US Form 6-K filing – 2018 Interim Financial Results

9 May 2018


Market Announcements Office
ASX Limited
20 Bridge Street
SYDNEY NSW 2000


Dear Sir / Madam
US FORM 6-K FILING (INTERIM FINANCIAL RESULTS ANNOUNCEMENT FOR
THE SIX MONTHS ENDED 31 MARCH 2018, PREPARED FOR DISTRIBUTION IN
THE UNITED STATES)
Westpac Banking Corporation (Westpac) has filed with the US Securities and
Exchange Commission a Form 6-K, which attaches Westpac’s Interim Financial
Results Announcement for the six months ended 31 March 2018, prepared specifically
for distribution in the United States (US Interim Financial Results Announcement). This
filing has been prepared to meet US securities law requirements and is necessary to
update Westpac’s US debt issuance programs.
As the US Interim Financial Results Announcement has been prepared to meet US
requirements, its presentation differs in some respects from Westpac’s 2018 Interim
Financial Results, incorporating the requirements of Appendix 4D (lodged with the ASX
on 7 May 2018). In particular, the 2018 Interim Financial Results, incorporating the
requirements of Appendix 4D predominantly focuses on cash earnings while the US
Interim Financial Results Announcement is focused on Westpac’s consolidated
statutory results.
A copy of the Form 6-K is attached for release to the market.

Yours sincerely,



Tim Hartin
Company Secretary

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
May 8, 2018
Commission File Number 1-10167
WESTPAC BANKING CORPORATION
(Translation of registrant’s name into English)
275 KENT STREET, SYDNEY, NEW SOUTH WALES 2000, AUSTRALIA
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F ____x_____ Form 40-F __________
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(1): __________
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by
Regulation S-T Rule 101(b)(7): ___________

Incorporation by Reference
The information contained in Exhibit 1 to this Report on Form 6-K (excluding the “Auditor’s
Independence Declaration” on page 84 and the “Independent auditor’s review report to the members of Westpac
Banking Corporation” on page 123 of such Exhibit) shall be incorporated by reference in the prospectuses
relating to the Registrant’s securities contained in the Registrant’s Registration Statements on Form F-3 (File
Nos. 333-207931 and 333-220373), as such prospectuses may be amended or supplemented from time to time.
Index to Exhibits
Exhibit
No.Description
12018 Interim Financial Results – prepared for distribution in the United States of America

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
WESTPAC BANKING CORPORATION
(Registrant)
Date: May 8, 2018By: /s/ Sean Crellin
Sean Crellin
Director – Corporate, Legal and Secretariat

Exhibit 1
2018
Interim
Financial
Results
THE INTERIM FINANCIAL RESULTS ANNOUNCEMENT HAS BEEN
PREPARED FOR DISTRIBUTION IN THE UNITED STATES OF AMERICA

This Interim Financial Results Announcement has been prepared for distribution in the United States.
Our interim period refers to the six months ended 31 March 2018 (First Half 2018). Throughout this profit announcement we also
refer to the six months ended 31 March 2017 (First Half 2017) and the six months ended 30 September 2017 (Second Hal
f
2017).
The selected financial information for First Half 2018, First Half 2017 and Second Half 2017 contained in this Interim Financial
Results Announcement is based on the financial statements contained in the unaudited consolidated Interim Financial Report fo
r
Westpac Banking Corporation (Westpac) and its controlled entities (Group) for the six months ended 31 March 2018. The
Interim Financial Report has been prepared and presented in accordance with Australian Accounting Standards (AAS) as they
relate to interim financial reports. The Interim Financial Report also complies with International Financial Reporting Standards as
issued by the International Accounting Standards Board (IASB) as they relate to interim financial reports.
All dollar values in this announcement are in Australian dollars unless otherwise noted. References to ‘dollars’, ‘dollar amounts’,
‘$’, ‘AUD’ or ‘A$’ are to Australian dollars, references to ‘US$’, ‘USD’ or ‘US dollars’ are to United States dollars and references
to ‘NZ$’, ‘NZD’ or ‘NZ dollars’ are to New Zealand dollars. Solely for the convenience of the reader, certain Australian dolla
r
amounts have been translated into US dollars at a specified rate. These translations should not be construed as representations
that the Australian dollar amounts actually represent such US dollar amounts or have been or could be converted into US dollars
at the rate indicated. Unless otherwise stated, the translation of Australian dollar amounts into US dollar amounts has been
made at the rate of A$1 = US$0.7690, the noon buying rate in New York City for cable transfers in Australian dollars as certified
for customs purposes by the Federal Reserve Bank of New York (the noon buying rate) on 30 March 2018. Refer to Section 5.5
for information regarding the rates of exchange between the Australian dollar and the US dollar applied by the Group as part o
f
its operating activities for First Half 2018, Second Half 2017 and First Half 2017.
In addition to discussing the AAS financial information in this announcement, we also discuss the following non-AAS financial
information:
Cash earnings policy
In assessing financial performance, including divisional results, Westpac Group uses a measure of performance referred to as
‘cash earnings’. Cash earnings is viewed as a measure of the level of profit that is generated by ongoing operations and is
therefore considered in assessing distributions, including dividends. Cash earnings is neither a measure of cash flow nor net
profit determined on a cash accounting basis, as it includes both cash and non-cash adjustments to statutory net profit.
Management believes this allows the Group to more effectively assess performance for the current period against prior periods
and to compare performance across business divisions and across peer companies.
To determine cash earnings, three categories of adjustments are made to reported results:
xMaterial items that key decision makers at the Westpac Group believe do not reflect ongoing operations;
xItems that are not considered when dividends are recommended, such as the amortisation of intangibles, impact of Treasury
shares and economic hedging impacts; and
xAccounting reclassifications between individual line items that do not impact reported results.
Outlined in Section 6.1 are the cash earnings adjustments to the reported result.
Average Ordinary Equity
Average ordinary equity is calculated as the daily average of total equity less average non-controlling interests. Management
believes this measure of average ordinary equity is useful in the calculation of return on equity as it removes the impact of equity
attributable to non-controlling interests.
Other companies may use different methodologies to calculate average ordinary equity or similar non-AAS financial measures.
2018 Interim financial results
Introduction
ii | Westpac Group 2018 Interim Financial Results Announcement

Disclosure regarding forward-looking statements
This Interim Financial Results Announcement contains statements that constitute ‘forward-looking statements’ within the
meaning of Section 21E of the US Securities Exchange Act of 1934.
Forward-looking statements are statements about matters that are not historical facts. Forward-looking statements appear in a
number of places in this Interim Financial Results Announcement and include statements regarding Westpac’s intent, belief o
r
current expectations with respect to its business and operations, market conditions, results of operations and financial condition,
including, without limitation, future loan loss provisions and financial support to certain borrowers. Words such as ‘will’, ‘may’,
‘expect’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘estimate’, ‘anticipate’, ‘believe’, ‘probability’, ‘risk’, ‘aim’ o
r
other similar words are used to identify forward-looking statements. These forward-looking statements reflect Westpac’s current
views with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many
instances, beyond Westpac’s control, and have been made based upon management’s expectations and beliefs concerning
future developments and their potential effect upon Westpac. There can be no assurance that future developments will be in
accordance with Westpac’s expectations or that the effect of future developments on Westpac will be those anticipated. Actual
results could differ materially from those expected, depending on the outcome of various factors, including, but not limited to:
xthe effect of, and changes in, laws, regulations, taxation or accounting standards or practices and government policy,
particularly changes to liquidity, leverage and capital requirements;
xregulatory investigations and other actions, inquiries, litigation, fines, penalties, restrictions or other regulator imposed
conditions, including as a result of our actual or alleged failure to comply with laws (such as financial crime laws),
regulations or regulatory policy;
xinternal and external events which may adversely impact Westpac’s reputation;
xinformation security breaches, including cyberattacks;
xreliability and security of Westpac’s technology and risks associated with changes to technology systems;
xthe stability of Australian and international financial systems and disruptions to financial markets and any losses or business
impacts Westpac or its customers or counterparties may experience as a result;
xmarket volatility, including uncertain conditions in funding, equity and asset markets;
xadverse asset, credit or capital market conditions;
xthe conduct, behaviour or practices of Westpac or its staff;
xchanges to Westpac’s credit ratings or the methodology used by credit rating agencies;
xlevels of inflation, interest rates, exchange rates and market and monetary fluctuations;
xmarket liquidity and investor confidence;
xchanges in economic conditions, consumer spending, saving and borrowing habits in Australia, New Zealand and other
countries in which Westpac or its customers or counterparties conduct their operations and Westpac’s ability to maintain or
to increase market share, margins and fees, and control expenses;
xthe effects of competition, including from established providers of financial services and from non-financial services entities,
in the geographic and business areas in which Westpac conducts its operations;
xthe timely development and acceptance of new products and services and the perceived overall value of these products and
services by customers;
xthe effectiveness of Westpac’s risk management policies, including internal processes, systems and employees;
xthe incidence or severity of Westpac-insured events;
xthe occurrence of environmental change (including as a result of climate change) or external events in countries in which
Westpac or its customers or counterparties conduct their operations;
xchanges to the value of Westpac’s intangible assets;
xchanges in political, social or economic conditions in any of the major markets in which Westpac or its customers or
counterparties operate;
xthe success of strategic decisions involving diversification or innovation, in addition to business expansion activity, business
acquisitions and the integration of new businesses; and
xvarious other factors beyond Westpac’s control.
2018 Interim financial results
Introduction
Westpac Group 2018 Interim Financial Results Announcement | iii

The above list is not exhaustive. For certain other factors that may impact on forward-looking statements made by Westpac,
refer to ‘Risk factors’ in the Directors’ report in this Interim Financial Results Announcement. When relying on forward-looking
statements to make decisions with respect to Westpac, investors and others should carefully consider the foregoing factors and
other uncertainties and events.
Westpac is under no obligation to update any forward-looking statements contained in this Interim Financial Results
Announcement, whether as a result of new information, future events or otherwise, after the date of this Interim Financial Results
Announcement.
References to websites
Information contained in or accessible through the websites mentioned in this Interim Financial Results Announcement does not
form part of this Interim Financial Results Announcement unless we specifically state that it is incorporated by reference and
forms part of this Interim Financial Results Announcement. All references in this Interim Financial Results Announcement to
websites are inactive textual references and are for information only
.
2018 Interim financial results
Introduction
iv | Westpac Group 2018 Interim Financial Results Announcement

Index
In this announcement references to ‘Westpac’, ‘WBC’, ‘Westpac Group’, ‘the Group’, ‘we’, ‘us’ and ‘our’ are to Westpac Banking Corporation and its
controlled entities, unless it clearly means just Westpac Banking Corporation.
All references to $ in this document are to Australian dollars unless otherwise stated.
Financial calendar
2018 Interim financial results
Table of contents
1.0Group results2
1.1Reported results2
1.2Key financial information3
1.3Market share and system multiple metrics5
2.0Review of Group operations6
2.1Performance overview6
2.2Review of reported results13
2.3Credit quality27
2.4Balance sheet and funding30
2.5Capital and dividends34
2.6Sustainability performance40
3.0Divisional results43
3.1Consumer Bank44
3.2Business Bank46
3.3BT Financial Group (Australia)48
3.4Westpac Institutional Bank52
3.5Westpac New Zealand54
3.6Group Businesses
58
4.02018 Interim financial report60
4.1Directors’ report61
4.2Consolidated income statement86
4.3Consolidated statement of comprehensive income87
4.4Consolidated balance sheet88
4.5Consolidated statement of changes in equity89
4.6Consolidated cash flow statement90
4.7Notes to the consolidated financial statements91
4.8Statutory statements
122
5.0Other information124
5.1Credit ratings124
5.2Dividend reinvestment plan124
5.3Changes in control of Group entities124
5.4Financial calendar and Share Registry details125
5.5Exchange rates129
5.6Group earnings reconciliation130
6.0Cash earnings supplementary information133
6.1Cash earnings adjustments133
7.0Glossary134
Interim results announcement7 May 2018
Ex-dividend date for interim dividend17 Ma
y 2018
Record date for interim dividend (Sydney)18 May 2018
Interim dividend payable4 July 2018
Final results announcement (scheduled)5 November 2018
Westpac Group 2018 Interim Financial Results Announcement | 1

