’ (86%), ‘I can raise
issues without fear of reprisals’ (80%) and
‘When I speak up, my ideas, opinions and
concerns are heard’ (83%) remained strong
and consistent with 2021 and 2020 results.1
In 2022, there were 1,133 employee
relations cases involving alleged breaches
of our Code of Conduct, with 518 resulting
in a formal consequence or the employee
leaving ANZ, down from 573 in 2021.
Breaches ranged from compliance/
procedure breaches (23%), through to
general unacceptable behaviour (36%),
email/systems misuse (17%), attendance
issues (14%), fraud/theft (4%), conflict of
interest (2%) and breaches of our Equal
Opportunity, Bullying and Harassment
Policy (3%). Outcomes following
investigations of breaches this year included
95 terminations, 322 warnings and 101
employees leaving ANZ.2
In relation to the application of
consequences to our senior leadership
population (senior executives, executives
and senior managers), 21 current and
former employees (16 in 2021) had a
consequence applied as a result of the
application of our Code of Conduct Policy
and/or findings of accountability for a
relevant event. Consequences included
warnings, impacts on performance and
remuneration outcomes and, for former
employees, malus of previously deferred
remuneration where relevant.
All employees and contractors across
the enterprise are required to complete
mandatory learning modules. Permanent
employees who fail to complete their
mandatory learning requirements within
30 days of the due date are (in the absence
of genuinely exceptional circumstances)
ineligible for any FR or variable remuneration
as part of our annual Performance and
Remuneration Review. In 2022, the
mandatory learning course compliance
rate across the enterprise was 99.9%.
1. Results reported are taken from the Q2 and/or Q4 employee engagement surveys. 2. Employees are listed in all categories which are relevant, meaning one employee may be listed
in multiple categories.
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7. Non-Executive Director (NED) remuneration
7.1 Remuneration structure
NEDs receive a fee for being a Director of the Board, and additional fees for either chairing, or being a member of a Board Committee.
The Chairman of the Board does not receive additional fees for serving on a Board Committee.
The HR Committee and Board reviewed NED fees for 2022 and determined that the NED member fee and Committee fees for the Audit
Committee chair and members would remain unchanged (noting that the Chairman, NED and Committee fees have remained unchanged
since 2016 with the exception of the Digital Business & Technology Committee Chair fee which has remained unchanged since 2020). From
1 April 2022 fees increased for the Chairman, and for the chairs and members of the Risk Committee, HR Committee, Digital Business &
Technology Committee, and Ethics, Environment, Social & Governance Committee.
In setting Board and Committee fees, the Board considers: general industry practice, ASX Corporate Governance Principles and
Recommendations, the responsibilities and risks attached to the NED role, the time commitment expected of NEDs on Group and
Company matters, and fees paid to NEDs of comparable companies.
ANZ compares NED fees to a comparator group of Australian listed companies with a similar market capitalisation, with particular focus on
the major financial services institutions. This is considered an appropriate group, given similarity in size and complexity, nature of work and
time commitment by NEDs.
To maintain NED independence and impartiality:
• NED fees are not linked to the performance of the Group; and
• NEDs are not eligible to participate in any of the Group’s variable remuneration arrangements.
The current aggregate fee pool for NEDs of $4m was approved by shareholders at the 2012 AGM. The annual total of NEDs’ fees, including
superannuation contributions, is within this agreed limit.
This table shows the NED fee policy structure for 2022.
2022 NED fee policy structure
Board1,2
Audit Committee
Risk Committee
HR Committee
Digital Business & Technology Committee
Ethics, Environment, Social & Governance Committee
1H22
2H22
Chair fee
$825,000
$65,000
$62,000
$57,000
$45,000
$35,000
Member fee
$240,000
$32,500
$31,000
$29,000
$15,000
$15,000
Chair fee
$850,000
$65,000
$65,000
$65,000
$55,000
$55,000
Member fee
$240,000
$32,500
$32,500
$32,500
$27,500
$27,500
1. Including superannuation. 2. The Chairman of the Board does not receive additional fees for serving on a Board Committee. The Chairman of the Board and NEDs do not receive a fee for
serving on the Nomination and Board Operations Committee.
NED shareholding guidelines
The HR Committee reviewed the shareholding guideline for the Chairman and determined that from 1 October 2021 it be increased from
200% of the NED member fee to 100% of the Chairman fee (i.e., from $480,000 to $850,000).
We expect our NEDs to hold ANZ shares. NEDs are required:
• to accumulate shares – over a five-year period from their appointment to the value of:
– 100% of the NED member fee for Directors;
– 100% of the Chairman fee for the Chairman; and
• to maintain this shareholding while they are a Director of ANZ.
Based on the ANZ share price as at 30 September 2022, all NEDs but one who have served five years met the holding guideline. The value of
the ANZ securities held by one NED who has served for more than 5 years as at 30 September dropped slightly below the guideline due to
fluctuations in the ANZ share price.
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7.2 2022 statutory remuneration – NEDS
The following table outlines the statutory remuneration of NEDs disclosed in accordance with Australian Accounting Standards.
In addition to the fee shown below, Sir John Key received NZD 422,050 in 2022 and NZD 391,000 in 2021 for his role as Chairman of ANZ
Bank New Zealand Limited.
2022 statutory remuneration – NEDS
Current Non-Executive Directors
P O’Sullivan
I Atlas
J Halton
J Key
G Liebelt
J Macfarlane
C O’Reilly4
J Smith5
Former Non-Executive Directors
P Dwyer6
Total of all Non-Executive Directors
Short-term NED benefits
Post-employment
Financial
year
Fees1
$
Non monetary
benefits2
$
Super
contributions1
$
Total
remuneration3
$
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2022
2022
2021
2022
2021
813,501
764,033
330,751
322,337
318,001
306,837
290,251
278,837
360,427
341,337
301,501
296,337
302,863
36,003
6,128
19,931
–
–
–
–
–
–
–
–
–
–
–
–
23,999
22,163
23,999
22,163
23,999
22,163
23,999
22,163
6,323
22,163
23,999
22,163
22,579
843,628
806,127
354,750
344,500
342,000
329,000
314,250
301,000
366,750
363,500
325,500
318,500
325,442
3,780
39,783
76,372
365,000
2,829,670
2,674,718
4,944
–
11,072
19,931
–
–
152,677
132,978
81,316
365,000
2,993,419
2,827,627
1. Year-on-year differences in fees relate to changes to the NED fee and also to the superannuation Maximum Contribution Base. From 1 October 2021 to 30 June 2022, G Liebelt, and from
1 October 2020 to the date of retirement P Dwyer, elected to receive all payments in fees and therefore did not receive superannuation contributions during this period. 2. Non monetary benefits
generally consist of company-funded benefits (and the associated Fringe Benefits Tax) such as car parking and gifts provided upon retirement. 3. Long-term benefits and share-based payments
do not apply for the NEDs. 4. C O’Reilly’s 2022 remuneration reflects a partial service year as she commenced as a NED on 1 November 2021. 5. J Smith’s 2022 remuneration reflects a partial
service year as he commenced as a NED on 1 August 2022. 6. P Dwyer's 2022 remuneration reflects a partial service year as she retired as a NED on 16 December 2021.
94
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8. Remuneration governance
8.1 The Human Resources (HR)
Committee
8.1.1 ROLE OF THE HR COMMITTEE
The HR Committee supports the Board
on remuneration and other HR matters.
It reviews the remuneration policies and
practices of the Group, and monitors market
practice and regulatory and compliance
requirements in Australia and overseas.
During the year the HR Committee met
on seven occasions1 and reviewed and
approved, or made recommendations to
the Board on matters including:
• remuneration for the CEO and other key
executives (broader than those disclosed
in the Remuneration Report) covered by
the ANZBGL Remuneration Policy, and
fees for the NEDs;
• matters related to the implementation
of APRA’s Prudential Standard CPS 511
Remuneration, and updates on the BEAR,
and Treasury’s Financial Accountability
Regime (FAR);
• changes to the executive remuneration
structure in light of CPS 511
Remuneration1;
• the ANZ Group Performance
Framework (annual objectives setting
and assessment) and annual variable
remuneration spend;
• performance and reward outcomes
for key senior executives, including the
consideration of material events that
have either occurred or came to light
in the year;
• the release, further deferral or application
of malus of deferred remuneration;
• key senior executive appointments
and terminations;
• the effectiveness of the ANZBGL
Remuneration Policy and the
Accountability & Consequence
Framework;
• ANZ’s response to the industry-wide
Retail Remuneration Review by Stephen
Sedgwick AO;
Whilst we completed our implementation
of the recommendations from Stephen
Sedgwick AO’s Retail Remuneration
Review in 2021 (noting the industry
wide recommendations were ongoing
at the time), we continue to review our
processes to ensure ongoing adherence
to the Sedgwick recommendations, with
updates provided to the HR Committee.
This review was focused on strengthening
the alignment of retail bank incentives, sales
practices and good customer outcomes.
More details about the role of the HR
Committee, including its Charter, can be
found on our website. Go to anz.com >
Our company > Strong governance
framework > ANZ Human Resources
Committee Charter.
8.1.2 LINK BETWEEN
REMUNERATION AND RISK
The HR Committee has a strong focus
on the relationship between business
performance, risk management and
remuneration, aligned with our business
strategy. The chairs of the Risk and
Audit Committees are members of the
HR Committee and the full Board is in
attendance for specific HR Committee
meetings. A concurrent meeting of the
HR, Risk and Audit Committees was held
to review:
• material risk, conduct and audit
events that either occurred or came
to light in 2022;
• 2022 performance and variable
remuneration recommendations at
both the Group, CEO and Disclosed
Executive level.
To further reflect the importance of the
link between remuneration and risk:
• the Board had two NEDs (in addition to
the Chairman) in 2022 who served on
both the HR Committee and the Risk
Committee;
• building capabilities required to deliver
• the HR Committee has free and
on our strategy;
• succession plans for key senior
executives; and
• culture, diversity and inclusion, employee
engagement, and how we work in a post
COVID environment.
unfettered access to risk and financial
control personnel (the CRO and CFO
attend HR Committee meetings for
specific agenda items);
• the CRO (together with GE T&C and GGM
IA) provides an independent report to
the HR Committee on the most material
risk, conduct and audit events (as
relevant) to help inform considerations
of performance and remuneration, and
accountability and consequences at the
Group, Divisional and individual level;
• the CRO also provides an independent
report to assist the Board in their
assessment of performance and
remuneration outcomes for the
CEO and Disclosed Executives;
• the chairs of the Risk and Audit
Committees are asked to provide input
to ensure appropriate consideration of
all relevant risk and internal audit issues;
• the ANZ Group Performance Framework
and Divisional Performance Frameworks
include Risk as a key element acting as a
modifier, and it forms an integral part of
each framework’s assessment and directly
impacts the overall outcomes; and
• the LTVR RR pre grant and pre vest
assessments undertaken by the Board
are primarily based on non-financial
risk outcomes.
8.1.3 CONFLICT OF INTEREST
To help mitigate potential conflicts
of interest:
• management are not in attendance
when their own performance or
remuneration is being discussed
by the HR Committee or Board;
• the CEO’s STVR is funded and determined
separately from the ANZIP variable
remuneration pool;
• the CRO’s remuneration arrangements
differ to other Disclosed Executives to
preserve the independence of the role;
• the EAG also has processes in place to
help mitigate conflicts of interest as
outlined in section 6; and
• the HR Committee seeks input from
a number of sources to inform their
consideration of performance and
remuneration outcomes for the CEO
and Disclosed Executives including:
– independent reports from Risk, Finance,
Talent and Culture, and Internal Audit;
– material risk, conduct and audit event
data provided by the CRO;
– input from both the Audit Committee
and the Risk Committee of the Board.
1. Subsets of the HR Committee also met on a number of occasions during the year to discuss regulatory developments, the executive remuneration structure and 2022 outcomes.
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8.1.4 EXTERNAL ADVISORS
PROVIDED INFORMATION BUT
NOT RECOMMENDATIONS
The HR Committee can engage
independent external advisors as needed.
Throughout the year, the HR Committee
and management received information
from the following external providers: Aon,
Ashurst, EY, Mercer Consulting (Australia)
Pty Ltd and PricewaterhouseCoopers. This
information related to market data, market
practices, analysis and modelling, legislative
requirements and the interpretation of
governance and regulatory requirements.
During the year, ANZ did not receive
any remuneration recommendations
from external consultants about the
remuneration of KMP.
ANZ employs in-house remuneration
professionals who provide recommendations
to the HR Committee and the Board. The
Board made its decisions independently,
using the information provided and with
careful regard to ANZ’s strategic objectives,
purpose and values, risk appetite and the
ANZBGL Remuneration Policy and Principles.
8.2 Internal governance
8.2.1 HEDGING PROHIBITION
All deferred equity must remain at risk until
it has fully vested. Accordingly, executives
and their associated persons must not enter
into any schemes that specifically protect
the unvested value of equity allocated.
If they do so, then they would forfeit the
relevant equity.
8.2.2 CEO AND DISCLOSED
EXECUTIVES’ SHAREHOLDING
GUIDELINES
We expect the CEO and each Disclosed
Executive to, over a five-year period:
• accumulate ANZ shares to the value
of 200% of their FR; and
• maintain this shareholding level
while they are an executive of ANZ.
Executives are permitted to sell ANZ
securities to meet taxation obligations on
employee equity even if below the 200%
guideline. However, tax obligations for the
purpose of these guidelines is limited to
that arising from the initial taxing point
event (i.e., when the deferred shares vest
or rights are exercised).
Shareholdings include all vested and
unvested equity (excluding PR). Based on
equity holdings as at 30 September 2022,
and the STVR deferred shares to be granted
on 22 November 2022 as a result of the
2022 Performance and Remuneration
Review outcomes, the CEO and all Disclosed
Executives meet or, if less than five years’
tenure, are on track to meet their minimum
shareholding guidelines requirements.
8.2.3 CEO AND DISCLOSED EXECUTIVES’ CONTRACT TERMS AND EQUITY TREATMENT
The details of the contract terms and also the equity treatment on termination (in accordance with the Conditions of Grant) relating to the
CEO and Disclosed Executives are below. Although they are similar, they vary in some cases to suit different circumstances.
Type of contract
Permanent ongoing employment contract.
Notice on resignation
• 12 months by CEO;
• 6 months by Disclosed Executives.1
Notice on termination
by ANZ2
• 12 months by ANZ for CEO and Disclosed Executives.3
However, ANZ may immediately terminate an individual’s employment at any time in the case of serious
misconduct. In that case, the individual will be entitled only to payment of FR up to the date of their
termination and their statutory entitlements.
How unvested equity is
treated on leaving ANZ
Change of control
(applies to the CEO only)
Executives who resign or are terminated will forfeit all their unvested deferred equity – unless the Board
determines otherwise.
If an executive is terminated due to redundancy or they are classified as a ‘good leaver’, unless the Board
determines otherwise, then:
• their STVR (deferred shares/share rights) remain on foot and are released at the original vesting date;
• their LTVR (RR/PR) (for grants awarded from 31 December 2020) remain on foot and are released at the
original vesting date4 (to the extent that the performance hurdles are met); and
• their PR5 (for grants awarded pre 31 December 2020) are prorated for service to the full notice termination
date and released at the original vesting date (to the extent that the performance hurdles are met).
On an executive’s death or total and permanent disablement, their deferred equity vests.
Unvested equity remains subject to malus post termination.
If a change of control or other similar event occurs, then we will test the performance conditions applying
to the CEO’s PR. They will vest to the extent that the performance conditions are satisfied.
A transitional agreement between ANZBGL and the CEO has been implemented that documents that if
the proposed change in legal structure proceeds (to create distinct banking and non-banking groups,
see ‘Note 35 Pending Organisational Changes Impacting Future Reporting Periods’ of the Annual Report),
then it will not give rise to a ‘Change of Control’ under the conditions of grant relating to unvested variable
remuneration equity awards.
1. 3 months by the former acting CFO. 2. For M Carnegie, K Corbally, F Faruqui, G Florian, K van der Merwe, M Whelan and M Hand, their contracts state that in particular circumstances they may
be eligible for a retrenchment benefit in accordance with the relevant ANZ policy, as varied from time to time, and M Hand was also eligible to receive a Retirement Allowance on retirement,
retrenchment, death, or resignation for illness, incapacity or domestic reasons (see footnote 5 of section 9.1). For A Watson, notice on retrenchment is 6 weeks and compensation on retrenchment
is calculated on a scale up to a maximum of 79 weeks after 25 years’ service. 3. 6 months by ANZ for the former acting CFO. 4. This approach is more aligned to industry practice. 5. Or deferred
share rights granted to the CRO instead of PR.
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9. Other information
9.1 2022 statutory remuneration – CEO and Disclosed Executives
The following table outlines the statutory remuneration disclosed in accordance with Australian Accounting Standards. While it shows the
FR awarded (cash and superannuation contributions) and also the cash component of the 2022 variable remuneration award, it does not
show the actual variable remuneration awarded or received in 2022 (see sections 4.2 and 4.1), but instead shows the amortised accounting
value for this financial year of deferred remuneration (including prior year awards).
2022 statutory remuneration – CEO and Disclosed Executives
Short–term employee benefits
Post–employment
Long–term employee
benefits
Financial year
Cash salary1
$
Non monetary
benefits2
$
Total cash
incentive3
$
Super
contributions4
$
Retirement
benefit accrued
during year5
$
Long service leave
accrued during
the year6
$
Deferred shares
$
Deferred
share rights
Performance
rights
$
Deferred shares
Termination
benefits
remuneration
Total
$
CEO and Current Disclosed Executives
S Elliott
M Carnegie
K Corbally
F Faruqui9
G Florian
K van der Merwe
A Watson10
M Whelan
Former Disclosed Executives
S Buggle11
M Hand12
2022
2021
2022
2021
2022
2021
2022
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2,476,001
15,384
930,000
15,025
1,000,000
2,478,132
1,176,001
1,178,047
1,176,001
1,078,030
31,041
22,621
9,884
9,525
1,159,194
174,222
1,072,169
1,062,530
976,001
885,012
1,019,021
1,040,213
1,376,001
1,254,082
28,785
689,935
480,216
1,178,047
18,569
21,431
16,034
15,620
22,049
9,786
9,884
12,275
–
–
4,053
9,525
460,000
569,250
442,500
613,800
579,575
442,500
676,500
400,000
594,000
422,742
687,167
535,000
810,150
–
462,000
–
544,500
23,999
21,868
24,499
22,453
23,999
21,970
4,806
23,999
21,970
24,499
22,488
70,686
56,131
23,999
21,918
4,215
14,065
11,784
21,953
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,443
5,218
1. Cash salary includes any adjustments required to reflect the use of ANZ's Lifestyle Leave Policy for the period in the KMP role. 2. Non monetary benefits generally consist of company-funded
benefits (and the associated Fringe Benefits Tax) such as car parking, taxation services and costs met by the Company in relation to relocation. 3. The total cash incentive relates to the cash
component only. The relevant amortisation of the STVR deferred components is included in share-based payments and has been amortised over the vesting period. The total STVR was approved by
the ANZBGL Board on 19 October 2022, and in addition for A Watson by the ANZ NZ Board on 18 October 2022. 100% of the cash component of the VR/STVR awarded for the 2021 and 2022 years
vested to the executive in the applicable financial year. 4. For Australian based executives, the 2021 and 2022 superannuation contributions reflect the Superannuation Guarantee Contribution based
on the Maximum Contribution Base. F Faruqui's 2022 amount reflects a part year superannuation contribution. A Watson participates in KiwiSaver where ANZ provides an employer superannuation
contribution matching member contributions up to 4% of total gross pay. KiwiSaver employer superannuation contributions are also contributed on top of cash STVR at the time of payment.
5. Accrual relates to Retirement Allowance. As a result of being employed with ANZ before November 1992, M Hand was eligible to receive a Retirement Allowance on retirement, retrenchment,
death, or resignation for illness, incapacity or domestic reasons. The Retirement Allowance is calculated as three months of preserved notional salary (which is 65% of fixed remuneration) plus an
additional 3% of notional salary for each year of full-time service above 10 years less the total accrual value of long service leave (including taken and untaken). 6. For Australian based executives,
long service leave accrued takes into consideration the impact of changes to the Superannuation Guarantee percentage. Long service leave accrued during the year increased year-on-year for
K Corbally as a result of his 2022 fixed remuneration increase, and decreased year-on-year for G Florian, K van der Merwe and M Whelan as a result of their 2021 fixed remuneration increases.
Share–based payments7
Total amortisation value of
Variable
remuneration
Other equity
allocations8
33,306
37,880
17,151
18,182
34,577
16,667
17,524
15,812
18,058
14,409
22,929
4,068
4,130
17,779
69,359
412
52,757
5,151
18,182
933,786
880,970
522,450
534,990
513,883
472,538
465,805
512,134
478,255
472,124
457,267
505,698
439,710
666,495
730,123
2,600
112,974
127,875
451,897
$
–
–
–
–
–
–
–
–
–
–
–
–
238,579
357,462
178,143
2,132
22,321
3,157
159,613
1,076,657
1,039,524
129,603
267,586
–
1,984
302,636
171,181
312,520
177,072
298,076
119,057
200,921
181,892
355,857
71
71,423
64,765
266,258
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
312
564
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,489,133
5,473,399
2,360,745
2,613,129
2,439,423
2,571,976
2,881,905
2,256,364
2,591,264
2,080,139
2,295,392
2,165,765
2,460,943
2,811,050
3,253,764
39,240
1,562,767
698,287
2,495,580
9. Other information
9.1 2022 statutory remuneration – CEO and Disclosed Executives
The following table outlines the statutory remuneration disclosed in accordance with Australian Accounting Standards. While it shows the
FR awarded (cash and superannuation contributions) and also the cash component of the 2022 variable remuneration award, it does not
show the actual variable remuneration awarded or received in 2022 (see sections 4.2 and 4.1), but instead shows the amortised accounting
value for this financial year of deferred remuneration (including prior year awards).
2022 statutory remuneration – CEO and Disclosed Executives
CEO and Current Disclosed Executives
2,476,001
15,384
930,000
15,025
1,000,000
S Elliott
M Carnegie
K Corbally
F Faruqui9
G Florian
A Watson10
M Whelan
S Buggle11
M Hand12
K van der Merwe
Former Disclosed Executives
1,159,194
174,222
2022
2021
2022
2021
2022
2021
2022
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2,478,132
1,176,001
1,178,047
1,176,001
1,078,030
1,072,169
1,062,530
976,001
885,012
1,019,021
1,040,213
1,376,001
1,254,082
28,785
689,935
480,216
1,178,047
31,041
22,621
9,884
9,525
18,569
21,431
16,034
15,620
22,049
9,786
9,884
12,275
–
–
4,053
9,525
460,000
569,250
442,500
613,800
579,575
442,500
676,500
400,000
594,000
422,742
687,167
535,000
810,150
462,000
–
–
544,500
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,443
5,218
23,999
21,868
24,499
22,453
23,999
21,970
4,806
23,999
21,970
24,499
22,488
70,686
56,131
23,999
21,918
4,215
14,065
11,784
21,953
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Short–term employee benefits
Post–employment
Long–term employee
benefits
Share–based payments7
Total amortisation value of
Variable
remuneration
Other equity
allocations8
Financial year
Cash salary1
Non monetary
benefits2
$
$
Total cash
incentive3
$
Retirement
Super
benefit accrued
contributions4
during year5
$
Long service leave
accrued during
the year6
$
Deferred shares
$
Deferred
share rights
$
Performance
rights
$
Deferred shares
$
Termination
benefits
$
Total
remuneration
$
33,306
37,880
17,151
18,182
34,577
16,667
17,524
15,812
18,058
14,409
22,929
4,068
4,130
17,779
69,359
412
52,757
5,151
18,182
933,786
880,970
522,450
534,990
513,883
472,538
465,805
512,134
478,255
472,124
457,267
505,698
439,710
666,495
730,123
2,600
112,974
127,875
451,897
–
–
–
–
238,579
357,462
178,143
–
–
–
–
2,132
22,321
–
–
3,157
159,613
–
–
1,076,657
1,039,524
129,603
267,586
–
1,984
302,636
171,181
312,520
177,072
298,076
119,057
200,921
181,892
355,857
71
71,423
64,765
266,258
–
–
–
–
–
–
–
–
–
–
–
312
564
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,489,133
5,473,399
2,360,745
2,613,129
2,439,423
2,571,976
2,881,905
2,256,364
2,591,264
2,080,139
2,295,392
2,165,765
2,460,943
2,811,050
3,253,764
39,240
1,562,767
698,287
2,495,580
7. As required by AASB 2 Share-based payments, the amortisation value includes a proportion of the fair value (taking into account market-related vesting conditions) of all equity that had not yet
fully vested as at the commencement of the financial year. The fair value is determined at grant date and is allocated on a straight-line basis over the relevant vesting period. The amount included
as remuneration neither relates to, nor indicates, the benefit (if any) that the executive may ultimately realise if the equity becomes exercisable. No terms of share-based payments have been
altered or modified during the financial year. There were no cash settled share-based payments or any other form of share-based payment compensation during the financial year for the CEO or
Disclosed Executives. 8. Other equity allocations relate to shares received in relation to the historical Employee Share Offer. 9. F Farhan's 2022 remuneration reflects a partial service year as he
commenced in a Disclosed Executive role on 11 October 2021. 10. A Watson's fixed remuneration is paid in NZD and converted to AUD. 2021 cash salary, superannuation contribution and total
remuneration restated to include gross value of KiwiSaver employer superannuation contributions relating to fixed remuneration and cash VR, and this represents a total change of AUD 17,622. In
2019 and 2020 A Watson was eligible to receive shares under the historical Employee Share Offer. That offer provided a grant of ANZ shares in each financial year to eligible employees subject to
Board approval. 11. S Buggle's 2022 remuneration reflects a partial service year up to the date he ceased in a Disclosed Executive role on 10 October 2021 (noting his annual fixed remuneration
for 2022 remained unchanged at $1.1m). 12. M Hand's 2022 remuneration reflects a partial service year up to the date he ceased in a Disclosed Executive role on 28 February 2022 (noting his
annual fixed remuneration for 2022 remained unchanged at $1.2m).
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9.2 Equity holdings
For the equity granted to the CEO and Disclosed Executives in November/December 2021, all deferred shares were purchased on the market.
For deferred share rights and PR, which vested to the CEO and Disclosed Executives in November/December 2021, where the rights were not
able to be satisfied through the reallocation of previously forfeited shares they were satisfied through the on market purchase of shares.
9.2.1 CEO AND DISCLOSED EXECUTIVES’ EQUITY GRANTED, VESTED, EXERCISED/SOLD AND
LAPSED/FORFEITED
The table below sets out details of deferred shares and rights that we granted to the CEO and Disclosed Executives:
• during the 2022 year, relating to 2021 Performance and Remuneration Review outcomes; or
• in prior years and that then vested, were exercised/sold or which lapsed/were forfeited during the 2022 year.
Equity granted, vested, exercised/sold and lapsed/forfeited – CEO and Disclosed Executives
Name
Type of equity
Number
granted1
Equity fair
value at
grant
(for 2022
grants
only)
$
Vested
Lapsed/
Forfeited
Exercised/Sold
First
date
exercisable
Grant
date
Date
of
expiry
Number %
Value2
$
Number %
$ Number %
Value2
Value2
$
Vested
and
exercis-
able as
at 30 Sep
20223
Unexer-
cisable
as at 30
Sep
20224
CEO and Current Disclosed Executives
S Elliott
Deferred shares
Deferred shares
Deferred shares
8,529
8,622
9,003
22-Nov-17 22-Nov-21
22-Nov-18 22-Nov-21
22-Nov-19 22-Nov-21
–
–
–
8,529 100
229,122
8,622 100
231,621
9,003 100
241,856
Deferred shares
10,843
07-Dec-20 22-Nov-21
–
10,843 100
291,285
Deferred shares
14,441
26.86 22-Nov-21 22-Nov-22
Deferred shares
10,830
26.86 22-Nov-21 22-Nov-23
Deferred shares
7,220
26.86 22-Nov-21 22-Nov-24
Deferred shares
3,610
26.86 22-Nov-21 22-Nov-25
–
–
–
–
Performance rights
107,471
19-Dec-17 19-Dec-20 19-Dec-22
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(8,529)
100
232,154
(8,622)
100
234,686
(9,003)
100
245,056
–
(10,843)
100
295,140
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(62,010)
58 1,687,875
Performance rights5
82,774
19-Dec-18 19-Dec-21 26-Dec-21
56,989
69 1,576,185
(25,785)
31
(713,154)
(56,989)
69 1,576,185
(27,591) 100
(763,104)
Performance rights
27,591
19-Dec-18 19-Dec-21 26-Dec-21
Performance rights
94,765
11.91 16-Dec-21 16-Dec-25 16-Dec-27
Performance rights
31,588
6.30 16-Dec-21 16-Dec-25 16-Dec-27
M
Carnegie
Deferred shares
Deferred shares
Deferred shares
Deferred shares
4,785
5,202
5,942
7,099
22-Nov-17 22-Nov-21
22-Nov-18 22-Nov-21
22-Nov-19 22-Nov-21
07-Dec-20 22-Nov-21
Deferred shares
8,220
26.86 22-Nov-21 22-Nov-22
Deferred shares
6,165
26.86 22-Nov-21 22-Nov-23
Deferred shares
4,110
26.86 22-Nov-21 22-Nov-24
Deferred shares
2,055
26.86 22-Nov-21 22-Nov-25
–
–
–
–
–
–
–
–
Performance rights
29,580
22-Nov-17 22-Nov-20 22-Nov-22
–
–
–
–
–
–
–
–
–
4,785 100
128,544
5,202 100
139,746
5,942 100
159,625
7,099 100
190,707
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Performance rights
10,721
22-Nov-18 22-Nov-21 22-Nov-23
Performance rights
31,759
11.66 22-Nov-21 22-Nov-25 22-Nov-27
Performance rights
10,586
6.37 22-Nov-21 22-Nov-25 22-Nov-27
K
Corbally
Deferred shares
Deferred shares
Deferred shares
3,007
5,744
5,582
22-Nov-18 22-Nov-21
22-Nov-19 22-Nov-21
07-Dec-20 22-Nov-21
Deferred shares
6,649
26.86 22-Nov-21 22-Nov-22
Deferred shares
6,647
26.86 22-Nov-21 22-Nov-23
Deferred shares
4,431
26.86 22-Nov-21 22-Nov-24
Deferred shares
4,431
26.86 22-Nov-21 22-Nov-25
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,007 100
80,780
5,744 100
154,306
5,582 100
149,954
–
–
–
–
–
–
–
–
–
–
–
–
Deferred share rights
14,546
22-Nov-18 22-Nov-21 29-Nov-21
14,546 100
390,762
Deferred share rights
22,830
21.60 22-Nov-21 22-Nov-25 29-Nov-25
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(17,067)
58
453,818
–
–
–
–
–
–
–
–
–
(3,007)
100
83,167
(5,744)
100
158,866
(5,582)
100
154,385
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Performance rights
32,163
22-Nov-18 22-Nov-21 22-Nov-23
22,144
69
594,874
(10,019)
31
(269,149)
(22,144)
69
611,679
(10,721) 100
(288,008)
–
–
–
–
–
–
–
–
–
14,441
–
10,830
–
–
–
–
–
7,220
3,610
–
–
–
–
94,765
–
31,588
4,785
5,202
5,942
7,099
–
–
–
–
–
–
–
–
–
–
–
8,220
6,165
4,110
2,055
–
–
–
–
31,759
–
10,586
–
–
–
–
–
–
–
–
–
–
–
6,649
6,647
4,431
4,431
–
–
(14,546)
100
390,762
–
–
–
–
–
22,830
ANZ 2022 Annual Report / Remuneration report
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
99
99
Name
Type of equity
Number
granted1
Equity fair
value at
grant
(for 2022
grants
only)
$
Vested
Lapsed/
Forfeited
Exercised/Sold
First
date
exercisable
Grant
date
Date
of
expiry
Number %
Value2
$
Number %
$ Number %
Value2
Value2
$
Vested
and
exercis-
able as
at 30 Sep
20223
Unexer-
cisable
as at 30
Sep
20224
CEO and Current Disclosed Executives
F Faruqui6
Deferred shares
10,486
26.86 22-Nov-21 22-Nov-22
Deferred shares
7,862
26.86 22-Nov-21 22-Nov-23
Deferred shares
5,241
26.86 22-Nov-21 22-Nov-24
Deferred shares
2,620
26.86 22-Nov-21 22-Nov-25
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Deferred share rights
10,138
22-Nov-17 22-Nov-21 29-Nov-21
10,138 100
272,346
Deferred share rights
8,013
22-Nov-18 22-Nov-21 29-Nov-21
8,013 100
215,260
Deferred share rights
11,363
22-Nov-19 22-Nov-21 29-Nov-21
11,363 100
305,254
Deferred share rights
6,459
07-Dec-20 22-Nov-21 29-Nov-21
6,459 100
173,514
Performance rights
28,845
22-Nov-17 22-Nov-20 22-Nov-22
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(10,138)
100
272,346
–
(8,013)
100
215,260
–
(11,363)
100
305,254
–
(6,459)
100
173,514
–
(28,845)
100
795,107
Performance rights
42,215
22-Nov-18 22-Nov-21 22-Nov-23
29,065
69
780,799
(13,150)
31
(353,260)
(29,065)
69
801,171
Performance rights
20,102
22-Nov-18 22-Nov-21 22-Nov-23
13,840
69
371,796
(6,262)
31
(168,222)
(13,840)
69
311,266
(6,700) 100
(179,988)
Performance rights
14,071
22-Nov-18 22-Nov-21 22-Nov-23
Performance rights
40,505
11.66 22-Nov-21 22-Nov-25 22-Nov-27
Performance rights
13,501
6.37 22-Nov-21 22-Nov-25 22-Nov-27
G Florian
Deferred shares
Deferred shares
Deferred shares
Deferred shares
Deferred shares
Deferred shares
2,462
2,462
3,251
3,251
3,367
6,442
22-Nov-17 22-Nov-20
22-Nov-17 22-Nov-21
22-Nov-18 22-Nov-20
22-Nov-18 22-Nov-21
22-Nov-19 22-Nov-21
07-Dec-20 22-Nov-21
Deferred shares
9,770
26.86 22-Nov-21 22-Nov-22
Deferred shares
7,326
26.86 22-Nov-21 22-Nov-23
Deferred shares
4,884
26.86 22-Nov-21 22-Nov-24
Deferred shares
2,442
26.86 22-Nov-21 22-Nov-25
–
–
–
–
–
–
–
–
–
–
Performance rights
15,225
22-Nov-17 22-Nov-20 22-Nov-22
–
–
–
–
–
–
–
–
–
–
–
–
2,462 100
66,139
–
–
–
3,251 100
87,335
3,367 100
90,451
6,442 100
173,057
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(14,071) 100
(378,002)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
K van der
Merwe
Performance rights
6,700
22-Nov-18 22-Nov-21 22-Nov-23
Performance rights
37,743
11.66 22-Nov-21 22-Nov-25 22-Nov-27
Performance rights
12,581
6.37 22-Nov-21 22-Nov-25 22-Nov-27
Deferred shares
Deferred shares
Deferred shares
Deferred shares
Deferred shares
Deferred shares
Deferred shares
Deferred shares
679
1,477
1,477
1,477
3,577
3,577
4,951
5,724
22-Nov-17 22-Nov-18
22-Nov-17 22-Nov-19
22-Nov-17 22-Nov-20
22-Nov-17 22-Nov-21
22-Nov-18 22-Nov-19
22-Nov-18 22-Nov-21
22-Nov-19 22-Nov-21
07-Dec-20 22-Nov-21
Deferred shares
8,579
26.86 22-Nov-21 22-Nov-22
Deferred shares
6,433
26.86 22-Nov-21 22-Nov-23
Deferred shares
4,288
26.86 22-Nov-21 22-Nov-24
Deferred shares
2,144
26.86 22-Nov-21 22-Nov-25
–
–
–
–
–
–
–
–
–
–
–
–
Performance rights
9,135
22-Nov-17 22-Nov-20 22-Nov-22
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,477 100
39,678
–
–
–
3,577 100
96,092
4,951 100
133,003
5,724 100
153,769
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
10,486
–
–
–
–
–
–
–
–
–
–
7,862
5,241
2,620
–
–
–
–
–
–
–
–
40,505
–
13,501
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,367
6,442
–
–
–
–
–
–
–
9,770
7,326
4,884
2,442
–
–
–
–
37,743
–
12,581
–
–
–
–
3,577
4,951
5,724
–
–
–
–
–
–
–
8,579
6,433
4,288
2,144
–
–
–
–
33,140
–
11,046
–
–
–
–
–
–
–
–
–
(2,462)
100
55,371
(2,462)
100
55,371
(3,251)
100
73,116
–
–
–
(1,642)
51
36,929
1,609
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(8,784)
58
197,555
–
–
–
–
–
–
–
–
–
(679)
100
19,244
(1,477)
100
41,860
(1,477)
100
41,860
(1,477)
100
41,860
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5,270)
58
119,265
(3,053)
85
86,525
524
Performance rights
22,112
22-Nov-18 22-Nov-21 22-Nov-23
15,224
69
408,976
(6,888)
31
(185,039)
(15,224)
69
344,534
Performance rights
7,370
22-Nov-18 22-Nov-21 22-Nov-23
Performance rights
33,140
11.66 22-Nov-21 22-Nov-25 22-Nov-27
Performance rights
11,046
6.37 22-Nov-21 22-Nov-25 22-Nov-27
–
–
–
–
–
–
–
–
–
(7,370) 100
(197,987)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100 ANZ 2022 Annual Report
100
ANZ 2022 Annual Report / Remuneration report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
Name
Type of equity
Number
granted1
Equity fair
value at
grant
(for 2022
grants
only)
$
Vested
Lapsed/
Forfeited
Exercised/Sold
First
date
exercisable
Grant
date
Date
of
expiry
Number %
Value2
$
Number %
$ Number %
Value2
Value2
$
CEO and Current Disclosed Executives
A Watson
Deferred shares
Deferred shares
Deferred shares
3,904
3,901
5,806
22-Nov-19 22-Nov-20
22-Nov-19 22-Nov-21
07-Dec-20 22-Nov-21
Deferred shares
9,924
26.86 22-Nov-21 22-Nov-22
Deferred shares
7,442
26.86 22-Nov-21 22-Nov-23
Deferred shares
4,961
26.86 22-Nov-21 22-Nov-24
Deferred shares
2,480
26.86 22-Nov-21 22-Nov-25
Employee
Share Offer
29
03-Dec-18 03-Dec-21
–
–
–
–
–
–
–
–
–
–
–
3,901 100
104,796
5,806 100
155,972
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
29 100
781
–
–
–
–
–
–
–
–
–
–
(3,904)
100
107,533
(3,901)
100
107,451
(5,806)
100
159,923
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Deferred share rights
2,817
22-Nov-18 22-Nov-21 22-Nov-23
2,817 100
75,676
–
–
–
(2,817)
100
77,912
Performance rights
4,802
22-Nov-18 22-Nov-21 22-Nov-23
3,306
69
88,812
(1,496)
31
(40,188)
(3,306)
69
91,436
Vested
and
exercis-
able as
at 30 Sep
20223
Unexer-
cisable
as at 30
Sep
20224
–
–
–
–
–
–
–
29
–
–
–
–
–
9,924
7,442
4,961
2,480
–
–
–
–
–
–
–
–
–
–
38,338
–
12,779
Performance rights
38,338
11.66 22-Nov-21 22-Nov-25 22-Nov-27
Performance rights
12,779
6.37 22-Nov-21 22-Nov-25 22-Nov-27
–
–
–
–
–
–
M Whelan
Deferred shares
Deferred shares
9,218
7,072
22-Nov-17 22-Nov-21
22-Nov-18 22-Nov-21
–
–
9,218 100
247,631
7,072 100
189,982
Deferred shares
10,498
22-Nov-19 22-Nov-21
–
10,498 100
282,017
Deferred shares
6,297
07-Dec-20 22-Nov-21
Deferred shares
11,700
26.86 22-Nov-21 22-Nov-22
Deferred shares
8,774
26.86 22-Nov-21 22-Nov-23
Deferred shares
5,849
26.86 22-Nov-21 22-Nov-24
Deferred shares
2,924
26.86 22-Nov-21 22-Nov-25
–
–
–
–
–
6,297 100
169,162
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(9,218)
100
250,823
(7,072)
100
192,430
–
(10,498)
100
285,652
–
–
–
–
–
(6,297)
100
171,342
–
–
–
–
–
–
–
–
–
–
–
–
Performance rights
43,722
22-Nov-18 22-Nov-21 22-Nov-23
30,102
69
808,657
(13,620)
31
(365,886)
(30,102)
69
829,142
Performance rights
14,574
22-Nov-18 22-Nov-21 22-Nov-23
Performance rights
45,200
11.66 22-Nov-21 22-Nov-25 22-Nov-27
Performance rights
15,066
6.37 22-Nov-21 22-Nov-25 22-Nov-27
–
–
–
–
–
–
–
–
–
Former Disclosed Executives
S Buggle7
M Hand7
Deferred shares
Deferred shares
Deferred shares
3,251
3,565
8,015
22-Nov-18 22-Nov-21
22-Nov-19 22-Nov-21
07-Dec-20 22-Nov-21
Deferred shares
7,864
26.86 22-Nov-21 22-Nov-22
Deferred shares
5,897
26.86 22-Nov-21 22-Nov-23
Deferred shares
3,931
26.86 22-Nov-21 22-Nov-24
Deferred shares
1,965
26.86 22-Nov-21 22-Nov-25
–
–
–
–
–
–
–
3,251 100
87,335
3,565 100
95,770
8,015 100
215,314
–
–
–
–
–
–
–
–
–
–
–
–
(14,574) 100
(391,514)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Performance rights
20,102
22-Nov-18 22-Nov-21 22-Nov-23
13,840
69
371,796
(6,262)
31
(168,222)
(13,840)
69
382,300
Performance rights
6,700
22-Nov-18 22-Nov-21 22-Nov-23
Performance rights
30,379
11.66 22-Nov-21 22-Nov-25 22-Nov-27
Performance rights
10,126
6.37 22-Nov-21 22-Nov-25 22-Nov-27
–
–
–
–
–
–
–
–
–
(6,700) 100
(179,988)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11,700
–
–
–
–
–
8,774
5,849
2,924
–
–
–
45,200
–
15,066
–
–
–
7,864
5,897
3,931
1,965
–
–
3,565
8,015
–
–
–
–
–
–
–
30,379
–
10,126
(2,160)
66
59,665
1,091
1. For the purpose of the five highest paid executive disclosures, Executives are defined as Disclosed Executives or other members of the ExCo. For the 2022 financial year the five highest paid executives include
five Disclosed Executives. Rights granted to Disclosed Executives as remuneration in 2022 are included in the table. No rights have been granted to the CEO, Disclosed Executives or the five highest paid executives
since the end of 2022 up to the Directors’ Report sign-off date. 2. The point in time value of deferred shares/deferred share rights and/or performance rights is based on the one day VWAP of the Company’s shares
traded on the ASX on the date of vesting, lapsing/forfeiture or exercising/sale/transfer out of trust, multiplied by the number of deferred shares/deferred share rights and/or performance rights. The exercise price for
all deferred share rights/performance rights is $0.00. No terms or conditions of grant of the share-based payment transactions have been altered or modified during the reporting period. 3. The number vested and
exercisable is the number of shares, options and rights that remain vested at the end of the reporting period. No shares, options and rights were vested and unexercisable.
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101
4. Performance rights granted in prior years (by grant date) that remained unexerciseable at 30 September 2022 or date ceased in a Disclosed Executive role include:
S Elliott
M Carnegie
K Corbally
F Faruqui
G Florian
K van der Merwe
A Watson
M Whelan
S Buggle
M Hand
Nov-18
-
-
-
-
-
-
-
-
6,464
-
Nov-19
168,066
40,816
-
69,118
23,128
34,013
-
72,108
-
24,489
Nov-20
159,308
38,378
-
34,045
34,820
30,950
31,389
34,045
-
43,330
Nov-21
126,353
42,345
-
54,006
50,324
44,186
51,117
60,266
-
40,505
Performance rights granted to S Elliott in 2022 were approved by shareholders at the 2021 AGM in accordance with ASX Listing Rule 10.14. 5. The vested value for S Elliott’s performance rights
includes the value of 51.6% of performance rights we awarded in December 2018 which vested in December 2021 due to performance hurdles being met and were settled by delivery of shares,
which remain subject to a further one-year restriction period. 6. Equity transactions disclosed from date commenced as a Disclosed Executive. 7. Equity transactions disclosed up to date ceased
in a Disclosed Executive role. There were no disclosable transactions up to the date S Buggle concluded as a Disclosed Executive.
102 ANZ 2022 Annual Report
102
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9.2.2 NED, CEO AND DISCLOSED EXECUTIVES’ EQUITY HOLDINGS
The table below sets out details of equity held directly, indirectly or beneficially by each NED, the CEO and each Disclosed Executive,
including their related parties.
Equity holdings – NED, CEO and Disclosed Executives
Name
Current Non–Executive Directors
P O’Sullivan
Type of equity
I Atlas
J Halton
J Key
G Liebelt
J Macfarlane
Ordinary shares
Capital notes 2
Capital notes 7
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Capital notes 2
Capital notes 6
Capital notes 7
Ordinary shares
Capital notes 2
Capital notes 3
Capital notes 6
Capital notes 7
Ordinary shares
Ordinary shares
C O’Reilly5
J Smith5
Former Non–Executive Directors
P Dwyer6
CEO and Current Disclosed Executives
S Elliott
Ordinary shares
M Carnegie
K Corbally
F Faruqui5
G Florian
K van der Merwe
A Watson
M Whelan
M Hand6
Deferred shares
Ordinary shares
Vested shares 1yr restriction
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Ordinary shares
Capital notes 6
Deferred share rights
Deferred shares
Ordinary shares
Deferred share rights
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Employee Share Offer
Ordinary shares
Deferred share rights
Performance rights
Deferred shares
Ordinary shares
Performance rights
Deferred shares
Ordinary shares
Capital notes 2
Capital notes 6
Deferred share rights
Performance rights
Deferred shares
Ordinary shares
Performance rights
Former Disclosed Executives
S Buggle6
Opening
balance at
1 Oct 2021
Granted during
the year as
remuneration1
Received during
the year on
exercise of
options or rights
Resulting from
any other
changes during
the year2
Closing
balance at
30 Sep 20223, 4
4,078
9,250
–
14,360
9,049
3,000
20,315
2,500
2,500
–
17,851
2,000
5,000
2,140
–
6,000
2,605
17,500
70,882
290,675
–
499,749
92,284
8,670
139,145
38,019
1,431
1,400
54,391
1,797
3,890
67,440
188,294
42,283
11,977
93,534
50,404
1,282
99,715
30,760
61
23,747
2,817
36,191
60,098
34,387
164,449
86,664
21,174
490
590
24,624
6,464
33,665
1,235
94,621
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
36,101
–
–
126,353
20,550
–
42,345
22,158
–
–
22,830
26,209
–
–
54,006
24,422
–
50,324
21,444
–
44,186
24,807
–
–
–
51,117
29,247
–
60,266
–
–
–
–
–
–
19,657
–
40,505
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
62,010
56,989
(118,999)
–
39,211
(39,211)
–
14,546
–
(14,546)
–
93,883
(35,973)
(57,910)
–
22,624
(22,624)
–
20,494
(20,494)
–
–
6,123
(2,817)
(3,306)
–
30,102
(30,102)
–
–
–
–
–
–
–
13,840
(13,840)
272
(9,250)
9,250
958
604
7,500
1,356
(2,500)
–
2,500
1,191
(2,000)
–
–
2,000
400
174
–
(36,997)
42,423
–
(53,376)
–
(13,783)
(20,740)
(14,333)
(14,596)
–
–
–
2,607
–
(27,221)
(10,100)
2,982
(12,962)
(8,333)
7,631
(14,258)
(13,611)
–
7,711
–
(1,496)
(33,085)
(17,526)
(28,194)
–
–
–
–
–
–
(2,160)
(12,964)
(12,962)
4,350
–
9,250
15,318
9,653
10,500
21,671
–
2,500
2,500
19,042
–
5,000
2,140
2,000
6,400
2,779
17,500
69,986
395,108
56,989
453,727
112,834
34,098
121,539
45,844
1,381
1,400
62,675
28,006
100,380
31,467
157,169
56,605
37,583
108,272
63,515
29,407
109,149
41,956
61
37,581
–
82,506
56,260
46,963
166,419
86,664
21,174
490
590
24,624
6,464
51,162
2,111
108,324
1. Details of options/rights granted as remuneration during 2022 are provided in the previous table. 2. Shares resulting from any other changes during the year include the net result of any shares
purchased (including under the ANZ Share Purchase Plan), forfeited, sold or acquired under the Dividend Reinvestment Plan. 3. The following shares (included in the holdings above) were held
on behalf of the NEDs, CEO and Disclosed Executives (i.e., indirect beneficially held shares) as at 30 September 2022 (or the date ceased as a KMP): P O’Sullivan – 0, I Atlas – 15,318, J Halton – 0,
J Key – 10,500, G Liebelt – 8,436, J Macfarlane – 28,182, C O’Reilly – 0, J Smith – 0, P Dwyer – 17,500, S Elliott – 518,500, M Carnegie – 112,834, K Corbally – 47,244, F Faruqui – 28,006, G Florian
– 66,504, K van der Merwe – 63,515, A Watson – 42,017, M Whelan – 100,073, S Buggle – 87,744 and M Hand – 51,162. 4. Zero rights were vested and exercisable, and zero options/rights were
vested and unexerciseable as at 30 September 2022. There was no change in the balance as at the Directors’ Report sign-off date. 5. Commencing balance is based on holdings as at the date of
commencement as a KMP. 6. Concluding balance is based on holdings as at the date ceased as a KMP.
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9.3 Loans
9.3.1 OVERVIEW
When we lend to NEDs, the CEO or Disclosed Executives, we do so in the ordinary course of business and on normal commercial terms and
conditions that are no more favourable than those given to other employees or customers – this includes the term of the loan, the security
required and the interest rate. Details of the terms and conditions of lending products can be found on anz.com. No amounts have been
written off during the period, or individual assessed allowance for expected credit losses raised in respect of these balances.
Total loans to NEDs, the CEO and Disclosed Executives, including their related parties at 30 September 2022 (including those with balances
less than $100,000) was $24,339,919 (2021: $25,444,692) with interest paid of $790,118 (2021: $776,791) during the period.
9.3.2 NED, CEO AND DISCLOSED EXECUTIVES’ LOAN TRANSACTIONS
The table below sets out details of loans outstanding to NEDs, the CEO and Disclosed Executives including their related parties, if – at any
time during the year – the individual’s aggregate loan balance exceeded $100,000.
Loan transactions – NED, CEO and Disclosed Executives
Name
Current Non–Executive Directors
P O’Sullivan
J Key
J Macfarlane
CEO and Current Disclosed Executives
S Elliott
G Florian
K van der Merwe
M Whelan
Former Disclosed Executives
S Buggle3
Total
Opening balance at
1 Oct 20211
$
Closing balance at
30 Sep 2022
$
Interest paid and payable
in the reporting period2
$
Highest balance in
the reporting period
$
792,259
–
12,913,111
2,616,885
4,483,293
2,464,654
1,628,540
731,495
3,703,009
9,364,205
2,521,407
4,250,856
1,655,942
1,550,938
65
73,835
423,076
54,579
140,327
47,480
50,625
810,049
3,704,351
14,104,140
2,641,851
8,072,732
2,479,909
1,681,066
504,008
499,193
–
504,061
25,402,750
24,277,045
789,987
33,998,158
1. Opening balances have been adjusted to take into account timing variances. 2. Actual interest paid after considering offset accounts. The loan balance is shown gross, however the interest paid
takes into account the impact of offset amounts. 3. Closing balance is as at the date ceased in a KMP role.
9.4 Other transactions
Other transactions with NEDs, the CEO and Disclosed Executives, and their related parties included deposits.
Other transactions – NED, CEO and Disclosed Executives
Total KMP deposits
Opening balance at
1 Oct 20211
$
Closing balance at
30 Sep 20222,3
$
27,513,114
30,208,600
1. Opening balance is at 1 October 2021 or the date of commencement as a KMP if part way through the year and it has been adjusted to take into account timing variances. 2. Closing balance is
at 30 September 2022 or at the date ceased in a KMP role if part way through the year. 3. Interest received on deposits for 2022 was $140,355 (2021: $88,209).
Other transactions with KMP and their related parties included amounts paid to the Group in respect of investment management service
fees, brokerage, bank fees and charges. The Group has reimbursed KMP for the costs incurred for security and secretarial services associated
with the performance of their duties. These transactions are conducted on normal commercial terms and conditions are no more favourable
than those given to other employees or customers.
104
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Directors’ report
The Directors’ Report for the financial
year ended 30 September 2022 has
been prepared in accordance with the
requirements of the Corporations Act 2001.
The information below forms part of this
Directors’ Report:
In Australia, ANZ meets the requirements
of the National Greenhouse and Energy
Reporting Act 2007 (Cth), which imposes
reporting obligations where energy
production, usage or greenhouse gas
emissions trigger specified thresholds.
• Principal activities on page 12;
• Operating and financial review on
pages 44 to 60;
• Dividends on page 58;
• Information on the Directors, Company
Secretaries and Directors’ meetings on
pages 26 to 35;
• Remuneration report on pages 62 to 103.
Significant changes in state
of affairs
There have been no significant changes
in the Group’s state of affairs.
Events since the end of the
financial year
There have been no significant events from
30 September 2022 to the date of signing
this report.
Participation in political-related
activities
ANZ aims to assist the democratic process
in Australia by attending and participating
in paid events hosted by the major federal
political parties. For the year ended 30
September 2022, ANZ contributed $90,000
to participate in political activities hosted by
the Australian Labor Party and the Liberal
Party of Australia. These activities included
speeches, political functions and policy
dialogue forums. ANZ discloses these
contributions to the Australian Electoral
Commission (AEC), noting the AEC’s
reporting year is a different period to
ANZ’s financial year.
Environmental regulation
ANZ recognises the expectations of its
stakeholders – customers, shareholders, staff
and the community – to operate in a way
that mitigates its environmental impact.
The Group does not believe that its
operations are subject to any other particular
and significant environmental regulation
under a law of the Commonwealth of
Australia or of an Australian State or Territory.
It may become subject to environmental
regulation as a result of its lending activities
in the ordinary course of business and has
developed policies, which are reviewed on
a regular basis to help identify and manage
such environmental matters.
Having made due enquiry, and to the best
of ANZ’s knowledge, no entity of the Group
has incurred any material environmental
liability during the year.
Further details of ANZ’s environmental
performance, including progress against
its targets and management of material
issues aligned with its commitment
to fair and responsible banking and
priority areas of financial wellbeing,
environmental sustainability and housing,
are available in ANZ’s ESG Supplement,
at anz.com/annualreport.
Corporate Governance Statement
ANZ is committed to maintaining a high
standard in its governance framework.
ANZ confirms it has followed the
ASX Corporate Governance Council’s
Corporate Governance Principles and
Recommendations (4th edition) during
the 2022 financial year. ANZ’s Corporate
Governance Statement, together with
the ASX Appendix 4G which relates to the
Corporate Governance Statement, can be
viewed at anz.com/corporategovernance
and has been lodged with the ASX.
Pillar III information
ANZ provides information required by
APS 330: Public Disclosure in the Regulatory
Disclosures section at anz.com/shareholder/
centre/reporting/regulatory-disclosure/.
External auditor
The Group’s external auditor is KPMG. The
Group appointed Peat, Marwick, Mitchell
& Co (predecessor to KPMG) in 1969.
The Board Audit Committee conducts a
formal annual performance assessment
of the external auditor, including whether
to commence an external tender for the
audit. After considering relevant factors
including tenure, audit quality, local and
international capability and experience, and
independence, the Board Audit Committee
resolved to reappoint KPMG for the 30
September 2023 financial year audit.
KPMG regularly rotates Group Lead Audit
Engagement Partner and the Engagement
Quality Control Review Partner with
the most recent rotation being for the
financial year ended 30 September 2021
and 30 September 2020 respectively.
Non-audit services
The Group’s Stakeholder Engagement Model
for Relationship with the External Auditor
(the Policy), which incorporates requirements
of the Corporations Act 2001 and industry
best practice, prevents the external auditor
from providing services that are perceived
to be in conflict with the role of the external
auditor or breach independence
requirements. This includes consulting
advice and sub-contracting of operational
activities normally undertaken by
management, and engagements where the
external auditor may ultimately be required
to express an opinion on its own work.
Specifically the Policy:
• Limits the scope of non-audit services
that may be provided;
• Requires that audit, audit-related
and permitted non-audit services be
considered in light of independence
requirements and for any potential
conflicts of interest before they are
approved by the Audit Committee,
or approved by the Chair of the Audit
Committee (or delegate) and notified
to the Audit Committee; and
• Requires pre-approval before the external
auditor can commence any engagement
for the Group.
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Further details about the Policy can be found
in the Corporate Governance Statement.
The external auditor has confirmed to the
Audit Committee that it has:
• Implemented procedures to ensure
it complies with independence rules
in applicable jurisdictions; and
• Complied with applicable policies
and regulations in those jurisdictions
regarding the provision of non-audit
services, and the Policy.
The Audit Committee has reviewed the
non-audit services provided by the external
auditor during the 2022 financial year,
and has confirmed that the provision of
these services is consistent with the Policy,
compatible with the general standard of
independence for auditors imposed by
the Corporations Act 2001 and did not
compromise the auditor independence
requirements of the Corporations Act 2001.
This has been formally advised by the
Audit Committee to the Board of Directors.
The categories of non-audit services
supplied to the Group during the year
ended 30 September 2022 by the external
auditor, KPMG, or by another person or firm
on KPMG’s behalf, and the amounts paid
or payable (including GST) by the Group
are as follows:
Amount paid/payable
$’000’s
Non-audit services
2022
2021
Training and
related services
Controls related
assessments
Methodology and
procedural reviews
Total
–
–
8
8
–
90
101
191
Further details on the compensation paid to
KPMG is provided in Note 34 Auditor Fees to
the financial statements including details of
audit-related services provided during the
year of $7.50 million (2021: $4.43 million).
For the reasons set out above, the Directors
are satisfied that the provision of non-audit
services by the external auditor during
the year ended 30 September 2022 is
compatible with the general standard
of independence for external auditors
imposed by the Corporations Act 2001
and did not compromise the auditor
independence requirements of the
Corporations Act 2001.
Directors’ and officers’ indemnity
The Company’s Constitution (Rule 11.1)
permits the Company to:
• Indemnify any officer or employee of
the Company, or its auditor, against
liabilities (so far as may be permitted
under applicable law) incurred as such
by an officer, employee or auditor,
including liabilities incurred as a result
of appointment or nomination by the
Company as a trustee or as an officer or
employee of another corporation; and
• Make payments in respect of legal
costs incurred by an officer, employee
or auditor in defending an action for a
liability incurred as such by an officer,
employee or auditor, or in resisting
or responding to actions taken by a
government agency, a duly constituted
Royal Commission or other official
inquiry, a liquidator, administrator, trustee
in bankruptcy or other authorised official.
It is the Company’s policy that its employees
should be protected from any liability they
incur as a result of acting in the course of
their employment, subject to appropriate
conditions.
Under the policy, the Company will
indemnify employees and former employees
against any liability they incur to any third
party as a result of acting in good faith in
the course of their employment with the
Company or a subsidiary of the Company
and this extends to liability incurred as a
result of their appointment/nomination by
or at the request of the Group as an officer
or employee of another corporation or
body or as a trustee.
The indemnity is subject to applicable
law and certain exceptions. In accordance
with the employee indemnity policy, the
Company has during or since the year ended
30 September 2022 paid legal expenses
totalling $328,250.32 incurred by Mr Richard
Moscati in relation to legal proceedings
that had been brought against him and
the Company by the Commonwealth
Director of Public Prosecutions.
The Company has entered into Indemnity
Deeds with each of its Directors, with
certain secretaries and former Directors of
the Company, and with certain employees
and other individuals who act as directors
or officers of related bodies corporate or
of another company, to indemnify them
against liabilities and legal costs of the kind
mentioned in the Company’s Constitution.
During the financial year, the Company
has paid premiums for insurance for the
benefit of the Directors and employees
of the Company and related bodies
corporate of the Company. In accordance
with common commercial practice, the
insurance prohibits disclosure of the nature
of the liability insured against and the
amount of the premium.
Key management personnel and
employee share and option plans
The Remuneration Report contains details
of Non-Executive Directors, Chief Executive
Officer and Disclosed Executives’ equity
holdings and options/rights issued during
the 2022 financial year and as at the date
of this report.
Note 31 Employee Share and Option Plans
to the 2022 Financial Report contains details
of the 2022 financial year and as at the date
of this report:
• Options/rights issued over shares granted
to employees;
• Shares issued as a result of the exercise of
options/rights granted to employees; and
• Other details about share options/rights
issued, including any rights to participate
in any share issues of the Company.
The names of all persons who currently hold
options/rights are entered in the register
kept by the Company pursuant to section
170 of the Corporations Act 2001. This register
may be inspected free of charge.
106
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Rounding of amounts
The Company is a company of the kind referred to in Australian Securities and Investments
Commission Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 dated
24 March 2016 and, in accordance with that Instrument, amounts in the consolidated
financial statements and this Directors’ Report have been rounded to the nearest million
dollars unless specifically stated otherwise.
This report is made in accordance with a resolution of the Board of Directors and is signed
for and on behalf of the Directors.
Paul D O’Sullivan
Chairman
Shayne C Elliott
Managing Director
26 October 2022
26 October 2022
Lead Auditor’s Independence Declaration
The Lead Auditors Independence Declaration given under Section 307C of the Corporations
Act 2001 is set out below and forms part of the Directors’ Report for the year ended
30 September 2022.
To: the Directors of Australia and New Zealand Banking Group Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Australia
and New Zealand Banking Group Limited for the financial year ended 30 September 2022,
there have been:
• No contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
• No contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Martin McGrath
Partner
26 October 2022
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited
by a scheme approved under Professional Standards Legislation.
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198
199
201
205
207
210
212
214
216
218
Financial
report
Financial Statements
Income Statements
108
Statements of Comprehensive Income 109
Balance Sheets
Cash Flow Statements
Statements of Changes in Equity
110
111
112
Notes to the Financial Statements
Basis of Preparation
20. Assets Charged as Security
for Liabilities and Collateral
Accepted as Security for Assets
21. Offsetting
Non-Financial Assets
22. Goodwill and Other
Intangible Assets
Non-Financial Liabilities
23. Other Provisions
1. About Our Financial Statements
114
Equity
Financial Performance
2. Net Interest Income
3. Non-Interest Income
4. Operating Expenses
5.
Income Tax
6. Dividends
7. Earnings per Ordinary Share
8. Segment Reporting
118
119
122
124
126
128
129
Financial Assets and Other Trading Assets
9. Cash and Cash Equivalents
10. Trading Assets
11. Derivative Financial Instruments
12. Investment Securities
13. Net Loans and Advances
14. Allowance for Expected
Credit Losses
Financial Liabilities
15. Deposits and Other Borrowings
16. Payables and Other Liabilities
17. Debt Issuances
Financial Instrument Disclosures
18. Financial Risk Management
19. Fair Value of Financial Assets
and Financial Liabilities
133
134
135
147
149
150
161
162
163
169
191
24. Shareholders’ Equity
25. Capital Management
Consolidation and Presentation
26. Controlled Entities
27. Investments in Associates
28. Structured Entities
29. Transfers of Financial Assets
Employee and Related Party Transactions
30. Superannuation and Post
Employment Benefit Obligations
220
31. Employee Share and Option Plans 222
32. Related Party Disclosures
226
Other Disclosures
33. Commitments, Contingent
Liabilities and Contingent Assets
34. Auditor Fees
35. Pending Organisational
Changes Impacting Future
Reporting Periods
36. Events Since the End
of the Financial Year
Directors’ Declaration
Independent Auditor’s Report
228
231
232
232
233
234
108 ANZ 2022 Annual Report
108
ANZ 2022 Annual Report / Financial Report
FINANCIAL REPORT
INCOME STATEMENTS
For the year ended 30 September
Note
Interest income1
Interest expense
Net interest income
Other operating income
Net income from insurance business
Share of associates’ profit/(loss)
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit for the year
Comprising:
Profit attributable to shareholders of the Company
Profit attributable to non-controlling interests
2
3
3
3
4
14
5
For the year ended 30 September
Note
Earnings per ordinary share (cents) including
discontinued operations2
Basic
Diluted
Earnings per ordinary share (cents) from
continuing operations2
Basic
Diluted
Dividend per ordinary share (cents)
7
7
7
7
6
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FINANCIAL REPORT
Consolidated
The Company
STATEMENTS OF COMPREHENSIVE INCOME
2022
$m
18,408
(7,433)
10,975
6,424
-
(12)
17,387
(8,123)
9,264
265
9,529
(1,933)
7,596
-
7,596
7,596
-
2021
$m
15,347
(4,822)
10,525
4,854
-
(1)
15,378
(7,594)
7,784
469
8,253
(1,922)
6,331
-
6,331
6,331
-
2022
$m
23,609
(8,735)
14,874
4,235
140
177
19,426
(9,579)
9,847
232
10,079
(2,940)
7,139
(19)
7,120
7,119
1
2021
$m
19,529
(5,368)
14,161
3,325
110
(176)
17,420
(9,051)
8,369
567
8,936
(2,756)
6,180
(17)
6,163
6,162
1
Consolidated
2022
2021
250.0
233.2
250.7
233.8
146
215.3
203.2
215.9
203.7
142
For the year ended 30 September
Profit for the year from continuing operations
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Investment securities - equity securities at FVOCI
Other reserve movements1
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve
Other reserve movements
Income tax attributable to the above items
Share of associates’ other comprehensive income2
Other comprehensive income after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Total comprehensive income for the year
Comprising total comprehensive income attributable to:
Shareholders of the Company
Non-controlling interests1
FVOCI reserve gain/(loss)
Defined benefits gain/(loss)
Cash flow hedge reserve gain/(loss)
Foreign currency translation reserve gain/(loss)
Total
2022
$m
(56)
15
-
1
(40)
2021
$m
(42)
(5)
1
(2)
(48)
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
1. The Group includes -$15 million (2021: nil) relating to foreign currency retranslation of the non-controlling interest in ANZ Bank New Zealand Limited.
2. The Group’s share of associates’ other comprehensive income, that may be reclassified subsequently to profit or loss in the Group, includes:
Consolidated
The Company
2022
$m
7,139
2021
$m
6,180
2022
$m
7,596
2021
$m
6,331
(55)
127
(759)
(4,180)
1,172
(40)
(3,735)
(19)
3,385
3,399
(14)
80
(41)
456
(1,052)
301
(48)
(304)
(17)
5,859
5,858
1
(119)
132
67
(95)
139
(4,132)
(14)
(1,003)
1,186
303
(2,794)
(742)
4,802
5,589
4,802
5,589
-
-
-
-
-
-
1. Includes interest income calculated using the effective interest method on financial assets measured at amortised cost or fair value through other comprehensive income of $22,844 million
(2021: $19,054 million) in the Group and $17,123 million (2021: $14,363 million) in the Company.
2. Earnings per share in 2021 has been restated to reflect the bonus element of the share entitlement offer made in 2022 in accordance with AASB 133 Earnings per Share.
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
108
109
For the year ended 30 September
Note
Consolidated
The Company
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
FINANCIAL REPORT
INCOME STATEMENTS
Interest income1
Interest expense
Net interest income
Other operating income
Net income from insurance business
Share of associates’ profit/(loss)
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit for the year
Comprising:
Profit attributable to shareholders of the Company
Profit attributable to non-controlling interests
Earnings per ordinary share (cents) including
discontinued operations2
Basic
Diluted
Basic
Diluted
Earnings per ordinary share (cents) from
continuing operations2
Dividend per ordinary share (cents)
2022
$m
18,408
(7,433)
10,975
6,424
-
(12)
17,387
(8,123)
9,264
265
9,529
(1,933)
7,596
-
-
2021
$m
15,347
(4,822)
10,525
4,854
-
(1)
15,378
(7,594)
7,784
469
8,253
(1,922)
6,331
-
-
2022
$m
23,609
(8,735)
14,874
4,235
140
177
19,426
(9,579)
9,847
232
10,079
(2,940)
7,139
(19)
7,120
7,119
1
250.0
233.2
250.7
233.8
146
2021
$m
19,529
(5,368)
14,161
3,325
110
(176)
17,420
(9,051)
8,369
567
8,936
(2,756)
6,180
(17)
6,163
6,162
1
215.3
203.2
215.9
203.7
142
2
3
3
3
4
14
5
7
7
7
7
6
Overview
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Financial
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109
109
FINANCIAL REPORT
STATEMENTS OF COMPREHENSIVE INCOME
For the year ended 30 September
Profit for the year from continuing operations
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Investment securities - equity securities at FVOCI
Other reserve movements1
Items that may be reclassified subsequently to profit or loss
Foreign currency translation reserve
Other reserve movements
Income tax attributable to the above items
Share of associates’ other comprehensive income2
Other comprehensive income after tax from continuing operations
7,596
6,331
Profit/(Loss) after tax from discontinued operations
Total comprehensive income for the year
7,596
6,331
Comprising total comprehensive income attributable to:
Shareholders of the Company
Non-controlling interests1
Consolidated
The Company
2022
$m
7,139
2021
$m
6,180
2022
$m
7,596
2021
$m
6,331
(55)
127
(759)
(4,180)
1,172
(40)
(3,735)
(19)
3,385
3,399
(14)
80
(41)
456
(1,052)
301
(48)
(304)
(17)
5,859
5,858
1
(119)
132
139
(4,132)
1,186
-
(2,794)
-
4,802
4,802
-
67
(95)
(14)
(1,003)
303
-
(742)
-
5,589
5,589
-
For the year ended 30 September
Note
2022
2021
Consolidated
1. The Group includes -$15 million (2021: nil) relating to foreign currency retranslation of the non-controlling interest in ANZ Bank New Zealand Limited.
2. The Group’s share of associates’ other comprehensive income, that may be reclassified subsequently to profit or loss in the Group, includes:
FVOCI reserve gain/(loss)
Defined benefits gain/(loss)
Cash flow hedge reserve gain/(loss)
Foreign currency translation reserve gain/(loss)
Total
2022
$m
(56)
15
-
1
(40)
2021
$m
(42)
(5)
1
(2)
(48)
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
1. Includes interest income calculated using the effective interest method on financial assets measured at amortised cost or fair value through other comprehensive income of $22,844 million
(2021: $19,054 million) in the Group and $17,123 million (2021: $14,363 million) in the Company.
2. Earnings per share in 2021 has been restated to reflect the bonus element of the share entitlement offer made in 2022 in accordance with AASB 133 Earnings per Share.
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
108
109
110 ANZ 2022 Annual Report
110
ANZ 2022 Annual Report / Financial Report
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FINANCIAL REPORT
BALANCE SHEETS
CASH FLOW STATEMENTS
As at 30 September
Assets
Cash and cash equivalents1
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
Net loans and advances
Regulatory deposits
Due from controlled entities
Shares in controlled entities
Investments in associates
Current tax assets
Deferred tax assets
Goodwill and other intangible assets
Premises and equipment
Other assets
Total assets
Liabilities
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Derivative financial instruments
Due to controlled entities
Current tax liabilities
Deferred tax liabilities
Payables and other liabilities
Employee entitlements
Other provisions
Debt issuances
Total liabilities
Net assets
Shareholders' equity
Ordinary share capital
Reserves
Retained earnings
Share capital and reserves attributable to shareholders of the
Company
Non-controlling interests
Total shareholders' equity
1. Includes settlement balances owed to ANZ that meet the definition of cash and cash equivalents.
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
110
Consolidated
The Company
Note
2022
$m
2021
$m
2022
$m
2021
$m
For the year ended 30 September
Profit after income tax
9
168,132
151,260
155,483
141,436
Adjustments to reconcile to net cash provided by/(used in) operating activities:
Consolidated
The Company
10
11
12
13
26
27
22
15
11
16
23
17
24
24
24
24
24
24
4,762
12,700
35,237
90,174
86,153
7,530
9,166
44,688
38,736
83,126
4,024
11,368
28,073
88,056
72,399
7,183
8,343
34,752
38,292
67,940
672,407
629,719
537,345
488,487
632
-
-
2,181
46
3,384
3,877
2,431
3,613
671
-
-
1,972
57
2,339
4,124
2,734
2,735
249
22,860
17,630
53
43
2,992
935
2,171
2,402
213
23,530
15,693
20
55
1,887
1,017
2,415
1,909
1,085,729
978,857
946,083
833,172
13,766
16,230
797,281
85,149
-
829
83
9,835
549
1,872
93,734
1,019,328
66,401
28,797
(2,606)
39,716
65,907
494
66,401
17,427
5,657
743,056
36,035
-
419
70
8,647
602
2,214
101,054
915,181
63,676
25,984
1,228
36,453
63,665
11
63,676
10,224
14,425
665,607
84,500
25,305
488
54
8,562
409
1,648
75,828
887,050
59,033
28,720
(2,546)
32,859
59,033
-
14,922
5,148
606,723
37,005
23,079
193
70
7,244
447
1,873
81,088
777,792
55,380
25,907
341
29,132
55,380
-
59,033
55,380
the Company.
3. Cash outflow for shares purchased to satisfy the dividend reinvestment plan are classified in Dividends paid.
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
1. Net cash (used in)/provided by operating activities for the Group includes interest received of $22,748 million (2021: $19,649 million), interest paid of $7,857 million (2021: $5,793 million) and income taxes
paid of $2,171 million (2021: $2,427 million). Net cash (used in)/provided by operating activities for the Company includes interest received of $17,672 million (2021: $15,435 million), interest paid of $6,692
million (2021: $5,117 million) and income taxes paid of $1,443 million (2021: $1,541 million).
2. Non-cash movements on Debt issuances include a gain of $4,725 million (2021: $3,476 million gain) from unrealised movements primarily due to fair value hedging adjustments partially offset by foreign
exchange losses for the Group, and include a gain of $3,420 million (2021: $2,322 million gain) from unrealised movements primarily due to fair value hedging partially offset by foreign exchange losses for
Allowance for expected credit losses
Depreciation and amortisation
(Profit)/Loss on sale of premises and equipment
Net derivatives/foreign exchange adjustment
(Gain)/Loss on sale from divestments
Other non-cash movements
Net (increase)/decrease in operating assets:
Collateral paid
Trading assets
Net loans and advances
Net intra-group loans and advances
Other assets
Net increase/(decrease) in operating liabilities:
Deposits and other borrowings
Settlement balances owed by ANZ
Collateral received
Other liabilities
Total adjustments
Net cash (used in)/provided by operating activities1
Cash flows from investing activities
Investment securities assets:
Purchases
Proceeds from sale or maturity
Proceeds from divestments, net of cash disposed
Net movement in shares in controlled entities
Net investments in other assets
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Deposits and other borrowings drawn down
Debt issuances:2
Issue proceeds
Redemptions
Dividends paid3
On market purchase of treasury shares
Repayment of lease liabilities
Share buyback
ANZ Bank New Zealand Perpetual Preference Shares
Share entitlement issue
Net cash (used in)/provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
2022
$m
7,120
(232)
1,008
(8)
(4,434)
(252)
(909)
(2,638)
8,020
(46,378)
-
685
48,879
(3,486)
9,468
3,333
13,056
20,176
(34,292)
32,797
394
(65)
(651)
(1,817)
23,422
(26,017)
(3,784)
(117)
(218)
(846)
492
3,497
(2,345)
16,014
151,260
858
168,132
2021
$m
6,163
(567)
1,087
(11)
(6,350)
238
(237)
4,995
10
(8,259)
-
143
48,896
(4,928)
(3,466)
6,108
37,659
43,822
(52,639)
63,445
13
-
(561)
10,258
12,624
(27,709)
(2,834)
(79)
(330)
(654)
-
-
(9,672)
44,408
107,923
(1,071)
151,260
2022
$m
7,596
(265)
867
(1)
(4,687)
(246)
(488)
(2,054)
6,355
(42,003)
978
655
45,058
(4,769)
8,074
3,426
10,900
18,496
(30,065)
28,201
(5)
(133)
(667)
(2,669)
20,145
(21,985)
(3,782)
(117)
(226)
(846)
-
3,497
(3,314)
12,513
141,436
1,534
155,483
1,226
9,310
-
8,091
2021
$m
6,331
(469)
959
(11)
(4,374)
(12)
(456)
4,484
(2,778)
(300)
(1,212)
89
41,908
(4,671)
(2,728)
5,579
36,008
42,339
(23,040)
35,493
-
(175)
(650)
11,628
9,517
(23,104)
(2,834)
(79)
(288)
(654)
-
-
(9,351)
44,616
98,083
(1,263)
141,436
111
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
FINANCIAL REPORT (continued)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
111
111
FINANCIAL REPORT
As at 30 September
Assets
Cash and cash equivalents1
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
Net loans and advances
Regulatory deposits
Due from controlled entities
Shares in controlled entities
Investments in associates
Current tax assets
Deferred tax assets
Goodwill and other intangible assets
Premises and equipment
Other assets
Total assets
Liabilities
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Derivative financial instruments
Due to controlled entities
Current tax liabilities
Deferred tax liabilities
Payables and other liabilities
Employee entitlements
Other provisions
Debt issuances
Total liabilities
Net assets
Shareholders' equity
Ordinary share capital
Reserves
Retained earnings
Company
Non-controlling interests
Total shareholders' equity
1,085,729
978,857
946,083
833,172
9
168,132
151,260
155,483
141,436
672,407
629,719
537,345
488,487
4,762
12,700
35,237
90,174
86,153
632
-
-
2,181
46
3,384
3,877
2,431
3,613
13,766
16,230
797,281
85,149
-
829
83
9,835
549
1,872
93,734
1,019,328
66,401
28,797
(2,606)
39,716
65,907
494
66,401
10
11
12
13
26
27
22
15
11
16
23
17
24
24
24
24
24
24
7,530
9,166
44,688
38,736
83,126
671
-
-
1,972
57
2,339
4,124
2,734
2,735
17,427
5,657
743,056
36,035
-
419
70
8,647
602
2,214
101,054
915,181
63,676
25,984
1,228
36,453
63,665
11
63,676
4,024
11,368
28,073
88,056
72,399
249
22,860
17,630
53
43
2,992
935
2,171
2,402
10,224
14,425
665,607
84,500
25,305
488
54
8,562
409
1,648
75,828
887,050
59,033
28,720
(2,546)
32,859
59,033
-
7,183
8,343
34,752
38,292
67,940
213
23,530
15,693
20
55
1,887
1,017
2,415
1,909
14,922
5,148
606,723
37,005
23,079
193
70
7,244
447
1,873
81,088
777,792
55,380
25,907
341
29,132
55,380
-
BALANCE SHEETS
CASH FLOW STATEMENTS
Consolidated
The Company
Note
2022
$m
2021
$m
2022
$m
2021
$m
For the year ended 30 September
Profit after income tax
Adjustments to reconcile to net cash provided by/(used in) operating activities:
Allowance for expected credit losses
Depreciation and amortisation
(Profit)/Loss on sale of premises and equipment
Net derivatives/foreign exchange adjustment
(Gain)/Loss on sale from divestments
Other non-cash movements
Net (increase)/decrease in operating assets:
Collateral paid
Trading assets
Net loans and advances
Net intra-group loans and advances
Other assets
Net increase/(decrease) in operating liabilities:
Deposits and other borrowings
Settlement balances owed by ANZ
Collateral received
Other liabilities
Total adjustments
Net cash (used in)/provided by operating activities1
Cash flows from investing activities
Investment securities assets:
Purchases
Proceeds from sale or maturity
Proceeds from divestments, net of cash disposed
Net movement in shares in controlled entities
Net investments in other assets
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Deposits and other borrowings drawn down
Debt issuances:2
Issue proceeds
Redemptions
Dividends paid3
On market purchase of treasury shares
Repayment of lease liabilities
Share buyback
ANZ Bank New Zealand Perpetual Preference Shares
Share entitlement issue
Net cash (used in)/provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of year
Consolidated
2022
$m
7,120
(232)
1,008
(8)
(4,434)
(252)
(909)
(2,638)
8,020
(46,378)
-
685
48,879
(3,486)
9,468
3,333
13,056
20,176
(34,292)
32,797
394
(65)
(651)
(1,817)
2021
$m
6,163
(567)
1,087
(11)
(6,350)
238
(237)
4,995
10
(8,259)
-
143
48,896
(4,928)
(3,466)
6,108
37,659
43,822
(52,639)
63,445
13
-
(561)
10,258
The Company
2022
$m
7,596
(265)
867
(1)
(4,687)
(246)
(488)
(2,054)
6,355
(42,003)
978
655
45,058
(4,769)
8,074
3,426
10,900
18,496
(30,065)
28,201
(5)
(133)
(667)
(2,669)
2021
$m
6,331
(469)
959
(11)
(4,374)
(12)
(456)
4,484
(2,778)
(300)
(1,212)
89
41,908
(4,671)
(2,728)
5,579
36,008
42,339
(23,040)
35,493
-
(175)
(650)
11,628
1,226
9,310
-
8,091
23,422
(26,017)
(3,784)
(117)
(218)
(846)
492
3,497
(2,345)
16,014
151,260
858
168,132
12,624
(27,709)
(2,834)
(79)
(330)
(654)
-
-
(9,672)
44,408
107,923
(1,071)
151,260
20,145
(21,985)
(3,782)
(117)
(226)
(846)
-
3,497
(3,314)
12,513
141,436
1,534
155,483
9,517
(23,104)
(2,834)
(79)
(288)
(654)
-
-
(9,351)
44,616
98,083
(1,263)
141,436
Share capital and reserves attributable to shareholders of the
1. Includes settlement balances owed to ANZ that meet the definition of cash and cash equivalents.
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
59,033
55,380
1. Net cash (used in)/provided by operating activities for the Group includes interest received of $22,748 million (2021: $19,649 million), interest paid of $7,857 million (2021: $5,793 million) and income taxes
paid of $2,171 million (2021: $2,427 million). Net cash (used in)/provided by operating activities for the Company includes interest received of $17,672 million (2021: $15,435 million), interest paid of $6,692
million (2021: $5,117 million) and income taxes paid of $1,443 million (2021: $1,541 million).
2. Non-cash movements on Debt issuances include a gain of $4,725 million (2021: $3,476 million gain) from unrealised movements primarily due to fair value hedging adjustments partially offset by foreign
exchange losses for the Group, and include a gain of $3,420 million (2021: $2,322 million gain) from unrealised movements primarily due to fair value hedging partially offset by foreign exchange losses for
the Company.
3. Cash outflow for shares purchased to satisfy the dividend reinvestment plan are classified in Dividends paid.
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
110
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112 ANZ 2022 Annual Report
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STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CHANGES IN EQUITY
The Company
As at 1 October 2020
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with equity holders in their capacity as
equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Other equity movements:
Other items
As at 30 September 2021
Profit for the year
Group employee share acquisition scheme
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with equity holders in their capacity as
equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Share entitlement issue3
Other equity movements:
Group employee share acquisition scheme
Other items
As at 30 September 2022
the DRP in 2022 were $204 million (2021: $199 million).
Ordinary
share capital
$m
26,454
-
-
-
-
-
-
-
-
-
94
(654)
13
25,907
183
(846)
3,497
(21)
-
28,720
Reserves
$m
1,018
-
(668)
(668)
(9)
341
(2,888)
(2,888)
-
-
-
-
-
-
-
-
-
-
1
Retained
earnings
$m
25,800
6,331
(74)
6,257
(2,928)
29,132
7,596
94
7,690
(3,965)
-
-
-
3
-
-
-
-
2
Total
shareholders’
equity
$m
53,272
6,331
(742)
5,589
(2,928)
94
(654)
13
(6)
55,380
7,596
(2,794)
4,802
(3,965)
183
(846)
3,497
(21)
3
59,033
1. 7.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2022 interim dividend (2021 final and interim dividend: nil; 2020 final dividend: 4.2 million). On-market share purchases for
(2,546)
32,859
2. The Company completed its $1.5 billion on-market share buy-back on 25 March 2022 resulting in 31 million (2021: 23 million) shares being cancelled in 2022.
3. The Company issued 187.1 million new ordinary shares under the share entitlement offer in 2022.
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
Ordinary
share capital
$m
Reserves
$m
Retained
earnings
$m
Share capital
and reserves
attributable to
shareholders
of the Company
$m
Non-
controlling
interests
$m
Total
shareholders’
equity
$m
26,531
1,501
Consolidated
As at 1 October 2020
Profit or loss from continuing operations
Profit or loss from discontinued operations
Other comprehensive income for the year from
continuing operations
Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Other equity movements:
Group employee share acquisition scheme
Other items
As at 30 September 2021
Profit or loss from continuing operations
Profit or loss from discontinued operations
Other comprehensive income for the year from
continuing operations
Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Share entitlement issue3
Other equity movements:
Group employee share acquisition scheme
Preference shares issued
Other items
As at 30 September 2022
-
-
-
-
-
94
(654)
13
-
25,984
-
-
-
-
-
183
(846)
3,497
(21)
-
-
-
-
(264)
(264)
-
-
-
-
(9)
1,228
-
-
(3,835)
33,255
6,179
(17)
(40)
6,122
(2,928)
-
-
-
4
36,453
7,138
(19)
115
(3,835)
7,234
-
-
-
-
-
-
1
(3,965)
-
-
-
-
(7)
1
61,287
6,179
(17)
(304)
5,858
(2,928)
94
(654)
13
(5)
63,665
7,138
(19)
(3,720)
3,399
(3,965)
183
(846)
3,497
(21)
(7)
2
10
1
-
-
1
-
-
-
-
-
11
1
-
(15)
(14)
(2)
-
-
-
-
499
-
494
61,297
6,180
(17)
(304)
5,859
(2,928)
94
(654)
13
(5)
63,676
7,139
(19)
(3,735)
3,385
(3,967)
183
(846)
3,497
(21)
492
2
66,401
28,797
(2,606)
39,716
65,907
1. 7.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2022 interim dividend (2021 final and interim dividend: nil; 2020 final dividend: 4.2 million). On-market share purchases for
the DRP in 2022 were $204 million (2021: $199 million).
