citibank, n.a. new zealand branch and associated banking ... · pdf file388 greenwich street...

CITIBANK, N.A.

NEW ZEALAND BRANCH

AND ASSOCIATED BANKING GROUP

Citibank Centre

Auckland 1010

23 Customs Street East

DISCLOSURE STATEMENT

31 DECEMBER 2016

Registered office

Page No.

General Disclosures 3

- including conditions of registration, credit ratings and information and financial data of the overseas banking group

Consolidated statement of comprehensive income 9

Consolidated statement of changes in equity 10

Consolidated statement of financial position 11

Consolidated statement of cash flows 12

Notes to the disclosure statements

1 Statement of significant accounting policies 13

2 Financial risk management 17

3 Interest 20

4 Other income 20

5 Operating expenses 20

6 Taxation 21

7 Derivative financial instruments 21

8 Available for sale assets 21

9 Other assets 22

10 Past due assets 22

11 Property, plant and equipment 22

12 Provisions 22

13 Other liabilities 23

14 Cash balances 23

15 Statement of cash flows reconciliation to profit 23

16 Related party transactions 23

17 Share based payments/stock options 25

18 Fiduciary activities 25

19 Contingent liabilities and commitments 25

20 Capital and reserves 26

21 Credit risk rating 27

22 Interest rate risk repricing schedule 28

23 Liquidity risk - maturity profile 29

24 Foreign currency risk 31

25 Fair value 31

26 Concentrations of credit exposure 33

27 Concentrations of funding 33

28 Credit exposures to individual counterparties 34

29 Exposures to market risk 34

30 Capital adequacy 36

31 Imputation credit account 36

32 Total liabilities to third parties - branch 36

33 Subsequent events 36

Directors' statement 37

Independent auditor's report 38

TABLE OF CONTENTS

CITIBANK, N.A. NEW ZEALAND BRANCH AND ASSOCIATED BANKING GROUP


GENERAL DISCLOSURES

Name and Address for service of the Banking Group

Citibank, N.A.

Citibank Centre


Auckland 1010

Name and Address for service of the Overseas Bank (Citibank, N.A.) outside New Zealand

Citibank, N.A. (CBNA)

701 East 60th Street North

Sioux Falls

South Dakota 57104

United States of America

Name and Address for service of the Ultimate Holding Company (Citigroup Inc.) of the Overseas Bank (Citibank, N.A.)

Citigroup Inc.

388 Greenwich Street

New York, NY 10013


Registered Bank: Directorate and Auditors

Responsible Person of Citibank, N.A. in New Zealand

Address for Service

Citibank, N.A.

Citibank Centre


Auckland 1010

Name Technical or Professional Qualifications

Derek Syme Lincoln University, B.Com. in Finance and Economics, 1987

Citi Country Officer University of Otago, Post Graduate Diploma in Finance, 1989

Citibank, N.A. New Zealand Branch

External Directorships: American Chamber of Commerce in New Zealand (President)

Responsible Person of Citibank, N.A. signing as agent for all Citibank, N.A. directors

Timothy Sedgwick Bachelor of Commerce majoring in Accounting, University of New South Wales, 1990

Chief Financial Officer Membership of the Institute of Chartered Accountants in Australia, 1994

Citi Australia / New Zealand

External Directorships: nil

Citibank, N.A. was originally organized on 16 June 1812, and formed a national banking association organized on 17 July 1865 under The National Bank Act of

1864 (United States of America).

Country of Residence

New Zealand

The financial statements are the aggregated financial statements for the "Banking Group" which consists of Citibank, N.A. New Zealand Branch (CBNA New

Zealand Branch) and the Associated Banking Group (Citicorp Services Limited and Citibank Nominees (New Zealand) Limited).

Australia

Directors of Citibank, N.A.

Address for Service of the Directors

Citibank, N.A.

388 Greenwich Street

New York, NY 10013


Name Technical or Professional Qualifications

Anthony M. Santomero Brown University, Ph.D. in Economics, 1971

Chairman, Citibank, N.A.

Former President, Federal Reserve Bank of Philadelphia.

External Directorships: Columbia Funds;

Penn Mutual Life Insurance Company;

RenaissanceRe Holdings, Ltd.

Ellen M. Costello St. Francis Xavier University, B.B.A., 1976

Former President, Chief Executive Officer, Dalhousie University, M.B.A., 1983

BMO Financial Corporation and Former U.S. Country Head,

BMO Financial Group.

External Directorships: DH Corporation.

Barbara J. Desoer Mount Holyoke College, B.A., 1974

Chief Executive Officer University of California, Berkeley - Haas School of Business, M.B.A., 1977

Citibank, N.A.

External Directorships: Davita Healthcare Partners Inc.;

UCLA Anderson School of Management Board of Visitors;

Haas School of Business Advisory Board.

Duncan P. Hennes University of Pennsylvania, B.S., 1978

Co-Founder/Partner, Atrevida Partners, LLC. Wharton School, M.B.A., 1979

External Directorships: Freeman & Co. LLC; Syncora Holdings, Ltd.

Eugene M. McQuade St. Bonaventure University, B.A., 1971

Retired, Chief Executive Officer, Citibank, N.A.

External Directorships: XL Group - Chairman;

Promontory Financial Group -Vice Chairman.

Joan E. Spero University of Wisconsin, B.A., 1966

Senior Research Scholar, Columbia University, M.B.A., 1968; Ph.D, 1973

Colombia University School of International and Public Affairs.

External Directorships: International Business Machines (IBM).

James S. Turley Rice University, B.A., 1977; Masters in Accounting, 1978

Former Chairman and CEO of Ernst & Young.

External Directorships: Emerson Electric Co;

Intrexon Corporation; Kohler Company (privately held);

Northrop Grumman Corporation.

USA

Country of Residence

USA

USA

The Citibank, N.A. board has established an Audit Committee for Citibank, N.A. comprising of three independent directors.

USA

USA

USA

USA

Auditors of Citigroup Inc. and Citibank, N.A. New Zealand Branch and Associated Banking Group

Name and address for Service of any auditor whose report is referred to in the Disclosure Statement

Citigroup Inc. KPMG LLP

Independent Registered Public Accountant Firm

345 Park Avenue

New York, New York 10154

KPMG

Level 38, Tower Three

International Towers Sydney

300 Barangaroo Avenue

Sydney NSW 2000 Australia

Transactions between Directors, New Zealand Chief Executive Officer and Affiliates

Director Policy on Conflict of Interest

Guarantee Arrangements

CBNA New Zealand Branch does not have a guarantee under the New Zealand deposit guarantee scheme as at 27th March 2017.

Conditions of Registration

2. That the Banking Group's insurance business is not greater than 1% of its total consolidated assets.

For the purposes of this Condition of Registration, the Banking Group’s insurance business is the sum of the following amounts for entities in the banking group:

In determining the total amount of the Banking Group’s insurance business -

The registration of CBNA in New Zealand is subject to the following conditions:

Certain transactions involving loans, deposits and sales of commercial paper, certificates of deposit and other money market instruments and certain other banking

transactions occur between Citigroup Inc. and CBNA on the one hand and certain directors or executive officers of Citigroup Inc., CBNA and CBNA New Zealand

Branch, members of their immediate families or associates of the directors, the executive officers or their family members on the other. All such transactions were

made in the ordinary course of business on substantially the same terms, including interest rates and collateral, that prevailed at the time for comparable transactions

with other persons and did not involve more than the normal risk of collectability or present other unfavourable features.

Directors must avoid circumstances in which their personal, professional or business interests conflict, or appear to conflict, with the interests of CBNA or its

customers.

These Conditions of Registration apply on or after 1 October 2016.

(a) all amounts must relate to on balance sheet items only, and must comply with generally accepted accounting practice; and

(b) if the entity conducts insurance business and its business does not predominantly consist of insurance business and the entity is not a subsidiary of another entity

in the Banking Group whose business predominantly consists of insurance business, the amount of the insurance business to sum is the total liabilities relating to the

entity’s insurance business plus the equity retained by the entity to meet the solvency or financial soundness needs of its insurance business.

Citibank, N.A. New Zealand Branch and

Associated Banking Group

1. That the Banking Group does not conduct any non-financial activities that in aggregate are material relative to its total activities.

(b) if products or assets of which an insurance business is comprised also contain a non-insurance component, the whole of such products or assets must be

considered part of the insurance business.

Conditions of registration for CBNA in New Zealand.

For the purposes of this Condition of Registration, -

“insurance business” means the undertaking or assumption of liability as an insurer under a contract of insurance.

In this Condition of Registration, the meaning of 'material' is based on generally accepted accounting practice.

“insurer” and “contract of insurance” have the same meaning as provided in sections 6 and 7 of the Insurance (Prudential Supervision) Act 2010.

(a) if the business of an entity predominantly consists of insurance business and the entity is not a subsidiary of another entity in the Banking Group whose business

predominantly consists of insurance business, the amount of the insurance business to sum is the total consolidated assets of the group headed by the entity; and

3. That the business of the registered bank in New Zealand does not constitute a predominant proportion of the total business of the registered bank.

4. That no appointment to the position of the New Zealand chief executive officer of the registered bank shall be made unless:

(i) the Reserve Bank has been supplied with a copy of the curriculum vitae of the proposed appointee; and

(ii) the Reserve Bank has advised that it has no objections to that appointment.

5. That CBNA complies with the requirements imposed on it by the Office of the Comptroller of the Currency.

For the purposes of this Condition of Registration, the capital adequacy ratios -

(a) must be calculated as a percentage of the registered bank’s risk weighted assets; and

(b) are otherwise as administered by the Office of the Comptroller of the Currency.

In Conditions of Registration 9 to 11 -

11. That the business of the registered bank in New Zealand must not make a residential mortgage loan unless the terms and conditions of the loan contract or the

terms and conditions for an associated mortgage require that a borrower obtain the registered bank’s agreement before the borrower can grant to another person a

charge over the residential property used as security for the loan.

On and after 1 January 2016Capital Adequacy Ratio

Tier 1 Capital

Total Capital

10. That, for a loan-to-valuation measurement period, the total of the business of the registered bank in New Zealand’s qualifying new mortgage lending amount in

respect of non property-investment residential mortgage loans with a loan-to-valuation ratio of more than 80%, must not exceed 10% of the total of the qualifying

new mortgage lending amount in respect of non property-investment residential mortgage loans arising in the loan-to-valuation measurement period.

Common Equity Tier 1 Capital

6. That, with reference to the following table, each capital adequacy ratio of CBNA must be equal to or greater than the applicable minimum requirement.

7. That liabilities of the registered bank in New Zealand, net of amounts due to related parties (including amounts due to a subsidiary or affiliate of the registered

bank), do not exceed NZ$15 billion.

8. That retail deposits of the registered bank in New Zealand do not exceed NZ$200 million. For the purposes of this Condition of Registration, retail deposits are

defined as deposits by natural persons, excluding deposits with an outstanding balance which exceeds NZ$250,000.

In these Conditions of Registration -

“banking group” means the New Zealand business of the registered bank and its subsidiaries as required to be reported in group financial statements for the group’s

New Zealand business under section 461B(2) of the Financial Markets Conduct Act 2013.

“business of the registered bank in New Zealand” means the New Zealand business of the registered bank as defined in the requirement for financial statements for

New Zealand business in section 461B(1) of the Financial Markets Conduct Act 2013.

4.5 percent

6 percent

8 percent

Minimum Requirement

“generally accepted accounting practice” has the same meaning as in section 8 of the Financial Reporting Act 2013.

“loan-to-valuation ratio”, “non property-investment residential mortgage loans”, property-investment residential mortgage loans”, “qualifying new mortgage lending

amount in respect of property-investment residential mortgage loans”, “qualifying new mortgage lending amount in respect of non property-investment residential

mortgage loans”, and “residential mortgage loan” have the same meaning as in the Reserve Bank of New Zealand document entitled “Framework for Restrictions on

High-LVR Residential Mortgage Lending” (BS19) dated October 2016, and where the version of the Reserve Bank of New Zealand document “Capital Adequacy

Framework (Standardised Approach)” (BS2A) referred to in BS19 for the purpose of defining these terms is that dated November 2015.

"loan-to-valuation measurement period" means a period of six calendar months ending on the last day of the sixth calendar month, the first of which ends on the last

day of March 2017.