1.0Group results
1.1Reported results
Reported net profit attributable to owners of Westpac Banking Corporation is prepared in accordance with the requirements o
f
Australian Accounting Standards (AAS) and regulations applicable to Australian Authorised Deposit-taking Institutions (ADIs).
Net profit attributable to owners of Westpac Banking Corporation for First Half 2018 was $4,198 million, an increase of $291
million or 7% compared to First Half 2017. Features of this result included a $384 million or 4% increase in net operating income
before operating expenses and impairment charges, a $92 million or 2% increase in operating expenses and a $100 million o
r
20% decrease in impairment charges.
Net interest income increased $665 million or 9% compared to First Half 2017, with total loan growth of 5%, mostly from
Australian housing which grew 6%. Reported net interest margin increased 11 basis points to 2.16%, reflecting higher spreads
on certain mortgage types (including investor lending and loans with an interest-only feature), and increased deposit spreads.
These were partly offset by the Bank Levy which was effective from July 2017. Net interest income, loans, deposits and othe
r
borrowings and net interest margins are discussed further in Sections 2.2.1 to 2.2.4.
Non-interest income decreased $281 million or 9% compared to First Half 2017 primarily due to a decrease in trading income o
f
$226 million and the impact of economic hedges on New Zealand earnings ($63 million lower). Non-interest income is discussed
further in Section 2.2.5.
Operating expenses increased $92 million or 2% compared to First Half 2017. The rise in operating expenses includes annual
salary increases and higher technology expenses related to the Group’s investment program and a rise in regulatory and
compliance costs, including costs associated with the Royal Commission. These increases were partly offset by productivity
benefits and lower amortisation of intangibles. Operating expenses are discussed further in Section 2.2.8.
Impairment charges were $100 million or 20% lower compared to First Half 2017. Asset quality remained sound, with stressed
exposures as a percentage of total committed exposures at 1.09%, down 5 basis points compared to First Half 2017. The
decrease in the impairment charges was primarily due to reduced individual provisions for larger facilities. Impairment charges
are discussed further in Section 2.2.9.
The effective tax rate of 30.4% was lower than the First Half 2017 effective tax rate of 30.7%. Income tax expense is discussed
further in Section 2.2.10.
2018 Interim financial results
Group results
Half YearHalf Year Half YearHalf Year% Mov’t% Mov’t
March 18March 18 Sept 17March 17Mar 18 -Mar 18 -
$m
US$A$ A$A$Sept 17Mar 17
Net interest income
6,3668,278 7,9037,61359
Non-interest income
2,2112,875 3,1303,156(8)(9)
Net operating income before operating expenses
and impairment charges8,57711,153 11,03310,76914
Operating expenses
(3,634)(4,725) (4,801)(4,633)(2)2
Impairment charges
(302)(393) (360)(493)9(20)
Profit before income tax
4,6416,035 5,8725,64337
Income tax expense
(1,411)(1,835) (1,787)(1,731)36
Net profit for the period
3,2304,200 4,0853,91237
Net profit attributable to non-controlling interests
(2)(2) (2)(5)-(60)
Net profit attributable to owners of Westpac
Banking Corporation
3,2284,198 4,0833,90737
Effective tax rate
30.4%30.4% 30.4%30.7%(2bps)(27bps)
Percentage movement represents an increase / (decrease) to the relevant comparative period.
2 | Westpac Group 2018 Interim Financial Results Announcement
11
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1.2Key financial information
2018 Interim financial results
Group results
Half YearHalf Year Half Year Half Year% Mov’t% Mov’t
March 18March 18Sept 17March 17Mar 18 -Mar 18 -
US$A$A$A$Sept 17Mar 17
Shareholder value
Earnings per ordinary share (cents)95.1123.7121.2116.826
Weighted average ordinary shares (millions)
3,3923,3923,3663,34411
Fully franked dividends per ordinary share (cents)
72949494--
Return on average ordinary equity
13.79%13.79%13.72%13.57%7bps22bps
Average ordinary equity ($m)46,94861,05159,36457,74436
Average total equity ($m)46,95961,06559,38057,76836
Net tangible asset per ordinary share ($)
11.5415.0014.6614.2425
Business performance
Interest spread2.00%2.00%1.90%1.88%10bps12bps
Benefit of net non-interest bearing assets,
liabilities and equity0.16%0.16%0.17%0.17%(1bps)(1bps)
Net interest margin
2.16%2.16%2.07%2.05%9bps11bps
Average interest-earning assets ($m)589,831767,011759,764744,78313
Expense to income ratio
42.37%42.37%43.51%43.02%(114bps)(65bps)
Capital, funding and liquidity
Common equity Tier 1 capital ratio
- APRA Basel III 10.50%10.50%10.56%9.97%(6bps)53bps
- Internationally comparable
16.13%16.13%16.20%15.34%(7bps)79bps
Credit risk weighted assets (credit RWA) ($m)
277,910361,391349,258352,71332
Total risk weighted assets (RWA) ($m)
319,707415,744404,235404,38233
Liquidity coverage ratio (LCR)
134%134%124%125%largelarge
Net stable funding ratio (NSFR)
112%112%109%108%351bps372bps
Asset quality
Gross impaired assets to gross loans0.22%0.22%0.30%-(8bps)
Gross impaired assets to equity and total provisions
2.33%2.39%3.15%(6bps)(82bps)
Gross impaired asset provisions to
gross impaired assets45.54%46.30%52.07%(76bps)large
Total committed exposures (TCE) ($m)
1,023,017 1,005,882984,79424
Total stressed exposures as a % of TCE
1.09%1.05%1.14%4bps(5bps)
Total provisions to gross loans
45bps45bps52bps-(7bps)
Mortgages 90+ day delinquencies
0.65%0.62%0.63%3bps2bps
Other consumer loans 90+ day delinquencies
1.64%1.57%1.55%7bps9bps
Collectively assessed provisions to credit RWA
75bps76bps77bps(1bps)(2bps)
Balance sheet ($m)
Loans539,371701,393684,919666,94625
Total assets
670,456871,855851,875839,99324
Deposits and other borrowings
421,209547,736533,591522,51335
Total liabilities
622,267809,190790,533780,62124
Total equity
48,18962,66561,34259,37226
Wealth Management
Average Group funds ($bn)167.1217.3213.9203.227
Life insurance in-force premiums (Australia) ($m)
9811,2761,0681,0301924
General insurance gross written premiums
(Australia) ($m)193251258250(3)-
Westpac Group 2018 Interim Financial Results Announcement | 3
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Based on the weighted average number of fully paid ordinary shares outstanding for the relevant six month period. Earnings are calculated as net
profit attributable to owners of WBC.
Weighted average number of fully paid ordinary shares listed on the ASX for the relevant period less Westpac shares held by the Group (Treasur
y
shares).
Calculated as net profit attributable to owners of WBC divided by average ordinary equity (annualised).
Calculated as average total equity less average non-controlling interests.
Average total equity is the average balance of shareholders’ equity, including non-controlling interests.
Total equity attributable to owners of WBC after deducting goodwill and other intangible assets divided by the number of ordinary shares outstanding,
less treasury shares held.
Calculated as the difference between the average yield on all interest earning assets and the average rate paid on all interest bearing liabilities.
Calculated as the difference between net interest margin and interest spread, and represents benefits derived from holdings of the net non-interes
t
bearing component of the balance sheet (including equity).
Calculated by dividing net interest income by average interest earning assets (annualised).
Calculated as Group operating expenses excluding impairment charges divided by Group net operating income before operating expenses an
d
impairment charges.
Refer to Glossary for definition.
The NSFR was effective from 1 January 2018 for Australian Authorised Deposit-taking Institutions (ADIs). Second Half September 2017 and First Hal
f
March 2017 are presented on a proforma basis.
Impairment provisions relating to impaired loans include individually assessed provisions plus the proportion of the collectively assessed provisions
that relate to impaired loans.
Spot balances.
Averages are based on a six month period.
2018 Interim financial results
Group results
4 | Westpac Group 2018 Interim Financial Results Announcement
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1.3Market share and system multiple metrics
1.3.1 Market share
1.3.2 System multiples
2018 Interim financial results
Group results
As atAs atAs at
31 March
2018
30 Sept
2017
31 Marc
h
2017
Australia
Banking system (APRA)
Housing credit25%25%25%
Cards
23%23%23%
Household deposits
23%23%23%
Business deposits
20%20%20%
Financial system (RBA)
Housing credit23%23%23%
Business credit
19%19%19%
Retail deposits
21%22%21%
New Zealand (RBNZ)
Consumer lending19%19%19%
Deposits
19%19%19%
Business lending
16%16%17%
Australian Wealth Management
Platforms (includes Wrap and Corporate Super)18%19%19%
Retail (excludes Cash)
18%18%18%
Corporate Super
13%13%14%
Half YearHalf Year Half Year
March 18Sept 17 March 17
Australia
Banking system (APRA)
Housing credit1.01.10.8
Cards
n/an/a1.1
Household deposits
0.81.31.1
Business deposits
0.91.11.0
Financial system (RBA)
Housing credit0.91.00.8
Business credit
0.91.0n/a
Retail deposits
0.61.30.7
New Zealand (RBNZ)
Consumer lending0.70.60.7
Deposits
1.21.4n/a
Source: Australian Prudential Regulation Authority (APRA).
Includes securitised loans.
Source: Reserve Bank of Australia (RBA).
Retail deposits as measured by the RBA, financial system includes financial corporations’ deposits.
New Zealand comprises New Zealand banking operations.
Source: Reserve Bank of New Zealand (RBNZ).
Market Share Funds under Management / Funds under Administration based on published market share statistics from Strategic Insight as at 31
December 2017 (for First Half 2018), as at 30 June 2017 (for Second Half 2017) and as at 31 December 2016 (for First Half 2017) and represents the
BT Wealth business market share reported at these times.
n/a indicates that s
ystem growth or Westpac growth was negative.
Westpac Group 2018 Interim Financial Results Announcement | 5
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2.0Review of Group operations
Section 2 ‘Review of Group operations’ focuses on our Group results and key drivers for movements, with reference to ou
r
significant divisions. For more commentary at the divisional level, refer to Section 3 ‘Divisional results’.
2.1Performance overview
Overview
Westpac Group generated net profit attributable to owners of Westpac Banking Corporation (WBC) of $4,198 million in First Hal
f
2018, 3% or $115 million higher than Second Half 2017. The rise in net profit attributable to owners of WBC over the half was
supported by a 3% rise in profit before impairment charges and income tax expense, partly offset by a 9% increase in
impairment charges. The 3% increase in profit before impairment charges and income tax expense was due to a 5% rise in net
interest income and a 2% decrease in operating expenses, partially offset by an 8% decrease in non-interest income.
Compared to First Half 2017, net profit attributable to owners of WBC was up 7% or $291 million.
The 3% growth in net profit attributable to owners of WBC compared to the prior half translated to 2% growth in earnings pe
r
share, following the new share issuance as part of the dividend reinvestment plan. The Group’s Return on average Ordinary
Equity (ROE) for the half was 13.8%, up from 13.7% in Second Half 2017 and 13.6% compared to the prior corresponding
period. Consistent with the rise in capital, net tangible assets per share increased 2% to $15.00.
The economic environment has remained positive for the banking sector with Australian system credit growth of around 5%
compared to the prior corresponding period, continued positive fund flows, and low levels of stressed assets. That said, credit
growth has eased a little over the last six months as macro prudential rules contributed to a slowing in the housing market and
businesses in aggregate remained cautious on new investment. Competition has remained intense from both local and
international financial institutions. Westpac has continued to manage the business in a balanced way across strength, return,
productivity and growth. In First Half 2018, the Group has again prioritised return over growth.
The environment for financial services has however been impacted by the Royal Commission into Misconduct in the Banking,
Superannuation and Financial Services Industry. First established in mid-December 2017, the Royal Commission has now
completed public hearings on consumer lending and financial advice. During the course of the Royal Commission serious
questions have been raised about customer treatment and outcomes, responsiveness to complaints, incentive structures,
conflicts of interest and regulatory oversight.
In recent years, and prior to the Royal Commission, Westpac commenced a number of programs to improve its policies,
procedures, and practices for customers. This included implementing the Australian Banking Association’s “Six point plan” to
improve the sector’s reputation and commencing a “get it right, put it right” initiative across the organisation. This effort covers all
of our businesses and aims to proactively identify potential issues for customers and fix them. At the same time, where we have
got things wrong we have committed to put things right for customers. In Full Year 2017, this included a provision of $169 million
for customer refunds and payments. More detail on these programs appears later in this overview.
2018 Interim financial results
Review of Group operations
Half YearHalf YearHalf YearHalf Year% Mov’t% Mov’t
March 18March 18Sept 17March 17Mar 18 -Mar 18 -
$m
US$A$A$A$Sept 17Mar 17
Net interest income6,3668,2787,9037,61359
Non-interest income
2,2112,8753,1303,156(8)(9)
Net operating income before operating expenses
and impairment charges8,57711,15311,03310,76914
Operating expenses(3,634)(4,725)(4,801)(4,633)(2)2
Profit before impairment charges and
income tax expense4,9436,4286,2326,13635
Impairment charges
(302)(393)(360)(493)9(20)
Profit before income tax4,6416,0355,8725,64337
Income tax expense
(1,411)(1,835)(1,787)(1,731)36
Net profit for the period
3,2304,2004,0853,91237
Net profit attributable to non-controlling interests(2)(2)(2)(5)-(60)
Net profit attributable to owners of Westpac
Banking Corporation
3,2284,1984,0833,90737
Source: RBA March 2018.
6 | Westpac Group 2018 Interim Financial Results Announcement
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Strategically, Westpac continues to focus on growing the long term value of the franchise through its customer focused strategy.
In First Half 2018 the Group has further grown its customer franchise, enhanced services to customers and improved
productivity. This has been achieved while continuing to transform the organisation, and the customer experience, in particula
r
using digital capabilities.
A key element of the Group’s strategy is the recognition of Westpac’s role in helping to create a positive social, economic and
environmental impact, for the benefit of all. In 2017, Westpac was recognised as the most sustainable bank globally in the Dow
Jones Sustainability Index; the fourth year in a row. For further details of our Sustainability Strategy, refer to Section 2.6.
Performance drivers
Compared to the prior half, lending across the Group grew a little below system at 2%, consistent with the Group’s decision to
prioritise return over growth. Customer deposits grew 3% supporting a further improvement in the Group’s funding mix. Net
interest margin was higher over the half, particularly in the Consumer Bank, Business Bank and Westpac New Zealand, along
with increased Treasury income. Spreads were higher on deposits. Mortgage spreads were also higher reflecting the full period
impact of pricing changes in Second Half 2017 in investor and interest only mortgages. These increases were partially offset by
customers switching to lower spread mortgage products and the full period impact of the Bank Levy, which only applied for one
quarter in Second Half 2017. The Bank Levy cost $186 million in First Half 2018, up from $95 million in Second Half 2017, and
reduced net interest margin by a further 2 basis points over the half. On an earnings per share basis, the First Half 2018 impact
of the Bank Levy is equivalent to around 4 cents per share.
In aggregate, net interest income increased 5% over the half, which was partly offset by an 8% decline in non-interest income,
resulted in net operating income before operating expenses and impairment charges rising 1%.
Operating expenses decreased 2% or $76 million, driven by lower intangible asset amortisation, costs associated with the sale
of BTIM shares last half that were not repeated and productivity gains continuing to offset increases in business as usual costs.
Most of the increase in expenses was related to higher investment and regulatory and compliance costs, including $34 million in
additional expenses associated with the Royal Commission.
With income growth and a reduction in operating expenses, the expense to income ratio declined by 114 basis points over the
half and by 65 basis points compared to the prior corresponding period to 42.4% for First Half 2018.
Profit before impairment charges and income tax expense was up 3% compared to the prior half with all operating divisions
contributing to the increase.
Credit quality remained sound with key metrics little changed compared to the prior half. Stressed assets to TCE were 1.09% at
31 March 2018, up 4 basis points from September 2017 but down 5 basis points compared to March 2017. Impaired assets
were little changed over the half with no new facilities greater than $50 million becoming impaired
.
Given the trends in credit quality, total provisions were little changed over the half (up $46 million) mostly in collectively
assessed provisions. As a result, the Group’s provision coverage was steady. The ratio of gross impaired asset provisions to
gross impaired assets was 46% (down 76 basis points on the prior half) while the ratio of collectively assessed provisions to
credit risk weighted assets was little changed over the half, down one basis point to 0.75%. The overlay provision was $12
million higher (totalling $335 million).
Operating divisions delivered an increase in cash earnings over the half, with the exception of Westpac New Zealand (which
saw impairments move from a benefit to a charge). The Consumer Bank, which contributed 40% to Group earnings, lifted cash
earnings 6%. The Business Bank recorded a 3% rise in cash earnings with profit before impairment charges and income tax
expense up 3% while Westpac Institutional Bank reported a 4% increase in cash earnings. BT Financial Group (Australia)
(BTFG) recorded a 13% increase in cash earnings with growth in funds and insurance premiums and lower provisions fo
r
customer payments and refunds. The Westpac New Zealand business (in NZ$) recorded a 3% increase in profit before
impairment charges and income tax expense although cash earnings were 5% (in NZ$) lower as a small impairment charge was
recorded this half compared to an impairment benefit in the prior half.
The Group maintained the strength of its balance sheet:
xA CET1 capital ratio of 10.5%, in line with the “unquestionably strong” benchmark set by APRA. The ratio was little changed
over the half as organic capital generation was largely offset by regulatory model changes;
xA liquidity coverage ratio (LCR) of 134% being above the 100% regulatory minimum; and
xThe net stable funding ratio (NSFR) was 112% and was comfortably above the 100% regulatory minimum which applied from
1 January 2018.
The Board determined an interim ordinary dividend of 94 cents per share, fully franked, unchanged over both Second Half 2017
and First Half 2017.
2018 Interim financial results
Review of Group operations
Source: RBA March 2018.
Westpac Group 2018 Interim Financial Results Announcement|7
1
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The interim ordinary dividend of 94 cents represents a payout ratio of 76.07% and a dividend yield of 6.6% . The Board has
determined to issue shares to satisfy the dividend reinvestment plan (DRP) for the First Half 2018 dividend and to apply no
discount to the market price used to determine the number of shares issued under the DRP. The final ordinary dividend will be
paid on 4 July 2018 with the record date of 18 May 2018 . After allowing for the final dividend, the Group’s adjusted franking
account balance was $1,279 million.
Strategic progress
Westpac is committed to its service-based strategy and its existing banking operations along with the wealth and insurance
businesses operated by BTFG. This consistency has enabled the Group to make significant progress on delivery through the
half, helping build the value of the franchise. Westpac’s vision is:
To be one of the world’s great service companies, helping our customers, communities and people to prosper and grow.
The five strategic priorities supporting that vision are: service leadership, performance discipline, digital transformation, targeted
growth and workforce revolution. Progress on these priorities is outlined below.
Service leadership
Westpac’s goal of being one of the world’s great service companies means the Group strives to deliver market-leading custome
r
experiences. While customer service has improved across the Group, there is still further work required. Recent developments
included:
xHelping customers to better manage their finances:
- Provided the capability for customers to reduce credit card limits online;
- Option to sign-up for reminder alerts via SMS or email five days before monthly credit card repayment is due;
- Ability to temporarily restrict all debit transactions on credit cards; and
- Introduced Westpac SmartPlan, a structured repayment schedule plan enabling customers to break down large amounts
on their credit cards into a number of regular monthly instalments.
xHelping customers develop savings habits by rewarding savings behaviour:
- Westpac Bump launched in April 2017 to encourage children and their parents develop savings habits. For eligible
children Westpac will deposit $200 into their account; and
- Westpac Life account launched in August 2017, helps customers save with a 0.8% bonus interest rate if the balance is
higher at month end.
xHelping customers in times of need:
- Over 19,000 customers provided hardship assistance in the half;
- Dementia-Friendly Banking program in partnership with Alzheimer’s Australia introduced in September 2017; and
- Fraud guarantee; monitor fraud and fix it when a retail customer loses money through no fault of their own (March 2018).
xGrowing the customer base by 1% over the last 12 months;
xMaking it easier for customers to understand our product offering by simplifying our product suite. We have reduced the
number of consumer products for sale – for example, in the Consumer Bank, the number of products has more than halved
from 126 in 2015 to 60;
xCustomer satisfaction ranked number 2 compared to peers, and ranked number 3 for NPS for the Consumer Bank; and
xIntroducing a range of improved services using digital (see digital transformation below).
Performance discipline
This strategic priority is focused on delivering a superior financial and risk management performance by achieving balanced
outcomes across strength, return, productivity, and growth.
This half, Westpac delivered 3% growth in net profit attributable to owners of WBC, an ROE of 13.8%, improved liquidity metrics
and $131 million of productivity savings (representing almost 3% of the cost base).
2018 Interim financial results
Review of Group operations
Based on the closing share price as at 29 March 2018 of $28.62.
Record date for 2018 interim dividend in New York is 17 May 2018.
Eligible children must be born in 2017, have a permanent Australian residential address and have the Bump Savings account opened in their name b
y
31 May 2018.
8 | Westpac Group 2018 Interim Financial Results Announcement
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This half, the Group further refined its internal capital allocation models to reflect the proposed changes to the Basel III capital
rules and to enhance divisional accountability for returns. As a result, approximately $6 billion of capital (previously held in the
Group centre) was allocated to operating divisions in the half, sending a clear signal on capital requirements each division needs
to operate under.
Contributors to the $131 million in productivity savings included:
xStreamlining via digital - $18 million: 45% of Consumer Bank customers and 70% of New Zealand customers have converted
to e-statements. Cheque digitisation has resulted in 45,000 cheques imaged daily (includes savings in manual handling);
xImproving network efficiency - $12 million: Closed or amalgamated 27 branches across Australia and New Zealand;
xVendor and process management - $32 million: Streamlining of external contracts particularly in technology and commercial
services and more efficient use of external suppliers; and
xSimplifying the Group’s operating model - $69 million: Reducing management spans and layers, and various improvements
in operating efficiency contributing to a reduction of over 350 roles.
After a decade of strengthening the balance sheet from a capital, funding, and liquidity perspective the Group’s ratios are now in
line, or ahead of, APRA’s updated benchmarks. While APRA’s final rules on capital are yet to be released, the Group believes it
is well placed to meet any subsequent changes by the scheduled 1 January 2020 commencement date.
With funding and liquidity, the Group has met the new NSFR requirements that became effective on 1 January 2018. The
Group’s customer deposit to loan ratio was 52 basis points higher over the half at 71.6% while the duration of new term funding
raised during First Half 2018 was over seven years.
Westpac effectively navigated APRA’s mortgage macro prudential rules through the half while achieving portfolio growth. This
included maintaining investor property growth below 10% per annum and holding the proportion of new interest only mortgages
to less than 30% of new flows. These rules were achieved with annual investor lending growing at around 5% over the year and
new interest only facilities representing 23% of new mortgage limits for the half. The repricing of investment and interest only
mortgages supported this outcome. As a result, the proportion of Australian interest only mortgage lending has declined by
around 10 percentage points over the last 12 months to 40% at March 2018. These rules were achieved while growing the
Australian mortgage portfolio by 2% for the six months to March 2018.
Digital transformation
Advances in digital technology provide the Group with the ability to improve the customer experience while simultaneously
improving productivity and risk management. As an outcome of this the Group aims to reduce its expense to income ratio to
below 40%. In First Half 2018 the Group invested $638 million, with most spending directed to growth and productivity initiatives.
Major developments over the half have included:
xProgress on the Group’s “customer service hub” that will be the centrepiece of customer origination and service processes.
The new system will go live for Westpac mortgages later this year;
xLaunching of “Presto Smart” in April 2018, a new integrated payments solution for business customers. The solution links
payments and point of sale systems to accelerate transaction processing and allow sales to be completed anywhere instore;
xLaunching PayWear, a new wearable debit card that allows customers to make payments without a phone or wallet;
xEnhancing the Group’s infrastructure that further reduce cybersecurity risks; and
xImproving the stability and efficiency of the Group’s technology infrastructure. The Group believes this has contributed to low
levels of severity one issues (those with a major customer impact). There was one severity one incident in Australia in First
Half 2018, compared to 19 recorded in Full Year 2016.
Targeted growth
Westpac seeks to grow value by targeting a small number of higher growth segments over the medium term. Wealth and SME
have continued to be the major areas of focus.
In Wealth, the Group’s franchise and investment has led to continuing funds management and administration flows along with
growth in insurance premiums. These trends have, however, been partially offset by a more cautious approach from consumers
and significant regulatory uncertainty. At the same time, funds margins have been lower and insurance claims were higher.
During First Half 2018, the Group:
2018 Interim financial results
Review of Group operations
Westpac Group 2018 Interim Financial Results Announcement | 9

