Philip ChronicanChair9 November 2023
Ross McEwan CBEGroup Chief Executive Officer9 November 2023
This is the financial report of National Australia Bank Limited (the Company) together with its controlled entities (Group) for the year ended 30 September 2023. The Company, incorporated and domiciled in Australia , is a for-profit company limited by shares which are publicly traded on the Australian Securities Exchange.
The directors resolved to authorise the issue of the financial report on 9 November 2023. The directors have the power to amend and reissue the financial report.
The financial report includes information to the extent the Group considers it material and relevant to the understanding of users. Disclosed information is considered material and relevant if, for example:
The dollar amount is significant in size or by nature.
The Group\u2019s results cannot be understood by users without the specific disclosure.
The information is important to help users understand the impact of significant changes in the Group\u2019s business during the financial year, for example, a business acquisition, disposal, or an impairment / write-down.
The information relates to an aspect of the Group\u2019s operations which is important to its future performance.
The information is required under legislative requirements of the Corporations Act 2001 (Cth), the Banking Act 1959 (Cth) or by the Group\u2019s principal regulators, including the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
This general purpose financial report has been prepared by a for-profit company, in accordance with the requirements of the Corporations Act 2001 (Cth) and accounting standards and interpretations issued by the Australian Accounting Standards Board (AASB). Compliance with standards and interpretations issued by the AASB ensures that this financial report complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
Amounts are presented in Australian dollars (unless otherwise stated), which is the Company\u2019s functional and presentation currency. These amounts have been rounded to the nearest million dollars ($m), except where indicated, as allowed by ASIC Corporations Instrument 2016/191.
Unless otherwise stated, comparative information has been restated for any changes to presentation made in the current year. Discontinued operations are excluded from the results of continuing operations and are presented as a single amount in the Group's income statement and statement of comprehensive income.
To comply with its obligations as an Australian Financial Services Licence holder, the Group includes the separate financial statements of the Company in this financial report, which is permitted by ASIC Corporations (Parent Entity Financial Statements) Instrument 2021/195.
The financial report has been prepared under the historical cost convention, except for:
Certain assets and liabilities (including derivative instruments) measured at fair value through profit or loss, or at fair value through other comprehensive income.
Financial assets and liabilities that are otherwise measured on an amortised cost basis but adjusted for changes in fair value attributable to the risk being hedged in qualifying fair value hedge relationships.
During the year ended 30 September 2023, the Group revised its accounting treatment of ongoing trail commission payable to mortgage brokers. The Group has recognised a liability within 'Other liabilities' equal to the present value of expected future trail commission payments and a corresponding increase in capitalised brokerage costs within 'Loans and advances'. Comparative information has not been restated.
Except as explained above, the accounting policies and methods of computation applied in this report are consistent with those applied in the Group's 2022 Annual Report. There were no substantial amendments to Australian Accounting Standards adopted during the year that have a material impact on the Group.
In the process of applying the Group\u2019s accounting policies, management have made a number of judgements and assumptions and applied estimates of future events. Some of these areas include:
Impairment charges on loans and advances.
Fair value of financial assets and liabilities.
Impairment assessment of goodwill and other intangible assets.
Determination of income tax.
Provisions for customer-related remediation and other regulatory matters.
Further details of these critical accounting judgements and estimates are provided in the respective notes to the financial statements.
Over the 2023 financial year, the Group has transitioned materially all contracts referencing Interbank Offered Rates (IBOR) benchmarks subject to cessation at 30 June 2023. Additionally, fallback language continues to be updated for contracts referencing IBOR benchmarks subject to cessation in 2024.
The Group continues to meet jurisdictional regulatory guidance and national working group timelines to cease referencing IBOR benchmarks subject to cessation and IBOR benchmarks which have ceased in new transactions, and actively transition legacy contracts to alternative risk-free rates. The Group continues to manage the risk arising from transition to ensure a low probability of occurrence and impact to the Group and its customers. Following the cessation of some benchmarks on
31 December 2021 and 30 June 2023, and adoption of fallback rates in contracts with major counterparties (in particular, central clearing counterparties), there has been a significant reduction in transition risk since 30 September 2022. In particular:
Following cessation of USD London Interbank Offered Rate (LIBOR) benchmarks on 30 June 2023, the Group\u2019s exposure to these benchmarks has reduced significantly. As at 30 September 2023, there is an immaterial exposure referencing the synthetic version of some of the ceased benchmarks. These financial instruments are awaiting the next contractual rate reset or customers have chosen to not transition for administrative reasons as their financial instruments mature before the cessation of the relevant synthetic benchmark.
Financial instruments referencing other ceased IBOR benchmarks are not material.
Financial instruments referencing IBOR benchmarks subject to a future announced cessation are also not material.
AASB 17 Insurance Contracts (AASB 17) will be effective for the Group from 1 October 2023. The expected impact to the Group from this new accounting standard is limited to the Group\u2019s equity-accounted associate MLC Life. The change in timing of profit recognition under AASB 17 is expected to result in a decrease in the carrying value of the MLC Life investment (included within Note 23 Other assets) by approximately $200 million with a corresponding decrease in retained earnings as at 1 October 2023. Refer to Note 32 Interest in subsidiaries and other entities for further information.
There are no other new standards or amendments to existing standards that are not yet effective which are expected to have a material impact on the Group\u2019s financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-1": { "value": "Australia", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-2": { "value": "for-profit company limited by shares which are publicly traded on the Australian Securities Exchange.", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-414": { "value": "This general purpose financial report has been prepared by a for-profit company, in accordance with the requirements of the Corporations Act 2001 (Cth) and accounting standards and interpretations issued by the Australian Accounting Standards Board (AASB). Compliance with standards and interpretations issued by the AASB ensures that this financial report complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-415": { "value": "In the process of applying the Group\u2019s accounting policies, management have made a number of judgements and assumptions and applied estimates of future events. Some of these areas include:
Impairment charges on loans and advances.
Fair value of financial assets and liabilities.
Impairment assessment of goodwill and other intangible assets.
Determination of income tax.
Provisions for customer-related remediation and other regulatory matters.
Further details of these critical accounting judgements and estimates are provided in the respective notes to the financial statements.
The Group undertakes transactions in the ordinary course of business where the income tax treatment requires the exercise of judgement. The Group estimates the amount expected to be paid to tax authorities based on its understanding and interpretation of relevant tax laws. The effect of uncertainty over income tax treatments is reflected in determining the relevant taxable profit or tax loss, tax bases, unused tax losses and unused tax credits or tax rates. Uncertain tax positions are presented as current or deferred tax assets or liabilities as appropriate.
Judgement is applied in determining ECL using objective, reasonable and supportable information about current and forecast economic conditions. Macro-economic variables used in these scenarios include (but are not limited to) the cash rate, unemployment rates, GDP growth rates, inflation and residential and commercial property prices. When determining whether the risk of default has increased significantly since initial recognition, both quantitative and qualitative information is considered, including expert credit assessment, forward looking information and analysis based on the Group\u2019s historical loss experience.
A significant portion of financial instruments are carried on the balance sheet at fair value.
Where no active market exists for a particular asset or liability, the Group uses a valuation technique to arrive at the fair value, including the use of transaction prices obtained in recent arm\u2019s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques, based on market conditions and risks existing at the reporting date. In doing so, fair value is estimated using a valuation technique that makes maximum use of observable market inputs and places minimal reliance upon entity-specific inputs.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When such evidence exists, the Group recognises the difference between the transaction price and the fair value in profit or loss on initial recognition (i.e. on day one).
The measurement of goodwill is subject to a number of key judgements and estimates. These include:
The allocation of goodwill to CGUs on initial recognition.
The re-allocation of goodwill in the event of disposal or reorganisation.
The appropriate cash flow forecasts, growth rates and discount rates.
Further details about these items are provided below.
Provisions are held in respect of a range of future obligations such as employee entitlements, restructuring costs, customer-related and payroll remediation. The recognition and measurement of some of these provisions involves significant judgement about the existence of a present obligation, the likely outcome of various future events and the related estimated future cash flows. If the future events are uncertain or where the outflows cannot be reliably measured a contingent liability is disclosed, refer to Note 31 Commitments and contingent liabilities.
Payments that are expected to be incurred after more than one year from the reporting date are discounted at a rate which reflects both current interest rates and the risks specific to that provision.
In relation to customer-related remediation, determining the amount of the provision requires the exercise of significant judgement. This includes forming a view on a number of different estimates, including the number of impacted customers, average refund per customer and the associated costs required to complete the remediation activities. The appropriateness of underlying assumptions is reviewed on a regular basis against actual experience and other available evidence, and adjustments are made to the provision where required.
The key estimates and inputs used in the Black-Scholes model vary depending on the award and type of security granted. They include the NAB share price at the time of the grant, exercise price of the rights (which is nil), the expected volatility of NAB\u2019s share price, the risk-free interest rate and the expected dividend yield on NAB shares for the life of the rights. When estimating expected volatility, historic daily share prices are analysed to arrive at annual and cumulative historic volatility estimates (which may be adjusted for any abnormal periods or non-recurring significant events). Trends in the data are analysed to estimate volatility movements in the future for use in the numeric pricing model. The simulated version of the Black-Scholes model takes into account both the probability of achieving market performance conditions and the potential for early exercise of vested rights.
While market performance conditions are incorporated into the grant date fair values, non-market conditions are not taken into account when determining the fair value and expected time to vesting of shares and rights. Instead, non-market conditions are taken into account by adjusting the number of shares and rights included in the measurement of the expense so that the amount recognised in the income statement reflects the number of shares or rights that actually vest.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-419": { "value": "Over the 2023 financial year, the Group has transitioned materially all contracts referencing Interbank Offered Rates (IBOR) benchmarks subject to cessation at 30 June 2023. Additionally, fallback language continues to be updated for contracts referencing IBOR benchmarks subject to cessation in 2024.
The Group continues to meet jurisdictional regulatory guidance and national working group timelines to cease referencing IBOR benchmarks subject to cessation and IBOR benchmarks which have ceased in new transactions, and actively transition legacy contracts to alternative risk-free rates. The Group continues to manage the risk arising from transition to ensure a low probability of occurrence and impact to the Group and its customers. Following the cessation of some benchmarks on
31 December 2021 and 30 June 2023, and adoption of fallback rates in contracts with major counterparties (in particular, central clearing counterparties), there has been a significant reduction in transition risk since 30 September 2022. In particular:
Following cessation of USD London Interbank Offered Rate (LIBOR) benchmarks on 30 June 2023, the Group\u2019s exposure to these benchmarks has reduced significantly. As at 30 September 2023, there is an immaterial exposure referencing the synthetic version of some of the ceased benchmarks. These financial instruments are awaiting the next contractual rate reset or customers have chosen to not transition for administrative reasons as their financial instruments mature before the cessation of the relevant synthetic benchmark.
Financial instruments referencing other ceased IBOR benchmarks are not material.
Financial instruments referencing IBOR benchmarks subject to a future announced cessation are also not material.
Market risk primarily stems from the Group\u2019s trading and balance sheet management activities, the impact of changes and correlation between interest rates, foreign exchange rates, credit spreads and volatility in bond, commodity or equity prices.
Market risk is represented by the below two categories:
| Traded Market Risk | Non-Traded Market Risk |
|---|---|
| Traded Market Risk is the potential for gains or losses to arise from trading activities undertaken by the Group as a result of movements in market prices. The trading activities of the Group are principally carried out by Corporate and Institutional Banking.Trading activities represent dealings that encompass both active management of market risk and supporting client sales businesses. The types of market risk arising from these activities include interest rate, foreign exchange, commodity, equity price, credit spread and volatility risk. | The Group has exposure to non-traded market risk, primarily Interest Rate Risk in the Banking Book (IRRBB). IRRBB is the risk that the Group\u2019s earnings or economic value will be affected or reduced by changes in interest rates. The sources of IRRBB are as follows:
|
The Group primarily manages and controls market risk using Value at Risk (VaR), which is a standard measure used throughout the industry. VaR gauges the Group\u2019s possible loss for the holding period based on historical market movements. VaR is measured at a 99% confidence interval. This means that there is a 99% chance that the loss will not exceed the VaR estimate during the holding period.
The Group employs other risk measures to supplement VaR, with appropriate limits to manage and control risks, and communicate the specific nature of market exposures to management, the Board Risk & Compliance Committee and ultimately the Board. These supplementary measures include stress testing, stop loss, position and sensitivity limits.
The VaR methodology involves multiple revaluations of the trading books using 550 days of historical pricing shifts. The pricing data is rolled daily.
The use of VaR methodology has limitations, which include:
The historical data used to calculate VaR is not always an appropriate proxy for current market conditions. If market volatility or correlation conditions change significantly, losses may occur more frequently and to a greater magnitude than the VaR measure suggests.
VaR methodology assumes that positions are held for one day and may underestimate losses on positions that cannot be hedged or reversed inside that timeframe.
VaR is calculated on positions at the close of each trading day, and does not measure risk on intra-day positions.
VaR does not describe the directional bias or size of the positions generating the risk.
The table below shows the Group and Company VaR for the trading portfolio, including both physical and derivative positions:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | ||||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Value at Risk at a 99% confidence level | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Foreign exchange risk | \u00a0 | 3.3 | 2.4 | \u00a0 | 2.7 | 3.0 | \u00a0 | 1.0 | 1.3 | \u00a0 | 5.7 | 5.8 | \u00a0 | 3.7 | 2.3 | \u00a0 | 2.2 | 2.7 | \u00a0 | 0.8 | 1.3 | \u00a0 | 5.0 | 5.4 |
| Interest rate risk | \u00a0 | 6.7 | 5.4 | \u00a0 | 8.4 | 8.9 | \u00a0 | 5.3 | 5.2 | \u00a0 | 17.8 | 14.1 | \u00a0 | 6.1 | 5.2 | \u00a0 | 7.5 | 7.6 | \u00a0 | 5.1 | 4.5 | \u00a0 | 17.4 | 12.3 |
| Volatility risk | \u00a0 | 1.8 | 2.3 | \u00a0 | 1.8 | 2.9 | \u00a0 | 0.9 | 2.0 | \u00a0 | 2.7 | 6.4 | \u00a0 | 1.8 | 2.3 | \u00a0 | 1.8 | 2.9 | \u00a0 | 0.9 | 2.0 | \u00a0 | 2.8 | 6.4 |
| Commodities risk | \u00a0 | 1.0 | 1.6 | \u00a0 | 1.4 | 1.6 | \u00a0 | 0.9 | 0.5 | \u00a0 | 2.9 | 2.9 | \u00a0 | 1.0 | 1.6 | \u00a0 | 1.4 | 1.6 | \u00a0 | 0.9 | 0.5 | \u00a0 | 2.9 | 2.9 |
| Credit risk | \u00a0 | 2.0 | 1.2 | \u00a0 | 1.8 | 1.8 | \u00a0 | 0.9 | 0.9 | \u00a0 | 3.2 | 3.4 | \u00a0 | 1.8 | 1.0 | \u00a0 | 1.5 | 1.4 | \u00a0 | 0.7 | 0.7 | \u00a0 | 2.9 | 2.9 |
| Inflation risk | \u00a0 | 2.3 | 1.7 | \u00a0 | 2.4 | 2.2 | \u00a0 | 1.6 | 1.4 | \u00a0 | 3.4 | 3.4 | \u00a0 | 2.3 | 1.7 | \u00a0 | 2.4 | 2.0 | \u00a0 | 1.6 | 1.4 | \u00a0 | 3.4 | 3.2 |
| Diversification benefit | \u00a0 | (7.1) | (7.5) | \u00a0 | (7.8) | (9.1) | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a | \u00a0 | (6.7) | (7.2) | \u00a0 | (7.2) | (8.1) | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a |
| Total Diversified VaR at 99% confidence interval | \u00a0 | 10.0 | 7.1 | \u00a0 | 10.7 | 11.3 | \u00a0 | 7.2 | 7.1 | \u00a0 | 20.3 | 18.7 | \u00a0 | 10.0 | 6.9 | \u00a0 | 9.6 | 10.1 | \u00a0 | 6.8 | 6.5 | \u00a0 | 17.5 | 17.0 |
| Other market risks | \u00a0 | 2.3 | 3.4 | \u00a0 | 1.9 | 4.5 | \u00a0 | 0.6 | 1.0 | \u00a0 | 3.2 | 8.4 | \u00a0 | 2.3 | 3.4 | \u00a0 | 1.9 | 4.5 | \u00a0 | 0.6 | 1.0 | \u00a0 | 3.2 | 8.4 |
| Total | \u00a0 | 12.3 | 10.5 | \u00a0 | 12.6 | 15.8 | \u00a0 | 7.8 | 8.1 | \u00a0 | 23.5 | 27.1 | \u00a0 | 12.3 | 10.3 | \u00a0 | 11.5 | 14.6 | \u00a0 | 7.4 | 7.5 | \u00a0 | 20.7 | 25.4 |
The principal objective of balance sheet risk management is 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\u2019s banking book, while ensuring the Group maintains sufficient liquidity to meet its obligations as they fall due.
IRRBB is measured, monitored, and managed from both an internal management and regulatory perspective. The Risk Management Framework incorporates both market valuation and earnings based approaches in accordance with the IRRBB Policy and Prudential Practice Guides. Risk measurement techniques include VaR, Earnings at Risk (EaR), interest rate risk stress testing, repricing analysis, cash flow analysis and scenario analysis. The IRRBB regulatory capital calculation incorporates repricing, yield curve, basis, and optionality risk, embedded gains / losses and any inter-risk and / or inter-currency diversification. The Group has been accredited by APRA to use its internal model for the measurement of IRRBB.
Key features of the internal interest rate risk management model include:
Historical simulation approach utilising instantaneous interest rate shocks.
Static balance sheet (i.e. any new business is assumed to be matched, hedged or subject to immediate repricing).
VaR and EaR are measured on a consistent basis.
99% confidence level.
Three month holding period.
EaR utilises a 12 month forecast period.
At least six years of business day historical data (updated daily).
Investment term for capital is modelled with an established benchmark term of between one and five years.
Investment term for core non-interest bearing assets and liabilities is modelled on a behavioural basis with a term that is consistent with sound statistical analysis.
The following table shows the Group and the Company aggregate VaR and EaR for the IRRBB:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | ||||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Value at Risk | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Australia | \u00a0 | 379.1 | 300.5 | \u00a0 | 375.1 | 307.3 | \u00a0 | 315.0 | 289.0 | \u00a0 | 407.9 | 326.4 | \u00a0 | 379.1 | 300.5 | \u00a0 | 375.1 | 307.3 | \u00a0 | 315.0 | 289.0 | \u00a0 | 407.9 | 326.4 |
| New Zealand | \u00a0 | 33.6 | 25.5 | \u00a0 | 31.6 | 31.6 | \u00a0 | 24.1 | 22.5 | \u00a0 | 36.7 | 39.4 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Other International | \u00a0 | 34.6 | 47.9 | \u00a0 | 44.0 | 37.1 | \u00a0 | 27.0 | 30.8 | \u00a0 | 62.8 | 47.9 | \u00a0 | 34.6 | 47.9 | \u00a0 | 44.0 | 37.1 | \u00a0 | 27.0 | 30.8 | \u00a0 | 62.8 | 47.9 |
| Earnings at Risk1 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Australia | \u00a0 | 59.1 | 29.6 | \u00a0 | 55.3 | 24.3 | \u00a0 | 38.2 | 14.0 | \u00a0 | 73.3 | 50.7 | \u00a0 | 59.1 | 29.6 | \u00a0 | 55.3 | 24.3 | \u00a0 | 38.2 | 14.0 | \u00a0 | 73.3 | 50.7 |
| New Zealand | \u00a0 | 9.6 | 18.4 | \u00a0 | 15.0 | 18.8 | \u00a0 | 7.8 | 10.0 | \u00a0 | 22.7 | 28.1 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Other International | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 0.1 | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
Residual value risk
As part of its normal lending activities, the Group takes residual value risk on assets such as industrial, mining, rail, aircraft, marine, technology, healthcare and other equipment. This exposes the Group to a potential fall in prices of these assets below the outstanding residual exposure at the facility expiry.
There are no other new standards or amendments to existing standards that are not yet effective which are expected to have a material impact on the Group\u2019s financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-425": { "value": "There are no other new standards or amendments to existing standards that are not yet effective which are expected to have a material impact on the Group\u2019s financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-426": { "value": "The Group\u2019s reportable segments are unchanged from the 2022 Annual Report.
A description of the operating activities of each reportable segment is provided below:
Business and Private Banking focuses on NAB's priority small and medium (SME) customer segments. This includes diversified businesses, as well as specialised Agriculture, Health, Professional Services, Franchisees, Government, Education and Community service segments along with Private Banking and JBWere.
Personal Banking provides banking products and services to customers including securing a home loan and managing personal finances through deposits, credit card or personal loan facilities. Customers are supported through a network of branches and ATMs, call centres, digital capabilities as well as through proprietary lenders and mortgage brokers. Personal Banking results include the financial performance of the Citi consumer business, acquired effective 1 June 2022.
Corporate and Institutional Banking provides a range of products and services including client coverage, corporate finance, markets, asset servicing, transactional banking and enterprise payments. The division serves its customers across Australia, the United States, Europe and Asia, with specialised industry relationships and product teams. It includes Bank of New Zealand's Markets Trading operations.
New Zealand Banking provides banking and financial services across customer segments in New Zealand. It consists of Partnership Banking servicing retail, business and private customers; Corporate and Institutional Banking servicing corporate and institutional customers, and includes Markets Sales operations in New Zealand. New Zealand Banking also includes the Wealth franchise operating under the \u2018Bank of New Zealand\u2019 brand. It excludes the Bank of New Zealand\u2019s Markets Trading operations. New Zealand Banking results include the financial performance of the New Zealand liquidity management portfolio, effective 1 October 2022.
Corporate Functions and Other includes ubank and enabling units that support all businesses including Treasury, Technology and Enterprise Operations, Digital, Data and Analytics, Support Units and eliminations.
The Group evaluates performance on the basis of cash earnings as it better reflects what is considered to be the underlying performance of the Group. Cash earnings is a non-IFRS key financial performance measure used by the Group and the investment community.
Cash earnings is calculated by adjusting statutory net profit from continuing operations for certain non-cash earnings items. Non-cash earnings items are those items which are considered separately when assessing performance and analysing the underlying trends in the business. Cash earnings for the year ended 30 September 2023 has been adjusted for hedging and fair value volatility, amortisation of acquired intangible assets, and certain other items associated with acquisitions, disposals and business closures. Cash earnings does not purport to represent the cash flows, funding or liquidity position of the Group, nor any amount represented on a statement of cash flows.
The Group earns the vast majority of its revenue in the form of net interest income, being the difference between interest earned on financial assets and interest paid on financial liabilities and other financing costs.
Financial instruments represent the majority of the Group's balance sheet, including loans and advances, deposits, trading assets and derivatives.
A financial asset or financial liability is recognised on the balance sheet when the Group becomes a party to the contractual provisions of the instrument. The Group recognises regular way transactions on the trade date.
All financial instruments are initially recognised at fair value. Directly attributable transaction costs are added to or deducted from the carrying value of the asset or liability on initial recognition, unless the instrument is measured at fair value through profit or loss, in which case they are recognised in profit or loss.
Subsequently, financial instruments are measured either at amortised cost or fair value depending on their classification. Classification of financial assets is driven by the Group's business model for managing the asset and the contractual cash flows of the asset. The Group uses the following flowchart to determine the appropriate classification for financial assets.
Non-derivative financial liabilities are measured at amortised cost unless the Group elects to measure the financial liability at fair value through profit or loss. The Group will elect to measure a financial liability at fair value through profit or loss if such measurement significantly reduces or eliminates an accounting mismatch.
Refer to the table at the end of this section for a summary of the classification of the Group's financial instruments.
Amortised cost is the amount at which a financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation of transaction costs, premiums or discounts using the effective interest method, and for financial assets, adjusted for any loss allowance.
Gains or losses arising from changes in the fair value of debt instruments measured at fair value through other comprehensive income are recognised in other comprehensive income and accumulated in a separate component of equity. Upon disposal, the cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to the income statement.
Investments in equity instruments that are neither held for trading nor contingent consideration recognised by the Group in a business combination to which AASB 3 Business Combinations applies, are measured at fair value through other comprehensive income, where an irrevocable election has been made by management. Amounts recognised in other comprehensive income are not subsequently transferred to profit or loss. Dividends on such investments are recognised in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment.
Changes in the fair value of financial assets are recognised in profit or loss.
Where a financial liability is designated at fair value through profit or loss, the movement in fair value attributable to changes in the Group\u2019s own credit risk is calculated by determining the changes in own credit spreads and is recognised separately in other comprehensive income.
Derivative financial instruments are contracts whose value is derived from an underlying price, index or other variable, and include instruments such as swaps, forward rate agreements, futures and options.
All derivatives are recognised initially on the balance sheet at fair value and are subsequently measured at fair value through profit or loss, except where they are designated as a part of an effective hedge relationship and classified as hedging derivatives. Derivatives are presented as assets when their fair value is positive and as liabilities when their fair value is negative.
The method of recognising the resulting fair value gain or loss on a derivative depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. Refer to Note 18 Derivatives and hedge accounting.
The Group derecognises a financial asset when the contractual cash flows from the asset expire or it transfers its rights to receive contractual cash flows from the financial asset in a transaction in which substantially all the risks and rewards of ownership are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when the obligation specified in the contract is discharged, cancelled or expires.
The Group executes reverse repurchase agreements where it purchases a security under an agreement to resell that security at a predetermined price. These securities are not recognised on the balance sheet because the Group does not acquire the risks and rewards of ownership of the security. Consideration paid for the purchase is accounted for as a reverse repurchase agreement and classified as a financial asset. Reverse repurchase agreements that are part of a portfolio of financial instruments managed together for short-term profit taking are measured at fair value through profit or loss and are included within Note 9 Trading assets. All other reverse repurchase agreements are measured at amortised cost.
The Group also executes repurchase agreements, where it sells a security under an agreement to repurchase that security at a predetermined price. These securities are not derecognised from the balance sheet because the Group retains substantially all of the risks and rewards of ownership of the security. Consideration received for the sale is accounted for as a repurchase agreement and classified as a financial liability. Repurchase agreements that are part of a portfolio of financial instruments managed together for short-term profit taking are measured at fair value through profit or loss and are included within Note 16 Other financial liabilities. All other repurchase agreements are measured at amortised cost.
Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans and advances (customer loans and facilities) | Amortised cost | \u00a0 | Cash flows represent solely payments of principal and interest, held with the objective to collect contractual cash flows | Note 12 Loans and advances |
| Trading assets (bonds, reverse repurchase agreements, notes or securities issued by government, financial institutions or other corporates) | Fair value through profit or loss | \u00a0 | Principal purpose is selling or repurchasing in the near term, or part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking | Note 9 Trading assets |
| Other financial assets | \u00a0 | Cash flows are not solely payments of principal and interest or designated at fair value through profit or loss to eliminate an accounting mismatch | Note 11 Other financial assets | |
| Debt instruments (bonds, notes or securities issued by government, financial institutions or other corporates) | Fair value through other comprehensive income | \u00a0 | Cash flows represent solely payments of principal and interest, held with the objective to both collect contractual cash flows or to sell | Note 10 Debt instruments |
| Derivatives (forwards, swaps, futures, options) | Fair value1 | \u00a0 | Trading derivatives - not in a qualifying hedging relationship | Note 18 Derivatives and hedge accounting |
| \u00a0 | Hedging derivatives - designated in a qualifying hedging relationship | |||
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Type of instrument | Classification and measurement | \u00a0 | Reason | Note |
| Deposits and other borrowings (deposits, commercial paper, repurchase agreements) | Amortised cost | \u00a0 | Not designated at fair value through profit or loss | Note 13 Deposits and other borrowings |
| Bonds and notes | \u00a0 | Note 14 Bonds, notes and subordinated debt | ||
| Perpetual notes and convertible notes | \u00a0 | Note 15 Debt issues | ||
| Certain bonds, notes and deposits | Fair value through profit or loss2 | \u00a0 | Designated at fair value through profit or loss to eliminate an accounting mismatch | Note 16 Other financial liabilities |
| Repurchase agreements, securities short sold, other financial liabilities | \u00a0 | Part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking | ||
| Derivatives (forwards, swaps, futures, options) | Fair value1 | \u00a0 | Trading derivatives - not in a qualifying hedging relationship | Note 18 Derivatives and hedge accounting |
| \u00a0 | Hedging derivatives - designated in a qualifying hedging relationship |
Cash and liquid assets, and balances with other banks are initially measured at fair value and subsequently at amortised cost. For the purposes of the statement of cash flows, cash and cash equivalents include cash and liquid assets (including reverse repurchase agreements and short-term government securities) and amounts due from other banks net of amounts due to other banks that are highly liquid, readily convertible to known amounts of cash within three months and are subject to an insignificant risk of changes in value. They are held for the purposes of meeting short-term cash commitments (rather than for investment or other purposes). Refer to Note 37 Notes to the statement of cash flows for a detailed reconciliation of cash and cash equivalents.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Cash and liquid assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Coins, notes and cash at bank | \u00a0 | 1,030 | 1,147 | \u00a0 | 937 | 1,021 |
| Reverse repurchase agreements1 | \u00a0 | 21,808 | 53,785 | \u00a0 | 21,350 | 53,725 |
| Other (including bills receivable and remittances in transit) | \u00a0 | 1,861 | 1,519 | \u00a0 | 1,672 | 1,375 |
| Total cash and liquid assets | \u00a0 | 24,699 | 56,451 | \u00a0 | 23,959 | 56,121 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due from other banks | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Central banks | \u00a0 | 105,034 | 113,232 | \u00a0 | 95,638 | 105,857 |
| Other banks1 | \u00a0 | 12,272 | 28,629 | \u00a0 | 11,317 | 27,287 |
| Total due from other banks | \u00a0 | 117,306 | 141,861 | \u00a0 | 106,955 | 133,144 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Central banks2 | \u00a0 | 25,394 | 40,824 | \u00a0 | 21,041 | 37,713 |
| Other banks1 | \u00a0 | 14,122 | 33,855 | \u00a0 | 12,924 | 31,582 |
| Total due to other banks | \u00a0 | 39,516 | 74,679 | \u00a0 | 33,965 | 69,295 |
Trading assets comprise assets that are classified as held for trading because they are acquired or incurred principally for the purpose of selling or repurchasing in the near term, or form part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking. Trading assets are measured at fair value through profit or loss. Trading assets include commodities measured at fair value less cost to sell in accordance with AASB 102 Inventories.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Trading assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Government bonds, notes and securities | \u00a0 | 29,237 | 26,127 | \u00a0 | 26,690 | 23,036 |
| Semi-government bonds, notes and securities | \u00a0 | 10,092 | 5,346 | \u00a0 | 6,887 | 2,989 |
| Corporate / financial institution bonds, notes and securities | \u00a0 | 5,360 | 8,681 | \u00a0 | 3,392 | 7,598 |
| Reverse repurchase agreements1 | \u00a0 | 55,403 | - | \u00a0 | 52,373 | - |
| Commodity inventory at fair value | \u00a0 | 610 | - | \u00a0 | 610 | - |
| Other bonds, notes, securities, equities and other assets | \u00a0 | 466 | 419 | \u00a0 | 465 | 420 |
| Total trading assets | \u00a0 | 101,168 | 40,573 | \u00a0 | 90,417 | 34,043 |
Debt instruments are measured at fair value through other comprehensive income as they are held in a business model with the objective of both collecting contractual cash flows and realising assets through sale and they have contractual cash flows which are considered to be solely payments of principal and interest.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Debt instruments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Government bonds, notes and securities | \u00a0 | 2,691 | 3,626 | \u00a0 | 2,691 | 3,626 |
| Semi-government bonds, notes and securities | \u00a0 | 28,892 | 25,275 | \u00a0 | 28,892 | 25,275 |
| Corporate / financial institution bonds, notes and securities | \u00a0 | 8,238 | 6,933 | \u00a0 | 8,238 | 6,933 |
| Other bonds, notes and securities | \u00a0 | 6,536 | 6,246 | \u00a0 | 6,515 | 6,260 |
| Total debt instruments | \u00a0 | 46,357 | 42,080 | \u00a0 | 46,336 | 42,094 |
Other financial assets are measured at fair value through profit or loss. Changes in fair value and transaction costs are recognised in the income statement. Financial assets are measured at fair value through profit or loss when they have contractual cash flow characteristics that are not considered to be solely payments of principal and interest or they have been designated as such to eliminate or reduce an accounting mismatch.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans at fair value | \u00a0 | 1,243 | 1,876 | \u00a0 | 682 | 1,305 |
| Other financial assets at fair value | \u00a0 | 187 | 185 | \u00a0 | 1,026 | 1,444 |
| Total other financial assets | \u00a0 | 1,430 | 2,061 | \u00a0 | 1,708 | 2,749 |
The maximum credit exposure of loans (excluding any undrawn facility limits) included in other financial assets is $1,243 million (2022: $1,876 million) for the Group and $682 million (2022: $1,305 million) for the Company. The cumulative change in fair value of the loans attributable to changes in credit risk amounted to a $33 million loss (2022: $49 million loss) for the Group and a $27 million loss (2022: $28 million loss) for the Company.
Loans and advances are financial assets for which the contractual cash flows are solely payments of principal and interest and that are held in a business model with the objective of collecting contractual cash flows.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the origination of the loan or advance, which are primarily brokerage and origination fees. Subsequently, loans and advances are measured at amortised cost using the effective interest rate method, net of any provision for credit impairment.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Loans and advances | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Housing loans | \u00a0 | 406,298 | 389,124 | \u00a0 | 352,113 | 340,278 |
| Other term lending | \u00a0 | 261,520 | 260,487 | \u00a0 | 223,490 | 224,128 |
| Asset and lease financing | \u00a0 | 17,214 | 14,988 | \u00a0 | 17,158 | 14,937 |
| Overdrafts | \u00a0 | 5,459 | 4,689 | \u00a0 | 3,420 | 2,819 |
| Credit card outstandings | \u00a0 | 9,528 | 8,684 | \u00a0 | 8,609 | 7,816 |
| Other lending | \u00a0 | 7,209 | 7,867 | \u00a0 | 6,766 | 7,467 |
| Total gross loans and advances | \u00a0 | 707,228 | 685,839 | \u00a0 | 611,556 | 597,445 |
| Unearned income and deferred net fee income1 | \u00a0 | (1,453) | (1,020) | \u00a0 | (1,536) | (1,067) |
| Capitalised brokerage costs12 | \u00a0 | 2,512 | 671 | \u00a0 | 2,357 | 633 |
| Provision for credit impairment | \u00a0 | (5,585) | (5,056) | \u00a0 | (4,693) | (4,332) |
| Total net loans and advances | \u00a0 | 702,702 | 680,434 | \u00a0 | 607,684 | 592,679 |
Deposits and other borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Deposits and other borrowings | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Term deposits | \u00a0 | 191,924 | 156,049 | \u00a0 | 159,535 | 131,275 |
| On-demand and short-term deposits | \u00a0 | 299,969 | 310,347 | \u00a0 | 272,035 | 281,021 |
| Certificates of deposit | \u00a0 | 55,290 | 48,555 | \u00a0 | 55,290 | 48,555 |
| Deposits not bearing interest | \u00a0 | 95,491 | 100,289 | \u00a0 | 82,754 | 89,029 |
| Commercial paper and other borrowings | \u00a0 | 35,255 | 44,346 | \u00a0 | 34,835 | 43,150 |
| Repurchase agreements1 | \u00a0 | 4,191 | 23,940 | \u00a0 | 4,192 | 23,931 |
| Total deposits and other borrowings | \u00a0 | 682,120 | 683,526 | \u00a0 | 608,641 | 616,961 |
Bonds, notes and subordinated debt are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Premiums, discounts and associated issue expenses are recognised using the effective interest method through the income statement from the date of issue.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Bonds, notes and subordinated debt | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Medium-term notes | \u00a0 | 83,218 | 74,076 | \u00a0 | 76,801 | 69,042 |
| Securitisation notes | \u00a0 | 2,593 | 3,504 | \u00a0 | - | - |
| Covered bonds | \u00a0 | 30,093 | 23,511 | \u00a0 | 27,787 | 22,440 |
| Subordinated medium-term notes | \u00a0 | 19,741 | 18,192 | \u00a0 | 19,741 | 18,192 |
| Total bonds, notes and subordinated debt | \u00a0 | 135,645 | 119,283 | \u00a0 | 124,329 | 109,674 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Issued bonds, notes and subordinated debt by currency | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| AUD | \u00a0 | 40,873 | 37,972 | \u00a0 | 38,245 | 34,432 |
| USD | \u00a0 | 46,363 | 37,002 | \u00a0 | 40,838 | 32,727 |
| EUR | \u00a0 | 24,979 | 23,463 | \u00a0 | 22,487 | 22,289 |
| GBP | \u00a0 | 10,342 | 8,240 | \u00a0 | 10,389 | 8,298 |
| JPY | \u00a0 | 3,952 | 4,285 | \u00a0 | 3,952 | 4,285 |
| CHF | \u00a0 | 3,756 | 3,589 | \u00a0 | 3,011 | 2,908 |
| Other | \u00a0 | 5,380 | 4,732 | \u00a0 | 5,407 | 4,735 |
| Total bonds, notes and subordinated debt | \u00a0 | 135,645 | 119,283 | \u00a0 | 124,329 | 109,674 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Currency | Notional amount Currency amount (m)1 | Rate | First optional call date2 | Maturity date3 | \u00a0 | 2023 $m | 2022 $m | \u00a0 | 2023 $m | 2022 $m |
| SGD | 450 | Fixed | n/a | Matured 2023 | \u00a0 | - | 479 | \u00a0 | - | 479 |
| AUD | 943 | Float | n/a | Matured 2023 | \u00a0 | - | 942 | \u00a0 | - | 942 |
| AUD | 20 | Fixed | n/a | Buy-back 2023 | \u00a0 | - | 23 | \u00a0 | - | 23 |
| AUD | 20 | Fixed | n/a | Buy-back 2023 | \u00a0 | - | 23 | \u00a0 | - | 23 |
| AUD | 1,000 | Float | 2024 | 2029 | \u00a0 | 1,000 | 1,000 | \u00a0 | 1,000 | 1,000 |
| CAD | 1,000 | Fixed | 2025 | 2030 | \u00a0 | 1,080 | 1,061 | \u00a0 | 1,080 | 1,061 |
| AUD | 1,250 | Float | 2025 | 2030 | \u00a0 | 1,250 | 1,250 | \u00a0 | 1,250 | 1,250 |
| USD | 1,500 | Fixed | n/a | 2030 | \u00a0 | 1,785 | 1,806 | \u00a0 | 1,785 | 1,806 |
| USD | 1,250 | Fixed | n/a | 2031 | \u00a0 | 1,561 | 1,603 | \u00a0 | 1,561 | 1,603 |
| GBP | 600 | Fixed | 2026 | 2031 | \u00a0 | 994 | 858 | \u00a0 | 994 | 858 |
| AUD | 1,175 | Float | 2026 | 2031 | \u00a0 | 1,175 | 1,175 | \u00a0 | 1,175 | 1,175 |
| AUD | 225 | Fixed | 2026 | 2031 | \u00a0 | 205 | 201 | \u00a0 | 205 | 201 |
| AUD | 275 | Fixed | 2027 | 2032 | \u00a0 | 262 | 260 | \u00a0 | 262 | 260 |
| JPY | 17,000 | Fixed | 2027 | 2032 | \u00a0 | 174 | 180 | \u00a0 | 174 | 180 |
| AUD | 1,000 | Fixed | 2027 | 2032 | \u00a0 | 1,000 | 1,000 | \u00a0 | 1,000 | 1,000 |
| AUD | 250 | Float | 2027 | 2032 | \u00a0 | 250 | 250 | \u00a0 | 250 | 250 |
| HKD | 382 | Fixed | 2027 | 2032 | \u00a0 | 71 | 71 | \u00a0 | 71 | 71 |
| AUD | 950 | Fixed | 2028 | 2033 | \u00a0 | 950 | - | \u00a0 | 950 | - |
| AUD | 300 | Float | 2028 | 2033 | \u00a0 | 300 | - | \u00a0 | 300 | - |
| HKD | 640 | Fixed | 2028 | 2033 | \u00a0 | 122 | - | \u00a0 | 122 | - |
| USD | 1,250 | Fixed | n/a | 2033 | \u00a0 | 1,796 | - | \u00a0 | 1,796 | - |
| USD | 1,500 | Fixed | 2029 | 2034 | \u00a0 | 2,004 | 2,037 | \u00a0 | 2,004 | 2,037 |
| AUD | 205 | Fixed | n/a | 2035 | \u00a0 | 205 | 205 | \u00a0 | 205 | 205 |
| USD | 1,250 | Fixed | 2032 | 2037 | \u00a0 | 1,549 | 1,602 | \u00a0 | 1,549 | 1,602 |
| AUD | 85 | Fixed | n/a | 2037 | \u00a0 | 85 | 85 | \u00a0 | 85 | 85 |
| AUD | 215 | Fixed | n/a | 2040 | \u00a0 | 122 | 129 | \u00a0 | 122 | 129 |
| AUD | 245 | Fixed | n/a | 2040 | \u00a0 | 140 | 148 | \u00a0 | 140 | 148 |
| AUD | 100 | Fixed | n/a | 2040 | \u00a0 | 57 | 60 | \u00a0 | 57 | 60 |
| USD | 1,250 | Fixed | n/a | 2041 | \u00a0 | 1,206 | 1,346 | \u00a0 | 1,206 | 1,346 |
| AUD | 195 | Fixed | n/a | 2041 | \u00a0 | 195 | 195 | \u00a0 | 195 | 195 |
| AUD | 203 | Fixed | n/a | 2042 | \u00a0 | 203 | 203 | \u00a0 | 203 | 203 |
| Total | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 19,741 | 18,192 | \u00a0 | 19,741 | 18,192 |
Convertible notes are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Debt issues | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Convertible notes | \u00a0 | 8,561 | 7,318 | \u00a0 | 8,561 | 7,318 |
| Total debt issues | \u00a0 | 8,561 | 7,318 | \u00a0 | 8,561 | 7,318 |
The table below highlights the key features of the Group\u2019s debt issuances.
| Convertible notes1 | Outstanding amount | Issued date | Interest payment frequency (in arrears) | Interest rate (per annum) | Maturity / Conversion | |
|---|---|---|---|---|---|---|
| Mandatory conversion | Issuer conversion option | |||||
| NAB Capital Notes 3 | $1.87bn | 20 March 2019 | Quarterly | 4.00% above 3 month BBSW | 19 June 2028 | 17 June 2026 |
| NAB Capital Notes 5 | $2.39bn | 17 December 2020 | Quarterly | 3.50% above 3 month BBSW | 17 December 2029 | 17 December 2027 |
| NAB Capital Notes 6 | $2.00bn | 7 July 2022 | Quarterly | 3.15% above 3 month BBSW | 17 September 2032 | 17 December 20292 |
| NAB Capital Notes 7 | $1.25bn | 14 September 2023 | Quarterly | 2.80% above 3 month BBSW | 17 June 2033 | 17 September 20303 |
| NAB Wholesale Capital Notes | $500m | 12 December 2019 | Semi-annually until the optional call date. Quarterly thereafter. | 4.95% until the optional call date. 3.75% above 3 month BBSW thereafter. | 12 December 2031 | 12 December 2029 |
| NAB Wholesale Capital Notes 2 | $600m | 17 July 2020 | Quarterly | 4.00% above 3 month BBSW | 17 July 2027 | 17 July 2025 |
In certain circumstances, the Group applies the fair value measurement option to financial liabilities. This option is applied where an accounting mismatch is significantly reduced or eliminated by measuring the financial liability at fair value through profit or loss.
Where liabilities are designated at fair value through profit or loss, they are initially recognised at fair value, with transaction costs recognised in the income statement as incurred. Subsequently, they are measured at fair value and any gains or losses are recognised in the income statement, with the exception of changes in own credit risk which are recognised in other comprehensive income.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Other financial liabilities designated at fair value | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Bonds, notes and subordinated debt | \u00a0 | 13,741 | 15,061 | \u00a0 | 4,371 | 4,479 |
| Deposits and other borrowings | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Certificates of deposit | \u00a0 | 1,477 | 1,463 | \u00a0 | - | - |
| Commercial paper and other borrowings | \u00a0 | 854 | 2,016 | \u00a0 | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other financial liabilities measured at fair value | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Repurchase agreements1 | \u00a0 | 42,547 | - | \u00a0 | 39,860 | - |
| Securities sold short | \u00a0 | 6,697 | 3,575 | \u00a0 | 6,476 | 3,310 |
| Other financial liabilities | \u00a0 | 1,036 | 1,171 | \u00a0 | 1,038 | 1,171 |
| Total other financial liabilities | \u00a0 | 66,352 | 23,286 | \u00a0 | 51,745 | 8,960 |
The change in fair value of bonds, notes and subordinated debt attributable to changes in credit risk amounted to a loss for the 2023 financial year of $67 million (2022: $149 million gain) for the Group and a loss of $75 million (2022: $88 million gain) for the Company. The cumulative change in fair value of bonds, notes and subordinated debt attributable to changes in credit risk amounted to a loss of $79 million (2022: $12 million loss) for the Group and a loss of $39 million (2022: $35 million gain) for the Company. The contractual amount to be paid at the maturity of the bonds, notes and subordinated debt is $14,964 million (2022: $15,958 million) for the Group and $5,335 million (2022: $5,079 million) for the Company.
The Group applies a three-stage approach to measuring expected credit losses (ECL) for the following categories of financial assets that are not measured at fair value through profit or loss:
Debt instruments measured at amortised cost and fair value through other comprehensive income.
Loan commitments.
Financial guarantee contracts.
Exposures are assessed on a collective basis in each stage unless there is sufficient evidence that one or more events associated with an exposure could have a detrimental impact on estimated future cash flows. Where such evidence exists, the exposure is assessed on an individual basis.
| Stage | Measurement basis |
| Performing - 12-month ECL (Stage 1) | The portion of lifetime ECL associated with the probability of default events occurring within the next 12 months. |
| Performing - Lifetime ECL (Stage 2) | ECL associated with the probability of default events occurring throughout the life of an instrument. |
| Non-performing - Lifetime ECL(Stage 3) | Lifetime ECL, but interest revenue is measured based on the carrying amount of the instrument net of the associated ECL. |
At each reporting date, the Group assesses the default risk of exposures in comparison to the default risk at initial recognition, to determine the stage that applies to the associated ECL measurement. If no significant increase in default risk is observed, the exposure will remain in Stage 1. If the default risk of an exposure has increased significantly since initial recognition, the exposure will migrate to Stage 2. Should an exposure become non-performing it will migrate to Stage 3.
For this purpose, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes quantitative and qualitative information and also forward looking analysis.
ECL are derived from probability-weighted estimates of expected loss, and are measured as follows:
Financial assets that are performing at the reporting date: as the present value of all cash shortfalls over the expected life of the financial asset discounted by the effective interest rate. The cash shortfall is the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive.
Financial assets that are non-performing at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash flows discounted by the effective interest rate.
Undrawn loan commitments: as the present value of the difference between the contractual cash flows that are due to the Group if the commitment is drawn down and the cash flows that the Group expects to receive.
Financial guarantee contracts: as the expected payments to reimburse the holder less any amounts that the Group expects to recover.
The Group\u2019s internally developed credit rating system utilises historical default data drawn from a number of sources to assess the potential default risk of lending, or other financial services products, provided to counterparties or customers. The Group has defined counterparty probabilities of default across retail and non-retail loans and advances, including performing (pre-default) and non-performing (post-default) rating grades. In assessing for credit impairment of financial assets under the ECL model, the Group aligns credit impairment with the definition of default prescribed in its Credit Policy and Procedures.
When determining whether the default risk has increased significantly since initial recognition, the Group considers both quantitative and qualitative information, including expert credit risk assessment, forward looking information and analysis based on the Group\u2019s historical default experience.
For non-retail facilities, internally derived credit ratings, as described above, represent a key determinant of default risk. The Group assigns each customer a credit rating at initial recognition based on available information. Credit risk is deemed to have increased significantly if the credit rating has significantly deteriorated at the reporting date, relative to the credit rating at the date of initial recognition.
Retail facilities use the number of days past due (DPD) or the relative change in probability of default at an account level, to determine whether or not there has been a significant increase in credit risk.
In addition, the Group considers that significant increase in credit risk occurs when a facility is more than 30 DPD.
Default occurs when a loan obligation is contractually 90+ DPD, or when it is considered unlikely that the credit obligation to the Group will be paid in full without remedial action, such as realisation of security. Exposures which are in default align to the non-performing exposures definition in APS 220 Credit Risk Management.
ECL are calculated using three main parameters being probability of default (PD), loss given default (LGD) and exposure at default (EAD). These parameters are generally derived from internally developed statistical models combined with historical, current and forward looking information, including macro-economic data.
For accounting purposes, the 12-month and lifetime PD represent the expected point-in-time probability of a default over the next 12 months and remaining expected lifetime of the financial instrument, respectively, based on conditions existing at the balance sheet date and future economic conditions that affect credit risk.
The LGD represents expected loss conditional on default, taking into account the mitigating effect of collateral, its expected value when realised and the time value of money.
The EAD represents the expected exposure at default, taking into account the repayment of principal and interest from the balance sheet date to the default event together with any expected drawdown of a facility.
The 12-month ECL is equal to the discounted sum over the next 12-months of monthly PD multiplied by LGD and EAD. Lifetime ECL is calculated using the discounted sum of monthly PD over the expected remaining life multiplied by LGD and EAD.
The Group uses internal subject matter experts from Risk, Economics and customer divisions to consider a range of relevant forward looking data, including macro-economic forecasts and assumptions, for the determination of general economic adjustments and any idiosyncratic or targeted portfolio / industry adjustments, to support the calculation of ECL.
Forward looking provisions for both general macro-economic adjustments (EA) and more targeted portfolio / industry forward looking adjustments (FLAs), reflect reasonable and supportable forecasts of potential future conditions that are not captured within the base ECL calculations.
Macro-economic factors taken into consideration include (but are not limited to) the cash rate, unemployment rates, GDP growth rates, inflation and residential and commercial property prices, and require an evaluation of both the current and forecast direction of the macro-economic cycle.
Incorporating forward looking information, including macro-economic forecasts, increases the degree of judgement required to assess how changes in these data points will affect ECL. The methodologies and assumptions, including any forecasts of future economic conditions, are reviewed regularly.
Judgement is applied in determining ECL using objective, reasonable and supportable information about current and forecast economic conditions. Macro-economic variables used in these scenarios include (but are not limited to) the cash rate, unemployment rates, GDP growth rates, inflation and residential and commercial property prices. When determining whether the risk of default has increased significantly since initial recognition, both quantitative and qualitative information is considered, including expert credit assessment, forward looking information and analysis based on the Group\u2019s historical loss experience.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Credit impairment charge on loans at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| New and increased provisions (net of collective provision releases) | \u00a0 | 1,043 | 355 | \u00a0 | 820 | 257 |
| Write-backs of specific provisions | \u00a0 | (148) | (161) | \u00a0 | (93) | (147) |
| Recoveries of specific provisions | \u00a0 | (79) | (70) | \u00a0 | (73) | (62) |
| Total charge to the income statement | \u00a0 | 816 | 124 | \u00a0 | 654 | 48 |
| \u00a0 | \u00a0 | Stage 1 | \u00a0 | Stage 2 | \u00a0 | Stage 3 | \u00a0 | \u00a0 | |
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Performing 12-mth ECL | \u00a0 | Performing Lifetime ECL | \u00a0 | Non-performing Lifetime ECL | \u00a0 | \u00a0 | |
| \u00a0 | \u00a0 | Collective provision | \u00a0 | Collective provision | \u00a0 | Collective provision | Specific provision | \u00a0 | Total |
| Group | \u00a0 | $m | \u00a0 | $m | \u00a0 | $m | $m | \u00a0 | $m |
| Balance at 1 October 2021 | \u00a0 | 256 | \u00a0 | 3,376 | \u00a0 | 889 | 650 | \u00a0 | 5,171 |
| Changes due to financial assets recognised in the opening balance that have: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Transferred to performing - 12-mth ECL - collective provision | \u00a0 | 238 | \u00a0 | (221) | \u00a0 | (17) | - | \u00a0 | - |
| Transferred to performing - Lifetime ECL - collective provision | \u00a0 | (39) | \u00a0 | 155 | \u00a0 | (116) | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - collective provision | \u00a0 | (1) | \u00a0 | (47) | \u00a0 | 48 | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - specific provision | \u00a0 | - | \u00a0 | (25) | \u00a0 | (45) | 70 | \u00a0 | - |
| New and increased provisions (net of collective provision releases) | \u00a0 | (42) | \u00a0 | 22 | \u00a0 | 47 | 328 | \u00a0 | 355 |
| Write-backs of specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (161) | \u00a0 | (161) |
| Write-offs from specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (362) | \u00a0 | (362) |
| Foreign currency translation and other adjustments1 | \u00a0 | 36 | \u00a0 | 16 | \u00a0 | 11 | (10) | \u00a0 | 53 |
| Balance as at 30 September 2022 | \u00a0 | 448 | \u00a0 | 3,276 | \u00a0 | 817 | 515 | \u00a0 | 5,056 |
| Changes due to financial assets recognised in the opening balance that have: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Transferred to performing - 12-mth ECL - collective provision | \u00a0 | 247 | \u00a0 | (234) | \u00a0 | (13) | - | \u00a0 | - |
| Transferred to performing - Lifetime ECL - collective provision | \u00a0 | (26) | \u00a0 | 104 | \u00a0 | (78) | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - collective provision | \u00a0 | (1) | \u00a0 | (49) | \u00a0 | 50 | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - specific provision | \u00a0 | - | \u00a0 | (14) | \u00a0 | (46) | 60 | \u00a0 | - |
| New and increased provisions (net of collective provision releases) | \u00a0 | (143) | \u00a0 | 428 | \u00a0 | 242 | 516 | \u00a0 | 1,043 |
| Write-backs of specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (148) | \u00a0 | (148) |
| Write-offs from specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (409) | \u00a0 | (409) |
| Foreign currency translation and other adjustments | \u00a0 | 4 | \u00a0 | 29 | \u00a0 | 5 | 5 | \u00a0 | 43 |
| Balance as at 30 September 2023 | \u00a0 | 529 | \u00a0 | 3,540 | \u00a0 | 977 | 539 | \u00a0 | 5,585 |
Provision for credit impairment reflects ECL measured using the three-stage approach. The following explains how significant changes in the gross carrying amount of loans and advances during the 2023 financial year have contributed to the changes in the provision for credit impairment for the Group under the ECL model.
Overall, the total provision for credit impairment increased by $529 million compared to the balance as at 30 September 2022.
Specific provisions increased by $24 million compared to the balance as at 30 September 2022, mainly due to new and increased specific provisions in the Business and Private Banking business lending portfolio, partially offset by work-outs for a small number of larger exposures in the business lending portfolio in Australia and New Zealand.
Collective provisions increased by $505 million compared to the balance as at 30 September 2022, comprised of:
Collective provision performing \u2013 12-months ECL (Stage 1) increased by $81 million as a result of:
$149 billion of loans and advances that were newly originated or migrated into Stage 1 from Stage 2 or Stage 3 due to credit quality improvement.
This was partially offset by:
$120 billion of loans and advances that were repaid, experienced movement in underlying account balances during the period or migrated from Stage 1 to Stage 2 or Stage 3 due to deterioration in credit quality.
A decrease in net forward looking provisions.
Collective provision performing \u2013 Lifetime ECL (Stage 2) increased by $264 million as a result of:
$72 billion of loans and advances that were originated and migrated over the year to Stage 2, including the impact of forward looking economic information applied in the ECL model or migrating into Stage 2 as a result of loans and advances transferred from Stage 1 or Stage 3.
This was partially offset by:
$86 billion of loans and advances that migrated to Stage 1 as a result of improved credit quality or into Stage 3 due to deterioration in credit quality, were repaid or experienced movement in underlying account balances during the period.
A decrease in net forward looking provisions.
Collective provision non-performing - Lifetime ECL (Stage 3) increased by $160 million as a result of:
$5 billion of loans and advances that experienced movement in underlying account balances during the period or were transferred into Stage 3 from Stage 1 and Stage 2 due to credit quality deterioration.
This was partially offset by:
$4 billion of loans and advances that were repaid or migrated to Stage 1 or Stage 2 due to credit quality improvement or migrated to individually credit assessed with specific provisions raised.
A decrease in net forward looking provisions.
The Group\u2019s ECL measurement is derived from a probability weighted average of three distinct scenarios (base case, upside and downside) applied across each of the Group\u2019s major loan portfolios, in addition to FLAs for emerging risk at an industry, geography or segment level. The probability of each scenario is determined by considering relevant macro-economic outlooks and their likely impact on the Group\u2019s credit portfolio.
The following table shows the key macro-economic variables for the Australian economy used in the base case and downside scenarios as at 30 September 2023.
| \u00a0 | \u00a0 | Base case | \u00a0 | Downside | ||||
|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Financial year | \u00a0 | Financial year | ||||
| \u00a0 | \u00a0 | 2024 | 2025 | 2026 | \u00a0 | 2024 | 2025 | 2026 |
| \u00a0 | \u00a0 | % | % | % | \u00a0 | % | % | % |
| GDP change (year ended September) | \u00a0 | 0.8 | 2.0 | 2.6 | \u00a0 | (1.2) | (2.6) | 2.8 |
| Unemployment (as at 30 September) | \u00a0 | 4.7 | 4.7 | 4.5 | \u00a0 | 4.7 | 7.9 | 9.1 |
| House price change (year ended September) | \u00a0 | 4.1 | 3.3 | 3.0 | \u00a0 | (24.5) | (20.3) | 5.5 |
The following table shows the reported total provisions for ECL based on the probability weighting of scenarios, with the sensitivity range reflecting the ECL impacts assuming a 100% weighting is applied to the base case scenario or the downside scenario (with all other assumptions held constant).
| \u00a0 | \u00a0 | Group | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m |
| Total provisions for ECL | \u00a0 | \u00a0 | \u00a0 |
| Probability weighted | \u00a0 | 5,585 | 5,056 |
| 100% Base case | \u00a0 | 4,000 | 4,292 |
| 100% Downside | \u00a0 | 7,546 | 6,008 |
Applying the average provision coverage ratios by stage, if 1% of the Group's Stage 1 gross loans and advances, contingent liabilities and credit commitments were included as Stage 2 the provision for ECL as at September 2023 would increase by $111 million (September 2022: $90 million).
Applying the average provision coverage ratios by stage, if 1% of the Group's Stage 2 gross loans and advances, contingent liabilities and credit commitments were included as Stage 1 the provision for ECL as at September 2023 would decrease by $34 million (September 2022: $31 million).
The table below shows weightings applied to the Australian portfolio to derive the probability weighted ECL.
| \u00a0 | \u00a0 | 2023 | 2022 |
|---|---|---|---|
| \u00a0 | \u00a0 | % | % |
| Macro-economics scenario weightings | \u00a0 | \u00a0 | \u00a0 |
| Upside | \u00a0 | 2.5 | 2.5 |
| Base case | \u00a0 | 52.5 | 52.5 |
| Downside | \u00a0 | 45.0 | 45.0 |
The September 2023 provisions for ECL in the 100% base case have decreased since September 2022 primarily due to an improved economic outlook. This was partially offset by deterioration in asset quality across the Group\u2019s lending portfolio combined with volume growth and updated methodology in Business and Private Banking.
The September 2023 provisions for ECL in the 100% downside scenario have increased since September 2022 primarily due to an increase in the severity of the stress applied in the downside scenario and deterioration in asset quality across the Group\u2019s lending portfolio combined with volume growth and updated methodology in Business and Private Banking.
The upside, downside and base case scenario weightings for the Australian portfolio have remained constant compared with September 2022.
The table below provides a breakdown of the probability weighted ECL by key portfolios:
| \u00a0 | \u00a0 | Group | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m |
| Total provision for ECL for key portfolios | \u00a0 | \u00a0 | \u00a0 |
| Housing | \u00a0 | 1,424 | 1,296 |
| Business | \u00a0 | 3,744 | 3,429 |
| Others | \u00a0 | 417 | 331 |
| Total | \u00a0 | 5,585 | 5,056 |
| \u00a0 | \u00a0 | Stage 1 | \u00a0 | Stage 2 | \u00a0 | Stage 3 | \u00a0 | \u00a0 | |
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Performing 12-mth ECL | \u00a0 | Performing Lifetime ECL | \u00a0 | Non-performing Lifetime ECL | \u00a0 | \u00a0 | |
| \u00a0 | \u00a0 | Collective provision | \u00a0 | Collective provision | \u00a0 | Collective provision | Specific provision | \u00a0 | Total |
| Company | \u00a0 | $m | \u00a0 | $m | \u00a0 | $m | $m | \u00a0 | $m |
| Balance at 1 October 2021 | \u00a0 | 203 | \u00a0 | 2,872 | \u00a0 | 806 | 526 | \u00a0 | 4,407 |
| Changes due to financial assets recognised in the opening balance that have: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Transferred to performing - 12-mth ECL - collective provision | \u00a0 | 210 | \u00a0 | (196) | \u00a0 | (14) | - | \u00a0 | - |
| Transferred to performing - Lifetime ECL - collective provision | \u00a0 | (31) | \u00a0 | 143 | \u00a0 | (112) | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - collective provision | \u00a0 | (1) | \u00a0 | (38) | \u00a0 | 39 | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - specific provision | \u00a0 | - | \u00a0 | (23) | \u00a0 | (39) | 62 | \u00a0 | - |
| New and increased provisions (net of collective provision releases) | \u00a0 | (39) | \u00a0 | (54) | \u00a0 | 51 | 299 | \u00a0 | 257 |
| Write-backs of specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (147) | \u00a0 | (147) |
| Write-offs from specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (294) | \u00a0 | (294) |
| Foreign currency translation and other adjustments1 | \u00a0 | 43 | \u00a0 | 54 | \u00a0 | 16 | (4) | \u00a0 | 109 |
| Balance as at 30 September 2022 | \u00a0 | 385 | \u00a0 | 2,758 | \u00a0 | 747 | 442 | \u00a0 | 4,332 |
| Changes due to financial assets recognised in the opening balance that have: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Transferred to performing - 12-mth ECL - collective provision | \u00a0 | 223 | \u00a0 | (212) | \u00a0 | (11) | - | \u00a0 | - |
| Transferred to performing - Lifetime ECL - collective provision | \u00a0 | (18) | \u00a0 | 88 | \u00a0 | (70) | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - collective provision | \u00a0 | (1) | \u00a0 | (42) | \u00a0 | 43 | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - specific provision | \u00a0 | - | \u00a0 | (11) | \u00a0 | (32) | 43 | \u00a0 | - |
| New and increased provisions (net of collective provision releases) | \u00a0 | (135) | \u00a0 | 360 | \u00a0 | 160 | 435 | \u00a0 | 820 |
| Write-backs of specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (93) | \u00a0 | (93) |
| Write-offs from specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (367) | \u00a0 | (367) |
| Foreign currency translation and other adjustments | \u00a0 | - | \u00a0 | - | \u00a0 | - | 1 | \u00a0 | 1 |
| Balance as at 30 September 2023 | \u00a0 | 454 | \u00a0 | 2,941 | \u00a0 | 837 | 461 | \u00a0 | 4,693 |
Provision for credit impairment reflects ECL measured using the three-stage approach. The following explains how significant changes in the gross carrying amount of loans and advances during the 2023 financial year have contributed to the changes in the provision for credit impairment for the Company under the ECL model.
Overall, the total provision for credit impairment increased by $361 million compared to the balance as at 30 September 2022.
Specific provisions increased by $19 million compared to the balance as at 30 September 2022, mainly due to new and increased specific provisions in the Business and Private Banking business lending portfolio, partially offset by work-outs for a small number of larger exposures in the Australian business lending portfolio.
Collective provisions increased by $342 million compared to the balance as at 30 September 2022, comprised of:
Collective provision performing \u2013 12-months ECL (Stage 1) increased by $69 million due to:
$131 billion of loans and advances that were newly originated or migrated into Stage 1 from Stage 2 or Stage 3 due to credit quality improvement.
This was partially offset by:
$105 billion of loans and advances that were repaid, experienced movement in underlying account balances during the period or migrated from Stage 1 to Stage 2 or Stage 3 due to deterioration in credit quality.
A decrease in net forward looking provisions.
Collective provision performing \u2013 Lifetime ECL (Stage 2) increased by $183 million due to:
$60 billion of loans and advances that were originated and migrated over the year to Stage 2, including the impact of forward looking economic information applied in the ECL model or migrating into Stage 2 as a result of loans and advances transferred from Stage 1 or Stage 3.
This was partially offset by:
$72 billion of loans and advances that were repaid, experienced movement in underlying account balances during the period, migrated to Stage 1 as a result of improved credit quality or into Stage 3 due to deterioration in credit quality.
A decrease in net forward looking provisions.
Collective provision non-performing - Lifetime ECL (Stage 3) increased by $90 million due to:
$4 billion of existing loans and advances that were transferred into Stage 3 from Stage 1 and Stage 2 due to credit quality deterioration or experienced movement in underlying account balances during the period.
This was partially offset by:
$3 billion of loan and advances that were repaid, migrated to Stage 1 or Stage 2 due to credit quality improvement or migrated to individually credit assessed with specific provisions raised.
A decrease in net forward looking provisions.
The contractual amount outstanding on loans and advances that were written off during the 2023 financial year, which are still subject to enforcement activity was $9 million (2022: $68 million) for the Group and $8 million (2022: $45 million) for the Company.
Stage 3 non-performing exposures include both default but not impaired and gross impaired assets. The following table provides details on gross impaired assets. Gross amounts are shown before taking into account any collateral held or other credit enhancements. Refer to Note 19 Financial risk management for analysis of the credit quality of the Group\u2019s loans and advances, including by provision stage.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Summary of gross impaired assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Gross impaired assets1 | \u00a0 | 1,260 | 1,029 | \u00a0 | 853 | 878 |
| Specific provision for credit impairment2 | \u00a0 | (539) | (531) | \u00a0 | (461) | (442) |
| Net impaired assets3 | \u00a0 | 721 | 498 | \u00a0 | 392 | 436 |
Trading derivatives
Trading derivatives are not in a qualifying hedging relationship and are measured at fair value through profit or loss.
Hedge accounting
The Group utilises the following types of hedge relationships in managing its exposure to risk. At inception of all hedge relationships the Group documents the relationship between the hedging instrument and hedged item, the risk being hedged, the Group\u2019s risk management objective and strategy and how effectiveness will be measured throughout the hedge relationship.
| \u00a0 | Cash flow hedge | Fair value hedge |
| Objective | To hedge changes to cash flows arising from interest rate and foreign currency risk. | To hedge fair value changes to recognised assets and liabilities arising from interest rate and foreign currency risk. |
| Methods for testing hedge effectiveness | Critical terms matching, regression analysis or cumulative dollar offset. | Critical terms matching or cumulative dollar offset. |
| Potential sources of ineffectiveness | Primarily mismatches in terms of the hedged item and the hedging instrument.Discounting basis between the hedged item and hedging instrument. | Primarily mismatches in terms of the hedged item and the hedging instrument, prepayment risk and reset risk.Discounting basis between the hedged item and hedging instrument. |
| Recognition of effective hedge portion | Fair value changes of the hedging instrument associated with the hedged risk are recognised in the cash flow hedge reserve in equity. | Fair value changes of the hedging instrument and those arising from the hedged risk on the hedged item are recognised in the income statement. |
| Recognition of ineffective hedge portion | Recognised in the income statement as ineffectiveness arises. | |
| Hedging instrument expires, is sold, or when hedging criteria are no longer met | Transferred to the income statement as / when the hedged item affects the income statement. If the hedged item is no longer expected to occur the effective portion accumulated in equity is transferred to the income statement immediately. | Cumulative hedge adjustment to the hedged item is amortised to the income statement on an effective yield basis. |
| Cost of hedging reserve | For qualifying hedging instruments, the Group excludes foreign currency basis spreads from hedge designations. Any change in the fair value of these hedging instruments for changes in cross currency basis spreads is deferred to the cost of hedging reserve and released to profit or loss either when the hedged exposure affects profit or loss or on a systematic basis over the life of the hedge. The cumulative movements are expected to be nil by maturity of the hedging instruments. |
The tables below set out total derivative assets and liabilities disclosed as trading and hedging derivatives.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Assets | \u00a0 | Liabilities | \u00a0 | Assets | \u00a0 | Liabilities | ||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Trading derivatives | \u00a0 | 30,770 | 53,429 | \u00a0 | 31,122 | 50,729 | \u00a0 | 31,079 | 54,932 | \u00a0 | 33,587 | 53,397 |
| Hedging derivatives | \u00a0 | 3,499 | 7,587 | \u00a0 | 4,511 | 6,757 | \u00a0 | 2,705 | 5,719 | \u00a0 | 2,523 | 4,097 |
| Total derivatives | \u00a0 | 34,269 | 61,016 | \u00a0 | 35,633 | 57,486 | \u00a0 | 33,784 | 60,651 | \u00a0 | 36,110 | 57,494 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Assets | \u00a0 | Liabilities | \u00a0 | Assets | \u00a0 | Liabilities | ||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Foreign exchange rate-related contracts | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Spot and forward contracts | \u00a0 | 11,514 | 26,167 | \u00a0 | 10,284 | 21,887 | \u00a0 | 11,209 | 24,668 | \u00a0 | 10,022 | 20,612 |
| Cross currency swaps | \u00a0 | 8,656 | 15,825 | \u00a0 | 7,969 | 14,418 | \u00a0 | 10,545 | 19,941 | \u00a0 | 11,446 | 19,076 |
| Options / swaptions | \u00a0 | 138 | 427 | \u00a0 | 133 | 400 | \u00a0 | 136 | 431 | \u00a0 | 133 | 400 |
| Total foreign exchange rate-related contracts | \u00a0 | 20,308 | 42,419 | \u00a0 | 18,386 | 36,705 | \u00a0 | 21,890 | 45,040 | \u00a0 | 21,601 | 40,088 |
| Interest rate-related contracts | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Swaps | \u00a0 | 8,710 | 8,444 | \u00a0 | 10,671 | 10,903 | \u00a0 | 7,429 | 7,320 | \u00a0 | 9,919 | 10,184 |
| Options / swaptions | \u00a0 | 1,148 | 1,045 | \u00a0 | 1,393 | 1,356 | \u00a0 | 1,148 | 1,045 | \u00a0 | 1,389 | 1,352 |
| Total interest rate-related contracts | \u00a0 | 9,858 | 9,489 | \u00a0 | 12,064 | 12,259 | \u00a0 | 8,577 | 8,365 | \u00a0 | 11,308 | 11,536 |
| Credit derivatives | \u00a0 | 146 | 234 | \u00a0 | 134 | 157 | \u00a0 | 146 | 234 | \u00a0 | 134 | 157 |
| Commodity derivatives | \u00a0 | 453 | 1,268 | \u00a0 | 533 | 1,592 | \u00a0 | 461 | 1,274 | \u00a0 | 541 | 1,600 |
| Other derivatives | \u00a0 | 5 | 19 | \u00a0 | 5 | 16 | \u00a0 | 5 | 19 | \u00a0 | 3 | 16 |
| Total trading derivatives | \u00a0 | 30,770 | 53,429 | \u00a0 | 31,122 | 50,729 | \u00a0 | 31,079 | 54,932 | \u00a0 | 33,587 | 53,397 |
The Group\u2019s hedging strategy is to manage its exposure to interest rate risk on a net variable basis in Australian or New Zealand dollars. For Australian and New Zealand denominated exposures the Group will enter into interest rate swaps where the exposure is to a fixed interest rate. In some instances, cash flow hedges of interest rate risk are also used to arrive at a net variable rate position. Foreign currency exposures are swapped to Australian or New Zealand dollars using cross-currency swaps and interest rate swaps. The material risks and the risk management strategy are explained further below.
The Group manages interest rate risk exposure on deposits and loans via interest rate derivatives. The Group accounts for these hedge relationships as a macro cash flow hedge. The gross exposures are allocated to time buckets based on expected repricing dates, with interest rate derivatives allocated to hedge accordingly. The benchmark interest rate is hedged which represents the largest component of changes in fair value and is observable in relevant financial markets.
The Group is exposed to foreign currency risk on credit margin cash flows and foreign currency risk on the principal cash flows, both of which arise from foreign currency debt issuances.
The Group uses foreign currency derivatives to manage changes between the foreign currency and Australian and New Zealand dollars for the above mentioned cash flows.
Interest rate risk arises on fixed rate bonds, notes and subordinated debt issuances, fixed rate debt instruments held for liquidity purposes and fixed rate loans and advances. The Group hedges its interest rate risk on these instruments with relevant interest rate derivatives to reduce its exposure to changes in fair value due to interest rate fluctuations.
Hedging relationships are predominantly one-to-one, with the exception of fixed rate housing loans which were previously designated on a macro basis until de-designation in the 2022 financial year.
With all the fair value hedges, the benchmark interest rate is hedged which represents the largest component of changes in fair value and is observable in relevant financial markets.
Hedging derivative assets and liabilities are disclosed by the hedged risk and type of hedge relationship in which they are designated. The Group may designate separate derivatives to hedge different risk components of one hedged item. In such scenario the notional amount of hedging derivatives will, in sum, exceed the notional amount of the hedged item. In the case of cross-currency swaps, the Group can designate a single instrument to hedge both interest rate risk in a fair value hedge and currency risk in a cash flow hedge.