The Conditions of Registration were amended on 1 October 2016. Conditions 9 to 11 were revised by the Reservse Bank, imposing restrictions on the share of high

loan-to-value ratio residential mortgage lending undertaken by registered banks to help maintain financial stability.

“liabilities of the registered bank in New Zealand” means the liabilities that the registered bank would be required to report in financial statements for its New

Zealand business if section 461B(1) of the Financial Markets Conduct Act 2013 applied.

9. That, for a loan-to-valuation measurement period, the total of the business of the registered bank in New Zealand’s qualifying new mortgage lending amount in

respect of property-investment residential mortgage loans with a loan-to-valuation ratio of more than 60%, must not exceed 5% of the total of the qualifying new

mortgage lending amount in respect of property-investment residential mortgage loans arising in the loan-to-valuation measurement period.

Historical Summary of Financial Statements


(Thousands of NZ Dollars) Year ended December 31,

2016 2015 2014 2013 2012

Interest Income 60,909 74,156 84,457 67,510 73,841

Interest Expense 27,243 41,089 44,524 32,883 38,631

Other Income 13,515 14,083 4,772 8,413 9,563

Operating Expenses 20,134 19,290 15,710 23,138 27,021

Net profit or (loss) before taxation 27,047 27,860 28,995 19,902 17,752

Taxation 7,570 7,891 7,878 6,152 4,914

Net Profit after taxation 19,477 19,969 21,117 13,750 12,838

Dividend/Remittance to Head Office 19,900 20,663 13,691 3,632 -

Net Profit or (Loss) Retained (423) (694) 7,426 10,118 12,838

Assets 2,065,376 1,974,218 1,980,111 2,190,662 2,179,785

Total Individually Impaired Assets - - - - -

Liabilities 1,870,819 1,779,064 1,784,580 2,003,043 2,001,966

Equity/Head Office Account 194,557 195,154 195,531 187,619 177,819

Claims of unsecured creditors of the Registered Bank on the assets of the Overseas Bank

The above legislation may affect all New Zealand liabilities.

Credit Ratings

Rating Agency

Moody’s

Standard & Poor’s

Fitch

* rating under review for upgrade.

Citibank, N.A. New Zealand Branch

Rating scales are:

AAA/Aaa Superior. Extremely strong capacity to pay interest and repay principal in a timely manner.

AA/Aa Excellent. Very strong capacity to pay interest and repay principal in a timely manner.

A Good. Strong capacity to pay interest and repay principal in a timely manner.

BBB/Baa Adequate capacity to pay interest and repay principal in a timely manner.

BB/Ba May be adequate but judged to have speculative elements.

B Vulnerable. Assurance of interest and principal payments over any long period of time may be small.

CCC/Caa Extremely vulnerable. Speculative to a high degree.

No material qualifications attach to the obligations and the ratings have not been withdrawn.

(if changed in the previous two years)

Friday, 16 December 2016

Approval Date Previous Rating

A (watch positive)

A1 (stable)

Under the law of the United States of America, a bank which is a member of the Federal Reserve System, including CBNA, is not required to repay a deposit at a

branch outside the United States if the branch cannot repay the deposit due to an act of war, civil strife, or action taken by the government in the host country, unless

the bank has expressly agreed to do so in writing.

The laws of the United States of America require that in the liquidation or other resolution of a failed U.S. insured depository institution, deposits in U.S. offices and

certain claims for administrative expenses and employee compensation are afforded a priority over other general unsecured claims, including deposits in offices

outside the U.S., non-deposit claims in all offices, and claims of a parent. Such priority creditors would include the Federal Deposit Insurance Corporation (FDIC),

which succeeds to the position of insured depositors. Subject to the application of New Zealand law, the local regulator may seize assets of the New Zealand branch

of CBNA and that action could impede the ability of the receiver to satisfy the preference to pay U.S. deposits.

The following historical summary data for CBNA New Zealand Branch and Associated Banking Group has been derived from audited financial statements prepared

on the basis of accounting principles generally accepted in New Zealand.

CBNA has the following long-term debt ratings which are applicable to the New Zealand Branch’s long-term senior unsecured obligations which are payable in

New Zealand in New Zealand dollars.

Standard & Poor’s, Moody's and Fitch have an implied rating equal to CBNA as CBNA New Zealand Branch is part of the same legal entity.

Tuesday, 19 May 2015 A (stable)

Thursday, 28 May 2015 A2 (RuR up)*

Standard & Poor's and Fitch may modify their ratings by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.

A+ (stable)

Current Rating

A+ (stable)

Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through B. 1 indicates that the obligation ranks in the higher end

of its generic rating category; 2 indicates a mid-range ranking; and 3 indicates a ranking in the lower end of that generic rating category.

Insurance Business and Non-Financial Activities

CBNA does not conduct any insurance business or non-financial activities in New Zealand that are outside its Banking Group.

Financial Statements

Profitability and size of Citibank, N.A.

31-Dec-16 31-Dec-15

Profitability

Net profit/(loss) after tax for the year ended 12,799,000 13,189,000

0.95% 0.99%

Size (refer Note 1)

Total Assets 1,349,581,000 1,299,801,000

3.83% -4.18%

Asset Quality (refer Note 1 and 2)

Total Impaired Assets 10,476,000 12,324,000

0.78% 0.95%

Total Individual Credit Impaired Allowance - -

0.00% 0.00%

Total Collective Credit Impairment Allowance - -

0.00% 0.00%

Total individually impaired assets for CBNA are not included because such figures are not publicly available.

The Citibank Call Report is prepared in accordance with the regulatory instructions issued by the Federal Financial Institutions Examination Council (“FFIEC”), as

compared to the Citibank 2016 Financials and Citigroup Form 10-K which are prepared in accordance with U.S. GAAP and, with respect to the Citigroup Form 10-

K and Quarterly Reports on Form 10-Q, the requirements of the U.S. Securities and Exchange Commission. In 1997, the FFIEC adopted U.S. GAAP as the

reporting basis for the consolidated balance sheet, income statement and related schedules included in the Call Report. Despite the adoption of U.S. GAAP as the

reporting basis for the Citibank Call Report, the presentation of financial statements in the Citibank Call Report differs significantly from the presentation of

financial statements included in the Citibank 2016 Financials and Citigroup’s Form 10-K and Quarterly Reports on Form 10-Q filed with the U.S. Securities and

Exchange Commission, including without limitation the Citibank Call Report generally contains less disclosure than audited financial statements prepared in

accordance with U.S. GAAP.

Impaired assets for CBNA consist of non-accrual loans, restructured loans, other non-accrual assets and other real estate owned. CBNA maintains an allowance that

is available to absorb all probable credit losses inherent in its portfolio. The allowance for loan and lease losses at 31 December 2016 is US$10,465 million (31

December 2015: US$10,852 million).

Net profit/(loss) after tax over the previous twelve months as a percentage of average total assets

Percentage Change in total assets over the previous twelve months

Total Impaired Assets as a percentage of Total Assets

Total Individual Credit Impaired Allowance as a percentage of Total Impaired Assets

(Thousands of US Dollars)

CBNA New Zealand Branch and the Banking Group does not conduct any insurance business in New Zealand.

Any person, upon request and without charge, may obtain a copy of CBNA New Zealand Branch and the Banking Group's most recent Disclosure Statement, which

contains a copy of the most recent publicly available consolidated financial statements of CBNA (Citibank Call Report for the fiscal year ended December 31, 2016

("Citibank Call Report") and the CBNA audited financial statements for the fiscal year ended December 31, 2016 (“Citibank 2016 Financials”)), and the Citigroup

Inc. Annual Report on Form 10-K for the fiscal year ended December 31, 2016 ("Citigroup Form 10-K”), immediately by requesting a copy from CBNA’s New

Zealand office in Auckland. The Citibank Call Report and the Citigroup Form 10-K are also available on the Bank's website 'www.citi.co.nz'.

CBNA is an indirect wholly owned subsidiary of Citigroup Inc. The information relating to CBNA contained in the Bank’s General Disclosure Statement is derived

from, and is qualified in its entirety by reference to, the detailed information and consolidated financial statements included in the Citibank Call Report and the

Citibank 2016 Financials.

Total Collective Credit Impairment Allowance as a percentage of Total Impaired Assets


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2016

Note 31-Dec-16 31-Dec-15

Numbers $(000's) $(000's)

Interest Income 3 60,909 74,156

Interest Expense 3 27,243 41,089

NET INTEREST INCOME 33,666 33,067

Other Income 4 13,515 14,083

TOTAL REVENUE 47,181 47,150

Operating Expenses 5 20,134 19,290

PROFIT BEFORE INCOME TAX 27,047 27,860

Income Tax Expense 6 7,570 7,891

PROFIT FOR THE YEAR 19,477 19,969

Other Comprehensive Income

Available For Sale Reserve

Fair value gain/(loss) taken directly to equity 10 236

Tax on movements and transfers (3) (66)

7 170

TOTAL COMPREHENSIVE INCOME FOR THE YEAR 19,484 20,139

The accompanying notes form part of these financial statements and supplementary information.

OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX,

THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO PROFIT


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY



Numbers $(000's) $(000's)

Capital

Citicorp Services Limited

Authorized, Issued and Paid-Up Capital

28,595 28,595 20 28,595 28,595

Head Office Account

CBNA New Zealand Branch

At the beginning of the year 33,665 33,518

Movement in share based payment reserve (181) 147

At the end of the year 20 33,484 33,665

Available For Sale Reserve

At the beginning of the year 61 (109)

Other comprehensive income 7 170 At the end of the year 20 68 61

Retained earnings

At the beginning of the year 132,833 133,527

Profit after tax 19,477 19,969

Profit remittance to Head Office (19,900) (20,663) At the end of the year 20 132,410 132,833

Equity at the end of the year 20 194,557 195,154

Represented by:

Equity at the beginning of the year 195,154 195,531

Transactions with owners, recorded directly in equity

(Profit remittance to)/Contribution from Head Office (19,900) (20,663)

Movement in share based payment reserve (181) 147 Total transactions with owners (20,081) (20,516)

Total Comprehensive Income for the year

Profit for the year 19,477 19,969

Other comprehensive income

Net change in fair value of available for sale assets to profit or loss on disposal 10 236

Income tax on other comprehensive income (3) (66)

Total other comprehensive income 7 170 Total Comprehensive Income for the year 19,484 20,139

Equity at the end of the year 194,557 195,154


25,000,000 (2015: 25,000,000) Ordinary Shares, fully paid


CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016


Numbers $(000's) $(000's)

ASSETS

Cash and Cash Equivalents 14 549,153 552,535

Due from Related Parties 16 (c) 171,824 80,967

Derivative Financial Assets 7 20,310 8,150

Current Tax Assets 2,559 2,806

Available For Sale Assets 8 504,453 567,479

Loans and Advances 22 810,805 754,879

Other Assets 9 5,054 5,822

Deferred Tax Assets 6 474 606

Property Plant and Equipment 11 744 974

TOTAL ASSETS 2,065,376 1,974,218

LIABILITIES

Deposits from Other Banks 4,340 23,297

Due to Related Parties 16 (c) 1,014,815 664,799

Other Deposits 22 839,617 1,064,196

Derivative Financial Liabilities 7 5,624 19,514

Provisions 12 176 176

Other Liabilities 13 6,247 7,082

TOTAL LIABILITIES 1,870,819 1,779,064

EQUITY

Issued and Paid-Up Capital 20 28,595 28,595

Head Office Account 20 33,484 33,665

Available For Sale Reserve 20 68 61

Retained Earnings 20 132,410 132,833

TOTAL EQUITY 194,557 195,154

TOTAL LIABILITIES AND EQUITY 2,065,376 1,974,218

Total Interest Earning and Discount Bearing Assets 2,036,235 1,954,500

Total Interest and Discount Bearing Liabilities 1,853,337 1,747,168


Banking Group


CONSOLIDATED STATEMENT OF CASH FLOWS



Numbers $(000's) $(000's)

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 62,649 75,104

Interest paid (27,905) (41,859)

Net trading (loss)/ income (26,782) 4,828

Other income 13,250 14,162

Net (increase)/ decrease in placements due from related companies (90,857) 49,975

Net (increase/ decrease in financial assets at fair value through profit or loss - 750,848

Net (increase)/ decrease available for sale assets 63,046 (516,660)

Net (increase)/ decrease in loans and advances (55,926) (182,386)

Net increase/ (decrease) in due to related parties 347,792 (155,734)

Net increase/ (decrease) in customer deposits (243,466) 149,593

Income tax paid (7,183) (9,383)

Other operating expenses paid (20,057) (20,482)

Net cash used in operating activities 15 14,561 118,006

CASH FLOWS FROM INVESTING ACTIVITIES

Payments to acquire property, plant and equipment (5) (97)

Net cash used in investing activities (5) (97)

CASH FLOWS FROM FINANCING ACTIVITIES

Receipt of dividends (192) 228

Payment of dividends (19,900) (20,663)

Net cash used in financing activities (20,092) (20,435)

Net (decrease) / increase in cash and cash equivalents (5,536) 97,474

Cash and cash equivalents at the beginning of the year 552,465 454,991 Cash and cash equivalents at the end of the year 14 546,929 552,465



NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION


1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

a) Statement of compliance

b) Basis of preparation

The amounts in the financial statements have been rounded to the nearest thousand dollars, unless otherwise stated.

