COMMONWEALTH BANK OF AUSTRALIA NEW ZEALAND OPERATIONS GENERAL SHORT FORM DISCLOSURE STATEMENT

Transcription

1 COMMONWEALTH BANK OF AUSTRALIA NEW ZEALAND OPERATIONS GENERAL SHORT FORM DISCLOSURE STATEMENT For the six months ended 31 December 2008

2 Commonwealth Bank of Australia NZ Operations General Disclosure Statement 31 December 2008 The Reserve Bank Orders in Council require Registered Banks licensed in New Zealand to produce a General Disclosure Statement prepared in accordance with the Financial Reporting Act 1993 and the Orders, and that such Statements be made available to the public on request. This General Disclosure Statement has been produced in compliance with those Orders and consists of two parts: Part A - Commonwealth Bank of Australia New Zealand Banking Group (the Banking Group ) General Disclosure Statement The New Zealand banking group of the Commonwealth Bank of Australia (the CBA ) comprises: CBA New Zealand Branch (the Registered Bank ) and various 100% owned CBA subsidiaries controlled by CBA New Zealand Branch. The CBA New Zealand Branch operates independently of the ASB Group operations within New Zealand and is a separately registered financial institution in terms of the Reserve Bank of New Zealand Act The registered bank for the purposes of this Disclosure Statement is CBA New Zealand Branch. CBA New Zealand Branch was issued a registered banking licence on 23 June 2000 AND ASB Banking Operations as disclosed in the ASB Bank Limited General Disclosure Statement, together with the immediate parent of ASB Bank Limited, ASB Holdings Limited, and ASB Funding Limited, a funding company for the CBA New Zealand Operations that is 100% owned by ASB Holdings Limited. ASB Holdings Limited is the ultimate holding company in New Zealand, owned as at the date of these financial statements, 100% by the Commonwealth Bank of Australia. The assets of ASB Holdings Limited consist mainly of its investments in Subsidiaries.

3 Part B - Commonwealth Bank of Australia New Zealand Life Insurance Group (the Life Group ) Disclosures The New Zealand life insurance activities of the Commonwealth Bank of Australia have not been included in the Banking Group General Disclosure Statement. Equivalent disclosures, where applicable, have been provided to assist interested parties to understand the entire New Zealand operations of the Commonwealth Bank of Australia. The Life Group is the aggregation of the life insurance activities of ASB Group (Life) Limited, The Colonial Mutual Life Assurance Society Limited New Zealand Branch, Colonial First State Investments (NZ) Limited, Colonial First State Investment Managers (NZ) Limited and Colonial Holding Company Limited New Zealand Branch.

4 COMMONWEALTH BANK OF AUSTRALIA NEW ZEALAND OPERATIONS PART A NEW ZEALAND BANKING GROUP GENERAL DISCLOSURE STATEMENT For the six months ended 31 December 2008

5 Contents 1-7 General Disclosures 8 Historical Summary of Aggregated Financial Statements 9 Income Statement 10 Statement of Recognised Income and Expense 11 Balance Sheet 12 Cash Flow Statement Notes to the Financial Statements Statement of Accounting Policies 21 2 Interest Income 21 3 Interest Expense 21 4 Discontinued Activities Other Income 22 6 Operating Expense Disclosures 22 7 Auditor's Remuneration 22 8 Taxation 22 9 Dividends Cash and Call Deposits with the Central Bank Due from Other Banks Money Market Advances Securities Derivative Financial Instruments Advances to Customers Credit Risk Management and Asset Quality Investments in Associates and Subsidiaries Other Assets Property, Plant and Equipment Intangible Assets Deferred Taxation Asset / (Liability) Due to Other Banks Money Market Deposits Deposits from Customers Other Liabilities Subordinated Debt Head Office Account and Contributed Capital Asset Revaluation Reserves Available for Sale Reserves Cash Flow Hedge Reserves Foreign Currency Translation Reserves Retained Earnings Minority Interests Reconciliation of Net Profit after Taxation to Net Cash Flows from Operating Activities Reconciliation of Cash and Cash Equivalents to the Balance Sheet Imputation and Policyholder Credit Accounts Related Party Transactions and Balances Directors and Key Management Personnel Credit and Capital Commitments, and Contingent Liabilities Leasing and Other Commitments Fair Value of Financial Instruments Capital Adequacy Securitisation, Funds Management, Other Fiduciary Activities and the Marketing and Distribution of Insurance Products Financial Reporting by Segments Risk Management Policies Events after the Balance Sheet Date Auditor's Review Report