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | ||||
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Carrying amount | Notional | Carrying amount | Notional | \u00a0 | Carrying amount | Notional | Carrying amount | Notional |
| \u00a0 | \u00a0 | Hedging instrument | \u00a0 | Risk | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Derivative assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash flow hedges | \u00a0 | Interest rate swaps | \u00a0 | Interest | \u00a0 | - | 177,400 | - | 160,449 | \u00a0 | - | 159,050 | - | 144,670 |
| Cash flow hedges | \u00a0 | Cross-currency swaps | \u00a0 | Currency | \u00a0 | 3,370 | 90,389 | 7,340 | 119,820 | \u00a0 | 2,576 | 70,629 | 5,493 | 93,038 |
| Cash flow hedges | \u00a0 | Foreign exchange contracts | \u00a0 | Currency | \u00a0 | 98 | 7,908 | 212 | 6,257 | \u00a0 | 98 | 7,908 | 212 | 6,257 |
| Fair value hedges | \u00a0 | Interest rate swaps | \u00a0 | Interest | \u00a0 | 28 | 67,540 | 19 | 75,768 | \u00a0 | 28 | 65,635 | 11 | 73,012 |
| Fair value and cash flow hedges | \u00a0 | Cross-currency swaps | \u00a0 | Interest and currency | \u00a0 | 1 | 21 | 16 | 475 | \u00a0 | 1 | 21 | 3 | 167 |
| Cash flow hedges | \u00a0 | Futures1 | \u00a0 | Interest | \u00a0 | 2 | 1,866 | - | 59 | \u00a0 | 2 | 1,866 | - | 59 |
| Total derivative assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,499 | 345,124 | 7,587 | 362,828 | \u00a0 | 2,705 | 305,109 | 5,719 | 317,203 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash flow hedges | \u00a0 | Interest rate swaps | \u00a0 | Interest | \u00a0 | 3 | 165,627 | 5 | 206,451 | \u00a0 | 3 | 152,929 | 5 | 201,808 |
| Cash flow hedges | \u00a0 | Cross-currency swaps | \u00a0 | Currency | \u00a0 | 2,580 | 94,734 | 4,152 | 64,945 | \u00a0 | 1,844 | 56,839 | 3,513 | 49,626 |
| Cash flow hedges | \u00a0 | Foreign exchange contracts | \u00a0 | Currency | \u00a0 | 151 | 15,864 | 1 | 506 | \u00a0 | 151 | 15,864 | 1 | 506 |
| Fair value hedges | \u00a0 | Interest rate swaps | \u00a0 | Interest | \u00a0 | 425 | 108,249 | 383 | 108,169 | \u00a0 | 290 | 81,548 | 279 | 90,448 |
| Fair value and cash flow hedges | \u00a0 | Cross-currency swaps | \u00a0 | Interest and currency | \u00a0 | 1,352 | 6,773 | 2,209 | 8,589 | \u00a0 | 235 | 1,934 | 292 | 2,612 |
| Cash flow hedges2 | \u00a0 | Futures1 | \u00a0 | Interest | \u00a0 | - | 465 | 7 | 1,128 | \u00a0 | - | 465 | 7 | 1,128 |
| Total derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 4,511 | 391,712 | 6,757 | 389,788 | \u00a0 | 2,523 | 309,579 | 4,097 | 346,128 |
The following table shows the maturity profile of hedging instruments based on their notional amounts.
| \u00a0 | \u00a0 | 2023 | \u00a0 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 0 to 12 months | 1 to 5 years | Over 5 years | Total | \u00a0 | 0 to 12 months | 1 to 5 years | Over 5 years | Total |
| \u00a0 | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest rate swaps | \u00a0 | 235,775 | 229,751 | 53,290 | 518,816 | \u00a0 | 247,746 | 245,893 | 57,198 | 550,837 |
| Foreign exchange contracts | \u00a0 | 23,714 | 58 | - | 23,772 | \u00a0 | 6,622 | 141 | - | 6,763 |
| Futures12 | \u00a0 | 1,681 | 650 | - | 2,331 | \u00a0 | 892 | 295 | - | 1,187 |
| Cross-currency swaps - interest and currency | \u00a0 | 744 | 5,746 | 304 | 6,794 | \u00a0 | 3,178 | 5,144 | 742 | 9,064 |
| Cross-currency swaps - currency | \u00a0 | 28,518 | 120,530 | 36,075 | 185,123 | \u00a0 | 37,059 | 104,868 | 42,838 | 184,765 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest rate swaps | \u00a0 | 220,232 | 191,754 | 47,176 | 459,162 | \u00a0 | 241,175 | 216,746 | 52,017 | 509,938 |
| Foreign exchange contracts | \u00a0 | 23,714 | 58 | - | 23,772 | \u00a0 | 6,622 | 141 | - | 6,763 |
| Futures1 | \u00a0 | 1,681 | 650 | - | 2,331 | \u00a0 | 892 | 295 | - | 1,187 |
| Cross-currency swaps - interest and currency | \u00a0 | 404 | 1,247 | 304 | 1,955 | \u00a0 | 1,358 | 982 | 439 | 2,779 |
| Cross-currency swaps - currency | \u00a0 | 26,676 | 75,784 | 25,008 | 127,468 | \u00a0 | 33,441 | 75,627 | 33,596 | 142,664 |
The average rate for major currencies of the final exchange of cross-currency swaps designated in hedge accounting relationships is as follows:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| USD:AUD | \u00a0 | 1.416 | 1.362 | \u00a0 | 1.412 | 1.361 |
| EUR:AUD | \u00a0 | 1.514 | 1.497 | \u00a0 | 1.546 | 1.551 |
| GBP:AUD | \u00a0 | 1.867 | 1.868 | \u00a0 | 1.861 | 1.863 |
| USD:NZD | \u00a0 | 1.488 | 1.458 | \u00a0 | n/a | n/a |
| CHF:NZD | \u00a0 | 1.554 | 1.554 | \u00a0 | n/a | n/a |
| EUR:NZD | \u00a0 | 1.715 | 1.683 | \u00a0 | n/a | n/a |
The average executed rate for interest rate swaps in hedge accounting relationships for major currencies is as follows:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | ||||
| \u00a0 | \u00a0 | Fair value hedges | Cash flow hedges | Fair value hedges | Cash flow hedges | \u00a0 | Fair value hedges | Cash flow hedges | Fair value hedges | Cash flow hedges |
| \u00a0 | \u00a0 | % | % | % | % | \u00a0 | % | % | % | % |
| NZD interest rates | \u00a0 | 1.95 to 3.05 | 0.04 to 7.30 | 1.95 to 4.50 | (0.01) to 4.87 | \u00a0 | 1.95 to 3.05 | - | 1.95 to 3.05 | - |
| USD interest rates | \u00a0 | 0.61 to 4.85 | - | 0.61 to 2.96 | - | \u00a0 | 0.61 to 2.73 | - | 0.61 to 2.73 | - |
| AUD interest rates | \u00a0 | 0.40 to 4.37 | 0.06 to 7.02 | 0.40 to 7.13 | 0.06 to 7.29 | \u00a0 | 0.40 to 3.99 | 0.06 to 7.02 | 0.40 to 7.13 | 0.06 to 7.29 |
| EUR interest rates | \u00a0 | (0.22) to 3.71 | - | (0.22) to 2.61 | - | \u00a0 | (0.22) to 2.61 | - | (0.22) to 2.61 | - |
The balance of the cash flow hedge reserve, which represents the effective portion of the movements in the hedging instrument, is presented in Note 29 Reserves. The movements in hedging instruments recognised in other comprehensive income are reported in the Group\u2019s Statement of other comprehensive income. As at 30 September, the amounts recognised in the cash flow hedge reserve for which hedge accounting is no longer applied is a loss of $11 million (2022: loss of $14 million).
The following table shows the carrying amount of fair value hedged items in hedge relationships, and the accumulated amount of fair value hedge adjustments in these carrying amounts. The Group does not hedge its entire exposure to a class of financial instruments, therefore the carrying amounts below do not equal the total carrying amounts disclosed in other notes.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | ||||
| \u00a0 | \u00a0 | Carrying amount | Fair value hedge adjustments | Carrying amount | Fair value hedge adjustments | \u00a0 | Carrying amount | Fair value hedge adjustments | Carrying amount | Fair value hedge adjustments |
| \u00a0 | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Debt instruments1 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Semi-government bonds, notes and securities | \u00a0 | 22,872 | - | 19,075 | - | \u00a0 | 22,872 | - | 19,075 | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Housing loans2 | \u00a0 | (13) | (13) | (26) | (26) | \u00a0 | - | - | - | - |
| Other term lending | \u00a0 | 763 | (54) | 984 | (55) | \u00a0 | 763 | (54) | 984 | (55) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Bonds, notes and subordinated debt | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Medium-term notes | \u00a0 | 46,451 | (2,876) | 41,765 | (2,698) | \u00a0 | 40,033 | (2,348) | 36,730 | (2,204) |
| Covered bonds3 | \u00a0 | 22,969 | (1,463) | 18,126 | (1,219) | \u00a0 | - | - | - | - |
| Subordinated medium-term notes | \u00a0 | 13,128 | (2,906) | 11,887 | (2,464) | \u00a0 | 13,128 | (2,906) | 11,887 | (2,464) |
Fair value and cash flow hedge relationships result in the following changes in value used as the basis for recognising hedge ineffectiveness for the years ended 30 September:
| \u00a0 | \u00a0 | Change in fair value on hedging instruments | \u00a0 | Change in fair value on hedged items | \u00a0 | Hedge ineffectiveness recognised in income statement | |||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |
| Fair value hedges (interest rate risk) | \u00a0 | (1,660) | (4,259) | \u00a0 | 1,610 | 4,286 | \u00a0 | (50) | 27 |
| Cash flow hedges (interest rate risk) | \u00a0 | 151 | (2,748) | \u00a0 | (149) | 2,749 | \u00a0 | 2 | 1 |
| Cash flow hedges (currency risk) | \u00a0 | 3,065 | 2,836 | \u00a0 | (3,038) | (2,806) | \u00a0 | 27 | 30 |
| Fair value and Cash flow hedges (interest rate and currency risk) | \u00a0 | 21 | (73) | \u00a0 | (21) | 73 | \u00a0 | - | - |
| Total | \u00a0 | 1,577 | (4,244) | \u00a0 | (1,598) | 4,302 | \u00a0 | (21) | 58 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |
| Fair value hedges (interest rate risk) | \u00a0 | (1,488) | (1,966) | \u00a0 | 1,439 | 1,970 | \u00a0 | (49) | 4 |
| Cash flow hedges (interest rate risk) | \u00a0 | 352 | (3,004) | \u00a0 | (352) | 3,004 | \u00a0 | - | - |
| Cash flow hedges (currency risk) | \u00a0 | 1,502 | 2,701 | \u00a0 | (1,480) | (2,674) | \u00a0 | 22 | 27 |
| Total | \u00a0 | 366 | (2,269) | \u00a0 | (393) | 2,300 | \u00a0 | (27) | 31 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Cash flow hedge (interest rate risk) | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||
| Cash flow hedges - gains / (losses) recognised in other comprehensive income1 | \u00a0 | (292) | (2,509) | \u00a0 | (357) | (2,804) | |||
| Amount reclassified from the cash flow hedge reserve to income statement1 | \u00a0 | 427 | (205) | \u00a0 | 711 | (200) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Cash flow hedge (currency risk) | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||
| Cash flow hedges - gains / (losses) recognised in other comprehensive income | \u00a0 | 3,034 | 2,787 | \u00a0 | 1,480 | 2,674 | |||
| Amount reclassified from the cash flow hedge reserve to income statement | \u00a0 | (3,103) | (2,583) | \u00a0 | (1,531) | (2,483) |
Risk is the potential for harm and an inherent part of the Group's business. The Group's ability to manage risk effectively is critical to being a safe and secure bank that can serve customers well and help our communities prosper. The Group's risk management is in line with APRA Prudential Standard CPS 220 Risk Management.
The Group's Risk Management Framework (RMF) consists of systems, structures, policies, processes and people within the Group that manage the Group's material risks. The RMF is comprehensively reviewed every three years for appropriateness, effectiveness and adequacy by an operationally independent party. The Board is ultimately responsible for the Risk Management Framework and oversees its operation by management. In addition, directors and senior executives are held accountable for the parts of the Group\u2019s operations they manage or control.
The Group applies a 'Three Lines of Accountability' operating model in relation to the management of risk. The overarching principle of the model is that risk management capability must be embedded within the business to be effective. The role of each line is:
First Line - Businesses own risks and obligations, and the controls and mitigation strategies that help manage them.
Second Line - A functionally segregated Risk function develops risk management frameworks, defines risk boundaries, provides objective review and challenge regarding the effectiveness of risk management within the first line businesses, and executes specific risk management activities where a functional segregation of duties and/or specific risk capability is required.
Third Line - An independent Internal Audit function reporting to the Board monitors the end-to-end effectiveness of risk management and compliance with the RMF.
Further risk management information for the Group is disclosed in the Corporate Governance section of the Group\u2019s website at nab.com.au/about-us/corporate-governance.
Credit is any transaction that creates an actual or potential obligation for a counterparty or a customer to pay the Group. Credit risk is the potential that a counterparty or customer will fail to meet its obligations to the Group in accordance with the agreed terms. Lending activities account for most of the Group\u2019s credit risk, however other sources of credit risk also exist throughout the activities of the Group. These activities include the trading book, and other financial instruments and loans (including, but not limited to, acceptances, placements, inter-bank transactions, trade financing, foreign exchange transactions, swaps, bonds and options), as well as in the extension of commitments and guarantees and the settlement of transactions.
The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to existing or potential counterparties or customers, groups of related counterparties or groups of related customers, and to geographical and industry segments. Such risks are monitored on an ongoing basis and are subject to annual or more frequent review.
In general, the Group does not take possession of collateral it holds as security or call on other credit enhancements that would result in recognition of an asset on the balance sheet.
Exposure to credit risk is managed through regular analysis of the ability of existing or potential counterparties, customers, groups of related counterparties or groups of related customers to meet repayment obligations, primarily interest and principal, and by changing credit limits where appropriate. Exposure to credit risk is also managed in part, by obtaining collateral and corporate and personal guarantees.
The Group further restricts its exposure to credit losses by entering into master netting arrangements for derivatives, repurchase and securities lending transactions with counterparties with which it undertakes a significant volume of transactions. The credit risk associated with contracts favourable to a Group entity is reduced by a master netting arrangement to the extent that if a counterparty failed to meet its obligations in accordance with agreed terms, all contracts with a counterparty can be terminated and settled on a net basis.
The Group is exposed to ESG and other emerging risks. The following items are examples of how these risks may impact the Group:
Increases in the frequency and severity of climatic events could impact customers\u2019 ability to service their loans or the value of the collateral held to secure the loans.
Action taken by governments, regulators and society more generally, to transition to a low-carbon economy, could impact the ability of some customers to generate long-term returns in a sustainable way or lead to certain assets being stranded in the future.
Failure to comply with environmental and social legislation (emerging and current) may impact customers\u2019 ability to generate sustainable returns and service their loans.
If in future customers don\u2019t hold appropriate levels of insurance for physical assets against certain risks, this may impact the value the Group can recover in the event of certain natural disasters.
The Group considers these risks as part of the credit risk assessment and due diligence process before relevant customers are granted credit and for new product development. The Group also manages its total credit portfolio within established risk appetite and limits, particularly for specific industries or regions that are more exposed to these types of risks. In addition, the Group may recognise FLAs to the provision for credit impairment for the impact of adverse climate events. In the 2022 financial year, the Group recognised a FLA of $14 million for the potential impact of the Lismore floods (2023: nil).
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 financial guarantees granted, the maximum exposure to credit risk is the maximum amount that the Group would have to pay if the guarantees are called upon. For irrevocable loan commitments and other credit-related commitments, the maximum exposure to credit risk is the full amount of committed facilities.
The table below shows the Group\u2019s maximum exposure to credit risk for on-balance sheet and off-balance sheet positions before taking into account any collateral held or other credit enhancements.
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | Footnote | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | (a) | \u00a0 | 23,669 | 55,304 | \u00a0 | 23,022 | 55,100 |
| Due from other banks | \u00a0 | (b) | \u00a0 | 117,306 | 141,861 | \u00a0 | 106,955 | 133,144 |
| Collateral placed | \u00a0 | (c) | \u00a0 | 11,286 | 13,115 | \u00a0 | 10,214 | 10,636 |
| Trading assets | \u00a0 | (d) | \u00a0 | 101,168 | 40,573 | \u00a0 | 90,417 | 34,043 |
| Debt instruments | \u00a0 | (e) | \u00a0 | 46,357 | 42,080 | \u00a0 | 46,336 | 42,094 |
| Other financial assets | \u00a0 | (f) | \u00a0 | 1,430 | 2,061 | \u00a0 | 1,708 | 2,749 |
| Derivative assets | \u00a0 | (d) | \u00a0 | 34,269 | 61,016 | \u00a0 | 33,784 | 60,651 |
| Gross loans and advances | \u00a0 | (f) | \u00a0 | 707,228 | 685,839 | \u00a0 | 611,556 | 597,445 |
| Due from controlled entities | \u00a0 | (g) | \u00a0 | - | - | \u00a0 | 43,577 | 38,226 |
| Other assets | \u00a0 | (g) | \u00a0 | 6,869 | 4,861 | \u00a0 | 6,572 | 4,181 |
| Total | \u00a0 | \u00a0 | \u00a0 | 1,049,582 | 1,046,710 | \u00a0 | 974,141 | 978,269 |
| Bank guarantees and letters of credit | \u00a0 | (h) | \u00a0 | 26,321 | 25,683 | \u00a0 | 24,637 | 23,958 |
| Credit commitments | \u00a0 | (h) | \u00a0 | 208,853 | 201,147 | \u00a0 | 188,268 | 182,667 |
| Total | \u00a0 | \u00a0 | \u00a0 | 235,174 | 226,830 | \u00a0 | 212,905 | 206,625 |
| Total credit risk exposure | \u00a0 | \u00a0 | \u00a0 | 1,284,756 | 1,273,540 | \u00a0 | 1,187,046 | 1,184,894 |
(a) The balance of Cash and liquid assets that is exposed to credit risk is comprised primarily of reverse repurchase agreements and securities borrowing agreements.
(b) The balance of Due from other banks that is exposed to credit risk is comprised primarily of securities borrowing agreements and reverse repurchase agreements, as well as balances held with central supervisory banks and other interest earning assets. Securities borrowing agreements and reverse repurchase agreements are collateralised with highly liquid securities and the collateral is in excess of the borrowed or loaned amount.
Balances held with central supervisory banks and other interest earning assets that are due from other banks are managed based on the counterparty\u2019s creditworthiness. The Group will utilise master netting arrangements where possible to reduce its exposure to credit risk.
(c) The maximum exposure to credit risk from Collateral placed is the collateral placed with the counterparty before consideration of any netting arrangements.
(d) At any one time, the maximum exposure to credit risk from Trading assets and Derivative assets is limited to the current fair value of instruments that are favourable to the Group less collateral obtained. This credit risk is managed as part of the overall lending limits with customers, together with potential exposures from market movements.
The Group uses documentation including International Swaps and Derivatives Association (ISDA) Master Agreements to document derivative activities. Under ISDA Master Agreements, if a default of a counterparty occurs, all contracts with the counterparty are terminated. They are then settled on a net basis at market levels current at the time of default. The Group also executes Credit Support Annexes in conjunction with ISDA Master Agreements.
Credit risk from over-the-counter trading and hedging derivatives is mitigated where possible through netting arrangements whereby derivative assets and liabilities with the same counterparty can be offset in certain circumstances. Derivatives that are cleared through a central clearing counterparty or an exchange have less credit risk than over-the-counter derivatives and are subject to relevant netting and collateral agreements.
Collateral is obtained against derivative assets, depending on the creditworthiness of the counterparty and / or the nature of the transaction.
(a) Debt instruments are generally comprised of government, semi-government, corporate and financial institution bonds, notes and securities. The amount of collateral held against such instruments will depend on the counterparty and the nature of the specific financial instrument.
The Group may utilise credit default swaps, guarantees provided by central banks, other forms of credit enhancements or collateral to minimise the Group\u2019s exposure to credit risk.
(b) Gross loans and advances and Other financial assets primarily comprise general lending and line of credit products. The distinction is due to accounting classification and measurement. These lending products will generally have a significant level of collateralisation depending on the nature of the product.
Other lending to non-retail customers may be provided on an unsecured basis or secured (partially or fully) by acceptable collateral defined in specific Group credit policy and business unit procedures. Collateral is generally comprised of business assets, inventories and in some cases personal assets of the borrower. The Group manages its exposure to these products by completing a credit evaluation to assess the customer\u2019s character, industry, business model and capacity to meet their commitments without distress. Collateral provides a secondary source of repayment for funds advanced in the event that a customer cannot meet their contractual repayment obligations. For amounts due from customers on acceptances the Group generally has recourse to guarantees, underlying inventories or other assets in the event of default which significantly mitigates the credit risk associated with accepting the customer\u2019s credit facility with a third party.
Housing loans are secured against residential property as collateral and, where applicable, Lenders Mortgage Insurance (LMI) is obtained by the Group (mostly in Australia) to cover any shortfall in outstanding loan principal and accrued interest. LMI is generally obtained for residential mortgages with a Loan to Valuation Ratio (LVR) in excess of 80%. The financial effect of these measures is that remaining credit risk on residential mortgage loans is minimal. Other retail lending products are mostly unsecured (e.g. credit card outstandings and other personal lending).
(c) The balance of Other assets which is exposed to credit risk includes securities sold not delivered, interest receivable accruals and other receivables. Interest receivable accruals are subject to the same collateral as the underlying borrowings. Other receivables will mostly be unsecured. There are typically no collateral or other credit enhancements obtained in respect of amounts Due from controlled entities.
(d) Bank guarantees and letters of credit are comprised primarily of guarantees to customers, standby or documentary letters of credit and performance related contingencies. The Group will typically have recourse to specific assets pledged as collateral in the event of a default by a party for which the Group has guaranteed its obligations to a third party and therefore tend to carry the same credit risk as loans.
Credit commitments represent binding commitments to extend credit where the Group is potentially exposed to loss of an amount equal to the total unused commitments. However, the likely amount of loss is generally less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards.
The Group monitors the term to maturity of credit commitments because, in general, longer-term commitments have a greater degree of credit risk than shorter term commitments.
The tables below present the amounts of financial instruments that have been offset on the balance sheet, as well as those amounts that are subject to enforceable master netting arrangements or similar agreements. The tables exclude financial instruments that are not subject to offsetting arrangements but are instead only subject to collateral arrangements.
The \u2018Net amounts\u2019 presented in the tables are not intended to represent the Group\u2019s actual exposure to credit risk. The Group utilises a wide range of strategies to mitigate credit risk in addition to netting and collateral arrangements, including placing limits on the amount of risk accepted in relation to counterparties, customers, groups of related counterparties or customers and geographical and industry segments.
The amounts recognised on the balance sheet are presented in the 'Total balance sheet amount' column in the tables below, and comprise the sum of the 'Net amount reported on balance sheet' and 'Amounts not subject to enforceable netting arrangements'.
| \u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Subject to enforceable netting arrangements | \u00a0 | Amounts not subject to enforceable netting arrangements | \u00a0 | Total balance sheet amount | |||||||
| \u00a0 | \u00a0 | Amounts offset on balance sheet | \u00a0 | Amounts not offset on balance sheet | \u00a0 | ||||||||
| \u00a0 | \u00a0 | Gross amount | Amount offset | Net amount reported on balance sheet | \u00a0 | Financial Instruments | Non-cash collateral | Cash collateral | Net Amount | \u00a0 | |||
| Group | \u00a0 | $m | $m | $m | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | \u00a0 | $m |
| Derivative assets1 | \u00a0 | 157,389 | (127,890) | 29,499 | \u00a0 | (14,611) | (362) | (10,164) | 4,362 | \u00a0 | 4,770 | \u00a0 | 34,269 |
| Reverse repurchase agreements | \u00a0 | 95,197 | (14,542) | 80,655 | \u00a0 | - | (80,655) | - | - | \u00a0 | - | \u00a0 | 80,655 |
| Loans and advances | \u00a0 | 5,748 | (5,705) | 43 | \u00a0 | - | - | - | 43 | \u00a0 | 708,428 | \u00a0 | 708,471 |
| Total assets | \u00a0 | 258,334 | (148,137) | 110,197 | \u00a0 | (14,611) | (81,017) | (10,164) | 4,405 | \u00a0 | 713,198 | \u00a0 | 823,395 |
| Derivative liabilities1 | \u00a0 | (154,459) | 127,891 | (26,568) | \u00a0 | 14,611 | 210 | 9,171 | (2,576) | \u00a0 | (9,065) | \u00a0 | (35,633) |
| Repurchase agreements | \u00a0 | (88,674) | 14,542 | (74,132) | \u00a0 | - | 74,132 | - | - | \u00a0 | - | \u00a0 | (74,132) |
| Deposits and other borrowings | \u00a0 | (9,122) | 5,705 | (3,417) | \u00a0 | - | - | - | (3,417) | \u00a0 | (681,034) | \u00a0 | (684,451) |
| Total liabilities | \u00a0 | (252,255) | 148,138 | (104,117) | \u00a0 | 14,611 | 74,342 | 9,171 | (5,993) | \u00a0 | (690,099) | \u00a0 | (794,216) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Derivative assets1 | \u00a0 | 143,179 | (114,623) | 28,556 | \u00a0 | (12,808) | (83) | (8,822) | 6,843 | \u00a0 | 5,228 | \u00a0 | 33,784 |
| Reverse repurchase agreements | \u00a0 | 91,333 | (14,166) | 77,167 | \u00a0 | - | (77,167) | - | - | \u00a0 | - | \u00a0 | 77,167 |
| Loans and advances | \u00a0 | 4,203 | (4,191) | 12 | \u00a0 | - | - | - | 12 | \u00a0 | 612,226 | \u00a0 | 612,238 |
| Total assets | \u00a0 | 238,715 | (132,980) | 105,735 | \u00a0 | (12,808) | (77,250) | (8,822) | 6,855 | \u00a0 | 617,454 | \u00a0 | 723,189 |
| Derivative liabilities1 | \u00a0 | (141,028) | 114,624 | (26,404) | \u00a0 | 12,808 | 210 | 8,701 | (4,685) | \u00a0 | (9,706) | \u00a0 | (36,110) |
| Repurchase agreements | \u00a0 | (81,339) | 14,166 | (67,173) | \u00a0 | - | 67,173 | - | - | \u00a0 | - | \u00a0 | (67,173) |
| Deposits and other borrowings | \u00a0 | (6,163) | 4,191 | (1,972) | \u00a0 | - | - | - | (1,972) | \u00a0 | (606,669) | \u00a0 | (608,641) |
| Total liabilities | \u00a0 | (228,530) | 132,981 | (95,549) | \u00a0 | 12,808 | 67,383 | 8,701 | (6,657) | \u00a0 | (616,375) | \u00a0 | (711,924) |
| \u00a0 | \u00a0 | 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Subject to enforceable netting arrangements | \u00a0 | Amounts not subject to enforceable netting arrangements | \u00a0 | Total balance sheet amount | |||||||
| \u00a0 | \u00a0 | Amounts offset on balance sheet | \u00a0 | Amounts not offset on balance sheet | \u00a0 | ||||||||
| \u00a0 | \u00a0 | Gross amount | Amount offset | Net amount reported on balance sheet | \u00a0 | Financial Instruments | Non-cash collateral | Cash collateral | Net Amount | \u00a0 | |||
| Group | \u00a0 | $m | $m | $m | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | \u00a0 | $m |
| Derivative assets1 | \u00a0 | 171,721 | (117,807) | 53,914 | \u00a0 | (33,670) | (956) | (15,053) | 4,235 | \u00a0 | 7,102 | \u00a0 | 61,016 |
| Reverse repurchase agreements2 | \u00a0 | 95,371 | (18,831) | 76,540 | \u00a0 | - | (76,540) | - | - | \u00a0 | - | \u00a0 | 76,540 |
| Loans and advances2 | \u00a0 | 1,399 | (1,344) | 55 | \u00a0 | - | - | - | 55 | \u00a0 | 687,660 | \u00a0 | 687,715 |
| Total assets | \u00a0 | 268,491 | (137,982) | 130,509 | \u00a0 | (33,670) | (77,496) | (15,053) | 4,290 | \u00a0 | 694,762 | \u00a0 | 825,271 |
| Derivative liabilities1 | \u00a0 | (165,410) | 117,807 | (47,603) | \u00a0 | 33,670 | 503 | 7,655 | (5,775) | \u00a0 | (9,883) | \u00a0 | (57,486) |
| Repurchase agreements2 | \u00a0 | (104,094) | 18,831 | (85,263) | \u00a0 | - | 85,263 | - | - | \u00a0 | - | \u00a0 | (85,263) |
| Deposits and other borrowings2 | \u00a0 | (6,906) | 1,344 | (5,562) | \u00a0 | - | - | - | (5,562) | \u00a0 | (681,443) | \u00a0 | (687,005) |
| Total liabilities | \u00a0 | (276,410) | 137,982 | (138,428) | \u00a0 | 33,670 | 85,766 | 7,655 | (11,337) | \u00a0 | (691,326) | \u00a0 | (829,754) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Derivative assets1 | \u00a0 | 160,532 | (106,481) | 54,051 | \u00a0 | (34,420) | (814) | (13,299) | 5,518 | \u00a0 | 6,600 | \u00a0 | 60,651 |
| Reverse repurchase agreements2 | \u00a0 | 95,092 | (18,831) | 76,261 | \u00a0 | - | (76,261) | - | - | \u00a0 | - | \u00a0 | 76,261 |
| Loans and advances2 | \u00a0 | 582 | (556) | 26 | \u00a0 | - | - | - | 26 | \u00a0 | 598,724 | \u00a0 | 598,750 |
| Total assets | \u00a0 | 256,206 | (125,868) | 130,338 | \u00a0 | (34,420) | (77,075) | (13,299) | 5,544 | \u00a0 | 605,324 | \u00a0 | 735,662 |
| Derivative liabilities1 | \u00a0 | (154,789) | 106,481 | (48,308) | \u00a0 | 34,420 | 503 | 6,115 | (7,270) | \u00a0 | (9,186) | \u00a0 | (57,494) |
| Repurchase agreements2 | \u00a0 | (100,922) | 18,831 | (82,091) | \u00a0 | - | 82,091 | - | - | \u00a0 | - | \u00a0 | (82,091) |
| Deposits and other borrowings2 | \u00a0 | (4,959) | 556 | (4,403) | \u00a0 | - | - | - | (4,403) | \u00a0 | (612,558) | \u00a0 | (616,961) |
| Total liabilities | \u00a0 | (260,670) | 125,868 | (134,802) | \u00a0 | 34,420 | 82,594 | 6,115 | (11,673) | \u00a0 | (621,744) | \u00a0 | (756,546) |
Derivative assets and derivative liabilities are only offset on the balance sheet where the Group has a legally enforceable right to offset in all circumstances and there is an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously. The Group has applied offsetting to certain centrally cleared derivatives and their associated collateral amounts which satisfy the AASB 132 Financial Instruments: Presentation requirements.
Reverse repurchase and repurchase agreements will typically be subject to Global Master Repurchase Agreements or similar agreements whereby all outstanding transactions with the same counterparty can only be offset and closed out upon a default or insolvency event. In some instances, the agreement provides the Group with a legally enforceable right to offset in all circumstances. In such a case and where there is an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously, the amounts with that counterparty are offset on the balance sheet.
Where the Group has a right to offset on default or insolvency only, the related non-cash collateral amounts comprise highly liquid securities, either obtained or pledged, which can be realised in the event of a default or insolvency by one of the counterparties. The value of such securities obtained or pledged must at least equate to the value of the exposure to the counterparty, therefore the net exposure is considered to be nil.
The amounts offset for loans and advances and deposits and other borrowings represent amounts subject to set-off agreements that satisfy the AASB 132 requirements. The 'Net amounts reported on balance sheet' are included within \u2018Overdrafts\u2019 in Note 12 Loans and Advances and \u2018On-demand and short-term deposits\u2019 and \u2018Deposits not bearing interest\u2019 in Note 13 Deposits and other borrowings. The 'Amounts not subject to enforceable netting arrangements' represent all other loans and advances and deposits and other borrowings of the Group, including those measured at fair value.
The following tables show the credit quality of credit risk exposures to which the expected credit loss model is applied, for both recognised and unrecognised financial assets, based on the following risk grades:
Senior investment grade: broadly corresponds with Standard & Poor\u2019s ratings of AAA to A- (internal rating 1 to 5).
Investment grade: broadly corresponds with Standard & Poor\u2019s ratings of BBB+ to BBB- (internal rating 6 to 11).
Sub-investment grade: broadly corresponds with Standard & Poor\u2019s ratings of BB+ (internal rating 12 to 23).
Default: broadly corresponds with Standard & Poor\u2019s rating of D (internal rating 98 and 99).
Notional stage allocations (Stage 1 and Stage 2) for credit risk exposures incorporate the impact of forward looking economic information applied in the expected credit loss model. Refer Accounting Policy section of Note 17 Provision for credit impairment on loans at amortised cost for further details.
| \u00a0 | \u00a0 | Stage 1 | \u00a0 | Stage 2 | \u00a0 | Stage 3 | \u00a0 | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Performing | \u00a0 | Performing | \u00a0 | Non-performing | \u00a0 | \u00a0 | ||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| Group | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Gross loans and advances | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 124,634 | 127,878 | \u00a0 | 2,356 | 4,376 | \u00a0 | - | - | \u00a0 | 126,990 | 132,254 |
| Investment grade | \u00a0 | 277,097 | 270,812 | \u00a0 | 27,385 | 33,614 | \u00a0 | - | - | \u00a0 | 304,482 | 304,426 |
| Sub-investment grade | \u00a0 | 126,373 | 99,753 | \u00a0 | 141,747 | 143,291 | \u00a0 | - | - | \u00a0 | 268,120 | 243,044 |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 7,636 | 6,115 | \u00a0 | 7,636 | 6,115 |
| Total gross loans and advances | \u00a0 | 528,104 | 498,443 | \u00a0 | 171,488 | 181,281 | \u00a0 | 7,636 | 6,115 | \u00a0 | 707,228 | 685,839 |
| Contingent liabilities and credit commitments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 88,046 | 85,149 | \u00a0 | 3,442 | 4,196 | \u00a0 | - | - | \u00a0 | 91,488 | 89,345 |
| Investment grade | \u00a0 | 75,102 | 70,260 | \u00a0 | 12,832 | 15,775 | \u00a0 | - | - | \u00a0 | 87,934 | 86,035 |
| Sub-investment grade | \u00a0 | 25,753 | 18,517 | \u00a0 | 29,643 | 32,577 | \u00a0 | - | - | \u00a0 | 55,396 | 51,094 |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 356 | 356 | \u00a0 | 356 | 356 |
| Total contingent liabilities and credit commitments | \u00a0 | 188,901 | 173,926 | \u00a0 | 45,917 | 52,548 | \u00a0 | 356 | 356 | \u00a0 | 235,174 | 226,830 |
| Total gross loans and advances, contingent liabilities and credit commitments | \u00a0 | 717,005 | 672,369 | \u00a0 | 217,405 | 233,829 | \u00a0 | 7,992 | 6,471 | \u00a0 | 942,402 | 912,669 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Debt instruments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 46,357 | 41,644 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 46,357 | 41,644 |
| Investment grade | \u00a0 | - | 436 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | 436 |
| Sub-investment grade | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Total debt instruments | \u00a0 | 46,357 | 42,080 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 46,357 | 42,080 |
| \u00a0 | \u00a0 | Stage 1 | \u00a0 | Stage 2 | \u00a0 | Stage 3 | \u00a0 | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Performing | \u00a0 | Performing | \u00a0 | Non-performing | \u00a0 | \u00a0 | ||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| Company | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Gross loans and advances | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 88,177 | 96,635 | \u00a0 | 1,257 | 2,842 | \u00a0 | - | - | \u00a0 | 89,434 | 99,477 |
| Investment grade | \u00a0 | 255,873 | 250,467 | \u00a0 | 22,003 | 26,761 | \u00a0 | - | - | \u00a0 | 277,876 | 277,228 |
| Sub-investment grade | \u00a0 | 114,773 | 89,083 | \u00a0 | 122,956 | 126,225 | \u00a0 | - | - | \u00a0 | 237,729 | 215,308 |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 6,517 | 5,432 | \u00a0 | 6,517 | 5,432 |
| Total gross loans and advances | \u00a0 | 458,823 | 436,185 | \u00a0 | 146,216 | 155,828 | \u00a0 | 6,517 | 5,432 | \u00a0 | 611,556 | 597,445 |
| Contingent liabilities and credit commitments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 82,623 | 80,614 | \u00a0 | 2,484 | 3,326 | \u00a0 | - | - | \u00a0 | 85,107 | 83,940 |
| Investment grade | \u00a0 | 68,954 | 65,389 | \u00a0 | 10,087 | 12,291 | \u00a0 | - | - | \u00a0 | 79,041 | 77,680 |
| Sub-investment grade | \u00a0 | 22,744 | 16,103 | \u00a0 | 25,665 | 28,553 | \u00a0 | - | - | \u00a0 | 48,409 | 44,656 |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 348 | 349 | \u00a0 | 348 | 349 |
| Total contingent liabilities and credit commitments | \u00a0 | 174,321 | 162,106 | \u00a0 | 38,236 | 44,170 | \u00a0 | 348 | 349 | \u00a0 | 212,905 | 206,625 |
| Total gross loans and advances, contingent liabilities and credit commitments | \u00a0 | 633,144 | 598,291 | \u00a0 | 184,452 | 199,998 | \u00a0 | 6,865 | 5,781 | \u00a0 | 824,461 | 804,070 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Debt instruments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 46,336 | 41,658 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 46,336 | 41,658 |
| Investment grade | \u00a0 | - | 436 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | 436 |
| Sub-investment grade | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Total debt instruments | \u00a0 | 46,336 | 42,094 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 46,336 | 42,094 |
Concentration of credit risk exists when a number of counterparties are engaged in similar activities, or operate in the same geographical areas or industry sectors and have similar economic characteristics so that their ability to meet contractual obligations is similarly affected by changes in economic, political or other conditions.
The diversification and size of the Group is such that its lending is widely spread both geographically and in terms of the types of industries it serves.
| \u00a0 | \u00a0 | Net loans and advances1 | \u00a0 | Other financial assets2 | \u00a0 | Contingent liabilities and credit commitments | \u00a0 | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Accommodation and hospitality | \u00a0 | 9,337 | 8,712 | \u00a0 | - | - | \u00a0 | 2,101 | 1,771 | \u00a0 | 11,438 | 10,483 |
| Agriculture, forestry, fishing & mining | \u00a0 | 55,912 | 51,518 | \u00a0 | - | - | \u00a0 | 14,112 | 13,280 | \u00a0 | 70,024 | 64,798 |
| Business services and property services | \u00a0 | 19,266 | 18,502 | \u00a0 | - | - | \u00a0 | 8,754 | 8,023 | \u00a0 | 28,020 | 26,525 |
| Commercial property | \u00a0 | 70,739 | 69,148 | \u00a0 | - | - | \u00a0 | 12,660 | 14,168 | \u00a0 | 83,399 | 83,316 |
| Construction | \u00a0 | 8,500 | 7,777 | \u00a0 | - | - | \u00a0 | 7,109 | 6,306 | \u00a0 | 15,609 | 14,083 |
| Financial & insurance | \u00a0 | 38,456 | 46,554 | \u00a0 | 137,048 | 161,724 | \u00a0 | 49,722 | 48,952 | \u00a0 | 225,226 | 257,230 |
| Government & public authorities | \u00a0 | 1,820 | 2,794 | \u00a0 | 31,005 | 28,773 | \u00a0 | 2,884 | 3,769 | \u00a0 | 35,709 | 35,336 |
| Manufacturing | \u00a0 | 13,383 | 12,497 | \u00a0 | - | - | \u00a0 | 8,313 | 7,373 | \u00a0 | 21,696 | 19,870 |
| Personal | \u00a0 | 12,161 | 11,097 | \u00a0 | - | - | \u00a0 | 18,594 | 18,062 | \u00a0 | 30,755 | 29,159 |
| Residential mortgages | \u00a0 | 404,870 | 387,817 | \u00a0 | 6,489 | 6,166 | \u00a0 | 68,943 | 66,554 | \u00a0 | 480,302 | 460,537 |
| Retail and wholesale trade | \u00a0 | 20,679 | 20,385 | \u00a0 | - | - | \u00a0 | 12,699 | 12,124 | \u00a0 | 33,378 | 32,509 |
| Transport and storage | \u00a0 | 15,662 | 15,514 | \u00a0 | - | - | \u00a0 | 9,246 | 8,471 | \u00a0 | 24,908 | 23,985 |
| Utilities | \u00a0 | 10,818 | 9,984 | \u00a0 | 157 | 203 | \u00a0 | 7,187 | 5,919 | \u00a0 | 18,162 | 16,106 |
| Other | \u00a0 | 21,283 | 20,360 | \u00a0 | 250 | 190 | \u00a0 | 12,850 | 12,058 | \u00a0 | 34,383 | 32,608 |
| Total | \u00a0 | 702,886 | 682,659 | \u00a0 | 174,949 | 197,056 | \u00a0 | 235,174 | 226,830 | \u00a0 | 1,113,009 | 1,106,545 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Accommodation and hospitality | \u00a0 | 8,103 | 7,557 | \u00a0 | - | - | \u00a0 | 1,955 | 1,630 | \u00a0 | 10,058 | 9,187 |
| Agriculture, forestry, fishing & mining | \u00a0 | 41,642 | 38,099 | \u00a0 | - | - | \u00a0 | 11,963 | 11,290 | \u00a0 | 53,605 | 49,389 |
| Business services and property services | \u00a0 | 17,640 | 17,029 | \u00a0 | - | - | \u00a0 | 7,851 | 7,273 | \u00a0 | 25,491 | 24,302 |
| Commercial property | \u00a0 | 63,613 | 61,707 | \u00a0 | - | - | \u00a0 | 11,196 | 12,439 | \u00a0 | 74,809 | 74,146 |
| Construction | \u00a0 | 7,072 | 6,651 | \u00a0 | - | - | \u00a0 | 6,118 | 5,382 | \u00a0 | 13,190 | 12,033 |
| Financial & insurance | \u00a0 | 36,369 | 43,821 | \u00a0 | 125,643 | 150,572 | \u00a0 | 47,114 | 47,325 | \u00a0 | 209,126 | 241,718 |
| Government & public authorities | \u00a0 | 1,753 | 2,734 | \u00a0 | 30,987 | 28,759 | \u00a0 | 2,224 | 3,122 | \u00a0 | 34,964 | 34,615 |
| Manufacturing | \u00a0 | 10,189 | 9,562 | \u00a0 | - | - | \u00a0 | 6,374 | 5,713 | \u00a0 | 16,563 | 15,275 |
| Personal | \u00a0 | 11,194 | 10,243 | \u00a0 | - | - | \u00a0 | 16,460 | 15,926 | \u00a0 | 27,654 | 26,169 |
| Residential mortgages | \u00a0 | 350,823 | 339,061 | \u00a0 | 6,467 | 6,150 | \u00a0 | 65,403 | 63,186 | \u00a0 | 422,693 | 408,397 |
| Retail and wholesale trade | \u00a0 | 16,638 | 16,721 | \u00a0 | - | - | \u00a0 | 10,695 | 10,442 | \u00a0 | 27,333 | 27,163 |
| Transport and storage | \u00a0 | 13,914 | 13,891 | \u00a0 | - | - | \u00a0 | 7,738 | 7,138 | \u00a0 | 21,652 | 21,029 |
| Utilities | \u00a0 | 9,775 | 9,185 | \u00a0 | 157 | 203 | \u00a0 | 6,612 | 5,270 | \u00a0 | 16,544 | 14,658 |
| Other | \u00a0 | 18,820 | 18,157 | \u00a0 | 251 | 190 | \u00a0 | 11,202 | 10,489 | \u00a0 | 30,273 | 28,836 |
| Total | \u00a0 | 607,545 | 594,418 | \u00a0 | 163,505 | 185,874 | \u00a0 | 212,905 | 206,625 | \u00a0 | 983,955 | 986,917 |
| \u00a0 | \u00a0 | Australia | \u00a0 | New Zealand | \u00a0 | Other International | |||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 4,345 | 15,567 | \u00a0 | 36 | 46 | \u00a0 | 19,288 | 39,691 |
| Due from other banks | \u00a0 | 92,378 | 112,767 | \u00a0 | 10,140 | 8,580 | \u00a0 | 14,788 | 20,514 |
| Collateral placed | \u00a0 | 8,709 | 9,401 | \u00a0 | 1,030 | 2,479 | \u00a0 | 1,547 | 1,235 |
| Trading assets | \u00a0 | 65,086 | 34,025 | \u00a0 | 7,782 | 6,530 | \u00a0 | 28,300 | 18 |
| Debt instruments | \u00a0 | 35,377 | 31,449 | \u00a0 | - | - | \u00a0 | 10,980 | 10,631 |
| Other financial assets | \u00a0 | 869 | 1,355 | \u00a0 | 561 | 570 | \u00a0 | - | 136 |
| Derivative assets | \u00a0 | 24,329 | 47,115 | \u00a0 | 2,720 | 4,882 | \u00a0 | 7,220 | 9,019 |
| Loans and advances | \u00a0 | 588,961 | 571,773 | \u00a0 | 94,206 | 87,006 | \u00a0 | 19,535 | 21,655 |
| Other assets | \u00a0 | 6,110 | 4,836 | \u00a0 | 764 | 938 | \u00a0 | 1,321 | 554 |
| Total | \u00a0 | 826,164 | 828,288 | \u00a0 | 117,239 | 111,031 | \u00a0 | 102,979 | 103,453 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 4,259 | 15,464 | \u00a0 | - | - | \u00a0 | 18,763 | 39,636 |
| Due from other banks | \u00a0 | 92,371 | 112,765 | \u00a0 | - | - | \u00a0 | 14,584 | 20,379 |
| Collateral placed | \u00a0 | 8,701 | 9,401 | \u00a0 | - | - | \u00a0 | 1,513 | 1,235 |
| Trading assets | \u00a0 | 65,086 | 34,025 | \u00a0 | - | - | \u00a0 | 25,331 | 18 |
| Debt instruments | \u00a0 | 35,378 | 31,479 | \u00a0 | - | - | \u00a0 | 10,958 | 10,615 |
| Other financial assets | \u00a0 | 869 | 1,354 | \u00a0 | - | - | \u00a0 | 839 | 1,395 |
| Derivative assets | \u00a0 | 26,247 | 50,953 | \u00a0 | - | - | \u00a0 | 7,537 | 9,698 |
| Loans and advances | \u00a0 | 588,288 | 571,074 | \u00a0 | - | - | \u00a0 | 19,396 | 21,605 |
| Other assets | \u00a0 | 6,255 | 4,877 | \u00a0 | - | - | \u00a0 | 1,300 | 551 |
| Total | \u00a0 | 827,454 | 831,392 | \u00a0 | - | - | \u00a0 | 100,221 | 105,132 |
Market risk primarily stems from the Group\u2019s trading and balance sheet management activities, the impact of changes and correlation between interest rates, foreign exchange rates, credit spreads and volatility in bond, commodity or equity prices.
Market risk is represented by the below two categories:
| Traded Market Risk | Non-Traded Market Risk |
|---|---|
| Traded Market Risk is the potential for gains or losses to arise from trading activities undertaken by the Group as a result of movements in market prices. The trading activities of the Group are principally carried out by Corporate and Institutional Banking.Trading activities represent dealings that encompass both active management of market risk and supporting client sales businesses. The types of market risk arising from these activities include interest rate, foreign exchange, commodity, equity price, credit spread and volatility risk. | The Group has exposure to non-traded market risk, primarily Interest Rate Risk in the Banking Book (IRRBB). IRRBB is the risk that the Group\u2019s earnings or economic value will be affected or reduced by changes in interest rates. The sources of IRRBB are as follows:
|
The Group primarily manages and controls market risk using Value at Risk (VaR), which is a standard measure used throughout the industry. VaR gauges the Group\u2019s possible loss for the holding period based on historical market movements. VaR is measured at a 99% confidence interval. This means that there is a 99% chance that the loss will not exceed the VaR estimate during the holding period.
The Group employs other risk measures to supplement VaR, with appropriate limits to manage and control risks, and communicate the specific nature of market exposures to management, the Board Risk & Compliance Committee and ultimately the Board. These supplementary measures include stress testing, stop loss, position and sensitivity limits.
The VaR methodology involves multiple revaluations of the trading books using 550 days of historical pricing shifts. The pricing data is rolled daily.
The use of VaR methodology has limitations, which include:
The historical data used to calculate VaR is not always an appropriate proxy for current market conditions. If market volatility or correlation conditions change significantly, losses may occur more frequently and to a greater magnitude than the VaR measure suggests.
VaR methodology assumes that positions are held for one day and may underestimate losses on positions that cannot be hedged or reversed inside that timeframe.
VaR is calculated on positions at the close of each trading day, and does not measure risk on intra-day positions.
VaR does not describe the directional bias or size of the positions generating the risk.
The table below shows the Group and Company VaR for the trading portfolio, including both physical and derivative positions:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | ||||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Value at Risk at a 99% confidence level | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Foreign exchange risk | \u00a0 | 3.3 | 2.4 | \u00a0 | 2.7 | 3.0 | \u00a0 | 1.0 | 1.3 | \u00a0 | 5.7 | 5.8 | \u00a0 | 3.7 | 2.3 | \u00a0 | 2.2 | 2.7 | \u00a0 | 0.8 | 1.3 | \u00a0 | 5.0 | 5.4 |
| Interest rate risk | \u00a0 | 6.7 | 5.4 | \u00a0 | 8.4 | 8.9 | \u00a0 | 5.3 | 5.2 | \u00a0 | 17.8 | 14.1 | \u00a0 | 6.1 | 5.2 | \u00a0 | 7.5 | 7.6 | \u00a0 | 5.1 | 4.5 | \u00a0 | 17.4 | 12.3 |
| Volatility risk | \u00a0 | 1.8 | 2.3 | \u00a0 | 1.8 | 2.9 | \u00a0 | 0.9 | 2.0 | \u00a0 | 2.7 | 6.4 | \u00a0 | 1.8 | 2.3 | \u00a0 | 1.8 | 2.9 | \u00a0 | 0.9 | 2.0 | \u00a0 | 2.8 | 6.4 |
| Commodities risk | \u00a0 | 1.0 | 1.6 | \u00a0 | 1.4 | 1.6 | \u00a0 | 0.9 | 0.5 | \u00a0 | 2.9 | 2.9 | \u00a0 | 1.0 | 1.6 | \u00a0 | 1.4 | 1.6 | \u00a0 | 0.9 | 0.5 | \u00a0 | 2.9 | 2.9 |
| Credit risk | \u00a0 | 2.0 | 1.2 | \u00a0 | 1.8 | 1.8 | \u00a0 | 0.9 | 0.9 | \u00a0 | 3.2 | 3.4 | \u00a0 | 1.8 | 1.0 | \u00a0 | 1.5 | 1.4 | \u00a0 | 0.7 | 0.7 | \u00a0 | 2.9 | 2.9 |
| Inflation risk | \u00a0 | 2.3 | 1.7 | \u00a0 | 2.4 | 2.2 | \u00a0 | 1.6 | 1.4 | \u00a0 | 3.4 | 3.4 | \u00a0 | 2.3 | 1.7 | \u00a0 | 2.4 | 2.0 | \u00a0 | 1.6 | 1.4 | \u00a0 | 3.4 | 3.2 |
| Diversification benefit | \u00a0 | (7.1) | (7.5) | \u00a0 | (7.8) | (9.1) | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a | \u00a0 | (6.7) | (7.2) | \u00a0 | (7.2) | (8.1) | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a |
| Total Diversified VaR at 99% confidence interval | \u00a0 | 10.0 | 7.1 | \u00a0 | 10.7 | 11.3 | \u00a0 | 7.2 | 7.1 | \u00a0 | 20.3 | 18.7 | \u00a0 | 10.0 | 6.9 | \u00a0 | 9.6 | 10.1 | \u00a0 | 6.8 | 6.5 | \u00a0 | 17.5 | 17.0 |
| Other market risks | \u00a0 | 2.3 | 3.4 | \u00a0 | 1.9 | 4.5 | \u00a0 | 0.6 | 1.0 | \u00a0 | 3.2 | 8.4 | \u00a0 | 2.3 | 3.4 | \u00a0 | 1.9 | 4.5 | \u00a0 | 0.6 | 1.0 | \u00a0 | 3.2 | 8.4 |
| Total | \u00a0 | 12.3 | 10.5 | \u00a0 | 12.6 | 15.8 | \u00a0 | 7.8 | 8.1 | \u00a0 | 23.5 | 27.1 | \u00a0 | 12.3 | 10.3 | \u00a0 | 11.5 | 14.6 | \u00a0 | 7.4 | 7.5 | \u00a0 | 20.7 | 25.4 |
The principal objective of balance sheet risk management is 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\u2019s banking book, while ensuring the Group maintains sufficient liquidity to meet its obligations as they fall due.
IRRBB is measured, monitored, and managed from both an internal management and regulatory perspective. The Risk Management Framework incorporates both market valuation and earnings based approaches in accordance with the IRRBB Policy and Prudential Practice Guides. Risk measurement techniques include VaR, Earnings at Risk (EaR), interest rate risk stress testing, repricing analysis, cash flow analysis and scenario analysis. The IRRBB regulatory capital calculation incorporates repricing, yield curve, basis, and optionality risk, embedded gains / losses and any inter-risk and / or inter-currency diversification. The Group has been accredited by APRA to use its internal model for the measurement of IRRBB.
Key features of the internal interest rate risk management model include:
Historical simulation approach utilising instantaneous interest rate shocks.
Static balance sheet (i.e. any new business is assumed to be matched, hedged or subject to immediate repricing).
VaR and EaR are measured on a consistent basis.
99% confidence level.
Three month holding period.
EaR utilises a 12 month forecast period.
At least six years of business day historical data (updated daily).
Investment term for capital is modelled with an established benchmark term of between one and five years.
Investment term for core non-interest bearing assets and liabilities is modelled on a behavioural basis with a term that is consistent with sound statistical analysis.
The following table shows the Group and the Company aggregate VaR and EaR for the IRRBB:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | ||||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Value at Risk | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Australia | \u00a0 | 379.1 | 300.5 | \u00a0 | 375.1 | 307.3 | \u00a0 | 315.0 | 289.0 | \u00a0 | 407.9 | 326.4 | \u00a0 | 379.1 | 300.5 | \u00a0 | 375.1 | 307.3 | \u00a0 | 315.0 | 289.0 | \u00a0 | 407.9 | 326.4 |
| New Zealand | \u00a0 | 33.6 | 25.5 | \u00a0 | 31.6 | 31.6 | \u00a0 | 24.1 | 22.5 | \u00a0 | 36.7 | 39.4 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Other International | \u00a0 | 34.6 | 47.9 | \u00a0 | 44.0 | 37.1 | \u00a0 | 27.0 | 30.8 | \u00a0 | 62.8 | 47.9 | \u00a0 | 34.6 | 47.9 | \u00a0 | 44.0 | 37.1 | \u00a0 | 27.0 | 30.8 | \u00a0 | 62.8 | 47.9 |
| Earnings at Risk1 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Australia | \u00a0 | 59.1 | 29.6 | \u00a0 | 55.3 | 24.3 | \u00a0 | 38.2 | 14.0 | \u00a0 | 73.3 | 50.7 | \u00a0 | 59.1 | 29.6 | \u00a0 | 55.3 | 24.3 | \u00a0 | 38.2 | 14.0 | \u00a0 | 73.3 | 50.7 |
| New Zealand | \u00a0 | 9.6 | 18.4 | \u00a0 | 15.0 | 18.8 | \u00a0 | 7.8 | 10.0 | \u00a0 | 22.7 | 28.1 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Other International | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 0.1 | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
Residual value risk
As part of its normal lending activities, the Group takes residual value risk on assets such as industrial, mining, rail, aircraft, marine, technology, healthcare and other equipment. This exposes the Group to a potential fall in prices of these assets below the outstanding residual exposure at the facility expiry.
Liquidity risk is the risk that the Group is unable to meet its financial obligations as they fall due. These obligations include the repayment of deposits on demand or at their contractual maturity, the repayment of wholesale borrowings and loan capital as they mature and the payment of interest on borrowings.
These risks are governed by the Group\u2019s funding and liquidity risk appetite which is set by the Board. Group Treasury is responsible for the management of these risks. Objective review and challenge of the effectiveness of risk management is provided by Group Balance Sheet and Liquidity Risk Management with oversight by the Group Asset and Liability Committee. The Board has the ultimate responsibility to monitor and review the adequacy of the Group\u2019s funding and liquidity RMF and the Group\u2019s compliance with risk appetite.
Key principles adopted in the Group\u2019s approach to managing liquidity risk include:
Monitoring the Group\u2019s liquidity position on a daily basis, using a combination of contractual and behavioural modelling of balance sheet and cash flow information.
Maintaining a HQLA portfolio which supports intra-day operations and may be sold in times of market stress.
Operating a prudent funding strategy which ensures appropriate diversification and limits maturity concentrations. The Group undertakes a conservative approach by imposing internal limits that are in addition to regulatory requirements.
Maintaining a contingent funding plan designed to respond to an accelerated outflow of funds from the Group.
Requiring the Group to have the ability to meet a range of survival horizon scenarios, including name-specific and general liquidity stress scenarios.
The Group maintained funding and liquidity metrics well above regulatory minimums throughout the 2023 financial year. The CLF has been fully phased out to zero on 1 January 2023.
The liquid asset portfolio held as part of these principles is well diversified by currency, counterparty and product type with the mix consistent with the liquidity risks of the Group. The composition of the portfolio includes cash, government securities and highly rated investment grade paper. The market value of total on-balance sheet liquid assets held as at 30 September 2023 was $222,463 million (2022: $220,415 million). In addition, the Group holds internal RMBS as a source of contingent liquidity. As at 30 September 2023, the cash value of unencumbered internal RMBS held and available was $80,089 million (2022: $66,114 million).
The Group\u2019s funding is comprised of a mix of deposits, term wholesale funding, short-term wholesale funding and equity. The Group manages this within risk appetite settings to ensure suitable funding of its asset base and to enable it to respond to changing market conditions and regulatory requirements.
The Group maintains a strong focus on stable deposits both from a growth and quality perspective and continues to utilise deposits as a key funding source for funded assets.
The Group supplements deposit-raising via its term funding programmes, raising $40,254 million1 of term wholesale funding in the 2023 financial year (2022: $38,676 million). The weighted average maturity of term wholesale funding issued by the Group was 4.32 years to first call (2022: 5.0 years). In addition, during the 2023 financial year, the Group continued to access international and domestic short-term wholesale markets.
On 19 March 2020, the RBA announced the establishment of the TFF for the Australian banking system to support ADIs in providing credit into the economy. The TFF provided access to three-year secured funding, supporting lending to the Group's customers and reducing wholesale funding refinancing risks at the time. The total available TFF allocation of $31,866 million (excluding the TFF acquired via the Citi consumer business acquisition) was drawn, consisting of $14,270 million of Initial Allowance in the 2020 financial year and $17,596 million of Additional and Supplementary Allowances in the 2021 financial year. As at 30 September 2023, the full Initial Allowance amount has been repaid. The Additional and Supplementary Allowances are due to mature by 30 June 2024.
The following tables show an analysis of contractual maturities of assets and liabilities at the reporting date. The Group expects that certain assets and liabilities will be recovered or settled at maturities which are different to their contractual maturities, including deposits where the Group expects as part of normal banking operations that a large proportion of these balances will roll over.
| \u00a0 | \u00a0 | Less than 12 months | \u00a0 | Greater than 12 months | \u00a0 | No specific maturity | \u00a0 | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 24,699 | 56,451 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 24,699 | 56,451 |
| Due from other banks | \u00a0 | 116,984 | 141,530 | \u00a0 | 322 | 331 | \u00a0 | - | - | \u00a0 | 117,306 | 141,861 |
| Collateral placed | \u00a0 | 11,286 | 13,115 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 11,286 | 13,115 |
| Trading assets | \u00a0 | 66,717 | 13,948 | \u00a0 | 34,434 | 26,524 | \u00a0 | 17 | 101 | \u00a0 | 101,168 | 40,573 |
| Debt instruments | \u00a0 | 6,505 | 7,081 | \u00a0 | 39,852 | 34,999 | \u00a0 | - | - | \u00a0 | 46,357 | 42,080 |
| Other financial assets | \u00a0 | 858 | 966 | \u00a0 | 572 | 1,095 | \u00a0 | - | - | \u00a0 | 1,430 | 2,061 |
| Derivative assets | \u00a0 | 236 | 1,379 | \u00a0 | 3,263 | 6,208 | \u00a0 | 30,770 | 53,429 | \u00a0 | 34,269 | 61,016 |
| Loans and advances | \u00a0 | 130,430 | 117,119 | \u00a0 | 562,744 | 554,631 | \u00a0 | 9,528 | 8,684 | \u00a0 | 702,702 | 680,434 |
| All other assets | \u00a0 | 7,429 | 5,418 | \u00a0 | 97 | 347 | \u00a0 | 12,340 | 11,770 | \u00a0 | 19,866 | 17,535 |
| Total assets | \u00a0 | 365,144 | 357,007 | \u00a0 | 641,284 | 624,135 | \u00a0 | 52,655 | 73,984 | \u00a0 | 1,059,083 | 1,055,126 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | 37,200 | 55,140 | \u00a0 | 2,316 | 19,539 | \u00a0 | - | - | \u00a0 | 39,516 | 74,679 |
| Collateral received | \u00a0 | 10,672 | 17,245 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 10,672 | 17,245 |
| Other financial liabilities | \u00a0 | 52,386 | 8,941 | \u00a0 | 13,966 | 14,345 | \u00a0 | - | - | \u00a0 | 66,352 | 23,286 |
| Derivative liabilities | \u00a0 | 985 | 1,528 | \u00a0 | 3,526 | 5,229 | \u00a0 | 31,122 | 50,729 | \u00a0 | 35,633 | 57,486 |
| Deposits and other borrowings | \u00a0 | 631,645 | 654,090 | \u00a0 | 50,475 | 29,436 | \u00a0 | - | - | \u00a0 | 682,120 | 683,526 |
| Bonds, notes and subordinated debt | \u00a0 | 20,848 | 26,080 | \u00a0 | 114,797 | 93,203 | \u00a0 | - | - | \u00a0 | 135,645 | 119,283 |
| Debt issues | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 8,561 | 7,318 | \u00a0 | 8,561 | 7,318 |
| All other liabilities | \u00a0 | 12,726 | 8,266 | \u00a0 | 4,456 | 2,213 | \u00a0 | 1,899 | 2,792 | \u00a0 | 19,081 | 13,271 |
| Total liabilities | \u00a0 | 766,462 | 771,290 | \u00a0 | 189,536 | 163,965 | \u00a0 | 41,582 | 60,839 | \u00a0 | 997,580 | 996,094 |
| Net (liabilities) / assets | \u00a0 | (401,318) | (414,283) | \u00a0 | 451,748 | 460,170 | \u00a0 | 11,073 | 13,145 | \u00a0 | 61,503 | 59,032 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 23,959 | 56,121 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 23,959 | 56,121 |
| Due from other banks | \u00a0 | 106,634 | 132,813 | \u00a0 | 321 | 331 | \u00a0 | - | - | \u00a0 | 106,955 | 133,144 |
| Collateral placed | \u00a0 | 10,214 | 10,636 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 10,214 | 10,636 |
| Trading assets | \u00a0 | 61,684 | 11,044 | \u00a0 | 28,716 | 22,898 | \u00a0 | 17 | 101 | \u00a0 | 90,417 | 34,043 |
| Debt instruments | \u00a0 | 6,499 | 7,092 | \u00a0 | 39,837 | 35,002 | \u00a0 | - | - | \u00a0 | 46,336 | 42,094 |
| Other financial assets | \u00a0 | 1,147 | 405 | \u00a0 | 561 | 2,344 | \u00a0 | - | - | \u00a0 | 1,708 | 2,749 |
| Derivative assets | \u00a0 | 571 | 1,311 | \u00a0 | 2,134 | 4,408 | \u00a0 | 31,079 | 54,932 | \u00a0 | 33,784 | 60,651 |
| Loans and advances | \u00a0 | 108,016 | 96,689 | \u00a0 | 491,059 | 488,174 | \u00a0 | 8,609 | 7,816 | \u00a0 | 607,684 | 592,679 |
| All other assets | \u00a0 | 6,472 | 4,357 | \u00a0 | 609 | 643 | \u00a0 | 61,643 | 50,711 | \u00a0 | 68,724 | 55,711 |
| Total assets | \u00a0 | 325,196 | 320,468 | \u00a0 | 563,237 | 553,800 | \u00a0 | 101,348 | 113,560 | \u00a0 | 989,781 | 987,828 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | 33,965 | 51,635 | \u00a0 | - | 17,660 | \u00a0 | - | - | \u00a0 | 33,965 | 69,295 |
| Collateral received | \u00a0 | 9,281 | 15,365 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 9,281 | 15,365 |
| Other financial liabilities | \u00a0 | 42,512 | 2,340 | \u00a0 | 9,233 | 6,620 | \u00a0 | - | - | \u00a0 | 51,745 | 8,960 |
| Derivative liabilities | \u00a0 | 957 | 1,021 | \u00a0 | 1,566 | 3,076 | \u00a0 | 33,587 | 53,397 | \u00a0 | 36,110 | 57,494 |
| Deposits and other borrowings | \u00a0 | 560,238 | 589,160 | \u00a0 | 48,403 | 27,801 | \u00a0 | - | - | \u00a0 | 608,641 | 616,961 |
| Bonds, notes and subordinated debt | \u00a0 | 20,587 | 25,995 | \u00a0 | 103,742 | 83,679 | \u00a0 | - | - | \u00a0 | 124,329 | 109,674 |
| Debt issues | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 8,561 | 7,318 | \u00a0 | 8,561 | 7,318 |
| All other liabilities | \u00a0 | 11,567 | 6,670 | \u00a0 | 3,324 | 1,745 | \u00a0 | 45,735 | 44,218 | \u00a0 | 60,626 | 52,633 |
| Total liabilities | \u00a0 | 679,107 | 692,186 | \u00a0 | 166,268 | 140,581 | \u00a0 | 87,883 | 104,933 | \u00a0 | 933,258 | 937,700 |
| Net (liabilities) / assets | \u00a0 | (353,911) | (371,718) | \u00a0 | 396,969 | 413,219 | \u00a0 | 13,465 | 8,627 | \u00a0 | 56,523 | 50,128 |
Fair value is 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. Where the classification of a financial asset or liability results in it being measured at fair value, wherever possible, the fair value is determined with reference to the quoted bid or offer price in the most advantageous active market to which the Group has immediate access. An adjustment for credit risk (CVA) is also incorporated into the fair value as appropriate as well as an adjustment for funding costs (FVA) related to uncollateralised over-the-counter derivatives. The fair value measurement technique of each class of instrument is described below.
| Instrument | Fair value measurement technique |
| Loans and advances | The fair value of loans and advances that are priced based on a variable rate with no contractual repricing tenor is assumed to equate to the carrying value. The fair value of all other loans and advances is calculated using discounted cash flow models based on the maturity of the loans and advances. The discount rates applied are based on interest rates at the reporting date for similar types of loans and advances, if the loans and advances were performing at the reporting date. |
| Deposits and other borrowings | The fair value of deposits and other borrowings that are non-interest bearing or at call, is assumed to equate to the carrying value. The fair value of other deposits and other borrowings is calculated using discounted cash flow models based on the deposit type and maturity. |
| Bonds, notes and subordinated debt and debt issues | The fair values of bonds, notes and subordinated debt and debt issues are calculated based on a discounted cash flow model using a yield curve appropriate to the remaining maturity of the instruments and appropriate credit spreads, or in some instances are calculated based on market quoted prices when there is sufficient liquidity in the market. |
| Derivatives | The fair values of trading and hedging derivative assets and liabilities are obtained from quoted closing market prices at the reporting date, discounted cash flow models or option pricing models as appropriate. |
| Trading assets and debt instruments | The fair values of trading assets and debt instruments are based on quoted closing market prices at the reporting date. Where securities are unlisted and quoted market prices are not available, the Group obtains the fair value by means of discounted cash flows and other valuation techniques that are commonly used by market participants. These techniques address factors such as interest rates, credit risk and liquidity. |
| Equity instruments | The fair value of equity instruments at fair value through other comprehensive income is estimated on the basis of the actual and forecasted financial position and results of the underlying assets or net assets taking into consideration their risk profile. |
| Other financial assets and liabilities | The fair values of other financial assets and liabilities are based on quoted closing market prices and data or valuation techniques, appropriate to the nature and type of the underlying instrument. |
| Due to controlled entities and due from controlled entities | Includes reverse repurchase agreements and repurchase agreements that are classified as held for trading and measured at fair value through profit and loss. The fair values are based on a discounted cash flow model\u00a0using an appropriate yield curve. |
The carrying amounts of cash and liquid assets, due from and to other banks, other assets, other liabilities and amounts due from and to controlled entities, approximate their fair value as they are short-term in nature or are receivable or payable on demand.
Guarantees, letters of credit, performance related contingencies and credit related commitments are generally not sold or traded and estimated fair values are not readily ascertainable. The fair value of these items are not calculated, as very few of the commitments extending beyond six months would commit the Group to a predetermined rate of interest, and the fees attaching to these commitments are the same as those currently charged for similar arrangements.
Fair value for a net open position is the offer price for a financial liability and the bid price for a financial asset, multiplied by the number of units of the instrument issued or held.
Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period in which the transfer occurs.
A significant portion of financial instruments are carried on the balance sheet at fair value.
Where no active market exists for a particular asset or liability, the Group uses a valuation technique to arrive at the fair value, including the use of transaction prices obtained in recent arm\u2019s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques, based on market conditions and risks existing at the reporting date. In doing so, fair value is estimated using a valuation technique that makes maximum use of observable market inputs and places minimal reliance upon entity-specific inputs.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When such evidence exists, the Group recognises the difference between the transaction price and the fair value in profit or loss on initial recognition (i.e. on day one).
The level in the fair value hierarchy within which a fair value measurement is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. The fair value hierarchy is as follows:
Level 1 \u2013 Financial instruments that have been valued by reference to unadjusted quoted prices for identical financial assets or financial liabilities in active markets. Financial instruments included in this category are Commonwealth of Australia and New Zealand government bonds, and spot and exchange traded derivatives.
Level 2 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs other than quoted prices within Level 1 that are observable for the financial asset or financial liability, either directly (as prices) or indirectly (derived from prices). Financial instruments included in this category are over-the-counter trading and hedging derivatives, semi-government bonds, financial institution and corporate bonds, mortgage-backed securities, loans measured at fair value, and issued bonds, notes and subordinated debt measured at fair value.
Level 3 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs that are not based on observable market data. Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. Financial instruments included in this category are bespoke trading derivatives, trading derivatives where the credit valuation adjustment is considered unobservable and significant to the valuation, and certain asset-backed securities valued using unobservable inputs.
Transfers into and out of Level 3 take place when there are changes to the inputs in the valuation technique. Where inputs are no longer observable the fair value measurement is transferred into Level 3. Conversely, a measurement is transferred out of Level 3 when inputs become observable.
The Group\u2019s exposure to fair value measurements based in full or in part on unobservable inputs is restricted to a small number of financial instruments, which comprise an insignificant component of the portfolios in which they belong. As such, a change in the assumption used to value the instruments as at 30 September 2023 attributable to reasonably possible alternatives would not have a material effect.