xBuilt its digital SME capability, leading to a 2% increase in SME lending over the half. In addition to Presto Smart mentioned
earlier, enhancements over the half have included:
- Enabling merchant terminals to accept new payment mechanisms, including Fitbit Pay;
- Extending our LOLA electronic loan origination platform to St.George bankers; and
- Introducing electronic documents to speed up processing times, making it easier for customers to connect with Westpac
digitally, as well as increasing the use of e-statements;
xImproved the functionality of its Panorama wealth management platform, with a particular focus on the mobile application and
client reporting; and
xGrew Australian Life insurance in-force premiums 19%, as the division began managing Group Insurance for BTFG
Corporate Super.
Workforce revolution
Successful achievement of the Group’s vision depends on the quality and engagement of our people. Westpac is already
regarded as a leader in staff engagement, diversity, and flexibility but recognises that there is more to do. Recent highlights
include:
xAll teller incentives now based 100% on customer advocacy;
xImplemented a new performance management approach called “Motivate” across all employees. The new system is centred
on a “behaviours-first” approach and removes performance rankings;
xPartnered with Australian Graduate School of Management (AGSM) to develop a range of senior leadership programs. More
than 1,400 employees have completed these programs with another 1,200 employees enrolled;
xDeveloping a learning culture with 80% of Westpac employees using Learning Bank with 50,000 materials utilised in First
Half 2018; and
xAchieved the Group’s target of 50% of women in leadership positions.
Restoring reputation
The First Half 2018 has continued to see the industry (including Westpac) under intense scrutiny including from the Royal
Commission into Financial Services.
Restoring the Group’s reputation has remained a focus and the Group has continued to implement a number of programs aimed
at improving trust. In particular, Westpac has largely completed the implementation of the Australian Banking Association’s “Six
point plan” with the Group waiting for finalisation of the industry Code of Banking Practice to complete implementation. In 2017
the Group also commenced a broader program to reduce complexity and resolve prior issues that have the potential to impact
customers and the Group’s reputation. These reviews have identified some previous instances where the Group has not met
industry or community standards and Westpac is taking action to put things right so that customers are not at a disadvantage
from past practices. Work on this program over the last 12 months included:
xProgressing the review of products to reassess their features and how the Group had engaged with customers. As part o
f
these reviews, 150 changes were made including more than halving the number of consumer products on offer;
xCutting transaction fees for 1.3 million customers, removing ATM fees, and introducing a new low rate credit card; and
xContinuing remediation of previous issues, paying out $39 million to customers from our 2017 provision for customer refunds
and payments.
Financial performance summary First Half 2018 – Second Half 2017
Net profit attributable to owners of WBC of $4,198 million was up 3% with profit before impairment charges and income tax
expense up 3% while impairment charges rose 9%. The result was supported by loan and deposit growth, improved net interest
margin and lower operating expenses. This half, the growth in net profit attributable to owners of WBC benefited from the
absence of a provision for customer refunds and payments, which reduced net profit attributable to owners of WBC by $118
million in Second Half 2017. Partially offsetting this increase were costs associated with the Royal Commission of $34 million
($24 million after tax) and the full period effect of the Bank Levy ($130 million impact after tax in First Half 2018).
Net interest income rose 5% reflecting a 1% rise in average interest-earning assets and a 9 basis point increase in net interest
margin. Net interest margin excluding Treasury and Markets increased 3 basis points over the half, with higher deposit spreads,
increased rates on certain mortgage types (including investor lending and interest-only loans) and lower funding costs early in
the half. Net interest margin in First Half 2018 was also impacted by the full period impact of the Bank Levy, which reduced net
interest margin by 2 basis points.
2018 Interim financial results
Review of Group operations
10 | Westpac Group 2018 Interim Financial Results Announcement

Total loans grew 2%, with most of the rise due to an increase in Australian mortgage lending. Other areas of growth included
Australian business lending, which was 2% higher in SME and 2% higher in commercial. In New Zealand, lending was up 2%
(up 4% in A$ terms) with growth spread evenly across business and mortgages. Australian personal lending was lower over the
half mostly reflecting lower demand. Deposits grew 3% over First Half 2018, with customer deposits rising 3%. New Zealand
customer deposits grew 6% in NZ$ (8% in A$).
Non-interest income was down 8%. Excluding the impact of provisions for customer refunds and payments of $111 million
raised, and the partial sale of BTIM shares of $279 million in Second Half 2017 that were not repeated, non-interest income
reduced by $87 million or 3%. The 3% decline reflected reductions in cards income, lower ATM fees, caps placed on transaction
account keeping fees, higher seasonal insurance claims and lower fees from Hastings.
Operating expenses decreased 2%, with lower intangible asset amortisation, costs associated with the sale of BTIM shares last
half that were not repeated and $131 million of productivity savings. This was partly offset by operating cost growth, highe
r
technology investment and increased regulatory and compliance costs, including expenses associated with the Royal
Commission.
Impairment charges were $33 million (or 9%) higher than Second Half 2017, with most of the increase due to higher new
collectively assessed provisions mostly related to the small rise in stressed assets. In aggregate, mortgage 90+ day
delinquencies were 3 basis points higher, consistent with normal seasonal trends, while consumer unsecured 90+ day
delinquencies were also seasonally higher, up 7 basis points.
The effective tax rate was 30.4% in First Half 2018.
Financial performance summary First Half 2018 – First Half 2017
Net profit attributable to owners of WBC of $4,198 million was $291 million, or 7%, higher than First Half 2017. Profit before
impairment charges and income tax expense grew 5% and impairment charges were 20% lower. Profit before impairment
charges and income tax expense growth included a 9% lift in net interest income, partly offset by a 9% decline in non-interest
income and a 2% rise in operating expenses.
The rise in net interest income reflected a 3% increase in average interest-earning assets and an 11 basis point rise in net
interest margin. Net interest margin excluding Treasury and Markets was 9 basis points higher, mostly due to higher spreads on
mortgages and lower funding costs. These increases were partially offset by the introduction of the Bank Levy from July 2017.
Lending increased 5%, with Australian mortgages the largest contributor, growing 6%. Australian business lending increased 3%
compared to the prior corresponding period with growth across SME and commercial lending. Lending in New Zealand
increased 3% in NZ$ (up 6% in A$). Customer deposits rose 5% compared to the prior corresponding period, with 6% growth in
Australian transaction accounts and an 8% lift in New Zealand customer deposits in NZ$ (up 11% in A$).
Non-interest income was down $281 million compared to the prior corresponding period (down 9%) mostly from lower markets
related income and a decline in banking fee income. The reduction in banking fees was due to lower credit card interchange
fees, the elimination of certain ATM fees and capping account-keeping fees.
Business as usual expense increases continued to be offset by productivity savings, with the 2% rise in overall operating
expenses due to higher investment-related spending and an increase in regulatory and compliance costs, including costs related
to the Royal Commission. Salaries and staff expenses were 3% higher reflecting annual salary increases, while occupancy costs
were down 2%, due to lower operating lease depreciation and benefits of retail property consolidation partly offset by rental
increases. Technology expenses also increased (up 5%) mostly from higher software amortisation, software maintenance and
licensing costs from the Group’s investment programs.
Overall credit quality remains sound with total stressed assets to TCE down 5 basis points to 1.09% at 31 March 2018. This
mostly reflects the write-off of some larger impaired facilities and the reduction in stress in the New Zealand dairy portfolio.
Impairment charges were $100 million lower, consistent with the improvement in credit quality and the absence of any new large
impaired assets.
2018 Interim financial results
Review of Group operations
Westpac Group 2018 Interim Financial Results Announcement | 11