2. The Group completed its $1.5 billion on-market share buy-back of ANZ ordinary shares on 25 March 2022 resulting in 31 million (2021: 23 million) shares being cancelled in 2022.
3. The Group issued 187.1 million new ordinary shares under the share entitlement offer in 2022.
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
112
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113
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CHANGES IN EQUITY
Consolidated
As at 1 October 2020
Profit or loss from continuing operations
Profit or loss from discontinued operations
Other comprehensive income for the year from
continuing operations
Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Other equity movements:
Group employee share acquisition scheme
Other items
As at 30 September 2021
Profit or loss from continuing operations
Profit or loss from discontinued operations
Other comprehensive income for the year from
continuing operations
Total comprehensive income for the year
Transactions with equity holders in their capacity
as equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Share entitlement issue3
Other equity movements:
Preference shares issued
Other items
As at 30 September 2022
Group employee share acquisition scheme
Ordinary
share capital
Reserves
$m
$m
Retained
earnings
$m
26,531
1,501
-
-
-
-
-
-
-
-
-
-
94
(654)
13
-
25,984
183
(846)
3,497
(21)
-
-
(264)
(264)
(9)
1,228
(3,835)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
33,255
6,179
(17)
(40)
6,122
(2,928)
-
-
-
4
36,453
7,138
(19)
115
(3,965)
-
-
-
-
(7)
1
(3,835)
7,234
Share capital
and reserves
attributable to
Non-
Total
shareholders
controlling
shareholders’
of the Company
interests
$m
61,287
6,179
(17)
(304)
5,858
(2,928)
94
(654)
13
(5)
63,665
7,138
(19)
(3,720)
3,399
(3,965)
183
(846)
3,497
(21)
(7)
2
$m
10
1
-
-
1
-
-
-
-
-
11
1
-
(15)
(14)
(2)
-
-
-
-
-
499
equity
$m
61,297
6,180
(17)
(304)
5,859
(2,928)
94
(654)
13
(5)
63,676
7,139
(19)
(3,735)
3,385
(3,967)
183
(846)
3,497
(21)
492
2
1. 7.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2022 interim dividend (2021 final and interim dividend: nil; 2020 final dividend: 4.2 million). On-market share purchases for
the DRP in 2022 were $204 million (2021: $199 million).
2. The Group completed its $1.5 billion on-market share buy-back of ANZ ordinary shares on 25 March 2022 resulting in 31 million (2021: 23 million) shares being cancelled in 2022.
3. The Group issued 187.1 million new ordinary shares under the share entitlement offer in 2022.
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
The Company
As at 1 October 2020
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with equity holders in their capacity as
equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Other equity movements:
Group employee share acquisition scheme
Other items
As at 30 September 2021
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Transactions with equity holders in their capacity as
equity holders:
Dividends paid
Dividend Reinvestment Plan1
Group share buy-back2
Share entitlement issue3
Other equity movements:
Group employee share acquisition scheme
Other items
As at 30 September 2022
Ordinary
share capital
$m
26,454
-
-
-
-
94
(654)
13
-
25,907
-
-
-
-
183
(846)
3,497
(21)
-
28,720
Reserves
$m
1,018
-
(668)
(668)
-
-
-
-
(9)
341
-
(2,888)
(2,888)
-
-
-
-
-
1
Retained
earnings
$m
25,800
6,331
(74)
6,257
(2,928)
-
-
-
3
29,132
7,596
94
7,690
(3,965)
-
-
-
-
2
(2,546)
32,859
Total
shareholders’
equity
$m
53,272
6,331
(742)
5,589
(2,928)
94
(654)
13
(6)
55,380
7,596
(2,794)
4,802
(3,965)
183
(846)
3,497
(21)
3
59,033
28,797
(2,606)
39,716
65,907
494
66,401
The notes appearing on pages 114 to 232 form an integral part of these financial statements.
1. 7.2 million shares were issued under the Dividend Reinvestment Plan (DRP) for the 2022 interim dividend (2021 final and interim dividend: nil; 2020 final dividend: 4.2 million). On-market share purchases for
the DRP in 2022 were $204 million (2021: $199 million).
2. The Company completed its $1.5 billion on-market share buy-back on 25 March 2022 resulting in 31 million (2021: 23 million) shares being cancelled in 2022.
3. The Company issued 187.1 million new ordinary shares under the share entitlement offer in 2022.
112
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Notes to the financial statements
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTES TO THE FINANCIAL STATEMENTS
1. ABOUT OUR FINANCIAL STATEMENTS
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
These are the financial statements for Australia and New Zealand Banking Group Limited (the Company) and its controlled entities (together, the
Group or ANZ) for the year ended 30 September 2022. The Company is a publicly listed company incorporated and domiciled in Australia. The address
of the Company’s registered office and its principal place of business is ANZ Centre, 833 Collins Street, Docklands, Victoria, Australia 3008. The Group
provides banking and financial services to individuals and business customers and operates in and across 32 markets.
On 26 October 2022, the Directors resolved to authorise the issue of these financial statements.
Information in the financial statements is included only to the extent we consider it material and relevant to the understanding of the financial
statements. A disclosure is considered material and relevant if, for example:
the amount is significant in size (quantitative factor);
the information is significant by nature (qualitative factor);
the user cannot understand the Group’s results without the specific disclosure (qualitative factor);
the information is critical to a user’s understanding of the impact of significant changes in the Group’s business during the period - for example,
business acquisitions or disposals (qualitative factor);
the information relates to an aspect of the Group’s operations that is important to its future performance (qualitative factor); and
the information is required under legislative requirements of the Corporations Act 2001, the Banking Act 1959 (Cth) or by the Group’s principal
regulators, including the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
This section of the financial statements:
outlines the basis upon which the Group’s financial statements have been prepared; and
discusses any new accounting standards or regulations that directly impact the financial statements.
BASIS OF PREPARATION
This financial report is a general purpose (Tier 1) financial report prepared by a ‘for profit’ entity, in accordance with Australian Accounting Standards
(AASs) and other authoritative pronouncements of the Australian Accounting Standards Board (AASB), the Corporations Act 2001, and International
Financial Reporting Standards (IFRS) and interpretations published by the International Accounting Standards Board (IASB).
We present the financial statements of the Group in Australian dollars, which is the Company’s functional and presentation currency. We have
rounded values to the nearest million dollars ($m), unless otherwise stated, as allowed under the ASIC Corporations (Rounding in Financial/Directors
Report) Instrument 2016/191. We measure the financial statements of each entity in the Group using the currency of the primary economic
environment in which that entity operates (the functional currency).
BASIS OF MEASUREMENT AND PRESENTATION
We have prepared the financial information in accordance with the historical cost basis - except the following assets and liabilities which we have
stated at their fair value:
another legislative requirement.
derivative financial instruments and in the case of fair value hedging, a fair value adjustment made to the underlying hedged item;
financial instruments held for trading;
financial assets and financial liabilities designated at fair value through profit or loss;
financial assets at fair value through other comprehensive income; and
assets and liabilities classified as held for sale (except those required to be at carrying value).
In accordance with AASB 119 Employee Benefits (AASB 119) we have measured defined benefit obligations using the Projected Unit
Credit Method.
During the 2022 financial year, the Group revised its treatment of ongoing trail commission payable to mortgage brokers and now recognises a
liability within Payables and other liabilities equal to the present value of expected future trail commission payments and a corresponding increase in
capitalised brokerage costs in Net loans and advances. Comparatives have not been restated.
The sale of Wealth Australia business to IOOF Holdings Limited (IOOF, now known as Insignia Financial Limited) and Zurich Financial Services Australia
(Zurich) completed across 2020 and 2019. The separation of the business sold to Zurich completed in early April 2022, and the business sold to IOOF
completed in early October 2022. The financial results of these divested businesses are treated as discontinued operations from a financial reporting
perspective.
BASIS OF CONSOLIDATION
The consolidated financial statements of the Group comprise the financial statements of the Company and all its subsidiaries. An entity, including a
structured entity, is considered a subsidiary of the Group when we determine that the Company has control over the entity. Control exists when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. We assess power by examining existing rights that give the Company the current ability to direct the relevant activities of the
entity. We have eliminated, on consolidation, the effect of all transactions between entities in the Group.
FOREIGN CURRENCY TRANSLATION
TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the relevant functional currency at the exchange rate prevailing at the date of the transaction. At the
reporting date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the relevant spot rate.
Any foreign currency translation gains or losses that arise are included in profit or loss in the period they arise.
We measure translation differences on non-monetary items at fair value through profit or loss and report them as part of the fair value gain or loss on
these items. For non-monetary items classified as investment securities measured at fair value through other comprehensive income, translation
differences are included in Other comprehensive income.
FINANCIAL STATEMENTS OF FOREIGN OPERATIONS THAT HAVE A FUNCTIONAL CURRENCY THAT IS NOT AUSTRALIAN DOLLARS
The financial statements of our foreign operations are translated into Australian dollars for consolidation into the Group Financial Statements using the
following method:
Foreign currency item
Exchange rate used
Assets and liabilities
The reporting date rate
Equity
The initial investment date rate
Income and expenses
The average rate for the period – but if for a significant transaction we believe the average rate is not
reasonable, then we use the rate at the date of the transaction
Exchange differences arising from the translation of financial statements of foreign operations are recognised in the foreign currency translation
reserve in equity. When we dispose of a foreign operation, the cumulative exchange differences are transferred to profit or loss.
FIDUCIARY ACTIVITIES
The Group provides fiduciary services to third parties including custody, nominee and trustee services. This involves the Group holding assets on
behalf of third parties and making decisions regarding the purchase and sale of financial instruments. If ANZ is not the beneficial owner or does not
control the assets, then we do not recognise these transactions in these financial statements, except when required by accounting standards or
KEY JUDGEMENTS AND ESTIMATES
In the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates and
assumptions about past and future events. Further information on the key judgements and estimates that we consider material to the
financial statements are contained within each relevant note to the financial statements.
Whilst the course of the COVID-19 pandemic is moderating and the management of its impact on the populace, businesses and economic
activity is better understood, the responses of consumers, business and governments remain uncertain. Compounding the effects of the
pandemic are mounting geopolitical tensions, global supply chain disruptions, the conflict in Ukraine, commodity price pressures and
increasing inflation and interest rates impacting the economy. Thus, there remains an elevated level of estimation uncertainty involved in
the preparation of these financial statements.
The Group has made various accounting estimates in this Financial Report based on forecasts of economic conditions which reflect
expectations and assumptions at 30 September 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 below and/or in the relevant notes in this
Financial Report. Readers should consider these disclosures in light of the inherent uncertainties described above.
114
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1. ABOUT OUR FINANCIAL STATEMENTS
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
BASIS OF CONSOLIDATION
The consolidated financial statements of the Group comprise the financial statements of the Company and all its subsidiaries. An entity, including a
structured entity, is considered a subsidiary of the Group when we determine that the Company has control over the entity. Control exists when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. We assess power by examining existing rights that give the Company the current ability to direct the relevant activities of the
entity. We have eliminated, on consolidation, the effect of all transactions between entities in the Group.
FOREIGN CURRENCY TRANSLATION
TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the relevant functional currency at the exchange rate prevailing at the date of the transaction. At the
reporting date, monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the relevant spot rate.
Any foreign currency translation gains or losses that arise are included in profit or loss in the period they arise.
We measure translation differences on non-monetary items at fair value through profit or loss and report them as part of the fair value gain or loss on
these items. For non-monetary items classified as investment securities measured at fair value through other comprehensive income, translation
differences are included in Other comprehensive income.
FINANCIAL STATEMENTS OF FOREIGN OPERATIONS THAT HAVE A FUNCTIONAL CURRENCY THAT IS NOT AUSTRALIAN DOLLARS
The financial statements of our foreign operations are translated into Australian dollars for consolidation into the Group Financial Statements using the
following method:
Foreign currency item
Exchange rate used
Assets and liabilities
The reporting date rate
Equity
The initial investment date rate
Income and expenses
The average rate for the period – but if for a significant transaction we believe the average rate is not
reasonable, then we use the rate at the date of the transaction
Exchange differences arising from the translation of financial statements of foreign operations are recognised in the foreign currency translation
reserve in equity. When we dispose of a foreign operation, the cumulative exchange differences are transferred to profit or loss.
FIDUCIARY ACTIVITIES
The Group provides fiduciary services to third parties including custody, nominee and trustee services. This involves the Group holding assets on
behalf of third parties and making decisions regarding the purchase and sale of financial instruments. If ANZ is not the beneficial owner or does not
control the assets, then we do not recognise these transactions in these financial statements, except when required by accounting standards or
another legislative requirement.
KEY JUDGEMENTS AND ESTIMATES
In the process of applying the Group’s accounting policies, management has made a number of judgements and applied estimates and
assumptions about past and future events. Further information on the key judgements and estimates that we consider material to the
financial statements are contained within each relevant note to the financial statements.
Whilst the course of the COVID-19 pandemic is moderating and the management of its impact on the populace, businesses and economic
activity is better understood, the responses of consumers, business and governments remain uncertain. Compounding the effects of the
pandemic are mounting geopolitical tensions, global supply chain disruptions, the conflict in Ukraine, commodity price pressures and
increasing inflation and interest rates impacting the economy. Thus, there remains an elevated level of estimation uncertainty involved in
the preparation of these financial statements.
The Group has made various accounting estimates in this Financial Report based on forecasts of economic conditions which reflect
expectations and assumptions at 30 September 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 below and/or in the relevant notes in this
Financial Report. Readers should consider these disclosures in light of the inherent uncertainties described above.
115
Notes to the financial statements
NOTES TO THE FINANCIAL STATEMENTS (continued)
NOTES TO THE FINANCIAL STATEMENTS
These are the financial statements for Australia and New Zealand Banking Group Limited (the Company) and its controlled entities (together, the
Group or ANZ) for the year ended 30 September 2022. The Company is a publicly listed company incorporated and domiciled in Australia. The address
of the Company’s registered office and its principal place of business is ANZ Centre, 833 Collins Street, Docklands, Victoria, Australia 3008. The Group
provides banking and financial services to individuals and business customers and operates in and across 32 markets.
On 26 October 2022, the Directors resolved to authorise the issue of these financial statements.
Information in the financial statements is included only to the extent we consider it material and relevant to the understanding of the financial
statements. A disclosure is considered material and relevant if, for example:
the amount is significant in size (quantitative factor);
the information is significant by nature (qualitative factor);
the user cannot understand the Group’s results without the specific disclosure (qualitative factor);
the information is critical to a user’s understanding of the impact of significant changes in the Group’s business during the period - for example,
business acquisitions or disposals (qualitative factor);
the information relates to an aspect of the Group’s operations that is important to its future performance (qualitative factor); and
the information is required under legislative requirements of the Corporations Act 2001, the Banking Act 1959 (Cth) or by the Group’s principal
regulators, including the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
This section of the financial statements:
outlines the basis upon which the Group’s financial statements have been prepared; and
discusses any new accounting standards or regulations that directly impact the financial statements.
BASIS OF PREPARATION
This financial report is a general purpose (Tier 1) financial report prepared by a ‘for profit’ entity, in accordance with Australian Accounting Standards
(AASs) and other authoritative pronouncements of the Australian Accounting Standards Board (AASB), the Corporations Act 2001, and International
Financial Reporting Standards (IFRS) and interpretations published by the International Accounting Standards Board (IASB).
We present the financial statements of the Group in Australian dollars, which is the Company’s functional and presentation currency. We have
rounded values to the nearest million dollars ($m), unless otherwise stated, as allowed under the ASIC Corporations (Rounding in Financial/Directors
Report) Instrument 2016/191. We measure the financial statements of each entity in the Group using the currency of the primary economic
environment in which that entity operates (the functional currency).
BASIS OF MEASUREMENT AND PRESENTATION
We have prepared the financial information in accordance with the historical cost basis - except the following assets and liabilities which we have
stated at their fair value:
financial instruments held for trading;
derivative financial instruments and in the case of fair value hedging, a fair value adjustment made to the underlying hedged item;
financial assets and financial liabilities designated at fair value through profit or loss;
financial assets at fair value through other comprehensive income; and
assets and liabilities classified as held for sale (except those required to be at carrying value).
In accordance with AASB 119 Employee Benefits (AASB 119) we have measured defined benefit obligations using the Projected Unit
During the 2022 financial year, the Group revised its treatment of ongoing trail commission payable to mortgage brokers and now recognises a
liability within Payables and other liabilities equal to the present value of expected future trail commission payments and a corresponding increase in
capitalised brokerage costs in Net loans and advances. Comparatives have not been restated.
The sale of Wealth Australia business to IOOF Holdings Limited (IOOF, now known as Insignia Financial Limited) and Zurich Financial Services Australia
(Zurich) completed across 2020 and 2019. The separation of the business sold to Zurich completed in early April 2022, and the business sold to IOOF
completed in early October 2022. The financial results of these divested businesses are treated as discontinued operations from a financial reporting
Credit Method.
perspective.
114
116116 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
INTEREST RATE BENCHMARK REFORM
ACCOUNTING STANDARDS ADOPTED IN THE PERIOD
There were no new accounting standards or interpretations adopted in 2022 that had a significant effect on the Group.
Accounting policies have been consistently applied, unless otherwise noted.
ACCOUNTING STANDARDS NOT EARLY ADOPTED
A number of new standards, amendments to standards and interpretations have been published but are not mandatory for the financial statements
for the year ended 30 September 2022 and have not been applied by the Group in preparing these financial statements. Further details of these are
set out below.
GENERAL HEDGE ACCOUNTING
requirements of AASB 139.
AASB 17 INSURANCE CONTRACTS (AASB 17)
AASB 9 Financial Instruments (AASB 9) introduces new hedge accounting requirements which more closely align accounting with risk management
activities undertaken when hedging both financial and non-financial risks. AASB 9 provides the Group with an accounting policy choice to continue to
apply the AASB 139 Financial Instruments: Recognition and Measurement (AASB 139) hedge accounting requirements until the International
Accounting Standards Board’s ongoing project on macro hedge accounting is completed. The Group continues to apply the hedge accounting
The final version of AASB 17 was issued in July 2017 and is not effective for the Group until 1 October 2023. It will replace AASB 4 Insurance Contracts,
AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. AASB 17 establishes principles for the recognition, measurement,
presentation and disclosure of insurance contracts.
The measurement, presentation and disclosure requirements under AASB 17 are significantly different from current accounting standards. Although
the overall profit recognised in respect of insurance contracts will not change, it is expected that the timing of profit recognition will change.
AASB 17 is not expected to have a material impact on the Group.
DEFERRED TAX RELATED TO ASSETS AND LIABILITIES ARISING FROM A SINGLE TRANSACTION
AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
amends AASB 112 Income Taxes and clarifies that entities are required to recognise deferred tax on transactions for which there is both an asset and a
liability and that give rise to equal taxable and deductible temporary differences. This may include transactions such as leases and decommissioning
or restoration obligations. This amendment is effective for the Group from 1 October 2023 and is not expected to have a significant impact.
Interbank offered rates (IBORs) have played a critical role in global financial markets, serving as reference rates for derivatives, loans and securities, and
in the valuation of financial instruments. The IBOR reforms have a wide-ranging impact for the Group and our customers given the fundamental
differences between IBORs and risk-free rates (RFRs). The key difference between IBORs and RFRs is that IBOR rates include a term and bank credit risk
premium, whereas RFRs do not. As a result of these differences, adjustments are required to an RFR to ensure contracts referencing an IBOR rate
transition on an economically comparable basis.
Update on the Group’s approach to interest rate benchmark reform
In line with the regulatory announcements made in 2021, the majority of IBOR rates, including Pound Sterling (GBP), Euro (EUR), Swiss Franc (CHF),
Japanese Yen (JPY), and the US Dollar (USD) 1-week and 2-month LIBOR rate settings ceased on 31 December 2021 and have been replaced by
alternative RFRs. This transition had an immaterial impact to the Group’s profit and loss. Through its loan and derivative transactions with customers,
issuance of debt and its asset and liability management activities the Group continues to have exposure to the remaining USD LIBOR settings and
other IBOR-related benchmarks that are due to largely cease by 30 June 2023.
The Group continues to manage the transition from the remaining USD LIBOR tenors and other remaining IBOR settings to RFR’s through its
enterprise-wide Benchmark Transition Program (the Program). The program is responsible for managing the risks associated with the transition
including operational, market, legal, conduct and financial reporting risks that may arise.
Exposures subject to benchmark reform as at 30 September 2022
The table below shows the Group’s exposure to interest rate benchmarks subject to IBOR reform. These are financial instruments that contractually
reference an IBOR benchmark planned to transition to an RFR and have a contractual maturity date beyond the planned IBOR cessation date.
As at 30 September 2022
Loan and advances1
Non-derivative financial assets1
Non-derivative financial liabilities2
Derivative asset (notional value)3
Derivative liability (notional value)3
Loan commitments1,4
USD Libor
$m
13,349
154
669
571,393
553,754
16,312
Others
$m
126
-
36
14,400
14,540
222
1. Excludes Expected Credit Losses (ECL).
2. Comprises floating rate debt issuances by the Group.
3. For cross-currency swaps, where both the receive and pay legs are in currencies subject to reform, the Group discloses the Australian dollar-equivalent notional amounts for both. Where one leg of a swap is
subject to reform, the Group discloses the notional amount of the receive leg.
4. For multi-currency IBOR referenced facilities, the undrawn balance has been allocated to the pricing currency of the facility or where there are multiple pricing currencies impacted by cessation, the most
likely currency of drawdown.
Hedge accounting exposures subject to IBOR reform
The Group has hedge-accounted relationships referencing USD LIBOR, primarily due to fixed rate investment securities and the Group’s fixed rate debt
issuances denominated in USD that are designated in fair value hedge accounting relationships. The table below details the carrying values of the
Group's USD exposures designated in hedge accounting relationships referencing LIBOR that will be impacted by reform. The nominal value of the
associated hedging instruments is also included:
Hedged items
Investment securities at FVOCI
Net loans and advances
Deposits and other borrowings
Debt issuances
Hedging instruments
Fair value hedges
Cash flow hedges
As at 30 September 2022
$m
8,457
216
163
19,861
Total notional amount
$m
30,318
286
Notional designated up to
30 June 2023
$m
8,523
-
Notional designated
beyond 30 June 2023
$m
21,795
286
116
117
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
117117
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
1. ABOUT OUR FINANCIAL STATEMENTS (continued)
INTEREST RATE BENCHMARK REFORM
ACCOUNTING STANDARDS ADOPTED IN THE PERIOD
Interbank offered rates (IBORs) have played a critical role in global financial markets, serving as reference rates for derivatives, loans and securities, and
There were no new accounting standards or interpretations adopted in 2022 that had a significant effect on the Group.
in the valuation of financial instruments. The IBOR reforms have a wide-ranging impact for the Group and our customers given the fundamental
differences between IBORs and risk-free rates (RFRs). The key difference between IBORs and RFRs is that IBOR rates include a term and bank credit risk
premium, whereas RFRs do not. As a result of these differences, adjustments are required to an RFR to ensure contracts referencing an IBOR rate
Accounting policies have been consistently applied, unless otherwise noted.
ACCOUNTING STANDARDS NOT EARLY ADOPTED
A number of new standards, amendments to standards and interpretations have been published but are not mandatory for the financial statements
for the year ended 30 September 2022 and have not been applied by the Group in preparing these financial statements. Further details of these are
set out below.
GENERAL HEDGE ACCOUNTING
AASB 9 Financial Instruments (AASB 9) introduces new hedge accounting requirements which more closely align accounting with risk management
activities undertaken when hedging both financial and non-financial risks. AASB 9 provides the Group with an accounting policy choice to continue to
apply the AASB 139 Financial Instruments: Recognition and Measurement (AASB 139) hedge accounting requirements until the International
Accounting Standards Board’s ongoing project on macro hedge accounting is completed. The Group continues to apply the hedge accounting
requirements of AASB 139.
AASB 17 INSURANCE CONTRACTS (AASB 17)
The final version of AASB 17 was issued in July 2017 and is not effective for the Group until 1 October 2023. It will replace AASB 4 Insurance Contracts,
AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. AASB 17 establishes principles for the recognition, measurement,
presentation and disclosure of insurance contracts.
The measurement, presentation and disclosure requirements under AASB 17 are significantly different from current accounting standards. Although
the overall profit recognised in respect of insurance contracts will not change, it is expected that the timing of profit recognition will change.
AASB 17 is not expected to have a material impact on the Group.
DEFERRED TAX RELATED TO ASSETS AND LIABILITIES ARISING FROM A SINGLE TRANSACTION
AASB 2021-5 Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities arising from a Single Transaction
amends AASB 112 Income Taxes and clarifies that entities are required to recognise deferred tax on transactions for which there is both an asset and a
liability and that give rise to equal taxable and deductible temporary differences. This may include transactions such as leases and decommissioning
or restoration obligations. This amendment is effective for the Group from 1 October 2023 and is not expected to have a significant impact.
transition on an economically comparable basis.
Update on the Group’s approach to interest rate benchmark reform
In line with the regulatory announcements made in 2021, the majority of IBOR rates, including Pound Sterling (GBP), Euro (EUR), Swiss Franc (CHF),
Japanese Yen (JPY), and the US Dollar (USD) 1-week and 2-month LIBOR rate settings ceased on 31 December 2021 and have been replaced by
alternative RFRs. This transition had an immaterial impact to the Group’s profit and loss. Through its loan and derivative transactions with customers,
issuance of debt and its asset and liability management activities the Group continues to have exposure to the remaining USD LIBOR settings and
other IBOR-related benchmarks that are due to largely cease by 30 June 2023.
The Group continues to manage the transition from the remaining USD LIBOR tenors and other remaining IBOR settings to RFR’s through its
enterprise-wide Benchmark Transition Program (the Program). The program is responsible for managing the risks associated with the transition
including operational, market, legal, conduct and financial reporting risks that may arise.
Exposures subject to benchmark reform as at 30 September 2022
The table below shows the Group’s exposure to interest rate benchmarks subject to IBOR reform. These are financial instruments that contractually
reference an IBOR benchmark planned to transition to an RFR and have a contractual maturity date beyond the planned IBOR cessation date.
As at 30 September 2022
Loan and advances1
Non-derivative financial assets1
Non-derivative financial liabilities2
Derivative asset (notional value)3
Derivative liability (notional value)3
Loan commitments1,4
1. Excludes Expected Credit Losses (ECL).
2. Comprises floating rate debt issuances by the Group.
Hedged items
Investment securities at FVOCI
Net loans and advances
Deposits and other borrowings
Debt issuances
Hedging instruments
Fair value hedges
Cash flow hedges
3. For cross-currency swaps, where both the receive and pay legs are in currencies subject to reform, the Group discloses the Australian dollar-equivalent notional amounts for both. Where one leg of a swap is
subject to reform, the Group discloses the notional amount of the receive leg.
4. For multi-currency IBOR referenced facilities, the undrawn balance has been allocated to the pricing currency of the facility or where there are multiple pricing currencies impacted by cessation, the most
likely currency of drawdown.
Hedge accounting exposures subject to IBOR reform
The Group has hedge-accounted relationships referencing USD LIBOR, primarily due to fixed rate investment securities and the Group’s fixed rate debt
issuances denominated in USD that are designated in fair value hedge accounting relationships. The table below details the carrying values of the
Group's USD exposures designated in hedge accounting relationships referencing LIBOR that will be impacted by reform. The nominal value of the
associated hedging instruments is also included:
As at 30 September 2022
Notional designated up to
Notional designated
30 June 2023
beyond 30 June 2023
Total notional amount
$m
8,523
-
$m
21,795
286
USD Libor
Others
$m
13,349
154
669
571,393
553,754
16,312
$m
126
-
36
14,400
14,540
222
$m
8,457
216
163
19,861
$m
30,318
286
116
117
118118 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
2. NET INTEREST INCOME
3. NON-INTEREST INCOME
Net interest income
Interest income by type of financial asset
Financial assets at amortised cost
Investment securities at FVOCI
Trading assets
Financial assets at FV through profit or loss
External interest income
Controlled entities' income
Interest income
Interest expense by type of financial liability
Financial liabilities at amortised cost
Securities sold short
Financial liabilities designated at FV through profit or loss
External interest expense
Controlled entities expense
Interest expense
Major bank levy
Net interest income1
Consolidated
The Company
2022
$m
2021
$m
2022
$m
2021
$m
21,737
1,107
700
65
23,609
-
23,609
(8,019)
(214)
(162)
(8,395)
-
(8,395)
(340)
14,874
18,188
16,289
13,767
866
446
29
19,529
-
19,529
(4,830)
(91)
(101)
(5,022)
-
(5,022)
(346)
14,161
834
547
177
17,847
561
18,408
(6,170)
(191)
(151)
(6,512)
(581)
(7,093)
(340)
10,975
596
325
124
14,812
535
15,347
(3,681)
(82)
(158)
(3,921)
(555)
(4,476)
(346)
10,525
1. Includes charges associated with customer remediation of nil (2021: -$86 million) for the Group and -$5 million (2021: -$82 million) for the Company.
RECOGNITION AND MEASUREMENT
NET INTEREST INCOME
Interest Income and Expense
We recognise interest income and expense in net interest income for all financial instruments, including those classified as held for trading,
assets measured at fair value through other comprehensive income and at fair value through profit or loss. We use the effective interest
rate method to calculate the amortised cost of assets held at amortised cost and to recognise interest income on financial assets measured
at fair value through other comprehensive income. The effective interest rate is the rate that discounts the stream of estimated future cash
receipts or payments over the expected life of the financial instrument or, when appropriate, a shorter period, to the net carrying amount
of the financial asset or liability. For assets subject to prepayment, we determine their expected life on the basis of historical behaviour of
the particular asset portfolio - taking into account contractual obligations and prepayment experience.
We recognise fees and costs, which form an integral part of the financial instrument (for example loan origination fees and costs), using the
effective interest rate method. These are presented as part of interest income or expense depending on whether the underlying financial
instrument is a financial asset or financial liability.
Major Bank Levy
The Major Bank Levy Act 2017 (levy or major bank levy) applies a rate of 0.06% to certain liabilities of the Company. The Group has
determined that the levy represents a finance cost for the Group and the Company and it is presented as interest expense in the Income
Statement.
Non-interest income
Fee and commission income
Lending fees1
Non-lending fees
Commissions
Funds management income
External fee and commission income
Controlled entities' income
Fee and commission income
Fee and commission expense
Net fee and commission income
Other income
Net foreign exchange earnings and other financial instruments income2
Gain on completion of ANZ Worldline partnership
Impairment of interest in controlled entities
Loss on disposal of ANZ Share Investing business
Release of foreign currency translation reserve
Loss on disposal of financial planning and advice business
Dividends received from controlled entities
Other
Other income
Other operating income
Net income from insurance business
Share of associates' profit/(loss)3
Non-interest income4
Consolidated
The Company
2022
$m
2021
$m
2022
$m
2021
$m
374
2,394
103
261
3,132
-
3,132
(1,160)
1,972
1,993
307
-
-
(65)
(62)
-
90
2,263
4,235
140
177
4,552
474
2,552
97
287
3,410
-
3,410
(1,267)
2,143
1,371
(251)
-
-
-
-
-
62
1,182
3,325
110
(176)
3,259
340
1,744
74
27
2,185
244
2,429
(695)
1,734
1,296
307
(180)
-
-
(22)
3,181
108
4,690
6,424
-
(12)
436
1,961
65
5
2,467
235
2,702
(836)
1,866
1,064
12
-
-
-
-
1,845
67
2,988
4,854
-
(1)
1. Lending fees exclude fees treated as part of the effective yield calculation in Interest income.
2. Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk, ineffective
portions of cash flow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit or loss.
3. Includes -$347 million of the Group’s share of AMMB Holdings Berhad’s 1Malaysia Development Berhad settlement and goodwill write-off in 2021.
4. Includes charges associated with customer remediation of -$34 million (2021: -$56 million) for the Group and -$20 million (2021: -$84 million) for the Company.
6,412
4,853
118
119
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
119119
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
2. NET INTEREST INCOME
3. NON-INTEREST INCOME
Net interest income
Interest income by type of financial asset
Financial assets at amortised cost
Investment securities at FVOCI
Trading assets
Financial assets at FV through profit or loss
External interest income
Controlled entities' income
Interest income
Interest expense by type of financial liability
Financial liabilities at amortised cost
Securities sold short
Financial liabilities designated at FV through profit or loss
External interest expense
Controlled entities expense
Interest expense
Major bank levy
Net interest income1
Consolidated
The Company
2022
$m
2021
$m
2022
$m
2021
$m
18,188
16,289
13,767
21,737
1,107
700
65
23,609
-
23,609
(8,019)
(214)
(162)
(8,395)
-
(8,395)
(340)
14,874
866
446
29
19,529
-
19,529
(4,830)
(91)
(101)
(5,022)
-
(5,022)
(346)
14,161
834
547
177
17,847
561
18,408
(6,170)
(191)
(151)
(6,512)
(581)
(7,093)
(340)
10,975
596
325
124
14,812
535
15,347
(3,681)
(82)
(158)
(3,921)
(555)
(4,476)
(346)
10,525
1. Includes charges associated with customer remediation of nil (2021: -$86 million) for the Group and -$5 million (2021: -$82 million) for the Company.
RECOGNITION AND MEASUREMENT
NET INTEREST INCOME
Interest Income and Expense
We recognise interest income and expense in net interest income for all financial instruments, including those classified as held for trading,
assets measured at fair value through other comprehensive income and at fair value through profit or loss. We use the effective interest
rate method to calculate the amortised cost of assets held at amortised cost and to recognise interest income on financial assets measured
at fair value through other comprehensive income. The effective interest rate is the rate that discounts the stream of estimated future cash
receipts or payments over the expected life of the financial instrument or, when appropriate, a shorter period, to the net carrying amount
of the financial asset or liability. For assets subject to prepayment, we determine their expected life on the basis of historical behaviour of
the particular asset portfolio - taking into account contractual obligations and prepayment experience.
We recognise fees and costs, which form an integral part of the financial instrument (for example loan origination fees and costs), using the
effective interest rate method. These are presented as part of interest income or expense depending on whether the underlying financial
instrument is a financial asset or financial liability.
The Major Bank Levy Act 2017 (levy or major bank levy) applies a rate of 0.06% to certain liabilities of the Company. The Group has
determined that the levy represents a finance cost for the Group and the Company and it is presented as interest expense in the Income
Major Bank Levy
Statement.
Non-interest income
Fee and commission income
Lending fees1
Non-lending fees
Commissions
Funds management income
External fee and commission income
Controlled entities' income
Fee and commission income
Fee and commission expense
Net fee and commission income
Other income
Net foreign exchange earnings and other financial instruments income2
Gain on completion of ANZ Worldline partnership
Impairment of interest in controlled entities
Loss on disposal of ANZ Share Investing business
Release of foreign currency translation reserve
Loss on disposal of financial planning and advice business
Dividends received from controlled entities
Other
Other income
Other operating income
Net income from insurance business
Share of associates' profit/(loss)3
Non-interest income4
Consolidated
The Company
2022
$m
2021
$m
2022
$m
2021
$m
374
2,394
103
261
3,132
-
3,132
(1,160)
1,972
1,993
307
-
-
(65)
(62)
-
90
2,263
4,235
140
177
4,552
474
2,552
97
287
3,410
-
3,410
(1,267)
2,143
1,371
-
-
(251)
-
-
-
62
1,182
3,325
110
(176)
3,259
340
1,744
74
27
2,185
244
2,429
(695)
1,734
1,296
307
(180)
-
-
(22)
3,181
108
4,690
6,424
-
(12)
436
1,961
65
5
2,467
235
2,702
(836)
1,866
1,064
-
-
12
-
-
1,845
67
2,988
4,854
-
(1)
6,412
4,853
1. Lending fees exclude fees treated as part of the effective yield calculation in Interest income.
2. Includes fair value movements (excluding realised and accrued interest) on derivatives not designated as accounting hedges entered into to manage interest rate and foreign exchange risk, ineffective
portions of cash flow hedges, and fair value movements in financial assets and liabilities designated at fair value through profit or loss.
3. Includes -$347 million of the Group’s share of AMMB Holdings Berhad’s 1Malaysia Development Berhad settlement and goodwill write-off in 2021.
4. Includes charges associated with customer remediation of -$34 million (2021: -$56 million) for the Group and -$20 million (2021: -$84 million) for the Company.
118
119
120120 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
3. NON-INTEREST INCOME (continued)
3. NON-INTEREST INCOME (continued)
RECOGNITION AND MEASUREMENT
NET INCOME FROM INSURANCE BUSINESS
We recognise:
premiums received (net of reinsurance premiums paid) based on an assessment of the likely pattern in which risk will emerge over the
term of the policies written. This assessment is undertaken periodically and updated in accordance with the latest pattern of risk
emergence; and
claims incurred net of reinsurance, on an accruals basis once the liability to the policy owner has been established under the terms of
the contract and through actuarial assumptions of future claims.
SHARE OF ASSOCIATES’ PROFIT/(LOSS)
The equity method is applied to accounting for associates. Under the equity method, our share of the after tax results of associates is
included in the Income Statement and the Statement of Comprehensive Income.
RECOGNITION AND MEASUREMENT
OTHER OPERATING INCOME
Fee and Commission Revenue
We recognise fee and commission revenue arising from contracts with customers (a) over time when the performance obligation is
satisfied across more than one reporting period, or (b) at a point in time when the performance obligation is satisfied immediately or is
satisfied within one reporting period.
lending fees exclude fees treated as part of the effective yield calculation of interest income. Lending fees include certain guarantee and
commitment fees where the loan or guarantee is not likely to be drawn upon, and other fees charged for providing customers a distinct
good or service that are recognised separately from the underlying lending product.
non-lending fees include fees associated with deposit and credit card accounts, interchange fees and fees charged for specific customer
transactions such as international money transfers. Where the Group provides multiple goods or services to a customer under the same
contract, the Group allocates the transaction price of the contract to distinct performance obligations based on the relative stand-alone
selling price of each performance obligation. Revenue is recognised as each performance obligation is satisfied.
commissions represent fees from third parties where we act as an agent by arranging a third party (such as an insurance provider) to
provide goods and services to a customer. In such cases, we are not primarily responsible for providing the underlying good or service
to the customer. If the Group collects funds on behalf of a third party when acting as an agent, we only recognise the net commission it
retains as revenue. When the commission is variable based on factors outside our control (such as a trail commission), revenue is only
recognised if it is highly probable that a significant reversal of the variable amount will not be required in future periods.
funds management income represents fees earned from customers for providing financial advice and fees for asset management
services and advice provided to investment funds. Revenue is recognised either at the point the financial advice is provided or over the
period in which the asset management services are delivered. Performance fees associated with funds management activities are only
recognised when it becomes highly probable the performance hurdle will be achieved.
Net Foreign Exchange Earnings and Other Financial Instruments Income
We recognise the following as net foreign exchange earnings and other financial instruments income:
exchange rate differences arising on the settlement of monetary items and translation differences on monetary items translated at rates
different to those at which they were initially recognised or included in a previous financial report;
fair value movements (excluding realised and accrued interest) on derivatives that we use to manage interest rate and foreign exchange
risk on funding instruments not designated as accounting hedges;
the ineffective portions of fair value hedges, cash flow hedges and net investment hedges;
immediately upon sale or repayment of a hedged item, the unamortised fair value adjustments to items designated as fair value hedges
and amounts accumulated in equity related to designated cash flow hedges;
fair value movements on financial assets and financial liabilities designated at fair value through profit or loss or held for trading;
amounts released from the fair value through other comprehensive income (FVOCI) reserve when a debt instrument classified as FVOCI
is sold; and
the gain or loss on derecognition of financial assets or liabilities measured at amortised cost.
Gain or Loss on Disposal of Non-Financial Assets
The gain or loss on the disposal of assets is the difference between the carrying value of the asset and the proceeds of disposal net of costs.
This is recognised in Other income in the year in which the significant risks and rewards from the asset transfer to the buyer.
When a non-financial asset or group of assets is classified as held for sale, the difference between the carrying value immediately prior to
reclassification and the fair value less costs to sell is recognised in Other operating income to align with the classification of gain or loss on
sale that would have applied if the sale had completed during the year.
120
121
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
121121
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
3. NON-INTEREST INCOME (continued)
3. NON-INTEREST INCOME (continued)
RECOGNITION AND MEASUREMENT
RECOGNITION AND MEASUREMENT
NET INCOME FROM INSURANCE BUSINESS
We recognise:
premiums received (net of reinsurance premiums paid) based on an assessment of the likely pattern in which risk will emerge over the
term of the policies written. This assessment is undertaken periodically and updated in accordance with the latest pattern of risk
emergence; and
claims incurred net of reinsurance, on an accruals basis once the liability to the policy owner has been established under the terms of
the contract and through actuarial assumptions of future claims.
SHARE OF ASSOCIATES’ PROFIT/(LOSS)
The equity method is applied to accounting for associates. Under the equity method, our share of the after tax results of associates is
included in the Income Statement and the Statement of Comprehensive Income.
OTHER OPERATING INCOME
Fee and Commission Revenue
satisfied within one reporting period.
We recognise fee and commission revenue arising from contracts with customers (a) over time when the performance obligation is
satisfied across more than one reporting period, or (b) at a point in time when the performance obligation is satisfied immediately or is
lending fees exclude fees treated as part of the effective yield calculation of interest income. Lending fees include certain guarantee and
commitment fees where the loan or guarantee is not likely to be drawn upon, and other fees charged for providing customers a distinct
good or service that are recognised separately from the underlying lending product.
non-lending fees include fees associated with deposit and credit card accounts, interchange fees and fees charged for specific customer
transactions such as international money transfers. Where the Group provides multiple goods or services to a customer under the same
contract, the Group allocates the transaction price of the contract to distinct performance obligations based on the relative stand-alone
selling price of each performance obligation. Revenue is recognised as each performance obligation is satisfied.
commissions represent fees from third parties where we act as an agent by arranging a third party (such as an insurance provider) to
provide goods and services to a customer. In such cases, we are not primarily responsible for providing the underlying good or service
to the customer. If the Group collects funds on behalf of a third party when acting as an agent, we only recognise the net commission it
retains as revenue. When the commission is variable based on factors outside our control (such as a trail commission), revenue is only
recognised if it is highly probable that a significant reversal of the variable amount will not be required in future periods.
funds management income represents fees earned from customers for providing financial advice and fees for asset management
services and advice provided to investment funds. Revenue is recognised either at the point the financial advice is provided or over the
period in which the asset management services are delivered. Performance fees associated with funds management activities are only
recognised when it becomes highly probable the performance hurdle will be achieved.
Net Foreign Exchange Earnings and Other Financial Instruments Income
We recognise the following as net foreign exchange earnings and other financial instruments income:
exchange rate differences arising on the settlement of monetary items and translation differences on monetary items translated at rates
different to those at which they were initially recognised or included in a previous financial report;
fair value movements (excluding realised and accrued interest) on derivatives that we use to manage interest rate and foreign exchange
risk on funding instruments not designated as accounting hedges;
the ineffective portions of fair value hedges, cash flow hedges and net investment hedges;
immediately upon sale or repayment of a hedged item, the unamortised fair value adjustments to items designated as fair value hedges
and amounts accumulated in equity related to designated cash flow hedges;
fair value movements on financial assets and financial liabilities designated at fair value through profit or loss or held for trading;
amounts released from the fair value through other comprehensive income (FVOCI) reserve when a debt instrument classified as FVOCI
is sold; and
the gain or loss on derecognition of financial assets or liabilities measured at amortised cost.
Gain or Loss on Disposal of Non-Financial Assets
The gain or loss on the disposal of assets is the difference between the carrying value of the asset and the proceeds of disposal net of costs.
This is recognised in Other income in the year in which the significant risks and rewards from the asset transfer to the buyer.
When a non-financial asset or group of assets is classified as held for sale, the difference between the carrying value immediately prior to
reclassification and the fair value less costs to sell is recognised in Other operating income to align with the classification of gain or loss on
sale that would have applied if the sale had completed during the year.
120
121
122122 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
4. OPERATING EXPENSES
4. OPERATING EXPENSES (continued)
Consolidated
The Company
Personnel
Salaries and related costs
Superannuation costs
Other
Personnel
Premises
Rent
Depreciation
Other
Premises
Technology
Depreciation and amortisation
Subscription licences and outsourced services
Other
Technology
Restructuring
Other
Advertising and public relations
Professional fees
Freight, stationery, postage and communication
Other
Other
Operating expenses1
2022
$m
4,754
375
167
5,296
88
419
214
721
578
899
144
1,621
101
165
935
172
568
1,840
9,579
2021
$m
4,425
337
184
4,946
85
446
174
705
638
786
164
1,588
127
178
769
185
553
1,685
9,051
2022
$m
3,494
317
127
3,938
67
344
168
579
521
648
162
1,331
78
128
864
128
1,077
2,197
8,123
2021
$m
3,241
281
110
3,632
62
371
131
564
585
587
170
1,342
77
134
714
141
990
1,979
7,594
RECOGNITION AND MEASUREMENT
Operating expenses are recognised as services are provided to the Group, over the period in which an asset is consumed, or once a liability
OPERATING EXPENSES
is created.
settled.
cash outflows.
SALARIES AND RELATED COSTS - ANNUAL LEAVE, LONG SERVICE LEAVE AND OTHER EMPLOYEE BENEFITS
Wages and salaries, annual leave and other employee entitlements expected to be paid or settled within twelve months of employees
rendering service are measured at their nominal amounts using remuneration rates that the Group expects to pay when the liabilities are
We accrue employee entitlements relating to long service leave using an actuarial calculation. It includes assumptions regarding staff
departures, leave utilisation and future salary increases. The result is then discounted using market yields at the reporting date. The market
yields are determined from a blended rate of high quality corporate bonds with terms to maturity that closely match the estimated future
If we expect to pay short term cash bonuses, then a liability is recognised when the Group has a present legal or constructive obligation to
pay this amount (as a result of past service provided by the employee) and the obligation can be reliably measured.
Personnel expenses also include share-based payments which may be cash or equity settled. We calculate the fair value of equity settled
remuneration at grant date, which is then amortised over the vesting period, with a corresponding increase in share capital or the share
option reserve as applicable. When we estimate the fair value, we take into account market vesting conditions, such as share price
performance conditions. We take non-market vesting conditions, such as service conditions, into account by adjusting the number of
equity instruments included in the expense.
After the grant of an equity-based award, the amount we recognise as an expense is reversed when non-market vesting conditions are not
met, for example an employee fails to satisfy the minimum service period specified in the award on resignation, termination or notice of
dismissal for serious misconduct. However, we do not reverse the expense if the award does not vest due to the failure to meet a market-
based performance condition.
Employee Share and Option Plans.
Further information on share-based payment schemes operated by the Group during the current and prior year is included in Note 31
1. Includes customer remediation expenses of $190 million (2021: $185 million) for the Group and $189 million (2021: $148 million) for the Company, litigation settlement expenses of $10 million (2021: $69
million) for the Group and $9 million (2021: $69 million) for the Company, and merger and acquisition related costs of $12 million (2021: nil) for the Group and the Company.
122
123
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
123123
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
4. OPERATING EXPENSES
4. OPERATING EXPENSES (continued)
Consolidated
The Company
Personnel
Salaries and related costs
Superannuation costs
Other
Personnel
Premises
Rent
Depreciation
Other
Premises
Technology
Other
Technology
Restructuring
Other
Depreciation and amortisation
Subscription licences and outsourced services
Advertising and public relations
Professional fees
Freight, stationery, postage and communication
Other
Other
Operating expenses1
2022
$m
4,754
375
167
5,296
88
419
214
721
578
899
144
1,621
101
165
935
172
568
1,840
9,579
2021
$m
4,425
337
184
4,946
85
446
174
705
638
786
164
1,588
127
178
769
185
553
1,685
9,051
2022
$m
3,494
317
127
3,938
67
344
168
579
521
648
162
1,331
78
128
864
128
1,077
2,197
8,123
2021
$m
3,241
281
110
3,632
62
371
131
564
585
587
170
1,342
77
134
714
141
990
1,979
7,594
RECOGNITION AND MEASUREMENT
OPERATING EXPENSES
Operating expenses are recognised as services are provided to the Group, over the period in which an asset is consumed, or once a liability
is created.
SALARIES AND RELATED COSTS - ANNUAL LEAVE, LONG SERVICE LEAVE AND OTHER EMPLOYEE BENEFITS
Wages and salaries, annual leave and other employee entitlements expected to be paid or settled within twelve months of employees
rendering service are measured at their nominal amounts using remuneration rates that the Group expects to pay when the liabilities are
settled.
We accrue employee entitlements relating to long service leave using an actuarial calculation. It includes assumptions regarding staff
departures, leave utilisation and future salary increases. The result is then discounted using market yields at the reporting date. The market
yields are determined from a blended rate of high quality corporate bonds with terms to maturity that closely match the estimated future
cash outflows.
If we expect to pay short term cash bonuses, then a liability is recognised when the Group has a present legal or constructive obligation to
pay this amount (as a result of past service provided by the employee) and the obligation can be reliably measured.
Personnel expenses also include share-based payments which may be cash or equity settled. We calculate the fair value of equity settled
remuneration at grant date, which is then amortised over the vesting period, with a corresponding increase in share capital or the share
option reserve as applicable. When we estimate the fair value, we take into account market vesting conditions, such as share price
performance conditions. We take non-market vesting conditions, such as service conditions, into account by adjusting the number of
equity instruments included in the expense.
After the grant of an equity-based award, the amount we recognise as an expense is reversed when non-market vesting conditions are not
met, for example an employee fails to satisfy the minimum service period specified in the award on resignation, termination or notice of
dismissal for serious misconduct. However, we do not reverse the expense if the award does not vest due to the failure to meet a market-
based performance condition.
Further information on share-based payment schemes operated by the Group during the current and prior year is included in Note 31
Employee Share and Option Plans.
1. Includes customer remediation expenses of $190 million (2021: $185 million) for the Group and $189 million (2021: $148 million) for the Company, litigation settlement expenses of $10 million (2021: $69
million) for the Group and $9 million (2021: $69 million) for the Company, and merger and acquisition related costs of $12 million (2021: nil) for the Group and the Company.
122
123
124124 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
5. INCOME TAX
INCOME TAX EXPENSE
5. INCOME TAX (continued)
TAX CONSOLIDATION
Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in profit or loss:
The Company and all its wholly owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. The Company is
Consolidated
The Company
Profit before income tax from continuing operations
Prima facie income tax expense at 30%
Tax effect of permanent differences:
Net (gain)/loss from divestments/closures
Share of associates' (profit)/loss
Interest on convertible instruments
Overseas tax rate differential
Provision for foreign tax on dividend repatriation
Rebatable and non-assessable dividends
Impairment of interest in controlled entities
Other
Subtotal
Income tax (over)/under provided in previous years
Income tax expense
Current tax expense
Adjustments recognised in the current year in relation to the current
tax of prior years
Deferred tax expense/(income) relating to the origination and reversal
of temporary differences
Income tax expense
Australia
Overseas
Effective tax rate
2022
$m
10,079
3,024
(83)
(53)
49
(128)
155
-
-
4
2,968
(28)
2,940
2,694
(28)
274
2,940
1,844
1,096
29.2%
2021
$m
8,936
2,681
71
53
44
(88)
37
-
-
(26)
2,772
(16)
2,756
2,616
(16)
156
2,756
1,897
859
30.8%
2022
$m
9,529
2,859
(113)
4
49
(70)
150
(954)
54
(21)
1,958
(25)
1,933
1,725
(25)
233
1,933
1,755
178
20.3%
2021
$m
8,253
2,476
(4)
-
44
(33)
33
(554)
-
(23)
1,939
(17)
1,922
1,743
(17)
196
1,922
1,806
116
23.3%
the head entity in the tax-consolidated group. We recognise each of the following in the separate financial statements of members of the tax
consolidated group on a ‘group allocation’ basis: tax expense/income, and deferred tax liabilities/assets that arise from temporary differences for
members of the tax-consolidated group. The Company (as head entity in the tax-consolidated group) recognises current tax liabilities and assets of
the tax-consolidated group.
Under a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the
Company and each member of the tax-consolidated group in relation to the tax contribution amounts paid or payable between the Company and
the other members of the tax-consolidated group.
Members of the tax-consolidated group have also entered into a tax sharing agreement that provides for the allocation of income tax liabilities
between the entities were the head entity to default on its income tax payment obligations.
UNRECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Unrecognised deferred tax assets related to unused realised tax losses (on revenue account) total $1 million (2021: $6 million) for the Group and nil
(2021: $2 million) for the Company.
Unrecognised deferred tax liabilities related to additional potential foreign tax costs (assuming all retained earnings in offshore branches and
subsidiaries are repatriated) total $250 million (2021: $344 million) for the Group and $18 million (2021: $15 million) for the Company.
RECOGNITION AND MEASUREMENT
INCOME TAX EXPENSE
Income tax expense comprises both current and deferred taxes and is based on the accounting profit adjusted for differences in the
accounting and tax treatments of income and expenses (that is, taxable income). We recognise tax expense in profit or loss except when
the tax relates to items recognised directly in equity and other comprehensive income, in which case we recognise the tax directly in
equity or other comprehensive income respectively.
CURRENT TAX EXPENSE
Current tax is the tax we expect to pay on taxable income for the year, based on tax rates (and tax laws) which are enacted at the reporting
date. We recognise current tax as a liability (or asset) to the extent that it is unpaid (or refundable).
DEFERRED TAX ASSETS AND LIABILITIES
We account for deferred tax using the balance sheet method. Deferred tax arises because the accounting income is not always the same as
the taxable income. This creates temporary differences, which usually reverse over time. Until they reverse, we recognise a deferred tax
asset, or liability, on the balance sheet. We measure deferred taxes at the tax rates that we expect will apply to the period(s) when the asset
is realised, or the liability settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the reporting date.
We offset current and deferred tax assets and liabilities only to the extent that:
they relate to income taxes imposed by the same taxation authority;
there is a legal right and intention to settle on a net basis; and
it is allowed under the tax law of the relevant jurisdiction.
KEY JUDGEMENTS AND ESTIMATES
Judgement is required in determining provisions held in respect of uncertain tax positions. The Group estimates its tax liabilities based on
its understanding of the relevant law in each of the countries in which it operates and seeks independent advice where appropriate.
124
125
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
125125
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
5. INCOME TAX
INCOME TAX EXPENSE
Reconciliation of the prima facie income tax expense on pre-tax profit with the income tax expense recognised in profit or loss:
Consolidated
The Company
Profit before income tax from continuing operations
Prima facie income tax expense at 30%
Tax effect of permanent differences:
Net (gain)/loss from divestments/closures
Share of associates' (profit)/loss
Interest on convertible instruments
Overseas tax rate differential
Provision for foreign tax on dividend repatriation
Rebatable and non-assessable dividends
Impairment of interest in controlled entities
Income tax (over)/under provided in previous years
Other
Subtotal
Income tax expense
Current tax expense
tax of prior years
of temporary differences
Income tax expense
Australia
Overseas
Effective tax rate
Adjustments recognised in the current year in relation to the current
Deferred tax expense/(income) relating to the origination and reversal
2022
$m
10,079
3,024
(83)
(53)
49
(128)
155
-
-
4
2,968
(28)
2,940
2,694
(28)
274
2,940
1,844
1,096
29.2%
2021
$m
8,936
2,681
71
53
44
(88)
37
-
-
(26)
2,772
(16)
2,756
2,616
(16)
156
2,756
1,897
859
30.8%
2022
$m
9,529
2,859
(113)
4
49
(70)
150
(954)
54
(21)
1,958
(25)
1,933
1,725
(25)
233
1,933
1,755
178
20.3%
2021
$m
8,253
2,476
(4)
-
44
(33)
33
(554)
-
(23)
1,939
(17)
1,922
1,743
(17)
196
1,922
1,806
116
23.3%
5. INCOME TAX (continued)
TAX CONSOLIDATION
The Company and all its wholly owned Australian resident entities are part of a tax-consolidated group under Australian taxation law. The Company is
the head entity in the tax-consolidated group. We recognise each of the following in the separate financial statements of members of the tax
consolidated group on a ‘group allocation’ basis: tax expense/income, and deferred tax liabilities/assets that arise from temporary differences for
members of the tax-consolidated group. The Company (as head entity in the tax-consolidated group) recognises current tax liabilities and assets of
the tax-consolidated group.
Under a tax funding arrangement between the entities in the tax-consolidated group, amounts are recognised as payable to or receivable by the
Company and each member of the tax-consolidated group in relation to the tax contribution amounts paid or payable between the Company and
the other members of the tax-consolidated group.
Members of the tax-consolidated group have also entered into a tax sharing agreement that provides for the allocation of income tax liabilities
between the entities were the head entity to default on its income tax payment obligations.
UNRECOGNISED DEFERRED TAX ASSETS AND LIABILITIES
Unrecognised deferred tax assets related to unused realised tax losses (on revenue account) total $1 million (2021: $6 million) for the Group and nil
(2021: $2 million) for the Company.
Unrecognised deferred tax liabilities related to additional potential foreign tax costs (assuming all retained earnings in offshore branches and
subsidiaries are repatriated) total $250 million (2021: $344 million) for the Group and $18 million (2021: $15 million) for the Company.
RECOGNITION AND MEASUREMENT
INCOME TAX EXPENSE
Income tax expense comprises both current and deferred taxes and is based on the accounting profit adjusted for differences in the
accounting and tax treatments of income and expenses (that is, taxable income). We recognise tax expense in profit or loss except when
the tax relates to items recognised directly in equity and other comprehensive income, in which case we recognise the tax directly in
equity or other comprehensive income respectively.
CURRENT TAX EXPENSE
Current tax is the tax we expect to pay on taxable income for the year, based on tax rates (and tax laws) which are enacted at the reporting
date. We recognise current tax as a liability (or asset) to the extent that it is unpaid (or refundable).
DEFERRED TAX ASSETS AND LIABILITIES
We account for deferred tax using the balance sheet method. Deferred tax arises because the accounting income is not always the same as
the taxable income. This creates temporary differences, which usually reverse over time. Until they reverse, we recognise a deferred tax
asset, or liability, on the balance sheet. We measure deferred taxes at the tax rates that we expect will apply to the period(s) when the asset
is realised, or the liability settled, based on tax rates (and tax laws) that have been enacted or substantially enacted at the reporting date.
We offset current and deferred tax assets and liabilities only to the extent that:
they relate to income taxes imposed by the same taxation authority;
there is a legal right and intention to settle on a net basis; and
it is allowed under the tax law of the relevant jurisdiction.
KEY JUDGEMENTS AND ESTIMATES
Judgement is required in determining provisions held in respect of uncertain tax positions. The Group estimates its tax liabilities based on
its understanding of the relevant law in each of the countries in which it operates and seeks independent advice where appropriate.
124
125
126126 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
6. DIVIDENDS
ORDINARY SHARE DIVIDENDS
Dividends are provided for in the financial statements once determined, accordingly, the final dividend announced for the current financial year is
provided for and paid in the following financial year.
6. DIVIDENDS (continued)
DIVIDEND FRANKING ACCOUNT
Dividends
Financial Year 2021
2020 final dividend paid1,2
2021 interim dividend paid1,2
Bonus option plan adjustment
Dividends paid during the year ended 30 September 2021
Cash
Dividend reinvestment plan3
Dividends paid during the year ended 30 September 2021
Financial Year 2022
2021 final dividend paid1,2
2022 interim dividend paid1,2
Bonus option plan adjustment
Dividends paid during the year ended 30 September 2022
Cash
Dividend reinvestment plan3
Dividends paid during the year ended 30 September 2022
% of total
Amount
per share
Total dividend
$m
Australian franking credits available at 30% tax rate
New Zealand imputation credits available (which can be attached to our Australian
dividends but may only be used by New Zealand resident shareholders)
35 cents
70 cents
72 cents
72 cents
90.0%
10.0%
90.2%
9.8%
994
1,992
(58)
2,928
2,635
293
2,928
2,030
2,012
(77)
3,965
3,577
388
3,965
The above amounts represent the balances of the franking accounts as at the end of the financial year, adjusted for:
franking credits that will arise from the payment of income tax payable as at the end of the financial year; and
franking credits/debits from the receipt/payment of dividends that have been recognised as tax receivables/payables as at the end of the financial
year.
The proposed 2022 final dividend will utilise the entire balance of $396 million franking credits available at 30 September 2022. Instalment tax
payments on account of the 2022 financial year, which will be made after 30 September 2022, will generate sufficient franking credits to enable the
2022 final dividend to be fully franked. The extent to which future dividends will be franked will depend on a number of factors, including the level of
profits generated by the Group that will be subject to tax in Australia.
RESTRICTIONS ON THE PAYMENT OF DIVIDENDS
APRA’s written approval is required before paying dividends on ANZ ordinary shares if:
the aggregate dividends exceed the Company’s after tax earnings (in calculating those after tax earnings, we take into account any payments we
made on senior capital instruments) in the financial year to which they relate; or
the Group’s Common Equity Tier 1 capital ratio falls within capital range buffers specified by APRA.
If the Company fails to pay a dividend or distribution on its ANZ Capital Notes or ANZ Capital Securities on the scheduled payment date, it may
(subject to a number of exceptions) be restricted from resolving to pay or paying any dividend on the ANZ ordinary shares.
Currency
AUD
NZD
2022
$m
396
5,000
2021
$m
772
5,020
Dividends announced and to be paid after year-end
Payment date
Amount
per share
Total
dividend
$m
2022 final dividend (fully franked for Australian tax, New Zealand imputation
credit NZD 9 cents per share)
15 December 2022
74 cents
2,213
1. Carries New Zealand imputation credits of NZD 9 cents for the 2022 interim dividend, NZD 8 cents for the 2021 final dividend and 2021 interim dividend, and NZD 4 cents for the 2020 final dividend.
2. Fully franked for Australian tax purposes (30% tax rate).
3. Includes on-market share purchases for the DRP of $204 million (2021: $199 million).
DIVIDEND REINVESTMENT PLAN AND BONUS OPTION PLAN
Eligible shareholders can elect to reinvest their dividend entitlement into ANZ ordinary shares under the Company’s Dividend Reinvestment Plan
(DRP). Eligible shareholders can elect to forgo their dividend entitlement and instead receive ANZ ordinary shares under the Company’s Bonus Option
Plan (BOP). For the 2022 final dividend, DRP and BOP participation will be satisfied by an issue of new ANZ ordinary shares. There will be no discount
applied to the DRP and BOP price.
Refer to Note 24 Shareholders’ Equity for details of shares the Company purchased or issued in respect of the DRP and BOP.
126
127
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
127127
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
Dividends are provided for in the financial statements once determined, accordingly, the final dividend announced for the current financial year is
6. DIVIDENDS
ORDINARY SHARE DIVIDENDS
provided for and paid in the following financial year.
Dividends paid during the year ended 30 September 2021
Dividends paid during the year ended 30 September 2021
Dividends
Financial Year 2021
2020 final dividend paid1,2
2021 interim dividend paid1,2
Bonus option plan adjustment
Cash
Dividend reinvestment plan3
Financial Year 2022
2021 final dividend paid1,2
2022 interim dividend paid1,2
Bonus option plan adjustment
Cash
Dividend reinvestment plan3
Dividends paid during the year ended 30 September 2022
Dividends paid during the year ended 30 September 2022
6. DIVIDENDS (continued)
DIVIDEND FRANKING ACCOUNT
Total dividend
Australian franking credits available at 30% tax rate
New Zealand imputation credits available (which can be attached to our Australian
dividends but may only be used by New Zealand resident shareholders)
Currency
AUD
NZD
2022
$m
396
5,000
2021
$m
772
5,020
The above amounts represent the balances of the franking accounts as at the end of the financial year, adjusted for:
franking credits that will arise from the payment of income tax payable as at the end of the financial year; and
franking credits/debits from the receipt/payment of dividends that have been recognised as tax receivables/payables as at the end of the financial
year.
The proposed 2022 final dividend will utilise the entire balance of $396 million franking credits available at 30 September 2022. Instalment tax
payments on account of the 2022 financial year, which will be made after 30 September 2022, will generate sufficient franking credits to enable the
2022 final dividend to be fully franked. The extent to which future dividends will be franked will depend on a number of factors, including the level of
profits generated by the Group that will be subject to tax in Australia.
RESTRICTIONS ON THE PAYMENT OF DIVIDENDS
APRA’s written approval is required before paying dividends on ANZ ordinary shares if:
the aggregate dividends exceed the Company’s after tax earnings (in calculating those after tax earnings, we take into account any payments we
made on senior capital instruments) in the financial year to which they relate; or
the Group’s Common Equity Tier 1 capital ratio falls within capital range buffers specified by APRA.
If the Company fails to pay a dividend or distribution on its ANZ Capital Notes or ANZ Capital Securities on the scheduled payment date, it may
(subject to a number of exceptions) be restricted from resolving to pay or paying any dividend on the ANZ ordinary shares.
Amount
per share
35 cents
70 cents
72 cents
72 cents
% of total
90.0%
10.0%
90.2%
9.8%
$m
994
1,992
(58)
2,928
2,635
293
2,928
2,030
2,012
(77)
3,965
3,577
388
3,965
Dividends announced and to be paid after year-end
Payment date
2022 final dividend (fully franked for Australian tax, New Zealand imputation
credit NZD 9 cents per share)
15 December 2022
74 cents
2,213
1. Carries New Zealand imputation credits of NZD 9 cents for the 2022 interim dividend, NZD 8 cents for the 2021 final dividend and 2021 interim dividend, and NZD 4 cents for the 2020 final dividend.
Amount
per share
Total
dividend
$m
2. Fully franked for Australian tax purposes (30% tax rate).
3. Includes on-market share purchases for the DRP of $204 million (2021: $199 million).
DIVIDEND REINVESTMENT PLAN AND BONUS OPTION PLAN
Eligible shareholders can elect to reinvest their dividend entitlement into ANZ ordinary shares under the Company’s Dividend Reinvestment Plan
(DRP). Eligible shareholders can elect to forgo their dividend entitlement and instead receive ANZ ordinary shares under the Company’s Bonus Option
Plan (BOP). For the 2022 final dividend, DRP and BOP participation will be satisfied by an issue of new ANZ ordinary shares. There will be no discount
applied to the DRP and BOP price.
Refer to Note 24 Shareholders’ Equity for details of shares the Company purchased or issued in respect of the DRP and BOP.
126
127
128128 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
7. EARNINGS PER ORDINARY SHARE
Basic earnings per share (EPS) is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of
ordinary shares (WANOS) outstanding during the period (after eliminating ANZ shares held within the Group known as treasury shares). Diluted EPS is
calculated by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares used in the basic
EPS calculation for the effect of dilutive potential ordinary shares.
8. SEGMENT REPORTING
DESCRIPTION OF SEGMENTS
Earnings per ordinary share - Basic1
Earnings Per Share
Earnings Per Share from continuing operations
Earnings Per Share from discontinued operations
Earnings per ordinary share - Diluted1
Earnings Per Share
Earnings Per Share from continuing operations
Earnings Per Share from discontinued operations
Reconciliation of earnings used in earnings per share calculations
Basic:
Profit for the year
Less: Profit attributable to non-controlling interests
Earnings used in calculating basic earnings per share
Less: Profit/(Loss) after tax from discontinued operations
Earnings used in calculating basic earnings per share from continuing operations
Diluted:
Earnings used in calculating basic earnings per share
Add: Interest on convertible subordinated debt
Earnings used in calculating diluted earnings per share
Less: Profit/(Loss) after tax from discontinued operations
Earnings used in calculating diluted earnings per share from continuing operations
Reconciliation of WANOS used in earnings per share calculations1,2
WANOS used in calculating basic earnings per share
Add: Weighted average dilutive potential ordinary shares
Convertible subordinated debt
Share based payments (options, rights and deferred shares)
WANOS used in calculating diluted earnings per share
1. WANOS and EPS have been restated to reflect the bonus element of the share entitlement issue made in 2022, in accordance with AASB 133 Earnings per Share.
2. WANOS excludes the weighted average number of treasury shares held in ANZEST Pty Ltd of 4.4 million (2021: 4.6 million).
2022
cents
250.0
250.7
(0.7)
2022
cents
233.2
233.8
(0.6)
2022
$m
7,120
1
7,119
(19)
7,138
7,119
199
7,318
(19)
7,337
2022
millions
2,847.5
282.9
7.7
3,138.1
2021
cents
215.3
215.9
(0.6)
2021
cents
203.2
203.7
(0.5)
2021
$m
6,163
1
6,162
(17)
6,179
6,162
187
6,349
(17)
6,366
2021
millions
2,862.6
252.5
10.0
3,125.1
On 1 March 2022, the Group announced a structural change to the existing Australia Retail and Commercial division, and the digital businesses in the
Group Centre division (formerly known as the Technology, Services & Operations (TSO) and Group Centre division). This involved the integration of the
Australian retail and digital businesses, and the separation of the Australian commercial business into a new division to improve productivity and
accountability within the organisation. As a result of these changes there are now six divisions: Australia Retail, Australia Commercial, Institutional, New
Zealand, Pacific and Group Centre, aligned to distinct strategies and opportunities within the Group. Comparative information has been restated
accordingly.
The Group’s six operating segments are presented on a basis that is consistent with the information provided internally to the Chief Executive Officer,
who is the chief operating decision maker. This reflects the way the Group’s businesses are managed, rather than the legal structure of the Group.
We measure the performance of these segments on a cash profit basis. To calculate cash profit, we remove certain non-core items from statutory
profit. Details of these items are included in the ‘Other items’ section of this note. Transactions between business units across segments within ANZ
are conducted on an arm’s length basis and disclosed as part of the income and expenses of these segments.
The reportable segments are divisions engaged in providing either different products or services or similar products and services in different
geographical areas. They are as follows:
Australia Retail
operation of the ANZ Plus proposition for retail customers.
Australia Commercial
The Australia Retail division provides a full range of banking services to Australian consumers. This includes Home Loans, Deposits, Credit Cards and
Personal Loans. Products and services are provided via the branch network, home loan specialists, contact centres, a variety of self-service channels
(digital and internet banking, website, ATMs and phone banking) and third-party brokers. It also includes the costs related to the development and
The Australia Commercial division provides a full range of banking products and financial services, including asset financing, across the following
customer segments: small business owners and medium commercial customers (SME Banking) and large commercial customers, high net worth
individuals and family groups (Specialist Business).
Institutional
following business units:
The Institutional division services governments, global institutional and corporate customers across Australia, New Zealand and International via the
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 provides customers with risk management services in foreign exchange, interest rates, credit, commodities, and debt capital markets in
addition to managing the Group's interest rate exposure and liquidity position.
New Zealand
The New Zealand division comprises the following business units:
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 a network of branches, mortgage specialists, relationship managers and contact centres.
Business provides a full range of banking services including small business banking, through our digital, branch and contact centre channels, and
traditional relationship banking and sophisticated financial solutions through dedicated managers. These cover privately owned small, medium
and large enterprises, the agricultural business segment, government and government-related entities.
Pacific
Group Centre
The Pacific division provides products and services to retail customers, small to medium-sized enterprises, institutional customers and governments
located in the Pacific Islands. Products and services include retail products provided to consumers, traditional relationship banking and sophisticated
financial solutions provided to business customers through dedicated managers.
The Group Centre division provides support to the operating divisions, including technology, property, risk management, financial management,
strategy, marketing, human resources and corporate affairs. It also includes residual components of Group divestments, Group Treasury, Shareholder
Functions, minority investments in Asia, and digital businesses.
128
129
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
129129
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
7. EARNINGS PER ORDINARY SHARE
8. SEGMENT REPORTING
Basic earnings per share (EPS) is calculated by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of
DESCRIPTION OF SEGMENTS
ordinary shares (WANOS) outstanding during the period (after eliminating ANZ shares held within the Group known as treasury shares). Diluted EPS is
calculated by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares used in the basic
EPS calculation for the effect of dilutive potential ordinary shares.
Earnings per ordinary share - Basic1
Earnings Per Share
Earnings Per Share from continuing operations
Earnings Per Share from discontinued operations
Earnings per ordinary share - Diluted1
Earnings Per Share
Earnings Per Share from continuing operations
Earnings Per Share from discontinued operations
Reconciliation of earnings used in earnings per share calculations
Basic:
Profit for the year
Less: Profit attributable to non-controlling interests
Earnings used in calculating basic earnings per share
Less: Profit/(Loss) after tax from discontinued operations
Earnings used in calculating basic earnings per share from continuing operations
Diluted:
Earnings used in calculating basic earnings per share
Add: Interest on convertible subordinated debt
Earnings used in calculating diluted earnings per share
Less: Profit/(Loss) after tax from discontinued operations
Earnings used in calculating diluted earnings per share from continuing operations
Reconciliation of WANOS used in earnings per share calculations1,2
WANOS used in calculating basic earnings per share
Add: Weighted average dilutive potential ordinary shares
Convertible subordinated debt
Share based payments (options, rights and deferred shares)
WANOS used in calculating diluted earnings per share
1. WANOS and EPS have been restated to reflect the bonus element of the share entitlement issue made in 2022, in accordance with AASB 133 Earnings per Share.
2. WANOS excludes the weighted average number of treasury shares held in ANZEST Pty Ltd of 4.4 million (2021: 4.6 million).
2022
cents
250.0
250.7
(0.7)
2022
cents
233.2
233.8
(0.6)
2022
$m
7,120
1
7,119
(19)
7,138
7,119
199
7,318
(19)
7,337
2022
millions
2,847.5
282.9
7.7
3,138.1
2021
cents
215.3
215.9
(0.6)
2021
cents
203.2
203.7
(0.5)
2021
$m
6,163
1
6,162
(17)
6,179
6,162
187
6,349
(17)
6,366
2021
millions
2,862.6
252.5
10.0
3,125.1
On 1 March 2022, the Group announced a structural change to the existing Australia Retail and Commercial division, and the digital businesses in the
Group Centre division (formerly known as the Technology, Services & Operations (TSO) and Group Centre division). This involved the integration of the
Australian retail and digital businesses, and the separation of the Australian commercial business into a new division to improve productivity and
accountability within the organisation. As a result of these changes there are now six divisions: Australia Retail, Australia Commercial, Institutional, New
Zealand, Pacific and Group Centre, aligned to distinct strategies and opportunities within the Group. Comparative information has been restated
accordingly.
The Group’s six operating segments are presented on a basis that is consistent with the information provided internally to the Chief Executive Officer,
who is the chief operating decision maker. This reflects the way the Group’s businesses are managed, rather than the legal structure of the Group.
We measure the performance of these segments on a cash profit basis. To calculate cash profit, we remove certain non-core items from statutory
profit. Details of these items are included in the ‘Other items’ section of this note. Transactions between business units across segments within ANZ
are conducted on an arm’s length basis and disclosed as part of the income and expenses of these segments.
The reportable segments are divisions engaged in providing either different products or services or similar products and services in different
geographical areas. They are as follows:
Australia Retail
The Australia Retail division provides a full range of banking services to Australian consumers. This includes Home Loans, Deposits, Credit Cards and
Personal Loans. Products and services are provided via the branch network, home loan specialists, contact centres, a variety of self-service channels
(digital and internet banking, website, ATMs and phone banking) and third-party brokers. It also includes the costs related to the development and
operation of the ANZ Plus proposition for retail customers.
Australia Commercial
The Australia Commercial division provides a full range of banking products and financial services, including asset financing, across the following
customer segments: small business owners and medium commercial customers (SME Banking) and large commercial customers, high net worth
individuals and family groups (Specialist Business).
Institutional
The Institutional division services governments, global institutional and corporate customers across Australia, New Zealand and International 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 provides customers with risk management services in foreign exchange, interest rates, credit, commodities, and debt capital markets in
addition to managing the Group's interest rate exposure and liquidity position.
New Zealand
The New Zealand division comprises the following business units:
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 a network of branches, mortgage specialists, relationship managers and contact centres.
Business provides a full range of banking services including small business banking, through our digital, branch and contact centre channels, and
traditional relationship banking and sophisticated financial solutions through dedicated managers. These cover privately owned small, medium
and large enterprises, the agricultural business segment, government and government-related entities.
Pacific
The Pacific division provides products and services to retail customers, small to medium-sized enterprises, institutional customers and governments
located in the Pacific Islands. Products and services include retail products provided to consumers, traditional relationship banking and sophisticated
financial solutions provided to business customers through dedicated managers.
Group Centre
The Group Centre division provides support to the operating divisions, including technology, property, risk management, financial management,
strategy, marketing, human resources and corporate affairs. It also includes residual components of Group divestments, Group Treasury, Shareholder
Functions, minority investments in Asia, and digital businesses.
128
129
130130 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
8. SEGMENT REPORTING (continued)
OPERATING SEGMENTS
8. SEGMENT REPORTING (continued)
OPERATING SEGMENTS (continued)
Year ended 30 September 2022
Net interest income
Net fee and commission income
- Lending fees
- Non-lending fees
- Commissions
- Funds management income
- Fee and commission expense
Net income from insurance business
Other income
Share of associates’ profit/(loss)
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense and non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax attributable to shareholders
Includes non-cash items:
Share of associates’ profit/(loss)
Depreciation and amortisation
Equity-settled share based payment expenses
Credit impairment (charge)/release
Australia
Retail
$m
Australia
Commercial Institutional
$m
$m
New
Zealand
$m
Pacific
$m
Group
Centre
$m
Other
items1
$m
Group
Total
$m
5,527
2,568
3,401
3,168
96
114
-
14,874
8
849
52
-
(432)
140
5
-
622
6,149
(3,210)
2,939
129
3,068
(928)
2,140
90
384
22
26
(118)
-
258
(10)
652
3,220
(1,346)
1,874
133
2,007
(497)
1,510
262
524
1
1
(140)
-
1,002
(2)
1,648
5,049
(2,503)
2,546
18
2,564
(803)
1,761
8
622
28
234
(464)
-
33
-
461
3,629
(1,324)
2,305
(36)
2,269
(636)
1,633
6
26
-
-
(6)
-
42
-
68
164
(153)
11
6
17
(8)
9
-
(11)
-
-
-
-
44
189
222
336
(1,043)
(707)
(18)
(725)
187
(538)
-
-
-
-
-
-
879
-
879
879
-
879
-
879
(256)
623
-
(61)
(5)
129
(10)
(12)
(1)
133
(2)
(158)
(72)
18
-
(116)
(4)
(36)
-
(10)
(1)
6
189
(652)
(19)
(18)
-
-
-
-
374
2,394
103
261
(1,160)
140
2,263
177
4,552
19,426
(9,579)
9,847
232
10,079
(2,941)
7,138
(19)
7,119
177
(1,009)
(102)
232
Year ended 30 September 2021
Net interest income
Net fee and commission income
- Lending fees
- Non-lending fees
- Commissions
- Funds management income
- Fee and commission expense
Net income from insurance business
Other income
Share of associates’ profit/(loss)
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense and non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax attributable to shareholders
Includes non-cash items:
Share of associates’ profit/(loss)
Goodwill write-off2
Depreciation and amortisation
Equity-settled share based payment expenses
Credit impairment (charge)/release
Financial position
Goodwill2
Investments in associates
Total external assets
Total external liabilities
Australia
Retail
$m
178
-
292,825
153,491
Australia
Commercial Institutional
$m
$m
New
Zealand
$m
Pacific
$m
Group
Centre
$m
-
47
60,031
118,363
1,022
5
1,706
-
533,450 126,919
470,006 118,371
-
-
2,129
-
3,707
68,797
4,065 155,032
Group
Total
$m
2,906
2,181
1,085,729
1,019,328
Financial position
Goodwill2
Investments in associates
Total external assets
Total external liabilities
Australia
Australia
New
Retail
Commercial Institutional
Zealand
Pacific
$m
5,708
$m
2,281
$m
$m
3,105
2,870
Group
Centre
Other
items1
$m
101
$m
Group
Total
$m
14,161
(27)
(27)
(27)
(27)
(27)
8
(19)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
136
738
40
-
(358)
110
(234)
1
433
6,141
(2,948)
3,193
227
3,420
(1,104)
2,316
1
(251)
(84)
(3)
227
$m
100
17
(202)
(274)
(430)
(2,447)
(1,325)
80
530
24
32
(8)
-
-
456
2,737
(1,353)
1,384
199
1,583
(476)
1,107
-
-
(24)
(1)
199
241
683
1
1
-
1,227
(1)
1,878
4,983
2,536
89
2,625
(738)
1,887
(1)
-
(115)
(63)
89
10
585
32
254
18
-
-
469
3,339
2,014
76
2,090
(582)
1,508
-
-
(117)
(6)
76
New
$m
1,849
-
Australia
Australia
Retail
Commercial Institutional
Zealand
Pacific
$m
40
-
$m
1,100
4
286,566
143,709
57,481
117,739
429,362
132,232
384,106
121,999
3,755
3,898
$m
96
7
20
-
-
-
-
(2)
40
65
161
(144)
17
(21)
(4)
1
(3)
-
-
(11)
(1)
(21)
$m
-
-
(4)
(1)
-
-
-
-
166
(176)
(15)
86
(834)
(748)
(3)
(751)
134
(617)
(176)
-
(739)
(17)
(3)
Group
Centre
$m
-
1,951
69,461
143,730
1. Cash profit represents our preferred measure of the result of the segments as presented in the table above. We remove certain items from the segments as discussed on page 132 if we consider them not
integral to the ongoing performance of the segment, and present these as Other items.
2. The Group recognised $78 million of goodwill in relation to the acquisition of the Cashrewards business in the Australia Retail division, and wrote off $40 million of goodwill in relation to the exit of the
financial planning and advice business servicing the affluent customer segment in the Australia Commercial division.
Australia Retail division.
1. Cash profit represents our preferred measure of the result of the segments as presented in the table above. We remove certain items from the segments as discussed on page 132 if we consider them not
integral to the ongoing performance of the segment, and present these as Other items.