The financial assets and financial liabilities listed in the table below are carried at amortised cost. While this is the value at which the Group expects the assets to be realised and the liabilities to be settled, the table below includes their fair values as at 30 September:
| \u00a0 | \u00a0 | 2023 | \u00a0 | 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Carrying value | Level 1 | Level 2 | Level 3 | Fair value | \u00a0 | Carrying value | Level 1 | Level 2 | Level 3 | Fair value |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | 702,702 | - | 5,530 | 693,672 | 699,202 | \u00a0 | 680,434 | - | 4,744 | 670,807 | 675,551 |
| Total financial assets | \u00a0 | 702,702 | - | 5,530 | 693,672 | 699,202 | \u00a0 | 680,434 | - | 4,744 | 670,807 | 675,551 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deposits and other borrowings | \u00a0 | 682,120 | - | 683,857 | - | 683,857 | \u00a0 | 683,526 | - | 683,530 | - | 683,530 |
| Bonds, notes and subordinated debt | \u00a0 | 135,645 | - | 135,405 | 7 | 135,412 | \u00a0 | 119,283 | - | 118,417 | - | 118,417 |
| Debt issues | \u00a0 | 8,561 | 7,802 | 1,040 | - | 8,842 | \u00a0 | 7,318 | 6,466 | 1,065 | - | 7,531 |
| Total financial liabilities | \u00a0 | 826,326 | 7,802 | 820,302 | 7 | 828,111 | \u00a0 | 810,127 | 6,466 | 803,012 | - | 809,478 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | 607,684 | - | 3,414 | 602,221 | 605,635 | \u00a0 | 592,679 | - | 2,811 | 586,399 | 589,210 |
| Total financial assets | \u00a0 | 607,684 | - | 3,414 | 602,221 | 605,635 | \u00a0 | 592,679 | - | 2,811 | 586,399 | 589,210 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deposits and other borrowings | \u00a0 | 608,641 | - | 610,438 | - | 610,438 | \u00a0 | 616,961 | - | 617,073 | - | 617,073 |
| Bonds, notes and subordinated debt | \u00a0 | 124,329 | - | 122,888 | - | 122,888 | \u00a0 | 109,674 | - | 107,792 | - | 107,792 |
| Debt issues | \u00a0 | 8,561 | 7,802 | 1,040 | - | 8,842 | \u00a0 | 7,318 | 6,466 | 1,065 | - | 7,531 |
| Total financial liabilities | \u00a0 | 741,531 | 7,802 | 734,366 | - | 742,168 | \u00a0 | 733,953 | 6,466 | 725,930 | - | 732,396 |
| \u00a0 | \u00a0 | 2023 | \u00a0 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Level 1 | Level 2 | Level 3 | Total | \u00a0 | Level 1 | Level 2 | Level 3 | Total |
| \u00a0 | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading assets | \u00a0 | 30,482 | 70,686 | - | 101,168 | \u00a0 | 27,393 | 13,180 | - | 40,573 |
| Debt instruments | \u00a0 | 2,691 | 43,377 | 289 | 46,357 | \u00a0 | 3,625 | 37,732 | 723 | 42,080 |
| Other financial assets | \u00a0 | - | 1,243 | 187 | 1,430 | \u00a0 | - | 1,740 | 321 | 2,061 |
| Derivative assets | \u00a0 | - | 33,946 | 323 | 34,269 | \u00a0 | - | 60,567 | 449 | 61,016 |
| Equity instruments1 | \u00a0 | - | - | 257 | 257 | \u00a0 | - | - | 187 | 187 |
| Total financial assets measured at fair value | \u00a0 | 33,173 | 149,252 | 1,056 | 183,481 | \u00a0 | 31,018 | 113,219 | 1,680 | 145,917 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other financial liabilities | \u00a0 | 5,453 | 60,899 | - | 66,352 | \u00a0 | 2,441 | 20,845 | - | 23,286 |
| Derivative liabilities | \u00a0 | - | 35,362 | 271 | 35,633 | \u00a0 | - | 57,117 | 369 | 57,486 |
| Total financial liabilities measured at fair value | \u00a0 | 5,453 | 96,261 | 271 | 101,985 | \u00a0 | 2,441 | 77,962 | 369 | 80,772 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading assets | \u00a0 | 27,935 | 62,482 | - | 90,417 | \u00a0 | 24,303 | 9,740 | - | 34,043 |
| Debt instruments | \u00a0 | 2,691 | 43,356 | 289 | 46,336 | \u00a0 | 3,626 | 37,745 | 723 | 42,094 |
| Other financial assets | \u00a0 | - | 1,521 | 187 | 1,708 | \u00a0 | - | 2,428 | 321 | 2,749 |
| Derivative assets | \u00a0 | - | 33,461 | 323 | 33,784 | \u00a0 | - | 60,202 | 449 | 60,651 |
| Equity instruments1 | \u00a0 | - | - | 122 | 122 | \u00a0 | - | - | 86 | 86 |
| Due from controlled entities | \u00a0 | - | 1,238 | - | 1,238 | \u00a0 | - | - | - | - |
| Total financial assets measured at fair value | \u00a0 | 30,626 | 142,058 | 921 | 173,605 | \u00a0 | 27,929 | 110,115 | 1,579 | 139,623 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other financial liabilities | \u00a0 | 5,254 | 46,491 | - | 51,745 | \u00a0 | 2,198 | 6,762 | - | 8,960 |
| Derivative liabilities | \u00a0 | - | 35,839 | 271 | 36,110 | \u00a0 | - | 57,125 | 369 | 57,494 |
| Due to controlled entities | \u00a0 | - | 1,159 | - | 1,159 | \u00a0 | - | - | - | - |
| Total financial liabilities measured at fair value | \u00a0 | 5,254 | 83,489 | 271 | 89,014 | \u00a0 | 2,198 | 63,887 | 369 | 66,454 |
There were no material transfers between Level 1 and Level 2 during the 2023 financial year for the Group and the Company.
The table below summarises changes in fair value classified as Level 3:
| \u00a0 | \u00a0 | Assets | \u00a0 | Liabilities | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Derivatives | Debt instruments | Other1 | \u00a0 | Derivatives | ||||
| \u00a0 | \u00a0 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at the beginning of year | \u00a0 | 449 | 148 | 723 | 919 | 508 | 369 | \u00a0 | 369 | 96 |
| Gains / (losses) on assets and (gains) / losses on liabilities recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 17 | 12 | \u00a0 | - | - |
| Purchases and issues | \u00a0 | 25 | 72 | 77 | 386 | 59 | 461 | \u00a0 | - | 20 |
| Sales and settlements | \u00a0 | - | (13) | (237) | (380) | (112) | (280) | \u00a0 | - | - |
| Transfers into Level 3 | \u00a0 | 20 | - | 72 | 250 | - | - | \u00a0 | - | 1 |
| Transfers out of Level 3 | \u00a0 | (153) | (1) | (351) | (438) | (49) | - | \u00a0 | (81) | - |
| Foreign currency translation adjustments | \u00a0 | 2 | (2) | - | 1 | 14 | (4) | \u00a0 | 1 | (1) |
| Balance at end of year | \u00a0 | 323 | 449 | 289 | 723 | 444 | 508 | \u00a0 | 271 | 369 |
| Gains / (losses) on assets and (gains) / losses on liabilities for the reporting period related to financial instruments held at the end of the reporting period recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 17 | 12 | \u00a0 | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at the beginning of year | \u00a0 | 449 | 148 | 723 | 919 | 407 | 285 | \u00a0 | 369 | 96 |
| Gains / (losses) on assets and (gains) / losses on liabilities recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 16 | (4) | \u00a0 | - | - |
| Purchases and issues | \u00a0 | 25 | 72 | 77 | 386 | 20 | 419 | \u00a0 | - | 20 |
| Sales and settlements | \u00a0 | - | (13) | (237) | (380) | (105) | (242) | \u00a0 | - | - |
| Transfers into Level 3 | \u00a0 | 20 | - | 72 | 250 | - | - | \u00a0 | - | 1 |
| Transfers out of Level 3 | \u00a0 | (153) | (1) | (351) | (438) | (49) | - | \u00a0 | (81) | - |
| Foreign currency translation adjustments | \u00a0 | 2 | (2) | - | 1 | 13 | (1) | \u00a0 | 1 | (1) |
| Balance at end of year | \u00a0 | 323 | 449 | 289 | 723 | 309 | 407 | \u00a0 | 271 | 369 |
| Gains / (losses) on assets and (gains) / losses on liabilities for the reporting period related to financial instruments held at the end of the reporting period recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 16 | (4) | \u00a0 | - | - |
The Group and the Company enter into transactions by which they transfer financial assets to counterparties or to structured entities. Financial assets that do not qualify for derecognition are typically associated with repurchase agreements, covered bonds and securitisation program agreements. The following table sets out the carrying amount of financial assets that did not qualify for derecognition and their associated liabilities. Where relevant, the table also sets out the net position of the fair value of financial assets where the counterparty to the associated liabilities has recourse only to the transferred assets.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Repurchase agreements | \u00a0 | Covered bonds | \u00a0 | Securitisation | \u00a0 | Repurchase agreements | \u00a0 | Covered bonds | \u00a0 | Securitisation12 | ||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Carrying amount of transferred assets | \u00a0 | 44,955 | 60,136 | \u00a0 | 40,508 | 35,343 | \u00a0 | 2,545 | 3,477 | \u00a0 | 39,401 | 56,327 | \u00a0 | 33,439 | 29,742 | \u00a0 | 2,738 | 3,757 |
| Carrying amount of associated liabilities | \u00a0 | 40,282 | 54,005 | \u00a0 | 33,617 | 26,874 | \u00a0 | 2,545 | 3,477 | \u00a0 | 35,646 | 50,823 | \u00a0 | 27,701 | 22,298 | \u00a0 | 2,738 | 3,757 |
| For those liabilities that have recourse only to the transferred assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Fair value of transferred assets | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a | \u00a0 | 2,532 | 3,452 | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a | \u00a0 | 2,729 | 3,735 |
| Fair value of associated liabilities | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a | \u00a0 | 2,541 | 3,452 | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a | \u00a0 | 2,706 | 3,693 |
| Net position | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a | \u00a0 | (9) | - | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a | \u00a0 | 23 | 42 |
| \u00a0 | \u00a0 | 2023 | |||||
|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Business and Private Banking | Personal Banking | Corporate and Institutional Banking1 | New Zealand Banking1 | Corporate Functions and Other2 | Total Group |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | $m |
| Reportable segment information | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Net interest income | \u00a0 | 7,270 | 4,329 | 2,361 | 2,616 | 231 | 16,807 |
| Other income | \u00a0 | 976 | 567 | 1,593 | 536 | 175 | 3,847 |
| Net operating income | \u00a0 | 8,246 | 4,896 | 3,954 | 3,152 | 406 | 20,654 |
| Operating expenses | \u00a0 | (2,931) | (2,561) | (1,452) | (1,105) | (974) | (9,023) |
| Underlying profit / (loss) | \u00a0 | 5,315 | 2,335 | 2,502 | 2,047 | (568) | 11,631 |
| Credit Impairment (charge) / write-back | \u00a0 | (568) | (287) | (32) | (85) | 170 | (802) |
| Cash earnings / (loss) before tax and distributions | \u00a0 | 4,747 | 2,048 | 2,470 | 1,962 | (398) | 10,829 |
| Income tax (expense) / benefit | \u00a0 | (1,429) | (602) | (600) | (553) | 91 | (3,093) |
| Cash earnings / (loss) before non-controlling interests | \u00a0 | 3,318 | 1,446 | 1,870 | 1,409 | (307) | 7,736 |
| Non-controlling interests | \u00a0 | - | - | - | (5) | - | (5) |
| Cash earnings / (loss) | \u00a0 | 3,318 | 1,446 | 1,870 | 1,404 | (307) | 7,731 |
| Hedging and fair value volatility | \u00a0 | (2) | (6) | (95) | (8) | 82 | (29) |
| Other non-cash earnings items | \u00a0 | (9) | (17) | - | - | (211) | (237) |
| Net profit / (loss) for the year from continuing operations | \u00a0 | 3,307 | 1,423 | 1,775 | 1,396 | (436) | 7,465 |
| Net loss from discontinued operations attributable to owners of the Company | \u00a0 | - | - | - | - | (51) | (51) |
| Net profit / (loss) attributable to owners of the Company | \u00a0 | 3,307 | 1,423 | 1,775 | 1,396 | (487) | 7,414 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reportable segment assets3 | \u00a0 | 255,451 | 247,934 | 282,809 | 117,090 | 155,799 | 1,059,083 |
| \u00a0 | \u00a0 | 2022 | |||||
|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Business and Private Banking | Personal Banking | Corporate and Institutional Banking | New Zealand Banking | Corporate Functions and Other1 | Total Group |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | $m |
| Reportable segment information | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Net interest income | \u00a0 | 6,074 | 4,055 | 2,058 | 2,302 | 363 | 14,852 |
| Other income | \u00a0 | 962 | 524 | 1,413 | 518 | 27 | 3,444 |
| Net operating income | \u00a0 | 7,036 | 4,579 | 3,471 | 2,820 | 390 | 18,296 |
| Operating expenses | \u00a0 | (2,664) | (2,311) | (1,377) | (971) | (951) | (8,274) |
| Underlying profit / (loss) | \u00a0 | 4,372 | 2,268 | 2,094 | 1,849 | (561) | 10,022 |
| Credit Impairment (charge) / write-back | \u00a0 | (60) | 5 | 26 | (47) | (49) | (125) |
| Cash earnings / (loss) before tax and distributions | \u00a0 | 4,312 | 2,273 | 2,120 | 1,802 | (610) | 9,897 |
| Income tax (expense) / benefit | \u00a0 | (1,299) | (682) | (492) | (507) | 187 | (2,793) |
| Cash earnings / (loss) | \u00a0 | 3,013 | 1,591 | 1,628 | 1,295 | (423) | 7,104 |
| Hedging and fair value volatility | \u00a0 | (2) | 9 | 90 | 40 | (68) | 69 |
| Other non-cash earnings items | \u00a0 | (2) | (7) | - | - | (104) | (113) |
| Net profit / (loss) for the year from continuing operations | \u00a0 | 3,009 | 1,593 | 1,718 | 1,335 | (595) | 7,060 |
| Net loss from discontinued operations attributable to owners of the Company | \u00a0 | - | - | - | - | (169) | (169) |
| Net profit / (loss) attributable to owners of the Company | \u00a0 | 3,009 | 1,593 | 1,718 | 1,335 | (764) | 6,891 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reportable segment assets2 | \u00a0 | 235,322 | 244,822 | 348,035 | 93,243 | 133,704 | 1,055,126 |
No single customer contributes revenue greater than 10% of the Group\u2019s revenues.
The Group has operations in Australia (the Company\u2019s country of domicile), New Zealand, Europe, the United States and Asia. The allocation of income and non-current assets is based on the geographical location in which transactions are booked.
| \u00a0 | \u00a0 | Group | ||||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Income | \u00a0 | Non-current assets1 | ||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Australia | \u00a0 | 16,674 | 14,746 | \u00a0 | 7,115 | 7,081 |
| New Zealand | \u00a0 | 3,218 | 2,953 | \u00a0 | 1,275 | 986 |
| Other International | \u00a0 | 1,051 | 936 | \u00a0 | 118 | 108 |
| Total before inter-geographic eliminations | \u00a0 | 20,943 | 18,635 | \u00a0 | 8,508 | 8,175 |
| Elimination of inter-geographic items | \u00a0 | (295) | (65) | \u00a0 | - | - |
| Total | \u00a0 | 20,648 | 18,570 | \u00a0 | 8,508 | 8,175 |
| \u00a0 | \u00a0 | 2023 | |||||
|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Business and Private Banking | Personal Banking | Corporate and Institutional Banking1 | New Zealand Banking1 | Corporate Functions and Other2 | Total Group |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | $m |
| Reportable segment information | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Net interest income | \u00a0 | 7,270 | 4,329 | 2,361 | 2,616 | 231 | 16,807 |
| Other income | \u00a0 | 976 | 567 | 1,593 | 536 | 175 | 3,847 |
| Net operating income | \u00a0 | 8,246 | 4,896 | 3,954 | 3,152 | 406 | 20,654 |
| Operating expenses | \u00a0 | (2,931) | (2,561) | (1,452) | (1,105) | (974) | (9,023) |
| Underlying profit / (loss) | \u00a0 | 5,315 | 2,335 | 2,502 | 2,047 | (568) | 11,631 |
| Credit Impairment (charge) / write-back | \u00a0 | (568) | (287) | (32) | (85) | 170 | (802) |
| Cash earnings / (loss) before tax and distributions | \u00a0 | 4,747 | 2,048 | 2,470 | 1,962 | (398) | 10,829 |
| Income tax (expense) / benefit | \u00a0 | (1,429) | (602) | (600) | (553) | 91 | (3,093) |
| Cash earnings / (loss) before non-controlling interests | \u00a0 | 3,318 | 1,446 | 1,870 | 1,409 | (307) | 7,736 |
| Non-controlling interests | \u00a0 | - | - | - | (5) | - | (5) |
| Cash earnings / (loss) | \u00a0 | 3,318 | 1,446 | 1,870 | 1,404 | (307) | 7,731 |
| Hedging and fair value volatility | \u00a0 | (2) | (6) | (95) | (8) | 82 | (29) |
| Other non-cash earnings items | \u00a0 | (9) | (17) | - | - | (211) | (237) |
| Net profit / (loss) for the year from continuing operations | \u00a0 | 3,307 | 1,423 | 1,775 | 1,396 | (436) | 7,465 |
| Net loss from discontinued operations attributable to owners of the Company | \u00a0 | - | - | - | - | (51) | (51) |
| Net profit / (loss) attributable to owners of the Company | \u00a0 | 3,307 | 1,423 | 1,775 | 1,396 | (487) | 7,414 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reportable segment assets3 | \u00a0 | 255,451 | 247,934 | 282,809 | 117,090 | 155,799 | 1,059,083 |
| \u00a0 | \u00a0 | 2022 | |||||
|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Business and Private Banking | Personal Banking | Corporate and Institutional Banking | New Zealand Banking | Corporate Functions and Other1 | Total Group |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | $m |
| Reportable segment information | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Net interest income | \u00a0 | 6,074 | 4,055 | 2,058 | 2,302 | 363 | 14,852 |
| Other income | \u00a0 | 962 | 524 | 1,413 | 518 | 27 | 3,444 |
| Net operating income | \u00a0 | 7,036 | 4,579 | 3,471 | 2,820 | 390 | 18,296 |
| Operating expenses | \u00a0 | (2,664) | (2,311) | (1,377) | (971) | (951) | (8,274) |
| Underlying profit / (loss) | \u00a0 | 4,372 | 2,268 | 2,094 | 1,849 | (561) | 10,022 |
| Credit Impairment (charge) / write-back | \u00a0 | (60) | 5 | 26 | (47) | (49) | (125) |
| Cash earnings / (loss) before tax and distributions | \u00a0 | 4,312 | 2,273 | 2,120 | 1,802 | (610) | 9,897 |
| Income tax (expense) / benefit | \u00a0 | (1,299) | (682) | (492) | (507) | 187 | (2,793) |
| Cash earnings / (loss) | \u00a0 | 3,013 | 1,591 | 1,628 | 1,295 | (423) | 7,104 |
| Hedging and fair value volatility | \u00a0 | (2) | 9 | 90 | 40 | (68) | 69 |
| Other non-cash earnings items | \u00a0 | (2) | (7) | - | - | (104) | (113) |
| Net profit / (loss) for the year from continuing operations | \u00a0 | 3,009 | 1,593 | 1,718 | 1,335 | (595) | 7,060 |
| Net loss from discontinued operations attributable to owners of the Company | \u00a0 | - | - | - | - | (169) | (169) |
| Net profit / (loss) attributable to owners of the Company | \u00a0 | 3,009 | 1,593 | 1,718 | 1,335 | (764) | 6,891 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reportable segment assets2 | \u00a0 | 235,322 | 244,822 | 348,035 | 93,243 | 133,704 | 1,055,126 |
No single customer contributes revenue greater than 10% of the Group\u2019s revenues.
The Group has operations in Australia (the Company\u2019s country of domicile), New Zealand, Europe, the United States and Asia. The allocation of income and non-current assets is based on the geographical location in which transactions are booked.
| \u00a0 | \u00a0 | Group | ||||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Income | \u00a0 | Non-current assets1 | ||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Australia | \u00a0 | 16,674 | 14,746 | \u00a0 | 7,115 | 7,081 |
| New Zealand | \u00a0 | 3,218 | 2,953 | \u00a0 | 1,275 | 986 |
| Other International | \u00a0 | 1,051 | 936 | \u00a0 | 118 | 108 |
| Total before inter-geographic eliminations | \u00a0 | 20,943 | 18,635 | \u00a0 | 8,508 | 8,175 |
| Elimination of inter-geographic items | \u00a0 | (295) | (65) | \u00a0 | - | - |
| Total | \u00a0 | 20,648 | 18,570 | \u00a0 | 8,508 | 8,175 |
Interest income and expense are recognised in the income statement using the effective interest method. The effective interest method measures the amortised cost of a financial asset or financial liability using the effective interest rate. The effective interest rate discounts the estimated stream of future cash payments or receipts over the expected life of the financial instrument to the net carrying amount of the financial instrument.
Fees and costs which form an integral part of the effective interest rate of a financial instrument (for example, loan origination fees) are recognised using the effective interest method and recorded in interest income or expense depending on whether the underlying instrument is a financial asset or liability.
Included in net interest income are interest income and expense on trading assets, hedging instruments and financial instruments measured at fair value through profit or loss.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Interest income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due from other banks | \u00a0 | 5,253 | 930 | \u00a0 | 4,713 | 767 |
| Loans and advances | \u00a0 | 35,807 | 19,542 | \u00a0 | 30,175 | 16,264 |
| Due from controlled entities | \u00a0 | - | - | \u00a0 | 2,586 | 1,183 |
| Other interest income | \u00a0 | 3,554 | 592 | \u00a0 | 3,261 | 553 |
| Fair value through other comprehensive income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Debt instruments | \u00a0 | 1,744 | 401 | \u00a0 | 1,743 | 400 |
| Total effective interest method | \u00a0 | 46,358 | 21,465 | \u00a0 | 42,478 | 19,167 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 1,607 | 803 | \u00a0 | 1,328 | 712 |
| Other financial assets | \u00a0 | 107 | 110 | \u00a0 | 76 | 93 |
| Total fair value through profit or loss | \u00a0 | 1,714 | 913 | \u00a0 | 1,404 | 805 |
| Total interest income | \u00a0 | 48,072 | 22,378 | \u00a0 | 43,882 | 19,972 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | 1,705 | 375 | \u00a0 | 1,525 | 343 |
| Deposits and other borrowings | \u00a0 | 19,889 | 3,832 | \u00a0 | 17,636 | 3,191 |
| Bonds, notes and subordinated debt | \u00a0 | 7,083 | 1,726 | \u00a0 | 6,413 | 1,598 |
| Due to controlled entities | \u00a0 | - | - | \u00a0 | 3,515 | 2,527 |
| Debt issues | \u00a0 | 362 | 224 | \u00a0 | 362 | 224 |
| Other interest expense | \u00a0 | 640 | 394 | \u00a0 | 555 | 371 |
| Total effective interest method | \u00a0 | 29,679 | 6,551 | \u00a0 | 30,006 | 8,254 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 51 | 5 | \u00a0 | 51 | 5 |
| Other financial liabilities | \u00a0 | 1,163 | 635 | \u00a0 | 465 | 193 |
| Total fair value through profit or loss | \u00a0 | 1,214 | 640 | \u00a0 | 516 | 198 |
| Bank levy | \u00a0 | 372 | 347 | \u00a0 | 372 | 347 |
| Total interest expense | \u00a0 | 31,265 | 7,538 | \u00a0 | 30,894 | 8,799 |
| Net interest income | \u00a0 | 16,807 | 14,840 | \u00a0 | 12,988 | 11,173 |
| \u00a0 | \u00a0 | 2023 | |||||
|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Business and Private Banking | Personal Banking | Corporate and Institutional Banking1 | New Zealand Banking1 | Corporate Functions and Other2 | Total Group |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | $m |
| Reportable segment information | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Net interest income | \u00a0 | 7,270 | 4,329 | 2,361 | 2,616 | 231 | 16,807 |
| Other income | \u00a0 | 976 | 567 | 1,593 | 536 | 175 | 3,847 |
| Net operating income | \u00a0 | 8,246 | 4,896 | 3,954 | 3,152 | 406 | 20,654 |
| Operating expenses | \u00a0 | (2,931) | (2,561) | (1,452) | (1,105) | (974) | (9,023) |
| Underlying profit / (loss) | \u00a0 | 5,315 | 2,335 | 2,502 | 2,047 | (568) | 11,631 |
| Credit Impairment (charge) / write-back | \u00a0 | (568) | (287) | (32) | (85) | 170 | (802) |
| Cash earnings / (loss) before tax and distributions | \u00a0 | 4,747 | 2,048 | 2,470 | 1,962 | (398) | 10,829 |
| Income tax (expense) / benefit | \u00a0 | (1,429) | (602) | (600) | (553) | 91 | (3,093) |
| Cash earnings / (loss) before non-controlling interests | \u00a0 | 3,318 | 1,446 | 1,870 | 1,409 | (307) | 7,736 |
| Non-controlling interests | \u00a0 | - | - | - | (5) | - | (5) |
| Cash earnings / (loss) | \u00a0 | 3,318 | 1,446 | 1,870 | 1,404 | (307) | 7,731 |
| Hedging and fair value volatility | \u00a0 | (2) | (6) | (95) | (8) | 82 | (29) |
| Other non-cash earnings items | \u00a0 | (9) | (17) | - | - | (211) | (237) |
| Net profit / (loss) for the year from continuing operations | \u00a0 | 3,307 | 1,423 | 1,775 | 1,396 | (436) | 7,465 |
| Net loss from discontinued operations attributable to owners of the Company | \u00a0 | - | - | - | - | (51) | (51) |
| Net profit / (loss) attributable to owners of the Company | \u00a0 | 3,307 | 1,423 | 1,775 | 1,396 | (487) | 7,414 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reportable segment assets3 | \u00a0 | 255,451 | 247,934 | 282,809 | 117,090 | 155,799 | 1,059,083 |
| \u00a0 | \u00a0 | 2022 | |||||
|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Business and Private Banking | Personal Banking | Corporate and Institutional Banking | New Zealand Banking | Corporate Functions and Other1 | Total Group |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | $m |
| Reportable segment information | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Net interest income | \u00a0 | 6,074 | 4,055 | 2,058 | 2,302 | 363 | 14,852 |
| Other income | \u00a0 | 962 | 524 | 1,413 | 518 | 27 | 3,444 |
| Net operating income | \u00a0 | 7,036 | 4,579 | 3,471 | 2,820 | 390 | 18,296 |
| Operating expenses | \u00a0 | (2,664) | (2,311) | (1,377) | (971) | (951) | (8,274) |
| Underlying profit / (loss) | \u00a0 | 4,372 | 2,268 | 2,094 | 1,849 | (561) | 10,022 |
| Credit Impairment (charge) / write-back | \u00a0 | (60) | 5 | 26 | (47) | (49) | (125) |
| Cash earnings / (loss) before tax and distributions | \u00a0 | 4,312 | 2,273 | 2,120 | 1,802 | (610) | 9,897 |
| Income tax (expense) / benefit | \u00a0 | (1,299) | (682) | (492) | (507) | 187 | (2,793) |
| Cash earnings / (loss) | \u00a0 | 3,013 | 1,591 | 1,628 | 1,295 | (423) | 7,104 |
| Hedging and fair value volatility | \u00a0 | (2) | 9 | 90 | 40 | (68) | 69 |
| Other non-cash earnings items | \u00a0 | (2) | (7) | - | - | (104) | (113) |
| Net profit / (loss) for the year from continuing operations | \u00a0 | 3,009 | 1,593 | 1,718 | 1,335 | (595) | 7,060 |
| Net loss from discontinued operations attributable to owners of the Company | \u00a0 | - | - | - | - | (169) | (169) |
| Net profit / (loss) attributable to owners of the Company | \u00a0 | 3,009 | 1,593 | 1,718 | 1,335 | (764) | 6,891 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reportable segment assets2 | \u00a0 | 235,322 | 244,822 | 348,035 | 93,243 | 133,704 | 1,055,126 |
No single customer contributes revenue greater than 10% of the Group\u2019s revenues.
The Group has operations in Australia (the Company\u2019s country of domicile), New Zealand, Europe, the United States and Asia. The allocation of income and non-current assets is based on the geographical location in which transactions are booked.
| \u00a0 | \u00a0 | Group | ||||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Income | \u00a0 | Non-current assets1 | ||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Australia | \u00a0 | 16,674 | 14,746 | \u00a0 | 7,115 | 7,081 |
| New Zealand | \u00a0 | 3,218 | 2,953 | \u00a0 | 1,275 | 986 |
| Other International | \u00a0 | 1,051 | 936 | \u00a0 | 118 | 108 |
| Total before inter-geographic eliminations | \u00a0 | 20,943 | 18,635 | \u00a0 | 8,508 | 8,175 |
| Elimination of inter-geographic items | \u00a0 | (295) | (65) | \u00a0 | - | - |
| Total | \u00a0 | 20,648 | 18,570 | \u00a0 | 8,508 | 8,175 |
Interest income and expense are recognised in the income statement using the effective interest method. The effective interest method measures the amortised cost of a financial asset or financial liability using the effective interest rate. The effective interest rate discounts the estimated stream of future cash payments or receipts over the expected life of the financial instrument to the net carrying amount of the financial instrument.
Fees and costs which form an integral part of the effective interest rate of a financial instrument (for example, loan origination fees) are recognised using the effective interest method and recorded in interest income or expense depending on whether the underlying instrument is a financial asset or liability.
Included in net interest income are interest income and expense on trading assets, hedging instruments and financial instruments measured at fair value through profit or loss.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Interest income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due from other banks | \u00a0 | 5,253 | 930 | \u00a0 | 4,713 | 767 |
| Loans and advances | \u00a0 | 35,807 | 19,542 | \u00a0 | 30,175 | 16,264 |
| Due from controlled entities | \u00a0 | - | - | \u00a0 | 2,586 | 1,183 |
| Other interest income | \u00a0 | 3,554 | 592 | \u00a0 | 3,261 | 553 |
| Fair value through other comprehensive income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Debt instruments | \u00a0 | 1,744 | 401 | \u00a0 | 1,743 | 400 |
| Total effective interest method | \u00a0 | 46,358 | 21,465 | \u00a0 | 42,478 | 19,167 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 1,607 | 803 | \u00a0 | 1,328 | 712 |
| Other financial assets | \u00a0 | 107 | 110 | \u00a0 | 76 | 93 |
| Total fair value through profit or loss | \u00a0 | 1,714 | 913 | \u00a0 | 1,404 | 805 |
| Total interest income | \u00a0 | 48,072 | 22,378 | \u00a0 | 43,882 | 19,972 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | 1,705 | 375 | \u00a0 | 1,525 | 343 |
| Deposits and other borrowings | \u00a0 | 19,889 | 3,832 | \u00a0 | 17,636 | 3,191 |
| Bonds, notes and subordinated debt | \u00a0 | 7,083 | 1,726 | \u00a0 | 6,413 | 1,598 |
| Due to controlled entities | \u00a0 | - | - | \u00a0 | 3,515 | 2,527 |
| Debt issues | \u00a0 | 362 | 224 | \u00a0 | 362 | 224 |
| Other interest expense | \u00a0 | 640 | 394 | \u00a0 | 555 | 371 |
| Total effective interest method | \u00a0 | 29,679 | 6,551 | \u00a0 | 30,006 | 8,254 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 51 | 5 | \u00a0 | 51 | 5 |
| Other financial liabilities | \u00a0 | 1,163 | 635 | \u00a0 | 465 | 193 |
| Total fair value through profit or loss | \u00a0 | 1,214 | 640 | \u00a0 | 516 | 198 |
| Bank levy | \u00a0 | 372 | 347 | \u00a0 | 372 | 347 |
| Total interest expense | \u00a0 | 31,265 | 7,538 | \u00a0 | 30,894 | 8,799 |
| Net interest income | \u00a0 | 16,807 | 14,840 | \u00a0 | 12,988 | 11,173 |
Interest income and expense are recognised in the income statement using the effective interest method. The effective interest method measures the amortised cost of a financial asset or financial liability using the effective interest rate. The effective interest rate discounts the estimated stream of future cash payments or receipts over the expected life of the financial instrument to the net carrying amount of the financial instrument.
Fees and costs which form an integral part of the effective interest rate of a financial instrument (for example, loan origination fees) are recognised using the effective interest method and recorded in interest income or expense depending on whether the underlying instrument is a financial asset or liability.
Included in net interest income are interest income and expense on trading assets, hedging instruments and financial instruments measured at fair value through profit or loss.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Interest income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due from other banks | \u00a0 | 5,253 | 930 | \u00a0 | 4,713 | 767 |
| Loans and advances | \u00a0 | 35,807 | 19,542 | \u00a0 | 30,175 | 16,264 |
| Due from controlled entities | \u00a0 | - | - | \u00a0 | 2,586 | 1,183 |
| Other interest income | \u00a0 | 3,554 | 592 | \u00a0 | 3,261 | 553 |
| Fair value through other comprehensive income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Debt instruments | \u00a0 | 1,744 | 401 | \u00a0 | 1,743 | 400 |
| Total effective interest method | \u00a0 | 46,358 | 21,465 | \u00a0 | 42,478 | 19,167 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 1,607 | 803 | \u00a0 | 1,328 | 712 |
| Other financial assets | \u00a0 | 107 | 110 | \u00a0 | 76 | 93 |
| Total fair value through profit or loss | \u00a0 | 1,714 | 913 | \u00a0 | 1,404 | 805 |
| Total interest income | \u00a0 | 48,072 | 22,378 | \u00a0 | 43,882 | 19,972 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | 1,705 | 375 | \u00a0 | 1,525 | 343 |
| Deposits and other borrowings | \u00a0 | 19,889 | 3,832 | \u00a0 | 17,636 | 3,191 |
| Bonds, notes and subordinated debt | \u00a0 | 7,083 | 1,726 | \u00a0 | 6,413 | 1,598 |
| Due to controlled entities | \u00a0 | - | - | \u00a0 | 3,515 | 2,527 |
| Debt issues | \u00a0 | 362 | 224 | \u00a0 | 362 | 224 |
| Other interest expense | \u00a0 | 640 | 394 | \u00a0 | 555 | 371 |
| Total effective interest method | \u00a0 | 29,679 | 6,551 | \u00a0 | 30,006 | 8,254 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 51 | 5 | \u00a0 | 51 | 5 |
| Other financial liabilities | \u00a0 | 1,163 | 635 | \u00a0 | 465 | 193 |
| Total fair value through profit or loss | \u00a0 | 1,214 | 640 | \u00a0 | 516 | 198 |
| Bank levy | \u00a0 | 372 | 347 | \u00a0 | 372 | 347 |
| Total interest expense | \u00a0 | 31,265 | 7,538 | \u00a0 | 30,894 | 8,799 |
| Net interest income | \u00a0 | 16,807 | 14,840 | \u00a0 | 12,988 | 11,173 |
Interest income and expense are recognised in the income statement using the effective interest method. The effective interest method measures the amortised cost of a financial asset or financial liability using the effective interest rate. The effective interest rate discounts the estimated stream of future cash payments or receipts over the expected life of the financial instrument to the net carrying amount of the financial instrument.
Fees and costs which form an integral part of the effective interest rate of a financial instrument (for example, loan origination fees) are recognised using the effective interest method and recorded in interest income or expense depending on whether the underlying instrument is a financial asset or liability.
Included in net interest income are interest income and expense on trading assets, hedging instruments and financial instruments measured at fair value through profit or loss.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Interest income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due from other banks | \u00a0 | 5,253 | 930 | \u00a0 | 4,713 | 767 |
| Loans and advances | \u00a0 | 35,807 | 19,542 | \u00a0 | 30,175 | 16,264 |
| Due from controlled entities | \u00a0 | - | - | \u00a0 | 2,586 | 1,183 |
| Other interest income | \u00a0 | 3,554 | 592 | \u00a0 | 3,261 | 553 |
| Fair value through other comprehensive income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Debt instruments | \u00a0 | 1,744 | 401 | \u00a0 | 1,743 | 400 |
| Total effective interest method | \u00a0 | 46,358 | 21,465 | \u00a0 | 42,478 | 19,167 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 1,607 | 803 | \u00a0 | 1,328 | 712 |
| Other financial assets | \u00a0 | 107 | 110 | \u00a0 | 76 | 93 |
| Total fair value through profit or loss | \u00a0 | 1,714 | 913 | \u00a0 | 1,404 | 805 |
| Total interest income | \u00a0 | 48,072 | 22,378 | \u00a0 | 43,882 | 19,972 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | 1,705 | 375 | \u00a0 | 1,525 | 343 |
| Deposits and other borrowings | \u00a0 | 19,889 | 3,832 | \u00a0 | 17,636 | 3,191 |
| Bonds, notes and subordinated debt | \u00a0 | 7,083 | 1,726 | \u00a0 | 6,413 | 1,598 |
| Due to controlled entities | \u00a0 | - | - | \u00a0 | 3,515 | 2,527 |
| Debt issues | \u00a0 | 362 | 224 | \u00a0 | 362 | 224 |
| Other interest expense | \u00a0 | 640 | 394 | \u00a0 | 555 | 371 |
| Total effective interest method | \u00a0 | 29,679 | 6,551 | \u00a0 | 30,006 | 8,254 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 51 | 5 | \u00a0 | 51 | 5 |
| Other financial liabilities | \u00a0 | 1,163 | 635 | \u00a0 | 465 | 193 |
| Total fair value through profit or loss | \u00a0 | 1,214 | 640 | \u00a0 | 516 | 198 |
| Bank levy | \u00a0 | 372 | 347 | \u00a0 | 372 | 347 |
| Total interest expense | \u00a0 | 31,265 | 7,538 | \u00a0 | 30,894 | 8,799 |
| Net interest income | \u00a0 | 16,807 | 14,840 | \u00a0 | 12,988 | 11,173 |
Interest income and expense are recognised in the income statement using the effective interest method. The effective interest method measures the amortised cost of a financial asset or financial liability using the effective interest rate. The effective interest rate discounts the estimated stream of future cash payments or receipts over the expected life of the financial instrument to the net carrying amount of the financial instrument.
Fees and costs which form an integral part of the effective interest rate of a financial instrument (for example, loan origination fees) are recognised using the effective interest method and recorded in interest income or expense depending on whether the underlying instrument is a financial asset or liability.
Included in net interest income are interest income and expense on trading assets, hedging instruments and financial instruments measured at fair value through profit or loss.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Interest income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due from other banks | \u00a0 | 5,253 | 930 | \u00a0 | 4,713 | 767 |
| Loans and advances | \u00a0 | 35,807 | 19,542 | \u00a0 | 30,175 | 16,264 |
| Due from controlled entities | \u00a0 | - | - | \u00a0 | 2,586 | 1,183 |
| Other interest income | \u00a0 | 3,554 | 592 | \u00a0 | 3,261 | 553 |
| Fair value through other comprehensive income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Debt instruments | \u00a0 | 1,744 | 401 | \u00a0 | 1,743 | 400 |
| Total effective interest method | \u00a0 | 46,358 | 21,465 | \u00a0 | 42,478 | 19,167 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 1,607 | 803 | \u00a0 | 1,328 | 712 |
| Other financial assets | \u00a0 | 107 | 110 | \u00a0 | 76 | 93 |
| Total fair value through profit or loss | \u00a0 | 1,714 | 913 | \u00a0 | 1,404 | 805 |
| Total interest income | \u00a0 | 48,072 | 22,378 | \u00a0 | 43,882 | 19,972 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Effective interest rate method | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | 1,705 | 375 | \u00a0 | 1,525 | 343 |
| Deposits and other borrowings | \u00a0 | 19,889 | 3,832 | \u00a0 | 17,636 | 3,191 |
| Bonds, notes and subordinated debt | \u00a0 | 7,083 | 1,726 | \u00a0 | 6,413 | 1,598 |
| Due to controlled entities | \u00a0 | - | - | \u00a0 | 3,515 | 2,527 |
| Debt issues | \u00a0 | 362 | 224 | \u00a0 | 362 | 224 |
| Other interest expense | \u00a0 | 640 | 394 | \u00a0 | 555 | 371 |
| Total effective interest method | \u00a0 | 29,679 | 6,551 | \u00a0 | 30,006 | 8,254 |
| Fair value through profit or loss | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 51 | 5 | \u00a0 | 51 | 5 |
| Other financial liabilities | \u00a0 | 1,163 | 635 | \u00a0 | 465 | 193 |
| Total fair value through profit or loss | \u00a0 | 1,214 | 640 | \u00a0 | 516 | 198 |
| Bank levy | \u00a0 | 372 | 347 | \u00a0 | 372 | 347 |
| Total interest expense | \u00a0 | 31,265 | 7,538 | \u00a0 | 30,894 | 8,799 |
| Net interest income | \u00a0 | 16,807 | 14,840 | \u00a0 | 12,988 | 11,173 |
Interest income and expense are recognised in the income statement using the effective interest method. The effective interest method measures the amortised cost of a financial asset or financial liability using the effective interest rate. The effective interest rate discounts the estimated stream of future cash payments or receipts over the expected life of the financial instrument to the net carrying amount of the financial instrument.
Fees and costs which form an integral part of the effective interest rate of a financial instrument (for example, loan origination fees) are recognised using the effective interest method and recorded in interest income or expense depending on whether the underlying instrument is a financial asset or liability.
Included in net interest income are interest income and expense on trading assets, hedging instruments and financial instruments measured at fair value through profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInterestIncomeAndExpenseExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-625": { "value": "Accounting policyInterest income and expense are recognised in the income statement using the effective interest method. The effective interest method measures the amortised cost of a financial asset or financial liability using the effective interest rate. The effective interest rate discounts the estimated stream of future cash payments or receipts over the expected life of the financial instrument to the net carrying amount of the financial instrument.
Fees and costs which form an integral part of the effective interest rate of a financial instrument (for example, loan origination fees) are recognised using the effective interest method and recorded in interest income or expense depending on whether the underlying instrument is a financial asset or liability.
Included in net interest income are interest income and expense on trading assets, hedging instruments and financial instruments measured at fair value through profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-626": { "value": "Accounting policyInterest income and expense are recognised in the income statement using the effective interest method. The effective interest method measures the amortised cost of a financial asset or financial liability using the effective interest rate. The effective interest rate discounts the estimated stream of future cash payments or receipts over the expected life of the financial instrument to the net carrying amount of the financial instrument.
Fees and costs which form an integral part of the effective interest rate of a financial instrument (for example, loan origination fees) are recognised using the effective interest method and recorded in interest income or expense depending on whether the underlying instrument is a financial asset or liability.
Included in net interest income are interest income and expense on trading assets, hedging instruments and financial instruments measured at fair value through profit or loss.
Accounting policyCategories of other income are measured as follows:
| Item | \u00a0 | Measurement basis |
| Trading instruments | \u00a0 | Trading derivatives - Total fair value change (including interest income or expense).Trading assets - All fair value changes except for interest income or expense, which is recognised within net interest income. |
| Hedge ineffectiveness | \u00a0 | Represents hedge ineffectiveness arising from hedge accounting, which are the fair value movements (excluding interest income or expense) that do not offset the hedged risk. |
| Financial instruments designated at fair value | \u00a0 | Includes fair value movements on such items, other than interest income or expense and movements attributable to the Group\u2019s own credit risk. |
| Dividend revenue | \u00a0 | Dividend revenue is recognised in the income statement when the Group\u2019s right to receive the dividend is established. |
| Lending fees and other fees and commissions | \u00a0 | Unless included in the effective interest rate, fees and commissions are recognised on an accruals basis when the service has been provided or on completion of the underlying transaction. Fees charged for providing ongoing services (for example, maintaining and administering existing facilities) are recognised as income over the period the service is provided. When a third party is involved in providing goods or services to the Group's customer, the Group assesses whether the nature of the arrangement with its customer is as a principal or an agent of the third party. When the Group is not acting in a principal capacity, the income earned by the Group is net of the amounts paid to the third party provider. The net consideration represents the Group's income for facilitating the transaction. |
| Net investment management income | \u00a0 | Investment management income is recognised on an accruals basis as the services are provided and is presented net of direct and incremental investment management expenses incurred in the provision of these services. |
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.
Amounts received by the Group as a reimbursement for costs incurred are recognised as a reduction of the related expense.
Annual leave, long service leave and other personnel expenses
Salaries, annual leave and other employee entitlements expected to be paid or settled within 12 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. A liability is recognised for the amount expected to be paid under short-term cash bonuses 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 estimated reliably. All other employee entitlements that are not expected to be paid or settled within 12 months of the reporting date are measured at the present value of net future cash flows. Employee entitlements to long service leave are accrued using an actuarial calculation, which includes assumptions regarding employee departures, leave utilisation and future salary increases.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Refer to Note 24 Provisions for balances of provisions for employee entitlements.
Accounting policyIncome tax expense (or benefit) is the tax payable (or receivable) on the current year's taxable income based on the applicable tax rate in each jurisdiction, adjusted by changes in deferred tax assets and liabilities. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised in the statement of comprehensive income. The tax associated with these transactions will be recognised in the income statement at the same time as the underlying transaction.
Deferred tax assets and liabilities are recognised for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted as at the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are only recognised for temporary differences, unused tax losses and unused tax credits if it is probable that future taxable amounts will arise to utilise those temporary differences and losses. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and deferred tax liabilities are offset where there is a legally enforceable right to offset current tax assets and current tax liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously.
The Company and its wholly owned Australian subsidiaries are part of a tax consolidated group. The Company is the head entity in the tax consolidated group. The members of the tax consolidated group have entered into tax funding and tax sharing agreements, which set out the funding obligations of members. Any current tax liabilities / assets and deferred tax assets from unused tax losses of subsidiaries in the tax consolidated group are recognised by the Company and funded in line with the tax funding arrangements.
The Group undertakes transactions in the ordinary course of business where the income tax treatment requires the exercise of judgement. The Group estimates the amount expected to be paid to tax authorities based on its understanding and interpretation of relevant tax laws. The effect of uncertainty over income tax treatments is reflected in determining the relevant taxable profit or tax loss, tax bases, unused tax losses and unused tax credits or tax rates. Uncertain tax positions are presented as current or deferred tax assets or liabilities as appropriate.
Accounting policyCash and liquid assets, and balances with other banks are initially measured at fair value and subsequently at amortised cost. For the purposes of the statement of cash flows, cash and cash equivalents include cash and liquid assets (including reverse repurchase agreements and short-term government securities) and amounts due from other banks net of amounts due to other banks that are highly liquid, readily convertible to known amounts of cash within three months and are subject to an insignificant risk of changes in value. They are held for the purposes of meeting short-term cash commitments (rather than for investment or other purposes). Refer to Note 37 Notes to the statement of cash flows for a detailed reconciliation of cash and cash equivalents.
Accounting policyTrading assets comprise assets that are classified as held for trading because they are acquired or incurred principally for the purpose of selling or repurchasing in the near term, or form part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking. Trading assets are measured at fair value through profit or loss. Trading assets include commodities measured at fair value less cost to sell in accordance with AASB 102 Inventories.
Accounting policyDebt instruments are measured at fair value through other comprehensive income as they are held in a business model with the objective of both collecting contractual cash flows and realising assets through sale and they have contractual cash flows which are considered to be solely payments of principal and interest.
Accounting policyOther financial assets are measured at fair value through profit or loss. Changes in fair value and transaction costs are recognised in the income statement. Financial assets are measured at fair value through profit or loss when they have contractual cash flow characteristics that are not considered to be solely payments of principal and interest or they have been designated as such to eliminate or reduce an accounting mismatch.
Accounting policyLoans and advances are financial assets for which the contractual cash flows are solely payments of principal and interest and that are held in a business model with the objective of collecting contractual cash flows.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the origination of the loan or advance, which are primarily brokerage and origination fees. Subsequently, loans and advances are measured at amortised cost using the effective interest rate method, net of any provision for credit impairment.
Accounting policyDeposits and other borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost.
Accounting policyBonds, notes and subordinated debt are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Premiums, discounts and associated issue expenses are recognised using the effective interest method through the income statement from the date of issue.
Accounting policyConvertible notes are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
Accounting policyIn certain circumstances, the Group applies the fair value measurement option to financial liabilities. This option is applied where an accounting mismatch is significantly reduced or eliminated by measuring the financial liability at fair value through profit or loss.
Where liabilities are designated at fair value through profit or loss, they are initially recognised at fair value, with transaction costs recognised in the income statement as incurred. Subsequently, they are measured at fair value and any gains or losses are recognised in the income statement, with the exception of changes in own credit risk which are recognised in other comprehensive income.
Accounting policyThe Group applies a three-stage approach to measuring expected credit losses (ECL) for the following categories of financial assets that are not measured at fair value through profit or loss:
Debt instruments measured at amortised cost and fair value through other comprehensive income.
Loan commitments.
Financial guarantee contracts.
Exposures are assessed on a collective basis in each stage unless there is sufficient evidence that one or more events associated with an exposure could have a detrimental impact on estimated future cash flows. Where such evidence exists, the exposure is assessed on an individual basis.
| Stage | Measurement basis |
| Performing - 12-month ECL (Stage 1) | The portion of lifetime ECL associated with the probability of default events occurring within the next 12 months. |
| Performing - Lifetime ECL (Stage 2) | ECL associated with the probability of default events occurring throughout the life of an instrument. |
| Non-performing - Lifetime ECL(Stage 3) | Lifetime ECL, but interest revenue is measured based on the carrying amount of the instrument net of the associated ECL. |
At each reporting date, the Group assesses the default risk of exposures in comparison to the default risk at initial recognition, to determine the stage that applies to the associated ECL measurement. If no significant increase in default risk is observed, the exposure will remain in Stage 1. If the default risk of an exposure has increased significantly since initial recognition, the exposure will migrate to Stage 2. Should an exposure become non-performing it will migrate to Stage 3.
For this purpose, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes quantitative and qualitative information and also forward looking analysis.
ECL are derived from probability-weighted estimates of expected loss, and are measured as follows:
Financial assets that are performing at the reporting date: as the present value of all cash shortfalls over the expected life of the financial asset discounted by the effective interest rate. The cash shortfall is the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive.
Financial assets that are non-performing at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash flows discounted by the effective interest rate.
Undrawn loan commitments: as the present value of the difference between the contractual cash flows that are due to the Group if the commitment is drawn down and the cash flows that the Group expects to receive.
Financial guarantee contracts: as the expected payments to reimburse the holder less any amounts that the Group expects to recover.
The Group\u2019s internally developed credit rating system utilises historical default data drawn from a number of sources to assess the potential default risk of lending, or other financial services products, provided to counterparties or customers. The Group has defined counterparty probabilities of default across retail and non-retail loans and advances, including performing (pre-default) and non-performing (post-default) rating grades. In assessing for credit impairment of financial assets under the ECL model, the Group aligns credit impairment with the definition of default prescribed in its Credit Policy and Procedures.
When determining whether the default risk has increased significantly since initial recognition, the Group considers both quantitative and qualitative information, including expert credit risk assessment, forward looking information and analysis based on the Group\u2019s historical default experience.
For non-retail facilities, internally derived credit ratings, as described above, represent a key determinant of default risk. The Group assigns each customer a credit rating at initial recognition based on available information. Credit risk is deemed to have increased significantly if the credit rating has significantly deteriorated at the reporting date, relative to the credit rating at the date of initial recognition.
Retail facilities use the number of days past due (DPD) or the relative change in probability of default at an account level, to determine whether or not there has been a significant increase in credit risk.
In addition, the Group considers that significant increase in credit risk occurs when a facility is more than 30 DPD.
Default occurs when a loan obligation is contractually 90+ DPD, or when it is considered unlikely that the credit obligation to the Group will be paid in full without remedial action, such as realisation of security. Exposures which are in default align to the non-performing exposures definition in APS 220 Credit Risk Management.
ECL are calculated using three main parameters being probability of default (PD), loss given default (LGD) and exposure at default (EAD). These parameters are generally derived from internally developed statistical models combined with historical, current and forward looking information, including macro-economic data.
For accounting purposes, the 12-month and lifetime PD represent the expected point-in-time probability of a default over the next 12 months and remaining expected lifetime of the financial instrument, respectively, based on conditions existing at the balance sheet date and future economic conditions that affect credit risk.
The LGD represents expected loss conditional on default, taking into account the mitigating effect of collateral, its expected value when realised and the time value of money.
The EAD represents the expected exposure at default, taking into account the repayment of principal and interest from the balance sheet date to the default event together with any expected drawdown of a facility.
The 12-month ECL is equal to the discounted sum over the next 12-months of monthly PD multiplied by LGD and EAD. Lifetime ECL is calculated using the discounted sum of monthly PD over the expected remaining life multiplied by LGD and EAD.
The Group uses internal subject matter experts from Risk, Economics and customer divisions to consider a range of relevant forward looking data, including macro-economic forecasts and assumptions, for the determination of general economic adjustments and any idiosyncratic or targeted portfolio / industry adjustments, to support the calculation of ECL.
Forward looking provisions for both general macro-economic adjustments (EA) and more targeted portfolio / industry forward looking adjustments (FLAs), reflect reasonable and supportable forecasts of potential future conditions that are not captured within the base ECL calculations.
Macro-economic factors taken into consideration include (but are not limited to) the cash rate, unemployment rates, GDP growth rates, inflation and residential and commercial property prices, and require an evaluation of both the current and forecast direction of the macro-economic cycle.
Incorporating forward looking information, including macro-economic forecasts, increases the degree of judgement required to assess how changes in these data points will affect ECL. The methodologies and assumptions, including any forecasts of future economic conditions, are reviewed regularly.
Judgement is applied in determining ECL using objective, reasonable and supportable information about current and forecast economic conditions. Macro-economic variables used in these scenarios include (but are not limited to) the cash rate, unemployment rates, GDP growth rates, inflation and residential and commercial property prices. When determining whether the risk of default has increased significantly since initial recognition, both quantitative and qualitative information is considered, including expert credit assessment, forward looking information and analysis based on the Group\u2019s historical loss experience.
Accounting policyTrading derivatives
Trading derivatives are not in a qualifying hedging relationship and are measured at fair value through profit or loss.
Hedge accounting
The Group utilises the following types of hedge relationships in managing its exposure to risk. At inception of all hedge relationships the Group documents the relationship between the hedging instrument and hedged item, the risk being hedged, the Group\u2019s risk management objective and strategy and how effectiveness will be measured throughout the hedge relationship.
| \u00a0 | Cash flow hedge | Fair value hedge |
| Objective | To hedge changes to cash flows arising from interest rate and foreign currency risk. | To hedge fair value changes to recognised assets and liabilities arising from interest rate and foreign currency risk. |
| Methods for testing hedge effectiveness | Critical terms matching, regression analysis or cumulative dollar offset. | Critical terms matching or cumulative dollar offset. |
| Potential sources of ineffectiveness | Primarily mismatches in terms of the hedged item and the hedging instrument.Discounting basis between the hedged item and hedging instrument. | Primarily mismatches in terms of the hedged item and the hedging instrument, prepayment risk and reset risk.Discounting basis between the hedged item and hedging instrument. |
| Recognition of effective hedge portion | Fair value changes of the hedging instrument associated with the hedged risk are recognised in the cash flow hedge reserve in equity. | Fair value changes of the hedging instrument and those arising from the hedged risk on the hedged item are recognised in the income statement. |
| Recognition of ineffective hedge portion | Recognised in the income statement as ineffectiveness arises. | |
| Hedging instrument expires, is sold, or when hedging criteria are no longer met | Transferred to the income statement as / when the hedged item affects the income statement. If the hedged item is no longer expected to occur the effective portion accumulated in equity is transferred to the income statement immediately. | Cumulative hedge adjustment to the hedged item is amortised to the income statement on an effective yield basis. |
| Cost of hedging reserve | For qualifying hedging instruments, the Group excludes foreign currency basis spreads from hedge designations. Any change in the fair value of these hedging instruments for changes in cross currency basis spreads is deferred to the cost of hedging reserve and released to profit or loss either when the hedged exposure affects profit or loss or on a systematic basis over the life of the hedge. The cumulative movements are expected to be nil by maturity of the hedging instruments. |
Fair value is 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. Where the classification of a financial asset or liability results in it being measured at fair value, wherever possible, the fair value is determined with reference to the quoted bid or offer price in the most advantageous active market to which the Group has immediate access. An adjustment for credit risk (CVA) is also incorporated into the fair value as appropriate as well as an adjustment for funding costs (FVA) related to uncollateralised over-the-counter derivatives. The fair value measurement technique of each class of instrument is described below.
| Instrument | Fair value measurement technique |
| Loans and advances | The fair value of loans and advances that are priced based on a variable rate with no contractual repricing tenor is assumed to equate to the carrying value. The fair value of all other loans and advances is calculated using discounted cash flow models based on the maturity of the loans and advances. The discount rates applied are based on interest rates at the reporting date for similar types of loans and advances, if the loans and advances were performing at the reporting date. |
| Deposits and other borrowings | The fair value of deposits and other borrowings that are non-interest bearing or at call, is assumed to equate to the carrying value. The fair value of other deposits and other borrowings is calculated using discounted cash flow models based on the deposit type and maturity. |
| Bonds, notes and subordinated debt and debt issues | The fair values of bonds, notes and subordinated debt and debt issues are calculated based on a discounted cash flow model using a yield curve appropriate to the remaining maturity of the instruments and appropriate credit spreads, or in some instances are calculated based on market quoted prices when there is sufficient liquidity in the market. |
| Derivatives | The fair values of trading and hedging derivative assets and liabilities are obtained from quoted closing market prices at the reporting date, discounted cash flow models or option pricing models as appropriate. |
| Trading assets and debt instruments | The fair values of trading assets and debt instruments are based on quoted closing market prices at the reporting date. Where securities are unlisted and quoted market prices are not available, the Group obtains the fair value by means of discounted cash flows and other valuation techniques that are commonly used by market participants. These techniques address factors such as interest rates, credit risk and liquidity. |
| Equity instruments | The fair value of equity instruments at fair value through other comprehensive income is estimated on the basis of the actual and forecasted financial position and results of the underlying assets or net assets taking into consideration their risk profile. |
| Other financial assets and liabilities | The fair values of other financial assets and liabilities are based on quoted closing market prices and data or valuation techniques, appropriate to the nature and type of the underlying instrument. |
| Due to controlled entities and due from controlled entities | Includes reverse repurchase agreements and repurchase agreements that are classified as held for trading and measured at fair value through profit and loss. The fair values are based on a discounted cash flow model\u00a0using an appropriate yield curve. |
The carrying amounts of cash and liquid assets, due from and to other banks, other assets, other liabilities and amounts due from and to controlled entities, approximate their fair value as they are short-term in nature or are receivable or payable on demand.
Guarantees, letters of credit, performance related contingencies and credit related commitments are generally not sold or traded and estimated fair values are not readily ascertainable. The fair value of these items are not calculated, as very few of the commitments extending beyond six months would commit the Group to a predetermined rate of interest, and the fees attaching to these commitments are the same as those currently charged for similar arrangements.
Fair value for a net open position is the offer price for a financial liability and the bid price for a financial asset, multiplied by the number of units of the instrument issued or held.
Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period in which the transfer occurs.
A significant portion of financial instruments are carried on the balance sheet at fair value.
Where no active market exists for a particular asset or liability, the Group uses a valuation technique to arrive at the fair value, including the use of transaction prices obtained in recent arm\u2019s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques, based on market conditions and risks existing at the reporting date. In doing so, fair value is estimated using a valuation technique that makes maximum use of observable market inputs and places minimal reliance upon entity-specific inputs.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When such evidence exists, the Group recognises the difference between the transaction price and the fair value in profit or loss on initial recognition (i.e. on day one).
The level in the fair value hierarchy within which a fair value measurement is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. The fair value hierarchy is as follows:
Level 1 \u2013 Financial instruments that have been valued by reference to unadjusted quoted prices for identical financial assets or financial liabilities in active markets. Financial instruments included in this category are Commonwealth of Australia and New Zealand government bonds, and spot and exchange traded derivatives.
Level 2 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs other than quoted prices within Level 1 that are observable for the financial asset or financial liability, either directly (as prices) or indirectly (derived from prices). Financial instruments included in this category are over-the-counter trading and hedging derivatives, semi-government bonds, financial institution and corporate bonds, mortgage-backed securities, loans measured at fair value, and issued bonds, notes and subordinated debt measured at fair value.
Level 3 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs that are not based on observable market data. Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. Financial instruments included in this category are bespoke trading derivatives, trading derivatives where the credit valuation adjustment is considered unobservable and significant to the valuation, and certain asset-backed securities valued using unobservable inputs.
Transfers into and out of Level 3 take place when there are changes to the inputs in the valuation technique. Where inputs are no longer observable the fair value measurement is transferred into Level 3. Conversely, a measurement is transferred out of Level 3 when inputs become observable.
Accounting policyGoodwill arises on the acquisition of an entity and represents the excess of the consideration paid over the fair value of the identifiable net assets acquired.
External and internal costs that are incurred to acquire or develop software are capitalised and recognised as an intangible asset. Capitalised software costs and other intangible assets are amortised on a systematic basis once deployed, using the straight-line method over their expected useful lives which are between three and ten years.
Assets with an indefinite useful life, including goodwill, are not subject to amortisation and are tested on an annual basis for impairment, and additionally whenever an indication of impairment exists. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs of disposal or its value in use. For assets that do not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit (CGU) to which that asset belongs.
Goodwill impairment is assessed for each CGU or group of CGUs that represents the lowest level within the Group at which goodwill is monitored for internal management purposes.
The recoverable amount of a CGU is determined using either value in use or fair value less costs of disposal. Assumptions for determining the recoverable amount of each CGU are based on past experience and expectations for the future. Cash flow projections for value in use are based on the latest management approved forecasts and are then extrapolated using a constant growth rate for up to a further five years. These forecasts use management estimates to determine income, expenses, capital expenditure and cash flows for each CGU.
The discount rate used reflects the market determined post-tax discount rate which is adjusted for specific risks relating to the CGUs and the countries in which they operate. The growth rate applied to extrapolate cash flows beyond the forecast period are based on forecast assumptions of the CGUs\u2019 long-term performance in their respective markets.
The measurement of goodwill is subject to a number of key judgements and estimates. These include:
The allocation of goodwill to CGUs on initial recognition.
The re-allocation of goodwill in the event of disposal or reorganisation.
The appropriate cash flow forecasts, growth rates and discount rates.
Further details about these items are provided below.
Accounting policyProvisions are recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are not discounted to the present value of their expected net future cash flows except where the time value of money is material.
Provisions are recognised for non-lending losses which include losses arising from specific legal actions not directly related to amounts of principal outstanding for loans and advances, and losses arising from forgeries, fraud and the correction of operational issues.
Provisions for customer-related and payroll remediation include provisions for potential refunds and other compensation to customers, payments to colleagues, as well as associated program costs.
Provisions are held in respect of a range of future obligations such as employee entitlements, restructuring costs, customer-related and payroll remediation. The recognition and measurement of some of these provisions involves significant judgement about the existence of a present obligation, the likely outcome of various future events and the related estimated future cash flows. If the future events are uncertain or where the outflows cannot be reliably measured a contingent liability is disclosed, refer to Note 31 Commitments and contingent liabilities.
Payments that are expected to be incurred after more than one year from the reporting date are discounted at a rate which reflects both current interest rates and the risks specific to that provision.
In relation to customer-related remediation, determining the amount of the provision requires the exercise of significant judgement. This includes forming a view on a number of different estimates, including the number of impacted customers, average refund per customer and the associated costs required to complete the remediation activities. The appropriateness of underlying assumptions is reviewed on a regular basis against actual experience and other available evidence, and adjustments are made to the provision where required.
Accounting policyAt inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone selling prices. For leases of land and buildings where the Group is the lessee, the Group has elected not to separate non-lease components, and accounts for the lease and non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, less any lease incentives received.
The right-of-use asset is subsequently measured under the cost model and depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is reviewed for impairment and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that have not been paid at the commencement date, discounted using the Group\u2019s incremental borrowing rate which is based on the Group\u2019s funds transfer pricing curve. The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a lease modification that is not accounted for as a separate lease, there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group\u2019s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. The Group does not include extension options in the measurement of the lease liability until such time that it is reasonably certain that the options will be exercised.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. Where this is the case, the lease is a finance lease. All other leases are classified as operating leases.
Accounting policyExchange differences arising on translation of the Group\u2019s foreign operations, any offsetting gains or losses on net investment hedges and any associated tax effect are reflected in the foreign currency translation reserve.
The results and financial position of the Group entities that have a functional currency different from Australian dollars are translated into Australian dollars as follows:
Assets and liabilities are translated at the closing exchange rate at the balance sheet date.
Income and expenses are translated at average exchange rates for the period.
All resulting exchange differences are recognised in the foreign currency translation reserve.
A cumulative credit balance in this reserve would not normally be regarded as available for payment of dividends until such gains are realised and recognised in the income statement on sale or disposal of the foreign operation.
The asset revaluation reserve is used to record revaluation adjustments on land and buildings. When an asset is sold or disposed of the related balance in the reserve is transferred directly to retained profits.
For qualifying hedging instruments, the Group excludes foreign currency basis spreads from hedge designations. Any change in the fair value of these hedging instruments for changes in cross currency basis spreads is deferred to the cost of hedging reserve and released to profit or loss either when the hedged exposure affects profit or loss or on a systematic basis over the life of the hedge. The cumulative movements are expected to be nil by maturity of the hedging instruments.
The equity-based compensation reserve comprises the fair value of shares and rights provided to employees.
The reserve includes all changes in the fair value of investments in debt instruments that are measured at fair value through other comprehensive income, other than impairment losses, foreign exchange gains and losses, interest income and net of any related hedge accounting adjustments. The cumulative amount recognised in the reserve is transferred to profit or loss when the related asset is derecognised.
The Group has made an irrevocable election to measure certain investments in equity instruments that are not held for trading purposes at fair value through other comprehensive income. Changes in the fair value of these investments are recognised in this reserve, while dividends are recognised in profit or loss. The cumulative amount recognised in the reserve is transferred directly to retained profits when the related asset is derecognised.
Accounting policyThe Group discloses certain items as contingent liabilities, as they are either possible obligations whose existence will be confirmed only by uncertain future events, or they are present obligations where a transfer of economic resources is not probable or cannot be reliably measured. Contingent liabilities are not recognised on the balance sheet but are disclosed unless an outflow of economic resources is remote.
Accounting policyControlled entities are all those entities (including structured entities) to which the Company is exposed, 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. An assessment of control is performed on an ongoing basis. Entities are consolidated from the date on which control is obtained by the Group. Entities are deconsolidated from the date that control ceases. The effects of transactions between entities within the Group are eliminated in full upon consolidation.
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. The Group's investments in associates are accounted for using the equity method, with the carrying amount of the investment increased or decreased to recognise the Group's share of the profit or loss of the investee.
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Structured entities generally have restricted activities and a narrow and well-defined objective which is created through contractual arrangement. Depending on the Group's power over the relevant activities of the structured entity and its exposure to and ability to influence its own returns, it may or may not consolidate the entity.
Unconsolidated structured entities refer to all structured entities that are not controlled by the Group. The Group enters into transactions with unconsolidated structured entities in the normal course of business to facilitate customer transactions or for specific investment opportunities.
Interests in unconsolidated structured entities include, but are not limited to, debt and equity investments, guarantees, liquidity arrangements, commitments, fees from investment structures, and derivative instruments that expose the Group to the risks of the unconsolidated structured entities. Interests do not include plain vanilla derivatives (e.g. interest rate swaps and cross currency swaps) and positions where the Group:
Creates rather than absorbs variability of the unconsolidated structured entity.
Provides administrative, trustee or other services as agent to third party managed structured entities.
Involvement is considered on a case by case basis, taking into account the nature of the structured entity\u2019s activities. This excludes involvement that exists only because of typical customer-supplier relationships.
Accounting policyThe value of shares and rights provided to employees are measured by reference to their grant date fair value. The grant date fair value of each share is determined by the market value of NAB shares and is generally a five-day weighted average share price. The grant date fair value of shares and rights with market performance hurdles is determined using a simulated version of the Black-Scholes model.
With the exception of general employee shares in Australia, the expense for each tranche of shares or rights granted is recognised in the income statement on a straight-line basis, adjusted for forfeitures, over the vesting period for the shares or rights. The expense for general employee shares in Australia is recognised in the income statement in the year the shares are granted as they are not subject to forfeiture. A corresponding increase is recorded in the equity-based compensation reserve.
The key estimates and inputs used in the Black-Scholes model vary depending on the award and type of security granted. They include the NAB share price at the time of the grant, exercise price of the rights (which is nil), the expected volatility of NAB\u2019s share price, the risk-free interest rate and the expected dividend yield on NAB shares for the life of the rights. When estimating expected volatility, historic daily share prices are analysed to arrive at annual and cumulative historic volatility estimates (which may be adjusted for any abnormal periods or non-recurring significant events). Trends in the data are analysed to estimate volatility movements in the future for use in the numeric pricing model. The simulated version of the Black-Scholes model takes into account both the probability of achieving market performance conditions and the potential for early exercise of vested rights.
While market performance conditions are incorporated into the grant date fair values, non-market conditions are not taken into account when determining the fair value and expected time to vesting of shares and rights. Instead, non-market conditions are taken into account by adjusting the number of shares and rights included in the measurement of the expense so that the amount recognised in the income statement reflects the number of shares or rights that actually vest.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-435": { "value": "Categories of other income are measured as follows:
| Item | \u00a0 | Measurement basis |
| Trading instruments | \u00a0 | Trading derivatives - Total fair value change (including interest income or expense).Trading assets - All fair value changes except for interest income or expense, which is recognised within net interest income. |
| Hedge ineffectiveness | \u00a0 | Represents hedge ineffectiveness arising from hedge accounting, which are the fair value movements (excluding interest income or expense) that do not offset the hedged risk. |
| Financial instruments designated at fair value | \u00a0 | Includes fair value movements on such items, other than interest income or expense and movements attributable to the Group\u2019s own credit risk. |
| Dividend revenue | \u00a0 | Dividend revenue is recognised in the income statement when the Group\u2019s right to receive the dividend is established. |
| Lending fees and other fees and commissions | \u00a0 | Unless included in the effective interest rate, fees and commissions are recognised on an accruals basis when the service has been provided or on completion of the underlying transaction. Fees charged for providing ongoing services (for example, maintaining and administering existing facilities) are recognised as income over the period the service is provided. When a third party is involved in providing goods or services to the Group's customer, the Group assesses whether the nature of the arrangement with its customer is as a principal or an agent of the third party. When the Group is not acting in a principal capacity, the income earned by the Group is net of the amounts paid to the third party provider. The net consideration represents the Group's income for facilitating the transaction. |
| Net investment management income | \u00a0 | Investment management income is recognised on an accruals basis as the services are provided and is presented net of direct and incremental investment management expenses incurred in the provision of these services. |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Net fees and commissions | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Lending fees | \u00a0 | 1,141 | 1,125 | \u00a0 | 932 | 925 |
| Other fees and commissions1 | \u00a0 | 893 | 838 | \u00a0 | 667 | 618 |
| Net investment management income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Investment management income | \u00a0 | 304 | 296 | \u00a0 | - | - |
| Investment management expense | \u00a0 | (155) | (140) | \u00a0 | - | - |
| Total net fees and commissions | \u00a0 | 2,183 | 2,119 | \u00a0 | 1,599 | 1,543 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Gains less losses on financial instruments at fair value | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 1,141 | (196) | \u00a0 | 813 | 30 |
| Hedge ineffectiveness | \u00a0 | (21) | 58 | \u00a0 | (27) | 31 |
| Financial instruments designated at fair value | \u00a0 | 390 | 1,205 | \u00a0 | 418 | 592 |
| Total gains less losses on financial instruments at fair value | \u00a0 | 1,510 | 1,067 | \u00a0 | 1,202 | 653 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other operating income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Dividend revenue2 | \u00a0 | 2 | 28 | \u00a0 | 7,423 | 2,053 |
| Net other income3 | \u00a0 | 146 | 516 | \u00a0 | 77 | 229 |
| Total net other operating income | \u00a0 | 148 | 544 | \u00a0 | 7,500 | 2,282 |
| Total other income | \u00a0 | 3,841 | 3,730 | \u00a0 | 10,301 | 4,478 |
Categories of other income are measured as follows:
| Item | \u00a0 | Measurement basis |
| Trading instruments | \u00a0 | Trading derivatives - Total fair value change (including interest income or expense).Trading assets - All fair value changes except for interest income or expense, which is recognised within net interest income. |
| Hedge ineffectiveness | \u00a0 | Represents hedge ineffectiveness arising from hedge accounting, which are the fair value movements (excluding interest income or expense) that do not offset the hedged risk. |
| Financial instruments designated at fair value | \u00a0 | Includes fair value movements on such items, other than interest income or expense and movements attributable to the Group\u2019s own credit risk. |
| Dividend revenue | \u00a0 | Dividend revenue is recognised in the income statement when the Group\u2019s right to receive the dividend is established. |
| Lending fees and other fees and commissions | \u00a0 | Unless included in the effective interest rate, fees and commissions are recognised on an accruals basis when the service has been provided or on completion of the underlying transaction. Fees charged for providing ongoing services (for example, maintaining and administering existing facilities) are recognised as income over the period the service is provided. When a third party is involved in providing goods or services to the Group's customer, the Group assesses whether the nature of the arrangement with its customer is as a principal or an agent of the third party. When the Group is not acting in a principal capacity, the income earned by the Group is net of the amounts paid to the third party provider. The net consideration represents the Group's income for facilitating the transaction. |
| Net investment management income | \u00a0 | Investment management income is recognised on an accruals basis as the services are provided and is presented net of direct and incremental investment management expenses incurred in the provision of these services. |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Net fees and commissions | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Lending fees | \u00a0 | 1,141 | 1,125 | \u00a0 | 932 | 925 |
| Other fees and commissions1 | \u00a0 | 893 | 838 | \u00a0 | 667 | 618 |
| Net investment management income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Investment management income | \u00a0 | 304 | 296 | \u00a0 | - | - |
| Investment management expense | \u00a0 | (155) | (140) | \u00a0 | - | - |
| Total net fees and commissions | \u00a0 | 2,183 | 2,119 | \u00a0 | 1,599 | 1,543 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Gains less losses on financial instruments at fair value | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 1,141 | (196) | \u00a0 | 813 | 30 |
| Hedge ineffectiveness | \u00a0 | (21) | 58 | \u00a0 | (27) | 31 |
| Financial instruments designated at fair value | \u00a0 | 390 | 1,205 | \u00a0 | 418 | 592 |
| Total gains less losses on financial instruments at fair value | \u00a0 | 1,510 | 1,067 | \u00a0 | 1,202 | 653 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other operating income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Dividend revenue2 | \u00a0 | 2 | 28 | \u00a0 | 7,423 | 2,053 |
| Net other income3 | \u00a0 | 146 | 516 | \u00a0 | 77 | 229 |
| Total net other operating income | \u00a0 | 148 | 544 | \u00a0 | 7,500 | 2,282 |
| Total other income | \u00a0 | 3,841 | 3,730 | \u00a0 | 10,301 | 4,478 |
Categories of other income are measured as follows:
| Item | \u00a0 | Measurement basis |
| Trading instruments | \u00a0 | Trading derivatives - Total fair value change (including interest income or expense).Trading assets - All fair value changes except for interest income or expense, which is recognised within net interest income. |
| Hedge ineffectiveness | \u00a0 | Represents hedge ineffectiveness arising from hedge accounting, which are the fair value movements (excluding interest income or expense) that do not offset the hedged risk. |
| Financial instruments designated at fair value | \u00a0 | Includes fair value movements on such items, other than interest income or expense and movements attributable to the Group\u2019s own credit risk. |
| Dividend revenue | \u00a0 | Dividend revenue is recognised in the income statement when the Group\u2019s right to receive the dividend is established. |
| Lending fees and other fees and commissions | \u00a0 | Unless included in the effective interest rate, fees and commissions are recognised on an accruals basis when the service has been provided or on completion of the underlying transaction. Fees charged for providing ongoing services (for example, maintaining and administering existing facilities) are recognised as income over the period the service is provided. When a third party is involved in providing goods or services to the Group's customer, the Group assesses whether the nature of the arrangement with its customer is as a principal or an agent of the third party. When the Group is not acting in a principal capacity, the income earned by the Group is net of the amounts paid to the third party provider. The net consideration represents the Group's income for facilitating the transaction. |
| Net investment management income | \u00a0 | Investment management income is recognised on an accruals basis as the services are provided and is presented net of direct and incremental investment management expenses incurred in the provision of these services. |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Net fees and commissions | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Lending fees | \u00a0 | 1,141 | 1,125 | \u00a0 | 932 | 925 |
| Other fees and commissions1 | \u00a0 | 893 | 838 | \u00a0 | 667 | 618 |
| Net investment management income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Investment management income | \u00a0 | 304 | 296 | \u00a0 | - | - |
| Investment management expense | \u00a0 | (155) | (140) | \u00a0 | - | - |
| Total net fees and commissions | \u00a0 | 2,183 | 2,119 | \u00a0 | 1,599 | 1,543 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Gains less losses on financial instruments at fair value | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 1,141 | (196) | \u00a0 | 813 | 30 |
| Hedge ineffectiveness | \u00a0 | (21) | 58 | \u00a0 | (27) | 31 |
| Financial instruments designated at fair value | \u00a0 | 390 | 1,205 | \u00a0 | 418 | 592 |
| Total gains less losses on financial instruments at fair value | \u00a0 | 1,510 | 1,067 | \u00a0 | 1,202 | 653 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other operating income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Dividend revenue2 | \u00a0 | 2 | 28 | \u00a0 | 7,423 | 2,053 |
| Net other income3 | \u00a0 | 146 | 516 | \u00a0 | 77 | 229 |
| Total net other operating income | \u00a0 | 148 | 544 | \u00a0 | 7,500 | 2,282 |
| Total other income | \u00a0 | 3,841 | 3,730 | \u00a0 | 10,301 | 4,478 |
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.