Classification and Measurement

Impairment of financial assets

• NZ IFRS 9 Financial Instruments was issued by the XRB in 2009 and is available for early adoption, but has not been applied in preparing this financial report.

• As a result of the issuance of NZ IFRS 9, two further standards have been issued by the XRB which give effect to consequential changes to a number of New

Zealand Accounting Standards and Interpretations. These standards are NZ IFRS 9 (2010) which was issued in November 2010 and NZ IFRS 9 (2013) Hedge

Accounting which was issued in December 2013. These standards will be applicable when NZ IFRS 9 is adopted by the Banking Group.

The financial statements are presented in New Zealand dollars, which is the functional currency of the Banking Group.

NZ IFRS 9 will replace existing financial instruments measurement categories with new categories of Fair Value Through Profit or Loss (FVPL), Fair Value

Through Other Comprehensive Income (FVOCI), and Amortised Cost. Financial assets (other than equity instruments and derivatives) will be assessed and

categorised based on their contractual cash flow characteristics and the business model for managing the assets. It will be possible, for instruments qualifying as

FVOCI, to be irrevocably designated as FVPL, where this eliminates or significantly reduces measurement or recognition inconsistencies, and also possible, for

equity instruments not held for trading, to be irrevocably designated as FVOCI, with no subsequent reclassification of gains or losses to the income statement.

Accounting for financial liabilities remains unchanged, except that gains or losses on liabilities designated at FVPL (if any), arising from the Banking Group’s own

credit risk, will be presented in OCI with no subsequent reclassification to the income statement, unless an accounting mismatch in profit or loss would arise.

We do not expect significant changes to the classification or measurement of most financial assets and financial liabilities.

The financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial

instruments, financial instruments at fair value through profit or loss, and available for sale assets.

The ultimate holding company of the Banking Group is Citigroup Inc. ("Citigroup") which is a global diversified financial services holding company whose

businesses provide a broad range of financial services to consumer and corporate customers.

The accounting policies set out below have been applied consistently to all periods presented in the consolidated financial statements. The accounting policies have

been applied consistently by each entity in the Banking Group.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is

revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The Banking Group’s financial statements have been prepared in accordance with the requirements of the Registered Bank Disclosure Statements (Overseas

Incorporated Registered Banks) Order 2014 (as amended), the Financial Markets Conduct Act 2013 ("FMCA 2013"), the Companies Act 1993, the Financial

Reporting Act 2013 and with New Zealand Generally Accepted Accounting Practice (“NZGAAP”). They comply with the New Zealand equivalents to International

Financial Reporting Standards (“NZ IFRS”) and other applicable Financial Reporting Standards, as appropriate for Tier 1 for-profit entities. The financial

statements also comply with International Financial Reporting Standards ("IFRS").

These financial statements were authorised for issue by CBNA under power of attorney and by the boards of directors of Citicorp Services Limited and its

subsidiaries on this 27th day of March 2017.

The preparation of a financial statements in conformity with New Zealand Accounting Standards requires management to make judgements, estimates and

assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these

estimates. Management believes that the critical accounting policies where management judgement is necessarily applied are those in relation to a) loans and

receivables (refer to the discussion on credit risk in Note 2), b) impairment of financial assets (refer Note 1 (n) and Note 10), c) provisions and contingencies (refer

Note 12 and Note 19) and d) measurement of share based payments (refer Note 1 (f) and Note 17).

NZ IFRS 9 introduces an expected credit loss impairment model that replaces the existing incurred loss model and applies to all financial assets, except for those

which are FVTPL, and equity securities designated as at FVOCI, which are not subject to impairment assessment. It also applies to off balance sheet loan

commitments and financial guarantees, are currently provided for under NZ IFRS 137 Provisions, Contingent Liabilities and Contingent Assets (IAS 37).

The new model will operate in three-stages:

• Stage 1 – From initial recognition until a significant increase in credit risk – credit losses expected from defaults over the next 12 months

• Stage 2 – Following a significant increase in credit risk relative to initial recognition – credit losses expected over the remaining lifetime of the asset

• Stage 3 – For credit-impaired assets – full lifetime expected credit losses, with interest revenue recognised based on the carrying amount of the asset, net of the loss

allowance

The new model may result in earlier recognition of some credit losses, with stage 1 and 2 provisions effectively replacing the previous collectively assessed

provisions, and Stage 3 effectively replacing the previous individually assessed provisions, although the stage 3 population will not necessarily correspond to those

assets which are currently disclosed as impaired.

The financial statements are those of Citibank NA New Zealand Branch (the "Branch") and those of the aggregated financial statements for the New Zealand Branch

and the Associated Banking Group (the "Banking Group").

As the Banking Group writes off loans when there is no realistic probability of recovery, our policy on when financial assets are written off is not expected to

significantly change on adoption of NZ IFRS 9.

Due to movements between 12 month and lifetime expected credit losses, and the application of forward looking information, provisions may be more volatile under

NZ IFRS 9 than NZ IFRS 139.

The following new standards and interpretations which may have an impact on the Consolidated Banking Group have been issued, but are not yet effective and have

not been early adopted by the Banking Group.




1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Transition

c) Principles of aggregation and consolidation

d) Revenue recognition

i) Interest income and expense

ii) Fee and commission income

iii) Net trading income

iv) Other income

e) Operating lease payments and receipts

f) Citigroup equity-based compensation

g) Foreign currency transactions

Foreign currency transactions are translated into the functional currency at the rates of exchange ruling at the dates of the transactions. Amounts receivable and

payable in foreign currencies at balance date are translated at the rates of exchange ruling on that date. Exchange differences relating to amounts payable and

receivable in foreign currencies are brought to account as exchange gains or losses in the statement of comprehensive income in the financial year in which the

exchange rates change.

Fees and commissions are generally recognised on an accrual basis when the service has been provided. Loan commitment fees for loans that are likely to be drawn

down are deferred (together with related direct costs) and recognised as an adjustment to the effective yield rate on the loan. Other service fees are recognised based

on the applicable service contracts, usually on a time-apportionate basis.

• NZ IFRS 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining whether, how much and when revenue is

recognised. It replaces existing revenue recognition guidance, including NZ IAS 18 Revenue and NZ IFRIC 13 Customer Loyalty Programmes . NZ IFRS 15 is

effective from annual reporting periods beginning on or after 1 January 2018. This standard is not expected to have a material impact.

The transition to NZ IFRS 9, is being implemented in conjunction with the Banking Group’s global franchise.

Net trading income comprises unrealised and realised gains and losses relating to derivative financial instruments.

Certain employees of the Company participate in equity-based compensation plans of Citigroup, the ultimate parent entity of the Company. Under these plans,

Citigroup shares or the cash equivalent of shares are issued to employees as remuneration for past services and to retain employees.

The Branch has entered into operating leases for its premises. The total payments made under operating leases net of incentives received, if any, are recognised in

the statement of comprehensive income on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has

expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place. The current

lease has a right of renewal at the termination of the lease.

Interest income and expense are recognised in the statement of comprehensive income for all instruments measured at amortised cost using the effective yield

method. The effective yield method is a method of calculating the amortised cost of a financial asset and of allocating the interest income over the relevant period.

The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when

appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability. When calculating the effective yield rate, the entity estimates cash

flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation

includes all fees received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

The impairment, and classification and measurement requirements of IFRS 9 will be applied retrospectively upon initial application of IFRS 9 by adjusting the

Banking Group’s Consolidated Balance Sheet at 1 January 2018. There is no requirement to restate comparative periods, other than for hedge accounting. At this

stage, it is not possible to reliably quantify the potential financial effect to the Banking Group from the adoption of NZ IFRS 9.

The aggregated financial statements of the Banking Group include the financial statements of the Branch and Associated Banking Group which have been

accounted for using the aggregation of interest method as the Branch does not own the Associated Banking Group and therefore is not a legal group. All significant

transactions between the Branch and Associated Banking Group have been eliminated. Within the Banking Group, consolidation has been done using the purchase

method of consolidation. Control exists when the primary entity within the Banking Group is exposed, or has rights, to variable returns from its involvement with

the investee and has the ability to affect those returns through its power over the investee.

The financial statements of controlled entities are included in the consolidated financial statements from the date that control commences until the date that control

ceases. Investments in subsidiaries are carried at their cost of acquisition in the Banking Group’s financial statements. Unrealised gains and losses and inter-entity

balances resulting from transactions with or between controlled entities are eliminated in full on consolidation.

Income recognition policies for financial assets at fair value through profit and loss, available for sale assets and derivative financial instruments are described in

Accounting Policy Notes 1(k), 1(m), and 1(u) respectively.

• NZ IFRS 16 Leases was recently issued in February 2016. The new standard introduces a new, single, lessee accounting model that requires lessees to recognise

assets and liabilities for all leases with terms over 12 months, unless the asset is of “low value”. A lessee must recognise a “right-of-use asset”, representing its right

to use the underlying leased asset, and a “lease liability”, representing its obligations for future lease payments. It will replace the existing standard NZ IAS 17

Leases . NZ IFRS 16 is effective from annual reporting periods beginning on or after 1 January 2019. The impact of this standard is still being assessed.

NZ IFRS 9 allows entities to continue with existing hedge accounting under NZ IFRS 139, even when other elements of IFRS 9 become mandatory on 1 January

2018, however, as there are no hedge accounting relationships currently in place, no assessment of potential future hedge accounting has been considered.

Hedge accounting





h) Taxation

i) Due from other financial institutions

Amounts due from other financial institutions are stated at the gross value of the outstanding balance. They are measured at amortised cost less impairment losses.

j) Financial assets

The Banking Group classifies its financial assets in the following categories:

- Financial Assets at Fair Value through Profit or Loss

- Loans and Advances

- Available For Sale Assets

- Derivative Financial Assets

Management determines the classification of financial assets at initial recognition.

k) Financial assets at fair value through profit or loss

l) Loans and advances

m) Available for sale assets

n) Impairment of financial assets

i) Assets carried at amortised cost

ii) Available for sale assets

Deferred tax relating to change in fair value of available for sale assets and cash flow hedges taken to other comprehensive income is also recognised in other

comprehensive income.

A financial instrument is classified in this category if acquired principally for the purpose of trading, managing risk, or selling in the short term. Assets held in this

category represent bank securities, promissory notes and treasury notes purchased for sale in the day-to-day trading operations of the banking business. They are

carried at fair value based on quoted bid prices or broker/dealer quotations and are recorded as at the trade-date. All changes in fair value are recognised within the

statements of comprehensive income. Interest received from trading securities is included within interest income in the statements of comprehensive income.

Loans and advances include loans and advances originated by the Banking Group, which are not intended to be sold in the short term and have not been classified

either as held for trading or designated at fair value. Loans and advances are recognised when cash is advanced to borrowers. They are measured at amortised cost

using the effective interest method, less impairment losses.