Divisional Net Profit after Tax (NPAT) Summary
Summary of movement in NPAT by Business Divisions (First Half 2018 – First Half 2017)
Consumer Bank (CB) NPAT increased $229 million or 16% primarily due to revenue growth.
Business Bank (BB) NPAT increased $125 million or 13% primarily due to revenue growth.
BT Financial Group (Australia) (BTFG) NPAT increased $35 million or 9% primarily due to revenue growth.
Westpac Institutional Bank (WIB) NPAT decreased $78 million or 12% primarily due to lower trading income partly offset by
lower impairment charges.
Westpac New Zealand NPAT increased $22 million or 5% primarily due to higher net interest income partly offset by highe
r
impairment.
Group Businesses NPAT decreased $42 million or 78% primarily due to higher operating expenses relating to the Royal
Commission and impairment charges.
2018 Interim financial results
Review of Group operations
The NPAT graph illustrates the movements in NPAT (in $ value) for each division.
12 | Westpac Group 2018 Interim Financial Results Announcement
1
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2.2Review of reported results
2.2.1Net interest income
First Half 2018 – Second Half 2017
Net interest income increased $375 million or 5% compared to Second Half 2017. Key features include:
xA 2% increase in average interest-earning loans largely from Australian housing, which grew 2%;
xGroup net interest margin excluding Treasury and Markets increased 3 basis points, primarily from increased spreads on
certain mortgage types (including investor lending and loans with an interest only feature) partly offset by the full period
impact of the Bank Levy (2 basis points). While funding costs were lower across deposits and wholesale funding for the half,
both short and long term funding costs increased towards the end of the half; and
xIn aggregate, Treasury and Markets net interest income increased $231 million or 113%, mostly from Treasury interest rate
risk management.
First Half 2018 – First Half 2017
Net interest income increased $665 million or 9% compared to First Half 2017. Key features include:
xA 4% growth in average interest-earning loans, primarily from Australian housing, which grew 5%;
xGroup net interest margin excluding Treasury and Markets increased 9 basis points. The full period impact of pricing changes
for certain Australian and New Zealand mortgages, including investor lending and interest only loans, and lower funding
costs were partly offset by the introduction of the Bank Levy from July 2017; and
xIn aggregate, the contribution from Treasury and Markets was up $106 million or 32%, mostly from higher fixed income
revenue in WIB Markets.
2.2.2Loans
2018 Interim financial results
Review of Group operations
% Mov’t% Mov’t
Half YearHalf YearHalf YearMar 18 -Mar 18 -
$mMarch 18Sept 17March 17Sept 17Mar 17
Net interest income8,2787,9037,61359
Average interest-earning assets767,011759,764744,78313
Group net interest margin2.16%2.07%2.05%9bps11bps
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
$
m201820172017Sept 17Mar 17
Australia610,397599,162583,54625
Housin
g437,239427,167413,93826
Personal (loans and cards)
21,78921,95222,716(1)(4)
Business
151,904150,542147,70513
Other
1,9631,9852,033(1)(3)
Provisions
(2,498)(2,484)(2,846)1(12)
New Zealand (A$)74,68771,48470,35046
New Zealand (NZ$)79,55777,68076,94823
Housing47,90746,94346,24524
Personal (loans and cards
)2,0472,0171,97714
Business
29,89828,97929,03433
Other
819290(12)(10)
Provisions
(376)(351)(398)7(6)
Other overseas16,30914,27313,0501425
Trade finance
3,9422,8182,2814073
Other loans
12,42911,51510,821815
Provisions
(62)(60)(52)319
Total loans
701,393684,919666,94625
Refer to Section 4 Note 3 for reported results breakdown.
Spot loan balances.
Includes mar
gin lending.
Westpac Group 2018 Interim Financial Results Announcement | 13
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First Half 2018 – Second Half 2017
Total loans increased $16.5 billion or 2% compared to Second Half 2017. Excluding foreign currency translation impacts, total
loans increased $14.6 billion or 2%.
Key features of total loan growth were:
xAustralian housing loans increased $10.1 billion or 2% which was slightly below system growth. Owner occupied housing
balances grew 3% and comprised 56% of the portfolio. Investor loans grew 1% and comprised 39% of the portfolio. The
Group continued to manage interest only growth below the macro-prudential limit of 30% of new flows, with new interest only
facilities representing 23% of new mortgage limits for the half. Interest only loans comprised 40% of the portfolio (30
September 2017: 46%, 31 March 2017: 50%);
xAustralian business loans increased $1.4 billion or 1%, primarily from a 2% increase in Business Bank with growth across
SME, property, entertainment and construction;
xNew Zealand loans increased NZ$1.9 billion or 2%, due to growth in housing (2%), mostly in fixed rate products to owne
r
occupiers and in business loans across a broad range of industries; and
xOther overseas lending increased $2.0 billion or 14%, across financing and trade financing in Asia.
First Half 2018 – First Half 2017
Total loans increased $34.4 billion or 5% compared to First Half 2017. Excluding foreign currency translation impacts, total loans
increased $32.5 billion or 5%.
Key features of total loan growth were:
xAustralian housing loans increased $23.3 billion or 6% (slightly below system ). Owner occupier loans increased 7%
compared to the prior corresponding period, while investor property lending grew 5% (below the 10% regulatory cap);
xAustralian personal loans and cards decreased $0.9 billion or 4%, primarily in auto finance and credit cards;
xAustralian business loans increased $4.2 billion or 3%, with 4% growth in Business Bank broadly based across areas
including SME, property, professional services and agriculture. Institutional lending grew 1%, mostly from increased
utilisation of existing securitisation warehouse facilities;
xNew Zealand lending increased NZ$2.6 billion or 3%. Housing grew 4% mostly in fixed rate, whilst business lending
increased 3% supported by growth in agriculture. Institutional balances were lower; and
xOther overseas lending increased $3.3 billion or 25%, across financing and trade financing in Asia.
2018 Interim financial results
Review of Group operations
Source: RBA March 2018.
14 | Westpac Group 2018 Interim Financial Results Announcement
1
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2.2.3Deposits and other borrowings
First Half 2018 – Second Half 2017
Total customer deposits increased $15.4 billion or 3% compared to Second Half 2017. Excluding foreign currency translation
impacts, customer deposits increased $13.4 billion or 3%.
Key features of total customer deposits growth were:
xA $9.0 billion or 2% increase in Australia, with growth in WIB and household deposits, particularly term deposits (up 4%);
xNew Zealand customer deposits increased NZ$3.2 billion or 6%, with at-call and term deposits both up 5%, and an 11%
increase from non-interest bearing deposits from growth in consumer and business transaction accounts. Deposit growth
more than fully funded loan growth in the half; and
xOther overseas deposits increased $2.3 billion or 19% due to growth in Asian deposits.
Certificates of deposits decreased $1.2 billion or 3%, reflecting less new funding in this form. The reduction in Australian
issuance was partly offset by higher issuance overseas, particularly in the United States.
First Half 2018 – First Half 2017
Total customer deposits increased $23.4 billion or 5% compared to First Half 2017. Excluding foreign currency translation
impacts, customer deposits increased $21.6 billion or 5%.
Key features of total customer deposits growth were:
xAustralian customer deposits increased $15.1 billion or 4%, with above system growth in household deposits and at
system growth in non-financial corporation segments primarily due to growth in at-call deposits;
xNew Zealand customer deposits increased NZ$4.8 billion or 8%, with the increase fully funding loan growth. Term deposits
grew 14% particularly across household and institutional segments, as the business focused on higher quality deposits and
customer preference for higher rate products; and
xOther overseas deposits increased $2.3 billion or 20% due to growth in deposits across Asia.
Certificates of deposits increased $1.8 billion or 4%, from higher short-term funding in this form.
2018 Interim financial results
Review of Group operations
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept 31 MarchMar 18 -Mar 18 -
$m
201820172017Sept 17Mar 17
Customer de
posits
Australia429,852420,841414,70624
At call
227,021224,268217,49214
Term
161,864156,249157,73043
Non-interest bearing
40,96740,32439,48424
New Zealand (A$)57,85653,74651,942811
New Zealand (NZ$)61,62858,40556,81268
At call
24,16423,11723,89451
Term
31,59530,01427,837514
Non-interest bearing5,8695,2745,0811116
Other overseas (A$)14,35512,08312,0121920
Total customer deposits502,063486,670478,66035
Certificates of deposit45,67346,92143,853(3)4
Australia
30,38737,51531,011(19)(2)
New Zealand (A$)5215461,478(5)(65)
Other overseas (A$)14,7658,86011,3646730
Total deposits and other borrowings
547,736533,591522,51335
Spot deposit balances.
Comparatives have been restated.
Source: APRA
.
Westpac Group 2018 Interim Financial Results Announcement | 15
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2.2.4Net interest margin
Group net interest margin movement (%)
First Half 2018 – Second Half 2017
First Half 2018 – Second Half 2017
Group net interest margin was 2.16%, an increase of 9 basis points from Second Half 2017. Key features include:
x2 basis points increase from loan spreads primarily from pricing changes to certain Australian mortgage types in the prior hal
f
(including investor lending and loans with an interest only feature) and higher New Zealand mortgage spreads. These were
partly offset by customer switching from interest only to principal and interest loans (1 basis point) and competition across all
loan markets;
x1 basis point increase from customer deposit spreads primarily from term deposits, partly offset by the impact of lower rates
on the hedging of transaction deposits;
x1 basis point increase from term wholesale funding, as pricing for new term senior issuance was lower than maturing deals;
xCapital and other was unchanged as the impact of lower interest rates was offset by the positive effect of higher capital
balances;
x1 basis point increase from liquidity reflecting lower holdings of third party liquid assets. The 1 basis point included the
increase in the CLF fee following a $8 billion increase to the CLF from 1 January 2018; and
x6 basis points increase from Treasury and Markets, due to increased Treasury revenue from interest rate risk management,
including management of short term basis risk.
These impacts were partially offset by:
x2 basis points decrease from the full period impact of the Bank Levy, which was introduced on 1 July 2017 ($186 million
based on $626 billion of applicable liabilities).
2018 Interim financial results
Review of Group operations
Group net interest margin excluding Treasury and Markets has been restated for changes in the allocation of revenue from balance sheet management
activities.
1
6 | Westpac Group 2018 Interim Financial Results Announcement
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Group net interest margin movement (%)
First Half 2018 – First Half 2017
First Half 2018 – First Half 2017
Group net interest margin was 2.16%, an increase of 11 basis points from First Half 2017. Key features include:
x9 basis points increase from loan spreads. This reflected the full period impact of pricing changes for certain Australian
mortgages, including interest only loans and investor lending, along with higher spreads on New Zealand mortgages. These
gains were partly offset by the impact of customer switching from interest only to principal and interest loans and competition
across all loan markets;
x1 basis point increase from customer deposit spreads, mostly from term deposit repricing, partly offset by the impact of lowe
r
interest rates on the hedging of transaction deposits;
x3 basis points increase from term wholesale funding, as pricing for new term senior issuance was lower than maturing deals;
xCapital and other was little changed as the impact of lower interest rates was offset by the positive impact from higher capital
balances;
x1 basis point increase from liquidity primarily due to decreased holdings of third party liquid assets; and
x2 basis points increase from Treasury and Markets.
These impacts were partially offset by:
x5 basis points decrease from the introduction of the Bank Levy.
2018 Interim financial results
Review of Group operations
Group net interest margin excluding Treasury and Markets has been restated for changes in the allocation of revenue from balance sheet management
activities.
Westpac Group 2018 Interim Financial Results Announcement | 17
1
1

2.2.5Non-interest income
First Half 2018 – Second Half 2017
Non-interest income decreased $255 million or 8% compared to Second Half 2017. Excluding the impact of provisions fo
r
customer refunds and payments of $111 million raised, and the partial sale of BTIM shares of $279 million in Second Half 2017
that were not repeated, non-interest income reduced by $87 million or 3%. The 3% decline reflected seasonally higher insurance
claims, impacts from regulatory changes to card interchange rates, and pricing changes to transaction accounts and ATM
withdrawal fees
.
Fees and commissions
Fees and commissions was little changed in the half (up $1 million) reflecting:
xProvisions for customer refunds and payments raised in the prior half of $55 million were not repeated; and
xHigher business lending fees (up $11 million) primarily driven by portfolio growth and pricing changes for facilities including
unused limits; partly offset by
xLower revenue from changes to transaction fees and the removal of ATM withdrawal fees effective from October 2017 ($17
million);
xReduced credit card income ($15 million) from the full period impact of regulatory changes to Australian interchange rates
from 1 July 2017;
xImpact from the accounting change to the Westpac New Zealand credit card reward scheme in the prior half that did not
repeat ($18 million); and
xLower corporate and institutional lending fees ($6 million) from a reduction in unused customer limits.
Wealth management and insurance income
Wealth management and insurance income increased $20 million or 2% compared to Second Half 2017, with:
xProvisions for customer refunds and payments raised in Second Half 2017 relating to wealth products of $56 million were not
repeated; and
xContribution from investments in boutique funds up $33 million; partly offset by
xLower insurance income ($28 million) from:
- A reduction in general insurance income (down $39 million) from seasonally higher claims, partly offset by 3% higher net
earned premiums;
- Lenders Mortgage Insurance (LMI) contribution was $3 million lower, primarily from a reduction in loans written at highe
r
LVR bands; partly offset by
- Contribution from life insurance income ($14 million), from movements in policyholder tax recoveries and an increase in in-
force premiums, partly offset by higher claims. The rise in premiums was principally due to BTFG commencing the
management of Group Insurance for BTFG Corporate Super.
xHastings contribution reduced by $32 million, due to lower performance fees that are normally recognised in the second hal
f
of the year and a decrease in funds; and
xPlatforms and Superannuation income was $11 million lower, with a reduction in member levies and the impact of margin
compression from competition, partly offset by the benefit of higher asset markets.
Trading income
Trading income was little changed in the half (down $2 million).
2018 Interim financial results
Review of Group operations
% Mov’t% Mov’t
$
m
Half Year
March 1
8
Half Year
Se
pt 17
Half Year
March 1
7
Mar 18 -
Se
pt 17
Mar 18 -
Mar 1
7
Fees and commissions1,3481,3471,408-(4)
Wealth management and insurance income95193186929
Tradin
g income487489713-(32)
Other income89363166(75)(46)
Non-interest income2,8753,1303,156(8)(9)
Refer to Section 4 Note 4 for reported results breakdown.
18 | Westpac Group 2018 Interim Financial Results Announcement
1
1

Other income
Other income decreased $274 million or 75% compared to Second Half 2017, reflecting the partial sale of BTIM shares ($279
million) in Second Half 2017 that did not repeat.
First Half 2018 – First Half 2017
Non-interest income decreased $281 million or 9% primarily from lower trading income ($226 million) following a higher trading
income in First Half 2017, impact from hedging New Zealand earnings (down $63 million) and lower credit card income largely
due to the full period impact from regulatory changes to Australian interchange rates.
Fees and commissions
Fees and commissions decreased by $60 million or 4% compared to First Half 2017, with:
xCredit card income down $53 million from the full period impact of regulatory changes to Australian interchange rates from 1
July 2017 and higher rewards costs;
xLower revenue from payments, changes to transaction fees and the removal of ATM withdrawal fees ($29 million); and
xCorporate and institutional lending fees decreased $12 million, with First Half 2017 supported by a number of large custome
r
transactions; partly offset by
xBusiness lending fees up $18 million primarily driven by portfolio growth and the full period impact of pricing changes fo
r
facilities including unused limits; and
xImpact from an accounting change to Westpac New Zealand credit card reward scheme ($18 million).
Wealth management and insurance income
Wealth management and insurance income increased by $82 million or 9% compared to First Half 2017 with:
xInsurance income $72 million higher from:
- Increase in general insurance income (up $34 million) from lower claims, with First Half 2017 impacted by claims related to
Cyclone Debbie, and a $6 million or 3% increase in net earned premiums; and
- Life insurance income was 33% higher from a 24% increase to in-force premiums, primarily due to BTFG commencing the
management of Group Insurance for BTFG Corporate Super, along with a higher contribution from New Zealand. This was
partly offset by a rise in claims and movements in policyholder tax recoveries; partly offset by
- Lower LMI contribution ($12 million) primarily from less need for LMI as new loans written at higher LVR bands have
reduced.
xIncreased revenue from investments in boutique funds ($9 million); and
xTotal Group funds income was little changed with the impact of margin compression from the transfer of legacy products to
lower fee ‘MySuper’ products and a reduction in member levies. This was partly offset by the benefit of higher asset markets.
Trading income
Trading income decreased $226 million or 32% compared to First Half 2017. The majority of the reduction was due to lower risk
income and customer activity in WIB markets.
Other income
Other income decreased $77 million or 46% compared to First Half 2017. This result was primarily driven by the impact o
f
hedging New Zealand earnings ($63 million).
2018 Interim financial results
Review of Group operations
Westpac Group 2018 Interim Financial Results Announcement | 19

2.2.6Group funds
2018 Interim financial results
Review of Group operations
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
$bn
201820172017Sept 17Mar 17
Superannuation
37.436.235.834
Platforms
118.6115.3113.335
Packaged Funds38.036.438.44(1)
Other3.73.54.06(8)
Westpac Institutional Bank6.612.511.3(47)(42)
New Zealand (A$)9.79.38.949
Total Grou
p funds214.0213.2211.7-1
Average funds for the Group217.3213.9203.227
Averages are based on a six month period.
20 | Westpac Group 2018 Interim Financial Results Announcement
1
1