6 General Disclosure Statement Commonwealth Bank of Australia New Zealand Banking Group This document comprises the General Disclosure Statement for the Commonwealth Bank of Australia New Zealand Banking Group (the "Banking Group") of Commonwealth Bank of Australia New Zealand Operations (the "CBA NZ Operations") and Commonwealth Bank of Australia New Zealand Branch (the "Registered Bank") as at 31 December The business of the Registered Bank comprises all banking business transacted in New Zealand through the New Zealand branch. This information is published in accordance with the Registered Bank Disclosure Statement (Full and Half-Year Overseas Incorporated Registered Banks) Order 2008 and pursuant to Section 81(1) of the Reserve Bank of New Zealand Act This document should be read in conjunction with the disclosures for Commonwealth Bank of Australia New Zealand Life Insurance Group (the "Life Group") of the CBA NZ Operations. GENERAL MATTERS 1.0 Registered Bank and Address for Service Commonwealth Bank of Australia New Zealand Branch Level 21, ASB Bank Centre 135 Albert Street Auckland New Zealand A copy of the Commonwealth Bank of Australia's most recent published Financial Statements will be available immediately upon a request being made to the above address. A copy of the Financial Statements may also be obtained from the Commonwealth Bank of Australia's website ( in the Shareholder Centre. The Registered Bank has not published a supplementary disclosure statement because none of the information required to be disclosed applies to the Banking Group. 2.0 Overseas Bank and Address for Service The Overseas Bank is the Commonwealth Bank of Australia, domiciled in Australia. The Overseas Banking Group is the Commonwealth Bank of Australia including subsidiary activities worldwide. Commonwealth Bank of Australia Level 7 48 Martin Place Sydney Australia The Commonwealth Bank of Australia (the "CBA") operates as a public company under the Corporations Act in Australia. It has share capital and is governed by a constitution. CBA was converted from a statutory corporation to a public company on 17 April The CBA Group provides a wide range of banking, financial and related services including funds management and life and general insurance. The origins of the Bank lie in the former Commonwealth Bank of Australia which was established in 1911 by an Act of Parliament to conduct commercial and savings bank functions. These functions were gradually expanded under continued Government ownership until September 1991 when the Bank was partially privatised. In July 1996 the Commonwealth Government sold its remaining shareholding in the Bank. 3.0 Ranking of Local Creditors in a Winding-Up Under Section 13A(3) of the Banking Act 1959 of the Commonwealth of Australia, if an Authorised Deposit-taking Institution ("ADI") (which includes a bank) becomes unable to meet its obligations or suspends payment, the assets of the ADI in Australia are to be available to meet the ADI s liabilities in the following order: (a) first, the ADI's liabilities to APRA, to the extent that APRA has made, or is required to make, payments to depositors under the Financial Claims Scheme; (b) second, the ADI's debts to APRA for costs incurred by APRA in the administration of the Scheme in respect of that ADI; (c) third, in payment of the ADI's deposit liabilities in Australia (other than liabilities covered under paragraph (a)); and (d) fourth, the ADI's other liabilities. Section 16(1) and (2) of the Banking Act 1959 of the Commonwealth of Australia provides that, despite anything contained in any law relating to the winding up of companies, but subject to Section 13A(3) of the Banking Act 1959, the debts of an ADI to the Australian Prudential Regulation Authority ("APRA") in respect of APRA s costs (including costs in the nature of remuneration and expenses) of being in control of the ADI s business or of having an administrator in control of the ADI s business have priority in a winding up of the ADI over all other unsecured debts. 3.1 Section 86 of the Reserve Bank Act 1959 of the Commonwealth of Australia provides that notwithstanding anything contained in any law relating to the winding up of companies, but subject to Section 13A(3) of the Banking Act 1959, debts due to the Reserve Bank of Australia by an ADI shall, in the winding up, have priority over all other debts other than debts due to the Commonwealth of Australia. The Commonwealth Bank of Australia is an ADI. Requirement for Commonwealth Bank of Australia to maintain sufficient assets in Australia to cover an ongoing obligation to pay deposit liabilities in Australia Section 13A(4) of the Banking Act 1959 of the Commonwealth of Australia states that it is an offence for an ADI not to hold assets in Australia of a value that is equal to or greater than the total amount of its deposit liabilities in Australia, unless APRA has authorised the ADI to hold assets of a lesser value. This requirement has the potential to impact on the management of the liquidity of the New Zealand operations of the Commonwealth Bank of Australia in extreme circumstances. 1