Amounts received by the Group as a reimbursement for costs incurred are recognised as a reduction of the related expense.
Annual leave, long service leave and other personnel expenses
Salaries, annual leave and other employee entitlements expected to be paid or settled within 12 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. A liability is recognised for the amount expected to be paid under short-term cash bonuses 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 estimated reliably. All other employee entitlements that are not expected to be paid or settled within 12 months of the reporting date are measured at the present value of net future cash flows. Employee entitlements to long service leave are accrued using an actuarial calculation, which includes assumptions regarding employee departures, leave utilisation and future salary increases.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Refer to Note 24 Provisions for balances of provisions for employee entitlements.
| \u00a0 | \u00a0 | Group | \u00a0 | Company1 | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Personnel expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Salaries and related on-costs | \u00a0 | 4,353 | 3,964 | \u00a0 | 3,590 | 3,355 |
| Superannuation costs-defined contribution plans | \u00a0 | 366 | 319 | \u00a0 | 348 | 302 |
| Performance-based compensation | \u00a0 | 557 | 517 | \u00a0 | 510 | 471 |
| Other expenses | \u00a0 | 215 | 177 | \u00a0 | 196 | 166 |
| Total personnel expenses | \u00a0 | 5,491 | 4,977 | \u00a0 | 4,644 | 4,294 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Occupancy and depreciation expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Rental expense | \u00a0 | 100 | 103 | \u00a0 | 209 | 203 |
| Depreciation and impairment | \u00a0 | 594 | 577 | \u00a0 | 408 | 411 |
| Other expenses | \u00a0 | 57 | 42 | \u00a0 | 53 | 39 |
| Total occupancy and depreciation expenses | \u00a0 | 751 | 722 | \u00a0 | 670 | 653 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| General expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Fees and commissions expense | \u00a0 | 18 | 44 | \u00a0 | 17 | 29 |
| Amortisation of intangible assets | \u00a0 | 620 | 535 | \u00a0 | 519 | 460 |
| Advertising and marketing | \u00a0 | 220 | 187 | \u00a0 | 166 | 142 |
| Charges to provide for operational risk event losses | \u00a0 | 103 | 107 | \u00a0 | 72 | 328 |
| Communications, postage and stationery | \u00a0 | 150 | 137 | \u00a0 | 125 | 114 |
| Computer equipment and software | \u00a0 | 888 | 789 | \u00a0 | 740 | 694 |
| Data communication and processing charges | \u00a0 | 127 | 90 | \u00a0 | 109 | 78 |
| Professional fees | \u00a0 | 711 | 729 | \u00a0 | 679 | 689 |
| Impairment losses recognised | \u00a0 | 13 | 10 | \u00a0 | 14 | 18 |
| Other expenses | \u00a0 | 290 | 375 | \u00a0 | 668 | 266 |
| Total general expenses | \u00a0 | 3,140 | 3,003 | \u00a0 | 3,109 | 2,818 |
| Total operating expenses | \u00a0 | 9,382 | 8,702 | \u00a0 | 8,423 | 7,765 |
Customer-related remediation recognised by the Group relates to costs for executing the remediation programs for banking-related matters. Payroll remediation relates to costs to address potential payroll issues relating to both current and former Australian colleagues, comprising payments to colleagues and costs to execute the remediation program. The charges recognised by the Company include costs related to the remediation programs for banking and MLC Wealth-related matters.
In the 2023 financial year, the Group recognised a charge of $20 million (2022: $45 million) and the Company recognised a charge of $45 million (2022: $219 million) for customer-related remediation.
The payroll remediation program was largely completed in December 2022 with all known remediation matters resolved. No charges were recognised in the 2023 financial year (2022: $55 million for the Group and $72 million for the Company).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExpenseExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-438": { "value": "Categories of other income are measured as follows:
| Item | \u00a0 | Measurement basis |
| Trading instruments | \u00a0 | Trading derivatives - Total fair value change (including interest income or expense).Trading assets - All fair value changes except for interest income or expense, which is recognised within net interest income. |
| Hedge ineffectiveness | \u00a0 | Represents hedge ineffectiveness arising from hedge accounting, which are the fair value movements (excluding interest income or expense) that do not offset the hedged risk. |
| Financial instruments designated at fair value | \u00a0 | Includes fair value movements on such items, other than interest income or expense and movements attributable to the Group\u2019s own credit risk. |
| Dividend revenue | \u00a0 | Dividend revenue is recognised in the income statement when the Group\u2019s right to receive the dividend is established. |
| Lending fees and other fees and commissions | \u00a0 | Unless included in the effective interest rate, fees and commissions are recognised on an accruals basis when the service has been provided or on completion of the underlying transaction. Fees charged for providing ongoing services (for example, maintaining and administering existing facilities) are recognised as income over the period the service is provided. When a third party is involved in providing goods or services to the Group's customer, the Group assesses whether the nature of the arrangement with its customer is as a principal or an agent of the third party. When the Group is not acting in a principal capacity, the income earned by the Group is net of the amounts paid to the third party provider. The net consideration represents the Group's income for facilitating the transaction. |
| Net investment management income | \u00a0 | Investment management income is recognised on an accruals basis as the services are provided and is presented net of direct and incremental investment management expenses incurred in the provision of these services. |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Net fees and commissions | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Lending fees | \u00a0 | 1,141 | 1,125 | \u00a0 | 932 | 925 |
| Other fees and commissions1 | \u00a0 | 893 | 838 | \u00a0 | 667 | 618 |
| Net investment management income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Investment management income | \u00a0 | 304 | 296 | \u00a0 | - | - |
| Investment management expense | \u00a0 | (155) | (140) | \u00a0 | - | - |
| Total net fees and commissions | \u00a0 | 2,183 | 2,119 | \u00a0 | 1,599 | 1,543 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Gains less losses on financial instruments at fair value | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading instruments | \u00a0 | 1,141 | (196) | \u00a0 | 813 | 30 |
| Hedge ineffectiveness | \u00a0 | (21) | 58 | \u00a0 | (27) | 31 |
| Financial instruments designated at fair value | \u00a0 | 390 | 1,205 | \u00a0 | 418 | 592 |
| Total gains less losses on financial instruments at fair value | \u00a0 | 1,510 | 1,067 | \u00a0 | 1,202 | 653 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other operating income | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Dividend revenue2 | \u00a0 | 2 | 28 | \u00a0 | 7,423 | 2,053 |
| Net other income3 | \u00a0 | 146 | 516 | \u00a0 | 77 | 229 |
| Total net other operating income | \u00a0 | 148 | 544 | \u00a0 | 7,500 | 2,282 |
| Total other income | \u00a0 | 3,841 | 3,730 | \u00a0 | 10,301 | 4,478 |
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.
Amounts received by the Group as a reimbursement for costs incurred are recognised as a reduction of the related expense.
Annual leave, long service leave and other personnel expenses
Salaries, annual leave and other employee entitlements expected to be paid or settled within 12 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. A liability is recognised for the amount expected to be paid under short-term cash bonuses 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 estimated reliably. All other employee entitlements that are not expected to be paid or settled within 12 months of the reporting date are measured at the present value of net future cash flows. Employee entitlements to long service leave are accrued using an actuarial calculation, which includes assumptions regarding employee departures, leave utilisation and future salary increases.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Refer to Note 24 Provisions for balances of provisions for employee entitlements.
| \u00a0 | \u00a0 | Group | \u00a0 | Company1 | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Personnel expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Salaries and related on-costs | \u00a0 | 4,353 | 3,964 | \u00a0 | 3,590 | 3,355 |
| Superannuation costs-defined contribution plans | \u00a0 | 366 | 319 | \u00a0 | 348 | 302 |
| Performance-based compensation | \u00a0 | 557 | 517 | \u00a0 | 510 | 471 |
| Other expenses | \u00a0 | 215 | 177 | \u00a0 | 196 | 166 |
| Total personnel expenses | \u00a0 | 5,491 | 4,977 | \u00a0 | 4,644 | 4,294 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Occupancy and depreciation expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Rental expense | \u00a0 | 100 | 103 | \u00a0 | 209 | 203 |
| Depreciation and impairment | \u00a0 | 594 | 577 | \u00a0 | 408 | 411 |
| Other expenses | \u00a0 | 57 | 42 | \u00a0 | 53 | 39 |
| Total occupancy and depreciation expenses | \u00a0 | 751 | 722 | \u00a0 | 670 | 653 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| General expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Fees and commissions expense | \u00a0 | 18 | 44 | \u00a0 | 17 | 29 |
| Amortisation of intangible assets | \u00a0 | 620 | 535 | \u00a0 | 519 | 460 |
| Advertising and marketing | \u00a0 | 220 | 187 | \u00a0 | 166 | 142 |
| Charges to provide for operational risk event losses | \u00a0 | 103 | 107 | \u00a0 | 72 | 328 |
| Communications, postage and stationery | \u00a0 | 150 | 137 | \u00a0 | 125 | 114 |
| Computer equipment and software | \u00a0 | 888 | 789 | \u00a0 | 740 | 694 |
| Data communication and processing charges | \u00a0 | 127 | 90 | \u00a0 | 109 | 78 |
| Professional fees | \u00a0 | 711 | 729 | \u00a0 | 679 | 689 |
| Impairment losses recognised | \u00a0 | 13 | 10 | \u00a0 | 14 | 18 |
| Other expenses | \u00a0 | 290 | 375 | \u00a0 | 668 | 266 |
| Total general expenses | \u00a0 | 3,140 | 3,003 | \u00a0 | 3,109 | 2,818 |
| Total operating expenses | \u00a0 | 9,382 | 8,702 | \u00a0 | 8,423 | 7,765 |
Customer-related remediation recognised by the Group relates to costs for executing the remediation programs for banking-related matters. Payroll remediation relates to costs to address potential payroll issues relating to both current and former Australian colleagues, comprising payments to colleagues and costs to execute the remediation program. The charges recognised by the Company include costs related to the remediation programs for banking and MLC Wealth-related matters.
In the 2023 financial year, the Group recognised a charge of $20 million (2022: $45 million) and the Company recognised a charge of $45 million (2022: $219 million) for customer-related remediation.
The payroll remediation program was largely completed in December 2022 with all known remediation matters resolved. No charges were recognised in the 2023 financial year (2022: $55 million for the Group and $72 million for the Company).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-627": { "value": "Accounting policyCategories of other income are measured as follows:
| Item | \u00a0 | Measurement basis |
| Trading instruments | \u00a0 | Trading derivatives - Total fair value change (including interest income or expense).Trading assets - All fair value changes except for interest income or expense, which is recognised within net interest income. |
| Hedge ineffectiveness | \u00a0 | Represents hedge ineffectiveness arising from hedge accounting, which are the fair value movements (excluding interest income or expense) that do not offset the hedged risk. |
| Financial instruments designated at fair value | \u00a0 | Includes fair value movements on such items, other than interest income or expense and movements attributable to the Group\u2019s own credit risk. |
| Dividend revenue | \u00a0 | Dividend revenue is recognised in the income statement when the Group\u2019s right to receive the dividend is established. |
| Lending fees and other fees and commissions | \u00a0 | Unless included in the effective interest rate, fees and commissions are recognised on an accruals basis when the service has been provided or on completion of the underlying transaction. Fees charged for providing ongoing services (for example, maintaining and administering existing facilities) are recognised as income over the period the service is provided. When a third party is involved in providing goods or services to the Group's customer, the Group assesses whether the nature of the arrangement with its customer is as a principal or an agent of the third party. When the Group is not acting in a principal capacity, the income earned by the Group is net of the amounts paid to the third party provider. The net consideration represents the Group's income for facilitating the transaction. |
| Net investment management income | \u00a0 | Investment management income is recognised on an accruals basis as the services are provided and is presented net of direct and incremental investment management expenses incurred in the provision of these services. |
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.
Amounts received by the Group as a reimbursement for costs incurred are recognised as a reduction of the related expense.
Annual leave, long service leave and other personnel expenses
Salaries, annual leave and other employee entitlements expected to be paid or settled within 12 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. A liability is recognised for the amount expected to be paid under short-term cash bonuses 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 estimated reliably. All other employee entitlements that are not expected to be paid or settled within 12 months of the reporting date are measured at the present value of net future cash flows. Employee entitlements to long service leave are accrued using an actuarial calculation, which includes assumptions regarding employee departures, leave utilisation and future salary increases.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Refer to Note 24 Provisions for balances of provisions for employee entitlements.
| \u00a0 | \u00a0 | Group | \u00a0 | Company1 | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Personnel expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Salaries and related on-costs | \u00a0 | 4,353 | 3,964 | \u00a0 | 3,590 | 3,355 |
| Superannuation costs-defined contribution plans | \u00a0 | 366 | 319 | \u00a0 | 348 | 302 |
| Performance-based compensation | \u00a0 | 557 | 517 | \u00a0 | 510 | 471 |
| Other expenses | \u00a0 | 215 | 177 | \u00a0 | 196 | 166 |
| Total personnel expenses | \u00a0 | 5,491 | 4,977 | \u00a0 | 4,644 | 4,294 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Occupancy and depreciation expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Rental expense | \u00a0 | 100 | 103 | \u00a0 | 209 | 203 |
| Depreciation and impairment | \u00a0 | 594 | 577 | \u00a0 | 408 | 411 |
| Other expenses | \u00a0 | 57 | 42 | \u00a0 | 53 | 39 |
| Total occupancy and depreciation expenses | \u00a0 | 751 | 722 | \u00a0 | 670 | 653 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| General expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Fees and commissions expense | \u00a0 | 18 | 44 | \u00a0 | 17 | 29 |
| Amortisation of intangible assets | \u00a0 | 620 | 535 | \u00a0 | 519 | 460 |
| Advertising and marketing | \u00a0 | 220 | 187 | \u00a0 | 166 | 142 |
| Charges to provide for operational risk event losses | \u00a0 | 103 | 107 | \u00a0 | 72 | 328 |
| Communications, postage and stationery | \u00a0 | 150 | 137 | \u00a0 | 125 | 114 |
| Computer equipment and software | \u00a0 | 888 | 789 | \u00a0 | 740 | 694 |
| Data communication and processing charges | \u00a0 | 127 | 90 | \u00a0 | 109 | 78 |
| Professional fees | \u00a0 | 711 | 729 | \u00a0 | 679 | 689 |
| Impairment losses recognised | \u00a0 | 13 | 10 | \u00a0 | 14 | 18 |
| Other expenses | \u00a0 | 290 | 375 | \u00a0 | 668 | 266 |
| Total general expenses | \u00a0 | 3,140 | 3,003 | \u00a0 | 3,109 | 2,818 |
| Total operating expenses | \u00a0 | 9,382 | 8,702 | \u00a0 | 8,423 | 7,765 |
Customer-related remediation recognised by the Group relates to costs for executing the remediation programs for banking-related matters. Payroll remediation relates to costs to address potential payroll issues relating to both current and former Australian colleagues, comprising payments to colleagues and costs to execute the remediation program. The charges recognised by the Company include costs related to the remediation programs for banking and MLC Wealth-related matters.
In the 2023 financial year, the Group recognised a charge of $20 million (2022: $45 million) and the Company recognised a charge of $45 million (2022: $219 million) for customer-related remediation.
The payroll remediation program was largely completed in December 2022 with all known remediation matters resolved. No charges were recognised in the 2023 financial year (2022: $55 million for the Group and $72 million for the Company).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-440": { "value": "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.
Amounts received by the Group as a reimbursement for costs incurred are recognised as a reduction of the related expense.
Annual leave, long service leave and other personnel expenses
Salaries, annual leave and other employee entitlements expected to be paid or settled within 12 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. A liability is recognised for the amount expected to be paid under short-term cash bonuses 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 estimated reliably. All other employee entitlements that are not expected to be paid or settled within 12 months of the reporting date are measured at the present value of net future cash flows. Employee entitlements to long service leave are accrued using an actuarial calculation, which includes assumptions regarding employee departures, leave utilisation and future salary increases.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Refer to Note 24 Provisions for balances of provisions for employee entitlements.
| \u00a0 | \u00a0 | Group | \u00a0 | Company1 | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Personnel expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Salaries and related on-costs | \u00a0 | 4,353 | 3,964 | \u00a0 | 3,590 | 3,355 |
| Superannuation costs-defined contribution plans | \u00a0 | 366 | 319 | \u00a0 | 348 | 302 |
| Performance-based compensation | \u00a0 | 557 | 517 | \u00a0 | 510 | 471 |
| Other expenses | \u00a0 | 215 | 177 | \u00a0 | 196 | 166 |
| Total personnel expenses | \u00a0 | 5,491 | 4,977 | \u00a0 | 4,644 | 4,294 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Occupancy and depreciation expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Rental expense | \u00a0 | 100 | 103 | \u00a0 | 209 | 203 |
| Depreciation and impairment | \u00a0 | 594 | 577 | \u00a0 | 408 | 411 |
| Other expenses | \u00a0 | 57 | 42 | \u00a0 | 53 | 39 |
| Total occupancy and depreciation expenses | \u00a0 | 751 | 722 | \u00a0 | 670 | 653 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| General expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Fees and commissions expense | \u00a0 | 18 | 44 | \u00a0 | 17 | 29 |
| Amortisation of intangible assets | \u00a0 | 620 | 535 | \u00a0 | 519 | 460 |
| Advertising and marketing | \u00a0 | 220 | 187 | \u00a0 | 166 | 142 |
| Charges to provide for operational risk event losses | \u00a0 | 103 | 107 | \u00a0 | 72 | 328 |
| Communications, postage and stationery | \u00a0 | 150 | 137 | \u00a0 | 125 | 114 |
| Computer equipment and software | \u00a0 | 888 | 789 | \u00a0 | 740 | 694 |
| Data communication and processing charges | \u00a0 | 127 | 90 | \u00a0 | 109 | 78 |
| Professional fees | \u00a0 | 711 | 729 | \u00a0 | 679 | 689 |
| Impairment losses recognised | \u00a0 | 13 | 10 | \u00a0 | 14 | 18 |
| Other expenses | \u00a0 | 290 | 375 | \u00a0 | 668 | 266 |
| Total general expenses | \u00a0 | 3,140 | 3,003 | \u00a0 | 3,109 | 2,818 |
| Total operating expenses | \u00a0 | 9,382 | 8,702 | \u00a0 | 8,423 | 7,765 |
Customer-related remediation recognised by the Group relates to costs for executing the remediation programs for banking-related matters. Payroll remediation relates to costs to address potential payroll issues relating to both current and former Australian colleagues, comprising payments to colleagues and costs to execute the remediation program. The charges recognised by the Company include costs related to the remediation programs for banking and MLC Wealth-related matters.
In the 2023 financial year, the Group recognised a charge of $20 million (2022: $45 million) and the Company recognised a charge of $45 million (2022: $219 million) for customer-related remediation.
The payroll remediation program was largely completed in December 2022 with all known remediation matters resolved. No charges were recognised in the 2023 financial year (2022: $55 million for the Group and $72 million for the Company).
", "dimensions": { "concept": "ifrs-full:DisclosureOfExpensesByNatureExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-441": { "value": "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.
Amounts received by the Group as a reimbursement for costs incurred are recognised as a reduction of the related expense.
Annual leave, long service leave and other personnel expenses
Salaries, annual leave and other employee entitlements expected to be paid or settled within 12 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. A liability is recognised for the amount expected to be paid under short-term cash bonuses 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 estimated reliably. All other employee entitlements that are not expected to be paid or settled within 12 months of the reporting date are measured at the present value of net future cash flows. Employee entitlements to long service leave are accrued using an actuarial calculation, which includes assumptions regarding employee departures, leave utilisation and future salary increases.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Refer to Note 24 Provisions for balances of provisions for employee entitlements.
| \u00a0 | \u00a0 | Group | \u00a0 | Company1 | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Personnel expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Salaries and related on-costs | \u00a0 | 4,353 | 3,964 | \u00a0 | 3,590 | 3,355 |
| Superannuation costs-defined contribution plans | \u00a0 | 366 | 319 | \u00a0 | 348 | 302 |
| Performance-based compensation | \u00a0 | 557 | 517 | \u00a0 | 510 | 471 |
| Other expenses | \u00a0 | 215 | 177 | \u00a0 | 196 | 166 |
| Total personnel expenses | \u00a0 | 5,491 | 4,977 | \u00a0 | 4,644 | 4,294 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Occupancy and depreciation expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Rental expense | \u00a0 | 100 | 103 | \u00a0 | 209 | 203 |
| Depreciation and impairment | \u00a0 | 594 | 577 | \u00a0 | 408 | 411 |
| Other expenses | \u00a0 | 57 | 42 | \u00a0 | 53 | 39 |
| Total occupancy and depreciation expenses | \u00a0 | 751 | 722 | \u00a0 | 670 | 653 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| General expenses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Fees and commissions expense | \u00a0 | 18 | 44 | \u00a0 | 17 | 29 |
| Amortisation of intangible assets | \u00a0 | 620 | 535 | \u00a0 | 519 | 460 |
| Advertising and marketing | \u00a0 | 220 | 187 | \u00a0 | 166 | 142 |
| Charges to provide for operational risk event losses | \u00a0 | 103 | 107 | \u00a0 | 72 | 328 |
| Communications, postage and stationery | \u00a0 | 150 | 137 | \u00a0 | 125 | 114 |
| Computer equipment and software | \u00a0 | 888 | 789 | \u00a0 | 740 | 694 |
| Data communication and processing charges | \u00a0 | 127 | 90 | \u00a0 | 109 | 78 |
| Professional fees | \u00a0 | 711 | 729 | \u00a0 | 679 | 689 |
| Impairment losses recognised | \u00a0 | 13 | 10 | \u00a0 | 14 | 18 |
| Other expenses | \u00a0 | 290 | 375 | \u00a0 | 668 | 266 |
| Total general expenses | \u00a0 | 3,140 | 3,003 | \u00a0 | 3,109 | 2,818 |
| Total operating expenses | \u00a0 | 9,382 | 8,702 | \u00a0 | 8,423 | 7,765 |
Customer-related remediation recognised by the Group relates to costs for executing the remediation programs for banking-related matters. Payroll remediation relates to costs to address potential payroll issues relating to both current and former Australian colleagues, comprising payments to colleagues and costs to execute the remediation program. The charges recognised by the Company include costs related to the remediation programs for banking and MLC Wealth-related matters.
In the 2023 financial year, the Group recognised a charge of $20 million (2022: $45 million) and the Company recognised a charge of $45 million (2022: $219 million) for customer-related remediation.
The payroll remediation program was largely completed in December 2022 with all known remediation matters resolved. No charges were recognised in the 2023 financial year (2022: $55 million for the Group and $72 million for the Company).
", "dimensions": { "concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-631": { "value": "Accounting policyOperating 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.
Amounts received by the Group as a reimbursement for costs incurred are recognised as a reduction of the related expense.
Annual leave, long service leave and other personnel expenses
Salaries, annual leave and other employee entitlements expected to be paid or settled within 12 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. A liability is recognised for the amount expected to be paid under short-term cash bonuses 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 estimated reliably. All other employee entitlements that are not expected to be paid or settled within 12 months of the reporting date are measured at the present value of net future cash flows. Employee entitlements to long service leave are accrued using an actuarial calculation, which includes assumptions regarding employee departures, leave utilisation and future salary increases.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
Refer to Note 24 Provisions for balances of provisions for employee entitlements.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-633": { "value": "Annual leave, long service leave and other personnel expenses
Salaries, annual leave and other employee entitlements expected to be paid or settled within 12 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. A liability is recognised for the amount expected to be paid under short-term cash bonuses 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 estimated reliably. All other employee entitlements that are not expected to be paid or settled within 12 months of the reporting date are measured at the present value of net future cash flows. Employee entitlements to long service leave are accrued using an actuarial calculation, which includes assumptions regarding employee departures, leave utilisation and future salary increases.
Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-635": { "value": "Termination benefits are recognised as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancy are recognised as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be estimated reliably.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-444": { "value": "Income tax expense (or benefit) is the tax payable (or receivable) on the current year's taxable income based on the applicable tax rate in each jurisdiction, adjusted by changes in deferred tax assets and liabilities. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised in the statement of comprehensive income. The tax associated with these transactions will be recognised in the income statement at the same time as the underlying transaction.
Deferred tax assets and liabilities are recognised for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted as at the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are only recognised for temporary differences, unused tax losses and unused tax credits if it is probable that future taxable amounts will arise to utilise those temporary differences and losses. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and deferred tax liabilities are offset where there is a legally enforceable right to offset current tax assets and current tax liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously.
The Company and its wholly owned Australian subsidiaries are part of a tax consolidated group. The Company is the head entity in the tax consolidated group. The members of the tax consolidated group have entered into tax funding and tax sharing agreements, which set out the funding obligations of members. Any current tax liabilities / assets and deferred tax assets from unused tax losses of subsidiaries in the tax consolidated group are recognised by the Company and funded in line with the tax funding arrangements.
The Group undertakes transactions in the ordinary course of business where the income tax treatment requires the exercise of judgement. The Group estimates the amount expected to be paid to tax authorities based on its understanding and interpretation of relevant tax laws. The effect of uncertainty over income tax treatments is reflected in determining the relevant taxable profit or tax loss, tax bases, unused tax losses and unused tax credits or tax rates. Uncertain tax positions are presented as current or deferred tax assets or liabilities as appropriate.
The income tax expense for the year reconciles to the profit before income tax as follows:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Profit before income tax | \u00a0 | 10,450 | 9,744 | \u00a0 | 14,212 | 7,838 |
| Prima facie income tax expense at 30% | \u00a0 | 3,135 | 2,923 | \u00a0 | 4,264 | 2,351 |
| Tax effect of permanent differences: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Assessable foreign income | \u00a0 | 11 | 7 | \u00a0 | 11 | 7 |
| Foreign tax rate differences | \u00a0 | (68) | (65) | \u00a0 | (24) | (25) |
| Adjustments to deferred tax balances for tax losses1 | \u00a0 | (142) | (82) | \u00a0 | (142) | (82) |
| Foreign branch income not deductible / (assessable) | \u00a0 | 6 | (12) | \u00a0 | 6 | (12) |
| Over provision in prior years | \u00a0 | (11) | (5) | \u00a0 | (11) | (5) |
| Offshore banking unit adjustment | \u00a0 | (77) | (97) | \u00a0 | (65) | (57) |
| Restatement of deferred tax balances for tax rate changes | \u00a0 | (1) | (5) | \u00a0 | (1) | 4 |
| Non-deductible interest on convertible instruments | \u00a0 | 109 | 67 | \u00a0 | 109 | 67 |
| Dividend income adjustments | \u00a0 | - | - | \u00a0 | (1,954) | (345) |
| Gain on disposal of BNZ Life | \u00a0 | - | (59) | \u00a0 | - | - |
| Other | \u00a0 | 18 | 12 | \u00a0 | 7 | (10) |
| Income tax expense | \u00a0 | 2,980 | 2,684 | \u00a0 | 2,200 | 1,893 |
| Current tax expense | \u00a0 | 3,081 | 2,365 | \u00a0 | 2,323 | 1,569 |
| Deferred tax (benefit) / expense | \u00a0 | (101) | 319 | \u00a0 | (123) | 324 |
| Total income tax expense | \u00a0 | 2,980 | 2,684 | \u00a0 | 2,200 | 1,893 |
The balance comprises temporary differences attributable to:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Deferred tax assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Specific provision for credit impairment | \u00a0 | 159 | 148 | \u00a0 | 137 | 129 |
| Collective provision for credit impairment | \u00a0 | 1,485 | 1,281 | \u00a0 | 1,239 | 1,078 |
| Employee entitlements | \u00a0 | 275 | 286 | \u00a0 | 257 | 269 |
| Tax losses | \u00a0 | 131 | 50 | \u00a0 | 121 | 47 |
| Unrealised derivatives in funding vehicles | \u00a0 | 39 | 90 | \u00a0 | - | - |
| Other provisions | \u00a0 | 91 | 169 | \u00a0 | 91 | 168 |
| Depreciation | \u00a0 | 327 | 309 | \u00a0 | 244 | 240 |
| Reserves | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash flow hedge reserve | \u00a0 | 732 | 821 | \u00a0 | 724 | 814 |
| Other reserves | \u00a0 | 45 | 4 | \u00a0 | 42 | 23 |
| Other | \u00a0 | 324 | 353 | \u00a0 | 304 | 321 |
| Total deferred tax assets | \u00a0 | 3,608 | 3,511 | \u00a0 | 3,159 | 3,089 |
| Set-off of deferred tax liabilities pursuant to set-off provisions | \u00a0 | (109) | (126) | \u00a0 | (100) | (114) |
| Net deferred tax assets | \u00a0 | 3,499 | 3,385 | \u00a0 | 3,059 | 2,975 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deferred tax liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Intangible assets | \u00a0 | 32 | 27 | \u00a0 | 27 | 23 |
| Defined benefit superannuation plan assets | \u00a0 | 12 | 11 | \u00a0 | 10 | 9 |
| Reserves | \u00a0 | 28 | 63 | \u00a0 | 28 | 63 |
| Other | \u00a0 | 37 | 25 | \u00a0 | 35 | 19 |
| Total deferred tax liabilities | \u00a0 | 109 | 126 | \u00a0 | 100 | 114 |
| Deferred tax liabilities set off against deferred tax assets pursuant to set-off provisions | \u00a0 | (109) | (126) | \u00a0 | (100) | (114) |
| Net deferred tax liability | \u00a0 | - | - | \u00a0 | - | - |
Deferred tax assets have not been brought to account for the following realised losses as the utilisation of the losses is not regarded as probable:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Capital gains tax losses | \u00a0 | 1,909 | 1,910 | \u00a0 | 1,909 | 1,910 |
| Income tax losses | \u00a0 | 125 | 239 | \u00a0 | 125 | 239 |
Income tax losses of $119m for the Group and Company are expected to expire between the 2030 to 2036 financial years. Capital gains tax losses of the Group and Company do not have any expiry date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-445": { "value": "Income tax expense (or benefit) is the tax payable (or receivable) on the current year's taxable income based on the applicable tax rate in each jurisdiction, adjusted by changes in deferred tax assets and liabilities. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised in the statement of comprehensive income. The tax associated with these transactions will be recognised in the income statement at the same time as the underlying transaction.
Deferred tax assets and liabilities are recognised for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted as at the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are only recognised for temporary differences, unused tax losses and unused tax credits if it is probable that future taxable amounts will arise to utilise those temporary differences and losses. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and deferred tax liabilities are offset where there is a legally enforceable right to offset current tax assets and current tax liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously.
The Company and its wholly owned Australian subsidiaries are part of a tax consolidated group. The Company is the head entity in the tax consolidated group. The members of the tax consolidated group have entered into tax funding and tax sharing agreements, which set out the funding obligations of members. Any current tax liabilities / assets and deferred tax assets from unused tax losses of subsidiaries in the tax consolidated group are recognised by the Company and funded in line with the tax funding arrangements.
The Group undertakes transactions in the ordinary course of business where the income tax treatment requires the exercise of judgement. The Group estimates the amount expected to be paid to tax authorities based on its understanding and interpretation of relevant tax laws. The effect of uncertainty over income tax treatments is reflected in determining the relevant taxable profit or tax loss, tax bases, unused tax losses and unused tax credits or tax rates. Uncertain tax positions are presented as current or deferred tax assets or liabilities as appropriate.
The income tax expense for the year reconciles to the profit before income tax as follows:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Profit before income tax | \u00a0 | 10,450 | 9,744 | \u00a0 | 14,212 | 7,838 |
| Prima facie income tax expense at 30% | \u00a0 | 3,135 | 2,923 | \u00a0 | 4,264 | 2,351 |
| Tax effect of permanent differences: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Assessable foreign income | \u00a0 | 11 | 7 | \u00a0 | 11 | 7 |
| Foreign tax rate differences | \u00a0 | (68) | (65) | \u00a0 | (24) | (25) |
| Adjustments to deferred tax balances for tax losses1 | \u00a0 | (142) | (82) | \u00a0 | (142) | (82) |
| Foreign branch income not deductible / (assessable) | \u00a0 | 6 | (12) | \u00a0 | 6 | (12) |
| Over provision in prior years | \u00a0 | (11) | (5) | \u00a0 | (11) | (5) |
| Offshore banking unit adjustment | \u00a0 | (77) | (97) | \u00a0 | (65) | (57) |
| Restatement of deferred tax balances for tax rate changes | \u00a0 | (1) | (5) | \u00a0 | (1) | 4 |
| Non-deductible interest on convertible instruments | \u00a0 | 109 | 67 | \u00a0 | 109 | 67 |
| Dividend income adjustments | \u00a0 | - | - | \u00a0 | (1,954) | (345) |
| Gain on disposal of BNZ Life | \u00a0 | - | (59) | \u00a0 | - | - |
| Other | \u00a0 | 18 | 12 | \u00a0 | 7 | (10) |
| Income tax expense | \u00a0 | 2,980 | 2,684 | \u00a0 | 2,200 | 1,893 |
| Current tax expense | \u00a0 | 3,081 | 2,365 | \u00a0 | 2,323 | 1,569 |
| Deferred tax (benefit) / expense | \u00a0 | (101) | 319 | \u00a0 | (123) | 324 |
| Total income tax expense | \u00a0 | 2,980 | 2,684 | \u00a0 | 2,200 | 1,893 |
The balance comprises temporary differences attributable to:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Deferred tax assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Specific provision for credit impairment | \u00a0 | 159 | 148 | \u00a0 | 137 | 129 |
| Collective provision for credit impairment | \u00a0 | 1,485 | 1,281 | \u00a0 | 1,239 | 1,078 |
| Employee entitlements | \u00a0 | 275 | 286 | \u00a0 | 257 | 269 |
| Tax losses | \u00a0 | 131 | 50 | \u00a0 | 121 | 47 |
| Unrealised derivatives in funding vehicles | \u00a0 | 39 | 90 | \u00a0 | - | - |
| Other provisions | \u00a0 | 91 | 169 | \u00a0 | 91 | 168 |
| Depreciation | \u00a0 | 327 | 309 | \u00a0 | 244 | 240 |
| Reserves | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash flow hedge reserve | \u00a0 | 732 | 821 | \u00a0 | 724 | 814 |
| Other reserves | \u00a0 | 45 | 4 | \u00a0 | 42 | 23 |
| Other | \u00a0 | 324 | 353 | \u00a0 | 304 | 321 |
| Total deferred tax assets | \u00a0 | 3,608 | 3,511 | \u00a0 | 3,159 | 3,089 |
| Set-off of deferred tax liabilities pursuant to set-off provisions | \u00a0 | (109) | (126) | \u00a0 | (100) | (114) |
| Net deferred tax assets | \u00a0 | 3,499 | 3,385 | \u00a0 | 3,059 | 2,975 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deferred tax liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Intangible assets | \u00a0 | 32 | 27 | \u00a0 | 27 | 23 |
| Defined benefit superannuation plan assets | \u00a0 | 12 | 11 | \u00a0 | 10 | 9 |
| Reserves | \u00a0 | 28 | 63 | \u00a0 | 28 | 63 |
| Other | \u00a0 | 37 | 25 | \u00a0 | 35 | 19 |
| Total deferred tax liabilities | \u00a0 | 109 | 126 | \u00a0 | 100 | 114 |
| Deferred tax liabilities set off against deferred tax assets pursuant to set-off provisions | \u00a0 | (109) | (126) | \u00a0 | (100) | (114) |
| Net deferred tax liability | \u00a0 | - | - | \u00a0 | - | - |
Deferred tax assets have not been brought to account for the following realised losses as the utilisation of the losses is not regarded as probable:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Capital gains tax losses | \u00a0 | 1,909 | 1,910 | \u00a0 | 1,909 | 1,910 |
| Income tax losses | \u00a0 | 125 | 239 | \u00a0 | 125 | 239 |
Income tax losses of $119m for the Group and Company are expected to expire between the 2030 to 2036 financial years. Capital gains tax losses of the Group and Company do not have any expiry date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-637": { "value": "Accounting policyIncome tax expense (or benefit) is the tax payable (or receivable) on the current year's taxable income based on the applicable tax rate in each jurisdiction, adjusted by changes in deferred tax assets and liabilities. Income tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in other comprehensive income, in which case it is recognised in the statement of comprehensive income. The tax associated with these transactions will be recognised in the income statement at the same time as the underlying transaction.
Deferred tax assets and liabilities are recognised for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted as at the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are only recognised for temporary differences, unused tax losses and unused tax credits if it is probable that future taxable amounts will arise to utilise those temporary differences and losses. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and deferred tax liabilities are offset where there is a legally enforceable right to offset current tax assets and current tax liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously.
The Company and its wholly owned Australian subsidiaries are part of a tax consolidated group. The Company is the head entity in the tax consolidated group. The members of the tax consolidated group have entered into tax funding and tax sharing agreements, which set out the funding obligations of members. Any current tax liabilities / assets and deferred tax assets from unused tax losses of subsidiaries in the tax consolidated group are recognised by the Company and funded in line with the tax funding arrangements.
The Group undertakes transactions in the ordinary course of business where the income tax treatment requires the exercise of judgement. The Group estimates the amount expected to be paid to tax authorities based on its understanding and interpretation of relevant tax laws. The effect of uncertainty over income tax treatments is reflected in determining the relevant taxable profit or tax loss, tax bases, unused tax losses and unused tax credits or tax rates. Uncertain tax positions are presented as current or deferred tax assets or liabilities as appropriate.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-639": { "value": "Deferred tax assets and liabilities are recognised for temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted as at the reporting date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred tax assets are only recognised for temporary differences, unused tax losses and unused tax credits if it is probable that future taxable amounts will arise to utilise those temporary differences and losses. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Deferred tax assets and deferred tax liabilities are offset where there is a legally enforceable right to offset current tax assets and current tax liabilities and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities which intend either to settle current tax liabilities and assets on a net basis or to realise the assets and settle the liabilities simultaneously.
The Company and its wholly owned Australian subsidiaries are part of a tax consolidated group. The Company is the head entity in the tax consolidated group. The members of the tax consolidated group have entered into tax funding and tax sharing agreements, which set out the funding obligations of members. Any current tax liabilities / assets and deferred tax assets from unused tax losses of subsidiaries in the tax consolidated group are recognised by the Company and funded in line with the tax funding arrangements.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-448": { "value": "| \u00a0 | \u00a0 | Group | ||||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Basic | \u00a0 | Diluted | ||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| Earnings ($m) | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Net profit attributable to owners of the Company | \u00a0 | 7,414 | 6,891 | \u00a0 | 7,414 | 6,891 |
| Potential dilutive adjustments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest expense on convertible notes | \u00a0 | - | - | \u00a0 | 371 | 232 |
| Adjusted earnings | \u00a0 | 7,414 | 6,891 | \u00a0 | 7,785 | 7,123 |
| Net loss from discontinued operations attributable to owners of the Company | \u00a0 | 51 | 169 | \u00a0 | 51 | 169 |
| Adjusted earnings from continuing operations | \u00a0 | 7,465 | 7,060 | \u00a0 | 7,836 | 7,292 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Weighted average number of ordinary shares (millions) | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Weighted average number of ordinary shares (net of treasury shares) | \u00a0 | 3,136 | 3,219 | \u00a0 | 3,136 | 3,219 |
| Weighted average number of dilutive potential ordinary shares | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Convertible notes | \u00a0 | - | - | \u00a0 | 258 | 240 |
| Share-based payments | \u00a0 | - | - | \u00a0 | 10 | 6 |
| Total weighted average number of ordinary shares | \u00a0 | 3,136 | 3,219 | \u00a0 | 3,404 | 3,465 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Earnings per share attributable to owners of the Company (cents) | \u00a0 | 236.4 | 214.1 | \u00a0 | 228.7 | 205.6 |
| Earnings per share from continuing operations | \u00a0 | 238.0 | 219.3 | \u00a0 | 230.2 | 210.5 |
| Earnings per share from discontinued operations | \u00a0 | (1.6) | (5.2) | \u00a0 | (1.5) | (4.9) |
Cash and liquid assets, and balances with other banks are initially measured at fair value and subsequently at amortised cost. For the purposes of the statement of cash flows, cash and cash equivalents include cash and liquid assets (including reverse repurchase agreements and short-term government securities) and amounts due from other banks net of amounts due to other banks that are highly liquid, readily convertible to known amounts of cash within three months and are subject to an insignificant risk of changes in value. They are held for the purposes of meeting short-term cash commitments (rather than for investment or other purposes). Refer to Note 37 Notes to the statement of cash flows for a detailed reconciliation of cash and cash equivalents.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Cash and liquid assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Coins, notes and cash at bank | \u00a0 | 1,030 | 1,147 | \u00a0 | 937 | 1,021 |
| Reverse repurchase agreements1 | \u00a0 | 21,808 | 53,785 | \u00a0 | 21,350 | 53,725 |
| Other (including bills receivable and remittances in transit) | \u00a0 | 1,861 | 1,519 | \u00a0 | 1,672 | 1,375 |
| Total cash and liquid assets | \u00a0 | 24,699 | 56,451 | \u00a0 | 23,959 | 56,121 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due from other banks | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Central banks | \u00a0 | 105,034 | 113,232 | \u00a0 | 95,638 | 105,857 |
| Other banks1 | \u00a0 | 12,272 | 28,629 | \u00a0 | 11,317 | 27,287 |
| Total due from other banks | \u00a0 | 117,306 | 141,861 | \u00a0 | 106,955 | 133,144 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Central banks2 | \u00a0 | 25,394 | 40,824 | \u00a0 | 21,041 | 37,713 |
| Other banks1 | \u00a0 | 14,122 | 33,855 | \u00a0 | 12,924 | 31,582 |
| Total due to other banks | \u00a0 | 39,516 | 74,679 | \u00a0 | 33,965 | 69,295 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Net profit attributable to owners of the Company | \u00a0 | 7,414 | 6,891 | \u00a0 | 12,012 | 5,945 |
| Add / (deduct) non-cash items in the income statement: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| (Increase) in interest receivable | \u00a0 | (1,086) | (981) | \u00a0 | (995) | (922) |
| Increase in interest payable | \u00a0 | 2,717 | 994 | \u00a0 | 2,339 | 843 |
| Increase in unearned income and deferred net fee income | \u00a0 | 381 | 166 | \u00a0 | 419 | 159 |
| Fair value movements on assets, liabilities and derivatives held at fair value | \u00a0 | 3,482 | 4,299 | \u00a0 | 2,879 | 4,389 |
| Increase in provisions | \u00a0 | 834 | 1,341 | \u00a0 | 813 | 1,242 |
| Equity-based compensation recognised in equity or reserves | \u00a0 | 131 | 113 | \u00a0 | 131 | 113 |
| Superannuation costs - defined benefit plans | \u00a0 | (2) | - | \u00a0 | (2) | - |
| Impairment losses on non-financial assets | \u00a0 | 13 | 10 | \u00a0 | 14 | 18 |
| Impairment losses on financial assets | \u00a0 | - | 1 | \u00a0 | - | - |
| Credit Impairment write-back | \u00a0 | 895 | 194 | \u00a0 | 727 | 110 |
| Depreciation and amortisation expense | \u00a0 | 1,214 | 1,112 | \u00a0 | 927 | 871 |
| (Increase) / decrease in other assets | \u00a0 | 150 | 84 | \u00a0 | (5,430) | 233 |
| Increase / (decrease) in other liabilities | \u00a0 | (293) | 280 | \u00a0 | (8) | 48 |
| Increase in income tax payable | \u00a0 | 77 | 659 | \u00a0 | 289 | 610 |
| (Increase) / decrease in deferred tax assets | \u00a0 | (109) | 352 | \u00a0 | (134) | 307 |
| Increase / (decrease) in deferred tax liabilities | \u00a0 | 8 | (13) | \u00a0 | 11 | 20 |
| Operating cash flow items not included in profit | \u00a0 | (42,474) | 13,170 | \u00a0 | (39,141) | 14,868 |
| Investing or financing cash flows included in profit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| (Gain) on sale of controlled entities, before income tax | \u00a0 | (29) | (197) | \u00a0 | (29) | - |
| (Gain) on sale of other debt and equity instruments | \u00a0 | (32) | (199) | \u00a0 | (32) | (199) |
| (Gain) / loss on sale of property, plant, equipment and other assets | \u00a0 | 10 | (55) | \u00a0 | (1) | (74) |
| Net cash provided by / (used in) operating activities | \u00a0 | (26,699) | 28,221 | \u00a0 | (25,211) | 28,581 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Bonds\u201a notes and subordinated debt | Debt issues | Lease liabilities | \u00a0 | Bonds\u201a notes and subordinated debt | Debt issues | Lease liabilities | ||
| \u00a0 | \u00a0 | At fair value | At amortised cost | \u00a0 | \u00a0 | \u00a0 | At fair value | At amortised cost | \u00a0 | \u00a0 |
| \u00a0 | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Balance at 1 October 2021 | \u00a0 | 18,416 | 109,154 | 6,831 | 1,967 | \u00a0 | 5,570 | 102,501 | 6,831 | 1,659 |
| Cash flows | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Proceeds from issue | \u00a0 | 1,500 | 40,432 | 1,983 | - | \u00a0 | 268 | 34,919 | 1,983 | - |
| Repayments | \u00a0 | (3,280) | (24,359) | (1,504) | (339) | \u00a0 | (742) | (23,577) | (1,504) | (299) |
| Non-cash changes | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Additions to lease liabilities | \u00a0 | - | - | - | 631 | \u00a0 | - | - | - | 617 |
| Fair value changes, including fair value hedge adjustments | \u00a0 | (1,497) | (7,718) | - | - | \u00a0 | (900) | (5,371) | - | - |
| Foreign currency translation and other adjustments | \u00a0 | (78) | 1,774 | 8 | (21) | \u00a0 | 283 | 1,202 | 8 | 1 |
| Balance as at 30 September 2022 | \u00a0 | 15,061 | 119,283 | 7,318 | 2,238 | \u00a0 | 4,479 | 109,674 | 7,318 | 1,978 |
| Cash flows | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Proceeds from issue | \u00a0 | 1,466 | 41,361 | 1,243 | - | \u00a0 | 78 | 38,870 | 1,243 | - |
| Repayments | \u00a0 | (3,325) | (27,819) | - | (328) | \u00a0 | (93) | (26,844) | - | (284) |
| Non-cash changes | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Additions to lease liabilities | \u00a0 | - | - | - | 333 | \u00a0 | - | - | - | 120 |
| Fair value changes, including fair value hedge adjustments | \u00a0 | (99) | (817) | - | - | \u00a0 | (159) | (623) | - | - |
| Foreign currency translation and other adjustments | \u00a0 | 638 | 3,637 | - | 16 | \u00a0 | 66 | 3,252 | - | 2 |
| Balance as at 30 September 2023 | \u00a0 | 13,741 | 135,645 | 8,561 | 2,259 | \u00a0 | 4,371 | 124,329 | 8,561 | 1,816 |
For the purposes of the cash flow statement, cash and cash equivalents includes cash and liquid assets and amounts due from other banks (including reverse repurchase agreements and short-term government securities) net of amounts due to other banks that are readily convertible to known amounts of cash within three months.
Cash and cash equivalents as shown in the cash flow statement is reconciled to the related items on the balance sheet as follows:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 24,699 | 56,451 | \u00a0 | 23,959 | 56,121 |
| Treasury and other eligible bills | \u00a0 | 53 | 505 | \u00a0 | - | - |
| Due from other banks (excluding mandatory deposits with supervisory central banks) | \u00a0 | 28,114 | 38,822 | \u00a0 | 17,772 | 30,142 |
| Total cash and cash equivalent assets | \u00a0 | 52,866 | 95,778 | \u00a0 | 41,731 | 86,263 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | (12,277) | (33,599) | \u00a0 | (9,950) | (31,080) |
| Total cash and cash equivalents | \u00a0 | 40,589 | 62,179 | \u00a0 | 31,781 | 55,183 |
In the 2023 financial year, the Company received a dividend of $5.4 billion from National Equities Limited (following a dividend payment by BNZ) which was reinvested into additional ordinary shares. These transactions were settled on a net basis and no cash was transferred. As these are transactions between entities within the Group they are eliminated in full upon consolidation.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Shares issued under the Dividend Reinvestment Plan | \u00a0 | 693 | 500 | \u00a0 | 693 | 500 |
There was no DRP discount on dividends paid in the 2023 financial year (2022: $nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-451": { "value": "Cash and liquid assets, and balances with other banks are initially measured at fair value and subsequently at amortised cost. For the purposes of the statement of cash flows, cash and cash equivalents include cash and liquid assets (including reverse repurchase agreements and short-term government securities) and amounts due from other banks net of amounts due to other banks that are highly liquid, readily convertible to known amounts of cash within three months and are subject to an insignificant risk of changes in value. They are held for the purposes of meeting short-term cash commitments (rather than for investment or other purposes). Refer to Note 37 Notes to the statement of cash flows for a detailed reconciliation of cash and cash equivalents.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Cash and liquid assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Coins, notes and cash at bank | \u00a0 | 1,030 | 1,147 | \u00a0 | 937 | 1,021 |
| Reverse repurchase agreements1 | \u00a0 | 21,808 | 53,785 | \u00a0 | 21,350 | 53,725 |
| Other (including bills receivable and remittances in transit) | \u00a0 | 1,861 | 1,519 | \u00a0 | 1,672 | 1,375 |
| Total cash and liquid assets | \u00a0 | 24,699 | 56,451 | \u00a0 | 23,959 | 56,121 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due from other banks | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Central banks | \u00a0 | 105,034 | 113,232 | \u00a0 | 95,638 | 105,857 |
| Other banks1 | \u00a0 | 12,272 | 28,629 | \u00a0 | 11,317 | 27,287 |
| Total due from other banks | \u00a0 | 117,306 | 141,861 | \u00a0 | 106,955 | 133,144 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Central banks2 | \u00a0 | 25,394 | 40,824 | \u00a0 | 21,041 | 37,713 |
| Other banks1 | \u00a0 | 14,122 | 33,855 | \u00a0 | 12,924 | 31,582 |
| Total due to other banks | \u00a0 | 39,516 | 74,679 | \u00a0 | 33,965 | 69,295 |
Cash and liquid assets, and balances with other banks are initially measured at fair value and subsequently at amortised cost. For the purposes of the statement of cash flows, cash and cash equivalents include cash and liquid assets (including reverse repurchase agreements and short-term government securities) and amounts due from other banks net of amounts due to other banks that are highly liquid, readily convertible to known amounts of cash within three months and are subject to an insignificant risk of changes in value. They are held for the purposes of meeting short-term cash commitments (rather than for investment or other purposes). Refer to Note 37 Notes to the statement of cash flows for a detailed reconciliation of cash and cash equivalents.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-644": { "value": "Accounting policyCash and liquid assets, and balances with other banks are initially measured at fair value and subsequently at amortised cost. For the purposes of the statement of cash flows, cash and cash equivalents include cash and liquid assets (including reverse repurchase agreements and short-term government securities) and amounts due from other banks net of amounts due to other banks that are highly liquid, readily convertible to known amounts of cash within three months and are subject to an insignificant risk of changes in value. They are held for the purposes of meeting short-term cash commitments (rather than for investment or other purposes). Refer to Note 37 Notes to the statement of cash flows for a detailed reconciliation of cash and cash equivalents.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-453": { "value": "Trading assets comprise assets that are classified as held for trading because they are acquired or incurred principally for the purpose of selling or repurchasing in the near term, or form part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking. Trading assets are measured at fair value through profit or loss. Trading assets include commodities measured at fair value less cost to sell in accordance with AASB 102 Inventories.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Trading assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Government bonds, notes and securities | \u00a0 | 29,237 | 26,127 | \u00a0 | 26,690 | 23,036 |
| Semi-government bonds, notes and securities | \u00a0 | 10,092 | 5,346 | \u00a0 | 6,887 | 2,989 |
| Corporate / financial institution bonds, notes and securities | \u00a0 | 5,360 | 8,681 | \u00a0 | 3,392 | 7,598 |
| Reverse repurchase agreements1 | \u00a0 | 55,403 | - | \u00a0 | 52,373 | - |
| Commodity inventory at fair value | \u00a0 | 610 | - | \u00a0 | 610 | - |
| Other bonds, notes, securities, equities and other assets | \u00a0 | 466 | 419 | \u00a0 | 465 | 420 |
| Total trading assets | \u00a0 | 101,168 | 40,573 | \u00a0 | 90,417 | 34,043 |
Trading assets comprise assets that are classified as held for trading because they are acquired or incurred principally for the purpose of selling or repurchasing in the near term, or form part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking. Trading assets are measured at fair value through profit or loss. Trading assets include commodities measured at fair value less cost to sell in accordance with AASB 102 Inventories.
Accounting policyDebt instruments are measured at fair value through other comprehensive income as they are held in a business model with the objective of both collecting contractual cash flows and realising assets through sale and they have contractual cash flows which are considered to be solely payments of principal and interest.
Accounting policyOther financial assets are measured at fair value through profit or loss. Changes in fair value and transaction costs are recognised in the income statement. Financial assets are measured at fair value through profit or loss when they have contractual cash flow characteristics that are not considered to be solely payments of principal and interest or they have been designated as such to eliminate or reduce an accounting mismatch.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-647": { "value": "Accounting policyTrading assets comprise assets that are classified as held for trading because they are acquired or incurred principally for the purpose of selling or repurchasing in the near term, or form part of a portfolio of financial instruments that are managed together and for which there is evidence of short-term profit taking. Trading assets are measured at fair value through profit or loss. Trading assets include commodities measured at fair value less cost to sell in accordance with AASB 102 Inventories.
Accounting policyOther financial assets are measured at fair value through profit or loss. Changes in fair value and transaction costs are recognised in the income statement. Financial assets are measured at fair value through profit or loss when they have contractual cash flow characteristics that are not considered to be solely payments of principal and interest or they have been designated as such to eliminate or reduce an accounting mismatch.
Accounting policyIn certain circumstances, the Group applies the fair value measurement option to financial liabilities. This option is applied where an accounting mismatch is significantly reduced or eliminated by measuring the financial liability at fair value through profit or loss.
Where liabilities are designated at fair value through profit or loss, they are initially recognised at fair value, with transaction costs recognised in the income statement as incurred. Subsequently, they are measured at fair value and any gains or losses are recognised in the income statement, with the exception of changes in own credit risk which are recognised in other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-455": { "value": "Debt instruments are measured at fair value through other comprehensive income as they are held in a business model with the objective of both collecting contractual cash flows and realising assets through sale and they have contractual cash flows which are considered to be solely payments of principal and interest.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Debt instruments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Government bonds, notes and securities | \u00a0 | 2,691 | 3,626 | \u00a0 | 2,691 | 3,626 |
| Semi-government bonds, notes and securities | \u00a0 | 28,892 | 25,275 | \u00a0 | 28,892 | 25,275 |
| Corporate / financial institution bonds, notes and securities | \u00a0 | 8,238 | 6,933 | \u00a0 | 8,238 | 6,933 |
| Other bonds, notes and securities | \u00a0 | 6,536 | 6,246 | \u00a0 | 6,515 | 6,260 |
| Total debt instruments | \u00a0 | 46,357 | 42,080 | \u00a0 | 46,336 | 42,094 |
Bonds, notes and subordinated debt are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Premiums, discounts and associated issue expenses are recognised using the effective interest method through the income statement from the date of issue.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Bonds, notes and subordinated debt | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Medium-term notes | \u00a0 | 83,218 | 74,076 | \u00a0 | 76,801 | 69,042 |
| Securitisation notes | \u00a0 | 2,593 | 3,504 | \u00a0 | - | - |
| Covered bonds | \u00a0 | 30,093 | 23,511 | \u00a0 | 27,787 | 22,440 |
| Subordinated medium-term notes | \u00a0 | 19,741 | 18,192 | \u00a0 | 19,741 | 18,192 |
| Total bonds, notes and subordinated debt | \u00a0 | 135,645 | 119,283 | \u00a0 | 124,329 | 109,674 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Issued bonds, notes and subordinated debt by currency | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| AUD | \u00a0 | 40,873 | 37,972 | \u00a0 | 38,245 | 34,432 |
| USD | \u00a0 | 46,363 | 37,002 | \u00a0 | 40,838 | 32,727 |
| EUR | \u00a0 | 24,979 | 23,463 | \u00a0 | 22,487 | 22,289 |
| GBP | \u00a0 | 10,342 | 8,240 | \u00a0 | 10,389 | 8,298 |
| JPY | \u00a0 | 3,952 | 4,285 | \u00a0 | 3,952 | 4,285 |
| CHF | \u00a0 | 3,756 | 3,589 | \u00a0 | 3,011 | 2,908 |
| Other | \u00a0 | 5,380 | 4,732 | \u00a0 | 5,407 | 4,735 |
| Total bonds, notes and subordinated debt | \u00a0 | 135,645 | 119,283 | \u00a0 | 124,329 | 109,674 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Currency | Notional amount Currency amount (m)1 | Rate | First optional call date2 | Maturity date3 | \u00a0 | 2023 $m | 2022 $m | \u00a0 | 2023 $m | 2022 $m |
| SGD | 450 | Fixed | n/a | Matured 2023 | \u00a0 | - | 479 | \u00a0 | - | 479 |
| AUD | 943 | Float | n/a | Matured 2023 | \u00a0 | - | 942 | \u00a0 | - | 942 |
| AUD | 20 | Fixed | n/a | Buy-back 2023 | \u00a0 | - | 23 | \u00a0 | - | 23 |
| AUD | 20 | Fixed | n/a | Buy-back 2023 | \u00a0 | - | 23 | \u00a0 | - | 23 |
| AUD | 1,000 | Float | 2024 | 2029 | \u00a0 | 1,000 | 1,000 | \u00a0 | 1,000 | 1,000 |
| CAD | 1,000 | Fixed | 2025 | 2030 | \u00a0 | 1,080 | 1,061 | \u00a0 | 1,080 | 1,061 |
| AUD | 1,250 | Float | 2025 | 2030 | \u00a0 | 1,250 | 1,250 | \u00a0 | 1,250 | 1,250 |
| USD | 1,500 | Fixed | n/a | 2030 | \u00a0 | 1,785 | 1,806 | \u00a0 | 1,785 | 1,806 |
| USD | 1,250 | Fixed | n/a | 2031 | \u00a0 | 1,561 | 1,603 | \u00a0 | 1,561 | 1,603 |
| GBP | 600 | Fixed | 2026 | 2031 | \u00a0 | 994 | 858 | \u00a0 | 994 | 858 |
| AUD | 1,175 | Float | 2026 | 2031 | \u00a0 | 1,175 | 1,175 | \u00a0 | 1,175 | 1,175 |
| AUD | 225 | Fixed | 2026 | 2031 | \u00a0 | 205 | 201 | \u00a0 | 205 | 201 |
| AUD | 275 | Fixed | 2027 | 2032 | \u00a0 | 262 | 260 | \u00a0 | 262 | 260 |
| JPY | 17,000 | Fixed | 2027 | 2032 | \u00a0 | 174 | 180 | \u00a0 | 174 | 180 |
| AUD | 1,000 | Fixed | 2027 | 2032 | \u00a0 | 1,000 | 1,000 | \u00a0 | 1,000 | 1,000 |
| AUD | 250 | Float | 2027 | 2032 | \u00a0 | 250 | 250 | \u00a0 | 250 | 250 |
| HKD | 382 | Fixed | 2027 | 2032 | \u00a0 | 71 | 71 | \u00a0 | 71 | 71 |
| AUD | 950 | Fixed | 2028 | 2033 | \u00a0 | 950 | - | \u00a0 | 950 | - |
| AUD | 300 | Float | 2028 | 2033 | \u00a0 | 300 | - | \u00a0 | 300 | - |
| HKD | 640 | Fixed | 2028 | 2033 | \u00a0 | 122 | - | \u00a0 | 122 | - |
| USD | 1,250 | Fixed | n/a | 2033 | \u00a0 | 1,796 | - | \u00a0 | 1,796 | - |
| USD | 1,500 | Fixed | 2029 | 2034 | \u00a0 | 2,004 | 2,037 | \u00a0 | 2,004 | 2,037 |
| AUD | 205 | Fixed | n/a | 2035 | \u00a0 | 205 | 205 | \u00a0 | 205 | 205 |
| USD | 1,250 | Fixed | 2032 | 2037 | \u00a0 | 1,549 | 1,602 | \u00a0 | 1,549 | 1,602 |
| AUD | 85 | Fixed | n/a | 2037 | \u00a0 | 85 | 85 | \u00a0 | 85 | 85 |
| AUD | 215 | Fixed | n/a | 2040 | \u00a0 | 122 | 129 | \u00a0 | 122 | 129 |
| AUD | 245 | Fixed | n/a | 2040 | \u00a0 | 140 | 148 | \u00a0 | 140 | 148 |
| AUD | 100 | Fixed | n/a | 2040 | \u00a0 | 57 | 60 | \u00a0 | 57 | 60 |
| USD | 1,250 | Fixed | n/a | 2041 | \u00a0 | 1,206 | 1,346 | \u00a0 | 1,206 | 1,346 |
| AUD | 195 | Fixed | n/a | 2041 | \u00a0 | 195 | 195 | \u00a0 | 195 | 195 |
| AUD | 203 | Fixed | n/a | 2042 | \u00a0 | 203 | 203 | \u00a0 | 203 | 203 |
| Total | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 19,741 | 18,192 | \u00a0 | 19,741 | 18,192 |
Other financial assets are measured at fair value through profit or loss. Changes in fair value and transaction costs are recognised in the income statement. Financial assets are measured at fair value through profit or loss when they have contractual cash flow characteristics that are not considered to be solely payments of principal and interest or they have been designated as such to eliminate or reduce an accounting mismatch.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Other financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans at fair value | \u00a0 | 1,243 | 1,876 | \u00a0 | 682 | 1,305 |
| Other financial assets at fair value | \u00a0 | 187 | 185 | \u00a0 | 1,026 | 1,444 |
| Total other financial assets | \u00a0 | 1,430 | 2,061 | \u00a0 | 1,708 | 2,749 |
The maximum credit exposure of loans (excluding any undrawn facility limits) included in other financial assets is $1,243 million (2022: $1,876 million) for the Group and $682 million (2022: $1,305 million) for the Company. The cumulative change in fair value of the loans attributable to changes in credit risk amounted to a $33 million loss (2022: $49 million loss) for the Group and a $27 million loss (2022: $28 million loss) for the Company.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-653": { "value": "Accounting policyOther financial assets are measured at fair value through profit or loss. Changes in fair value and transaction costs are recognised in the income statement. Financial assets are measured at fair value through profit or loss when they have contractual cash flow characteristics that are not considered to be solely payments of principal and interest or they have been designated as such to eliminate or reduce an accounting mismatch.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-459": { "value": "Loans and advances are financial assets for which the contractual cash flows are solely payments of principal and interest and that are held in a business model with the objective of collecting contractual cash flows.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the origination of the loan or advance, which are primarily brokerage and origination fees. Subsequently, loans and advances are measured at amortised cost using the effective interest rate method, net of any provision for credit impairment.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Loans and advances | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Housing loans | \u00a0 | 406,298 | 389,124 | \u00a0 | 352,113 | 340,278 |
| Other term lending | \u00a0 | 261,520 | 260,487 | \u00a0 | 223,490 | 224,128 |
| Asset and lease financing | \u00a0 | 17,214 | 14,988 | \u00a0 | 17,158 | 14,937 |
| Overdrafts | \u00a0 | 5,459 | 4,689 | \u00a0 | 3,420 | 2,819 |
| Credit card outstandings | \u00a0 | 9,528 | 8,684 | \u00a0 | 8,609 | 7,816 |
| Other lending | \u00a0 | 7,209 | 7,867 | \u00a0 | 6,766 | 7,467 |
| Total gross loans and advances | \u00a0 | 707,228 | 685,839 | \u00a0 | 611,556 | 597,445 |
| Unearned income and deferred net fee income1 | \u00a0 | (1,453) | (1,020) | \u00a0 | (1,536) | (1,067) |
| Capitalised brokerage costs12 | \u00a0 | 2,512 | 671 | \u00a0 | 2,357 | 633 |
| Provision for credit impairment | \u00a0 | (5,585) | (5,056) | \u00a0 | (4,693) | (4,332) |
| Total net loans and advances | \u00a0 | 702,702 | 680,434 | \u00a0 | 607,684 | 592,679 |
Loans and advances are financial assets for which the contractual cash flows are solely payments of principal and interest and that are held in a business model with the objective of collecting contractual cash flows.
Loans and advances are initially recognised at fair value plus transaction costs directly attributable to the origination of the loan or advance, which are primarily brokerage and origination fees. Subsequently, loans and advances are measured at amortised cost using the effective interest rate method, net of any provision for credit impairment.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLoansAndReceivablesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-461": { "value": "Deposits and other borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Deposits and other borrowings | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Term deposits | \u00a0 | 191,924 | 156,049 | \u00a0 | 159,535 | 131,275 |
| On-demand and short-term deposits | \u00a0 | 299,969 | 310,347 | \u00a0 | 272,035 | 281,021 |
| Certificates of deposit | \u00a0 | 55,290 | 48,555 | \u00a0 | 55,290 | 48,555 |
| Deposits not bearing interest | \u00a0 | 95,491 | 100,289 | \u00a0 | 82,754 | 89,029 |
| Commercial paper and other borrowings | \u00a0 | 35,255 | 44,346 | \u00a0 | 34,835 | 43,150 |
| Repurchase agreements1 | \u00a0 | 4,191 | 23,940 | \u00a0 | 4,192 | 23,931 |
| Total deposits and other borrowings | \u00a0 | 682,120 | 683,526 | \u00a0 | 608,641 | 616,961 |
Bonds, notes and subordinated debt are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Premiums, discounts and associated issue expenses are recognised using the effective interest method through the income statement from the date of issue.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Bonds, notes and subordinated debt | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Medium-term notes | \u00a0 | 83,218 | 74,076 | \u00a0 | 76,801 | 69,042 |
| Securitisation notes | \u00a0 | 2,593 | 3,504 | \u00a0 | - | - |
| Covered bonds | \u00a0 | 30,093 | 23,511 | \u00a0 | 27,787 | 22,440 |
| Subordinated medium-term notes | \u00a0 | 19,741 | 18,192 | \u00a0 | 19,741 | 18,192 |
| Total bonds, notes and subordinated debt | \u00a0 | 135,645 | 119,283 | \u00a0 | 124,329 | 109,674 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Issued bonds, notes and subordinated debt by currency | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| AUD | \u00a0 | 40,873 | 37,972 | \u00a0 | 38,245 | 34,432 |
| USD | \u00a0 | 46,363 | 37,002 | \u00a0 | 40,838 | 32,727 |
| EUR | \u00a0 | 24,979 | 23,463 | \u00a0 | 22,487 | 22,289 |
| GBP | \u00a0 | 10,342 | 8,240 | \u00a0 | 10,389 | 8,298 |
| JPY | \u00a0 | 3,952 | 4,285 | \u00a0 | 3,952 | 4,285 |
| CHF | \u00a0 | 3,756 | 3,589 | \u00a0 | 3,011 | 2,908 |
| Other | \u00a0 | 5,380 | 4,732 | \u00a0 | 5,407 | 4,735 |
| Total bonds, notes and subordinated debt | \u00a0 | 135,645 | 119,283 | \u00a0 | 124,329 | 109,674 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Currency | Notional amount Currency amount (m)1 | Rate | First optional call date2 | Maturity date3 | \u00a0 | 2023 $m | 2022 $m | \u00a0 | 2023 $m | 2022 $m |
| SGD | 450 | Fixed | n/a | Matured 2023 | \u00a0 | - | 479 | \u00a0 | - | 479 |
| AUD | 943 | Float | n/a | Matured 2023 | \u00a0 | - | 942 | \u00a0 | - | 942 |
| AUD | 20 | Fixed | n/a | Buy-back 2023 | \u00a0 | - | 23 | \u00a0 | - | 23 |
| AUD | 20 | Fixed | n/a | Buy-back 2023 | \u00a0 | - | 23 | \u00a0 | - | 23 |
| AUD | 1,000 | Float | 2024 | 2029 | \u00a0 | 1,000 | 1,000 | \u00a0 | 1,000 | 1,000 |
| CAD | 1,000 | Fixed | 2025 | 2030 | \u00a0 | 1,080 | 1,061 | \u00a0 | 1,080 | 1,061 |
| AUD | 1,250 | Float | 2025 | 2030 | \u00a0 | 1,250 | 1,250 | \u00a0 | 1,250 | 1,250 |
| USD | 1,500 | Fixed | n/a | 2030 | \u00a0 | 1,785 | 1,806 | \u00a0 | 1,785 | 1,806 |
| USD | 1,250 | Fixed | n/a | 2031 | \u00a0 | 1,561 | 1,603 | \u00a0 | 1,561 | 1,603 |
| GBP | 600 | Fixed | 2026 | 2031 | \u00a0 | 994 | 858 | \u00a0 | 994 | 858 |
| AUD | 1,175 | Float | 2026 | 2031 | \u00a0 | 1,175 | 1,175 | \u00a0 | 1,175 | 1,175 |
| AUD | 225 | Fixed | 2026 | 2031 | \u00a0 | 205 | 201 | \u00a0 | 205 | 201 |
| AUD | 275 | Fixed | 2027 | 2032 | \u00a0 | 262 | 260 | \u00a0 | 262 | 260 |
| JPY | 17,000 | Fixed | 2027 | 2032 | \u00a0 | 174 | 180 | \u00a0 | 174 | 180 |
| AUD | 1,000 | Fixed | 2027 | 2032 | \u00a0 | 1,000 | 1,000 | \u00a0 | 1,000 | 1,000 |
| AUD | 250 | Float | 2027 | 2032 | \u00a0 | 250 | 250 | \u00a0 | 250 | 250 |
| HKD | 382 | Fixed | 2027 | 2032 | \u00a0 | 71 | 71 | \u00a0 | 71 | 71 |
| AUD | 950 | Fixed | 2028 | 2033 | \u00a0 | 950 | - | \u00a0 | 950 | - |
| AUD | 300 | Float | 2028 | 2033 | \u00a0 | 300 | - | \u00a0 | 300 | - |
| HKD | 640 | Fixed | 2028 | 2033 | \u00a0 | 122 | - | \u00a0 | 122 | - |
| USD | 1,250 | Fixed | n/a | 2033 | \u00a0 | 1,796 | - | \u00a0 | 1,796 | - |
| USD | 1,500 | Fixed | 2029 | 2034 | \u00a0 | 2,004 | 2,037 | \u00a0 | 2,004 | 2,037 |
| AUD | 205 | Fixed | n/a | 2035 | \u00a0 | 205 | 205 | \u00a0 | 205 | 205 |
| USD | 1,250 | Fixed | 2032 | 2037 | \u00a0 | 1,549 | 1,602 | \u00a0 | 1,549 | 1,602 |
| AUD | 85 | Fixed | n/a | 2037 | \u00a0 | 85 | 85 | \u00a0 | 85 | 85 |
| AUD | 215 | Fixed | n/a | 2040 | \u00a0 | 122 | 129 | \u00a0 | 122 | 129 |
| AUD | 245 | Fixed | n/a | 2040 | \u00a0 | 140 | 148 | \u00a0 | 140 | 148 |
| AUD | 100 | Fixed | n/a | 2040 | \u00a0 | 57 | 60 | \u00a0 | 57 | 60 |
| USD | 1,250 | Fixed | n/a | 2041 | \u00a0 | 1,206 | 1,346 | \u00a0 | 1,206 | 1,346 |
| AUD | 195 | Fixed | n/a | 2041 | \u00a0 | 195 | 195 | \u00a0 | 195 | 195 |
| AUD | 203 | Fixed | n/a | 2042 | \u00a0 | 203 | 203 | \u00a0 | 203 | 203 |
| Total | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 19,741 | 18,192 | \u00a0 | 19,741 | 18,192 |
Convertible notes are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Debt issues | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Convertible notes | \u00a0 | 8,561 | 7,318 | \u00a0 | 8,561 | 7,318 |
| Total debt issues | \u00a0 | 8,561 | 7,318 | \u00a0 | 8,561 | 7,318 |
The table below highlights the key features of the Group\u2019s debt issuances.
| Convertible notes1 | Outstanding amount | Issued date | Interest payment frequency (in arrears) | Interest rate (per annum) | Maturity / Conversion | |
|---|---|---|---|---|---|---|
| Mandatory conversion | Issuer conversion option | |||||
| NAB Capital Notes 3 | $1.87bn | 20 March 2019 | Quarterly | 4.00% above 3 month BBSW | 19 June 2028 | 17 June 2026 |
| NAB Capital Notes 5 | $2.39bn | 17 December 2020 | Quarterly | 3.50% above 3 month BBSW | 17 December 2029 | 17 December 2027 |
| NAB Capital Notes 6 | $2.00bn | 7 July 2022 | Quarterly | 3.15% above 3 month BBSW | 17 September 2032 | 17 December 20292 |
| NAB Capital Notes 7 | $1.25bn | 14 September 2023 | Quarterly | 2.80% above 3 month BBSW | 17 June 2033 | 17 September 20303 |
| NAB Wholesale Capital Notes | $500m | 12 December 2019 | Semi-annually until the optional call date. Quarterly thereafter. | 4.95% until the optional call date. 3.75% above 3 month BBSW thereafter. | 12 December 2031 | 12 December 2029 |
| NAB Wholesale Capital Notes 2 | $600m | 17 July 2020 | Quarterly | 4.00% above 3 month BBSW | 17 July 2027 | 17 July 2025 |
Deposits and other borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Deposits and other borrowings | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Term deposits | \u00a0 | 191,924 | 156,049 | \u00a0 | 159,535 | 131,275 |
| On-demand and short-term deposits | \u00a0 | 299,969 | 310,347 | \u00a0 | 272,035 | 281,021 |
| Certificates of deposit | \u00a0 | 55,290 | 48,555 | \u00a0 | 55,290 | 48,555 |
| Deposits not bearing interest | \u00a0 | 95,491 | 100,289 | \u00a0 | 82,754 | 89,029 |
| Commercial paper and other borrowings | \u00a0 | 35,255 | 44,346 | \u00a0 | 34,835 | 43,150 |
| Repurchase agreements1 | \u00a0 | 4,191 | 23,940 | \u00a0 | 4,192 | 23,931 |
| Total deposits and other borrowings | \u00a0 | 682,120 | 683,526 | \u00a0 | 608,641 | 616,961 |
Deposits and other borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost.