Income tax expense for the year consists of current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised

directly in equity, in which case it is recognised in other comprehensive income.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax

assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Available for sale assets are those intended to be held for an indefinite period of time, and may be sold in response to needs for liquidity or changes in interest rates,

exchange rates or equity prices. Purchases and sales of available for sale assets are recognised as at the trade-date – the date on which the Banking Group commits

to purchase or sell the asset. These financial assets are carried at fair value. Gains and losses arising from changes in the fair value of available for sale assets are

recognised directly in other comprehensive income, until the financial asset is derecognised or impaired at which time the cumulative gain or loss previously

recognised in other comprehensive income is recognised in profit or loss. Dividends on available for sale assets are recognised in profit or loss when the Banking

Group’s right to receive payment is declared.

The fair values of quoted investments in active markets are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities),

the Banking Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, discounted cash flow analysis, or

other valuation techniques commonly used by market participants.

The recoverable amount of any equity instrument designated as available for sale is its fair value including direct and incremental transaction costs. The recoverable

amount of debt instruments and purchased loans remeasured to fair value is calculated as the present value of expected future cash flows discounted at the current

market rate of interest. Gains and losses arising from changes in fair value are included as a separate component of other comprehensive income, within the

available-for-sale reserve, until the sale of the financial assets occurs, at which time the cumulative gain or loss is transferred to the statement of comprehensive

income. Interest income is determined using the effective interest method. In the event of the financial asset being impaired the cumulative gain or loss previously

recognised in equity is recognised in the statement of comprehensive income.

Impaired assets consist of restructured assets, assets acquired through the enforcement of security and other impaired assets.

The Banking Group assesses at each financial year end whether there is objective evidence that a financial asset or group of financial assets are impaired as a result

of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash

flows of the financial asset or group of financial assets that can be reliably estimated. The Banking Group first assesses whether objective evidence of impairment

exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If the

Banking Group determines that no objective evidence of impairment exists it includes the asset in a group of financial assets with similar credit risk characteristics

and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be

recognised are not included in a collective assessment of impairment.

A past due asset is any credit exposure where a counterparty has failed to make a payment which is contractually due, and which is not an impaired asset. A 90

days past due asset is a past due asset which has not been operated by the counterparty within its key terms within the past 90 days.

If there is objective evidence that an impairment loss on loans and advances carried at amortised cost has been incurred, the amount of the loss is measured as the

difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred)

discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account and the

amount of the loss is recognised in profit or loss. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective

interest rate determined under the contract.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment

to tax payable in respect of previous years.

Deferred tax is provided for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for

taxation purposes. The following temporary differences are not provided for: the initial recognition of assets or liabilities that affect neither accounting nor taxable

profit, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax

provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted

at the reporting date.





o) Property, plant and equipment

i) Recognition and measurement

Items of property, plant and equipment are initially recorded at cost and depreciated as outlined below.

ii) Subsequent additional costs

iii) Disposal of assets

iv) Depreciation and amortisation

Installations 10 years

Furniture and fixtures 5-10 years

Computer technology 2-5 years

p) Deposits and amounts due to other financial institutions

q) Provisions

r) Employee entitlements provision

s) Superannuation

t) Payables

u) Derivative financial instruments

v) Commitments to extend credit and letters of credit

w) Offsetting financial assets and financial liabilities

x) Statements of cash flows

Payables include accrued expenses and interest payable which are brought to account at the gross value of the outstanding balance which is expected to approximate

cost.

Interest payments and receipts under interest rate and cross currency swap contracts and realised gains and losses on forward rate agreements are recognised on an

effective yield basis in profit or loss.

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset

the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

The provisions for employee entitlements to wages, salaries, bonuses, annual leave and sick leave represent present obligations resulting from employees’ services

provided up to the reporting date, calculated at undiscounted amounts based on current wage and salary rates that the Banking Group expects to pay as at reporting

date including related on-costs.

The gain or loss on disposal of assets is calculated as the difference between the carrying amount of the asset at the time of disposal and the proceeds on disposal,

and is included within the statement of comprehensive income in the year of disposal.

These financial instruments attract credit risk, generate fees and generally do not involve cash payments other than in the event of default. They are recorded as

commitments at their face value. Fee income relating to commitments are deferred and amortised over the expected life of the facility as part of the effective yield

method.

Costs incurred on property, plant and equipment subsequent to initial acquisition are capitalised when it is probable that future economic benefits, in excess of the

originally assessed performance of the asset, will flow to the Banking Group in future years. Where these costs represent separate components they are accounted

for as separate assets and are separately depreciated over their useful lives. Costs that do not meet the criteria for capitalisation are expensed as incurred through the

statement of comprehensive income.

A provision, other than in relation to impairment of financial assets, is recognised when there is a legal or constructive obligation as a result of a past event and it is

probable that a future sacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain.

Assets are depreciated using the straight line method over their estimated useful lives. Assets are depreciated or amortised from the date of acquisition. The useful

lives of assets are as follows:

The Branch contributes to a defined contribution plan called Citibank SuperLife provided by SuperLife master trust where CBNA employees form a separate group

within the master trust. SuperLife is governed by trust deeds and is managed separate to the Banking Group. The assets and liabilities of this plan are legally held in

a separate trustee-administered fund and are calculated by assessing the fair value of plan assets and deducting the amount of future benefit that employees have

earned in return for their service in current and prior periods discounted to present value. However, the Banking Group in New Zealand has no ongoing obligation

in respect of liabilities arising under the scheme except for net contributions.

Deposits and amounts due to other financial institutions are recognised initially at fair value plus transaction costs and subsequently at amortised cost using the

effective interest rate method.

The Banking Group recognises contributions due in respect of the accounting period in the statement of comprehensive income. Any contributions unpaid at the

financial year end are included as a liability.

The statements of cash flows have been prepared on the basis of net cash flows of this Banking Group. The reason for this presentation is that the business of

banking produces cash receipts and payments for items in which their turnover is quick, the amounts are large and the maturities are short. The reporting of gross

turnover of these items would not assist in the understanding of the Financial Statements.

The Banking Group is exposed to changes in interest rates and foreign exchange rates from its activities. The Banking Group offers futures, forwards, options and

swaps to enable customers to transfer, modify, or reduce their interest rate, foreign exchange and other market risks. The Banking Group also trades these products

on its own account and it enters into derivative and foreign exchange contracts, among other instruments, as an end-user in connection with its own risk

management activities of certain assets and liabilities such as loans and deposits. All derivatives that do not meet the hedging criteria under NZ IAS 39 are classified

as derivatives held for trading. Derivative financial instruments used for trading purposes are carried at fair value using bid/offer rates, broker/dealer quotations,

discounted cash flows or estimated fair values generated by option pricing models. Revaluation gains and losses on derivative and foreign exchange contracts are

reported gross as due to and from financial institutions, except when qualifying netting agreements are in place with the counterparties.





y) Determination of fair value

2. FINANCIAL RISK MANAGEMENT

The Group has exposure to the following material risks from the use of financial instruments:

• Credit Risk

• Liquidity Risk

• Market Risk

• Operational Risk

• Strategic Risk

• Reputational Risk

• Compliance Risk

• Legal Risk

Risk Management Framework

• Risk management is integrated within the business plan and strategy.

• All risks and resulting returns are owned and managed by an accountable business unit.

• All risks are managed within a limit framework; risk limits are endorsed by business management and approved by independent risk management.

• All risk management policies are clearly and formally documented.

• All risks are measured using defined methodologies, including stress testing and approved portfolio benchmark.

• All risks are comprehensively reported across the organisation.

Credit Risk

Management of credit risk

If cash collateral is taken this does not decrease the measured credit risk but may improve the assigned risk rating.

Internal Audit (IA) conduct independent periodic examinations of both portfolio quality and the credit process.

Credit policies are organised around two basic approaches - Credit Programmes and Credit Transactions.

Credit Risk is the risk of financial loss to the Banking Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises

primarily from the Banking Group's loans to customers, investment securities and financial assets due from other financial institutions. For risk management

reporting purposes the Banking Group considers and consolidates all elements of credit risk exposure.

The Company has developed comprehensive credit and operation policies and procedures with respect to recording, clearance and monitoring control processes, to

ensure that all customer transactions are promptly accounted for, accurate and that portfolio credit performance is closely monitored. All exchange rates and interest

rates are updated daily. Limits for all classes of credit risk are approved via an annual approval process which depends on the risk rating of the client and the type of

facilities being extended.

The Citigroup Risk Management Framework is responsible for establishing standards for the measurement, approval, reporting and limiting of risk, for managing,

evaluating, and compensating the senior independent risk managers at the business level, for approving business-level risk management policies, for approving

business risk-taking authority through the allocation of limits and capital and for reviewing, on an ongoing basis, major risk exposures and concentrations across the

organisation. Risks are regularly reviewed with the independent business-level risk managers, the Citigroup senior business managers and, as appropriate, the

Board.

For fair value instruments and available for sale financial assets that are quoted in active markets, fair values are determined at the current quoted bid/offer price.

Where independent prices are not available, fair values may be determined using valuation techniques with reference to observable market data. These include

comparison to similar instruments where market observable prices exist, discounted cash flow analysis, option pricing models and other valuation techniques

commonly used by market participants.

This note presents information about the Banking Group's exposure to each of these risks and the objectives, policies and processes for measuring and managing

risk. The management of capital is discussed in note 20.

The CBNA New Zealand Branch and the Banking Group’s Risk Management framework is consolidated within Citigroup’s Risk Management framework. The

Citigroup Risk Management Framework is grounded on the following principles which apply universally across all businesses and all risk types:

Extensions of credit are initiated by line management, and approved by Independent Risk Management, which together with the business are responsible for credit

quality. Independent Risk Management also establish any required supplementary credit policies specific for each business, deploy the credit talent needed and

monitor portfolio and process quality.

The Credit Transaction approach focuses on the decision to extend credit to an individual customer or customer relationship. It starts with target market definition

and risk acceptance criteria, and involves detailed customised financial analysis. Approval requirements for each decision are tiered based on the transaction

amount, the customer's industry and aggregate facilities and credit risk ratings.

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 in the principal or, in its absence, the most advantageous market to which the Banking Group has access at that date. The fair value of a liability reflects its non-

performance risk.

Credit Programmes focus on the decision to extend credit to sets of customers with similar characteristics and/or product needs. Approvals under this approach

cover the expected level of aggregate exposure, the terms, risk acceptance criteria, operating systems and reporting mechanisms. Credit Programmes are reviewed

annually, with approvals tiered on the basis of projected outstanding exposures as well as the maturity and performance of the product.

Independent Risk Management, together with the Business, identify problem credits or programmes as they develop, and correct deficiencies as needed through

remedial management.

Counterparty credit risk is measured based on current market values, updated daily, plus an allowance for the likely movement in market rates over the remaining

term of the contract. Counterparty limits cover activity in foreign exchange, and derivatives such as swaps, forward rate agreements and options.

Credit risk exposure is also generated through daylight overdrafts, settlement risk and clearing risk. These exposures are generally treated as intra-day risk and are

monitored separately. All exposures are monitored daily against approved credit lines.




2. FINANCIAL RISK MANAGEMENT (continued)

Credit Risk (continued)

Market Risk

Management of market risk

Traded market risk (Trading Book)

Non-traded market risk (Banking Book)

Liquidity Risk

Management of liquidity risk

Operational Risk

Framework

The Banking Group’s approach to operational risk is defined in the Citigroup Risk and Operational Risk Policy (“the Policy”).

MCA aims to:

Credit Programmes and Credit Transactions are approved by at least two credit officers, generally including the sponsoring officer and a Markets & Banking

Independent Risk Management officer. The sponsoring officer is responsible for ensuring the integrity of the credit process and proper documentation of the credit

decision.

Traded and non-traded market risks of the Banking Group are managed through Citigroup-wide standards and business policies and procedures. The policies define

market risk limits and triggers, risk limits approval processes, limits exceptions and breaches. The policies also define market risk limit monitoring and escalation of

limits excesses.

The liquidity management framework establishes the liquidity risk tolerance and management framework. The risk tolerance for the Banking Group is set by a

series of quantitative targets and qualitative parameters. The liquidity management framework is updated annually with material changes approved by ALCO.

Limits are established to manage the extent to which businesses can take liquidity risk. The liquidity profile is monitored on a daily basis and reported to ALCO on

a regular basis.