7 4.0 Guarantee Arrangements On 12 October 2008 the Australian Government announced guarantee arrangements for deposits and wholesale funding of Australian deposit-taking institutions. Commonwealth Bank of Australia is an eligible Authorised Deposit-taking Institution ( ADI ) under the terms of the guarantee arrangements. The guarantee arrangements also apply to the Registered Bank, as a foreign branch of an eligible institution. The Australian Government Guarantee Scheme for Large Deposits and Wholesale Funding ("Guarantee Scheme") formally commenced on 28 November Interim arrangements applied until that date, with deposits and eligible wholesale borrowings guaranteed without charge in this period. Under the Guarantee Scheme, eligible ADIs can obtain guarantees for deposit balances totalling over one million Australian dollars ("AUD 1 million") per customer and for wholesale funding liabilities, in return for a fee (which is calculated to reflect the ADI's credit rating and may be passed on by the ADI). Access to the Guarantee Scheme is voluntary. Separate arrangements apply for deposit balances totalling up to and including AUD 1 million per customer per institution. Such deposits are guaranteed by the Australian Government under the Financial Claims Scheme and this guarantee is free. Eligible institutions wanting to access the Guarantee Scheme for their large deposit balances or wholesale funding from 28 November 2008 need to apply to the Scheme Administrator. 4.1 Deposits up to and including AUD 1 million The guarantee of deposits up to and including AUD 1 million is provided under Commonwealth legislation. It only applies to protected accounts with ADI's. A protected account is an account that is kept by an account holder with an ADI that is either prescribed by regulation or an account, or covered financial product, that is kept under an agreement between the account holder and the ADI requiring the ADI to pay the account holder on demand, or at an agreed time, the net credit balance. Various deposit accounts, such as saving, call, current, cheque, debit card, transaction, and mortgage offset accounts, have been declared to be covered financial products. The guarantee of deposits up to and including AUD 1 million applies without charge. The Government has stated the guarantee will operate for a period of three years from 12 October The guarantee applies to deposits denominated in any currency. 4.2 Guarantee Scheme The Guarantee Scheme applies, without limit, to deposit liabilities in excess of AUD 1 million (per customer per ADI) and to wholesale funding liabilities. The Scheme commenced on 28 November Any claim for payment must be made in accordance with the Scheme deed and rules. A liability will only be covered by the Scheme if it is the subject of an Eligibility Certificate issued in accordance with the Rules. The Rules prescribe the criteria which must be satisfied before a certificate can be issued, and the application process and fees applicable. The ADI must provide certain statements and legal documents, before it obtains coverage. The Scheme guarantee will terminate 67 calendar months after the Final Application Date notified by the Government. (i) (ii) Deposit Liabilities over AUD 1 million Deposits may be denominated in any currency and there are no restrictions on the type of depositor. Deposits may be at call or with maturities up to 60 months. Short term wholesale funding liabilities These are senior unsecured debt instruments; in any currency; with maturities up to 15 months; issued in bearer, registered or dematerialised form; which are "not complex"; and which are bank bills, certificates of deposit, transferable deposits, debentures or commercial paper. Applications can also be made for issuance programs. (iii) (iv) Term funding liabilities These are the same as short term funding liabilities, except that the term covered must be 15 to 60 months; and the instruments must be bonds, notes or debentures. "Not Complex" The Government has published detailed guidelines at under the Guidance Note link. For example, generally, market or index linked investment products and structured products are excluded. General The Government has indicated that the guarantee arrangements may require refinement or adjustment in light of market developments, and has indicated that it will review them on an ongoing basis and will revise them if necessary. Guarantor's name and address for service under Wholesale Funding Guarantee: The Commonwealth of Australia c/o Australian Government Solicitor 50 Blackall Street BARTON ACT 2600 Attention: Director, Canberra Facsimile Further details of the guarantee arrangements, together with relevant legislation, regulations, the Scheme deed and rules, and other documents setting out the terms and conditions of the guarantee arrangements, are available at the Treasury website and at The most recent audited financial statements of the Commonwealth of Australia can be obtained at the Treasury s Budget website under the budget tab. 2

8 4.0 Guarantee Arrangements (continued) As at the date of the signing of this General Disclosure Statement, the following ratings were assigned to the Commonwealth of Australia's long term, AUD denominated debt: Rating Agency Long Term Ratings (and Any Qualifications) Fitch Ratings Moody's Investors Service, Inc. Standard & Poor's (Australia) Pty Limited AAA Aaa AAA These ratings have remained unchanged in the two preceding years. The outlook from all agencies is stable. Descriptions of the steps in the ratings scales above are set out on page New Zealand Guarantee Arrangements Also on 12 October 2008 the New Zealand Minister of Finance announced a Deposit Guarantee Scheme ("Scheme"), under which the Crown guarantees retail deposits of participating financial institutions from 12 October 2008 until 12 October The Registered Bank does not have a guarantee under the Scheme. However, ASB Bank Limited, a member of the Banking Group with its own separate banking licence is covered by the Scheme. Information on the Scheme is available on the Treasury website 3