2. The Group wrote off $251 million of goodwill upon the reclassification of ANZ Share Investing business to held for sale with the remaining $13 million derecognised on completion of the disposal in the
130
474
2,552
97
287
(1,267)
110
1,182
(176)
3,259
17,420
(9,051)
8,369
567
8,936
(2,757)
6,179
(17)
6,162
(176)
(251)
(1,090)
(91)
567
Group
Total
$m
3,089
1,972
978,857
915,181
131
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
131131
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
8. SEGMENT REPORTING (continued)
OPERATING SEGMENTS
8. SEGMENT REPORTING (continued)
OPERATING SEGMENTS (continued)
Year ended 30 September 2022
Net interest income
Net fee and commission income
- Lending fees
- Non-lending fees
- Commissions
- Funds management income
- Fee and commission expense
Net income from insurance business
Other income
Share of associates’ profit/(loss)
Other operating income
Operating income
Operating expenses
Credit impairment (charge)/release
Profit before income tax
Income tax expense and non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax attributable to shareholders
Includes non-cash items:
Share of associates’ profit/(loss)
Depreciation and amortisation
Equity-settled share based payment expenses
Credit impairment (charge)/release
Australia
Australia
New
Retail
Commercial Institutional
Zealand
Pacific
$m
5,527
$m
2,568
$m
$m
3,401
3,168
Group
Centre
Other
items1
$m
90
384
22
26
(118)
-
258
(10)
652
3,220
(1,346)
1,874
133
2,007
(497)
1,510
(140)
(464)
262
524
1
1
-
1,002
(2)
1,648
5,049
18
2,564
(803)
1,761
8
622
28
234
33
-
-
(36)
2,269
(636)
1,633
461
3,629
68
164
(2,503)
(1,324)
(153)
(1,043)
$m
96
6
26
-
-
-
-
(6)
42
11
6
17
(8)
9
$m
114
(11)
-
-
-
-
-
44
189
222
336
(707)
(18)
(725)
187
(538)
189
(652)
(19)
(18)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
879
879
879
879
879
(256)
623
(10)
(12)
(1)
133
(2)
(158)
(72)
18
-
(116)
(4)
(36)
-
(10)
(1)
6
Profit before credit impairment and income tax
2,546
2,305
8
849
52
-
(432)
140
5
-
622
6,149
(3,210)
2,939
129
3,068
(928)
2,140
-
(61)
(5)
129
$m
178
-
Group
Total
$m
14,874
374
2,394
103
261
(1,160)
140
2,263
177
4,552
19,426
(9,579)
9,847
232
10,079
(2,941)
7,138
(19)
7,119
177
(1,009)
(102)
232
Group
Total
$m
2,906
2,181
Year ended 30 September 2021
Net interest income
Net fee and commission income
- Lending fees
- Non-lending fees
- Commissions
- Funds management income
- Fee and commission expense
Net income from insurance business
Other income
Share of associates’ profit/(loss)
Other operating income
Operating income
Operating expenses
Profit before credit impairment and income tax
Credit impairment (charge)/release
Profit before income tax
Income tax expense and non-controlling interests
Profit after tax from continuing operations
Profit/(Loss) after tax from discontinued operations
Profit after tax attributable to shareholders
Includes non-cash items:
Share of associates’ profit/(loss)
Goodwill write-off2
Depreciation and amortisation
Equity-settled share based payment expenses
Credit impairment (charge)/release
Financial position
Goodwill2
Investments in associates
Total external assets
Total external liabilities
Australia
Australia
New
Retail
Commercial Institutional
Zealand
Pacific
$m
-
47
$m
$m
$m
1,022
1,706
5
-
-
-
Group
Centre
$m
-
2,129
292,825
153,491
60,031
118,363
533,450 126,919
3,707
68,797
470,006 118,371
4,065 155,032
1,085,729
1,019,328
Financial position
Goodwill2
Investments in associates
Total external assets
Total external liabilities
Australia
Retail
$m
5,708
Australia
Commercial Institutional
$m
3,105
$m
2,281
New
Zealand
$m
2,870
Pacific
$m
96
Group
Centre
$m
101
Other
items1
$m
-
Group
Total
$m
14,161
136
738
40
-
(358)
110
(234)
1
433
6,141
(2,948)
3,193
227
3,420
(1,104)
2,316
1
(251)
(84)
(3)
227
80
530
24
32
(202)
-
(8)
-
456
2,737
(1,353)
1,384
199
1,583
(476)
1,107
-
-
(24)
(1)
199
241
683
1
1
(274)
-
1,227
(1)
1,878
4,983
(2,447)
2,536
89
2,625
(738)
1,887
10
585
32
254
(430)
-
18
-
469
3,339
(1,325)
2,014
76
2,090
(582)
1,508
(1)
-
(115)
(63)
89
-
-
(117)
(6)
76
7
20
-
-
(2)
-
40
-
65
161
(144)
17
(21)
(4)
1
(3)
-
-
(11)
(1)
(21)
-
(4)
-
-
(1)
-
166
(176)
(15)
86
(834)
(748)
(3)
(751)
134
(617)
(176)
-
(739)
(17)
(3)
-
-
-
-
-
-
(27)
-
(27)
(27)
-
(27)
-
(27)
8
(19)
-
-
-
-
-
Australia
Retail
$m
100
17
286,566
143,709
Australia
Commercial Institutional
$m
1,100
4
429,362
384,106
$m
40
-
57,481
117,739
New
Zealand
$m
1,849
-
132,232
121,999
Pacific
$m
-
-
3,755
3,898
Group
Centre
$m
-
1,951
69,461
143,730
474
2,552
97
287
(1,267)
110
1,182
(176)
3,259
17,420
(9,051)
8,369
567
8,936
(2,757)
6,179
(17)
6,162
(176)
(251)
(1,090)
(91)
567
Group
Total
$m
3,089
1,972
978,857
915,181
1. Cash profit represents our preferred measure of the result of the segments as presented in the table above. We remove certain items from the segments as discussed on page 132 if we consider them not
integral to the ongoing performance of the segment, and present these as Other items.
2. The Group recognised $78 million of goodwill in relation to the acquisition of the Cashrewards business in the Australia Retail division, and wrote off $40 million of goodwill in relation to the exit of the
financial planning and advice business servicing the affluent customer segment in the Australia Commercial division.
1. Cash profit represents our preferred measure of the result of the segments as presented in the table above. We remove certain items from the segments as discussed on page 132 if we consider them not
integral to the ongoing performance of the segment, and present these as Other items.
2. The Group wrote off $251 million of goodwill upon the reclassification of ANZ Share Investing business to held for sale with the remaining $13 million derecognised on completion of the disposal in the
Australia Retail division.
130
131
132132 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
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create value
Performance
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
8. SEGMENT REPORTING (continued)
OTHER ITEMS
FINANCIAL ASSETS
Outlined below is a description of how we classify and measure financial assets as they apply to subsequent note disclosures.
The table below sets out the profit after tax impact of other items which are removed from statutory profit to reflect the cash profit of each segment.
Item
Economic hedges
Related segment
Institutional, New Zealand, Group Centre
Revenue and expense hedges
Group Centre
Total other items from continuing operations
Profit after tax
2022
$m
569
54
623
2021
$m
77
(96)
(19)
SEGMENT INCOME BY PRODUCTS AND SERVICES
The primary sources of our external income across all divisions are Interest income and Other operating income, which includes net fee and
commission income, net foreign exchange earnings and other financial instruments income. The Australia Retail, Australia Commercial, New Zealand,
and Pacific divisions derive income from products and services from retail and commercial banking. The Institutional division derives its income from
institutional products and market services. No single customer amounts to greater than 10% of the Group’s income.
GEOGRAPHICAL INFORMATION
The reportable segments operate across three geographical regions as follows:
Australia Retail division - Australia
Australia Commercial division - Australia
Institutional division - all three geographical regions
New Zealand division - New Zealand
Pacific division - International
Group Centre division - all three geographical regions
Discontinued operations results are included in the Australia geography. The International region includes Asia, Pacific, Europe and Americas.
The following table sets out total operating income earned including discontinued operations and assets to be recovered in more than one year
based on the geographical regions in which the Group operates.
Total operating income1
Australia
International
New Zealand
Total
2022
$m
2021
$m
12,462
11,822
2022
$m
2,547
2021
$m
1,778
2022
$m
4,501
2021
$m
2022
$m
2021
$m
3,892
19,510
17,492
Assets to be recovered in more than one year2
384,724
362,588
32,350
28,213
109,191
112,966
526,265
503,767
1. Includes Operating income earned from discontinued operations of $84 million (2021: $72 million).
2. Represents Net loans and advances based on the contractual maturity.
CLASSIFICATION AND MEASUREMENT
Financial assets - general
of two criteria:
the business model within which the financial asset is managed; and
of principal and interest).
The resultant financial asset classifications are as follows:
There are three measurement classifications for financial assets under AASB 9: amortised cost, fair value through profit or loss (FVTPL) and
fair value through other comprehensive income (FVOCI). Financial assets are classified into these measurement classifications on the basis
the contractual cash flow characteristics of the financial asset (specifically whether the contractual cash flows represent solely payments
Amortised cost: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held
in a business model whose objective is to collect their cash flows;
FVOCI: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held in a
business model whose objective is to collect their cash flows or to sell the assets; and
FVTPL: Any other financial assets not falling into the categories above are measured at FVTPL.
Fair value option for financial assets
A financial asset may be irrevocably designated on initial recognition:
at FVTPL when the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise; or
at FVOCI for investments in equity securities, where that instrument is neither held for trading nor contingent consideration recognised
by an acquirer in a business combination.
9. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and other balances, as outlined below, that are convertible into cash with an insignificant risk of
changes in value and with remaining maturities of three months or less, including reverse repurchase agreements.
Coins, notes and cash at bank
Securities purchased under agreements to resell in less than 3 months
Balances with central banks
Settlement balances owed to ANZ within 3 months
Cash and cash equivalents
Consolidated
The Company
2022
$m
1,147
15,996
127,790
23,199
168,132
2021
$m
1,127
17,571
107,915
24,647
151,260
2022
$m
787
14,372
118,928
21,396
155,483
2021
$m
721
16,465
101,400
22,850
141,436
132
133
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
133133
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
8. SEGMENT REPORTING (continued)
OTHER ITEMS
FINANCIAL ASSETS
Outlined below is a description of how we classify and measure financial assets as they apply to subsequent note disclosures.
The table below sets out the profit after tax impact of other items which are removed from statutory profit to reflect the cash profit of each segment.
Item
Economic hedges
Related segment
Institutional, New Zealand, Group Centre
Revenue and expense hedges
Group Centre
Total other items from continuing operations
Profit after tax
2022
$m
569
54
623
2021
$m
77
(96)
(19)
SEGMENT INCOME BY PRODUCTS AND SERVICES
The primary sources of our external income across all divisions are Interest income and Other operating income, which includes net fee and
commission income, net foreign exchange earnings and other financial instruments income. The Australia Retail, Australia Commercial, New Zealand,
and Pacific divisions derive income from products and services from retail and commercial banking. The Institutional division derives its income from
institutional products and market services. No single customer amounts to greater than 10% of the Group’s income.
GEOGRAPHICAL INFORMATION
The reportable segments operate across three geographical regions as follows:
Australia Retail division - Australia
Australia Commercial division - Australia
Institutional division - all three geographical regions
New Zealand division - New Zealand
Pacific division - International
Group Centre division - all three geographical regions
Discontinued operations results are included in the Australia geography. The International region includes Asia, Pacific, Europe and Americas.
The following table sets out total operating income earned including discontinued operations and assets to be recovered in more than one year
based on the geographical regions in which the Group operates.
Total operating income1
Assets to be recovered in more than one year2
384,724
362,588
32,350
28,213
109,191
112,966
526,265
503,767
Australia
International
New Zealand
Total
2022
$m
2021
$m
12,462
11,822
2022
$m
2,547
2021
$m
1,778
2022
$m
4,501
2021
$m
2022
$m
2021
$m
3,892
19,510
17,492
1. Includes Operating income earned from discontinued operations of $84 million (2021: $72 million).
2. Represents Net loans and advances based on the contractual maturity.
CLASSIFICATION AND MEASUREMENT
Financial assets - general
There are three measurement classifications for financial assets under AASB 9: amortised cost, fair value through profit or loss (FVTPL) and
fair value through other comprehensive income (FVOCI). Financial assets are classified into these measurement classifications on the basis
of two criteria:
the business model within which the financial asset is managed; and
the contractual cash flow characteristics of the financial asset (specifically whether the contractual cash flows represent solely payments
of principal and interest).
The resultant financial asset classifications are as follows:
Amortised cost: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held
in a business model whose objective is to collect their cash flows;
FVOCI: Financial assets with contractual cash flows that comprise solely payments of principal and interest and which are held in a
business model whose objective is to collect their cash flows or to sell the assets; and
FVTPL: Any other financial assets not falling into the categories above are measured at FVTPL.
Fair value option for financial assets
A financial asset may be irrevocably designated on initial recognition:
at FVTPL when the designation eliminates or significantly reduces an accounting mismatch that would otherwise arise; or
at FVOCI for investments in equity securities, where that instrument is neither held for trading nor contingent consideration recognised
by an acquirer in a business combination.
9. CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash on hand and other balances, as outlined below, that are convertible into cash with an insignificant risk of
changes in value and with remaining maturities of three months or less, including reverse repurchase agreements.
Coins, notes and cash at bank
Securities purchased under agreements to resell in less than 3 months
Balances with central banks
Settlement balances owed to ANZ within 3 months
Cash and cash equivalents
Consolidated
The Company
2022
$m
1,147
15,996
127,790
23,199
168,132
2021
$m
1,127
17,571
107,915
24,647
151,260
2022
$m
787
14,372
118,928
21,396
155,483
2021
$m
721
16,465
101,400
22,850
141,436
132
133
134134 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
10. TRADING ASSETS
11. DERIVATIVE FINANCIAL INSTRUMENTS
145
3,860
3,941
183
4,995
5,630
2022
27,291
2021
33,880
Government debt
securities and notes
Corporate and financial
institution securities
Commodities
Other securities
Consolidated
The Company
2022
$m
27,291
3,941
3,860
145
35,237
2021
$m
33,880
5,630
4,995
183
44,688
2022
$m
21,881
2,700
3,348
144
28,073
2021
$m
26,119
3,493
4,957
183
34,752
Government debt securities and notes
Corporate and financial institution securities
Commodities
Other securities
Total
RECOGNITION AND MEASUREMENT
Trading assets are financial instruments or other assets we either:
acquire principally for the purpose of selling in the short-term; or
hold as part of a portfolio we manage for short-term profit making.
Trading assets include commodity inventories measured at fair value less cost to sell in accordance with the broker trader exemption under
AASB 102 Inventories.
We recognise purchases and sales of trading assets on trade date:
initially, we measure them at fair value; and
subsequently, we measure them in the balance sheet at their fair value with any change in fair value recognised in profit or loss.
Assets disclosed as Trading assets are subject to the general classification and measurement policy for Financial Assets outlined at the
commencement of the Group’s financial assets disclosures on page 133.
KEY JUDGEMENTS AND ESTIMATES
The Group offers or uses four different types of derivative financial instruments:
Judgement is required when applying the valuation techniques used to determine the fair value of trading assets not valued using quoted
market prices. Refer to Note 19 Fair Value of Financial Assets and Financial Liabilities for further details.
Forwards
A contract documenting the rate of interest, or the currency exchange rate, to be paid or received on a notional
principal amount at a future date.
134
135
Derivative financial instruments - held for trading
Derivative financial instruments - designated in hedging relationships
Derivative financial instruments
Derivative financial instruments - held for trading
Derivative financial instruments - designated in hedging relationships
Derivative financial instruments
Assets
2022
$m
89,716
458
90,174
Assets
2022
$m
87,650
406
88,056
Liabilities
2022
$m
(84,793)
(356)
(85,149)
Liabilities
2022
$m
(84,200)
(300)
(84,500)
Assets
2021
$m
38,080
656
38,736
Assets
2021
$m
37,700
592
38,292
Liabilities
2021
$m
(35,833)
(202)
(36,035)
Liabilities
2021
$m
(36,847)
(158)
(37,005)
Derivative financial instruments are contracts:
whose value is derived from an underlying price index (or other variable) defined in the contract - sometimes the value is derived from more than
that require little or no initial net investment; and
that are settled at a future date.
Movements in the price of the underlying variables, which cause the value of the contract to fluctuate, are reflected in the fair value of the derivative.
The Group’s derivative financial instruments have been categorised as following:
Trading
Derivatives held in order to:
meet customer needs for managing their own risks.
manage risks in the Group that are not in a designated hedge accounting relationship (some elements of balance
undertake market making and positioning activities to generate profits from short-term fluctuations in prices
sheet management).
or margins.
Designated in Hedging
Derivatives designated into hedge accounting relationships in order to minimise profit or loss volatility by matching
Relationships
movements in underlying positions relating to:
hedges of the Group’s exposures to interest rate risk and currency risk.
hedges of other exposures relating to non-trading positions.
Consolidated
Fair Value
The Company
Fair Value
FEATURES
one variable;
PURPOSE
TYPES
Futures
Swaps
Options
An exchange traded contract in which the parties agree to buy or sell an asset in the future for a price agreed on the
transaction date, with a net settlement in cash paid on the future date without physical delivery of the asset.
A contract in which two parties exchange one series of cash flows for another.
A contract in which the buyer of the contract has the right - but not the obligation - to buy (known as a ‘call option’)
or to sell (known as a ‘put option’) an asset or instrument at a set price on a future date. The seller has the
corresponding obligation to fulfil the transaction to sell or buy the asset or instrument if the buyer exercises
the option.
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
135135
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
10. TRADING ASSETS
11. DERIVATIVE FINANCIAL INSTRUMENTS
145
3,860
3,941
183
4,995
5,630
2022
27,291
2021
33,880
Government debt
securities and notes
Corporate and financial
institution securities
Commodities
Other securities
Consolidated
The Company
2022
$m
27,291
3,941
3,860
145
35,237
2021
$m
33,880
5,630
4,995
183
44,688
2022
$m
21,881
2,700
3,348
144
28,073
2021
$m
26,119
3,493
4,957
183
34,752
Government debt securities and notes
Corporate and financial institution securities
Commodities
Other securities
Total
RECOGNITION AND MEASUREMENT
Trading assets are financial instruments or other assets we either:
acquire principally for the purpose of selling in the short-term; or
hold as part of a portfolio we manage for short-term profit making.
AASB 102 Inventories.
We recognise purchases and sales of trading assets on trade date:
initially, we measure them at fair value; and
Trading assets include commodity inventories measured at fair value less cost to sell in accordance with the broker trader exemption under
subsequently, we measure them in the balance sheet at their fair value with any change in fair value recognised in profit or loss.
Assets disclosed as Trading assets are subject to the general classification and measurement policy for Financial Assets outlined at the
commencement of the Group’s financial assets disclosures on page 133.
KEY JUDGEMENTS AND ESTIMATES
Judgement is required when applying the valuation techniques used to determine the fair value of trading assets not valued using quoted
market prices. Refer to Note 19 Fair Value of Financial Assets and Financial Liabilities for further details.
Consolidated
Fair Value
Derivative financial instruments - held for trading
Derivative financial instruments - designated in hedging relationships
Derivative financial instruments
The Company
Fair Value
Derivative financial instruments - held for trading
Derivative financial instruments - designated in hedging relationships
Derivative financial instruments
FEATURES
Derivative financial instruments are contracts:
Assets
2022
$m
89,716
458
90,174
Assets
2022
$m
87,650
406
88,056
Liabilities
2022
$m
(84,793)
(356)
(85,149)
Liabilities
2022
$m
(84,200)
(300)
(84,500)
Assets
2021
$m
38,080
656
38,736
Assets
2021
$m
37,700
592
38,292
Liabilities
2021
$m
(35,833)
(202)
(36,035)
Liabilities
2021
$m
(36,847)
(158)
(37,005)
whose value is derived from an underlying price index (or other variable) defined in the contract - sometimes the value is derived from more than
one variable;
that require little or no initial net investment; and
that are settled at a future date.
Movements in the price of the underlying variables, which cause the value of the contract to fluctuate, are reflected in the fair value of the derivative.
PURPOSE
The Group’s derivative financial instruments have been categorised as following:
Trading
Derivatives held in order to:
meet customer needs for managing their own risks.
manage risks in the Group that are not in a designated hedge accounting relationship (some elements of balance
sheet management).
undertake market making and positioning activities to generate profits from short-term fluctuations in prices
or margins.
Designated in Hedging
Relationships
Derivatives designated into hedge accounting relationships in order to minimise profit or loss volatility by matching
movements in underlying positions relating to:
hedges of the Group’s exposures to interest rate risk and currency risk.
hedges of other exposures relating to non-trading positions.
TYPES
The Group offers or uses four different types of derivative financial instruments:
Forwards
Futures
Swaps
Options
A contract documenting the rate of interest, or the currency exchange rate, to be paid or received on a notional
principal amount at a future date.
An exchange traded contract in which the parties agree to buy or sell an asset in the future for a price agreed on the
transaction date, with a net settlement in cash paid on the future date without physical delivery of the asset.
A contract in which two parties exchange one series of cash flows for another.
A contract in which the buyer of the contract has the right - but not the obligation - to buy (known as a ‘call option’)
or to sell (known as a ‘put option’) an asset or instrument at a set price on a future date. The seller has the
corresponding obligation to fulfil the transaction to sell or buy the asset or instrument if the buyer exercises
the option.
134
135
136136 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
RISKS MANAGED
DERIVATIVE FINANCIAL INSTRUMENTS – HELD FOR TRADING (continued)
The Group offers and uses the instruments described above to manage fluctuations in the following market factors:
The majority of the Company’s derivative financial instruments are held for trading. The fair value of derivative financial instruments held for trading is:
Foreign Exchange
Currencies at current or determined rates of exchange.
Interest Rate
Commodity
Fixed or variable interest rates applying to money lent, deposited or borrowed.
Soft commodities (that is, agricultural products such as wheat, coffee, cocoa and sugar) and hard commodities (that
is, mined products such as gold, oil and gas).
Credit
Risk of default by customers or third parties.
The Group uses a number of central clearing counterparties and exchanges to settle derivative transactions. Different arrangements for posting of
collateral exist with these exchanges:
some transactions are subject to clearing arrangements which result in separate recognition of collateral assets and liabilities, with the carrying
values of the associated derivative assets and liabilities held at their fair value.
other transactions, are legally settled by the payment or receipt of collateral which reduces the carrying values of the related derivative instruments
by the amount paid or received.
DERIVATIVE FINANCIAL INSTRUMENTS – HELD FOR TRADING
The majority of the Group’s derivative financial instruments are held for trading. The fair value of derivative financial instruments held for trading is:
The Company
Fair Value
Interest rate contracts
Forward rate agreements
Futures contracts
Swap agreements
Options purchased
Options sold
Total
Foreign exchange contracts
Spot and forward contracts
Swap agreements
Options purchased
Options sold
Total
Commodity and other contracts
Credit default swaps
Credit derivatives purchased
Credit derivatives sold
Total
Assets
2022
$m
Liabilities
2022
$m
Assets
2021
$m
Liabilities
2021
$m
(15,098)
11,598
(10,538)
2
240
10,778
1,684
-
12,704
36,576
35,526
895
-
72,997
1,923
24
2
26
(7)
(116)
-
-
(1,947)
(17,168)
(33,376)
(30,949)
(1,331)
(65,656)
(1,352)
(2)
(22)
(24)
3
87
969
-
12,657
11,840
11,463
267
-
23,570
1,422
-
51
51
(24)
(19)
-
(1,206)
(11,787)
(9,658)
(12,940)
-
(408)
(23,006)
(2,015)
(39)
-
(39)
Derivative financial instruments - held for trading1
87,650
(84,200)
37,700
(36,847)
1. Includes derivatives held for balance sheet management which are not designated into accounting hedge relationships.
Assets
2022
$m
Liabilities
2022
$m
Assets
2021
$m
2
105
(1)
(123)
Consolidated
Fair Value
Interest rate contracts
Forward rate agreements
Futures contracts
Swap agreements
Options purchased
Options sold
Total
Foreign exchange contracts
Spot and forward contracts
Swap agreements
Options purchased
Options sold
Total
Commodity and other contracts
Credit default swaps
Credit derivatives purchased
Credit derivatives sold
Total
-
336
10,421
1,698
-
12,455
42,221
32,169
926
-
75,316
1,927
16
2
18
(15,031)
10,267
-
(1,954)
(17,109)
(37,426)
(27,548)
-
(1,343)
(66,317)
(1,353)
(2)
(12)
(14)
971
-
11,345
13,869
11,109
277
-
25,255
1,445
-
35
35
Liabilities
2021
$m
(23)
(24)
(8,065)
-
(1,207)
(9,319)
(11,462)
(12,425)
-
(577)
(24,464)
(2,017)
(33)
-
(33)
Derivative financial instruments - held for trading1
89,716
(84,793)
38,080
(35,833)
1. Includes derivatives held for balance sheet management which are not designated into accounting hedge relationships.
136
137
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
137137
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
RISKS MANAGED
DERIVATIVE FINANCIAL INSTRUMENTS – HELD FOR TRADING (continued)
The Group offers and uses the instruments described above to manage fluctuations in the following market factors:
The majority of the Company’s derivative financial instruments are held for trading. The fair value of derivative financial instruments held for trading is:
Foreign Exchange
Currencies at current or determined rates of exchange.
Interest Rate
Commodity
Fixed or variable interest rates applying to money lent, deposited or borrowed.
Soft commodities (that is, agricultural products such as wheat, coffee, cocoa and sugar) and hard commodities (that
Credit
Risk of default by customers or third parties.
is, mined products such as gold, oil and gas).
The Group uses a number of central clearing counterparties and exchanges to settle derivative transactions. Different arrangements for posting of
collateral exist with these exchanges:
some transactions are subject to clearing arrangements which result in separate recognition of collateral assets and liabilities, with the carrying
values of the associated derivative assets and liabilities held at their fair value.
other transactions, are legally settled by the payment or receipt of collateral which reduces the carrying values of the related derivative instruments
by the amount paid or received.
DERIVATIVE FINANCIAL INSTRUMENTS – HELD FOR TRADING
The majority of the Group’s derivative financial instruments are held for trading. The fair value of derivative financial instruments held for trading is:
Consolidated
Fair Value
Interest rate contracts
Forward rate agreements
Futures contracts
Swap agreements
Options purchased
Options sold
Total
Foreign exchange contracts
Spot and forward contracts
Swap agreements
Options purchased
Options sold
Total
Commodity and other contracts
Credit default swaps
Credit derivatives purchased
Credit derivatives sold
Total
Assets
2022
$m
Liabilities
2022
$m
Assets
2021
$m
Liabilities
2021
$m
(15,031)
10,267
-
336
10,421
1,698
-
12,455
42,221
32,169
926
-
75,316
1,927
16
2
18
(1)
(123)
-
-
(1,954)
(17,109)
(37,426)
(27,548)
(1,343)
(66,317)
(1,353)
(2)
(12)
(14)
2
105
971
-
11,345
13,869
11,109
277
-
25,255
1,445
-
35
35
(23)
(24)
(8,065)
-
(1,207)
(9,319)
(11,462)
(12,425)
-
(577)
(24,464)
(2,017)
(33)
-
(33)
Derivative financial instruments - held for trading1
89,716
(84,793)
38,080
(35,833)
1. Includes derivatives held for balance sheet management which are not designated into accounting hedge relationships.
The Company
Fair Value
Interest rate contracts
Forward rate agreements
Futures contracts
Swap agreements
Options purchased
Options sold
Total
Foreign exchange contracts
Spot and forward contracts
Swap agreements
Options purchased
Options sold
Total
Commodity and other contracts
Credit default swaps
Credit derivatives purchased
Credit derivatives sold
Total
Assets
2022
$m
Liabilities
2022
$m
(7)
(116)
Assets
2021
$m
3
87
Liabilities
2021
$m
(24)
(19)
2
240
10,778
1,684
-
12,704
36,576
35,526
895
-
72,997
1,923
24
2
26
(15,098)
11,598
(10,538)
-
(1,947)
(17,168)
(33,376)
(30,949)
-
(1,331)
(65,656)
(1,352)
(2)
(22)
(24)
969
-
12,657
11,840
11,463
267
-
23,570
1,422
-
51
51
-
(1,206)
(11,787)
(9,658)
(12,940)
-
(408)
(23,006)
(2,015)
(39)
-
(39)
Derivative financial instruments - held for trading1
87,650
(84,200)
37,700
(36,847)
1. Includes derivatives held for balance sheet management which are not designated into accounting hedge relationships.
136
137
138138 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
There are three types of hedge accounting relationships the Group utilises:
Under the policy choice provided by AASB 9, the Group has continued to apply the hedge accounting requirements of AASB 139.
Fair value hedge
Cash flow hedge
Net investment hedge
The fair value of derivative financial instruments designated in hedging relationships is:
Objective of this
hedging
arrangement
Recognition of
effective hedge
portion
Recognition of
ineffective hedge
portion
If a hedging
instrument expires,
or is sold, terminated,
or exercised; or no
longer qualifies for
hedge accounting
To hedge our exposure to changes to
the fair value of a recognised asset or
liability or unrecognised firm
commitment caused by interest rate
or foreign currency movements.
To hedge our exposure to variability in
cash flows of a recognised asset or
liability, a firm commitment or a highly
probable forecast transaction caused
by interest rate, foreign currency and
other price movements.
To hedge our exposure to exchange
rate differences arising from the
translation of our foreign operations
from their functional currency to
Australian dollars.
The following are recognised in profit
or loss at the same time:
all changes in the fair value of the
underlying item relating to the
hedged risk; and
the change in the fair value of the
derivatives.
We recognise the effective portion of
changes in the fair value of derivatives
designated as a cash flow hedge in
the cash flow hedge reserve.
We recognise the effective portion of
changes in the fair value of the
hedging instrument in the foreign
currency translation reserve (FCTR).
Recognised immediately in Other operating income.
When we recognise the hedged item
in profit or loss, we recognise the
related unamortised fair value
adjustment in profit or loss. This may
occur over time if the hedged item is
amortised to profit or loss as part of
the effective yield over the period
to maturity.
Only when we recognise the hedged
item in profit or loss is the amount
previously deferred in the cash flow
hedge reserve transferred to profit
or loss.
The amount we defer in the foreign
currency translation reserve remains in
equity and is transferred to profit or
loss only when we dispose of, or
partially dispose of, the foreign
operation.
Hedged item sold or
repaid
We recognise the unamortised fair
value adjustment immediately in
profit or loss.
Amounts accumulated in equity are
transferred immediately to profit
or loss.
The gain or loss, or applicable
proportion, we have recognised in
equity is transferred to profit or loss on
disposal or partial disposal of a foreign
operation.
Consolidated
Fair value hedges
Foreign exchange spot and forward contracts
Interest rate swap agreements
Interest rate futures contracts
Cash flow hedges
Interest rate swap agreements
Foreign exchange swap agreements
Foreign exchange spot and forward contracts
Net investment hedges
Foreign exchange spot and forward contracts
Derivative financial instruments - designated in
hedging relationships
The Company
Fair value hedges
Foreign exchange spot and forward contracts
Interest rate swap agreements
Interest rate futures contracts
Cash flow hedges
Interest rate swap agreements
Foreign exchange swap agreements
Foreign exchange spot and forward contracts
Net investment hedges
Foreign exchange spot and forward contracts
Derivative financial instruments - designated in
hedging relationships
2022
2021
Assets
Liabilities
$m
$m
Assets
Liabilities
$m
$m
Nominal
amount
$m
604
106,366
17,361
125,063
656
161
940
604
80,185
17,361
94,928
656
161
146
-
79
264
33
48
-
34
458
-
65
264
28
48
-
1
406
Nominal
amount
$m
548
95,384
8,704
105,416
642
153
(37)
(168)
(3)
(53)
(44)
(4)
(37)
(163)
(3)
(49)
(44)
(4)
-
548
68,708
8,704
78,852
642
153
299
194,041
(300)
157,906
251,151
(356)
211,944
(47)
1,097
2022
2021
Nominal
amount
$m
Assets
Liabilities
$m
$m
Nominal
amount
$m
Assets
Liabilities
$m
$m
-
370
191
27
22
-
46
656
-
358
191
19
22
-
2
592
(13)
(121)
(2)
(20)
-
(1)
(45)
(202)
(13)
(116)
(2)
(16)
-
(1)
(10)
(158)
138
139
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
139139
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
There are three types of hedge accounting relationships the Group utilises:
Under the policy choice provided by AASB 9, the Group has continued to apply the hedge accounting requirements of AASB 139.
Fair value hedge
Cash flow hedge
Net investment hedge
The fair value of derivative financial instruments designated in hedging relationships is:
2022
2021
Objective of this
To hedge our exposure to changes to
To hedge our exposure to variability in
To hedge our exposure to exchange
hedging
arrangement
the fair value of a recognised asset or
cash flows of a recognised asset or
rate differences arising from the
liability or unrecognised firm
liability, a firm commitment or a highly
translation of our foreign operations
commitment caused by interest rate
probable forecast transaction caused
from their functional currency to
or foreign currency movements.
by interest rate, foreign currency and
Australian dollars.
other price movements.
Recognition of
effective hedge
portion
Recognition of
ineffective hedge
portion
The following are recognised in profit
We recognise the effective portion of
We recognise the effective portion of
or loss at the same time:
changes in the fair value of derivatives
changes in the fair value of the
designated as a cash flow hedge in
hedging instrument in the foreign
the cash flow hedge reserve.
currency translation reserve (FCTR).
all changes in the fair value of the
underlying item relating to the
hedged risk; and
the change in the fair value of the
derivatives.
Recognised immediately in Other operating income.
If a hedging
When we recognise the hedged item
Only when we recognise the hedged
The amount we defer in the foreign
instrument expires,
in profit or loss, we recognise the
item in profit or loss is the amount
currency translation reserve remains in
or is sold, terminated,
related unamortised fair value
previously deferred in the cash flow
equity and is transferred to profit or
or exercised; or no
adjustment in profit or loss. This may
hedge reserve transferred to profit
loss only when we dispose of, or
the effective yield over the period
to maturity.
Hedged item sold or
We recognise the unamortised fair
Amounts accumulated in equity are
The gain or loss, or applicable
repaid
value adjustment immediately in
transferred immediately to profit
proportion, we have recognised in
profit or loss.
or loss.
equity is transferred to profit or loss on
disposal or partial disposal of a foreign
operation.
Consolidated
Fair value hedges
Foreign exchange spot and forward contracts
Interest rate swap agreements
Interest rate futures contracts
Cash flow hedges
Interest rate swap agreements
Foreign exchange swap agreements
Foreign exchange spot and forward contracts
Net investment hedges
Foreign exchange spot and forward contracts
Derivative financial instruments - designated in
hedging relationships
longer qualifies for
occur over time if the hedged item is
or loss.
hedge accounting
amortised to profit or loss as part of
partially dispose of, the foreign
The Company
operation.
Fair value hedges
Foreign exchange spot and forward contracts
Interest rate swap agreements
Interest rate futures contracts
Cash flow hedges
Interest rate swap agreements
Foreign exchange swap agreements
Foreign exchange spot and forward contracts
Net investment hedges
Foreign exchange spot and forward contracts
Derivative financial instruments - designated in
hedging relationships
Nominal
amount
$m
604
106,366
17,361
125,063
656
161
940
251,151
Nominal
amount
$m
604
80,185
17,361
94,928
656
161
146
194,041
Assets
$m
Liabilities
$m
Nominal
amount
$m
548
95,384
8,704
105,416
642
153
(37)
(168)
(3)
(53)
(44)
(4)
(47)
1,097
(356)
211,944
Assets
$m
Liabilities
$m
-
370
191
27
22
-
46
656
(13)
(121)
(2)
(20)
-
(1)
(45)
(202)
-
79
264
33
48
-
34
458
2022
2021
Assets
$m
Liabilities
$m
Nominal
amount
$m
Assets
$m
Liabilities
$m
-
65
264
28
48
-
1
406
(37)
(163)
(3)
(49)
(44)
(4)
-
548
68,708
8,704
78,852
642
153
299
(300)
157,906
-
358
191
19
22
-
2
592
(13)
(116)
(2)
(16)
-
(1)
(10)
(158)
138
139
140140 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The maturity profile of the nominal amounts of our hedging instruments held is:
Consolidated
Nominal Amount
As at 30 September 2022
Fair value hedges
Interest rate
Interest Rate
Foreign exchange
HKD/AUD FX Rate
Cash flow hedges
Interest rate
Interest Rate
Foreign exchange1
Net investment hedges
Foreign exchange
AUD/USD FX Rate
USD/EUR FX Rate
TWD/AUD FX Rate
THB/AUD FX Rate
As at 30 September 2021
Fair value hedges
Interest rate
Interest Rate
Foreign exchange
HKD/AUD FX Rate
Cash flow hedges
Interest rate
Interest Rate
Foreign exchange1
Net investment hedges
Foreign exchange
AUD/USD FX Rate
USD/EUR FX Rate
TWD/AUD FX Rate
THB/AUD FX Rate
Average
Rate
Less than 3
months
$m
3 to 12
months
$m
1 to 5
years
$m
After
5 years
$m
Total
$m
1.65%
5.43
1.59%
0.74
0.91
20.68
25.05
1.26%
5.74
1.17%
0.74
0.91
20.81
24.18
10,931
604
17,322
65,259
30,215
123,727
-
-
-
604
3,317
32,145
88,461
1,140
125,063
Interest rate
Interest Rate
1,708
22,611
69,600
1,009
94,928
656
817
40
121
794
146
-
-
656
817
Foreign exchange
TWD/AUD FX Rate
20.68
-
940
As at 30 September 2021
2,597
548
14,328
-
58,658
-
28,505
104,088
-
548
4,593
14,180
84,924
1,719
105,416
38
115
456
641
-
-
642
795
-
1,097
1. Hedges of foreign exchange risk cover multiple currency pairs. The table reflects the larger currency pairs only.
Average
Rate
Less than 3
months
$m
3 to 12
months
$m
1 to 5
years
$m
After
5 years
$m
13,466
48,011
25,138
The Company
Nominal Amount
As at 30 September 2022
Fair value hedges
Interest rate
Interest Rate
Foreign exchange
HKD/AUD FX Rate
Cash flow hedges
Foreign exchange1
Net investment hedges
AUD/USD FX Rate
USD/EUR FX Rate
Fair value hedges
Interest rate
Interest Rate
Foreign exchange
HKD/AUD FX Rate
Cash flow hedges
Interest rate
Interest Rate
Foreign exchange1
Net investment hedges
AUD/USD FX Rate
USD/EUR FX Rate
1.75%
5.43
1.37%
0.74
0.91
1.37%
5.74
1.06%
0.74
0.91
10,931
604
40
-
2,445
548
2,125
38
-
121
146
10,884
-
7,233
115
Foreign exchange
TWD/AUD FX Rate
20.81
150
149
1. Hedges of foreign exchange risk cover multiple currency pairs. The table reflects the larger currency pairs only.
Total
$m
97,546
604
146
77,412
548
78,852
795
299
-
-
-
-
-
-
-
-
-
-
43,063
21,020
67,799
1,695
642
140
141
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
141141
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The Company
Nominal Amount
As at 30 September 2022
Fair value hedges
Average
Rate
Less than 3
months
$m
3 to 12
months
$m
1 to 5
years
$m
After
5 years
$m
Total
$m
Interest rate
Interest Rate
Foreign exchange
HKD/AUD FX Rate
Cash flow hedges
Interest rate
Interest Rate
Foreign exchange1
Net investment hedges
AUD/USD FX Rate
USD/EUR FX Rate
1.75%
5.43
1.37%
0.74
0.91
Foreign exchange
TWD/AUD FX Rate
20.68
794
146
940
As at 30 September 2021
Fair value hedges
Interest rate
Interest Rate
Foreign exchange
HKD/AUD FX Rate
Interest rate
Interest Rate
4,593
14,180
84,924
1,719
105,416
2,597
548
14,328
-
58,658
28,505
104,088
Cash flow hedges
548
Interest rate
Interest Rate
Foreign exchange1
Net investment hedges
AUD/USD FX Rate
USD/EUR FX Rate
1.37%
5.74
1.06%
0.74
0.91
The maturity profile of the nominal amounts of our hedging instruments held is:
Average
Rate
Less than 3
months
$m
3 to 12
months
$m
1 to 5
years
$m
After
5 years
$m
10,931
604
-
17,322
65,259
30,215
123,727
Total
$m
604
Interest rate
Interest Rate
3,317
32,145
88,461
1,140
125,063
40
121
656
817
Consolidated
Nominal Amount
As at 30 September 2022
Fair value hedges
Interest rate
Interest Rate
Foreign exchange
HKD/AUD FX Rate
Cash flow hedges
Foreign exchange1
Net investment hedges
Foreign exchange
AUD/USD FX Rate
USD/EUR FX Rate
TWD/AUD FX Rate
THB/AUD FX Rate
As at 30 September 2021
Fair value hedges
Interest rate
Interest Rate
Foreign exchange
HKD/AUD FX Rate
Cash flow hedges
Foreign exchange1
Net investment hedges
Foreign exchange
AUD/USD FX Rate
USD/EUR FX Rate
TWD/AUD FX Rate
THB/AUD FX Rate
1.65%
5.43
1.59%
0.74
0.91
20.68
25.05
1.26%
5.74
1.17%
0.74
0.91
20.81
24.18
1. Hedges of foreign exchange risk cover multiple currency pairs. The table reflects the larger currency pairs only.
-
-
-
-
-
-
-
-
-
38
115
642
795
Foreign exchange
TWD/AUD FX Rate
20.81
150
149
1. Hedges of foreign exchange risk cover multiple currency pairs. The table reflects the larger currency pairs only.
456
641
-
1,097
10,931
604
13,466
48,011
25,138
-
-
-
97,546
604
1,708
22,611
69,600
1,009
94,928
40
-
2,445
548
2,125
38
121
146
10,884
-
7,233
115
-
-
43,063
-
67,799
-
-
656
817
-
146
21,020
-
1,695
642
-
77,412
548
78,852
795
299
140
141
142142 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The impacts of ineffectiveness from our designated hedge relationships by type of hedge relationship and type of risk being hedged are:
The hedged items in relation to the Group’s fair value hedges are:
Consolidated
As at 30 September 2022
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
As at 30 September 2021
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
The Company
As at 30 September 2022
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
As at 30 September 2021
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
Ineffectiveness
Change in value
of hedging
instrument2
$m
Change in value
of hedged item
$m
Hedge ineffectiveness
recognised in profit or
loss3
$m
Amount reclassified
from the cash flow
hedge reserve or FCTR
to profit or loss4
$m
Consolidated
As at 30 September 2022
Balance sheet
presentation
Hedged risk
Carrying amount
Assets
Liabilities
$m
$m
Accumulated fair value
hedge adjustments on
the hedged item
Assets
Liabilities
$m
$m
697
(55)
(3,619)
(4)
(719)
55
3,453
4
62
(62)
1,005
9
(934)
(10)
61
(1,006)
(9)
909
10
(61)
(22)
-
(166)
-
-
(1)
-
(25)
-
-
-
-
(13)
1
-
-
-
4
(1)
-
Ineffectiveness
Change in value
of hedging
instrument2
$m
Change in value
of hedged item
$m
Hedge ineffectiveness
recognised in profit or
loss3
$m
Amount reclassified
from the cash flow
hedge reserve or FCTR
to profit or loss4
$m
1,570
(55)
(3,643)
(4)
(1,586)
55
3,477
4
58
(58)
731
9
(797)
(10)
(6)
(734)
(9)
772
10
6
(16)
-
(166)
-
-
(3)
-
(25)
-
-
-
-
(13)
1
-
-
-
(6)
(1)
-
1. All hedging instruments are classified as derivative financial instruments.
2. Changes in value of hedging instruments is before any adjustments for Settle to Market clearing arrangements.
3. Recognised in Other operating income.
4. Recognised in Net interest income and Other operating income.
142
Fixed rate loans and advances
Net loans and advances
Interest rate
10,252
Fixed rate debt issuance
Debt issuances
Interest rate
-
(51,531)
3,721
Fixed rate investment securities at FVOCI1 Investment securities
Interest rate
Equity securities at FVOCI1
Investment securities
Foreign exchange
53,915
604
64,771
(51,531)
(5,643)
3,721
Total
Total
As at 30 September 2021
Fixed rate loans and advances
Net loans and advances
Interest rate
3,416
Fixed rate debt issuance
Debt issuances
Interest rate
-
(53,885)
Fixed rate investment securities at FVOCI1 Investment securities
Interest rate
Equity securities at FVOCI1
Investment securities
Foreign exchange
53,321
548
57,285
(53,885)
1. The carrying amount of debt and equity instruments at FVOCI does not include the fair value hedge adjustment since accounting for the hedge relationship results in the transfer of the hedge adjustment
out of Other comprehensive income into the Income Statement to match the profit or loss on the hedging instrument.
The cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the Balance Sheet is -$7 million
(2021: $2 million).
The hedged items in relation to the Company’s fair value hedges are:
Balance sheet
presentation
Hedged risk
Carrying amount
Assets
Liabilities
$m
$m
Accumulated fair value
hedge adjustments on
the hedged item
Assets
Liabilities
$m
$m
Fixed rate loans and advances
Net loans and advances
Interest rate
10,252
Fixed rate debt issuance
Debt issuances
Interest rate
-
(37,141)
2,572
Fixed rate investment securities at FVOCI1 Investment securities
Interest rate
Equity securities at FVOCI1
Investment securities
Foreign exchange
44,038
604
54,894
(37,141)
(4,783)
2,572
Fixed rate loans and advances
Net loans and advances
Interest rate
3,416
Fixed rate debt issuance
Debt issuances
Interest rate
-
(38,222)
Fixed rate investment securities at FVOCI1 Investment securities
Interest rate
Equity securities at FVOCI1
Investment securities
Foreign exchange
41,944
548
45,908
(38,222)
1. The carrying amount of debt and equity instruments at FVOCI does not include the fair value hedge adjustment since accounting for the hedge relationship results in the transfer of the hedge adjustment
out of Other comprehensive income into the Income Statement to match the profit or loss on the hedging instrument.
The cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the Balance Sheet is -$7 million
The Company
As at 30 September 2022
Total
As at 30 September 2021
Total
(2021: nil).
(369)
-
(5,349)
75
9
-
(209)
20
(180)
(369)
-
(4,489)
75
7
-
129
20
156
-
-
-
-
-
-
-
-
-
-
-
-
(999)
(999)
-
-
-
-
-
-
-
-
-
-
-
-
(769)
(769)
143
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
143143
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The impacts of ineffectiveness from our designated hedge relationships by type of hedge relationship and type of risk being hedged are:
The hedged items in relation to the Group’s fair value hedges are:
Ineffectiveness
Change in value
Hedge ineffectiveness
of hedging
Change in value
recognised in profit or
hedge reserve or FCTR
instrument2
of hedged item
Amount reclassified
from the cash flow
to profit or loss4
$m
Consolidated
As at 30 September 2022
Balance sheet
presentation
Hedged risk
Carrying amount
Assets
$m
Liabilities
$m
Accumulated fair value
hedge adjustments on
the hedged item
Assets
$m
Liabilities
$m
(13)
-
-
1
-
-
-
4
(1)
-
(13)
-
-
1
-
-
-
(6)
(1)
-
Fixed rate loans and advances
Net loans and advances
Interest rate
10,252
-
Fixed rate debt issuance
Debt issuances
Interest rate
-
(51,531)
Fixed rate investment securities at FVOCI1 Investment securities
Interest rate
Equity securities at FVOCI1
Investment securities
Foreign exchange
53,915
604
-
-
(369)
-
(5,349)
75
-
3,721
-
-
Total
As at 30 September 2021
64,771
(51,531)
(5,643)
3,721
Fixed rate loans and advances
Net loans and advances
Interest rate
3,416
-
Fixed rate debt issuance
Debt issuances
Interest rate
-
(53,885)
Fixed rate investment securities at FVOCI1 Investment securities
Interest rate
Equity securities at FVOCI1
Investment securities
Foreign exchange
Total
53,321
548
-
-
57,285
(53,885)
9
-
(209)
20
(180)
-
(999)
-
-
(999)
1. The carrying amount of debt and equity instruments at FVOCI does not include the fair value hedge adjustment since accounting for the hedge relationship results in the transfer of the hedge adjustment
out of Other comprehensive income into the Income Statement to match the profit or loss on the hedging instrument.
The cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the Balance Sheet is -$7 million
(2021: $2 million).
The hedged items in relation to the Company’s fair value hedges are:
Balance sheet
presentation
Hedged risk
Carrying amount
Assets
$m
Liabilities
$m
Accumulated fair value
hedge adjustments on
the hedged item
Assets
$m
Liabilities
$m
The Company
As at 30 September 2022
Fixed rate loans and advances
Net loans and advances
Interest rate
10,252
-
Fixed rate debt issuance
Debt issuances
Interest rate
-
(37,141)
Fixed rate investment securities at FVOCI1 Investment securities
Interest rate
Equity securities at FVOCI1
Investment securities
Foreign exchange
44,038
604
-
-
(369)
-
(4,489)
75
-
2,572
-
-
Total
As at 30 September 2021
54,894
(37,141)
(4,783)
2,572
Fixed rate loans and advances
Net loans and advances
Interest rate
3,416
-
Fixed rate debt issuance
Debt issuances
Interest rate
-
(38,222)
Fixed rate investment securities at FVOCI1 Investment securities
Interest rate
Equity securities at FVOCI1
Investment securities
Foreign exchange
Total
41,944
548
-
-
45,908
(38,222)
7
-
129
20
156
-
(769)
-
-
(769)
1. The carrying amount of debt and equity instruments at FVOCI does not include the fair value hedge adjustment since accounting for the hedge relationship results in the transfer of the hedge adjustment
out of Other comprehensive income into the Income Statement to match the profit or loss on the hedging instrument.
The cumulative amount of fair value hedge adjustments relating to ceased hedge relationships remaining on the Balance Sheet is -$7 million
(2021: nil).
Consolidated
As at 30 September 2022
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
As at 30 September 2021
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
The Company
As at 30 September 2022
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
As at 30 September 2021
Fair value hedges1
Interest rate
Foreign exchange
Cash flow hedges1
Interest rate
Foreign exchange
Net investment hedges1
Foreign exchange
62
(62)
$m
697
(55)
(3,619)
(4)
1,005
9
(934)
(10)
61
$m
(719)
55
3,453
4
(1,006)
(9)
909
10
(61)
instrument2
of hedged item
$m
$m
1,570
(55)
(3,643)
(4)
(1,586)
55
3,477
4
58
(58)
731
9
(797)
(10)
(6)
(734)
(9)
772
10
6
loss3
$m
(22)
(166)
(1)
-
(25)
loss3
$m
(16)
(166)
-
-
-
-
-
-
-
-
(3)
-
(25)
-
-
Ineffectiveness
Change in value
Hedge ineffectiveness
of hedging
Change in value
recognised in profit or
hedge reserve or FCTR
Amount reclassified
from the cash flow
to profit or loss4
$m
1. All hedging instruments are classified as derivative financial instruments.
2. Changes in value of hedging instruments is before any adjustments for Settle to Market clearing arrangements.
3. Recognised in Other operating income.
4. Recognised in Net interest income and Other operating income.
142
143
144144 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The hedged items in relation to the Group’s and the Company’s cash flow and net investment hedges are:
The table below details the reconciliation of the Group’s cash flow hedge reserve by risk type:
Consolidated
As at 30 September 2022
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
As at 30 September 2021
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
The Company
As at 30 September 2022
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
As at 30 September 2021
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
Hedged risk
Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange
Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange
Hedged risk
Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange
Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange
Cash flow
hedge reserve
Foreign currency
translation reserve
Continuing
hedges
$m
Discontinued
hedges
$m
Continuing
hedges
$m
Discontinued
hedges
$m
(4,286)
1,357
(1)
(7)
-
546
4
(4)
(1)
-
19
5
(1)
-
-
20
(6)
(1)
-
-
-
-
-
-
-
-
-
-
43
(149)
-
-
-
-
-
-
-
-
(19)
(149)
Cash flow
hedge reserve
Foreign currency
translation reserve
Continuing
hedges
$m
Discontinued
hedges
$m
Continuing
hedges
$m
Discontinued
hedges
$m
(4,005)
1,053
(1)
(7)
-
541
8
(4)
(1)
-
11
6
(1)
-
-
11
(6)
(1)
-
-
-
-
-
-
-
-
-
-
88
(149)
-
-
-
-
-
-
-
-
30
(149)
Consolidated
Balance at 1 October 2020
Fair value gains/(losses)
Transferred to profit or loss
Income taxes and others
Balance at 30 September 2021
Fair value gains/(losses)
Transferred to profit or loss
Income taxes and others
Balance at 30 September 2022
The Company
Balance at 1 October 2020
Fair value gains/(losses)
Transferred to profit or loss
Income taxes and others
Balance at 30 September 2021
Fair value gains/(losses)
Transferred to profit or loss
Income taxes and others
Balance at 30 September 2022
Interest rate
Foreign
currency
$m
1,034
(909)
4
269
398
(3,453)
(13)
1,040
(2,028)
$m
931
(772)
(6)
236
389
(3,477)
(13)
1,048
(2,053)
$m
4
(10)
(1)
2
(5)
(4)
1
-
(8)
$m
4
(10)
(1)
2
(5)
(4)
1
-
(8)
Total
$m
1,038
(919)
3
271
393
(3,457)
(12)
1,040
(2,036)
Total
$m
935
(782)
(7)
238
384
(3,481)
(12)
1,048
(2,061)
Hedges of net investments in a foreign operation resulted in a $62 million increase in FCTR during the year (2021: $61 million increase).
The table below details the reconciliation of the Company’s cash flow hedge reserve by risk type:
Interest rate
Foreign
currency
Hedges of net investments in a foreign operation resulted in a $58 million increase in FCTR during the year (2021: $6 million decrease).
144
145
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
145145
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
DERIVATIVE FINANCIAL INSTRUMENTS – DESIGNATED IN HEDGING RELATIONSHIPS (continued)
The hedged items in relation to the Group’s and the Company’s cash flow and net investment hedges are:
The table below details the reconciliation of the Group’s cash flow hedge reserve by risk type:
Cash flow
hedge reserve
Foreign currency
translation reserve
Continuing
Discontinued
Continuing
Discontinued
hedges
$m
hedges
$m
hedges
$m
hedges
$m
Consolidated
Balance at 1 October 2020
Fair value gains/(losses)
Transferred to profit or loss
Income taxes and others
Balance at 30 September 2021
Fair value gains/(losses)
Transferred to profit or loss
Income taxes and others
Balance at 30 September 2022
43
(149)
Interest rate
$m
Foreign
currency
$m
1,034
(909)
4
269
398
(3,453)
(13)
1,040
(2,028)
4
(10)
(1)
2
(5)
(4)
1
-
(8)
Hedges of net investments in a foreign operation resulted in a $62 million increase in FCTR during the year (2021: $61 million increase).
The table below details the reconciliation of the Company’s cash flow hedge reserve by risk type:
(19)
(149)
Cash flow
hedge reserve
Foreign currency
translation reserve
Continuing
Discontinued
Continuing
Discontinued
hedges
$m
hedges
$m
hedges
$m
hedges
$m
The Company
Balance at 1 October 2020
Fair value gains/(losses)
Transferred to profit or loss
Income taxes and others
Balance at 30 September 2021
Fair value gains/(losses)
Transferred to profit or loss
Income taxes and others
Balance at 30 September 2022
Interest rate
$m
Foreign
currency
$m
931
(772)
(6)
236
389
(3,477)
(13)
1,048
(2,053)
4
(10)
(1)
2
(5)
(4)
1
-
(8)
Total
$m
1,038
(919)
3
271
393
(3,457)
(12)
1,040
(2,036)
Total
$m
935
(782)
(7)
238
384
(3,481)
(12)
1,048
(2,061)
Hedges of net investments in a foreign operation resulted in a $58 million increase in FCTR during the year (2021: $6 million decrease).
Consolidated
As at 30 September 2022
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
As at 30 September 2021
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
The Company
As at 30 September 2022
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
As at 30 September 2021
Cash flow hedges
Floating rate loans and advances
Floating rate customer deposits
Foreign currency debt issuances
Highly probable forecast transactions
Net investment hedges
Foreign operations
Hedged risk
Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange
Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange
Hedged risk
Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange
Interest rate
Interest rate
Foreign exchange
Foreign exchange
Foreign exchange
(4,286)
1,357
(1)
(7)
-
546
4
(4)
(1)
-
(4,005)
1,053
(1)
(7)
-
541
8
(4)
(1)
-
19
5
(1)
-
-
20
(6)
(1)
-
-
11
6
(1)
-
-
11
(6)
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
88
(149)
30
(149)
144
145
146146 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
12. INVESTMENT SECURITIES
RECOGNITION AND MEASUREMENT
Recognition
Initially and at each reporting date, we recognise all derivatives at fair value. If the fair value of a
derivative is positive, then we carry it as an asset, but if its value is negative, then we carry it as a
liability.
Valuation adjustments are integral in determining the fair value of derivatives. This includes:
a credit valuation adjustment to reflect the counterparty risk and/or event of default; and
a funding valuation adjustment to account for funding costs and benefits in the derivatives
portfolio.
Derecognition of
assets and liabilities
We remove derivative assets from our Balance Sheet when the contracts expire or we have transferred
substantially all the risks and rewards of ownership. We remove derivative liabilities from our Balance
Sheet when the Group’s contractual obligations are discharged, cancelled or expired.
With respect to derivatives cleared through a central clearing counterparty or exchange, derivative
assets or liabilities may be derecognised in accordance with the principle above when collateral is
settled, depending on the legal arrangements in place for each instrument.
Impact on the
Income Statement
The recognition of gains or losses on derivative financial instruments depends on whether the
derivative is held for trading or is designated in a hedging relationship. For derivative financial
instruments held for trading, gains or losses from changes in the fair value are recognised in profit or
loss.
Investment securities measured at amortised cost
Investment Securities measured at fair value through profit or loss
For an instrument designated in a hedging relationship, the recognition of gains or losses depends on
the nature of the item being hedged. Refer to the table on page 138 for details of the recognition
approach applied for each type of hedge accounting relationship.
Sources of hedge ineffectiveness may arise from differences in the interest rate reference rate, margins,
or rate set differences and differences in discounting between the hedged items and the hedging
instruments.
Hedge effectiveness
To qualify for hedge accounting under AASB 139, a hedge relationship is expected to be highly
effective. A hedge relationship is highly effective only if the following conditions are met:
the hedge is expected to be highly effective in achieving offsetting changes in fair value or cash
flows attributable to the hedged risk during the period for which the hedge is designated
(prospective effectiveness); and
the actual results of the hedge are within the range of 80-125% (retrospective effectiveness).
The Group monitors hedge effectiveness on a regular basis but at a minimum at each reporting date.
KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select the valuation techniques used to determine the fair value of derivatives, particularly the selection of
valuation inputs that are not readily observable, and the application of valuation adjustments to certain derivatives. Refer to Note 19 Fair
Value of Financial Assets and Financial Liabilities for further details.
4,758
7,791
1,353
3,600
7,275
1,310
2022
72,251
2021
70,941
Government securities
Corporate and financial
institution securities
Other securities
Equity securities
Investment securities measured at fair value through other
comprehensive income
Debt securities
Equity securities
Debt securities1
Debt securities
Total
Consolidated
The Company
2022
$m
2021
$m
2022
$m
2021
$m
76,817
1,353
74,743
1,310
65,257
1,027
61,623
1,054
7,943
7,031
6,115
5,263
40
86,153
42
83,126
-
-
72,399
67,940
1. Includes allowance for expected credit losses of $38 million (2021: $31 million) for the Group and $1 million (2021: $1 million) for the Company.
The maturity profile of investment securities is as follows:
Consolidated
As at 30 September 2022
Government securities
Other securities
Equity securities
Total
Corporate and financial institution securities
As at 30 September 2021
Government securities
Corporate and financial institution securities
Other securities
Equity securities
Total
Less than 3
3 to 12
months
months 1 to 5 years After 5 years
maturity
$m
6,544
324
429
-
$m
$m
$m
14,045
29,806
21,856
2,462
423
-
4,906
543
-
97
3,363
-
7,297
16,930
35,255
25,316
6,396
12,984
32,179
19,382
285
129
-
1,179
295
-
5,701
553
-
110
2,623
-
6,810
14,458
38,433
22,115
No
$m
-
2
-
1,353
1,355
-
-
-
1,310
1,310
Total
$m
72,251
7,791
4,758
1,353
86,153
70,941
7,275
3,600
1,310
83,126
During the year, the Group recognised a net gain (before tax) of $28 million (2021: $303 million) in Other operating income from the recycling of
gains/losses previously recognised in Other comprehensive income in respect of debt securities at FVOCI.
146
147
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
147147
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
11. DERIVATIVE FINANCIAL INSTRUMENTS (continued)
12. INVESTMENT SECURITIES
4,758
7,791
1,353
3,600
7,275
1,310
2022
72,251
2021
70,941
Government securities
Corporate and financial
institution securities
Other securities
Equity securities
Investment securities measured at fair value through other
comprehensive income
Debt securities
Equity securities
Investment securities measured at amortised cost
Debt securities1
Investment Securities measured at fair value through profit or loss
Debt securities
Total
Consolidated
The Company
2022
$m
2021
$m
2022
$m
2021
$m
76,817
1,353
74,743
1,310
65,257
1,027
61,623
1,054
7,943
7,031
6,115
5,263
40
86,153
42
83,126
-
-
72,399
67,940
1. Includes allowance for expected credit losses of $38 million (2021: $31 million) for the Group and $1 million (2021: $1 million) for the Company.
The maturity profile of investment securities is as follows:
RECOGNITION AND MEASUREMENT
Recognition
Initially and at each reporting date, we recognise all derivatives at fair value. If the fair value of a
derivative is positive, then we carry it as an asset, but if its value is negative, then we carry it as a
Valuation adjustments are integral in determining the fair value of derivatives. This includes:
a credit valuation adjustment to reflect the counterparty risk and/or event of default; and
a funding valuation adjustment to account for funding costs and benefits in the derivatives
Derecognition of
assets and liabilities
We remove derivative assets from our Balance Sheet when the contracts expire or we have transferred
substantially all the risks and rewards of ownership. We remove derivative liabilities from our Balance
Sheet when the Group’s contractual obligations are discharged, cancelled or expired.
With respect to derivatives cleared through a central clearing counterparty or exchange, derivative
assets or liabilities may be derecognised in accordance with the principle above when collateral is
settled, depending on the legal arrangements in place for each instrument.
Impact on the
Income Statement
The recognition of gains or losses on derivative financial instruments depends on whether the
derivative is held for trading or is designated in a hedging relationship. For derivative financial
instruments held for trading, gains or losses from changes in the fair value are recognised in profit or
For an instrument designated in a hedging relationship, the recognition of gains or losses depends on
the nature of the item being hedged. Refer to the table on page 138 for details of the recognition
approach applied for each type of hedge accounting relationship.
Sources of hedge ineffectiveness may arise from differences in the interest rate reference rate, margins,
or rate set differences and differences in discounting between the hedged items and the hedging
liability.
portfolio.
loss.
instruments.
Hedge effectiveness
To qualify for hedge accounting under AASB 139, a hedge relationship is expected to be highly
effective. A hedge relationship is highly effective only if the following conditions are met:
the hedge is expected to be highly effective in achieving offsetting changes in fair value or cash
flows attributable to the hedged risk during the period for which the hedge is designated
(prospective effectiveness); and
the actual results of the hedge are within the range of 80-125% (retrospective effectiveness).
The Group monitors hedge effectiveness on a regular basis but at a minimum at each reporting date.
KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select the valuation techniques used to determine the fair value of derivatives, particularly the selection of
valuation inputs that are not readily observable, and the application of valuation adjustments to certain derivatives. Refer to Note 19 Fair
Value of Financial Assets and Financial Liabilities for further details.
Consolidated
As at 30 September 2022
Government securities
Corporate and financial institution securities
Other securities
Equity securities
Total
As at 30 September 2021
Government securities
Corporate and financial institution securities
Other securities
Equity securities
Total
6,544
14,045
29,806
21,856
324
429
-
2,462
423
-
4,906
543
-
97
3,363
-
7,297
16,930
35,255
25,316
6,396
12,984
32,179
19,382
285
129
-
1,179
295
-
5,701
553
-
110
2,623
-
6,810
14,458
38,433
22,115
No
maturity
$m
-
2
-
1,353
1,355
-
-
-
1,310
1,310
Total
$m
72,251
7,791
4,758
1,353
86,153
70,941
7,275
3,600
1,310
83,126
3 to 12
months 1 to 5 years After 5 years
$m
Less than 3
months
$m
$m
$m
During the year, the Group recognised a net gain (before tax) of $28 million (2021: $303 million) in Other operating income from the recycling of
gains/losses previously recognised in Other comprehensive income in respect of debt securities at FVOCI.
146
147
148148 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
12. INVESTMENT SECURITIES (continued)
13. NET LOANS AND ADVANCES
The following table provides details of Net loans and advances for the Group and the Company:
$m
$m
Less than 3
months
$m
3 to 12
months 1 to 5 years After 5 years
$m
No
maturity
$m
-
-
-
1,027
1,027
-
-
-
1,054
1,054
Total
$m
60,315
6,299
4,758
1,027
72,399
57,839
5,447
3,600
1,054
67,940
5,715
11,647
23,100
19,853
276
429
-
1,972
423
-
3,993
543
-
58
3,363
-
6,420
14,042
27,636
23,274
5,453
11,646
24,390
16,350
175
129
-
830
295
-
4,371
553
-
71
2,623
-
5,757
12,771
29,314
19,044
The Company
As at 30 September 2022
Government securities
Corporate and financial institution securities
Other securities
Equity securities
Total
As at 30 September 2021
Government securities
Corporate and financial institution securities
Other securities
Equity securities
Total
Capitalised brokerage and other origination costs1,2
Gross loans and advances
Allowance for expected credit losses (refer to Note 14)
Overdrafts
Credit cards
Commercial bills
Term loans – housing
Term loans – non-housing
Other
Subtotal
Unearned income1
Net loans and advances
Residual contractual maturity:
Within one year
More than one year
Net loans and advances
Carried on Balance Sheet at:
Amortised cost
Fair value through profit or loss
Net loans and advances3
1. Amortised over the expected life of the loan.
Consolidated
The Company
2022
$m
5,266
6,755
5,214
374,625
279,730
2,035
673,625
(518)
2,882
675,989
(3,582)
672,407
146,142
526,265
672,407
667,732
4,675
672,407
2021
$m
5,360
6,570
6,000
372,572
239,277
2,985
632,764
(434)
1,434
633,764
(4,045)
629,719
125,952
503,767
629,719
626,099
3,620
629,719
2022
$m
4,262
5,664
5,214
282,965
238,215
1,929
538,249
(480)
2,501
540,270
(2,925)
537,345
121,513
415,832
537,345
533,082
4,263
537,345
2021
$m
4,465
5,494
6,000
278,372
194,150
2,733
491,214
(390)
1,050
491,874
(3,387)
488,487
98,214
390,273
488,487
485,015
3,472
488,487
2. During 2022, the Group revised its accounting treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of
expected future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,320 million for the Group and
3. Net loans and advances of the Group and the Company include a balance of $667 million relating to the Share Investing lending portfolio that is in the process of being sold with completion anticipated in
the Company. Comparatives have not been restated.
2023.
RECOGNITION AND MEASUREMENT
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and
are facilities the Group provides directly to customers or through third party channels.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the issue of the loan or advance,
which are primarily brokerage and other origination costs which we amortise over the estimated life of the loan. Subsequently, we then
measure loans and advances at amortised cost using the effective interest rate method, net of any allowance for expected credit losses, or
at fair value when they are specifically designated on initial recognition as fair value through profit or loss, are classified as held for sale or
when held for trading.
We classify contracts to lease assets and hire purchase agreements as finance leases if they transfer substantially all the risks and rewards of
ownership of the asset to the customer or an unrelated third party. We include these facilities in ‘Other’ in the table above.
The Group enters into transactions in which it transfers financial assets that are recognised on its Balance Sheet. When the Group retains
substantially all of the risks and rewards of the transferred assets, the transferred assets remain on the Group’s Balance Sheet, however if
substantially all the risks and rewards are transferred, the Group derecognises the asset. If the risks and rewards are partially retained and
control over the asset is lost, the Group derecognises the asset. If control over the asset is not lost, the Group continues to recognise the
asset to the extent of its continuing involvement.
We separately recognise the rights and obligations retained, or created, in the transfer of assets as appropriate.
Assets disclosed as Net loans and advances are subject to the general classification and measurement policy for financial assets outlined on
page 133. Additionally, expected credit losses associated with loans and advances at amortised cost are recognised and measured in
accordance with the accounting policy outlined in Note 14 Allowance for Expected Credit Losses.
During the year, the Company recognised a net gain (before tax) of $1 million (2021: $301 million) in Other operating income from the recycling of
gains/losses previously recognised in Other comprehensive income in respect of debt securities at FVOCI.
RECOGNITION AND MEASUREMENT
Investment securities are those financial assets in security form (that is, transferable debt or equity instruments) that are not held for trading
purposes. By way of exception, bills of exchange (a form of security/transferable instrument) which are used to facilitate the Group’s
customer lending activities are classified as Loans and advances (rather than Investment securities) to better reflect the substance of the
arrangement.
Equity investments not held for trading purposes may be designated at FVOCI on an instrument by instrument basis. If this election is
made, gains or losses are not reclassified from Other comprehensive income to profit or loss on disposal of the investment. However, gains
or losses may be reclassified within equity.
Assets disclosed as Investment securities are subject to the general classification and measurement policy for Financial Assets outlined at
the commencement of the Group’s financial asset disclosures on page 133. Additionally, expected credit losses associated with ‘Investment
securities - debt securities at amortised cost’ and ‘Investment securities - debt securities at fair value through other comprehensive income’
are recognised and measured in accordance with the accounting policy outlined in Note 14 Allowance for Expected Credit Losses. For
‘Investment securities - debt securities at fair value through other comprehensive income’, the allowance for Expected Credit Loss (ECL) is
recognised in the FVOCI reserve in equity with a corresponding charge to profit or loss.
KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select valuation techniques used to determine the fair value of assets not valued using quoted market
prices, particularly the selection of valuation inputs that are not readily observable. Refer to Note 19 Fair Value of Financial Assets and
Financial Liabilities for further details.
148
149
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
149149
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
12. INVESTMENT SECURITIES (continued)
The Company
As at 30 September 2022
Government securities
Other securities
Equity securities
Total
Corporate and financial institution securities
As at 30 September 2021
Government securities
Corporate and financial institution securities
Other securities
Equity securities
Total
Less than 3
3 to 12
months
months 1 to 5 years After 5 years
maturity
$m
5,715
276
429
-
$m
$m
$m
11,647
23,100
19,853
1,972
423
-
3,993
543
-
58
3,363
-
6,420
14,042
27,636
23,274
5,453
11,646
24,390
16,350
175
129
-
830
295
-
4,371
553
-
71
2,623
-
5,757
12,771
29,314
19,044
No
$m
1,027
1,027
-
-
-
-
-
-
1,054
1,054
Total
$m
60,315
6,299
4,758
1,027
72,399
57,839
5,447
3,600
1,054
67,940
During the year, the Company recognised a net gain (before tax) of $1 million (2021: $301 million) in Other operating income from the recycling of
gains/losses previously recognised in Other comprehensive income in respect of debt securities at FVOCI.
RECOGNITION AND MEASUREMENT
Investment securities are those financial assets in security form (that is, transferable debt or equity instruments) that are not held for trading
purposes. By way of exception, bills of exchange (a form of security/transferable instrument) which are used to facilitate the Group’s
customer lending activities are classified as Loans and advances (rather than Investment securities) to better reflect the substance of the
arrangement.
Assets disclosed as Investment securities are subject to the general classification and measurement policy for Financial Assets outlined at
the commencement of the Group’s financial asset disclosures on page 133. Additionally, expected credit losses associated with ‘Investment
securities - debt securities at amortised cost’ and ‘Investment securities - debt securities at fair value through other comprehensive income’
are recognised and measured in accordance with the accounting policy outlined in Note 14 Allowance for Expected Credit Losses. For
‘Investment securities - debt securities at fair value through other comprehensive income’, the allowance for Expected Credit Loss (ECL) is
recognised in the FVOCI reserve in equity with a corresponding charge to profit or loss.
KEY JUDGEMENTS AND ESTIMATES
Judgement is required when we select valuation techniques used to determine the fair value of assets not valued using quoted market
prices, particularly the selection of valuation inputs that are not readily observable. Refer to Note 19 Fair Value of Financial Assets and
Financial Liabilities for further details.
13. NET LOANS AND ADVANCES
The following table provides details of Net loans and advances for the Group and the Company:
Overdrafts
Credit cards
Commercial bills
Term loans – housing
Term loans – non-housing
Other
Subtotal
Unearned income1
Capitalised brokerage and other origination costs1,2
Gross loans and advances
Allowance for expected credit losses (refer to Note 14)
Net loans and advances
Residual contractual maturity:
Within one year
More than one year
Net loans and advances
Carried on Balance Sheet at:
Amortised cost
Fair value through profit or loss
Net loans and advances3
Consolidated
2022
$m
5,266
6,755
5,214
374,625
279,730
2,035
673,625
(518)
2,882
675,989
(3,582)
672,407
146,142
526,265
672,407
667,732
4,675
672,407
2021
$m
5,360
6,570
6,000
372,572
239,277
2,985
632,764
(434)
1,434
633,764
(4,045)
629,719
125,952
503,767
629,719
626,099
3,620
629,719
The Company
2022
$m
4,262
5,664
5,214
282,965
238,215
1,929
538,249
(480)
2,501
540,270
(2,925)
537,345
121,513
415,832
537,345
533,082
4,263
537,345
2021
$m
4,465
5,494
6,000
278,372
194,150
2,733
491,214
(390)
1,050
491,874
(3,387)
488,487
98,214
390,273
488,487
485,015
3,472
488,487
1. Amortised over the expected life of the loan.
2. During 2022, the Group revised its accounting treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of
expected future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,320 million for the Group and
the Company. Comparatives have not been restated.
3. Net loans and advances of the Group and the Company include a balance of $667 million relating to the Share Investing lending portfolio that is in the process of being sold with completion anticipated in
Equity investments not held for trading purposes may be designated at FVOCI on an instrument by instrument basis. If this election is
made, gains or losses are not reclassified from Other comprehensive income to profit or loss on disposal of the investment. However, gains
2023.
or losses may be reclassified within equity.
RECOGNITION AND MEASUREMENT
Loans and advances are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and
are facilities the Group provides directly to customers or through third party channels.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the issue of the loan or advance,
which are primarily brokerage and other origination costs which we amortise over the estimated life of the loan. Subsequently, we then
measure loans and advances at amortised cost using the effective interest rate method, net of any allowance for expected credit losses, or
at fair value when they are specifically designated on initial recognition as fair value through profit or loss, are classified as held for sale or
when held for trading.
We classify contracts to lease assets and hire purchase agreements as finance leases if they transfer substantially all the risks and rewards of
ownership of the asset to the customer or an unrelated third party. We include these facilities in ‘Other’ in the table above.
The Group enters into transactions in which it transfers financial assets that are recognised on its Balance Sheet. When the Group retains
substantially all of the risks and rewards of the transferred assets, the transferred assets remain on the Group’s Balance Sheet, however if
substantially all the risks and rewards are transferred, the Group derecognises the asset. If the risks and rewards are partially retained and
control over the asset is lost, the Group derecognises the asset. If control over the asset is not lost, the Group continues to recognise the
asset to the extent of its continuing involvement.
We separately recognise the rights and obligations retained, or created, in the transfer of assets as appropriate.
Assets disclosed as Net loans and advances are subject to the general classification and measurement policy for financial assets outlined on
page 133. Additionally, expected credit losses associated with loans and advances at amortised cost are recognised and measured in
accordance with the accounting policy outlined in Note 14 Allowance for Expected Credit Losses.
148
149
150150 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
Consolidated
Net loans and advances at amortised cost
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Total
Other comprehensive income
Investment securities - debt securities at FVOCI1
The Company
Net loans and advances at amortised cost
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Total
Other comprehensive income
Investment securities - debt securities at FVOCI1
Collectively
assessed
$m
3,049
766
38
3,853
2022
Individually
assessed
$m
533
9
-
542
Collectively
assessed
$m
3,379
785
31
4,195
2021
Individually
assessed
$m
666
21
-
687
Total
$m
3,582
775
38
4,395
Total
$m
4,045
806
31
4,882
10
-
10
11
-
11
Collectively
assessed
$m
2,500
668
1
3,169
2022
Individually
assessed
$m
425
5
-
430
Collectively
assessed
$m
2,824
667
1
3,492
2021
Individually
assessed
$m
563
7
-
570
Total
$m
2,925
673
1
3,599
Total
$m
3,387
674
1
4,062
The Company
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2022
7
-
7
7
-
7
Off-balance sheet commitments - undrawn and contingent facilities
1. For FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in Other comprehensive income with a corresponding
charge to profit or loss.
Allowance for ECL is included in Other provisions.
1. The Company’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.
2. Other movements include the impact of discount unwind on individually assessed allowance for ECL.
1,259
295
The following tables present the movement in the allowance for ECL for the year.
Net loans and advances - at amortised cost
Allowance for ECL is included in Net loans and advances.
Consolidated
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2022
Stage 1
$m
1,204
399
(639)
-
-
4
968
219
(48)
-
-
2
1,141
Stage 2
$m
2,465
(421)
(53)
-
-
3
1,994
(224)
(202)
-
-
(20)
1,548
Stage 31
Collectively
assessed
$m
461
(137)
90
-
-
3
417
Individually
assessed
$m
851
159
663
(365)
(626)
(16)
666
(95)
42
-
-
(4)
360
100
420
(222)
(428)
(3)
533
Total
$m
4,981
-
61
(365)
(626)
(6)
4,045
-
212
(222)
(428)
(25)
3,582
1. The Group’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.
2. Other movements include the impacts of discount unwind on individually assessed allowance for ECL or the impact of divestments completed during the year.
New and increased provisions (net of releases)
Consolidated
As at 1 October 2020
Transfer between stages
Write-backs
Foreign currency translation
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation and other movements2
As at 30 September 2022
1. The Group’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.
2. Other movements include impact of divestments completed during the year.
150
Stage 31
Stage 1
Stage 2
assessed
assessed
Collectively
Individually
$m
1,028
392
(620)
(3)
797
192
(59)
-
-
-
-
16
946
$m
596
51
(92)
-
-
555
40
7
-
(9)
593
$m
2,114
(382)
(49)
-
-
(4)
1,679
(201)
(220)
-
-
1
$m
239
(49)
19
-
2
211
(34)
(28)
-
(5)
144
$m
373
(130)
106
(1)
348
(84)
31
-
-
-
-
-
$m
23
(3)
-
-
(1)
19
(8)
18
-
-
29
$m
704
120
619
(308)
(556)
(16)
563
93
354
(193)
(386)
(6)
425
$m
40
1
1
(21)
-
21
2
(2)
(11)
(1)
9
Stage 1
Stage 2
assessed
assessed
Collectively
Individually
Stage 31
Total
$m
4,219
-
56
(308)
(556)
(24)
3,387
-
106
(193)
(386)
11
2,925
Total
$m
898
-
(72)
(21)
806
1
-
(5)
(11)
(15)
775
151
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
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Directors’
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Financial
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Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
151151
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
The Company
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2022
1. The Company’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.
2. Other movements include the impact of discount unwind on individually assessed allowance for ECL.
Off-balance sheet commitments - undrawn and contingent facilities
Allowance for ECL is included in Other provisions.
Consolidated
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation and other movements2
As at 30 September 2022
1. The Group’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.
2. Other movements include impact of divestments completed during the year.
Stage 1
$m
1,028
392
(620)
-
-
(3)
797
192
(59)
-
-
16
946
Stage 2
$m
2,114
(382)
(49)
-
-
(4)
1,679
(201)
(220)
-
-
1
1,259
Stage 31
Collectively
assessed
$m
373
(130)
106
-
-
(1)
348
Individually
assessed
$m
704
120
619
(308)
(556)
(16)
563
(84)
31
-
-
-
295
93
354
(193)
(386)
(6)
425
Stage 1
$m
596
51
(92)
-
-
555
40
7
-
(9)
593
Stage 2
$m
239
(49)
19
-
2
211
(34)
(28)
-
(5)
144
Stage 31
Collectively
assessed
$m
23
(3)
-
-
(1)
19
Individually
assessed
$m
40
1
1
(21)
-
21
(8)
18
-
-
29
2
(2)
(11)
(1)
9
Total
$m
4,219
-
56
(308)
(556)
(24)
3,387
-
106
(193)
(386)
11
2,925
Total
$m
898
-
(72)
(21)
1
806
-
(5)
(11)
(15)
775
151
NOTES TO THE FINANCIAL STATEMENTS (continued)
2022
Collectively
Individually
assessed
assessed
$m
533
2021
Collectively
Individually
assessed
assessed
Consolidated
Net loans and advances at amortised cost
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Total
Other comprehensive income
Investment securities - debt securities at FVOCI1
The Company
Net loans and advances at amortised cost
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Other comprehensive income
Investment securities - debt securities at FVOCI1
charge to profit or loss.
$m
3,049
766
38
3,853
10
$m
2,500
668
1
7
542
4,395
Total
$m
3,582
775
38
Total
$m
2,925
673
1
7
9
-
-
5
-
-
2022
Collectively
Individually
assessed
assessed
$m
425
The following tables present the movement in the allowance for ECL for the year.
Net loans and advances - at amortised cost
Allowance for ECL is included in Net loans and advances.
Total
3,169
430
3,599
3,492
570
4,062
1. For FVOCI assets, the allowance for ECL does not alter the carrying amount which remains at fair value. Instead, the allowance for ECL is recognised in Other comprehensive income with a corresponding
10
11
-
11
2021
Collectively
Individually
assessed
assessed
$m
3,379
785
31
4,195
$m
2,824
667
1
7
$m
461
(137)
90
-
-
3
417
(95)
42
-
-
(4)
360
$m
666
21
-
687
$m
563
7
-
-
$m
851
159
663
(365)
(626)
(16)
666
100
420
(222)
(428)
(3)
533
Total
$m
4,045
806
31
4,882
Total
$m
3,387
674
1
7
Total
$m
4,981
-
61
(365)
(626)
(6)
4,045
-
212
(222)
(428)
(25)
3,582
$m
1,204
399
(639)
-
-
4
968
219
(48)
-
-
2
1,141
$m
2,465
(421)
(53)
-
-
3
1,994
(224)
(202)
-
-
(20)
1,548
Stage 31
Stage 1
Stage 2
assessed
assessed
Collectively
Individually
Consolidated
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Bad debts written off (excluding recoveries)
Foreign currency translation and other movements2
As at 30 September 2022
1. The Group’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.
2. Other movements include the impacts of discount unwind on individually assessed allowance for ECL or the impact of divestments completed during the year.
150
152152 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
CREDIT IMPAIRMENT CHARGE - INCOME STATEMENT
Credit impairment charge/(release) analysis
New and increased provisions (net of releases)1,2
- Collectively assessed
- Individually assessed
Write-backs3
Recoveries of amounts previously written-off
Total credit impairment charge
1. Includes the impact of transfers between collectively assessed and individually assessed.
2. New and increased provisions (net of releases) includes:
Consolidated
The Company
2022
$m
(311)
520
(233)
(208)
(232)
2021
$m
(823)
824
(386)
(182)
(567)
2022
$m
(333)
447
(195)
(184)
(265)
2021
$m
(726)
741
(323)
(161)
(469)
Net loans and advances at amortised cost
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Investment securities - debt securities at FVOCI
Consolidated
The Company
2022
2021
2022
2021
Collectively
assessed
Individually
assessed
Collectively
assessed
Individually
assessed
Collectively
assessed
Individually
assessed
Collectively
assessed
Individually
assessed
$m
(308)
(5)
3
(1)
$m
520
-
-
-
$m
(761)
(74)
11
1
(823)
$m
822
2
-
-
$m
(341)
8
-
-
$m
447
-
-
-
$m
(683)
(43)
-
-
$m
739
2
-
-
Total
(311)
520
824
(333)
447
(726)
741
3. Consists of write-backs in Net loans and advances at amortised cost of $222 million (2021: $365 million) for the Group and $193 million (2021: $308 million) for the Company, and Off-balance sheet
commitments of $11 million (2021: $21 million) for the Group and $2 million (2021: $15 million) for the Company.
The contractual amount outstanding on financial assets that were written off during the year and that are still subject to enforcement activity is
$143 million (2021: $168 million) for the Group, and $128 million (2021: $138 million) for the Company.
The Company
As at 1 October 2020
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation and other movements2
As at 30 September 2022
1. The Company’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.
2. Other movements include the impact of divestments completed during the year.
Investment securities - debt securities at amortised cost
Allowance for ECL is included in Investment securities.
Consolidated
As at 30 September 2021
As at 30 September 2022
The Company
As at 30 September 2021
As at 30 September 2022
Stage 1
$m
513
45
(72)
-
(2)
484
33
17
-
(4)
530
Stage 2
$m
183
(41)
28
-
1
171
(27)
(29)
-
(3)
112
Stage 31
Collectively
assessed
$m
15
(5)
2
-
-
12
Individually
assessed
$m
20
1
1
(15)
-
7
(6)
20
-
-
26
-
-
(2)
-
5
Stage 1
$m
31
38
Stage 2
$m
-
-
Stage 1
$m
1
1
Stage 2
$m
-
-
Stage 3
Collectively
assessed
$m
-
-
Individually
assessed
$m
-
-
Stage 3
Collectively
assessed
$m
-
-
Individually
assessed
$m
-
-
Investment securities - debt securities at FVOCI
As FVOCI assets are measured at fair value, there is no separate allowance for ECL. Instead, the allowance for ECL is recognised in Other
comprehensive income with a corresponding charge to profit or loss.
Consolidated
As at 30 September 2021
As at 30 September 2022
The Company
As at 30 September 2021
As at 30 September 2022
Stage 1
$m
11
10
Stage 2
$m
-
-
Stage 1
$m
7
7
Stage 2
$m
-
-
Stage 3
Collectively
assessed
$m
-
-
Individually
assessed
$m
-
-
Stage 3
Collectively
assessed
$m
-
-
Individually
assessed
$m
-
-
Total
$m
731
-
(41)
(15)
(1)
674
-
8
(2)
(7)
673
Total
$m
31
38
Total
$m
1
1
Total
$m
11
10
Total
$m
7
7
152
153
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
153153
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
New and increased provisions (net of releases)
The Company
As at 1 October 2020
Transfer between stages
Write-backs
Foreign currency translation
As at 30 September 2021
Transfer between stages
New and increased provisions (net of releases)
Write-backs
Foreign currency translation and other movements2
As at 30 September 2022
1. The Company’s credit exposures that are purchased or originated credit-impaired (POCI) are insignificant.
2. Other movements include the impact of divestments completed during the year.
Investment securities - debt securities at amortised cost
Allowance for ECL is included in Investment securities.
Stage 1
Stage 2
assessed
assessed
Collectively
Individually
Credit impairment charge/(release) analysis
Stage 31
CREDIT IMPAIRMENT CHARGE - INCOME STATEMENT
New and increased provisions (net of releases)1,2
- Collectively assessed
- Individually assessed
Write-backs3
Recoveries of amounts previously written-off
Total credit impairment charge
1. Includes the impact of transfers between collectively assessed and individually assessed.
2. New and increased provisions (net of releases) includes:
Consolidated
2022
$m
(311)
520
(233)
(208)
(232)
2021
$m
(823)
824
(386)
(182)
(567)
The Company
2022
$m
(333)
447
(195)
(184)
(265)
2021
$m
(726)
741
(323)
(161)
(469)
Consolidated
The Company
2022
2021
2022
2021
Collectively
assessed
$m
Individually
assessed
$m
Collectively
assessed
$m
Individually
assessed
$m
Collectively
assessed
$m
Individually
assessed
$m
Collectively
assessed
$m
Individually
assessed
$m
Net loans and advances at amortised cost
(308)
520
Off-balance sheet commitments
Investment securities - debt securities at amortised cost
Investment securities - debt securities at FVOCI
(5)
3
(1)
-
-
-
Total
(311)
520
(761)
(74)
11
1
(823)
822
(341)
447
2
-
-
8
-
-
-
-
-
(683)
(43)
-
-
739
2
-
-
824
(333)
447
(726)
741
3. Consists of write-backs in Net loans and advances at amortised cost of $222 million (2021: $365 million) for the Group and $193 million (2021: $308 million) for the Company, and Off-balance sheet
commitments of $11 million (2021: $21 million) for the Group and $2 million (2021: $15 million) for the Company.