2.2.7Markets related income
Markets income comprises sales and risk management revenue derived from the creation, pricing and distribution of risk
management products to the Group’s consumer, business, corporate and institutional customers. Dedicated relationship
specialists provide product solutions to these customers to help manage their interest rate, foreign exchange, commodity, credit
and structured products risk exposures.
First Half 2018 - Second Half 2017
Total markets income increased $75 million or 14% compared to Second Half 2017, across both customer and non-custome
r
income.
Customer income increased 3%, driven by higher fixed income sales.
Non-customer income increased 125% compared to Second Half 2017, primarily due to higher foreign exchange and
commodities risk management income.
First Half 2018 – First Half 2017
Total markets income decreased $138 million or 18% compared to the First Half 2017, primarily due to lower non-custome
r
income.
Customer income decreased 7% compared to First Half 2017 mainly driven by lower fixed income sales.
Non-customer income decreased $85 million or 34% compared to First Half 2017 due to lower fixed income risk management
income in First Half 2018.
Markets Value at Risk (VaR)
2018 Interim financial results
Review of Group operations
% Mov’t% Mov’t
Half YearHalf YearHalf YearMar 18 -Mar 18 -
$m
March 18Sept 17March 17Sept 17Mar 17
Net interest income
63472434163
Non-interest income54748872412(24)
Total Markets income
61053574814(18)
Customer income4484364823(7)
Non-customer income16272247125(34)
Derivative valuation adjustments-2719(100)(100)
Total Markets income
61053574814(18)
$mAverageHighLow
Six months ended 31 March 201
89.019.93.8
Six months ended 30 September 201711.216.07.6
Six months ended 31 March 20179.413.16.5
The Components of Markets VaR are as follows:
Avera
geHalf YearHalf YearHalf Year
$
mMarch 18Sept 17March 17
Interest rate risk2.73.03.7
Forei
gn exchange risk1.51.52.3
Equity risk
0.10.10.1
Commodit
y risk6.48.15.0
Credit and other market risks
2.63.43.6
Diversification benefit
(4.3)(4.9)(5.3)
Net market risk
9.011.29.4
Markets income includes WIB Markets, Business Bank, Consumer Bank, BTFG and Westpac New Zealand markets.
The daily VaR presented above reflects a WIB divisional view of VaR. It varies from presentations of VaR in Westpac’s 2017 Annual Report an
d
Australian Prudential Standard (APS) 330 Prudential Disclosure under Basel III where market risk disclosures are segregated into trading and banking
book. VaR measures the potential for loss using a history of price volatility.
Includes electricity risk.
Includes
pre-payment risk and credit spread risk (exposures to generic credit rating bonds).
Westpac Group 2018 Interim Financial Results Announcement | 21
1
2
3
4
1
2
3
4

2.2.8Operating expenses
First Half 2018 – Second Half 2017
Operating expenses decreased $76 million or 2% in the half driven by lower intangible asset amortisation, costs associated with
the sale of BTIM shares last half that were not repeated and $131 million in productivity benefits. This was partly offset by
operating cost growth, costs associated with the Royal Commission of $34 million and the Group’s investment programs ($22
million).
Staff expenses were up $23 million or 1% due to annual salary increases effective from January 2018 and higher FTE fo
r
compliance related activities and the Group’s investment programs. In addition, the Group’s investment programs had a higher
proportion of spend on staff expenses relative to non-staff expenses. This was partly offset by Second Half 2017 costs
associated with the sale of shares in BTIM that were not repeated.
Occupancy expenses reduced $18 million or 3%, with lower operating lease depreciation costs and the full period benefit o
f
retail property consolidation partly offset by rental increases. Branch numbers across the Group were 27 lower over the half.
Technology expenses increased $23 million or 2% compared to Second Half 2017, largely from the impact of the Group’s
investment programs. Higher technology services costs (up $42 million) and software maintenance and licensing costs (up $17
million) were driven by programs including the customer service hub, Panorama and enhancements to the Group’s technology
infrastructure. Amortisation of software assets and depreciation of IT equipment, in aggregate, were $19 million lower as
investments across data centres, branch teller system upgrades and components of Westpac Live were fully amortised o
r
depreciated. Software impairments were also lower this half (down $9 million).
Other expenses decreased $104 million or 12% over the half primarily reflecting amortisation of St.George intangible assets,
including the core deposit intangible and financial planner relationships, that were fully amortised in the half ($51 million lower).
In addition, professional and processing services costs reduced due to the completion of the first phase of the New Zealand
transformation program. Postage and stationery costs were also lower as customers continue to migrate to electronic
statements. This was partly offset by costs associated with the Royal Commission, higher marketing spend and partial
writedown of Hastings’ goodwill ($15 million).
First Half 2018 – First Half 2017
Operating expenses increased $92 million or 2% compared to First Half 2017 due to higher regulatory and compliance related
costs ($83 million) and investment related spending ($79 million), offset partially by a reduction in amortisation of intangible
assets and lower operating lease depreciation. Productivity benefits of $275 million more than offset growth in operating costs.
Staff expenses increased $72 million or 3% compared to the prior corresponding period reflecting annual salary increases and
additional FTE to support compliance related activity and the Group’s investment programs. This was partly offset by decreased
restructuring costs and lower share based payments.
Occupancy expenses were down $13 million or 2%, with lower operating lease depreciation and benefits of retail property
consolidation partly offset by rental expense increases across corporate sites. Branch numbers across the Group were 41 lowe
r
compared to the prior corresponding period.
Technology expenses increased $53 million or 5% compared to First Half 2017, largely reflecting the impact of the Group’s
investment programs. This included a $40 million increase in software maintenance and licensing costs for the customer service
hub, Panorama and New Payments Platform. Telecommunication costs were up $18 million from enhancements to the
telephony infrastructure of the Group’s customer contact centres.
Other expenses were $20 million or 3% lower during the year due to a reduction in amortisation of intangible assets ($55
million) and a $13 million reduction in postage and stationery costs with increased customer migration to electronic statements.
These were partly offset by increased professional services costs primarily related to costs associated with the Royal
Commission, higher marketing spend and partial writedown of Hastings’ goodwill.
2018 Interim financial results
Review of Group operations
% Mov’t% Mov’t
Half YearHalf YearHalf YearMar 18 -Mar 18 -
$m
March 18Sept 17March 17Sept 17Mar 17
Staff expenses
(2,398)(2,375)(2,326)13
Occu
pancy expenses(521)(539)(534)(3)(2)
Technology expenses(1,042)(1,019)(989)25
Other expenses(764)(868)(784)(12)(3)
Total operating expenses
(4,725)(4,801)(4,633)(2)2
Refer to Section 4 Note 5 for reported results breakdown.
22 | Westpac Group 2018 Interim Financial Results Announcement
1
1

Full Time Equivalent (FTE) employees
First Half 2018 – Second Half 2017
FTE was up 624 or 2% in the half driven by an increase in employees related to regulatory and compliance activities and the
Group’s investment programs across both permanent and temporary employees. This was partly offset by productivity initiatives,
including simplifying the organisation and digitising manual processes across operations and the branch network.
First Half 2018 – First Half 2017
FTE increased 430 or 1% compared to the prior corresponding period, with additional employees directed to regulatory and
compliance related activities and the Group’s investment programs. These increases were partly offset by productivity initiatives
across the Group.
Investment spend
The Group invested $638 million in First Half 2018, of which 61% was spent on growth and productivity initiatives, 26% on
regulatory change and 13% on other technology programs.
The lower investment spend in First Half 2018 compared to Second Half 2017 was principally due to the completion of some
transformation and productivity initiatives. Other technology costs were higher associated with accelerating system refreshes.
Of the $638 million investment in First Half 2018, 39% was expensed while 61% was capitalised. Investment spend also tends to
be a little lower in the first half of the financial year.
Compared to the prior corresponding period investment spend rose 10% including increasing investment in the customer service
hub and the New Payments Platform. Regulatory change investment was also higher including additional spend on systems
supporting the introduction of AASB 9 and new regulatory reporting.
Across the major investment categories the following progress was achieved in First Half 2018:
Growth and productivity
x The customer service hub is a major Group program seeking to implement a one bank, multi-brand operating system creating
greater efficiencies and more agile environment. The system will support a single and complete view of the customer, and it
will enable continuous customer conversations across various channels. The system is beginning with home ownership,
creating an ability to process all elements of a home loan, including offset accounts and insurance needs. This will ultimately
be broadened across other product sets. The program foundation was released in August 2017 enabling mortgages to be
originated on the system. Since then the focus has been on building out capability and improving the experience fo
r
customers and bankers. By the end of 2018, new Westpac mortgage customers will be originated on the system;
x Westpac commenced the progressive roll out of 24/7 real time payments on the New Payments Platform. Beginning with a
small group of customers, the capability will be extended through 2018;
2018 Interim financial results
Review of Group operations
As atAs atAs at% Mov’t% Mov’t
Number of FTE
31 March
2018
30 Sept
2017
31 March
2017
Mar 18
-
Sept 17
Mar 18 -
Mar 17
Permanent employees
32,03332,04431,994--
Temporary employees
3,6873,0523,2962112
FTE
35,72035,09635,29021
% Mov’t% Mov’t
$
m
Half Year
March 1
8
Half Year
Sept 17
Half Year
March 1
7
Mar 18 -
Sept 17
Mar 18 -
Mar 1
7
Expensed
25124323636
Ca
pitalised software and fixed assets
387433344(11)13
Total
638676580(6)10
Growth and
productivity
391417375(6)4
Re
gulatory change
163182143(10)14
Other technolo
gy
847762935
Total
638676580(6)10
Westpac Group 2018 Interim Financial Results Announcement | 23

x New banking and payments features released to customers include:
-PayWear, a wearable, waterproof payments device providing a hands free way to pay without needing to carry a wallet o
r
a phone;
-Enabling Westpac customers to access their banking via Amazon’s virtual assistant Alexa; and
-Rolling out iMessage which allows customers to make payments, get a cardless cash code and share BSB and account
details, with those in their contacts list, while texting on their iPhone.
xDigital enhancements for customers have included:
-Enabling St.George unsecured finance customers to more quickly register for online banking;
-Supporting customers to complete their digital applications for deposits, credit cards and personal loan applications using
email and SMS messages; and
-Simplifying the process for customers to move to electronic statements and correspondence. Almost 800,000 St.George
customers have elected to be contacted electronically while over half a million St.George accounts have switched to e-
statements, saving $3 million in printing/postage costs.
xIn April, launched a new payments solution for business customers called Presto Smart that streamlines the sales processes
for in-store payments. The system links the merchant terminals with point of sale software to reduce manual inputs and
enable sales to be made throughout a store;
xBusiness Bank launched electronic documents to reduce loan deal preparation time for bankers and faster custome
r
acceptance, resulting in a faster time for customers to access cash;
xExpanded the Group’s online lending origination platform (LOLA) to St.George SME bankers. The system simplifies and
speeds up loan origination;
xFurther enhanced Panorama (BT’s funds administration system) including improved customer reporting, increased mobile
app functionality and building out new investor directed portfolio services; and
xLaunched BT Super Invest – a new superannuation product offering broad investment choice and flexibility to personalise a
portfolio from mobile or tablet.
Regulatory change
Major developments over the half included:
xEnhancements to systems for the management and reporting of the net stable funding ratio. Banks needed to comply with
the new ratio on 1 January 2018;
xDelivery of new industry reporting for global tax compliance and economic and financial statistics data;
xDeveloping systems for AASB 9 implementation due to be implemented from 1 October 2018; and
xCompletion of the Super Stream standards for government to business transactions.
Other technology
Investment over the half has focused on reducing cybersecurity risks and moving more of the Group’s infrastructure onto cloud
based technologies, which is expected to more efficiently and rapidly deliver major IT developments.
2018 Interim financial results
Review of Group operations
24 | Westpac Group 2018 Interim Financial Results Announcement

Capitalised software
Capitalised software balances have increased compared to the prior corresponding period and the half as new investment has
not been offset by amortisation. This, in part, reflects that a number of major programs continue to be in development, and
therefore amortisation has yet to fully commence, while at the same time some projects commenced three to five years ago are
now fully amortised.
As part of the Group’s regular asset review, $2 million of capitalised software was written off in First Half 2018. In aggregate, the
average amortisation of our capitalised software assets continues to be approximately three years.
2.2.9Impairment charges
Asset quality remained sound through First Half 2018 with stressed assets to total committed exposures increasing by 4 basis
points to 1.09%. The increase in stressed assets mostly reflects increases in mortgage delinquencies and a small rise in
stressed exposures in the Business Bank. Impaired assets were stable, with gross impaired assets to gross loans unchanged at
0.22% compared to Second Half 2017. Emerging stress is mostly due to the seasonal rise in delinquencies and in property and
retail exposures.
With stressed assets modestly higher, provisioning levels were also higher, up $46 million to $3,165 million. IAPs were $9 million
lower at $471 million, while collectively assessed provisions were $55 million higher at $2,694 million on Second Half 2017.
Within collectively assessed provisions, the overlay was a little higher (up $12 million) at $335 million at 31 March 2018.
First Half 2018 – Second Half 2017
Impairment charges for First Half 2018 were $393 million, up $33 million compared to Second Half 2017, and were equivalent to
11 basis points of average gross loans. The increase was mostly due to higher total new CAPs reflecting small increases in
consumer delinquencies.
2018 Interim financial results
Review of Group operations
% Mov’t% Mov’t
$
m
Half Year
March 1
8
Half Year
Se
pt 17
Half Year
March 1
7
Mar 18 -
Se
pt 17
Mar 18 -
Mar 1
7
Opening balance
1,9161,8141,78168
Total additions
389422344(8)13
Amortisation expense
(301)(311)(303)(3)(1)
Im
pairment expense
(2)(11)(3)(82)(33)
Forei
gn exchange translation
32(5)50large
Closin
g balance
2,0051,9161,814511
% Mov’t% Mov’t
$m
Half Year
March 18
Half Year
Sept 17
Half Year
March 17
Mar 18 -
Sept 17
Mar 18 -
Mar 17
Individually assessed provisions (IAPs)
New IAPs
(173)(246)(364)(30)(52)
Write-backs
67144144(53)(53)
Recoveries
10084841919
Total IAPs, write-backs and recoveries
(6)(18)(136)(67)(96)
Collectively assessed provisions (CAPs)
Write-offs
(430)(525)(443)(18)(3)
Other changes in CAPs
4318386(77)(50)
Total new CAPs
(387)(342)(357)138
Total impairment charges
(393)(360)(493)9(20)
Westpac Group 2018 Interim Financial Results Announcement | 25