9 5.0 Directorate and Auditor Mr C.J.S. Pink replaced Mr G.H. Burrett as Responsible Person authorised by the Directors to sign the General Disclosure Statement in accordance with section 62 of the Reserve Bank of New Zealand Act with effect from 1 January There have been no changes to Directors since the 30 September 2008 General Short Form Disclosure Statement was signed. 5.1 Address for Directors and the New Zealand Chief Executive Officer Directors New Zealand Chief Executive Officer Commonwealth Bank of Australia Commonwealth Bank of Australia New Zealand Branch Level 7 Level 21, ASB Bank Centre 48 Martin Place 135 Albert Street Sydney Auckland Australia New Zealand NEW ZEALAND CHIEF EXECUTIVE OFFICER Name Primary Occupation Residence External Directorships A.J. (Andrew) Woodward, Head of Institutional Banking NZ CBA BANK EXECUTIVE Auckland, New Zealand Nil 5.2 Directors of the Commonwealth Bank of Australia EXECUTIVE DIRECTOR Name Primary Occupation Residence External Directorships R.J. (Ralph) Norris DCNZM, FNZIM, FNZCS (Managing Director) CHIEF EXECUTIVE OFFICER New South Wales, Australia Nil INDEPENDENT DIRECTORS Name J.M. (John) Schubert, BE, PhD, Name C.R. (Colin) Galbraith, LLM FIE Aust, FTS, CP(Eng) (Chairman) LLB (Hons), AM Primary Occupation COMPANY DIRECTOR Primary Occupation COMPANY DIRECTOR Residence New South Wales, Australia Residence Victoria, Australia External Directorships G2 Therapies Limited, BHP Billiton Limited, External Directorships BHP Billiton Community Trust, OneSteel BHP Billiton Plc, Qantas Airways Limited, Limited, Australian Institute Great Barrier Reef Foundation of Company Directors Name J.S. (Jane) Hemstritch BSc, FCA, FCPA Name R.J. (Reg) Clairs AO Primary Occupation COMPANY DIRECTOR Primary Occupation COMPANY DIRECTOR Residence Victoria, Australia Residence Queensland, Australia External Directorships The Global Foundation, Tabcorp Limited External Directorships David Jones Limited Name S.C.H. (Carolyn) Kay BA, LLB, FAICD Name F.D. (Fergus) Ryan Primary Occupation COMPANY DIRECTOR Primary Occupation COMPANY DIRECTOR Residence New South Wales, Australia Residence Victoria, Australia External Directorships Brambles Industries Limited, External Directorships Australian Foundation Investment Company Starlight Foundation, Allens Arthur Robinson Limited, Clayton Utz, National Australia Day Council, National Library of Australia Name Sir J.A. (John) Anderson KBE Name H.H. (Harrison) Young Primary Occupation COMPANY DIRECTOR Primary Occupation COMPANY DIRECTOR Residence Wellington, New Zealand Residence Victoria, Australia External Directorships Television New Zealand, New Zealand External Directorships Florey Neuroscience Institutes Cricket, International Cricket Council, Asia Society AustralAsia Centre, Howard Capital Coast District Health Board, Florey Institute Foundation, Financial Services New Zealand Venture Investment Fund, Volunteer Corps, Asia Society New Zealand Meat Industry Taskforce Name D.J. (David) Turner FCA Name A.M. (Andrew) Mohl Primary Occupation COMPANY DIRECTOR Primary Occupation COMPANY DIRECTOR Residence United Kingdom Residence New South Wales, Australia External Directorships Brambles Limited, Cobham plc External Directorships AMP Foundation AUDIT COMMITTEE The Board's Audit Committee consists of Fergus Ryan (Chairman), Colin Galbraith, Carolyn Kay, and David Turner. All members in the Audit Committee are independent directors. 4

10 5.0 Directorate and Auditor (continued) 5.3 Responsible Person C.J.S. (Charles) Pink Managing Director and Chief Executive Officer Auckland, New Zealand In Absence S.B. (Stewart) McRobie Head of Group Finance and Risk Management Auckland, New Zealand 5.4 Name and Address for Service of Auditor PricewaterhouseCoopers Chartered Accountants 188 Quay Street Auckland New Zealand 5.5 Dealings with Directors There have been no dealings with Directors of any entities within the Banking Group or of Commonwealth Bank of Australia or parties related to these Directors on terms other than in the ordinary course of business. Refer to Note 38 for outstanding balances with Directors of entities within the Banking Group. A number of Directors of Commonwealth Bank of Australia have given written notices, stating that they hold office in specified companies and accordingly are to be regarded as having an interest in any contract or proposed contract that may be made between the Commonwealth Bank of Australia and any of those companies. Directors of entities within the Banking Group are required to table all possible conflicts of interest at the Board of Directors' meetings for those entities, and are required to abstain from any vote on those proceedings. Entities within the Banking Group comply with all requirements of the Companies Act 1993 in terms of registers and notices for Directors' conflict of interest Conditions of Registration - Commonwealth Bank of Australia New Zealand Branch (the "Registered Bank") as from 26 November 2007 The registration of the New Zealand branch of Commonwealth Bank of Australia (the "Registered Bank'') is subject to the following conditions: 6.2 That the Banking Group does not conduct any non-financial activities that in aggregate are material relative to its total activities, where the term material is based on generally accepted accounting practice, as defined in the Financial Reporting Act That the Banking Group's insurance business is not greater than 1 percent of its total consolidated assets. For the purposes of this condition: (i) Insurance business means any business of the nature referred to in section 4 of the Insurance Companies (Ratings and Inspections) Act 1994 (including those to which the Act is disapplied by sections 4(1)(a) and (b) and 9 of that Act), or any business of the nature referred to in section 3(1) of the Life Insurance Act 1908; (ii) In measuring the size of the Banking Group's insurance business: (a) (b) (c) (d) where insurance business is conducted by any entity whose business predominantly consists of insurance business, the size of that insurance business shall be: the total consolidated assets of the group headed by that entity; or if the entity is a subsidiary of another entity whose business predominantly consists of insurance business, the total consolidated assets of the group headed by the latter entity; otherwise, the size of each insurance business conducted by any entity within the Banking Group shall equal the total liabilities relating to that insurance business, plus the equity retained by the entity to meet the solvency or financial soundness needs of the insurance business; the amounts measured in relation to parts (a) and (b) shall be summed and compared to the total consolidated assets of the Banking Group. All amounts in parts (a) and (b) shall relate to on balance sheet items only, and shall be determined in accordance with generally accepted accounting practice, as defined in the Financial Reporting Act 1993; where products or assets of which an insurance business is comprised also contain a non-insurance component, the whole of such products or assets shall be considered part of the insurance business That the business of the Registered Bank does not constitute a predominant proportion of the business of the Commonwealth Bank of Australia. That no appointment to the position of the New Zealand chief executive officer of the Registered Bank shall be made unless: (i) the Reserve Bank has been supplied with a copy of the curriculum vitae of the proposed appointee; and (ii) the Reserve Bank has advised that it has no objection to that appointment. 5