Accounting policyBonds, notes and subordinated debt are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Premiums, discounts and associated issue expenses are recognised using the effective interest method through the income statement from the date of issue.
Accounting policyConvertible notes are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-658": { "value": "Accounting policyDeposits and other borrowings are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost.
Accounting policyBonds, notes and subordinated debt are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Premiums, discounts and associated issue expenses are recognised using the effective interest method through the income statement from the date of issue.
Accounting policyConvertible notes are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method.
Accounting policyIn certain circumstances, the Group applies the fair value measurement option to financial liabilities. This option is applied where an accounting mismatch is significantly reduced or eliminated by measuring the financial liability at fair value through profit or loss.
Where liabilities are designated at fair value through profit or loss, they are initially recognised at fair value, with transaction costs recognised in the income statement as incurred. Subsequently, they are measured at fair value and any gains or losses are recognised in the income statement, with the exception of changes in own credit risk which are recognised in other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-465": { "value": "Bonds, notes and subordinated debt are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. Premiums, discounts and associated issue expenses are recognised using the effective interest method through the income statement from the date of issue.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Bonds, notes and subordinated debt | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Medium-term notes | \u00a0 | 83,218 | 74,076 | \u00a0 | 76,801 | 69,042 |
| Securitisation notes | \u00a0 | 2,593 | 3,504 | \u00a0 | - | - |
| Covered bonds | \u00a0 | 30,093 | 23,511 | \u00a0 | 27,787 | 22,440 |
| Subordinated medium-term notes | \u00a0 | 19,741 | 18,192 | \u00a0 | 19,741 | 18,192 |
| Total bonds, notes and subordinated debt | \u00a0 | 135,645 | 119,283 | \u00a0 | 124,329 | 109,674 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Issued bonds, notes and subordinated debt by currency | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| AUD | \u00a0 | 40,873 | 37,972 | \u00a0 | 38,245 | 34,432 |
| USD | \u00a0 | 46,363 | 37,002 | \u00a0 | 40,838 | 32,727 |
| EUR | \u00a0 | 24,979 | 23,463 | \u00a0 | 22,487 | 22,289 |
| GBP | \u00a0 | 10,342 | 8,240 | \u00a0 | 10,389 | 8,298 |
| JPY | \u00a0 | 3,952 | 4,285 | \u00a0 | 3,952 | 4,285 |
| CHF | \u00a0 | 3,756 | 3,589 | \u00a0 | 3,011 | 2,908 |
| Other | \u00a0 | 5,380 | 4,732 | \u00a0 | 5,407 | 4,735 |
| Total bonds, notes and subordinated debt | \u00a0 | 135,645 | 119,283 | \u00a0 | 124,329 | 109,674 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|---|---|
| Currency | Notional amount Currency amount (m)1 | Rate | First optional call date2 | Maturity date3 | \u00a0 | 2023 $m | 2022 $m | \u00a0 | 2023 $m | 2022 $m |
| SGD | 450 | Fixed | n/a | Matured 2023 | \u00a0 | - | 479 | \u00a0 | - | 479 |
| AUD | 943 | Float | n/a | Matured 2023 | \u00a0 | - | 942 | \u00a0 | - | 942 |
| AUD | 20 | Fixed | n/a | Buy-back 2023 | \u00a0 | - | 23 | \u00a0 | - | 23 |
| AUD | 20 | Fixed | n/a | Buy-back 2023 | \u00a0 | - | 23 | \u00a0 | - | 23 |
| AUD | 1,000 | Float | 2024 | 2029 | \u00a0 | 1,000 | 1,000 | \u00a0 | 1,000 | 1,000 |
| CAD | 1,000 | Fixed | 2025 | 2030 | \u00a0 | 1,080 | 1,061 | \u00a0 | 1,080 | 1,061 |
| AUD | 1,250 | Float | 2025 | 2030 | \u00a0 | 1,250 | 1,250 | \u00a0 | 1,250 | 1,250 |
| USD | 1,500 | Fixed | n/a | 2030 | \u00a0 | 1,785 | 1,806 | \u00a0 | 1,785 | 1,806 |
| USD | 1,250 | Fixed | n/a | 2031 | \u00a0 | 1,561 | 1,603 | \u00a0 | 1,561 | 1,603 |
| GBP | 600 | Fixed | 2026 | 2031 | \u00a0 | 994 | 858 | \u00a0 | 994 | 858 |
| AUD | 1,175 | Float | 2026 | 2031 | \u00a0 | 1,175 | 1,175 | \u00a0 | 1,175 | 1,175 |
| AUD | 225 | Fixed | 2026 | 2031 | \u00a0 | 205 | 201 | \u00a0 | 205 | 201 |
| AUD | 275 | Fixed | 2027 | 2032 | \u00a0 | 262 | 260 | \u00a0 | 262 | 260 |
| JPY | 17,000 | Fixed | 2027 | 2032 | \u00a0 | 174 | 180 | \u00a0 | 174 | 180 |
| AUD | 1,000 | Fixed | 2027 | 2032 | \u00a0 | 1,000 | 1,000 | \u00a0 | 1,000 | 1,000 |
| AUD | 250 | Float | 2027 | 2032 | \u00a0 | 250 | 250 | \u00a0 | 250 | 250 |
| HKD | 382 | Fixed | 2027 | 2032 | \u00a0 | 71 | 71 | \u00a0 | 71 | 71 |
| AUD | 950 | Fixed | 2028 | 2033 | \u00a0 | 950 | - | \u00a0 | 950 | - |
| AUD | 300 | Float | 2028 | 2033 | \u00a0 | 300 | - | \u00a0 | 300 | - |
| HKD | 640 | Fixed | 2028 | 2033 | \u00a0 | 122 | - | \u00a0 | 122 | - |
| USD | 1,250 | Fixed | n/a | 2033 | \u00a0 | 1,796 | - | \u00a0 | 1,796 | - |
| USD | 1,500 | Fixed | 2029 | 2034 | \u00a0 | 2,004 | 2,037 | \u00a0 | 2,004 | 2,037 |
| AUD | 205 | Fixed | n/a | 2035 | \u00a0 | 205 | 205 | \u00a0 | 205 | 205 |
| USD | 1,250 | Fixed | 2032 | 2037 | \u00a0 | 1,549 | 1,602 | \u00a0 | 1,549 | 1,602 |
| AUD | 85 | Fixed | n/a | 2037 | \u00a0 | 85 | 85 | \u00a0 | 85 | 85 |
| AUD | 215 | Fixed | n/a | 2040 | \u00a0 | 122 | 129 | \u00a0 | 122 | 129 |
| AUD | 245 | Fixed | n/a | 2040 | \u00a0 | 140 | 148 | \u00a0 | 140 | 148 |
| AUD | 100 | Fixed | n/a | 2040 | \u00a0 | 57 | 60 | \u00a0 | 57 | 60 |
| USD | 1,250 | Fixed | n/a | 2041 | \u00a0 | 1,206 | 1,346 | \u00a0 | 1,206 | 1,346 |
| AUD | 195 | Fixed | n/a | 2041 | \u00a0 | 195 | 195 | \u00a0 | 195 | 195 |
| AUD | 203 | Fixed | n/a | 2042 | \u00a0 | 203 | 203 | \u00a0 | 203 | 203 |
| Total | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 19,741 | 18,192 | \u00a0 | 19,741 | 18,192 |
In certain circumstances, the Group applies the fair value measurement option to financial liabilities. This option is applied where an accounting mismatch is significantly reduced or eliminated by measuring the financial liability at fair value through profit or loss.
Where liabilities are designated at fair value through profit or loss, they are initially recognised at fair value, with transaction costs recognised in the income statement as incurred. Subsequently, they are measured at fair value and any gains or losses are recognised in the income statement, with the exception of changes in own credit risk which are recognised in other comprehensive income.
Accounting policyFair value is 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. Where the classification of a financial asset or liability results in it being measured at fair value, wherever possible, the fair value is determined with reference to the quoted bid or offer price in the most advantageous active market to which the Group has immediate access. An adjustment for credit risk (CVA) is also incorporated into the fair value as appropriate as well as an adjustment for funding costs (FVA) related to uncollateralised over-the-counter derivatives. The fair value measurement technique of each class of instrument is described below.
| Instrument | Fair value measurement technique |
| Loans and advances | The fair value of loans and advances that are priced based on a variable rate with no contractual repricing tenor is assumed to equate to the carrying value. The fair value of all other loans and advances is calculated using discounted cash flow models based on the maturity of the loans and advances. The discount rates applied are based on interest rates at the reporting date for similar types of loans and advances, if the loans and advances were performing at the reporting date. |
| Deposits and other borrowings | The fair value of deposits and other borrowings that are non-interest bearing or at call, is assumed to equate to the carrying value. The fair value of other deposits and other borrowings is calculated using discounted cash flow models based on the deposit type and maturity. |
| Bonds, notes and subordinated debt and debt issues | The fair values of bonds, notes and subordinated debt and debt issues are calculated based on a discounted cash flow model using a yield curve appropriate to the remaining maturity of the instruments and appropriate credit spreads, or in some instances are calculated based on market quoted prices when there is sufficient liquidity in the market. |
| Derivatives | The fair values of trading and hedging derivative assets and liabilities are obtained from quoted closing market prices at the reporting date, discounted cash flow models or option pricing models as appropriate. |
| Trading assets and debt instruments | The fair values of trading assets and debt instruments are based on quoted closing market prices at the reporting date. Where securities are unlisted and quoted market prices are not available, the Group obtains the fair value by means of discounted cash flows and other valuation techniques that are commonly used by market participants. These techniques address factors such as interest rates, credit risk and liquidity. |
| Equity instruments | The fair value of equity instruments at fair value through other comprehensive income is estimated on the basis of the actual and forecasted financial position and results of the underlying assets or net assets taking into consideration their risk profile. |
| Other financial assets and liabilities | The fair values of other financial assets and liabilities are based on quoted closing market prices and data or valuation techniques, appropriate to the nature and type of the underlying instrument. |
| Due to controlled entities and due from controlled entities | Includes reverse repurchase agreements and repurchase agreements that are classified as held for trading and measured at fair value through profit and loss. The fair values are based on a discounted cash flow model\u00a0using an appropriate yield curve. |
The carrying amounts of cash and liquid assets, due from and to other banks, other assets, other liabilities and amounts due from and to controlled entities, approximate their fair value as they are short-term in nature or are receivable or payable on demand.
Guarantees, letters of credit, performance related contingencies and credit related commitments are generally not sold or traded and estimated fair values are not readily ascertainable. The fair value of these items are not calculated, as very few of the commitments extending beyond six months would commit the Group to a predetermined rate of interest, and the fees attaching to these commitments are the same as those currently charged for similar arrangements.
Fair value for a net open position is the offer price for a financial liability and the bid price for a financial asset, multiplied by the number of units of the instrument issued or held.
Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period in which the transfer occurs.
A significant portion of financial instruments are carried on the balance sheet at fair value.
Where no active market exists for a particular asset or liability, the Group uses a valuation technique to arrive at the fair value, including the use of transaction prices obtained in recent arm\u2019s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques, based on market conditions and risks existing at the reporting date. In doing so, fair value is estimated using a valuation technique that makes maximum use of observable market inputs and places minimal reliance upon entity-specific inputs.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When such evidence exists, the Group recognises the difference between the transaction price and the fair value in profit or loss on initial recognition (i.e. on day one).
The level in the fair value hierarchy within which a fair value measurement is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. The fair value hierarchy is as follows:
Level 1 \u2013 Financial instruments that have been valued by reference to unadjusted quoted prices for identical financial assets or financial liabilities in active markets. Financial instruments included in this category are Commonwealth of Australia and New Zealand government bonds, and spot and exchange traded derivatives.
Level 2 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs other than quoted prices within Level 1 that are observable for the financial asset or financial liability, either directly (as prices) or indirectly (derived from prices). Financial instruments included in this category are over-the-counter trading and hedging derivatives, semi-government bonds, financial institution and corporate bonds, mortgage-backed securities, loans measured at fair value, and issued bonds, notes and subordinated debt measured at fair value.
Level 3 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs that are not based on observable market data. Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. Financial instruments included in this category are bespoke trading derivatives, trading derivatives where the credit valuation adjustment is considered unobservable and significant to the valuation, and certain asset-backed securities valued using unobservable inputs.
Transfers into and out of Level 3 take place when there are changes to the inputs in the valuation technique. Where inputs are no longer observable the fair value measurement is transferred into Level 3. Conversely, a measurement is transferred out of Level 3 when inputs become observable.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-471": { "value": "The Group applies a three-stage approach to measuring expected credit losses (ECL) for the following categories of financial assets that are not measured at fair value through profit or loss:
Debt instruments measured at amortised cost and fair value through other comprehensive income.
Loan commitments.
Financial guarantee contracts.
Exposures are assessed on a collective basis in each stage unless there is sufficient evidence that one or more events associated with an exposure could have a detrimental impact on estimated future cash flows. Where such evidence exists, the exposure is assessed on an individual basis.
| Stage | Measurement basis |
| Performing - 12-month ECL (Stage 1) | The portion of lifetime ECL associated with the probability of default events occurring within the next 12 months. |
| Performing - Lifetime ECL (Stage 2) | ECL associated with the probability of default events occurring throughout the life of an instrument. |
| Non-performing - Lifetime ECL(Stage 3) | Lifetime ECL, but interest revenue is measured based on the carrying amount of the instrument net of the associated ECL. |
At each reporting date, the Group assesses the default risk of exposures in comparison to the default risk at initial recognition, to determine the stage that applies to the associated ECL measurement. If no significant increase in default risk is observed, the exposure will remain in Stage 1. If the default risk of an exposure has increased significantly since initial recognition, the exposure will migrate to Stage 2. Should an exposure become non-performing it will migrate to Stage 3.
For this purpose, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes quantitative and qualitative information and also forward looking analysis.
ECL are derived from probability-weighted estimates of expected loss, and are measured as follows:
Financial assets that are performing at the reporting date: as the present value of all cash shortfalls over the expected life of the financial asset discounted by the effective interest rate. The cash shortfall is the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive.
Financial assets that are non-performing at the reporting date: as the difference between the gross carrying amount and the present value of estimated future cash flows discounted by the effective interest rate.
Undrawn loan commitments: as the present value of the difference between the contractual cash flows that are due to the Group if the commitment is drawn down and the cash flows that the Group expects to receive.
Financial guarantee contracts: as the expected payments to reimburse the holder less any amounts that the Group expects to recover.
The Group\u2019s internally developed credit rating system utilises historical default data drawn from a number of sources to assess the potential default risk of lending, or other financial services products, provided to counterparties or customers. The Group has defined counterparty probabilities of default across retail and non-retail loans and advances, including performing (pre-default) and non-performing (post-default) rating grades. In assessing for credit impairment of financial assets under the ECL model, the Group aligns credit impairment with the definition of default prescribed in its Credit Policy and Procedures.
When determining whether the default risk has increased significantly since initial recognition, the Group considers both quantitative and qualitative information, including expert credit risk assessment, forward looking information and analysis based on the Group\u2019s historical default experience.
For non-retail facilities, internally derived credit ratings, as described above, represent a key determinant of default risk. The Group assigns each customer a credit rating at initial recognition based on available information. Credit risk is deemed to have increased significantly if the credit rating has significantly deteriorated at the reporting date, relative to the credit rating at the date of initial recognition.
Retail facilities use the number of days past due (DPD) or the relative change in probability of default at an account level, to determine whether or not there has been a significant increase in credit risk.
In addition, the Group considers that significant increase in credit risk occurs when a facility is more than 30 DPD.
Default occurs when a loan obligation is contractually 90+ DPD, or when it is considered unlikely that the credit obligation to the Group will be paid in full without remedial action, such as realisation of security. Exposures which are in default align to the non-performing exposures definition in APS 220 Credit Risk Management.
ECL are calculated using three main parameters being probability of default (PD), loss given default (LGD) and exposure at default (EAD). These parameters are generally derived from internally developed statistical models combined with historical, current and forward looking information, including macro-economic data.
For accounting purposes, the 12-month and lifetime PD represent the expected point-in-time probability of a default over the next 12 months and remaining expected lifetime of the financial instrument, respectively, based on conditions existing at the balance sheet date and future economic conditions that affect credit risk.
The LGD represents expected loss conditional on default, taking into account the mitigating effect of collateral, its expected value when realised and the time value of money.
The EAD represents the expected exposure at default, taking into account the repayment of principal and interest from the balance sheet date to the default event together with any expected drawdown of a facility.
The 12-month ECL is equal to the discounted sum over the next 12-months of monthly PD multiplied by LGD and EAD. Lifetime ECL is calculated using the discounted sum of monthly PD over the expected remaining life multiplied by LGD and EAD.
The Group uses internal subject matter experts from Risk, Economics and customer divisions to consider a range of relevant forward looking data, including macro-economic forecasts and assumptions, for the determination of general economic adjustments and any idiosyncratic or targeted portfolio / industry adjustments, to support the calculation of ECL.
Forward looking provisions for both general macro-economic adjustments (EA) and more targeted portfolio / industry forward looking adjustments (FLAs), reflect reasonable and supportable forecasts of potential future conditions that are not captured within the base ECL calculations.
Macro-economic factors taken into consideration include (but are not limited to) the cash rate, unemployment rates, GDP growth rates, inflation and residential and commercial property prices, and require an evaluation of both the current and forecast direction of the macro-economic cycle.
Incorporating forward looking information, including macro-economic forecasts, increases the degree of judgement required to assess how changes in these data points will affect ECL. The methodologies and assumptions, including any forecasts of future economic conditions, are reviewed regularly.
Judgement is applied in determining ECL using objective, reasonable and supportable information about current and forecast economic conditions. Macro-economic variables used in these scenarios include (but are not limited to) the cash rate, unemployment rates, GDP growth rates, inflation and residential and commercial property prices. When determining whether the risk of default has increased significantly since initial recognition, both quantitative and qualitative information is considered, including expert credit assessment, forward looking information and analysis based on the Group\u2019s historical loss experience.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Credit impairment charge on loans at amortised cost | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| New and increased provisions (net of collective provision releases) | \u00a0 | 1,043 | 355 | \u00a0 | 820 | 257 |
| Write-backs of specific provisions | \u00a0 | (148) | (161) | \u00a0 | (93) | (147) |
| Recoveries of specific provisions | \u00a0 | (79) | (70) | \u00a0 | (73) | (62) |
| Total charge to the income statement | \u00a0 | 816 | 124 | \u00a0 | 654 | 48 |
| \u00a0 | \u00a0 | Stage 1 | \u00a0 | Stage 2 | \u00a0 | Stage 3 | \u00a0 | \u00a0 | |
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Performing 12-mth ECL | \u00a0 | Performing Lifetime ECL | \u00a0 | Non-performing Lifetime ECL | \u00a0 | \u00a0 | |
| \u00a0 | \u00a0 | Collective provision | \u00a0 | Collective provision | \u00a0 | Collective provision | Specific provision | \u00a0 | Total |
| Group | \u00a0 | $m | \u00a0 | $m | \u00a0 | $m | $m | \u00a0 | $m |
| Balance at 1 October 2021 | \u00a0 | 256 | \u00a0 | 3,376 | \u00a0 | 889 | 650 | \u00a0 | 5,171 |
| Changes due to financial assets recognised in the opening balance that have: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Transferred to performing - 12-mth ECL - collective provision | \u00a0 | 238 | \u00a0 | (221) | \u00a0 | (17) | - | \u00a0 | - |
| Transferred to performing - Lifetime ECL - collective provision | \u00a0 | (39) | \u00a0 | 155 | \u00a0 | (116) | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - collective provision | \u00a0 | (1) | \u00a0 | (47) | \u00a0 | 48 | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - specific provision | \u00a0 | - | \u00a0 | (25) | \u00a0 | (45) | 70 | \u00a0 | - |
| New and increased provisions (net of collective provision releases) | \u00a0 | (42) | \u00a0 | 22 | \u00a0 | 47 | 328 | \u00a0 | 355 |
| Write-backs of specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (161) | \u00a0 | (161) |
| Write-offs from specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (362) | \u00a0 | (362) |
| Foreign currency translation and other adjustments1 | \u00a0 | 36 | \u00a0 | 16 | \u00a0 | 11 | (10) | \u00a0 | 53 |
| Balance as at 30 September 2022 | \u00a0 | 448 | \u00a0 | 3,276 | \u00a0 | 817 | 515 | \u00a0 | 5,056 |
| Changes due to financial assets recognised in the opening balance that have: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Transferred to performing - 12-mth ECL - collective provision | \u00a0 | 247 | \u00a0 | (234) | \u00a0 | (13) | - | \u00a0 | - |
| Transferred to performing - Lifetime ECL - collective provision | \u00a0 | (26) | \u00a0 | 104 | \u00a0 | (78) | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - collective provision | \u00a0 | (1) | \u00a0 | (49) | \u00a0 | 50 | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - specific provision | \u00a0 | - | \u00a0 | (14) | \u00a0 | (46) | 60 | \u00a0 | - |
| New and increased provisions (net of collective provision releases) | \u00a0 | (143) | \u00a0 | 428 | \u00a0 | 242 | 516 | \u00a0 | 1,043 |
| Write-backs of specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (148) | \u00a0 | (148) |
| Write-offs from specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (409) | \u00a0 | (409) |
| Foreign currency translation and other adjustments | \u00a0 | 4 | \u00a0 | 29 | \u00a0 | 5 | 5 | \u00a0 | 43 |
| Balance as at 30 September 2023 | \u00a0 | 529 | \u00a0 | 3,540 | \u00a0 | 977 | 539 | \u00a0 | 5,585 |
Provision for credit impairment reflects ECL measured using the three-stage approach. The following explains how significant changes in the gross carrying amount of loans and advances during the 2023 financial year have contributed to the changes in the provision for credit impairment for the Group under the ECL model.
Overall, the total provision for credit impairment increased by $529 million compared to the balance as at 30 September 2022.
Specific provisions increased by $24 million compared to the balance as at 30 September 2022, mainly due to new and increased specific provisions in the Business and Private Banking business lending portfolio, partially offset by work-outs for a small number of larger exposures in the business lending portfolio in Australia and New Zealand.
Collective provisions increased by $505 million compared to the balance as at 30 September 2022, comprised of:
Collective provision performing \u2013 12-months ECL (Stage 1) increased by $81 million as a result of:
$149 billion of loans and advances that were newly originated or migrated into Stage 1 from Stage 2 or Stage 3 due to credit quality improvement.
This was partially offset by:
$120 billion of loans and advances that were repaid, experienced movement in underlying account balances during the period or migrated from Stage 1 to Stage 2 or Stage 3 due to deterioration in credit quality.
A decrease in net forward looking provisions.
Collective provision performing \u2013 Lifetime ECL (Stage 2) increased by $264 million as a result of:
$72 billion of loans and advances that were originated and migrated over the year to Stage 2, including the impact of forward looking economic information applied in the ECL model or migrating into Stage 2 as a result of loans and advances transferred from Stage 1 or Stage 3.
This was partially offset by:
$86 billion of loans and advances that migrated to Stage 1 as a result of improved credit quality or into Stage 3 due to deterioration in credit quality, were repaid or experienced movement in underlying account balances during the period.
A decrease in net forward looking provisions.
Collective provision non-performing - Lifetime ECL (Stage 3) increased by $160 million as a result of:
$5 billion of loans and advances that experienced movement in underlying account balances during the period or were transferred into Stage 3 from Stage 1 and Stage 2 due to credit quality deterioration.
This was partially offset by:
$4 billion of loans and advances that were repaid or migrated to Stage 1 or Stage 2 due to credit quality improvement or migrated to individually credit assessed with specific provisions raised.
A decrease in net forward looking provisions.
The Group\u2019s ECL measurement is derived from a probability weighted average of three distinct scenarios (base case, upside and downside) applied across each of the Group\u2019s major loan portfolios, in addition to FLAs for emerging risk at an industry, geography or segment level. The probability of each scenario is determined by considering relevant macro-economic outlooks and their likely impact on the Group\u2019s credit portfolio.
The following table shows the key macro-economic variables for the Australian economy used in the base case and downside scenarios as at 30 September 2023.
| \u00a0 | \u00a0 | Base case | \u00a0 | Downside | ||||
|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Financial year | \u00a0 | Financial year | ||||
| \u00a0 | \u00a0 | 2024 | 2025 | 2026 | \u00a0 | 2024 | 2025 | 2026 |
| \u00a0 | \u00a0 | % | % | % | \u00a0 | % | % | % |
| GDP change (year ended September) | \u00a0 | 0.8 | 2.0 | 2.6 | \u00a0 | (1.2) | (2.6) | 2.8 |
| Unemployment (as at 30 September) | \u00a0 | 4.7 | 4.7 | 4.5 | \u00a0 | 4.7 | 7.9 | 9.1 |
| House price change (year ended September) | \u00a0 | 4.1 | 3.3 | 3.0 | \u00a0 | (24.5) | (20.3) | 5.5 |
The following table shows the reported total provisions for ECL based on the probability weighting of scenarios, with the sensitivity range reflecting the ECL impacts assuming a 100% weighting is applied to the base case scenario or the downside scenario (with all other assumptions held constant).
| \u00a0 | \u00a0 | Group | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m |
| Total provisions for ECL | \u00a0 | \u00a0 | \u00a0 |
| Probability weighted | \u00a0 | 5,585 | 5,056 |
| 100% Base case | \u00a0 | 4,000 | 4,292 |
| 100% Downside | \u00a0 | 7,546 | 6,008 |
Applying the average provision coverage ratios by stage, if 1% of the Group's Stage 1 gross loans and advances, contingent liabilities and credit commitments were included as Stage 2 the provision for ECL as at September 2023 would increase by $111 million (September 2022: $90 million).
Applying the average provision coverage ratios by stage, if 1% of the Group's Stage 2 gross loans and advances, contingent liabilities and credit commitments were included as Stage 1 the provision for ECL as at September 2023 would decrease by $34 million (September 2022: $31 million).
The table below shows weightings applied to the Australian portfolio to derive the probability weighted ECL.
| \u00a0 | \u00a0 | 2023 | 2022 |
|---|---|---|---|
| \u00a0 | \u00a0 | % | % |
| Macro-economics scenario weightings | \u00a0 | \u00a0 | \u00a0 |
| Upside | \u00a0 | 2.5 | 2.5 |
| Base case | \u00a0 | 52.5 | 52.5 |
| Downside | \u00a0 | 45.0 | 45.0 |
The September 2023 provisions for ECL in the 100% base case have decreased since September 2022 primarily due to an improved economic outlook. This was partially offset by deterioration in asset quality across the Group\u2019s lending portfolio combined with volume growth and updated methodology in Business and Private Banking.
The September 2023 provisions for ECL in the 100% downside scenario have increased since September 2022 primarily due to an increase in the severity of the stress applied in the downside scenario and deterioration in asset quality across the Group\u2019s lending portfolio combined with volume growth and updated methodology in Business and Private Banking.
The upside, downside and base case scenario weightings for the Australian portfolio have remained constant compared with September 2022.
The table below provides a breakdown of the probability weighted ECL by key portfolios:
| \u00a0 | \u00a0 | Group | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m |
| Total provision for ECL for key portfolios | \u00a0 | \u00a0 | \u00a0 |
| Housing | \u00a0 | 1,424 | 1,296 |
| Business | \u00a0 | 3,744 | 3,429 |
| Others | \u00a0 | 417 | 331 |
| Total | \u00a0 | 5,585 | 5,056 |
| \u00a0 | \u00a0 | Stage 1 | \u00a0 | Stage 2 | \u00a0 | Stage 3 | \u00a0 | \u00a0 | |
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Performing 12-mth ECL | \u00a0 | Performing Lifetime ECL | \u00a0 | Non-performing Lifetime ECL | \u00a0 | \u00a0 | |
| \u00a0 | \u00a0 | Collective provision | \u00a0 | Collective provision | \u00a0 | Collective provision | Specific provision | \u00a0 | Total |
| Company | \u00a0 | $m | \u00a0 | $m | \u00a0 | $m | $m | \u00a0 | $m |
| Balance at 1 October 2021 | \u00a0 | 203 | \u00a0 | 2,872 | \u00a0 | 806 | 526 | \u00a0 | 4,407 |
| Changes due to financial assets recognised in the opening balance that have: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Transferred to performing - 12-mth ECL - collective provision | \u00a0 | 210 | \u00a0 | (196) | \u00a0 | (14) | - | \u00a0 | - |
| Transferred to performing - Lifetime ECL - collective provision | \u00a0 | (31) | \u00a0 | 143 | \u00a0 | (112) | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - collective provision | \u00a0 | (1) | \u00a0 | (38) | \u00a0 | 39 | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - specific provision | \u00a0 | - | \u00a0 | (23) | \u00a0 | (39) | 62 | \u00a0 | - |
| New and increased provisions (net of collective provision releases) | \u00a0 | (39) | \u00a0 | (54) | \u00a0 | 51 | 299 | \u00a0 | 257 |
| Write-backs of specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (147) | \u00a0 | (147) |
| Write-offs from specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (294) | \u00a0 | (294) |
| Foreign currency translation and other adjustments1 | \u00a0 | 43 | \u00a0 | 54 | \u00a0 | 16 | (4) | \u00a0 | 109 |
| Balance as at 30 September 2022 | \u00a0 | 385 | \u00a0 | 2,758 | \u00a0 | 747 | 442 | \u00a0 | 4,332 |
| Changes due to financial assets recognised in the opening balance that have: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Transferred to performing - 12-mth ECL - collective provision | \u00a0 | 223 | \u00a0 | (212) | \u00a0 | (11) | - | \u00a0 | - |
| Transferred to performing - Lifetime ECL - collective provision | \u00a0 | (18) | \u00a0 | 88 | \u00a0 | (70) | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - collective provision | \u00a0 | (1) | \u00a0 | (42) | \u00a0 | 43 | - | \u00a0 | - |
| Transferred to non-performing - Lifetime ECL - specific provision | \u00a0 | - | \u00a0 | (11) | \u00a0 | (32) | 43 | \u00a0 | - |
| New and increased provisions (net of collective provision releases) | \u00a0 | (135) | \u00a0 | 360 | \u00a0 | 160 | 435 | \u00a0 | 820 |
| Write-backs of specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (93) | \u00a0 | (93) |
| Write-offs from specific provisions | \u00a0 | - | \u00a0 | - | \u00a0 | - | (367) | \u00a0 | (367) |
| Foreign currency translation and other adjustments | \u00a0 | - | \u00a0 | - | \u00a0 | - | 1 | \u00a0 | 1 |
| Balance as at 30 September 2023 | \u00a0 | 454 | \u00a0 | 2,941 | \u00a0 | 837 | 461 | \u00a0 | 4,693 |
Provision for credit impairment reflects ECL measured using the three-stage approach. The following explains how significant changes in the gross carrying amount of loans and advances during the 2023 financial year have contributed to the changes in the provision for credit impairment for the Company under the ECL model.
Overall, the total provision for credit impairment increased by $361 million compared to the balance as at 30 September 2022.
Specific provisions increased by $19 million compared to the balance as at 30 September 2022, mainly due to new and increased specific provisions in the Business and Private Banking business lending portfolio, partially offset by work-outs for a small number of larger exposures in the Australian business lending portfolio.
Collective provisions increased by $342 million compared to the balance as at 30 September 2022, comprised of:
Collective provision performing \u2013 12-months ECL (Stage 1) increased by $69 million due to:
$131 billion of loans and advances that were newly originated or migrated into Stage 1 from Stage 2 or Stage 3 due to credit quality improvement.
This was partially offset by:
$105 billion of loans and advances that were repaid, experienced movement in underlying account balances during the period or migrated from Stage 1 to Stage 2 or Stage 3 due to deterioration in credit quality.
A decrease in net forward looking provisions.
Collective provision performing \u2013 Lifetime ECL (Stage 2) increased by $183 million due to:
$60 billion of loans and advances that were originated and migrated over the year to Stage 2, including the impact of forward looking economic information applied in the ECL model or migrating into Stage 2 as a result of loans and advances transferred from Stage 1 or Stage 3.
This was partially offset by:
$72 billion of loans and advances that were repaid, experienced movement in underlying account balances during the period, migrated to Stage 1 as a result of improved credit quality or into Stage 3 due to deterioration in credit quality.
A decrease in net forward looking provisions.
Collective provision non-performing - Lifetime ECL (Stage 3) increased by $90 million due to:
$4 billion of existing loans and advances that were transferred into Stage 3 from Stage 1 and Stage 2 due to credit quality deterioration or experienced movement in underlying account balances during the period.
This was partially offset by:
$3 billion of loan and advances that were repaid, migrated to Stage 1 or Stage 2 due to credit quality improvement or migrated to individually credit assessed with specific provisions raised.
A decrease in net forward looking provisions.
The contractual amount outstanding on loans and advances that were written off during the 2023 financial year, which are still subject to enforcement activity was $9 million (2022: $68 million) for the Group and $8 million (2022: $45 million) for the Company.
Stage 3 non-performing exposures include both default but not impaired and gross impaired assets. The following table provides details on gross impaired assets. Gross amounts are shown before taking into account any collateral held or other credit enhancements. Refer to Note 19 Financial risk management for analysis of the credit quality of the Group\u2019s loans and advances, including by provision stage.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Summary of gross impaired assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Gross impaired assets1 | \u00a0 | 1,260 | 1,029 | \u00a0 | 853 | 878 |
| Specific provision for credit impairment2 | \u00a0 | (539) | (531) | \u00a0 | (461) | (442) |
| Net impaired assets3 | \u00a0 | 721 | 498 | \u00a0 | 392 | 436 |
Trading derivatives
Trading derivatives are not in a qualifying hedging relationship and are measured at fair value through profit or loss.
Hedge accounting
The Group utilises the following types of hedge relationships in managing its exposure to risk. At inception of all hedge relationships the Group documents the relationship between the hedging instrument and hedged item, the risk being hedged, the Group\u2019s risk management objective and strategy and how effectiveness will be measured throughout the hedge relationship.
| \u00a0 | Cash flow hedge | Fair value hedge |
| Objective | To hedge changes to cash flows arising from interest rate and foreign currency risk. | To hedge fair value changes to recognised assets and liabilities arising from interest rate and foreign currency risk. |
| Methods for testing hedge effectiveness | Critical terms matching, regression analysis or cumulative dollar offset. | Critical terms matching or cumulative dollar offset. |
| Potential sources of ineffectiveness | Primarily mismatches in terms of the hedged item and the hedging instrument.Discounting basis between the hedged item and hedging instrument. | Primarily mismatches in terms of the hedged item and the hedging instrument, prepayment risk and reset risk.Discounting basis between the hedged item and hedging instrument. |
| Recognition of effective hedge portion | Fair value changes of the hedging instrument associated with the hedged risk are recognised in the cash flow hedge reserve in equity. | Fair value changes of the hedging instrument and those arising from the hedged risk on the hedged item are recognised in the income statement. |
| Recognition of ineffective hedge portion | Recognised in the income statement as ineffectiveness arises. | |
| Hedging instrument expires, is sold, or when hedging criteria are no longer met | Transferred to the income statement as / when the hedged item affects the income statement. If the hedged item is no longer expected to occur the effective portion accumulated in equity is transferred to the income statement immediately. | Cumulative hedge adjustment to the hedged item is amortised to the income statement on an effective yield basis. |
| Cost of hedging reserve | For qualifying hedging instruments, the Group excludes foreign currency basis spreads from hedge designations. Any change in the fair value of these hedging instruments for changes in cross currency basis spreads is deferred to the cost of hedging reserve and released to profit or loss either when the hedged exposure affects profit or loss or on a systematic basis over the life of the hedge. The cumulative movements are expected to be nil by maturity of the hedging instruments. |
The tables below set out total derivative assets and liabilities disclosed as trading and hedging derivatives.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Assets | \u00a0 | Liabilities | \u00a0 | Assets | \u00a0 | Liabilities | ||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Trading derivatives | \u00a0 | 30,770 | 53,429 | \u00a0 | 31,122 | 50,729 | \u00a0 | 31,079 | 54,932 | \u00a0 | 33,587 | 53,397 |
| Hedging derivatives | \u00a0 | 3,499 | 7,587 | \u00a0 | 4,511 | 6,757 | \u00a0 | 2,705 | 5,719 | \u00a0 | 2,523 | 4,097 |
| Total derivatives | \u00a0 | 34,269 | 61,016 | \u00a0 | 35,633 | 57,486 | \u00a0 | 33,784 | 60,651 | \u00a0 | 36,110 | 57,494 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Assets | \u00a0 | Liabilities | \u00a0 | Assets | \u00a0 | Liabilities | ||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Foreign exchange rate-related contracts | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Spot and forward contracts | \u00a0 | 11,514 | 26,167 | \u00a0 | 10,284 | 21,887 | \u00a0 | 11,209 | 24,668 | \u00a0 | 10,022 | 20,612 |
| Cross currency swaps | \u00a0 | 8,656 | 15,825 | \u00a0 | 7,969 | 14,418 | \u00a0 | 10,545 | 19,941 | \u00a0 | 11,446 | 19,076 |
| Options / swaptions | \u00a0 | 138 | 427 | \u00a0 | 133 | 400 | \u00a0 | 136 | 431 | \u00a0 | 133 | 400 |
| Total foreign exchange rate-related contracts | \u00a0 | 20,308 | 42,419 | \u00a0 | 18,386 | 36,705 | \u00a0 | 21,890 | 45,040 | \u00a0 | 21,601 | 40,088 |
| Interest rate-related contracts | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Swaps | \u00a0 | 8,710 | 8,444 | \u00a0 | 10,671 | 10,903 | \u00a0 | 7,429 | 7,320 | \u00a0 | 9,919 | 10,184 |
| Options / swaptions | \u00a0 | 1,148 | 1,045 | \u00a0 | 1,393 | 1,356 | \u00a0 | 1,148 | 1,045 | \u00a0 | 1,389 | 1,352 |
| Total interest rate-related contracts | \u00a0 | 9,858 | 9,489 | \u00a0 | 12,064 | 12,259 | \u00a0 | 8,577 | 8,365 | \u00a0 | 11,308 | 11,536 |
| Credit derivatives | \u00a0 | 146 | 234 | \u00a0 | 134 | 157 | \u00a0 | 146 | 234 | \u00a0 | 134 | 157 |
| Commodity derivatives | \u00a0 | 453 | 1,268 | \u00a0 | 533 | 1,592 | \u00a0 | 461 | 1,274 | \u00a0 | 541 | 1,600 |
| Other derivatives | \u00a0 | 5 | 19 | \u00a0 | 5 | 16 | \u00a0 | 5 | 19 | \u00a0 | 3 | 16 |
| Total trading derivatives | \u00a0 | 30,770 | 53,429 | \u00a0 | 31,122 | 50,729 | \u00a0 | 31,079 | 54,932 | \u00a0 | 33,587 | 53,397 |
The Group\u2019s hedging strategy is to manage its exposure to interest rate risk on a net variable basis in Australian or New Zealand dollars. For Australian and New Zealand denominated exposures the Group will enter into interest rate swaps where the exposure is to a fixed interest rate. In some instances, cash flow hedges of interest rate risk are also used to arrive at a net variable rate position. Foreign currency exposures are swapped to Australian or New Zealand dollars using cross-currency swaps and interest rate swaps. The material risks and the risk management strategy are explained further below.
The Group manages interest rate risk exposure on deposits and loans via interest rate derivatives. The Group accounts for these hedge relationships as a macro cash flow hedge. The gross exposures are allocated to time buckets based on expected repricing dates, with interest rate derivatives allocated to hedge accordingly. The benchmark interest rate is hedged which represents the largest component of changes in fair value and is observable in relevant financial markets.
The Group is exposed to foreign currency risk on credit margin cash flows and foreign currency risk on the principal cash flows, both of which arise from foreign currency debt issuances.
The Group uses foreign currency derivatives to manage changes between the foreign currency and Australian and New Zealand dollars for the above mentioned cash flows.
Interest rate risk arises on fixed rate bonds, notes and subordinated debt issuances, fixed rate debt instruments held for liquidity purposes and fixed rate loans and advances. The Group hedges its interest rate risk on these instruments with relevant interest rate derivatives to reduce its exposure to changes in fair value due to interest rate fluctuations.
Hedging relationships are predominantly one-to-one, with the exception of fixed rate housing loans which were previously designated on a macro basis until de-designation in the 2022 financial year.
With all the fair value hedges, the benchmark interest rate is hedged which represents the largest component of changes in fair value and is observable in relevant financial markets.
Hedging derivative assets and liabilities are disclosed by the hedged risk and type of hedge relationship in which they are designated. The Group may designate separate derivatives to hedge different risk components of one hedged item. In such scenario the notional amount of hedging derivatives will, in sum, exceed the notional amount of the hedged item. In the case of cross-currency swaps, the Group can designate a single instrument to hedge both interest rate risk in a fair value hedge and currency risk in a cash flow hedge.
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | ||||
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Carrying amount | Notional | Carrying amount | Notional | \u00a0 | Carrying amount | Notional | Carrying amount | Notional |
| \u00a0 | \u00a0 | Hedging instrument | \u00a0 | Risk | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Derivative assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash flow hedges | \u00a0 | Interest rate swaps | \u00a0 | Interest | \u00a0 | - | 177,400 | - | 160,449 | \u00a0 | - | 159,050 | - | 144,670 |
| Cash flow hedges | \u00a0 | Cross-currency swaps | \u00a0 | Currency | \u00a0 | 3,370 | 90,389 | 7,340 | 119,820 | \u00a0 | 2,576 | 70,629 | 5,493 | 93,038 |
| Cash flow hedges | \u00a0 | Foreign exchange contracts | \u00a0 | Currency | \u00a0 | 98 | 7,908 | 212 | 6,257 | \u00a0 | 98 | 7,908 | 212 | 6,257 |
| Fair value hedges | \u00a0 | Interest rate swaps | \u00a0 | Interest | \u00a0 | 28 | 67,540 | 19 | 75,768 | \u00a0 | 28 | 65,635 | 11 | 73,012 |
| Fair value and cash flow hedges | \u00a0 | Cross-currency swaps | \u00a0 | Interest and currency | \u00a0 | 1 | 21 | 16 | 475 | \u00a0 | 1 | 21 | 3 | 167 |
| Cash flow hedges | \u00a0 | Futures1 | \u00a0 | Interest | \u00a0 | 2 | 1,866 | - | 59 | \u00a0 | 2 | 1,866 | - | 59 |
| Total derivative assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,499 | 345,124 | 7,587 | 362,828 | \u00a0 | 2,705 | 305,109 | 5,719 | 317,203 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash flow hedges | \u00a0 | Interest rate swaps | \u00a0 | Interest | \u00a0 | 3 | 165,627 | 5 | 206,451 | \u00a0 | 3 | 152,929 | 5 | 201,808 |
| Cash flow hedges | \u00a0 | Cross-currency swaps | \u00a0 | Currency | \u00a0 | 2,580 | 94,734 | 4,152 | 64,945 | \u00a0 | 1,844 | 56,839 | 3,513 | 49,626 |
| Cash flow hedges | \u00a0 | Foreign exchange contracts | \u00a0 | Currency | \u00a0 | 151 | 15,864 | 1 | 506 | \u00a0 | 151 | 15,864 | 1 | 506 |
| Fair value hedges | \u00a0 | Interest rate swaps | \u00a0 | Interest | \u00a0 | 425 | 108,249 | 383 | 108,169 | \u00a0 | 290 | 81,548 | 279 | 90,448 |
| Fair value and cash flow hedges | \u00a0 | Cross-currency swaps | \u00a0 | Interest and currency | \u00a0 | 1,352 | 6,773 | 2,209 | 8,589 | \u00a0 | 235 | 1,934 | 292 | 2,612 |
| Cash flow hedges2 | \u00a0 | Futures1 | \u00a0 | Interest | \u00a0 | - | 465 | 7 | 1,128 | \u00a0 | - | 465 | 7 | 1,128 |
| Total derivative liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 4,511 | 391,712 | 6,757 | 389,788 | \u00a0 | 2,523 | 309,579 | 4,097 | 346,128 |
The following table shows the maturity profile of hedging instruments based on their notional amounts.
| \u00a0 | \u00a0 | 2023 | \u00a0 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 0 to 12 months | 1 to 5 years | Over 5 years | Total | \u00a0 | 0 to 12 months | 1 to 5 years | Over 5 years | Total |
| \u00a0 | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest rate swaps | \u00a0 | 235,775 | 229,751 | 53,290 | 518,816 | \u00a0 | 247,746 | 245,893 | 57,198 | 550,837 |
| Foreign exchange contracts | \u00a0 | 23,714 | 58 | - | 23,772 | \u00a0 | 6,622 | 141 | - | 6,763 |
| Futures12 | \u00a0 | 1,681 | 650 | - | 2,331 | \u00a0 | 892 | 295 | - | 1,187 |
| Cross-currency swaps - interest and currency | \u00a0 | 744 | 5,746 | 304 | 6,794 | \u00a0 | 3,178 | 5,144 | 742 | 9,064 |
| Cross-currency swaps - currency | \u00a0 | 28,518 | 120,530 | 36,075 | 185,123 | \u00a0 | 37,059 | 104,868 | 42,838 | 184,765 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest rate swaps | \u00a0 | 220,232 | 191,754 | 47,176 | 459,162 | \u00a0 | 241,175 | 216,746 | 52,017 | 509,938 |
| Foreign exchange contracts | \u00a0 | 23,714 | 58 | - | 23,772 | \u00a0 | 6,622 | 141 | - | 6,763 |
| Futures1 | \u00a0 | 1,681 | 650 | - | 2,331 | \u00a0 | 892 | 295 | - | 1,187 |
| Cross-currency swaps - interest and currency | \u00a0 | 404 | 1,247 | 304 | 1,955 | \u00a0 | 1,358 | 982 | 439 | 2,779 |
| Cross-currency swaps - currency | \u00a0 | 26,676 | 75,784 | 25,008 | 127,468 | \u00a0 | 33,441 | 75,627 | 33,596 | 142,664 |
The average rate for major currencies of the final exchange of cross-currency swaps designated in hedge accounting relationships is as follows:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| USD:AUD | \u00a0 | 1.416 | 1.362 | \u00a0 | 1.412 | 1.361 |
| EUR:AUD | \u00a0 | 1.514 | 1.497 | \u00a0 | 1.546 | 1.551 |
| GBP:AUD | \u00a0 | 1.867 | 1.868 | \u00a0 | 1.861 | 1.863 |
| USD:NZD | \u00a0 | 1.488 | 1.458 | \u00a0 | n/a | n/a |
| CHF:NZD | \u00a0 | 1.554 | 1.554 | \u00a0 | n/a | n/a |
| EUR:NZD | \u00a0 | 1.715 | 1.683 | \u00a0 | n/a | n/a |
The average executed rate for interest rate swaps in hedge accounting relationships for major currencies is as follows:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | ||||
| \u00a0 | \u00a0 | Fair value hedges | Cash flow hedges | Fair value hedges | Cash flow hedges | \u00a0 | Fair value hedges | Cash flow hedges | Fair value hedges | Cash flow hedges |
| \u00a0 | \u00a0 | % | % | % | % | \u00a0 | % | % | % | % |
| NZD interest rates | \u00a0 | 1.95 to 3.05 | 0.04 to 7.30 | 1.95 to 4.50 | (0.01) to 4.87 | \u00a0 | 1.95 to 3.05 | - | 1.95 to 3.05 | - |
| USD interest rates | \u00a0 | 0.61 to 4.85 | - | 0.61 to 2.96 | - | \u00a0 | 0.61 to 2.73 | - | 0.61 to 2.73 | - |
| AUD interest rates | \u00a0 | 0.40 to 4.37 | 0.06 to 7.02 | 0.40 to 7.13 | 0.06 to 7.29 | \u00a0 | 0.40 to 3.99 | 0.06 to 7.02 | 0.40 to 7.13 | 0.06 to 7.29 |
| EUR interest rates | \u00a0 | (0.22) to 3.71 | - | (0.22) to 2.61 | - | \u00a0 | (0.22) to 2.61 | - | (0.22) to 2.61 | - |
The balance of the cash flow hedge reserve, which represents the effective portion of the movements in the hedging instrument, is presented in Note 29 Reserves. The movements in hedging instruments recognised in other comprehensive income are reported in the Group\u2019s Statement of other comprehensive income. As at 30 September, the amounts recognised in the cash flow hedge reserve for which hedge accounting is no longer applied is a loss of $11 million (2022: loss of $14 million).
The following table shows the carrying amount of fair value hedged items in hedge relationships, and the accumulated amount of fair value hedge adjustments in these carrying amounts. The Group does not hedge its entire exposure to a class of financial instruments, therefore the carrying amounts below do not equal the total carrying amounts disclosed in other notes.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | ||||
| \u00a0 | \u00a0 | Carrying amount | Fair value hedge adjustments | Carrying amount | Fair value hedge adjustments | \u00a0 | Carrying amount | Fair value hedge adjustments | Carrying amount | Fair value hedge adjustments |
| \u00a0 | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Debt instruments1 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Semi-government bonds, notes and securities | \u00a0 | 22,872 | - | 19,075 | - | \u00a0 | 22,872 | - | 19,075 | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Housing loans2 | \u00a0 | (13) | (13) | (26) | (26) | \u00a0 | - | - | - | - |
| Other term lending | \u00a0 | 763 | (54) | 984 | (55) | \u00a0 | 763 | (54) | 984 | (55) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Bonds, notes and subordinated debt | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Medium-term notes | \u00a0 | 46,451 | (2,876) | 41,765 | (2,698) | \u00a0 | 40,033 | (2,348) | 36,730 | (2,204) |
| Covered bonds3 | \u00a0 | 22,969 | (1,463) | 18,126 | (1,219) | \u00a0 | - | - | - | - |
| Subordinated medium-term notes | \u00a0 | 13,128 | (2,906) | 11,887 | (2,464) | \u00a0 | 13,128 | (2,906) | 11,887 | (2,464) |
Fair value and cash flow hedge relationships result in the following changes in value used as the basis for recognising hedge ineffectiveness for the years ended 30 September:
| \u00a0 | \u00a0 | Change in fair value on hedging instruments | \u00a0 | Change in fair value on hedged items | \u00a0 | Hedge ineffectiveness recognised in income statement | |||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |
| Fair value hedges (interest rate risk) | \u00a0 | (1,660) | (4,259) | \u00a0 | 1,610 | 4,286 | \u00a0 | (50) | 27 |
| Cash flow hedges (interest rate risk) | \u00a0 | 151 | (2,748) | \u00a0 | (149) | 2,749 | \u00a0 | 2 | 1 |
| Cash flow hedges (currency risk) | \u00a0 | 3,065 | 2,836 | \u00a0 | (3,038) | (2,806) | \u00a0 | 27 | 30 |
| Fair value and Cash flow hedges (interest rate and currency risk) | \u00a0 | 21 | (73) | \u00a0 | (21) | 73 | \u00a0 | - | - |
| Total | \u00a0 | 1,577 | (4,244) | \u00a0 | (1,598) | 4,302 | \u00a0 | (21) | 58 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |
| Fair value hedges (interest rate risk) | \u00a0 | (1,488) | (1,966) | \u00a0 | 1,439 | 1,970 | \u00a0 | (49) | 4 |
| Cash flow hedges (interest rate risk) | \u00a0 | 352 | (3,004) | \u00a0 | (352) | 3,004 | \u00a0 | - | - |
| Cash flow hedges (currency risk) | \u00a0 | 1,502 | 2,701 | \u00a0 | (1,480) | (2,674) | \u00a0 | 22 | 27 |
| Total | \u00a0 | 366 | (2,269) | \u00a0 | (393) | 2,300 | \u00a0 | (27) | 31 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Cash flow hedge (interest rate risk) | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||
| Cash flow hedges - gains / (losses) recognised in other comprehensive income1 | \u00a0 | (292) | (2,509) | \u00a0 | (357) | (2,804) | |||
| Amount reclassified from the cash flow hedge reserve to income statement1 | \u00a0 | 427 | (205) | \u00a0 | 711 | (200) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Cash flow hedge (currency risk) | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||
| Cash flow hedges - gains / (losses) recognised in other comprehensive income | \u00a0 | 3,034 | 2,787 | \u00a0 | 1,480 | 2,674 | |||
| Amount reclassified from the cash flow hedge reserve to income statement | \u00a0 | (3,103) | (2,583) | \u00a0 | (1,531) | (2,483) |
Trading derivatives
Trading derivatives are not in a qualifying hedging relationship and are measured at fair value through profit or loss.
Hedge accounting
The Group utilises the following types of hedge relationships in managing its exposure to risk. At inception of all hedge relationships the Group documents the relationship between the hedging instrument and hedged item, the risk being hedged, the Group\u2019s risk management objective and strategy and how effectiveness will be measured throughout the hedge relationship.
| \u00a0 | Cash flow hedge | Fair value hedge |
| Objective | To hedge changes to cash flows arising from interest rate and foreign currency risk. | To hedge fair value changes to recognised assets and liabilities arising from interest rate and foreign currency risk. |
| Methods for testing hedge effectiveness | Critical terms matching, regression analysis or cumulative dollar offset. | Critical terms matching or cumulative dollar offset. |
| Potential sources of ineffectiveness | Primarily mismatches in terms of the hedged item and the hedging instrument.Discounting basis between the hedged item and hedging instrument. | Primarily mismatches in terms of the hedged item and the hedging instrument, prepayment risk and reset risk.Discounting basis between the hedged item and hedging instrument. |
| Recognition of effective hedge portion | Fair value changes of the hedging instrument associated with the hedged risk are recognised in the cash flow hedge reserve in equity. | Fair value changes of the hedging instrument and those arising from the hedged risk on the hedged item are recognised in the income statement. |
| Recognition of ineffective hedge portion | Recognised in the income statement as ineffectiveness arises. | |
| Hedging instrument expires, is sold, or when hedging criteria are no longer met | Transferred to the income statement as / when the hedged item affects the income statement. If the hedged item is no longer expected to occur the effective portion accumulated in equity is transferred to the income statement immediately. | Cumulative hedge adjustment to the hedged item is amortised to the income statement on an effective yield basis. |
| Cost of hedging reserve | For qualifying hedging instruments, the Group excludes foreign currency basis spreads from hedge designations. Any change in the fair value of these hedging instruments for changes in cross currency basis spreads is deferred to the cost of hedging reserve and released to profit or loss either when the hedged exposure affects profit or loss or on a systematic basis over the life of the hedge. The cumulative movements are expected to be nil by maturity of the hedging instruments. |
Risk is the potential for harm and an inherent part of the Group's business. The Group's ability to manage risk effectively is critical to being a safe and secure bank that can serve customers well and help our communities prosper. The Group's risk management is in line with APRA Prudential Standard CPS 220 Risk Management.
The Group's Risk Management Framework (RMF) consists of systems, structures, policies, processes and people within the Group that manage the Group's material risks. The RMF is comprehensively reviewed every three years for appropriateness, effectiveness and adequacy by an operationally independent party. The Board is ultimately responsible for the Risk Management Framework and oversees its operation by management. In addition, directors and senior executives are held accountable for the parts of the Group\u2019s operations they manage or control.
The Group applies a 'Three Lines of Accountability' operating model in relation to the management of risk. The overarching principle of the model is that risk management capability must be embedded within the business to be effective. The role of each line is:
First Line - Businesses own risks and obligations, and the controls and mitigation strategies that help manage them.
Second Line - A functionally segregated Risk function develops risk management frameworks, defines risk boundaries, provides objective review and challenge regarding the effectiveness of risk management within the first line businesses, and executes specific risk management activities where a functional segregation of duties and/or specific risk capability is required.
Third Line - An independent Internal Audit function reporting to the Board monitors the end-to-end effectiveness of risk management and compliance with the RMF.
Further risk management information for the Group is disclosed in the Corporate Governance section of the Group\u2019s website at nab.com.au/about-us/corporate-governance.
Credit is any transaction that creates an actual or potential obligation for a counterparty or a customer to pay the Group. Credit risk is the potential that a counterparty or customer will fail to meet its obligations to the Group in accordance with the agreed terms. Lending activities account for most of the Group\u2019s credit risk, however other sources of credit risk also exist throughout the activities of the Group. These activities include the trading book, and other financial instruments and loans (including, but not limited to, acceptances, placements, inter-bank transactions, trade financing, foreign exchange transactions, swaps, bonds and options), as well as in the extension of commitments and guarantees and the settlement of transactions.
The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to existing or potential counterparties or customers, groups of related counterparties or groups of related customers, and to geographical and industry segments. Such risks are monitored on an ongoing basis and are subject to annual or more frequent review.
In general, the Group does not take possession of collateral it holds as security or call on other credit enhancements that would result in recognition of an asset on the balance sheet.
Exposure to credit risk is managed through regular analysis of the ability of existing or potential counterparties, customers, groups of related counterparties or groups of related customers to meet repayment obligations, primarily interest and principal, and by changing credit limits where appropriate. Exposure to credit risk is also managed in part, by obtaining collateral and corporate and personal guarantees.
The Group further restricts its exposure to credit losses by entering into master netting arrangements for derivatives, repurchase and securities lending transactions with counterparties with which it undertakes a significant volume of transactions. The credit risk associated with contracts favourable to a Group entity is reduced by a master netting arrangement to the extent that if a counterparty failed to meet its obligations in accordance with agreed terms, all contracts with a counterparty can be terminated and settled on a net basis.
The Group is exposed to ESG and other emerging risks. The following items are examples of how these risks may impact the Group:
Increases in the frequency and severity of climatic events could impact customers\u2019 ability to service their loans or the value of the collateral held to secure the loans.
Action taken by governments, regulators and society more generally, to transition to a low-carbon economy, could impact the ability of some customers to generate long-term returns in a sustainable way or lead to certain assets being stranded in the future.
Failure to comply with environmental and social legislation (emerging and current) may impact customers\u2019 ability to generate sustainable returns and service their loans.
If in future customers don\u2019t hold appropriate levels of insurance for physical assets against certain risks, this may impact the value the Group can recover in the event of certain natural disasters.
The Group considers these risks as part of the credit risk assessment and due diligence process before relevant customers are granted credit and for new product development. The Group also manages its total credit portfolio within established risk appetite and limits, particularly for specific industries or regions that are more exposed to these types of risks. In addition, the Group may recognise FLAs to the provision for credit impairment for the impact of adverse climate events. In the 2022 financial year, the Group recognised a FLA of $14 million for the potential impact of the Lismore floods (2023: nil).
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 financial guarantees granted, the maximum exposure to credit risk is the maximum amount that the Group would have to pay if the guarantees are called upon. For irrevocable loan commitments and other credit-related commitments, the maximum exposure to credit risk is the full amount of committed facilities.
The table below shows the Group\u2019s maximum exposure to credit risk for on-balance sheet and off-balance sheet positions before taking into account any collateral held or other credit enhancements.
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | Footnote | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | (a) | \u00a0 | 23,669 | 55,304 | \u00a0 | 23,022 | 55,100 |
| Due from other banks | \u00a0 | (b) | \u00a0 | 117,306 | 141,861 | \u00a0 | 106,955 | 133,144 |
| Collateral placed | \u00a0 | (c) | \u00a0 | 11,286 | 13,115 | \u00a0 | 10,214 | 10,636 |
| Trading assets | \u00a0 | (d) | \u00a0 | 101,168 | 40,573 | \u00a0 | 90,417 | 34,043 |
| Debt instruments | \u00a0 | (e) | \u00a0 | 46,357 | 42,080 | \u00a0 | 46,336 | 42,094 |
| Other financial assets | \u00a0 | (f) | \u00a0 | 1,430 | 2,061 | \u00a0 | 1,708 | 2,749 |
| Derivative assets | \u00a0 | (d) | \u00a0 | 34,269 | 61,016 | \u00a0 | 33,784 | 60,651 |
| Gross loans and advances | \u00a0 | (f) | \u00a0 | 707,228 | 685,839 | \u00a0 | 611,556 | 597,445 |
| Due from controlled entities | \u00a0 | (g) | \u00a0 | - | - | \u00a0 | 43,577 | 38,226 |
| Other assets | \u00a0 | (g) | \u00a0 | 6,869 | 4,861 | \u00a0 | 6,572 | 4,181 |
| Total | \u00a0 | \u00a0 | \u00a0 | 1,049,582 | 1,046,710 | \u00a0 | 974,141 | 978,269 |
| Bank guarantees and letters of credit | \u00a0 | (h) | \u00a0 | 26,321 | 25,683 | \u00a0 | 24,637 | 23,958 |
| Credit commitments | \u00a0 | (h) | \u00a0 | 208,853 | 201,147 | \u00a0 | 188,268 | 182,667 |
| Total | \u00a0 | \u00a0 | \u00a0 | 235,174 | 226,830 | \u00a0 | 212,905 | 206,625 |
| Total credit risk exposure | \u00a0 | \u00a0 | \u00a0 | 1,284,756 | 1,273,540 | \u00a0 | 1,187,046 | 1,184,894 |
(a) The balance of Cash and liquid assets that is exposed to credit risk is comprised primarily of reverse repurchase agreements and securities borrowing agreements.
(b) The balance of Due from other banks that is exposed to credit risk is comprised primarily of securities borrowing agreements and reverse repurchase agreements, as well as balances held with central supervisory banks and other interest earning assets. Securities borrowing agreements and reverse repurchase agreements are collateralised with highly liquid securities and the collateral is in excess of the borrowed or loaned amount.
Balances held with central supervisory banks and other interest earning assets that are due from other banks are managed based on the counterparty\u2019s creditworthiness. The Group will utilise master netting arrangements where possible to reduce its exposure to credit risk.
(c) The maximum exposure to credit risk from Collateral placed is the collateral placed with the counterparty before consideration of any netting arrangements.
(d) At any one time, the maximum exposure to credit risk from Trading assets and Derivative assets is limited to the current fair value of instruments that are favourable to the Group less collateral obtained. This credit risk is managed as part of the overall lending limits with customers, together with potential exposures from market movements.
The Group uses documentation including International Swaps and Derivatives Association (ISDA) Master Agreements to document derivative activities. Under ISDA Master Agreements, if a default of a counterparty occurs, all contracts with the counterparty are terminated. They are then settled on a net basis at market levels current at the time of default. The Group also executes Credit Support Annexes in conjunction with ISDA Master Agreements.
Credit risk from over-the-counter trading and hedging derivatives is mitigated where possible through netting arrangements whereby derivative assets and liabilities with the same counterparty can be offset in certain circumstances. Derivatives that are cleared through a central clearing counterparty or an exchange have less credit risk than over-the-counter derivatives and are subject to relevant netting and collateral agreements.
Collateral is obtained against derivative assets, depending on the creditworthiness of the counterparty and / or the nature of the transaction.
(a) Debt instruments are generally comprised of government, semi-government, corporate and financial institution bonds, notes and securities. The amount of collateral held against such instruments will depend on the counterparty and the nature of the specific financial instrument.
The Group may utilise credit default swaps, guarantees provided by central banks, other forms of credit enhancements or collateral to minimise the Group\u2019s exposure to credit risk.
(b) Gross loans and advances and Other financial assets primarily comprise general lending and line of credit products. The distinction is due to accounting classification and measurement. These lending products will generally have a significant level of collateralisation depending on the nature of the product.
Other lending to non-retail customers may be provided on an unsecured basis or secured (partially or fully) by acceptable collateral defined in specific Group credit policy and business unit procedures. Collateral is generally comprised of business assets, inventories and in some cases personal assets of the borrower. The Group manages its exposure to these products by completing a credit evaluation to assess the customer\u2019s character, industry, business model and capacity to meet their commitments without distress. Collateral provides a secondary source of repayment for funds advanced in the event that a customer cannot meet their contractual repayment obligations. For amounts due from customers on acceptances the Group generally has recourse to guarantees, underlying inventories or other assets in the event of default which significantly mitigates the credit risk associated with accepting the customer\u2019s credit facility with a third party.
Housing loans are secured against residential property as collateral and, where applicable, Lenders Mortgage Insurance (LMI) is obtained by the Group (mostly in Australia) to cover any shortfall in outstanding loan principal and accrued interest. LMI is generally obtained for residential mortgages with a Loan to Valuation Ratio (LVR) in excess of 80%. The financial effect of these measures is that remaining credit risk on residential mortgage loans is minimal. Other retail lending products are mostly unsecured (e.g. credit card outstandings and other personal lending).
(c) The balance of Other assets which is exposed to credit risk includes securities sold not delivered, interest receivable accruals and other receivables. Interest receivable accruals are subject to the same collateral as the underlying borrowings. Other receivables will mostly be unsecured. There are typically no collateral or other credit enhancements obtained in respect of amounts Due from controlled entities.
(d) Bank guarantees and letters of credit are comprised primarily of guarantees to customers, standby or documentary letters of credit and performance related contingencies. The Group will typically have recourse to specific assets pledged as collateral in the event of a default by a party for which the Group has guaranteed its obligations to a third party and therefore tend to carry the same credit risk as loans.
Credit commitments represent binding commitments to extend credit where the Group is potentially exposed to loss of an amount equal to the total unused commitments. However, the likely amount of loss is generally less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards.
The Group monitors the term to maturity of credit commitments because, in general, longer-term commitments have a greater degree of credit risk than shorter term commitments.
The tables below present the amounts of financial instruments that have been offset on the balance sheet, as well as those amounts that are subject to enforceable master netting arrangements or similar agreements. The tables exclude financial instruments that are not subject to offsetting arrangements but are instead only subject to collateral arrangements.
The \u2018Net amounts\u2019 presented in the tables are not intended to represent the Group\u2019s actual exposure to credit risk. The Group utilises a wide range of strategies to mitigate credit risk in addition to netting and collateral arrangements, including placing limits on the amount of risk accepted in relation to counterparties, customers, groups of related counterparties or customers and geographical and industry segments.
The amounts recognised on the balance sheet are presented in the 'Total balance sheet amount' column in the tables below, and comprise the sum of the 'Net amount reported on balance sheet' and 'Amounts not subject to enforceable netting arrangements'.
| \u00a0 | \u00a0 | 2023 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Subject to enforceable netting arrangements | \u00a0 | Amounts not subject to enforceable netting arrangements | \u00a0 | Total balance sheet amount | |||||||
| \u00a0 | \u00a0 | Amounts offset on balance sheet | \u00a0 | Amounts not offset on balance sheet | \u00a0 | ||||||||
| \u00a0 | \u00a0 | Gross amount | Amount offset | Net amount reported on balance sheet | \u00a0 | Financial Instruments | Non-cash collateral | Cash collateral | Net Amount | \u00a0 | |||
| Group | \u00a0 | $m | $m | $m | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | \u00a0 | $m |
| Derivative assets1 | \u00a0 | 157,389 | (127,890) | 29,499 | \u00a0 | (14,611) | (362) | (10,164) | 4,362 | \u00a0 | 4,770 | \u00a0 | 34,269 |
| Reverse repurchase agreements | \u00a0 | 95,197 | (14,542) | 80,655 | \u00a0 | - | (80,655) | - | - | \u00a0 | - | \u00a0 | 80,655 |
| Loans and advances | \u00a0 | 5,748 | (5,705) | 43 | \u00a0 | - | - | - | 43 | \u00a0 | 708,428 | \u00a0 | 708,471 |
| Total assets | \u00a0 | 258,334 | (148,137) | 110,197 | \u00a0 | (14,611) | (81,017) | (10,164) | 4,405 | \u00a0 | 713,198 | \u00a0 | 823,395 |
| Derivative liabilities1 | \u00a0 | (154,459) | 127,891 | (26,568) | \u00a0 | 14,611 | 210 | 9,171 | (2,576) | \u00a0 | (9,065) | \u00a0 | (35,633) |
| Repurchase agreements | \u00a0 | (88,674) | 14,542 | (74,132) | \u00a0 | - | 74,132 | - | - | \u00a0 | - | \u00a0 | (74,132) |
| Deposits and other borrowings | \u00a0 | (9,122) | 5,705 | (3,417) | \u00a0 | - | - | - | (3,417) | \u00a0 | (681,034) | \u00a0 | (684,451) |
| Total liabilities | \u00a0 | (252,255) | 148,138 | (104,117) | \u00a0 | 14,611 | 74,342 | 9,171 | (5,993) | \u00a0 | (690,099) | \u00a0 | (794,216) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Derivative assets1 | \u00a0 | 143,179 | (114,623) | 28,556 | \u00a0 | (12,808) | (83) | (8,822) | 6,843 | \u00a0 | 5,228 | \u00a0 | 33,784 |
| Reverse repurchase agreements | \u00a0 | 91,333 | (14,166) | 77,167 | \u00a0 | - | (77,167) | - | - | \u00a0 | - | \u00a0 | 77,167 |
| Loans and advances | \u00a0 | 4,203 | (4,191) | 12 | \u00a0 | - | - | - | 12 | \u00a0 | 612,226 | \u00a0 | 612,238 |
| Total assets | \u00a0 | 238,715 | (132,980) | 105,735 | \u00a0 | (12,808) | (77,250) | (8,822) | 6,855 | \u00a0 | 617,454 | \u00a0 | 723,189 |
| Derivative liabilities1 | \u00a0 | (141,028) | 114,624 | (26,404) | \u00a0 | 12,808 | 210 | 8,701 | (4,685) | \u00a0 | (9,706) | \u00a0 | (36,110) |
| Repurchase agreements | \u00a0 | (81,339) | 14,166 | (67,173) | \u00a0 | - | 67,173 | - | - | \u00a0 | - | \u00a0 | (67,173) |
| Deposits and other borrowings | \u00a0 | (6,163) | 4,191 | (1,972) | \u00a0 | - | - | - | (1,972) | \u00a0 | (606,669) | \u00a0 | (608,641) |
| Total liabilities | \u00a0 | (228,530) | 132,981 | (95,549) | \u00a0 | 12,808 | 67,383 | 8,701 | (6,657) | \u00a0 | (616,375) | \u00a0 | (711,924) |
| \u00a0 | \u00a0 | 2022 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Subject to enforceable netting arrangements | \u00a0 | Amounts not subject to enforceable netting arrangements | \u00a0 | Total balance sheet amount | |||||||
| \u00a0 | \u00a0 | Amounts offset on balance sheet | \u00a0 | Amounts not offset on balance sheet | \u00a0 | ||||||||
| \u00a0 | \u00a0 | Gross amount | Amount offset | Net amount reported on balance sheet | \u00a0 | Financial Instruments | Non-cash collateral | Cash collateral | Net Amount | \u00a0 | |||
| Group | \u00a0 | $m | $m | $m | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | \u00a0 | $m |
| Derivative assets1 | \u00a0 | 171,721 | (117,807) | 53,914 | \u00a0 | (33,670) | (956) | (15,053) | 4,235 | \u00a0 | 7,102 | \u00a0 | 61,016 |
| Reverse repurchase agreements2 | \u00a0 | 95,371 | (18,831) | 76,540 | \u00a0 | - | (76,540) | - | - | \u00a0 | - | \u00a0 | 76,540 |
| Loans and advances2 | \u00a0 | 1,399 | (1,344) | 55 | \u00a0 | - | - | - | 55 | \u00a0 | 687,660 | \u00a0 | 687,715 |
| Total assets | \u00a0 | 268,491 | (137,982) | 130,509 | \u00a0 | (33,670) | (77,496) | (15,053) | 4,290 | \u00a0 | 694,762 | \u00a0 | 825,271 |
| Derivative liabilities1 | \u00a0 | (165,410) | 117,807 | (47,603) | \u00a0 | 33,670 | 503 | 7,655 | (5,775) | \u00a0 | (9,883) | \u00a0 | (57,486) |
| Repurchase agreements2 | \u00a0 | (104,094) | 18,831 | (85,263) | \u00a0 | - | 85,263 | - | - | \u00a0 | - | \u00a0 | (85,263) |
| Deposits and other borrowings2 | \u00a0 | (6,906) | 1,344 | (5,562) | \u00a0 | - | - | - | (5,562) | \u00a0 | (681,443) | \u00a0 | (687,005) |
| Total liabilities | \u00a0 | (276,410) | 137,982 | (138,428) | \u00a0 | 33,670 | 85,766 | 7,655 | (11,337) | \u00a0 | (691,326) | \u00a0 | (829,754) |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Derivative assets1 | \u00a0 | 160,532 | (106,481) | 54,051 | \u00a0 | (34,420) | (814) | (13,299) | 5,518 | \u00a0 | 6,600 | \u00a0 | 60,651 |
| Reverse repurchase agreements2 | \u00a0 | 95,092 | (18,831) | 76,261 | \u00a0 | - | (76,261) | - | - | \u00a0 | - | \u00a0 | 76,261 |
| Loans and advances2 | \u00a0 | 582 | (556) | 26 | \u00a0 | - | - | - | 26 | \u00a0 | 598,724 | \u00a0 | 598,750 |
| Total assets | \u00a0 | 256,206 | (125,868) | 130,338 | \u00a0 | (34,420) | (77,075) | (13,299) | 5,544 | \u00a0 | 605,324 | \u00a0 | 735,662 |
| Derivative liabilities1 | \u00a0 | (154,789) | 106,481 | (48,308) | \u00a0 | 34,420 | 503 | 6,115 | (7,270) | \u00a0 | (9,186) | \u00a0 | (57,494) |
| Repurchase agreements2 | \u00a0 | (100,922) | 18,831 | (82,091) | \u00a0 | - | 82,091 | - | - | \u00a0 | - | \u00a0 | (82,091) |
| Deposits and other borrowings2 | \u00a0 | (4,959) | 556 | (4,403) | \u00a0 | - | - | - | (4,403) | \u00a0 | (612,558) | \u00a0 | (616,961) |
| Total liabilities | \u00a0 | (260,670) | 125,868 | (134,802) | \u00a0 | 34,420 | 82,594 | 6,115 | (11,673) | \u00a0 | (621,744) | \u00a0 | (756,546) |
Derivative assets and derivative liabilities are only offset on the balance sheet where the Group has a legally enforceable right to offset in all circumstances and there is an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously. The Group has applied offsetting to certain centrally cleared derivatives and their associated collateral amounts which satisfy the AASB 132 Financial Instruments: Presentation requirements.