The contractual amount outstanding on financial assets that were written off during the year and that are still subject to enforcement activity is
$143 million (2021: $168 million) for the Group, and $128 million (2021: $138 million) for the Company.
$m
513
45
(72)
-
(2)
484
33
17
-
(4)
530
$m
31
38
$m
1
1
$m
11
10
$m
7
7
$m
183
(41)
28
-
1
171
(27)
(29)
-
(3)
112
$m
-
-
$m
-
-
$m
-
-
$m
-
-
Stage 1
Stage 2
assessed
assessed
Collectively
Individually
Stage 3
Stage 1
Stage 2
assessed
assessed
Collectively
Individually
Stage 3
Stage 1
Stage 2
assessed
assessed
Collectively
Individually
Stage 3
Stage 1
Stage 2
assessed
assessed
Collectively
Individually
Stage 3
$m
15
(5)
2
-
-
12
(6)
20
-
-
26
$m
-
-
$m
-
-
$m
-
-
$m
-
-
$m
20
(15)
1
1
-
7
-
-
-
5
(2)
$m
-
-
$m
-
-
$m
-
-
$m
-
-
Total
$m
731
-
(41)
(15)
(1)
674
-
8
(2)
(7)
673
Total
$m
31
38
Total
$m
1
1
Total
$m
11
10
Total
$m
7
7
Investment securities - debt securities at FVOCI
As FVOCI assets are measured at fair value, there is no separate allowance for ECL. Instead, the allowance for ECL is recognised in Other
comprehensive income with a corresponding charge to profit or loss.
Consolidated
As at 30 September 2021
As at 30 September 2022
The Company
As at 30 September 2021
As at 30 September 2022
Consolidated
As at 30 September 2021
As at 30 September 2022
The Company
As at 30 September 2021
As at 30 September 2022
152
153
154154 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENT
EXPECTED CREDIT LOSS MODEL
The measurement of expected credit losses reflects an unbiased, probability weighted prediction which evaluates a range of scenarios and
takes into account the time value of money, past events, current conditions and forecasts of future economic conditions.
Expected credit losses are either measured over 12 months or the expected lifetime of the financial asset, depending on credit
deterioration since origination, according to the following three-stage approach:
Stage 1: At the origination of a financial asset, and where there has not been a Significant Increase in Credit Risk (SICR) since origination,
an allowance equivalent to 12 months ECL is recognised reflecting the expected credit losses resulting from default events that are
possible within the next 12 months from the reporting date. For instruments with a remaining maturity of less than 12 months,
expected credit losses are estimated based on default events that are possible over the remaining time to maturity.
Stage 2: Where there has been a SICR since origination, an allowance equivalent to lifetime ECL is recognised reflecting expected credit
losses resulting from all possible default events over the expected life of a financial instrument. If credit risk were to improve in a
subsequent period such that the increase in credit risk since origination is no longer considered significant, the exposure returns to a
Stage 1 classification with ECL measured accordingly.
Stage 3: Where there is objective evidence of impairment, an allowance equivalent to lifetime ECL is recognised.
Expected credit losses are estimated on a collective basis for exposures in Stage 1 and Stage 2, and on either a collective or individual basis
when transferred to Stage 3.
MEASUREMENT OF EXPECTED CREDIT LOSS
ECL is calculated as the product of the following credit risk factors at a facility level, discounted to incorporate the time value of money:
Probability of default (PD) - the estimate of the likelihood that a borrower will default over a given period;
Exposure at default (EAD) - the expected balance sheet exposure at default taking into account repayments of principal and interest,
expected additional drawdowns and accrued interest; and
Loss given default (LGD) - the expected loss in the event of the borrower defaulting, expressed as a percentage of the facility's EAD,
taking into account direct and indirect recovery costs.
These credit risk factors are adjusted for current and forward-looking information through the use of macroeconomic variables.
EXPECTED LIFE
When estimating ECL for exposures in Stage 2 and 3, the Group considers the expected lifetime over which it is exposed to credit risk.
FORWARD-LOOKING INFORMATION
For non-retail portfolios, the Group uses the maximum contractual period as the expected lifetime for non-revolving credit facilities. For
non-retail revolving credit facilities, such as corporate lines of credit, the expected life reflects the Group’s contractual right to withdraw a
facility as part of a contractually agreed annual review, after taking into account the applicable notice period.
For retail portfolios, the expected lifetime is determined using a behavioural term, taking into account expected prepayment behaviour
and events that give rise to substantial modifications.
DEFINITION OF DEFAULT, CREDIT IMPAIRED AND WRITE-OFFS
The definition of default used in measuring ECL is aligned to the definition used for internal credit risk management purposes across all
portfolios. This definition is also in line with the regulatory definition of default. Default occurs when there are indicators that a debtor is
unlikely to fully satisfy contractual credit obligations to the Group, or the exposure is 90 days past due.
Financial assets, including those that are well secured, are considered credit impaired for financial reporting purposes when they default.
When there is no realistic probability of recovery, loans are written off against the related impairment allowance on completion of the
Group’s internal processes and when all reasonably expected recoveries have been collected. In subsequent periods, any recoveries of
amounts previously written-off are recorded as a release to the credit impairment charge in the income statement.
RECOGNITION AND MEASUREMENT (continued)
MODIFIED FINANCIAL ASSETS
If the contractual terms of a financial asset are modified or an existing financial asset is replaced with a new one for either credit or
commercial reasons, an assessment is made to determine if the changes to the terms of the existing financial asset are considered
substantial. This assessment considers both changes in cash flows arising from the modified terms as well as changes in the overall
instrument risk profile; for example, changes in the principal (credit limit), term, or type of underlying collateral. Where a modification is
considered non-substantial, the existing financial asset is not derecognised and its date of origination continues to be used to determine
SICR. Where a modification is considered substantial, the existing financial asset is derecognised and a new financial asset is recognised at
its fair value on the modification date, which also becomes the date of origination used to determine SICR for this new asset.
Stage 2 assets are those that have experienced a SICR since origination. In determining what constitutes a SICR, the Group considers both
SIGNIFICANT INCREASE IN CREDIT RISK (SICR)
qualitative and quantitative information:
i.
Internal credit rating grade
For the majority of portfolios, the primary indicator of a SICR is a significant deterioration in the internal credit rating grade of a facility
since origination and is measured by application of thresholds.
For non-retail portfolios, a SICR is determined by comparing the Customer Credit Rating (CCR) applicable to a facility at reporting date
to the CCR at origination of that facility. A CCR is assigned to each borrower which reflects the PD of the borrower and incorporates
both borrower and non-borrower specific information, including forward-looking information. CCRs are subject to review at least
annually or more frequently when an event occurs which could affect the credit risk of the customer.
For retail portfolios, a SICR is determined, depending on the type of facility, by either comparing the scenario weighted lifetime PD at
the reporting date to that at origination, or by reference to customer behavioural score thresholds. The scenario weighted lifetime
probability of default may increase significantly if:
there has been a deterioration in the economic outlook, or an increase in economic uncertainty; or
there has been a deterioration in the customer’s overall credit position, or ability to manage their credit obligations.
ii. Backstop criteria
The Group uses 30 days past due arrears as a backstop criterion for both non-retail and retail portfolios. For retail portfolios only,
facilities are required to demonstrate three to six months of good payment behaviour prior to being allocated back to Stage 1.
Forward-looking information is incorporated into both our assessment of whether a financial asset has experienced a SICR since origination
and in our estimate of ECL. In applying forward-looking information for estimating ECL, the Group considers four probability-weighted
forecast economic scenarios as follows:
i. Base case scenario
The base case scenario is ANZ’s view of future macroeconomic conditions. It reflects management’s assumptions used for strategic
planning and budgeting, and also informs the Group Internal Capital Adequacy Assessment Process (ICAAP) which is the process the
Group applies in strategic and capital planning over a 3-year time horizon;
ii. Upside and iii. Downside scenarios
The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the
economic conditions prevailing at balance date) and are based on a combination of more optimistic (in the case of the upside) and
pessimistic (in the case of the downside) economic events and uncertainty over long term horizons; and
iv. Severe downside scenario
wide stress testing.
To better reflect the current economic conditions and geopolitical environment, the Group has altered the severe downside scenario in
2022 from a scenario fixed by reference to average economic cycle conditions to one which aligns with the scenario used for Group-
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NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENT
EXPECTED CREDIT LOSS MODEL
The measurement of expected credit losses reflects an unbiased, probability weighted prediction which evaluates a range of scenarios and
takes into account the time value of money, past events, current conditions and forecasts of future economic conditions.
Expected credit losses are either measured over 12 months or the expected lifetime of the financial asset, depending on credit
deterioration since origination, according to the following three-stage approach:
Stage 1: At the origination of a financial asset, and where there has not been a Significant Increase in Credit Risk (SICR) since origination,
an allowance equivalent to 12 months ECL is recognised reflecting the expected credit losses resulting from default events that are
possible within the next 12 months from the reporting date. For instruments with a remaining maturity of less than 12 months,
expected credit losses are estimated based on default events that are possible over the remaining time to maturity.
Stage 2: Where there has been a SICR since origination, an allowance equivalent to lifetime ECL is recognised reflecting expected credit
losses resulting from all possible default events over the expected life of a financial instrument. If credit risk were to improve in a
subsequent period such that the increase in credit risk since origination is no longer considered significant, the exposure returns to a
Stage 1 classification with ECL measured accordingly.
Stage 3: Where there is objective evidence of impairment, an allowance equivalent to lifetime ECL is recognised.
Expected credit losses are estimated on a collective basis for exposures in Stage 1 and Stage 2, and on either a collective or individual basis
when transferred to Stage 3.
MEASUREMENT OF EXPECTED CREDIT LOSS
ECL is calculated as the product of the following credit risk factors at a facility level, discounted to incorporate the time value of money:
Probability of default (PD) - the estimate of the likelihood that a borrower will default over a given period;
Exposure at default (EAD) - the expected balance sheet exposure at default taking into account repayments of principal and interest,
expected additional drawdowns and accrued interest; and
Loss given default (LGD) - the expected loss in the event of the borrower defaulting, expressed as a percentage of the facility's EAD,
taking into account direct and indirect recovery costs.
These credit risk factors are adjusted for current and forward-looking information through the use of macroeconomic variables.
EXPECTED LIFE
For non-retail portfolios, the Group uses the maximum contractual period as the expected lifetime for non-revolving credit facilities. For
non-retail revolving credit facilities, such as corporate lines of credit, the expected life reflects the Group’s contractual right to withdraw a
facility as part of a contractually agreed annual review, after taking into account the applicable notice period.
For retail portfolios, the expected lifetime is determined using a behavioural term, taking into account expected prepayment behaviour
and events that give rise to substantial modifications.
DEFINITION OF DEFAULT, CREDIT IMPAIRED AND WRITE-OFFS
The definition of default used in measuring ECL is aligned to the definition used for internal credit risk management purposes across all
portfolios. This definition is also in line with the regulatory definition of default. Default occurs when there are indicators that a debtor is
unlikely to fully satisfy contractual credit obligations to the Group, or the exposure is 90 days past due.
Financial assets, including those that are well secured, are considered credit impaired for financial reporting purposes when they default.
When there is no realistic probability of recovery, loans are written off against the related impairment allowance on completion of the
Group’s internal processes and when all reasonably expected recoveries have been collected. In subsequent periods, any recoveries of
amounts previously written-off are recorded as a release to the credit impairment charge in the income statement.
RECOGNITION AND MEASUREMENT (continued)
MODIFIED FINANCIAL ASSETS
If the contractual terms of a financial asset are modified or an existing financial asset is replaced with a new one for either credit or
commercial reasons, an assessment is made to determine if the changes to the terms of the existing financial asset are considered
substantial. This assessment considers both changes in cash flows arising from the modified terms as well as changes in the overall
instrument risk profile; for example, changes in the principal (credit limit), term, or type of underlying collateral. Where a modification is
considered non-substantial, the existing financial asset is not derecognised and its date of origination continues to be used to determine
SICR. Where a modification is considered substantial, the existing financial asset is derecognised and a new financial asset is recognised at
its fair value on the modification date, which also becomes the date of origination used to determine SICR for this new asset.
SIGNIFICANT INCREASE IN CREDIT RISK (SICR)
Stage 2 assets are those that have experienced a SICR since origination. In determining what constitutes a SICR, the Group considers both
qualitative and quantitative information:
i.
Internal credit rating grade
For the majority of portfolios, the primary indicator of a SICR is a significant deterioration in the internal credit rating grade of a facility
since origination and is measured by application of thresholds.
For non-retail portfolios, a SICR is determined by comparing the Customer Credit Rating (CCR) applicable to a facility at reporting date
to the CCR at origination of that facility. A CCR is assigned to each borrower which reflects the PD of the borrower and incorporates
both borrower and non-borrower specific information, including forward-looking information. CCRs are subject to review at least
annually or more frequently when an event occurs which could affect the credit risk of the customer.
For retail portfolios, a SICR is determined, depending on the type of facility, by either comparing the scenario weighted lifetime PD at
the reporting date to that at origination, or by reference to customer behavioural score thresholds. The scenario weighted lifetime
probability of default may increase significantly if:
there has been a deterioration in the economic outlook, or an increase in economic uncertainty; or
there has been a deterioration in the customer’s overall credit position, or ability to manage their credit obligations.
ii. Backstop criteria
The Group uses 30 days past due arrears as a backstop criterion for both non-retail and retail portfolios. For retail portfolios only,
facilities are required to demonstrate three to six months of good payment behaviour prior to being allocated back to Stage 1.
When estimating ECL for exposures in Stage 2 and 3, the Group considers the expected lifetime over which it is exposed to credit risk.
FORWARD-LOOKING INFORMATION
Forward-looking information is incorporated into both our assessment of whether a financial asset has experienced a SICR since origination
and in our estimate of ECL. In applying forward-looking information for estimating ECL, the Group considers four probability-weighted
forecast economic scenarios as follows:
i. Base case scenario
The base case scenario is ANZ’s view of future macroeconomic conditions. It reflects management’s assumptions used for strategic
planning and budgeting, and also informs the Group Internal Capital Adequacy Assessment Process (ICAAP) which is the process the
Group applies in strategic and capital planning over a 3-year time horizon;
ii. Upside and iii. Downside scenarios
The upside and downside scenarios are fixed by reference to average economic cycle conditions (that is, they are not based on the
economic conditions prevailing at balance date) and are based on a combination of more optimistic (in the case of the upside) and
pessimistic (in the case of the downside) economic events and uncertainty over long term horizons; and
iv. Severe downside scenario
To better reflect the current economic conditions and geopolitical environment, the Group has altered the severe downside scenario in
2022 from a scenario fixed by reference to average economic cycle conditions to one which aligns with the scenario used for Group-
wide stress testing.
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155
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ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENT (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
FORWARD-LOOKING INFORMATION (continued)
The four scenarios are described in terms of macroeconomic variables used in the PD, LGD and EAD models (collectively the ECL models)
depending on the lending portfolio and country of the borrower. Examples of the macroeconomic variables include unemployment rates,
GDP growth rates, house price indices, commercial property price indices and consumer price indices.
Probability weighting of each scenario is determined by management considering the risks and uncertainties surrounding the base case
economic scenario, as well as specific portfolio considerations where required. The Group Asset and Liability Committee (GALCO) is
responsible for reviewing and approving the base case economic scenario and the Credit and Market Risk Committee (CMRC) approves the
probability weights applied to each scenario.
Where applicable, temporary adjustments may be made to account for situations where known or expected risks have not been adequately
addressed in the modelling process. CMRC is responsible for approving such adjustments.
KEY JUDGEMENTS AND ESTIMATES
Collectively assessed allowance for expected credit losses
In estimating collectively assessed ECL, the 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 within 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 Group’s ECL estimates are inherently uncertain and, as a result,
actual results may differ from these estimates.
Considerations for the year ended 30 September 2022
The Group has adjusted the ECL this period to account
for expected deterioration in credit-worthiness of certain
customer segments which are considered particularly
vulnerable to economic pressures such as higher interest
rates, increasing inflation and low wage growth.
Judgement/Assumption Description
Determining when a
Significant Increase in
Credit Risk 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 Group
monitors the effectiveness of SICR criteria on an
ongoing basis.
Judgement/Assumption Description
Considerations for the year ended 30 September 2022
Measuring both 12-
month and lifetime
credit losses
The probability of default (PD), loss given default
The modelled outcome as at 30 September 2021 included a
(LGD) and exposure at default (EAD) credit risk
model adjustment to recognise increased model
parameters used in determining ECL are point-in-
uncertainties as a result of COVID-19. With these
time measures reflecting the relevant forward-
uncertainties largely being appropriately reflected in the
looking information determined by management.
underlying models, the COVID-19 model adjustments have
Judgement is involved in determining which
been removed.
In addition, judgement is required where
There were no material changes to the policies.
Base case economic
The Group derives a forward-looking ‘base case’
There have been no changes to the types of forward-looking
forecast
economic scenario which reflects ANZ Research -
variables (key economic drivers) used as model inputs.
forward-looking information variables are relevant
for particular lending portfolios and for
determining each portfolio’s point-in-time
sensitivity.
behavioural characteristics are applied in
estimating the lifetime of a facility to be used in
measuring ECL.
Economics’ (ANZ Economics) view of future
macroeconomic conditions.
As at 30 September 2022, the base case assumptions have
been updated to reflect the relaxation of COVID-19 related
restrictions, continuing supply chain and labour market
pressures, and rapidly increasing global inflation and interest
rate rises, as well as lower growth in key economies.
The expected outcomes of key economic drivers for the base
case scenario at 30 September 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
Probability weighting of each economic scenario is
To better reflect the current economic conditions and
determined by management considering the risks
geopolitical environment, the Group has altered the severe
and uncertainties surrounding the base case
downside scenario from a scenario fixed by reference to
economic scenario at each measurement date.
average economic cycle conditions to one which aligns with
The assigned probability weightings in Australia,
New Zealand and Rest of world are subject to a
high degree of inherent uncertainty and therefore
the actual outcomes may be significantly different
to those projected.
the scenario used for Group-wide stress testing.
The key considerations for probability weightings in the
current period include the emergence from COVID-19
restrictions, how customers will respond to interest rate rises
and higher inflation, and potential impacts of lower growth
prospects globally.
Weightings for current and prior periods are as detailed in
the section on ‘Probability weightings’ below.
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.
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
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create value
Performance
overview
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report
Directors’
report
Financial
report
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
157157
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NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
RECOGNITION AND MEASUREMENT (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
FORWARD-LOOKING INFORMATION (continued)
Judgement/Assumption Description
The four scenarios are described in terms of macroeconomic variables used in the PD, LGD and EAD models (collectively the ECL models)
depending on the lending portfolio and country of the borrower. Examples of the macroeconomic variables include unemployment rates,
GDP growth rates, house price indices, commercial property price indices and consumer price indices.
Probability weighting of each scenario is determined by management considering the risks and uncertainties surrounding the base case
economic scenario, as well as specific portfolio considerations where required. The Group Asset and Liability Committee (GALCO) is
responsible for reviewing and approving the base case economic scenario and the Credit and Market Risk Committee (CMRC) approves the
probability weights applied to each scenario.
Where applicable, temporary adjustments may be made to account for situations where known or expected risks have not been adequately
addressed in the modelling process. CMRC is responsible for approving such adjustments.
KEY JUDGEMENTS AND ESTIMATES
Collectively assessed allowance for expected credit losses
In estimating collectively assessed ECL, the 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 within 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 Group’s ECL estimates are inherently uncertain and, as a result,
actual results may differ from these estimates.
Judgement/Assumption Description
Considerations for the year ended 30 September 2022
Determining when a
In the measurement of ECL, judgement is
The Group has adjusted the ECL this period to account
Significant Increase in
involved in setting the rules and trigger points
for expected deterioration in credit-worthiness of certain
Credit Risk has occurred
to determine whether there has been a SICR
customer segments which are considered particularly
since initial recognition of a loan, which would
vulnerable to economic pressures such as higher interest
result in the financial asset moving from Stage 1
rates, increasing inflation and low wage growth.
Measuring both 12-
month and lifetime
credit losses
Base case economic
forecast
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.
In addition, judgement is required where
behavioural characteristics are applied in
estimating the lifetime of a facility to be used in
measuring ECL.
The Group derives a forward-looking ‘base case’
economic scenario which reflects ANZ Research -
Economics’ (ANZ Economics) view of future
macroeconomic conditions.
Probability weighting of
each economic scenario
(base case, upside,
downside and severe
downside scenarios)1
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 assigned probability weightings in Australia,
New Zealand and Rest of world are subject to a
high degree of inherent uncertainty and therefore
the actual outcomes may be significantly different
to those projected.
Considerations for the year ended 30 September 2022
The modelled outcome as at 30 September 2021 included a
model adjustment to recognise increased model
uncertainties as a result of COVID-19. With these
uncertainties largely being appropriately reflected in the
underlying models, the COVID-19 model adjustments have
been removed.
There were no material changes to the policies.
There have been no changes to the types of forward-looking
variables (key economic drivers) used as model inputs.
As at 30 September 2022, the base case assumptions have
been updated to reflect the relaxation of COVID-19 related
restrictions, continuing supply chain and labour market
pressures, and rapidly increasing global inflation and interest
rate rises, as well as lower growth in key economies.
The expected outcomes of key economic drivers for the base
case scenario at 30 September 2022 are described below
under the heading ‘Base case economic forecast
assumptions’.
To better reflect the current economic conditions and
geopolitical environment, the Group has altered the severe
downside scenario from a scenario fixed by reference to
average economic cycle conditions to one which aligns with
the scenario used for Group-wide stress testing.
The key considerations for probability weightings in the
current period include the emergence from COVID-19
restrictions, how customers will respond to interest rate rises
and higher inflation, and potential impacts of lower growth
prospects globally.
Weightings for current and prior periods are as detailed in
the section on ‘Probability weightings’ below.
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.
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 Group
monitors the effectiveness of SICR criteria on an
ongoing basis.
156
157
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ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
Judgement/Assumption Description
Considerations for the year ended 30 September 2022
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.
As at 30 September 2022, Management no longer
consider that a separate management temporary
adjustment is necessary for the uncertainty associated
with COVID-19. Management have however included
adjustments to accommodate uncertainty associated
with rising inflation, rapidly increasing interest rates,
and ongoing supply chain and labour market
pressures.
In addition, management overlays have been made for
risks particular to retail, including home loans and
small business in Australia and NZ, for personal, and for
tourism in the Pacific.
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 ANZ Economics’ view of future macroeconomic conditions used at
30 September 2022 are set out below. For the years following 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.
Forecast calendar year
2023
2022
2024
Australia
GDP (annual % change)
Unemployment rate (annual average)
Residential property prices (annual % change)
Consumer price index (annual average % change)
New Zealand
GDP (annual % change)
Unemployment rate (annual average)
Residential property prices (annual % change)
Consumer price index (annual average % change)
Rest of world
GDP (annual % change)
Consumer price index (annual average % change)
4.0%
3.5%
-2.6%
6.4%
1.9%
3.3%
-11.3%
6.8%
1.7%
8.3%
2.4%
3.1%
-8.9%
3.8%
1.8%
3.9%
-3.1%
3.6%
0.9%
3.1%
1.4%
3.6%
5.2%
2.8%
1.7%
4.9%
2.6%
1.9%
1.2%
2.0%
158
159
The base case economic forecasts for Australia, New Zealand and Rest of World reflect the expected slow down in economic activity
globally from higher interest rates and increasing inflation, along with declining residential property prices until 2024. Tight labour markets
are expected to persist until central banks’ monetary policies have the intended impact of reducing demand and bringing inflation down.
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 an overall deterioration in the forecasts since September 2021 for all three geographical segments.
Given uncertainties associated with how the economy may respond to rapidly moving factors including inflation and lower economic
growth globally, the average upside case weighting across geographies has been reduced to 0% (Sep 21: 5%), the base case weighting has
been increased to 45% (Sep 21: 41%), and the severe downside scenario increased to 15% (Sep 21: 6%).
The assigned probability weightings in Australia, New Zealand and Rest of World are subject to a high degree of inherent uncertainty and
therefore the actual outcomes may be significantly different to those projected. The Group considers these weightings in each geography
to provide estimates of the possible loss outcomes and taking into account short and long term inter-relationships within the Group’s
credit portfolios. The average weightings applied across the Group are set out below:
Base
Upside
Downside
Severe downside
ECL - Sensitivity analysis
Consolidated
The Company
2022
45.0%
0.0%
40.0%
15.0%
2021
41.3%
5.2%
47.7%
5.8%
2022
45.0%
0.0%
40.0%
15.0%
2021
40.0%
5.4%
48.8%
5.8%
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 Group should be considered as a best estimate within a range of possible estimates.
The table below illustrates the sensitivity of collectively assessed ECL to key factors used in determining it as at 30 September 2022:
If 1% of Stage 1 facilities were included in Stage 2
If 1% of Stage 2 facilities were included in Stage 1
100% upside scenario
100% base scenario
100% downside scenario
100% severe downside scenario
Consolidated
The Company
ECL
$m
3,936
3,848
1,423
1,750
3,239
6,951
Impact
$m
83
(5)
(2,430)
(2,103)
(614)
3,098
ECL
$m
3,242
3,165
1,190
1,454
2,699
5,725
Impact
$m
73
(4)
(1,979)
(1,715)
(470)
2,556
Individually assessed allowance for expected credit losses
In estimating individually assessed ECL, the 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 uncertainties described
above.
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
159159
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
14. ALLOWANCE FOR EXPECTED CREDIT LOSSES (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
KEY JUDGEMENTS AND ESTIMATES (continued)
Judgement/Assumption Description
Considerations for the year ended 30 September 2022
Management
Management temporary adjustments to the ECL
As at 30 September 2022, Management no longer
temporary adjustments
allowance are used in circumstances where it is
consider that a separate management temporary
The base case economic forecasts for Australia, New Zealand and Rest of World reflect the expected slow down in economic activity
globally from higher interest rates and increasing inflation, along with declining residential property prices until 2024. Tight labour markets
are expected to persist until central banks’ monetary policies have the intended impact of reducing demand and bringing inflation down.
judged that our existing inputs, assumptions and
adjustment is necessary for the uncertainty associated
model techniques do not capture all the risk
with COVID-19. Management have however included
factors relevant to our lending portfolios.
adjustments to accommodate uncertainty associated
Emerging local or global macroeconomic,
with rising inflation, rapidly increasing interest rates,
microeconomic or political events, and natural
and ongoing supply chain and labour market
disasters that are not incorporated into our current
pressures.
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.
In addition, management overlays have been made for
risks particular to retail, including home loans and
small business in Australia and NZ, for personal, and for
tourism in the Pacific.
Base case economic forecast assumptions
the ECL balance.
Continuing uncertainties described above increase the risk of the economic forecast resulting in an understatement or overstatement of
The economic drivers of the base case economic forecasts, reflective of ANZ Economics’ view of future macroeconomic conditions used at
30 September 2022 are set out below. For the years following 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.
Australia
GDP (annual % change)
Unemployment rate (annual average)
Residential property prices (annual % change)
Consumer price index (annual average % change)
New Zealand
GDP (annual % change)
Unemployment rate (annual average)
Residential property prices (annual % change)
Consumer price index (annual average % change)
Rest of world
GDP (annual % change)
Consumer price index (annual average % change)
Forecast calendar year
2022
2023
2024
4.0%
3.5%
-2.6%
6.4%
1.9%
3.3%
-11.3%
6.8%
1.7%
8.3%
2.4%
3.1%
-8.9%
3.8%
1.8%
3.9%
-3.1%
3.6%
0.9%
3.1%
1.4%
3.6%
5.2%
2.8%
1.7%
4.9%
2.6%
1.9%
1.2%
2.0%
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 an overall deterioration in the forecasts since September 2021 for all three geographical segments.
Given uncertainties associated with how the economy may respond to rapidly moving factors including inflation and lower economic
growth globally, the average upside case weighting across geographies has been reduced to 0% (Sep 21: 5%), the base case weighting has
been increased to 45% (Sep 21: 41%), and the severe downside scenario increased to 15% (Sep 21: 6%).
The assigned probability weightings in Australia, New Zealand and Rest of World are subject to a high degree of inherent uncertainty and
therefore the actual outcomes may be significantly different to those projected. The Group considers these weightings in each geography
to provide estimates of the possible loss outcomes and taking into account short and long term inter-relationships within the Group’s
credit portfolios. The average weightings applied across the Group are set out below:
Base
Upside
Downside
Severe downside
ECL - Sensitivity analysis
Consolidated
The Company
2022
45.0%
0.0%
40.0%
15.0%
2021
41.3%
5.2%
47.7%
5.8%
2022
45.0%
0.0%
40.0%
15.0%
2021
40.0%
5.4%
48.8%
5.8%
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 Group should be considered as a best estimate within a range of possible estimates.
The table below illustrates the sensitivity of collectively assessed ECL to key factors used in determining it as at 30 September 2022:
If 1% of Stage 1 facilities were included in Stage 2
If 1% of Stage 2 facilities were included in Stage 1
100% upside scenario
100% base scenario
100% downside scenario
100% severe downside scenario
Consolidated
The Company
ECL
$m
3,936
3,848
1,423
1,750
3,239
6,951
Impact
$m
83
(5)
(2,430)
(2,103)
(614)
3,098
ECL
$m
3,242
3,165
1,190
1,454
2,699
5,725
Impact
$m
73
(4)
(1,979)
(1,715)
(470)
2,556
Individually assessed allowance for expected credit losses
In estimating individually assessed ECL, the 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 uncertainties described
above.
158
159
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NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
FINANCIAL LIABILITIES
15. DEPOSITS AND OTHER BORROWINGS
Outlined below is a description of how we classify and measure financial liabilities relevant to the subsequent note disclosures.
CLASSIFICATION AND MEASUREMENT
Financial liabilities
Financial liabilities are measured at amortised cost, or fair value through profit or loss (FVTPL) when they are held for trading. Additionally,
financial liabilities can be designated at FVTPL where:
the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise;
a group of financial liabilities are managed and their performance is evaluated on a fair value basis, in accordance with a documented
risk management strategy; or
the financial liability contains one or more embedded derivatives unless:
a) the embedded derivative does not significantly modify the cash flows that otherwise would be required by the contract; or
b) the embedded derivative is closely related to the host financial liability.
Where financial liabilities are designated as measured at fair value, gains or losses relating to changes in the entity’s own credit risk are
included in Other comprehensive income, except where doing so would create or enlarge an accounting mismatch in profit or loss.
39,222
103,580
50,906
34,049
200,064
25,684
86,082
49,746
37,708
177,081
2022
2021
369,460
366,755
Deposits from banks & securities sold under repurchase agreements
Certificates of deposit
Term deposits
On demand and short term deposits
Deposits not bearing interest
Commercial paper and other borrowings
Deposits and other borrowings
Residual contractual maturity:
Within one year
More than one year
Deposits and other borrowings
Carried on Balance Sheet at:
Amortised cost
Fair value through profit or loss
Deposits and other borrowings
Certificates of deposit
Term deposits
On demand and short
term deposits
Deposits not bearing interest
Deposits from banks &
securities sold under
repurchase agreements
Commercial paper and
other borrowings
Consolidated
The Company
2022
$m
34,049
200,064
369,460
50,906
103,580
39,222
797,281
781,573
15,708
797,281
794,621
2,660
797,281
2021
$m
37,708
177,081
366,755
49,746
86,082
25,684
743,056
717,889
25,167
743,056
738,772
4,284
743,056
2022
$m
32,411
157,479
310,857
29,416
98,825
36,619
665,607
654,997
10,610
665,607
665,567
40
665,607
2021
$m
35,696
136,067
303,381
26,836
83,294
21,449
606,723
584,816
21,907
606,723
606,673
50
606,723
RECOGNITION AND MEASUREMENT
For deposits and other borrowings that:
effective interest rate method; and
are not designated at FVTPL on initial recognition, we measure them at amortised cost and recognise their interest expense using the
are managed on a fair value basis, reduce or eliminate an accounting mismatch or contain an embedded derivative, we designate them
as measured at fair value through profit or loss.
Refer to Note 19 Fair Value of Financial Assets and Financial Liabilities for further details.
For deposits and other borrowings designated at fair value we recognise the amount of fair value gain or loss attributable to changes in
the Group’s own credit risk in Other comprehensive income in retained earnings. Any remaining amount of fair value gain or loss we
recognise directly in profit or loss. Once we have recognised an amount in Other comprehensive income, we do not later reclassify it to
profit or loss.
Securities sold under repurchase agreements represent a liability to repurchase the financial assets that remain on our balance sheet since
the risks and rewards of ownership remain with the Group. Over the life of the repurchase agreement, we recognise the difference
between the sale price and the repurchase price and charge it to interest expense in profit or loss.
160
161
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
161161
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
FINANCIAL LIABILITIES
15. DEPOSITS AND OTHER BORROWINGS
Outlined below is a description of how we classify and measure financial liabilities relevant to the subsequent note disclosures.
CLASSIFICATION AND MEASUREMENT
Financial liabilities
Financial liabilities are measured at amortised cost, or fair value through profit or loss (FVTPL) when they are held for trading. Additionally,
financial liabilities can be designated at FVTPL where:
the designation eliminates or significantly reduces an accounting mismatch which would otherwise arise;
a group of financial liabilities are managed and their performance is evaluated on a fair value basis, in accordance with a documented
risk management strategy; or
the financial liability contains one or more embedded derivatives unless:
a) the embedded derivative does not significantly modify the cash flows that otherwise would be required by the contract; or
b) the embedded derivative is closely related to the host financial liability.
Where financial liabilities are designated as measured at fair value, gains or losses relating to changes in the entity’s own credit risk are
included in Other comprehensive income, except where doing so would create or enlarge an accounting mismatch in profit or loss.
39,222
103,580
50,906
34,049
200,064
25,684
86,082
49,746
37,708
177,081
2022
2021
369,460
366,755
Certificates of deposit
Term deposits
On demand and short term deposits
Deposits not bearing interest
Deposits from banks & securities sold under repurchase agreements
Commercial paper and other borrowings
Deposits and other borrowings
Residual contractual maturity:
Within one year
More than one year
Deposits and other borrowings
Carried on Balance Sheet at:
Amortised cost
Fair value through profit or loss
Deposits and other borrowings
RECOGNITION AND MEASUREMENT
For deposits and other borrowings that:
Consolidated
2022
$m
34,049
200,064
369,460
50,906
103,580
39,222
797,281
781,573
15,708
797,281
794,621
2,660
797,281
2021
$m
37,708
177,081
366,755
49,746
86,082
25,684
743,056
717,889
25,167
743,056
738,772
4,284
743,056
Certificates of deposit
Term deposits
On demand and short
term deposits
Deposits not bearing interest
Deposits from banks &
securities sold under
repurchase agreements
Commercial paper and
other borrowings
The Company
2022
$m
32,411
157,479
310,857
29,416
98,825
36,619
665,607
654,997
10,610
665,607
665,567
40
665,607
2021
$m
35,696
136,067
303,381
26,836
83,294
21,449
606,723
584,816
21,907
606,723
606,673
50
606,723
are not designated at FVTPL on initial recognition, we measure them at amortised cost and recognise their interest expense using the
effective interest rate method; and
are managed on a fair value basis, reduce or eliminate an accounting mismatch or contain an embedded derivative, we designate them
as measured at fair value through profit or loss.
Refer to Note 19 Fair Value of Financial Assets and Financial Liabilities for further details.
For deposits and other borrowings designated at fair value we recognise the amount of fair value gain or loss attributable to changes in
the Group’s own credit risk in Other comprehensive income in retained earnings. Any remaining amount of fair value gain or loss we
recognise directly in profit or loss. Once we have recognised an amount in Other comprehensive income, we do not later reclassify it to
profit or loss.
Securities sold under repurchase agreements represent a liability to repurchase the financial assets that remain on our balance sheet since
the risks and rewards of ownership remain with the Group. Over the life of the repurchase agreement, we recognise the difference
between the sale price and the repurchase price and charge it to interest expense in profit or loss.
160
161
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
16. PAYABLES AND OTHER LIABILITIES
17. DEBT ISSUANCES
Payables and accruals
Liabilities at fair value
Lease liabilities
Trail commission liabilities1
Other liabilities
Payables and other liabilities
Consolidated
2022
$m
2,896
3,239
1,040
1,320
1,340
9,835
2021
$m
2,062
3,913
1,245
-
1,427
8,647
The Company
The Group uses a variety of funding programmes to issue senior debt (including covered bonds and securitisations) and subordinated debt. The
2022
$m
2,189
2,857
1,628
1,320
568
8,562
2021
$m
1,526
3,245
1,831
-
642
7,244
difference between senior debt and subordinated debt is that holders of senior debt take priority over holders of subordinated debt owed by the
relevant issuer. In the winding up of the relevant issuer, the subordinated debt will be repaid by the relevant issuer only after the repayment of claims
of its depositors, other creditors and the senior debt holders.
Consolidated
The Company
1. During 2022, the Group revised its treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of expected
future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,320 million for the Group and the
Company. Comparatives have not been restated.
RECOGNITION AND MEASUREMENT
The Group recognises liabilities when there is a present obligation to transfer economic resources as a result of past events.
Below is the measurement basis for each item classified as other liabilities:
Payables, accruals and other liabilities are measured at the contractual amount payable or the best estimate of consideration required to
Residual contractual maturity2:
settle the payable.
Liabilities at fair value are trading liabilities measured based on quoted prices in active markets.
Lease liabilities are initially measured at the present value of the future lease payments using the Group’s incremental borrowing rate at
the lease commencement date. The carrying amount is then subsequently adjusted to reflect the interest on the lease liability, lease
payments that have been made and any lease reassessments or modifications.
Trail commission liabilities are measured based on the present value of expected future trail commission payments taking into
consideration average behavioural loan life and outstanding balances of broker originated loans.
162
Senior debt
Covered bonds
Securitisation
Total unsubordinated debt
Subordinated debt
- Additional Tier 1 capital
- Tier 2 capital
- Other subordinated debt securities1
Total subordinated debt
Total debt issued
Within one year
More than one year
Total debt issued
No maturity date (instruments in perpetuity)
USD
EUR
AUD
NZD
JPY
CHF
GBP
HKD
United States dollars
Euro
Australian dollars
New Zealand dollars
Japanese yen
Swiss francs
Pounds sterling
Hong Kong dollars
Other
dollars
Total debt issued
SUBORDINATED DEBT
2022
$m
52,324
12,967
1,115
66,406
7,705
17,907
1,716
27,328
93,734
25,208
66,660
1,866
93,734
2022
$m
25,527
19,923
36,398
1,628
2,159
954
5,261
771
1,113
2021
$m
58,952
15,399
1,424
75,775
8,506
16,207
566
25,279
101,054
22,621
76,594
1,839
101,054
2021
$m
29,788
22,984
35,709
3,276
1,854
940
4,286
727
1,490
2022
$m
40,325
9,371
-
49,696
7,763
17,907
462
26,132
75,828
21,990
51,929
1,909
75,828
2022
$m
17,206
14,049
35,259
46
2,159
-
5,261
771
1,077
2021
$m
45,348
11,342
56,690
8,191
16,207
-
-
24,398
81,088
18,512
60,605
1,971
81,088
2021
$m
22,354
15,294
34,299
839
1,853
-
4,287
727
1,435
163
1. This includes the Company’s USD 300 million perpetual subordinated debt and the subordinated debt issued by ANZ Bank New Zealand. The Company’s USD 300 million perpetual subordinated notes
were included in the Group’s Tier 2 capital in 2021 pursuant to APRA’s Basel III transition arrangements which ended in December 2021.
2. Based on the final maturity date or, in the case of Additional Tier 1 capital securities, the mandatory conversion date (if any).
TOTAL DEBT ISSUED BY CURRENCY
The table below shows the Group’s issued debt by currency of issue, which broadly represents the debt holders’ base location.
Consolidated
The Company
Chinese yuan, Norwegian kroner, Singapore dollars and Canadian
93,734
101,054
75,828
81,088
At 30 September 2022, all subordinated debt issued by the Company qualifies as regulatory capital for the Group (other than the Company’s USD 300
million perpetual subordinated notes – refer to commentary below). Depending on their terms and conditions, the Company’s subordinated debt
instruments are classified as either Additional Tier 1 (AT1) capital for the Group (in the case of the ANZ Capital Notes (ANZ CN) and ANZ Capital
Securities (ANZ CS)), or Tier 2 capital (in the case of the Company’s term subordinated notes) for APRA’s capital adequacy purposes.
Subordinated debt issued externally by ANZ Bank New Zealand Limited (ANZ Bank New Zealand) will constitute subordinated debt of both ANZ Bank
New Zealand and the Group. Whilst it will constitute tier 2 capital for ANZ Bank New Zealand for the purposes of the Reserve Bank of New Zealand’s
(RBNZ) capital requirements, it will not constitute Tier 2 capital for the Group as the terms of the subordinated debt does not satisfy APRA’s capital
requirements.
event impacting the issuer of the instruments.
Tier 2 capital instruments rank ahead of AT1 capital instruments, and AT1 capital instruments rank only ahead of ordinary shares, in any liquidation
ANZ 2022 Annual Report / Financial Report
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
163163
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
16. PAYABLES AND OTHER LIABILITIES
17. DEBT ISSUANCES
Payables and accruals
Liabilities at fair value
Lease liabilities
Trail commission liabilities1
Other liabilities
Payables and other liabilities
Consolidated
The Company
2022
$m
2,896
3,239
1,040
1,320
1,340
9,835
2021
$m
2,062
3,913
1,245
-
1,427
8,647
2022
$m
2,189
2,857
1,628
1,320
568
8,562
2021
$m
1,526
3,245
1,831
-
642
7,244
1. During 2022, the Group revised its treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of expected
future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,320 million for the Group and the
Company. Comparatives have not been restated.
RECOGNITION AND MEASUREMENT
The Group recognises liabilities when there is a present obligation to transfer economic resources as a result of past events.
Below is the measurement basis for each item classified as other liabilities:
Payables, accruals and other liabilities are measured at the contractual amount payable or the best estimate of consideration required to
settle the payable.
Liabilities at fair value are trading liabilities measured based on quoted prices in active markets.
Lease liabilities are initially measured at the present value of the future lease payments using the Group’s incremental borrowing rate at
the lease commencement date. The carrying amount is then subsequently adjusted to reflect the interest on the lease liability, lease
payments that have been made and any lease reassessments or modifications.
Trail commission liabilities are measured based on the present value of expected future trail commission payments taking into
consideration average behavioural loan life and outstanding balances of broker originated loans.
The Group uses a variety of funding programmes to issue senior debt (including covered bonds and securitisations) and subordinated debt. The
difference between senior debt and subordinated debt is that holders of senior debt take priority over holders of subordinated debt owed by the
relevant issuer. In the winding up of the relevant issuer, the subordinated debt will be repaid by the relevant issuer only after the repayment of claims
of its depositors, other creditors and the senior debt holders.
Senior debt
Covered bonds
Securitisation
Total unsubordinated debt
Subordinated debt
- Additional Tier 1 capital
- Tier 2 capital
- Other subordinated debt securities1
Total subordinated debt
Total debt issued
Residual contractual maturity2:
Within one year
More than one year
No maturity date (instruments in perpetuity)
Total debt issued
Consolidated
2022
$m
52,324
12,967
1,115
66,406
7,705
17,907
1,716
27,328
93,734
25,208
66,660
1,866
93,734
2021
$m
58,952
15,399
1,424
75,775
8,506
16,207
566
25,279
101,054
22,621
76,594
1,839
101,054
The Company
2022
$m
40,325
9,371
-
49,696
7,763
17,907
462
26,132
75,828
21,990
51,929
1,909
75,828
2021
$m
45,348
11,342
-
56,690
8,191
16,207
-
24,398
81,088
18,512
60,605
1,971
81,088
1. This includes the Company’s USD 300 million perpetual subordinated debt and the subordinated debt issued by ANZ Bank New Zealand. The Company’s USD 300 million perpetual subordinated notes
were included in the Group’s Tier 2 capital in 2021 pursuant to APRA’s Basel III transition arrangements which ended in December 2021.
2. Based on the final maturity date or, in the case of Additional Tier 1 capital securities, the mandatory conversion date (if any).
TOTAL DEBT ISSUED BY CURRENCY
The table below shows the Group’s issued debt by currency of issue, which broadly represents the debt holders’ base location.
USD
EUR
AUD
NZD
JPY
CHF
GBP
HKD
Other
United States dollars
Euro
Australian dollars
New Zealand dollars
Japanese yen
Swiss francs
Pounds sterling
Hong Kong dollars
Chinese yuan, Norwegian kroner, Singapore dollars and Canadian
dollars
Total debt issued
SUBORDINATED DEBT
Consolidated
2022
$m
25,527
19,923
36,398
1,628
2,159
954
5,261
771
1,113
93,734
2021
$m
29,788
22,984
35,709
3,276
1,854
940
4,286
727
1,490
101,054
The Company
2022
$m
17,206
14,049
35,259
46
2,159
-
5,261
771
1,077
75,828
2021
$m
22,354
15,294
34,299
839
1,853
-
4,287
727
1,435
81,088
At 30 September 2022, all subordinated debt issued by the Company qualifies as regulatory capital for the Group (other than the Company’s USD 300
million perpetual subordinated notes – refer to commentary below). Depending on their terms and conditions, the Company’s subordinated debt
instruments are classified as either Additional Tier 1 (AT1) capital for the Group (in the case of the ANZ Capital Notes (ANZ CN) and ANZ Capital
Securities (ANZ CS)), or Tier 2 capital (in the case of the Company’s term subordinated notes) for APRA’s capital adequacy purposes.
Subordinated debt issued externally by ANZ Bank New Zealand Limited (ANZ Bank New Zealand) will constitute subordinated debt of both ANZ Bank
New Zealand and the Group. Whilst it will constitute tier 2 capital for ANZ Bank New Zealand for the purposes of the Reserve Bank of New Zealand’s
(RBNZ) capital requirements, it will not constitute Tier 2 capital for the Group as the terms of the subordinated debt does not satisfy APRA’s capital
requirements.
Tier 2 capital instruments rank ahead of AT1 capital instruments, and AT1 capital instruments rank only ahead of ordinary shares, in any liquidation
event impacting the issuer of the instruments.
162
163
164164 ANZ 2022 Annual Report
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ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
17. DEBT ISSUANCES (continued)
17. DEBT ISSUANCES (continued)
AT1 Capital
All outstanding AT1 capital instruments of the Company are Basel III fully compliant instruments (refer to Note 25 Capital Management for further
information about Basel III). Each of the ANZ CN and ANZ CS rank equally with each other.
Distributions on the AT1 capital instruments are non-cumulative and subject to the issuer’s absolute discretion and certain payment conditions
(including regulatory requirements). Distributions on ANZ CNs are franked in line with the franking applied to ANZ ordinary shares.
Where specified, the AT1 capital instruments provide the issuer with an early redemption or conversion option on a specified date and in certain other
circumstances (such as a tax or regulatory event). This redemption option is subject to APRA’s prior written approval.
Each of the AT1 capital instruments will immediately convert into a variable number of ANZ ordinary shares (based on the average market price of the
shares immediately prior to conversion less a 1% discount, subject to a maximum conversion number of ANZ ordinary shares) if:
The Group’s or the Company’s Common Equity Tier 1 capital ratio is equal to or less than 5.125% - known as a Common Equity Capital Trigger
Event; or
APRA notifies the Company that, without the conversion or write-off of certain securities or a public sector injection of capital (or equivalent
support), it considers that the Company would become non-viable – known as a Non-Viability Trigger Event.
Where specified, AT1 capital instruments mandatorily convert into a variable number of ANZ ordinary shares (based on the average market price of
the shares immediately prior to conversion less a 1% discount):
on a specified mandatory conversion date; or
on an earlier date under certain circumstances as set out in the terms.
However, the mandatory conversion is deferred for a specified period if certain conversion tests are not met.
Preference shares issued externally by ANZ Bank New Zealand will constitute additional tier 1 capital for ANZ Bank New Zealand for the purposes of
the RBNZ’s capital requirements, however they will not constitute Additional Tier 1 capital for the Group as the terms of the preference shares do not
satisfy APRA’s capital requirements. The preference shares are included within non-controlling interests in Note 24 Shareholders’ Equity.
The tables below show the key details of the Group’s AT1 capital instruments on issue at 30 September in both the current and prior years:
ANZ Capital Notes (ANZ CN)
Issuer
Issue date
Issue amount
Face value
Distribution frequency
Distribution rate
CN2
ANZ
31 March 2014
$1,610 million
$100
CN3
ANZ, acting through its New
CN4
ANZ
Zealand branch
5 March 2015
$970 million
$100
27 September 2016
$1,622 million
$100
Semi-annually in arrears
Semi-annually in arrears
Quarterly in arrears
Floating rate: (180 day Bank
Floating rate: (180 day Bank
Floating rate: (90 day Bank
Bill rate +3.25%)x(1-
Bill rate +3.6%)x(1-Australian
Bill rate +4.7%)x(1-Australian
Australian corporate tax rate)
corporate tax rate)
corporate tax rate)
Issuer’s early redemption or conversion option
24 March 20221
Mandatory conversion date
24 March 20242
Common equity capital trigger event
Non-viability trigger event
Carrying value (net of issue costs)
24 March 2023
24 March 2025
Yes
Yes
20 March 2024
20 March 2026
Yes
Yes
$970 million
$1,619 million
(2021: $1,609 million)
(2021: $968 million)
(2021: $1,617 million)
Issuer
Issue date
Issue amount
Face value
Distribution frequency
Distribution rate
28 September 2017
$931 million
$100
CN6
ANZ
8 July 2021
$1,500 million
$100
CN7
ANZ
24 March 2022
$1,310 million
$100
Quarterly in arrears
Quarterly in arrears
Quarterly in arrears
Floating rate: (90 day Bank Bill
Floating rate: (90 day Bank
Floating rate: (90 day Bank
rate +3.8%)x(1-Australian
Bill rate +3.0%)x(1-Australian
Bill rate +2.7%)x(1-Australian
corporate tax rate)
corporate tax rate)
corporate tax rate)
Issuer’s early redemption or conversion option
20 March 2025
20 March 2028
20 March 2029
Mandatory conversion date
20 March 2027
20 September 2030
20 September 2031
Common equity capital trigger event
Non-viability trigger event
Carrying value (net of issue costs)
Yes
Yes
Yes
Yes
Yes
Yes
$928 million
$1,487 million
$1,297 million
(2021: $927 million)
(2021: $1,486 million)
(2021: $nil)
1. All of the ANZ Capital Notes 2 were redeemed on 24 March 2022 with approximately $860 million of the proceeds from redemption reinvested into ANZ Capital Notes 7 on the same date.
2. The mandatory conversion date is no longer applicable as all of CN2 has been redeemed.
Yes
Yes
$nil
CN5
ANZ
ANZ CN22
ANZ CN3
ANZ CN4
ANZ CN5
ANZ CN6
ANZ CN7
Consolidated
2022
$m
2021
$m
The Company
2022
$m
2021
$m
-
970
1,619
928
1,487
1,297
1,609
968
1,617
927
1,486
-
-
985
1,619
928
1,487
1,297
1,609
998
1,617
927
1,486
-
1,404
1,422
1,447
1,554
-
7,705
477
8,506
-
7,763
-
8,191
Additional Tier 1 capital (perpetual subordinated securities)1
ANZ Capital Notes (ANZ CN)
1,610m
AUD
970m
AUD
1,622m
AUD
931m
AUD
1,500m
AUD
1,310m
AUD
ANZ Capital Securities (ANZ CS)
USD
1,000m
ANZ NZ Capital Notes (ANZ NZ CN)
500m
NZD
Total Additional Tier 1 capital4
ANZ NZ Capital Notes3
ANZ Capital Securities
1. Carrying values are net of issuance costs.
2. All of the ANZ Capital Notes 2 were redeemed on 24 March 2022 with approximately $860 million of the proceeds from redemption reinvested into ANZ Capital Notes 7 on the same date.
3. All of the ANZ NZ Capital Notes were redeemed by ANZ Bank New Zealand Limited on 31 December 2021.
4. This forms part of qualifying Additional Tier 1 capital. Refer to Note 25 Capital Management for further details.
164
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ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
165165
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
17. DEBT ISSUANCES (continued)
AT1 Capital
All outstanding AT1 capital instruments of the Company are Basel III fully compliant instruments (refer to Note 25 Capital Management for further
information about Basel III). Each of the ANZ CN and ANZ CS rank equally with each other.
Distributions on the AT1 capital instruments are non-cumulative and subject to the issuer’s absolute discretion and certain payment conditions
(including regulatory requirements). Distributions on ANZ CNs are franked in line with the franking applied to ANZ ordinary shares.
Where specified, the AT1 capital instruments provide the issuer with an early redemption or conversion option on a specified date and in certain other
circumstances (such as a tax or regulatory event). This redemption option is subject to APRA’s prior written approval.
Each of the AT1 capital instruments will immediately convert into a variable number of ANZ ordinary shares (based on the average market price of the
shares immediately prior to conversion less a 1% discount, subject to a maximum conversion number of ANZ ordinary shares) if:
The Group’s or the Company’s Common Equity Tier 1 capital ratio is equal to or less than 5.125% - known as a Common Equity Capital Trigger
Event; or
APRA notifies the Company that, without the conversion or write-off of certain securities or a public sector injection of capital (or equivalent
support), it considers that the Company would become non-viable – known as a Non-Viability Trigger Event.
Where specified, AT1 capital instruments mandatorily convert into a variable number of ANZ ordinary shares (based on the average market price of
the shares immediately prior to conversion less a 1% discount):
on a specified mandatory conversion date; or
on an earlier date under certain circumstances as set out in the terms.
However, the mandatory conversion is deferred for a specified period if certain conversion tests are not met.
Preference shares issued externally by ANZ Bank New Zealand will constitute additional tier 1 capital for ANZ Bank New Zealand for the purposes of
the RBNZ’s capital requirements, however they will not constitute Additional Tier 1 capital for the Group as the terms of the preference shares do not
satisfy APRA’s capital requirements. The preference shares are included within non-controlling interests in Note 24 Shareholders’ Equity.
The tables below show the key details of the Group’s AT1 capital instruments on issue at 30 September in both the current and prior years:
Additional Tier 1 capital (perpetual subordinated securities)1
ANZ Capital Notes (ANZ CN)
AUD
AUD
AUD
AUD
AUD
AUD
1,610m
ANZ CN22
970m
ANZ CN3
1,622m
ANZ CN4
931m
1,500m
1,310m
ANZ CN5
ANZ CN6
ANZ CN7
ANZ Capital Securities (ANZ CS)
USD
1,000m
ANZ Capital Securities
ANZ NZ Capital Notes (ANZ NZ CN)
NZD
500m
ANZ NZ Capital Notes3
Total Additional Tier 1 capital4
1. Carrying values are net of issuance costs.
Consolidated
The Company
2022
$m
2021
$m
2022
$m
2021
$m
-
970
1,619
928
1,487
1,297
1,609
968
1,617
927
1,486
-
-
7,705
477
8,506
-
985
1,619
928
1,487
1,297
-
7,763
1,609
998
1,617
927
1,486
-
-
8,191
1,404
1,422
1,447
1,554
2. All of the ANZ Capital Notes 2 were redeemed on 24 March 2022 with approximately $860 million of the proceeds from redemption reinvested into ANZ Capital Notes 7 on the same date.
3. All of the ANZ NZ Capital Notes were redeemed by ANZ Bank New Zealand Limited on 31 December 2021.
4. This forms part of qualifying Additional Tier 1 capital. Refer to Note 25 Capital Management for further details.
17. DEBT ISSUANCES (continued)
ANZ Capital Notes (ANZ CN)
Issuer
Issue date
Issue amount
Face value
Distribution frequency
Distribution rate
CN2
ANZ
31 March 2014
$1,610 million
$100
CN3
ANZ, acting through its New
Zealand branch
5 March 2015
$970 million
$100
CN4
ANZ
27 September 2016
$1,622 million
$100
Semi-annually in arrears
Semi-annually in arrears
Quarterly in arrears
Floating rate: (180 day Bank
Bill rate +3.25%)x(1-
Australian corporate tax rate)
Floating rate: (180 day Bank
Bill rate +3.6%)x(1-Australian
corporate tax rate)
Floating rate: (90 day Bank
Bill rate +4.7%)x(1-Australian
corporate tax rate)
Issuer’s early redemption or conversion option
24 March 20221
Mandatory conversion date
24 March 20242
Common equity capital trigger event
Non-viability trigger event
Carrying value (net of issue costs)
Yes
Yes
$nil
24 March 2023
24 March 2025
Yes
Yes
$970 million
20 March 2024
20 March 2026
Yes
Yes
$1,619 million
(2021: $1,609 million)
(2021: $968 million)
(2021: $1,617 million)
Issuer
Issue date
Issue amount
Face value
Distribution frequency
Distribution rate
CN5
ANZ
28 September 2017
$931 million
$100
CN6
ANZ
8 July 2021
$1,500 million
$100
CN7
ANZ
24 March 2022
$1,310 million
$100
Quarterly in arrears
Quarterly in arrears
Quarterly in arrears
Floating rate: (90 day Bank Bill
rate +3.8%)x(1-Australian
corporate tax rate)
Floating rate: (90 day Bank
Bill rate +3.0%)x(1-Australian
corporate tax rate)
Floating rate: (90 day Bank
Bill rate +2.7%)x(1-Australian
corporate tax rate)
Issuer’s early redemption or conversion option
20 March 2025
20 March 2028
20 March 2029
Mandatory conversion date
20 March 2027
20 September 2030
20 September 2031
Common equity capital trigger event
Non-viability trigger event
Carrying value (net of issue costs)
Yes
Yes
Yes
Yes
$928 million
(2021: $927 million)
$1,487 million
(2021: $1,486 million)
Yes
Yes
$1,297 million
(2021: $nil)
1. All of the ANZ Capital Notes 2 were redeemed on 24 March 2022 with approximately $860 million of the proceeds from redemption reinvested into ANZ Capital Notes 7 on the same date.
2. The mandatory conversion date is no longer applicable as all of CN2 has been redeemed.
164
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ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
17. DEBT ISSUANCES (continued)
ANZ Capital Securities (ANZ CS)
17. DEBT ISSUANCES (continued)
TIER 2 CAPITAL
Issuer
Issue date
Issue amount
Face value
Interest frequency
Interest rate
Issuer’s early redemption option
Common equity capital trigger event
Non-viability trigger event
ANZ, acting through its London branch
15 June 2016
USD 1,000 million
Minimum denomination of USD 200,000 and an integral multiple of USD 1,000 above that
Semi-annually in arrears
Fixed at 6.75% p.a. until 15 June 2026. Reset on 15 June 2026 and each 5 year anniversary
to a floating rate: 5 year USD mid-market swap rate + 5.168%
15 June 2026 and each 5 year anniversary
Yes
Yes
Carrying value (net of issue costs)
$1,404 million (2021: $1,422 million)
Convertible term subordinated notes issued by the Company are Basel III fully compliant instruments. If a Non-Viability Trigger Event occurs, each of
the convertible term subordinated notes will immediately convert into ANZ ordinary shares (based on the average market price of the shares
immediately prior to conversion less a 1% discount, subject to a maximum conversion number).
The table below shows the Tier 2 capital subordinated debt the Group holds at 30 September in both the current and prior year:
Currency
Face value Maturity
subject to APRA’s prior approval
Next optional call date –
Interest
rate
2022
$m
2021
$m
2022
$m
2021
$m
Consolidated
The Company
Basel III transitional subordinated notes (perpetual)1
USD
300m
Perpetual
Each semi-annual interest payment date Floating
Total Basel III transitional subordinated notes
Tier 2 capital (term subordinated notes)
ANZ NZ Capital Notes (ANZ NZ CN)1
Issuer
Issue date
Issue amount
Face value
Interest frequency
Interest rate
ANZ Bank New Zealand Limited
31 March 2015
NZD 500 million
NZD 1
Quarterly in arrears
Fixed at 7.2% p.a. until 25 May 2020. The rate reset in May 2020 to a floating rate: New Zealand 3
month bank bill rate + 3.5%
Interest payments are subject to ANZ Bank New Zealand’s absolute discretion and certain payment
conditions (including APRA and RBNZ requirements)
Issuer’s early redemption option
The option was not exercised on 25 May 2020 and has expired
Mandatory conversion date
25 May 2022
Common equity capital trigger event
Non-viability trigger event
Yes
Yes
Carrying value (net of issue costs)
$nil (2021: $477 million)
1. All of the ANZ NZ CNs were redeemed by ANZ Bank New Zealand Limited on 31 December 2021.
USD
SGD
AUD
JPY
USD
JPY
AUD
AUD
EUR
AUD
USD
AUD
USD
AUD
AUD
EUR
GBP
AUD
AUD
JPY
SGD
AUD
800m
500m
200m
20,000m
1,500m
10,000m
225m
1,750m
1,000m
265m
1,250m
1,250m
1,500m
330m
195m
750m
500m
1,450m
300m
59,400m
600m
900m
2024
2027
2027
2026
2026
2028
2032
2029
2029
2039
2030
2031
2035
2040
2040
2031
2031
2032
2032
2032
2032
2034
N/A
2022
2022
N/A
N/A
2023
2027
2024
2024
N/A
2025
2026
2030
N/A
N/A
2026
2026
2027
2027
2027
2027
2029
1,189
1,173
1,189
1,173
-
-
-
-
213
2,113
106
225
1,750
1,410
179
1,785
1,250
1,830
214
124
1,003
714
1,390
300
627
618
867
417
417
515
200
250
2,137
124
225
1,740
1,608
253
1,782
1,235
1,955
304
178
1,193
918
-
-
-
-
-
-
-
-
-
213
2,113
106
225
1,750
1,410
179
1,785
1,250
1,830
214
124
1,003
714
1,390
300
627
618
867
417
417
515
200
250
2,137
124
225
1,740
1,608
253
1,782
1,235
1,955
304
178
1,193
918
-
-
-
-
-
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Floating
Floating
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Floating
Total Basel III fully compliant subordinated notes
Total Tier 2 capital2,3
17,907
17,907
15,790
16,207
17,907
17,907
15,790
16,207
1. The Company’s USD 300 million perpetual subordinated notes were included in the Group’s Tier 2 capital in 2021 pursuant to APRA’s Basel III transition arrangements, which ended in December 2021. In
2022 this has been included in Other subordinated debt securities.
2. Carrying values are net of issuance costs, and, where applicable, include fair value hedge accounting adjustments.
3. This forms part of qualifying Tier 2 capital. Refer to Note 25 Capital Management for further details.
166
167
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
167167
NOTES TO THE FINANCIAL STATEMENTS (continued)
17. DEBT ISSUANCES (continued)
ANZ Capital Securities (ANZ CS)
Issuer
Issue date
Issue amount
Face value
Interest frequency
Interest rate
ANZ, acting through its London branch
15 June 2016
USD 1,000 million
Semi-annually in arrears
Issuer’s early redemption option
15 June 2026 and each 5 year anniversary
Common equity capital trigger event
Non-viability trigger event
Yes
Yes
Carrying value (net of issue costs)
$1,404 million (2021: $1,422 million)
ANZ NZ Capital Notes (ANZ NZ CN)1
Issuer
Issue date
Issue amount
Face value
Interest frequency
Interest rate
ANZ Bank New Zealand Limited
31 March 2015
NZD 500 million
NZD 1
Quarterly in arrears
Fixed at 7.2% p.a. until 25 May 2020. The rate reset in May 2020 to a floating rate: New Zealand 3
month bank bill rate + 3.5%
Interest payments are subject to ANZ Bank New Zealand’s absolute discretion and certain payment
conditions (including APRA and RBNZ requirements)
Issuer’s early redemption option
The option was not exercised on 25 May 2020 and has expired
Mandatory conversion date
25 May 2022
Common equity capital trigger event
Non-viability trigger event
Yes
Yes
Carrying value (net of issue costs)
$nil (2021: $477 million)
1. All of the ANZ NZ CNs were redeemed by ANZ Bank New Zealand Limited on 31 December 2021.
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
17. DEBT ISSUANCES (continued)
TIER 2 CAPITAL
Convertible term subordinated notes issued by the Company are Basel III fully compliant instruments. If a Non-Viability Trigger Event occurs, each of
the convertible term subordinated notes will immediately convert into ANZ ordinary shares (based on the average market price of the shares
immediately prior to conversion less a 1% discount, subject to a maximum conversion number).
Minimum denomination of USD 200,000 and an integral multiple of USD 1,000 above that
The table below shows the Tier 2 capital subordinated debt the Group holds at 30 September in both the current and prior year:
Fixed at 6.75% p.a. until 15 June 2026. Reset on 15 June 2026 and each 5 year anniversary
to a floating rate: 5 year USD mid-market swap rate + 5.168%
Currency
Face value Maturity
Next optional call date –
subject to APRA’s prior approval
Interest
rate
2022
$m
2021
$m
2022
$m
2021
$m
Consolidated
The Company
Basel III transitional subordinated notes (perpetual)1
USD
300m
Perpetual
Each semi-annual interest payment date Floating
Total Basel III transitional subordinated notes
Tier 2 capital (term subordinated notes)
USD
SGD
AUD
JPY
USD
JPY
AUD
AUD
EUR
AUD
USD
AUD
USD
AUD
AUD
EUR
GBP
AUD
AUD
JPY
SGD
AUD
800m
500m
200m
20,000m
1,500m
10,000m
225m
1,750m
1,000m
265m
1,250m
1,250m
1,500m
330m
195m
750m
500m
1,450m
300m
59,400m
600m
900m
2024
2027
2027
2026
2026
2028
2032
2029
2029
2039
2030
2031
2035
2040
2040
2031
2031
2032
2032
2032
2032
2034
N/A
2022
2022
N/A
N/A
2023
2027
2024
2024
N/A
2025
2026
2030
N/A
N/A
2026
2026
2027
2027
2027
2027
2029
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Floating
Fixed
Fixed
Fixed
Floating
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
Floating
Fixed
Fixed
Fixed
-
-
417
417
-
-
417
417
1,189
1,173
1,189
1,173
-
-
213
2,113
106
225
1,750
1,410
179
1,785
1,250
1,830
214
124
1,003
714
1,390
300
627
618
867
515
200
250
2,137
124
225
1,740
1,608
253
1,782
1,235
1,955
304
178
1,193
918
-
-
-
-
-
-
-
213
2,113
106
225
1,750
1,410
179
1,785
1,250
1,830
214
124
1,003
714
1,390
300
627
618
867
515
200
250
2,137
124
225
1,740
1,608
253
1,782
1,235
1,955
304
178
1,193
918
-
-
-
-
-
Total Basel III fully compliant subordinated notes
Total Tier 2 capital2,3
17,907
17,907
15,790
16,207
17,907
17,907
15,790
16,207
1. The Company’s USD 300 million perpetual subordinated notes were included in the Group’s Tier 2 capital in 2021 pursuant to APRA’s Basel III transition arrangements, which ended in December 2021. In
2022 this has been included in Other subordinated debt securities.
2. Carrying values are net of issuance costs, and, where applicable, include fair value hedge accounting adjustments.
3. This forms part of qualifying Tier 2 capital. Refer to Note 25 Capital Management for further details.
166
167
168168 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
17. DEBT ISSUANCES (continued)
OTHER SUBORDINATED DEBT SECURITIES
18. FINANCIAL RISK MANAGEMENT
RISK MANAGEMENT FRAMEWORK AND MODEL
The Company’s USD 300 million perpetual subordinated notes no longer form a component part of regulatory capital for the Group (as APRA’s
transitional Basel III capital treatment ceased to apply from January 2022). These subordinated notes do not contain a Non-Viability Trigger Event.
INTRODUCTION
A subsidiary of the Group, ANZ Bank New Zealand, issued NZD 600 million of unsecured subordinated notes in September 2021 and USD 500 million
of unsecured subordinated notes in August 2022. Whilst these subordinated notes constitute tier 2 capital under RBNZ requirements, the
subordinated notes do not (among other things) contain a Non-Viability Trigger Event and therefore do not meet APRA’s requirements for Tier 2
capital instruments in order to qualify as regulatory capital for the Group.
The use of financial instruments is fundamental to the Group’s businesses of providing banking and other financial services to our customers. The
associated financial risks (primarily credit, market, and liquidity risks) are a significant portion of the Group’s key material risks.
We disclose details of all key material risks impacting the Group, and further information on the Group’s risk management activities, in the Governance
and Risk Management sections of this Annual Report.
This note details the Group’s financial risk management policies, processes and quantitative disclosures in relation to the key financial risks.
Currency
Face value Maturity
Next optional call date1
Consolidated
The Company
Interest
rate
2022
$m
2021
$m
2022
$m
2021
$m
Key material financial risks
Credit risk
Non-Basel III compliant perpetual subordinated notes issued by the Company2
USD
300m
Perpetual
Each semi-annual interest payment
date
Term subordinated notes issued by ANZ Bank New Zealand Limited
NZD
USD
600m
500m
2031
2032
2026
2027
Other subordinated debt
Floating
462
-
Fixed
Fixed
524
730
1,716
566
-
566
462
-
-
462
-
-
-
-
1. Subject to APRA’s or RBNZ’s prior approval (as applicable).
2. The Company’s USD 300 million perpetual subordinated notes were included in the Group’s Tier 2 capital in 2021 pursuant to APRA’s Basel III transition arrangements, which ended in December 2021.
RECOGNITION AND MEASUREMENT
Debt issuances are initially recognised at fair value and are subsequently measured at amortised cost, except where designated at fair value
through profit or loss. Interest expense on debt issuances is recognised using the effective interest rate method. Where the Group enters
into a fair value hedge accounting relationship, the fair value attributable to the hedge risk is reflected in adjustments to the carrying value
of the debt.
Subordinated debt with capital-based conversion features (i.e. Common Equity Capital Trigger Events or Non-Viability Trigger Events) are
considered to contain embedded derivatives that we account for separately at fair value through profit or loss. The embedded derivatives
arise because the amount of shares issued on conversion following any of those trigger events is subject to the maximum conversion
number, however they have no significant value as of the reporting date given the remote nature of those trigger events.
The risk of financial loss resulting from:
a counterparty failing to fulfil its obligations; or
a decrease in credit quality of a counterparty resulting in a
financial loss.
Credit risk incorporates the risks associated with us lending to
customers who could be impacted by climate change or by
changes to laws, regulations, or other policies adopted by
governments or regulatory authorities, including carbon pricing
and climate change adaptation or mitigation policies.
Key sections applicable to this risk
Credit risk overview, management and control responsibilities
Maximum exposure to credit risk
Credit quality
Concentrations of credit risk
Collateral management
Market risk
Market risk overview, management and control responsibilities
The risk to the Group’s earnings arising from:
Measurement of market risk
changes in interest rates, foreign exchange rates, credit spreads,
Traded and non-traded market risk
volatility and correlations; or
fluctuations in bond, commodity or equity prices.
Equity securities designated at FVOCI
Foreign currency risk – structural exposure
Liquidity and funding risk
Liquidity risk overview, management and control responsibilities
The risk that the Group is unable to meet payment obligations as
Key areas of measurement for liquidity risk
they fall due, including:
repaying depositors or maturing wholesale debt; or
the Group having insufficient capacity to fund increases in
assets.
Liquidity risk outcomes
Residual contractual maturity analysis of the Group’s liabilities
168
169
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
169169
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
17. DEBT ISSUANCES (continued)
OTHER SUBORDINATED DEBT SECURITIES
18. FINANCIAL RISK MANAGEMENT
RISK MANAGEMENT FRAMEWORK AND MODEL
The Company’s USD 300 million perpetual subordinated notes no longer form a component part of regulatory capital for the Group (as APRA’s
transitional Basel III capital treatment ceased to apply from January 2022). These subordinated notes do not contain a Non-Viability Trigger Event.
A subsidiary of the Group, ANZ Bank New Zealand, issued NZD 600 million of unsecured subordinated notes in September 2021 and USD 500 million
of unsecured subordinated notes in August 2022. Whilst these subordinated notes constitute tier 2 capital under RBNZ requirements, the
subordinated notes do not (among other things) contain a Non-Viability Trigger Event and therefore do not meet APRA’s requirements for Tier 2
capital instruments in order to qualify as regulatory capital for the Group.
INTRODUCTION
The use of financial instruments is fundamental to the Group’s businesses of providing banking and other financial services to our customers. The
associated financial risks (primarily credit, market, and liquidity risks) are a significant portion of the Group’s key material risks.
We disclose details of all key material risks impacting the Group, and further information on the Group’s risk management activities, in the Governance
and Risk Management sections of this Annual Report.
This note details the Group’s financial risk management policies, processes and quantitative disclosures in relation to the key financial risks.
Currency
Face value Maturity
Next optional call date1
Non-Basel III compliant perpetual subordinated notes issued by the Company2
USD
300m
Perpetual
Floating
462
-
Each semi-annual interest payment
Term subordinated notes issued by ANZ Bank New Zealand Limited
date
2026
2027
NZD
USD
600m
500m
2031
2032
Other subordinated debt
1. Subject to APRA’s or RBNZ’s prior approval (as applicable).
Consolidated
The Company
Interest
rate
2022
$m
2021
$m
2022
$m
2021
$m
Fixed
Fixed
524
730
1,716
566
-
566
462
-
-
462
-
-
-
-
2. The Company’s USD 300 million perpetual subordinated notes were included in the Group’s Tier 2 capital in 2021 pursuant to APRA’s Basel III transition arrangements, which ended in December 2021.
RECOGNITION AND MEASUREMENT
Debt issuances are initially recognised at fair value and are subsequently measured at amortised cost, except where designated at fair value
through profit or loss. Interest expense on debt issuances is recognised using the effective interest rate method. Where the Group enters
into a fair value hedge accounting relationship, the fair value attributable to the hedge risk is reflected in adjustments to the carrying value
of the debt.
Subordinated debt with capital-based conversion features (i.e. Common Equity Capital Trigger Events or Non-Viability Trigger Events) are
considered to contain embedded derivatives that we account for separately at fair value through profit or loss. The embedded derivatives
arise because the amount of shares issued on conversion following any of those trigger events is subject to the maximum conversion
number, however they have no significant value as of the reporting date given the remote nature of those trigger events.
Key material financial risks
Credit risk
The risk of financial loss resulting from:
a counterparty failing to fulfil its obligations; or
a decrease in credit quality of a counterparty resulting in a
financial loss.
Credit risk incorporates the risks associated with us lending to
customers who could be impacted by climate change or by
changes to laws, regulations, or other policies adopted by
governments or regulatory authorities, including carbon pricing
and climate change adaptation or mitigation policies.
Market risk
The risk to the Group’s earnings arising from:
changes in interest rates, foreign exchange rates, credit spreads,
volatility and correlations; or
fluctuations in bond, commodity or equity prices.
Liquidity and funding risk
The risk that the Group is unable to meet payment obligations as
they fall due, including:
repaying depositors or maturing wholesale debt; or
the Group having insufficient capacity to fund increases in
assets.
Key sections applicable to this risk
Credit risk overview, management and control responsibilities
Maximum exposure to credit risk
Credit quality
Concentrations of credit risk
Collateral management
Market risk overview, management and control responsibilities
Measurement of market risk
Traded and non-traded market risk
Equity securities designated at FVOCI
Foreign currency risk – structural exposure
Liquidity risk overview, management and control responsibilities
Key areas of measurement for liquidity risk
Liquidity risk outcomes
Residual contractual maturity analysis of the Group’s liabilities
168
169
170170 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
OVERVIEW
AN OVERVIEW OF OUR RISK MANAGEMENT FRAMEWORK
This overview is provided to aid the users of the financial statements in understanding the context of the financial disclosures required under AASB 7
Financial Instruments: Disclosures. It should be read in conjunction with the Governance and Risk Management sections of this Annual Report.
The Board is responsible for establishing and overseeing the Group’s Risk Management Framework (RMF). The Board has delegated authority to the
Board Risk Committee (BRC) to develop and monitor compliance with the Group’s risk management policies. The BRC reports regularly to the Board
on its activities.
activities around the world.
The Board approves the strategic objectives of the Group including:
the Risk Appetite Statement (RAS), which sets out the Board’s expectations regarding the degree of risk that ANZ is prepared to accept in pursuit of
its strategic objectives and business plan; and
the Risk Management Strategy (RMS), which describes ANZ’s strategy for managing risks and the key elements of the RMF that give effect to this
strategy. This includes a description of each material risk, and an overview of how the RMF addresses each risk, with reference to the relevant
policies, standards and procedures. It also includes information on how ANZ identifies, measures, evaluates, monitors, reports and controls or
mitigates material risks.
The Group, through its training and management standards and procedures, aims to maintain a disciplined and robust control environment in which
all employees understand their roles and obligations. At ANZ, risk is everyone’s responsibility.
The Group has an independent risk management function, headed by the Chief Risk Officer who:
is responsible for overseeing the risk profile and the risk management framework;
can effectively challenge activities and decisions that materially affect ANZ’s risk profile; and
has an independent reporting line to the BRC to enable the appropriate escalation of issues of concern.
The Internal Audit Function reports directly to the Board Audit Committee (BAC). Internal Audit provides:
an independent evaluation of the Group’s RMF annually that seeks to ensure compliance with, and the effectiveness of, the risk management
framework;
facilitation of a comprehensive review every three years that seeks to ensure the appropriateness, effectiveness and adequacy of the risk
management framework; and
recommendations to improve the framework and/or work practices to strengthen the effectiveness of day to day operations.
Large and more complex lending
Retail and some small business lending
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK
CREDIT RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Granting credit facilities to customers is one of the Group’s major sources of income. As this activity is also a principal risk, the Group dedicates
considerable resources to its management. The Group assumes credit risk in a wide range of lending and other activities in diverse markets and in
many jurisdictions. Credit risks arise from traditional lending to customers as well as from interbank, treasury, trade finance and capital markets
Our credit risk management framework ensures we apply a consistent approach across the Group when we measure, monitor and manage the credit
risk appetite set by the Board. The Board is assisted and advised by the BRC in discharging its duty to oversee credit risk. The BRC:
sets the credit risk appetite and credit strategies; and
approves credit transactions beyond the discretion of executive management.
We quantify credit risk through an internal credit rating system (masterscales) to ensure consistency across exposure types and to provide a consistent
framework for reporting and analysis. The system uses models and other tools to measure the following for customer exposures:
Probability of Default (PD)
Expressed by a Customer Credit Rating (CCR), reflecting the Group’s assessment of a customer’s ability
to service and repay debt.
Exposure at Default (EAD)
The expected balance sheet exposure at default taking into account repayments of principal and
interest, expected additional drawdowns and accrued interest at the time of default.
Loss Given Default (LGD)
Expressed by a Security Indicator (SI) ranging from A to G. The SI is calculated by reference to the
percentage of loan covered by security which the Group can realise if a customer defaults. The A-G
scale is supplemented by a range of other SIs which cover factors such as cash cover and sovereign
backing. For retail and some small business lending, we group exposures into large homogenous pools
– and the LGD is assigned at the pool level.
Our specialist credit risk teams develop and validate the Group’s PD and LGD rating models. The outputs from these models drive our day-to-day
credit risk management decisions including origination, pricing, approval levels, regulatory capital adequacy, economic capital allocation, and
credit provisioning.
All customers with whom ANZ has a credit relationship are assigned a CCR at origination via either of the following assessment approaches:
Rating models provide a consistent and structured assessment, with
Automated assessment of credit applications using a combination of
judgement required around the use of out-of-model factors. We
scoring (application and behavioural), policy rules and external credit
handle credit approval on a dual approval basis, jointly with the
reporting information. If the application does not meet the automated
business writer and an independent credit officer.
assessment criteria, then it is subject to manual assessment.
We use the Group’s internal CCRs to manage the credit quality of financial assets. To enable wider comparisons, the Group’s CCRs are mapped to
external rating agency scales as follows:
Credit Quality
Description
Internal CCR
ANZ Customer Requirements
Strong
CCR 0+ to 4-
Demonstrated superior stability in their operating and financial
Aaa – Baa3
Moody’s
Rating
S&P Global
Ratings
AAA – BBB-
Satisfactory
CCR 5+ to 6-
Demonstrated sound operational and financial stability over
Ba1 – B1
BB+ – B+
Weak
CCR 7+ to 8=
Demonstrated some operational and financial instability, with
B2 - Caa
B - CCC
performance over the long-term, and whose earnings capacity
is not significantly vulnerable to foreseeable events.
the medium to long-term, even though some may be
susceptible to cyclical trends or variability in earnings.
variability and uncertainty in profitability and liquidity
projected to continue over the short and possibly medium
term.
Defaulted
CCR 8- to 10
When doubt arises as to the collectability of a credit facility, the
N/A
N/A
financial instrument (or ‘the facility’) is classified as defaulted.
170
171
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
171171
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
OVERVIEW
AN OVERVIEW OF OUR RISK MANAGEMENT FRAMEWORK
This overview is provided to aid the users of the financial statements in understanding the context of the financial disclosures required under AASB 7
Financial Instruments: Disclosures. It should be read in conjunction with the Governance and Risk Management sections of this Annual Report.
The Board is responsible for establishing and overseeing the Group’s Risk Management Framework (RMF). The Board has delegated authority to the
Board Risk Committee (BRC) to develop and monitor compliance with the Group’s risk management policies. The BRC reports regularly to the Board
on its activities.
The Board approves the strategic objectives of the Group including:
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK
CREDIT RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Granting credit facilities to customers is one of the Group’s major sources of income. As this activity is also a principal risk, the Group dedicates
considerable resources to its management. The Group assumes credit risk in a wide range of lending and other activities in diverse markets and in
many jurisdictions. Credit risks arise from traditional lending to customers as well as from interbank, treasury, trade finance and capital markets
activities around the world.
Our credit risk management framework ensures we apply a consistent approach across the Group when we measure, monitor and manage the credit
risk appetite set by the Board. The Board is assisted and advised by the BRC in discharging its duty to oversee credit risk. The BRC:
the Risk Appetite Statement (RAS), which sets out the Board’s expectations regarding the degree of risk that ANZ is prepared to accept in pursuit of
its strategic objectives and business plan; and
sets the credit risk appetite and credit strategies; and
approves credit transactions beyond the discretion of executive management.
the Risk Management Strategy (RMS), which describes ANZ’s strategy for managing risks and the key elements of the RMF that give effect to this
strategy. This includes a description of each material risk, and an overview of how the RMF addresses each risk, with reference to the relevant
We quantify credit risk through an internal credit rating system (masterscales) to ensure consistency across exposure types and to provide a consistent
framework for reporting and analysis. The system uses models and other tools to measure the following for customer exposures:
policies, standards and procedures. It also includes information on how ANZ identifies, measures, evaluates, monitors, reports and controls or
mitigates material risks.
The Group, through its training and management standards and procedures, aims to maintain a disciplined and robust control environment in which
all employees understand their roles and obligations. At ANZ, risk is everyone’s responsibility.
The Group has an independent risk management function, headed by the Chief Risk Officer who:
is responsible for overseeing the risk profile and the risk management framework;
can effectively challenge activities and decisions that materially affect ANZ’s risk profile; and
has an independent reporting line to the BRC to enable the appropriate escalation of issues of concern.
The Internal Audit Function reports directly to the Board Audit Committee (BAC). Internal Audit provides:
an independent evaluation of the Group’s RMF annually that seeks to ensure compliance with, and the effectiveness of, the risk management
facilitation of a comprehensive review every three years that seeks to ensure the appropriateness, effectiveness and adequacy of the risk
framework;
management framework; and
Probability of Default (PD)
Exposure at Default (EAD)
Loss Given Default (LGD)
Expressed by a Customer Credit Rating (CCR), reflecting the Group’s assessment of a customer’s ability
to service and repay debt.
The expected balance sheet exposure at default taking into account repayments of principal and
interest, expected additional drawdowns and accrued interest at the time of default.
Expressed by a Security Indicator (SI) ranging from A to G. The SI is calculated by reference to the
percentage of loan covered by security which the Group can realise if a customer defaults. The A-G
scale is supplemented by a range of other SIs which cover factors such as cash cover and sovereign
backing. For retail and some small business lending, we group exposures into large homogenous pools
– and the LGD is assigned at the pool level.
Our specialist credit risk teams develop and validate the Group’s PD and LGD rating models. The outputs from these models drive our day-to-day
credit risk management decisions including origination, pricing, approval levels, regulatory capital adequacy, economic capital allocation, and
credit provisioning.
All customers with whom ANZ has a credit relationship are assigned a CCR at origination via either of the following assessment approaches:
recommendations to improve the framework and/or work practices to strengthen the effectiveness of day to day operations.
Large and more complex lending
Retail and some small business lending
Rating models provide a consistent and structured assessment, with
judgement required around the use of out-of-model factors. We
handle credit approval on a dual approval basis, jointly with the
business writer and an independent credit officer.