11 Conditions of Registration - Commonwealth Bank of Australia New Zealand Branch (the "Registered Bank") as from 26 November 2007 (continued) That the Commonwealth Bank of Australia complies with the requirements imposed on it by the Australian Prudential Regulation Authority. That the Commonwealth Bank of Australia complies with the following minimum capital adequacy requirements, as administered by the Australian Prudential Regulation Authority: Tier One Capital of the Commonwealth Bank of Australia is not less than 4 percent of risk weighted exposures; Capital of the Commonwealth Bank of Australia is not less than 8 percent of risk weighted exposures That liabilities of the Registered Bank in New Zealand, net of amounts due to related parties (including amounts due to a subsidiary or affiliate of the Registered Bank), do not exceed NZ$15 billion. That retail deposits of the Registered Bank in New Zealand do not exceed $200 million. For the purposes of this condition retail deposits are defined as deposits by natural persons, excluding deposits with an outstanding balance which exceeds $250, For the purposes of these conditions of registration, the term "Banking Group" means the New Zealand operations of the Commonwealth Bank of Australia and those subsidiaries of the Commonwealth Bank of Australia (except those which conduct life assurance business) whose business is required to be reported in financial statements for the group's New Zealand business prepared in accordance with Section 9(2) of the Financial Reporting Act There have been no changes to the conditions of registration since the signing of the previous disclosure statement (for the period ending 30 September 2008). 7.0 Pending Proceedings or Arbitration 7.1 The Banking Group is not party to any pending proceedings or arbitration which are expected to have a material adverse effect on the financial position, or results, of the CBA NZ Operations or CBA NZ Branch. 8.0 Credit Rating of Commonwealth Bank of Australia 8.1 As at the date of the signing of this General Disclosure Statement, the following ratings were assigned to the Commonwealth Bank of Australia's long term debt: Rating Agency Current Long Term Rating Fitch Ratings Moody's Investors Service, Inc. Standard & Poor's (Australia) Pty Limited AA Aa1 AA The Moody's rating was raised from Aa3 to Aa1 on 4 May The Standard and Poor's rating was raised from AA- to AA on 21 February The Fitch rating was assigned as AA and has remained unchanged since Long Term Debt Rating Definitions Long Term Debt Rating Fitch Moody's S&P (a) (b) (a) Highest quality / Extremely strong capacity to pay interest and principal AAA Aaa AAA High quality / Very strong AA Aa AA Upper medium grade / Strong A A A Medium grade (lowest investment grade) / Adequate BBB Baa BBB Predominantly speculative / Less near term vulnerability to default BB Ba BB Speculative, low grade / Greater vulnerability B B B Poor to default / Identifiable vulnerability CCC Caa CCC Highest speculations CC Ca CC Lowest quality, no interest C C C In payment default, in arrears - questionable value D - D (a) Fitch and S&P apply plus (+) or minus (-) signs to ratings from AA to CCC to indicate relative standing within the major rating categories. (b) Moody's applies numeric modifiers to each generic rating category from Aa to B, indicating that the counterparty is (1) in the higher end of its letter-rating category, (2) in mid-range, (3) in lower end. 6

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13 Historical Summary of Aggregated Financial Statements Banking Group Previous NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ GAAP Unaudited Audited Audited Audited Audited Audited For the period ended 31-Dec Jun Jun Jun Jun Jun-04 $ millions 6 months 12 months 12 months 12 months 12 months 12 months INCOME STATEMENT Interest Income 2,836 5,147 4,142 3,425 2,829 2,173 Interest Expense 2,334 4,128 3,273 2,656 2,092 1,527 Net Interest Earnings 502 1, Other Income Total Operating Income 716 1,350 1,360 1,143 1, Impairment Losses on Advances Total Operating Income after Impairment Losses 631 1,303 1,343 1,124 1, Total Operating Expenses Net Profit before Taxation Taxation Net Profit after Taxation Of which Impaired Asset Expense / (Recovery) (1) (1) (1) DIVIDENDS and REPATRIATIONS PAID Minority Interests Ordinary Dividends Redeemable Preference Dividends Distribution of Prior Period Profit Total Dividends and Repatriations Paid Banking Group Previous NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ IFRS NZ GAAP $ millions Unaudited Audited Audited Audited Audited Audited As at 31-Dec Jun Jun Jun Jun Jun-04 BALANCE SHEET Total Assets 72,647 66,323 58,532 48,511 41,684 35,365 Of which Impaired Assets Total Liabilities 69,447 62,913 55,796 46,624 39,559 33,938 Total Shareholder's Equity 3,200 3,410 2,736 1,887 2,125 1,427 8

