Certain fees (such as loan
approval & financial service fees) previously reported in
Non Interest Income, are capitalised and amortised to net interest income as a yield adjustment over the
lives of the financial instruments to which they relate.
ANZ StEPS hybrid Tier 1
instrument currently treated as equity will be reclassified as
debt. Accordingly ongoing distributions will be classified as
interest expense rather than as
dividends.
Write-back of notional INGA and other equity accounted investments'
goodwill amortisation, previously included in the share of
joint venture and associates profit. Under AIFRS goodwill is no longer
amortised, rather it is subject to impairment
testing.
Certain fees (such as loan
approval & financial service fees) previously reported in
Non Interest Income, are capitalised and amortised to net interest income as a yield adjustment over the
lives of the financial instruments to which they relate.
Fair value movements on derivatives that were previously included in a hedging relationship under AGAAP and accrual accounted. Under AIFRS these hedges do not meet the hedge accounting criteria.
Intercompany elimination of other income associated with securitisation entities now brought on balance sheet (decrease of $21m)
Increased share of profits from associates and JVs ($6m)
Effect of applying 'bid' or 'offer' prices rather than 'mid' prices and including improvements in the market value of counterparty risk in measuring the fair value of derivatives ($2m)
All share based payments,
including deferred shares and options are required to be
recognised as an expense over the relevant vesting period.
Previously an expense was recognised only for the full fair value
of deferred shares issued.
Under AIFRS the Bad &
Doubtful Debt charge reflects movements in Individual
Provisions (previously Specific Provisions) and Collective
Provisions.
The movement in Collective
Provisions is a function of change in portfolio size,
portfolio mix, changes in risk profile, specific macro events
and economic cycle outlook.
Under AGAAP the annual ELP
charge was determined as the average one year loss expected to
be incurred if the same loan portfolio was held over an
economic cycle.
Under AIFRS the charge
reflects a small reduction being the impact of the
strengthening risk profile largely offset by the estimated
impact of higher oil prices.
The changes to
goodwill and intangible assets reflect
The write-back of goodwill
amortisation. Under AIFRS, goodwill is no longer amortised,
rather it is subject to impairment testing($179m).
The reclassification of
software assets from premises and equipment to
intangibles($387m).
The de-recognition of
intangible assets associated with the Origin business where,
under AIFRS, the definition of a business combination is not
met (decrease of $25m).
Under AIFRS, certain fees
which are integral to the yield of a financial instrument
(such as loan approval & financial service fees), are
capitalised and amortised over the expected useful life of the
financial instruments to which they relate.
AIFRS is more prescriptive
than previous AGAAP in its guidance on impairment provisioning
and requires discounting cash flows.
Under AIFRS, provisions can
only be raised for loans where a "loss event" has occurred and
is objectively verifiable.
Under AGAAP, the annual
(ELP) charge was determined as the average one year loss
expected to be incurred if the same loan portfolio was held
over an economic cycle.
The adjustment to NLAs
reflects the reduction of provisions previously charged under
ELP where an objectively identifiable "loss event" has yet to
occur.
The designation of fair
value hedges held in respect of certain interest rate
exposures on net loans and advances results in fair value
movements in the hedged item ($110m) being offset against the
hedging instruments.
Fair value movements
($104m) associated with additional securitisation entities and
related assets being brought on balance sheet and offset by
the valuation movements in hedging
instruments.
The designation of a
portfolio of loans that it intends to sell as Available for
Sale ($951m).
The reclassification of
effective yield income relating to certain structured leasing
transactions from Other Liabilities ($257m) and associated
marketing fees from Other Assets (increase of
$79m).
Additional securitisation
entities and financial assets held with ANZ Group, previously
not consolidated, are required to be brought on balance sheet
resulting in some instances of intercompany
eliminations.
Separate disclosure of
derivative assets, previously included in other
assets($3,750m).
Recognition of the fair
value of derivatives relating to securitisation vehicles and
structured finance transactions now brought on balance sheet
(decrease of $30m).
Recognition of the fair
value of other derivatives on balance sheet
($281m).
Adjustment to reflect the
market value of counterparty risk in the fair value of
derivatives. Under AGAAP, counterparty risk was notionally
allowed for as part of the General
Provision.
Additional securitisation
entities and financial assets held with ANZ Group, previously
not consolidated, are required to be brought on balance sheet
resulting in some instances of intercompany
eliminations.
Increased policy liabilities
resulting from a change in the actuarial valuation.
Under AIFRS the liabilities are discounted at the risk
free rate and exclude deferred acquisition costs (DACs),
previously the margin on services approach permitted
policy liabilities to be measured on a present value
basis, inclusive of DACs.
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Initial fee income previously
taken to income upfront will be deferred and amortised
to income over time.
These reductions to
the carrying value of the investment in INGA are offset
by the write-back of notional INGA goodwill amortisation
of $43m for the year ended 30 September 2005 and the
increase in deferred acquisition costs associated with
the funds management and life insurance
businesses.
Recognition of surplus net
assets in certain defined benefit superannuation schemes as an
asset. Under AGAAP, these schemes were accounted for on a cash
basis with the net position not recognised as an
asset.
AIFRS introduces stricter
requirements for recognition of financial assets, including
those transferred to SPVs for securitisation and related
assets previously not consolidated,are now brought on balance
sheet.
Separate disclosure of
derivative assets, previously included in other assets
($3,750m).
Fair value movements ($11m)
associated with additional securitisation entities and related
assets being brought on balance sheet and offset by the
valuation movements in hedging
instruments.
The reclassification of
prepaid marketing fees associated with effective yield income
relating to certain structured leasing transactions to Net
Loans and Advances (decrease of $79m).
Reclassification of other
assets previously included in an AGAAP hedging relationship
and offset against the underlying hedged
item.
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