Automated assessment of credit applications using a combination of
scoring (application and behavioural), policy rules and external credit
reporting information. If the application does not meet the automated
assessment criteria, then it is subject to manual assessment.
We use the Group’s internal CCRs to manage the credit quality of financial assets. To enable wider comparisons, the Group’s CCRs are mapped to
external rating agency scales as follows:
Credit Quality
Description
Internal CCR
ANZ Customer Requirements
Strong
CCR 0+ to 4-
Satisfactory
CCR 5+ to 6-
Weak
CCR 7+ to 8=
Demonstrated superior stability in their operating and financial
performance over the long-term, and whose earnings capacity
is not significantly vulnerable to foreseeable events.
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.
Demonstrated some operational and financial instability, with
variability and uncertainty in profitability and liquidity
projected to continue over the short and possibly medium
term.
Moody’s
Rating
Aaa – Baa3
S&P Global
Ratings
AAA – BBB-
Ba1 – B1
BB+ – B+
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
170
171
172172 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
CREDIT RISK (continued)
MAXIMUM EXPOSURE TO CREDIT RISK
For financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may
be differences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, these
differences arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject to
market risk, or bank notes and coins.
For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount the 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.
Consolidated
On-balance sheet positions
Net loans and advances
Other financial assets:
Cash and cash equivalents
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
- debt securities at amortised cost
- debt securities at FVOCI
- equity securities at FVOCI
- debt securities at FVTPL
Regulatory deposits
Other financial assets2
Total other financial assets
Subtotal
Off-balance sheet positions
Undrawn and contingent facilities3
Total
Reported
2022
$m
2021
$m
Excluded1
2022
$m
2021
$m
Maximum exposure
to credit risk
2022
$m
2021
$m
672,407
629,719
-
-
672,407
629,719
- debt securities at amortised cost
168,132
151,260
4,762
12,700
35,237
90,174
7,943
76,817
1,353
40
632
2,943
400,733
1,073,140
7,530
9,166
44,688
38,736
7,031
74,743
1,310
42
671
2,054
1,147
4,762
-
3,860
-
-
-
1,127
7,530
-
4,996
-
-
-
1,353
1,310
-
-
-
-
-
-
166,985
150,133
-
12,700
31,377
90,174
7,943
76,817
-
40
632
2,943
-
9,166
39,692
38,736
7,031
74,743
-
42
671
2,054
337,231
966,950
11,122
11,122
14,963
14,963
389,611
1,062,018
322,268
951,987
285,041
259,789
-
-
285,041
259,789
1,358,181
1,226,739
11,122
14,963
1,347,059
1,211,776
1. Coins, notes and cash at bank within Cash and cash equivalents; Trade dated assets within Settlement balances owed to ANZ; Equity securities, precious metal exposures and carbon credits within Trading
assets; and Equity securities within Investment securities were excluded as they do not have credit risk exposure.
2. Other financial assets mainly comprise accrued interest and acceptances.
3. Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expected credit losses.
172
173
The Company
On-balance sheet positions
Net loans and advances
Other financial assets:
Cash and cash equivalents
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
- debt securities at FVOCI
- equity securities at FVOCI
- debt securities at FVTPL
Regulatory deposits
Due from controlled entities
Other financial assets2
Total other financial assets
Subtotal
Total
Off-balance sheet positions
Undrawn and contingent facilities3
Reported
2022
$m
2021
$m
Excluded1
2022
$m
Maximum exposure
to credit risk
2021
$m
2022
$m
2021
$m
537,345
488,487
-
537,345
488,487
155,483
141,436
154,696
140,715
4,024
11,368
28,073
88,056
6,115
65,257
1,027
-
249
22,860
1,882
384,394
921,739
7,183
8,343
34,752
38,292
5,263
61,623
1,054
-
213
23,530
1,371
323,060
811,547
-
-
-
-
-
-
-
-
-
-
787
4,024
721
7,183
3,348
4,957
1,027
1,054
9,186
9,186
13,915
13,915
-
-
-
-
-
-
-
-
-
11,368
24,725
88,056
6,115
65,257
-
-
249
22,860
1,882
375,208
912,553
-
8,343
29,795
38,292
5,263
61,623
-
-
213
23,530
1,371
309,145
797,632
246,722
220,445
-
246,722
220,445
1,168,461
1,031,992
9,186
13,915
1,159,275
1,018,077
1. Coins, notes and cash at bank within Cash and cash equivalents; Trade dated assets within Settlement balances owed to ANZ; Equity securities, precious metal exposures, and carbon credits within Trading
assets; and Equity securities within Investment securities were excluded as they do not have credit risk exposure.
2. Other financial assets mainly comprise accrued interest and acceptances.
3. Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expected credit losses.
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
173173
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
The Company
On-balance sheet positions
Net loans and advances
Other financial assets:
Cash and cash equivalents
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
672,407
629,719
-
672,407
629,719
- debt securities at amortised cost
- debt securities at FVOCI
- equity securities at FVOCI
- debt securities at FVTPL
Regulatory deposits
Due from controlled entities
Other financial assets2
Total other financial assets
Subtotal
Off-balance sheet positions
Undrawn and contingent facilities3
Total
Reported
2022
$m
2021
$m
Excluded1
2022
$m
2021
$m
Maximum exposure
to credit risk
2022
$m
2021
$m
537,345
488,487
-
-
537,345
488,487
155,483
141,436
4,024
11,368
28,073
88,056
6,115
65,257
1,027
-
249
22,860
1,882
7,183
8,343
34,752
38,292
5,263
61,623
1,054
-
213
23,530
1,371
787
4,024
-
3,348
-
-
-
721
7,183
-
4,957
-
-
-
1,027
1,054
-
-
-
-
-
-
-
-
384,394
921,739
323,060
811,547
9,186
9,186
13,915
13,915
154,696
140,715
-
11,368
24,725
88,056
6,115
65,257
-
-
249
22,860
1,882
375,208
912,553
-
8,343
29,795
38,292
5,263
61,623
-
-
213
23,530
1,371
309,145
797,632
246,722
220,445
-
-
246,722
220,445
1,168,461
1,031,992
9,186
13,915
1,159,275
1,018,077
1. Coins, notes and cash at bank within Cash and cash equivalents; Trade dated assets within Settlement balances owed to ANZ; Equity securities, precious metal exposures, and carbon credits within Trading
assets; and Equity securities within Investment securities were excluded as they do not have credit risk exposure.
2. Other financial assets mainly comprise accrued interest and acceptances.
3. Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expected credit losses.
NOTES TO THE FINANCIAL STATEMENTS (continued)
CREDIT RISK (continued)
MAXIMUM EXPOSURE TO CREDIT RISK
For financial assets recognised on the balance sheet, the maximum exposure to credit risk is the carrying amount. In certain circumstances there may
be differences between the carrying amounts reported on the balance sheet and the amounts reported in the tables below. Principally, these
differences arise in respect of financial assets that are subject to risks other than credit risk, such as equity instruments which are primarily subject to
market risk, or bank notes and coins.
For undrawn facilities, this maximum exposure to credit risk is the full amount of the committed facilities. For contingent exposures, the maximum
exposure to credit risk is the maximum amount the 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.
Consolidated
On-balance sheet positions
Net loans and advances
Other financial assets:
Cash and cash equivalents
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
- debt securities at amortised cost
- debt securities at FVOCI
- equity securities at FVOCI
- debt securities at FVTPL
Regulatory deposits
Other financial assets2
Total other financial assets
Subtotal
Off-balance sheet positions
Undrawn and contingent facilities3
Total
Reported
2022
$m
2021
$m
Excluded1
2022
$m
Maximum exposure
to credit risk
2021
$m
2022
$m
2021
$m
-
-
-
-
-
-
-
-
-
168,132
151,260
166,985
150,133
4,762
12,700
35,237
90,174
7,943
76,817
1,353
40
632
2,943
400,733
1,073,140
7,530
9,166
44,688
38,736
7,031
74,743
1,310
42
671
2,054
1,147
4,762
1,127
7,530
3,860
4,996
1,353
1,310
-
12,700
31,377
90,174
7,943
76,817
-
40
632
2,943
-
-
-
-
-
-
-
-
9,166
39,692
38,736
7,031
74,743
-
42
671
2,054
337,231
966,950
11,122
11,122
14,963
14,963
389,611
1,062,018
322,268
951,987
285,041
259,789
-
285,041
259,789
1,358,181
1,226,739
11,122
14,963
1,347,059
1,211,776
1. Coins, notes and cash at bank within Cash and cash equivalents; Trade dated assets within Settlement balances owed to ANZ; Equity securities, precious metal exposures and carbon credits within Trading
assets; and Equity securities within Investment securities were excluded as they do not have credit risk exposure.
2. Other financial assets mainly comprise accrued interest and acceptances.
3. Undrawn and contingent facilities include guarantees, letters of credit and performance related contingencies, net of collectively assessed and individually assessed allowance for expected credit losses.
172
173
174174 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
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report
Directors’
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Financial
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Shareholder
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
CREDIT QUALITY
An analysis of the Group’s credit risk exposure is presented in the following tables based on the Group’s internal credit quality rating by stage without
taking account of the effects of any collateral or other credit enhancements:
Net loans and advances
Consolidated
As at 30 September 2022
Strong
Satisfactory
Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Loans and advances at fair value through profit or loss
Unearned income
Capitalised brokerage and other origination costs
Net carrying amount
As at 30 September 2021
Strong
Satisfactory
Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Loans and advances at fair value through profit or loss
Unearned income
Capitalised brokerage and other origination costs
Net carrying amount
Stage 1
$m
Stage 2
$m
Stage 3
Collectively
assessed
$m
Individually
assessed
$m
443,571
154,823
9,197
-
607,591
(1,141)
606,450
0.19%
412,821
146,368
7,921
-
567,110
(968)
566,142
0.17%
15,880
31,864
9,244
-
56,988
(1,548)
55,440
2.72%
12,596
31,228
12,907
-
56,731
(1,994)
54,737
3.51%
-
-
-
3,328
3,328
(360)
2,968
-
-
-
1,043
1,043
(533)
510
10.82%
51.10%
-
-
-
3,754
3,754
(417)
3,337
-
-
-
1,549
1,549
(666)
883
11.11%
43.00%
Total
$m
459,451
186,687
18,441
4,371
668,950
(3,582)
665,368
0.54%
4,675
(518)
2,882
672,407
425,417
177,596
20,828
5,303
629,144
(4,045)
625,099
0.64%
3,620
(434)
1,434
629,719
CREDIT RISK (continued)
Net loans and advances
The Company
As at 30 September 2022
Strong
Satisfactory
Weak
Defaulted
Allowance for ECL
Coverage ratio
Unearned income
Strong
Satisfactory
Weak
Defaulted
Allowance for ECL
Coverage ratio
Unearned income
Gross loans and advances at amortised cost
Net loans and advances at amortised cost
Loans and advances at fair value through profit or loss
Capitalised brokerage and other origination costs
Net carrying amount
As at 30 September 2021
Gross loans and advances at amortised cost
Net loans and advances at amortised cost
Loans and advances at fair value through profit or loss
Capitalised brokerage and other origination costs
Net carrying amount
Stage 3
Collectively
Individually
Stage 1
$m
Stage 2
assessed
assessed
$m
$m
$m
Total
$m
334,850
142,772
9,181
-
486,803
(946)
485,857
0.19%
297,511
131,979
7,913
-
437,403
(797)
436,606
0.18%
9,641
26,186
7,759
-
43,586
(1,259)
42,327
2.89%
9,329
25,538
11,038
-
45,905
(1,679)
44,226
3.66%
10.75%
49.82%
-
-
-
2,744
2,744
(295)
2,449
-
-
-
3,089
3,089
(348)
2,741
-
-
-
853
853
(425)
428
-
-
-
1,345
1,345
(563)
782
11.27%
41.86%
344,491
168,958
16,940
3,597
533,986
(2,925)
531,061
0.55%
4,263
(480)
2,501
537,345
306,840
157,517
18,951
4,434
487,742
(3,387)
484,355
0.69%
3,472
(390)
1,050
488,487
174
175
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
175175
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
An analysis of the Group’s credit risk exposure is presented in the following tables based on the Group’s internal credit quality rating by stage without
Net loans and advances
taking account of the effects of any collateral or other credit enhancements:
The Company
As at 30 September 2022
Strong
Satisfactory
Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Loans and advances at fair value through profit or loss
Unearned income
10.82%
51.10%
Capitalised brokerage and other origination costs
Net carrying amount
As at 30 September 2021
Strong
Satisfactory
Weak
Defaulted
Gross loans and advances at amortised cost
Allowance for ECL
Net loans and advances at amortised cost
Coverage ratio
Loans and advances at fair value through profit or loss
Unearned income
11.11%
43.00%
Capitalised brokerage and other origination costs
Net carrying amount
Stage 3
Collectively
Individually
Stage 1
$m
Stage 2
assessed
assessed
$m
$m
$m
Total
$m
443,571
154,823
9,197
-
607,591
(1,141)
606,450
0.19%
412,821
146,368
7,921
-
567,110
(968)
566,142
0.17%
15,880
31,864
9,244
-
56,988
(1,548)
55,440
2.72%
12,596
31,228
12,907
-
56,731
(1,994)
54,737
3.51%
-
-
-
3,328
3,328
(360)
2,968
-
-
-
3,754
3,754
(417)
3,337
-
-
-
1,043
1,043
(533)
510
-
-
-
1,549
1,549
(666)
883
459,451
186,687
18,441
4,371
668,950
(3,582)
665,368
0.54%
4,675
(518)
2,882
672,407
425,417
177,596
20,828
5,303
629,144
(4,045)
625,099
0.64%
3,620
(434)
1,434
629,719
CREDIT RISK (continued)
CREDIT QUALITY
Net loans and advances
Consolidated
As at 30 September 2022
Strong
Satisfactory
Weak
Defaulted
Allowance for ECL
Coverage ratio
Unearned income
Strong
Satisfactory
Weak
Defaulted
Allowance for ECL
Coverage ratio
Unearned income
Gross loans and advances at amortised cost
Net loans and advances at amortised cost
Loans and advances at fair value through profit or loss
Capitalised brokerage and other origination costs
Net carrying amount
As at 30 September 2021
Gross loans and advances at amortised cost
Net loans and advances at amortised cost
Loans and advances at fair value through profit or loss
Capitalised brokerage and other origination costs
Net carrying amount
Stage 1
$m
Stage 2
$m
Stage 3
Collectively
assessed
$m
Individually
assessed
$m
334,850
142,772
9,181
-
486,803
(946)
485,857
0.19%
297,511
131,979
7,913
-
437,403
(797)
436,606
0.18%
9,641
26,186
7,759
-
43,586
(1,259)
42,327
2.89%
9,329
25,538
11,038
-
45,905
(1,679)
44,226
3.66%
-
-
-
2,744
2,744
(295)
2,449
-
-
-
853
853
(425)
428
10.75%
49.82%
-
-
-
3,089
3,089
(348)
2,741
-
-
-
1,345
1,345
(563)
782
11.27%
41.86%
Total
$m
344,491
168,958
16,940
3,597
533,986
(2,925)
531,061
0.55%
4,263
(480)
2,501
537,345
306,840
157,517
18,951
4,434
487,742
(3,387)
484,355
0.69%
3,472
(390)
1,050
488,487
174
175
176176 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
CREDIT RISK (continued)
Off-balance sheet commitments - undrawn and contingent facilities
Off-balance sheet commitments - undrawn and contingent facilities
Consolidated
As at 30 September 2022
Strong
Satisfactory
Weak
Defaulted
Gross undrawn and contingent facilities subject to ECL
Allowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL1
Net undrawn and contingent facilities
As at 30 September 2021
Strong
Satisfactory
Weak
Defaulted
Gross undrawn and contingent facilities subject to ECL
Allowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL1
Net undrawn and contingent facilities
1. Commitments that can be unconditionally cancelled at any time without notice.
Stage 1
$m
Stage 2
$m
Stage 3
Collectively
assessed
$m
Individually
assessed
$m
191,363
18,583
774
-
210,720
(593)
210,127
0.28%
174,808
23,799
1,030
-
199,637
(555)
199,082
0.28%
1,703
3,078
706
-
5,487
(144)
5,343
-
-
-
113
113
(29)
84
-
-
-
19
19
(9)
10
2.62%
25.66%
47.37%
1,754
3,564
1,185
-
6,503
(211)
6,292
3.24%
-
-
-
138
138
(19)
119
-
-
-
50
50
(21)
29
13.77%
42.00%
Total
$m
193,066
21,661
1,480
132
216,339
(775)
215,564
0.36%
69,477
285,041
176,562
27,363
2,215
188
206,328
(806)
205,522
0.39%
54,267
259,789
The Company
As at 30 September 2022
Strong
Satisfactory
Weak
Defaulted
As at 30 September 2021
Strong
Satisfactory
Weak
Defaulted
Gross undrawn and contingent facilities subject to ECL
Allowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL1
Net undrawn and contingent facilities
Gross undrawn and contingent facilities subject to ECL
Allowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL1
Net undrawn and contingent facilities
1. Commitments that can be unconditionally cancelled at any time without notice.
Stage 3
Collectively
Individually
Stage 1
$m
Stage 2
assessed
assessed
$m
$m
$m
Total
$m
2.49%
26.80%
38.46%
185,979
15,496
711
-
202,186
(530)
201,656
0.26%
162,232
19,790
1,005
-
183,027
(484)
182,543
0.26%
1,725
2,306
463
-
4,494
(112)
4,382
1,745
2,662
966
-
5,373
(171)
5,202
3.18%
-
-
-
97
97
(26)
71
-
-
-
91
91
(12)
79
13.19%
25.00%
-
-
-
13
13
(5)
8
-
-
-
28
28
(7)
21
187,704
17,802
1,174
110
206,790
(673)
206,117
0.33%
40,605
246,722
163,977
22,452
1,971
119
188,519
(674)
187,845
0.36%
32,600
220,445
176
177
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
177177
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
CREDIT RISK (continued)
Off-balance sheet commitments - undrawn and contingent facilities
Off-balance sheet commitments - undrawn and contingent facilities
Consolidated
As at 30 September 2022
Strong
Satisfactory
Weak
Defaulted
As at 30 September 2021
Strong
Satisfactory
Weak
Defaulted
Gross undrawn and contingent facilities subject to ECL
Allowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL1
Net undrawn and contingent facilities
Gross undrawn and contingent facilities subject to ECL
Allowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
Coverage ratio
Undrawn and contingent facilities not subject to ECL1
Net undrawn and contingent facilities
1. Commitments that can be unconditionally cancelled at any time without notice.
Stage 3
Collectively
Individually
Stage 1
$m
Stage 2
assessed
assessed
$m
$m
$m
Total
$m
191,363
18,583
774
-
210,720
(593)
210,127
0.28%
174,808
23,799
1,030
-
199,637
(555)
199,082
0.28%
1,703
3,078
706
-
5,487
(144)
5,343
1,754
3,564
1,185
-
6,503
(211)
6,292
3.24%
-
-
-
113
113
(29)
84
-
-
-
138
138
(19)
119
-
-
-
19
19
(9)
10
-
-
-
50
50
(21)
29
193,066
21,661
1,480
132
216,339
(775)
215,564
0.36%
69,477
285,041
176,562
27,363
2,215
188
206,328
(806)
205,522
0.39%
54,267
259,789
The Company
As at 30 September 2022
Strong
Satisfactory
Weak
Defaulted
Gross undrawn and contingent facilities subject to ECL
Allowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
2.62%
25.66%
47.37%
Coverage ratio
Undrawn and contingent facilities not subject to ECL1
Net undrawn and contingent facilities
As at 30 September 2021
Strong
Satisfactory
Weak
Defaulted
Gross undrawn and contingent facilities subject to ECL
Allowance for ECL included in Other provisions (refer to Note 23)
Net undrawn and contingent facilities subject to ECL
13.77%
42.00%
Coverage ratio
Undrawn and contingent facilities not subject to ECL1
Net undrawn and contingent facilities
1. Commitments that can be unconditionally cancelled at any time without notice.
Stage 1
$m
Stage 2
$m
Stage 3
Collectively
assessed
$m
Individually
assessed
$m
185,979
15,496
711
-
202,186
(530)
201,656
0.26%
162,232
19,790
1,005
-
183,027
(484)
182,543
0.26%
1,725
2,306
463
-
4,494
(112)
4,382
-
-
-
97
97
(26)
71
-
-
-
13
13
(5)
8
2.49%
26.80%
38.46%
1,745
2,662
966
-
5,373
(171)
5,202
3.18%
-
-
-
91
91
(12)
79
-
-
-
28
28
(7)
21
13.19%
25.00%
Total
$m
187,704
17,802
1,174
110
206,790
(673)
206,117
0.33%
40,605
246,722
163,977
22,452
1,971
119
188,519
(674)
187,845
0.36%
32,600
220,445
176
177
178178 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Investment securities - debt securities at amortised cost
Consolidated
As at 30 September 2022
Strong
Satisfactory
Weak
Gross investment securities - debt securities at amortised cost
Allowance for ECL
Net investment securities - debt securities at amortised cost
Coverage ratio
As at 30 September 2021
Strong
Satisfactory
Weak
Gross investment securities - debt securities at amortised cost
Allowance for ECL
Net investment securities - debt securities at amortised cost
Coverage ratio
The Company
As at 30 September 2022
Strong
Satisfactory
Gross investment securities - debt securities at amortised cost
Allowance for ECL
Net investment securities - debt securities at amortised cost
Coverage ratio
As at 30 September 2021
Strong
Satisfactory
Gross investment securities - debt securities at amortised cost
Allowance for ECL
Net investment securities - debt securities at amortised cost
Coverage ratio
178
Stage 1
$m
Stage 2
$m
Stage 3
Collectively
assessed
$m
Individually
assessed
$m
6,279
113
1,589
7,981
(38)
7,943
0.48%
5,574
121
1,367
7,062
(31)
7,031
0.44%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Stage 1
$m
Stage 2
$m
Stage 3
Collectively
assessed
$m
Individually
assessed
$m
6,032
84
6,116
(1)
6,115
0.02%
5,162
102
5,264
(1)
5,263
0.02%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$m
6,279
113
1,589
7,981
(38)
7,943
0.48%
5,574
121
1367
7,062
(31)
7,031
0.44%
Total
$m
6,032
84
6,116
(1)
6,115
0.02%
5,162
102
5,264
(1)
5,263
0.02%
CREDIT RISK (continued)
Investment securities - debt securities at FVOCI
Investment securities - debt securities at FVOCI
Allowance for ECL recognised in Other comprehensive income
Investment securities - debt securities at FVOCI
Allowance for ECL recognised in Other comprehensive income
Coverage ratio
Consolidated
As at 30 September 2022
Strong
Satisfactory
Coverage ratio
As at 30 September 2021
Strong
Satisfactory
The Company
As at 30 September 2022
Strong
Satisfactory
Coverage ratio
As at 30 September 2021
Strong
Satisfactory
Investment securities - debt securities at FVOCI
Allowance for ECL recognised in Other comprehensive income
Investment securities - debt securities at FVOCI
Allowance for ECL recognised in Other comprehensive income
Coverage ratio
Stage 3
Collectively
Individually
Stage 1
$m
Stage 2
assessed
assessed
$m
$m
$m
76,668
149
76,817
(10)
0.01%
74,541
202
74,743
(11)
0.01%
65,257
-
65,257
(7)
0.01%
61,623
-
61,623
(7)
0.01%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Stage 3
Collectively
Individually
Stage 1
$m
Stage 2
assessed
assessed
$m
$m
$m
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$m
76,668
149
76,817
(10)
0.01%
74,541
202
74,743
(11)
0.01%
Total
$m
65,257
-
65,257
(7)
0.01%
61,623
-
61,623
(7)
0.01%
179
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
179179
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Investment securities - debt securities at FVOCI
Consolidated
As at 30 September 2022
Strong
Satisfactory
Investment securities - debt securities at FVOCI
Allowance for ECL recognised in Other comprehensive income
Coverage ratio
As at 30 September 2021
Strong
Satisfactory
Investment securities - debt securities at FVOCI
Allowance for ECL recognised in Other comprehensive income
Coverage ratio
The Company
As at 30 September 2022
Strong
Satisfactory
Investment securities - debt securities at FVOCI
Allowance for ECL recognised in Other comprehensive income
Coverage ratio
As at 30 September 2021
Strong
Satisfactory
Investment securities - debt securities at FVOCI
Allowance for ECL recognised in Other comprehensive income
Coverage ratio
Stage 1
$m
Stage 2
$m
Stage 3
Collectively
assessed
$m
Individually
assessed
$m
76,668
149
76,817
(10)
0.01%
74,541
202
74,743
(11)
0.01%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Stage 1
$m
Stage 2
$m
Stage 3
Collectively
assessed
$m
Individually
assessed
$m
65,257
-
65,257
(7)
0.01%
61,623
-
61,623
(7)
0.01%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$m
76,668
149
76,817
(10)
0.01%
74,541
202
74,743
(11)
0.01%
Total
$m
65,257
-
65,257
(7)
0.01%
61,623
-
61,623
(7)
0.01%
179
NOTES TO THE FINANCIAL STATEMENTS (continued)
CREDIT RISK (continued)
Investment securities - debt securities at amortised cost
Stage 3
Collectively
Individually
Stage 1
$m
Stage 2
assessed
assessed
$m
$m
$m
6,279
113
1,589
7,981
(38)
7,943
0.48%
5,574
121
1,367
7,062
(31)
7,031
0.44%
6,032
84
6,116
(1)
6,115
0.02%
5,162
102
5,264
(1)
5,263
0.02%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Stage 3
Collectively
Individually
Stage 1
$m
Stage 2
assessed
assessed
$m
$m
$m
Total
$m
6,279
113
1,589
7,981
(38)
7,943
0.48%
5,574
121
1367
7,062
(31)
7,031
0.44%
Total
$m
6,032
84
6,116
(1)
6,115
0.02%
5,162
102
5,264
(1)
5,263
0.02%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Gross investment securities - debt securities at amortised cost
Net investment securities - debt securities at amortised cost
Gross investment securities - debt securities at amortised cost
Net investment securities - debt securities at amortised cost
Gross investment securities - debt securities at amortised cost
Net investment securities - debt securities at amortised cost
Gross investment securities - debt securities at amortised cost
Net investment securities - debt securities at amortised cost
Consolidated
As at 30 September 2022
Strong
Satisfactory
Weak
Allowance for ECL
Coverage ratio
Strong
Satisfactory
Weak
Allowance for ECL
Coverage ratio
As at 30 September 2021
The Company
As at 30 September 2022
Strong
Satisfactory
Allowance for ECL
Coverage ratio
As at 30 September 2021
Strong
Satisfactory
Allowance for ECL
Coverage ratio
178
180180 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Other financial assets
Strong
Satisfactory1
Weak
Defaulted
Total carrying amount
Consolidated
2022
$m
2021
$m
The Company
2022
$m
2021
$m
301,735
235,847
301,771
238,452
The Company
2,164
945
7
3,513
1,122
12
1,707
351
7
3,026
769
12
304,851
240,494
303,836
242,259
1. Includes Investment Securities - debt securities at FVTPL of $40 million (2021: $42 million) for the Group and nil (2021: nil) for the Company.
CONCENTRATIONS OF CREDIT RISK
Credit risk becomes concentrated when a number of customers are engaged in similar activities, have similar economic characteristics, or have similar
activities within the same geographic region – therefore, they may be similarly affected by changes in economic or other conditions. The Group
monitors its credit portfolio to manage risk concentration and rebalance the portfolio. The Group also applies single customer counterparty limits to
protect against unacceptably large exposures to one single customer.
Composition of financial instruments that give rise to credit risk by industry group are presented below:
CREDIT RISK (continued)
Composition of financial instruments that give rise to credit risk by industry group are presented below:
Agriculture, forestry, fishing and mining
19,065
18,283
16,304
14,305
36,120
Business services
Construction
Electricity, gas and water supply
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Manufacturing
Personal lending
Property services
Retail trade
Transport and storage
Wholesale trade
Other
Gross total
Allowance for ECL
Subtotal
Unearned income
Loans
and advances
Other financial
assets
2022
$m
2021
$m
Off-balance sheet
credit related
commitments
52,230
306,318
236,430
53,970
46,971 432,177
335,631
4,621
58,342
65,429
910
1,113
66,524
2022
$m
751
202
42
533
58
664
912
531
74
270
791
2021
$m
297
73
30
580
138
369
638
379
82
339
380
2022
$m
5,517
5,376
8,526
3,192
39,279
47,596
15,640
6,279
7,252
24,185
13,369
Total
2021
$m
2022
$m
5,618
5,241
7,356
3,404
14,101
10,422
17,879
14,517
30,794
64,588
45,886 330,603
325,050
14,424
58,763
7,298
7,229
16,401
18,753
17,462
38,031
14,018
41,974
2021
$m
32,885
13,787
9,981
13,459
14,476
71,163
51,306
52,383
15,653
18,132
28,187
39,386
8,382
5,004
8,820
11,267
71,889
7,272
24,645
42,592
10,048
11,231
13,055
22,884
8,096
4,710
5,523
10,934
20,143
37,580
8,273
10,564
10,345
21,386
282,095
278,526
5,721
3,982
538,249
491,214
375,209
309,146
247,395
221,119 1,160,853 1,021,479
(2,925)
(3,387)
(1)
(1)
(673)
(674)
(3,599)
(4,062)
535,324
487,827
375,208
309,145
246,722
220,445 1,157,254 1,017,417
(480)
2,501
(390)
1,050
-
-
-
-
-
-
-
-
(480)
2,501
(390)
1,050
Capitalised brokerage and other origination costs
Maximum exposure to credit risk
537,345
488,487
375,208
309,145
246,722
220,445 1,159,275 1,018,077
We use collateral for on and off-balance sheet exposures to mitigate credit risk if a counterparty cannot meet its repayment obligations. Where there is
sufficient collateral, an expected credit loss is not recognised. This is largely the case for certain lending products, such as margin loans and reverse
repurchase agreements that are secured by the securities purchased using the lending. For some products, the collateral provided by customers is
fundamental to the product’s structuring, so it is not strictly the secondary source of repayment - for example, lending secured by trade receivables is
typically repaid by the collection of those receivables. During the period there was no change in our collateral policies.
Other financial
assets
Off-balance sheet
credit related
commitments
Total
2022
$m
781
242
48
790
89
2021
$m
335
119
46
807
157
2022
$m
2021
$m
2022
$m
17,694
16,034
52,143
6,245
6,594
9,865
3,691
6,429
6,458
9,053
3,862
15,739
12,797
20,305
16,666
2021
$m
51,231
15,709
12,390
16,373
16,729
56,107
305,148
229,273
58,075
50,568 438,341
335,948
COLLATERAL MANAGEMENT
Loans
and advances
2022
$m
2021
$m
33,668
34,862
9,252
6,155
9,650
12,886
75,118
7,280
28,072
9,161
5,886
6,513
12,710
4,651
71,139
83,741
23,752
1,279
Consolidated
Agriculture, forestry, fishing and mining
Business services
Construction
Electricity, gas and water supply
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Manufacturing
Personal lending
Property services
Retail trade
Transport and storage
Wholesale trade
Other
Gross total
Allowance for ECL
Subtotal
Unearned income
Capitalised brokerage and other origination costs
363,539
361,814
55,203
11,648
12,311
15,215
33,628
50,396
9,967
11,710
12,434
32,801
955
606
98
327
1,235
6,912
1,592
46,701
57,989
17,862
7,076
8,423
28,042
15,967
1,798
80,011
37,696
76,052
90,190
62,189
57,410 422,483
419,888
16,673
73,671
8,444
8,257
18,822
21,061
20,899
44,492
17,014
56,507
67,558
18,515
20,404
33,916
54,618
741
664
489
104
437
583
4,803
673,625
632,764
389,649
322,299
285,816
260,595 1,349,090 1,215,658
(3,582)
(4,045)
(38)
(31)
(775)
(806)
(4,395)
(4,882)
670,043
628,719
389,611
322,268
285,041
259,789 1,344,695 1,210,776
(518)
2,882
(434)
1,434
-
-
-
-
-
-
-
-
(518)
2,882
(434)
1,434
Maximum exposure to credit risk
672,407
629,719
389,611
322,268
285,041
259,789 1,347,059 1,211,776
180
181
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
181181
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
Composition of financial instruments that give rise to credit risk by industry group are presented below:
The Company
Agriculture, forestry, fishing and mining
Business services
Construction
Electricity, gas and water supply
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Manufacturing
Personal lending
Property services
Retail trade
Transport and storage
Wholesale trade
Other
Gross total
Allowance for ECL
Subtotal
Unearned income
Capitalised brokerage and other origination costs
Loans
and advances
2022
$m
2021
$m
19,065
18,283
8,382
5,004
8,820
11,267
71,889
7,272
24,645
8,096
4,710
5,523
10,934
20,143
282,095
278,526
42,592
10,048
11,231
13,055
22,884
37,580
8,273
10,564
10,345
21,386
Other financial
assets
Off-balance sheet
credit related
commitments
Total
2022
$m
751
202
42
533
58
2021
$m
297
73
30
580
138
2022
$m
2021
$m
2022
$m
16,304
14,305
36,120
5,517
5,376
8,526
3,192
5,618
5,241
7,356
3,404
14,101
10,422
17,879
14,517
2021
$m
32,885
13,787
9,981
13,459
14,476
52,230
306,318
236,430
53,970
46,971 432,177
335,631
4,621
58,342
65,429
910
1,113
66,524
664
912
531
74
270
791
369
638
379
82
339
380
5,721
3,982
39,279
47,596
15,640
6,279
7,252
24,185
13,369
71,163
51,306
30,794
64,588
45,886 330,603
325,050
14,424
58,763
7,298
7,229
16,401
18,753
17,462
38,031
14,018
41,974
52,383
15,653
18,132
28,187
39,386
538,249
491,214
375,209
309,146
247,395
221,119 1,160,853 1,021,479
(2,925)
(3,387)
(1)
(1)
(673)
(674)
(3,599)
(4,062)
535,324
487,827
375,208
309,145
246,722
220,445 1,157,254 1,017,417
(480)
2,501
(390)
1,050
-
-
-
-
-
-
-
-
(480)
2,501
(390)
1,050
Maximum exposure to credit risk
537,345
488,487
375,208
309,145
246,722
220,445 1,159,275 1,018,077
COLLATERAL MANAGEMENT
We use collateral for on and off-balance sheet exposures to mitigate credit risk if a counterparty cannot meet its repayment obligations. Where there is
sufficient collateral, an expected credit loss is not recognised. This is largely the case for certain lending products, such as margin loans and reverse
repurchase agreements that are secured by the securities purchased using the lending. For some products, the collateral provided by customers is
fundamental to the product’s structuring, so it is not strictly the secondary source of repayment - for example, lending secured by trade receivables is
typically repaid by the collection of those receivables. During the period there was no change in our collateral policies.
180
181
Consolidated
The Company
301,735
235,847
301,771
238,452
2022
$m
2,164
945
7
2021
$m
3,513
1,122
12
2022
$m
1,707
351
7
2021
$m
3,026
769
12
Total carrying amount
304,851
240,494
303,836
242,259
1. Includes Investment Securities - debt securities at FVTPL of $40 million (2021: $42 million) for the Group and nil (2021: nil) for the Company.
CONCENTRATIONS OF CREDIT RISK
Credit risk becomes concentrated when a number of customers are engaged in similar activities, have similar economic characteristics, or have similar
activities within the same geographic region – therefore, they may be similarly affected by changes in economic or other conditions. The Group
monitors its credit portfolio to manage risk concentration and rebalance the portfolio. The Group also applies single customer counterparty limits to
protect against unacceptably large exposures to one single customer.
Composition of financial instruments that give rise to credit risk by industry group are presented below:
Agriculture, forestry, fishing and mining
33,668
34,862
17,694
16,034
52,143
Loans
and advances
Other financial
assets
2022
$m
2021
$m
Off-balance sheet
credit related
commitments
2022
$m
781
242
48
790
89
955
606
98
327
1,235
6,912
2021
$m
335
119
46
807
157
741
664
489
104
437
583
4,803
2022
$m
6,245
6,594
9,865
3,691
1,592
46,701
57,989
17,862
7,076
8,423
28,042
15,967
Total
2021
$m
2022
$m
6,429
6,458
9,053
3,862
15,739
12,797
20,305
16,666
2021
$m
51,231
15,709
12,390
16,373
16,729
1,798
80,011
37,696
76,052
90,190
62,189
57,410 422,483
419,888
16,673
73,671
8,444
8,257
18,822
21,061
20,899
44,492
17,014
56,507
67,558
18,515
20,404
33,916
54,618
56,107
305,148
229,273
58,075
50,568 438,341
335,948
4,651
71,139
83,741
23,752
1,279
363,539
361,814
9,252
6,155
9,650
12,886
75,118
7,280
28,072
55,203
11,648
12,311
15,215
33,628
9,161
5,886
6,513
12,710
50,396
9,967
11,710
12,434
32,801
CREDIT RISK (continued)
Other financial assets
Strong
Satisfactory1
Weak
Defaulted
Consolidated
Business services
Construction
Electricity, gas and water supply
Entertainment, leisure and tourism
Financial, investment and insurance
Government and official institutions
Manufacturing
Personal lending
Property services
Retail trade
Transport and storage
Wholesale trade
Other
Gross total
Allowance for ECL
Subtotal
Unearned income
673,625
632,764
389,649
322,299
285,816
260,595 1,349,090 1,215,658
(3,582)
(4,045)
(38)
(31)
(775)
(806)
(4,395)
(4,882)
670,043
628,719
389,611
322,268
285,041
259,789 1,344,695 1,210,776
(518)
2,882
(434)
1,434
-
-
-
-
-
-
-
-
(518)
2,882
(434)
1,434
Capitalised brokerage and other origination costs
Maximum exposure to credit risk
672,407
629,719
389,611
322,268
285,041
259,789 1,347,059 1,211,776
182182 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
CREDIT RISK (continued)
The nature of collateral or security held for the relevant classes of financial assets is as follows:
Net loans and advances
18. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISK
MARKET RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Market risk stems from the Group’s trading and balance sheet management activities and the impact of changes and correlations between interest
rates, foreign exchange rates, credit spreads and volatility in bond, commodity or equity prices.
Loans - housing and
personal
Housing loans are secured by mortgage(s) over property and additional security may take the form of
guarantees and deposits.
The BRC delegates responsibility for day-to-day management of both market risks and compliance with market risk policies to the Credit & Market Risk
Committee (CMRC) and the Group Asset & Liability Committee (GALCO).
Personal lending (including credit cards and overdrafts) is predominantly unsecured. If we take security, then
it is restricted to eligible vehicles, motor homes and other assets.
Loans - business
Business loans may be secured, partially secured or unsecured. Typically, we take security by way of a
mortgage over property and/or a charge over the business or other assets.
and profit and loss limits.
Within overall strategies and policies established by the BRC, business units and risk management have joint responsibility for the control of market
risk at the Group level. The Market Risk team (a specialist risk management unit independent of the business) allocates market risk limits at various
levels and monitors and reports on them daily. This detailed framework allocates individual limits to manage and control exposures using risk factors
Other financial assets
If appropriate, we may take other security to mitigate the credit risk, such as guarantees, standby letters of
credit or derivative protection.
Management, measurement and reporting of market risk is undertaken in two broad categories:
Traded Market Risk
Non-Traded Market Risk
Trading assets, Investment
securities, Derivatives and
Other financial assets
For trading assets, we do not seek collateral directly from the issuer or counterparty. However, the collateral
may be implicit in the terms of the instrument (for example, with an asset-backed security). The terms of
debt securities may include collateralisation.
Risk of loss from changes in the value of financial instruments due
Risk of loss associated with the management of non-traded interest rate risk,
to movements in price factors for both physical and derivative
liquidity risk and foreign exchange exposures. This includes interest rate risk
trading positions. Principal risk categories monitored are:
in the banking book. This risk of loss arises from adverse changes in the
For derivatives, we typically terminate all contracts with the counterparty and settle on a net basis at market
levels current at the time of a counterparty default under International Swaps and Derivatives Association
(ISDA) Master Agreements.
Our preferred practice is to use a Credit Support Annex (CSA) to the ISDA so that open derivative positions
with the counterparty are aggregated and cash collateral (or other forms of eligible collateral) is exchanged
daily. The collateral is provided by the counterparty when their position is out of the money (or provided to
the counterparty by ANZ when our position is out of the money).
Collateral for off-balance sheet positions is mainly held against undrawn facilities, and they are typically
performance bonds or guarantees. Undrawn facilities that are secured include housing loans secured by
mortgages over residential property and business lending secured by commercial real estate and/or charges
over business assets.
Off-balance sheet positions
Undrawn and contingent
facilities
The table below shows the estimated value of collateral we hold and the net unsecured portion of credit exposures:
Consolidated
Net loans and advances
Other financial assets
Off-balance sheet positions
Maximum exposure to credit risk
2021
$m
2022
$m
672,407
389,611
285,041
629,719
322,268
259,789
Total
1,347,059
1,211,776
The Company
Net loans and advances
Other financial assets
Off-balance sheet positions
Maximum exposure to credit risk
2021
$m
2022
$m
537,345
375,208
246,722
488,487
309,145
220,445
Total
1,159,275
1,018,077
Total value of collateral
Unsecured portion of
credit exposure
volatilities over:
2022
$m
531,815
24,758
60,544
617,117
2021
$m
515,866
24,410
52,512
592,788
2022
$m
140,592
364,853
224,497
729,942
2021
$m
113,853
297,858
207,277
618,988
Total value of collateral
Unsecured portion of
credit exposure
2022
$m
407,610
19,492
38,618
465,720
2021
$m
387,273
22,027
36,676
445,976
2022
$m
129,735
355,716
208,104
693,555
2021
$m
101,214
287,118
183,769
572,101
1. Currency risk – potential loss arising from changes in foreign
exchange rates or their implied volatilities.
2. Interest rate risk – potential loss from changes in market interest
rates or their implied volatilities.
3. Credit spread risk – potential loss arising from a movement in
margin or spread relative to a benchmark.
4. Commodity risk – potential loss arising from changes in
commodity prices or their implied volatilities.
5. Equity risk – potential loss arising from changes in equity prices.
overall and relative level of interest rates for different tenors, differences in
the actual versus expected net interest margin, and the potential valuation
risk associated with embedded options in financial instruments and bank
products.
MEASUREMENT OF MARKET RISK
We primarily manage and control market risk using Value at Risk (VaR), sensitivity analysis and stress testing.
VaR measures the Group’s possible daily loss based on historical market movements.
The Group’s VaR approach for both traded and non-traded risk is historical simulation. We use historical changes in market rates, prices and
the previous 500 business days, to calculate standard VaR; and
a 1-year stressed period, to calculate stressed VaR.
We calculate traded and non-traded VaR using one-day and ten-day holding periods. For stressed VaR, we use a ten-day period. Back testing is used to
ensure our VaR models remain accurate.
ANZ measures VaR at a 99% confidence interval which means there is a 99% chance that a loss will not exceed the VaR for the relevant holding period.
182
183
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
183183
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
The nature of collateral or security held for the relevant classes of financial assets is as follows:
CREDIT RISK (continued)
Net loans and advances
MARKET RISK
MARKET RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Market risk stems from the Group’s trading and balance sheet management activities and the impact of changes and correlations between interest
rates, foreign exchange rates, credit spreads and volatility in bond, commodity or equity prices.
Loans - housing and
Housing loans are secured by mortgage(s) over property and additional security may take the form of
personal
guarantees and deposits.
The BRC delegates responsibility for day-to-day management of both market risks and compliance with market risk policies to the Credit & Market Risk
Committee (CMRC) and the Group Asset & Liability Committee (GALCO).
Personal lending (including credit cards and overdrafts) is predominantly unsecured. If we take security, then
it is restricted to eligible vehicles, motor homes and other assets.
Loans - business
Business loans may be secured, partially secured or unsecured. Typically, we take security by way of a
mortgage over property and/or a charge over the business or other assets.
Within overall strategies and policies established by the BRC, business units and risk management have joint responsibility for the control of market
risk at the Group level. The Market Risk team (a specialist risk management unit independent of the business) allocates market risk limits at various
levels and monitors and reports on them daily. This detailed framework allocates individual limits to manage and control exposures using risk factors
and profit and loss limits.
If appropriate, we may take other security to mitigate the credit risk, such as guarantees, standby letters of
Management, measurement and reporting of market risk is undertaken in two broad categories:
Traded Market Risk
Non-Traded Market Risk
Risk of loss from changes in the value of financial instruments due
to movements in price factors for both physical and derivative
trading positions. Principal risk categories monitored are:
1. Currency risk – potential loss arising from changes in foreign
exchange rates or their implied volatilities.
2. Interest rate risk – potential loss from changes in market interest
rates or their implied volatilities.
3. Credit spread risk – potential loss arising from a movement in
margin or spread relative to a benchmark.
4. Commodity risk – potential loss arising from changes in
commodity prices or their implied volatilities.
5. Equity risk – potential loss arising from changes in equity prices.
Risk of loss associated with the management of non-traded interest rate risk,
liquidity risk and foreign exchange exposures. This includes interest rate risk
in the banking book. This risk of loss arises from adverse changes in the
overall and relative level of interest rates for different tenors, differences in
the actual versus expected net interest margin, and the potential valuation
risk associated with embedded options in financial instruments and bank
products.
MEASUREMENT OF MARKET RISK
We primarily manage and control market risk using Value at Risk (VaR), sensitivity analysis and stress testing.
VaR measures the Group’s possible daily loss based on historical market movements.
The Group’s VaR approach for both traded and non-traded risk is historical simulation. We use historical changes in market rates, prices and
volatilities over:
the previous 500 business days, to calculate standard VaR; and
a 1-year stressed period, to calculate stressed VaR.
We calculate traded and non-traded VaR using one-day and ten-day holding periods. For stressed VaR, we use a ten-day period. Back testing is used to
ensure our VaR models remain accurate.
ANZ measures VaR at a 99% confidence interval which means there is a 99% chance that a loss will not exceed the VaR for the relevant holding period.
Other financial assets
credit or derivative protection.
Trading assets, Investment
For trading assets, we do not seek collateral directly from the issuer or counterparty. However, the collateral
securities, Derivatives and
may be implicit in the terms of the instrument (for example, with an asset-backed security). The terms of
Other financial assets
debt securities may include collateralisation.
For derivatives, we typically terminate all contracts with the counterparty and settle on a net basis at market
levels current at the time of a counterparty default under International Swaps and Derivatives Association
(ISDA) Master Agreements.
Our preferred practice is to use a Credit Support Annex (CSA) to the ISDA so that open derivative positions
with the counterparty are aggregated and cash collateral (or other forms of eligible collateral) is exchanged
daily. The collateral is provided by the counterparty when their position is out of the money (or provided to
the counterparty by ANZ when our position is out of the money).
Off-balance sheet positions
Undrawn and contingent
Collateral for off-balance sheet positions is mainly held against undrawn facilities, and they are typically
facilities
performance bonds or guarantees. Undrawn facilities that are secured include housing loans secured by
mortgages over residential property and business lending secured by commercial real estate and/or charges
over business assets.
The table below shows the estimated value of collateral we hold and the net unsecured portion of credit exposures:
Maximum exposure to credit risk
Total value of collateral
Unsecured portion of
credit exposure
Total
1,347,059
1,211,776
Consolidated
Net loans and advances
Other financial assets
Off-balance sheet positions
The Company
Net loans and advances
Other financial assets
Off-balance sheet positions
2022
$m
672,407
389,611
285,041
2022
$m
537,345
375,208
246,722
2021
$m
629,719
322,268
259,789
2021
$m
488,487
309,145
220,445
2022
$m
531,815
24,758
60,544
617,117
2022
$m
407,610
19,492
38,618
465,720
2021
$m
515,866
24,410
52,512
592,788
2021
$m
387,273
22,027
36,676
445,976
2022
$m
140,592
364,853
224,497
729,942
2022
$m
129,735
355,716
208,104
693,555
2021
$m
113,853
297,858
207,277
618,988
2021
$m
101,214
287,118
183,769
572,101
Maximum exposure to credit risk
Total value of collateral
Unsecured portion of
credit exposure
Total
1,159,275
1,018,077
182
183
184184 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISK (continued)
TRADED AND NON-TRADED MARKET RISK
Traded market risk
The table below shows the traded market risk VaR on a diversified basis by risk categories:
MARKET RISK (continued)
Non-traded market risk
Balance sheet risk management
Consolidated
Traded value at risk 99% confidence
Foreign exchange
Interest rate
Credit
Commodity
Equity
Diversification benefit1
Total VaR
The Company
Traded value at risk 99% confidence
Foreign exchange
Interest rate
Credit
Commodity
Equity
Diversification benefit1
Total VaR
2022
2021
High for
year
$m
Low for
year
$m
Average
for year
$m
As at
$m
High for
year
$m
Low for
year
$m
Average
for year
$m
As at
$m
liquidity to meet its obligations as they fall due.
Interest rate risk management
1.8
7.9
2.6
4.3
-
(7.2)
9.4
4.8
22.7
11.8
7.0
-
n/a
26.9
1.1
5.0
1.6
1.4
-
n/a
5.6
2.4
9.5
4.9
2.9
-
3.8
9.6
6.3
3.1
-
(7.1)
12.6
(9.4)
13.4
10.0
19.6
22.2
5.0
-
n/a
30.0
1.3
4.3
5.3
1.3
-
n/a
8.7
3.9
8.8
13.7
2.8
-
(9.7)
19.5
2022
2021
High for
year
$m
Low for
year
$m
Average
for year
$m
As at
$m
High for
year
$m
Low for
year
$m
Average
for year
$m
As at
$m
2.0
6.7
2.0
1.4
-
(4.2)
7.9
5.1
18.6
11.9
7.2
-
n/a
23.4
0.9
4.9
1.3
0.9
-
n/a
5.4
2.4
8.8
4.7
2.8
-
3.4
9.0
5.8
2.3
-
(7.4)
11.3
(6.0)
14.5
7.6
16.4
22.1
5.4
-
n/a
26.0
1.5
4.1
5.3
1.4
-
n/a
9.6
3.5
7.5
13.3
2.7
-
(10.1)
16.9
1. The diversification benefit reflects risks that offset across categories. The high and low VaR figures reported for each factor did not necessarily occur on the same day as the high and low VaR reported for the
Group as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.
The principal objectives of balance sheet risk management are to maintain acceptable levels of interest rate and liquidity risk to mitigate the negative
impact of movements in interest rates on the earnings and market value of the Group’s banking book, while ensuring the Group maintains sufficient
Non-traded interest rate risk relates to the potential adverse impact of changes in market interest rates on the Group’s future Net interest income. This
risk arises from two principal sources, namely mismatches between the repricing dates of interest bearing assets and liabilities; and the investment of
capital and other non-interest bearing liabilities and assets. Interest rate risk is reported using VaR and scenario analysis (based on the impact of a 1%
rate shock). The table below shows VaR figures for non-traded interest rate risk for the combined Group as well as Australia, New Zealand and Asia
Pacific, Europe and Americas (APEA) geographies which are calculated separately.
Non-traded value at risk 99% confidence
Consolidated
Australia
New Zealand
Asia Pacific, Europe & America
Diversification benefit1
Total VaR
Non-traded value at risk 99% confidence
The Company
Australia
New Zealand
Asia Pacific, Europe & America
Diversification benefit1
Total VaR
2022
2021
High for
Low for
Average
High for
Low for
Average
As at
$m
year
$m
year
$m
for year
$m
As at
$m
year
$m
for year
$m
78.5
25.4
21.7
93.4
27.1
38.0
63.0
20.2
16.8
76.1
23.9
25.8
(38.1)
n/a
n/a
(33.7)
87.5
104.9
66.8
92.1
67.0
21.6
31.5
(32.9)
87.2
61.9
21.6
29.0
n/a
59.3
69.8
26.7
32.0
(53.7)
74.8
2022
2021
High for
Low for
Average
High for
Low for
Average
year
$m
for year
$m
As at
$m
year
$m
for year
$m
As at
$m
78.5
0.0
22.1
(17.1)
83.5
year
$m
93.4
0.1
37.7
n/a
94.5
63.0
0.0
16.7
76.1
0.0
25.6
n/a
(20.2)
62.9
81.5
67.0
0.0
30.8
(31.9)
65.9
61.9
0.0
27.5
n/a
55.0
69.8
0.0
31.2
(36.2)
64.8
year
$m
81.8
32.8
34.9
n/a
87.2
year
$m
81.8
0.0
35.2
n/a
69.9
1. The diversification benefit reflects the historical correlation between the regions. The high and low VaR figures reported for the region did not necessarily occur on the same day as the high and low VaR
reported for the Group as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.
184
185
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
185185
NOTES TO THE FINANCIAL STATEMENTS (continued)
MARKET RISK (continued)
TRADED AND NON-TRADED MARKET RISK
Traded market risk
The table below shows the traded market risk VaR on a diversified basis by risk categories:
Consolidated
Traded value at risk 99% confidence
Foreign exchange
Interest rate
Credit
Commodity
Equity
Diversification benefit1
Total VaR
The Company
Traded value at risk 99% confidence
Foreign exchange
Interest rate
Credit
Commodity
Equity
Diversification benefit1
Total VaR
2022
2021
High for
Low for
Average
High for
Low for
Average
year
$m
for year
$m
As at
$m
year
$m
for year
$m
As at
$m
1.8
7.9
2.6
4.3
-
(7.2)
9.4
As at
$m
2.0
6.7
2.0
1.4
-
(4.2)
7.9
year
$m
4.8
22.7
11.8
7.0
-
n/a
26.9
year
$m
5.1
18.6
11.9
7.2
-
n/a
23.4
year
$m
10.0
19.6
22.2
5.0
-
n/a
30.0
year
$m
7.6
16.4
22.1
5.4
-
n/a
26.0
1.3
4.3
5.3
1.3
-
n/a
8.7
1.5
4.1
5.3
1.4
-
n/a
9.6
3.9
8.8
13.7
2.8
-
(9.7)
19.5
3.5
7.5
13.3
2.7
-
(10.1)
16.9
1.1
5.0
1.6
1.4
-
n/a
5.6
0.9
4.9
1.3
0.9
-
n/a
5.4
(7.1)
12.6
(9.4)
13.4
2.4
9.5
4.9
2.9
-
2.4
8.8
4.7
2.8
-
3.8
9.6
6.3
3.1
-
3.4
9.0
5.8
2.3
-
(7.4)
11.3
(6.0)
14.5
2022
2021
High for
Low for
Average
High for
Low for
Average
year
$m
for year
$m
As at
$m
year
$m
for year
$m
1. The diversification benefit reflects risks that offset across categories. The high and low VaR figures reported for each factor did not necessarily occur on the same day as the high and low VaR reported for the
Group as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISK (continued)
Non-traded market risk
Balance sheet risk management
The principal objectives of balance sheet risk management are to maintain acceptable levels of interest rate and liquidity risk to mitigate the negative
impact of movements in interest rates on the earnings and market value of the Group’s banking book, while ensuring the Group maintains sufficient
liquidity to meet its obligations as they fall due.
Interest rate risk management
Non-traded interest rate risk relates to the potential adverse impact of changes in market interest rates on the Group’s future Net interest income. This
risk arises from two principal sources, namely mismatches between the repricing dates of interest bearing assets and liabilities; and the investment of
capital and other non-interest bearing liabilities and assets. Interest rate risk is reported using VaR and scenario analysis (based on the impact of a 1%
rate shock). The table below shows VaR figures for non-traded interest rate risk for the combined Group as well as Australia, New Zealand and Asia
Pacific, Europe and Americas (APEA) geographies which are calculated separately.
Consolidated
Non-traded value at risk 99% confidence
Australia
New Zealand
Asia Pacific, Europe & America
Diversification benefit1
Total VaR
The Company
Non-traded value at risk 99% confidence
Australia
New Zealand
Asia Pacific, Europe & America
Diversification benefit1
Total VaR
2022
High for
year
$m
Low for
year
$m
Average
for year
$m
As at
$m
78.5
25.4
21.7
93.4
27.1
38.0
63.0
20.2
16.8
76.1
23.9
25.8
(38.1)
n/a
n/a
(33.7)
87.5
104.9
66.8
92.1
2022
High for
year
$m
Low for
year
$m
Average
for year
$m
As at
$m
78.5
0.0
22.1
(17.1)
83.5
93.4
0.1
37.7
n/a
94.5
63.0
0.0
16.7
76.1
0.0
25.6
n/a
(20.2)
62.9
81.5
2021
High for
year
$m
Low for
year
$m
Average
for year
$m
81.8
32.8
34.9
n/a
87.2
61.9
21.6
29.0
n/a
59.3
69.8
26.7
32.0
(53.7)
74.8
2021
High for
year
$m
Low for
year
$m
Average
for year
$m
81.8
0.0
35.2
n/a
69.9
61.9
0.0
27.5
n/a
55.0
69.8
0.0
31.2
(36.2)
64.8
As at
$m
67.0
21.6
31.5
(32.9)
87.2
As at
$m
67.0
0.0
30.8
(31.9)
65.9
1. The diversification benefit reflects the historical correlation between the regions. The high and low VaR figures reported for the region did not necessarily occur on the same day as the high and low VaR
reported for the Group as a whole. Consequently, a diversification benefit for high and low would not be meaningful and is therefore omitted from the table.
184
185
186186 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISK (continued)
We undertake scenario analysis to stress test the impact of extreme events on the Group’s market risk exposures. We model a 1% overnight parallel
positive shift in the yield curve to determine the potential impact on our Net interest income over the next 12 months. This is a standard risk measure
which assumes the parallel shift is reflected in all wholesale and customer rates.
The table below shows the outcome of this risk measure for the current and previous financial years, expressed as a percentage of reported Net
interest income.
18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK
LIQUIDITY RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Liquidity risk is the risk that the Group is either:
unable to meet its payment obligations (including repaying depositors or maturing wholesale debt) when they fall due; or
does not have the appropriate amount, tenor and composition of funding and liquidity to fund increases in its assets.
Management of liquidity and funding risks are overseen by GALCO. The Group’s liquidity and funding risks are governed by a set of principles
Consolidated
The Company
approved by the BRC and include:
2022
2021
2022
2021
maintaining the ability to meet all payment obligations in the immediate term;
Impact of 1% rate shock on 12 months of net interest income
As at period end
Maximum exposure
Minimum exposure
Average exposure (in absolute terms)
1.29%
2.08%
1.15%
1.56%
2.43%
2.43%
0.98%
1.55%
0.90%
1.65%
0.71%
1.11%
2.02%
2.02%
0.54%
1.08%
EQUITY SECURITIES DESIGNATED AT FVOCI
Our investment securities contain equity investment holdings which predominantly comprise Bank of Tianjin and equity holding in 1835i Ventures
Trust business unit. The market risk impact on these equity investments is not captured by the Group’s VaR processes for traded and non-traded
market risks. Therefore, the Group regularly reviews the valuations of the investments within the portfolio and assesses whether the investments are
appropriately measured based on the recognition and measurement policies set out in Note 12 Investment Securities.
FOREIGN CURRENCY RISK – STRUCTURAL EXPOSURES
Our investment of capital in foreign operations - for example, branches, subsidiaries or associates with functional currencies other than the Australian
Dollar - exposes the Group to the risk of changes in foreign exchange rates. Variations in the value of these foreign operations arising as a result of
exchange differences are reflected in the foreign currency translation reserve in equity.
Where it is considered appropriate, the Group takes out economic hedges against larger foreign exchange denominated revenue streams (primarily
New Zealand Dollar, US Dollar and US Dollar correlated). The primary objective of hedging is to ensure that, if practical, the effect of changes in foreign
exchange rates on the consolidated capital ratios are minimised.
ensuring that the Group has the ability to meet ‘survival horizons’ under a range of ANZ specific, and general market, liquidity stress scenarios, at
the site and Group-wide level, to meet cash flow obligations over the short to medium term;
maintaining strength in the Group’s balance sheet structure to ensure long term resilience in the liquidity and funding risk profile;
ensuring the liquidity management framework is compatible with local regulatory requirements;
preparing daily liquidity reports and scenario analysis to quantify the Group’s positions;
targeting a diversified funding base to avoid undue concentrations by investor type, maturity, market source and currency;
holding a portfolio of high quality liquid assets to protect against adverse funding conditions and to support day-to-day operations; and
establishing detailed contingency plans to cover different liquidity crisis events.
KEY AREAS OF MEASUREMENT FOR LIQUIDITY RISK
Scenario modelling of funding sources
scenarios of varying duration and level of severity.
ANZ’s liquidity risk appetite is defined by a range of regulatory and internal liquidity metrics mandated by the Board. The metrics cover a range of
A key component of this framework is the Liquidity Coverage Ratio (LCR), which is a severe short term liquidity stress scenario mandated by banking
regulators including APRA. As part of meeting LCR requirements, the Group has a Committed Liquidity Facility (CLF) with the Reserve Bank of Australia
(RBA). The CLF was established to offset the shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative form of
contingent liquidity. The CLF is collateralised by assets, including internal residential mortgage backed securities, that are eligible to be pledged as
security with the RBA. In September 2021, APRA wrote to ADI’s to advise that APRA and the RBA consider there to be sufficient HQLA for ADI’s to meet
their LCR requirements, and therefore the use of the CLF should no longer be required beyond 2022 calendar year.
Consistent with APRA’s requirement to reduce the $10.7 billion CLF with four equal reductions during the 2022 calendar year to $0 on 1 January 2023,
ANZ’s CLF was $2.7 billion as at 30 September 2022 (2021: $10.7 billion).
Liquid assets
same-day liquidity.
The Group holds a portfolio of high quality (unencumbered) liquid assets to protect the Group’s liquidity position in a severely stressed environment
and to meet regulatory requirements. HQLA comprise three categories consistent with Basel III LCR requirements:
HQLA1- Cash and highest credit quality government, central bank or public sector securities eligible for repurchase with central banks to provide
HQLA2 - High credit quality government, central bank or public sector securities, high quality corporate debt securities and high quality covered
bonds eligible for repurchase with central banks to provide same-day liquidity.
Alternative liquid assets (ALA) - Assets qualifying as collateral for the CLF and eligible securities that the Reserve Bank of New Zealand (RBNZ) will
accept in its domestic market operations.
LIQUIDITY RISK OUTCOMES1
regulatory minimum of 100%.
of 100%.
Liquidity Coverage Ratio - ANZ’s Liquidity Coverage Ratio (LCR) averaged 131% for 2022, a decrease from the 2021 average of 137%, and above the
Net Stable Funding Ratio - ANZ’s Net Stable Funding Ratio (NSFR) as at 30 September 2022 was 119% (2021: 124%), above the regulatory minimum
1. This information is not within the scope of the external audit of the Group Financial Report by the Group’s external auditor, KPMG. The Liquidity Coverage Ratio and Net Stable Funding Ratio are non-IFRS
disclosures and are disclosed as part of the Group's APS 330 Public Disclosure which is subject to specific review procedures in accordance with the Australian Standard on Related Services (ASRS) 4400
Agreed upon Procedures Engagements to Report Factual Findings.
186
187
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
187187
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
MARKET RISK (continued)
LIQUIDITY AND FUNDING RISK
We undertake scenario analysis to stress test the impact of extreme events on the Group’s market risk exposures. We model a 1% overnight parallel
positive shift in the yield curve to determine the potential impact on our Net interest income over the next 12 months. This is a standard risk measure
LIQUIDITY RISK OVERVIEW, MANAGEMENT AND CONTROL RESPONSIBILITIES
Liquidity risk is the risk that the Group is either:
which assumes the parallel shift is reflected in all wholesale and customer rates.
The table below shows the outcome of this risk measure for the current and previous financial years, expressed as a percentage of reported Net
Impact of 1% rate shock on 12 months of net interest income
interest income.
As at period end
Maximum exposure
Minimum exposure
Average exposure (in absolute terms)
EQUITY SECURITIES DESIGNATED AT FVOCI
Consolidated
The Company
2022
2021
2022
2021
1.29%
2.08%
1.15%
1.56%
2.43%
2.43%
0.98%
1.55%
0.90%
1.65%
0.71%
1.11%
2.02%
2.02%
0.54%
1.08%
Our investment securities contain equity investment holdings which predominantly comprise Bank of Tianjin and equity holding in 1835i Ventures
Trust business unit. The market risk impact on these equity investments is not captured by the Group’s VaR processes for traded and non-traded
market risks. Therefore, the Group regularly reviews the valuations of the investments within the portfolio and assesses whether the investments are
appropriately measured based on the recognition and measurement policies set out in Note 12 Investment Securities.
FOREIGN CURRENCY RISK – STRUCTURAL EXPOSURES
Our investment of capital in foreign operations - for example, branches, subsidiaries or associates with functional currencies other than the Australian
Dollar - exposes the Group to the risk of changes in foreign exchange rates. Variations in the value of these foreign operations arising as a result of
exchange differences are reflected in the foreign currency translation reserve in equity.
Where it is considered appropriate, the Group takes out economic hedges against larger foreign exchange denominated revenue streams (primarily
New Zealand Dollar, US Dollar and US Dollar correlated). The primary objective of hedging is to ensure that, if practical, the effect of changes in foreign
exchange rates on the consolidated capital ratios are minimised.
unable to meet its payment obligations (including repaying depositors or maturing wholesale debt) when they fall due; or
does not have the appropriate amount, tenor and composition of funding and liquidity to fund increases in its assets.
Management of liquidity and funding risks are overseen by GALCO. The Group’s liquidity and funding risks are governed by a set of principles
approved by the BRC and include:
maintaining the ability to meet all payment obligations in the immediate term;
ensuring that the Group has the ability to meet ‘survival horizons’ under a range of ANZ specific, and general market, liquidity stress scenarios, at
the site and Group-wide level, to meet cash flow obligations over the short to medium term;
maintaining strength in the Group’s balance sheet structure to ensure long term resilience in the liquidity and funding risk profile;
ensuring the liquidity management framework is compatible with local regulatory requirements;
preparing daily liquidity reports and scenario analysis to quantify the Group’s positions;
targeting a diversified funding base to avoid undue concentrations by investor type, maturity, market source and currency;
holding a portfolio of high quality liquid assets to protect against adverse funding conditions and to support day-to-day operations; and
establishing detailed contingency plans to cover different liquidity crisis events.
KEY AREAS OF MEASUREMENT FOR LIQUIDITY RISK
Scenario modelling of funding sources
ANZ’s liquidity risk appetite is defined by a range of regulatory and internal liquidity metrics mandated by the Board. The metrics cover a range of
scenarios of varying duration and level of severity.
A key component of this framework is the Liquidity Coverage Ratio (LCR), which is a severe short term liquidity stress scenario mandated by banking
regulators including APRA. As part of meeting LCR requirements, the Group has a Committed Liquidity Facility (CLF) with the Reserve Bank of Australia
(RBA). The CLF was established to offset the shortage of available High Quality Liquid Assets (HQLA) in Australia and provides an alternative form of
contingent liquidity. The CLF is collateralised by assets, including internal residential mortgage backed securities, that are eligible to be pledged as
security with the RBA. In September 2021, APRA wrote to ADI’s to advise that APRA and the RBA consider there to be sufficient HQLA for ADI’s to meet
their LCR requirements, and therefore the use of the CLF should no longer be required beyond 2022 calendar year.
Consistent with APRA’s requirement to reduce the $10.7 billion CLF with four equal reductions during the 2022 calendar year to $0 on 1 January 2023,
ANZ’s CLF was $2.7 billion as at 30 September 2022 (2021: $10.7 billion).
Liquid assets
The Group holds a portfolio of high quality (unencumbered) liquid assets to protect the Group’s liquidity position in a severely stressed environment
and to meet regulatory requirements. HQLA comprise three categories consistent with Basel III LCR requirements:
HQLA1- Cash and highest credit quality government, central bank or public sector securities eligible for repurchase with central banks to provide
same-day liquidity.
HQLA2 - High credit quality government, central bank or public sector securities, high quality corporate debt securities and high quality covered
bonds eligible for repurchase with central banks to provide same-day liquidity.
Alternative liquid assets (ALA) - Assets qualifying as collateral for the CLF and eligible securities that the Reserve Bank of New Zealand (RBNZ) will
accept in its domestic market operations.
LIQUIDITY RISK OUTCOMES1
Liquidity Coverage Ratio - ANZ’s Liquidity Coverage Ratio (LCR) averaged 131% for 2022, a decrease from the 2021 average of 137%, and above the
regulatory minimum of 100%.
Net Stable Funding Ratio - ANZ’s Net Stable Funding Ratio (NSFR) as at 30 September 2022 was 119% (2021: 124%), above the regulatory minimum
of 100%.
1. This information is not within the scope of the external audit of the Group Financial Report by the Group’s external auditor, KPMG. The Liquidity Coverage Ratio and Net Stable Funding Ratio are non-IFRS
disclosures and are disclosed as part of the Group's APS 330 Public Disclosure which is subject to specific review procedures in accordance with the Australian Standard on Related Services (ASRS) 4400
Agreed upon Procedures Engagements to Report Factual Findings.
186
187
188188 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK (continued)
Liquidity crisis contingency planning
The Group maintains APRA-endorsed liquidity crisis contingency plans for analysing and responding to a liquidity threatening event at a country and
Group-wide level. Key liquidity contingency crisis planning requirements and guidelines include:
Ongoing business management
Early signs/ mild stress
Severe stress
establish crisis/severity levels
liquidity limits
early warning indicators
monitoring and review
management actions not requiring
activate contingency funding plans
management actions for altering asset and liability
business rationalisation
behaviour
Assigned responsibility for internal and external communications and the appropriate timing to communicate
Since the precise nature of any stress event cannot be known in advance, we design the plans to be flexible to the nature and severity of the stress
event with multiple variables able to be accommodated in any plan.
Group funding
The Group monitors the composition and stability of its funding so that it remains within the Group’s funding risk appetite. This approach ensures that
an appropriate proportion of the Group’s assets are funded by stable funding sources, including customer deposits; longer-dated wholesale funding
(with a remaining term exceeding one year); and equity.
Funding plans prepared
Considerations in preparing funding plans
Derivative liabilities (excluding those held for balance sheet management)3
3 year strategic plan prepared annually
annual funding plan as part of the Group’s planning
process
forecasting in light of actual results as a calibration to the
customer balance sheet growth
changes in wholesale funding including: targeted funding volumes; markets;
investors; tenors; and currencies for senior, secured, subordinated, hybrid
transactions and market conditions
annual plan
RBA Term Funding Facility
As an additional source of funding, in March 2020, the RBA announced a Term Funding Facility (TFF) for the banking system to support lending to
Australian businesses. The TFF is a three-year secured funding facility to ADIs at a fixed rate of 0.25% for drawdowns up to 4 November 2020, and
reduced to 0.10% for new drawdowns from 4 November 2020 onwards. The TFF was closed to drawdowns on 30 June 2021.
As at 30 September 2022, ANZ had drawn $20.1 billion under the RBA’s TFF.
RBNZ Funding for Lending Programme and Term Lending Facility
Between May 2020 and July 2021, the RBNZ made funds available under a Term Lending Facility (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 the RBNZ announced a Funding for Lending Programme (FLP) which aimed 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 were able to 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). The initial allocation closed on 6 June 2022. An
additional allocation of up to 2% of eligible loans is available, subject to certain conditions until 6 December 2022.
As at 30 September 2022, ANZ Bank New Zealand had drawn $0.3 billion under the TLF and $2.3 billion under the FLP.
18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK (continued)
RESIDUAL CONTRACTUAL MATURITY ANALYSIS OF GROUP’S LIABILITIES
The tables below provide residual contractual maturity analysis of financial liabilities at 30 September within relevant maturity groupings. All
outstanding debt issuance and subordinated debt is profiled on the earliest date on which the Group may be required to pay. All at-call liabilities are
reported in the ‘Less than 3 months’ category unless there is a longer minimum notice period. The amounts represent principal and interest cash flows
- so they may differ from equivalent amounts reported on balance sheet.
It should be noted that this is not how the Group manages its liquidity risk. The management of this risk is detailed on page 187.
Derivative assets and liabilities (balance sheet management)4
Consolidated
As at 30 September 2022
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Liability for acceptances
Debt issuances1,2
Lease liabilities
- Funding:
Receive leg
Pay leg
Receive leg
Pay leg
- Other balance sheet management:
As at 30 September 2021
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Liability for acceptances
Debt issuances1
Lease liabilities
- Funding:
Receive leg
Pay leg
Receive leg
Pay leg
- Other balance sheet management:
Derivative liabilities (excluding those held for balance sheet management)3
Derivative assets and liabilities (balance sheet management)4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Less than
3 months
$m
3 to 12
months
$m
1 to 5
years
$m
After
5 years
$m
13,766
16,230
352
7,591
71,073
81
17,427
5,657
392
4,218
30,474
86
Total
$m
13,766
16,230
352
71,073
1,113
17,427
5,657
392
30,474
1,366
-
-
-
-
-
-
-
-
667,568
117,166
15,960
160
800,854
22,315
60,716
13,667
104,289
210
654
168
(33,155)
(49,030)
(66,661)
(12,851)
(161,697)
30,845
49,191
68,211
12,913
161,160
(125,122)
(44,835)
(29,188)
(10,063)
(209,208)
120,959
44,126
31,026
15,170
211,281
634,145
84,357
25,247
227
743,976
24,928
65,198
14,588
108,932
224
755
301
(29,186)
28,538
(36,462)
35,082
(62,061)
61,867
(14,334)
(142,043)
14,473
139,960
(104,036)
103,586
(37,275)
36,804
(14,982)
15,457
(8,029)
(164,322)
9,974
165,821
1. Callable wholesale debt instruments have been included at their next call date. Balance includes subordinated debt instruments that may be settled in cash or in equity, at the option of the Group and
subordinated debt issued by ANZ New Zealand which constitutes Tier 2 capital under RBNZ requirements but does not qualify as the APRA Tier 2 requirements.
2. Perpetual debt instrument of USD 300 million has been included in the ‘3 to 12 months’ category to reflect the end of the APRA Basel III capital transitional period (December 2021). This was included in the
3. The full mark-to-market after any adjustments for Settle to Market of derivative liabilities (excluding those held for balance sheet management) is included in the ‘Less than 3 months’ category.
4. Includes derivatives designated into hedging relationships of $356 million (2021: $202 million) and $13,720 million (2021: $5,359 million) categorised as held for trading but form part of the Group’s balance
‘After 5 years’ category in 2021.
sheet managed activities.
At 30 September 2022, $236,051 million (2021: $212,265 million) of the Group’s undrawn facilities and $49,765 million (2021: $48,330 million) of its
issued guarantees mature in less than 1 year, based on the earliest date on which the Group may be required to pay.
188
189
NOTES TO THE FINANCIAL STATEMENTS (continued)
LIQUIDITY AND FUNDING RISK (continued)
Liquidity crisis contingency planning
The Group maintains APRA-endorsed liquidity crisis contingency plans for analysing and responding to a liquidity threatening event at a country and
Group-wide level. Key liquidity contingency crisis planning requirements and guidelines include:
Ongoing business management
Early signs/ mild stress
Severe stress
establish crisis/severity levels
monitoring and review
activate contingency funding plans
liquidity limits
early warning indicators
management actions not requiring
management actions for altering asset and liability
business rationalisation
behaviour
Assigned responsibility for internal and external communications and the appropriate timing to communicate
Since the precise nature of any stress event cannot be known in advance, we design the plans to be flexible to the nature and severity of the stress
event with multiple variables able to be accommodated in any plan.
an appropriate proportion of the Group’s assets are funded by stable funding sources, including customer deposits; longer-dated wholesale funding
(with a remaining term exceeding one year); and equity.
Funding plans prepared
Considerations in preparing funding plans
3 year strategic plan prepared annually
customer balance sheet growth
annual funding plan as part of the Group’s planning
changes in wholesale funding including: targeted funding volumes; markets;
investors; tenors; and currencies for senior, secured, subordinated, hybrid
forecasting in light of actual results as a calibration to the
transactions and market conditions
Group funding
process
annual plan
RBA Term Funding Facility
As an additional source of funding, in March 2020, the RBA announced a Term Funding Facility (TFF) for the banking system to support lending to
Australian businesses. The TFF is a three-year secured funding facility to ADIs at a fixed rate of 0.25% for drawdowns up to 4 November 2020, and
reduced to 0.10% for new drawdowns from 4 November 2020 onwards. The TFF was closed to drawdowns on 30 June 2021.
As at 30 September 2022, ANZ had drawn $20.1 billion under the RBA’s TFF.
RBNZ Funding for Lending Programme and Term Lending Facility
Between May 2020 and July 2021, the RBNZ made funds available under a Term Lending Facility (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 the RBNZ announced a Funding for Lending Programme (FLP) which aimed 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 were able to 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). The initial allocation closed on 6 June 2022. An
additional allocation of up to 2% of eligible loans is available, subject to certain conditions until 6 December 2022.
As at 30 September 2022, ANZ Bank New Zealand had drawn $0.3 billion under the TLF and $2.3 billion under the FLP.
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
189189
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
18. FINANCIAL RISK MANAGEMENT (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK (continued)
RESIDUAL CONTRACTUAL MATURITY ANALYSIS OF GROUP’S LIABILITIES
The tables below provide residual contractual maturity analysis of financial liabilities at 30 September within relevant maturity groupings. All
outstanding debt issuance and subordinated debt is profiled on the earliest date on which the Group may be required to pay. All at-call liabilities are
reported in the ‘Less than 3 months’ category unless there is a longer minimum notice period. The amounts represent principal and interest cash flows
- so they may differ from equivalent amounts reported on balance sheet.
It should be noted that this is not how the Group manages its liquidity risk. The management of this risk is detailed on page 187.
The Group monitors the composition and stability of its funding so that it remains within the Group’s funding risk appetite. This approach ensures that
Deposits and other borrowings
Consolidated
As at 30 September 2022
Settlement balances owed by ANZ
Collateral received
Less than
3 months
$m
3 to 12
months
$m
1 to 5
years
$m
After
5 years
$m
13,766
16,230
-
-
-
-
667,568
117,166
15,960
-
-
-
-
160
-
Total
$m
13,766
16,230
800,854
352
22,315
60,716
13,667
104,289
-
210
-
654
-
168
71,073
1,113
(33,155)
(49,030)
(66,661)
(12,851)
(161,697)
30,845
49,191
68,211
12,913
161,160
(125,122)
(44,835)
(29,188)
(10,063)
(209,208)
120,959
44,126
31,026
15,170
211,281
17,427
5,657
-
-
-
-
634,145
84,357
25,247
-
-
-
-
227
-
17,427
5,657
743,976
392
24,928
65,198
14,588
108,932
-
224
-
755
-
301
30,474
1,366
Liability for acceptances
Debt issuances1,2
Derivative liabilities (excluding those held for balance sheet management)3
Lease liabilities
Derivative assets and liabilities (balance sheet management)4
- Funding:
352
7,591
71,073
81
Receive leg
Pay leg
- Other balance sheet management:
Receive leg
Pay leg
As at 30 September 2021
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Liability for acceptances
Debt issuances1
Derivative liabilities (excluding those held for balance sheet management)3
Lease liabilities
Derivative assets and liabilities (balance sheet management)4
- Funding:
392
4,218
30,474
86
Receive leg
Pay leg
- Other balance sheet management:
Receive leg
Pay leg
(29,186)
28,538
(36,462)
35,082
(62,061)
61,867
(14,334)
(142,043)
14,473
139,960
(104,036)
103,586
(37,275)
36,804
(14,982)
15,457
(8,029)
(164,322)
9,974
165,821
1. Callable wholesale debt instruments have been included at their next call date. Balance includes subordinated debt instruments that may be settled in cash or in equity, at the option of the Group and
subordinated debt issued by ANZ New Zealand which constitutes Tier 2 capital under RBNZ requirements but does not qualify as the APRA Tier 2 requirements.
2. Perpetual debt instrument of USD 300 million has been included in the ‘3 to 12 months’ category to reflect the end of the APRA Basel III capital transitional period (December 2021). This was included in the
‘After 5 years’ category in 2021.
3. The full mark-to-market after any adjustments for Settle to Market of derivative liabilities (excluding those held for balance sheet management) is included in the ‘Less than 3 months’ category.
4. Includes derivatives designated into hedging relationships of $356 million (2021: $202 million) and $13,720 million (2021: $5,359 million) categorised as held for trading but form part of the Group’s balance
sheet managed activities.
At 30 September 2022, $236,051 million (2021: $212,265 million) of the Group’s undrawn facilities and $49,765 million (2021: $48,330 million) of its
issued guarantees mature in less than 1 year, based on the earliest date on which the Group may be required to pay.
188
189
190190 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK (continued)
The Company
As at 30 September 2022
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Liability for acceptances
Debt issuances1,2
Derivative liabilities (excluding those held for balance sheet management)3
Lease liabilities
Derivative assets and liabilities (balance sheet management)4
- Funding:
Receive leg
Pay leg
- Other balance sheet management:
Receive leg
Pay leg
As at 30 September 2021
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Liability for acceptances
Debt issuances1
Derivative liabilities (excluding those held for balance sheet management)3
Lease liabilities
Derivative assets and liabilities (balance sheet management)4
- Funding:
Receive leg
Pay leg
- Other balance sheet management:
Receive leg
Pay leg
Less than
3 months
$m
3 to 12
months
$m
1 to 5
years
$m
After
5 years
$m
10,224
14,425
-
-
-
-
564,147
93,197
10,639
144
7,648
75,810
76
-
-
18,951
48,323
-
202
-
744
-
-
157
-
9,970
-
826
Total
$m
10,224
14,425
668,140
144
84,892
75,810
1,848
(29,397)
(39,350)
(46,997)
(8,857)
(124,601)
27,413
40,237
48,281
9,064
124,995
(121,112)
(40,061)
(21,417)
(9,498)
(192,088)
116,992
39,921
24,081
14,666
195,660
14,922
5,148
-
-
-
-
524,654
60,427
21,844
223
4,108
34,240
81
-
-
20,244
54,465
-
208
-
814
-
-
227
-
8,965
-
989
14,922
5,148
607,152
223
87,782
34,240
2,092
(25,170)
24,523
(26,362)
25,344
(48,026)
47,467
(7,364)
(106,922)
7,318
104,652
(102,921)
102,346
(35,426)
34,908
(11,063)
11,501
(7,633)
(157,043)
9,587
158,342
1. Callable wholesale debt instruments have been included at their next call date. Balance includes subordinated debt instruments that may be settled in cash or in equity, at the option of the Company.
2. Perpetual debt instrument of USD 300 million has been included in the ‘3 to 12 months’ category to reflect the end of the APRA Basel III capital transitional period (December 2021). This was included in the
‘After 5 years’ category in 2021.
3. The full mark-to-market after any adjustments for Settle to Market of derivative liabilities (excluding those held for balance sheet management) is included in the ‘Less than 3 months’ category.
4. Includes derivatives designated into hedging relationships of $300 million (2021: $158 million) and $8,390 million (2021: $2,607 million) categorised as held for trading but form part of the Company’s
balance sheet managed activities.
At 30 September 2022, $201,204 million (2021: $176,077 million) of the Company’s undrawn facilities and $46,191 million (2021: $45,042 million) of its
issued guarantees mature in less than 1 year, based on the earliest date on which the Company may be required to pay.
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Group recognises and measures financial instruments at either fair value or amortised cost, with a significant number of financial instruments on
the balance sheet at fair value.
market participants at the measurement date.
amounts as recognised on the balance sheet.
Fair value is the best estimate of the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between
The following tables set out the classification of financial asset and liabilities according to their measurement bases together with their carrying
Consolidated
Financial assets
Cash and cash equivalents
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
Net loans and advances
Regulatory deposits
Other financial assets
Total
Financial liabilities
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities
Debt issuances
Total
amortised
At
cost
$m
2022
At
fair
value
$m
amortised
At
cost
$m
Total
$m
2021
At
fair
value
$m
Note
9
168,132
168,132
151,260
4,762
12,700
-
-
7,943
632
2,943
13,766
16,230
35,237
90,174
78,210
-
-
-
-
-
-
-
4,762
12,700
35,237
90,174
86,153
632
2,943
7,530
9,166
-
-
7,031
671
2,054
13,766
16,230
17,427
5,657
44,688
38,736
76,095
-
-
-
-
-
-
-
667,732
4,675
672,407
626,099
3,620
629,719
864,844
208,296 1,073,140
803,811
163,139
966,950
794,621
2,660
797,281
738,772
4,284
743,056
-
85,149
85,149
-
36,035
6,596
92,623
3,239
1,111
9,835
93,734
4,734
99,092
3,913
1,962
923,836
92,159 1,015,995
865,682
46,194
911,876
10
11
12
13
15
11
17
Total
$m
151,260
7,530
9,166
44,688
38,736
83,126
671
2,054
17,427
5,657
36,035
8,647
101,054
190
191
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
191191
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES
The Group recognises and measures financial instruments at either fair value or amortised cost, with a significant number of financial instruments on
the balance sheet at fair value.
Fair value is the best estimate of the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between
market participants at the measurement date.
The following tables set out the classification of financial asset and liabilities according to their measurement bases together with their carrying
amounts as recognised on the balance sheet.