14 Income Statement Banking Group Registered Bank Unaudited Unaudited Audited Unaudited Unaudited Audited For the period ended 31-Dec Dec Jun Dec Dec Jun-08 $ millions Note 6 months 6 months 12 months 6 months 6 months 12 months Interest Income 2 2,836 2,451 5, Interest Expense 3 2,334 1,957 4, Net Interest Earnings , Other Income Total Operating Income , Impairment Losses on Advances 16 (b) Total Operating Income after Impairment Losses , Total Operating Expenses Salaries and Other Staff Expenses Building Occupancy and Equipment Expenses Information Technology Expenses Other Expenses Net Profit before Taxation Taxation Net Profit after Taxation Attributable to: Parent Company Shareholders Minority Interests Net Profit after Taxation Interest Rate Swaps which are transacted as economic hedges of interest rate risk, but which do not qualify for hedge accounting under NZ IAS 39 Financial Instruments: Recognition and Measurement, are accounted for at fair value. Changes in the fair value of these swaps are reflected in the Income Statement immediately when they occur. This can create an accounting inconsistency, as changes in the fair value of the swaps cannot be offset against changes in the fair value or cash flows attributable to the underlying transaction. Other Income for the Banking Group for the period ended 31 December 2008 included a loss of $105m before tax from such swaps (31 December 2007 $16m loss, 30 June 2008 $82m loss). These statements are to be read in conjunction with the notes on pages 13 to 77 and the Auditor's Review Report on pages 78 and 79. 9

15 Statement of Recognised Income and Expense Banking Group Registered Bank Unaudited Unaudited Audited Unaudited Unaudited Audited For the period ended 31-Dec Dec Jun Dec Dec Jun-08 $ millions Note 6 months 6 months 12 months 6 months 6 months 12 months Items Recognised Directly in Equity: Movement in Asset Revaluation Reserves Net Change in Available for Sale Reserves 29 (6) Net Change in Cash Flow Hedge Reserves 30 (571) 17 (185) Net Change in Investment Hedge 31 (171) (43) (78) Currency Translation Differences Transfer from Asset Revaluation Reserves to Retained Earnings Net (Expense) / Income Recognised Directly in Equity (576) 17 (163) Net Profit after Taxation Total Recognised Income and Expense (363) Attributable to: Parent Company Shareholders (381) Minority Interests Total Recognised Income and Expense (363) These statements are to be read in conjunction with the notes on pages 13 to 77 and the Auditor's Review Report on pages 78 and

16 Balance Sheet Banking Group Registered Bank $ millions Unaudited Unaudited Audited Unaudited Unaudited Audited As at Note 31-Dec Dec Jun Dec Dec Jun-08 ASSETS Cash and Call Deposits with the Central Bank 10 1,291 1,412 1, Due from Other Banks 11 1, ,902 3,841 3,738 Money Market Advances ,351 1, Securities 13 6,487 4,672 5, Derivative Assets 14 4, , Advances to Customers 15 58,278 50,036 55,773 5,962 5,700 6,530 Current Taxation Asset Other Assets Property, Plant and Equipment Intangible Assets Deferred Taxation Asset Total Assets 72,647 61,911 66,323 11,018 10,019 11,128 Total Interest Earning and Discount Bearing Assets 67,134 60,082 64,070 10,254 9,848 10,708 Financed by: LIABILITIES Due to Other Banks 22 7,639 6,755 7,800 5,283 4,191 5,341 Money Market Deposits 23 20,936 18,079 20, Derivative Liabilities 14 4,187 1,340 1, Deposits from Customers 24 30,185 26,487 27, , Current Taxation Liability Other Liabilities Deferred Taxation Liability Subordinated Debt 26 5,899 4,674 5,129 4,866 3,969 4,136 Total Liabilities 69,447 58,163 62,913 10,506 9,754 10,856 SHAREHOLDER'S EQUITY Head Office Contribution Contributed Capital - Ordinary Shareholder Asset Revaluation Reserves Available for Sale Reserves Cash Flow Hedge Reserves 30 (565) (11) (11) Foreign Currency Translation Reserve Retained Earnings Ordinary Shareholder's Equity 1,379 1,927 1, Contributed Capital - Redeemable Preference Shareholder 27 1,271 1,271 1, Total Shareholder's Equity Attributed to Parent Company Shareholders 2,650 3,198 2, Minority Interest Controlled Entities Total Shareholder's Equity 3,200 3,748 3, Total Liabilities and Shareholder's Equity 72,647 61,911 66,323 11,018 10,019 11,128 Total Interest and Discount Bearing Liabilities 62,209 52,023 53,263 10,442 9,175 10,328 These statements are to be read in conjunction with the notes on pages 13 to 77 and the Auditor's Review Report on pages 78 and