Key movements included:
xTotal IAPs, write-backs and recoveries were $12 million lower than Second Half 2017 principally due to:
-New IAPs were $73 million lower compared to Second Half 2017 mostly from a lower level of new impaired assets in WIB
and Business Bank. There were no facilities greater than $50 million that migrated to impaired in the half. This was
partially offset by a small rise in New Zealand IAPs, mostly from one name that was downgraded to impaired; and
-Write-backs and recoveries were $61 million lower over the half principally from a lower level of business write-backs.
Recoveries were higher primarily in the Australian unsecured consumer portfolio and the New Zealand business portfolio.
xTotal new CAPs were $45 million higher than Second Half 2017. Key movements included:
-Write-offs were $95 million lower in First Half 2018, consistent with normal seasonal patterns in unsecured personal
lending and in the auto finance portfolio;
-Benefits from other changes in CAPs were $140 million lower related to the seasonal increases in consumer
delinquencies in Australia ($48 million) and in New Zealand ($26 million); and
-While the overlay provision was little changed, the charge was $67 million higher as Second Half 2017 recorded a $55
million reduction (mostly due to provisions utilised or no longer required for the mining and related exposures and New
Zealand dairy) while in First Half 2018 a net $12 million was added to the overlay due to modelling changes.
First Half 2018 – First Half 2017
Impairment charges of $393 million were down $100 million when compared to First Half 2017.
Key movements included:
xTotal new IAPs, write-backs and recoveries were $130 million lower than First Half 2017. This was due to much lower new
IAPs (down $191 million) partially offset by lower write-backs and recoveries. The reduction in new IAPs was primarily due to
a small number of large impairments in WIB in First Half 2017 that were not repeated. New IAPs in Business Bank were also
lower. This was partially offset by higher new IAPs in New Zealand; and
xTotal new CAPs were $30 million higher due to a $43 million increase from other changes in CAPs and a $13 million
reduction in write-offs principally in Business Bank related to auto finance and commercial portfolios. Within other changes in
CAPs, the overlay was increased $12 million in First Half 2018 compared to an $11 million reduction in First Half 2017.
2.2.10 Income tax expense
First Half 2018 – Second Half 2017
The effective tax rate of 30.4% in First Half 2018 is unchanged from the 30.4% recorded in Second Half 2017. The effective tax
rate reflects several Additional Tier 1 instruments whose distributions are not deductible for Australian taxation purposes.
First Half 2018 – First Half 2017
The effective tax rate of 30.4% in First Half 2018 was slightly lower than the First Half 2017 effective tax rate of 30.7%.
2.2.11 Non-controlling interests
Non-controlling interests represent profits of non-wholly owned subsidiaries attributable to shareholders other than Westpac.
These include profits attributable to the 10.1% shareholding in Westpac Bank-PNG-Limited and the 25% shareholding in
St.George Motor Finance Limited that are not owned by Westpac.
2018 Interim financial results
Review of Group operations
26 | Westpac Group 2018 Interim Financial Results Announcement

2.3Credit quality
Credit quality remained sound over First Half 2018 with total stressed exposures to TCE increasing modestly and remaining low
relative to historical experience. Stressed exposures to TCE were 1.09%, 4 basis points higher than Second Half 2017 and 5
basis points lower compared to First Half 2017 (see 2.3.1 Credit quality key metrics).
The 4 basis points rise in stressed assets relates to increases in both 90 days past due and not impaired (3 basis points) and to
watchlist and substandard (1 basis point) facilities. The increase in 90 day past due and not impaired was due to an increase in
mortgage 90+ day delinquencies and a small increase in business facilities.
Consistent with the increase in stressed assets, provisioning levels were $46 million higher than Second Half 2017, due mainly
to an increase in CAPs. The ratio of gross impaired asset provisions to gross impaired assets is 45.5% while the ratio o
f
collectively assessed provisions to credit risk weighted assets was little changed at 75 basis points.
Portfolio segments
The institutional segment continued to perform well, with the level of stressed assets reducing as a number of facilities were
refinanced or repaid. Over recent periods, the depth of distressed debt markets has increased allowing the Group to partially sell
down or exit some impaired exposures and this contributed to the reduction in stress in this segment this half. There were no
new large (greater than $50 million) facilities downgraded to impaired during First Half 2018.
The commercial property segment continued to have relatively low levels of stress. Stress peaked in this portfolio in the midst o
f
the financial crisis with the proportion of the portfolio (stress as a percent of total committed exposure) stressed reaching 15.5%.
Since then stress has declined to 1.7% and remains well below long term averages. In First Half 2018 a small number o
f
facilities were downgraded to stressed, which saw the ratio increase from 1.3% at Second Half 2017.
The small and medium business portfolio has also continued to perform well. In First Half 2018 the Group has seen stress
emerge in a small number of companies, with the increases primarily in Western Australia (WA), Queensland (Qld) and South
Australia (SA).
The New Zealand business portfolio has continued to benefit from the improving prospects of the New Zealand dairy sector with
a number of facilities returning to performing status.
The credit quality of the mortgage portfolio remains high with Australian mortgage 90+ day delinquencies 2 basis points highe
r
over Second Half 2017 to end the half at 0.69%. This increase is primarily due to normal seasonal trends. The implementation of
new prudential rules for the reporting of delinquencies for customers granted hardship assistance (which are being progressively
applied across the industry) have now fully flowed through on mortgages.
While mortgage delinquencies in aggregate across Australia have changed little in recent years, conditions have been different
across states with more modest growth and higher unemployment in some regions, particularly in WA and Qld which have seen
higher delinquencies. Delinquencies were a little higher in New South Wales (NSW) mostly due to some operational changes in
the management of some delinquencies at the end of March 2018.
Australian properties in possession decreased over the half by 39 to 398 at 31 March 2018 due principally to those states and
regions impacted by the slowing of the mining investment cycle which had seen elevated levels in Second Half 2017. Realised
mortgage losses were $47 million for First Half 2018, equivalent to 2 basis points.
Consumer unsecured delinquencies were higher over First Half 2018. Total Group other consumer 90+ day delinquencies were
1.64%, up 7 basis points since Second Half 2017 and were 9 basis points higher compared to First Half 2017. Around 22 basis
points of the increase compared to the prior corresponding period was due to the change in delinquency reporting for customers
granted hardship assistance. This was offset by a 13 basis point reduction due to improved collection processes. Over the half,
the 7 basis point increase since Second Half 2017 was due to seasonal trends.
New Zealand mortgage 90+ day delinquencies increased 4 basis points to 0.16% from Second Half 2017. While delinquencies
were higher, they remain at or near historical lows and reflect the favourable economic conditions, and the positive impact o
f
prudential controls reducing the level of higher LVR lending.
New Zealand unsecured delinquencies were also higher at 0.86%. Other consumer 90+ day delinquencies increased 29 basis
points since Second Half 2017 and were 28 basis points higher than First Half 2017. This increase mirrors trends across the
industry, as portfolio performance starts to normalise from the low-point of the cycle.
2018 Interim financial results
Review of Group operations
Westpac Group 2018 Interim Financial Results Announcement | 27

Provisioning
Westpac has maintained adequate provisioning coverage with:
zThe ratio of gross impaired asset provisions to gross impaired assets remains high at 45.5% (down 76 basis points
compared to Second Half 2017); and
zThe ratio of collectively assessed provisions to credit risk weighted assets was 75 basis points with the ratio little changed
from the 76 basis points reported at 30 September 2017.
2018 Interim financial results
Review of Group operations
28 | Westpac Group 2018 Interim Financial Results Announcement

2.3.1Credit quality key metrics
2018 Interim financial results
Review of Group operations
As atAs atAs at
31 March30 Sept31 March
201820172017
Stressed exposures by credit grade as a % of TCE:
Impaired0.15%0.15%0.20%
90 days past due and not impaired
0.37%0.34%0.35%
Watchlist and substandard
0.57%0.56%0.59%
Total stressed exposures
1.09%1.05%1.14%
Gross impaired assets to TCE for business and institutional:
Business Australia0.48%0.47%0.63%
Business New Zealand
0.74%0.62%0.68%
Institutional
0.04%0.06%0.17%
Mortgage 90+ day delinquencies:
Group0.65%0.62%0.63%
Australia0.69%0.67%0.67%
New Zealand
0.16%0.12%0.14%
Other consumer loans 90+ day delinquencies:
Group1.64%1.57%1.55%
Australia1.71%1.66%1.63%
New Zealand
0.86%0.57%0.58%
Other:
Gross impaired assets to gross loans0.22%0.22%0.30%
Gross impaired asset provisions to gross impaired assets
45.54%46.30%52.07%
Total provisions to gross loans
45bps45bps52bps
Collectively assessed provisions to risk weighted assets
65bps65bps67bps
Collectively assessed provisions to credit risk weighted assets
75bps76bps77bps
Total provisions to risk weighted assets
76bps77bps87bps
Impairment charges to average loans annualised
11bps11bps15bps
Net write-offs to average loans annualised
13bps25bps19bps
Averages are based on a six month period.
Westpac Group 2018 Interim Financial Results Announcement | 29
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2.4Balance sheet and funding
2.4.1 Balance sheet
First Half 2018 – Second Half 2017
Key movements during the half included:
Assets
zCash and balances with central banks increased $3.2 billion or 17% reflecting higher liquid assets held in this form;
zReceivables due from other financial institutions decreased $3.2 billion or 44% mainly due to a reduction in collateral posted
with derivative counterparties and less interbank lending;
zTrading securities and financial assets designated at fair value and available-for-sale securities decreased $0.6 billion or 1%
reflecting lower holdings of liquid assets in this form;
zDerivative assets increased $2.9 billion or 12% mainly driven by foreign currency translation impacts on cross currency
swaps and forward contracts, partly offset by movements in interest rate swaps; and
zLoans grew $16.5 billion or 2%. Refer to Section 2.2.2 Loans for further information.
2018 Interim financial results
Review of Group operations
As atAs atAs atAs at
31-Mar31 March30 Sept31 March% Mov’t% Mov’t
2018201820172017Mar 18 -Mar 18 -
$
mUS$A$A$A$Sept 17Mar 17
Assets
Cash and balances with central banks16,59521,58018,39715,9121736
Receivables due from other financial institutions
3,0583,9777,1289,545(44)(58)
Trading securities and financial assets designated
at fair value and available-for-sale securities65,73785,48486,03490,929(1)(6)
Derivative financial instruments
20,68926,90424,03324,619129
Loans
539,371701,393684,919666,94625
Life insurance assets
8,06010,48110,64310,934(2)(4)
Other assets
16,94622,03620,72121,10864
Total assets
670,456871,855851,875839,99324
Liabilities
Payables due to other financial institutions14,66719,07321,90721,390(13)(11)
Deposits and other borrowings
421,209547,736533,591522,51335
Other financial liabilities at fair value through
income statement4,2995,5904,0564,8943814
Derivative financial instruments
18,50724,06625,37528,457(5)(15)
Debt issues
133,912174,138168,356167,30634
Life insurance liabilities
6,7398,7639,0199,158(3)(4)
Loan capital
14,09818,33317,66617,10647
Other liabilities
8,83611,49110,5639,797917
Total liabilities
622,267809,190790,533780,62124
Equity
Total equity attributable to owners of Westpac
Banking Corporation48,15162,61561,28859,31526
Non-controlling interests
38505457(7)(12)
Total equity
48,18962,66561,34259,37226
As atAs atAs atAs at
31-Mar31 March30 Sept31 March% Mov’t% Mov’t
2018201820172017Mar 18 -Mar 18 -
$
mUS$A$A$A$Sept 17Mar 17
Average balances
Total assets673,641875,996867,359861,67512
Loans and other receivables
519,256675,236666,950649,11714
Total equity
46,95961,06559,38057,76836
30 | Westpac Group 2018 Interim Financial Results Announcement

Liabilities
zPayables due to other financial institutions decreased $2.8 billion or 13% due to lower securities sold under agreements to
repurchase, interbank borrowings and offshore central bank deposits, partly offset by higher collateral posted by derivative
counterparties;
zDeposits and other borrowings increased $14.1 billion or 3%. Refer to Section 2.2.3 Deposits and other borrowings for
further information;
zOther financial liabilities at fair value through the income statement increased $1.5 billion or 38% reflecting higher securities
sold under agreements to repurchase and increased trading activity;
zDerivative liabilities decreased $1.3 billion or 5% mainly driven by movements in interest rate swaps and foreign currency
translation impacts on cross currency swaps and forward contracts;
zDebt issues increased $5.8 billion or 3% ($1.1 billion or 1% increase excluding foreign currency impacts). Refer to
Section 2.4.2 Funding and liquidity risk management for further information; and
zLoan capital increased $0.7 billion or 4% as new issuances exceeded maturities for both Additional Tier 1 and Tier 2 capital
instruments.
Equity attributable to owners of Westpac Banking Corporation increased $1.3 billion or 2% reflecting retained profits less
dividends paid during the period and shares issued under the 2017 final dividend reinvestment plan (DRP).
First Half 2018 – First Half 2017
Key movements included:
Assets
zCash and balances with central banks increased $5.7 billion or 36% reflecting higher liquid assets held in this form;
zReceivables due from other financial institutions decreased $5.6 billion or 58% mainly due to a reduction in collateral posted
with derivative counterparties and lower interbank lending;
zTrading securities and financial assets designated at fair value and available-for-sale securities decreased $5.4 billion or 6%
reflecting lower holdings of liquid assets in this form;
zDerivative assets increased $2.3 billion or 9% mainly driven by foreign currency translation impacts on cross currency swaps
and forward contracts, partly offset by movements in interest rate swaps; and
zLoans grew $34.4 billion or 5%. Refer to Section 2.2.2 Loans for further information.
Liabilities
zPayables due to other financial institutions decreased $2.3 billion or 11% due to lower securities sold under agreements to
repurchase, interbank borrowings and offshore central bank deposits, partly offset by higher collateral posted by derivative
counterparties;
zDeposits and other borrowings increased $25.2 billion or 5%. Refer to Section 2.2.3 Deposits and other borrowings for
further information;
zOther financial liabilities at fair value through the income statement increased $0.7 billion or 14% mainly due to higher
securities sold under agreements to repurchase;
zDerivative liabilities decreased $4.4 billion or 15% mainly driven by movements in interest rate swaps and foreign currency
translation impacts on cross currency swaps and forward contracts;
zDebt issues increased $6.8 billion or 4% ($2.7 billion or 2% increase excluding foreign currency impacts). Refer to
Section 2.4.2 Funding and liquidity risk management for further information; and
zLoan capital increased $1.2 billion or 7% as new issuances exceeded maturities for both Additional Tier 1 and Tier 2 capital
instruments.
Equity attributable to owners of Westpac Banking Corporation increased $3.3 billion reflecting retained profits less dividends
paid during the period and shares issued under the 2017 interim DRP and 2017 final DRP.
2018 Interim financial results
Review of Group operations
Westpac Group 2018 Interim Financial Results Announcement | 31