Consolidated
Financial assets
Cash and cash equivalents
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
Net loans and advances
Regulatory deposits
Other financial assets
Total
Financial liabilities
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities
Debt issuances
Total
At
amortised
cost
$m
2022
At
fair
value
$m
At
amortised
cost
$m
Total
$m
2021
At
fair
value
$m
Note
9
168,132
4,762
12,700
-
-
7,943
-
-
-
35,237
90,174
78,210
168,132
151,260
4,762
12,700
35,237
90,174
86,153
7,530
9,166
-
-
7,031
-
-
-
44,688
38,736
76,095
Total
$m
151,260
7,530
9,166
44,688
38,736
83,126
667,732
4,675
672,407
626,099
3,620
629,719
632
2,943
-
-
632
2,943
671
2,054
-
-
671
2,054
864,844
208,296 1,073,140
803,811
163,139
966,950
13,766
16,230
-
-
13,766
16,230
17,427
5,657
-
-
17,427
5,657
794,621
2,660
797,281
738,772
4,284
743,056
-
85,149
85,149
-
36,035
6,596
92,623
3,239
1,111
9,835
93,734
4,734
99,092
3,913
1,962
36,035
8,647
101,054
923,836
92,159 1,015,995
865,682
46,194
911,876
10
11
12
13
15
11
17
NOTES TO THE FINANCIAL STATEMENTS (continued)
18. FINANCIAL RISK MANAGEMENT (continued)
LIQUIDITY AND FUNDING RISK (continued)
The Company
As at 30 September 2022
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Liability for acceptances
Debt issuances1,2
Lease liabilities
- Funding:
Receive leg
Pay leg
Receive leg
Pay leg
- Other balance sheet management:
As at 30 September 2021
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Liability for acceptances
Debt issuances1
Lease liabilities
- Funding:
Receive leg
Pay leg
Receive leg
Pay leg
- Other balance sheet management:
Derivative liabilities (excluding those held for balance sheet management)3
Derivative assets and liabilities (balance sheet management)4
Derivative liabilities (excluding those held for balance sheet management)3
Derivative assets and liabilities (balance sheet management)4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Less than
3 months
$m
3 to 12
months
$m
1 to 5
years
$m
After
5 years
$m
10,224
14,425
144
7,648
75,810
76
14,922
5,148
223
4,108
34,240
81
Total
$m
10,224
14,425
144
84,892
75,810
1,848
14,922
5,148
223
87,782
34,240
2,092
-
-
-
-
-
-
-
-
564,147
93,197
10,639
157
668,140
18,951
48,323
9,970
202
744
826
(29,397)
(39,350)
(46,997)
(8,857)
(124,601)
27,413
40,237
48,281
9,064
124,995
(121,112)
(40,061)
(21,417)
(9,498)
(192,088)
116,992
39,921
24,081
14,666
195,660
524,654
60,427
21,844
227
607,152
20,244
54,465
8,965
208
814
989
(25,170)
24,523
(26,362)
25,344
(48,026)
47,467
(7,364)
(106,922)
7,318
104,652
(102,921)
102,346
(35,426)
34,908
(11,063)
11,501
(7,633)
(157,043)
9,587
158,342
1. Callable wholesale debt instruments have been included at their next call date. Balance includes subordinated debt instruments that may be settled in cash or in equity, at the option of the Company.
2. Perpetual debt instrument of USD 300 million has been included in the ‘3 to 12 months’ category to reflect the end of the APRA Basel III capital transitional period (December 2021). This was included in the
3. The full mark-to-market after any adjustments for Settle to Market of derivative liabilities (excluding those held for balance sheet management) is included in the ‘Less than 3 months’ category.
4. Includes derivatives designated into hedging relationships of $300 million (2021: $158 million) and $8,390 million (2021: $2,607 million) categorised as held for trading but form part of the Company’s
‘After 5 years’ category in 2021.
balance sheet managed activities.
At 30 September 2022, $201,204 million (2021: $176,077 million) of the Company’s undrawn facilities and $46,191 million (2021: $45,042 million) of its
issued guarantees mature in less than 1 year, based on the earliest date on which the Company may be required to pay.
190
191
192192 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
The Company
Financial assets
Cash and cash equivalents
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
Net loans and advances
Regulatory deposits
Due from controlled entities
Other financial assets
Total
Financial liabilities
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Derivative financial instruments
Due to controlled entities
Payables and other liabilities
Debt issuances
Total
At
amortised
cost
$m
2022
At
fair
value
$m
At
amortised
cost
$m
Total
$m
2021
At
fair
value
$m
Note
9
155,483
4,024
11,368
-
-
6,115
-
-
-
28,073
88,056
66,284
155,483
141,436
4,024
11,368
28,073
88,056
72,399
7,183
8,343
-
-
5,263
-
-
-
34,752
38,292
62,677
Total
$m
141,436
7,183
8,343
34,752
38,292
67,940
10
11
12
13
15
11
17
533,082
4,263
537,345
485,015
3,472
488,487
249
20,360
1,882
-
249
2,500
22,860
-
1,882
213
21,489
1,371
-
2,041
-
213
23,530
1,371
732,563
189,176
921,739
670,313
141,234
811,547
FAIR VALUE APPROACH AND VALUATION TECHNIQUES
10,224
14,425
665,567
-
-
10,224
14,425
14,922
5,148
-
-
14,922
5,148
40
665,607
606,673
50
606,723
-
84,500
25,305
5,705
72,757
-
2,857
3,071
84,500
25,305
8,562
75,828
-
37,005
23,079
3,999
77,053
-
3,245
4,035
37,005
23,079
7,244
81,088
793,983
90,468
884,451
730,874
44,335
775,209
FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUE
The fair valuation of financial assets and financial liabilities is generally determined at the individual instrument level.
If the Group holds offsetting risk positions, then we use the portfolio exception in AASB 13 Fair Value Measurement (AASB 13) to measure the fair value
of such groups of financial assets and financial liabilities. We measure the portfolio based on the price that would be received to sell a net long
position (an asset) for a particular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.
Fair value designation
We designate certain loans and advances and certain deposits and other borrowings and debt issuances as fair value through profit or loss:
where they contain a separable embedded derivative which significantly modifies the instruments’ cash flow ensuring we recognise the fair value
movements on the assets or liabilities in profit or loss in the same period as the movement on the associated hedging instruments; or
in order to eliminate an accounting mismatch which would arise if the asset or liabilities were otherwise carried at amortised cost. This mismatch
arises due to measuring the derivative financial instruments (which we use to mitigate interest rate risk of these assets or liabilities) at fair value
Our approach ensures that we recognise the fair value movements on the assets or liabilities in profit or loss in the same period as the movement on
through profit or loss.
the associated derivatives.
We may also designate certain loans and advances, certain deposits and other borrowings and debt issuances as fair value through profit or loss
where they are managed on a fair value basis to align the measurement with how the instruments are managed.
We use valuation techniques to estimate the fair value of assets and liabilities for recognition, measurement and disclosure purposes where no quoted
price in an active market exists for that asset or liability. This includes the following:
Asset or Liability
Fair Value Approach
Financial instruments held for trading:
Valuation techniques are used that incorporate observable market inputs for financial
- Securities sold short
instruments with similar credit risk, maturity and yield characteristics.
- Derivative financial assets and financial liabilities
- Debt and equity securities
Equity securities where an active market does not exist are measured using
comparable company valuation multiples (such as price-to-book ratios).
Financial instruments classified as:
Discounted cash flow techniques are used whereby contractual future cash flows of
- Derivative financial assets and financial liabilities
(not held for trading)
- Net loans and advances
- Deposits and other borrowings
the instrument are discounted using wholesale market interest rates, or market
borrowing rates for debt or loans with similar maturities or yield curve appropriate for
the remaining term to maturity.
Financial instruments classified as:
Valuation techniques use comparable multiples (such as price-to-book ratios) or
-
Investment securities – debt or equity
discounted cashflow (DCF) techniques incorporating, to the extent possible,
observable inputs from instruments with similar characteristics.
192
193
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
193193
NOTES TO THE FINANCIAL STATEMENTS (continued)
CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
The Company
Financial assets
Cash and cash equivalents
Settlement balances owed to ANZ
Collateral paid
Trading assets
Derivative financial instruments
Investment securities
Net loans and advances
Regulatory deposits
Due from controlled entities
Other financial assets
Total
Financial liabilities
Settlement balances owed by ANZ
Collateral received
Deposits and other borrowings
Derivative financial instruments
Due to controlled entities
Payables and other liabilities
Debt issuances
Total
amortised
At
cost
$m
2022
At
fair
value
$m
amortised
At
cost
$m
Total
$m
2021
At
fair
value
$m
Note
9
155,483
155,483
141,436
4,024
11,368
-
-
6,115
249
20,360
1,882
10,224
14,425
665,567
25,305
5,705
72,757
28,073
88,056
66,284
-
-
-
-
-
-
-
-
4,024
11,368
28,073
88,056
72,399
249
1,882
10,224
14,425
84,500
25,305
8,562
75,828
34,752
38,292
62,677
-
-
-
-
-
-
-
-
7,183
8,343
-
-
5,263
213
21,489
1,371
14,922
5,148
23,079
3,999
77,053
10
11
12
13
15
11
17
Total
$m
141,436
7,183
8,343
34,752
38,292
67,940
213
23,530
1,371
14,922
5,148
37,005
23,079
7,244
81,088
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUE
The fair valuation of financial assets and financial liabilities is generally determined at the individual instrument level.
If the Group holds offsetting risk positions, then we use the portfolio exception in AASB 13 Fair Value Measurement (AASB 13) to measure the fair value
of such groups of financial assets and financial liabilities. We measure the portfolio based on the price that would be received to sell a net long
position (an asset) for a particular risk exposure, or to transfer a net short position (a liability) for a particular risk exposure.
Fair value designation
We designate certain loans and advances and certain deposits and other borrowings and debt issuances as fair value through profit or loss:
where they contain a separable embedded derivative which significantly modifies the instruments’ cash flow ensuring we recognise the fair value
movements on the assets or liabilities in profit or loss in the same period as the movement on the associated hedging instruments; or
in order to eliminate an accounting mismatch which would arise if the asset or liabilities were otherwise carried at amortised cost. This mismatch
arises due to measuring the derivative financial instruments (which we use to mitigate interest rate risk of these assets or liabilities) at fair value
through profit or loss.
533,082
4,263
537,345
485,015
3,472
488,487
Our approach ensures that we recognise the fair value movements on the assets or liabilities in profit or loss in the same period as the movement on
the associated derivatives.
2,500
22,860
2,041
We may also designate certain loans and advances, certain deposits and other borrowings and debt issuances as fair value through profit or loss
where they are managed on a fair value basis to align the measurement with how the instruments are managed.
732,563
189,176
921,739
670,313
141,234
811,547
FAIR VALUE APPROACH AND VALUATION TECHNIQUES
We use valuation techniques to estimate the fair value of assets and liabilities for recognition, measurement and disclosure purposes where no quoted
price in an active market exists for that asset or liability. This includes the following:
40
665,607
606,673
50
606,723
-
84,500
-
37,005
2,857
3,071
3,245
4,035
Asset or Liability
Fair Value Approach
Financial instruments held for trading:
- Securities sold short
- Derivative financial assets and financial liabilities
- Debt and equity securities
Valuation techniques are used that incorporate observable market inputs for financial
instruments with similar credit risk, maturity and yield characteristics.
Equity securities where an active market does not exist are measured using
comparable company valuation multiples (such as price-to-book ratios).
793,983
90,468
884,451
730,874
44,335
775,209
Financial instruments classified as:
- Derivative financial assets and financial liabilities
(not held for trading)
- Net loans and advances
- Deposits and other borrowings
Financial instruments classified as:
-
Investment securities – debt or equity
Discounted cash flow techniques are used whereby contractual future cash flows of
the instrument are discounted using wholesale market interest rates, or market
borrowing rates for debt or loans with similar maturities or yield curve appropriate for
the remaining term to maturity.
Valuation techniques use comparable multiples (such as price-to-book ratios) or
discounted cashflow (DCF) techniques incorporating, to the extent possible,
observable inputs from instruments with similar characteristics.
192
193
194194 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FAIR VALUE HIERARCHY
FAIR VALUE MEASUREMENT INCORPORATING UNOBSERVABLE MARKET DATA
The Group categorises assets and liabilities carried at fair value into a fair value hierarchy in accordance with AASB 13 based on the observability of
inputs used to measure the fair value:
Level 3 fair value measurements
Level 3 financial instruments are a net asset of $1,802 million (2021: $1,467 million) for the Group and $1,429 million (2021: $1,160 million) for the
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
Company.
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:
The assets and liabilities which incorporate significant unobservable inputs are:
equity securities for which there is no active market or traded prices cannot be observed;
loans and advances measured at fair value for which there is no observable market data; and
derivatives referencing market rates that cannot be observed primarily due to lack of market activity.
Consolidated
Assets
Trading assets1
Derivative financial instruments
Investment securities1
Net loans and advances2
Total
Liabilities
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities2,3
Debt issuances (designated at fair value)
Total
The Company
Assets
Trading assets1
Derivative financial instruments
Investment securities1
Net loans and advances2
Due from controlled entities
Total
Liabilities
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities2,3
Debt issuances (designated at fair value)
Total
Fair value measurements
Level 3 Transfers
Quoted price in
active markets
(Level 1)
Using observable
inputs (Level 2)
Using unobservable
inputs (Level 3)
Total
During the year, the Group and the Company transferred $312 million of Loan and advances measured at fair value from Level 2 to Level 3, as a result
of valuation parameters becoming unobservable during the year. There were no other transfers into or out of Level 3 in the current or prior year.
The material Level 3 financial instruments as at 30 September 2022 are listed as below:
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
i) Investment Securities - equity holdings classified as FVOCI
Bank of Tianjin (BoT)
28,455
36,025
6,782
8,663
944
494
89,185
38,187
68,211
68,007
-
-
8,614
4,272
6,756
3,510
97,610
104,526 108,853
57,116
-
309
2,842
-
-
2,660
4,284
1,131
3,690
-
84,809
34,874
397
1,111
223
1,962
3,151
4,821
88,977
41,343
-
45
1,385
403
1,833
-
31
-
-
31
-
55
1,332
110
35,237
90,174
78,210
4,675
44,688
38,736
76,095
3,620
1,497 208,296
163,139
-
30
-
-
2,660
4,284
85,149
36,035
3,239
1,111
3,913
1,962
30
92,159
46,194
to new equity purchases during the financial year.
Fair value measurements
Quoted price in
active markets
(Level 1)
Using observable
inputs (Level 2)
Using unobservable
inputs (Level 3)
Total
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
23,037
848
58,259
27,764
470
56,277
-
-
-
-
5,036
87,181
7,006
3,860
2,500
6,988
37,788
5,354
3,362
2,041
-
27
1,019
403
-
-
34
1,046
110
-
28,073
88,056
66,284
4,263
2,500
34,752
38,292
62,677
3,472
2,041
82,144
84,511 105,583
55,533
1,449
1,190 189,176
141,234
-
301
2,510
985
3,796
-
1,121
3,040
998
40
50
84,179
35,854
347
2,086
205
3,037
5,159
86,652
39,146
-
20
-
-
20
-
30
-
-
40
50
84,500
37,005
2,857
3,071
3,245
4,035
30
90,468
44,335
1. During 2022, $1,043 million of assets were transferred from Level 1 to Level 2 (2021: $3,845 million transferred from Level 1 to Level 2), as well as $ 1,677 million of assets were transferred from Level 2 to
Level 1 (2021: nil transferred from Level 2 to Level 1) for the Group and the Company due to a change of the observability of valuation inputs. There were no other material transfers during the year. Transfers
into and out of levels are measured at the beginning of the reporting period in which the transfer occurred.
2. During 2022, the Group revised its accounting treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of
expected future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,320 million for the Group and
the Company. Comparatives have not been restated.
3. Payables and other liabilities relate to securities sold short, which we classify as held for trading and measured at fair value through profit or loss.
194
195
The Group holds an investment in the Bank of Tianjin. The investment is valued based on comparative price-to-book (P/B) multiples (a P/B multiple is
the ratio of the market value of equity to the book value of equity). The extent of judgement applied in determining the appropriate multiple and
comparator group from which the multiple is derived resulted in the Level 3 classification. As at September 2022, the BoT equity holding balance was
$854 million (2021: $991 million). A decrease in the BoT fair valuation in the financial year was mainly due to a decrease in the P/B multiple used in the
valuation.
1835i Ventures Trust
The Group holds $324 million (2021: $241 million) of unlisted equities in its 1835i Ventures Trust business unit classified as FVOCI, for which there are
no active markets or traded price observed resulting in Level 3 classification. The increase in the 1835i equity holding balance in the financial year were
mainly due to new equity investments as well as revaluation increases.
Institutional division - Equity Holdings
The Group holds $137 million (2021: $4 million) of unlisted equities in the Institutional division classified as FVOCI, for which there are no active
markets or traded prices available, resulting in Level 3 classification. The increase in the Institutional division equity holdings balance was mainly due
ii) Net loans and advances - classified as FVTPL
Syndication Loans
The Group holds $403 million (2021: $110 million) of syndication loans for sale which are measured at FVTPL. These loans are classified as Level 3 when
there is no observable market data available for the valuation. During the financial year the Group transferred $312 million of syndication loans
measured at fair value from Level 2 to Level 3, due to valuation parameters for these financial instruments becoming unobservable.
Sensitivity to Level 3 data inputs
When we make assumptions due to significant inputs to a valuation not being directly observable (Level 3 inputs), then changing these assumptions
changes the Group’s estimate of the instrument’s fair value. Favourable and unfavourable changes are determined by changing the primary
unobservable parameters used to derive the fair valuation.
Investment Securities - equity holdings
The valuation of the equity investments are sensitive to variations in select unobservable inputs, with valuation techniques used including P/B
multiples and discounted cashflow techniques. If for example, a 10% increase or decrease to the primary input into the valuations were to occur (such
as the P/B multiple), it would result in a $135 million increase or decrease in the fair value of the portfolio, which would be recognised in shareholders’
equity in the Group ($102m for the Company), with no impact to net profit or loss.
Net Loans and Advances
Syndicated loan valuations are sensitive to credit spreads and discount curves in determining their fair valuation. However as these are primarily
investment-grade loans, an increase or decrease in credit spreads and / or interest yield would have an immaterial impact on net profit or net assets of
the Group.
Other
Deferred fair value gains and losses
The remaining Level 3 balance is immaterial and changes in inputs have a minimal impact on net profit and net assets of the Group.
Where fair values are determined using unobservable inputs significant to the fair value of a financial instrument, the Group does not immediately
recognise the difference between the transaction price and the amount we determine based on the valuation technique (day one gain or loss) in
profit or loss. After initial recognition, we recognise the deferred amount in profit or loss on a straight-line basis over the life of the transaction or until
all inputs become observable. Day one gains and losses which have been deferred are not material.
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
195195
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FAIR VALUE MEASUREMENT INCORPORATING UNOBSERVABLE MARKET DATA
Level 3 fair value measurements
Level 3 financial instruments are a net asset of $1,802 million (2021: $1,467 million) for the Group and $1,429 million (2021: $1,160 million) for the
Company.
The assets and liabilities which incorporate significant unobservable inputs are:
equity securities for which there is no active market or traded prices cannot be observed;
loans and advances measured at fair value for which there is no observable market data; and
derivatives referencing market rates that cannot be observed primarily due to lack of market activity.
Level 3 Transfers
During the year, the Group and the Company transferred $312 million of Loan and advances measured at fair value from Level 2 to Level 3, as a result
of valuation parameters becoming unobservable during the year. There were no other transfers into or out of Level 3 in the current or prior year.
The material Level 3 financial instruments as at 30 September 2022 are listed as below:
i) Investment Securities - equity holdings classified as FVOCI
Bank of Tianjin (BoT)
The Group holds an investment in the Bank of Tianjin. The investment is valued based on comparative price-to-book (P/B) multiples (a P/B multiple is
the ratio of the market value of equity to the book value of equity). The extent of judgement applied in determining the appropriate multiple and
comparator group from which the multiple is derived resulted in the Level 3 classification. As at September 2022, the BoT equity holding balance was
$854 million (2021: $991 million). A decrease in the BoT fair valuation in the financial year was mainly due to a decrease in the P/B multiple used in the
valuation.
1835i Ventures Trust
The Group holds $324 million (2021: $241 million) of unlisted equities in its 1835i Ventures Trust business unit classified as FVOCI, for which there are
no active markets or traded price observed resulting in Level 3 classification. The increase in the 1835i equity holding balance in the financial year were
mainly due to new equity investments as well as revaluation increases.
Institutional division - Equity Holdings
The Group holds $137 million (2021: $4 million) of unlisted equities in the Institutional division classified as FVOCI, for which there are no active
markets or traded prices available, resulting in Level 3 classification. The increase in the Institutional division equity holdings balance was mainly due
to new equity purchases during the financial year.
ii) Net loans and advances - classified as FVTPL
Syndication Loans
The Group holds $403 million (2021: $110 million) of syndication loans for sale which are measured at FVTPL. These loans are classified as Level 3 when
there is no observable market data available for the valuation. During the financial year the Group transferred $312 million of syndication loans
measured at fair value from Level 2 to Level 3, due to valuation parameters for these financial instruments becoming unobservable.
Sensitivity to Level 3 data inputs
When we make assumptions due to significant inputs to a valuation not being directly observable (Level 3 inputs), then changing these assumptions
changes the Group’s estimate of the instrument’s fair value. Favourable and unfavourable changes are determined by changing the primary
unobservable parameters used to derive the fair valuation.
Investment Securities - equity holdings
The valuation of the equity investments are sensitive to variations in select unobservable inputs, with valuation techniques used including P/B
multiples and discounted cashflow techniques. If for example, a 10% increase or decrease to the primary input into the valuations were to occur (such
as the P/B multiple), it would result in a $135 million increase or decrease in the fair value of the portfolio, which would be recognised in shareholders’
equity in the Group ($102m for the Company), with no impact to net profit or loss.
Net Loans and Advances
Syndicated loan valuations are sensitive to credit spreads and discount curves in determining their fair valuation. However as these are primarily
investment-grade loans, an increase or decrease in credit spreads and / or interest yield would have an immaterial impact on net profit or net assets of
the Group.
Other
The remaining Level 3 balance is immaterial and changes in inputs have a minimal impact on net profit and net assets of the Group.
Deferred fair value gains and losses
Where fair values are determined using unobservable inputs significant to the fair value of a financial instrument, the Group does not immediately
recognise the difference between the transaction price and the amount we determine based on the valuation technique (day one gain or loss) in
profit or loss. After initial recognition, we recognise the deferred amount in profit or loss on a straight-line basis over the life of the transaction or until
all inputs become observable. Day one gains and losses which have been deferred are not material.
NOTES TO THE FINANCIAL STATEMENTS (continued)
FAIR VALUE HIERARCHY
inputs used to measure the fair value:
The Group categorises assets and liabilities carried at fair value into a fair value hierarchy in accordance with AASB 13 based on the observability of
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:
Consolidated
Assets
Trading assets1
Derivative financial instruments
Investment securities1
Net loans and advances2
Total
Liabilities
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities2,3
Debt issuances (designated at fair value)
Total
The Company
Assets
Trading assets1
Derivative financial instruments
Investment securities1
Net loans and advances2
Due from controlled entities
Total
Liabilities
Deposits and other borrowings
Derivative financial instruments
Payables and other liabilities2,3
Debt issuances (designated at fair value)
Total
Fair value measurements
Quoted price in
active markets
Using observable
Using unobservable
(Level 1)
inputs (Level 2)
inputs (Level 3)
Total
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
28,455
36,025
6,782
8,663
944
494
89,185
38,187
68,211
68,007
8,614
4,272
6,756
3,510
-
55
1,332
110
35,237
90,174
78,210
4,675
44,688
38,736
76,095
3,620
97,610
104,526 108,853
57,116
1,497 208,296
163,139
309
2,842
1,131
3,690
2,660
4,284
84,809
34,874
397
1,111
223
1,962
2,660
4,284
30
85,149
36,035
3,239
1,111
3,913
1,962
3,151
4,821
88,977
41,343
30
92,159
46,194
Fair value measurements
Quoted price in
active markets
Using observable
Using unobservable
(Level 1)
inputs (Level 2)
inputs (Level 3)
Total
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
23,037
27,764
5,036
6,988
848
470
87,181
37,788
58,259
56,277
7,006
3,860
2,500
5,354
3,362
2,041
-
27
1,019
403
-
34
1,046
110
28,073
88,056
66,284
4,263
2,500
34,752
38,292
62,677
3,472
2,041
82,144
84,511 105,583
55,533
1,449
1,190 189,176
141,234
301
2,510
985
3,796
1,121
3,040
998
40
50
40
50
84,179
35,854
20
30
84,500
37,005
347
2,086
205
3,037
2,857
3,071
3,245
4,035
5,159
86,652
39,146
20
30
90,468
44,335
-
45
1,385
403
1,833
31
-
-
-
31
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. During 2022, $1,043 million of assets were transferred from Level 1 to Level 2 (2021: $3,845 million transferred from Level 1 to Level 2), as well as $ 1,677 million of assets were transferred from Level 2 to
Level 1 (2021: nil transferred from Level 2 to Level 1) for the Group and the Company due to a change of the observability of valuation inputs. There were no other material transfers during the year. Transfers
into and out of levels are measured at the beginning of the reporting period in which the transfer occurred.
2. During 2022, the Group revised its accounting treatment of ongoing trail commission payable to mortgage brokers to recognise a liability within Payables and other liabilities equal to the present value of
expected future trail commission payments and a corresponding increase in capitalised brokerage costs in Net loans and advances. The balance at 30 September 2022 was $1,320 million for the Group and
the Company. Comparatives have not been restated.
3. Payables and other liabilities relate to securities sold short, which we classify as held for trading and measured at fair value through profit or loss.
194
195
The following table sets out the Group’s basis of estimating the fair values of financial assets and liabilities carried at amortised cost where the carrying
value is not typically a reasonable approximation of fair value.
The carrying values of certain on-balance sheet financial instruments approximate fair values. These financial instruments are short term in nature or
are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.
Financial Asset and Liability
Fair Value Approach
Investment securities - debt securities at amortised cost
Calculated based on quoted market prices or observable inputs as applicable. If
quoted market prices are not available, we use a discounted cash flow model using a
yield curve appropriate for the remaining term to maturity of the debt instrument.
The fair value reflects adjustments to credit spreads applicable for that instrument.
Deposit liability without a specified maturity or at call
The amount payable on demand at the reporting date. We do not adjust the fair
changes in wholesale market rates, the Group’s cost of wholesale funding and the
customer margin, as appropriate.
value for any value we expect the Group to derive from retaining the deposit for a
future period.
Interest bearing fixed maturity deposits and other
Market borrowing rates of interest for debt with a similar maturity are used to
borrowings and acceptances with quoted market rates
discount contractual cash flows to derive the fair value.
Debt issuances
Calculated based on quoted market prices or observable inputs as applicable. If
quoted market prices are not available, we use a discounted cash flow model using a
yield curve appropriate for the remaining term to maturity of the debt instrument.
The fair value reflects adjustments to credit spreads applicable to ANZ for that
instrument.
196196 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
FINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE (continued)
The financial assets and financial liabilities listed below are carried at amortised cost on the Group’s Balance Sheet. While this is the value at which we
expect the assets will be realised and the liabilities settled, the Group provides an estimate of the fair value of the financial assets and financial liabilities
at balance date in the tables below.
Categorised into fair value hierarchy
Quoted price
active markets
(Level 1)
2022
$m
2021
$m
Using observable
inputs (Level 2)
2022
$m
2021
$m
With significant non-
observable inputs
(Level 3)
2022
$m
2021
$m
At amortised cost
2022
$m
2021
$m
Total fair value
2022
$m
2021
$m
Consolidated
Financial assets
Investment securities
7,943
7,031
Net loans and advances
667,732
626,099
Total
Financial liabilities
675,675
633,130
Deposits and other borrowings
794,621
738,772
-
-
-
-
Debt issuances
Total
92,623
99,092
22,982
27,785
69,028
73,332
887,244
837,864
22,982
27,785 863,152
812,172
- 794,124
738,840
-
-
-
-
-
-
794,124
738,840
92,010
101,117
886,134
839,957
Categorised into fair value hierarchy
Quoted price
active markets
(Level 1)
2022
$m
2021
$m
Using observable
inputs (Level 2)
2022
$m
2021
$m
With significant non-
observable inputs
(Level 3)
2022
$m
2021
$m
At amortised cost
2022
$m
2021
$m
Total fair value
2022
$m
2021
$m
The Company
Financial assets
7,918
7,043
-
-
7,918
7,043
credit quality.
29,460
16,906
634,272
609,541
663,732
626,447
Net loans and advances to customers
Present value of future cash flows, discounted using a curve that incorporates
Net loans and advances to banks
Discounted cash flows using prevailing market rates for loans with similar
37,378
23,949
634,272
609,541
671,650
633,490
-
-
-
Investment securities
6,115
5,263
Net loans and advances
533,082
485,015
Due from controlled entities
20,360
21,489
Total
Financial liabilities
559,557
511,767
Deposits and other borrowings
665,567
606,673
Due to controlled entities
Debt issuances
Total
-
-
-
-
-
-
-
-
-
-
6,092
5,275
-
-
6,092
5,275
28,708
16,050
501,795
469,363
530,503
485,413
-
-
20,360
21,489
20,360
21,489
34,800
21,325
522,155
490,852
556,955
512,177
KEY JUDGEMENTS AND ESTIMATES
A significant portion of financial instruments are carried on the Group and the Company balance sheets at fair value. The Group therefore
regularly evaluates the key valuation assumptions used in the determination of the fair valuation of financial instruments incorporated
within the financial statements, as this can involve a high degree of judgement and estimation in determining the carrying values at the
- 665,242
606,723
-
-
665,242
606,723
balance sheet date.
25,305
72,757
23,079
-
-
-
25,305
23,079
77,053
19,741
24,280
52,453
54,421
-
-
25,305
72,194
23,079
78,701
In determining the fair valuation of financial instruments, the Group has considered the impact of related economic and market conditions
on fair value measurement assumptions and the appropriateness of valuation inputs in these estimates, notably valuation adjustments, as
763,629
706,805
19,741
24,280 717,695
661,144
25,305
23,079
762,741
708,503
well as the impact of these matters on the classification of financial instruments in the fair value hierarchy.
Most of the valuation models the Group uses employ only observable market data as inputs. For certain financial instruments, we may use
data that is not readily observable in current markets. If we use unobservable market data, then we need to exercise more judgement to
determine fair value depending on the significance of the unobservable input to the overall valuation. Generally, we derive unobservable
inputs from other relevant market data and compare them to observed transaction prices where available. When establishing the fair value
of a financial instrument using a valuation technique, the Group also considers any required valuation adjustments in determining the fair
value. We may apply adjustments (such as credit valuation adjustments and funding valuation adjustments – refer to Note 11 Derivative
Financial Instruments) to reflect the Group’s assessment of factors that market participants would consider in determining fair value of a
particular financial instrument.
196
197
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
197197
at balance date in the tables below.
Categorised into fair value hierarchy
Quoted price
active markets
Using observable
observable inputs
With significant non-
At amortised cost
(Level 1)
inputs (Level 2)
(Level 3)
Total fair value
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
19. FAIR VALUE OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
FINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE
FINANCIAL ASSETS AND FINANCIAL LIABILITIES NOT MEASURED AT FAIR VALUE (continued)
The financial assets and financial liabilities listed below are carried at amortised cost on the Group’s Balance Sheet. While this is the value at which we
expect the assets will be realised and the liabilities settled, the Group provides an estimate of the fair value of the financial assets and financial liabilities
The following table sets out the Group’s basis of estimating the fair values of financial assets and liabilities carried at amortised cost where the carrying
value is not typically a reasonable approximation of fair value.
The carrying values of certain on-balance sheet financial instruments approximate fair values. These financial instruments are short term in nature or
are floating rate instruments that are re-priced to market interest rates on or near the end of the reporting period.
Financial Asset and Liability
Fair Value Approach
Investment securities
7,943
7,031
7,918
7,043
-
7,918
7,043
Net loans and advances
667,732
626,099
29,460
16,906
634,272
609,541
663,732
626,447
Net loans and advances to customers
675,675
633,130
37,378
23,949
634,272
609,541
671,650
633,490
Deposits and other borrowings
794,621
738,772
- 794,124
738,840
Deposit liability without a specified maturity or at call
92,623
99,092
22,982
27,785
69,028
73,332
887,244
837,864
22,982
27,785 863,152
812,172
-
-
-
794,124
738,840
92,010
101,117
886,134
839,957
Investment securities - debt securities at amortised cost
Net loans and advances to banks
Calculated based on quoted market prices or observable inputs as applicable. If
quoted market prices are not available, we use a discounted cash flow model using a
yield curve appropriate for the remaining term to maturity of the debt instrument.
The fair value reflects adjustments to credit spreads applicable for that instrument.
Discounted cash flows using prevailing market rates for loans with similar
credit quality.
Present value of future cash flows, discounted using a curve that incorporates
changes in wholesale market rates, the Group’s cost of wholesale funding and the
customer margin, as appropriate.
The amount payable on demand at the reporting date. We do not adjust the fair
value for any value we expect the Group to derive from retaining the deposit for a
future period.
Categorised into fair value hierarchy
Quoted price
active markets
With significant non-
observable inputs
Using observable
inputs (Level 2)
At amortised cost
(Level 1)
(Level 3)
Total fair value
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
Interest bearing fixed maturity deposits and other
borrowings and acceptances with quoted market rates
Market borrowing rates of interest for debt with a similar maturity are used to
discount contractual cash flows to derive the fair value.
Debt issuances
Calculated based on quoted market prices or observable inputs as applicable. If
quoted market prices are not available, we use a discounted cash flow model using a
yield curve appropriate for the remaining term to maturity of the debt instrument.
The fair value reflects adjustments to credit spreads applicable to ANZ for that
instrument.
Investment securities
6,115
5,263
6,092
5,275
-
6,092
5,275
Net loans and advances
533,082
485,015
28,708
16,050
501,795
469,363
530,503
485,413
KEY JUDGEMENTS AND ESTIMATES
A significant portion of financial instruments are carried on the Group and the Company balance sheets at fair value. The Group therefore
regularly evaluates the key valuation assumptions used in the determination of the fair valuation of financial instruments incorporated
within the financial statements, as this can involve a high degree of judgement and estimation in determining the carrying values at the
balance sheet date.
In determining the fair valuation of financial instruments, the Group has considered the impact of related economic and market conditions
on fair value measurement assumptions and the appropriateness of valuation inputs in these estimates, notably valuation adjustments, as
well as the impact of these matters on the classification of financial instruments in the fair value hierarchy.
Most of the valuation models the Group uses employ only observable market data as inputs. For certain financial instruments, we may use
data that is not readily observable in current markets. If we use unobservable market data, then we need to exercise more judgement to
determine fair value depending on the significance of the unobservable input to the overall valuation. Generally, we derive unobservable
inputs from other relevant market data and compare them to observed transaction prices where available. When establishing the fair value
of a financial instrument using a valuation technique, the Group also considers any required valuation adjustments in determining the fair
value. We may apply adjustments (such as credit valuation adjustments and funding valuation adjustments – refer to Note 11 Derivative
Financial Instruments) to reflect the Group’s assessment of factors that market participants would consider in determining fair value of a
particular financial instrument.
Consolidated
Financial assets
Total
Financial liabilities
Debt issuances
Total
The Company
Financial assets
Total
Financial liabilities
Debt issuances
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Due from controlled entities
20,360
21,489
-
20,360
21,489
20,360
21,489
559,557
511,767
34,800
21,325
522,155
490,852
556,955
512,177
Deposits and other borrowings
665,567
606,673
- 665,242
606,723
Due to controlled entities
23,079
-
25,305
23,079
25,305
72,757
77,053
19,741
24,280
52,453
54,421
-
-
665,242
606,723
25,305
72,194
23,079
78,701
763,629
706,805
19,741
24,280 717,695
661,144
25,305
23,079
762,741
708,503
-
-
196
197
198198 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
20. ASSETS CHARGED AS SECURITY FOR LIABILITIES AND COLLATERAL ACCEPTED AS
SECURITY FOR ASSETS
21. OFFSETTING
The following disclosure excludes the amounts presented as collateral paid and received in the Balance Sheet that relate to derivative liabilities and
derivative assets respectively. The terms and conditions of those collateral agreements are included in the standard 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
Assets charged as security for liabilities include the following types of instruments:
securities provided as collateral for repurchase transactions. These transactions are governed by standard industry agreements;
specified residential mortgages provided as security for notes and bonds issued to investors as part of ANZ’s covered bond programs;
collateral provided to central banks; and
collateral provided to clearing houses.
The carrying amount of assets pledged as security are as follows:
Securities sold under arrangements to repurchase1
Residential mortgages provided as security for covered bonds
Other
1. The amounts disclosed as securities sold under arrangements to repurchase include both:
assets pledged as security which continue to be recognised on the Group's balance sheet; and
assets repledged, which are included in the disclosure below.
COLLATERAL ACCEPTED AS SECURITY FOR ASSETS
Consolidated
The Company
2022
$m
52,757
27,575
5,601
2021
$m
51,208
28,816
4,039
2022
$m
47,846
17,953
5,527
2021
$m
48,663
17,925
3,963
ANZ has received collateral associated with various financial transactions. Under certain arrangements ANZ has the right to sell, or to repledge, the
collateral received. These arrangements are governed by standard industry agreements.
The fair value of collateral we have received and that which we have sold or repledged is as follows:
Fair value of assets which can be sold or repledged
Fair value of assets sold or repledged
Consolidated
The Company
2022
$m
32,389
21,269
2021
$m
26,814
18,741
2022
$m
30,647
20,359
2021
$m
25,679
18,189
We offset financial assets and financial liabilities on the balance sheet (in accordance with AASB 132 Financial Instruments: Presentation) when there is:
a current legally enforceable right to set off the recognised amounts in all circumstances; and
an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously.
The following table identifies financial assets and financial liabilities which have not been offset but are subject to enforceable master netting
agreements (or similar arrangements) and the related amounts not offset in the balance sheet. We have not taken into account the effect of over-
collateralisation.
Amount subject to master netting agreement or similar
Total amounts
Amounts not
subject to
recognised
master netting
in the
agreement or
Balance Sheet
$m
similar
$m
Financial
collateral
Financial
(received)/
Total
$m
instruments
pledged
Net amount
$m
$m
$m
Reverse repurchase, securities borrowing and
29,776
(6,697)
23,079
(1,985)
(21,094)
90,174
(6,983)
83,191
(56,491)
(16,951)
9,749
Consolidated
As at 30 September 2022
Derivative financial assets
similar agreements1
Total financial assets
Derivative financial liabilities
Repurchase, securities lending and similar
agreements2
Total financial liabilities
As at 30 September 2021
Derivative financial assets
similar agreements1
Total financial assets
Reverse repurchase, securities borrowing and
Derivative financial liabilities
Repurchase, securities lending and similar
agreements2
Total financial liabilities
1. Reverse repurchase agreements:
with less than 90 days to maturity are presented in the Balance Sheet within Cash and cash equivalents; or
with 90 days or more to maturity are presented in the Balance Sheet within Net loans and advances.
2. Repurchase agreements are presented on the Balance Sheet within Deposits and other borrowings.
119,950
(85,149)
(13,680)
9,936
106,270
(75,213)
(58,476)
(38,045)
56,491
9,964
9,749
(8,758)
(47,229)
12,497
(34,732)
1,985
32,747
(132,378)
22,433
(109,945)
58,476
42,711
(8,758)
38,736
26,082
64,818
(36,035)
(3,078)
(3,166)
(6,244)
2,822
35,658
(24,186)
(5,750)
5,722
22,916
(1,052)
(21,864)
58,574
(33,213)
(25,238)
24,186
(46,147)
11,461
(34,686)
1,052
(82,182)
14,283
(67,899)
25,238
(27,614)
5,530
33,634
39,164
5,722
(3,497)
(3,497)
198
-
-
-
-
199
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
199199
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
20. ASSETS CHARGED AS SECURITY FOR LIABILITIES AND COLLATERAL ACCEPTED AS
21. OFFSETTING
We offset financial assets and financial liabilities on the balance sheet (in accordance with AASB 132 Financial Instruments: Presentation) when there is:
a current legally enforceable right to set off the recognised amounts in all circumstances; and
an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously.
The following table identifies financial assets and financial liabilities which have not been offset but are subject to enforceable master netting
agreements (or similar arrangements) and the related amounts not offset in the balance sheet. We have not taken into account the effect of over-
collateralisation.
Amount subject to master netting agreement or similar
Total amounts
recognised
in the
Balance Sheet
$m
Amounts not
subject to
master netting
agreement or
similar
$m
Total
$m
Financial
instruments
$m
Financial
collateral
(received)/
pledged
$m
Net amount
$m
90,174
(6,983)
83,191
(56,491)
(16,951)
9,749
29,776
(6,697)
23,079
(1,985)
(21,094)
-
119,950
(85,149)
(13,680)
9,936
106,270
(75,213)
(58,476)
(38,045)
56,491
9,964
(47,229)
12,497
(34,732)
1,985
32,747
9,749
(8,758)
-
Consolidated
As at 30 September 2022
Derivative financial assets
Reverse repurchase, securities borrowing and
similar agreements1
Total financial assets
Derivative financial liabilities
Repurchase, securities lending and similar
agreements2
ANZ has received collateral associated with various financial transactions. Under certain arrangements ANZ has the right to sell, or to repledge, the
Total financial liabilities
(132,378)
22,433
(109,945)
58,476
42,711
(8,758)
As at 30 September 2021
Derivative financial assets
Reverse repurchase, securities borrowing and
similar agreements1
Total financial assets
Derivative financial liabilities
Repurchase, securities lending and similar
agreements2
Total financial liabilities
1. Reverse repurchase agreements:
35,658
(24,186)
(5,750)
5,722
22,916
(1,052)
(21,864)
38,736
26,082
64,818
(36,035)
(3,078)
(3,166)
(6,244)
2,822
58,574
(33,213)
(25,238)
24,186
(46,147)
11,461
(34,686)
1,052
(82,182)
14,283
(67,899)
25,238
(27,614)
5,530
33,634
39,164
with less than 90 days to maturity are presented in the Balance Sheet within Cash and cash equivalents; or
with 90 days or more to maturity are presented in the Balance Sheet within Net loans and advances.
2. Repurchase agreements are presented on the Balance Sheet within Deposits and other borrowings.
-
5,722
(3,497)
-
(3,497)
199
SECURITY FOR ASSETS
The following disclosure excludes the amounts presented as collateral paid and received in the Balance Sheet that relate to derivative liabilities and
derivative assets respectively. The terms and conditions of those collateral agreements are included in the standard 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
Assets charged as security for liabilities include the following types of instruments:
securities provided as collateral for repurchase transactions. These transactions are governed by standard industry agreements;
specified residential mortgages provided as security for notes and bonds issued to investors as part of ANZ’s covered bond programs;
collateral provided to central banks; and
collateral provided to clearing houses.
The carrying amount of assets pledged as security are as follows:
Securities sold under arrangements to repurchase1
Residential mortgages provided as security for covered bonds
Other
1. The amounts disclosed as securities sold under arrangements to repurchase include both:
assets pledged as security which continue to be recognised on the Group's balance sheet; and
assets repledged, which are included in the disclosure below.
COLLATERAL ACCEPTED AS SECURITY FOR ASSETS
Consolidated
The Company
2022
$m
52,757
27,575
5,601
2021
$m
51,208
28,816
4,039
2022
$m
47,846
17,953
5,527
2021
$m
48,663
17,925
3,963
collateral received. These arrangements are governed by standard industry agreements.
The fair value of collateral we have received and that which we have sold or repledged is as follows:
Fair value of assets which can be sold or repledged
Fair value of assets sold or repledged
Consolidated
The Company
2022
$m
32,389
21,269
2021
$m
26,814
18,741
2022
$m
30,647
20,359
2021
$m
25,679
18,189
198
200200 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
21. OFFSETTING (continued)
22. GOODWILL AND OTHER INTANGIBLE ASSETS
Amount subject to master netting agreement or similar
Goodwill1
Software
Other Intangibles
Total
Total amounts
recognised
in the
Balance Sheet
$m
Amounts not
subject to
master netting
agreement or
similar
$m
Total
$m
Financial
instruments
$m
Financial
collateral
(received)/
pledged
$m
Net amount
$m
88,056
(4,242)
83,814
(61,038)
(14,876)
7,900
28,045
(5,323)
22,722
(1,629)
(21,093)
-
116,101
(84,500)
(9,565)
6,839
106,536
(77,661)
(62,667)
(35,969)
61,038
8,548
(42,940)
11,021
(31,919)
1,629
30,290
7,900
(8,075)
-
The Company
As at 30 September 2022
Derivative financial assets
Reverse repurchase, securities borrowing and
similar agreements1
Total financial assets
Derivative financial liabilities
Repurchase, securities lending and similar
agreements2
Total financial liabilities
(127,440)
17,860
(109,580)
62,667
38,838
(8,075)
As at 30 September 2021
Derivative financial assets
Reverse repurchase, securities borrowing and
similar agreements1
Total financial assets
Derivative financial liabilities
Repurchase, securities lending and similar
agreements2
Total financial liabilities
1. Reverse repurchase agreements:
36,753
(27,288)
(5,189)
4,276
22,916
(1,052)
(21,864)
38,292
24,958
63,250
(37,005)
(1,539)
(2,042)
(3,581)
1,343
59,669
(35,662)
(28,340)
27,288
(43,925)
10,480
(33,445)
1,052
(80,930)
11,823
(69,107)
28,340
(27,053)
5,425
32,393
37,818
-
4,276
(2,949)
-
(2,949)
with less than 90 days to maturity are presented in the Balance Sheet within Cash and cash equivalents; or
with 90 days or more to maturity are presented in the Balance Sheet within Net loans and advances.
2. Repurchase agreements are presented on the Balance Sheet within Deposits and other borrowings.
200
Consolidated
Balance at start of year
Additions2
Amortisation expense
Impairment expense3
Written-off on disposal/exit3,4
Foreign currency exchange difference
Balance at end of year
Cost5
Accumulated amortisation
Carrying amount
The Company
Balance at start of year
Additions
Amortisation expense
Impairment expense
Foreign currency exchange difference
Balance at end of year
Cost5
Accumulated amortisation
Carrying amount
n/a
(6,947)
(6,679)
2,906
3,089
896
960
Goodwill1
Software
Other Intangibles
Total
2022
2021
2022
$m
3,089
78
-
-
(40)
(221)
2,906
2,906
n/a
$m
62
-
-
-
-
62
62
n/a
62
2021
$m
3,264
-
-
(251)
(13)
89
3,089
3,089
$m
62
-
-
-
-
62
62
n/a
62
2022
$m
960
315
(375)
(3)
-
(1)
896
7,843
2022
$m
952
287
(363)
(3)
(1)
872
7,544
2021
$m
1,039
356
(434)
(1)
-
-
960
7,639
2021
$m
1,030
345
(422)
(1)
-
952
7,342
2022
2021
2022
$m
2021
$m
(3)
(2)
3,877
10,832
4,124
10,806
(6,955)
(6,682)
3,877
4,124
2022
$m
4,124
403
(379)
(3)
(40)
(228)
2022
$m
1,017
287
(366)
(3)
-
935
7,613
2021
$m
4,379
356
(436)
(252)
(13)
90
2021
$m
1,097
345
(424)
(1)
-
1,017
7,410
$m
76
-
(2)
-
-
1
75
78
(3)
75
5
-
-
-
3
6
(3)
3
(6,672)
(6,390)
872
952
(6,678)
(6,393)
935
1,017
3. 2021 goodwill impairment expense relates to the write-off on reclassification of ANZ Share Investing business to held for sale with a remaining $13 million derecognised on sale of the business. This
1. Goodwill excludes notional goodwill in equity accounted investments.
2. 2022 goodwill addition relates to acquisition of Cashrewards.
impairment was recognised in Other income to align with the classification on completion of the disposal in 2021.
4. 2022 goodwill written-off on disposal/exit relates to the exit of the financial planning and advice business.
5. Includes impact of foreign currency translation differences.
IMPAIRMENT TESTING FOR CASH GENERATING UNITS CONTAINING GOODWILL
Goodwill acquired in a business combination is tested for impairment annually and whenever there are indicators of potential impairment. Goodwill is
allocated at the date of acquisition to the cash generating unit (CGU) or group of CGUs that are expected to benefit from the synergies of the related
business combination.
Goodwill is considered to be impaired if the carrying amount of the relevant CGU exceeds its recoverable amount. We estimate the recoverable
amount of each CGU to which goodwill is allocated using a fair value less costs of disposal (FVLCOD) approach, with a value-in-use (VIU) assessment
performed where the FVLCOD is less than the carrying amount.
During the year ended 30 September 2022, the Group restructured its business to establish separate Australia Retail and Australia Commercial
divisions. For the purpose of goodwill impairment testing, these changes led to the creation of new CGUs which reflect the new divisional structure.
Goodwill is allocated to the following CGUs based on the lowest level at which goodwill is monitored.
$m
75
10
(4)
-
-
(6)
75
83
(8)
75
3
-
-
1
1
7
(6)
1
2022
$m
178
-
1,706
1,022
Cash generating units:
Australia Retail
Australia Commercial
New Zealand
Institutional
2021
$m
100
40
1,849
1,100
201
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
201201
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
21. OFFSETTING (continued)
22. GOODWILL AND OTHER INTANGIBLE ASSETS
Amount subject to master netting agreement or similar
Goodwill1
Software
Other Intangibles
Total
Reverse repurchase, securities borrowing and
28,045
(5,323)
22,722
(1,629)
(21,093)
88,056
(4,242)
83,814
(61,038)
(14,876)
7,900
Total amounts
Amounts not
subject to
recognised
master netting
in the
agreement or
Balance Sheet
$m
similar
$m
Financial
collateral
Financial
(received)/
Total
$m
instruments
pledged
Net amount
$m
$m
$m
116,101
(84,500)
(9,565)
6,839
106,536
(77,661)
(62,667)
(35,969)
61,038
8,548
7,900
(8,075)
(42,940)
11,021
(31,919)
1,629
30,290
(127,440)
17,860
(109,580)
62,667
38,838
(8,075)
38,292
24,958
63,250
(37,005)
(1,539)
(2,042)
(3,581)
1,343
36,753
(27,288)
(5,189)
4,276
22,916
(1,052)
(21,864)
59,669
(35,662)
(28,340)
27,288
(43,925)
10,480
(33,445)
1,052
(80,930)
11,823
(69,107)
28,340
(27,053)
5,425
32,393
37,818
4,276
(2,949)
(2,949)
-
-
-
-
The Company
As at 30 September 2022
Derivative financial assets
similar agreements1
Total financial assets
Derivative financial liabilities
Repurchase, securities lending and similar
agreements2
Total financial liabilities
As at 30 September 2021
Derivative financial assets
similar agreements1
Total financial assets
Reverse repurchase, securities borrowing and
Derivative financial liabilities
Repurchase, securities lending and similar
agreements2
Total financial liabilities
1. Reverse repurchase agreements:
with less than 90 days to maturity are presented in the Balance Sheet within Cash and cash equivalents; or
with 90 days or more to maturity are presented in the Balance Sheet within Net loans and advances.
2. Repurchase agreements are presented on the Balance Sheet within Deposits and other borrowings.
200
Consolidated
Balance at start of year
Additions2
Amortisation expense
Impairment expense3
Written-off on disposal/exit3,4
Foreign currency exchange difference
Balance at end of year
Cost5
Accumulated amortisation
Carrying amount
The Company
Balance at start of year
Additions
Amortisation expense
Impairment expense
Foreign currency exchange difference
Balance at end of year
Cost5
Accumulated amortisation
Carrying amount
2022
$m
3,089
78
-
-
(40)
(221)
2,906
2,906
n/a
2021
$m
3,264
-
-
(251)
(13)
89
3,089
3,089
2022
$m
960
315
(375)
(3)
-
(1)
896
7,843
2021
$m
1,039
356
(434)
(1)
-
-
960
7,639
n/a
(6,947)
(6,679)
2,906
3,089
896
960
2022
2021
$m
75
10
(4)
-
-
(6)
75
83
(8)
75
$m
76
-
(2)
-
-
1
75
78
(3)
75
2022
$m
4,124
403
(379)
(3)
(40)
(228)
2021
$m
4,379
356
(436)
(252)
(13)
90
3,877
10,832
4,124
10,806
(6,955)
(6,682)
3,877
4,124
Goodwill1
Software
Other Intangibles
Total
2022
2021
$m
62
-
-
-
-
62
62
n/a
62
$m
62
-
-
-
-
62
62
n/a
62
2022
$m
952
287
(363)
(3)
(1)
872
7,544
2021
$m
1,030
345
(422)
(1)
-
952
7,342
(6,672)
(6,390)
872
952
2022
$m
2021
$m
3
-
(3)
-
1
1
7
(6)
1
5
-
(2)
-
-
3
6
(3)
3
2022
$m
1,017
287
(366)
(3)
-
935
7,613
2021
$m
1,097
345
(424)
(1)
-
1,017
7,410
(6,678)
(6,393)
935
1,017
1. Goodwill excludes notional goodwill in equity accounted investments.
2. 2022 goodwill addition relates to acquisition of Cashrewards.
3. 2021 goodwill impairment expense relates to the write-off on reclassification of ANZ Share Investing business to held for sale with a remaining $13 million derecognised on sale of the business. This
impairment was recognised in Other income to align with the classification on completion of the disposal in 2021.
4. 2022 goodwill written-off on disposal/exit relates to the exit of the financial planning and advice business.
5. Includes impact of foreign currency translation differences.
IMPAIRMENT TESTING FOR CASH GENERATING UNITS CONTAINING GOODWILL
Goodwill acquired in a business combination is tested for impairment annually and whenever there are indicators of potential impairment. Goodwill is
allocated at the date of acquisition to the cash generating unit (CGU) or group of CGUs that are expected to benefit from the synergies of the related
business combination.
Goodwill is considered to be impaired if the carrying amount of the relevant CGU exceeds its recoverable amount. We estimate the recoverable
amount of each CGU to which goodwill is allocated using a fair value less costs of disposal (FVLCOD) approach, with a value-in-use (VIU) assessment
performed where the FVLCOD is less than the carrying amount.
During the year ended 30 September 2022, the Group restructured its business to establish separate Australia Retail and Australia Commercial
divisions. For the purpose of goodwill impairment testing, these changes led to the creation of new CGUs which reflect the new divisional structure.
Goodwill is allocated to the following CGUs based on the lowest level at which goodwill is monitored.
Cash generating units:
Australia Retail
Australia Commercial
New Zealand
Institutional
2022
$m
178
-
1,706
1,022
2021
$m
100
40
1,849
1,100
201
202202 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
22. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
22. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
We estimate the FVLCOD of each CGU to which goodwill is allocated by applying observable price earnings multiples of comparable companies to
the estimated future maintainable earnings of each CGU. A deduction is then made for estimated costs of disposal. The valuation is considered to be
level 3 in the fair value hierarchy due to unobservable inputs used in the valuation.
RECOGNITION AND MEASUREMENT
Management’s approach and the key assumptions used in determining FVLCOD are as follows:
The table below details how we recognise and measure different intangible assets:
Key assumption
Approach to determining the value (or values) for each key assumption
Future maintainable earnings
Future maintainable earnings for each CGU is estimated as the sum of:
Goodwill
Software
Other Intangibles
Definition
Excess amount the Group has paid
Purchased software owned by the Group
Management fee rights arising
The Group’s 2023 financial plan for each CGU; and
An allocation of the central costs recorded outside of the CGUs to which goodwill is allocated.
Where relevant, adjustments are made to the Group’s financial plan to reflect the long-term expectations for
items such as expected credit losses and investment spend.
Price/Earnings (P/E) multiple
P/E multiples applicable to each CGU have been derived from a comparator group of publicly traded
companies, and include a 30% control premium, discussed below.
In the case of the New Zealand and Institutional CGUs, management has made downwards adjustments to
P/E multiples to address specific factors relevant to those CGUs.
A control premium has been applied which recognises the increased consideration a potential acquirer
would be willing to pay in order to gain sufficient ownership to achieve control over the relevant activities of
the CGU. For each CGU, the control premium has been estimated as 30% of the comparator group P/E
multiple based on historical transactions.
Costs of disposal
Costs of disposal have been estimated as 2% of the fair value of the CGU based on those observed from
historical and recent transactions.
As noted above, our impairment testing did not result in any material impairment of goodwill being identified as at 30 September 2022.
Useful life
Indefinite.
The FVLCOD estimates for each CGU are sensitive to assumptions about P/E multiples, future maintainable earnings and control premium (30%).
However, each CGU would continue to show a surplus in recoverable amount over carrying amount even where other reasonably possible alternative
estimates were used.
in acquiring a business over the fair
is capitalised.
value of the identifiable assets and
liabilities acquired.
from acquisition of funds
management business and
other intangible assets arising
from contractual rights.
Internal and external costs incurred in
building software and computer systems
costing greater than $20 million are
capitalised as assets. Those less than $20
million are expensed in the year in which
the costs are incurred.
Carrying value
Cost less any accumulated
Initially, measured at cost.
Initially, measured at fair value at
Allocated to the cash generating
accumulated amortisation and
Subsequently, carried at cost less
impairment losses.
unit to which the
acquisition relates.
acquisition.
Subsequently, carried at cost
less accumulated amortisation
and impairment losses.
impairment losses.
Costs incurred in planning or evaluating
software proposals or in maintaining
systems after implementation are
not capitalised.
Goodwill is reviewed for
impairment at least annually or
when there is an indication of
impairment.
Except for major core infrastructure,
Management fee rights with an
amortised over periods between
2-5 years; however major core
indefinite life are reviewed for
impairment at least annually or
infrastructure may be amortised up to 7
when there is an indication of
years subject to approval by the Audit
impairment. Other intangible
Committee.
Purchased software is amortised over 2
years unless it is considered integral to
other assets with a longer useful life.
assets are amortised over 3
years.
Depreciation
Not applicable.
Straight-line method.
method
Not applicable to indefinite life
intangible assets. Straight-line
method for assets with a finite
life.
202
203
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
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overview
Remuneration
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Directors’
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Financial
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Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
203203
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
We estimate the FVLCOD of each CGU to which goodwill is allocated by applying observable price earnings multiples of comparable companies to
the estimated future maintainable earnings of each CGU. A deduction is then made for estimated costs of disposal. The valuation is considered to be
level 3 in the fair value hierarchy due to unobservable inputs used in the valuation.
Management’s approach and the key assumptions used in determining FVLCOD are as follows:
Key assumption
Approach to determining the value (or values) for each key assumption
Future maintainable earnings
Future maintainable earnings for each CGU is estimated as the sum of:
Price/Earnings (P/E) multiple
P/E multiples applicable to each CGU have been derived from a comparator group of publicly traded
The Group’s 2023 financial plan for each CGU; and
An allocation of the central costs recorded outside of the CGUs to which goodwill is allocated.
Where relevant, adjustments are made to the Group’s financial plan to reflect the long-term expectations for
items such as expected credit losses and investment spend.
companies, and include a 30% control premium, discussed below.
In the case of the New Zealand and Institutional CGUs, management has made downwards adjustments to
P/E multiples to address specific factors relevant to those CGUs.
A control premium has been applied which recognises the increased consideration a potential acquirer
would be willing to pay in order to gain sufficient ownership to achieve control over the relevant activities of
the CGU. For each CGU, the control premium has been estimated as 30% of the comparator group P/E
multiple based on historical transactions.
Costs of disposal
Costs of disposal have been estimated as 2% of the fair value of the CGU based on those observed from
historical and recent transactions.
22. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
22. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
RECOGNITION AND MEASUREMENT
The table below details how we recognise and measure different intangible assets:
Goodwill
Software
Definition
Excess amount the Group has paid
in acquiring a business over the fair
value of the identifiable assets and
liabilities acquired.
Carrying value
Cost less any accumulated
impairment losses.
Allocated to the cash generating
unit to which the
acquisition relates.
As noted above, our impairment testing did not result in any material impairment of goodwill being identified as at 30 September 2022.
Useful life
Indefinite.
The FVLCOD estimates for each CGU are sensitive to assumptions about P/E multiples, future maintainable earnings and control premium (30%).
However, each CGU would continue to show a surplus in recoverable amount over carrying amount even where other reasonably possible alternative
estimates were used.
Goodwill is reviewed for
impairment at least annually or
when there is an indication of
impairment.
Purchased software owned by the Group
is capitalised.
Internal and external costs incurred in
building software and computer systems
costing greater than $20 million are
capitalised as assets. Those less than $20
million are expensed in the year in which
the costs are incurred.
Initially, measured at cost.
Subsequently, carried at cost less
accumulated amortisation and
impairment losses.
Costs incurred in planning or evaluating
software proposals or in maintaining
systems after implementation are
not capitalised.
Except for major core infrastructure,
amortised over periods between
2-5 years; however major core
infrastructure may be amortised up to 7
years subject to approval by the Audit
Committee.
Purchased software is amortised over 2
years unless it is considered integral to
other assets with a longer useful life.
Depreciation
method
Not applicable.
Straight-line method.
Other Intangibles
Management fee rights arising
from acquisition of funds
management business and
other intangible assets arising
from contractual rights.
Initially, measured at fair value at
acquisition.
Subsequently, carried at cost
less accumulated amortisation
and impairment losses.
Management fee rights with an
indefinite life are reviewed for
impairment at least annually or
when there is an indication of
impairment. Other intangible
assets are amortised over 3
years.
Not applicable to indefinite life
intangible assets. Straight-line
method for assets with a finite
life.
202
203
204204 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
22. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
23. OTHER PROVISIONS
KEY JUDGEMENTS AND ESTIMATES
Management judgement is used to assess the recoverable value of goodwill and other intangible assets, and the useful economic life of an
asset, or whether an asset has an indefinite life. We reassess the recoverability of the carrying value at each reporting date.
Goodwill
A number of key judgements are required in the determination of whether or not a goodwill balance is impaired including:
the level at which goodwill is allocated – consistent with prior periods the CGUs to which goodwill is allocated are the Group’s revenue
generating segments that benefit from relevant historical business combinations generating goodwill.
determination of the carrying amount of each CGU which includes an allocation, on a reasonable and consistent basis, of corporate
assets and liabilities that are not directly attributable to the CGUs to which goodwill is allocated.
assessment of the recoverable amount of each CGU including:
o selection of the model used to determine the fair value – the Group has used the market multiple approach to estimate the fair
value; and
o selection of the key assumptions in respect of future maintainable earnings, the P/E multiple applied, including selection of an
appropriate comparator group and determination of an appropriate control premium, and costs of disposal as described above.
Software and other intangible assets
At each reporting date, software and other intangible assets are assessed for indicators of impairment and, where such indicators are
identified, an impairment assessment is performed. In the event that an asset’s carrying amount is determined to be greater than its
recoverable amount, the carrying amount of the asset is written down immediately. Those assets not yet ready for use are tested for
impairment annually.
In addition, the expected useful lives of intangible assets are assessed at each reporting date. The assessment requires management
judgement, and in relation to our software assets, a number of factors can influence the expected useful lives. These factors include
changes to business strategy, significant divestments and the pace of technological change.
ECL allowance on undrawn and contingent facilities1
Non-lending losses, frauds and forgeries2
Customer remediation
Restructuring costs
Other2
Total other provisions
Consolidated
Balance at 1 October 2021
New and increased provisions made during the year
Provisions used during the year
Unused amounts reversed during the year
Balance at 30 September 2022
The Company
Balance at 1 October 2021
New and increased provisions made during the year
Provisions used during the year
Unused amounts reversed during the year
Balance at 30 September 2022
1. Refer to Note 14 Allowance for Expected Credit Losses for movement analysis.
Consolidated
The Company
1,872
2,214
Customer
Restructuring
remediation
Non-lending
losses, frauds
and forgeries2
2022
$m
775
662
68
105
262
$m
886
231
(404)
(51)
662
$m
791
228
(375)
(44)
600
2021
$m
806
886
99
133
290
costs
$m
99
64
(67)
(28)
68
costs
$m
44
54
(27)
(24)
47
2022
$m
673
600
47
93
235
1,648
$m
133
122
(148)
(2)
105
$m
115
13
(35)
-
93
2021
$m
674
791
44
115
249
1,873
Other2
$m
290
191
(202)
(17)
262
Other2
$m
249
170
(181)
(3)
235
Customer
Restructuring
remediation
Non-lending
losses, frauds
and forgeries2
2. Certain provisions have been reclassified during 2022 from Other to Non-lending losses, frauds and forgeries to better reflect their nature. Comparatives have been restated accordingly, with a
reclassification impact of $72 million to the Group and $61 million to the Company.
204
205
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
205205
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
22. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)
23. OTHER PROVISIONS
KEY JUDGEMENTS AND ESTIMATES
Management judgement is used to assess the recoverable value of goodwill and other intangible assets, and the useful economic life of an
asset, or whether an asset has an indefinite life. We reassess the recoverability of the carrying value at each reporting date.
Goodwill
A number of key judgements are required in the determination of whether or not a goodwill balance is impaired including:
the level at which goodwill is allocated – consistent with prior periods the CGUs to which goodwill is allocated are the Group’s revenue
generating segments that benefit from relevant historical business combinations generating goodwill.
determination of the carrying amount of each CGU which includes an allocation, on a reasonable and consistent basis, of corporate
assets and liabilities that are not directly attributable to the CGUs to which goodwill is allocated.
assessment of the recoverable amount of each CGU including:
o selection of the model used to determine the fair value – the Group has used the market multiple approach to estimate the fair
value; and
o selection of the key assumptions in respect of future maintainable earnings, the P/E multiple applied, including selection of an
appropriate comparator group and determination of an appropriate control premium, and costs of disposal as described above.
Software and other intangible assets
At each reporting date, software and other intangible assets are assessed for indicators of impairment and, where such indicators are
identified, an impairment assessment is performed. In the event that an asset’s carrying amount is determined to be greater than its
recoverable amount, the carrying amount of the asset is written down immediately. Those assets not yet ready for use are tested for
impairment annually.
In addition, the expected useful lives of intangible assets are assessed at each reporting date. The assessment requires management
judgement, and in relation to our software assets, a number of factors can influence the expected useful lives. These factors include
changes to business strategy, significant divestments and the pace of technological change.
ECL allowance on undrawn and contingent facilities1
Customer remediation
Restructuring costs
Non-lending losses, frauds and forgeries2
Other2
Total other provisions
Consolidated
Balance at 1 October 2021
New and increased provisions made during the year
Provisions used during the year
Unused amounts reversed during the year
Balance at 30 September 2022
The Company
Balance at 1 October 2021
New and increased provisions made during the year
Provisions used during the year
Unused amounts reversed during the year
Balance at 30 September 2022
Consolidated
The Company
2022
$m
775
662
68
105
262
2021
$m
806
886
99
133
290
1,872
2,214
2022
$m
673
600
47
93
235
1,648
Customer
remediation
$m
Restructuring
costs
$m
Non-lending
losses, frauds
and forgeries2
$m
886
231
(404)
(51)
662
99
64
(67)
(28)
68
133
122
(148)
(2)
105
Customer
remediation
$m
Restructuring
costs
$m
Non-lending
losses, frauds
and forgeries2
$m
791
228
(375)
(44)
600
44
54
(27)
(24)
47
115
13
(35)
-
93
2021
$m
674
791
44
115
249
1,873
Other2
$m
290
191
(202)
(17)
262
Other2
$m
249
170
(181)
(3)
235
1. Refer to Note 14 Allowance for Expected Credit Losses for movement analysis.
2. Certain provisions have been reclassified during 2022 from Other to Non-lending losses, frauds and forgeries to better reflect their nature. Comparatives have been restated accordingly, with a
reclassification impact of $72 million to the Group and $61 million to the Company.
204
205
206206 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
23. OTHER PROVISIONS (continued)
Customer remediation
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
penalties and litigation costs and outcomes.
Restructuring costs
Provisions for restructuring costs arise from activities related to material changes in the scope of business undertaken by the Group or the manner in
which that business is undertaken and include employee termination benefits. Costs relating to on-going activities are not provided for and are
expensed as incurred.
Non-lending losses, frauds and forgeries
Non-lending losses include losses arising from certain legal actions not directly related to amounts of principal outstanding for loans and advances
and losses arising from forgeries, frauds and the correction of operational issues. The amounts recognised are the best estimate of the consideration
required to settle the present obligation at the reporting date, taking into account the risks and uncertainties that surround the events and
circumstances that affect the provision.
Other
Other provisions comprise various other provisions including workers compensation, make-good provisions associated with leased premises,
warranties and indemnities provided in connection with various disposals of businesses and assets, and contingent liabilities recognised as part of a
business combination.
RECOGNITION AND MEASUREMENT
The Group recognises provisions when there is a present obligation arising from a past event, an outflow of economic resources is
probable, and the amount of the provision can be measured reliably.
The amount recognised is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into
account the risks and uncertainties surrounding the timing and amount of the obligation. Where a provision is measured using the
estimated cash flows required to settle the present obligation, its carrying amount is the present value of those cash flows.
KEY JUDGEMENTS AND ESTIMATES
The Group holds provisions for various obligations including customer remediation, restructuring costs, non-lending losses, fraud and
forgeries and litigation related claims. These provisions involve judgements regarding the timing and outcome of future events, including
estimates of expenditure required to satisfy such obligations. Where relevant, expert legal advice has been obtained and, in light of such
advice, provisions and/or disclosures as deemed appropriate have been made.
In relation to customer remediation, determining the amount of the provisions, which represent management’s best estimate of the cost
of settling the identified matters, requires the exercise of significant judgement. It will often be necessary to form a view on a number of
different assumptions, including, the number of impacted customers, the average refund per customer, the associated remediation project
costs, and the implications of regulatory exposures and customer claims having regard to their specific facts and circumstances. There is a
heightened level of estimation uncertainty where the customer remediation provision relates to a legal proceeding or matter. The
appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence
including expert legal advice, and adjustments are made to the provisions where appropriate.
206
1. As a result of the dissolution of Minerva Holdings Limited in the United Kingdom and ANZ Asia Limited in Hong Kong, $65 million of the associated foreign currency translation reserve was recycled from
Other comprehensive income to profit or loss in 2022.
2. ANZ Bank New Zealand has issued $484 million of perpetual preference shares in 2022 that are considered non-controlling interests to the Group.
ORDINARY SHARE CAPITAL
The table below details the movement in ordinary shares and share capital for the period.
24. SHAREHOLDERS’ EQUITY
SHAREHOLDERS' EQUITY
Ordinary share capital
Reserves
Foreign currency translation reserve1
Share option reserve
FVOCI reserve
Cash flow hedge reserve
Transactions with non-controlling interests reserve
Total reserves
Retained earnings
Non-controlling interests2
Total shareholders’ equity
Share capital and reserves attributable to shareholders of the Company
Consolidated
Balance at start of the year
Dividend reinvestment plan issuances
Bonus option plan
Group employee share acquisition scheme
Share buy-back1
Share entitlement issue2
Balance at end of year
Less: Treasury Shares
Balance at end of year
The Company
Balance at start of the year
Dividend reinvestment plan issuances
Bonus option plan
Group employee share acquisition scheme
Share buy-back1
Share entitlement issue2
Balance at end of year
shares being cancelled in 2022.
Consolidated
The Company
2022
$m
28,797
(148)
78
(478)
(2,036)
(22)
(2,606)
39,716
65,907
494
66,401
2022
Number of
shares
2,823,563,652
7,195,108
2,890,268
-
(30,831,227)
187,105,950
2022
Number of
shares
2,823,563,652
7,195,108
2,890,268
-
(30,831,227)
187,105,950
2021
$m
25,984
611
76
170
393
(22)
1,228
36,453
63,665
11
63,676
$m
25,984
183
-
(21)
(846)
3,497
$m
25,907
183
-
(21)
(846)
3,497
2022
$m
28,720
(6)
78
(557)
(2,061)
(2,546)
32,859
59,033
-
-
59,033
2021
Number of
shares
2,840,370,225
4,242,368
2,259,507
-
-
-
-
2021
Number of
shares
2,840,370,225
4,242,368
2,259,507
(23,308,448)
(23,308,448)
(654)
2,989,923,751
28,797
2,823,563,652
25,984
(4,209,150)
(4,401,593)
2,985,714,601
28,797
2,819,162,059
25,984
2021
$m
25,907
(145)
76
26
384
-
341
29,132
55,380
-
55,380
$m
26,531
94
-
13
-
-
$m
26,454
94
-
13
(654)
-
25,907
207
1. The Company completed its $1.5 billion on-market share buy-back of ANZ ordinary shares in 2022, purchasing $846 million (2021: $654 million) worth of shares resulting in 31 million (2021: 23 million)
2. On 18 July 2022, the Group announced a fully underwritten pro rata accelerated renounceable entitlement offer of new ANZ ordinary shares to help fund the Group’s anticipated acquisition of Suncorp
Bank. All eligible shareholders were invited to purchase one new ordinary share for every 15 existing ordinary shares held on 21 July 2022 at an issue price of $18.90 per share. The Company issued a total of
187.1 million ordinary shares under the offer, raising $3,497 million of new share capital (net of issue costs).
2,989,923,751
28,720
2,823,563,652
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
207207
NOTES TO THE FINANCIAL STATEMENTS (continued)
23. OTHER PROVISIONS (continued)
Customer remediation
penalties and litigation costs and outcomes.
Restructuring costs
expensed as incurred.
Provisions for restructuring costs arise from activities related to material changes in the scope of business undertaken by the Group or the manner in
which that business is undertaken and include employee termination benefits. Costs relating to on-going activities are not provided for and are
Non-lending losses, frauds and forgeries
Non-lending losses include losses arising from certain legal actions not directly related to amounts of principal outstanding for loans and advances
and losses arising from forgeries, frauds and the correction of operational issues. The amounts recognised are the best estimate of the consideration
required to settle the present obligation at the reporting date, taking into account the risks and uncertainties that surround the events and
circumstances that affect the provision.
Other
business combination.
Other provisions comprise various other provisions including workers compensation, make-good provisions associated with leased premises,
warranties and indemnities provided in connection with various disposals of businesses and assets, and contingent liabilities recognised as part of a
RECOGNITION AND MEASUREMENT
The Group recognises provisions when there is a present obligation arising from a past event, an outflow of economic resources is
probable, and the amount of the provision can be measured reliably.
The amount recognised is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into
account the risks and uncertainties surrounding the timing and amount of the obligation. Where a provision is measured using the
estimated cash flows required to settle the present obligation, its carrying amount is the present value of those cash flows.
KEY JUDGEMENTS AND ESTIMATES
The Group holds provisions for various obligations including customer remediation, restructuring costs, non-lending losses, fraud and
forgeries and litigation related claims. These provisions involve judgements regarding the timing and outcome of future events, including
estimates of expenditure required to satisfy such obligations. Where relevant, expert legal advice has been obtained and, in light of such
advice, provisions and/or disclosures as deemed appropriate have been made.
In relation to customer remediation, determining the amount of the provisions, which represent management’s best estimate of the cost
of settling the identified matters, requires the exercise of significant judgement. It will often be necessary to form a view on a number of
different assumptions, including, the number of impacted customers, the average refund per customer, the associated remediation project
costs, and the implications of regulatory exposures and customer claims having regard to their specific facts and circumstances. There is a
heightened level of estimation uncertainty where the customer remediation provision relates to a legal proceeding or matter. The
appropriateness of the underlying assumptions is reviewed on a regular basis against actual experience and other relevant evidence
including expert legal advice, and adjustments are made to the provisions where appropriate.
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Customer remediation includes provisions for expected refunds to customers, remediation project costs and related customer and regulatory claims,
Consolidated
The Company
24. SHAREHOLDERS’ EQUITY
SHAREHOLDERS' EQUITY
Ordinary share capital
Reserves
Foreign currency translation reserve1
Share option reserve
FVOCI reserve
Cash flow hedge reserve
Transactions with non-controlling interests reserve
Total reserves
Retained earnings
Share capital and reserves attributable to shareholders of the Company
Non-controlling interests2
Total shareholders’ equity
2022
$m
28,797
(148)
78
(478)
(2,036)
(22)
(2,606)
39,716
65,907
494
66,401
2021
$m
25,984
611
76
170
393
(22)
1,228
36,453
63,665
11
63,676
2022
$m
28,720
(6)
78
(557)
(2,061)
-
(2,546)
32,859
59,033
-
59,033
2021
$m
25,907
(145)
76
26
384
-
341
29,132
55,380
-
55,380
1. As a result of the dissolution of Minerva Holdings Limited in the United Kingdom and ANZ Asia Limited in Hong Kong, $65 million of the associated foreign currency translation reserve was recycled from
Other comprehensive income to profit or loss in 2022.
2. ANZ Bank New Zealand has issued $484 million of perpetual preference shares in 2022 that are considered non-controlling interests to the Group.
ORDINARY SHARE CAPITAL
The table below details the movement in ordinary shares and share capital for the period.
Consolidated
Balance at start of the year
Dividend reinvestment plan issuances
Bonus option plan
Group employee share acquisition scheme
Share buy-back1
Share entitlement issue2
Balance at end of year
Less: Treasury Shares
Balance at end of year
The Company
Balance at start of the year
Dividend reinvestment plan issuances
Bonus option plan
Group employee share acquisition scheme
Share buy-back1
Share entitlement issue2
Balance at end of year
2022
Number of
shares
2,823,563,652
7,195,108
2,890,268
-
(30,831,227)
187,105,950
2021
Number of
shares
2,840,370,225
4,242,368
2,259,507
-
(23,308,448)
-
$m
25,984
183
-
(21)
(846)
3,497
2,989,923,751
28,797
2,823,563,652
(4,209,150)
(4,401,593)
2,985,714,601
28,797
2,819,162,059
2022
Number of
shares
2,823,563,652
7,195,108
2,890,268
-
(30,831,227)
187,105,950
2021
Number of
shares
2,840,370,225
4,242,368
2,259,507
-
(23,308,448)
-
$m
25,907
183
-
(21)
(846)
3,497
2,989,923,751
28,720
2,823,563,652
$m
26,531
94
-
13
(654)
-
25,984
-
25,984
$m
26,454
94
-
13
(654)
-
25,907
1. The Company completed its $1.5 billion on-market share buy-back of ANZ ordinary shares in 2022, purchasing $846 million (2021: $654 million) worth of shares resulting in 31 million (2021: 23 million)
shares being cancelled in 2022.
2. On 18 July 2022, the Group announced a fully underwritten pro rata accelerated renounceable entitlement offer of new ANZ ordinary shares to help fund the Group’s anticipated acquisition of Suncorp
Bank. All eligible shareholders were invited to purchase one new ordinary share for every 15 existing ordinary shares held on 21 July 2022 at an issue price of $18.90 per share. The Company issued a total of
187.1 million ordinary shares under the offer, raising $3,497 million of new share capital (net of issue costs).
206
207
208208 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
24. SHAREHOLDERS’ EQUITY (continued)
NON-CONTROLLING INTERESTS
Profit attributable to non-
controlling interests
Equity attributable to
non-controlling interests
Dividend paid to non-
controlling interests
2022
$m
-
1
1
2021
$m
-
1
1
2022
$m
484
10
494
2021
$m
-
11
11
2022
$m
-
2
2
2021
$m
-
-
-
Consolidated
ANZ Bank New Zealand PPS
Other
Total
ANZ Bank New Zealand Preference Shares
ANZ Bank New Zealand Limited (ANZ Bank New Zealand), a wholly owned subsidiary of the Group, has perpetual preference shares (PPS) on issue that
are considered non-controlling interests to the Group.
Treasury shares
Treasury shares are shares in the Company which:
the ANZ Employee Share Acquisition Plan purchases on market and have not yet
The key terms of the PPS are summarised below:
PPS dividends
PPS dividends are payable at the discretion of the Directors of ANZ Bank New Zealand and are non-cumulative. ANZ Bank New Zealand must not
resolve to pay any dividend or make any other distribution on its ordinary shares until the next PPS dividend payment date if a PPS is not paid.
Should ANZ Bank New Zealand elect to pay a PPS dividend, the PPS dividend is 6.95% per annum up until 18 July 2028 and thereafter a floating rate
equal to the aggregate of the New Zealand 3 month bank bill rate plus 3.25%, multiplied by one minus the New Zealand company tax rate (where the
PPS dividend is fully imputed), with PPS dividend payments due on 18 January, 18 April, 18 July and 18 October each year.
Redemption features
Holders of PPS have no right to require that the PPS be redeemed. ANZ Bank New Zealand may at its option redeem all of the PPS on an optional
redemption date (each PPS dividend date from 18 July 2028), or at any time following the occurrence of a tax event or regulatory event , subject to
prior written approval of RBNZ and meeting of other conditions.
24. SHAREHOLDERS’ EQUITY (continued)
RECOGNITION AND MEASUREMENT
Ordinary shares
Ordinary shares have no par value. They entitle holders to receive dividends, or proceeds
available on winding up of the Company, in proportion to the number of fully paid ordinary
shares held. They are recognised at the amount paid per ordinary share net of directly
attributable costs. Every holder of fully paid ordinary shares present at a meeting in person, or
by proxy, is entitled to:
on a show of hands, one vote; and
on a poll, one vote, for each share held.
distributed, or
distributed.
the Company issues to the ANZ Employee Share Acquisition Plan and have not yet been
Treasury shares are deducted from share capital and excluded from the weighted average
number of ordinary shares used in the earnings per share calculations.
Reserves:
Foreign currency translation reserve
Includes differences arising on translation of assets and liabilities into Australian dollars when
the functional currency of a foreign operation (including subsidiaries and branches) is not
Australian dollars. In this reserve, we reflect any offsetting gains or losses on hedging these
exposures, together with any tax effect.
Cash flow hedge reserve
Includes fair value gains and losses associated with the effective portion of designated cash
flow hedging instruments together with any tax effect.
FVOCI reserve
Includes changes in the fair value of certain debt securities and equity securities included
within Investment Securities together with any tax effect.
In respect of debt securities classified as measured at FVOCI, the FVOCI reserve records
accumulated changes in fair value arising subsequent to initial recognition, except for those
relating to allowance for expected credit losses, interest income and foreign currency
exchange gains and losses which are recognised in profit or loss. As debt securities at FVOCI
are recorded at fair value, the balance of the FVOCI reserve is net of the ECL allowance
associated with such assets. When a debt security measured at FVOCI is derecognised, the
cumulative gain or loss recognised in the FVOCI reserve in respect of that security is
reclassified to profit or loss and presented in Other operating income.
In respect of the equity securities classified as measured at FVOCI, the FVOCI reserve records
accumulated changes in fair value arising subsequent to initial recognition (including any
related foreign exchange gains or losses). When an equity security measured at FVOCI is
derecognised, the cumulative gain or loss recognised in the FVOCI reserve in respect of that
security is not recycled to profit or loss.
Share option reserve
Includes amounts which arise on the recognition of share-based compensation expense.
Transactions with non-controlling
Includes the impact of transactions with non-controlling shareholders in their capacity as
interests reserve
shareholders.
Non-controlling interests
Share in the net assets of controlled entities attributable to equity interests which the
Company does not own directly or indirectly.
208
209
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
209209
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
24. SHAREHOLDERS’ EQUITY (continued)
NON-CONTROLLING INTERESTS
Profit attributable to non-
Equity attributable to
Dividend paid to non-
controlling interests
non-controlling interests
controlling interests
2022
$m
-
1
1
2021
$m
-
1
1
2022
$m
484
10
494
2021
$m
-
11
11
2022
$m
-
2
2
2021
$m
-
-
-
Consolidated
ANZ Bank New Zealand PPS
Other
Total
ANZ Bank New Zealand Preference Shares
are considered non-controlling interests to the Group.
The key terms of the PPS are summarised below:
PPS dividends
ANZ Bank New Zealand Limited (ANZ Bank New Zealand), a wholly owned subsidiary of the Group, has perpetual preference shares (PPS) on issue that
PPS dividends are payable at the discretion of the Directors of ANZ Bank New Zealand and are non-cumulative. ANZ Bank New Zealand must not
resolve to pay any dividend or make any other distribution on its ordinary shares until the next PPS dividend payment date if a PPS is not paid.
Should ANZ Bank New Zealand elect to pay a PPS dividend, the PPS dividend is 6.95% per annum up until 18 July 2028 and thereafter a floating rate
equal to the aggregate of the New Zealand 3 month bank bill rate plus 3.25%, multiplied by one minus the New Zealand company tax rate (where the
PPS dividend is fully imputed), with PPS dividend payments due on 18 January, 18 April, 18 July and 18 October each year.
Redemption features
Holders of PPS have no right to require that the PPS be redeemed. ANZ Bank New Zealand may at its option redeem all of the PPS on an optional
redemption date (each PPS dividend date from 18 July 2028), or at any time following the occurrence of a tax event or regulatory event , subject to
prior written approval of RBNZ and meeting of other conditions.
24. SHAREHOLDERS’ EQUITY (continued)
RECOGNITION AND MEASUREMENT
Ordinary shares
Ordinary shares have no par value. They entitle holders to receive dividends, or proceeds
available on winding up of the Company, in proportion to the number of fully paid ordinary
shares held. They are recognised at the amount paid per ordinary share net of directly
attributable costs. Every holder of fully paid ordinary shares present at a meeting in person, or
by proxy, is entitled to:
on a show of hands, one vote; and
on a poll, one vote, for each share held.
Treasury shares
Treasury shares are shares in the Company which:
Reserves:
Foreign currency translation reserve
the ANZ Employee Share Acquisition Plan purchases on market and have not yet
distributed, or
the Company issues to the ANZ Employee Share Acquisition Plan and have not yet been
distributed.
Treasury shares are deducted from share capital and excluded from the weighted average
number of ordinary shares used in the earnings per share calculations.