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from external events. It includes the reputation and

franchise risks associated with business practices or market conduct that the Banking Group may undertake with respect to activities in a fiduciary role, as principal,

as well as agent, or through a specialpurpose entity.

The level of price risk assumed by a business is based on its objectives and earnings, its capacity to manage risk and by the sophistication of the local market. Limits

are established for each major category of risk.

Market Risk Management (“MRM”) for New Zealand, and the trading businesses, have implemented a market risk limit and trigger framework. In addition to

adhering to market risk limits and triggers, risk taking units are required to trade only within their Permitted Products List, approved by MRM. Market risk

exposures against limits and triggers are monitored daily and limits are reviewed at least annually by MRM. Any limit excess is escalated and actioned as specified

per the Citigroup Mark-to-Market Risk Policy. MRM and the applicable business management are responsible for agreeing on appropriate corrective actions,

including a resolution date. The methodologies used to measure market risk exposures are approved by Citigroup Risk Analytics.

The Banking Group engages in Traded Market Risk as defined in the Trading Book Policy.

Activities excluded from the Trading Book as per the market risk policies are included within the Banking Book. This includes funding and liquidity management

positions which are marked-to-market or accrual positions.

Treasury manage non-traded interest rate risk for the local business units, by requiring all businesses to transfer price the interest rate risk in their accrual portfolios

to the Treasury unit.

For risk management purposes, fixed-rate items are repriced according to their residual terms. Floating rate items are repriced according to the residual term to the

next repricing date. Repricing assumptions are made for items that do not have a contractually defined repricing date. Those assumptions are reviewed and approved

on an annual basis by various functions, including the business, the Asset & Liablilty Committee ("ALCO") and the Market Risk Manager for New Zealand.

Liquidity risk is the risk that the Banking Group will not be able to fund its obligations as they become due, without incurring unacceptable losses.

Market Risk is the risk to earnings or capital due to changes in market variables such as interest rates or foreign exchange.

The Banking Group is exposed to liquidity risk in its lending and funding activities. The primary responsibility of managing liquidity is with ALCO.

• The first line is recognised ownership and management of the risk by the businesses;

• Second line is an oversight model consisting of Independent Control Functions and Operational Risk Management; and

• The third line is Internal Audit which recommends enhancements continually and provides independent assessment and evaluation.

The objective of the Policy is to establish a consistent value-added framework for assessing and communicating operational risk and overall effectiveness of the

internal control environment across the Banking Group. Each major business segment must implement an operational risk process consistent with the requirements

of this Policy.

A “Manager’s Control Assessment” (MCA) is used as the formal governance and reporting structure consistent with the requirements of the most recent release of

the COSO 2013 Internal Control – Integrated Framework providing the necessary support for overall Internal Control over Financial Reporting (ICFR). An

Operational Risk Profile is prepared and utilised by the firm to monitor material operational risks.

Operational risk is inherent in the Banking Group’s global business activities and, as with other risk types, is managed through the Citigroup Operational Risk

Management Framework with a defined Three Lines of Defence model.

• Create a framework for discussing operational risks and controls;

• Renew focus on the design and execution of operational controls;

• Increase the capabilities for managers to obtain and consider multiple sources of control-related information in order to determine the adequacy of the overall

control environment; and

• Help managers across Citigroup gain early line of sight into control issues and vulnerabilities, and emerging risks.

The MCA standards for Risk Assessment and Controls Monitoring are applicable to all businesses and staff functions and establish a process whereby important

risks inherent in the activities of a business are identified and the effectiveness of the key controls over those risks are evaluated and monitored.

MCA processes facilitate the Banking Group’s adherence to internal control over financial reporting, regulatory requirements, and other corporate initiatives,

including operational risk management and alignment of capital assessments with risk management objectives.




2. FINANCIAL RISK MANAGEMENT (continued)

Operational Risk (continued)

Reputational Risk

Strategic Risk

Compliance Risk

Legal risk

Compliance risk is the risk to current or anticipated earnings or capital arising from violations of, or non-conformance with, laws, rules, regulations, prescribed

practices, internal policies and procedures, or ethical standards.

The management of compliance risk adheres to the Citigroup’s Global Compliance Programme Policy.

Legal risk includes the risk from uncertainty due to legal or regulatory actions, proceedings or investigations, or uncertainty in the applicability or interpretation of

contracts, laws or regulations.

In order to mitigate legal risk, the legal function provides or procures legal advice and counsel to facilitate adherence with laws and regulations and facilitate

Citigroup’s business activities. In addition, the legal function seeks to protect Citigroup’s interests by resolving, or vigorously defending Citigroup against litigation

and enforcement actions. This is led by the General Counsel, who is supported by Legal Counsel for all Citigroup New Zealand products. Country Management, and

Regional General Counsel are kept informed of significant developments in those matters through both formal channels and also through informal interactions.

Reputational Risk is the risk to current or anticipated earnings, capital or franchise or enterprise value arising from the negative public opinion.

Reputational risk is managed centrally across all the legal entities operating under the Citigroup brand hence reputational risk is shared across the group. Being a

global bank, the local entities are also subject to a contagion risk as the local operations may be impacted by Citigroup’s action offshore.

Citigroup has established a multi-dimensional approach to the management of reputational risk, which is active, preventative and re-active based upon governance

and Citigroup’s Three Lines of Defence.

The Banking Group senior management is responsible for the development and execution of the strategy. At the business level, business heads are accountable for

the interpretation and execution of the firm-wide business plan, as it applies to their area, including decisions on new product entries.

The management of the strategic risk rests upon the following foundational elements such as clear articulation of the firms strategy, defined financial and operating

targets, regular updates to senior management and the Board on performance, including financial and operating targets, current and potential macro-economic

events, the strength of capital and liquidity positions, staffing levels, stress testing results and other factors such as market growth rates and peer analysis and

management scorecards.

Strategic Risk is risk to current or anticipated earnings, capital, or franchise or enterprise value arising from adverse business decisions, poor implementation of

business decisions, or lack of responsiveness to changes in the banking industry and operating environment.

The operational risk standards facilitate the effective communication of operational risk within and across businesses. Information about the businesses’ operational

risk, historical losses and the control environment is reported by each major business segment and functional area and summarised for senior management and the

Board.

The entire process is monitored and periodically validated by in-country independent Compliance & Enterprise Risk Management teams and is subject to audit by

the Consolidated Entity’s Internal Audit Department. The results of MCA are included in periodic management reporting, including reporting to senior management

and the Audit and Risk Committees.




31-Dec-16 31-Dec-15

3. INTEREST $(000's) $(000's)

Interest Income from:

Cash and Demand Deposits with Central Banks 12,316 17,672

Loans and Advances to customers 26,399 26,195

- 25,617

Available for Sale Securities 17,091 359

Loans and Advances - Head Office (including other branches) 3,908 3,520

Loans and Advances - Other Related Parties 1,195 793

60,909 74,156

Interest Expense from:


Other Deposits 16,718 22,723

Head Office (including other branches) 7,704 5,210

Other Related Parties 1,763 10,969

27,243 41,089 Net Interest Income 33,666 33,067

4. OTHER INCOME

Net Trading Income

Related parties

Interest rate derivatives gain/(loss) (19,178) 21,247

Third parties

Net foreign exchange gain/(loss) 18,450 (20,699)

Securities 6 233

(722) 781

Fees

Lending and Credit Facility Related 4,106 3,769

Fiduciary activities 2,748 2,170

Other fee income 5,420 7,369

Other gain/(loss) 1,963 (6)

14,237 13,302 13,515 14,083

5. OPERATING EXPENSES

Auditor's remuneration

Audit services 162 185

Other assurance services 12 13

174 198

Other assurance services provided included ISAE 3402 Assurance Report on Controls at a Service Organisation

Staff Costs

Salaries and other staff expenses 6,400 6,336

Defined contribution superannuation expenses 494 457

Share based payments 162 162

Other fees paid 175 160

7,231 7,115

Depreciation

Installations 163 163

Furniture and Equipment 40 42

Computer Technology 32 38

235 243

Other

Operating Lease - Premises Rent Expense 364 352

Management Fees Paid - Head Office (including other branches) 3,542 3,999

Management Fees Paid - Other Related Parties 4,582 3,678

Other 4,006 3,705

12,494 11,734 Total Operating Expenses 20,134 19,290

Financial Assets at Fair Value through Profit or Loss




6. TAXATION 31-Dec-16 31-Dec-15

$(000's) $(000's)

(i) Income tax expense

Current year tax expense

Current year 7,476 7,800

Prior year adjustment (46) 129

Deferred tax expense

Origination/reversal of deferred tax 140 (38) 7,570 7,891

(ii) Reconciliation between tax expense and pre tax profit

Profit before tax 27,047 27,860

Tax at 28% 7,573 7,801

Increase in income tax expense due to

Non-deductible expenses 42 43

Change in fair value of share based payments 1 (82)

Under/(over) provision in prior year (46) 129 Income tax expense 7,570 7,891

(iii) Income tax recognised directly in equity

Available For Sale Reserve 27 24

Share Based Payments 87 89 114 113

(iv) Tax assets and tax liabilities

Details of recognised deferred tax assets

Property plant and equipment 45 36

Share based payments 5 122

Provisions 375 399

Other 49 49 474 606

(v) Movement in deferred tax

Opening balance as at 1st January 606 1,038

Recognised in income (132) (424)

Recognised in equity - (8) Closing balance 474 606

7. DERIVATIVE FINANCIAL INSTRUMENTS

Derivative Assets

Related Parties

Interest Rate

Trading derivatives 5,408 8,150

Foreign Exchange

Trading derivatives 14,902 - 20,310 8,150

Derivative Liabilities

Related Parties

Interest Rate

Trading derivatives 4,921 7,294

Foreign Exchange

Trading derivatives 703 12,220 5,624 19,514

8. AVAILABLE FOR SALE ASSETS

Government Bonds 140,216 -

Certificates of Deposit 364,237 567,479 504,453 567,479

Banking Group

Refer to Note 31 for the imputation credits available to the shareholders of CBNA New Zealand Branch and the Banking Group through Citicorp Services Limited

and Citibank Nominees (New Zealand) Limited.




31-Dec-16 31-Dec-15

$(000's) $(000's)

9. OTHER ASSETS

Accrued Interest - Head Office (including other branches) 252 333

Accrued Interest - Other Related Parties 11 104

Accrued Interest - Third Parties 2,435 4,005

Other Receivables - Head Office (including other branches) 1,761 993

Other Receivables - Other Related Parties 321 -

Other Receivables - Third Parties 274 387 5,054 5,822

10. PAST DUE ASSETS

11. PROPERTY PLANT AND EQUIPMENT

31-Dec-16 31-Dec-15

$(000's) $(000's)

Installations

Cost

At beginning of period 1,371 1,366

Additions 2 5

Disposals - - At end of period 1,373 1,371

Accumulated Depreciation

At beginning of period 693 529

Depreciation Expense 163 164

Reversal on disposal - - At end of period 856 693

517 678

Furniture / Equipment

Cost


Additions 3 82

Disposals (24) (9) At end of period 409 430



Depreciation 40 41

Reversal on disposal (24) (9) At end of period 253 237

156 193

Computer Hardware

Cost


Additions - 10

Disposals (427) (6) At end of period 571 998



Depreciation 32 38

Reversal on disposal (427) (6) At end of period 500 895

71 103

Closing Net book value 744 974

12. PROVISIONS

Restoration Obligation - Operating Lease (Note 19)

Carrying amount at the beginning of the year 176 176 Carrying amount at the end of the year 176 176

CBNA New Zealand Branch and the Banking Group have no past due assets, impaired assets, restructured assets, assets (including real estate) acquired through the

enforcement of security or other assets under administration and therefore there are no specific provisions as at 31 December 2016 (31 December 2015: nil).




31-Dec-16 31-Dec-15

13. OTHER LIABILITIES $(000's) $(000's)

Accrued Interest - Head Office (including other branches) 522 356

Accrued Interest - Other Related Parties 84 498

Accrued Interest - Third Parties 660 1,074

Fees Received in Advance - Third Parties 319 582

Employee Entitlements 1,690 1,896

Other Payables - Head Office (including other branches) 363 371

Other Payables - Other Related Parties 995 -

Other Payables - Third Parties 1,614 2,305 6,247 7,082

14. CASH BALANCES

31-Dec-16 31-Dec-15

$(000's) $(000's)

Cash and Demand Deposits with Central Banks 531,004 523,490

Loans and Advances to Financial Institutions at call 42 187

Due from Related Parties 18,107 28,858

Deposits from Other Banks* (2,224) (70) Cash and cash equivalents in the statement of cash flows 546,929 552,465

* This represents bank overdrafts repayable on demand to other banks. It is presented on the statement of financial position within "Deposits from Other Banks".