2.4.2Funding and liquidity risk management
Liquidity risk is the risk that the Group will be unable to fund assets and meet obligations as they become due. This type of risk
is inherent for all banks through their role as intermediaries between depositors and borrowers. The Group has a liquidity risk
management framework which seeks to meet the objective of meeting cash flow obligations under a wide range of market
conditions, including name specific and market-wide stress scenarios, as well as meeting the regulatory requirements of the
LCR and NSFR .
In First Half 2018 the Group maintained its funding and liquidity profile, funding the majority of loan growth of $16.5 billion
through growth in customer deposits of $15.4 billion, leading to an improvement in the overall composition of the Group’s total
funding. Key metrics remained comfortably above regulatory minimums, including an LCR of 134% and an NSFR of 112%.
Liquid Assets
The Group’s liquid asset portfolio includes both high-quality liquid assets (HQLA) and other securities that are eligible fo
r
repurchase with a central bank. In total, Westpac held $147.6 billion in unencumbered liquid assets as at 31 March 2018 (30
September 2017: $137.8 billion). At 31 March 2018 the portfolio comprised:
z$73.5 billion of cash, deposits at central banks, government and semi-government bonds;
z$19.1 billion of repo-eligible private securities; and
z$55.0 billion of self-originated AAA rated mortgage backed securities, which are eligible collateral for repurchase agreement
with the RBA or the RBNZ.
LCR
The LCR requires banks to hold sufficient HQLA, as defined, to withstand 30 days under a regulator-defined acute stress
scenario.
Given the limited amount of government debt in Australia, the RBA, jointly with APRA, makes available to ADIs a CLF. Subject
to satisfaction of qualifying conditions, the CLF can be accessed to help meet the LCR requirement. In order to have access to a
CLF, ADIs are required to pay a fee of 15 basis points (0.15%) per annum to the RBA on the approved undrawn facility. APRA
approved Westpac’s CLF allocation of $57 billion for the 2018 calendar year (2017 calendar year: $49.1 billion).
The Group’s LCR as at 31 March 2018 was 134% (30 September 2017: 124%) and the average LCR for the quarter ended 31
March 2018 was 128% .
NSFR
The Group is required to maintain a NSFR, designed to encourage longer-term funding resilience, of at least 100%. The NSFR
came into effect for Australian ADIs on 1 January 2018. Westpac had a NSFR of 112% at 31 March 2018 (estimated at 109%
as at 30 September 2017). Improvement in the ratio since 30 September 2017 mainly reflects continued lengthening o
f
wholesale funding profile, an increased CLF allocation and ongoing data and methodology refinements.
Funding
The Group monitors the composition and stability of its funding so that it remains within the Group’s funding risk appetite. This
includes compliance with both the LCR and NSFR.
Customer deposits as a proportion of total funding increased by 31 basis points to 62.1% (30 September 2017: 61.8%). The
proportion of long term funding to total funding increased by 77 basis points to 16.0% (30 September 2017: 15.2%). There was
little change in other sources of stable funding, with securitisation and equity to total funding remaining relatively stable.
Short term wholesale funding as a proportion of total funding decreased by 101 basis points over the six months to 31
March 2018 and now makes up 13.1% of the Group’s total funding (30 September 2017: 14.1%). This portfolio of $105.7 billion
has a weighted average maturity of 158 days and is more than covered by the $147.6 billion of repo-eligible liquid assets held by
the Group.
In First Half 2018, the Group raised $21.3 billion of long term wholesale funding in a range of currencies, including AUD, USD,
EUR and GBP, and through a diverse range of products, proactively accessing constructive market conditions in the first five
months of the financial year.
The Group also continued to lengthen the tenor of its long term funding portfolio. In First Half 2018, 56% of new term issuance
had a contractual maturity of greater than five years and this contributed to a weighted average maturity (excluding
securitisation) of new term issuance in First Half 2018 of 7.0 years (Full Year 2017: 5.8 years).
2018 Interim financial results
Review of Group operations
Refer to Glossary for definition.
Calculated as a simple average of the daily observations over the 31 March 2018 quarter.
32 | Westpac Group 2018 Interim Financial Results Announcement
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Liquidity coverage ratio
2018 Interim financial results
Review of Group operations
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
$m
201820172017Sept 17Mar 17
High Quality Liquid Assets (HQLA)
71,95271,90473,565-(2)
Committed Liquidity Facility (CLF)
57,00049,10049,1001616
Total LCR liquid assets
128,952121,004122,66575
Cash outflows in a modelled 30-day APRA defined
stressed scenario
Customer deposits66,22265,61265,86111
Wholesale funding
8,41112,23113,238(31)(36)
Other flows
21,40520,10919,121612
Total
96,03897,95298,220(2)(2)
LCR
134%124%125%largelarge
Net stable funding ratio
ProformaProforma
As atas atas at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
$m
201820172017Sept 17Mar 17
Available stable funding593,669566,304557,48956
Required stable funding
529,100521,048513,90423
Net stable funding ratio
112%109%108%351bps372bps
Funding by residual maturity
As at 31 March 2018As at 30 Sept 2017As at 31 March 2017
$mRatio %$mRatio %$mRatio %
Wholesale funding
Less than 6 months61,2457.663,1738.064,8908.3
6 to 12 months
16,9732.119,7762.517,4462.3
Long term to short term scroll
27,5223.427,9553.625,9423.4
Wholesale funding - residual maturity less
than 12 months105,74013.1110,90414.1108,27814.0
Securitisation
8,1861.08,2091.09,8561.3
Greater than 12 months
128,92116.0119,49415.2116,82515.1
Wholesale funding - residual maturity greater
than 12 months137,10717.0127,70316.2126,68116.4
Customer deposits
502,06362.1486,67061.8478,66061.9
Equity
63,2257.861,9257.959,8687.7
Total funding
808,135100.0787,202100.0773,487100.0
Deposits to net loans ratio
As at 31 March 2018As at 30 Sept 2017As at 31 March 2017
$mRatio %$mRatio %$mRatio %
Customer deposits
502,063486,670478,660
Net loans
701,39371.6684,91971.1666,94671.8
Refer to Glossary for definition.
Other flows include credit and liquidity facilities, collateral outflows and inflows from customers.
Calculated on a spot basis.
The NSFR was effective from 1 January 2018 for ADIs. Half Year September 2017 and Half Year March 2017 are presented on a proforma basis.
Scroll represents wholesale funding with an original maturity greater than 12 months that now has a residual maturity less than 12 months.
Includes total share capital, share based payments reserve and retained profits.
Westpac Group 2018 Interim Financial Results Announcement | 33
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Funding view of the balance sheet
2.5Capital and dividends
Capital management strategy
In light of APRA’s announcement on ‘unquestionably strong’ capital benchmarks on 19 July 2017, Westpac has ceased to use
its preferred range for its CET1 capital ratio of 8.75% to 9.25% as a guide to managing capital levels. Westpac will revise its
preferred range for the CET1 capital ratio once APRA finalises its review of the capital adequacy framework. In the interim,
Westpac will seek to operate with a CET1 capital ratio of at least 10.5% in March and September as measured under the
existing capital framework. This also takes into consideration:
xCurrent regulatory capital minimums and the capital conservation buffer (CCB), which together are the total CET1
requirement. In line with the above, the total CET1 requirement for Westpac is at least 8.0%, based upon an industry
minimum CET1 requirement of 4.5% plus a capital buffer of at least 3.5% applicable to domestic systemically important
banks (D-SIBs) ;
xStress testing to calibrate an appropriate buffer against a downturn; and
xQuarterly volatility of capital ratios due to the half yearly cycle of ordinary dividend payments.
Should the CET1 capital ratio fall below the total CET1 requirement, restrictions on the distribution of earnings will apply. This
includes restrictions on the amount of earnings that can be distributed through dividends, Additional Tier 1 capital distributions
and discretionary staff bonuses.
2018 Interim financial results
Review of Group operations
Total liquidCustomerWholesaleCustomerMarket
$massetsdepositsfundingfranchiseinventoryTotal
As at 31 March 2018
Total assets147,634--660,41763,804871,855
Total liabilities
-(502,063)(242,847)-(64,280)(809,190)
Total equity
---(63,225)560(62,665)
Total
147,634(502,063)(242,847)597,19284-
Net loans
55,058--646,335-701,393
As at 30 Sept 2017
Total assets137,797--651,57362,505851,875
Total liabilities-(486,670)(238,607)-(65,256)(790,533)
Total equity---(61,925)583(61,342)
Total137,797(486,670)(238,607)589,648(2,168)-
Net loans47,935--636,984-684,919
As at 31 March 2017
Total assets138,511--633,25568,227839,993
Total liabilities-(478,660)(234,959)-(67,002)(780,621)
Total equity---(59,868)496(59,372)
Total
138,511(478,660)(234,959)573,3871,721-
Net loans
47,691--619,255-666,946
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
201820172017Sept 17Mar 17
Regulatory capital structure
Common equity Tier 1 capital after deductions ($m)43,63942,67040,33528
Risk weighted assets (RWA) ($m)415,744404,235404,38233
Common equity Tier 1 capital ratio (CET1)10.50%10.56%9.97%(6bps)53bps
Additional Tier 1 capital ratio2.31%2.10%1.71%21bps60bps
Tier 1 capital ratio12.81%12.66%11.68%15bps113bps
Tier 2 capital ratio2.02%2.16%2.32%(14bps)(30bps)
Total regulatory capital ratio14.83%14.82%14.00%1bps83bps
APRA leverage ratio5.75%5.66%5.30%9bps45bps
Refer to Glossary for definition.
Liquid assets in net loans include internally securitised assets that are eligible for repurchase agreements with the RBA / RBNZ.
Notin
g that APRA may apply higher CET1 requirements for an individual ADI.
34 | Westpac Group 2018 Interim Financial Results Announcement
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Common Equity Tier 1 capital ratio movement for First Half 2018
Westpac’s CET1 capital ratio was 10.50% at 31 March 2018, 6 basis points lower than 30 September 2017. Regulatory
modelling changes, which reduced the ratio 22 basis points, were partially offset by First Half 2018 organic capital generation o
f
19 basis points.
Organic capital generation of 19 basis points included:
xFirst Half 2018 NPAT of $4.2 billion (101 basis point increase);
xThe 2017 final dividend payment, net of DRP share issuance (70 basis point decrease);
xIncrease in ordinary RWAs before the impact of FX movements and RWA modelling changes (8 basis point decrease); and
xOther movements reduced the CET1 capital ratio 4 basis points, mainly from an increase in the deduction for regulatory
expected loss in excess of eligible provisions (3 basis points decrease) and other small movements (1 basis point decrease).
Other items decreased the CET1 capital ratio by 25 basis points mainly from:
xRegulatory modelling changes which decreased the ratio by 22 basis points. (refer RWA details further below); and
xOther movements (3 basis point decrease) including foreign currency translation impacts, primarily related to NZ$ lending.
Additional Tier 1 and Tier 2 capital movement for First Half 2018
During the half Westpac:
xIssued $1.7 billion of new Additional Tier 1 capital instruments via the issue of Westpac Capital Notes 5 (WCN5), of which
$0.6 billion was via the partial reinvestment of Westpac Convertible Preference Share investors reinvesting in WCN5 (net 26
basis points increase);
xIssued $0.6 billion of new Tier 2 capital instruments (14 basis points increase); and
xRedeemed US$0.8 billion of Tier 2 capital instruments, which reduced Tier 2 capital by $1.0 billion (25 basis points
decrease).
Leverage ratio
The leverage ratio represents the amount of Tier 1 capital relative to exposure. At 31 March 2018, Westpac’s leverage ratio was
5.8% , up 9 basis points since 30 September 2017.
2018 Interim financial results
Review of Group operations
The leverage ratio is based on the same definition of Tier 1 as used for APRA capital requirements and is not comparable to the Basel Committee for
Banking Supervision leverage ratio calculation.
Westpac Group 2018 Interim Financial Results Announcement | 35
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Internationally comparable capital ratios
The APRA Basel III capital adequacy requirements are more conservative than those of the Basel Committee on Banking
Supervision (BCBS), leading to lower reported capital ratios when compared to international peers. APRA conducted a study in
July 2015 outlining its methodology for measuring international comparable capital ratios.
The table below calculates the Group’s reported capital ratios consistent with this methodology.
2018 Interim financial results
Review of Group operations
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
201820172017Sept 17Mar 17
Internationally comparable capital ratios
Common equity Tier 1 capital ratio16.13%16.20%15.34%(7bps)79bps
Tier 1 capital ratio19.06%18.64%17.21%42bps185bps
Total regulatory capital ratio21.68%21.09%19.37%59bps231bps
Leverage ratio6.39%6.33%6.01%6bps38bps
36 | Westpac Group 2018 Interim Financial Results Announcement

Risk Weighted Assets (RWA)
Total RWA increased $11.5 billion or 3% this half:
xCredit risk RWA increased $12.1 billion or 3%:
- Modelling changes added $6.0 billion to RWA mostly from:
oimplementation of APRA’s revised prudential standard for securitisation (APS 120) effective 1 January 2018 ($1.4 billion
increase);
oupdates to models for small business in line with APRA guidance on the definition of default ($1.8 billion increase);
ochanges in the modelling for credit cards and personal loans which include updated data for facilities in hardship ($2.1
billion increase); and
oreclassification of $6.6 billion of mortgages exposures to business related categories ($0.7 billion net RWA increase).
The reclassification follows APRA industry guidance that where the purpose of a mortgage loan is business related,
these loans should be classified under business related categories.
- Portfolio growth added $3.4 billion to RWA;
- Credit quality movements increased RWA by $0.9 billion with seasonally higher mortgage delinquencies being partly offset
by improved credit quality in corporate lending;
- Foreign currency translation impacts, primarily related to NZ$ lending, increased RWA $1.2 billion; and
- Increase in mark-to-market related credit risk RWA of $0.6 billion.
xNon-credit RWA decreased $0.6 billion or 1%. Lower risk weighted assets for other assets ($1.3 billion), market risk ($0.7
billion) and operational risk ($0.4 billion) were partially offset by an increase in interest rate risk in the banking book (IRRBB)
($1.8 billion) mostly from higher capital for credit spread risk for liquid assets.
2018 Interim financial results
Review of Group operations
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
$m201820172017Sept 17Mar 17
Corporate71,59071,16076,2101 (6)
Business lending34,87234,63833,7351 3
Sovereign1,5361,5051,6652 (8)
Bank6,2535,9055,8876 6
Residential mortgages129,748127,825127,1112 2
Australian credit cards6,5535,6656,00916 9
Other retail14,05613,25013,5386 4
Small business16,01711,70811,48237 39
Specialised lending: Property and project finance57,23957,08156,122-2
Securitisation5,8694,1673,99241 47
Standardised10,6399,9469,6827 10
Mark-to-market related credit risk
7,0196,4087,28010 (4)
Credit risk361,391349,258352,7133 2
Market risk7,4068,0947,471(9)(1)
Operational risk30,86631,22931,653(1)(2)
Interest rate risk in the banking book (IRRBB)12,87511,1018,14316 58
Other
3,2064,5534,402(30)(27)
Total415,744404,235404,38233
Corporate – typically includes exposure where the borrower has annual turnover greater than $50 million, and other business exposures not captured
under the definitions of either Business lending or Small Business.
Business lending – includes exposures not captured elsewhere where the borrower has annual turnover less than or equal to $50 million.
Sovereign – includes exposures to governments themselves and other non-commercial enterprises that are owned or controlled by them.
Bank – includes exposures to licensed banks and their owned or controlled subsidiaries, and overseas central banks.
Small business – program managed business lending exposures.
Specialised lending – property and project finance – includes exposures to entities created to finance and / or operates specific assets where, apar
t
from the income received from the assets being financed, the borrower has little or no independent capacity to repay from other activities or assets.
Securitisation – exposures reflect Westpac’s involvement in activities ranging from originator to investor and include the provision of securitisation
services for clients wishing to access capital markets.
Operational risk – the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, including lega
l
risk but excluding strategic or reputational risk.
Westpac Group 2018 Interim Financial Results Announcement | 37
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Capital adequacy
2018 Interim financial results
Review of Group operations
As atAs atAs at
31 March30 Sept31 March
$m
201820172017
Tier 1 capital
Common equity Tier 1 capital
Paid up ordinary capital
35,16834,88933,765
Treasury shares
(506)(436)(420)
Equity based remuneration
1,4141,3561,226
Foreign currency translation reserve
(522)(558)(482)
Accumulated other comprehensive income
(14)15127
Non-controlling interests - other
505457
Retained earnings
27,12226,10025,206
Less retained earnings in life and general insurance, funds management and
securitisation entities
(1,238)(1,153)(1,323)
Deferred fees
254253250
Total common equity Tier 1 capital
61,72860,52058,406
Deductions from common equity Tier 1 capital
Goodwill (excluding funds management entities)
(8,656)(8,670)(8,557)
Deferred tax assets
(1,116)(1,110)(1,179)
Goodwill in life and general insurance, funds management and securitisation entities
(1,032)(1,065)(1,066)
Capitalised expenditure
(1,867)(1,913)(1,859)
Capitalised software
(1,628)(1,603)(1,529)
Investments in subsidiaries not consolidated for regulatory purposes
(1,532)(1,589)(1,573)
Regulatory expected loss in excess of eligible provisions
(1,192)(861)(915)
General reserve for credit losses adjustment
(339)(332)(311)
Securitisation
---
Equity investments
(680)(679)(948)
Regulatory adjustments to fair value positions
(46)(27)(133)
Other Tier 1 deductions
(1)(1)(1)
Total deductions from common equity Tier 1 capital
(18,089)(17,850)(18,071)
Total common equity Tier 1 capital after deductions
43,63942,67040,335
Additional Tier 1 capital
Basel III complying instruments
9,0417,3155,720
Basel III transitional instruments
5661,1901,190
Total Additional Tier 1 capital
9,6078,5056,910
Net Tier 1 regulatory capital
53,24651,17547,245
Tier 2 capital
Basel III complying instruments
8,1027,3756,703
Basel III transitional instruments
4731,5263,288
Eligible general reserve for credit loss
555149
Basel III transitional adjustment
--(445)
Total Tier 2 capital
8,6308,9529,595
Deductions from Tier 2 capital
Investments in subsidiaries not consolidated for regulatory purposes
(140)(140)(140)
Holdings of own and other financial institutions Tier 2 capital instruments
(83)(77)(91)
Total deductions from Tier 2 capital
(223)(217)(231)
Net Tier 2 regulatory capital
8,4078,7359,364
Total regulatory capital
61,65359,91056,609
Risk weighted assets
415,744404,235404,382
Common equity Tier 1 capital ratio
10.50%10.56%9.97%
Additional Tier 1 capital ratio
2.31%2.10%1.71%
Tier 1 capital ratio
12.81%12.66%11.68%
Tier 2 capital ratio
2.02%2.16%2.32%
Total regulatory capital ratio
14.83%14.82%14.00%
38 | Westpac Group 2018 Interim Financial Results Announcement