Reverse repurchase and repurchase agreements will typically be subject to Global Master Repurchase Agreements or similar agreements whereby all outstanding transactions with the same counterparty can only be offset and closed out upon a default or insolvency event. In some instances, the agreement provides the Group with a legally enforceable right to offset in all circumstances. In such a case and where there is an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously, the amounts with that counterparty are offset on the balance sheet.
Where the Group has a right to offset on default or insolvency only, the related non-cash collateral amounts comprise highly liquid securities, either obtained or pledged, which can be realised in the event of a default or insolvency by one of the counterparties. The value of such securities obtained or pledged must at least equate to the value of the exposure to the counterparty, therefore the net exposure is considered to be nil.
The amounts offset for loans and advances and deposits and other borrowings represent amounts subject to set-off agreements that satisfy the AASB 132 requirements. The 'Net amounts reported on balance sheet' are included within \u2018Overdrafts\u2019 in Note 12 Loans and Advances and \u2018On-demand and short-term deposits\u2019 and \u2018Deposits not bearing interest\u2019 in Note 13 Deposits and other borrowings. The 'Amounts not subject to enforceable netting arrangements' represent all other loans and advances and deposits and other borrowings of the Group, including those measured at fair value.
The following tables show the credit quality of credit risk exposures to which the expected credit loss model is applied, for both recognised and unrecognised financial assets, based on the following risk grades:
Senior investment grade: broadly corresponds with Standard & Poor\u2019s ratings of AAA to A- (internal rating 1 to 5).
Investment grade: broadly corresponds with Standard & Poor\u2019s ratings of BBB+ to BBB- (internal rating 6 to 11).
Sub-investment grade: broadly corresponds with Standard & Poor\u2019s ratings of BB+ (internal rating 12 to 23).
Default: broadly corresponds with Standard & Poor\u2019s rating of D (internal rating 98 and 99).
Notional stage allocations (Stage 1 and Stage 2) for credit risk exposures incorporate the impact of forward looking economic information applied in the expected credit loss model. Refer Accounting Policy section of Note 17 Provision for credit impairment on loans at amortised cost for further details.
| \u00a0 | \u00a0 | Stage 1 | \u00a0 | Stage 2 | \u00a0 | Stage 3 | \u00a0 | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Performing | \u00a0 | Performing | \u00a0 | Non-performing | \u00a0 | \u00a0 | ||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| Group | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Gross loans and advances | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 124,634 | 127,878 | \u00a0 | 2,356 | 4,376 | \u00a0 | - | - | \u00a0 | 126,990 | 132,254 |
| Investment grade | \u00a0 | 277,097 | 270,812 | \u00a0 | 27,385 | 33,614 | \u00a0 | - | - | \u00a0 | 304,482 | 304,426 |
| Sub-investment grade | \u00a0 | 126,373 | 99,753 | \u00a0 | 141,747 | 143,291 | \u00a0 | - | - | \u00a0 | 268,120 | 243,044 |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 7,636 | 6,115 | \u00a0 | 7,636 | 6,115 |
| Total gross loans and advances | \u00a0 | 528,104 | 498,443 | \u00a0 | 171,488 | 181,281 | \u00a0 | 7,636 | 6,115 | \u00a0 | 707,228 | 685,839 |
| Contingent liabilities and credit commitments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 88,046 | 85,149 | \u00a0 | 3,442 | 4,196 | \u00a0 | - | - | \u00a0 | 91,488 | 89,345 |
| Investment grade | \u00a0 | 75,102 | 70,260 | \u00a0 | 12,832 | 15,775 | \u00a0 | - | - | \u00a0 | 87,934 | 86,035 |
| Sub-investment grade | \u00a0 | 25,753 | 18,517 | \u00a0 | 29,643 | 32,577 | \u00a0 | - | - | \u00a0 | 55,396 | 51,094 |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 356 | 356 | \u00a0 | 356 | 356 |
| Total contingent liabilities and credit commitments | \u00a0 | 188,901 | 173,926 | \u00a0 | 45,917 | 52,548 | \u00a0 | 356 | 356 | \u00a0 | 235,174 | 226,830 |
| Total gross loans and advances, contingent liabilities and credit commitments | \u00a0 | 717,005 | 672,369 | \u00a0 | 217,405 | 233,829 | \u00a0 | 7,992 | 6,471 | \u00a0 | 942,402 | 912,669 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Debt instruments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 46,357 | 41,644 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 46,357 | 41,644 |
| Investment grade | \u00a0 | - | 436 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | 436 |
| Sub-investment grade | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Total debt instruments | \u00a0 | 46,357 | 42,080 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 46,357 | 42,080 |
| \u00a0 | \u00a0 | Stage 1 | \u00a0 | Stage 2 | \u00a0 | Stage 3 | \u00a0 | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Performing | \u00a0 | Performing | \u00a0 | Non-performing | \u00a0 | \u00a0 | ||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| Company | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Gross loans and advances | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 88,177 | 96,635 | \u00a0 | 1,257 | 2,842 | \u00a0 | - | - | \u00a0 | 89,434 | 99,477 |
| Investment grade | \u00a0 | 255,873 | 250,467 | \u00a0 | 22,003 | 26,761 | \u00a0 | - | - | \u00a0 | 277,876 | 277,228 |
| Sub-investment grade | \u00a0 | 114,773 | 89,083 | \u00a0 | 122,956 | 126,225 | \u00a0 | - | - | \u00a0 | 237,729 | 215,308 |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 6,517 | 5,432 | \u00a0 | 6,517 | 5,432 |
| Total gross loans and advances | \u00a0 | 458,823 | 436,185 | \u00a0 | 146,216 | 155,828 | \u00a0 | 6,517 | 5,432 | \u00a0 | 611,556 | 597,445 |
| Contingent liabilities and credit commitments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 82,623 | 80,614 | \u00a0 | 2,484 | 3,326 | \u00a0 | - | - | \u00a0 | 85,107 | 83,940 |
| Investment grade | \u00a0 | 68,954 | 65,389 | \u00a0 | 10,087 | 12,291 | \u00a0 | - | - | \u00a0 | 79,041 | 77,680 |
| Sub-investment grade | \u00a0 | 22,744 | 16,103 | \u00a0 | 25,665 | 28,553 | \u00a0 | - | - | \u00a0 | 48,409 | 44,656 |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 348 | 349 | \u00a0 | 348 | 349 |
| Total contingent liabilities and credit commitments | \u00a0 | 174,321 | 162,106 | \u00a0 | 38,236 | 44,170 | \u00a0 | 348 | 349 | \u00a0 | 212,905 | 206,625 |
| Total gross loans and advances, contingent liabilities and credit commitments | \u00a0 | 633,144 | 598,291 | \u00a0 | 184,452 | 199,998 | \u00a0 | 6,865 | 5,781 | \u00a0 | 824,461 | 804,070 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Debt instruments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Senior investment grade | \u00a0 | 46,336 | 41,658 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 46,336 | 41,658 |
| Investment grade | \u00a0 | - | 436 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | 436 |
| Sub-investment grade | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Default | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Total debt instruments | \u00a0 | 46,336 | 42,094 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 46,336 | 42,094 |
Concentration of credit risk exists when a number of counterparties are engaged in similar activities, or operate in the same geographical areas or industry sectors and have similar economic characteristics so that their ability to meet contractual obligations is similarly affected by changes in economic, political or other conditions.
The diversification and size of the Group is such that its lending is widely spread both geographically and in terms of the types of industries it serves.
| \u00a0 | \u00a0 | Net loans and advances1 | \u00a0 | Other financial assets2 | \u00a0 | Contingent liabilities and credit commitments | \u00a0 | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Accommodation and hospitality | \u00a0 | 9,337 | 8,712 | \u00a0 | - | - | \u00a0 | 2,101 | 1,771 | \u00a0 | 11,438 | 10,483 |
| Agriculture, forestry, fishing & mining | \u00a0 | 55,912 | 51,518 | \u00a0 | - | - | \u00a0 | 14,112 | 13,280 | \u00a0 | 70,024 | 64,798 |
| Business services and property services | \u00a0 | 19,266 | 18,502 | \u00a0 | - | - | \u00a0 | 8,754 | 8,023 | \u00a0 | 28,020 | 26,525 |
| Commercial property | \u00a0 | 70,739 | 69,148 | \u00a0 | - | - | \u00a0 | 12,660 | 14,168 | \u00a0 | 83,399 | 83,316 |
| Construction | \u00a0 | 8,500 | 7,777 | \u00a0 | - | - | \u00a0 | 7,109 | 6,306 | \u00a0 | 15,609 | 14,083 |
| Financial & insurance | \u00a0 | 38,456 | 46,554 | \u00a0 | 137,048 | 161,724 | \u00a0 | 49,722 | 48,952 | \u00a0 | 225,226 | 257,230 |
| Government & public authorities | \u00a0 | 1,820 | 2,794 | \u00a0 | 31,005 | 28,773 | \u00a0 | 2,884 | 3,769 | \u00a0 | 35,709 | 35,336 |
| Manufacturing | \u00a0 | 13,383 | 12,497 | \u00a0 | - | - | \u00a0 | 8,313 | 7,373 | \u00a0 | 21,696 | 19,870 |
| Personal | \u00a0 | 12,161 | 11,097 | \u00a0 | - | - | \u00a0 | 18,594 | 18,062 | \u00a0 | 30,755 | 29,159 |
| Residential mortgages | \u00a0 | 404,870 | 387,817 | \u00a0 | 6,489 | 6,166 | \u00a0 | 68,943 | 66,554 | \u00a0 | 480,302 | 460,537 |
| Retail and wholesale trade | \u00a0 | 20,679 | 20,385 | \u00a0 | - | - | \u00a0 | 12,699 | 12,124 | \u00a0 | 33,378 | 32,509 |
| Transport and storage | \u00a0 | 15,662 | 15,514 | \u00a0 | - | - | \u00a0 | 9,246 | 8,471 | \u00a0 | 24,908 | 23,985 |
| Utilities | \u00a0 | 10,818 | 9,984 | \u00a0 | 157 | 203 | \u00a0 | 7,187 | 5,919 | \u00a0 | 18,162 | 16,106 |
| Other | \u00a0 | 21,283 | 20,360 | \u00a0 | 250 | 190 | \u00a0 | 12,850 | 12,058 | \u00a0 | 34,383 | 32,608 |
| Total | \u00a0 | 702,886 | 682,659 | \u00a0 | 174,949 | 197,056 | \u00a0 | 235,174 | 226,830 | \u00a0 | 1,113,009 | 1,106,545 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Accommodation and hospitality | \u00a0 | 8,103 | 7,557 | \u00a0 | - | - | \u00a0 | 1,955 | 1,630 | \u00a0 | 10,058 | 9,187 |
| Agriculture, forestry, fishing & mining | \u00a0 | 41,642 | 38,099 | \u00a0 | - | - | \u00a0 | 11,963 | 11,290 | \u00a0 | 53,605 | 49,389 |
| Business services and property services | \u00a0 | 17,640 | 17,029 | \u00a0 | - | - | \u00a0 | 7,851 | 7,273 | \u00a0 | 25,491 | 24,302 |
| Commercial property | \u00a0 | 63,613 | 61,707 | \u00a0 | - | - | \u00a0 | 11,196 | 12,439 | \u00a0 | 74,809 | 74,146 |
| Construction | \u00a0 | 7,072 | 6,651 | \u00a0 | - | - | \u00a0 | 6,118 | 5,382 | \u00a0 | 13,190 | 12,033 |
| Financial & insurance | \u00a0 | 36,369 | 43,821 | \u00a0 | 125,643 | 150,572 | \u00a0 | 47,114 | 47,325 | \u00a0 | 209,126 | 241,718 |
| Government & public authorities | \u00a0 | 1,753 | 2,734 | \u00a0 | 30,987 | 28,759 | \u00a0 | 2,224 | 3,122 | \u00a0 | 34,964 | 34,615 |
| Manufacturing | \u00a0 | 10,189 | 9,562 | \u00a0 | - | - | \u00a0 | 6,374 | 5,713 | \u00a0 | 16,563 | 15,275 |
| Personal | \u00a0 | 11,194 | 10,243 | \u00a0 | - | - | \u00a0 | 16,460 | 15,926 | \u00a0 | 27,654 | 26,169 |
| Residential mortgages | \u00a0 | 350,823 | 339,061 | \u00a0 | 6,467 | 6,150 | \u00a0 | 65,403 | 63,186 | \u00a0 | 422,693 | 408,397 |
| Retail and wholesale trade | \u00a0 | 16,638 | 16,721 | \u00a0 | - | - | \u00a0 | 10,695 | 10,442 | \u00a0 | 27,333 | 27,163 |
| Transport and storage | \u00a0 | 13,914 | 13,891 | \u00a0 | - | - | \u00a0 | 7,738 | 7,138 | \u00a0 | 21,652 | 21,029 |
| Utilities | \u00a0 | 9,775 | 9,185 | \u00a0 | 157 | 203 | \u00a0 | 6,612 | 5,270 | \u00a0 | 16,544 | 14,658 |
| Other | \u00a0 | 18,820 | 18,157 | \u00a0 | 251 | 190 | \u00a0 | 11,202 | 10,489 | \u00a0 | 30,273 | 28,836 |
| Total | \u00a0 | 607,545 | 594,418 | \u00a0 | 163,505 | 185,874 | \u00a0 | 212,905 | 206,625 | \u00a0 | 983,955 | 986,917 |
| \u00a0 | \u00a0 | Australia | \u00a0 | New Zealand | \u00a0 | Other International | |||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 4,345 | 15,567 | \u00a0 | 36 | 46 | \u00a0 | 19,288 | 39,691 |
| Due from other banks | \u00a0 | 92,378 | 112,767 | \u00a0 | 10,140 | 8,580 | \u00a0 | 14,788 | 20,514 |
| Collateral placed | \u00a0 | 8,709 | 9,401 | \u00a0 | 1,030 | 2,479 | \u00a0 | 1,547 | 1,235 |
| Trading assets | \u00a0 | 65,086 | 34,025 | \u00a0 | 7,782 | 6,530 | \u00a0 | 28,300 | 18 |
| Debt instruments | \u00a0 | 35,377 | 31,449 | \u00a0 | - | - | \u00a0 | 10,980 | 10,631 |
| Other financial assets | \u00a0 | 869 | 1,355 | \u00a0 | 561 | 570 | \u00a0 | - | 136 |
| Derivative assets | \u00a0 | 24,329 | 47,115 | \u00a0 | 2,720 | 4,882 | \u00a0 | 7,220 | 9,019 |
| Loans and advances | \u00a0 | 588,961 | 571,773 | \u00a0 | 94,206 | 87,006 | \u00a0 | 19,535 | 21,655 |
| Other assets | \u00a0 | 6,110 | 4,836 | \u00a0 | 764 | 938 | \u00a0 | 1,321 | 554 |
| Total | \u00a0 | 826,164 | 828,288 | \u00a0 | 117,239 | 111,031 | \u00a0 | 102,979 | 103,453 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 4,259 | 15,464 | \u00a0 | - | - | \u00a0 | 18,763 | 39,636 |
| Due from other banks | \u00a0 | 92,371 | 112,765 | \u00a0 | - | - | \u00a0 | 14,584 | 20,379 |
| Collateral placed | \u00a0 | 8,701 | 9,401 | \u00a0 | - | - | \u00a0 | 1,513 | 1,235 |
| Trading assets | \u00a0 | 65,086 | 34,025 | \u00a0 | - | - | \u00a0 | 25,331 | 18 |
| Debt instruments | \u00a0 | 35,378 | 31,479 | \u00a0 | - | - | \u00a0 | 10,958 | 10,615 |
| Other financial assets | \u00a0 | 869 | 1,354 | \u00a0 | - | - | \u00a0 | 839 | 1,395 |
| Derivative assets | \u00a0 | 26,247 | 50,953 | \u00a0 | - | - | \u00a0 | 7,537 | 9,698 |
| Loans and advances | \u00a0 | 588,288 | 571,074 | \u00a0 | - | - | \u00a0 | 19,396 | 21,605 |
| Other assets | \u00a0 | 6,255 | 4,877 | \u00a0 | - | - | \u00a0 | 1,300 | 551 |
| Total | \u00a0 | 827,454 | 831,392 | \u00a0 | - | - | \u00a0 | 100,221 | 105,132 |
Market risk primarily stems from the Group\u2019s trading and balance sheet management activities, the impact of changes and correlation between interest rates, foreign exchange rates, credit spreads and volatility in bond, commodity or equity prices.
Market risk is represented by the below two categories:
| Traded Market Risk | Non-Traded Market Risk |
|---|---|
| Traded Market Risk is the potential for gains or losses to arise from trading activities undertaken by the Group as a result of movements in market prices. The trading activities of the Group are principally carried out by Corporate and Institutional Banking.Trading activities represent dealings that encompass both active management of market risk and supporting client sales businesses. The types of market risk arising from these activities include interest rate, foreign exchange, commodity, equity price, credit spread and volatility risk. | The Group has exposure to non-traded market risk, primarily Interest Rate Risk in the Banking Book (IRRBB). IRRBB is the risk that the Group\u2019s earnings or economic value will be affected or reduced by changes in interest rates. The sources of IRRBB are as follows:
|
The Group primarily manages and controls market risk using Value at Risk (VaR), which is a standard measure used throughout the industry. VaR gauges the Group\u2019s possible loss for the holding period based on historical market movements. VaR is measured at a 99% confidence interval. This means that there is a 99% chance that the loss will not exceed the VaR estimate during the holding period.
The Group employs other risk measures to supplement VaR, with appropriate limits to manage and control risks, and communicate the specific nature of market exposures to management, the Board Risk & Compliance Committee and ultimately the Board. These supplementary measures include stress testing, stop loss, position and sensitivity limits.
The VaR methodology involves multiple revaluations of the trading books using 550 days of historical pricing shifts. The pricing data is rolled daily.
The use of VaR methodology has limitations, which include:
The historical data used to calculate VaR is not always an appropriate proxy for current market conditions. If market volatility or correlation conditions change significantly, losses may occur more frequently and to a greater magnitude than the VaR measure suggests.
VaR methodology assumes that positions are held for one day and may underestimate losses on positions that cannot be hedged or reversed inside that timeframe.
VaR is calculated on positions at the close of each trading day, and does not measure risk on intra-day positions.
VaR does not describe the directional bias or size of the positions generating the risk.
The table below shows the Group and Company VaR for the trading portfolio, including both physical and derivative positions:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | ||||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Value at Risk at a 99% confidence level | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Foreign exchange risk | \u00a0 | 3.3 | 2.4 | \u00a0 | 2.7 | 3.0 | \u00a0 | 1.0 | 1.3 | \u00a0 | 5.7 | 5.8 | \u00a0 | 3.7 | 2.3 | \u00a0 | 2.2 | 2.7 | \u00a0 | 0.8 | 1.3 | \u00a0 | 5.0 | 5.4 |
| Interest rate risk | \u00a0 | 6.7 | 5.4 | \u00a0 | 8.4 | 8.9 | \u00a0 | 5.3 | 5.2 | \u00a0 | 17.8 | 14.1 | \u00a0 | 6.1 | 5.2 | \u00a0 | 7.5 | 7.6 | \u00a0 | 5.1 | 4.5 | \u00a0 | 17.4 | 12.3 |
| Volatility risk | \u00a0 | 1.8 | 2.3 | \u00a0 | 1.8 | 2.9 | \u00a0 | 0.9 | 2.0 | \u00a0 | 2.7 | 6.4 | \u00a0 | 1.8 | 2.3 | \u00a0 | 1.8 | 2.9 | \u00a0 | 0.9 | 2.0 | \u00a0 | 2.8 | 6.4 |
| Commodities risk | \u00a0 | 1.0 | 1.6 | \u00a0 | 1.4 | 1.6 | \u00a0 | 0.9 | 0.5 | \u00a0 | 2.9 | 2.9 | \u00a0 | 1.0 | 1.6 | \u00a0 | 1.4 | 1.6 | \u00a0 | 0.9 | 0.5 | \u00a0 | 2.9 | 2.9 |
| Credit risk | \u00a0 | 2.0 | 1.2 | \u00a0 | 1.8 | 1.8 | \u00a0 | 0.9 | 0.9 | \u00a0 | 3.2 | 3.4 | \u00a0 | 1.8 | 1.0 | \u00a0 | 1.5 | 1.4 | \u00a0 | 0.7 | 0.7 | \u00a0 | 2.9 | 2.9 |
| Inflation risk | \u00a0 | 2.3 | 1.7 | \u00a0 | 2.4 | 2.2 | \u00a0 | 1.6 | 1.4 | \u00a0 | 3.4 | 3.4 | \u00a0 | 2.3 | 1.7 | \u00a0 | 2.4 | 2.0 | \u00a0 | 1.6 | 1.4 | \u00a0 | 3.4 | 3.2 |
| Diversification benefit | \u00a0 | (7.1) | (7.5) | \u00a0 | (7.8) | (9.1) | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a | \u00a0 | (6.7) | (7.2) | \u00a0 | (7.2) | (8.1) | \u00a0 | n/a | n/a | \u00a0 | n/a | n/a |
| Total Diversified VaR at 99% confidence interval | \u00a0 | 10.0 | 7.1 | \u00a0 | 10.7 | 11.3 | \u00a0 | 7.2 | 7.1 | \u00a0 | 20.3 | 18.7 | \u00a0 | 10.0 | 6.9 | \u00a0 | 9.6 | 10.1 | \u00a0 | 6.8 | 6.5 | \u00a0 | 17.5 | 17.0 |
| Other market risks | \u00a0 | 2.3 | 3.4 | \u00a0 | 1.9 | 4.5 | \u00a0 | 0.6 | 1.0 | \u00a0 | 3.2 | 8.4 | \u00a0 | 2.3 | 3.4 | \u00a0 | 1.9 | 4.5 | \u00a0 | 0.6 | 1.0 | \u00a0 | 3.2 | 8.4 |
| Total | \u00a0 | 12.3 | 10.5 | \u00a0 | 12.6 | 15.8 | \u00a0 | 7.8 | 8.1 | \u00a0 | 23.5 | 27.1 | \u00a0 | 12.3 | 10.3 | \u00a0 | 11.5 | 14.6 | \u00a0 | 7.4 | 7.5 | \u00a0 | 20.7 | 25.4 |
The principal objective of balance sheet risk management is 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\u2019s banking book, while ensuring the Group maintains sufficient liquidity to meet its obligations as they fall due.
IRRBB is measured, monitored, and managed from both an internal management and regulatory perspective. The Risk Management Framework incorporates both market valuation and earnings based approaches in accordance with the IRRBB Policy and Prudential Practice Guides. Risk measurement techniques include VaR, Earnings at Risk (EaR), interest rate risk stress testing, repricing analysis, cash flow analysis and scenario analysis. The IRRBB regulatory capital calculation incorporates repricing, yield curve, basis, and optionality risk, embedded gains / losses and any inter-risk and / or inter-currency diversification. The Group has been accredited by APRA to use its internal model for the measurement of IRRBB.
Key features of the internal interest rate risk management model include:
Historical simulation approach utilising instantaneous interest rate shocks.
Static balance sheet (i.e. any new business is assumed to be matched, hedged or subject to immediate repricing).
VaR and EaR are measured on a consistent basis.
99% confidence level.
Three month holding period.
EaR utilises a 12 month forecast period.
At least six years of business day historical data (updated daily).
Investment term for capital is modelled with an established benchmark term of between one and five years.
Investment term for core non-interest bearing assets and liabilities is modelled on a behavioural basis with a term that is consistent with sound statistical analysis.
The following table shows the Group and the Company aggregate VaR and EaR for the IRRBB:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | \u00a0 | As at 30 September | \u00a0 | Average value | \u00a0 | Minimum value | \u00a0 | Maximum value | ||||||||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Value at Risk | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Australia | \u00a0 | 379.1 | 300.5 | \u00a0 | 375.1 | 307.3 | \u00a0 | 315.0 | 289.0 | \u00a0 | 407.9 | 326.4 | \u00a0 | 379.1 | 300.5 | \u00a0 | 375.1 | 307.3 | \u00a0 | 315.0 | 289.0 | \u00a0 | 407.9 | 326.4 |
| New Zealand | \u00a0 | 33.6 | 25.5 | \u00a0 | 31.6 | 31.6 | \u00a0 | 24.1 | 22.5 | \u00a0 | 36.7 | 39.4 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Other International | \u00a0 | 34.6 | 47.9 | \u00a0 | 44.0 | 37.1 | \u00a0 | 27.0 | 30.8 | \u00a0 | 62.8 | 47.9 | \u00a0 | 34.6 | 47.9 | \u00a0 | 44.0 | 37.1 | \u00a0 | 27.0 | 30.8 | \u00a0 | 62.8 | 47.9 |
| Earnings at Risk1 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Australia | \u00a0 | 59.1 | 29.6 | \u00a0 | 55.3 | 24.3 | \u00a0 | 38.2 | 14.0 | \u00a0 | 73.3 | 50.7 | \u00a0 | 59.1 | 29.6 | \u00a0 | 55.3 | 24.3 | \u00a0 | 38.2 | 14.0 | \u00a0 | 73.3 | 50.7 |
| New Zealand | \u00a0 | 9.6 | 18.4 | \u00a0 | 15.0 | 18.8 | \u00a0 | 7.8 | 10.0 | \u00a0 | 22.7 | 28.1 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
| Other International | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 0.1 | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | - | - |
Residual value risk
As part of its normal lending activities, the Group takes residual value risk on assets such as industrial, mining, rail, aircraft, marine, technology, healthcare and other equipment. This exposes the Group to a potential fall in prices of these assets below the outstanding residual exposure at the facility expiry.
Liquidity risk is the risk that the Group is unable to meet its financial obligations as they fall due. These obligations include the repayment of deposits on demand or at their contractual maturity, the repayment of wholesale borrowings and loan capital as they mature and the payment of interest on borrowings.
These risks are governed by the Group\u2019s funding and liquidity risk appetite which is set by the Board. Group Treasury is responsible for the management of these risks. Objective review and challenge of the effectiveness of risk management is provided by Group Balance Sheet and Liquidity Risk Management with oversight by the Group Asset and Liability Committee. The Board has the ultimate responsibility to monitor and review the adequacy of the Group\u2019s funding and liquidity RMF and the Group\u2019s compliance with risk appetite.
Key principles adopted in the Group\u2019s approach to managing liquidity risk include:
Monitoring the Group\u2019s liquidity position on a daily basis, using a combination of contractual and behavioural modelling of balance sheet and cash flow information.
Maintaining a HQLA portfolio which supports intra-day operations and may be sold in times of market stress.
Operating a prudent funding strategy which ensures appropriate diversification and limits maturity concentrations. The Group undertakes a conservative approach by imposing internal limits that are in addition to regulatory requirements.
Maintaining a contingent funding plan designed to respond to an accelerated outflow of funds from the Group.
Requiring the Group to have the ability to meet a range of survival horizon scenarios, including name-specific and general liquidity stress scenarios.
The Group maintained funding and liquidity metrics well above regulatory minimums throughout the 2023 financial year. The CLF has been fully phased out to zero on 1 January 2023.
The liquid asset portfolio held as part of these principles is well diversified by currency, counterparty and product type with the mix consistent with the liquidity risks of the Group. The composition of the portfolio includes cash, government securities and highly rated investment grade paper. The market value of total on-balance sheet liquid assets held as at 30 September 2023 was $222,463 million (2022: $220,415 million). In addition, the Group holds internal RMBS as a source of contingent liquidity. As at 30 September 2023, the cash value of unencumbered internal RMBS held and available was $80,089 million (2022: $66,114 million).
The Group\u2019s funding is comprised of a mix of deposits, term wholesale funding, short-term wholesale funding and equity. The Group manages this within risk appetite settings to ensure suitable funding of its asset base and to enable it to respond to changing market conditions and regulatory requirements.
The Group maintains a strong focus on stable deposits both from a growth and quality perspective and continues to utilise deposits as a key funding source for funded assets.
The Group supplements deposit-raising via its term funding programmes, raising $40,254 million1 of term wholesale funding in the 2023 financial year (2022: $38,676 million). The weighted average maturity of term wholesale funding issued by the Group was 4.32 years to first call (2022: 5.0 years). In addition, during the 2023 financial year, the Group continued to access international and domestic short-term wholesale markets.
On 19 March 2020, the RBA announced the establishment of the TFF for the Australian banking system to support ADIs in providing credit into the economy. The TFF provided access to three-year secured funding, supporting lending to the Group's customers and reducing wholesale funding refinancing risks at the time. The total available TFF allocation of $31,866 million (excluding the TFF acquired via the Citi consumer business acquisition) was drawn, consisting of $14,270 million of Initial Allowance in the 2020 financial year and $17,596 million of Additional and Supplementary Allowances in the 2021 financial year. As at 30 September 2023, the full Initial Allowance amount has been repaid. The Additional and Supplementary Allowances are due to mature by 30 June 2024.
The following tables show an analysis of contractual maturities of assets and liabilities at the reporting date. The Group expects that certain assets and liabilities will be recovered or settled at maturities which are different to their contractual maturities, including deposits where the Group expects as part of normal banking operations that a large proportion of these balances will roll over.
| \u00a0 | \u00a0 | Less than 12 months | \u00a0 | Greater than 12 months | \u00a0 | No specific maturity | \u00a0 | Total | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 24,699 | 56,451 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 24,699 | 56,451 |
| Due from other banks | \u00a0 | 116,984 | 141,530 | \u00a0 | 322 | 331 | \u00a0 | - | - | \u00a0 | 117,306 | 141,861 |
| Collateral placed | \u00a0 | 11,286 | 13,115 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 11,286 | 13,115 |
| Trading assets | \u00a0 | 66,717 | 13,948 | \u00a0 | 34,434 | 26,524 | \u00a0 | 17 | 101 | \u00a0 | 101,168 | 40,573 |
| Debt instruments | \u00a0 | 6,505 | 7,081 | \u00a0 | 39,852 | 34,999 | \u00a0 | - | - | \u00a0 | 46,357 | 42,080 |
| Other financial assets | \u00a0 | 858 | 966 | \u00a0 | 572 | 1,095 | \u00a0 | - | - | \u00a0 | 1,430 | 2,061 |
| Derivative assets | \u00a0 | 236 | 1,379 | \u00a0 | 3,263 | 6,208 | \u00a0 | 30,770 | 53,429 | \u00a0 | 34,269 | 61,016 |
| Loans and advances | \u00a0 | 130,430 | 117,119 | \u00a0 | 562,744 | 554,631 | \u00a0 | 9,528 | 8,684 | \u00a0 | 702,702 | 680,434 |
| All other assets | \u00a0 | 7,429 | 5,418 | \u00a0 | 97 | 347 | \u00a0 | 12,340 | 11,770 | \u00a0 | 19,866 | 17,535 |
| Total assets | \u00a0 | 365,144 | 357,007 | \u00a0 | 641,284 | 624,135 | \u00a0 | 52,655 | 73,984 | \u00a0 | 1,059,083 | 1,055,126 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | 37,200 | 55,140 | \u00a0 | 2,316 | 19,539 | \u00a0 | - | - | \u00a0 | 39,516 | 74,679 |
| Collateral received | \u00a0 | 10,672 | 17,245 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 10,672 | 17,245 |
| Other financial liabilities | \u00a0 | 52,386 | 8,941 | \u00a0 | 13,966 | 14,345 | \u00a0 | - | - | \u00a0 | 66,352 | 23,286 |
| Derivative liabilities | \u00a0 | 985 | 1,528 | \u00a0 | 3,526 | 5,229 | \u00a0 | 31,122 | 50,729 | \u00a0 | 35,633 | 57,486 |
| Deposits and other borrowings | \u00a0 | 631,645 | 654,090 | \u00a0 | 50,475 | 29,436 | \u00a0 | - | - | \u00a0 | 682,120 | 683,526 |
| Bonds, notes and subordinated debt | \u00a0 | 20,848 | 26,080 | \u00a0 | 114,797 | 93,203 | \u00a0 | - | - | \u00a0 | 135,645 | 119,283 |
| Debt issues | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 8,561 | 7,318 | \u00a0 | 8,561 | 7,318 |
| All other liabilities | \u00a0 | 12,726 | 8,266 | \u00a0 | 4,456 | 2,213 | \u00a0 | 1,899 | 2,792 | \u00a0 | 19,081 | 13,271 |
| Total liabilities | \u00a0 | 766,462 | 771,290 | \u00a0 | 189,536 | 163,965 | \u00a0 | 41,582 | 60,839 | \u00a0 | 997,580 | 996,094 |
| Net (liabilities) / assets | \u00a0 | (401,318) | (414,283) | \u00a0 | 451,748 | 460,170 | \u00a0 | 11,073 | 13,145 | \u00a0 | 61,503 | 59,032 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 23,959 | 56,121 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 23,959 | 56,121 |
| Due from other banks | \u00a0 | 106,634 | 132,813 | \u00a0 | 321 | 331 | \u00a0 | - | - | \u00a0 | 106,955 | 133,144 |
| Collateral placed | \u00a0 | 10,214 | 10,636 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 10,214 | 10,636 |
| Trading assets | \u00a0 | 61,684 | 11,044 | \u00a0 | 28,716 | 22,898 | \u00a0 | 17 | 101 | \u00a0 | 90,417 | 34,043 |
| Debt instruments | \u00a0 | 6,499 | 7,092 | \u00a0 | 39,837 | 35,002 | \u00a0 | - | - | \u00a0 | 46,336 | 42,094 |
| Other financial assets | \u00a0 | 1,147 | 405 | \u00a0 | 561 | 2,344 | \u00a0 | - | - | \u00a0 | 1,708 | 2,749 |
| Derivative assets | \u00a0 | 571 | 1,311 | \u00a0 | 2,134 | 4,408 | \u00a0 | 31,079 | 54,932 | \u00a0 | 33,784 | 60,651 |
| Loans and advances | \u00a0 | 108,016 | 96,689 | \u00a0 | 491,059 | 488,174 | \u00a0 | 8,609 | 7,816 | \u00a0 | 607,684 | 592,679 |
| All other assets | \u00a0 | 6,472 | 4,357 | \u00a0 | 609 | 643 | \u00a0 | 61,643 | 50,711 | \u00a0 | 68,724 | 55,711 |
| Total assets | \u00a0 | 325,196 | 320,468 | \u00a0 | 563,237 | 553,800 | \u00a0 | 101,348 | 113,560 | \u00a0 | 989,781 | 987,828 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | 33,965 | 51,635 | \u00a0 | - | 17,660 | \u00a0 | - | - | \u00a0 | 33,965 | 69,295 |
| Collateral received | \u00a0 | 9,281 | 15,365 | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 9,281 | 15,365 |
| Other financial liabilities | \u00a0 | 42,512 | 2,340 | \u00a0 | 9,233 | 6,620 | \u00a0 | - | - | \u00a0 | 51,745 | 8,960 |
| Derivative liabilities | \u00a0 | 957 | 1,021 | \u00a0 | 1,566 | 3,076 | \u00a0 | 33,587 | 53,397 | \u00a0 | 36,110 | 57,494 |
| Deposits and other borrowings | \u00a0 | 560,238 | 589,160 | \u00a0 | 48,403 | 27,801 | \u00a0 | - | - | \u00a0 | 608,641 | 616,961 |
| Bonds, notes and subordinated debt | \u00a0 | 20,587 | 25,995 | \u00a0 | 103,742 | 83,679 | \u00a0 | - | - | \u00a0 | 124,329 | 109,674 |
| Debt issues | \u00a0 | - | - | \u00a0 | - | - | \u00a0 | 8,561 | 7,318 | \u00a0 | 8,561 | 7,318 |
| All other liabilities | \u00a0 | 11,567 | 6,670 | \u00a0 | 3,324 | 1,745 | \u00a0 | 45,735 | 44,218 | \u00a0 | 60,626 | 52,633 |
| Total liabilities | \u00a0 | 679,107 | 692,186 | \u00a0 | 166,268 | 140,581 | \u00a0 | 87,883 | 104,933 | \u00a0 | 933,258 | 937,700 |
| Net (liabilities) / assets | \u00a0 | (353,911) | (371,718) | \u00a0 | 396,969 | 413,219 | \u00a0 | 13,465 | 8,627 | \u00a0 | 56,523 | 50,128 |
Credit is any transaction that creates an actual or potential obligation for a counterparty or a customer to pay the Group. Credit risk is the potential that a counterparty or customer will fail to meet its obligations to the Group in accordance with the agreed terms. Lending activities account for most of the Group\u2019s credit risk, however other sources of credit risk also exist throughout the activities of the Group. These activities include the trading book, and other financial instruments and loans (including, but not limited to, acceptances, placements, inter-bank transactions, trade financing, foreign exchange transactions, swaps, bonds and options), as well as in the extension of commitments and guarantees and the settlement of transactions.
The Group structures the levels of credit risk it undertakes by placing limits on the amount of risk accepted in relation to existing or potential counterparties or customers, groups of related counterparties or groups of related customers, and to geographical and industry segments. Such risks are monitored on an ongoing basis and are subject to annual or more frequent review.
In general, the Group does not take possession of collateral it holds as security or call on other credit enhancements that would result in recognition of an asset on the balance sheet.
Exposure to credit risk is managed through regular analysis of the ability of existing or potential counterparties, customers, groups of related counterparties or groups of related customers to meet repayment obligations, primarily interest and principal, and by changing credit limits where appropriate. Exposure to credit risk is also managed in part, by obtaining collateral and corporate and personal guarantees.
The Group further restricts its exposure to credit losses by entering into master netting arrangements for derivatives, repurchase and securities lending transactions with counterparties with which it undertakes a significant volume of transactions. The credit risk associated with contracts favourable to a Group entity is reduced by a master netting arrangement to the extent that if a counterparty failed to meet its obligations in accordance with agreed terms, all contracts with a counterparty can be terminated and settled on a net basis.
The Group is exposed to ESG and other emerging risks. The following items are examples of how these risks may impact the Group:
Increases in the frequency and severity of climatic events could impact customers\u2019 ability to service their loans or the value of the collateral held to secure the loans.
Action taken by governments, regulators and society more generally, to transition to a low-carbon economy, could impact the ability of some customers to generate long-term returns in a sustainable way or lead to certain assets being stranded in the future.
Failure to comply with environmental and social legislation (emerging and current) may impact customers\u2019 ability to generate sustainable returns and service their loans.
If in future customers don\u2019t hold appropriate levels of insurance for physical assets against certain risks, this may impact the value the Group can recover in the event of certain natural disasters.
The Group considers these risks as part of the credit risk assessment and due diligence process before relevant customers are granted credit and for new product development. The Group also manages its total credit portfolio within established risk appetite and limits, particularly for specific industries or regions that are more exposed to these types of risks. In addition, the Group may recognise FLAs to the provision for credit impairment for the impact of adverse climate events. In the 2022 financial year, the Group recognised a FLA of $14 million for the potential impact of the Lismore floods (2023: nil).
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 financial guarantees granted, the maximum exposure to credit risk is the maximum amount that the Group would have to pay if the guarantees are called upon. For irrevocable loan commitments and other credit-related commitments, the maximum exposure to credit risk is the full amount of committed facilities.
The table below shows the Group\u2019s maximum exposure to credit risk for on-balance sheet and off-balance sheet positions before taking into account any collateral held or other credit enhancements.
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | Footnote | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | (a) | \u00a0 | 23,669 | 55,304 | \u00a0 | 23,022 | 55,100 |
| Due from other banks | \u00a0 | (b) | \u00a0 | 117,306 | 141,861 | \u00a0 | 106,955 | 133,144 |
| Collateral placed | \u00a0 | (c) | \u00a0 | 11,286 | 13,115 | \u00a0 | 10,214 | 10,636 |
| Trading assets | \u00a0 | (d) | \u00a0 | 101,168 | 40,573 | \u00a0 | 90,417 | 34,043 |
| Debt instruments | \u00a0 | (e) | \u00a0 | 46,357 | 42,080 | \u00a0 | 46,336 | 42,094 |
| Other financial assets | \u00a0 | (f) | \u00a0 | 1,430 | 2,061 | \u00a0 | 1,708 | 2,749 |
| Derivative assets | \u00a0 | (d) | \u00a0 | 34,269 | 61,016 | \u00a0 | 33,784 | 60,651 |
| Gross loans and advances | \u00a0 | (f) | \u00a0 | 707,228 | 685,839 | \u00a0 | 611,556 | 597,445 |
| Due from controlled entities | \u00a0 | (g) | \u00a0 | - | - | \u00a0 | 43,577 | 38,226 |
| Other assets | \u00a0 | (g) | \u00a0 | 6,869 | 4,861 | \u00a0 | 6,572 | 4,181 |
| Total | \u00a0 | \u00a0 | \u00a0 | 1,049,582 | 1,046,710 | \u00a0 | 974,141 | 978,269 |
| Bank guarantees and letters of credit | \u00a0 | (h) | \u00a0 | 26,321 | 25,683 | \u00a0 | 24,637 | 23,958 |
| Credit commitments | \u00a0 | (h) | \u00a0 | 208,853 | 201,147 | \u00a0 | 188,268 | 182,667 |
| Total | \u00a0 | \u00a0 | \u00a0 | 235,174 | 226,830 | \u00a0 | 212,905 | 206,625 |
| Total credit risk exposure | \u00a0 | \u00a0 | \u00a0 | 1,284,756 | 1,273,540 | \u00a0 | 1,187,046 | 1,184,894 |
(a) The balance of Cash and liquid assets that is exposed to credit risk is comprised primarily of reverse repurchase agreements and securities borrowing agreements.
(b) The balance of Due from other banks that is exposed to credit risk is comprised primarily of securities borrowing agreements and reverse repurchase agreements, as well as balances held with central supervisory banks and other interest earning assets. Securities borrowing agreements and reverse repurchase agreements are collateralised with highly liquid securities and the collateral is in excess of the borrowed or loaned amount.
Balances held with central supervisory banks and other interest earning assets that are due from other banks are managed based on the counterparty\u2019s creditworthiness. The Group will utilise master netting arrangements where possible to reduce its exposure to credit risk.
(c) The maximum exposure to credit risk from Collateral placed is the collateral placed with the counterparty before consideration of any netting arrangements.
(d) At any one time, the maximum exposure to credit risk from Trading assets and Derivative assets is limited to the current fair value of instruments that are favourable to the Group less collateral obtained. This credit risk is managed as part of the overall lending limits with customers, together with potential exposures from market movements.
The Group uses documentation including International Swaps and Derivatives Association (ISDA) Master Agreements to document derivative activities. Under ISDA Master Agreements, if a default of a counterparty occurs, all contracts with the counterparty are terminated. They are then settled on a net basis at market levels current at the time of default. The Group also executes Credit Support Annexes in conjunction with ISDA Master Agreements.
Credit risk from over-the-counter trading and hedging derivatives is mitigated where possible through netting arrangements whereby derivative assets and liabilities with the same counterparty can be offset in certain circumstances. Derivatives that are cleared through a central clearing counterparty or an exchange have less credit risk than over-the-counter derivatives and are subject to relevant netting and collateral agreements.
Collateral is obtained against derivative assets, depending on the creditworthiness of the counterparty and / or the nature of the transaction.
(a) Debt instruments are generally comprised of government, semi-government, corporate and financial institution bonds, notes and securities. The amount of collateral held against such instruments will depend on the counterparty and the nature of the specific financial instrument.
The Group may utilise credit default swaps, guarantees provided by central banks, other forms of credit enhancements or collateral to minimise the Group\u2019s exposure to credit risk.
(b) Gross loans and advances and Other financial assets primarily comprise general lending and line of credit products. The distinction is due to accounting classification and measurement. These lending products will generally have a significant level of collateralisation depending on the nature of the product.
Other lending to non-retail customers may be provided on an unsecured basis or secured (partially or fully) by acceptable collateral defined in specific Group credit policy and business unit procedures. Collateral is generally comprised of business assets, inventories and in some cases personal assets of the borrower. The Group manages its exposure to these products by completing a credit evaluation to assess the customer\u2019s character, industry, business model and capacity to meet their commitments without distress. Collateral provides a secondary source of repayment for funds advanced in the event that a customer cannot meet their contractual repayment obligations. For amounts due from customers on acceptances the Group generally has recourse to guarantees, underlying inventories or other assets in the event of default which significantly mitigates the credit risk associated with accepting the customer\u2019s credit facility with a third party.
Housing loans are secured against residential property as collateral and, where applicable, Lenders Mortgage Insurance (LMI) is obtained by the Group (mostly in Australia) to cover any shortfall in outstanding loan principal and accrued interest. LMI is generally obtained for residential mortgages with a Loan to Valuation Ratio (LVR) in excess of 80%. The financial effect of these measures is that remaining credit risk on residential mortgage loans is minimal. Other retail lending products are mostly unsecured (e.g. credit card outstandings and other personal lending).
(c) The balance of Other assets which is exposed to credit risk includes securities sold not delivered, interest receivable accruals and other receivables. Interest receivable accruals are subject to the same collateral as the underlying borrowings. Other receivables will mostly be unsecured. There are typically no collateral or other credit enhancements obtained in respect of amounts Due from controlled entities.
(d) Bank guarantees and letters of credit are comprised primarily of guarantees to customers, standby or documentary letters of credit and performance related contingencies. The Group will typically have recourse to specific assets pledged as collateral in the event of a default by a party for which the Group has guaranteed its obligations to a third party and therefore tend to carry the same credit risk as loans.
Credit commitments represent binding commitments to extend credit where the Group is potentially exposed to loss of an amount equal to the total unused commitments. However, the likely amount of loss is generally less than the total unused commitments, as most commitments to extend credit are contingent upon customers maintaining specific credit standards.
The Group monitors the term to maturity of credit commitments because, in general, longer-term commitments have a greater degree of credit risk than shorter term commitments.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-483": { "value": "Liquidity risk is the risk that the Group is unable to meet its financial obligations as they fall due. These obligations include the repayment of deposits on demand or at their contractual maturity, the repayment of wholesale borrowings and loan capital as they mature and the payment of interest on borrowings.
These risks are governed by the Group\u2019s funding and liquidity risk appetite which is set by the Board. Group Treasury is responsible for the management of these risks. Objective review and challenge of the effectiveness of risk management is provided by Group Balance Sheet and Liquidity Risk Management with oversight by the Group Asset and Liability Committee. The Board has the ultimate responsibility to monitor and review the adequacy of the Group\u2019s funding and liquidity RMF and the Group\u2019s compliance with risk appetite.
Key principles adopted in the Group\u2019s approach to managing liquidity risk include:
Monitoring the Group\u2019s liquidity position on a daily basis, using a combination of contractual and behavioural modelling of balance sheet and cash flow information.
Maintaining a HQLA portfolio which supports intra-day operations and may be sold in times of market stress.
Operating a prudent funding strategy which ensures appropriate diversification and limits maturity concentrations. The Group undertakes a conservative approach by imposing internal limits that are in addition to regulatory requirements.
Maintaining a contingent funding plan designed to respond to an accelerated outflow of funds from the Group.
Requiring the Group to have the ability to meet a range of survival horizon scenarios, including name-specific and general liquidity stress scenarios.
The Group maintained funding and liquidity metrics well above regulatory minimums throughout the 2023 financial year. The CLF has been fully phased out to zero on 1 January 2023.
The liquid asset portfolio held as part of these principles is well diversified by currency, counterparty and product type with the mix consistent with the liquidity risks of the Group. The composition of the portfolio includes cash, government securities and highly rated investment grade paper. The market value of total on-balance sheet liquid assets held as at 30 September 2023 was $222,463 million (2022: $220,415 million). In addition, the Group holds internal RMBS as a source of contingent liquidity. As at 30 September 2023, the cash value of unencumbered internal RMBS held and available was $80,089 million (2022: $66,114 million).
The Group\u2019s funding is comprised of a mix of deposits, term wholesale funding, short-term wholesale funding and equity. The Group manages this within risk appetite settings to ensure suitable funding of its asset base and to enable it to respond to changing market conditions and regulatory requirements.
The Group maintains a strong focus on stable deposits both from a growth and quality perspective and continues to utilise deposits as a key funding source for funded assets.
The Group supplements deposit-raising via its term funding programmes, raising $40,254 million1 of term wholesale funding in the 2023 financial year (2022: $38,676 million). The weighted average maturity of term wholesale funding issued by the Group was 4.32 years to first call (2022: 5.0 years). In addition, during the 2023 financial year, the Group continued to access international and domestic short-term wholesale markets.
On 19 March 2020, the RBA announced the establishment of the TFF for the Australian banking system to support ADIs in providing credit into the economy. The TFF provided access to three-year secured funding, supporting lending to the Group's customers and reducing wholesale funding refinancing risks at the time. The total available TFF allocation of $31,866 million (excluding the TFF acquired via the Citi consumer business acquisition) was drawn, consisting of $14,270 million of Initial Allowance in the 2020 financial year and $17,596 million of Additional and Supplementary Allowances in the 2021 financial year. As at 30 September 2023, the full Initial Allowance amount has been repaid. The Additional and Supplementary Allowances are due to mature by 30 June 2024.
Fair value is 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. Where the classification of a financial asset or liability results in it being measured at fair value, wherever possible, the fair value is determined with reference to the quoted bid or offer price in the most advantageous active market to which the Group has immediate access. An adjustment for credit risk (CVA) is also incorporated into the fair value as appropriate as well as an adjustment for funding costs (FVA) related to uncollateralised over-the-counter derivatives. The fair value measurement technique of each class of instrument is described below.
| Instrument | Fair value measurement technique |
| Loans and advances | The fair value of loans and advances that are priced based on a variable rate with no contractual repricing tenor is assumed to equate to the carrying value. The fair value of all other loans and advances is calculated using discounted cash flow models based on the maturity of the loans and advances. The discount rates applied are based on interest rates at the reporting date for similar types of loans and advances, if the loans and advances were performing at the reporting date. |
| Deposits and other borrowings | The fair value of deposits and other borrowings that are non-interest bearing or at call, is assumed to equate to the carrying value. The fair value of other deposits and other borrowings is calculated using discounted cash flow models based on the deposit type and maturity. |
| Bonds, notes and subordinated debt and debt issues | The fair values of bonds, notes and subordinated debt and debt issues are calculated based on a discounted cash flow model using a yield curve appropriate to the remaining maturity of the instruments and appropriate credit spreads, or in some instances are calculated based on market quoted prices when there is sufficient liquidity in the market. |
| Derivatives | The fair values of trading and hedging derivative assets and liabilities are obtained from quoted closing market prices at the reporting date, discounted cash flow models or option pricing models as appropriate. |
| Trading assets and debt instruments | The fair values of trading assets and debt instruments are based on quoted closing market prices at the reporting date. Where securities are unlisted and quoted market prices are not available, the Group obtains the fair value by means of discounted cash flows and other valuation techniques that are commonly used by market participants. These techniques address factors such as interest rates, credit risk and liquidity. |
| Equity instruments | The fair value of equity instruments at fair value through other comprehensive income is estimated on the basis of the actual and forecasted financial position and results of the underlying assets or net assets taking into consideration their risk profile. |
| Other financial assets and liabilities | The fair values of other financial assets and liabilities are based on quoted closing market prices and data or valuation techniques, appropriate to the nature and type of the underlying instrument. |
| Due to controlled entities and due from controlled entities | Includes reverse repurchase agreements and repurchase agreements that are classified as held for trading and measured at fair value through profit and loss. The fair values are based on a discounted cash flow model\u00a0using an appropriate yield curve. |
The carrying amounts of cash and liquid assets, due from and to other banks, other assets, other liabilities and amounts due from and to controlled entities, approximate their fair value as they are short-term in nature or are receivable or payable on demand.
Guarantees, letters of credit, performance related contingencies and credit related commitments are generally not sold or traded and estimated fair values are not readily ascertainable. The fair value of these items are not calculated, as very few of the commitments extending beyond six months would commit the Group to a predetermined rate of interest, and the fees attaching to these commitments are the same as those currently charged for similar arrangements.
Fair value for a net open position is the offer price for a financial liability and the bid price for a financial asset, multiplied by the number of units of the instrument issued or held.
Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period in which the transfer occurs.
A significant portion of financial instruments are carried on the balance sheet at fair value.
Where no active market exists for a particular asset or liability, the Group uses a valuation technique to arrive at the fair value, including the use of transaction prices obtained in recent arm\u2019s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques, based on market conditions and risks existing at the reporting date. In doing so, fair value is estimated using a valuation technique that makes maximum use of observable market inputs and places minimal reliance upon entity-specific inputs.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When such evidence exists, the Group recognises the difference between the transaction price and the fair value in profit or loss on initial recognition (i.e. on day one).
The level in the fair value hierarchy within which a fair value measurement is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. The fair value hierarchy is as follows:
Level 1 \u2013 Financial instruments that have been valued by reference to unadjusted quoted prices for identical financial assets or financial liabilities in active markets. Financial instruments included in this category are Commonwealth of Australia and New Zealand government bonds, and spot and exchange traded derivatives.
Level 2 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs other than quoted prices within Level 1 that are observable for the financial asset or financial liability, either directly (as prices) or indirectly (derived from prices). Financial instruments included in this category are over-the-counter trading and hedging derivatives, semi-government bonds, financial institution and corporate bonds, mortgage-backed securities, loans measured at fair value, and issued bonds, notes and subordinated debt measured at fair value.
Level 3 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs that are not based on observable market data. Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. Financial instruments included in this category are bespoke trading derivatives, trading derivatives where the credit valuation adjustment is considered unobservable and significant to the valuation, and certain asset-backed securities valued using unobservable inputs.
Transfers into and out of Level 3 take place when there are changes to the inputs in the valuation technique. Where inputs are no longer observable the fair value measurement is transferred into Level 3. Conversely, a measurement is transferred out of Level 3 when inputs become observable.
The Group\u2019s exposure to fair value measurements based in full or in part on unobservable inputs is restricted to a small number of financial instruments, which comprise an insignificant component of the portfolios in which they belong. As such, a change in the assumption used to value the instruments as at 30 September 2023 attributable to reasonably possible alternatives would not have a material effect.
The financial assets and financial liabilities listed in the table below are carried at amortised cost. While this is the value at which the Group expects the assets to be realised and the liabilities to be settled, the table below includes their fair values as at 30 September:
| \u00a0 | \u00a0 | 2023 | \u00a0 | 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Carrying value | Level 1 | Level 2 | Level 3 | Fair value | \u00a0 | Carrying value | Level 1 | Level 2 | Level 3 | Fair value |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | 702,702 | - | 5,530 | 693,672 | 699,202 | \u00a0 | 680,434 | - | 4,744 | 670,807 | 675,551 |
| Total financial assets | \u00a0 | 702,702 | - | 5,530 | 693,672 | 699,202 | \u00a0 | 680,434 | - | 4,744 | 670,807 | 675,551 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deposits and other borrowings | \u00a0 | 682,120 | - | 683,857 | - | 683,857 | \u00a0 | 683,526 | - | 683,530 | - | 683,530 |
| Bonds, notes and subordinated debt | \u00a0 | 135,645 | - | 135,405 | 7 | 135,412 | \u00a0 | 119,283 | - | 118,417 | - | 118,417 |
| Debt issues | \u00a0 | 8,561 | 7,802 | 1,040 | - | 8,842 | \u00a0 | 7,318 | 6,466 | 1,065 | - | 7,531 |
| Total financial liabilities | \u00a0 | 826,326 | 7,802 | 820,302 | 7 | 828,111 | \u00a0 | 810,127 | 6,466 | 803,012 | - | 809,478 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | 607,684 | - | 3,414 | 602,221 | 605,635 | \u00a0 | 592,679 | - | 2,811 | 586,399 | 589,210 |
| Total financial assets | \u00a0 | 607,684 | - | 3,414 | 602,221 | 605,635 | \u00a0 | 592,679 | - | 2,811 | 586,399 | 589,210 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deposits and other borrowings | \u00a0 | 608,641 | - | 610,438 | - | 610,438 | \u00a0 | 616,961 | - | 617,073 | - | 617,073 |
| Bonds, notes and subordinated debt | \u00a0 | 124,329 | - | 122,888 | - | 122,888 | \u00a0 | 109,674 | - | 107,792 | - | 107,792 |
| Debt issues | \u00a0 | 8,561 | 7,802 | 1,040 | - | 8,842 | \u00a0 | 7,318 | 6,466 | 1,065 | - | 7,531 |
| Total financial liabilities | \u00a0 | 741,531 | 7,802 | 734,366 | - | 742,168 | \u00a0 | 733,953 | 6,466 | 725,930 | - | 732,396 |
| \u00a0 | \u00a0 | 2023 | \u00a0 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Level 1 | Level 2 | Level 3 | Total | \u00a0 | Level 1 | Level 2 | Level 3 | Total |
| \u00a0 | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading assets | \u00a0 | 30,482 | 70,686 | - | 101,168 | \u00a0 | 27,393 | 13,180 | - | 40,573 |
| Debt instruments | \u00a0 | 2,691 | 43,377 | 289 | 46,357 | \u00a0 | 3,625 | 37,732 | 723 | 42,080 |
| Other financial assets | \u00a0 | - | 1,243 | 187 | 1,430 | \u00a0 | - | 1,740 | 321 | 2,061 |
| Derivative assets | \u00a0 | - | 33,946 | 323 | 34,269 | \u00a0 | - | 60,567 | 449 | 61,016 |
| Equity instruments1 | \u00a0 | - | - | 257 | 257 | \u00a0 | - | - | 187 | 187 |
| Total financial assets measured at fair value | \u00a0 | 33,173 | 149,252 | 1,056 | 183,481 | \u00a0 | 31,018 | 113,219 | 1,680 | 145,917 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other financial liabilities | \u00a0 | 5,453 | 60,899 | - | 66,352 | \u00a0 | 2,441 | 20,845 | - | 23,286 |
| Derivative liabilities | \u00a0 | - | 35,362 | 271 | 35,633 | \u00a0 | - | 57,117 | 369 | 57,486 |
| Total financial liabilities measured at fair value | \u00a0 | 5,453 | 96,261 | 271 | 101,985 | \u00a0 | 2,441 | 77,962 | 369 | 80,772 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading assets | \u00a0 | 27,935 | 62,482 | - | 90,417 | \u00a0 | 24,303 | 9,740 | - | 34,043 |
| Debt instruments | \u00a0 | 2,691 | 43,356 | 289 | 46,336 | \u00a0 | 3,626 | 37,745 | 723 | 42,094 |
| Other financial assets | \u00a0 | - | 1,521 | 187 | 1,708 | \u00a0 | - | 2,428 | 321 | 2,749 |
| Derivative assets | \u00a0 | - | 33,461 | 323 | 33,784 | \u00a0 | - | 60,202 | 449 | 60,651 |
| Equity instruments1 | \u00a0 | - | - | 122 | 122 | \u00a0 | - | - | 86 | 86 |
| Due from controlled entities | \u00a0 | - | 1,238 | - | 1,238 | \u00a0 | - | - | - | - |
| Total financial assets measured at fair value | \u00a0 | 30,626 | 142,058 | 921 | 173,605 | \u00a0 | 27,929 | 110,115 | 1,579 | 139,623 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other financial liabilities | \u00a0 | 5,254 | 46,491 | - | 51,745 | \u00a0 | 2,198 | 6,762 | - | 8,960 |
| Derivative liabilities | \u00a0 | - | 35,839 | 271 | 36,110 | \u00a0 | - | 57,125 | 369 | 57,494 |
| Due to controlled entities | \u00a0 | - | 1,159 | - | 1,159 | \u00a0 | - | - | - | - |
| Total financial liabilities measured at fair value | \u00a0 | 5,254 | 83,489 | 271 | 89,014 | \u00a0 | 2,198 | 63,887 | 369 | 66,454 |
There were no material transfers between Level 1 and Level 2 during the 2023 financial year for the Group and the Company.
The table below summarises changes in fair value classified as Level 3:
| \u00a0 | \u00a0 | Assets | \u00a0 | Liabilities | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Derivatives | Debt instruments | Other1 | \u00a0 | Derivatives | ||||
| \u00a0 | \u00a0 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at the beginning of year | \u00a0 | 449 | 148 | 723 | 919 | 508 | 369 | \u00a0 | 369 | 96 |
| Gains / (losses) on assets and (gains) / losses on liabilities recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 17 | 12 | \u00a0 | - | - |
| Purchases and issues | \u00a0 | 25 | 72 | 77 | 386 | 59 | 461 | \u00a0 | - | 20 |
| Sales and settlements | \u00a0 | - | (13) | (237) | (380) | (112) | (280) | \u00a0 | - | - |
| Transfers into Level 3 | \u00a0 | 20 | - | 72 | 250 | - | - | \u00a0 | - | 1 |
| Transfers out of Level 3 | \u00a0 | (153) | (1) | (351) | (438) | (49) | - | \u00a0 | (81) | - |
| Foreign currency translation adjustments | \u00a0 | 2 | (2) | - | 1 | 14 | (4) | \u00a0 | 1 | (1) |
| Balance at end of year | \u00a0 | 323 | 449 | 289 | 723 | 444 | 508 | \u00a0 | 271 | 369 |
| Gains / (losses) on assets and (gains) / losses on liabilities for the reporting period related to financial instruments held at the end of the reporting period recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 17 | 12 | \u00a0 | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at the beginning of year | \u00a0 | 449 | 148 | 723 | 919 | 407 | 285 | \u00a0 | 369 | 96 |
| Gains / (losses) on assets and (gains) / losses on liabilities recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 16 | (4) | \u00a0 | - | - |
| Purchases and issues | \u00a0 | 25 | 72 | 77 | 386 | 20 | 419 | \u00a0 | - | 20 |
| Sales and settlements | \u00a0 | - | (13) | (237) | (380) | (105) | (242) | \u00a0 | - | - |
| Transfers into Level 3 | \u00a0 | 20 | - | 72 | 250 | - | - | \u00a0 | - | 1 |
| Transfers out of Level 3 | \u00a0 | (153) | (1) | (351) | (438) | (49) | - | \u00a0 | (81) | - |
| Foreign currency translation adjustments | \u00a0 | 2 | (2) | - | 1 | 13 | (1) | \u00a0 | 1 | (1) |
| Balance at end of year | \u00a0 | 323 | 449 | 289 | 723 | 309 | 407 | \u00a0 | 271 | 369 |
| Gains / (losses) on assets and (gains) / losses on liabilities for the reporting period related to financial instruments held at the end of the reporting period recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 16 | (4) | \u00a0 | - | - |
Fair value is 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. Where the classification of a financial asset or liability results in it being measured at fair value, wherever possible, the fair value is determined with reference to the quoted bid or offer price in the most advantageous active market to which the Group has immediate access. An adjustment for credit risk (CVA) is also incorporated into the fair value as appropriate as well as an adjustment for funding costs (FVA) related to uncollateralised over-the-counter derivatives. The fair value measurement technique of each class of instrument is described below.
| Instrument | Fair value measurement technique |
| Loans and advances | The fair value of loans and advances that are priced based on a variable rate with no contractual repricing tenor is assumed to equate to the carrying value. The fair value of all other loans and advances is calculated using discounted cash flow models based on the maturity of the loans and advances. The discount rates applied are based on interest rates at the reporting date for similar types of loans and advances, if the loans and advances were performing at the reporting date. |
| Deposits and other borrowings | The fair value of deposits and other borrowings that are non-interest bearing or at call, is assumed to equate to the carrying value. The fair value of other deposits and other borrowings is calculated using discounted cash flow models based on the deposit type and maturity. |
| Bonds, notes and subordinated debt and debt issues | The fair values of bonds, notes and subordinated debt and debt issues are calculated based on a discounted cash flow model using a yield curve appropriate to the remaining maturity of the instruments and appropriate credit spreads, or in some instances are calculated based on market quoted prices when there is sufficient liquidity in the market. |
| Derivatives | The fair values of trading and hedging derivative assets and liabilities are obtained from quoted closing market prices at the reporting date, discounted cash flow models or option pricing models as appropriate. |
| Trading assets and debt instruments | The fair values of trading assets and debt instruments are based on quoted closing market prices at the reporting date. Where securities are unlisted and quoted market prices are not available, the Group obtains the fair value by means of discounted cash flows and other valuation techniques that are commonly used by market participants. These techniques address factors such as interest rates, credit risk and liquidity. |
| Equity instruments | The fair value of equity instruments at fair value through other comprehensive income is estimated on the basis of the actual and forecasted financial position and results of the underlying assets or net assets taking into consideration their risk profile. |
| Other financial assets and liabilities | The fair values of other financial assets and liabilities are based on quoted closing market prices and data or valuation techniques, appropriate to the nature and type of the underlying instrument. |
| Due to controlled entities and due from controlled entities | Includes reverse repurchase agreements and repurchase agreements that are classified as held for trading and measured at fair value through profit and loss. The fair values are based on a discounted cash flow model\u00a0using an appropriate yield curve. |
The carrying amounts of cash and liquid assets, due from and to other banks, other assets, other liabilities and amounts due from and to controlled entities, approximate their fair value as they are short-term in nature or are receivable or payable on demand.
Guarantees, letters of credit, performance related contingencies and credit related commitments are generally not sold or traded and estimated fair values are not readily ascertainable. The fair value of these items are not calculated, as very few of the commitments extending beyond six months would commit the Group to a predetermined rate of interest, and the fees attaching to these commitments are the same as those currently charged for similar arrangements.
Fair value for a net open position is the offer price for a financial liability and the bid price for a financial asset, multiplied by the number of units of the instrument issued or held.
Transfers between levels of the fair value hierarchy are deemed to have occurred at the beginning of the reporting period in which the transfer occurs.
A significant portion of financial instruments are carried on the balance sheet at fair value.
Where no active market exists for a particular asset or liability, the Group uses a valuation technique to arrive at the fair value, including the use of transaction prices obtained in recent arm\u2019s length transactions, discounted cash flow analysis, option pricing models and other valuation techniques, based on market conditions and risks existing at the reporting date. In doing so, fair value is estimated using a valuation technique that makes maximum use of observable market inputs and places minimal reliance upon entity-specific inputs.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price (i.e. the fair value of the consideration given or received) unless the fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets. When such evidence exists, the Group recognises the difference between the transaction price and the fair value in profit or loss on initial recognition (i.e. on day one).
The level in the fair value hierarchy within which a fair value measurement is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. The fair value hierarchy is as follows:
Level 1 \u2013 Financial instruments that have been valued by reference to unadjusted quoted prices for identical financial assets or financial liabilities in active markets. Financial instruments included in this category are Commonwealth of Australia and New Zealand government bonds, and spot and exchange traded derivatives.
Level 2 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs other than quoted prices within Level 1 that are observable for the financial asset or financial liability, either directly (as prices) or indirectly (derived from prices). Financial instruments included in this category are over-the-counter trading and hedging derivatives, semi-government bonds, financial institution and corporate bonds, mortgage-backed securities, loans measured at fair value, and issued bonds, notes and subordinated debt measured at fair value.
Level 3 \u2013 Financial instruments that have been valued through valuation techniques incorporating inputs that are not based on observable market data. Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. Financial instruments included in this category are bespoke trading derivatives, trading derivatives where the credit valuation adjustment is considered unobservable and significant to the valuation, and certain asset-backed securities valued using unobservable inputs.
Transfers into and out of Level 3 take place when there are changes to the inputs in the valuation technique. Where inputs are no longer observable the fair value measurement is transferred into Level 3. Conversely, a measurement is transferred out of Level 3 when inputs become observable.
The Group\u2019s exposure to fair value measurements based in full or in part on unobservable inputs is restricted to a small number of financial instruments, which comprise an insignificant component of the portfolios in which they belong. As such, a change in the assumption used to value the instruments as at 30 September 2023 attributable to reasonably possible alternatives would not have a material effect.
The financial assets and financial liabilities listed in the table below are carried at amortised cost. While this is the value at which the Group expects the assets to be realised and the liabilities to be settled, the table below includes their fair values as at 30 September:
| \u00a0 | \u00a0 | 2023 | \u00a0 | 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Carrying value | Level 1 | Level 2 | Level 3 | Fair value | \u00a0 | Carrying value | Level 1 | Level 2 | Level 3 | Fair value |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | 702,702 | - | 5,530 | 693,672 | 699,202 | \u00a0 | 680,434 | - | 4,744 | 670,807 | 675,551 |
| Total financial assets | \u00a0 | 702,702 | - | 5,530 | 693,672 | 699,202 | \u00a0 | 680,434 | - | 4,744 | 670,807 | 675,551 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deposits and other borrowings | \u00a0 | 682,120 | - | 683,857 | - | 683,857 | \u00a0 | 683,526 | - | 683,530 | - | 683,530 |
| Bonds, notes and subordinated debt | \u00a0 | 135,645 | - | 135,405 | 7 | 135,412 | \u00a0 | 119,283 | - | 118,417 | - | 118,417 |
| Debt issues | \u00a0 | 8,561 | 7,802 | 1,040 | - | 8,842 | \u00a0 | 7,318 | 6,466 | 1,065 | - | 7,531 |
| Total financial liabilities | \u00a0 | 826,326 | 7,802 | 820,302 | 7 | 828,111 | \u00a0 | 810,127 | 6,466 | 803,012 | - | 809,478 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | 607,684 | - | 3,414 | 602,221 | 605,635 | \u00a0 | 592,679 | - | 2,811 | 586,399 | 589,210 |
| Total financial assets | \u00a0 | 607,684 | - | 3,414 | 602,221 | 605,635 | \u00a0 | 592,679 | - | 2,811 | 586,399 | 589,210 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Deposits and other borrowings | \u00a0 | 608,641 | - | 610,438 | - | 610,438 | \u00a0 | 616,961 | - | 617,073 | - | 617,073 |
| Bonds, notes and subordinated debt | \u00a0 | 124,329 | - | 122,888 | - | 122,888 | \u00a0 | 109,674 | - | 107,792 | - | 107,792 |
| Debt issues | \u00a0 | 8,561 | 7,802 | 1,040 | - | 8,842 | \u00a0 | 7,318 | 6,466 | 1,065 | - | 7,531 |
| Total financial liabilities | \u00a0 | 741,531 | 7,802 | 734,366 | - | 742,168 | \u00a0 | 733,953 | 6,466 | 725,930 | - | 732,396 |
| \u00a0 | \u00a0 | 2023 | \u00a0 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Level 1 | Level 2 | Level 3 | Total | \u00a0 | Level 1 | Level 2 | Level 3 | Total |
| \u00a0 | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading assets | \u00a0 | 30,482 | 70,686 | - | 101,168 | \u00a0 | 27,393 | 13,180 | - | 40,573 |
| Debt instruments | \u00a0 | 2,691 | 43,377 | 289 | 46,357 | \u00a0 | 3,625 | 37,732 | 723 | 42,080 |
| Other financial assets | \u00a0 | - | 1,243 | 187 | 1,430 | \u00a0 | - | 1,740 | 321 | 2,061 |
| Derivative assets | \u00a0 | - | 33,946 | 323 | 34,269 | \u00a0 | - | 60,567 | 449 | 61,016 |
| Equity instruments1 | \u00a0 | - | - | 257 | 257 | \u00a0 | - | - | 187 | 187 |
| Total financial assets measured at fair value | \u00a0 | 33,173 | 149,252 | 1,056 | 183,481 | \u00a0 | 31,018 | 113,219 | 1,680 | 145,917 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other financial liabilities | \u00a0 | 5,453 | 60,899 | - | 66,352 | \u00a0 | 2,441 | 20,845 | - | 23,286 |
| Derivative liabilities | \u00a0 | - | 35,362 | 271 | 35,633 | \u00a0 | - | 57,117 | 369 | 57,486 |
| Total financial liabilities measured at fair value | \u00a0 | 5,453 | 96,261 | 271 | 101,985 | \u00a0 | 2,441 | 77,962 | 369 | 80,772 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Financial assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Trading assets | \u00a0 | 27,935 | 62,482 | - | 90,417 | \u00a0 | 24,303 | 9,740 | - | 34,043 |
| Debt instruments | \u00a0 | 2,691 | 43,356 | 289 | 46,336 | \u00a0 | 3,626 | 37,745 | 723 | 42,094 |
| Other financial assets | \u00a0 | - | 1,521 | 187 | 1,708 | \u00a0 | - | 2,428 | 321 | 2,749 |
| Derivative assets | \u00a0 | - | 33,461 | 323 | 33,784 | \u00a0 | - | 60,202 | 449 | 60,651 |
| Equity instruments1 | \u00a0 | - | - | 122 | 122 | \u00a0 | - | - | 86 | 86 |
| Due from controlled entities | \u00a0 | - | 1,238 | - | 1,238 | \u00a0 | - | - | - | - |
| Total financial assets measured at fair value | \u00a0 | 30,626 | 142,058 | 921 | 173,605 | \u00a0 | 27,929 | 110,115 | 1,579 | 139,623 |
| Financial liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other financial liabilities | \u00a0 | 5,254 | 46,491 | - | 51,745 | \u00a0 | 2,198 | 6,762 | - | 8,960 |
| Derivative liabilities | \u00a0 | - | 35,839 | 271 | 36,110 | \u00a0 | - | 57,125 | 369 | 57,494 |
| Due to controlled entities | \u00a0 | - | 1,159 | - | 1,159 | \u00a0 | - | - | - | - |
| Total financial liabilities measured at fair value | \u00a0 | 5,254 | 83,489 | 271 | 89,014 | \u00a0 | 2,198 | 63,887 | 369 | 66,454 |
There were no material transfers between Level 1 and Level 2 during the 2023 financial year for the Group and the Company.