31-Dec-16 31-Dec-15

15. STATEMENT OF CASH FLOWS RECONCILIATION TO PROFIT $(000's) $(000's)

Net Profit after Tax 19,477 19,969

Adjustments for:

Depreciation 235 243

Movements in operating assets less liabilities 20,589 95,636

(Decrease)/Increase in accrual of interest expenses (662) (770)

Decrease/Increase in accrual of other expenses/income (882) (28)

Revaluations of financial assets and liabilities (26,060) 4,047

Movement in tax provision 387 (1,492)

Decrease/(Increase) in accrual of interest income 1,740 948

Decrease in accrual of fees and commissions (263) (547) Net Cash Flows from Operating Activities 14,561 118,006

16. RELATED PARTY TRANSACTIONS

(a) ULTIMATE HOLDING COMPANY

Members of Citibank, N.A. New Zealand Branch and Associated Banking Group

CBNA New Zealand Branch Branch of CBNA

Citicorp Services Limited Locally incorporated wholly-owned subsidiary of Citibank Overseas Investment Corporation

Citibank Nominees (New Zealand) Limited Locally incorporated wholly-owned subsidiary of Citicorp Services Limited

Reconciliation of net profit after tax to net cash flows from operating activities:

Cash and cash equivalents include cash on hand, deposits held overnight or on call with financial institutions, nostro accounts and other short term highly liquid

assets which are subject to insignificant risk of change in their fair value and are used by the Banking Group in the management of its short term commitments.

The ultimate parent of CBNA New Zealand Branch and the Banking Group is Citigroup. These financial statements reflect only the operations of the Banking

Group. The financial statements of Citigroup should be read in conjunction with these financial statements.




16. RELATED PARTY TRANSACTIONS (continued)

(b) TRANSACTIONS

Interest received and paid to related parties is disclosed in Note 3.

Management Fees are disclosed in Note 5.

(c) BALANCES 31-Dec-16 31-Dec-15

$(000's) $(000's)

Assets

Cash Balances - Head Office (including other branches) 16,062 28,661

Cash Balances - Other Related parties 2,045 197

Current Accounts - Head Office (including other branches) 2,955 2,355

Current Accounts - Other Related parties 5,869 12,112

Placements - Head Office (including other branches) 163,000 66,500 Due from Related Parties 189,931 109,825

Derivative Financial Assets - On Balance Sheet 20,310 8,150

Other Assets - Head Office (including other branches) 2,013 1,326

Other Assets - Other Related parties 332 104

Other Related Parties Assets 22,655 9,580

Liabilities

Current Accounts - Head Office (including other branches) 72,011 57,761

Current Accounts - Other Related parties 65,607 65,302

Deposits - Head Office (including other branches) 877,197 541,736 Due to Related Parties 1,014,815 664,799

Derivative Financial Liabilities - On Balance Sheet 5,624 19,514

Other Liabilities - Head Office (including other branches) 885 727

Other Liabilities - Other Related parties 1,079 498 Other Related Parties Liabilities 7,588 20,739

Derivative Notional Amounts

Interest Rate Swaps

- Head Office (including other branches) 180,000 180,000

Foreign Exchange Forwards

- Head Office (including other branches) 718,147 420,388

(d) COMPENSATION OF KEY MANAGEMENT PERSONNEL OF THE NEW ZEALAND BANKING GROUP

31-Dec-16 31-Dec-15

$(000's) $(000's)

Short term employee benefits 2,438 2,470

Post employment benefits 195 201

Equity compensation benefits 112 184 2,745 2,855

(e) LOANS TO KEY MANAGEMENT PERSONNEL OF THE NEW ZEALAND BANKING GROUP

There are no outstanding loans to Key Management Personnel at 31 December 2016 (2015: nil).

Key management personnel compensation represents compensation paid or payable to the directors and specified employees of the New Zealand Banking Group for

their services to the Banking Group.

All transactions with related parties are at commercial arms length terms and rates. These are conducted predominantly with other CBNA branches and in the case

of the Branch, the Banking Group as well. Outstanding related party balances are not secured.

Total income payable or otherwise made available to all key

management personnel of the NZ Banking Group

All Citigroup entities within New Zealand are grouped for tax reporting purposes. This group includes the Branch and the Associated Banking Group. There were

no outstanding balances at balance date.

Management fees are paid to Singapore, Penang, Manila and Sydney for computer system usage and processing charges for back office and middle office functions.

Cash balances due to/from related parties are disclosed in Note 14.




17. SHARE BASED PAYMENTS/ STOCK OPTIONS

Stock option programme

31-Dec-16 31-Dec-15

Options at the beginning of the year - 15,283

Exercised - (14,237)

Cancelled - -

Expired - (1,046)

Transferred in - -

Transferred out - -

Outstanding at the end of the year - -

Exercisable at the end of the year - -

Stock award programme

Information with respect to current year stock awards is as follows: 31-Dec-16 31-Dec-15

Shares awarded 1,706.93 2,162.10

37.05 50.07

$(000's) $(000's)

70 72

Balance of liability account 580 628

18. FIDUCIARY ACTIVITIES

19. CONTINGENT LIABILITIES AND COMMITMENTS

Specific commitments and contingent liabilities existing at period end are: 31-Dec-16 31-Dec-15

$(000's) $(000's)

Operating Lease Commitments:

Due within 1 yr 293 333

Due between 1 & 5 yrs - 288 293 621

Guarantees, Letters of Credit and undrawn loans 477,725 400,121

Foreign Exchange Forwards (Notional Amounts) 718,147 420,388

Interest Rate Swaps (Notional Amounts) 180,000 180,000

Number Outstanding

Weighted average fair market value per share (US $)

Normal business activity incurs a variety of outstanding commitments and contingent liabilities such as commitments to extend credit, forward foreign exchange

contracts, and futures contracts. The directors do not anticipate any material loss occurring as a result of these transactions and consequently no provisions are

included in the financial statements in respect of these matters. For operating lease, there has been no changes on restoration obligation during 2016. The balance of

restoration obligation provision is disclosed in Note 12.

Expense arising from share plans booked in statement of

comprehensive income

The Company participates in CAP and awards shares of Citigroup common stock in the form of restricted or deferred stock to participating employees. CAP awards

generally vest in equal annual instalments over four years.

The Branch provides nominee and custodial services on behalf of customers. At balance date, the Branch had securities registered in its name of $9,280 million

which were held under nominee arrangements on behalf of its customers (Dec 2015: $8,160 million). The provision of such services do not adversely affect the

Banking Group.

There are no stock options outstanding under Citigroup stock option plans at 31 December 2016.

Information with respect to stock option activity in 2016 and 2015 under Citigroup stock option plans is as follows:

In recent years Citigroup has significantly reduced the proportion of share-based incentive awards made in the form of stock options. In January 2008, share-based

incentive awards were granted to eligible employees in the form of restricted or deferred stock under the Capital Accumulation Programme (“CAP”) and stock

options were only granted to CAP participants who made an advance election to receive them in place of restricted or deferred stock. For each forgone share

participants received four stock options. The stock options carry the same vesting period as the restricted or deferred stock awards, have a six-year term and an

exercise price equal to the market value of the underlying stock at the grant date.

The last stock option granted was in October 2009. The Citigroup Employee Option Grant (CEOG) was awarded to Citigroup Employees who had unvested

Citigroup Awards from previous programme. The awards vested over 3 years without a sale restriction and had a 6 year expiration date.

The Banking Group has offered a number of Citigroup stock option programme for its employees. Options were granted on Citigroup's common stock at the market

value at the time of grant. The options granted from 2008/2009 onwards have a term of six years.




20. CAPITAL AND RESERVES

The process for managing capital:

31-Dec-16 31-Dec-15

Paid-up capital 28,595 28,595

Head office account 33,484 33,665

Available For Sale Reserve 68 61

Retained earnings 132,410 132,833

194,557 195,154

The equity comprises Banking Group share capital, Branch equity in the form of the head office account, available for sale reserves and retained earnings.

- To ensure sufficient liquidity, limits and ratios are in place to support any asset growth.

CBNA New Zealand Branch - the capital contribution from Head Office is unsecured and interest free and is repayable at the discretion of the branch and

subordinate to all other debts. The Head Office Account balances have changed due to the recognition of amounts in relation to share based payments/share options

under NZ IFRS 2 Share Based Payments.

CBNA New Zealand Branch, as a full branch of CBNA has a banking license but is not subject to any minimum capital requirements in New Zealand due to its

branch status, other than the requirement to comply with Thin Capitalisation Rules. The compliance with the minimum capital adequacy requirements is

administered at the US parent entity level.

The major business is conducted in CBNA with no significant activity carried out in the Banking Group. The capital management plan is therefore prepared on a

consolidated level covering both the Branch and Banking Group.

- To ensure that capital is maintained at a level that meets Thin Capitalisation Rules and to support the case for any capital surplus repatriation back to New York;

- To ensure that the Banking Group maintains an appropriate level of capital commensurate to its risks and to support new business initiatives and growth;

The objectives of this Capital Management Plan are:

The key risks to the businesses in the Banking Group which are continuously monitored are liquidity risk and Thin Capitalisation risk. Liquidity risk and the process

of its management has been explained in Note 2 of these financial statements.Thin Capitalisation risk is the risk that interest deductions could be denied for tax

purposes.

The Thin Capitalisation rules effectively require the Banking Group to hold a combination of share capital and Branch equity in the form of the head office account

and retained earnings amounting to not less than 6% of the amount of Risk Weighted Exposures of the Banking Group calculated pursuant to the Capital Adequacy

Framework prescribed by the Reserve Bank of New Zealand. Risk Weighted Exposures comprises the sum of a) risk-weighted on-balance sheet credit exposures b)

risk-weighted off-balance sheet credit exposures c) credit equivalent amounts for derivatives d) 12.5 × total capital requirement for operational risk and e) 12.5 ×

total capital charge for market risk exposure.

Citicorp Services Limited - There was no movement in the issued and paid up capital during the period. Shares have no par value and carry equal voting rights and

share equally in any surplus on the winding up of the company.

A two year forward Capital Plan is produced on an annual basis by Corporate Treasury. Through this process a historical and forecast trend analysis of the

statement of financial position including capital is performed. The Asset & Liability Committee (ALCO) approves the annual Capital Plan. There are no local

minimum regulatory capital requirements for CBNA New Zealand Branch as a result of its branch status. Capital levels are only monitored for Thin Capitalisation

adequacy which is calculated on a consolidated basis for all Citi entities in New Zealand. Actual capital levels versus risk weighted assets for Thin Capitalisation

purposes are monitored on a quarterly basis (and more frequently depending on the situation) throughout the year by Financial Control, Risk Management, Tax and

Corporate Treasury and any issues are reported to ALCO. If additional capital is required, a formal request to New York Corporate Treasury is made after ALCO

and requisite local and regional management approvals are obtained. If there is capital excess to requirements, a capital repatriation must first be approved by local

ALCO prior to the repatriation occurring. Local Corporate Treasury manage the settlement process for capital injections and repatriations.