Includes differences arising on translation of assets and liabilities into Australian dollars when
the functional currency of a foreign operation (including subsidiaries and branches) is not
Australian dollars. In this reserve, we reflect any offsetting gains or losses on hedging these
exposures, together with any tax effect.
Cash flow hedge reserve
Includes fair value gains and losses associated with the effective portion of designated cash
flow hedging instruments together with any tax effect.
FVOCI reserve
Includes changes in the fair value of certain debt securities and equity securities included
within Investment Securities together with any tax effect.
In respect of debt securities classified as measured at FVOCI, the FVOCI reserve records
accumulated changes in fair value arising subsequent to initial recognition, except for those
relating to allowance for expected credit losses, interest income and foreign currency
exchange gains and losses which are recognised in profit or loss. As debt securities at FVOCI
are recorded at fair value, the balance of the FVOCI reserve is net of the ECL allowance
associated with such assets. When a debt security measured at FVOCI is derecognised, the
cumulative gain or loss recognised in the FVOCI reserve in respect of that security is
reclassified to profit or loss and presented in Other operating income.
In respect of the equity securities classified as measured at FVOCI, the FVOCI reserve records
accumulated changes in fair value arising subsequent to initial recognition (including any
related foreign exchange gains or losses). When an equity security measured at FVOCI is
derecognised, the cumulative gain or loss recognised in the FVOCI reserve in respect of that
security is not recycled to profit or loss.
Share option reserve
Includes amounts which arise on the recognition of share-based compensation expense.
Transactions with non-controlling
interests reserve
Includes the impact of transactions with non-controlling shareholders in their capacity as
shareholders.
Non-controlling interests
Share in the net assets of controlled entities attributable to equity interests which the
Company does not own directly or indirectly.
208
209
210210 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
25. CAPITAL MANAGEMENT
CAPITAL MANAGEMENT STRATEGY
ANZ’s capital management strategy aims to protect the interests of depositors, creditors and shareholders. We achieve this through an Internal
Capital Adequacy Assessment Process (ICAAP) whereby ANZ conducts detailed strategic and capital planning over a 3 year time horizon.
The process involves:
forecasting economic variables, financial performance of ANZ’s divisions and the financial impact of new strategic initiatives to be implemented
during the planning period;
performing stress tests under different economic scenarios to determine the level of additional capital (stress capital buffer) needed to absorb
losses that may be experienced under an economic downturn;
Outside Australia
reviewing capital ratios and targets across various classes of capital against ANZ’s risk profile; and
developing a capital plan, taking into account capital ratio targets, current and future capital issuances requirements and options around capital
products, timing and markets to execute the capital plan under differing market and economic conditions.
The capital plan is approved by the Board and updated as required. The Board and senior management are provided with regular updates of ANZ’s
capital position. Any material actions required to ensure ongoing prudent capital management are submitted to the Board for approval. Throughout
the year, the Group maintained compliance with all the regulatory requirements related to Capital Adequacy in the jurisdictions in which it operates.
REGULATORY ENVIRONMENT
Australia
As ANZ is an Authorised Deposit-taking Institution (ADI) in Australia, it is primarily regulated by APRA under the Banking Act 1959 (Cth). ANZ must
comply with the minimum regulatory capital requirements, prudential capital ratios and specific reporting levels that APRA sets and which are
consistent with the global Basel III capital framework. This is the common framework for determining the appropriate level of bank regulatory capital
as set by the Basel Committee on Banking Supervision (BCBS). APRA requirements are summarised below:
Regulatory Capital Definition
Common Equity Tier 1 (CET1) Capital
Tier 1 Capital
Tier 2 Capital
Total Capital
Shareholders’ equity adjusted for
specific items.
CET1 Capital plus certain
securities with complying loss
absorbing characteristics known
as Additional Tier 1 Capital.
Subordinated debt instruments
which have a minimum term of 5
years at issue date.
Tier 1 plus Tier 2 Capital.
Deductions
Minimum Prudential Capital Ratios (PCRs)
CET1 Ratio
Tier 1 Ratio
Total Capital Ratio
CET1 Capital divided by total risk
weighted assets must be at least 4.5%.
Tier 1 Capital divided by total risk
weighted assets must be at least
6.0%.
Total Capital divided by total risk weighted
assets must be at least 8.0%.
Reporting Levels
Level 1
Level 2
Level 3
The ADI on a stand-alone basis (that is
the Company and specified subsidiaries
which are consolidated to form the
ADI’s Extended Licensed Entity).
The consolidated Group less
certain subsidiaries and associates
that are excluded under
prudential standards.
A conglomerate Group at the widest level.
APRA also requires the ADI to hold additional CET1 buffers as follows:
a capital conservation buffer (CCB) of 3.5% which is inclusive of the additional 1% surcharge for domestically systemically important banks (D-SIBs).
APRA has determined that ANZ is a D-SIB.
a countercyclical capital buffer which is set on a jurisdictional basis. The requirement is currently set to zero for Australia.
ANZ reports to APRA on a Level 1 and Level 2 basis, and measures capital adequacy monthly on a Level 1 and Level 2 basis, and is not yet required to
maintain capital on a Level 3 basis (APRA have yet to conclude required timing for Level 3 reporting).
Qualifying capital
Tier 1
Shareholders' equity and non-controlling interests
Prudential adjustments to shareholders' equity
Gross Common Equity Tier 1 capital
Common Equity Tier 1 capital
Additional Tier 1 capital2
Tier 1 capital
Tier 2 capital3
Total qualifying capital
Capital adequacy ratios (Level 2)
Common Equity Tier 1
Tier 1
Tier 2
Total capital ratio
Risk weighted assets
25. CAPITAL MANAGEMENT (continued)
Life Insurance and Funds Management
As required by APRA’s Prudential Standards, insurance and funds management activities are:
de-consolidated for the purposes of calculating capital adequacy; and
excluded from the risk-based capital adequacy framework.
We deduct the investment in these controlled entities 100% from CET1 capital, and if we include any profits from these activities in the Group’s results,
then we exclude them from the determination of CET1 capital to the extent they have not been remitted to the Company.
In addition to APRA, the Company’s branch operations and major banking subsidiary operations are also overseen by local regulators such as the
Reserve Bank of New Zealand, the US Federal Reserve, the UK Prudential Regulation Authority, the Monetary Authority of Singapore, the Hong Kong
Monetary Authority and the China Banking and Insurance Regulatory Commission. They may impose minimum capital levels on operations in their
individual jurisdictions.
CAPITAL ADEQUACY1
The following table provides details of the Group’s capital adequacy ratios at 30 September:
Consolidated
2022
$m
2021
$m
66,401
(175)
66,226
(10,354)
55,872
7,686
63,558
19,277
82,835
12.3%
14.0%
4.2%
18.2%
63,676
3
63,679
(12,320)
51,359
8,114
59,473
17,125
76,598
12.3%
14.3%
4.1%
18.4%
454,718
416,086
1. This information is not within the scope of the external audit of the Group Financial Report by the Group’s external auditor, KPMG. The information presented in this table is a regulatory requirement
disclosed in Part A of the APRA Reporting Form (ARF) 110 Capital Adequacy which will be subject to audit in accordance with Prudential Standard APS 310 Audit and Related Matters.
2. This includes Additional Tier 1 capital of $7,705 million (2021: $8,506 million) (refer to Note 17 Debt Issuances), regulatory adjustments and deductions of -$19 million (2021: -$392 million).
3. This includes Tier 2 capital of $17,907 million (2021: $16,207 million) (refer to Note 17 Debt Issuances), general reserve for impairment of financial assets of $1,233 million (2021: $1,412 million) and regulatory
adjustments and deductions of $137 million (2021: -$494 million).
210
211
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
211211
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
25. CAPITAL MANAGEMENT
CAPITAL MANAGEMENT STRATEGY
The process involves:
during the planning period;
ANZ’s capital management strategy aims to protect the interests of depositors, creditors and shareholders. We achieve this through an Internal
Capital Adequacy Assessment Process (ICAAP) whereby ANZ conducts detailed strategic and capital planning over a 3 year time horizon.
forecasting economic variables, financial performance of ANZ’s divisions and the financial impact of new strategic initiatives to be implemented
performing stress tests under different economic scenarios to determine the level of additional capital (stress capital buffer) needed to absorb
losses that may be experienced under an economic downturn;
reviewing capital ratios and targets across various classes of capital against ANZ’s risk profile; and
developing a capital plan, taking into account capital ratio targets, current and future capital issuances requirements and options around capital
products, timing and markets to execute the capital plan under differing market and economic conditions.
The capital plan is approved by the Board and updated as required. The Board and senior management are provided with regular updates of ANZ’s
capital position. Any material actions required to ensure ongoing prudent capital management are submitted to the Board for approval. Throughout
the year, the Group maintained compliance with all the regulatory requirements related to Capital Adequacy in the jurisdictions in which it operates.
REGULATORY ENVIRONMENT
Australia
As ANZ is an Authorised Deposit-taking Institution (ADI) in Australia, it is primarily regulated by APRA under the Banking Act 1959 (Cth). ANZ must
comply with the minimum regulatory capital requirements, prudential capital ratios and specific reporting levels that APRA sets and which are
consistent with the global Basel III capital framework. This is the common framework for determining the appropriate level of bank regulatory capital
as set by the Basel Committee on Banking Supervision (BCBS). APRA requirements are summarised below:
Regulatory Capital Definition
Common Equity Tier 1 (CET1) Capital
Tier 1 Capital
Tier 2 Capital
Total Capital
Shareholders’ equity adjusted for
CET1 Capital plus certain
Subordinated debt instruments
Tier 1 plus Tier 2 Capital.
specific items.
securities with complying loss
which have a minimum term of 5
absorbing characteristics known
years at issue date.
as Additional Tier 1 Capital.
Minimum Prudential Capital Ratios (PCRs)
CET1 Ratio
Tier 1 Ratio
Total Capital Ratio
CET1 Capital divided by total risk
Tier 1 Capital divided by total risk
Total Capital divided by total risk weighted
weighted assets must be at least 4.5%.
weighted assets must be at least
assets must be at least 8.0%.
Reporting Levels
Level 1
6.0%.
Level 2
Level 3
The ADI on a stand-alone basis (that is
The consolidated Group less
A conglomerate Group at the widest level.
the Company and specified subsidiaries
certain subsidiaries and associates
which are consolidated to form the
that are excluded under
ADI’s Extended Licensed Entity).
prudential standards.
APRA also requires the ADI to hold additional CET1 buffers as follows:
a capital conservation buffer (CCB) of 3.5% which is inclusive of the additional 1% surcharge for domestically systemically important banks (D-SIBs).
APRA has determined that ANZ is a D-SIB.
a countercyclical capital buffer which is set on a jurisdictional basis. The requirement is currently set to zero for Australia.
ANZ reports to APRA on a Level 1 and Level 2 basis, and measures capital adequacy monthly on a Level 1 and Level 2 basis, and is not yet required to
maintain capital on a Level 3 basis (APRA have yet to conclude required timing for Level 3 reporting).
25. CAPITAL MANAGEMENT (continued)
Life Insurance and Funds Management
As required by APRA’s Prudential Standards, insurance and funds management activities are:
de-consolidated for the purposes of calculating capital adequacy; and
excluded from the risk-based capital adequacy framework.
We deduct the investment in these controlled entities 100% from CET1 capital, and if we include any profits from these activities in the Group’s results,
then we exclude them from the determination of CET1 capital to the extent they have not been remitted to the Company.
Outside Australia
In addition to APRA, the Company’s branch operations and major banking subsidiary operations are also overseen by local regulators such as the
Reserve Bank of New Zealand, the US Federal Reserve, the UK Prudential Regulation Authority, the Monetary Authority of Singapore, the Hong Kong
Monetary Authority and the China Banking and Insurance Regulatory Commission. They may impose minimum capital levels on operations in their
individual jurisdictions.
CAPITAL ADEQUACY1
The following table provides details of the Group’s capital adequacy ratios at 30 September:
Qualifying capital
Tier 1
Shareholders' equity and non-controlling interests
Prudential adjustments to shareholders' equity
Gross Common Equity Tier 1 capital
Deductions
Common Equity Tier 1 capital
Additional Tier 1 capital2
Tier 1 capital
Tier 2 capital3
Total qualifying capital
Capital adequacy ratios (Level 2)
Common Equity Tier 1
Tier 1
Tier 2
Total capital ratio
Risk weighted assets
Consolidated
2022
$m
2021
$m
66,401
(175)
66,226
(10,354)
55,872
7,686
63,558
19,277
82,835
12.3%
14.0%
4.2%
18.2%
63,676
3
63,679
(12,320)
51,359
8,114
59,473
17,125
76,598
12.3%
14.3%
4.1%
18.4%
454,718
416,086
1. This information is not within the scope of the external audit of the Group Financial Report by the Group’s external auditor, KPMG. The information presented in this table is a regulatory requirement
disclosed in Part A of the APRA Reporting Form (ARF) 110 Capital Adequacy which will be subject to audit in accordance with Prudential Standard APS 310 Audit and Related Matters.
2. This includes Additional Tier 1 capital of $7,705 million (2021: $8,506 million) (refer to Note 17 Debt Issuances), regulatory adjustments and deductions of -$19 million (2021: -$392 million).
3. This includes Tier 2 capital of $17,907 million (2021: $16,207 million) (refer to Note 17 Debt Issuances), general reserve for impairment of financial assets of $1,233 million (2021: $1,412 million) and regulatory
adjustments and deductions of $137 million (2021: -$494 million).
210
211
RECOGNITION AND MEASUREMENT
The Group’s subsidiaries are those entities it controls through:
being exposed to, or having rights to, variable returns from the entity; and
being able to affect those returns through its power over the entity.
The Group assesses whether it has power over those entities by examining the Group’s existing rights to direct the relevant activities of the
entity.
If the Group sells or acquires subsidiaries during the year, it includes their operating results in the Group results to the date of disposal or
from the date of acquisition. When the Group’s control ceases, it derecognises the assets and liabilities of the subsidiary, any related non-
controlling interest and other components of equity.
If the Group’s ownership interest in a subsidiary changes in a way that does not result in a loss of control, then the Group accounts for that
as a transaction with equity holders in their capacity as equity holders.
All transactions between Group entities are eliminated on consolidation.
212212 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
26. CONTROLLED ENTITIES
26. CONTROLLED ENTITIES (continued)
The ultimate parent of the Group is Australia and New Zealand Banking Group Limited
The Group holds 100% of the voting interests in all controlled entities, unless noted otherwise.
Incorporated in
Australia
Nature of Business
Banking
The material controlled entities of the Group are:
ANZ Bank (Vietnam) Limited1
ANZ Funds Pty. Ltd.
ANZ Bank (Kiribati) Limited1 (75% ownership)
ANZ Bank (Samoa) Limited1
ANZ Bank (Thai) Public Company Limited1
ANZ Holdings (New Zealand) Limited1
ANZ Bank New Zealand Limited1
ANZ Investment Services (New Zealand) Limited1
ANZ New Zealand (Int’l) Limited1
ANZ New Zealand Investments Holdings Limited (formerly ANZ Wealth New Zealand Limited)1
ANZ New Zealand Investments Limited1
ANZNZ Covered Bond Trust1,4
ANZ International Private Limited1
ANZ Singapore Limited1
ANZ International (Hong Kong) Limited1
ANZ Bank (Vanuatu) Limited2
ANZcover Insurance Private Ltd1
ANZ Lenders Mortgage Insurance Pty. Limited
ANZ Residential Covered Bond Trust4
Australia and New Zealand Bank (China) Company Limited1
Australia and New Zealand Banking Group (PNG) Limited1
Chongqing Liangping ANZ Rural Bank Company Limited1
Citizens Bancorp3
ANZ Guam Inc3
Vietnam
Australia
Kiribati
Samoa
Thailand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Singapore
Singapore
Hong Kong
Vanuatu
Singapore
Australia
Australia
China
Papua New Guinea
China
Guam
Guam
Banking
Holding Company
Banking
Banking
Banking
Holding Company
Banking
Funds Management
Finance
Holding Company
Funds Management
Finance
Holding Company
Merchant Banking
Holding Company
Banking
Captive-Insurance
Mortgage Insurance
Finance
Banking
Banking
Banking
Holding Company
Banking
Institutional Securitisation Services Limited (formerly ANZ Capel Court Limited)
PT Bank ANZ Indonesia1 (99% ownership)
Australia
Securitisation Manager
Indonesia
Banking
1. Audited by overseas KPMG firms — either as part of the Group audit, or for standalone financial statements as required.
2. Audited by Law Partners.
3. Audited by Deloitte Guam.
4. Not owned by the Group. Control exists as the Group retains substantially all the risks and rewards of the operations.
CHANGES TO MATERIAL CONTROLLED ENTITIES
ANZ Asia Limited was deregistered in July 2022.
SIGNIFICANT RESTRICTIONS
Controlled entities that are subject to prudential regulation may be required to maintain minimum capital or other regulatory requirements which
may, from time to time, limit the entity’s ability to transfer assets, pay dividends or make other capital distributions to the parent entity or to other
entities in the Group. The Group manages such restrictions within our risk management framework, as outlined in Note 18 Financial Risk Management
and our capital management strategy, as outlined in Note 25 Capital Management.
As at 30 September 2022, there were no significant restrictions on the ability of an entity within the Group to transfer assets, pay dividends or make
other capital distributions to other entities in the Group.
212
213
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
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Performance
overview
Remuneration
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Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
213213
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
26. CONTROLLED ENTITIES
26. CONTROLLED ENTITIES (continued)
RECOGNITION AND MEASUREMENT
The Group’s subsidiaries are those entities it controls through:
being exposed to, or having rights to, variable returns from the entity; and
being able to affect those returns through its power over the entity.
The Group assesses whether it has power over those entities by examining the Group’s existing rights to direct the relevant activities of the
entity.
If the Group sells or acquires subsidiaries during the year, it includes their operating results in the Group results to the date of disposal or
from the date of acquisition. When the Group’s control ceases, it derecognises the assets and liabilities of the subsidiary, any related non-
controlling interest and other components of equity.
If the Group’s ownership interest in a subsidiary changes in a way that does not result in a loss of control, then the Group accounts for that
as a transaction with equity holders in their capacity as equity holders.
All transactions between Group entities are eliminated on consolidation.
The ultimate parent of the Group is Australia and New Zealand Banking Group Limited
The Group holds 100% of the voting interests in all controlled entities, unless noted otherwise.
Incorporated in
Nature of Business
Australia
Banking
ANZ New Zealand Investments Holdings Limited (formerly ANZ Wealth New Zealand Limited)1
The material controlled entities of the Group are:
ANZ Bank (Vietnam) Limited1
ANZ Funds Pty. Ltd.
ANZ Bank (Kiribati) Limited1 (75% ownership)
ANZ Bank (Samoa) Limited1
ANZ Bank (Thai) Public Company Limited1
ANZ Holdings (New Zealand) Limited1
ANZ Bank New Zealand Limited1
ANZ Investment Services (New Zealand) Limited1
ANZ New Zealand (Int’l) Limited1
ANZ New Zealand Investments Limited1
ANZNZ Covered Bond Trust1,4
ANZ International Private Limited1
ANZ Singapore Limited1
ANZ International (Hong Kong) Limited1
ANZ Bank (Vanuatu) Limited2
ANZcover Insurance Private Ltd1
ANZ Lenders Mortgage Insurance Pty. Limited
ANZ Residential Covered Bond Trust4
Australia and New Zealand Bank (China) Company Limited1
Australia and New Zealand Banking Group (PNG) Limited1
Chongqing Liangping ANZ Rural Bank Company Limited1
Vietnam
Australia
Kiribati
Samoa
Thailand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
New Zealand
Singapore
Singapore
Hong Kong
Vanuatu
Singapore
Australia
Australia
China
China
Guam
Guam
Indonesia
Papua New Guinea
Holding Company
Banking
Banking
Banking
Banking
Banking
Finance
Holding Company
Funds Management
Holding Company
Funds Management
Finance
Holding Company
Merchant Banking
Holding Company
Banking
Captive-Insurance
Mortgage Insurance
Finance
Banking
Banking
Banking
Banking
Banking
Holding Company
Institutional Securitisation Services Limited (formerly ANZ Capel Court Limited)
Australia
Securitisation Manager
Citizens Bancorp3
ANZ Guam Inc3
2. Audited by Law Partners.
3. Audited by Deloitte Guam.
PT Bank ANZ Indonesia1 (99% ownership)
1. Audited by overseas KPMG firms — either as part of the Group audit, or for standalone financial statements as required.
4. Not owned by the Group. Control exists as the Group retains substantially all the risks and rewards of the operations.
CHANGES TO MATERIAL CONTROLLED ENTITIES
ANZ Asia Limited was deregistered in July 2022.
SIGNIFICANT RESTRICTIONS
Controlled entities that are subject to prudential regulation may be required to maintain minimum capital or other regulatory requirements which
may, from time to time, limit the entity’s ability to transfer assets, pay dividends or make other capital distributions to the parent entity or to other
entities in the Group. The Group manages such restrictions within our risk management framework, as outlined in Note 18 Financial Risk Management
and our capital management strategy, as outlined in Note 25 Capital Management.
As at 30 September 2022, there were no significant restrictions on the ability of an entity within the Group to transfer assets, pay dividends or make
other capital distributions to other entities in the Group.
212
213
214214 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
27. INVESTMENTS IN ASSOCIATES
Significant associates of the Group are:
Name of entity
AMMB Holdings Berhad (AmBank)
PT Bank Pan Indonesia (PT Panin)
Principal activity
Banking and insurance
Consumer and business bank
Worldline Australia Pty Ltd (Worldline)
Payment and transactional services
Aggregate other individually immaterial associates
Total carrying value of associates1
1. Includes the impact of foreign currency translation recognised in the foreign currency translation reserve.
FINANCIAL INFORMATION ON SIGNIFICANT ASSOCIATES
27. INVESTMENTS IN ASSOCIATES (continued)
Ordinary share
interest
Carrying amount $m
2022
22%
39%
49%
n/a
2021
22%
39%
-
n/a
2022
790
1,318
47
26
2021
719
1,210
-
43
RECOGNITION AND MEASUREMENT
An associate is an entity over which the Group has significant influence over its operating and financial policies but does not control. The
Group accounts for associates using the equity method. Its investments in associates are carried at cost plus the post-acquisition share of
changes in the associate’s net assets less accumulated impairments. Dividends the Group receives from associates are recognised as a
reduction in the carrying amount of the investment. The Group includes goodwill recognised by the associate in the carrying amount of
the investment. It does not individually test the goodwill incorporated in the associates carrying amount for impairment.
2,181
1,972
At least at each reporting date, the Group reviews investments in associates for any indication of impairment. If an indication of impairment
exists, then the Group determines the recoverable amount of the associate using the higher of:
Set out below is the summarised financial information of each associate that is significant to the Group. The summarised financial information is based
on the associates’ IFRS financial information and may require the use of unaudited financial information as each associate has a different financial year
to the Group (PT Panin 31 December, AmBank 31 March, Worldline 31 December).
Principal place of business and country of incorporation
AMMB Holdings Berhad
Malaysia
PT Bank Pan Indonesia
Indonesia
Worldline
Australia
Pty Ltd1
Australia
Summarised results
Operating income2
Profit/(Loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Less: Total comprehensive (income)/loss attributable to non–controlling
interests
Total comprehensive income/(loss) attributable to owners of
associate
Summarised financial position
Total assets3
Total liabilities3
Total net assets3
Less: Non-controlling interests of associate
Net assets attributable to owners of associate
Reconciliation to carrying amount of Group's interest in associate
Carrying amount at the beginning of the year
Acquired
Group's share of total comprehensive income/(loss)
Dividends received from associate
Foreign currency translation reserve adjustments
Carrying amount at the end of the year
Market value of Group's investment in associate
2022
$m
1,511
529
(128)
401
(18)
383
57,220
53,234
3,986
(402)
3,584
719
-
81
(12)
2
790
929
2021
$m
1,560
(1,192)
(39)
(1,231)
(25)
(1,256)
55,711
49,773
5,938
(327)
5,611
1,056
-
(313)
-
(24)
719
756
2022
$m
2021
$m
2022
$m
1,206
1,222
198
6
204
25
229
20,537
17,234
3,303
(315)
2,988
298
(56)
242
1
243
18,323
15,377
2,946
(304)
2,642
1,210
1,084
-
71
(18)
55
1,318
2,016
-
90
-
36
1,210
675
57
(21)
-
(21)
-
(21)
203
90
113
-
113
-
57
(10)
-
-
47
n/a
1. During 2022, the Group entered into a partnership with Worldline SA. This included the creation of a new entity, Worldline Australia Pty Ltd, which commenced operations on 8 March 2022.
2. 2021 operating income was restated for AmBank to align with the change in presentation in AmBank’s financial statements.
3. Includes market value adjustments (including goodwill) the Group made at the time of acquisition (and adjustments for any differences in accounting policies).
the associate’s fair value less cost of disposal; and
its value-in-use.
to determine the recoverable amount.
We use a discounted cash flow methodology, and when applicable, other methodologies (such as capitalisation of earnings methodology),
KEY JUDGEMENTS AND ESTIMATES
Investments in associates and joint ventures are assessed at each reporting date and tested for impairment when there is an indication
that the investment may be impaired. In addition, the Group is required to assess at each reporting date whether the recoverable amount
of the Group’s investment has increased to such a level as to support the reversal of prior period impairments.
During the year ended 30 September 2022, the fair value less costs of disposal of the Group’s investment in PT Bank Pan Indonesia (PT
Panin) as determined by reference to the quoted share price increased significantly and as at 30 September 2022 was greater than its
carrying value. The increase in fair value is a significant reversal of the position at 30 September 2021 when the fair value less cost of
disposal determined by reference to share price was lower than the carrying value of the investment.
In considering whether a full or partial reversal of previous periods’ impairments of PT Panin is appropriate, the Group has assessed
particular features of the PT Panin stock. Given the recent rapid increase and ongoing elevated volatility in the share price, the Group has
determined that none of the prior period impairment will be reversed.
If management had assessed these factors differently, then the amount of impairment reversed could be anywhere between nil and
$220 million.
214
215
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
215215
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
27. INVESTMENTS IN ASSOCIATES (continued)
RECOGNITION AND MEASUREMENT
An associate is an entity over which the Group has significant influence over its operating and financial policies but does not control. The
Group accounts for associates using the equity method. Its investments in associates are carried at cost plus the post-acquisition share of
changes in the associate’s net assets less accumulated impairments. Dividends the Group receives from associates are recognised as a
reduction in the carrying amount of the investment. The Group includes goodwill recognised by the associate in the carrying amount of
the investment. It does not individually test the goodwill incorporated in the associates carrying amount for impairment.
At least at each reporting date, the Group reviews investments in associates for any indication of impairment. If an indication of impairment
exists, then the Group determines the recoverable amount of the associate using the higher of:
the associate’s fair value less cost of disposal; and
its value-in-use.
Set out below is the summarised financial information of each associate that is significant to the Group. The summarised financial information is based
on the associates’ IFRS financial information and may require the use of unaudited financial information as each associate has a different financial year
to the Group (PT Panin 31 December, AmBank 31 March, Worldline 31 December).
We use a discounted cash flow methodology, and when applicable, other methodologies (such as capitalisation of earnings methodology),
to determine the recoverable amount.
Principal place of business and country of incorporation
Malaysia
Indonesia
AMMB Holdings Berhad
PT Bank Pan Indonesia
KEY JUDGEMENTS AND ESTIMATES
Investments in associates and joint ventures are assessed at each reporting date and tested for impairment when there is an indication
that the investment may be impaired. In addition, the Group is required to assess at each reporting date whether the recoverable amount
of the Group’s investment has increased to such a level as to support the reversal of prior period impairments.
During the year ended 30 September 2022, the fair value less costs of disposal of the Group’s investment in PT Bank Pan Indonesia (PT
Panin) as determined by reference to the quoted share price increased significantly and as at 30 September 2022 was greater than its
carrying value. The increase in fair value is a significant reversal of the position at 30 September 2021 when the fair value less cost of
disposal determined by reference to share price was lower than the carrying value of the investment.
In considering whether a full or partial reversal of previous periods’ impairments of PT Panin is appropriate, the Group has assessed
particular features of the PT Panin stock. Given the recent rapid increase and ongoing elevated volatility in the share price, the Group has
determined that none of the prior period impairment will be reversed.
If management had assessed these factors differently, then the amount of impairment reversed could be anywhere between nil and
$220 million.
NOTES TO THE FINANCIAL STATEMENTS (continued)
27. INVESTMENTS IN ASSOCIATES
Significant associates of the Group are:
Name of entity
AMMB Holdings Berhad (AmBank)
PT Bank Pan Indonesia (PT Panin)
Principal activity
Banking and insurance
Consumer and business bank
Worldline Australia Pty Ltd (Worldline)
Payment and transactional services
Aggregate other individually immaterial associates
Total carrying value of associates1
1. Includes the impact of foreign currency translation recognised in the foreign currency translation reserve.
FINANCIAL INFORMATION ON SIGNIFICANT ASSOCIATES
Ordinary share
interest
Carrying amount $m
2022
22%
39%
49%
n/a
2021
22%
39%
-
n/a
2022
790
1,318
47
26
2021
719
1,210
-
43
2,181
1,972
Summarised results
Operating income2
Profit/(Loss) for the year
Other comprehensive income/(loss)
Total comprehensive income/(loss)
Summarised financial position
interests
associate
Total assets3
Total liabilities3
Total net assets3
Less: Total comprehensive (income)/loss attributable to non–controlling
Total comprehensive income/(loss) attributable to owners of
Less: Non-controlling interests of associate
Net assets attributable to owners of associate
Reconciliation to carrying amount of Group's interest in associate
Carrying amount at the beginning of the year
Acquired
Group's share of total comprehensive income/(loss)
Dividends received from associate
Foreign currency translation reserve adjustments
Carrying amount at the end of the year
Market value of Group's investment in associate
Worldline
Australia
Pty Ltd1
Australia
2022
$m
2021
$m
2022
$m
1,206
1,222
198
6
204
25
229
20,537
17,234
3,303
(315)
2,988
-
71
(18)
55
1,318
2,016
298
(56)
242
1
243
18,323
15,377
2,946
(304)
2,642
90
-
-
36
1,210
675
57
(21)
(21)
-
-
(21)
203
90
113
-
113
-
57
(10)
-
-
47
n/a
2022
$m
1,511
529
(128)
401
(18)
383
57,220
53,234
3,986
(402)
3,584
719
-
81
(12)
2
790
929
2021
$m
1,560
(1,192)
(39)
(1,231)
(25)
(1,256)
55,711
49,773
5,938
(327)
5,611
(313)
-
-
(24)
719
756
1,056
1,210
1,084
1. During 2022, the Group entered into a partnership with Worldline SA. This included the creation of a new entity, Worldline Australia Pty Ltd, which commenced operations on 8 March 2022.
2. 2021 operating income was restated for AmBank to align with the change in presentation in AmBank’s financial statements.
3. Includes market value adjustments (including goodwill) the Group made at the time of acquisition (and adjustments for any differences in accounting policies).
214
215
216216 ANZ 2022 Annual Report
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
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overview
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
28. STRUCTURED ENTITIES
A Structured Entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in determining who controls
the entity. SEs are generally established with restrictions on their ongoing activities in order to achieve narrow and well defined objectives.
SEs are classified as subsidiaries and consolidated when control exists. If the Group does not control a SE, then it is not consolidated. This note
provides information on both consolidated and unconsolidated SEs.
The Group’s involvement with SEs is as follows:
Type
Securitisation
Details
The Group establishes SEs to securitise customer loans and advances that it has originated, in order to diversify
sources of funding for liquidity management. Securitisation programs include customer loans and advances
assigned to bankruptcy remote SEs to provide either security for obligations payable on notes issued by the SEs
to external investors or create assets held by the Group eligible for repurchase agreements with applicable
central banks.
The Group retains control over these SEs and therefore they are consolidated. Refer to Note 29 Transfers of
Financial Assets for further details.
The Group also establishes SEs on behalf of customers to securitise their loans or receivables. The Group may
manage these securitisation vehicles or provide liquidity or other support. Additionally, the Group may acquire
interests in securitisation vehicles set up by third parties through holding securities issued by such entities. In
limited circumstances where control exists, the Group consolidates the SE.
Covered bond issuances
Certain loans and advances have been assigned to bankruptcy remote SEs to provide security for issuances of
debt securities by the Group. The Group retains control over these SEs and therefore they are consolidated. Refer
to Note 29 Transfers of Financial Assets for further details.
Structured finance
arrangements
Funds management activities
The Group is involved with SEs established:
in connection with structured lending transactions to facilitate debt syndication and/or to ring-fence
collateral; and
to own assets that are leased to customers in structured leasing transactions.
The Group may manage the SE, hold minor amounts of the SE’s capital, or provide risk management products
(derivatives) to the SE. In most instances, the Group does not control these SEs. In limited circumstances where
control exists, the Group consolidates the SE.
The Group is the scheme manager for a number of Managed Investment Schemes (MIS) in New Zealand. These
MIS are financed through the issue of units to investors and the Group considers them to be SEs. The Group’s
interests in these MIS are limited to receiving fees for services or providing risk management products
(derivatives). These interests do not create significant exposures that would allow the Group to control the funds.
Therefore, these MIS are not consolidated.
CONSOLIDATED STRUCTURED ENTITIES
FINANCIAL OR OTHER SUPPORT PROVIDED TO CONSOLIDATED STRUCTURED ENTITIES
The Group provides financial support to consolidated SEs as outlined below.
Securitisation and covered
bond issuances
The Group provides lending facilities, derivatives and commitments to these SEs and/or holds debt instruments
that they have issued.
Structured finance
arrangements
The assets held by these SEs are normally pledged as collateral for financing provided. Certain consolidated SEs
are financed entirely by the Group while others are financed by syndicated loan facilities in which the Group is a
participant. The financing provided by the Group includes lending facilities where the Group’s exposure is limited
to the amount of the loan and any undrawn amount. Additionally, the Group has provided Letters of Support to
these consolidated SEs confirming that the Group will not demand repayment of the financing provided for the
ensuing 12 month period.
The Group did not provide any non-contractual support to consolidated SEs during the year (2021: nil). Other than as disclosed above, the Group does
not have any current intention to provide financial or other support to consolidated SEs.
28. STRUCTURED ENTITIES (continued)
UNCONSOLIDATED STRUCTURED ENTITIES
GROUP’S INTEREST IN UNCONSOLIDATED STRUCTURED ENTITIES
An ‘interest’ in an unconsolidated SE is any form of contractual or non-contractual involvement with a SE that exposes the Group to variability of
returns from the performance of that SE. These interests include, but are not limited to: holdings of debt or equity securities; derivatives that pass-on
risks specific to the performance of the SE; lending; loan commitments; financial guarantees; and fees from funds management activities.
For the purpose of disclosing interests in unconsolidated SEs:
no disclosure is made if the Group’s involvement is not more than a passive interest - for example: when the Group’s involvement constitutes a
typical customer-supplier relationship. On this basis, exposures to unconsolidated SEs that arise from lending, trading and investing activities are
not considered disclosable interests - unless the design of the structured entity allows the Group to participate in decisions about the relevant
activities (being those that significantly affect the entity’s returns).
‘interests’ do not include derivatives intended to expose the Group to market-risk (rather than performance risk specific to the SE) or derivatives
through which the Group creates, rather than absorbs, variability of the unconsolidated SE (such as purchase of credit protection under a credit
The table below sets out the Group’s interests in unconsolidated SEs together with the maximum exposure to loss that could arise from
default swap).
those interests:
On-balance sheet interests
Investment securities
Gross loans and advances
Total on-balance sheet
Off-balance sheet interests
Commitments (facilities undrawn)
Guarantees
Total off-balance sheet
Maximum exposure to loss
million) during the year.
Securitisation
Structured finance
2022
$m
2021
$m
2022
$m
3,352
9,433
12,785
2,078
50
2,128
14,913
2021
$m
2,624
7,697
10,321
2,034
50
2,084
12,405
Total
2022
$m
3,352
9,476
12,828
2,078
50
2,128
14,956
2021
$m
2,624
7,750
10,374
2,034
50
2,084
12,458
-
43
43
-
-
-
43
-
53
53
-
-
-
53
In addition to the interests above, the Group earned funds management fees from unconsolidated investment funds of $181 million (2021: $192
The Group’s maximum exposure to loss represents the maximum amount of loss that the Group could incur as a result of its involvement with
unconsolidated SEs if loss events were to take place - regardless of the probability of occurrence. This does not in any way represent the actual losses
expected to be incurred. Furthermore, the maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements entered
into to mitigate ANZ’s exposure to loss.
The maximum exposure to loss has been determined as:
the carrying amount of Investment securities measured at amortised cost; and
the carrying amount plus the undrawn amount of any committed loans and advances.
The size of unconsolidated SEs is indicated by total assets which vary by SE with the largest single SE having a value of approximately $5.2 billion.
The Group did not provide any non-contractual support to unconsolidated SEs during the year (2021: nil) nor does it have any current intention to
provide financial or other support to unconsolidated SEs.
216
217
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
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create value
Performance
overview
Remuneration
report
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report
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report
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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
217217
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
28. STRUCTURED ENTITIES
28. STRUCTURED ENTITIES (continued)
A Structured Entity (SE) is an entity that has been designed such that voting or similar rights are not the dominant factor in determining who controls
UNCONSOLIDATED STRUCTURED ENTITIES
GROUP’S INTEREST IN UNCONSOLIDATED STRUCTURED ENTITIES
An ‘interest’ in an unconsolidated SE is any form of contractual or non-contractual involvement with a SE that exposes the Group to variability of
returns from the performance of that SE. These interests include, but are not limited to: holdings of debt or equity securities; derivatives that pass-on
risks specific to the performance of the SE; lending; loan commitments; financial guarantees; and fees from funds management activities.
For the purpose of disclosing interests in unconsolidated SEs:
no disclosure is made if the Group’s involvement is not more than a passive interest - for example: when the Group’s involvement constitutes a
typical customer-supplier relationship. On this basis, exposures to unconsolidated SEs that arise from lending, trading and investing activities are
not considered disclosable interests - unless the design of the structured entity allows the Group to participate in decisions about the relevant
activities (being those that significantly affect the entity’s returns).
‘interests’ do not include derivatives intended to expose the Group to market-risk (rather than performance risk specific to the SE) or derivatives
through which the Group creates, rather than absorbs, variability of the unconsolidated SE (such as purchase of credit protection under a credit
default swap).
The table below sets out the Group’s interests in unconsolidated SEs together with the maximum exposure to loss that could arise from
those interests:
On-balance sheet interests
Investment securities
Gross loans and advances
Total on-balance sheet
Off-balance sheet interests
Commitments (facilities undrawn)
Guarantees
Total off-balance sheet
Maximum exposure to loss
Securitisation
Structured finance
2022
$m
3,352
9,433
12,785
2,078
50
2,128
14,913
2021
$m
2,624
7,697
10,321
2,034
50
2,084
12,405
2022
$m
2021
$m
-
43
43
-
-
-
43
-
53
53
-
-
-
53
Total
2022
$m
3,352
9,476
12,828
2,078
50
2,128
14,956
2021
$m
2,624
7,750
10,374
2,034
50
2,084
12,458
MIS are financed through the issue of units to investors and the Group considers them to be SEs. The Group’s
interests in these MIS are limited to receiving fees for services or providing risk management products
(derivatives). These interests do not create significant exposures that would allow the Group to control the funds.
Therefore, these MIS are not consolidated.
The Group’s maximum exposure to loss represents the maximum amount of loss that the Group could incur as a result of its involvement with
unconsolidated SEs if loss events were to take place - regardless of the probability of occurrence. This does not in any way represent the actual losses
expected to be incurred. Furthermore, the maximum exposure to loss is stated gross of the effects of hedging and collateral arrangements entered
into to mitigate ANZ’s exposure to loss.
In addition to the interests above, the Group earned funds management fees from unconsolidated investment funds of $181 million (2021: $192
million) during the year.
The maximum exposure to loss has been determined as:
the carrying amount of Investment securities measured at amortised cost; and
the carrying amount plus the undrawn amount of any committed loans and advances.
The size of unconsolidated SEs is indicated by total assets which vary by SE with the largest single SE having a value of approximately $5.2 billion.
The Group did not provide any non-contractual support to unconsolidated SEs during the year (2021: nil) nor does it have any current intention to
provide financial or other support to unconsolidated SEs.
the entity. SEs are generally established with restrictions on their ongoing activities in order to achieve narrow and well defined objectives.
SEs are classified as subsidiaries and consolidated when control exists. If the Group does not control a SE, then it is not consolidated. This note
provides information on both consolidated and unconsolidated SEs.
The Group’s involvement with SEs is as follows:
Type
Details
Securitisation
The Group establishes SEs to securitise customer loans and advances that it has originated, in order to diversify
sources of funding for liquidity management. Securitisation programs include customer loans and advances
assigned to bankruptcy remote SEs to provide either security for obligations payable on notes issued by the SEs
to external investors or create assets held by the Group eligible for repurchase agreements with applicable
central banks.
Financial Assets for further details.
The Group retains control over these SEs and therefore they are consolidated. Refer to Note 29 Transfers of
The Group also establishes SEs on behalf of customers to securitise their loans or receivables. The Group may
manage these securitisation vehicles or provide liquidity or other support. Additionally, the Group may acquire
interests in securitisation vehicles set up by third parties through holding securities issued by such entities. In
limited circumstances where control exists, the Group consolidates the SE.
Covered bond issuances
Certain loans and advances have been assigned to bankruptcy remote SEs to provide security for issuances of
debt securities by the Group. The Group retains control over these SEs and therefore they are consolidated. Refer
Structured finance
arrangements
to Note 29 Transfers of Financial Assets for further details.
The Group is involved with SEs established:
in connection with structured lending transactions to facilitate debt syndication and/or to ring-fence
collateral; and
to own assets that are leased to customers in structured leasing transactions.
The Group may manage the SE, hold minor amounts of the SE’s capital, or provide risk management products
(derivatives) to the SE. In most instances, the Group does not control these SEs. In limited circumstances where
control exists, the Group consolidates the SE.
Funds management activities
The Group is the scheme manager for a number of Managed Investment Schemes (MIS) in New Zealand. These
CONSOLIDATED STRUCTURED ENTITIES
FINANCIAL OR OTHER SUPPORT PROVIDED TO CONSOLIDATED STRUCTURED ENTITIES
The Group provides financial support to consolidated SEs as outlined below.
Securitisation and covered
The Group provides lending facilities, derivatives and commitments to these SEs and/or holds debt instruments
bond issuances
that they have issued.
Structured finance
arrangements
The assets held by these SEs are normally pledged as collateral for financing provided. Certain consolidated SEs
are financed entirely by the Group while others are financed by syndicated loan facilities in which the Group is a
participant. The financing provided by the Group includes lending facilities where the Group’s exposure is limited
to the amount of the loan and any undrawn amount. Additionally, the Group has provided Letters of Support to
these consolidated SEs confirming that the Group will not demand repayment of the financing provided for the
ensuing 12 month period.
The Group did not provide any non-contractual support to consolidated SEs during the year (2021: nil). Other than as disclosed above, the Group does
not have any current intention to provide financial or other support to consolidated SEs.
216
217
218218 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
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Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
28. STRUCTURED ENTITIES (continued)
29. TRANSFERS OF FINANCIAL ASSETS (continued)
SPONSORED UNCONSOLIDATED STRUCTURED ENTITIES
The Group may also sponsor unconsolidated SEs in which it has no disclosable interest.
For the purposes of this disclosure, the Group considers itself the ‘sponsor’ of an unconsolidated SE if it is the primary party involved in the design and
establishment of that SE and:
payable on the issued covered bonds.
the Group is the major user of that SE; or
the Group’s name appears in the name of that SE, or on its products; or
the Group provides implicit or explicit guarantees of that SE’s performance.
The Group has sponsored the ANZ PIE Fund in New Zealand, which invests only in deposits with ANZ Bank New Zealand. The Group does not provide
any implicit or explicit guarantees of the capital value or performance of investments in the ANZ PIE Fund. There was no income received from, nor
assets transferred to, this entity during the year.
financial liability of the Company.
COVERED BONDS
The Group operates various global covered bond programs to raise funding in its primary markets. Net loans and advances include residential
mortgages assigned to bankruptcy remote SEs associated with these covered bond programs. The mortgages provide security for the obligations
The covered bond holders have dual recourse to the issuer and the cover pool of assets. The issuer cannot otherwise pledge or dispose of the
transferred assets, however, subject to legal arrangements it may repurchase and substitute assets as long as the required cover is maintained.
The Company is required to maintain the cover pool at a level sufficient to cover the bond obligations. In addition, the Company is entitled to any
residual income of the covered bond SEs and enters into derivatives with the SEs. The Company retains the majority of the risks and rewards of the
residential mortgages and continues to recognise the mortgages as financial assets. The obligation to pay this amount to the SEs is recognised as a
The Group is exposed to variable returns from its involvement with the covered bond SEs and has the ability to affect those returns through its power
over the SEs activities. The SEs are therefore consolidated by the Group. The covered bonds issued externally are included within debt issuances.
KEY JUDGEMENTS AND ESTIMATES
REPURCHASE AGREEMENTS
Significant judgement is required in assessing whether the Group has control over Structured Entities. Judgement is required to determine
the existence of:
When the Group sells securities subject to repurchase agreements under which we retain substantially all the risks and rewards of ownership, then
those assets do not qualify for derecognition. An associated liability is recognised for the consideration received from the counterparty.
power over the relevant activities (being those that significantly affect the entity’s returns); and
exposure to variable returns of the entity.
29. TRANSFERS OF FINANCIAL ASSETS
In the normal course of business the Group enters into transactions where it transfers financial assets directly to third parties or to SEs. These transfers
may give rise to the Group fully, or partially, derecognising those financial assets - depending on the Group’s exposure to the risks and rewards or
control over the transferred assets. If the Group retains substantially all of the risk and rewards of a transferred asset, the transfer does not qualify for
derecognition and the asset remains on the Group’s balance sheet in its entirety.
SECURITISATIONS
Net loans and advances include residential mortgages securitised under the Group’s securitisation programs which are assigned to bankruptcy
remote SEs to provide security for obligations payable on the notes issued by the SEs. The holders of the issued notes have full recourse to the pool of
residential mortgages which have been securitised and the Group cannot otherwise pledge or dispose of the transferred assets.
In some instances, the Group is also the holder of the securitised notes issued by the SEs. In addition, the Group is entitled to any residual income of
the SEs and sometimes enters into derivatives with the SEs. The Group retains the risks and rewards of the residential mortgages and continues to
recognise the mortgages as financial assets.
The Group is exposed to variable returns from its involvement with these securitisation SEs and has the ability to affect those returns through its
power over the SEs activities. The SEs are therefore consolidated by the Group.
STRUCTURED FINANCE ARRANGEMENTS
The Group arranges funding for certain customer transactions through structured leasing. These transactions are recognised on Group’s balance sheet
as lease receivables or loans. At times, other financial institutions participate in the funding of these arrangements. This participation involves a
proportionate transfer of the rights to the assets recognised by the Group. The participating banks have limited recourse to the leased assets and
related proceeds. Where the Group continues to be exposed to some of the risks of the transferred assets through a derivative or other continuing
involvement, the Group does not derecognise the lease receivable or loan. Instead, the Group recognises an associated liability representing its
obligations to the participating financial institutions.
The tables below set out the balance of assets transferred that do not qualify for derecognition, along with the associated liabilities.
Consolidated
Current carrying amount of assets transferred
Carrying amount of associated liabilities
Securitisations1,2
Covered bonds
Repurchase
agreements
2021
$m
1,430
1,424
2022
$m
27,575
12,967
2021
$m
28,816
15,399
2022
$m
52,757
47,229
2021
$m
51,208
46,147
Structured finance
arrangements
2022
2021
$m
36
36
$m
55
55
The Company
Current carrying amount of assets transferred
Carrying amount of associated liabilities
Securitisations1,2
Covered bonds
Repurchase
agreements
Structured finance
arrangements
2021
$m
1,430
1,430
2022
$m
17,953
17,953
2021
$m
17,925
17,925
2022
$m
47,846
42,940
2021
$m
48,663
43,925
2022
$m
-
-
2021
$m
-
-
1. Does not include transfers to internal structured entities where there are no external investors.
2. The securitisation noteholders have recourse only to the pool of residential mortgages which have been securitised. The carrying value of securitised assets and the associated liabilities approximates their
fair value.
2022
$m
1,121
1,115
2022
$m
1,121
1,121
218
219
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
219219
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
28. STRUCTURED ENTITIES (continued)
29. TRANSFERS OF FINANCIAL ASSETS (continued)
COVERED BONDS
The Group operates various global covered bond programs to raise funding in its primary markets. Net loans and advances include residential
mortgages assigned to bankruptcy remote SEs associated with these covered bond programs. The mortgages provide security for the obligations
payable on the issued covered bonds.
The covered bond holders have dual recourse to the issuer and the cover pool of assets. The issuer cannot otherwise pledge or dispose of the
transferred assets, however, subject to legal arrangements it may repurchase and substitute assets as long as the required cover is maintained.
The Company is required to maintain the cover pool at a level sufficient to cover the bond obligations. In addition, the Company is entitled to any
residual income of the covered bond SEs and enters into derivatives with the SEs. The Company retains the majority of the risks and rewards of the
residential mortgages and continues to recognise the mortgages as financial assets. The obligation to pay this amount to the SEs is recognised as a
financial liability of the Company.
The Group is exposed to variable returns from its involvement with the covered bond SEs and has the ability to affect those returns through its power
over the SEs activities. The SEs are therefore consolidated by the Group. The covered bonds issued externally are included within debt issuances.
REPURCHASE AGREEMENTS
When the Group sells securities subject to repurchase agreements under which we retain substantially all the risks and rewards of ownership, then
those assets do not qualify for derecognition. An associated liability is recognised for the consideration received from the counterparty.
STRUCTURED FINANCE ARRANGEMENTS
The Group arranges funding for certain customer transactions through structured leasing. These transactions are recognised on Group’s balance sheet
as lease receivables or loans. At times, other financial institutions participate in the funding of these arrangements. This participation involves a
proportionate transfer of the rights to the assets recognised by the Group. The participating banks have limited recourse to the leased assets and
related proceeds. Where the Group continues to be exposed to some of the risks of the transferred assets through a derivative or other continuing
involvement, the Group does not derecognise the lease receivable or loan. Instead, the Group recognises an associated liability representing its
obligations to the participating financial institutions.
The tables below set out the balance of assets transferred that do not qualify for derecognition, along with the associated liabilities.
NOTES TO THE FINANCIAL STATEMENTS (continued)
For the purposes of this disclosure, the Group considers itself the ‘sponsor’ of an unconsolidated SE if it is the primary party involved in the design and
SPONSORED UNCONSOLIDATED STRUCTURED ENTITIES
The Group may also sponsor unconsolidated SEs in which it has no disclosable interest.
establishment of that SE and:
the Group is the major user of that SE; or
the Group’s name appears in the name of that SE, or on its products; or
the Group provides implicit or explicit guarantees of that SE’s performance.
The Group has sponsored the ANZ PIE Fund in New Zealand, which invests only in deposits with ANZ Bank New Zealand. The Group does not provide
any implicit or explicit guarantees of the capital value or performance of investments in the ANZ PIE Fund. There was no income received from, nor
assets transferred to, this entity during the year.
KEY JUDGEMENTS AND ESTIMATES
Significant judgement is required in assessing whether the Group has control over Structured Entities. Judgement is required to determine
the existence of:
power over the relevant activities (being those that significantly affect the entity’s returns); and
exposure to variable returns of the entity.
29. TRANSFERS OF FINANCIAL ASSETS
In the normal course of business the Group enters into transactions where it transfers financial assets directly to third parties or to SEs. These transfers
may give rise to the Group fully, or partially, derecognising those financial assets - depending on the Group’s exposure to the risks and rewards or
control over the transferred assets. If the Group retains substantially all of the risk and rewards of a transferred asset, the transfer does not qualify for
derecognition and the asset remains on the Group’s balance sheet in its entirety.
SECURITISATIONS
Net loans and advances include residential mortgages securitised under the Group’s securitisation programs which are assigned to bankruptcy
remote SEs to provide security for obligations payable on the notes issued by the SEs. The holders of the issued notes have full recourse to the pool of
residential mortgages which have been securitised and the Group cannot otherwise pledge or dispose of the transferred assets.
In some instances, the Group is also the holder of the securitised notes issued by the SEs. In addition, the Group is entitled to any residual income of
the SEs and sometimes enters into derivatives with the SEs. The Group retains the risks and rewards of the residential mortgages and continues to
recognise the mortgages as financial assets.
The Group is exposed to variable returns from its involvement with these securitisation SEs and has the ability to affect those returns through its
power over the SEs activities. The SEs are therefore consolidated by the Group.
Consolidated
Current carrying amount of assets transferred
Carrying amount of associated liabilities
The Company
Current carrying amount of assets transferred
Carrying amount of associated liabilities
Securitisations1,2
Covered bonds
2022
$m
1,121
1,115
2021
$m
1,430
1,424
2022
$m
27,575
12,967
2021
$m
28,816
15,399
Securitisations1,2
Covered bonds
2022
$m
1,121
1,121
2021
$m
1,430
1,430
2022
$m
17,953
17,953
2021
$m
17,925
17,925
Structured finance
arrangements
2022
2021
$m
36
36
$m
55
55
Structured finance
arrangements
2022
$m
-
-
2021
$m
-
-
Repurchase
agreements
2022
Repurchase
agreements
2022
$m
52,757
47,229
$m
47,846
42,940
51,208
46,147
48,663
43,925
2021
$m
2021
$m
1. Does not include transfers to internal structured entities where there are no external investors.
2. The securitisation noteholders have recourse only to the pool of residential mortgages which have been securitised. The carrying value of securitised assets and the associated liabilities approximates their
fair value.
218
219
220220 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
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create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
30. SUPERANNUATION AND POST EMPLOYMENT BENEFIT OBLIGATIONS
30. SUPERANNUATION AND POST EMPLOYMENT BENEFIT OBLIGATIONS (continued)
Set out below is a summary of amounts recognised in the Balance Sheet in respect of the defined benefit superannuation schemes:
Consolidated
The Company
KEY JUDGEMENTS AND ESTIMATES
Defined benefit obligation and scheme assets
Present value of funded defined benefit obligation
Fair value of scheme assets
Net defined benefit asset
As represented in the Balance Sheet
Net liabilities arising from defined benefit obligations included in payables
and other liabilities
Net assets arising from defined benefit obligations included in other assets
Net defined benefit asset
Weighted average duration of the benefit payments reflected in the defined
benefit obligation (years)
2022
$m
(930)
1,123
193
(6)
199
193
14.8
2021
$m
(1,477)
1,679
202
(11)
213
202
14.9
2022
$m
(809)
988
179
(6)
185
179
14.9
2021
$m
(1,319)
1,514
195
(11)
206
195
14.9
The main assumptions we use in valuing defined benefit obligations are listed in the table below. A change to any assumptions, or
applying different assumptions, could have an effect on the Statement of Other Comprehensive Income and Balance Sheet.
Consolidated
Discount rate (% p.a.)
Future salary increases (% p.a.)
Future pension indexation
2022
1.35-5.45
1.5-3.8
2021
0.4-2.15
1.9-3.5
In payment (% p.a.)/In deferment (% p.a.)
3.1-3.5/3.0 1.05-3.35/2.7
Life expectancy at age 60 for current pensioners
0.5% increase
1 year increase
32
40
84
74
Sensitivity analysis
change in significant
assumptions
0.5% increase
Increase/(decrease) in
defined benefit
obligation
2022
$m
(49)
2021
$m
(103)
As at the most recent reporting dates of the schemes, the aggregate surplus of net market value of assets over the value of accrued benefits on a
funding basis was $69 million (2021: $109 million surplus). In 2022, the Group made defined benefit contributions totalling $2 million (2021:
$3 million). It expects to make contributions of approximately $2 million next financial year.
– Males (years)
– Females (years)
26.2-28.3
29.1-30.2
26.1-28.8
29.0-30.5
GOVERNANCE OF THE SCHEMES AND FUNDING OF THE DEFINED BENEFIT SECTIONS
The main defined benefit superannuation schemes in which the Group participates operate under trust law and are managed and administered on
behalf of the members in accordance with the terms of the relevant trust deed and rules and all relevant legislation. These schemes have corporate
trustees, which are wholly owned subsidiaries of the Group. The trustees are the legal owners of the assets, which are held separately from the assets
of the Group, and are responsible for setting investment policy and agreeing funding requirements with the employer through the triennial actuarial
valuation process.
The Group has defined benefit arrangements in Australia, Japan, New Zealand, Philippines, Taiwan and United Kingdom. The defined benefit section
of the ANZ Australian Staff Superannuation Scheme, the ANZ UK Staff Pension Scheme and the ANZ National Retirement Scheme in New Zealand are
the three largest plans. They have been closed to new members since 1987, 2004 and 1991 respectively. None of the schemes had a material deficit,
or surplus, at the last funding valuation. The Group has no present liability under any of the schemes’ trust deeds to fund a deficit (measured on a
funding basis). A contingent liability of the Group may arise if any of the schemes were wound up.
Sensitivity analysis
change in significant
assumptions
0.5% increase
Increase/(decrease) in
defined benefit
obligation
2022
$m
(43)
2021
$m
(94)
The Company
Discount rate (% p.a.)
Future salary increases (% p.a.)
Future pension indexation
2022
2021
5.1-5.45
1.95-2.15
3.8
3.5
In payment (% p.a.)/In deferment (% p.a.)
3.1-3.5/3.0
2.0-3.35/2.7
Life expectancy at age 60 for current pensioners
0.5% increase
1 year increase
26
35
75
67
– Males (years)
– Females (years)
26.2-28.3
29.1-30.2
26.1-28.8
29.0-30.5
RECOGNITION AND MEASUREMENT
Defined benefit superannuation schemes
The Group operates a small number of defined benefit schemes. Independent actuaries calculate the liability and expenses related to
providing benefits to employees under each defined benefit scheme. They use the Projected Unit Credit Method to value the liabilities. The
balance sheet includes:
a defined benefit liability if the obligation is greater than the fair value of the schemes assets; and
an asset (capped to its recoverable amount) if the fair value of the assets is greater than the obligation.
In each reporting period, the movements in the net defined benefit liability are recognised as follows:
the net movement relating to the current period’s service cost, net interest on the defined benefit liability, past service costs and other
costs (such as the effects of any curtailments and settlements) as operating expenses;
remeasurements of the net defined benefit liability (which comprise actuarial gains and losses and return on scheme assets, excluding
interest income included in net interest) directly in retained earnings through other comprehensive income; and
contributions of the Group directly against the net defined benefit position.
Defined contribution superannuation schemes
The Group operates a number of defined contribution schemes. It also contributes (according to local law, in the various countries in which
it operates) to Government and other plans that have the characteristics of defined contribution plans. The Group’s contributions to these
schemes are recognised as personnel expenses when they are incurred.
220
221
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
221221
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
30. SUPERANNUATION AND POST EMPLOYMENT BENEFIT OBLIGATIONS
30. SUPERANNUATION AND POST EMPLOYMENT BENEFIT OBLIGATIONS (continued)
Set out below is a summary of amounts recognised in the Balance Sheet in respect of the defined benefit superannuation schemes:
Consolidated
The Company
KEY JUDGEMENTS AND ESTIMATES
Defined benefit obligation and scheme assets
Present value of funded defined benefit obligation
Fair value of scheme assets
Net defined benefit asset
As represented in the Balance Sheet
Net liabilities arising from defined benefit obligations included in payables
Net assets arising from defined benefit obligations included in other assets
and other liabilities
Net defined benefit asset
benefit obligation (years)
Weighted average duration of the benefit payments reflected in the defined
2022
$m
(930)
1,123
193
(6)
199
193
14.8
2021
$m
(1,477)
1,679
202
(11)
213
202
14.9
2022
$m
(809)
988
179
(6)
185
179
14.9
2021
$m
(1,319)
1,514
195
(11)
206
195
14.9
The main assumptions we use in valuing defined benefit obligations are listed in the table below. A change to any assumptions, or
applying different assumptions, could have an effect on the Statement of Other Comprehensive Income and Balance Sheet.
Consolidated
Discount rate (% p.a.)
Future salary increases (% p.a.)
Future pension indexation
2022
1.35-5.45
1.5-3.8
2021
0.4-2.15
1.9-3.5
Sensitivity analysis
change in significant
assumptions
0.5% increase
Increase/(decrease) in
defined benefit
obligation
2022
$m
(49)
2021
$m
(103)
In payment (% p.a.)/In deferment (% p.a.)
3.1-3.5/3.0 1.05-3.35/2.7
Life expectancy at age 60 for current pensioners
0.5% increase
1 year increase
32
40
84
74
As at the most recent reporting dates of the schemes, the aggregate surplus of net market value of assets over the value of accrued benefits on a
funding basis was $69 million (2021: $109 million surplus). In 2022, the Group made defined benefit contributions totalling $2 million (2021:
$3 million). It expects to make contributions of approximately $2 million next financial year.
– Males (years)
– Females (years)
26.2-28.3
29.1-30.2
26.1-28.8
29.0-30.5
GOVERNANCE OF THE SCHEMES AND FUNDING OF THE DEFINED BENEFIT SECTIONS
The main defined benefit superannuation schemes in which the Group participates operate under trust law and are managed and administered on
behalf of the members in accordance with the terms of the relevant trust deed and rules and all relevant legislation. These schemes have corporate
trustees, which are wholly owned subsidiaries of the Group. The trustees are the legal owners of the assets, which are held separately from the assets
of the Group, and are responsible for setting investment policy and agreeing funding requirements with the employer through the triennial actuarial
valuation process.
The Group has defined benefit arrangements in Australia, Japan, New Zealand, Philippines, Taiwan and United Kingdom. The defined benefit section
of the ANZ Australian Staff Superannuation Scheme, the ANZ UK Staff Pension Scheme and the ANZ National Retirement Scheme in New Zealand are
the three largest plans. They have been closed to new members since 1987, 2004 and 1991 respectively. None of the schemes had a material deficit,
or surplus, at the last funding valuation. The Group has no present liability under any of the schemes’ trust deeds to fund a deficit (measured on a
funding basis). A contingent liability of the Group may arise if any of the schemes were wound up.
The Company
Discount rate (% p.a.)
Future salary increases (% p.a.)
Future pension indexation
2022
5.1-5.45
3.8
2021
1.95-2.15
3.5
Sensitivity analysis
change in significant
assumptions
0.5% increase
Increase/(decrease) in
defined benefit
obligation
2022
$m
(43)
2021
$m
(94)
In payment (% p.a.)/In deferment (% p.a.)
3.1-3.5/3.0
2.0-3.35/2.7
Life expectancy at age 60 for current pensioners
– Males (years)
– Females (years)
26.2-28.3
29.1-30.2
26.1-28.8
29.0-30.5
0.5% increase
1 year increase
26
35
75
67
RECOGNITION AND MEASUREMENT
Defined benefit superannuation schemes
The Group operates a small number of defined benefit schemes. Independent actuaries calculate the liability and expenses related to
providing benefits to employees under each defined benefit scheme. They use the Projected Unit Credit Method to value the liabilities. The
balance sheet includes:
a defined benefit liability if the obligation is greater than the fair value of the schemes assets; and
an asset (capped to its recoverable amount) if the fair value of the assets is greater than the obligation.
In each reporting period, the movements in the net defined benefit liability are recognised as follows:
the net movement relating to the current period’s service cost, net interest on the defined benefit liability, past service costs and other
costs (such as the effects of any curtailments and settlements) as operating expenses;
remeasurements of the net defined benefit liability (which comprise actuarial gains and losses and return on scheme assets, excluding
interest income included in net interest) directly in retained earnings through other comprehensive income; and
contributions of the Group directly against the net defined benefit position.
Defined contribution superannuation schemes
The Group operates a number of defined contribution schemes. It also contributes (according to local law, in the various countries in which
it operates) to Government and other plans that have the characteristics of defined contribution plans. The Group’s contributions to these
schemes are recognised as personnel expenses when they are incurred.
220
221
222222 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS
31. EMPLOYEE SHARE AND OPTION PLANS (continued)
ANZ operates a number of employee share and option schemes under the ANZ Employee Share Acquisition Plan and the ANZ Share Option Plan.
ANZ SHARE OPTION PLAN
ANZ EMPLOYEE SHARE ACQUISITION PLAN
Allocation
We may grant selected employees options/rights which entitle them to acquire fully paid ordinary ANZ shares at a
fixed price at the time the options/rights vest. Voting and dividend rights will be attached to the ordinary shares
The Deferred Share Plan was the only ANZ Employee Share Acquisition Plan scheme that operated during 2022 and 2021.
allocated on exercise of the options/rights.
Deferred Share Plan
i) ANZ Incentive Plan (ANZIP) - Chief Executive Officer (CEO), Group Executive Committee (ExCo) and other Banking Executive Accountability
Regime (BEAR) Accountable Executives: Based on the 2021 and 2020 Performance and Remuneration Review (granted in the 2022 and 2021
financial years)
Eligibility
Grant
CEO, ExCo and Group General Manager Internal Audit (GGM IA).
50% of the CEO’s Short Term Variable Remuneration (STVR), 25% of ExCo’s Variable Remuneration (VR) (except for the
Chief Risk Officer (CRO)), and 33% of the CRO and GGM IA’s VR, was received as deferred shares.
Conditions
Deferred over at least one to four years from the date the Board approved the variable remuneration award.
ii) ANZIP: Based on the 2021 and 2020 Performance and Remuneration Reviews (granted in the 2022 and 2021 financial years)
Eligibility
Grant
Conditions
All employees excluding the CEO, ExCo and GGM IA (i.e., other BEAR Accountable Executive), and select roles in the
United Kingdom (UK)/China1.
If VR is at or exceeds AUD 100,000, then 60% of total VR amount is deferred as shares.
Deferred over three years from grant date.
iii) Exceptional circumstances
Remuneration
foregone
In exceptional circumstances, we grant deferred shares to certain employees when they start with ANZ to
compensate them for remuneration they have foregone from their previous employer. The vesting period generally
aligns with the remaining vesting period of the remuneration they have foregone, and therefore varies between
grants.
Retention
We may grant deferred shares to high performing employees who are regarded as a significant retention risk to ANZ.
iv) Further information
Cessation
Dividends
Instrument
Unless the Board decides otherwise, employees forfeit their unvested deferred shares if they resign, are terminated
on notice, or are dismissed for serious misconduct. The deferred shares may be held in trust beyond the deferral
period.
Dividends are reinvested in the Dividend Reinvestment Plan.
Deferred share rights may be granted instead of deferred shares in some countries as locally appropriate (see
deferred share rights section).
Allocation value
All deferred shares are issued based on the VWAP of ANZ shares traded on the ASX in the week leading up to and
including the date of grant.
Expensing value (fair
value)
We expense the fair value of deferred shares on a straight-line basis over the relevant vesting period and we
recognise the expense as a share-based compensation expense with a corresponding increase in equity.
2022 and 2021 grants
During the 2022 year, we granted 1,971,715 deferred shares (2021: 1,653,585) with a weighted average grant price of
$27.52 (2021: $23.31).
Malus (downward
adjustment)
Deferred shares remain at risk and the Board has the discretion to adjust the number of deferred shares downwards,
including to zero at any time before the vesting date. ANZ’s malus (downward adjustment) provisions are detailed in
section 5.3 of the 2022 Remuneration Report.
Board discretion was not exercised to adjust downward any deferred shares in 2022 (2021: nil).
1. Specific deferral arrangements also exist under ANZIP for roles defined as UK Material Risk Takers and China Material Risk Takers, in line with local regulatory requirements.
Expensing of the ANZ Employee Share Acquisition Plan
Expensing value
(fair value)
The fair value of shares we granted during 2022 under the Deferred Share Plan, measured as at the date of grant of
the shares, is $52.6 million (2021: $38.9 million) based on 1,971,715 shares (2021: 1,653,585) at VWAP of $26.69
(2021: $23.53).
Each option/right entitles the holder to one ordinary share subject to the terms and conditions imposed on grant.
Exercise price of options, determined in accordance with the rules of the plan, is generally based on the VWAP of the
shares traded on the ASX in the week leading up to and including the date of grant. For rights, the exercise price is nil.
Rules
Prior to the exercise of the option/right if ANZ changes its share capital due to a bonus share issue, pro-rata new share
issue or reorganisation the following adjustments are required:
Issue of bonus shares - When the holder exercises their option, they are also entitled to be issued the number of
bonus shares they would have been entitled to had they held the underlying shares at the time of the bonus issue;
Pro-rata share offer - We will adjust the exercise price of the option in the manner set out in the ASX Listing Rules;
Reorganisation - In respect of rights, if there is a bonus issue or reorganisation of ANZ’s share capital, then the
Board may adjust the number of rights or the number of underlying shares so that there is no advantage or
and
disadvantage to the holder.
Holders otherwise have no other entitlements to participate:
in any new issue of ANZ securities before they exercise their options/rights; or
in a share issue of a body corporate other than ANZ (such as a subsidiary).
Any portion of the award which vests may, at the Board’s discretion, be satisfied by a cash equivalent payment rather
than shares.
Expensing
We expense the fair value of options/rights on a straight-line basis over the relevant vesting period and we recognise
the expense as a share-based compensation expense with a corresponding increase in equity.
Cessation
The provisions that apply if the employee’s employment ends are in section 8.2.3 of the 2022 Remuneration Report.
Malus (downward
ANZ’s malus (downward adjustment) provisions are detailed in section 5.3 of the 2022 Remuneration Report.
adjustment)
Option Plans that operated during 2022 and 2021
i) Performance Rights
Allocation
We grant performance rights to the CEO and ExCo as part of ANZ’s variable remuneration plans. Performance
rights provide the holder with the right to acquire ANZ shares at nil cost, subject to a four-year vesting period
and Total Shareholder Return (TSR) performance hurdles. Further details on the performance hurdles are in
section 5.2.5 of the 2022 Remuneration Report.
Satisfying vesting
Any portion of the award of performance rights (that have met the performance hurdles) may be satisfied by a
cash equivalent payment rather than shares at the Board’s discretion. In 2022 (and 2021), the performance rights
that vested (previously granted in November/December 2018 (and in November/December 2017)) were
satisfied through a share allocation, other than 24,011 performance rights for which a cash payment was made
(2021: 36,103).
2022 and 2021 grants
During 2022, we granted 542,747 performance rights (2021: 485,032).
Malus (downward adjustment)
Board discretion was not exercised to adjust downward any performance rights in 2022 (2021: nil).
ii) Deferred Share Rights (no performance hurdles)
Allocation
Deferred share rights provide the holder with the right to acquire ANZ shares at nil cost after a specified vesting
period. We adjust the fair value of rights for the absence of dividends during the restriction period.
Satisfying vesting
Any portion of the award of share rights may be satisfied by a cash equivalent payment rather than shares at the
Board’s discretion. All share rights were satisfied through a share allocation, other than 55,977 deferred share
rights (2021: 89,296) for which a cash payment was made.
2022 and 2021 grants
During the 2022 year, 2,576,907 deferred share rights (no performance hurdles) were granted (2021: 2,258,774).
Malus (downward adjustment)
Board discretion was not exercised to adjust downward any deferred share rights in 2022 (2021: 8,414).
222
223
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
223223
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS
31. EMPLOYEE SHARE AND OPTION PLANS (continued)
ANZ operates a number of employee share and option schemes under the ANZ Employee Share Acquisition Plan and the ANZ Share Option Plan.
ANZ SHARE OPTION PLAN
Allocation
We may grant selected employees options/rights which entitle them to acquire fully paid ordinary ANZ shares at a
fixed price at the time the options/rights vest. Voting and dividend rights will be attached to the ordinary shares
allocated on exercise of the options/rights.
Each option/right entitles the holder to one ordinary share subject to the terms and conditions imposed on grant.
Exercise price of options, determined in accordance with the rules of the plan, is generally based on the VWAP of the
shares traded on the ASX in the week leading up to and including the date of grant. For rights, the exercise price is nil.
Rules
Prior to the exercise of the option/right if ANZ changes its share capital due to a bonus share issue, pro-rata new share
issue or reorganisation the following adjustments are required:
Issue of bonus shares - When the holder exercises their option, they are also entitled to be issued the number of
bonus shares they would have been entitled to had they held the underlying shares at the time of the bonus issue;
Pro-rata share offer - We will adjust the exercise price of the option in the manner set out in the ASX Listing Rules;
and
Reorganisation - In respect of rights, if there is a bonus issue or reorganisation of ANZ’s share capital, then the
Board may adjust the number of rights or the number of underlying shares so that there is no advantage or
disadvantage to the holder.
Holders otherwise have no other entitlements to participate:
in any new issue of ANZ securities before they exercise their options/rights; or
in a share issue of a body corporate other than ANZ (such as a subsidiary).
Any portion of the award which vests may, at the Board’s discretion, be satisfied by a cash equivalent payment rather
than shares.
Expensing
We expense the fair value of options/rights on a straight-line basis over the relevant vesting period and we recognise
the expense as a share-based compensation expense with a corresponding increase in equity.
Cessation
The provisions that apply if the employee’s employment ends are in section 8.2.3 of the 2022 Remuneration Report.
Malus (downward
adjustment)
ANZ’s malus (downward adjustment) provisions are detailed in section 5.3 of the 2022 Remuneration Report.
Cessation
Unless the Board decides otherwise, employees forfeit their unvested deferred shares if they resign, are terminated
on notice, or are dismissed for serious misconduct. The deferred shares may be held in trust beyond the deferral
Option Plans that operated during 2022 and 2021
i) Performance Rights
Allocation
Satisfying vesting
We grant performance rights to the CEO and ExCo as part of ANZ’s variable remuneration plans. Performance
rights provide the holder with the right to acquire ANZ shares at nil cost, subject to a four-year vesting period
and Total Shareholder Return (TSR) performance hurdles. Further details on the performance hurdles are in
section 5.2.5 of the 2022 Remuneration Report.
Any portion of the award of performance rights (that have met the performance hurdles) may be satisfied by a
cash equivalent payment rather than shares at the Board’s discretion. In 2022 (and 2021), the performance rights
that vested (previously granted in November/December 2018 (and in November/December 2017)) were
satisfied through a share allocation, other than 24,011 performance rights for which a cash payment was made
(2021: 36,103).
2022 and 2021 grants
During 2022, we granted 542,747 performance rights (2021: 485,032).
Malus (downward adjustment)
Board discretion was not exercised to adjust downward any performance rights in 2022 (2021: nil).
ii) Deferred Share Rights (no performance hurdles)
Allocation
Satisfying vesting
Deferred share rights provide the holder with the right to acquire ANZ shares at nil cost after a specified vesting
period. We adjust the fair value of rights for the absence of dividends during the restriction period.
Any portion of the award of share rights may be satisfied by a cash equivalent payment rather than shares at the
Board’s discretion. All share rights were satisfied through a share allocation, other than 55,977 deferred share
rights (2021: 89,296) for which a cash payment was made.
2022 and 2021 grants
During the 2022 year, 2,576,907 deferred share rights (no performance hurdles) were granted (2021: 2,258,774).
Malus (downward adjustment)
Board discretion was not exercised to adjust downward any deferred share rights in 2022 (2021: 8,414).
222
223
ANZ EMPLOYEE SHARE ACQUISITION PLAN
The Deferred Share Plan was the only ANZ Employee Share Acquisition Plan scheme that operated during 2022 and 2021.
Deferred Share Plan
financial years)
Eligibility
Grant
i) ANZ Incentive Plan (ANZIP) - Chief Executive Officer (CEO), Group Executive Committee (ExCo) and other Banking Executive Accountability
Regime (BEAR) Accountable Executives: Based on the 2021 and 2020 Performance and Remuneration Review (granted in the 2022 and 2021
CEO, ExCo and Group General Manager Internal Audit (GGM IA).
50% of the CEO’s Short Term Variable Remuneration (STVR), 25% of ExCo’s Variable Remuneration (VR) (except for the
Chief Risk Officer (CRO)), and 33% of the CRO and GGM IA’s VR, was received as deferred shares.
Conditions
Deferred over at least one to four years from the date the Board approved the variable remuneration award.
ii) ANZIP: Based on the 2021 and 2020 Performance and Remuneration Reviews (granted in the 2022 and 2021 financial years)
Eligibility
All employees excluding the CEO, ExCo and GGM IA (i.e., other BEAR Accountable Executive), and select roles in the
United Kingdom (UK)/China1.
If VR is at or exceeds AUD 100,000, then 60% of total VR amount is deferred as shares.
Deferred over three years from grant date.
In exceptional circumstances, we grant deferred shares to certain employees when they start with ANZ to
compensate them for remuneration they have foregone from their previous employer. The vesting period generally
aligns with the remaining vesting period of the remuneration they have foregone, and therefore varies between
Retention
We may grant deferred shares to high performing employees who are regarded as a significant retention risk to ANZ.
Grant
Conditions
Remuneration
foregone
iii) Exceptional circumstances
iv) Further information
grants.
period.
Dividends
Instrument
Dividends are reinvested in the Dividend Reinvestment Plan.
Deferred share rights may be granted instead of deferred shares in some countries as locally appropriate (see
deferred share rights section).
including the date of grant.
$27.52 (2021: $23.31).
Allocation value
All deferred shares are issued based on the VWAP of ANZ shares traded on the ASX in the week leading up to and
Expensing value (fair
We expense the fair value of deferred shares on a straight-line basis over the relevant vesting period and we
value)
recognise the expense as a share-based compensation expense with a corresponding increase in equity.
2022 and 2021 grants
During the 2022 year, we granted 1,971,715 deferred shares (2021: 1,653,585) with a weighted average grant price of
Malus (downward
Deferred shares remain at risk and the Board has the discretion to adjust the number of deferred shares downwards,
adjustment)
including to zero at any time before the vesting date. ANZ’s malus (downward adjustment) provisions are detailed in
section 5.3 of the 2022 Remuneration Report.
Board discretion was not exercised to adjust downward any deferred shares in 2022 (2021: nil).
1. Specific deferral arrangements also exist under ANZIP for roles defined as UK Material Risk Takers and China Material Risk Takers, in line with local regulatory requirements.
Expensing of the ANZ Employee Share Acquisition Plan
Expensing value
The fair value of shares we granted during 2022 under the Deferred Share Plan, measured as at the date of grant of
(fair value)
the shares, is $52.6 million (2021: $38.9 million) based on 1,971,715 shares (2021: 1,653,585) at VWAP of $26.69
(2021: $23.53).
224224 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS (continued)
Options, Deferred Share Rights and Performance Rights on Issue
Fair Value Assumptions
As at 26 October 2022, there were 457 holders of 4,804,445 deferred share rights on issue and 22 holders of 1,402,847 performance rights on issue.
When determining the fair value, we apply the standard market techniques for valuation, including Monte Carlo and/or Black Scholes pricing models.
Options/Rights Movements
We do so in accordance with the requirements of AASB 2 Share-based Payments. The models take into account early exercise of vested equity, non-
transferability and internal/external performance hurdles (if any).
This table shows the options/rights over unissued ANZ shares and their related weighted average (WA) exercise prices as at the beginning and end of
2022 and the movements during 2022:
The table below shows the significant assumptions we used as inputs into our fair value calculation of instruments granted during the period. We
present the values as weighted averages, but the specific values we use for each allocation are the ones we use for the fair value calculation.
Number of options/rights
WA exercise price
WA closing share price
WA remaining contractual life
WA exercise price of all exercisable
options/rights outstanding
Outstanding exercisable options/rights
Opening
balance
1 Oct 2021
6,307,778
$0.00
Options/
rights
granted
3,119,654
$0.00
Options/
rights
forfeited1
(747,744)
$0.00
Options/
rights
expired
Options/
rights
exercised
Closing
balance
30 Sep 2022
0
(2,470,648)
6,209,040
$0.00
$0.00
$0.00
$25.56
1.9 years
$0.00
141,633
This table shows the options/rights over unissued ANZ shares and their related weighted average exercise prices as at the beginning and end of 2021
and the movements during 2021:
Number of options/rights
WA exercise price
WA closing share price
WA remaining contractual life
WA exercise price of all exercisable
options/rights outstanding
Outstanding exercisable options/rights
Opening
balance
1 Oct 2020
6,724,557
$0.00
Options/
rights
granted
2,743,806
$0.00
Options/
rights
forfeited1
(918,589)
$0.00
Options/
rights
expired
Options/
rights
exercised
Closing
balance
30 Sep 2021
0
(2,241,996)
6,307,778
$0.00
$0.00
$0.00
$25.34
1.8 years
$0.00
227,412
1. Refers to any circumstance where equity can be forfeited (for example on cessation, downward adjustment or performance conditions not met).
All of the shares issued as a result of the exercise of options/rights during 2022 and 2021, were issued at a nil exercise price.
As at the date of the signing of the Directors’ Report on 26 October 2022:
no options/rights over ordinary shares have been granted since the end of 2022; and
no shares issued as a result of the exercise of options/rights since the end of 2022.
Exercise price ($)
Share closing price at grant date ($)
Expected volatility of ANZ share price (%)1
Equity term (years)
Vesting period (years)
Expected life (years)
Expected dividend yield (%)
Risk free interest rate (%)
Fair value ($)
2022
Deferred
2021
Deferred
Performance
Performance
share
rights
0.00
26.62
20.0
2.2
2.1
2.1
5.50
0.80
23.71
rights
0.00
26.92
20.0
6.0
4.0
4.0
5.50
1.25
10.38
share
rights
0.00
23.37
26.5
2.3
2.0
2.0
4.85
0.10
21.15
rights
0.00
23.32
25.0
6.0
4.0
4.0
5.25
0.21
9.56
1. Expected volatility represents a measure of the amount by which ANZ’s share price is expected to fluctuate over the life of the rights. The measure of volatility used in the model is the annualised standard
deviation of the continuously compounded rates of return on the historical share price over a defined period of time preceding the date of grant. This historical average annualised volatility is then used to
estimate a reasonable expected volatility over the expected life of the rights.
SATISFYING EQUITY AWARDS
All shares underpinning equity awards may be purchased on market, reallocated or be newly issued shares, or a combination.
The equity we purchased on market during the 2022 financial year (either under the ANZ Employee Share Acquisition Plan and the ANZ Share Option
Plan, or to satisfy options or rights) for all employees amounted to 4,230,962 shares at an average price of $27.57 per share (2021: 3,593,574 shares at
an average price of $22.03 per share).
224
225
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
225225
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS (continued)
31. EMPLOYEE SHARE AND OPTION PLANS (continued)
Options, Deferred Share Rights and Performance Rights on Issue
Fair Value Assumptions
As at 26 October 2022, there were 457 holders of 4,804,445 deferred share rights on issue and 22 holders of 1,402,847 performance rights on issue.
This table shows the options/rights over unissued ANZ shares and their related weighted average (WA) exercise prices as at the beginning and end of
When determining the fair value, we apply the standard market techniques for valuation, including Monte Carlo and/or Black Scholes pricing models.
We do so in accordance with the requirements of AASB 2 Share-based Payments. The models take into account early exercise of vested equity, non-
transferability and internal/external performance hurdles (if any).
The table below shows the significant assumptions we used as inputs into our fair value calculation of instruments granted during the period. We
present the values as weighted averages, but the specific values we use for each allocation are the ones we use for the fair value calculation.
Opening
balance
1 Oct 2021
6,307,778
$0.00
Options/
rights
granted
3,119,654
$0.00
Options/
rights
forfeited1
(747,744)
$0.00
Options/
rights
expired
Options/
rights
Closing
balance
exercised
30 Sep 2022
0
(2,470,648)
6,209,040
$0.00
$0.00
Exercise price ($)
Share closing price at grant date ($)
Expected volatility of ANZ share price (%)1
Equity term (years)
Vesting period (years)
Expected life (years)
Expected dividend yield (%)
Risk free interest rate (%)
Fair value ($)
2022
Deferred
share
rights
Performance
rights
2021
Deferred
share
rights
Performance
rights
0.00
26.62
20.0
2.2
2.1
2.1
5.50
0.80
23.71
0.00
26.92
20.0
6.0
4.0
4.0
5.50
1.25
10.38
0.00
23.37
26.5
2.3
2.0
2.0
4.85
0.10
21.15
0.00
23.32
25.0
6.0
4.0
4.0
5.25
0.21
9.56
1. Expected volatility represents a measure of the amount by which ANZ’s share price is expected to fluctuate over the life of the rights. The measure of volatility used in the model is the annualised standard
deviation of the continuously compounded rates of return on the historical share price over a defined period of time preceding the date of grant. This historical average annualised volatility is then used to
estimate a reasonable expected volatility over the expected life of the rights.
SATISFYING EQUITY AWARDS
All shares underpinning equity awards may be purchased on market, reallocated or be newly issued shares, or a combination.
The equity we purchased on market during the 2022 financial year (either under the ANZ Employee Share Acquisition Plan and the ANZ Share Option
Plan, or to satisfy options or rights) for all employees amounted to 4,230,962 shares at an average price of $27.57 per share (2021: 3,593,574 shares at
an average price of $22.03 per share).