The table below summarises changes in fair value classified as Level 3:
| \u00a0 | \u00a0 | Assets | \u00a0 | Liabilities | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Derivatives | Debt instruments | Other1 | \u00a0 | Derivatives | ||||
| \u00a0 | \u00a0 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | $m | $m | $m | $m | \u00a0 | $m | $m |
| Group | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at the beginning of year | \u00a0 | 449 | 148 | 723 | 919 | 508 | 369 | \u00a0 | 369 | 96 |
| Gains / (losses) on assets and (gains) / losses on liabilities recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 17 | 12 | \u00a0 | - | - |
| Purchases and issues | \u00a0 | 25 | 72 | 77 | 386 | 59 | 461 | \u00a0 | - | 20 |
| Sales and settlements | \u00a0 | - | (13) | (237) | (380) | (112) | (280) | \u00a0 | - | - |
| Transfers into Level 3 | \u00a0 | 20 | - | 72 | 250 | - | - | \u00a0 | - | 1 |
| Transfers out of Level 3 | \u00a0 | (153) | (1) | (351) | (438) | (49) | - | \u00a0 | (81) | - |
| Foreign currency translation adjustments | \u00a0 | 2 | (2) | - | 1 | 14 | (4) | \u00a0 | 1 | (1) |
| Balance at end of year | \u00a0 | 323 | 449 | 289 | 723 | 444 | 508 | \u00a0 | 271 | 369 |
| Gains / (losses) on assets and (gains) / losses on liabilities for the reporting period related to financial instruments held at the end of the reporting period recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 17 | 12 | \u00a0 | - | - |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Company | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at the beginning of year | \u00a0 | 449 | 148 | 723 | 919 | 407 | 285 | \u00a0 | 369 | 96 |
| Gains / (losses) on assets and (gains) / losses on liabilities recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 16 | (4) | \u00a0 | - | - |
| Purchases and issues | \u00a0 | 25 | 72 | 77 | 386 | 20 | 419 | \u00a0 | - | 20 |
| Sales and settlements | \u00a0 | - | (13) | (237) | (380) | (105) | (242) | \u00a0 | - | - |
| Transfers into Level 3 | \u00a0 | 20 | - | 72 | 250 | - | - | \u00a0 | - | 1 |
| Transfers out of Level 3 | \u00a0 | (153) | (1) | (351) | (438) | (49) | - | \u00a0 | (81) | - |
| Foreign currency translation adjustments | \u00a0 | 2 | (2) | - | 1 | 13 | (1) | \u00a0 | 1 | (1) |
| Balance at end of year | \u00a0 | 323 | 449 | 289 | 723 | 309 | 407 | \u00a0 | 271 | 369 |
| Gains / (losses) on assets and (gains) / losses on liabilities for the reporting period related to financial instruments held at the end of the reporting period recognised: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| In profit or loss2 | \u00a0 | (20) | 245 | - | - | 7 | (50) | \u00a0 | (18) | 253 |
| In other comprehensive income2 | \u00a0 | - | - | 5 | (15) | 16 | (4) | \u00a0 | - | - |
Goodwill arises on the acquisition of an entity and represents the excess of the consideration paid over the fair value of the identifiable net assets acquired.
External and internal costs that are incurred to acquire or develop software are capitalised and recognised as an intangible asset. Capitalised software costs and other intangible assets are amortised on a systematic basis once deployed, using the straight-line method over their expected useful lives which are between three and ten years.
Assets with an indefinite useful life, including goodwill, are not subject to amortisation and are tested on an annual basis for impairment, and additionally whenever an indication of impairment exists. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs of disposal or its value in use. For assets that do not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit (CGU) to which that asset belongs.
Goodwill impairment is assessed for each CGU or group of CGUs that represents the lowest level within the Group at which goodwill is monitored for internal management purposes.
The recoverable amount of a CGU is determined using either value in use or fair value less costs of disposal. Assumptions for determining the recoverable amount of each CGU are based on past experience and expectations for the future. Cash flow projections for value in use are based on the latest management approved forecasts and are then extrapolated using a constant growth rate for up to a further five years. These forecasts use management estimates to determine income, expenses, capital expenditure and cash flows for each CGU.
The discount rate used reflects the market determined post-tax discount rate which is adjusted for specific risks relating to the CGUs and the countries in which they operate. The growth rate applied to extrapolate cash flows beyond the forecast period are based on forecast assumptions of the CGUs\u2019 long-term performance in their respective markets.
The measurement of goodwill is subject to a number of key judgements and estimates. These include:
The allocation of goodwill to CGUs on initial recognition.
The re-allocation of goodwill in the event of disposal or reorganisation.
The appropriate cash flow forecasts, growth rates and discount rates.
Further details about these items are provided below.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Goodwill and other intangible assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Goodwill | \u00a0 | 2,070 | 2,089 | \u00a0 | 80 | 99 |
| Internally generated software | \u00a0 | 2,484 | 2,174 | \u00a0 | 2,052 | 1,837 |
| Acquired software | \u00a0 | 238 | 208 | \u00a0 | 115 | 71 |
| Other acquired intangible assets1 | \u00a0 | 160 | 181 | \u00a0 | 145 | 165 |
| Total goodwill and other intangible assets | \u00a0 | 4,952 | 4,652 | \u00a0 | 2,392 | 2,172 |
| At cost | \u00a0 | 11,560 | 10,627 | \u00a0 | 7,949 | 7,207 |
| Deduct: Accumulated amortisation / impairment losses | \u00a0 | (6,608) | (5,975) | \u00a0 | (5,557) | (5,035) |
| Total goodwill and other intangible assets | \u00a0 | 4,952 | 4,652 | \u00a0 | 2,392 | 2,172 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Goodwill | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 2,089 | 1,964 | \u00a0 | 99 | - |
| Acquisition of controlled entities and business combinations12 | \u00a0 | (19) | 125 | \u00a0 | (19) | 99 |
| Balance at end of year | \u00a0 | 2,070 | 2,089 | \u00a0 | 80 | 99 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Internally generated software | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 2,174 | 1,956 | \u00a0 | 1,837 | 1,703 |
| Additions from internal development | \u00a0 | 863 | 730 | \u00a0 | 702 | 584 |
| Disposals, impairments and write-offs | \u00a0 | (9) | (23) | \u00a0 | (2) | (23) |
| Amortisation | \u00a0 | (558) | (497) | \u00a0 | (485) | (449) |
| Foreign currency translation adjustments | \u00a0 | 14 | 8 | \u00a0 | - | 22 |
| Balance at end of year | \u00a0 | 2,484 | 2,174 | \u00a0 | 2,052 | 1,837 |
The key assumptions used in determining the recoverable amount of CGUs, to which goodwill has been allocated, are as follows:
| \u00a0 | \u00a0 | Goodwill | \u00a0 | Discount rate per annum | Terminal growth rate per annum | |
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2023 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | % | % |
| CGUs | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business and Private Banking | \u00a0 | 94 | 94 | \u00a0 | 9.9 | 3.4 |
| New Zealand Banking | \u00a0 | 258 | 258 | \u00a0 | 10.4 | 3.1 |
| Personal Banking1 | \u00a0 | 1,592 | 1,611 | \u00a0 | 9.9 | 3.4 |
| ubank | \u00a0 | 126 | 126 | \u00a0 | 10.4 | 3.4 |
| Total goodwill | \u00a0 | 2,070 | 2,089 | \u00a0 | n/a | n/a |
Goodwill arises on the acquisition of an entity and represents the excess of the consideration paid over the fair value of the identifiable net assets acquired.
External and internal costs that are incurred to acquire or develop software are capitalised and recognised as an intangible asset. Capitalised software costs and other intangible assets are amortised on a systematic basis once deployed, using the straight-line method over their expected useful lives which are between three and ten years.
Assets with an indefinite useful life, including goodwill, are not subject to amortisation and are tested on an annual basis for impairment, and additionally whenever an indication of impairment exists. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs of disposal or its value in use. For assets that do not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit (CGU) to which that asset belongs.
Goodwill impairment is assessed for each CGU or group of CGUs that represents the lowest level within the Group at which goodwill is monitored for internal management purposes.
The recoverable amount of a CGU is determined using either value in use or fair value less costs of disposal. Assumptions for determining the recoverable amount of each CGU are based on past experience and expectations for the future. Cash flow projections for value in use are based on the latest management approved forecasts and are then extrapolated using a constant growth rate for up to a further five years. These forecasts use management estimates to determine income, expenses, capital expenditure and cash flows for each CGU.
The discount rate used reflects the market determined post-tax discount rate which is adjusted for specific risks relating to the CGUs and the countries in which they operate. The growth rate applied to extrapolate cash flows beyond the forecast period are based on forecast assumptions of the CGUs\u2019 long-term performance in their respective markets.
The measurement of goodwill is subject to a number of key judgements and estimates. These include:
The allocation of goodwill to CGUs on initial recognition.
The re-allocation of goodwill in the event of disposal or reorganisation.
The appropriate cash flow forecasts, growth rates and discount rates.
Further details about these items are provided below.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Goodwill and other intangible assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Goodwill | \u00a0 | 2,070 | 2,089 | \u00a0 | 80 | 99 |
| Internally generated software | \u00a0 | 2,484 | 2,174 | \u00a0 | 2,052 | 1,837 |
| Acquired software | \u00a0 | 238 | 208 | \u00a0 | 115 | 71 |
| Other acquired intangible assets1 | \u00a0 | 160 | 181 | \u00a0 | 145 | 165 |
| Total goodwill and other intangible assets | \u00a0 | 4,952 | 4,652 | \u00a0 | 2,392 | 2,172 |
| At cost | \u00a0 | 11,560 | 10,627 | \u00a0 | 7,949 | 7,207 |
| Deduct: Accumulated amortisation / impairment losses | \u00a0 | (6,608) | (5,975) | \u00a0 | (5,557) | (5,035) |
| Total goodwill and other intangible assets | \u00a0 | 4,952 | 4,652 | \u00a0 | 2,392 | 2,172 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Goodwill | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 2,089 | 1,964 | \u00a0 | 99 | - |
| Acquisition of controlled entities and business combinations12 | \u00a0 | (19) | 125 | \u00a0 | (19) | 99 |
| Balance at end of year | \u00a0 | 2,070 | 2,089 | \u00a0 | 80 | 99 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Internally generated software | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 2,174 | 1,956 | \u00a0 | 1,837 | 1,703 |
| Additions from internal development | \u00a0 | 863 | 730 | \u00a0 | 702 | 584 |
| Disposals, impairments and write-offs | \u00a0 | (9) | (23) | \u00a0 | (2) | (23) |
| Amortisation | \u00a0 | (558) | (497) | \u00a0 | (485) | (449) |
| Foreign currency translation adjustments | \u00a0 | 14 | 8 | \u00a0 | - | 22 |
| Balance at end of year | \u00a0 | 2,484 | 2,174 | \u00a0 | 2,052 | 1,837 |
The key assumptions used in determining the recoverable amount of CGUs, to which goodwill has been allocated, are as follows:
| \u00a0 | \u00a0 | Goodwill | \u00a0 | Discount rate per annum | Terminal growth rate per annum | |
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2023 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | % | % |
| CGUs | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business and Private Banking | \u00a0 | 94 | 94 | \u00a0 | 9.9 | 3.4 |
| New Zealand Banking | \u00a0 | 258 | 258 | \u00a0 | 10.4 | 3.1 |
| Personal Banking1 | \u00a0 | 1,592 | 1,611 | \u00a0 | 9.9 | 3.4 |
| ubank | \u00a0 | 126 | 126 | \u00a0 | 10.4 | 3.4 |
| Total goodwill | \u00a0 | 2,070 | 2,089 | \u00a0 | n/a | n/a |
On 1 June 2022, the Company completed the acquisition of the Citi consumer business, including its home lending portfolio, unsecured lending business (personal loans and credit cards), retail deposits business and private wealth management business. The acquisition qualified as a business combination as defined in AASB 3 Business Combinations.
The acquisition was undertaken to support NAB\u2019s ambition to build a leading personal bank with a simpler, more digital experience.
The net assets recognised in the 2022 financial year were recorded on a provisional basis using preliminary completion accounts and a draft purchase price allocation. During the 2023 financial year the final completion payment was made and the purchase price allocation was finalised.
The final fair values of the assets and liabilities are summarised in the table below:
| \u00a0 | \u00a0 | Group |
|---|---|---|
| \u00a0 | \u00a0 | $m |
| Consideration | \u00a0 | \u00a0 |
| Total cash consideration for the acquisition | \u00a0 | 3,135 |
| Assets and liabilities acquired | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | 12,832 |
| Other assets | \u00a0 | 523 |
| Total assets | \u00a0 | 13,355 |
| Deposits and other borrowings | \u00a0 | 9,488 |
| Other liabilities | \u00a0 | 732 |
| Total liabilities | \u00a0 | 10,220 |
| Net assets | \u00a0 | 3,135 |
| Goodwill and other intangible assets | \u00a0 | 248 |
| Goodwill | \u00a0 | 80 |
| Intangible assets | \u00a0 | 168 |
The most significant adjustments to the provisional amounts disclosed in the 2022 Annual Report are in relation to a $19 million increase in net deferred tax assets recognised and a $3 million decrease in intangible assets.
The final goodwill value of $80 million is supported by the scale and expertise in unsecured lending acquired, together with anticipated synergies. Other intangible assets comprise customer relationships and core deposits.
The goodwill has been allocated to the Personal Banking CGU (refer to Note 22 Goodwill and other intangible assets).
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-494": { "value": "Goodwill arises on the acquisition of an entity and represents the excess of the consideration paid over the fair value of the identifiable net assets acquired.
External and internal costs that are incurred to acquire or develop software are capitalised and recognised as an intangible asset. Capitalised software costs and other intangible assets are amortised on a systematic basis once deployed, using the straight-line method over their expected useful lives which are between three and ten years.
Assets with an indefinite useful life, including goodwill, are not subject to amortisation and are tested on an annual basis for impairment, and additionally whenever an indication of impairment exists. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs of disposal or its value in use. For assets that do not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit (CGU) to which that asset belongs.
Goodwill impairment is assessed for each CGU or group of CGUs that represents the lowest level within the Group at which goodwill is monitored for internal management purposes.
The recoverable amount of a CGU is determined using either value in use or fair value less costs of disposal. Assumptions for determining the recoverable amount of each CGU are based on past experience and expectations for the future. Cash flow projections for value in use are based on the latest management approved forecasts and are then extrapolated using a constant growth rate for up to a further five years. These forecasts use management estimates to determine income, expenses, capital expenditure and cash flows for each CGU.
The discount rate used reflects the market determined post-tax discount rate which is adjusted for specific risks relating to the CGUs and the countries in which they operate. The growth rate applied to extrapolate cash flows beyond the forecast period are based on forecast assumptions of the CGUs\u2019 long-term performance in their respective markets.
The measurement of goodwill is subject to a number of key judgements and estimates. These include:
The allocation of goodwill to CGUs on initial recognition.
The re-allocation of goodwill in the event of disposal or reorganisation.
The appropriate cash flow forecasts, growth rates and discount rates.
Further details about these items are provided below.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Goodwill and other intangible assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Goodwill | \u00a0 | 2,070 | 2,089 | \u00a0 | 80 | 99 |
| Internally generated software | \u00a0 | 2,484 | 2,174 | \u00a0 | 2,052 | 1,837 |
| Acquired software | \u00a0 | 238 | 208 | \u00a0 | 115 | 71 |
| Other acquired intangible assets1 | \u00a0 | 160 | 181 | \u00a0 | 145 | 165 |
| Total goodwill and other intangible assets | \u00a0 | 4,952 | 4,652 | \u00a0 | 2,392 | 2,172 |
| At cost | \u00a0 | 11,560 | 10,627 | \u00a0 | 7,949 | 7,207 |
| Deduct: Accumulated amortisation / impairment losses | \u00a0 | (6,608) | (5,975) | \u00a0 | (5,557) | (5,035) |
| Total goodwill and other intangible assets | \u00a0 | 4,952 | 4,652 | \u00a0 | 2,392 | 2,172 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Goodwill | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 2,089 | 1,964 | \u00a0 | 99 | - |
| Acquisition of controlled entities and business combinations12 | \u00a0 | (19) | 125 | \u00a0 | (19) | 99 |
| Balance at end of year | \u00a0 | 2,070 | 2,089 | \u00a0 | 80 | 99 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Internally generated software | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 2,174 | 1,956 | \u00a0 | 1,837 | 1,703 |
| Additions from internal development | \u00a0 | 863 | 730 | \u00a0 | 702 | 584 |
| Disposals, impairments and write-offs | \u00a0 | (9) | (23) | \u00a0 | (2) | (23) |
| Amortisation | \u00a0 | (558) | (497) | \u00a0 | (485) | (449) |
| Foreign currency translation adjustments | \u00a0 | 14 | 8 | \u00a0 | - | 22 |
| Balance at end of year | \u00a0 | 2,484 | 2,174 | \u00a0 | 2,052 | 1,837 |
The key assumptions used in determining the recoverable amount of CGUs, to which goodwill has been allocated, are as follows:
| \u00a0 | \u00a0 | Goodwill | \u00a0 | Discount rate per annum | Terminal growth rate per annum | |
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2023 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | % | % |
| CGUs | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business and Private Banking | \u00a0 | 94 | 94 | \u00a0 | 9.9 | 3.4 |
| New Zealand Banking | \u00a0 | 258 | 258 | \u00a0 | 10.4 | 3.1 |
| Personal Banking1 | \u00a0 | 1,592 | 1,611 | \u00a0 | 9.9 | 3.4 |
| ubank | \u00a0 | 126 | 126 | \u00a0 | 10.4 | 3.4 |
| Total goodwill | \u00a0 | 2,070 | 2,089 | \u00a0 | n/a | n/a |
Goodwill arises on the acquisition of an entity and represents the excess of the consideration paid over the fair value of the identifiable net assets acquired.
External and internal costs that are incurred to acquire or develop software are capitalised and recognised as an intangible asset. Capitalised software costs and other intangible assets are amortised on a systematic basis once deployed, using the straight-line method over their expected useful lives which are between three and ten years.
Assets with an indefinite useful life, including goodwill, are not subject to amortisation and are tested on an annual basis for impairment, and additionally whenever an indication of impairment exists. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs of disposal or its value in use. For assets that do not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit (CGU) to which that asset belongs.
Goodwill impairment is assessed for each CGU or group of CGUs that represents the lowest level within the Group at which goodwill is monitored for internal management purposes.
The recoverable amount of a CGU is determined using either value in use or fair value less costs of disposal. Assumptions for determining the recoverable amount of each CGU are based on past experience and expectations for the future. Cash flow projections for value in use are based on the latest management approved forecasts and are then extrapolated using a constant growth rate for up to a further five years. These forecasts use management estimates to determine income, expenses, capital expenditure and cash flows for each CGU.
The discount rate used reflects the market determined post-tax discount rate which is adjusted for specific risks relating to the CGUs and the countries in which they operate. The growth rate applied to extrapolate cash flows beyond the forecast period are based on forecast assumptions of the CGUs\u2019 long-term performance in their respective markets.
The measurement of goodwill is subject to a number of key judgements and estimates. These include:
The allocation of goodwill to CGUs on initial recognition.
The re-allocation of goodwill in the event of disposal or reorganisation.
The appropriate cash flow forecasts, growth rates and discount rates.
Further details about these items are provided below.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Goodwill and other intangible assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Goodwill | \u00a0 | 2,070 | 2,089 | \u00a0 | 80 | 99 |
| Internally generated software | \u00a0 | 2,484 | 2,174 | \u00a0 | 2,052 | 1,837 |
| Acquired software | \u00a0 | 238 | 208 | \u00a0 | 115 | 71 |
| Other acquired intangible assets1 | \u00a0 | 160 | 181 | \u00a0 | 145 | 165 |
| Total goodwill and other intangible assets | \u00a0 | 4,952 | 4,652 | \u00a0 | 2,392 | 2,172 |
| At cost | \u00a0 | 11,560 | 10,627 | \u00a0 | 7,949 | 7,207 |
| Deduct: Accumulated amortisation / impairment losses | \u00a0 | (6,608) | (5,975) | \u00a0 | (5,557) | (5,035) |
| Total goodwill and other intangible assets | \u00a0 | 4,952 | 4,652 | \u00a0 | 2,392 | 2,172 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Goodwill | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 2,089 | 1,964 | \u00a0 | 99 | - |
| Acquisition of controlled entities and business combinations12 | \u00a0 | (19) | 125 | \u00a0 | (19) | 99 |
| Balance at end of year | \u00a0 | 2,070 | 2,089 | \u00a0 | 80 | 99 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Internally generated software | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 2,174 | 1,956 | \u00a0 | 1,837 | 1,703 |
| Additions from internal development | \u00a0 | 863 | 730 | \u00a0 | 702 | 584 |
| Disposals, impairments and write-offs | \u00a0 | (9) | (23) | \u00a0 | (2) | (23) |
| Amortisation | \u00a0 | (558) | (497) | \u00a0 | (485) | (449) |
| Foreign currency translation adjustments | \u00a0 | 14 | 8 | \u00a0 | - | 22 |
| Balance at end of year | \u00a0 | 2,484 | 2,174 | \u00a0 | 2,052 | 1,837 |
The key assumptions used in determining the recoverable amount of CGUs, to which goodwill has been allocated, are as follows:
| \u00a0 | \u00a0 | Goodwill | \u00a0 | Discount rate per annum | Terminal growth rate per annum | |
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2023 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | % | % |
| CGUs | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Business and Private Banking | \u00a0 | 94 | 94 | \u00a0 | 9.9 | 3.4 |
| New Zealand Banking | \u00a0 | 258 | 258 | \u00a0 | 10.4 | 3.1 |
| Personal Banking1 | \u00a0 | 1,592 | 1,611 | \u00a0 | 9.9 | 3.4 |
| ubank | \u00a0 | 126 | 126 | \u00a0 | 10.4 | 3.4 |
| Total goodwill | \u00a0 | 2,070 | 2,089 | \u00a0 | n/a | n/a |
Goodwill arises on the acquisition of an entity and represents the excess of the consideration paid over the fair value of the identifiable net assets acquired.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-688": { "value": "Goodwill arises on the acquisition of an entity and represents the excess of the consideration paid over the fair value of the identifiable net assets acquired.
External and internal costs that are incurred to acquire or develop software are capitalised and recognised as an intangible asset. Capitalised software costs and other intangible assets are amortised on a systematic basis once deployed, using the straight-line method over their expected useful lives which are between three and ten years.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-692": { "value": "External and internal costs that are incurred to acquire or develop software are capitalised and recognised as an intangible asset. Capitalised software costs and other intangible assets are amortised on a systematic basis once deployed, using the straight-line method over their expected useful lives which are between three and ten years.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-695": { "value": "Assets with an indefinite useful life, including goodwill, are not subject to amortisation and are tested on an annual basis for impairment, and additionally whenever an indication of impairment exists. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs of disposal or its value in use. For assets that do not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit (CGU) to which that asset belongs.
Goodwill impairment is assessed for each CGU or group of CGUs that represents the lowest level within the Group at which goodwill is monitored for internal management purposes.
The recoverable amount of a CGU is determined using either value in use or fair value less costs of disposal. Assumptions for determining the recoverable amount of each CGU are based on past experience and expectations for the future. Cash flow projections for value in use are based on the latest management approved forecasts and are then extrapolated using a constant growth rate for up to a further five years. These forecasts use management estimates to determine income, expenses, capital expenditure and cash flows for each CGU.
The discount rate used reflects the market determined post-tax discount rate which is adjusted for specific risks relating to the CGUs and the countries in which they operate. The growth rate applied to extrapolate cash flows beyond the forecast period are based on forecast assumptions of the CGUs\u2019 long-term performance in their respective markets.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-696": { "value": "Assets with an indefinite useful life, including goodwill, are not subject to amortisation and are tested on an annual basis for impairment, and additionally whenever an indication of impairment exists. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of an asset exceeds its recoverable amount.
The recoverable amount of an asset is the higher of its fair value less costs of disposal or its value in use. For assets that do not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit (CGU) to which that asset belongs.
Goodwill impairment is assessed for each CGU or group of CGUs that represents the lowest level within the Group at which goodwill is monitored for internal management purposes.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-500": { "value": "| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Other assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Accrued interest receivable | \u00a0 | 2,527 | 1,608 | \u00a0 | 2,285 | 1,459 |
| Prepayments | \u00a0 | 328 | 314 | \u00a0 | 264 | 260 |
| Receivables | \u00a0 | 349 | 555 | \u00a0 | 102 | 80 |
| Other debt instruments at amortised cost | \u00a0 | 97 | 197 | \u00a0 | 608 | 586 |
| Equity instruments at fair value through other comprehensive income | \u00a0 | 245 | 175 | \u00a0 | 111 | 75 |
| Investment in associates - MLC Life1 | \u00a0 | 515 | 486 | \u00a0 | 477 | 477 |
| Securities sold not delivered | \u00a0 | 3,742 | 2,402 | \u00a0 | 3,447 | 1,980 |
| Other | \u00a0 | 576 | 736 | \u00a0 | 423 | 645 |
| Total other assets | \u00a0 | 8,379 | 6,473 | \u00a0 | 7,717 | 5,562 |
Provisions are recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are not discounted to the present value of their expected net future cash flows except where the time value of money is material.
Provisions are recognised for non-lending losses which include losses arising from specific legal actions not directly related to amounts of principal outstanding for loans and advances, and losses arising from forgeries, fraud and the correction of operational issues.
Provisions for customer-related and payroll remediation include provisions for potential refunds and other compensation to customers, payments to colleagues, as well as associated program costs.
Provisions are held in respect of a range of future obligations such as employee entitlements, restructuring costs, customer-related and payroll remediation. The recognition and measurement of some of these provisions involves significant judgement about the existence of a present obligation, the likely outcome of various future events and the related estimated future cash flows. If the future events are uncertain or where the outflows cannot be reliably measured a contingent liability is disclosed, refer to Note 31 Commitments and contingent liabilities.
Payments that are expected to be incurred after more than one year from the reporting date are discounted at a rate which reflects both current interest rates and the risks specific to that provision.
In relation to customer-related remediation, determining the amount of the provision requires the exercise of significant judgement. This includes forming a view on a number of different estimates, including the number of impacted customers, average refund per customer and the associated costs required to complete the remediation activities. The appropriateness of underlying assumptions is reviewed on a regular basis against actual experience and other available evidence, and adjustments are made to the provision where required.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Provisions | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Employee entitlements | \u00a0 | 1,021 | 1,026 | \u00a0 | 872 | 905 |
| Operational risk event losses | \u00a0 | 43 | 47 | \u00a0 | 25 | 29 |
| Customer-related and payroll remediation | \u00a0 | 305 | 557 | \u00a0 | 305 | 554 |
| Other | \u00a0 | 483 | 466 | \u00a0 | 449 | 409 |
| Total provisions | \u00a0 | 1,852 | 2,096 | \u00a0 | 1,651 | 1,897 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Operational risk event losses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 47 | 134 | \u00a0 | 29 | 81 |
| Provisions made1 | \u00a0 | 90 | 35 | \u00a0 | 68 | 32 |
| Payments out of provisions | \u00a0 | (94) | (92) | \u00a0 | (72) | (84) |
| Provisions no longer required and net foreign currency movements | \u00a0 | - | (30) | \u00a0 | - | - |
| Balance at end of year | \u00a0 | 43 | 47 | \u00a0 | 25 | 29 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Customer-related and payroll remediation | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 557 | 1,231 | \u00a0 | 554 | 1,221 |
| Provisions made (continuing operations) | \u00a0 | 52 | 179 | \u00a0 | 51 | 181 |
| Provisions made (discontinued operations) | \u00a0 | 35 | 160 | \u00a0 | 35 | 160 |
| Payments out of provisions | \u00a0 | (339) | (1,013) | \u00a0 | (335) | (1,008) |
| Balance at end of year | \u00a0 | 305 | 557 | \u00a0 | 305 | 554 |
Provisions are recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and the amount of the obligation can be reliably estimated. Provisions are not discounted to the present value of their expected net future cash flows except where the time value of money is material.
Provisions are recognised for non-lending losses which include losses arising from specific legal actions not directly related to amounts of principal outstanding for loans and advances, and losses arising from forgeries, fraud and the correction of operational issues.
Provisions for customer-related and payroll remediation include provisions for potential refunds and other compensation to customers, payments to colleagues, as well as associated program costs.
Provisions are held in respect of a range of future obligations such as employee entitlements, restructuring costs, customer-related and payroll remediation. The recognition and measurement of some of these provisions involves significant judgement about the existence of a present obligation, the likely outcome of various future events and the related estimated future cash flows. If the future events are uncertain or where the outflows cannot be reliably measured a contingent liability is disclosed, refer to Note 31 Commitments and contingent liabilities.
Payments that are expected to be incurred after more than one year from the reporting date are discounted at a rate which reflects both current interest rates and the risks specific to that provision.
In relation to customer-related remediation, determining the amount of the provision requires the exercise of significant judgement. This includes forming a view on a number of different estimates, including the number of impacted customers, average refund per customer and the associated costs required to complete the remediation activities. The appropriateness of underlying assumptions is reviewed on a regular basis against actual experience and other available evidence, and adjustments are made to the provision where required.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-506": { "value": "| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Other liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Accrued interest payable | \u00a0 | 4,599 | 1,840 | \u00a0 | 4,011 | 1,644 |
| Payables and accrued expenses | \u00a0 | 1,094 | 1,377 | \u00a0 | 684 | 692 |
| Securities purchased not delivered | \u00a0 | 5,341 | 2,824 | \u00a0 | 5,048 | 2,223 |
| Lease liabilities | \u00a0 | 2,259 | 2,238 | \u00a0 | 1,816 | 1,978 |
| Trail commission payable1 | \u00a0 | 1,795 | - | \u00a0 | 1,330 | - |
| Other | \u00a0 | 1,129 | 1,885 | \u00a0 | 1,049 | 1,844 |
| Total other liabilities | \u00a0 | 16,217 | 10,164 | \u00a0 | 13,938 | 8,381 |
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone selling prices. For leases of land and buildings where the Group is the lessee, the Group has elected not to separate non-lease components, and accounts for the lease and non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, less any lease incentives received.
The right-of-use asset is subsequently measured under the cost model and depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is reviewed for impairment and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that have not been paid at the commencement date, discounted using the Group\u2019s incremental borrowing rate which is based on the Group\u2019s funds transfer pricing curve. The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a lease modification that is not accounted for as a separate lease, there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group\u2019s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. The Group does not include extension options in the measurement of the lease liability until such time that it is reasonably certain that the options will be exercised.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. Where this is the case, the lease is a finance lease. All other leases are classified as operating leases.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Right-of-use assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Property, plant and equipment | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Buildings | \u00a0 | 1,912 | 1,883 | \u00a0 | 1,481 | 1,628 |
| Technology | \u00a0 | 47 | 63 | \u00a0 | 45 | 60 |
| Total right-of-use assets | \u00a0 | 1,959 | 1,946 | \u00a0 | 1,526 | 1,688 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Additions to right-of-use assets during the period | \u00a0 | 334 | 601 | \u00a0 | 121 | 589 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Lease liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other liabilities | \u00a0 | 2,259 | 2,238 | \u00a0 | 1,816 | 1,978 |
| Total lease liabilities | \u00a0 | 2,259 | 2,238 | \u00a0 | 1,816 | 1,978 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Depreciation | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Buildings | \u00a0 | 318 | 331 | \u00a0 | 264 | 284 |
| Technology | \u00a0 | 20 | 17 | \u00a0 | 18 | 16 |
| Total depreciation on right-of-use assets | \u00a0 | 338 | 348 | \u00a0 | 282 | 300 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Interest expense on lease liabilities | \u00a0 | 49 | 46 | \u00a0 | 39 | 40 |
| Total interest expense on lease liabilities | \u00a0 | 49 | 46 | \u00a0 | 39 | 40 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Short-term lease expense | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Short-term lease expense | \u00a0 | 7 | 11 | \u00a0 | 4 | 5 |
| Total short-term lease expense | \u00a0 | 7 | 11 | \u00a0 | 4 | 5 |
The table below is a maturity analysis of future lease payments in respect of existing lease arrangements on an undiscounted basis.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Due within one year | \u00a0 | 361 | 339 | \u00a0 | 306 | 294 |
| Due after one year but no later than five years | \u00a0 | 1,151 | 1,120 | \u00a0 | 974 | 992 |
| Due after five years | \u00a0 | 1,176 | 997 | \u00a0 | 686 | 855 |
| Total future lease payments | \u00a0 | 2,688 | 2,456 | \u00a0 | 1,966 | 2,141 |
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At inception or on reassessment of a contract that contains a lease component, the Group allocates the consideration in the contract to each lease component on the basis of their relative stand-alone selling prices. For leases of land and buildings where the Group is the lessee, the Group has elected not to separate non-lease components, and accounts for the lease and non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset, less any lease incentives received.
The right-of-use asset is subsequently measured under the cost model and depreciated using the straight-line method from the commencement date to the end of the lease term. In addition, the right-of-use asset is reviewed for impairment and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that have not been paid at the commencement date, discounted using the Group\u2019s incremental borrowing rate which is based on the Group\u2019s funds transfer pricing curve. The lease liability is subsequently measured at amortised cost using the effective interest method. It is remeasured when there is a lease modification that is not accounted for as a separate lease, there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group\u2019s estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option. The Group does not include extension options in the measurement of the lease liability until such time that it is reasonably certain that the options will be exercised.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases and leases of low-value assets. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset. Where this is the case, the lease is a finance lease. All other leases are classified as operating leases.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-508": { "value": "In accordance with the Corporations Act 2001 (Cth), the Company does not have authorised capital and all ordinary shares have no par value. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are included within equity. Holders of ordinary shares are entitled to receive dividends as determined from time to time and are entitled to one vote, on a show of hands or on a poll, for each fully paid ordinary share held at shareholders\u2019 meetings. In the event of a winding-up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any residual proceeds of liquidation.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Issued and paid-up ordinary share capital | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Ordinary shares, fully paid | \u00a0 | 38,546 | 39,399 | \u00a0 | 37,760 | 38,613 |
| Total contributed equity | \u00a0 | 38,546 | 39,399 | \u00a0 | 37,760 | 38,613 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Balance at beginning of year | \u00a0 | 39,399 | 43,247 | \u00a0 | 38,613 | 42,461 |
| Shares issued: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Dividend reinvestment plan | \u00a0 | 693 | 500 | \u00a0 | 693 | 500 |
| Transfer from equity-based compensation reserve | \u00a0 | 74 | 69 | \u00a0 | 74 | 69 |
| Purchase of treasury shares for employee share offer | \u00a0 | (23) | - | \u00a0 | (23) | - |
| On-market purchase of shares for dividend reinvestment plan neutralisation | \u00a0 | (693) | (500) | \u00a0 | (693) | (500) |
| Share buy-back | \u00a0 | (904) | (3,917) | \u00a0 | (904) | (3,917) |
| Balance at end of year | \u00a0 | 38,546 | 39,399 | \u00a0 | 37,760 | 38,613 |
The number of ordinary shares on issue for the last two years as at 30 September was as follows:
| \u00a0 | \u00a0 | Company | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | No. \u2019000 | No. \u2019000 |
| Ordinary shares, fully paid | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 3,153,813 | 3,281,991 |
| Shares issued: | \u00a0 | \u00a0 | \u00a0 |
| Dividend reinvestment plan | \u00a0 | 24,676 | 16,890 |
| Bonus share plan | \u00a0 | 1,338 | 1,227 |
| Share-based payments | \u00a0 | 3,628 | 5,547 |
| Paying up of partly paid shares | \u00a0 | 3 | - |
| On-market purchase of shares for dividend reinvestment plan neutralisation | \u00a0 | (24,676) | (16,890) |
| Share buy-back | \u00a0 | (29,833) | (134,952) |
| Total ordinary shares, fully paid | \u00a0 | 3,128,949 | 3,153,813 |
| Ordinary shares, partly paid to 25 cents | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 12 | 12 |
| Paying up of partly paid shares | \u00a0 | (3) | - |
| Total ordinary shares, partly paid to 25 cents | \u00a0 | 9 | 12 |
| Total ordinary shares (including treasury shares) | \u00a0 | 3,128,958 | 3,153,825 |
| Less: Treasury shares | \u00a0 | (8,137) | (6,331) |
| Total ordinary shares (excluding treasury shares) | \u00a0 | 3,120,821 | 3,147,494 |
In accordance with the Corporations Act 2001 (Cth), the Company does not have authorised capital and all ordinary shares have no par value. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are included within equity. Holders of ordinary shares are entitled to receive dividends as determined from time to time and are entitled to one vote, on a show of hands or on a poll, for each fully paid ordinary share held at shareholders\u2019 meetings. In the event of a winding-up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any residual proceeds of liquidation.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Issued and paid-up ordinary share capital | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Ordinary shares, fully paid | \u00a0 | 38,546 | 39,399 | \u00a0 | 37,760 | 38,613 |
| Total contributed equity | \u00a0 | 38,546 | 39,399 | \u00a0 | 37,760 | 38,613 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Balance at beginning of year | \u00a0 | 39,399 | 43,247 | \u00a0 | 38,613 | 42,461 |
| Shares issued: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Dividend reinvestment plan | \u00a0 | 693 | 500 | \u00a0 | 693 | 500 |
| Transfer from equity-based compensation reserve | \u00a0 | 74 | 69 | \u00a0 | 74 | 69 |
| Purchase of treasury shares for employee share offer | \u00a0 | (23) | - | \u00a0 | (23) | - |
| On-market purchase of shares for dividend reinvestment plan neutralisation | \u00a0 | (693) | (500) | \u00a0 | (693) | (500) |
| Share buy-back | \u00a0 | (904) | (3,917) | \u00a0 | (904) | (3,917) |
| Balance at end of year | \u00a0 | 38,546 | 39,399 | \u00a0 | 37,760 | 38,613 |
The number of ordinary shares on issue for the last two years as at 30 September was as follows:
| \u00a0 | \u00a0 | Company | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | No. \u2019000 | No. \u2019000 |
| Ordinary shares, fully paid | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 3,153,813 | 3,281,991 |
| Shares issued: | \u00a0 | \u00a0 | \u00a0 |
| Dividend reinvestment plan | \u00a0 | 24,676 | 16,890 |
| Bonus share plan | \u00a0 | 1,338 | 1,227 |
| Share-based payments | \u00a0 | 3,628 | 5,547 |
| Paying up of partly paid shares | \u00a0 | 3 | - |
| On-market purchase of shares for dividend reinvestment plan neutralisation | \u00a0 | (24,676) | (16,890) |
| Share buy-back | \u00a0 | (29,833) | (134,952) |
| Total ordinary shares, fully paid | \u00a0 | 3,128,949 | 3,153,813 |
| Ordinary shares, partly paid to 25 cents | \u00a0 | \u00a0 | \u00a0 |
| Balance at beginning of year | \u00a0 | 12 | 12 |
| Paying up of partly paid shares | \u00a0 | (3) | - |
| Total ordinary shares, partly paid to 25 cents | \u00a0 | 9 | 12 |
| Total ordinary shares (including treasury shares) | \u00a0 | 3,128,958 | 3,153,825 |
| Less: Treasury shares | \u00a0 | (8,137) | (6,331) |
| Total ordinary shares (excluding treasury shares) | \u00a0 | 3,120,821 | 3,147,494 |
Non-controlling interests represent the share in the net assets of controlled entities attributable to equity interests which the Company does not own directly or indirectly.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Non-controlling interests | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| BNZ perpetual preference shares | \u00a0 | 349 | - | \u00a0 | - | - |
| Total | \u00a0 | 349 | - | \u00a0 | - | - |
On 14 June 2023, Bank of New Zealand (BNZ), a wholly owned subsidiary of the Group, issued NZD $375 million of perpetual preference shares (PPS) that are classified as non-controlling interests to the Group. The balance as at 30 September 2023 represents an AUD equivalent of $341 million of PPS issued and $8 million impact of changes in the exchange rate between AUD and NZD during the 2023 financial year.\u00a0
The key terms of the PPS are summarised below:
Distributions on the PPS are discretionary and non-cumulative. If a PPS distribution is not paid in full within 3 business days of a distribution payment date, BNZ must not authorise or pay a dividend on its ordinary shares, acquire its ordinary shares or otherwise undertake a capital reduction in respect of its ordinary shares, until a subsequent PPS distribution is paid in full or there are no longer any PPS outstanding.
The distribution rate for the PPS is fixed at 7.30% per annum until the first optional redemption date of 14 June 2029. After this date the distribution rate will be a floating rate, reset quarterly, equal to the New Zealand 3 month bank bill rate plus 3.0%. Scheduled distribution payment dates are on 14 March, 14 June, 14 September and 14 December each year. Any distributions will comprise a cash amount and imputation credits.
The PPS have no fixed maturity date and will remain on issue indefinitely if not redeemed by BNZ.
BNZ may redeem the PPS on the first optional redemption date of 14 June 2029 or on each quarterly scheduled distribution payment date thereafter, or at any time if a tax event or regulatory event occurs. Redemption is subject to certain conditions being met, including obtaining the RBNZ\u2019s approval. Holders of PPS have no right to require that the PPS be redeemed.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-511": { "value": "Exchange differences arising on translation of the Group\u2019s foreign operations, any offsetting gains or losses on net investment hedges and any associated tax effect are reflected in the foreign currency translation reserve.
The results and financial position of the Group entities that have a functional currency different from Australian dollars are translated into Australian dollars as follows:
Assets and liabilities are translated at the closing exchange rate at the balance sheet date.
Income and expenses are translated at average exchange rates for the period.
All resulting exchange differences are recognised in the foreign currency translation reserve.
A cumulative credit balance in this reserve would not normally be regarded as available for payment of dividends until such gains are realised and recognised in the income statement on sale or disposal of the foreign operation.
The asset revaluation reserve is used to record revaluation adjustments on land and buildings. When an asset is sold or disposed of the related balance in the reserve is transferred directly to retained profits.
For qualifying hedging instruments, the Group excludes foreign currency basis spreads from hedge designations. Any change in the fair value of these hedging instruments for changes in cross currency basis spreads is deferred to the cost of hedging reserve and released to profit or loss either when the hedged exposure affects profit or loss or on a systematic basis over the life of the hedge. The cumulative movements are expected to be nil by maturity of the hedging instruments.
The equity-based compensation reserve comprises the fair value of shares and rights provided to employees.
The reserve includes all changes in the fair value of investments in debt instruments that are measured at fair value through other comprehensive income, other than impairment losses, foreign exchange gains and losses, interest income and net of any related hedge accounting adjustments. The cumulative amount recognised in the reserve is transferred to profit or loss when the related asset is derecognised.
The Group has made an irrevocable election to measure certain investments in equity instruments that are not held for trading purposes at fair value through other comprehensive income. Changes in the fair value of these investments are recognised in this reserve, while dividends are recognised in profit or loss. The cumulative amount recognised in the reserve is transferred directly to retained profits when the related asset is derecognised.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Foreign currency translation reserve | \u00a0 | 156 | (516) | \u00a0 | (134) | (222) |
| Asset revaluation reserve | \u00a0 | 21 | 25 | \u00a0 | - | - |
| Cash flow hedge reserve | \u00a0 | (1,611) | (1,667) | \u00a0 | (1,688) | (1,900) |
| Cost of hedging reserve | \u00a0 | (34) | 81 | \u00a0 | (5) | 28 |
| Equity-based compensation reserve | \u00a0 | 237 | 180 | \u00a0 | 237 | 180 |
| Debt instruments at fair value through other comprehensive income reserve | \u00a0 | 5 | 36 | \u00a0 | 5 | 36 |
| Equity instruments at fair value through other comprehensive income reserve | \u00a0 | 34 | 22 | \u00a0 | 20 | 4 |
| Total reserves | \u00a0 | (1,192) | (1,839) | \u00a0 | (1,565) | (1,874) |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Balance at beginning of year | \u00a0 | (516) | 288 | \u00a0 | (222) | (200) |
| Transfer from retained profits | \u00a0 | - | 1 | \u00a0 | - | - |
| Currency adjustments on translation of foreign operations, net of hedging | \u00a0 | 701 | (776) | \u00a0 | 117 | (22) |
| Transfer to the income statement on disposal or partial disposal of foreign operations1 | \u00a0 | (29) | (29) | \u00a0 | (29) | - |
| Balance at end of year | \u00a0 | 156 | (516) | \u00a0 | (134) | (222) |
Exchange differences arising on translation of the Group\u2019s foreign operations, any offsetting gains or losses on net investment hedges and any associated tax effect are reflected in the foreign currency translation reserve.
The results and financial position of the Group entities that have a functional currency different from Australian dollars are translated into Australian dollars as follows:
Assets and liabilities are translated at the closing exchange rate at the balance sheet date.
Income and expenses are translated at average exchange rates for the period.
All resulting exchange differences are recognised in the foreign currency translation reserve.
A cumulative credit balance in this reserve would not normally be regarded as available for payment of dividends until such gains are realised and recognised in the income statement on sale or disposal of the foreign operation.
The asset revaluation reserve is used to record revaluation adjustments on land and buildings. When an asset is sold or disposed of the related balance in the reserve is transferred directly to retained profits.
For qualifying hedging instruments, the Group excludes foreign currency basis spreads from hedge designations. Any change in the fair value of these hedging instruments for changes in cross currency basis spreads is deferred to the cost of hedging reserve and released to profit or loss either when the hedged exposure affects profit or loss or on a systematic basis over the life of the hedge. The cumulative movements are expected to be nil by maturity of the hedging instruments.
The equity-based compensation reserve comprises the fair value of shares and rights provided to employees.
The reserve includes all changes in the fair value of investments in debt instruments that are measured at fair value through other comprehensive income, other than impairment losses, foreign exchange gains and losses, interest income and net of any related hedge accounting adjustments. The cumulative amount recognised in the reserve is transferred to profit or loss when the related asset is derecognised.
The Group has made an irrevocable election to measure certain investments in equity instruments that are not held for trading purposes at fair value through other comprehensive income. Changes in the fair value of these investments are recognised in this reserve, while dividends are recognised in profit or loss. The cumulative amount recognised in the reserve is transferred directly to retained profits when the related asset is derecognised.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Foreign currency translation reserve | \u00a0 | 156 | (516) | \u00a0 | (134) | (222) |
| Asset revaluation reserve | \u00a0 | 21 | 25 | \u00a0 | - | - |
| Cash flow hedge reserve | \u00a0 | (1,611) | (1,667) | \u00a0 | (1,688) | (1,900) |
| Cost of hedging reserve | \u00a0 | (34) | 81 | \u00a0 | (5) | 28 |
| Equity-based compensation reserve | \u00a0 | 237 | 180 | \u00a0 | 237 | 180 |
| Debt instruments at fair value through other comprehensive income reserve | \u00a0 | 5 | 36 | \u00a0 | 5 | 36 |
| Equity instruments at fair value through other comprehensive income reserve | \u00a0 | 34 | 22 | \u00a0 | 20 | 4 |
| Total reserves | \u00a0 | (1,192) | (1,839) | \u00a0 | (1,565) | (1,874) |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Balance at beginning of year | \u00a0 | (516) | 288 | \u00a0 | (222) | (200) |
| Transfer from retained profits | \u00a0 | - | 1 | \u00a0 | - | - |
| Currency adjustments on translation of foreign operations, net of hedging | \u00a0 | 701 | (776) | \u00a0 | 117 | (22) |
| Transfer to the income statement on disposal or partial disposal of foreign operations1 | \u00a0 | (29) | (29) | \u00a0 | (29) | - |
| Balance at end of year | \u00a0 | 156 | (516) | \u00a0 | (134) | (222) |
Exchange differences arising on translation of the Group\u2019s foreign operations, any offsetting gains or losses on net investment hedges and any associated tax effect are reflected in the foreign currency translation reserve.
The results and financial position of the Group entities that have a functional currency different from Australian dollars are translated into Australian dollars as follows:
Assets and liabilities are translated at the closing exchange rate at the balance sheet date.
Income and expenses are translated at average exchange rates for the period.
All resulting exchange differences are recognised in the foreign currency translation reserve.
A cumulative credit balance in this reserve would not normally be regarded as available for payment of dividends until such gains are realised and recognised in the income statement on sale or disposal of the foreign operation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-712": { "value": "Exchange differences arising on translation of the Group\u2019s foreign operations, any offsetting gains or losses on net investment hedges and any associated tax effect are reflected in the foreign currency translation reserve.
The results and financial position of the Group entities that have a functional currency different from Australian dollars are translated into Australian dollars as follows:
Assets and liabilities are translated at the closing exchange rate at the balance sheet date.
Income and expenses are translated at average exchange rates for the period.
All resulting exchange differences are recognised in the foreign currency translation reserve.
A cumulative credit balance in this reserve would not normally be regarded as available for payment of dividends until such gains are realised and recognised in the income statement on sale or disposal of the foreign operation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-513": { "value": "| \u00a0 | \u00a0 | Amount per share | Total amount |
|---|---|---|---|
| \u00a0 | \u00a0 | cents | $m |
| Dividends paid | \u00a0 | \u00a0 | \u00a0 |
| For the year ended 30 September 2023 | \u00a0 | \u00a0 | \u00a0 |
| Final dividend determined in respect of the year ended 30 September 2022 | \u00a0 | 78 | 2,460 |
| Interim dividend determined in respect of the year ended 30 September 2023 | \u00a0 | 83 | 2,605 |
| Deduct: Bonus shares in lieu of dividend | \u00a0 | n/a | (38) |
| Dividends paid by the Company during the year ended 30 September 2023 | \u00a0 | n/a | 5,027 |
| Add: Dividends paid to non-controlling interests in controlled entities | \u00a0 | n/a | 5 |
| Total dividends paid by the Group (before dividend reinvestment plan) | \u00a0 | n/a | 5,032 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| For the year ended 30 September 2022 | \u00a0 | \u00a0 | \u00a0 |
| Final dividend determined in respect of the year ended 30 September 2021 | \u00a0 | 67 | 2,196 |
| Interim dividend determined in respect of the year ended 30 September 2022 | \u00a0 | 73 | 2,347 |
| Deduct: Bonus shares in lieu of dividend | \u00a0 | n/a | (37) |
| Total dividends paid by the Group (before dividend reinvestment plan) | \u00a0 | n/a | 4,506 |
Dividends paid during 2023 were fully franked at a tax rate of 30% (2022: 30%).
On 9 November 2023, the directors determined the following dividend:
| \u00a0 | \u00a0 | Amount per share | Total amount | \u00a0 | Franked amount per share |
|---|---|---|---|---|---|
| \u00a0 | \u00a0 | cents | $m | \u00a0 | % |
| Final dividend determined in respect of the year ended 30 September 2023 | \u00a0 | 84 | 2,628 | \u00a0 | 100 |
The 2023 final dividend is payable on 15 December 2023. The DRP discount for the 2023 final dividend is nil. Eligible shareholders have the ability to participate in the DRP for the 2023 final dividend for up to 5 million NAB ordinary shares per participant. The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 September 2023 and will be recognised in subsequent financial reports.
The franking credits available to the Company as at 30 September 2023 are estimated to be $768 million (2022: $665 million) after allowing for Australian tax payable in respect of the current reporting period's profit and the receipt of dividends recognised as a receivable at reporting date.
The final 2023 dividend will utilise the balance of franking credits available as at 30 September 2023.\u00a0 The Company's franking account will fluctuate during the year depending on the timing of tax and dividend payments. A surplus franking account balance is only required as at 30 June each year for the purpose of complying with Australian income tax legislation. \u00a0Instalment tax payments made after 30 September 2023 will generate sufficient franking credits to enable the final 2023 dividend to be fully franked and comply with the income tax legislation.
Franking is not guaranteed.\u00a0 The extent to which future dividends on ordinary shares and distributions on frankable hybrids will be franked will depend on a number of factors, including capital management activities and the level of profits that will be subject to tax in Australia.\u00a0
The New Zealand imputation credits available to the Company as at 30 September 2023 are estimated to be NZD $2,273 million (2022: NZD $232 million). The increase in this balance is due to the NZD $5.0 billion dividend that was paid by BNZ in the 2023 financial year.
The Company is able to attach available New Zealand imputation credits to dividends paid. As a result, New Zealand imputation credits of NZD $0.15 per share will be attached to the final 2023 dividend payable by the Company. New Zealand imputation credits are only relevant for shareholders who are required to file New Zealand income tax returns.\u00a0
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-514": { "value": "The Group discloses certain items as contingent liabilities, as they are either possible obligations whose existence will be confirmed only by uncertain future events, or they are present obligations where a transfer of economic resources is not probable or cannot be reliably measured. Contingent liabilities are not recognised on the balance sheet but are disclosed unless an outflow of economic resources is remote.
Financial assets are pledged as collateral predominantly under repurchase agreements with other banks. The financial assets pledged by the Group are strictly for the purpose of providing collateral for the counterparty. These transactions are conducted under terms that are usual and customary to standard lending and securities borrowing and lending activities, as well as requirements determined by exchanges where the Group acts as an intermediary. Repurchase agreements that do not qualify for derecognition are reported in Note 21 Financial asset transfers.
The Group provides guarantees in its normal course of business on behalf of its customers. Guarantees written are conditional commitments issued by the Group to guarantee the performance of a customer to a third party. Guarantees are primarily issued to support direct financial obligations such as commercial bills or other debt instruments issued by a counterparty. The Group has four principal types of guarantees:
Bank guarantees.
Standby letters of credit.
Documentary letters of credit.
Performance-related contingencies.
The Group considers all bank guarantees and letters of credit as \u201cat call\u201d for liquidity management purposes because it has no control over when the holder might call upon the instrument.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Bank guarantees and letters of credit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Bank guarantees | \u00a0 | 5,249 | 4,912 | \u00a0 | 5,421 | 4,859 |
| Standby letters of credit | \u00a0 | 7,380 | 7,270 | \u00a0 | 7,380 | 7,270 |
| Documentary letters of credit | \u00a0 | 2,767 | 3,358 | \u00a0 | 2,434 | 2,942 |
| Performance-related contingencies1 | \u00a0 | 10,925 | 10,143 | \u00a0 | 9,402 | 8,887 |
| Total bank guarantees and letters of credit | \u00a0 | 26,321 | 25,683 | \u00a0 | 24,637 | 23,958 |
The Group is subject to a commitment in accordance with the rules governing clearing and settlement arrangements contained in the Australian Payments Network Regulations for the Australian Paper Clearing System, the Bulk Electronic Clearing System, the Consumer Electronic Clearing System and the High Value Clearing System which could result in a credit risk exposure and loss in the event of a failure to settle by a member institution. The Group also has a commitment in accordance with the Austraclear System Regulations and the Continuous Linked Settlement Bank Rules to participate in loss-sharing arrangements in the event that another financial institution fails to settle.
The Group is a member of various central clearing houses, most notably the London Clearing House (LCH) SwapClear and RepoClear platforms and the ASX Over-The-Counter Central Counterparty, which enables the Group to centrally clear derivative and repurchase agreement instruments respectively. As a member of these central clearing houses, the Group is required to make a default fund contribution. The exposure to risk associated with this commitment is reflected for capital adequacy purposes in the Group\u2019s Pillar 3 reporting. In the event of a default of another clearing member, the Group could be required to commit additional funds to the default fund contribution.
Binding credit-related commitments to extend credit are agreements to lend to a customer provided that there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the customer. Since many of the commitments are expected to expire without being drawn down, the total commitment amounts do not necessarily represent future cash requirements. Nevertheless, credit-related commitments are considered \u201cat call\u201d for liquidity management purposes.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Credit-related commitments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Binding credit commitments1 | \u00a0 | 208,853 | 201,147 | \u00a0 | 188,268 | 182,667 |
| Total credit-related commitments | \u00a0 | 208,853 | 201,147 | \u00a0 | 188,268 | 182,667 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Credit-related commitments by geographical location | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Australia | \u00a0 | 165,594 | 162,265 | \u00a0 | 164,994 | 161,686 |
| New Zealand | \u00a0 | 19,985 | 17,901 | \u00a0 | - | - |
| Other International | \u00a0 | 23,274 | 20,981 | \u00a0 | 23,274 | 20,981 |
| Total credit-related commitments | \u00a0 | 208,853 | 201,147 | \u00a0 | 188,268 | 182,667 |
The Company has provided the following guarantees and undertakings relating to entities in the Group. These guarantees and undertakings are not included in previous tables in this note:
The Company will guarantee up to $30,881 million (2022: $29,023 million) of commercial paper issuances by National Australia Funding (Delaware) Inc. Commercial paper of $419 million (2022: $1,196 million) has been issued.
The Company is responsible to its customers for any direct loss suffered as a result of National Nominees Limited failing to perform its obligations to the Company.
The Company and MLC Wealth had both been granted a licence (the Licence) in 2007 by the Safety, Rehabilitation and Compensation Commission (the Commission) to operate as self-insurers under the Commonwealth Government Comcare Scheme (the Commonwealth Scheme). The Company still holds its Licence and continues to be self-insured under the Commonwealth Scheme. Following the sale of MLC Wealth to Insignia Financial Ltd (formerly IOOF) in 2021, the Commission agreed to revoke MLC Wealth\u2019s Licence effective from the date of the sale. As required by legislation and the Commission, the Company has provided a guarantee in respect of any workers' compensation liabilities of employees of MLC Wealth in respect of injuries that arose before the completion of the sale.
The Company has issued letters of support in respect of certain subsidiaries and associates in the normal course of business. The letters recognise that the Company has a responsibility to ensure that those subsidiaries and associates continue to meet their obligations.
The Group is exposed to contingent risks and liabilities arising from the conduct of its business including:
Actual and potential disputes, claims and legal proceedings.
Investigations into past conduct, including actual and potential regulatory breaches carried out by regulatory authorities on either an industry-wide or Group-specific basis.
Internal investigations and reviews into past conduct, including actual and potential regulatory breaches, carried out by or on behalf of the Group.
Contracts that involve giving contingent commitments such as warranties, indemnities or guarantees.
There are contingent liabilities in respect of all such matters. Such matters are often highly complex and uncertain. Where appropriate, provisions have been made. The aggregate potential liability of the Group in relation to these matters cannot be accurately assessed.
Further details on some specific contingent liabilities that may impact the Group are set out below.
Nine separate claims (comprising 904 individual claimants) focused on Tailored Business Loans (TBLs) have been commenced against the Company and Clydesdale Bank Plc, now owned by Virgin Money UK Plc and trading as Virgin Money (Virgin Money) by former customers of Virgin Money, represented by RGL Management Limited (a claims management company) (RGL) and law firm Fladgate LLP, in the English Courts. The cases involving four individual claimants (being the first and fourth claims) proceeded to a 12 week trial which commenced on 2 October 2023, effectively as test cases. The cases of the remaining individual claimants are currently stayed pending the outcome of the first and fourth claims.
The claims concern TBLs which customers entered into with Virgin Money and in respect of which NAB employees performed various functions. The claimants allege they were misled about: (1) the cost of repaying (or restructuring) their TBLs early; and (2) the composition of fixed interest rates/other rates offered under the TBLs. The alleged misconduct is said to give rise to several causes of action, including negligent misstatement, misrepresentation and deceit.
The potential outcome and total costs associated with the claims remain uncertain.
In January 2022, a class action complaint was filed in the Federal Court by a number of subcontractors regarding the Company's alleged conduct in connection with the collapse of the Walton Construction Group (WCG). It is alleged that the Company's conduct in the period prior to the collapse of WCG contributed to losses incurred by subcontractors following the liquidation of WCG. The Company filed and served its defence to the claims on 16 December 2022, however, the Applicant is seeking to file a second Further Amended Statement of Claim (FASC) and has been given until 7 February 2024 to provide a draft FASC. The potential outcome and total costs associated with the claims under this class action remain uncertain.
The Group continues to enhance its systems and processes to comply with AML and CTF requirements. The Group continues to keep AUSTRAC informed of its progress. In addition to an ongoing general uplift in capability, the Group is remediating specific known compliance issues and weaknesses. The Group has reported a number of compliance issues to relevant regulators, including in relation to \u2018Know Your Customer\u2019 (KYC) requirements (particularly with enhanced customer due diligence for non-individual customers), systems and process issues that impacted some aspects of transaction monitoring and reporting, and other financial crime risks. As this work progresses, further compliance issues may be identified and reported to AUSTRAC or equivalent foreign regulators, and additional uplifting and strengthening may be required.
On 29 April 2022, the Company entered into an enforceable undertaking (EU) with AUSTRAC to address AUSTRAC\u2019s concerns with the Group\u2019s compliance with certain AML and CTF requirements. In accepting the EU, AUSTRAC stated that the regulator had \u201cformed the view at the start of the investigation that a civil penalty proceeding was not appropriate at that time\u201d and that it had \u201cnot identified any information during the investigation to change that view\u201d. Under the terms of the EU, the Company and certain subsidiaries are required to:
Complete a Remedial Action Plan (RAP) approved by AUSTRAC.
Address to AUSTRAC\u2019s satisfaction any deficiencies or concerns with activities in the RAP identified by AUSTRAC.
Whilst the Company has delivered the approved RAP and approximately three quarters of the required deliverables, the total costs of the above remains uncertain and the conclusion or otherwise of the EU will be determined by AUSTRAC.
A number of reviews into banking-related matters are being carried on across the Group, both internally and in some cases by regulatory authorities, including matters regarding:
Incorrect fees being applied in connection with certain products.
Incorrect interest rates being applied in relation to certain products, including home lending products on conversion from interest only to principal.
Capturing customer consent to receive electronic statements and inconsistencies with recording statement preferences.
Issues with treatment of deregistered companies identified in the customer base.
The potential outcome and total costs associated with these matters remains uncertain.
In December 2019, NAB announced an end-to-end payroll review examining internal pay processes and compliance with pay related obligations under Australian employment laws. The review identified a range of issues, which have been notified to the Fair Work Ombudsman (FWO). A remediation program was undertaken, which is now largely complete save for some discrete residual matters still being addressed. There remains some potential for further developments regarding this matter, including possible enforcement action by the FWO or other legal actions, so the final outcome and total costs associated with this matter remain uncertain.
In March 2023, the Finance Sector Union (FSU) filed proceedings against NAB and MLC Wealth Ltd in the Federal Court alleging that those parties had breached provisions of the Fair Work Act which prohibit an employer from requesting or requiring an employee to work unreasonable additional hours. The claim relates to four current and former employees. The FSU is seeking declarations that NAB and MLC Wealth Ltd breached the Fair Work Act, the imposition of penalties in respect of the alleged breaches, as well as compensation for loss and damage to the four named current and former employees and the payment of legal costs. The final outcome and total costs associated with this matter remain uncertain.
In October 2015, the Group began contacting certain groups of customers where there was a concern that they may have received non-compliant financial advice since 2009 to: (a) assess the appropriateness of that advice; and (b) identify whether customers had suffered loss as a result of non-compliant advice that would warrant compensation. Subsequent to this, these cases are now progressing through the Customer Response Initiative review program, the scope of which includes the advice businesses of MLC Advice, NAB Advice Partnerships and JBWere, with compensation offered and paid in a number of cases1. Where customer compensation is able to be reliably estimated, provisions have been recognised. The final outcome and total costs associated with this work remain uncertain.
The Group is undertaking a remediation program in relation to financial advice fees paid by customers pursuant to ongoing service arrangements. This matter relates to JBWere and the various advice businesses, which were operated by the Group prior to completion of the MLC Wealth Transaction discussed below, including MLC Advice (formerly known as NAB Financial Planning) and NAB Advice Partnerships.1 Payments with respect to MLC Advice are now complete. Payments with respect to NAB Advice Partnerships are largely complete.
JBWere has identified its potentially impacted customers and has commenced making remediation payments where appropriate. JBWere continues to assess further matters which may impact clients including clients who are members of an APRA regulated superannuation fund and their treatment as a wholesale client instead of retail.
While the Group has taken provisions in relation to these matters based on current information, there remains the potential for further developments and the potential outcomes and total costs associated with these matters remains uncertain.
On 30 September 2022, National Wealth Management International Holdings Limited (NWMIH), a wholly owned subsidiary of the Company, completed the sale of BNZ Life to Partners Life. Under the sale agreements, NWMIH has provided certain warranties and indemnities in favour of Partners Life, a breach of which may result in NWMIH or the Company (as a guarantor to NWMIH under the terms of the sale) being liable to Partners Life. NWMIH has novated its obligations under the sale agreements, including with regards to the warranties and indemnities in favour of Partners Life, to the Company. The potential outcome and total costs associated with this transaction remain uncertain.
In connection with the sale of 80% of MLC Life to Nippon Life Insurance Company (Nippon Life) in October 2016, the Company gave certain covenants, warranties and indemnities in favour of Nippon Life and MLC Life. The claims periods for some of these covenants, warranties and indemnities have expired. The potential outcome and total costs associated with any claims under these covenants, warranties and indemnities remain uncertain.
On 31 May 2021, the Group completed the sale of MLC Wealth, comprising its advice, platforms, superannuation and investments, and asset management businesses to Insignia Financial. As part of the MLC Wealth Transaction, the Company has provided Insignia Financial with indemnities relating to certain pre-completion matters, including:
A remediation program relating to workplace superannuation (including matters where some employer superannuation plans and member entitlements were not correctly set up in the administration systems, and matters relating to disclosure and administration of certain features of the super product such as insurance and fees).
Breaches of anti-money laundering laws and regulations.
Regulatory fines and penalties.
Certain litigation and regulatory investigations (including the NULIS and MLCN class actions described below).
The Company also provided covenants and warranties in favour of Insignia Financial. A breach or triggering of these contractual protections may result in the Company being liable to Insignia Financial. The claims periods for some of these covenants, warranties and indemnities have expired.
As part of the MLC Wealth Transaction, the Group retained the companies that operated the advice business, such that the Group has retained all liabilities associated with the conduct of that business pre-completion.
The Company has also agreed to provide Insignia Financial with certain transitional services and continuing access to records, as well as support for data migration activities. The Company may be liable to Insignia Financial if it fails to perform its obligations under these agreements.
The final financial impact associated with the MLC Wealth Transaction remains uncertain and subject to finalisation of the completion accounts process and other contingencies as outlined above.
In October 2019, litigation funder Omni Bridgeway (formerly IMF Bentham) and William Roberts Lawyers commenced a class action against NULIS Nominees (Australia) Limited (NULIS) alleging breaches of NULIS\u2019s trustee obligations to act in the best interests of the former members of The Universal Super Scheme in deciding to maintain grandfathered commissions on their transfer into the MLC Super Fund on 1 July 2016. NULIS filed its first defence in the proceeding in February 2020. An initial trial to make determinations on the individual claims of the applicant and one sample group member was held on 9 October 2023. Judgment has been reserved.
In January 2020, Maurice Blackburn commenced a class action in the Supreme Court of Victoria against NULIS and MLC Nominees Pty Ltd (MLCN) alleging breaches of NULIS's trustee obligations in connection with the speed with which NULIS and MLCN effected transfers of members\u2019 accrued default amounts to the MySuper product (Supreme Court Class Action). NULIS and MLCN filed their joint defence in the proceeding in April 2020.
The potential outcomes and total costs associated with these matters remains uncertain. While NULIS and MLCN are no longer part of the Group following completion of the MLC Wealth Transaction, the Company remains liable for the costs associated with, and retains conduct of, these matters pursuant to the terms of the MLC Wealth Transaction.
The Group discloses certain items as contingent liabilities, as they are either possible obligations whose existence will be confirmed only by uncertain future events, or they are present obligations where a transfer of economic resources is not probable or cannot be reliably measured. Contingent liabilities are not recognised on the balance sheet but are disclosed unless an outflow of economic resources is remote.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-515": { "value": "Accounting policyThe Group discloses certain items as contingent liabilities, as they are either possible obligations whose existence will be confirmed only by uncertain future events, or they are present obligations where a transfer of economic resources is not probable or cannot be reliably measured. Contingent liabilities are not recognised on the balance sheet but are disclosed unless an outflow of economic resources is remote.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-722": { "value": "Accounting policyThe Group discloses certain items as contingent liabilities, as they are either possible obligations whose existence will be confirmed only by uncertain future events, or they are present obligations where a transfer of economic resources is not probable or cannot be reliably measured. Contingent liabilities are not recognised on the balance sheet but are disclosed unless an outflow of economic resources is remote.
Financial assets are pledged as collateral predominantly under repurchase agreements with other banks. The financial assets pledged by the Group are strictly for the purpose of providing collateral for the counterparty. These transactions are conducted under terms that are usual and customary to standard lending and securities borrowing and lending activities, as well as requirements determined by exchanges where the Group acts as an intermediary. Repurchase agreements that do not qualify for derecognition are reported in Note 21 Financial asset transfers.
The Group provides guarantees in its normal course of business on behalf of its customers. Guarantees written are conditional commitments issued by the Group to guarantee the performance of a customer to a third party. Guarantees are primarily issued to support direct financial obligations such as commercial bills or other debt instruments issued by a counterparty. The Group has four principal types of guarantees:
Bank guarantees.
Standby letters of credit.
Documentary letters of credit.
Performance-related contingencies.
The Group discloses certain items as contingent liabilities, as they are either possible obligations whose existence will be confirmed only by uncertain future events, or they are present obligations where a transfer of economic resources is not probable or cannot be reliably measured. Contingent liabilities are not recognised on the balance sheet but are disclosed unless an outflow of economic resources is remote.
The Group is exposed to contingent risks and liabilities arising from the conduct of its business including:
Actual and potential disputes, claims and legal proceedings.
Investigations into past conduct, including actual and potential regulatory breaches carried out by regulatory authorities on either an industry-wide or Group-specific basis.
Internal investigations and reviews into past conduct, including actual and potential regulatory breaches, carried out by or on behalf of the Group.
Contracts that involve giving contingent commitments such as warranties, indemnities or guarantees.
There are contingent liabilities in respect of all such matters. Such matters are often highly complex and uncertain. Where appropriate, provisions have been made. The aggregate potential liability of the Group in relation to these matters cannot be accurately assessed.
Further details on some specific contingent liabilities that may impact the Group are set out below.
Nine separate claims (comprising 904 individual claimants) focused on Tailored Business Loans (TBLs) have been commenced against the Company and Clydesdale Bank Plc, now owned by Virgin Money UK Plc and trading as Virgin Money (Virgin Money) by former customers of Virgin Money, represented by RGL Management Limited (a claims management company) (RGL) and law firm Fladgate LLP, in the English Courts. The cases involving four individual claimants (being the first and fourth claims) proceeded to a 12 week trial which commenced on 2 October 2023, effectively as test cases. The cases of the remaining individual claimants are currently stayed pending the outcome of the first and fourth claims.
The claims concern TBLs which customers entered into with Virgin Money and in respect of which NAB employees performed various functions. The claimants allege they were misled about: (1) the cost of repaying (or restructuring) their TBLs early; and (2) the composition of fixed interest rates/other rates offered under the TBLs. The alleged misconduct is said to give rise to several causes of action, including negligent misstatement, misrepresentation and deceit.
The potential outcome and total costs associated with the claims remain uncertain.
In January 2022, a class action complaint was filed in the Federal Court by a number of subcontractors regarding the Company's alleged conduct in connection with the collapse of the Walton Construction Group (WCG). It is alleged that the Company's conduct in the period prior to the collapse of WCG contributed to losses incurred by subcontractors following the liquidation of WCG. The Company filed and served its defence to the claims on 16 December 2022, however, the Applicant is seeking to file a second Further Amended Statement of Claim (FASC) and has been given until 7 February 2024 to provide a draft FASC. The potential outcome and total costs associated with the claims under this class action remain uncertain.
The Group continues to enhance its systems and processes to comply with AML and CTF requirements. The Group continues to keep AUSTRAC informed of its progress. In addition to an ongoing general uplift in capability, the Group is remediating specific known compliance issues and weaknesses. The Group has reported a number of compliance issues to relevant regulators, including in relation to \u2018Know Your Customer\u2019 (KYC) requirements (particularly with enhanced customer due diligence for non-individual customers), systems and process issues that impacted some aspects of transaction monitoring and reporting, and other financial crime risks. As this work progresses, further compliance issues may be identified and reported to AUSTRAC or equivalent foreign regulators, and additional uplifting and strengthening may be required.
On 29 April 2022, the Company entered into an enforceable undertaking (EU) with AUSTRAC to address AUSTRAC\u2019s concerns with the Group\u2019s compliance with certain AML and CTF requirements. In accepting the EU, AUSTRAC stated that the regulator had \u201cformed the view at the start of the investigation that a civil penalty proceeding was not appropriate at that time\u201d and that it had \u201cnot identified any information during the investigation to change that view\u201d. Under the terms of the EU, the Company and certain subsidiaries are required to:
Complete a Remedial Action Plan (RAP) approved by AUSTRAC.