21. CREDIT RISK RATING

Description

Superior. Extremely strong capacity to pay interest and repay principal in a timely manner. 1

2+

Excellent. Very strong capacity to pay interest and repay principal in a timely manner. 2

2-

3+

Good. Strong capacity to pay interest and repay principal in a timely manner. 3

3-

4+

Adequate capacity to pay interest and repay principal in a timely manner. 4

4-

5+

May be adequate but judged to have speculative elements. 5

5-

6+

6

6-

7+

7

Extremely vulnerable. Speculative to a high degree. 7-

8

9

10

Distribution of risk ratings:

1 2+ to 2- 3+ to 3- 4+ to 4- 5+ to 5- 6+ to 10 Total

$(000's) $(000's) $(000's) $(000's) $(000's) $(000's) $(000's)

As at 31 December 2016

Cash and cash Equivalents 531,003 17,701 26 394 29 - 549,153

Due from Related Parties - 165,906 5,891 27 - - 171,824

Derivative Financial Assets - 20,310 - - - - 20,310

Available for Sale Assets - 140,216 364,237 - - - 504,453

Loans and Advances - 95,821 528,202 136,961 49,779 42 810,805

Interest and Fees Accrued 51 681 1,530 168 268 - 2,698

531,054 440,635 899,886 137,550 50,076 42 2,059,243

1 2+ to 2- 3+ to 3- 4+ to 4- 5+ to 5- 6+ to 10 Total

$(000's) $(000's) $(000's) $(000's) $(000's) $(000's) $(000's)


Cash and cash Equivalents 523,490 - 28,951 23 71 - 552,535

Due from Related Parties - - 79,342 - - 1,625 80,967

Derivative Financial Assets - - 8,150 - - - 8,150

Available for Sale Assets - - 542,511 24,968 - - 567,479

Loans and Advances - 571 390,003 257,276 107,029 - 754,879

Interest and Fees Accrued 40 3 2,749 531 1,108 11 4,442 523,530 574 1,051,706 282,798 108,208 1,636 1,968,452

Citigroup Risk Rating

Risk Ratings enable the Banking Group to describe and compare all Citigroup credit exposures regardless of the nature, type or location of the credit facility. Risk

ratings are assigned on a scale of 1-10, with 1 being the highest quality risk and 10 being the lowest. A sub-grade is used to indicate a finer degree of potential risk.

Risk Rating

A Risk Rating is the numerical proxy for the 12 month risk of default on long term (over 1 year) senior unsecured debt in local currency.

Risk Rating

Vulnerable. Assurance of interest and principal payments over any long period of time may be small.




22. INTEREST RATE RISK REPRICING SCHEDULE

The contractual repricing or maturity periods of financial instruments are as follows:

More than Not Interest

0-3 mths 3-6 mths 6-12 mths 1-2 years 2 years Bearing Total

As at 31 December 2016 $(000's) $(000's) $(000's) $(000's) $(000's) $(000's) $(000's)

Cash and cash Equivalents 549,153 - - - - - 549,153

Due from Related Parties 171,824 - - - - - 171,824

Available for Sale Assets 364,237 140,216 - - - - 504,453

Loans and Advances 428,305 382,500 - - - - 810,805

1,513,519 522,716 - - - - 2,036,235

Deposits from Other Banks 4,340 - - - - - 4,340

Due to Related Parties 1,004,179 - 10,000 - - 636 1,014,815

Other Deposits 834,818 - - - - 4,799 839,617

1,843,337 - 10,000 - - 5,435 1,858,772

Foreign Exchange Contracts - receive 716,596 - - - - - 716,596

Foreign Exchange Contracts - (pay) (718,147) - - - - - (718,147)

Interest Rate Swaps - receive 90,000 50,000 - - 40,000 - 180,000

Interest Rate Swaps - (pay) (90,000) (40,000) (10,000) - (40,000) - (180,000)

OFF BALANCE SHEET (1,551) 10,000 (10,000) - - - (1,551)

More than Not Interest

0-3 mths 3-6 mths 6-12 mths 1-2 years 2 years Bearing Total


Cash and cash Equivalents 552,535 - - - - - 552,535

Due from Related Parties 80,967 - - - - - 80,967

Available for Sale Assets 517,994 49,485 - - - - 567,479

Loans and Advances 448,519 305,000 - - 1,360 754,879 1,600,015 354,485 - - - 1,360 1,955,860

Deposits from Other Banks 21,556 - - - - 1,741 23,297

Due to Related Parties 664,668 - - - 131 664,799

Other Deposits 1,060,944 - - - - 3,252 1,064,196 1,747,168 - - - - 5,124 1,752,292

Foreign Exchange Contracts - receive 420,388 - - - - - 420,388

Foreign Exchange Contracts - (pay) (421,400) - - - - - (421,400)

Interest Rate Swaps - receive 90,000 - - 50,000 40,000 - 180,000

Interest Rate Swaps - (pay) (90,000) - - (50,000) (40,000) - (180,000) OFF BALANCE SHEET (1,012) - - - - - (1,012)




23. LIQUIDITY RISK - MATURITY PROFILE

Gross

a) The contractual maturity periods of financial instruments are as follows: nominal

More than inflow/ Carrying

On Demand 0-12 mths 1-2 years 2-5 years 5 years (outflow) Amount


Assets

Cash and cash Equivalents 549,153 - - - - 549,153 549,153

Due from Related Parties 171,824 - - - - 171,824 171,824

Available for Sale Assets - 504,453 - - - 504,453 504,453

Loans and Advances 21,950 158,754 387,534 182,152 66,975 817,365 810,805

Other Financial Assets 147 2,551 - - - 2,698 2,698

743,074 665,758 387,534 182,152 66,975 2,045,493 2,038,933

Liabilities


Due to Related Parties 262,664 561,645 - 198,161 - 1,022,470 1,014,815

Other Deposits 830,017 9,608 - - - 839,625 839,617

Other Financial Liabilities - 1,585 - - - 1,585 1,585

1,097,021 572,838 - 198,161 - 1,868,020 1,860,357

Gross

nominal

More than inflow/ Carrying

On Demand 0-12 mths 1-2 years 2-5 years 5 years (outflow) Amount


Assets

Cash and cash Equivalents 552,535 - - - - 552,535 552,535

Due from Related Parties 14,467 66,521 - - - 80,988 80,967

Available for Sale Assets - 567,479 - - - 567,479 567,479

Loans and Advances 27,064 158,338 27,037 471,977 76,104 760,520 754,879

Other Financial Assets 91 4,351 - - - 4,442 4,442 594,157 796,689 27,037 471,977 76,104 1,965,964 1,960,302

Liabilities


Due to Related Parties 123,063 541,962 - - - 665,025 664,799

Other Deposits 743,784 320,618 - - - 1,064,402 1,064,196

Other Financial Liabilities 1,312 1,198 - - - 2,510 2,510 891,456 863,778 - - - 1,755,234 1,754,802




23. LIQUIDITY RISK - MATURITY PROFILE (continued)

b) Liquidity Risk Management

The expected maturity periods of financial instruments are as follows:

More than

On Demand 0-12 mths 1-2 years 2 years Total

$(000's) $(000's) $(000's) $(000's) $(000's)


Assets

Cash and cash Equivalents 549,111 - - 42 549,153

Due from Related Parties 171,824 - - - 171,824

Available for Sale Assets - - - 504,453 504,453

Loans and Advances - - - 810,805 810,805

Other Financial Assets 263 - - 2,435 2,698

721,198 - - 1,317,735 2,038,933

Liabilities

Deposits from Other Banks 223 889 - 3,228 4,340

Due to Related Parties 262,664 553,990 - 198,161 1,014,815

Other Deposits 43,186 171,994 - 624,437 839,617

Other Financial Liabilities 50 807 - 728 1,585

306,123 727,680 - 826,554 1,860,357

Net Assets and Liabilities 415,075 (727,680) - 491,181 178,576

More than

On Demand 0-12 mths 1-2 years 2 years Total

$(000's) $(000's) $(000's) $(000's) $(000's)


Assets

Cash and cash Equivalents 552,348 - - 187 552,535

Due from Related Parties 14,467 66,500 - - 80,967

Available for Sale Assets - - - 567,479 567,479

Loans and Advances - - - 754,879 754,879

Other Financial Assets 466 10 - 3,966 4,442

567,281 66,510 - 1,326,511 1,960,302

Liabilities

Deposits from Other Banks 2,674 - - 20,623 23,297

Due to Related Parties 123,063 541,736 - - 664,799

Other Deposits 122,170 - - 942,026 1,064,196

Other Financial Liabilities 552 - - 1,958 2,510

248,459 541,736 - 964,607 1,754,802

Net Assets and Liabilities 318,822 (475,226) - 361,904 205,500

It is assumed that third party assets will roll over as management is not expecting any reduction in the balance sheet and are therefore shown in the > 2 years

category. The only exception is cash with central banks which is treated on a contractual maturity basis.

Liquidity risk is managed on the basis of expected maturity dates for certain products (see below) and is based on a business-as-usual view of the Banking Group's

funding requirements.

Third party liabilities are split into two main categories -

The expected maturity periods of financial instruments are based on the carrying value in the statement of financial position.

b) Corporate and other deposits. Non-volatile balances are reported in the >2 years bucket and volatile balances in the up to three months bucket. The methodology

for calculating the volatile and non-volatile balances is based on an analysis of 2.36 standard deviations of the previous twelve months' balances and the resulting

percentages are applied to the balance sheet.

a) Long-term debt which is managed on a contractual maturity basis

All related party assets and liabilities are managed on a contractual maturity basis.




24. FOREIGN CURRENCY RISK 31-Dec-16 31-Dec-15

$(000's) $(000's)

The receivable/(payable) net open position in each currency is

AUD (145) (838)

CAD 103 31

CHF 125 28

EUR 291 47

GBP 103 (12)

HKD 30 19

JPY 11 16

SEK 13 11

SGD 9 27

USD 429 (166) 969 (837)

25. FAIR VALUE

Carrying Fair Carrying Fair

Fair Value of Financial Instruments Value Value Value Value

$(000's) $(000's) $(000's) $(000's)

ASSETS

Cash and cash Equivalents 549,153 549,153 552,535 552,535

Due from Related Parties 171,824 171,824 80,967 80,967

Derivative Financial Assets 20,310 20,310 8,150 8,150

Available For Sale Assets 504,453 504,453 567,479 567,479

Loans and Advances 810,805 810,805 754,879 754,879

Other Financial Assets 2,698 2,698 4,442 4,442

TOTAL ASSETS 2,059,243 2,059,243 1,968,452 1,968,452

LIABILITIES

Deposits from Other Banks 4,340 4,340 23,297 23,297

Due to Related Parties 1,014,815 1,006,414 664,799 664,799

Other Deposits 839,617 839,617 1,064,196 1,064,196

Derivative Financial Liabilities 5,624 5,624 19,514 19,514

Other Financial Liabilities 1,585 1,585 2,510 2,510

TOTAL LIABILITIES 1,865,981 1,857,580 1,774,316 1,774,316

For financial instruments not carried at fair value in the balance sheet, fair value is estimated as follows:

Cash or receivables short term in nature - the carrying value is a reasonable estimate of the fair value.

Fair Value Hierarchy:

Level 1 Level 2 Level 3 Total

As at 31 December 2016 $(000's) $(000's) $(000's) $(000's)

ASSETS

Derivative Financial Assets - 20,310 - 20,310

Available For Sale Assets 140,216 364,237 - 504,453

140,216 384,547 - 524,763

LIABILITIES

Derivative Financial Liabilities 5,624 5,624

Level 1 Level 2 Level 3 Total

As at 31 December 2015 $(000's) $(000's) $(000's) $(000's)

ASSETS

Derivative Financial Assets - 8,150 - 8,150

Available For Sale Assets - 567,479 - 567,479 - 575,629 - 575,629

LIABILITIES

Derivative Financial Liabilities - 19,514 - 19,514

Loans and Advances and Financial Liabilities carried at amortised cost with a maturity greater than six months - fair value is estimated using a discounted cash flow

model by reference to published price quotations.

Level 1. Fair values measured using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2. Fair values measured using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices)

or indirectly (i.e. derived from prices).

Level 3. Fair values measured using inputs for the asset or liability that are not substantially based on observable market data (i.e. unobservable inputs).