17 Cash Flow Statement Banking Group Registered Bank Unaudited Unaudited Audited Unaudited Unaudited Audited For the period ended 31-Dec Dec Jun Dec Dec Jun-08 $ millions Note 6 months 6 months 12 months 6 months 6 months 12 months CASH FLOWS FROM OPERATING ACTIVITIES Interest Received 2,879 2,372 5, Other Income Received Dividends Received Interest Paid (2,238) (1,925) (4,000) (454) (427) (811) Operating Expenses (333) (273) (528) - (5) (7) Net Taxation Paid (86) (74) (196) (1) (6) (11) Receipts from Related Parties for Tax Related Items Cash Flows from Operating Profits before Changes in Operating Assets and Liabilities , Changes in Operating Assets and Liabilities Net Decrease / (Increase) in Money Market Advances 953 (1,068) (1,813) Net Decrease / (Increase) in Due from Other Banks (Term) (118) (13) (44) Net (Increase) / Decrease in Advances to Customers (2,541) (2,340) (5,202) 548 (233) (1,028) Net (Increase) / Decrease in Trading Securities (1,450) (1,261) (1,837) (110) Net Increase / (Decrease) in Customer Deposits 2,363 1,989 3,322 (558) Net (Decrease) / Increase in Money Market Deposits (592) 750 1, Net (Decrease) / Increase in Due to Other Banks (Term) (169) (241) 761 (63) (10) 1,140 Cash Flows from Operating Assets and Liabilities (1,402) (1,735) (2,560) (142) (52) (25) Net Cash Flows from Operating Activities 34 (431) (1,285) (1,364) (139) (38) 44 CASH FLOWS FROM INVESTING ACTIVITIES Cash was applied to: Acquisition of Subsidiaries Net of Cash Acquired Net (Decrease) / Increase in Other Securities (864) Purchase of Property, Plant and Equipment Purchase of Intangible Assets (782) Net Cash Flows from Investing Activities 782 (589) (627) CASH FLOWS FROM FINANCING ACTIVITIES Cash was provided from: Head Office Contribution Issue of Ordinary Share Capital Issue of Redeemable Preference Shares Issue of Subordinated Debt ,158 1, Cash was applied to: Dividends Paid Dividends Paid to Minority Interest Repatriation of Profit Redemption of Subordinated Debt , Net Cash Flows from Financing Activities SUMMARY OF MOVEMENTS IN CASH FLOWS Net Increase / (Decrease) in Cash and Cash Equivalents 503 (1,548) (1,864) Add: Cash and Cash Equivalents at Beginning of Period 560 2,424 2, Cash and Cash Equivalents at End of Period 35 1, These statements are to be read in conjunction with the notes on pages 13 to 77 and the Auditor's Review Report on pages 78 and

18 1 Statement of Accounting Policies GENERAL ACCOUNTING POLICIES The reporting entity is Commonwealth Bank of Australia New Zealand Branch (the "Registered Bank"), which holds the banking licence for the purposes of this disclosure statement. The reporting group (the "Banking Group") is the aggregated results of: Commonwealth Bank of Australia New Zealand Branch, ASB Holdings Limited, ASB Funding Limited, ASB Bank Limited and its subsidiaries, CBA Funding (NZ) Limited and its subsidiaries, CBA NZ Holding Limited and its subsidiary, CBA Real Estate Funding (NZ) Limited and its subsidiary, CBA USD Funding Limited and Group Treasury Services NZ Limited. The basis of aggregation is an addition of the Banking Group entities' individual financial statements. All transactions and balances between entities within the Banking Group have been eliminated. These financial statements have been drawn up in accordance with the requirements of the Companies Act 1993, the Financial Reporting Act 1993 and the Registered Bank Disclosure Statement (Full and Half-Year - Overseas Incorporated Registered Banks) Order They were approved for issue by the Directors on 16 March The Banking Group's financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice ("NZ GAAP"). They comply with New Zealand equivalents to International Financial Reporting Standards ("NZ IFRS") and other applicable Financial Reporting Standards, as appropriate for profit-oriented entities. The financial statements comply with International Financial Reporting Standards. The Directors do not have the power to amend the financial statements once issued. The following new standards and amendments to standards relevant to the Banking Group are not yet effective and have not yet been applied in preparing the financial statements. Adoption of these standards will not have any impact on the Banking Group's reported profit or financial position. NZ IAS 1 Presentation of Financial Statements (revised) will apply to the Banking Group from 1 July 2009 and will result in changes to the disclosure of changes in Equity. NZ IFRS 3 Business Combinations (revised) will apply to the Banking Group from 1 July 2009 and will result in additional disclosures in the event of a business combination. NZ IFRS 8 Operating Segments will apply to the Banking Group from 1 July 2009 and will affect the financial and descriptive information disclosed about the Banking Group's reportable segments. Basis of Preparation The measurement base adopted is that of historical cost as modified by the fair value measurement of Available for Sale Financial Assets, Financial Instruments at Fair Value through Profit or Loss, Derivative contracts and the revaluation of certain Property, Plant and Equipment. Critical Accounting Estimates and Judgements The critical judgements used by management in applying the accounting policies that have the most significant effect on the amounts recognised in the financial statements, apart from those involving estimation, are the designation of financial assets and financial liabilities as at fair value through profit or loss. Preparation of the financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates, although it is not anticipated that such differences would be material. Estimates and assumptions are continually evaluated, and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Banking Group considers that the valuation of financial instruments, the Provision for Impairment on Customer Advances and impairment testing of Goodwill require significant accounting estimates and management judgement. Refer to (f) for details of valuation of financial instruments, Note 16 for details of credit risk management and the basis of the Banking Group's impairment provision model, and Note 20 for key assumptions used in testing Goodwill for impairment. Presentation Currency and Rounding The functional and presentation currency of the Banking Group is New Zealand dollars. The amounts contained in this disclosure statement and the financial statements are presented in millions of New Zealand dollars, unless otherwise stated. PARTICULAR ACCOUNTING POLICIES There have been no material changes to accounting policies in the period ended 31 December All policies have been applied on a basis consistent with that used during the financial year ended 30 June A Glossary of Terms included within the Statement of Accounting Policies is set out on page 20. (a) Basis of Consolidation Subsidiaries Subsidiaries are those entities controlled by CBA New Zealand Branch or the banking activities of ASB Holdings Limited. Control exists when the Banking Group has the power, directly or indirectly, to govern the financial and operating policies of entities so as to obtain benefits from their activities. The financial statements of subsidiaries are included in the Banking Group's financial statements from the date on which control is transferred to the Banking Group until the date that control ceases. Assets, liabilities and results of subsidiaries are included in the Banking Group's financial statements on the basis of financial statements made up to balance date, using the purchase method. All intra group balances and transactions have been eliminated in preparing the consolidated financial statements. Other Controlled Entities The Banking Group may invest in or establish special purpose entities ("SPE") to enable it to undertake specific transactions. The main type of specific transactions of these SPE are securitisation vehicles and structured finance entities. Where the Banking Group has established SPE which are controlled by the Banking Group to facilitate transactions undertaken for Banking Group purposes, these are consolidated in the Banking Group's financial statements (refer to Note 17). The Banking Group does not consolidate SPE that it does not control. As it can sometimes be difficult to determine whether the Banking Group has control of an SPE, judgements are made about its exposure to the risks and rewards and whether the majority pass to the Banking Group, as well as about its ability to make operational and financial decisions for the SPE in question. 13