Address to AUSTRAC\u2019s satisfaction any deficiencies or concerns with activities in the RAP identified by AUSTRAC.
Whilst the Company has delivered the approved RAP and approximately three quarters of the required deliverables, the total costs of the above remains uncertain and the conclusion or otherwise of the EU will be determined by AUSTRAC.
A number of reviews into banking-related matters are being carried on across the Group, both internally and in some cases by regulatory authorities, including matters regarding:
Incorrect fees being applied in connection with certain products.
Incorrect interest rates being applied in relation to certain products, including home lending products on conversion from interest only to principal.
Capturing customer consent to receive electronic statements and inconsistencies with recording statement preferences.
Issues with treatment of deregistered companies identified in the customer base.
The potential outcome and total costs associated with these matters remains uncertain.
In December 2019, NAB announced an end-to-end payroll review examining internal pay processes and compliance with pay related obligations under Australian employment laws. The review identified a range of issues, which have been notified to the Fair Work Ombudsman (FWO). A remediation program was undertaken, which is now largely complete save for some discrete residual matters still being addressed. There remains some potential for further developments regarding this matter, including possible enforcement action by the FWO or other legal actions, so the final outcome and total costs associated with this matter remain uncertain.
In March 2023, the Finance Sector Union (FSU) filed proceedings against NAB and MLC Wealth Ltd in the Federal Court alleging that those parties had breached provisions of the Fair Work Act which prohibit an employer from requesting or requiring an employee to work unreasonable additional hours. The claim relates to four current and former employees. The FSU is seeking declarations that NAB and MLC Wealth Ltd breached the Fair Work Act, the imposition of penalties in respect of the alleged breaches, as well as compensation for loss and damage to the four named current and former employees and the payment of legal costs. The final outcome and total costs associated with this matter remain uncertain.
In October 2015, the Group began contacting certain groups of customers where there was a concern that they may have received non-compliant financial advice since 2009 to: (a) assess the appropriateness of that advice; and (b) identify whether customers had suffered loss as a result of non-compliant advice that would warrant compensation. Subsequent to this, these cases are now progressing through the Customer Response Initiative review program, the scope of which includes the advice businesses of MLC Advice, NAB Advice Partnerships and JBWere, with compensation offered and paid in a number of cases1. Where customer compensation is able to be reliably estimated, provisions have been recognised. The final outcome and total costs associated with this work remain uncertain.
The Group is undertaking a remediation program in relation to financial advice fees paid by customers pursuant to ongoing service arrangements. This matter relates to JBWere and the various advice businesses, which were operated by the Group prior to completion of the MLC Wealth Transaction discussed below, including MLC Advice (formerly known as NAB Financial Planning) and NAB Advice Partnerships.1 Payments with respect to MLC Advice are now complete. Payments with respect to NAB Advice Partnerships are largely complete.
JBWere has identified its potentially impacted customers and has commenced making remediation payments where appropriate. JBWere continues to assess further matters which may impact clients including clients who are members of an APRA regulated superannuation fund and their treatment as a wholesale client instead of retail.
While the Group has taken provisions in relation to these matters based on current information, there remains the potential for further developments and the potential outcomes and total costs associated with these matters remains uncertain.
On 30 September 2022, National Wealth Management International Holdings Limited (NWMIH), a wholly owned subsidiary of the Company, completed the sale of BNZ Life to Partners Life. Under the sale agreements, NWMIH has provided certain warranties and indemnities in favour of Partners Life, a breach of which may result in NWMIH or the Company (as a guarantor to NWMIH under the terms of the sale) being liable to Partners Life. NWMIH has novated its obligations under the sale agreements, including with regards to the warranties and indemnities in favour of Partners Life, to the Company. The potential outcome and total costs associated with this transaction remain uncertain.
In connection with the sale of 80% of MLC Life to Nippon Life Insurance Company (Nippon Life) in October 2016, the Company gave certain covenants, warranties and indemnities in favour of Nippon Life and MLC Life. The claims periods for some of these covenants, warranties and indemnities have expired. The potential outcome and total costs associated with any claims under these covenants, warranties and indemnities remain uncertain.
On 31 May 2021, the Group completed the sale of MLC Wealth, comprising its advice, platforms, superannuation and investments, and asset management businesses to Insignia Financial. As part of the MLC Wealth Transaction, the Company has provided Insignia Financial with indemnities relating to certain pre-completion matters, including:
A remediation program relating to workplace superannuation (including matters where some employer superannuation plans and member entitlements were not correctly set up in the administration systems, and matters relating to disclosure and administration of certain features of the super product such as insurance and fees).
Breaches of anti-money laundering laws and regulations.
Regulatory fines and penalties.
Certain litigation and regulatory investigations (including the NULIS and MLCN class actions described below).
The Company also provided covenants and warranties in favour of Insignia Financial. A breach or triggering of these contractual protections may result in the Company being liable to Insignia Financial. The claims periods for some of these covenants, warranties and indemnities have expired.
As part of the MLC Wealth Transaction, the Group retained the companies that operated the advice business, such that the Group has retained all liabilities associated with the conduct of that business pre-completion.
The Company has also agreed to provide Insignia Financial with certain transitional services and continuing access to records, as well as support for data migration activities. The Company may be liable to Insignia Financial if it fails to perform its obligations under these agreements.
The final financial impact associated with the MLC Wealth Transaction remains uncertain and subject to finalisation of the completion accounts process and other contingencies as outlined above.
In October 2019, litigation funder Omni Bridgeway (formerly IMF Bentham) and William Roberts Lawyers commenced a class action against NULIS Nominees (Australia) Limited (NULIS) alleging breaches of NULIS\u2019s trustee obligations to act in the best interests of the former members of The Universal Super Scheme in deciding to maintain grandfathered commissions on their transfer into the MLC Super Fund on 1 July 2016. NULIS filed its first defence in the proceeding in February 2020. An initial trial to make determinations on the individual claims of the applicant and one sample group member was held on 9 October 2023. Judgment has been reserved.
In January 2020, Maurice Blackburn commenced a class action in the Supreme Court of Victoria against NULIS and MLC Nominees Pty Ltd (MLCN) alleging breaches of NULIS's trustee obligations in connection with the speed with which NULIS and MLCN effected transfers of members\u2019 accrued default amounts to the MySuper product (Supreme Court Class Action). NULIS and MLCN filed their joint defence in the proceeding in April 2020.
The potential outcomes and total costs associated with these matters remains uncertain. While NULIS and MLCN are no longer part of the Group following completion of the MLC Wealth Transaction, the Company remains liable for the costs associated with, and retains conduct of, these matters pursuant to the terms of the MLC Wealth Transaction.
", "dimensions": { "concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-517": { "value": "Financial assets are pledged as collateral predominantly under repurchase agreements with other banks. The financial assets pledged by the Group are strictly for the purpose of providing collateral for the counterparty. These transactions are conducted under terms that are usual and customary to standard lending and securities borrowing and lending activities, as well as requirements determined by exchanges where the Group acts as an intermediary. Repurchase agreements that do not qualify for derecognition are reported in Note 21 Financial asset transfers.
The Group provides guarantees in its normal course of business on behalf of its customers. Guarantees written are conditional commitments issued by the Group to guarantee the performance of a customer to a third party. Guarantees are primarily issued to support direct financial obligations such as commercial bills or other debt instruments issued by a counterparty. The Group has four principal types of guarantees:
Bank guarantees.
Standby letters of credit.
Documentary letters of credit.
Performance-related contingencies.
The Group considers all bank guarantees and letters of credit as \u201cat call\u201d for liquidity management purposes because it has no control over when the holder might call upon the instrument.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Bank guarantees and letters of credit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Bank guarantees | \u00a0 | 5,249 | 4,912 | \u00a0 | 5,421 | 4,859 |
| Standby letters of credit | \u00a0 | 7,380 | 7,270 | \u00a0 | 7,380 | 7,270 |
| Documentary letters of credit | \u00a0 | 2,767 | 3,358 | \u00a0 | 2,434 | 2,942 |
| Performance-related contingencies1 | \u00a0 | 10,925 | 10,143 | \u00a0 | 9,402 | 8,887 |
| Total bank guarantees and letters of credit | \u00a0 | 26,321 | 25,683 | \u00a0 | 24,637 | 23,958 |
The Group is subject to a commitment in accordance with the rules governing clearing and settlement arrangements contained in the Australian Payments Network Regulations for the Australian Paper Clearing System, the Bulk Electronic Clearing System, the Consumer Electronic Clearing System and the High Value Clearing System which could result in a credit risk exposure and loss in the event of a failure to settle by a member institution. The Group also has a commitment in accordance with the Austraclear System Regulations and the Continuous Linked Settlement Bank Rules to participate in loss-sharing arrangements in the event that another financial institution fails to settle.
The Group is a member of various central clearing houses, most notably the London Clearing House (LCH) SwapClear and RepoClear platforms and the ASX Over-The-Counter Central Counterparty, which enables the Group to centrally clear derivative and repurchase agreement instruments respectively. As a member of these central clearing houses, the Group is required to make a default fund contribution. The exposure to risk associated with this commitment is reflected for capital adequacy purposes in the Group\u2019s Pillar 3 reporting. In the event of a default of another clearing member, the Group could be required to commit additional funds to the default fund contribution.
Binding credit-related commitments to extend credit are agreements to lend to a customer provided that there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee by the customer. Since many of the commitments are expected to expire without being drawn down, the total commitment amounts do not necessarily represent future cash requirements. Nevertheless, credit-related commitments are considered \u201cat call\u201d for liquidity management purposes.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Credit-related commitments | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Binding credit commitments1 | \u00a0 | 208,853 | 201,147 | \u00a0 | 188,268 | 182,667 |
| Total credit-related commitments | \u00a0 | 208,853 | 201,147 | \u00a0 | 188,268 | 182,667 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Credit-related commitments by geographical location | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Australia | \u00a0 | 165,594 | 162,265 | \u00a0 | 164,994 | 161,686 |
| New Zealand | \u00a0 | 19,985 | 17,901 | \u00a0 | - | - |
| Other International | \u00a0 | 23,274 | 20,981 | \u00a0 | 23,274 | 20,981 |
| Total credit-related commitments | \u00a0 | 208,853 | 201,147 | \u00a0 | 188,268 | 182,667 |
The Company has provided the following guarantees and undertakings relating to entities in the Group. These guarantees and undertakings are not included in previous tables in this note:
The Company will guarantee up to $30,881 million (2022: $29,023 million) of commercial paper issuances by National Australia Funding (Delaware) Inc. Commercial paper of $419 million (2022: $1,196 million) has been issued.
The Company is responsible to its customers for any direct loss suffered as a result of National Nominees Limited failing to perform its obligations to the Company.
The Company and MLC Wealth had both been granted a licence (the Licence) in 2007 by the Safety, Rehabilitation and Compensation Commission (the Commission) to operate as self-insurers under the Commonwealth Government Comcare Scheme (the Commonwealth Scheme). The Company still holds its Licence and continues to be self-insured under the Commonwealth Scheme. Following the sale of MLC Wealth to Insignia Financial Ltd (formerly IOOF) in 2021, the Commission agreed to revoke MLC Wealth\u2019s Licence effective from the date of the sale. As required by legislation and the Commission, the Company has provided a guarantee in respect of any workers' compensation liabilities of employees of MLC Wealth in respect of injuries that arose before the completion of the sale.
The Company has issued letters of support in respect of certain subsidiaries and associates in the normal course of business. The letters recognise that the Company has a responsibility to ensure that those subsidiaries and associates continue to meet their obligations.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-593": { "value": "Controlled entities are all those entities (including structured entities) to which the Company is exposed, 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. An assessment of control is performed on an ongoing basis. Entities are consolidated from the date on which control is obtained by the Group. Entities are deconsolidated from the date that control ceases. The effects of transactions between entities within the Group are eliminated in full upon consolidation.
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. The Group's investments in associates are accounted for using the equity method, with the carrying amount of the investment increased or decreased to recognise the Group's share of the profit or loss of the investee.
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Structured entities generally have restricted activities and a narrow and well-defined objective which is created through contractual arrangement. Depending on the Group's power over the relevant activities of the structured entity and its exposure to and ability to influence its own returns, it may or may not consolidate the entity.
Unconsolidated structured entities refer to all structured entities that are not controlled by the Group. The Group enters into transactions with unconsolidated structured entities in the normal course of business to facilitate customer transactions or for specific investment opportunities.
Interests in unconsolidated structured entities include, but are not limited to, debt and equity investments, guarantees, liquidity arrangements, commitments, fees from investment structures, and derivative instruments that expose the Group to the risks of the unconsolidated structured entities. Interests do not include plain vanilla derivatives (e.g. interest rate swaps and cross currency swaps) and positions where the Group:
Creates rather than absorbs variability of the unconsolidated structured entity.
Provides administrative, trustee or other services as agent to third party managed structured entities.
Involvement is considered on a case by case basis, taking into account the nature of the structured entity\u2019s activities. This excludes involvement that exists only because of typical customer-supplier relationships.
The following table presents the material controlled entities as at 30 September 2023:
| Entity name | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Ownership % | Incorporated / formed in |
|---|---|---|---|---|---|---|---|
| National Equities Limited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 100 | Australia |
| National Australia Group (NZ) Limited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 100 | New Zealand |
| Bank of New Zealand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 100 | New Zealand |
Subsidiary companies that are subject to prudential regulation are required to maintain minimum capital and other regulatory requirements that may restrict the ability of these entities to make distributions of cash or other assets to the parent company. These restrictions are managed in accordance with the Group\u2019s normal risk management policies set out in Note 19 Financial risk management and capital adequacy requirements in Note 36 Capital adequacy.
The Group\u2019s investments in associates include a 20% interest in MLC Life, a provider of life insurance products in Australia. Set out below is the summarised financial information of MLC Life based on its financial information (and not the Group\u2019s 20% share of those amounts) and a reconciliation of that information to the equity-accounted carrying amount as at 30 September:
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 |
|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | $m | $m |
| Summarised income statement of MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Revenue | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,656 | 949 |
| Net profit for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 146 | 69 |
| Total comprehensive income for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 146 | 69 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reconciliation to the Group's share of profit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| MLC Life's net profit for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 146 | 69 |
| Prima facie share of profit at 20% | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 29 | 14 |
| Group's share of profit for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 29 | 14 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Summarised balance sheet of MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Total assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 7,137 | 6,841 |
| Total liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 4,129 | 3,979 |
| Net assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,008 | 2,862 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reconciliation to the Group's investment in MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Prima facie share of net assets at 20% | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 601 | 572 |
| Accumulated impairment losses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (86) | (86) |
| Group's carrying amount of the investment in MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 515 | 486 |
There was no dividend received from MLC Life during the 2023 financial year (2022: $nil).
AASB 17 will be effective for the Group from 1 October 2023. AASB 17 will change the timing of profit recognition from insurance contracts. In general, profits will be recognised later than under the current accounting standard.
On transition to AASB 17 the value of MLC Life\u2019s insurance and reinsurance contract liabilities, net of insurance and reinsurance contract assets, is expected to increase by approximately $1.5 billion, before associated tax impacts. As a result, the carrying value of the Group's investment in MLC Life is expected to reduce by approximately $200 million with a corresponding decrease in retained earnings as at 1 October 2023.
Assets in a statutory fund of MLC Life can only be used to meet the liabilities and expenses of that fund, to acquire investments to further the business of that fund, or to make profit distributions when solvency and capital adequacy requirements of the Life Insurance Act 1995 (Cth) are met. This may impact MLC Life's ability to transfer funds to the Group in the form of dividends. In addition, in certain circumstances the payment of dividends may require approval by APRA.
As part of a long-term commercial arrangement with Nippon Life and MLC Life, the Group refers certain bank customers to MLC Life. Under a financial services agreement and certain linked arrangements, the Group provides MLC Life with certain financial services on an arm\u2019s length basis, including custody, transactional banking facilities, fixed income and currency services.
The Group has interests in the following types of consolidated structured entities:
| Type | Details |
| Securitisation | The Group engages in securitisation activities for funding, liquidity and capital management purposes. The Group principally packages and sells residential mortgage loans as securities to investors through a series of bankruptcy remote securitisation vehicles. The Group is entitled to any residual income after all payments to investors and costs related to the program have been met. The note holders only have recourse to the pool of assets. The Group is considered to hold the majority of the residual risks and benefits of the vehicles. All relevant financial assets continue to be held on the Group balance sheet, and a liability is recognised for the proceeds of the funding transaction.The Group provides liquidity facilities to the securitisation vehicles. These facilities can only be drawn to manage the timing mismatch of cash inflows from securitised loans and cash outflows due to investors. The Group also provides redraw facilities to certain securitisation vehicles to manage the timing mismatch of principal collections from securitised loans and cash outflows in respect of customer redraws. The aggregate limit of these liquidity and redraw facilities as at 30 September 2023 is $1,364 million. |
| Covered bonds | The Group is entitled to any residual income after all payments due to covered bonds investors and costs related to the program have been met. Residential mortgage loans are assigned to a bankruptcy remote structured entity, which provides guarantees on the payments to covered bondholders. The covered bondholders have recourse to the Group and, following certain trigger events including payment default, the covered pool assets. |
The Group has interests in the following types of unconsolidated structured entities:
| Type | Details |
| Securitisation | The Group engages with third party (client) securitisation vehicles by providing warehouse facilities, liquidity support and derivatives. The Group invests in residential mortgage and asset-backed securities. |
| Other financing | The Group provides tailored lending to limited recourse single purpose vehicles which are established to facilitate asset financing for clients. The assets are pledged as collateral to the Group. The Group engages in raising finance for leasing assets such as aircraft, trains, shipping vessels and other infrastructure assets. The Group may act as a lender, arranger or derivative counterparty to these vehicles.Other financing transactions are generally senior, secured self-liquidating facilities in compliance with Group credit lending policies. Regular credit and financial reviews of the borrowers are conducted to ensure collateral is sufficient to support the Group\u2019s maximum exposures. |
| Investment funds | The Group has direct interests in unconsolidated investment funds. The Group\u2019s interests include holding units and receiving fees for services. The Group\u2019s interest in unconsolidated investment funds is immaterial. |
The table below shows the carrying value and maximum exposure to loss of the Group\u2019s interests in unconsolidated structured entities:
| \u00a0 | \u00a0 | Group | |||||||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Securitisations | \u00a0 | Other financing | \u00a0 | Total | |||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Loans and advances | \u00a0 | 19,833 | 22,849 | \u00a0 | 2,564 | 3,132 | \u00a0 | 22,397 | 25,981 |
| Debt instruments | \u00a0 | 6,536 | 6,283 | \u00a0 | - | - | \u00a0 | 6,536 | 6,283 |
| Total carrying value of assets in unconsolidated structured entities | \u00a0 | 26,369 | 29,132 | \u00a0 | 2,564 | 3,132 | \u00a0 | 28,933 | 32,264 |
| Commitment / contingencies | \u00a0 | 7,486 | 8,490 | \u00a0 | 62 | 121 | \u00a0 | 7,548 | 8,611 |
| Total maximum exposure to loss in unconsolidated structured entities | \u00a0 | 33,855 | 37,622 | \u00a0 | 2,626 | 3,253 | \u00a0 | 36,481 | 40,875 |
Exposure to loss is managed as part of the Group's RMF. The Group\u2019s maximum exposure to loss is the total of its on-balance sheet positions and its off-balance sheet arrangements, being loan commitments, financial guarantees, and liquidity support. Consequently, the Group has presented these measures rather than the total assets of the unconsolidated structured entities. Refer to Note 19 Financial risk management for further details. Income earned from interests in unconsolidated structured entities primarily results from interest income, mark-to-market movements and fees and commissions.
The majority of the Group\u2019s exposures are senior investment grade, but in some limited cases, the Group may be required to absorb losses from unconsolidated structured entities before other parties because the Group\u2019s interests are subordinated to others in the ownership structure. The table below shows the credit quality of the Group\u2019s exposures in unconsolidated structured entities:
| \u00a0 | \u00a0 | Group | |||||||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Securitisations | \u00a0 | Other financing | \u00a0 | Total | |||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Senior investment grade | \u00a0 | 26,358 | 29,065 | \u00a0 | 708 | 790 | \u00a0 | 27,066 | 29,855 |
| Investment grade | \u00a0 | 9 | 57 | \u00a0 | 1,352 | 1,419 | \u00a0 | 1,361 | 1,476 |
| Sub-investment grade | \u00a0 | 2 | 10 | \u00a0 | 504 | 923 | \u00a0 | 506 | 933 |
| Total1 | \u00a0 | 26,369 | 29,132 | \u00a0 | 2,564 | 3,132 | \u00a0 | 28,933 | 32,264 |
Controlled entities are all those entities (including structured entities) to which the Company is exposed, 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. An assessment of control is performed on an ongoing basis. Entities are consolidated from the date on which control is obtained by the Group. Entities are deconsolidated from the date that control ceases. The effects of transactions between entities within the Group are eliminated in full upon consolidation.
An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. The Group's investments in associates are accounted for using the equity method, with the carrying amount of the investment increased or decreased to recognise the Group's share of the profit or loss of the investee.
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity. Structured entities generally have restricted activities and a narrow and well-defined objective which is created through contractual arrangement. Depending on the Group's power over the relevant activities of the structured entity and its exposure to and ability to influence its own returns, it may or may not consolidate the entity.
Unconsolidated structured entities refer to all structured entities that are not controlled by the Group. The Group enters into transactions with unconsolidated structured entities in the normal course of business to facilitate customer transactions or for specific investment opportunities.
Interests in unconsolidated structured entities include, but are not limited to, debt and equity investments, guarantees, liquidity arrangements, commitments, fees from investment structures, and derivative instruments that expose the Group to the risks of the unconsolidated structured entities. Interests do not include plain vanilla derivatives (e.g. interest rate swaps and cross currency swaps) and positions where the Group:
Creates rather than absorbs variability of the unconsolidated structured entity.
Provides administrative, trustee or other services as agent to third party managed structured entities.
Involvement is considered on a case by case basis, taking into account the nature of the structured entity\u2019s activities. This excludes involvement that exists only because of typical customer-supplier relationships.
The following table presents the material controlled entities as at 30 September 2023:
| Entity name | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Ownership % | Incorporated / formed in |
|---|---|---|---|---|---|---|---|
| National Equities Limited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 100 | Australia |
| National Australia Group (NZ) Limited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 100 | New Zealand |
| Bank of New Zealand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 100 | New Zealand |
Subsidiary companies that are subject to prudential regulation are required to maintain minimum capital and other regulatory requirements that may restrict the ability of these entities to make distributions of cash or other assets to the parent company. These restrictions are managed in accordance with the Group\u2019s normal risk management policies set out in Note 19 Financial risk management and capital adequacy requirements in Note 36 Capital adequacy.
The Group\u2019s investments in associates include a 20% interest in MLC Life, a provider of life insurance products in Australia. Set out below is the summarised financial information of MLC Life based on its financial information (and not the Group\u2019s 20% share of those amounts) and a reconciliation of that information to the equity-accounted carrying amount as at 30 September:
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 |
|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | $m | $m |
| Summarised income statement of MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Revenue | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,656 | 949 |
| Net profit for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 146 | 69 |
| Total comprehensive income for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 146 | 69 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reconciliation to the Group's share of profit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| MLC Life's net profit for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 146 | 69 |
| Prima facie share of profit at 20% | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 29 | 14 |
| Group's share of profit for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 29 | 14 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Summarised balance sheet of MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Total assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 7,137 | 6,841 |
| Total liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 4,129 | 3,979 |
| Net assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,008 | 2,862 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reconciliation to the Group's investment in MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Prima facie share of net assets at 20% | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 601 | 572 |
| Accumulated impairment losses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (86) | (86) |
| Group's carrying amount of the investment in MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 515 | 486 |
There was no dividend received from MLC Life during the 2023 financial year (2022: $nil).
AASB 17 will be effective for the Group from 1 October 2023. AASB 17 will change the timing of profit recognition from insurance contracts. In general, profits will be recognised later than under the current accounting standard.
On transition to AASB 17 the value of MLC Life\u2019s insurance and reinsurance contract liabilities, net of insurance and reinsurance contract assets, is expected to increase by approximately $1.5 billion, before associated tax impacts. As a result, the carrying value of the Group's investment in MLC Life is expected to reduce by approximately $200 million with a corresponding decrease in retained earnings as at 1 October 2023.
Assets in a statutory fund of MLC Life can only be used to meet the liabilities and expenses of that fund, to acquire investments to further the business of that fund, or to make profit distributions when solvency and capital adequacy requirements of the Life Insurance Act 1995 (Cth) are met. This may impact MLC Life's ability to transfer funds to the Group in the form of dividends. In addition, in certain circumstances the payment of dividends may require approval by APRA.
As part of a long-term commercial arrangement with Nippon Life and MLC Life, the Group refers certain bank customers to MLC Life. Under a financial services agreement and certain linked arrangements, the Group provides MLC Life with certain financial services on an arm\u2019s length basis, including custody, transactional banking facilities, fixed income and currency services.
The Group has interests in the following types of consolidated structured entities:
| Type | Details |
| Securitisation | The Group engages in securitisation activities for funding, liquidity and capital management purposes. The Group principally packages and sells residential mortgage loans as securities to investors through a series of bankruptcy remote securitisation vehicles. The Group is entitled to any residual income after all payments to investors and costs related to the program have been met. The note holders only have recourse to the pool of assets. The Group is considered to hold the majority of the residual risks and benefits of the vehicles. All relevant financial assets continue to be held on the Group balance sheet, and a liability is recognised for the proceeds of the funding transaction.The Group provides liquidity facilities to the securitisation vehicles. These facilities can only be drawn to manage the timing mismatch of cash inflows from securitised loans and cash outflows due to investors. The Group also provides redraw facilities to certain securitisation vehicles to manage the timing mismatch of principal collections from securitised loans and cash outflows in respect of customer redraws. The aggregate limit of these liquidity and redraw facilities as at 30 September 2023 is $1,364 million. |
| Covered bonds | The Group is entitled to any residual income after all payments due to covered bonds investors and costs related to the program have been met. Residential mortgage loans are assigned to a bankruptcy remote structured entity, which provides guarantees on the payments to covered bondholders. The covered bondholders have recourse to the Group and, following certain trigger events including payment default, the covered pool assets. |
The Group has interests in the following types of unconsolidated structured entities:
| Type | Details |
| Securitisation | The Group engages with third party (client) securitisation vehicles by providing warehouse facilities, liquidity support and derivatives. The Group invests in residential mortgage and asset-backed securities. |
| Other financing | The Group provides tailored lending to limited recourse single purpose vehicles which are established to facilitate asset financing for clients. The assets are pledged as collateral to the Group. The Group engages in raising finance for leasing assets such as aircraft, trains, shipping vessels and other infrastructure assets. The Group may act as a lender, arranger or derivative counterparty to these vehicles.Other financing transactions are generally senior, secured self-liquidating facilities in compliance with Group credit lending policies. Regular credit and financial reviews of the borrowers are conducted to ensure collateral is sufficient to support the Group\u2019s maximum exposures. |
| Investment funds | The Group has direct interests in unconsolidated investment funds. The Group\u2019s interests include holding units and receiving fees for services. The Group\u2019s interest in unconsolidated investment funds is immaterial. |
The table below shows the carrying value and maximum exposure to loss of the Group\u2019s interests in unconsolidated structured entities:
| \u00a0 | \u00a0 | Group | |||||||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Securitisations | \u00a0 | Other financing | \u00a0 | Total | |||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Loans and advances | \u00a0 | 19,833 | 22,849 | \u00a0 | 2,564 | 3,132 | \u00a0 | 22,397 | 25,981 |
| Debt instruments | \u00a0 | 6,536 | 6,283 | \u00a0 | - | - | \u00a0 | 6,536 | 6,283 |
| Total carrying value of assets in unconsolidated structured entities | \u00a0 | 26,369 | 29,132 | \u00a0 | 2,564 | 3,132 | \u00a0 | 28,933 | 32,264 |
| Commitment / contingencies | \u00a0 | 7,486 | 8,490 | \u00a0 | 62 | 121 | \u00a0 | 7,548 | 8,611 |
| Total maximum exposure to loss in unconsolidated structured entities | \u00a0 | 33,855 | 37,622 | \u00a0 | 2,626 | 3,253 | \u00a0 | 36,481 | 40,875 |
Exposure to loss is managed as part of the Group's RMF. The Group\u2019s maximum exposure to loss is the total of its on-balance sheet positions and its off-balance sheet arrangements, being loan commitments, financial guarantees, and liquidity support. Consequently, the Group has presented these measures rather than the total assets of the unconsolidated structured entities. Refer to Note 19 Financial risk management for further details. Income earned from interests in unconsolidated structured entities primarily results from interest income, mark-to-market movements and fees and commissions.
The majority of the Group\u2019s exposures are senior investment grade, but in some limited cases, the Group may be required to absorb losses from unconsolidated structured entities before other parties because the Group\u2019s interests are subordinated to others in the ownership structure. The table below shows the credit quality of the Group\u2019s exposures in unconsolidated structured entities:
| \u00a0 | \u00a0 | Group | |||||||
|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Securitisations | \u00a0 | Other financing | \u00a0 | Total | |||
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Senior investment grade | \u00a0 | 26,358 | 29,065 | \u00a0 | 708 | 790 | \u00a0 | 27,066 | 29,855 |
| Investment grade | \u00a0 | 9 | 57 | \u00a0 | 1,352 | 1,419 | \u00a0 | 1,361 | 1,476 |
| Sub-investment grade | \u00a0 | 2 | 10 | \u00a0 | 504 | 923 | \u00a0 | 506 | 933 |
| Total1 | \u00a0 | 26,369 | 29,132 | \u00a0 | 2,564 | 3,132 | \u00a0 | 28,933 | 32,264 |
Controlled entities are all those entities (including structured entities) to which the Company is exposed, 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. An assessment of control is performed on an ongoing basis. Entities are consolidated from the date on which control is obtained by the Group. Entities are deconsolidated from the date that control ceases. The effects of transactions between entities within the Group are eliminated in full upon consolidation.
The following table presents the material controlled entities as at 30 September 2023:
| Entity name | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | Ownership % | Incorporated / formed in |
|---|---|---|---|---|---|---|---|
| National Equities Limited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 100 | Australia |
| National Australia Group (NZ) Limited | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 100 | New Zealand |
| Bank of New Zealand | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 100 | New Zealand |
Subsidiary companies that are subject to prudential regulation are required to maintain minimum capital and other regulatory requirements that may restrict the ability of these entities to make distributions of cash or other assets to the parent company. These restrictions are managed in accordance with the Group\u2019s normal risk management policies set out in Note 19 Financial risk management and capital adequacy requirements in Note 36 Capital adequacy.
On 1 June 2022, the Company completed the acquisition of the Citi consumer business, including its home lending portfolio, unsecured lending business (personal loans and credit cards), retail deposits business and private wealth management business. The acquisition qualified as a business combination as defined in AASB 3 Business Combinations.
The acquisition was undertaken to support NAB\u2019s ambition to build a leading personal bank with a simpler, more digital experience.
The net assets recognised in the 2022 financial year were recorded on a provisional basis using preliminary completion accounts and a draft purchase price allocation. During the 2023 financial year the final completion payment was made and the purchase price allocation was finalised.
The final fair values of the assets and liabilities are summarised in the table below:
| \u00a0 | \u00a0 | Group |
|---|---|---|
| \u00a0 | \u00a0 | $m |
| Consideration | \u00a0 | \u00a0 |
| Total cash consideration for the acquisition | \u00a0 | 3,135 |
| Assets and liabilities acquired | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | 12,832 |
| Other assets | \u00a0 | 523 |
| Total assets | \u00a0 | 13,355 |
| Deposits and other borrowings | \u00a0 | 9,488 |
| Other liabilities | \u00a0 | 732 |
| Total liabilities | \u00a0 | 10,220 |
| Net assets | \u00a0 | 3,135 |
| Goodwill and other intangible assets | \u00a0 | 248 |
| Goodwill | \u00a0 | 80 |
| Intangible assets | \u00a0 | 168 |
The most significant adjustments to the provisional amounts disclosed in the 2022 Annual Report are in relation to a $19 million increase in net deferred tax assets recognised and a $3 million decrease in intangible assets.
The final goodwill value of $80 million is supported by the scale and expertise in unsecured lending acquired, together with anticipated synergies. Other intangible assets comprise customer relationships and core deposits.
The goodwill has been allocated to the Personal Banking CGU (refer to Note 22 Goodwill and other intangible assets).
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-730": { "value": "Controlled entities are all those entities (including structured entities) to which the Company is exposed, 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. An assessment of control is performed on an ongoing basis. Entities are consolidated from the date on which control is obtained by the Group. Entities are deconsolidated from the date that control ceases. The effects of transactions between entities within the Group are eliminated in full upon consolidation.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-597": { "value": "An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. The Group's investments in associates are accounted for using the equity method, with the carrying amount of the investment increased or decreased to recognise the Group's share of the profit or loss of the investee.
The Group\u2019s investments in associates include a 20% interest in MLC Life, a provider of life insurance products in Australia. Set out below is the summarised financial information of MLC Life based on its financial information (and not the Group\u2019s 20% share of those amounts) and a reconciliation of that information to the equity-accounted carrying amount as at 30 September:
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 2023 | 2022 |
|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | $m | $m |
| Summarised income statement of MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Revenue | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 1,656 | 949 |
| Net profit for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 146 | 69 |
| Total comprehensive income for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 146 | 69 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reconciliation to the Group's share of profit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| MLC Life's net profit for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 146 | 69 |
| Prima facie share of profit at 20% | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 29 | 14 |
| Group's share of profit for the period | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 29 | 14 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Summarised balance sheet of MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Total assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 7,137 | 6,841 |
| Total liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 4,129 | 3,979 |
| Net assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 3,008 | 2,862 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Reconciliation to the Group's investment in MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Prima facie share of net assets at 20% | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 601 | 572 |
| Accumulated impairment losses | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | (86) | (86) |
| Group's carrying amount of the investment in MLC Life | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | 515 | 486 |
There was no dividend received from MLC Life during the 2023 financial year (2022: $nil).
AASB 17 will be effective for the Group from 1 October 2023. AASB 17 will change the timing of profit recognition from insurance contracts. In general, profits will be recognised later than under the current accounting standard.
On transition to AASB 17 the value of MLC Life\u2019s insurance and reinsurance contract liabilities, net of insurance and reinsurance contract assets, is expected to increase by approximately $1.5 billion, before associated tax impacts. As a result, the carrying value of the Group's investment in MLC Life is expected to reduce by approximately $200 million with a corresponding decrease in retained earnings as at 1 October 2023.
Assets in a statutory fund of MLC Life can only be used to meet the liabilities and expenses of that fund, to acquire investments to further the business of that fund, or to make profit distributions when solvency and capital adequacy requirements of the Life Insurance Act 1995 (Cth) are met. This may impact MLC Life's ability to transfer funds to the Group in the form of dividends. In addition, in certain circumstances the payment of dividends may require approval by APRA.
As part of a long-term commercial arrangement with Nippon Life and MLC Life, the Group refers certain bank customers to MLC Life. Under a financial services agreement and certain linked arrangements, the Group provides MLC Life with certain financial services on an arm\u2019s length basis, including custody, transactional banking facilities, fixed income and currency services.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-732": { "value": "An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. The Group's investments in associates are accounted for using the equity method, with the carrying amount of the investment increased or decreased to recognise the Group's share of the profit or loss of the investee.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-733": { "value": "An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control of those policies. The Group's investments in associates are accounted for using the equity method, with the carrying amount of the investment increased or decreased to recognise the Group's share of the profit or loss of the investee.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociatesAndJointVenturesExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-601": { "value": "The Group provides a range of services to related parties including the provision of banking facilities and standby financing arrangements. Other dealings include granting loans and accepting deposits, and the provision of finance. These transactions are normally entered into on terms equivalent to those that prevail on an arm\u2019s length basis in the ordinary course of business.
Other transactions with controlled entities may involve leases of properties, plant and equipment, provision of data processing services or access to intellectual or other intangible property rights. Charges for these transactions are normally on an arm\u2019s length basis and are otherwise on the basis of equitable rates agreed between the parties. The Company also provides various administrative services to the Group, which may include accounting, secretarial and legal. Fees may be charged for these services.
Loans made to subsidiaries are generally entered into on terms equivalent to those that prevail on an arm\u2019s length basis, except that there are often no fixed repayment terms for the settlement of loans between parties. Outstanding balances are unsecured and are repayable in cash.
The Company may incur costs on behalf of controlled entities in respect of customer-related remediation, regulatory activity, compliance investigations and associated proceedings. Refer to Note 31 Commitments and contingent liabilities for further details in respect of these matters.
The table below shows the net amounts payable to subsidiaries for the years ended 30 September:
| \u00a0 | \u00a0 | Company | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m |
| Balance at beginning of year | \u00a0 | (3,413) | (83) |
| Net cash outflows / (inflows) | \u00a0 | 3,320 | (3,162) |
| Net foreign currency translation movements and other amounts receivable | \u00a0 | (389) | (168) |
| Balance at end of year | \u00a0 | (482) | (3,413) |
The table below shows material transactions with subsidiaries for the years ended 30 September:
| \u00a0 | \u00a0 | Company | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m |
| Net interest expense | \u00a0 | (929) | (1,344) |
| Dividend revenue | \u00a0 | 7,421 | 2,024 |
The following payments were made to superannuation plans sponsored by the Group:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| Payment to: | \u00a0 | $m | $m | \u00a0 | $m | $m |
| National Australia Bank Group Superannuation Fund A | \u00a0 | 298 | 272 | \u00a0 | 298 | 272 |
| Other | \u00a0 | 9 | 9 | \u00a0 | 9 | 8 |
Transactions between the Group and superannuation plans sponsored by the Group were made on commercial terms and conditions.
The list of the Company's KMP is assessed each year and comprises the non-executive directors of the Company, the Group CEO (an executive director of the Company) and those employees of the Group who have authority and responsibility for planning, directing and controlling the activities of both the Company and the Group. Details of KMP are set out in Section 7.1 and Section 8.3 of the Remuneration Report included in the Report of the Directors.
Total remuneration of KMP is included within total personnel expenses in Note 5 Operating expenses. The total remuneration is as follows:
| \u00a0 | \u00a0 | Group | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $ | $ |
| Short-term benefits | \u00a0 | \u00a0 | \u00a0 |
| Cash salary | \u00a0 | 18,860,539 | 18,587,954 |
| Variable reward cash | \u00a0 | 8,312,680 | 7,996,381 |
| Non-monetary | \u00a0 | 172,600 | 272,922 |
| Post-employment benefits | \u00a0 | \u00a0 | \u00a0 |
| Superannuation | \u00a0 | 578,764 | 532,755 |
| Other long-term benefits | \u00a0 | \u00a0 | \u00a0 |
| Other long-term benefits | \u00a0 | 200,462 | 182,991 |
| Equity-based benefits | \u00a0 | \u00a0 | \u00a0 |
| Shares | \u00a0 | 489,226 | 1,477,224 |
| Performance rights | \u00a0 | 14,955,354 | 13,433,135 |
| Other | \u00a0 | \u00a0 | \u00a0 |
| Other remuneration | \u00a0 | 1,742,506 | - |
| Total | \u00a0 | 45,312,131 | 42,483,362 |
Performance rights and shareholdings of KMP are set out in the Remuneration Report included in the Report of the Directors.
During the 2023 financial year, loans made to KMP and other related parties of the Group and Company were $21 million (2022: $13 million). Loans to non-executive directors of the Company are made in the ordinary course of business on terms equivalent to those that prevail in arm's length transactions. Loans to the Group CEO and Group Executives may be made on similar terms and conditions generally available to other employees of the Group. Loans may be secured or unsecured depending on the nature of the lending product advanced. As at 30 September 2023, the total loan balances outstanding were $59 million (2022: $47 million).
No amounts were written off in respect of any loans made to directors or other KMP of the Group and Company during the current or prior reporting period.
Further details regarding loans advanced to KMP of the Group and Company are included in the Remuneration Report within the Report of the Directors.
On 8 December 2021, 86 400 transferred approximately $1,286 million of its banking related mortgage assets and $663 million of its banking related deposit liabilities to the Company on an arms-length basis under the Financial Sector (Transfer and Restructure) Act 1999 (Cth) (FSTRA). In addition, 86 400 transferred approximately $285 million of its fixed income securities portfolio, held for liquidity purposes, to the Company on an arm\u2019s length basis under the FSTRA. These fixed income securities were previously measured at amortised cost as they were managed within a \u2018hold to collect\u2019 business model. Following the transfer to the Company, these securities were reclassified to fair value through profit or loss as the revised business model is neither \u2018hold to collect\u2019 nor \u2018hold to collect and sell\u2019. The difference between the previous amortised cost of these assets and their fair value at the reclassification date was not material. Following these transfers 86 400 surrendered its ADI Licence to APRA and returned approximately $144 million of share capital to the Company. On a prospective basis, 86 400 will perform various technology and operational services to support and grow the Company's digital banking activities and business.
", "dimensions": { "concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-602": { "value": "The list of the Company's KMP is assessed each year and comprises the non-executive directors of the Company, the Group CEO (an executive director of the Company) and those employees of the Group who have authority and responsibility for planning, directing and controlling the activities of both the Company and the Group. Details of KMP are set out in Section 7.1 and Section 8.3 of the Remuneration Report included in the Report of the Directors.
Total remuneration of KMP is included within total personnel expenses in Note 5 Operating expenses. The total remuneration is as follows:
| \u00a0 | \u00a0 | Group | |
|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $ | $ |
| Short-term benefits | \u00a0 | \u00a0 | \u00a0 |
| Cash salary | \u00a0 | 18,860,539 | 18,587,954 |
| Variable reward cash | \u00a0 | 8,312,680 | 7,996,381 |
| Non-monetary | \u00a0 | 172,600 | 272,922 |
| Post-employment benefits | \u00a0 | \u00a0 | \u00a0 |
| Superannuation | \u00a0 | 578,764 | 532,755 |
| Other long-term benefits | \u00a0 | \u00a0 | \u00a0 |
| Other long-term benefits | \u00a0 | 200,462 | 182,991 |
| Equity-based benefits | \u00a0 | \u00a0 | \u00a0 |
| Shares | \u00a0 | 489,226 | 1,477,224 |
| Performance rights | \u00a0 | 14,955,354 | 13,433,135 |
| Other | \u00a0 | \u00a0 | \u00a0 |
| Other remuneration | \u00a0 | 1,742,506 | - |
| Total | \u00a0 | 45,312,131 | 42,483,362 |
During the 2023 financial year, loans made to KMP and other related parties of the Group and Company were $21 million (2022: $13 million). Loans to non-executive directors of the Company are made in the ordinary course of business on terms equivalent to those that prevail in arm's length transactions. Loans to the Group CEO and Group Executives may be made on similar terms and conditions generally available to other employees of the Group. Loans may be secured or unsecured depending on the nature of the lending product advanced. As at 30 September 2023, the total loan balances outstanding were $59 million (2022: $47 million).
No amounts were written off in respect of any loans made to directors or other KMP of the Group and Company during the current or prior reporting period.
Further details regarding loans advanced to KMP of the Group and Company are included in the Remuneration Report within the Report of the Directors.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInformationAboutKeyManagementPersonnelExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-611": { "value": "| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $'000 | $'000 | \u00a0 | $'000 | $'000 |
| EY Australia | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Audit services | \u00a0 | 12,862 | 12,457 | \u00a0 | 10,527 | 10,405 |
| Audit-related services | \u00a0 | 5,660 | 5,475 | \u00a0 | 5,303 | 5,094 |
| Taxation-related services | \u00a0 | 50 | 47 | \u00a0 | 50 | 47 |
| Non-audit services1 | \u00a0 | 500 | - | \u00a0 | 500 | - |
| Total Australia | \u00a0 | 19,072 | 17,979 | \u00a0 | 16,380 | 15,546 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| EY Overseas | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Audit services | \u00a0 | 4,152 | 4,079 | \u00a0 | 1,991 | 1,962 |
| Audit-related services | \u00a0 | 1,027 | 865 | \u00a0 | 355 | 344 |
| Taxation-related services | \u00a0 | 5 | - | \u00a0 | - | - |
| Non-audit services1 | \u00a0 | 56 | 1,163 | \u00a0 | - | - |
| Total Overseas | \u00a0 | 5,240 | 6,107 | \u00a0 | 2,346 | 2,306 |
| Total Australia and Overseas | \u00a0 | 24,312 | 24,086 | \u00a0 | 18,726 | 17,852 |
| Fees paid to the external auditor for services to non-consolidated entities of the Group | \u00a0 | 673 | 435 | \u00a0 | - | - |
| Total remuneration paid to the external auditor | \u00a0 | 24,985 | 24,521 | \u00a0 | 18,726 | 17,852 |
Total remuneration paid to another audit firm where EY is in a joint audit arrangement for the audit of a Group subsidiary is $104,000.
The Joint Parliamentary Committee inquiry into the Regulation of Auditing in Australia highlighted the disparity and lack of comparability of the external auditor fee remuneration disclosure for ASX listed corporates. ASIC are proposing four categories to define external auditor services as the basis of the proposed future disclosure requirements which are set out below.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $'000 | $'000 | \u00a0 | $'000 | $'000 |
| EY Australia - consolidated entities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Audit services for the statutory financial report of the parent and any of its controlled entities | \u00a0 | 12,862 | 12,457 | \u00a0 | 10,527 | 10,405 |
| Assurance services that are required by legislation to be provided by the external auditor | \u00a0 | 196 | 224 | \u00a0 | 139 | 128 |
| Other assurance and agreed-upon-procedures under other legislation or contractual arrangements | \u00a0 | 5,305 | 5,099 | \u00a0 | 5,005 | 4,814 |
| Other services | \u00a0 | 709 | 199 | \u00a0 | 709 | 199 |
| Total Australia | \u00a0 | 19,072 | 17,979 | \u00a0 | 16,380 | 15,546 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| EY Overseas - consolidated entities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Audit services for the statutory financial report of the parent and any of its controlled entities | \u00a0 | 4,152 | 4,079 | \u00a0 | 1,991 | 1,962 |
| Other assurance and agreed-upon-procedures under other legislation or contractual arrangements | \u00a0 | 1,032 | 865 | \u00a0 | 355 | 344 |
| Other services | \u00a0 | 56 | 1,163 | \u00a0 | - | - |
| Total Overseas | \u00a0 | 5,240 | 6,107 | \u00a0 | 2,346 | 2,306 |
| Total Australia and Overseas | \u00a0 | 24,312 | 24,086 | \u00a0 | 18,726 | 17,852 |
| \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| EY Australia and Overseas - non-consolidated entities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Other assurance and agreed-upon-procedures under other legislation or contractual arrangements | \u00a0 | 673 | 435 | \u00a0 | - | - |
| Total remuneration paid to the external auditor | \u00a0 | 24,985 | 24,521 | \u00a0 | 18,726 | 17,852 |
A description of the Board Audit Committee\u2019s pre-approval policies and procedures are set out in Assurance and Control in the Corporate Governance section and included in the Report of the Directors.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuditorsRemunerationExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-612": { "value": "The value of shares and rights provided to employees are measured by reference to their grant date fair value. The grant date fair value of each share is determined by the market value of NAB shares and is generally a five-day weighted average share price. The grant date fair value of shares and rights with market performance hurdles is determined using a simulated version of the Black-Scholes model.
With the exception of general employee shares in Australia, the expense for each tranche of shares or rights granted is recognised in the income statement on a straight-line basis, adjusted for forfeitures, over the vesting period for the shares or rights. The expense for general employee shares in Australia is recognised in the income statement in the year the shares are granted as they are not subject to forfeiture. A corresponding increase is recorded in the equity-based compensation reserve.
The key estimates and inputs used in the Black-Scholes model vary depending on the award and type of security granted. They include the NAB share price at the time of the grant, exercise price of the rights (which is nil), the expected volatility of NAB\u2019s share price, the risk-free interest rate and the expected dividend yield on NAB shares for the life of the rights. When estimating expected volatility, historic daily share prices are analysed to arrive at annual and cumulative historic volatility estimates (which may be adjusted for any abnormal periods or non-recurring significant events). Trends in the data are analysed to estimate volatility movements in the future for use in the numeric pricing model. The simulated version of the Black-Scholes model takes into account both the probability of achieving market performance conditions and the potential for early exercise of vested rights.
While market performance conditions are incorporated into the grant date fair values, non-market conditions are not taken into account when determining the fair value and expected time to vesting of shares and rights. Instead, non-market conditions are taken into account by adjusting the number of shares and rights included in the measurement of the expense so that the amount recognised in the income statement reflects the number of shares or rights that actually vest.
Under the Group\u2019s employee equity plans, employees of the Group are awarded shares and rights. An employee\u2019s right to participate in a plan is often dependent on their performance or the performance of the Group, and shares and rights awarded under the plans are often subject to service and/or performance conditions.
Generally, a right entitles its holder to be allocated one share when the right vests and is exercised. However, under certain bespoke plans, a right entitles its holder to be allocated a number of shares equal to a predetermined value on vesting and exercise of the right.
The Board determines the maximum total value of shares or rights offered under each plan having regard to the rules of the relevant plan and, where required, the method used in calculating the fair value per security. Under ASX Listing Rules, shares and rights may not be issued to the Company's directors under an employee equity plan without specific shareholder approval.
Under the terms of most offers, there is a period during which shares are held on trust for the employee they are allocated to and cannot be dealt with, or rights granted to an employee cannot be exercised, by that employee. There may be forfeiture or lapse conditions which apply to shares or rights allocated to an employee (as described below), including as a result of the employee ceasing employment with the Group during those periods or conduct standards not being met. Shares allocated to employees are eligible for any cash dividends paid by the Company on those shares from the time those shares are allocated to the trustee on their behalf. Rights granted to employees are not eligible for any cash dividends paid by the Company. In some limited circumstances, there may be a cash dividend equivalent payment made in the event that rights vest.
The table below sets out details of the Group\u2019s employee equity plans that are offered on a regular basis. As noted above, the Group also offers bespoke plans in certain circumstances, including in connection with material transactions, as a retention mechanism and to encourage the achievement of certain specific business growth targets.
| \u00a0 | Variable Reward (VR) | Long-term Variable Reward (LTVR)(Up to 30 September 2023) | Long-term Incentive (LTI) - LTEA & LTVR(From 1 October 2023) | Annual Equity Award (AEA) | Commencement awards | Recognition/ Retention awards | General employee shares |
|---|---|---|---|---|---|---|---|
| Description | A proportion of an employee\u2019s annual VR is provided in equity and is deferred for a specified period. The deferred amount and the deferral period is different based on the incentive plan participated in, and the level of risk, responsibility and seniority of the employees.VR was referred to as \u2018short-term incentive\u2019 before the 2019 financial year. | LTVRs (including prior year Long-term Incentive (LTI) grants) are awarded to encourage long-term decision-making critical to creating long-term value for shareholders through the use of challenging long-term performance hurdles. | LTI consists of two equally weighted components:Long-term Equity Award (LTEA) - Represents the non-financial measure component of LTI, focused on risk. It is awarded to ensure risk management is front of mind in making long-term decisions and encourage the creation of safe, sustainable growth in shareholder value.Long-term Variable Reward (LTVR) - Represents the financial measure component of LTI. It is awarded to encourage long-term decision-making critical to creating long-term value for shareholders. | Annual awards of deferred shares under the AEA to create shareholder alignment, drive continued sustainable performance and emphasise focus on risk management and good conduct and behaviour outcomes. Deferred shares are subject to restrictions and certain forfeiture or lapsing conditions, including forfeiture or lapsing on resignation from the Group, \u00a0or if conduct standards are not met. | Provided to enable the buy-out of equity or other incentives from an employee\u2019s previous employment. | Offered to key individuals in roles where retention is critical over the medium-term (generally between 2 and 3 years). | Shares up to a target value of $1,000 are offered to eligible employees. |
| Eligibility | Certain employees based in Australia and certain overseas jurisdictions having regard to their individual performance and the performance of the Group. | The ELT up to and including the 2023 financial year (except for the 2018 financial year when no LTVRs were awarded). | The ELT from the 2024 financial year onwards, subject to pre-grant assessments undertaken by the Board. | Certain employees appointed to Group 5 and 6 roles based in Australia and certain overseas jurisdictions. | Provided on a case by case basis, with the recommendation of the People & Remuneration Committee and the approval of the Board. | Provided on a case by case basis, with the recommendation of the People & Remuneration Committee and the approval of the Board. | Permanent employees in Australia. |
| \u00a0 | Variable Reward (VR) | Long-term Variable Reward (LTVR)(Up to 30 September 2023) | Long-term Incentive (LTI) - LTEA & LTVR(From 1 October 2023) | Annual Equity Award (AEA) | Commencement awards | Recognition/ Retention awards | General employee shares |
|---|---|---|---|---|---|---|---|
| Type of equity- based payment | Generally shares. However, rights are also granted for jurisdictional reasons. | Performance rights. | Performance rights. | Generally shares. | Generally shares. However, rights are also granted for jurisdictional reasons. | Generally shares. However, rights are also granted for jurisdictional reasons. | Shares. |
| Service conditions and performance hurdles | Deferred shares or rights are forfeited or lapsed during the vesting period if:
| During the vesting period, all of an executive\u2019s performance rights will lapse on the executive\u2019s resignation from the Group. Performance rights will also lapse if conduct standards or performance hurdles are not met. The Board has absolute discretion to determine vesting or lapsing outcomes for the performance rights. | During the performance period and post-vesting deferral period, all of an executive\u2019s performance rights will lapse on the executive\u2019s resignation from the Group.Performance rights will also lapse if risk management, conduct standards or performance hurdles are not met. The Board has absolute discretion to determine vesting or lapsing outcomes for the performance rights. | Deferred shares are subject to restrictions and certain forfeiture or lapsing conditions, including forfeiture or lapsing on resignation from the Group, \u00a0or if conduct standards are not met. | Shares or rights are subject to restrictions and certain forfeiture or lapsing conditions, including forfeiture or lapsing on resignation from the Group or if conduct standards are not met. | Shares or rights are subject to restrictions and certain forfeiture or lapsing conditions, including forfeiture or lapsing on resignation from the Group or if conduct standards are not met. | Shares are subject to restrictions on dealing for three years and are not subject to forfeiture. |
| \u00a0 | Variable Reward (VR) | Long-term Variable Reward (LTVR)(Up to 30 September 2023) | Long-term Incentive (LTI) - LTEA & LTVR(From 1 October 2023) | Annual Equity Award (AEA) | Commencement awards | Recognition/ Retention awards | General employee shares |
|---|---|---|---|---|---|---|---|
| Vesting, performance or deferral period | Defined period which differs based on the VR plan participated in and the employee's seniority. The period aligns with the level of risk, impact of the role on business performance and results and regulatory requirements. The vesting period will generally be between 1 and 7 years. | Defined period set at time of grant, generally between 4 and 5 years. | Defined performance period of 4 years, followed by a further 2 years (for CEO) or 1 year (all other ELT) restriction period.A risk and conduct assessment will be undertaken by the Board prior to vesting. | Defined period set at time of grant. Deferred Shares vest in equal tranches over 3 years. | Defined period set at time of grant, based on satisfactory evidence of foregone awards from previous employment. | Defined period set at time of grant. | 3 years. |
| Exercise period (only applicable for rights) | If the applicable conditions are met, deferred rights will vest and each right will be automatically exercised.n/a for share grants. | Performance rights will be automatically exercised if they vest. | Performance rights will be automatically exercised if they vest. | n/a | If the applicable conditions are met, rights will vest and each right will be automatically exercised.n/a for share grants. | If the applicable conditions are met, rights will vest and each right will be automatically exercised.n/a for share grants. | n/a |
| Board discretion | The Board regularly reviews Group performance for risk, reputation, conduct and performance considerations and has the ability to:
| n/a |
| \u00a0 | \u00a0 | 2023 | 2022 | ||
|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Fully paid ordinary shares granted during the year | Weighted average grant date fair value | Fully paid ordinary shares granted during the year | Weighted average grant date fair value |
| \u00a0 | \u00a0 | No. | $ | No. | $ |
| Employee share plans | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Variable reward deferred shares | \u00a0 | 2,666,264 | 30.60 | 3,309,953 | 28.99 |
| Commencement and recognition shares | \u00a0 | 235,641 | 30.23 | 889,923 | 29.12 |
| General employee shares | \u00a0 | 747,328 | 30.71 | 747,285 | 28.39 |
| Annual Equity Award shares | \u00a0 | 771,935 | 29.11 | 453,216 | 30.09 |
The closing market price of NAB shares as at 30 September 2023 was $29.07 (2022: $28.81). The volume weighted average share price during the year ended 30 September 2023 was $28.86 (2022: $29.44).
| \u00a0 | \u00a0 | 2023 | 2022 |
|---|---|---|---|
| Number of rights | \u00a0 | \u00a0 | \u00a0 |
| Opening balance as at 1 October | \u00a0 | 2,935,432 | 2,645,771 |
| Granted1 | \u00a0 | 1,194,372 | 1,029,947 |
| Forfeited1 | \u00a0 | (116,286) | (405,781) |
| Exercised | \u00a0 | (166,898) | (334,505) |
| Closing balance as at 30 September | \u00a0 | 3,846,620 | 2,935,432 |
| Exercisable as at 30 September | \u00a0 | - | - |
| \u00a0 | \u00a0 | 2023 | 2022 | ||
|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Outstanding at 30 Sep | Weighted average remaining life | Outstanding at 30 Sep | Weighted average remaining life |
| \u00a0 | \u00a0 | No. | months | No. | months |
| Terms and conditions | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Market hurdle | \u00a0 | 2,867,981 | 23 | 2,140,396 | 32 |
| Non-market hurdle1 | \u00a0 | 211,210 | 8 | 361,180 | 21 |
| Individual hurdle1 | \u00a0 | 767,429 | 17 | 433,856 | 23 |
The table below shows the significant assumptions used as inputs into the grant date fair value calculation of rights granted during each of the last two years. In the following table, values have been presented as weighted averages, but the specific values for each grant are used for the fair value calculation. The table also shows a \u2018no hurdle\u2019 value for rights that do not have any market-based performance hurdles attached. The 'no hurdle' value is calculated as the grant date fair value of the rights, and in most instances is adjusted for expected dividends over the vesting period.
| \u00a0 | \u00a0 | 2023 | 2022 |
|---|---|---|---|
| Weighted average values | \u00a0 | \u00a0 | \u00a0 |
| Contractual life (years) | \u00a0 | 3.3 | 3.5 |
| Risk-free interest rate (per annum) (%) | \u00a0 | 3.45 | 1.61 |
| Expected volatility of share price (%) | \u00a0 | 31 | 30 |
| Closing share price on grant date ($) | \u00a0 | 30.12 | 28.81 |
| Dividend yield (per annum) (%) | \u00a0 | 5.00 | 4.93 |
| Fair value of rights with a market hurdle ($) | \u00a0 | 11.62 | 17.30 |
| Fair value of rights without a market hurdle ($) | \u00a0 | 27.35 | 23.41 |
| Expected time to vesting (years) | \u00a0 | 3.18 | 3.30 |
The value of shares and rights provided to employees are measured by reference to their grant date fair value. The grant date fair value of each share is determined by the market value of NAB shares and is generally a five-day weighted average share price. The grant date fair value of shares and rights with market performance hurdles is determined using a simulated version of the Black-Scholes model.
With the exception of general employee shares in Australia, the expense for each tranche of shares or rights granted is recognised in the income statement on a straight-line basis, adjusted for forfeitures, over the vesting period for the shares or rights. The expense for general employee shares in Australia is recognised in the income statement in the year the shares are granted as they are not subject to forfeiture. A corresponding increase is recorded in the equity-based compensation reserve.
The key estimates and inputs used in the Black-Scholes model vary depending on the award and type of security granted. They include the NAB share price at the time of the grant, exercise price of the rights (which is nil), the expected volatility of NAB\u2019s share price, the risk-free interest rate and the expected dividend yield on NAB shares for the life of the rights. When estimating expected volatility, historic daily share prices are analysed to arrive at annual and cumulative historic volatility estimates (which may be adjusted for any abnormal periods or non-recurring significant events). Trends in the data are analysed to estimate volatility movements in the future for use in the numeric pricing model. The simulated version of the Black-Scholes model takes into account both the probability of achieving market performance conditions and the potential for early exercise of vested rights.
While market performance conditions are incorporated into the grant date fair values, non-market conditions are not taken into account when determining the fair value and expected time to vesting of shares and rights. Instead, non-market conditions are taken into account by adjusting the number of shares and rights included in the measurement of the expense so that the amount recognised in the income statement reflects the number of shares or rights that actually vest.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-616": { "value": "As an ADI, the Company is subject to regulation by APRA under the authority of the Banking Act 1959 (Cth). APRA has set minimum Prudential Capital Requirements (PCR) for ADIs consistent with the Basel Committee on Banking Supervision capital adequacy framework. PCR are expressed as a percentage of total RWA. APRA requirements are summarised below:
| CET1 capital | Tier 1 capital | Total capital |
|---|---|---|
| CET1 capital ranks behind the claims of depositors and other creditors in the event of winding-up of the issuer, absorbs losses as and when they occur, has full flexibility of dividend payments and has no maturity date. CET1 capital consists of the sum of paid-up ordinary share capital, retained profits plus certain other items as defined in APS 111 Capital Adequacy: Measurement of Capital. | CET1 capital plus AT1 capital. AT1 capital comprises high quality components of capital that satisfy the following essential characteristics:
| Tier 1 capital plus Tier 2 capital. Tier 2 capital comprises other components of capital that, to varying degrees, do not meet the requirements of Tier 1 capital but nonetheless contribute to the overall strength of an ADI and its capacity to absorb losses. |
Regulatory capital requirements are measured on a Level 1 and Level 2 basis. Level 1 comprises the Company and Extended Licenced Entities approved by APRA. Level 2 comprises the Company and the entities it controls, excluding securitisation special purpose vehicles (SPVs) to which assets have been transferred in accordance with the requirements for regulatory capital relief in APS 120 Securitisation and funds management entities.
APRA\u2019s revised capital framework has applied since 1 January 2023. Under this framework, APRA\u2019s minimum PCR as a percentage of the ADI\u2019s total RWA are: 4.5% of RWA for CET1 capital, 6% for Tier 1 capital and 8% for Total capital.
An ADI must hold a capital conservation buffer above the PCR for CET1 capital. The capital conservation buffer is 3.75% of the ADI\u2019s total RWA. As a D-SIB in Australia, the Group is also required to hold an additional buffer of 1% in CET1 capital.
In addition, APRA requires the Group to hold a countercyclical capital buffer set on a jurisdictional basis, with a default setting of 1% for Australia.
APRA may determine higher PCRs for an ADI and may change an ADI\u2019s PCRs at any time. A breach of the required ratios under APRA's prudential standards may trigger legally enforceable directions by APRA, which can include a direction to raise additional capital.
The Group\u2019s capital management strategy is focused on adequacy, efficiency and flexibility. The capital adequacy objective seeks to ensure sufficient capital is held in excess of regulatory requirements, and within the Group\u2019s balance sheet risk appetite. This approach is consistent across the Group\u2019s subsidiaries.
Capital ratios are monitored against operating targets that are set by the Board above minimum capital requirements set by APRA.
The Group\u2019s capital ratio operating targets are regularly reviewed in the context of the external economic and regulatory outlook with the objective of maintaining balance sheet strength.
From 1 January 2023, the Group\u2019s CET1 target range moved to 11.00-11.50% to align with the new calculation methodology under APRA\u2019s revised capital framework.
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-618": { "value": "| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Net profit attributable to owners of the Company | \u00a0 | 7,414 | 6,891 | \u00a0 | 12,012 | 5,945 |
| Add / (deduct) non-cash items in the income statement: | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| (Increase) in interest receivable | \u00a0 | (1,086) | (981) | \u00a0 | (995) | (922) |
| Increase in interest payable | \u00a0 | 2,717 | 994 | \u00a0 | 2,339 | 843 |
| Increase in unearned income and deferred net fee income | \u00a0 | 381 | 166 | \u00a0 | 419 | 159 |
| Fair value movements on assets, liabilities and derivatives held at fair value | \u00a0 | 3,482 | 4,299 | \u00a0 | 2,879 | 4,389 |
| Increase in provisions | \u00a0 | 834 | 1,341 | \u00a0 | 813 | 1,242 |
| Equity-based compensation recognised in equity or reserves | \u00a0 | 131 | 113 | \u00a0 | 131 | 113 |
| Superannuation costs - defined benefit plans | \u00a0 | (2) | - | \u00a0 | (2) | - |
| Impairment losses on non-financial assets | \u00a0 | 13 | 10 | \u00a0 | 14 | 18 |
| Impairment losses on financial assets | \u00a0 | - | 1 | \u00a0 | - | - |
| Credit Impairment write-back | \u00a0 | 895 | 194 | \u00a0 | 727 | 110 |
| Depreciation and amortisation expense | \u00a0 | 1,214 | 1,112 | \u00a0 | 927 | 871 |
| (Increase) / decrease in other assets | \u00a0 | 150 | 84 | \u00a0 | (5,430) | 233 |
| Increase / (decrease) in other liabilities | \u00a0 | (293) | 280 | \u00a0 | (8) | 48 |
| Increase in income tax payable | \u00a0 | 77 | 659 | \u00a0 | 289 | 610 |
| (Increase) / decrease in deferred tax assets | \u00a0 | (109) | 352 | \u00a0 | (134) | 307 |
| Increase / (decrease) in deferred tax liabilities | \u00a0 | 8 | (13) | \u00a0 | 11 | 20 |
| Operating cash flow items not included in profit | \u00a0 | (42,474) | 13,170 | \u00a0 | (39,141) | 14,868 |
| Investing or financing cash flows included in profit | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| (Gain) on sale of controlled entities, before income tax | \u00a0 | (29) | (197) | \u00a0 | (29) | - |
| (Gain) on sale of other debt and equity instruments | \u00a0 | (32) | (199) | \u00a0 | (32) | (199) |
| (Gain) / loss on sale of property, plant, equipment and other assets | \u00a0 | 10 | (55) | \u00a0 | (1) | (74) |
| Net cash provided by / (used in) operating activities | \u00a0 | (26,699) | 28,221 | \u00a0 | (25,211) | 28,581 |
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | Bonds\u201a notes and subordinated debt | Debt issues | Lease liabilities | \u00a0 | Bonds\u201a notes and subordinated debt | Debt issues | Lease liabilities | ||
| \u00a0 | \u00a0 | At fair value | At amortised cost | \u00a0 | \u00a0 | \u00a0 | At fair value | At amortised cost | \u00a0 | \u00a0 |
| \u00a0 | \u00a0 | $m | $m | $m | $m | \u00a0 | $m | $m | $m | $m |
| Balance at 1 October 2021 | \u00a0 | 18,416 | 109,154 | 6,831 | 1,967 | \u00a0 | 5,570 | 102,501 | 6,831 | 1,659 |
| Cash flows | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Proceeds from issue | \u00a0 | 1,500 | 40,432 | 1,983 | - | \u00a0 | 268 | 34,919 | 1,983 | - |
| Repayments | \u00a0 | (3,280) | (24,359) | (1,504) | (339) | \u00a0 | (742) | (23,577) | (1,504) | (299) |
| Non-cash changes | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Additions to lease liabilities | \u00a0 | - | - | - | 631 | \u00a0 | - | - | - | 617 |
| Fair value changes, including fair value hedge adjustments | \u00a0 | (1,497) | (7,718) | - | - | \u00a0 | (900) | (5,371) | - | - |
| Foreign currency translation and other adjustments | \u00a0 | (78) | 1,774 | 8 | (21) | \u00a0 | 283 | 1,202 | 8 | 1 |
| Balance as at 30 September 2022 | \u00a0 | 15,061 | 119,283 | 7,318 | 2,238 | \u00a0 | 4,479 | 109,674 | 7,318 | 1,978 |
| Cash flows | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Proceeds from issue | \u00a0 | 1,466 | 41,361 | 1,243 | - | \u00a0 | 78 | 38,870 | 1,243 | - |
| Repayments | \u00a0 | (3,325) | (27,819) | - | (328) | \u00a0 | (93) | (26,844) | - | (284) |
| Non-cash changes | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Additions to lease liabilities | \u00a0 | - | - | - | 333 | \u00a0 | - | - | - | 120 |
| Fair value changes, including fair value hedge adjustments | \u00a0 | (99) | (817) | - | - | \u00a0 | (159) | (623) | - | - |
| Foreign currency translation and other adjustments | \u00a0 | 638 | 3,637 | - | 16 | \u00a0 | 66 | 3,252 | - | 2 |
| Balance as at 30 September 2023 | \u00a0 | 13,741 | 135,645 | 8,561 | 2,259 | \u00a0 | 4,371 | 124,329 | 8,561 | 1,816 |
For the purposes of the cash flow statement, cash and cash equivalents includes cash and liquid assets and amounts due from other banks (including reverse repurchase agreements and short-term government securities) net of amounts due to other banks that are readily convertible to known amounts of cash within three months.
Cash and cash equivalents as shown in the cash flow statement is reconciled to the related items on the balance sheet as follows:
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Assets | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Cash and liquid assets | \u00a0 | 24,699 | 56,451 | \u00a0 | 23,959 | 56,121 |
| Treasury and other eligible bills | \u00a0 | 53 | 505 | \u00a0 | - | - |
| Due from other banks (excluding mandatory deposits with supervisory central banks) | \u00a0 | 28,114 | 38,822 | \u00a0 | 17,772 | 30,142 |
| Total cash and cash equivalent assets | \u00a0 | 52,866 | 95,778 | \u00a0 | 41,731 | 86,263 |
| Liabilities | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 | \u00a0 |
| Due to other banks | \u00a0 | (12,277) | (33,599) | \u00a0 | (9,950) | (31,080) |
| Total cash and cash equivalents | \u00a0 | 40,589 | 62,179 | \u00a0 | 31,781 | 55,183 |
In the 2023 financial year, the Company received a dividend of $5.4 billion from National Equities Limited (following a dividend payment by BNZ) which was reinvested into additional ordinary shares. These transactions were settled on a net basis and no cash was transferred. As these are transactions between entities within the Group they are eliminated in full upon consolidation.
| \u00a0 | \u00a0 | Group | \u00a0 | Company | ||
|---|---|---|---|---|---|---|
| \u00a0 | \u00a0 | 2023 | 2022 | \u00a0 | 2023 | 2022 |
| \u00a0 | \u00a0 | $m | $m | \u00a0 | $m | $m |
| Shares issued under the Dividend Reinvestment Plan | \u00a0 | 693 | 500 | \u00a0 | 693 | 500 |
There was no DRP discount on dividends paid in the 2023 financial year (2022: $nil).
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashFlowStatementExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-620": { "value": "On 1 June 2022, the Company completed the acquisition of the Citi consumer business, including its home lending portfolio, unsecured lending business (personal loans and credit cards), retail deposits business and private wealth management business. The acquisition qualified as a business combination as defined in AASB 3 Business Combinations.
The acquisition was undertaken to support NAB\u2019s ambition to build a leading personal bank with a simpler, more digital experience.
The net assets recognised in the 2022 financial year were recorded on a provisional basis using preliminary completion accounts and a draft purchase price allocation. During the 2023 financial year the final completion payment was made and the purchase price allocation was finalised.
The final fair values of the assets and liabilities are summarised in the table below:
| \u00a0 | \u00a0 | Group |
|---|---|---|
| \u00a0 | \u00a0 | $m |
| Consideration | \u00a0 | \u00a0 |
| Total cash consideration for the acquisition | \u00a0 | 3,135 |
| Assets and liabilities acquired | \u00a0 | \u00a0 |
| Loans and advances | \u00a0 | 12,832 |
| Other assets | \u00a0 | 523 |
| Total assets | \u00a0 | 13,355 |
| Deposits and other borrowings | \u00a0 | 9,488 |
| Other liabilities | \u00a0 | 732 |
| Total liabilities | \u00a0 | 10,220 |
| Net assets | \u00a0 | 3,135 |
| Goodwill and other intangible assets | \u00a0 | 248 |
| Goodwill | \u00a0 | 80 |
| Intangible assets | \u00a0 | 168 |
The most significant adjustments to the provisional amounts disclosed in the 2022 Annual Report are in relation to a $19 million increase in net deferred tax assets recognised and a $3 million decrease in intangible assets.
The final goodwill value of $80 million is supported by the scale and expertise in unsecured lending acquired, together with anticipated synergies. Other intangible assets comprise customer relationships and core deposits.
The goodwill has been allocated to the Personal Banking CGU (refer to Note 22 Goodwill and other intangible assets).
", "dimensions": { "concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-622": { "value": "There are no items, transactions or events of a material or unusual nature that have arisen in the interval between 30 September 2023 and the date of this report that, in the opinion of the directors, have significantly affected or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:F8SB4JFBSYQFRQEH3Z21", "period": "2022-10-01T00:00:00/2023-10-01T00:00:00" } }, "ixv-623": { "value": "The directors of National Australia Bank Limited declare that:
(a) in the opinion of the directors, the financial statements and notes for the year ended 30 September 2023, as set out on pages to , are in accordance with the Corporations Act 2001 (Cth), including:
i) in compliance with Australian Accounting Standards (including Australian Accounting Interpretations), International Financial Reporting Standards as stated in Note 1 Basis of preparation, and any further requirements of the Corporations Regulations 2001; and
ii) give a true and fair view of the financial position of the Company and the Group as at 30 September 2023, and of the performance of the Company and the Group for the year ended 30 September 2023.
(b) in the opinion of the directors, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
(c) the directors have been given the declarations required by section 295A of the Corporations Act 2001 (Cth) for the year ended 30 September 2023.
Signed in accordance with a resolution of the directors.
| \u00a0 | \u00a0 | ||
Philip ChronicanChair9 November 2023 | \u00a0 | Ross McEwan CBEGroup Chief Executive Officer9 November 2023 | \u00a0 |