Options/Rights Movements
2022 and the movements during 2022:
Number of options/rights
WA exercise price
WA closing share price
WA remaining contractual life
WA exercise price of all exercisable
options/rights outstanding
Outstanding exercisable options/rights
and the movements during 2021:
Number of options/rights
WA exercise price
WA closing share price
WA remaining contractual life
WA exercise price of all exercisable
options/rights outstanding
Outstanding exercisable options/rights
$0.00
$25.56
1.9 years
$0.00
141,633
$0.00
$25.34
1.8 years
$0.00
227,412
This table shows the options/rights over unissued ANZ shares and their related weighted average exercise prices as at the beginning and end of 2021
Opening
balance
1 Oct 2020
6,724,557
$0.00
Options/
rights
granted
2,743,806
$0.00
Options/
rights
forfeited1
(918,589)
$0.00
Options/
rights
expired
Options/
rights
exercised
Closing
balance
30 Sep 2021
0
(2,241,996)
6,307,778
$0.00
$0.00
1. Refers to any circumstance where equity can be forfeited (for example on cessation, downward adjustment or performance conditions not met).
All of the shares issued as a result of the exercise of options/rights during 2022 and 2021, were issued at a nil exercise price.
As at the date of the signing of the Directors’ Report on 26 October 2022:
no options/rights over ordinary shares have been granted since the end of 2022; and
no shares issued as a result of the exercise of options/rights since the end of 2022.
224
225
226226 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
32. RELATED PARTY DISCLOSURES
KEY MANAGEMENT PERSONNEL COMPENSATION
Key Management Personnel (KMP) are Directors of Australia and New Zealand Banking Group Limited (whether executive directors or otherwise), and
those personnel with a key responsibility for the strategic direction and management of the Group (i.e., members of the Group Executive Committee
(ExCo)) who have Banking Executive Accountability Regime (BEAR) accountability and who report to the Chief Executive Officer (CEO). KMP
compensation included within total personnel expenses in Note 4 Operating Expenses is as follows:
Short-term benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total
Consolidated
20221
$'000
18,294
394
160
-
7,368
26,216
2021
$'000
21,107
403
258
250
5,066
27,084
32. RELATED PARTY DISCLOSURES (continued)
OTHER TRANSACTIONS OF KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES
The aggregate of deposits of KMP and their related parties with the Group were $30 million (2021: $28 million) and with the Company were
$21 million (2021: $20 million).
During the year, KMP participated in the ANZ Retail Entitlement Offer in their capacity as shareholders on the same terms and conditions as other
shareholders of the Group. Refer to Note 24 Shareholders’ Equity for additional details regarding the ANZ Retail Entitlement Offer.
Other transactions with KMP and their related parties included amounts paid to the Group in respect of investment management service fees,
brokerage and bank fees and charges. The Group has reimbursed KMP for the costs incurred for security and secretarial services associated with the
performance of their duties. These transactions are conducted on normal commercial terms and conditions no more favourable than those given to
other employees or customers. Gifts were provided to KMP on retirement amounting to $4,944 during the year.
ASSOCIATES
We disclose significant associates in Note 27 Investments in Associates. During the course of the financial year, transactions conducted with all
associates were on terms equivalent to those made on an arm’s length basis.
1. Includes former disclosed KMP until the end of their employment.
KEY MANAGEMENT PERSONNEL LOAN TRANSACTIONS
Loans made to KMP are made in the ordinary course of business and on normal commercial terms and conditions that are no more favourable than
those given to other employees or customers, including the term of the loan, security required and the interest rate. No amounts have been written
off during the period, or individual provisions raised in respect of these balances. Details of the terms and conditions of lending products can be
found on anz.com. The aggregate of loans (including credit card balances) made, guaranteed or secured, and undrawn facilities to KMP including their
related parties, were as follows:
Loans advanced1
Undrawn facilities1
Interest charged2
Consolidated
The Company
2022
$'000
2021
$'000
2022
$'000
2021
$'000
24,340
25,445
11,270
12,534
489
790
531
777
277
293
277
434
1. Balances are as at the balance sheet date (for KMP in office at balance sheet date) or at the date of cessation of former KMP. Comparatives have been amended to include opening balances (at date of
commencement) for new KMP in the current period.
2. Interest charged is for all KMP’s during the period.
KEY MANAGEMENT PERSONNEL HOLDINGS OF ANZ SECURITIES
KMP, including their related parties, held subordinated debt, shares, share rights and options over shares in the Company directly, indirectly or
beneficially as shown below:
Amounts receivable from associates
Amounts payable to associates
Interest revenue from associates
Interest expense to associates
Other revenue from associates
Other expenses paid to associates
Guarantees given to associates
Dividend income from associates
Undrawn facilities
SUBSIDIARIES
transactions to be fully collectible.
Shares, options and rights1
Subordinated debt1
Consolidated
Income.
2022
Number
2,911,138
29,948
2021
Number
2,471,577
25,870
1. Balances are as at the balance sheet date (for KMP in office at balance sheet date) or at the date of cessation of former KMP. Comparatives have been amended to include opening balances (at date of
commencement) for new KMP in the current period.
There have been no material guarantees given or received. No amounts receivable from the associates have been written-off during the period, or
individual provisions raised in respect of these balances.
We disclose material controlled entities in Note 26 Controlled Entities. During the financial year, subsidiaries conducted transactions with each other
and with associates on terms equivalent to those on an arm’s length basis. As of 30 September 2022, we consider all outstanding amounts on these
Transactions between the Company and its subsidiaries include providing a wide range of banking and other financial facilities. Details of amounts
paid to, or received from, related parties, in the form of dividends or interest, are set out in Note 2 Net Interest Income and Note 3 Non-Interest
Other intragroup transactions include providing management and administrative services, staff training, data processing facilities, transfer of tax losses,
and the leasing of Premises and equipment. The Company also issued letters of comfort and guarantees in respect of certain subsidiaries in the
normal course of business.
Consolidated
The Company
2022
$'000
86,469
102,042
5,570
34
14,296
11,159
72
38,692
94,097
2021
$'000
1,739
7
-
2
-
28
-
-
9,988
2022
$'000
18,572
101,198
4,477
26
14,296
8,592
72
-
94,097
2021
$'000
716
8,063
28
-
-
-
-
-
-
226
227
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
227227
(ExCo)) who have Banking Executive Accountability Regime (BEAR) accountability and who report to the Chief Executive Officer (CEO). KMP
compensation included within total personnel expenses in Note 4 Operating Expenses is as follows:
1. Includes former disclosed KMP until the end of their employment.
KEY MANAGEMENT PERSONNEL LOAN TRANSACTIONS
Loans made to KMP are made in the ordinary course of business and on normal commercial terms and conditions that are no more favourable than
those given to other employees or customers, including the term of the loan, security required and the interest rate. No amounts have been written
off during the period, or individual provisions raised in respect of these balances. Details of the terms and conditions of lending products can be
found on anz.com. The aggregate of loans (including credit card balances) made, guaranteed or secured, and undrawn facilities to KMP including their
related parties, were as follows:
Consolidated
20221
$'000
18,294
394
160
-
7,368
26,216
2021
$'000
21,107
403
258
250
5,066
27,084
Consolidated
The Company
2022
$'000
2021
$'000
2022
$'000
2021
$'000
24,340
25,445
11,270
12,534
489
790
531
777
277
293
277
434
Short-term benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Total
Loans advanced1
Undrawn facilities1
Interest charged2
commencement) for new KMP in the current period.
2. Interest charged is for all KMP’s during the period.
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
32. RELATED PARTY DISCLOSURES
32. RELATED PARTY DISCLOSURES (continued)
KEY MANAGEMENT PERSONNEL COMPENSATION
OTHER TRANSACTIONS OF KEY MANAGEMENT PERSONNEL AND THEIR RELATED PARTIES
Key Management Personnel (KMP) are Directors of Australia and New Zealand Banking Group Limited (whether executive directors or otherwise), and
those personnel with a key responsibility for the strategic direction and management of the Group (i.e., members of the Group Executive Committee
The aggregate of deposits of KMP and their related parties with the Group were $30 million (2021: $28 million) and with the Company were
$21 million (2021: $20 million).
During the year, KMP participated in the ANZ Retail Entitlement Offer in their capacity as shareholders on the same terms and conditions as other
shareholders of the Group. Refer to Note 24 Shareholders’ Equity for additional details regarding the ANZ Retail Entitlement Offer.
Other transactions with KMP and their related parties included amounts paid to the Group in respect of investment management service fees,
brokerage and bank fees and charges. The Group has reimbursed KMP for the costs incurred for security and secretarial services associated with the
performance of their duties. These transactions are conducted on normal commercial terms and conditions no more favourable than those given to
other employees or customers. Gifts were provided to KMP on retirement amounting to $4,944 during the year.
ASSOCIATES
We disclose significant associates in Note 27 Investments in Associates. During the course of the financial year, transactions conducted with all
associates were on terms equivalent to those made on an arm’s length basis.
Amounts receivable from associates
Amounts payable to associates
Interest revenue from associates
Interest expense to associates
Other revenue from associates
Other expenses paid to associates
Guarantees given to associates
Dividend income from associates
Undrawn facilities
Consolidated
The Company
2022
$'000
86,469
102,042
5,570
34
14,296
11,159
72
38,692
94,097
2021
$'000
7
1,739
-
2
-
9,988
28
-
-
2022
$'000
18,572
101,198
4,477
26
14,296
8,592
72
-
94,097
2021
$'000
-
716
-
-
-
8,063
28
-
-
1. Balances are as at the balance sheet date (for KMP in office at balance sheet date) or at the date of cessation of former KMP. Comparatives have been amended to include opening balances (at date of
SUBSIDIARIES
There have been no material guarantees given or received. No amounts receivable from the associates have been written-off during the period, or
individual provisions raised in respect of these balances.
KEY MANAGEMENT PERSONNEL HOLDINGS OF ANZ SECURITIES
KMP, including their related parties, held subordinated debt, shares, share rights and options over shares in the Company directly, indirectly or
beneficially as shown below:
Shares, options and rights1
Subordinated debt1
1. Balances are as at the balance sheet date (for KMP in office at balance sheet date) or at the date of cessation of former KMP. Comparatives have been amended to include opening balances (at date of
commencement) for new KMP in the current period.
Consolidated
2022
Number
2,911,138
29,948
2021
Number
2,471,577
25,870
We disclose material controlled entities in Note 26 Controlled Entities. During the financial year, subsidiaries conducted transactions with each other
and with associates on terms equivalent to those on an arm’s length basis. As of 30 September 2022, we consider all outstanding amounts on these
transactions to be fully collectible.
Transactions between the Company and its subsidiaries include providing a wide range of banking and other financial facilities. Details of amounts
paid to, or received from, related parties, in the form of dividends or interest, are set out in Note 2 Net Interest Income and Note 3 Non-Interest
Income.
Other intragroup transactions include providing management and administrative services, staff training, data processing facilities, transfer of tax losses,
and the leasing of Premises and equipment. The Company also issued letters of comfort and guarantees in respect of certain subsidiaries in the
normal course of business.
226
227
228228 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
CREDIT RELATED COMMITMENTS AND CONTINGENCIES
Contract amount of:
Undrawn facilities
Guarantees and letters of credit
Performance related contingencies
Total
Consolidated
The Company
2022
$m
2021
$m
2022
$m
2021
$m
OTHER CONTINGENT LIABILITIES (continued)
BENCHMARK/RATE ACTIONS
In July and August 2016, class action complaints were brought in the United States District Court against local and international banks, including the
Company. The class actions are expressed to apply to persons and entities that engaged in US-based transactions in financial instruments that were
priced, benchmarked, and/or settled based on certain benchmark rates. The claimants sought damages or compensation in amounts not specified,
and alleged that the defendant banks, including the Company, violated US anti-trust laws, antiracketeering laws, and (in one case only), the
236,051
212,265
201,204
176,077
Commodity Exchange Act and unjust enrichment principles. As at 30 September 2022, ANZ has reached agreements to settle each of these matters.
23,729
26,036
30,027
18,303
21,557
24,634
27,957
17,085
285,816
260,595
247,395
221,119
The financial impact is not material. The settlements are without admission of liability and remain subject to finalisation and court approval.
In February 2017, the South African Competition Commission commenced proceedings against local and international banks including the Company
alleging breaches of the cartel provisions of the South African Competition Act in respect of trading in the South African rand. The potential civil
UNDRAWN FACILITIES
The majority of undrawn facilities are subject to customers maintaining specific credit and other requirements or conditions. Many of these facilities
are expected to be only partially used, and others may never be used at all. As such, the total of the nominal principal amounts is not necessarily
representative of future liquidity risks or future cash requirements. Based on the earliest date on which the Group or the Company may be required to
pay, the full amount of undrawn facilities for the Group and the Company mature within 12 months.
GUARANTEES, LETTERS OF CREDIT AND PERFORMANCE RELATED CONTINGENCIES
Guarantees, letters of credit and performance related contingencies relate to transactions that the Group has entered into as principal – including
guarantees, standby letters of credit and documentary letters of credit.
Documentary letters of credit involve the Group issuing letters of credit guaranteeing payment in favour of an exporter. They are secured against an
underlying shipment of goods or backed by a confirmatory letter of credit from another bank.
ESANDA DEALER CAR LOAN LITIGATION
Performance related contingencies are liabilities that oblige the Group to make payments to a third party if the customer fails to fulfil its non-monetary
obligations under the contract.
To reflect the risk associated with these transactions, we apply the same credit origination, portfolio management and collateral requirements that we
apply to loans. The contract amount represents the maximum potential amount that we could lose if the counterparty fails to meet its financial
obligations. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements. Based
on the earliest date on which the Group or the Company may be required to pay, the full amount of guarantees and letters of credit and performance
related contingencies for the Group and the Company mature within 12 months.
OTHER CONTINGENT LIABILITIES
As at 30 September 2022, the Group had contingent liabilities in respect of the matters outlined below. Where relevant, expert legal advice has been
obtained and, in the light of such advice, provisions (refer to Note 23 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 the interests of the Group.
allegations.
CREDIT CARDS LITIGATION
REGULATORY AND CUSTOMER EXPOSURES
The Group regularly engages with its regulators in relation to regulatory investigations, surveillance and reviews, reportable situations, civil
enforcement actions (whether by court action or otherwise), formal and informal inquiries and regulatory supervisory activities in Australia and
globally. The Group has received various notices and requests for information from its regulators as part of both industry-wide and Group-specific
reviews and has also made disclosures to its regulators at its own instigation. The nature of these interactions can be wide ranging and, for example,
include or have included in recent years 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, privacy obligations and information security, business continuity management, 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.
penalty or other financial impact is uncertain.
CAPITAL RAISING ACTION
placement. The Company is defending the allegations.
CONSUMER CREDIT INSURANCE LITIGATION
In September 2018, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against the Company alleging
failure to comply with continuous disclosure obligations in connection with the Company’s August 2015 underwritten institutional equity placement.
ASIC alleges the Company should have advised the market that the joint lead managers took up approximately 25.5 million ordinary shares of the
In February 2020, a class action was brought against the Company alleging breaches of financial advice obligations, misleading or deceptive conduct
and unconscionable conduct in relation to the distribution of consumer credit insurance products. The issuers of the insurance products, QBE and
OnePath Life, are also defendants to the claim. The Company is defending the allegations.
In August 2020, a class action was brought against the Company alleging unfair conduct, misleading or deceptive conduct and equitable mistake in
relation to the use of flex commissions in dealer arranged Esanda car loans. The Company is defending the allegations.
ONEPATH SUPERANNUATION LITIGATION
In December 2020, a class action was brought against OnePath Custodians, OnePath Life and the Company alleging that OnePath Custodians
breached its obligations under superannuation legislation, and its duties as trustee, in respect of superannuation investments and fees. The claim also
alleges that the Company was involved in some of OnePath Custodians’ investment breaches. The Company is defending the allegations.
NEW ZEALAND LOAN INFORMATION LITIGATION
In September 2021, a representative proceeding was brought against ANZ Bank New Zealand Limited, alleging breaches of disclosure requirements
under consumer credit legislation in respect of variation letters sent to certain loan customers. ANZ Bank New Zealand Limited is defending the
In November 2021, a class action was brought against the Company alleging that certain interest terms in credit card contracts were unfair contract
terms and that it was unconscionable for the Company to rely on them. The Company is defending the allegations.
UNLICENSED THIRD PARTIES ACTION
In November 2021, ASIC commenced civil penalty proceedings against the Company alleging that three unlicensed third parties provided home loan
application documents to the Company’s lenders, including in connection with the Company’s home loan introducer program. ASIC alleges that the
Company contravened its obligations under credit legislation.
AVAILABLE FUNDS ACTION
In May 2022, ASIC commenced civil penalty proceedings against the Company in relation to fees charged to customers in some circumstances for
credit card cash advance transactions made using recently deposited unprocessed funds. ASIC alleges that the Company made false or misleading
representations, engaged in misleading or deceptive conduct and breached certain statutory obligations as a credit licensee. The Company is
defending the allegations.
228
229
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
229229
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
CREDIT RELATED COMMITMENTS AND CONTINGENCIES
OTHER CONTINGENT LIABILITIES (continued)
Contract amount of:
Undrawn facilities
Guarantees and letters of credit
Performance related contingencies
Total
UNDRAWN FACILITIES
Consolidated
The Company
2022
$m
2021
$m
2022
$m
2021
$m
236,051
212,265
201,204
176,077
23,729
26,036
30,027
18,303
21,557
24,634
27,957
17,085
285,816
260,595
247,395
221,119
The majority of undrawn facilities are subject to customers maintaining specific credit and other requirements or conditions. Many of these facilities
are expected to be only partially used, and others may never be used at all. As such, the total of the nominal principal amounts is not necessarily
representative of future liquidity risks or future cash requirements. Based on the earliest date on which the Group or the Company may be required to
pay, the full amount of undrawn facilities for the Group and the Company mature within 12 months.
GUARANTEES, LETTERS OF CREDIT AND PERFORMANCE RELATED CONTINGENCIES
Guarantees, letters of credit and performance related contingencies relate to transactions that the Group has entered into as principal – including
guarantees, standby letters of credit and documentary letters of credit.
Documentary letters of credit involve the Group issuing letters of credit guaranteeing payment in favour of an exporter. They are secured against an
underlying shipment of goods or backed by a confirmatory letter of credit from another bank.
Performance related contingencies are liabilities that oblige the Group to make payments to a third party if the customer fails to fulfil its non-monetary
obligations under the contract.
To reflect the risk associated with these transactions, we apply the same credit origination, portfolio management and collateral requirements that we
apply to loans. The contract amount represents the maximum potential amount that we could lose if the counterparty fails to meet its financial
obligations. As the facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash requirements. Based
on the earliest date on which the Group or the Company may be required to pay, the full amount of guarantees and letters of credit and performance
related contingencies for the Group and the Company mature within 12 months.
OTHER CONTINGENT LIABILITIES
As at 30 September 2022, the Group had contingent liabilities in respect of the matters outlined below. Where relevant, expert legal advice has been
obtained and, in the light of such advice, provisions (refer to Note 23 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 the interests of the Group.
REGULATORY AND CUSTOMER EXPOSURES
The Group regularly engages with its regulators in relation to regulatory investigations, surveillance and reviews, reportable situations, civil
enforcement actions (whether by court action or otherwise), formal and informal inquiries and regulatory supervisory activities in Australia and
globally. The Group has received various notices and requests for information from its regulators as part of both industry-wide and Group-specific
reviews and has also made disclosures to its regulators at its own instigation. The nature of these interactions can be wide ranging and, for example,
include or have included in recent years 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, privacy obligations and information security, business continuity management, 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.
BENCHMARK/RATE ACTIONS
In July and August 2016, class action complaints were brought in the United States District Court against local and international banks, including the
Company. The class actions are expressed to apply to persons and entities that engaged in US-based transactions in financial instruments that were
priced, benchmarked, and/or settled based on certain benchmark rates. The claimants sought damages or compensation in amounts not specified,
and alleged that the defendant banks, including the Company, violated US anti-trust laws, antiracketeering laws, and (in one case only), the
Commodity Exchange Act and unjust enrichment principles. As at 30 September 2022, ANZ has reached agreements to settle each of these matters.
The financial impact is not material. The settlements are without admission of liability and remain subject to finalisation and court approval.
In February 2017, the South African Competition Commission commenced proceedings against local and international banks including the Company
alleging breaches of the cartel provisions of the South African Competition Act in respect of trading in the South African rand. The potential civil
penalty or other financial impact is uncertain.
CAPITAL RAISING ACTION
In September 2018, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings against the Company alleging
failure to comply with continuous disclosure obligations in connection with the Company’s August 2015 underwritten institutional equity placement.
ASIC alleges the Company should have advised the market that the joint lead managers took up approximately 25.5 million ordinary shares of the
placement. The Company is defending the allegations.
CONSUMER CREDIT INSURANCE LITIGATION
In February 2020, a class action was brought against the Company alleging breaches of financial advice obligations, misleading or deceptive conduct
and unconscionable conduct in relation to the distribution of consumer credit insurance products. The issuers of the insurance products, QBE and
OnePath Life, are also defendants to the claim. The Company is defending the allegations.
ESANDA DEALER CAR LOAN LITIGATION
In August 2020, a class action was brought against the Company alleging unfair conduct, misleading or deceptive conduct and equitable mistake in
relation to the use of flex commissions in dealer arranged Esanda car loans. The Company is defending the allegations.
ONEPATH SUPERANNUATION LITIGATION
In December 2020, a class action was brought against OnePath Custodians, OnePath Life and the Company alleging that OnePath Custodians
breached its obligations under superannuation legislation, and its duties as trustee, in respect of superannuation investments and fees. The claim also
alleges that the Company was involved in some of OnePath Custodians’ investment breaches. The Company is defending the allegations.
NEW ZEALAND LOAN INFORMATION LITIGATION
In September 2021, a representative proceeding was brought against ANZ Bank New Zealand Limited, alleging breaches of disclosure requirements
under consumer credit legislation in respect of variation letters sent to certain loan customers. ANZ Bank New Zealand Limited is defending the
allegations.
CREDIT CARDS LITIGATION
In November 2021, a class action was brought against the Company alleging that certain interest terms in credit card contracts were unfair contract
terms and that it was unconscionable for the Company to rely on them. The Company is defending the allegations.
UNLICENSED THIRD PARTIES ACTION
In November 2021, ASIC commenced civil penalty proceedings against the Company alleging that three unlicensed third parties provided home loan
application documents to the Company’s lenders, including in connection with the Company’s home loan introducer program. ASIC alleges that the
Company contravened its obligations under credit legislation.
AVAILABLE FUNDS ACTION
In May 2022, ASIC commenced civil penalty proceedings against the Company in relation to fees charged to customers in some circumstances for
credit card cash advance transactions made using recently deposited unprocessed funds. ASIC alleges that the Company made false or misleading
representations, engaged in misleading or deceptive conduct and breached certain statutory obligations as a credit licensee. The Company is
defending the allegations.
228
229
230230 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
34. AUDITOR FEES
KPMG Australia
Audit or review of financial reports
Audit-related services1
Non-audit services2
Total3
Overseas related practices of KPMG Australia
Audit or review of financial reports
Audit-related services1
Non-audit services2
Total
Total auditor fees
million (2021: $0.38 million).
3. Inclusive of goods and services tax.
Consolidated
The Company
2022
$’000
2021
$’000
8,217
6,037
8
14,262
5,808
1,459
-
7,267
21,529
7,434
2,772
106
10,312
5,511
1,657
85
7,253
17,565
2022
$’000
7,726
5,956
8
13,690
2,033
831
-
2,864
16,554
2021
$’000
7,021
2,696
106
9,823
1,965
917
85
2,967
12,790
1. Group audit-related services comprise prudential and regulatory services of $6.26 million (2021: $3.27 million), comfort letters $0.52 million (2021: $0.49 million) and other services $0.71 million (2021:
$0.67 million). Company audit-related services comprise prudential and regulatory services of $5.90million (2021: $2.78 million), comfort letters $0.48 million (2021: $0.45 million) and other services $0.41
2. The nature of non-audit services for the Group and the Company include controls related assessments and methodology and procedural reviews. Further details are provided in the Directors’ Report.
The Group and the Company’s Policy allows KPMG Australia or any of its related practices to provide assurance and other audit-related services that,
while outside the scope of the statutory audit, are consistent with the role of an external auditor. These include regulatory and prudential reviews
requested by regulators such as APRA. Any other services that are not audit or audit-related services are non-audit services. The Policy allows certain
non-audit services to be provided where the service would not contravene auditor independence requirements. KPMG Australia or any of its related
practices may not provide services that are perceived to be in conflict with the role of the external auditor or breach auditor independence. These
include consulting advice and subcontracting of operational activities normally undertaken by management, and engagements where the external
auditor may ultimately be required to express an opinion on its own work.
OTHER CONTINGENT LIABILITIES (continued)
ROYAL COMMISSION
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report on 4 February 2019.
Following the Royal Commission there have been, and continue to be, additional costs and further exposures, including exposures associated with
further regulator activity or potential customer exposures such as class actions, individual claims or customer remediation or compensation activities.
The outcomes and total costs associated with these possible exposures remain uncertain.
SECURITY RECOVERY ACTIONS
Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets. These claims will be
defended.
WARRANTIES, INDEMNITIES AND PERFORMANCE MANAGEMENT FEES
The Group has provided warranties, indemnities and other commitments in favour of the purchaser and other persons in connection with various
disposals of businesses and assets and other transactions, covering a range of matters and risks. It is exposed to claims under those warranties,
indemnities and commitments, some of which are currently active. The outcomes and total costs associated with these exposures remain uncertain.
The Group has entered an arrangement to pay performance management fees to external fund managers in the event predetermined performance
criteria are satisfied in relation to certain Group investments. The satisfaction of the performance criteria and associated performance management fee
remains uncertain.
CLEARING AND SETTLEMENT OBLIGATIONS
Certain group companies have a commitment to comply with rules governing various clearing and settlement arrangements which could result in a
credit risk exposure and loss if another member institution fails to settle its payment clearing activities. The Group’s potential exposure arising from
these arrangements is unquantifiable in advance.
Certain group companies hold memberships of central clearing houses, including ASX Clear (Futures), London Clearing House (LCH) SwapClear and
RepoClear, Korea Exchange (KRX), Hong Kong Exchange (HKEX), Clearing Corporation of India and the Shanghai Clearing House. These memberships
allow the relevant group company to centrally clear derivative instruments in line with cross-border regulatory requirements. Common to all of these
memberships is the requirement for the relevant group company to make default fund contributions. In the event of a default by another member,
the relevant group company could potentially be required to commit additional default fund contributions which are unquantifiable in advance.
PARENT ENTITY GUARANTEES
The Company has issued letters of comfort and guarantees in respect of certain subsidiaries in the normal course of business. Under these letters and
guarantees, the Company undertakes to ensure that those subsidiaries continue to meet their financial obligations, subject to certain conditions
including that the entity remains a controlled entity of the Company.
SALE OF GRINDLAYS BUSINESS
On 31 July 2000, the Company completed the sale to Standard Chartered Bank (SCB) of ANZ Grindlays Bank Limited (Grindlays) and certain other
businesses. The Company provided warranties and indemnities relating to those businesses.
The indemnified matters include civil penalty proceedings and criminal prosecutions brought by Indian authorities against Grindlays and certain of its
officers, in relation to certain transactions conducted in 1991 that are alleged to have breached the Foreign Exchange Regulation Act, 1973. Civil
penalties were imposed in 2007 which are the subject of appeals. The criminal prosecutions are being defended.
CONTINGENT ASSETS
NATIONAL HOUSING BANK
The Company is pursuing recovery of the proceeds of certain disputed cheques which were credited to the account of a former Grindlays customer in
the early 1990s.
The disputed cheques were drawn on the National Housing Bank (NHB) in India. Proceedings between Grindlays and NHB concerning the proceeds of
the cheques were resolved in early 2002.
Recovery is now being pursued from the estate of the Grindlays customer who received the cheque proceeds. Any amounts recovered are to be
shared between the Company and NHB.
230
231
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
231231
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS (continued)
33. COMMITMENTS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS (continued)
34. AUDITOR FEES
OTHER CONTINGENT LIABILITIES (continued)
ROYAL COMMISSION
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report on 4 February 2019.
Following the Royal Commission there have been, and continue to be, additional costs and further exposures, including exposures associated with
KPMG Australia
further regulator activity or potential customer exposures such as class actions, individual claims or customer remediation or compensation activities.
Audit or review of financial reports
The outcomes and total costs associated with these possible exposures remain uncertain.
SECURITY RECOVERY ACTIONS
defended.
Various claims have been made or are anticipated, arising from security recovery actions taken to resolve impaired assets. These claims will be
Audit-related services1
Non-audit services2
Total3
WARRANTIES, INDEMNITIES AND PERFORMANCE MANAGEMENT FEES
Overseas related practices of KPMG Australia
The Group has provided warranties, indemnities and other commitments in favour of the purchaser and other persons in connection with various
Audit or review of financial reports
disposals of businesses and assets and other transactions, covering a range of matters and risks. It is exposed to claims under those warranties,
indemnities and commitments, some of which are currently active. The outcomes and total costs associated with these exposures remain uncertain.
The Group has entered an arrangement to pay performance management fees to external fund managers in the event predetermined performance
criteria are satisfied in relation to certain Group investments. The satisfaction of the performance criteria and associated performance management fee
Audit-related services1
Non-audit services2
Total
Total auditor fees
Consolidated
The Company
2022
$’000
2021
$’000
8,217
6,037
8
14,262
5,808
1,459
-
7,267
21,529
7,434
2,772
106
10,312
5,511
1,657
85
7,253
17,565
2022
$’000
7,726
5,956
8
13,690
2,033
831
-
2,864
16,554
2021
$’000
7,021
2,696
106
9,823
1,965
917
85
2,967
12,790
1. Group audit-related services comprise prudential and regulatory services of $6.26 million (2021: $3.27 million), comfort letters $0.52 million (2021: $0.49 million) and other services $0.71 million (2021:
$0.67 million). Company audit-related services comprise prudential and regulatory services of $5.90million (2021: $2.78 million), comfort letters $0.48 million (2021: $0.45 million) and other services $0.41
million (2021: $0.38 million).
2. The nature of non-audit services for the Group and the Company include controls related assessments and methodology and procedural reviews. Further details are provided in the Directors’ Report.
3. Inclusive of goods and services tax.
The Group and the Company’s Policy allows KPMG Australia or any of its related practices to provide assurance and other audit-related services that,
while outside the scope of the statutory audit, are consistent with the role of an external auditor. These include regulatory and prudential reviews
requested by regulators such as APRA. Any other services that are not audit or audit-related services are non-audit services. The Policy allows certain
non-audit services to be provided where the service would not contravene auditor independence requirements. KPMG Australia or any of its related
practices may not provide services that are perceived to be in conflict with the role of the external auditor or breach auditor independence. These
include consulting advice and subcontracting of operational activities normally undertaken by management, and engagements where the external
auditor may ultimately be required to express an opinion on its own work.
remains uncertain.
CLEARING AND SETTLEMENT OBLIGATIONS
Certain group companies have a commitment to comply with rules governing various clearing and settlement arrangements which could result in a
credit risk exposure and loss if another member institution fails to settle its payment clearing activities. The Group’s potential exposure arising from
these arrangements is unquantifiable in advance.
Certain group companies hold memberships of central clearing houses, including ASX Clear (Futures), London Clearing House (LCH) SwapClear and
RepoClear, Korea Exchange (KRX), Hong Kong Exchange (HKEX), Clearing Corporation of India and the Shanghai Clearing House. These memberships
allow the relevant group company to centrally clear derivative instruments in line with cross-border regulatory requirements. Common to all of these
memberships is the requirement for the relevant group company to make default fund contributions. In the event of a default by another member,
the relevant group company could potentially be required to commit additional default fund contributions which are unquantifiable in advance.
PARENT ENTITY GUARANTEES
The Company has issued letters of comfort and guarantees in respect of certain subsidiaries in the normal course of business. Under these letters and
guarantees, the Company undertakes to ensure that those subsidiaries continue to meet their financial obligations, subject to certain conditions
including that the entity remains a controlled entity of the Company.
SALE OF GRINDLAYS BUSINESS
On 31 July 2000, the Company completed the sale to Standard Chartered Bank (SCB) of ANZ Grindlays Bank Limited (Grindlays) and certain other
businesses. The Company provided warranties and indemnities relating to those businesses.
The indemnified matters include civil penalty proceedings and criminal prosecutions brought by Indian authorities against Grindlays and certain of its
officers, in relation to certain transactions conducted in 1991 that are alleged to have breached the Foreign Exchange Regulation Act, 1973. Civil
penalties were imposed in 2007 which are the subject of appeals. The criminal prosecutions are being defended.
CONTINGENT ASSETS
NATIONAL HOUSING BANK
the early 1990s.
the cheques were resolved in early 2002.
shared between the Company and NHB.
The Company is pursuing recovery of the proceeds of certain disputed cheques which were credited to the account of a former Grindlays customer in
The disputed cheques were drawn on the National Housing Bank (NHB) in India. Proceedings between Grindlays and NHB concerning the proceeds of
Recovery is now being pursued from the estate of the Grindlays customer who received the cheque proceeds. Any amounts recovered are to be
230
231
232232 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report / Financial Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS (continued)
CONSOLIDATED GROUP DIRECTORS’ DECLARATION
35. PENDING ORGANISATIONAL CHANGES IMPACTING FUTURE REPORTING PERIODS
Directors’ Declaration
Non-Operating Holding Company
The Directors of Australia and New Zealand Banking Group Limited declare that:
On 4 May 2022, the Group announced its intention to lodge a formal application with APRA, the Federal Treasurer and other applicable regulators to
establish a non-operating holding company and create distinct bank and non-bank groups within the organisation to assist ANZ to better deliver its
strategy to strengthen and grow its core business further.
Should the proposed restructure proceed, ANZ will establish a non-operating holding company, ANZ Group Holdings Limited, as the new listed
parent holding company of the ANZ Group by a scheme of arrangement and to separate ANZ’s banking and certain non-banking businesses into the
ANZ Bank Group and ANZ Non-Bank Group. The ‘ANZ Bank Group’ would comprise the current Australia and New Zealand Banking Group Limited and
the majority of its present-day subsidiaries. The ‘ANZ Non-Bank Group’ would house banking-adjacent businesses developed or acquired by the ANZ
Group, as we continue to seek ways to bring the best new technology and banking-adjacent services to our customers.
The Explanatory Memorandum has been registered with the Australian Securities and Investments Commission and ANZ shareholders will be asked to
vote on the scheme on 15 December 2022. A copy of the Explanatory Memorandum will be made available on ANZ’s website
(www.anz.com/schememeeting).
Suncorp Bank Acquisition
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding
company of Suncorp Bank. The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal
Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State Financial
Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions is 24 months after
signing (after which either party may terminate the agreement). The final purchase price is subject to completion adjustments and may be more or
less than $4.9 billion. In addition, ANZ will also acquire Suncorp Bank’s Additional Tier I capital notes at face value ($0.6 billion as at June 2022).
Completion is expected in the second half of calendar year 2023.
a)
in the Directors’ opinion, the financial statements and notes of the Company and the Consolidated Entity are in accordance with the Corporations
Act 2001, including:
i)
and
section 296, that they comply with the Australian Accounting Standards and any further requirements of the Corporations Regulations 2001;
ii) section 297, that they give a true and fair view of the financial position of the Company and the Consolidated Entity as at 30 September 2022
and of their performance for the year ended on that date; and
b) the notes to the financial statements of the Company and the Consolidated Entity include a statement that the financial statements and notes of
the Company and the Consolidated Entity comply with International Financial Reporting Standards; and
c)
the Directors have been given the declarations required by section 295A of the Corporations Act 2001; and
d)
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
Signed in accordance with a resolution of the Directors.
36. EVENTS SINCE THE END OF THE FINANCIAL YEAR
There have been no significant events from 30 September 2022 to the date of signing this report.
Paul D O’Sullivan
Chairman
26 October 2022
Shayne C Elliott
Managing Director
232
233
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
ANZ 2022 ANNUAL REPORT
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
233
233
NOTES TO THE FINANCIAL STATEMENTS (continued)
CONSOLIDATED GROUP DIRECTORS’ DECLARATION
35. PENDING ORGANISATIONAL CHANGES IMPACTING FUTURE REPORTING PERIODS
Directors’ Declaration
Non-Operating Holding Company
The Directors of Australia and New Zealand Banking Group Limited declare that:
On 4 May 2022, the Group announced its intention to lodge a formal application with APRA, the Federal Treasurer and other applicable regulators to
establish a non-operating holding company and create distinct bank and non-bank groups within the organisation to assist ANZ to better deliver its
strategy to strengthen and grow its core business further.
Should the proposed restructure proceed, ANZ will establish a non-operating holding company, ANZ Group Holdings Limited, as the new listed
a)
in the Directors’ opinion, the financial statements and notes of the Company and the Consolidated Entity are in accordance with the Corporations
Act 2001, including:
i)
section 296, that they comply with the Australian Accounting Standards and any further requirements of the Corporations Regulations 2001;
and
parent holding company of the ANZ Group by a scheme of arrangement and to separate ANZ’s banking and certain non-banking businesses into the
ii) section 297, that they give a true and fair view of the financial position of the Company and the Consolidated Entity as at 30 September 2022
ANZ Bank Group and ANZ Non-Bank Group. The ‘ANZ Bank Group’ would comprise the current Australia and New Zealand Banking Group Limited and
the majority of its present-day subsidiaries. The ‘ANZ Non-Bank Group’ would house banking-adjacent businesses developed or acquired by the ANZ
Group, as we continue to seek ways to bring the best new technology and banking-adjacent services to our customers.
and of their performance for the year ended on that date; and
b) the notes to the financial statements of the Company and the Consolidated Entity include a statement that the financial statements and notes of
the Company and the Consolidated Entity comply with International Financial Reporting Standards; and
The Explanatory Memorandum has been registered with the Australian Securities and Investments Commission and ANZ shareholders will be asked to
c)
the Directors have been given the declarations required by section 295A of the Corporations Act 2001; and
d)
in the Directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
Signed in accordance with a resolution of the Directors.
vote on the scheme on 15 December 2022. A copy of the Explanatory Memorandum will be made available on ANZ’s website
(www.anz.com/schememeeting).
Suncorp Bank Acquisition
On 18 July 2022, the Group announced an agreement to purchase 100% of the shares in SBGH Limited, the immediate non-operating holding
company of Suncorp Bank. The acquisition is subject to a minimum completion period of 12 months and to certain conditions, being Federal
Treasurer approval, Australian Competition and Consumer Commission authorisation or approval and certain amendments to the State Financial
Institutions and Metway Merger Act 1996 (Qld). Unless the parties agree otherwise, the last date for satisfaction of these conditions is 24 months after
signing (after which either party may terminate the agreement). The final purchase price is subject to completion adjustments and may be more or
less than $4.9 billion. In addition, ANZ will also acquire Suncorp Bank’s Additional Tier I capital notes at face value ($0.6 billion as at June 2022).
Completion is expected in the second half of calendar year 2023.
36. EVENTS SINCE THE END OF THE FINANCIAL YEAR
There have been no significant events from 30 September 2022 to the date of signing this report.
Paul D O’Sullivan
Chairman
26 October 2022
Shayne C Elliott
Managing Director
232
233
234 ANZ 2022 Annual Report
234
ANZ 2022 Annual Report / Financial Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
NOTES TO THE FINANCIAL STATEMENTS
CONSOLIDATED GROUP DIRECTORS’ DECLARATION
TO THE SHAREHOLDERS OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
REPORT ON THE AUDITS OF THE FINANCIAL REPORTS
OPINIONS
We have audited the consolidated Financial Report of Australia and New Zealand Banking Group Limited (the Group Financial Report). We have also
audited the Financial Report of Australia and New Zealand Banking Group Limited (the Company Financial Report).
In our opinion, each of the accompanying Group Financial Report and Company Financial Report are in accordance with the Corporations Act 2001,
including:
giving a true and fair view of the Group’s and of the Company’s financial position as at 30 September 2022 and of its financial performance for the
year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
The respective Financial Reports of the Group and the Company comprise:
balance sheets as at 30 September 2022
income statements, statements of comprehensive income, statements of changes in equity, and cash flow statements for the year then ended
notes 1 to 36 including a summary of significant accounting policies
Directors’ Declaration.
The Group consists of Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the year-end or from time to
time during the financial year.
BASIS FOR OPINIONS
We conducted our audits in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions.
The ECL model governance and validation processes which involved assessment of model performance;
The assessment and approval of the forward-looking macroeconomic assumptions and scenario weightings through challenge applied by the
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audits of the Financial Reports section of our
report.
We are independent of the Group and Company in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants ((including Independence Standards) (the Code) that
are relevant to our audits of the Financial Reports in Australia. We have fulfilled our other ethical responsibilities in accordance with these
requirements.
KEY AUDIT MATTERS
The Key Audit Matters we identified for the Group and Company are:
Allowance for expected credit losses;
Subjective and complex valuation of financial instruments held at fair value;
Provisions for customer remediation; and
IT systems and controls.
The additional Key Audit Matter we identified for the Group (only) is:
Carrying value of investment in PT Bank Pan Indonesia (PT Panin).
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our respective audits of the Financial Reports of
the current period.
These matters were addressed in the context of our audits of each of the Financial Reports as a whole, and in forming our opinions thereon, and we
do not provide a separate opinion on these matters.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member
firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
KEY AUDIT MATTERS (continued)
ALLOWANCE FOR EXPECTED CREDIT LOSSES (Group $4,395m; Company $3,599m)
Refer to the critical accounting estimates and judgements disclosures in relation to the allowance for expected credit losses in Note 14 to the Group
and Company Financial Reports.
The Key Audit Matter
increase in credit risk (SICR).
applies to the ECL results.
Allowance for expected credit losses is a key audit matter due to the significance of the loans and advances balances to the financial statements and
the inherent complexity of the Company and Group’s Expected Credit Loss models (ECL models) used to measure ECL allowances. These models are
reliant on data and a number of estimates including the impact of multiple economic scenarios and other assumptions such as defining a significant
AASB 9 Financial Instruments requires the Company and Group to measure ECLs on a forward-looking basis reflecting a range of economic conditions.
Post-model adjustments are made by the Company and Group to address known ECL model limitations or emerging trends in the loan portfolios. We
exercise significant judgement in challenging the economic scenarios used and the judgmental post-model adjustments the Company and Group
Additional subjectivity and judgement has been introduced into the Group and Company’s measurement of ECL due to the heightened uncertainty
associated with the impact of the economic outlook to the Group and Company’s customers, increasing our audit effort thereon.
The Company and Group’s criteria selected to identify a SICR, such as a decrease in customer credit rating (CCR), are key areas of judgement within the
Company and Group’s ECL methodology as these criteria determine if a forward-looking 12 month or lifetime allowance is recorded.
Additionally, allowances for individually assessed wholesale loans exceeding specific thresholds are assessed by the Company and Group. We exercise
significant judgement in challenging the assessment of specific allowances based on the expected future cash repayments and estimated proceeds
from the value of the collateral held by the Company and Group in respect of the loans.
Our audit procedures for the allowance for ECL included assessing the Company and Group’s significant accounting policies against the requirements
How the matter was addressed in our audits
of the accounting standard. Additionally, our procedures included:
Testing key controls of the Company and Group in relation to:
Company and Group’s internal governance processes;
Reconciliation of the data used in the ECL calculation process to gross balances recorded within the general ledger as well as source systems;
Customer credit rating (CCR) for wholesale loans (larger customer exposures are monitored individually). This covered elements such as: approval
of new lending facilities against the Company and Group’s lending policies, monitoring of counterparty credit quality against the Company and
Group’s exposure criteria for internal factors specific to the counterparty or external macroeconomic factors, and accuracy and timeliness of CCR
and security indicator (SI) assessments against the requirements of the Company and Group’s lending policies and regulatory requirements;
IT system controls which record retail loans lending arrears, group exposures into delinquency buckets, and re-calculate individual allowances. We
tested automated calculation and change management controls and evaluated the Company and Group’s oversight of the portfolios, with a focus
on controls over delinquency monitoring.
We tested relevant General Information Technology Controls (GITCs) in relation to the key IT applications used by the Company and Group in
measuring ECL allowances as detailed in the IT Systems and Controls key audit matter below.
In addition to controls testing, our procedures included:
Re-performing credit assessments of a sample of wholesale loans controlled by the Company and Group’s specialist workout and recovery team
assessed as higher risk or impaired, and a sample of other loans, focusing on larger exposures assessed by the Company and Group as showing
signs of deterioration, or in areas of emerging risk. For each loan sampled, we challenged the Company and Group’s assessment of CCR and SI
using the customer’s financial position, the valuation of security, and, where relevant, the risk of stranded assets, to inform our overall assessment of
loan recoverability and the impact on the credit allowance. To do this, we used the information on the Company’s and Group’s loan file and
discussed the facts and circumstances of the case with the loan officer. Exercising our judgement, our procedures included using our
understanding of relevant industries and the macro-economic environment and comparing data and assumptions used by the Company and
Group in recoverability assessments to externally sourced evidence, such as commodity prices, publicly available audited financial statements and
comparable external valuations of collateral held. Where relevant we assessed the forecast timing of future cash flows in the context of underlying
valuations and approved business plans and challenged key assumptions in the valuations;
Obtaining an understanding of the Company and Group’s processes to determine ECL allowances, evaluating the Company and Group’s ECL
model methodologies against established market practices and criteria in the accounting standards;
234
235
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
Financial
report
Shareholder
information
235
235
NOTES TO THE FINANCIAL STATEMENTS
CONSOLIDATED GROUP DIRECTORS’ DECLARATION
TO THE SHAREHOLDERS OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
REPORT ON THE AUDITS OF THE FINANCIAL REPORTS
OPINIONS
including:
We have audited the consolidated Financial Report of Australia and New Zealand Banking Group Limited (the Group Financial Report). We have also
audited the Financial Report of Australia and New Zealand Banking Group Limited (the Company Financial Report).
In our opinion, each of the accompanying Group Financial Report and Company Financial Report are in accordance with the Corporations Act 2001,
giving a true and fair view of the Group’s and of the Company’s financial position as at 30 September 2022 and of its financial performance for the
year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
The respective Financial Reports of the Group and the Company comprise:
balance sheets as at 30 September 2022
income statements, statements of comprehensive income, statements of changes in equity, and cash flow statements for the year then ended
notes 1 to 36 including a summary of significant accounting policies
The Group consists of Australia and New Zealand Banking Group Limited (the Company) and the entities it controlled at the year-end or from time to
We conducted our audits in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinions.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audits of the Financial Reports section of our
We are independent of the Group and Company in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants ((including Independence Standards) (the Code) that
are relevant to our audits of the Financial Reports in Australia. We have fulfilled our other ethical responsibilities in accordance with these
Directors’ Declaration.
time during the financial year.
BASIS FOR OPINIONS
report.
requirements.
KEY AUDIT MATTERS
The Key Audit Matters we identified for the Group and Company are:
Allowance for expected credit losses;
Subjective and complex valuation of financial instruments held at fair value;
Provisions for customer remediation; and
IT systems and controls.
The additional Key Audit Matter we identified for the Group (only) is:
Carrying value of investment in PT Bank Pan Indonesia (PT Panin).
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our respective audits of the Financial Reports of
the current period.
These matters were addressed in the context of our audits of each of the Financial Reports as a whole, and in forming our opinions thereon, and we
do not provide a separate opinion on these matters.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a
private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member
firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.
KEY AUDIT MATTERS (continued)
ALLOWANCE FOR EXPECTED CREDIT LOSSES (Group $4,395m; Company $3,599m)
Refer to the critical accounting estimates and judgements disclosures in relation to the allowance for expected credit losses in Note 14 to the Group
and Company Financial Reports.
The Key Audit Matter
Allowance for expected credit losses is a key audit matter due to the significance of the loans and advances balances to the financial statements and
the inherent complexity of the Company and Group’s Expected Credit Loss models (ECL models) used to measure ECL allowances. These models are
reliant on data and a number of estimates including the impact of multiple economic scenarios and other assumptions such as defining a significant
increase in credit risk (SICR).
AASB 9 Financial Instruments requires the Company and Group to measure ECLs on a forward-looking basis reflecting a range of economic conditions.
Post-model adjustments are made by the Company and Group to address known ECL model limitations or emerging trends in the loan portfolios. We
exercise significant judgement in challenging the economic scenarios used and the judgmental post-model adjustments the Company and Group
applies to the ECL results.
Additional subjectivity and judgement has been introduced into the Group and Company’s measurement of ECL due to the heightened uncertainty
associated with the impact of the economic outlook to the Group and Company’s customers, increasing our audit effort thereon.
The Company and Group’s criteria selected to identify a SICR, such as a decrease in customer credit rating (CCR), are key areas of judgement within the
Company and Group’s ECL methodology as these criteria determine if a forward-looking 12 month or lifetime allowance is recorded.
Additionally, allowances for individually assessed wholesale loans exceeding specific thresholds are assessed by the Company and Group. We exercise
significant judgement in challenging the assessment of specific allowances based on the expected future cash repayments and estimated proceeds
from the value of the collateral held by the Company and Group in respect of the loans.
How the matter was addressed in our audits
Our audit procedures for the allowance for ECL included assessing the Company and Group’s significant accounting policies against the requirements
of the accounting standard. Additionally, our procedures included:
Testing key controls of the Company and Group in relation to:
The ECL model governance and validation processes which involved assessment of model performance;
The assessment and approval of the forward-looking macroeconomic assumptions and scenario weightings through challenge applied by the
Company and Group’s internal governance processes;
Reconciliation of the data used in the ECL calculation process to gross balances recorded within the general ledger as well as source systems;
Customer credit rating (CCR) for wholesale loans (larger customer exposures are monitored individually). This covered elements such as: approval
of new lending facilities against the Company and Group’s lending policies, monitoring of counterparty credit quality against the Company and
Group’s exposure criteria for internal factors specific to the counterparty or external macroeconomic factors, and accuracy and timeliness of CCR
and security indicator (SI) assessments against the requirements of the Company and Group’s lending policies and regulatory requirements;
IT system controls which record retail loans lending arrears, group exposures into delinquency buckets, and re-calculate individual allowances. We
tested automated calculation and change management controls and evaluated the Company and Group’s oversight of the portfolios, with a focus
on controls over delinquency monitoring.
We tested relevant General Information Technology Controls (GITCs) in relation to the key IT applications used by the Company and Group in
measuring ECL allowances as detailed in the IT Systems and Controls key audit matter below.
In addition to controls testing, our procedures included:
Re-performing credit assessments of a sample of wholesale loans controlled by the Company and Group’s specialist workout and recovery team
assessed as higher risk or impaired, and a sample of other loans, focusing on larger exposures assessed by the Company and Group as showing
signs of deterioration, or in areas of emerging risk. For each loan sampled, we challenged the Company and Group’s assessment of CCR and SI
using the customer’s financial position, the valuation of security, and, where relevant, the risk of stranded assets, to inform our overall assessment of
loan recoverability and the impact on the credit allowance. To do this, we used the information on the Company’s and Group’s loan file and
discussed the facts and circumstances of the case with the loan officer. Exercising our judgement, our procedures included using our
understanding of relevant industries and the macro-economic environment and comparing data and assumptions used by the Company and
Group in recoverability assessments to externally sourced evidence, such as commodity prices, publicly available audited financial statements and
comparable external valuations of collateral held. Where relevant we assessed the forecast timing of future cash flows in the context of underlying
valuations and approved business plans and challenged key assumptions in the valuations;
Obtaining an understanding of the Company and Group’s processes to determine ECL allowances, evaluating the Company and Group’s ECL
model methodologies against established market practices and criteria in the accounting standards;
234
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236236 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
Financial
report
Shareholder
information
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
KEY AUDIT MATTERS (continued)
How the matter was addressed in our audits
Our audit procedures in relation to the valuation of financial instruments held at fair value included:
Performing an assessment of the population of financial instruments held at fair value by the Company and Group to identify portfolios with a
higher risk of misstatement arising from significant judgements over valuation either due to unobservable inputs or complex models.
Testing the design and operating effectiveness of key controls relating specifically to these financial instruments, including those in relation to:
Independent Price Verification (IPV), including completeness of portfolios and valuation inputs subject to IPV;
model validation at inception and periodically, including assessment of model limitation and assumptions;
review, approval and challenge of daily profit and loss by a control function;
collateral management process, including review and approval of margin reconciliations with clearing houses; and
review and approval of fair value adjustments (FVAs), including exit price and portfolio level adjustments.
In relation to the subjective valuation of complex Level 2 and Level 3 financial instruments, with our valuation specialists:
Assessing the reasonableness of key inputs and assumptions using comparable data in the market and available alternatives;
Comparing the Company and Group’s valuation methodology to industry practice and the criteria in the accounting standards.
With the assistance of our valuation specialists, independently re-valuing a selection of financial instruments and FVAs of the Company and Group.
This involved sourcing independent inputs from comparable data in the market and available alternatives. We challenged the Company and Group
where our revaluations significantly differed from the Company and Group’s valuations.
Assessing the appropriateness of the Company and Group’s disclosures in the financial reports using our understanding obtained from our testing
and against the requirements of the accounting standards.
CARRYING VALUE OF INVESTMENT IN PT BANK PAN INDONESIA (PT PANIN) (Group $1,318m)
Refer to the critical accounting estimates, judgements and disclosures in Note 27 to the Group Financial Report.
The carrying value of the Group’s investment in associate, PT Panin, is a key audit matter as:
The investment is equity accounted as an associate and where indicators of impairment are identified the recoverable amount must be assessed.
This involves judgement and consideration of valuation models given historical volatility in the market price of the shares and limited liquidity in
the market for the shares. Impairment has been recognised in prior periods.
The Group’s impairment assessment identified that the Group’s investment in associate, PT Panin, experienced a significant increase in the quoted
share price during the period. At 30 September 2022, this indicated a value greater than its carrying value, indicating a possible reversal of previous
impairment under accounting standard requirements.
We critically evaluated the Group’s conclusion not to reverse the impairment losses recorded against the investment in PT Panin in prior periods.
This required analysis of the market and comparison against the Group’s value in use modelled outcome and other fair value approaches.
We focused on critically evaluating the Group’s judgement in relation to key assumptions for assessing the recoverable amount, including:
The nature of alternative valuation methodologies;
assumptions;
Forecast earnings, forecast growth rates and terminal growth rates – the Group’s model is highly sensitive to small changes in these
Discount rates – these are complicated in nature and vary according to the conditions and environment the associate investment operates in.
We involved our valuation specialists to supplement our senior team members in assessing this key audit matter.
INDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS (continued)
Working with our Credit risk specialists, we assessed the accuracy of the Company and Group’s ECL model estimates by re-performing, for a sample
of loans, the ECL allowance using our independently derived calculation tools and comparing this to the amount recorded by the Company and
Group;
Working with our economic specialists, we challenged the Company and Group’s forward-looking macro-economic assumptions and scenarios
incorporated in the Company and Group’s ECL models. We compared the Company and Group’s forecast GDP, unemployment rates, CPI and
property price indices to relevant publicly available macro-economic information, and considered other known variables and information obtained
through our other audit procedures to identify contradictory indicators;
Testing the implementation of the Company and Group’s SICR methodology by re-performing the staging calculation for a sample of loans taking
into consideration movements in the CCR from loan origination and comparing our result to actual staging applied on an individual account level
in the Company and Group’s ECL model;
Assessing the accuracy of the data used in the ECL models by checking a sample of data fields such as account balance and CCR to relevant source
systems.
We challenged key assumptions in the components of the Company and Group’s post-model adjustments to the ECL allowance balance. This
included:
Assessing post-model adjustments against the Company and Group’s ECL model and data deficiencies identified by the Company and Group’s ECL
model validation processes, particularly in light of the significant volatility in economic scenarios;
Comparing underlying data used in concentration risk and economic cycle allowances to underlying loan portfolio characteristics of recent loss
experience, current market conditions and specific risks in the Company and Group’s loan portfolios;
Assessing certain post-model adjustments identified by the Group and Company against internal and external information;
Assessing the completeness of post-model adjustments by checking the consistency of risks we identified in the loan portfolios against the
Company and Group’s assessment.
Assessing the appropriateness of the Company and Group’s disclosures in the financial reports using our understanding obtained from our testing
and against the requirements of the accounting standards.
The Key Audit Matter
SUBJECTIVE AND COMPLEX VALUATION OF FINANCIAL INSTRUMENTS HELD AT FAIR VALUE:
GROUP
- FAIR VALUE OF LEVEL 3 ASSET POSITIONS $1,833m
- FAIR VALUE OF LEVEL 2 ASSET POSITIONS $108,853m
- FAIR VALUE OF LEVEL 3 LIABILITY POSITIONS $31m
- FAIR VALUE OF LEVEL 2 LIABILITY POSITIONS $88,977m
COMPANY
- FAIR VALUE OF LEVEL 3 ASSET POSITIONS $1,449m
- FAIR VALUE OF LEVEL 2 ASSET POSITIONS $105,583m
- FAIR VALUE OF LEVEL 3 LIABILITY POSITIONS $20m
- FAIR VALUE OF LEVEL 2 LIABILITY POSITIONS $86,652m
Refer to the critical accounting estimates, judgements and disclosures of fair values in Note 19 to the Group and Company Financial Reports.
The Key Audit Matter
The fair value of the Company and Group’s Level 3 and 2 financial instruments is determined by the Company and Group’s application of valuation
techniques which often involve the exercise of judgement and the use of assumptions and estimates.
How the matter was addressed in our audit
Working with our valuation specialists, our procedures included:
In assessing this Key Audit Matter, we involved our valuation specialists to supplement our senior team members who understand the Company and
Group’s methods, assumptions and data relevant to their valuation of Financial Instruments.
investment in associate, PT Panin, is supportable;
Considering the appropriateness of the recoverable amount assessment used by the Group to conclude the carrying value of the Group’s
The Company and Group’s valuation of Level 3 and Level 2 financial instruments held at fair value is a Key Audit Matter due to:
The high degree of estimation uncertainty and potentially significant range of reasonable outcomes associated with the valuation of financial
the limited free float of shares;
instruments classified as Level 3 where significant pricing inputs used in the valuation methodology and models are not observable.
The complexity associated with the Company and Group’s valuation methodology and models of certain more complex Level 2 financial
instruments leading to an increase in subjectivity and estimation uncertainty.
Critically evaluating other fair valuation approaches and comparing this to the quoted share price value, and the Group’s value in use outcome;
Considering the appropriateness of the value in use valuation method applied by the Group against the requirements of the accounting standards.
This included:
These factors increased the level of judgement applied by us and our audit effort thereon.
Assessing the integrity of the model used, including the accuracy of the underlying calculation formulas;
Understanding the features of the PT Panin stock and the drivers of the recent significant increase in fair value indicated by reference to the quoted
share price. This included analysis of the volatility of movements, the nature and size of the Group’s shareholdings and the volumes of trading of
Assessing the Group’s key assumptions used in the model, such as, discount rates, forecast earnings, forecast growth rates and terminal growth
rate by comparing to external observable metrics, historical experience, our knowledge of the markets and current market practice;
236
237
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
237237
Financial
report
Shareholder
information
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS (continued)
KEY AUDIT MATTERS (continued)
Working with our Credit risk specialists, we assessed the accuracy of the Company and Group’s ECL model estimates by re-performing, for a sample
of loans, the ECL allowance using our independently derived calculation tools and comparing this to the amount recorded by the Company and
How the matter was addressed in our audits
Our audit procedures in relation to the valuation of financial instruments held at fair value included:
Working with our economic specialists, we challenged the Company and Group’s forward-looking macro-economic assumptions and scenarios
higher risk of misstatement arising from significant judgements over valuation either due to unobservable inputs or complex models.
Performing an assessment of the population of financial instruments held at fair value by the Company and Group to identify portfolios with a
Testing the design and operating effectiveness of key controls relating specifically to these financial instruments, including those in relation to:
Independent Price Verification (IPV), including completeness of portfolios and valuation inputs subject to IPV;
model validation at inception and periodically, including assessment of model limitation and assumptions;
review, approval and challenge of daily profit and loss by a control function;
collateral management process, including review and approval of margin reconciliations with clearing houses; and
review and approval of fair value adjustments (FVAs), including exit price and portfolio level adjustments.
In relation to the subjective valuation of complex Level 2 and Level 3 financial instruments, with our valuation specialists:
Assessing the reasonableness of key inputs and assumptions using comparable data in the market and available alternatives;
Comparing the Company and Group’s valuation methodology to industry practice and the criteria in the accounting standards.
With the assistance of our valuation specialists, independently re-valuing a selection of financial instruments and FVAs of the Company and Group.
This involved sourcing independent inputs from comparable data in the market and available alternatives. We challenged the Company and Group
where our revaluations significantly differed from the Company and Group’s valuations.
Assessing the appropriateness of the Company and Group’s disclosures in the financial reports using our understanding obtained from our testing
and against the requirements of the accounting standards.
CARRYING VALUE OF INVESTMENT IN PT BANK PAN INDONESIA (PT PANIN) (Group $1,318m)
Refer to the critical accounting estimates, judgements and disclosures in Note 27 to the Group Financial Report.
The Key Audit Matter
The carrying value of the Group’s investment in associate, PT Panin, is a key audit matter as:
The investment is equity accounted as an associate and where indicators of impairment are identified the recoverable amount must be assessed.
This involves judgement and consideration of valuation models given historical volatility in the market price of the shares and limited liquidity in
the market for the shares. Impairment has been recognised in prior periods.
The Group’s impairment assessment identified that the Group’s investment in associate, PT Panin, experienced a significant increase in the quoted
share price during the period. At 30 September 2022, this indicated a value greater than its carrying value, indicating a possible reversal of previous
impairment under accounting standard requirements.
We critically evaluated the Group’s conclusion not to reverse the impairment losses recorded against the investment in PT Panin in prior periods.
This required analysis of the market and comparison against the Group’s value in use modelled outcome and other fair value approaches.
We focused on critically evaluating the Group’s judgement in relation to key assumptions for assessing the recoverable amount, including:
The nature of alternative valuation methodologies;
Forecast earnings, forecast growth rates and terminal growth rates – the Group’s model is highly sensitive to small changes in these
assumptions;
Discount rates – these are complicated in nature and vary according to the conditions and environment the associate investment operates in.
We involved our valuation specialists to supplement our senior team members in assessing this key audit matter.
Group;
systems.
included:
incorporated in the Company and Group’s ECL models. We compared the Company and Group’s forecast GDP, unemployment rates, CPI and
property price indices to relevant publicly available macro-economic information, and considered other known variables and information obtained
through our other audit procedures to identify contradictory indicators;
Testing the implementation of the Company and Group’s SICR methodology by re-performing the staging calculation for a sample of loans taking
into consideration movements in the CCR from loan origination and comparing our result to actual staging applied on an individual account level
in the Company and Group’s ECL model;
Assessing the accuracy of the data used in the ECL models by checking a sample of data fields such as account balance and CCR to relevant source
We challenged key assumptions in the components of the Company and Group’s post-model adjustments to the ECL allowance balance. This
Assessing post-model adjustments against the Company and Group’s ECL model and data deficiencies identified by the Company and Group’s ECL
model validation processes, particularly in light of the significant volatility in economic scenarios;
Comparing underlying data used in concentration risk and economic cycle allowances to underlying loan portfolio characteristics of recent loss
experience, current market conditions and specific risks in the Company and Group’s loan portfolios;
Assessing certain post-model adjustments identified by the Group and Company against internal and external information;
Assessing the completeness of post-model adjustments by checking the consistency of risks we identified in the loan portfolios against the
Company and Group’s assessment.
Assessing the appropriateness of the Company and Group’s disclosures in the financial reports using our understanding obtained from our testing
and against the requirements of the accounting standards.
SUBJECTIVE AND COMPLEX VALUATION OF FINANCIAL INSTRUMENTS HELD AT FAIR VALUE:
- FAIR VALUE OF LEVEL 3 ASSET POSITIONS $1,833m
- FAIR VALUE OF LEVEL 2 ASSET POSITIONS $108,853m
- FAIR VALUE OF LEVEL 3 LIABILITY POSITIONS $31m
- FAIR VALUE OF LEVEL 2 LIABILITY POSITIONS $88,977m
GROUP
COMPANY
- FAIR VALUE OF LEVEL 3 ASSET POSITIONS $1,449m
- FAIR VALUE OF LEVEL 2 ASSET POSITIONS $105,583m
- FAIR VALUE OF LEVEL 3 LIABILITY POSITIONS $20m
- FAIR VALUE OF LEVEL 2 LIABILITY POSITIONS $86,652m
The Key Audit Matter
Refer to the critical accounting estimates, judgements and disclosures of fair values in Note 19 to the Group and Company Financial Reports.
The fair value of the Company and Group’s Level 3 and 2 financial instruments is determined by the Company and Group’s application of valuation
techniques which often involve the exercise of judgement and the use of assumptions and estimates.
How the matter was addressed in our audit
Working with our valuation specialists, our procedures included:
In assessing this Key Audit Matter, we involved our valuation specialists to supplement our senior team members who understand the Company and
Group’s methods, assumptions and data relevant to their valuation of Financial Instruments.
The Company and Group’s valuation of Level 3 and Level 2 financial instruments held at fair value is a Key Audit Matter due to:
The high degree of estimation uncertainty and potentially significant range of reasonable outcomes associated with the valuation of financial
instruments classified as Level 3 where significant pricing inputs used in the valuation methodology and models are not observable.
The complexity associated with the Company and Group’s valuation methodology and models of certain more complex Level 2 financial
instruments leading to an increase in subjectivity and estimation uncertainty.
These factors increased the level of judgement applied by us and our audit effort thereon.
Considering the appropriateness of the recoverable amount assessment used by the Group to conclude the carrying value of the Group’s
investment in associate, PT Panin, is supportable;
Understanding the features of the PT Panin stock and the drivers of the recent significant increase in fair value indicated by reference to the quoted
share price. This included analysis of the volatility of movements, the nature and size of the Group’s shareholdings and the volumes of trading of
the limited free float of shares;
Critically evaluating other fair valuation approaches and comparing this to the quoted share price value, and the Group’s value in use outcome;
Considering the appropriateness of the value in use valuation method applied by the Group against the requirements of the accounting standards.
This included:
Assessing the integrity of the model used, including the accuracy of the underlying calculation formulas;
Assessing the Group’s key assumptions used in the model, such as, discount rates, forecast earnings, forecast growth rates and terminal growth
rate by comparing to external observable metrics, historical experience, our knowledge of the markets and current market practice;
236
237
238238 ANZ 2022 Annual Report
ANZ 2022 Annual Report / Financial Report
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
Financial
report
Shareholder
information
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS (continued)
KEY AUDIT MATTERS (continued)
Independently developing a discount rate estimate or range considered comparable using publicly available market data for comparable
Assessing the appropriateness of the Company and Group’s conclusions against the requirements of Australian Accounting Standards where
entities, adjusted for factors specific to the investment and the market and industry it operates in;
estimates were unable to be reliably made for a provision to be recognised;
Comparing the forecast earnings contained in the model to broker consensus reports, and released financial results;
Assessing the accuracy of previous forecasts to inform our evaluation of current forecasts incorporated in the model;
Considering the sensitivity of the model by varying key assumptions, such as, discount rates and terminal growth rates, within a reasonable
possible range. We did this to identify those assumptions at higher risk of bias or inconsistency in application and to focus our further
procedures.
Assessing the recoverable amount at the reporting date against the recoverable amount of the investment when it was last impaired to critically
assess reversal of previous impairment losses;
Assessing the disclosures in the financial report using our understanding obtained from our testing and against the requirements of the
accounting standards.
PROVISIONS FOR CUSTOMER REMEDIATION (Group $662m; Company $600m)
Refer to the critical accounting estimates, judgements and disclosures in Notes 23 and 33 to the Group and Company Financial Reports.
The Key Audit Matter
The Company and Group have recognised provisions in relation to certain customer remediation activities arising from both internal and external
investigations and reviews.
Provisions for customer remediation activities is a key audit matter due to the judgements required by us in assessing the Company and Group’s
determination of:
The completeness of the population of matters requiring remediation;
The existence of a present legal or constructive obligation arising from a past event, considering the conditions of the event against the criteria in
the accounting standards;
Reliable estimates of the remediation amounts which may be paid arising from investigations and legal actions, including estimates of related
costs; and
The potential for legal proceedings, further investigations, and reviews from their regulators leading to a wider range of estimation outcomes for us
to consider.
How the matter was addressed in our audits
Our audit procedures for customer remediation provisions included:
Evaluating the related disclosures using our understanding obtained from our testing and against the requirements of Australian Accounting
Standards.
IT SYSTEMS AND CONTROLS
The Key Audit Matter
performance.
As a major Australian bank, the Company and Group’s businesses utilise many complex, interdependent Information Technology (IT) systems to
process and record a high volume of transactions. The controls over access, changes to and operation of IT systems are key to the recording of
financial information and the preparation of financial reports which provide a true and fair view of the Company and Group’s financial positions and
The IT systems and controls, as they impact the financial recording and reporting of the Company and Group’s transactions, is a key audit matter as
our audit approaches could significantly differ depending on the effective operation of the Company and Group’s IT controls. We work with our IT
specialists as a core part of our audit team.
How the matter was addressed in our audits
Our testing focused on the technology control environments for key IT applications (systems) used in processing significant transactions and
recording balances in the general ledgers, and the automated controls embedded within these systems which link the technology-enabled business
processes. Working with our IT specialists, our audit procedures included:
Assessing the governance and higher-level controls across the IT environments, including those regarding policy design, policy review and
awareness, and IT Risk and cyber security management practices;
Design and operating effectiveness testing of key controls across the user access management lifecycle, including how users are on-boarded,
reviewed for access levels assigned, and removed on a timely basis from key IT applications and supporting infrastructure. We also examined the
management of privileged roles and functions across relevant IT application and the supporting infrastructure;
Design and operating effectiveness testing of key controls for IT change management including authorisation of changes prior to development,
testing performed and approvals prior to migration into the production environment of key IT applications. We assessed user access to release
changes to IT application production environments across the Company and Group and whether access was commensurate with their job
Design and operating effectiveness testing of key controls used by the Company and Group’s technology teams to restrict access to and monitor
Obtaining an understanding of the Company and Group’s processes and controls for identifying and assessing the impact of the investigations into
customer remediation activities;
Enquiring with the Company and Group regarding ongoing legal, regulatory and other investigations into past activities which may require
Design and operating effectiveness testing of key automated business process controls including those relating to enforcing segregation of duties
to avoid conflicts from inappropriate role combinations within IT applications. Our testing included:
Configurations to perform calculations, mappings and flagging of financial transactions, and automated reconciliation controls (both between
remediation;
Conducting independent discussions on significant matters with external legal counsel;
Reading the minutes and other relevant documentation of the Company’s Board of Directors, Board Committees, various management
committees, and attending the Company’s Audit and Risk Committee meetings, for consistency to the basis used to estimate the provision;
Inspecting correspondence with relevant regulatory bodies and comparing the status and positioning with the basis for estimation used by the
Company and Group;
For a sample of individual customer remediation matters, evaluating the basis for recognition of a provision and associated costs against the
requirements of the accounting standards and for consistency with the Group and Company’s policies. We did this by obtaining an understanding
of the matter and its status and independently assessing this against the recognition requirements of the accounting standards;
For a sample of individual customer remediation matters:
Assessing and challenging the methods, data and assumptions used by the Company and Group to provide for customer remediation matters;
Sample checking data accuracy to underlying systems;
Performing model integrity checks;
Testing the accuracy of historical remediation provisions by comparing to actual payments. We used this knowledge to challenge the Group’s
and Company’s current estimates and to inform our further procedures.
Testing completeness by evaluating where exposures may have arisen based upon our knowledge and experience of broader industry matters, the
Company and Group's documentation and the current regulatory environment. We also checked the features of these exposures against the
criteria defining a provision or a contingency in the accounting standards;
responsibilities;
system batch job schedules;
systems and intra-system); and
financial reporting.
OTHER INFORMATION
Data integrity of key system reporting used by us in our audit to select samples and analyse data used by the Company and Group to generate
Other Information is financial and non-financial information in Australia and New Zealand Banking Group Limited’s annual reporting which is provided
in addition to the Financial Reports and the Auditor's Report. The Directors are responsible for the Other Information.
Our opinions on the Financial Reports do not cover the Other Information and, accordingly, we do not express an audit opinion or any form of
assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audits of the Financial Reports, our responsibility is to read the Other Information. In doing so, we consider whether the Other
Information is materially inconsistent with the Financial Reports or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed
on the Other Information that we obtained prior to the date of this Auditor’s Report, we have nothing to report.
238
239
ANZ 2022 Annual Report / Financial Report
ANZ 2022 Annual Report
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
report
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
239239
Financial
report
Shareholder
information
ANZ 2022 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT (continued)
KEY AUDIT MATTERS (continued)
KEY AUDIT MATTERS (continued)
Independently developing a discount rate estimate or range considered comparable using publicly available market data for comparable
Assessing the appropriateness of the Company and Group’s conclusions against the requirements of Australian Accounting Standards where
entities, adjusted for factors specific to the investment and the market and industry it operates in;
estimates were unable to be reliably made for a provision to be recognised;
Comparing the forecast earnings contained in the model to broker consensus reports, and released financial results;
Evaluating the related disclosures using our understanding obtained from our testing and against the requirements of Australian Accounting
Standards.
IT SYSTEMS AND CONTROLS
The Key Audit Matter
As a major Australian bank, the Company and Group’s businesses utilise many complex, interdependent Information Technology (IT) systems to
process and record a high volume of transactions. The controls over access, changes to and operation of IT systems are key to the recording of
financial information and the preparation of financial reports which provide a true and fair view of the Company and Group’s financial positions and
performance.
The IT systems and controls, as they impact the financial recording and reporting of the Company and Group’s transactions, is a key audit matter as
our audit approaches could significantly differ depending on the effective operation of the Company and Group’s IT controls. We work with our IT
specialists as a core part of our audit team.
How the matter was addressed in our audits
Our testing focused on the technology control environments for key IT applications (systems) used in processing significant transactions and
recording balances in the general ledgers, and the automated controls embedded within these systems which link the technology-enabled business
processes. Working with our IT specialists, our audit procedures included:
Assessing the governance and higher-level controls across the IT environments, including those regarding policy design, policy review and
awareness, and IT Risk and cyber security management practices;
Design and operating effectiveness testing of key controls across the user access management lifecycle, including how users are on-boarded,
reviewed for access levels assigned, and removed on a timely basis from key IT applications and supporting infrastructure. We also examined the
management of privileged roles and functions across relevant IT application and the supporting infrastructure;
Design and operating effectiveness testing of key controls for IT change management including authorisation of changes prior to development,
testing performed and approvals prior to migration into the production environment of key IT applications. We assessed user access to release
changes to IT application production environments across the Company and Group and whether access was commensurate with their job
responsibilities;
Design and operating effectiveness testing of key controls used by the Company and Group’s technology teams to restrict access to and monitor
system batch job schedules;
Design and operating effectiveness testing of key automated business process controls including those relating to enforcing segregation of duties
to avoid conflicts from inappropriate role combinations within IT applications. Our testing included:
Configurations to perform calculations, mappings and flagging of financial transactions, and automated reconciliation controls (both between
systems and intra-system); and
Data integrity of key system reporting used by us in our audit to select samples and analyse data used by the Company and Group to generate
financial reporting.
OTHER INFORMATION
Other Information is financial and non-financial information in Australia and New Zealand Banking Group Limited’s annual reporting which is provided
in addition to the Financial Reports and the Auditor's Report. The Directors are responsible for the Other Information.
Our opinions on the Financial Reports do not cover the Other Information and, accordingly, we do not express an audit opinion or any form of
assurance conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audits of the Financial Reports, our responsibility is to read the Other Information. In doing so, we consider whether the Other
Information is materially inconsistent with the Financial Reports or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed
on the Other Information that we obtained prior to the date of this Auditor’s Report, we have nothing to report.
Assessing the accuracy of previous forecasts to inform our evaluation of current forecasts incorporated in the model;
Considering the sensitivity of the model by varying key assumptions, such as, discount rates and terminal growth rates, within a reasonable
possible range. We did this to identify those assumptions at higher risk of bias or inconsistency in application and to focus our further
Assessing the recoverable amount at the reporting date against the recoverable amount of the investment when it was last impaired to critically
Assessing the disclosures in the financial report using our understanding obtained from our testing and against the requirements of the
procedures.
assess reversal of previous impairment losses;
accounting standards.
PROVISIONS FOR CUSTOMER REMEDIATION (Group $662m; Company $600m)
Refer to the critical accounting estimates, judgements and disclosures in Notes 23 and 33 to the Group and Company Financial Reports.
The Company and Group have recognised provisions in relation to certain customer remediation activities arising from both internal and external
The Key Audit Matter
investigations and reviews.
determination of:
the accounting standards;
costs; and
to consider.
Provisions for customer remediation activities is a key audit matter due to the judgements required by us in assessing the Company and Group’s
The completeness of the population of matters requiring remediation;
The existence of a present legal or constructive obligation arising from a past event, considering the conditions of the event against the criteria in
Reliable estimates of the remediation amounts which may be paid arising from investigations and legal actions, including estimates of related
The potential for legal proceedings, further investigations, and reviews from their regulators leading to a wider range of estimation outcomes for us
How the matter was addressed in our audits
Our audit procedures for customer remediation provisions included:
customer remediation activities;
remediation;
Obtaining an understanding of the Company and Group’s processes and controls for identifying and assessing the impact of the investigations into
Enquiring with the Company and Group regarding ongoing legal, regulatory and other investigations into past activities which may require
Conducting independent discussions on significant matters with external legal counsel;
Reading the minutes and other relevant documentation of the Company’s Board of Directors, Board Committees, various management
committees, and attending the Company’s Audit and Risk Committee meetings, for consistency to the basis used to estimate the provision;
Inspecting correspondence with relevant regulatory bodies and comparing the status and positioning with the basis for estimation used by the
Company and Group;
For a sample of individual customer remediation matters, evaluating the basis for recognition of a provision and associated costs against the
requirements of the accounting standards and for consistency with the Group and Company’s policies. We did this by obtaining an understanding
of the matter and its status and independently assessing this against the recognition requirements of the accounting standards;
Assessing and challenging the methods, data and assumptions used by the Company and Group to provide for customer remediation matters;
For a sample of individual customer remediation matters:
Sample checking data accuracy to underlying systems;
Performing model integrity checks;
Testing the accuracy of historical remediation provisions by comparing to actual payments. We used this knowledge to challenge the Group’s
and Company’s current estimates and to inform our further procedures.
Testing completeness by evaluating where exposures may have arisen based upon our knowledge and experience of broader industry matters, the
Company and Group's documentation and the current regulatory environment. We also checked the features of these exposures against the
criteria defining a provision or a contingency in the accounting standards;
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ANZ 2022 Annual Report
ANZ 2022 ANNUAL REPORT
INDEPENDENT AUDITOR’S REPORT (continued)
RESPONSIBILITIES OF THE DIRECTORS FOR THE FINANCIAL REPORTS
The Directors are responsible for:
preparing the Financial Reports that give a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
implementing necessary internal controls to enable the preparation of a Financial Report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error
assessing the Group and Company’s ability to continue as a going concern and whether the use of the going concern basis of accounting is
appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they
either intend to liquidate the Group and Company or to cease operations or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDITS OF THE FINANCIAL REPORTS
Our objective is:
to obtain reasonable assurance about whether each of the Financial Reports as a whole are free from material misstatement, whether due to fraud
or error; and
to issue an Auditor’s Report that includes our opinions.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error. They are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Reports.
A further description of our responsibilities for the audits of the Financial Reports is located at the Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our Auditor’s Report.
REPORT ON THE REMUNERATION REPORT
In our opinion, the Remuneration Report of Australia and New Zealand Banking Group Limited for the year ended 30 September 2022 complies with
Section 300A of the Corporations Act 2001.
DIRECTORS’ RESPONSIBILITIES
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with Section 300A of
the Corporations Act 2001.
OUR RESPONSIBILITIES
We have audited the Remuneration Report included in pages 62 to 103 of the Directors’ report for the year ended 30 September 2022.
Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
Martin McGrath
Partner
Melbourne
26 October 2022
KPMG
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Independent Limited Assurance Report
to the Directors of Australia and
New Zealand Banking Group Limited
Conclusion
Based on the evidence we obtained
from the procedures performed,
we are not aware of any material
misstatements in the specified ESG
Information in the ANZ 2022 Annual
Report and ANZ 2022 Annual Review
which has been prepared by ANZ in
accordance with the Criteria for the
year ended 30 September 2022.
Information Subject to Assurance
Australia and New Zealand Banking Group
Limited (ANZ) engaged KPMG to perform
a limited assurance engagement in relation
to the ESG Information in the ANZ 2022
Annual Report and ANZ 2022 Annual
Review. The scope of work comprised
limited assurance over the material text and
data claims as specified in the table below:
ESG Information
Page
2022 Performance Snapshot
What matters most
to our stakeholders
Our approach to societal
challenges
Our approach to
climate change
Performance overview
(Five year summary)
3
10
14-15
16-17
60
The ANZ 2022 Annual Report and
ANZ 2022 Annual Review covers ANZ’s
global operations for the year ended
30 September 2022 unless otherwise
indicated.
Criteria
The ESG Information has been extracted
from and prepared by ANZ on a consistent
basis with the information in the ANZ 2022
ESG Supplement and accompanying ANZ
2022 ESG Supplement Data Pack, copies of
which are available at anz.com/annualreport
(the criteria). The ANZ 2022 ESG Supplement
and ANZ 2022 ESG Supplement Data Pack
has been prepared in accordance with
the GRI Standards published by the Global
Reporting Initiative, version dated 2016
and management’s basis of reporting,
a summary of which is included in the
Explanatory Notes section in the ANZ
2022 ESG Supplement.
Basis of our Conclusion
We conducted our work in accordance
with International Standard on Assurance
Engagements ISAE 3000 (Standard). In
accordance with the Standard we have:
• Used our professional judgement to
plan and perform the engagement to
obtain limited assurance that we are
not aware of any material misstatements
in the ESG Information, whether due to
fraud or error;
• Considered relevant internal controls
when designing our assurance
procedures, however we do not express
a conclusion on their effectiveness; and
• Ensured that the engagement team
possess the appropriate knowledge,
skills and professional competencies.
Summary of Procedures Performed
Our limited assurance conclusion is based
on the evidence obtained from performing
the following procedures:
• Interviews with relevant employees
responsible for developing the content
(text and data) within the ESG
Information to understand the approach
for monitoring, collation and reporting
of such information and the accuracy,
completeness and existence of reported
text and data;
• Undertaking analytical review
procedures to support the
reasonableness of the data;
• Identifying and testing assumptions
supporting the calculations;
• Comparing text and data (on a sample
basis) presented to underlying
sources; and
• Reviewing the ANZ 2022 Annual Report,
ANZ 2022 Annual Review and ANZ 2022
ESG Supplement and ANZ 2022 ESG
Supplement Data Pack in their entirety
for consistency with the ESG Information
and our knowledge obtained through
our assurance engagement.
How the Standard Defines
Limited Assurance and
Material Misstatement
A limited assurance engagement is restricted
primarily to enquiries and analytical
procedures. The procedures performed
in a limited assurance engagement vary
in nature and timing from, and are less in
extent than for a reasonable assurance
engagement. Consequently the level of
assurance obtained in a limited assurance
engagement is substantially lower than the
assurance that would have been obtained
had a reasonable assurance engagement
been performed. The Standard requires our
report to be worded around what we have
not found, rather than what we have found.
Misstatements, including omissions, are
considered material if, individually or in
the aggregate, they could reasonably be
expected to influence relevant decisions
of the Directors of ANZ.
Use of this Assurance Report
This report has been prepared for the
Directors of ANZ Banking Group Limited
for the purpose of providing an assurance
conclusion on the ESG Information within
the ANZ 2022 Annual Report and ANZ 2022
Annual Review and may not be suitable
for another purpose. We disclaim any
assumption of responsibility for any reliance
on this report, to any person other than the
Directors of ANZ, or for any other purpose
than that for which it was prepared.
ANZ 2022 Annual Report
Overview
How we
create value
Performance
overview
Remuneration
report
Directors’
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Financial
report
Shareholder
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243
ANZ’s responsibility
Our responsibility
• Determining that the criteria is
appropriate to meet their needs;
• Preparing and presenting the ESG
Information in accordance with the
criteria; and
• Establishing internal controls that enable
the preparation and presentation of
the ESG Information that is free from
material misstatement, whether due
to fraud or error.
Our responsibility is to perform a limited
assurance engagement in relation
to the ESG Information for the year
ended 30 September 2022, and to
issue an assurance report that includes
our conclusion.
Our Independence and Quality
Control
We have complied with our independence
and other relevant ethical requirements
of the Code of Ethics for Professional
Accountants (including Independence
Standards) issued by the Australian
Professional and Ethical Standards Board, and
complied with the applicable requirements
of Australian Standard on Quality Control
1 to maintain a comprehensive system of
quality control. We have also complied with
ANZ’s Stakeholder Engagement Model for
Relationship with External Auditor (available
on anz.com).
KPMG
Adrian King
Partner
KPMG Melbourne
26 October 2022
©2022 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English
company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
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Performance
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Remuneration
report
Directors’
report
Financial
report
Shareholder
information
Shareholder information – unaudited
Ordinary shares
At 3 October 2022, the 20 largest holders of ANZ ordinary shares held 1,759,194,451 ordinary shares, equal to 58.84% of the total issued
ordinary capital. At 3 October 2022 the issued ordinary capital was 2,989,923,751 ordinary shares.
Name
Number of shares
% of shares
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2
3
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
4 NATIONAL NOMINEES LIMITED
5
6
BNP PARIBAS NOMS PTY LTD
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