19 1 Statement of Accounting Policies (continued) Associates Associates are those entities in which the Banking Group has significant influence, but not control, over the financial and operating policies. The Banking Group has representation on the board of directors of all companies classified as Associates. Associates are accounted for under the equity method of accounting. (b) (c) Segment Reporting The Banking Group's primary reporting format is business segments (refer to Note 44). Segments reported are in line with the organisational structure of the Banking Group and take into account the nature of the products and services provided. The Banking Group operates predominantly within New Zealand. On this basis geographical segment reporting is not applicable. Foreign Currency Translation All foreign currency monetary assets and liabilities are converted at the rates of exchange ruling as at balance date. Foreign currency forward, futures, swaps and option positions are valued at fair value as at balance date. Unrealised gains and losses arising from these revaluations and gains and losses arising from foreign exchange dealings are recognised immediately in the Income Statement. The foreign currency assets and liabilities of overseas subsidiaries are translated into the Banking Group's presentation currency at the rate of exchange ruling as at balance date. Income Statements are translated at the weighted average rates for the year. All resulting exchange differences are recognised in the Foreign Currency Translation Reserve ("FCTR") as a separate component of equity. Gains or losses accumulated in the FCTR are transferred to the Income Statement upon partial or full disposal of the overseas subsidiary. (d) Revenue Recognition Revenue is recognised to the extent that it is probable that economic benefits will flow to the Banking Group and that the revenue can be reliably measured. The principal sources of revenue are interest income, fees and commissions. Interest Income and Expense Financial instruments are classified in the manner described in (f). Some are measured by reference to amortised cost, others by reference to fair value. For financial instruments measured at amortised cost, the effective interest method is used to measure the Interest Income or Expense recognised in the Income Statement. For financial instruments measured at fair value, Interest Income or Expense is recognised on an accrual basis, either daily or on a yield to maturity basis. Lending Fees Fees and direct costs relating to loan origination, financing or restructuring and to loan commitments are deferred and amortised to Interest Income over the life of the loan using the effective interest method. Lending fees not directly related to the origination of a loan are recognised over the period of service. Commission and Other Fees When commissions or fees relate to specific transactions or events, they are recognised in the Income Statement when the service is provided to the customer. When they are charged for services provided over a period, they are taken to Other Income on an accruals basis as the service is provided. Other Income Dividend income is recorded in the Income Statement when the Banking Group's right to receive the dividend is established. Realised and unrealised gains and losses from re-measurement of Financial Instruments at Fair Value through Profit or Loss are included in Other Income. (e) (f) Expense Recognition Operating lease payments are recognised in the Income Statement on a straight-line basis over the term of the lease, unless another systematic basis is more representative of the time pattern of the benefit received. All other expenses are recognised in the Income Statement on an accrual basis. Financial Instruments BASIS OF RECOGNITION AND MEASUREMENT The Banking Group offers an extensive range of financial instruments. Financial instruments are transacted on a commercial basis to derive an interest yield / cost with terms and conditions having due regard to the nature of the transaction and the risks involved. All financial instruments are accounted for on a settlement date basis. They are classified in one of the following categories at initial recognition: Financial Assets at Fair Value through Profit or Loss, Available for Sale Financial Assets, Loans and Receivables, Held to Maturity, Financial Liabilities at Fair Value through Profit or Loss and Other Financial Liabilities. Some of these categories require measurement at fair value. Where available, quoted market prices are used as a measure of fair value. Bid prices are used to estimate fair values of assets, whereas offer prices are applied to liabilities. Where the Banking Group has assets and liabilities with offsetting market risk, it uses mid-market prices as a basis for establishing fair values for the offsetting risk positions and applies a bid / offer spread adjustment to the net open position as appropriate. Where quoted market prices do not exist, fair values are estimated using present value or other market accepted valuation techniques, using methods and assumptions that are based on market conditions and risks existing as at balance date. If changes in these assumptions to a reasonably possible alternative would result in a significantly different fair value this has been disclosed. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS Assets in this category are either held for trading or are managed with other assets and liabilities transacted in ASB Bank Limited's Treasury and Financial Markets Division, which are accounted for and evaluated on a fair value basis. Fair value reporting of these assets and liabilities reflects the Banking Group's risk management process, which includes utilising natural offsets where possible and managing the overall risks of the Treasury portfolio on a trading basis. Assets in this category are measured at fair value and are described on the following page. 14