Fair Value Hierarchy of Financial Instruments:

31-Dec-1531-Dec-16




25. FAIR VALUE (continued)

Financial Assets and Liabilities by Class Designated Trading Loans and Available Other Total

at receivables for sale amortised

fair value cost

$(000's) $(000's) $(000's) $(000's) $(000's) $(000's)


Cash and cash Equivalents - - 549,153 - - 549,153

Due from Related Parties - - 171,824 - - 171,824

Derivative Financial Assets - 20,310 - - - 20,310

Available for Sale Assets - - - 504,453 - 504,453

Loans and Advances - - 810,805 - - 810,805

Other Financial Assets - - 2,698 - - 2,698

Total carrying value - 20,310 1,534,480 504,453 - 2,059,243

Total fair value - 20,310 1,534,480 504,453 - 2,059,243

Deposits from Other Banks - - - - 4,340 4,340

Due to Related Parties - - - - 1,014,815 1,014,815

Other Deposits - - - - 839,617 839,617

Derivative Financial Liabilities - 5,624 - - - 5,624

Other Financial Liabilities - - - - 1,585 1,585

Total carrying value - 5,624 - - 1,860,357 1,865,981

Total fair value - 5,624 - - 1,851,956 1,857,580

Designated Trading Loans and Available Other Total

at receivables for sale amortised

fair value cost

$(000's) $(000's) $(000's) $(000's) $(000's) $(000's)


Cash and cash Equivalents - - 552,535 - - 552,535

Due from Related Parties - - 80,967 - - 80,967

Derivative Financial Assets - 8,150 - - - 8,150

Available for Sale Assets - - - 567,479 - 567,479

Loans and Advances - - 754,879 - - 754,879

Other Financial Assets - - 4,442 - - 4,442

Total carrying value - 8,150 1,392,823 567,479 - 1,968,452

Total fair value - 8,150 1,392,823 567,479 - 1,968,452

Deposits from Other Banks - - - - 23,297 23,297

Due to Related Parties - - - - 664,799 664,799

Other Deposits - - - - 1,064,196 1,064,196

Derivative Financial Liabilities - 19,514 - - - 19,514

Other Financial Liabilities - - - - 2,510 2,510

Total carrying value - 19,514 - - 1,754,802 1,774,316

Total fair value - 19,514 - - 1,754,802 1,774,316




26. CONCENTRATIONS OF CREDIT EXPOSURE 31-Dec-16 31-Dec-15

$(000's) $(000's)

(a) Industry Sectors

Finance 1,194,172 1,224,309

Accommodation and Restaurants 20,033 71,357

Communication 10 83,332

Food Manufacturing 80,298 75,591

Government 150,733 10,604

Insurance 95,262 100,326

Property and Business Services 555,808 272,129

Retail Trade 97 145,698

Transport 475 86,416

Wholesale Trade 26,083 26,420

Other 49,101 28,104

2,172,072 2,124,286

Other Assets 6,133 5,766 2,178,205 2,130,052

(b) Geographical Areas

Exposures within New Zealand 1,956,438 1,964,181

Exposures to other countries (in NZD) - Great Britain 48,793 27,724

Singapore 209 43,840

USA 16,235 37,385

Other 150,397 51,156

2,172,072 2,124,286

Other Assets 6,133 5,766 2,178,205 2,130,052

The concentration of credit exposure includes both on and off balance sheet items.

ANZSIC codes have been used as the basis for disclosing industry sectors.

31-Dec-16 31-Dec-15

27. CONCENTRATIONS OF FUNDING $(000's) $(000's)

(a) Product

Transaction Call Accounts 1,097,911 888,810

Deposits 762,446 840,474

Certificates of Deposits - 24,936

Derivative Financial Instruments 5,624 19,514

Other - 582

1,865,981 1,774,316

Provisions and Other Liabilities 4,838 4,748 1,870,819 1,779,064

31-Dec-16 31-Dec-15

$(000's) $(000's)

(b) Industry Sectors

Finance 1,166,038 996,831

Communication 28,393 40,537

Food Manufacturing 19,431 23,912

Insurance 68,822 57,609

Other Manufacturing 248,230 249,181

Property and Business Services 136,044 169,849

Transport 37,763 45,619

Wholesale Trade 111,625 135,315

Other 49,635 55,463

1,865,981 1,774,316

Provisions and Other Liabilities 4,838 4,748

1,870,819 1,779,064

ANZSIC codes have been used as the basis for disclosing industry sectors.




27. CONCENTRATIONS OF FUNDING (continued)

31-Dec-16 31-Dec-15

$(000's) $(000's)

(c) Geographical Areas

Exposures within New Zealand 567,770 873,938

Exposures to other countries (in NZD) - Australia 395,862 101,385

Great Britain 55,056 49,690

Singapore 174,127 109,361

United States 486,908 473,696

Other 186,258 166,246

1,865,981 1,774,316

Provisions and Other Liabilities 4,838 4,748 1,870,819 1,779,064

28. CREDIT EXPOSURES TO INDIVIDUAL COUNTERPARTIES

29. EXPOSURES TO MARKET RISK

Unaudited*

$(000's) $(000's)

Interest Rate Risk as at 31/12/16 3,500 280

Peak End-of-Date Interest Rate Risk 01/07/16-31/12/16 3,413 273

Foreign Currency Risk as at 31/12/16 963 77

Peak End-of-Date Foreign Currency Risk 01/07/16-31/12/16 3,138 251

Equity Risk as at 31/12/16 - -

Peak End-of-Date Equity Risk 01/07/16-31/12/16 - -

Interest Rate Risk as at 31/12/15 1,075 86

Peak End-of-Date Interest Rate Risk 01/07/15-31/12/15 2,013 161

Foreign Currency Risk as at 31/12/15 4,163 333

Peak End-of-Date Foreign Currency Risk 01/07/15-31/12/15 6,950 556

Equity Risk as at 31/12/16 - -

Peak End-of-Date Equity Risk 01/07/16-31/12/16 - -

Peak Exposure has been derived using the Overseas Banking Group's equity as at the end of the quarter.

Traded Market Risk

The Branch did not have traded market risk positions during 2016.

Non-Traded Market Risk

* Note 29 Exposures to Market Risk is subject to review procedures which do not constitute an audit. Refer to the Independent Auditor's Report for further

information.

Notional

Capital

Charge

For the New Zealand operations market risk oversight is achieved through factor sensitivity guidelines covering the traded market risk, non-traded market risk and

accrual portfolios. These guidelines ensure that the portfolios are managed within the Global factor sensitivity limits of Citigroup.

The entire Branch portfolio is used for liquidity management activities. It contains money market instruments, securities and interest rate hedges (some of them are

mark-to-market).

The Branch segregates its exposure to market risk between trading, non-trading and accrual portfolios.

Based on actual credit exposures, no credit exposure to any individual counterparty of CBNA New Zealand Branch and the Banking Group equaled or exceeded

10% of CBNA's equity during 2016 (2015: $nil). This did not include exposures to counterparties if they were booked outside of New Zealand.

Implied Risk

Weighted

Exposure

Market risk notional capital charges are derived in accordance with the Capital Adequacy Framework (Standardised Approach) (BS2A) per the Registered Bank

Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014 (as amended).




29. EXPOSURES TO MARKET RISK (continued)

Mark-to-Market Portfolio

Balance Average Maximum Minimum

for the year for the year for the year

$(000's) $(000's) $(000's) $(000's)

Year ended 31 December 2016 58 29 185 11

Year ended 31 December 2015 34 47 171 4

Accrual Portfolio

Summary of VaC position of the non trading portfolio as at period end is as follows: $(000's)

Year ended 31 December 2016 - loss to earnings 284

Year ended 31 December 2015 - loss to earnings 350

The market factors are modeled as either normal or lognormal stochastic diffusion processes. Volatility parameters are calculated using the most recent historical

time series data available, typically of three years in length. Under these assumptions the market factor returns are multivariate normal. The one-day period

covariance matrix characterizing the multivariate normal distribution of these market factor changes is estimated from the historical times series data of market

rates/prices. Limitations of the model relate to the assumptions of the distribution of the market factor changes over the holding period.

In the current portfolio interest rate risk outright and interest rate spreads contribute around 85-90% of the total VaR, with FX Spot contributing to the remaining

balance of 10-15%.

Market risk is managed and controlled using Value at Risk (VaR) along with factor sensitivities which are the standard measures used in the banking industry. VaR

is an estimate of the potential losses resulting from shifts in interest rate spreads and currency exchange rates. VaR is calculated with internally developed models

designed to capture the market risk of each specific product in the corporate portfolio. The one-day 99% VaR is obtained from the sample 1% quantile of the

distribution of portfolio P&Ls obtained as a result of the 5,000 Monte-Carlo simulated scenarios of one-day changes in the market risk factors underlying the

portfolio. The ten-day 99% USD VaR needed for regulatory risk capital is estimated similarly to the one-day 99% USD VaR by using a ten-day period covariance

matrix to characterize the multivariate normal distribution of market factor changes over a ten-day horizon. The ten-day covariance matrix is obtained from the one-

day covariance matrix by scaling the latter by a factor (squared) of 10.

The Banking Group employs Value at Close (VaC) as the principal measure to handle the non traded market risk. VaC measures the impact to earnings if the

current balance sheet gaps were closed at the market yield curve. The gaps are closed successively from the farthest tenor. Long positions are closed at the bid rate

and short positions at the offer rate. Since the methodology is a simple mark to market of the accrual book at the current market interest rates there are no

assumptions or parameters involved in this process.

Summary of VaR positions of the portfolio as at period end and during the year

are as follows:




30. CAPITAL ADEQUACY

Unaudited*

Advanced Standardised Advanced StandardisedApproaches Approach Approaches Approach

Common Equity Tier 1 Capital ratio (1)

12.96% 12.61% 14.10% 12.69%

Tier 1 Capital ratio (1)

12.99% 12.63% 14.10% 12.69%

Total Capital ratio (1) 14.25% 15.01% 15.37% 14.93%

Tier 1 Leverage ratio 9.49% 9.80%

Supplementary Leverage ratio 6.80% 6.92%

31. IMPUTATION CREDIT ACCOUNT 31-Dec-16 31-Dec-15

$(000's) $(000's)

Balance at the beginning of the year 303 223

Imputational credits from dividends - -

Imputational credits from tax payable 81 80 Balance at the end of the year 384 303

31-Dec-16 31-Dec-15

32. TOTAL LIABILITIES TO THIRD PARTIES - BRANCH $(000's) $(000's)


Other Deposits 839,617 1,064,196

Other Liabilities 4,283 6,033 848,240 1,093,526

Branch information is provided as per the Registered Bank Disclosure Statement (Overseas Incorporated Registered Banks) Order 2014 (as amended).

33. SUBSEQUENT EVENTS

31-Dec-15

⁽¹⁾ As of December 31, 2016, CBNA’s reportable Common Equity Tier 1 Capital and Tier 1 Capital ratios were the lower derived under the Basel III

Standardized Approach, whereas Citibank's reportable Total Capital ratio as of December 31, 2016 was the lower derived under the Basel III Advanced

Approaches framework. As of December 31, 2015, Citibank’s reportable Common Equity Tier 1 Capital, Tier 1 Capital, and Total Capital ratios were the

lower derived under the Basel III Standardized Approach.

31-Dec-16

Below are the capital ratios of Citibank, N.A.

There has not arisen in the interval between the end of the financial year and the date of this report any other item, transaction or event of a material and unusual

nature likely, in the opinion of the directors of the Branch, to affect significantly the operations of the Banking Group, the results of those operations, or the state of

affairs of the Banking Group in future financial years.

* Note 30 Capital Adequacy is subject to review procedures which do not constitute an audit. Refer to the Independent Auditor's Report for further information.

During 2016, CBNA was subject to effective minimum Common Equity Tier 1 Capital, Tier 1 Capital and Total Capital ratios, inclusive of the 25% phase in of the

2.5% Capital Conservation Buffer, of 5.125%, 6.625% and 8.625%, respectively. CBNA’s effective and stated minimum Common Equity Tier 1 Capital, Tier 1

Capital and Total Capital ratios during 2015 were equivalent at 4.5%, 6%, and 8%, respectively.

For information on the Basel III capital adequacy framework in relation to Citigroup see "Capital Resources and Liquidity - Capital Resources" in Citigroup's Annual

Report on Form 10-K for the year ended 31 December 2016. It is available on the Bank's website 'www.citi.co.nz' as part of the Disclosure Statement dated 31

December 2016.

The imputation credits are available to the shareholders of CBNA New Zealand Branch and the Banking Group through Citicorp Services Limited and Citibank

Nominees (New Zealand) Limited.

31-Dec-15

CBNA New Zealand Branch is a branch of, and each member of the Banking Group is a wholly-owned subsidiary of, CBNA, which is an indirect wholly-owned

subsidiary of Citigroup.

31-Dec-16

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