Today I want to update the ANZ New Zealand banking covenants for September 30th 2016 quarter (corresponding to the EOFY). ANZ New Zealand includes their wholly owned subsidiary UDC finance.
The document I am referencing is the:
"ANZ bank New Zealand Limited Annual Report and Disclosure Statement for the year ended 30th September 2016, Number 83 issued November 2016"
Page 49, note 29 contains the information on capital adequacy.
The information supplied is as follows:
Common Equity Tier 1 ratio: 10.0% (vs RBNZ minimum of 4.5% + 2.5% buffer)
Total Tier 1 ratio: 13.2% (vs RBNZ minimum of 6.0% + 2.5% buffer)
Total Tier 1 & 2 ratio: 13.7% (vs RBNZ minimum of 8.0% + 2.5% buffer)
The ANZ.NZ Tier 1 capital ratio has gone down slightly again in New Zealand over the year, and no new share capital injection initiative is apparent from the accounts. Total equity has increased to $12,710m, an increase of 2% due to an increase retained earnings.
From Note 17 on Subordinated Debt, The ANZ New Zealand operation has been shored up by the issue of a new tranche of ANZ convertible notes, dubbed "ANZ New Zealand Internal Capital Notes 2."
• On 15 June 2016, the Bank issued 9.38m million convertible notes (ANZ NZ ICN2) to the NZ Branch at NZ$100 each,
raising NZ$938 million.
This issue is structured as additional Tier 1 capital for ANZ.NZ.
Page 50 contains detailed notes on just how the ANZ NZ capital is made up. If you use that information and use it to calculate the above ratios, based on a loan book with net loans and advances of $114,623m (from the balance sheet) I calculate the above ratios as follows (total net loans and advances of broken down under Note 13 'Net Loans & Advances'):
Common Equity Tier 1 ratio: $8,725m/$114,623m = 7.6%
Total Tier 1 ratio: $11,505m/$114,623m = 10.0%
Total Tier 1 & 2 ratio: $11,973m/$114,623m = 10.4%
Those figures are a different to those precedingly calculated. That is because the Tier 1 and Tier 2 capital figures have been 'risk adjusted' before they went into my first calculation. The risk adjustment is done because the expected capital recovery from loans -should they go bad- is different among the different classes of loans (corporate, sovereign, bank, retail mortgages and other retail)
SNOOPY
PS Tabulated version of above results
|
30/09/2016 (risk adj) |
30/09/2016 (book value) |
RBNZ Required |
Common Equity Tier 1 Ratio |
10.0 |
7.6 |
4.5+2.5 |
Total Tier 1 Ratio |
13.2 |
10.0 |
6.0+2.5 |
Total Tier 1&2 Ratio |
13.7 |
10.4 |
8.0+2.5 |
A multi year picture of capital adequacy is shown below:
|
FY2012 |
FY2013 |
FY2014 |
FY2015 |
FY2016 |
Quoted Common Equity Tier 1 Ratio |
N/A |
10.4% |
10.7% |
10.5% |
10.0% |
Quoted Total Equity Tier 1 Ratio |
10.8% |
10.8% |
11.1% |
12.7% |
13.2% |
Quoted Total Equity Tier 1 & 2 Ratio |
12.5% |
12.4% |
12.3% |
13.6% |
13.7% |
It is interesting that although the Common Tier 1 equity has been weakening, other tier 1 (including preference shares) and tier 2 capital has been issued to strengthen the balance sheet.