Dividends
The Board has determined an interim fully franked dividend of 94 cents per share, to be paid on 4 July 2018, to shareholders on
the register at the record date of 18 May 2018 . The interim dividend represents a payout ratio of 76.07%. In addition to being
fully franked, the dividend will also carry NZ$0.07 in New Zealand imputation credits that may be used by New Zealand
residents.
The Board has determined to satisfy the DRP for the 2018 interim dividend by issuing Westpac ordinary shares. The Market
Price used to determine the number of shares issued to DRP participants will be set over the 10 trading days commencing 23
May 2018 and will not include any discount.
Capital deduction for regulatory expected credit loss
For capital adequacy purposes APRA requires the amount of regulatory expected credit losses in excess of eligible provisions to
be deducted from CET1 capital. The table below shows the calculation of this capital deduction.
2018 Interim financial results
Review of Group operations
% Mov’t% Mov’t
Half YearHalf YearHalf YearMar 18 -Mar 18 -
Ordinary dividend (cents per share)March 18Sept 17March 17Sept 17Mar 17
Interim (fully franked)94-94--
Final (fully franked)-94---
Total ordinary dividend949494--
Payout ratio (reported)76.07%78.05%80.57%(198bps)large
Adjusted franking credit balance ($m)1,2791,0637422072
Imputation credit (cents per share - NZ)7.07.07.0--
As atAs atAs at
31 March30 Sept31 March
$m
201820172017
Provisions associated with eligible portfolios
Total provisions for impairment charges (Section 4 Note 10)
3,1653,1193,513
plus general reserve for credit losses adjustment
339332311
plus provisions associated with partial write-offs
82148174
less ineligible provisions
(79)(74)(72)
Total eligible provisions
3,5073,5253,926
Regulatory expected downturn loss
4,6994,3864,841
Shortfall in eligible provisions compared to regulatory expected downturn loss
1,192861915
Common equity Tier 1 capital deduction for regulatory expected downturn loss
in excess of eligible provisions(1,192)(861)(915)
Record date in New York is 17 May 2018.
Provisions associated with
portfolios subject to the Basel standardised approach to credit risk are not eligible.
Westpac Group 2018 Interim Financial Results Announcement | 39
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2
1
2

2.6Sustainability performance
As one of Australia’s largest and oldest companies, Westpac Group is playing a role in helping to create positive social,
economic and environmental impact, for the benefit of all.
Our approach to operating sustainably is designed to anticipate, respond to and shape new and emerging opportunities and
challenges that have the potential to materially impact customers, employees, suppliers, shareholders and communities. This
view is embedded within the Group’s business activities, and aligns with the priorities set out in the Group’s strategy.
Sustainability leadership
Westpac’s sustainability leadership is regularly acknowledged and validated by a number of third party ratings and awards,
including:
xRanked as the world’s most sustainable bank in the 2017 Dow Jones Sustainability Indices (DJSI) achieving a score of 94.
This marks the fourth year in a row and 10th time that Westpac has achieved global banking sector leadership, and the 16th
year in a row that Westpac has been recognised among global banking leaders;
xAchieved a Gold Class (highest) ranking in 2018 RobecoSAM Sustainability Yearbook; and
xRecognised as one of only ten Australian companies to achieve Leadership level in the 2017 CDP , with a climate score A-.
This puts Westpac among the top 22% of companies globally to achieve this level.
It’s about all of us: 2018-2020 Sustainability Strategy
This year marks the start of Westpac Group’s 2018-2020 Sustainability Strategy which outlines the Group’s commitment to
building a sustainable future by taking action in the areas where it can have the greatest impact. Westpac believes it can create
sustainable, long-term value for customers, communities and the nation by:
xHelping people make better financial decisions;
xHelping people by being there when it matters most to them; and
xHelping people create a prosperous nation.
Underpinning these three priority areas is a commitment to fostering a culture of care and doing the right thing, and continuing to
lead on the sustainability fundamentals – policies, action plans, frameworks and metrics reporting, in particular building on the
climate change, human rights and reconciliation action plans developed in 2017.
Westpac is committed to regular reporting to enable a comparison of performance over time. The table below summarises
progress in the last six months against the goals set out in the Group’s sustainability strategy.
Performance against sustainability goals
2018 Interim financial results
Review of Group operations
Priority areasGoalsHalf Year 2018 performance
Helping people
make better
financial
decisions
Help more people
better understand their
financial position,
improving their
financial confidence
zContinued to offer a range of products and services, including Westpac SmartPlan, an online tool to
help customers manage their credit card balance and pay down their debts more easily, and Westpac
Life, a flexible savings account that supports customers’ savings goals;
zDelivered a range of financial literacy programs to individuals, businesses, not-for-profit organisations
and community groups through the Davidson Institute in Australia and through Managing Your Money
program in New Zealand; and
zDelivered enhanced financial capability communication for different customer segments, including
406,000 children through Mathspace and Year 13 partnerships, 918,000 young Australians via The
Cusp, 158,000 women through Ruby Connection and 2.5 million Australians aged 65+ via Starts at
60.
Helping people
by being there
when it matters
most to them
Help people recover
from financial hardship
z19,473 customers received hardship assistance from Westpac Group Assist.
Help people lift out of a
difficult time and
recover stronger
zProvided 65 relief packages for customers impacted by natural disasters across Australia, including
bushfires in southern NSW and south east and south west Victoria, Cyclone Marcus in the Northern
Territory and floods in northern Queensland.
Helping our most
vulnerable customers
zContinued to work towards rolling out dementia-friendly banking across Group brands, following New
Zealand and St.George.
Formerly the Carbon Disclosure Project.
40 | Westpac Group 2018 Interim Financial Results Announcement
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1

2018 Interim financial results
Review of Group operations
Priority areasGoalsHalf Year 2018 performance
Helping people
creating a
prosperous
nation
Build the workforce of
the future
zProgressed the design of a learning and re-skilling program to support employees stay relevant in a
rapidly changing workforce.
Invest and back the
people and ideas
shaping Australia
zWestpac Bicentennial Foundation paid $1.7 million in educational scholarships to 45 scholars in First
Half 2018, bringing the total cohort of Westpac Scholars to 336;
zWestpac Foundation Social Scale-up Grants supported 10 social enterprises to create over 234
jobs for vulnerable Australians;
z During First Half 2018 134 microenterprises, including 39 Indigenous businesses, were established
through our Many Rivers partnership, 1,681 jobs were created;
zWestpac has directly invested in 25 early stage companies, including 20 through Reinventure. To
date, $100 million has been committed to Reinventure as part of two funds; and
zContinued the Businesses of Tomorrow program, with the next recipients to be announced in
June 2018.
Back the growth of
climate change
solutions
zIncreased committed exposure to climate change solutions and environmental services relative to Full
Year 2017, taking total committed exposure to more than $8.5 billion, progressing towards the 2020
target of $10 billion; and
zArranged and issued climate-related bonds of $1.7 billion supporting the Group’s funding for climate
change solutions.
Back the growth of
housing affordability
solutions
xLent over $1.34 billion to the social and affordable housing sector, up from $1.32 billion at 30
September 2017.
Bring together partners
and harness the
Group’s capacity to
tackle pressing social
issues that matter most
to the nation
zEstablished a Vulnerable Customer Council, comprised of industry based consumer advocates to
enable two-way dialogue on emerging issues and external customer perspectives;
zEstablished a small business customer council which enables us to hear key issues and feedback
from the small business community and discuss new initiatives for our small business customers; and
zStakeholder Advisory Council meets three times per year to discuss emerging themes and issues,
comprising of external social, environmental, governance, community and business leaders.
A culture that is
caring,
inclusive and
innovative
Promote an inclusive
society, where our
workforce reflects our
customers
zProportion of women in leadership maintained at 50%;
zRecruited an additional 86 employees who identify as Aboriginal or Torres Strait Islander peoples,
maintaining Indigenous employment parity;
zLaunched a neurodiversity internship program to support people on the Autism Spectrum to build a
career with the Group; and
zLaunched the Group’s 2018-2020 Inclusion and Diversity Strategy.
Increase channels
where customers can
provide feedback
zMultiple channels exist for customer feedback, including the Customer Advocate, Customer Council
and the ‘Resonate Program’, designed to address specific pain points.
Continuing to
lead on the
Sustainability
fundamentals
Employees
zAchieved total recordable injury frequency rate of (TRIFR) 5.0 and lost time injury frequency rate
(LTIFR) of 0.3.
Human rights
zReleased 2017 UK Slavery and Human Trafficking Statement; and
zSupported the introduction of comparable Australian legislation to the UK Modern Slavery Act.
Sustainability lending
and investment
zBTFG refreshed its Responsible Investment Position Statement.
Environment
zMaintained carbon neutral status and on track to achieve a 3% reduction in GHG emissions
compared to Full Year 2017, and a reduction of 11% since 2016;
zGroup paper consumption on track to achieve a 41% reduction in Full Year 2018 since 2016;
zWater consumption in all Australian workspaces on track for a 13% reduction, consuming 223,849 kL
in First Half 2018; and
zAchieved 72% diversion of waste from landfill in Australian offices.
Responsible sourcing
z$2.6 million sourced from diverse suppliers, including $1.7 million from Indigenous suppliers.
Community & social
impact
z6.7% employees participate in volunteering program and 50% in workplace giving.
Environmental footprint and jobs created through the Westpac Foundation Social Scale-up grant and Many Rivers which are as at 31
December 2017
.
Westpac Group 2018 Interim Financial Results Announcement | 41
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2.6.1Climate-related financial disclosures
The Group has long recognised that climate change is one of the most significant issues that will impact the long-term prosperity
of the economy and way of life. Westpac was the first Australian bank to recognise the importance of limiting global warming to
two degrees and that to do this, global emissions need to reach net zero in the second half of this century.
2018 marks a decade since the Group released its first climate change action plan. Since then, Westpac has continued to
integrate the consideration of climate-related risks and opportunities into business operations. This includes alignment with the
recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which the Group has publically committed
to support.
The Westpac Group’s performance against the recommendations of the TCFD are summarised below:
Governance
The highest level of direct responsibility for climate change at Westpac Group lies with the Board. The Group’s third Climate
Change Position Statement and 2020 Action Plan was approved by the Group Executive and the Board in 2017. It covers the
management of Westpac’s direct carbon footprint, criteria to manage the carbon impact of lending to emissions intensive
sectors, measuring and reporting of performance, and the incorporation of climate change considerations into the Group’s risk
management framework.
The Westpac Group’s Sustainability Council, formed in 2008, comprises a cross-section of senior leaders from across the Group
with responsibility for managing our sustainability agenda and performance, including climate change. The Grou
p’s Climate
Change Solutions and Climate Change Risk Committees focus on specific aspects of climate-related issues and report half-
yearly to the Sustainability Council.
Strategy
The Westpac Group’s 2018-2020 Sustainability Strategy and Climate Change Position Statement and 2020 Action Plan describe
its climate change strategy, including a long term lending target of $25 billion to climate change solutions by 2030, and an
enhanced approach to financing emissions intensive sectors.
Risk management
Westpac applies the same rigour in managing climate change as in any other transformational issue facing the economy. The
Group examines the policy, legal, technology and market changes related to climate change (‘transition risks’), and the financial
impacts of changes in climate patterns and extreme weather events (‘physical risks’).
In 2016, the Group analysed the financial and reputational implications of transitioning to a two-degree economy under three
scenarios to understand the longer term impacts to the Australian economy, including risks and opportunities for the Group. The
scenarios represent plausible pathways to a low carbon economy based on different approaches to global cooperation and
timing of action on climate change.
As a result of this work Westpac enhanced its approach to lending to emissions-intensive sectors, supporting customers that are
in or reliant on these sectors and who assess the financial implications of climate change on their business, including how thei
r
strategies are likely to perform under various forward-looking scenarios, and demonstrate a rigorous approach to governance,
strategy setting, risk management and reporting.
Westpac has committed to undertake further climate scenario analysis in 2018 to continue to review exposure to climate-related
risks.
Metrics and targets
2018 Interim financial results
Review of Group operations
MetricsHalf Year 2018 performance
$10 billion available for lending and investment in climate change
solutions and environmental services b
y 2020
z$8.5 billion exposure in climate change solutions and environmental
services
$3 billion in facilitation in climate change solutions by 2020
z$1.7 billion issuance of climate-related bonds
Aim to reduce the emission intensity of our power generation portfolio to
0.30 (tCO e/MWh) by 2020 - Australia
z0.36 (tCO e/MWh)
Ener
gy mix of electricity generation exposure (WIB only)z72% renewable versus 28% non-renewables.
Fossil fuel extraction (TCE)
z$3.5 billion in oil and gas, $0.4 billion in coal, 0.4% of the Group’s total
committed ex
posure (TCE) of $1.0 trillion.
Total Scope 1, 2 & 3 emissions (tCOe)z203,065 tCOe
Emissions intensity of our power generation portfolio is at 30 September 2017. Total Scope 1, 2 and 3 emissions are as at 30 June 2017.
42 | Westpac Group 2018 Interim Financial Results Announcement
2
2
1
22
1
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3.0Divisional results
Divisional results are presented on a management reporting basis.
The accounting standard AASB 8 Operating Segments requires segment results to be presented on a basis that is consistent
with information provided internally to Westpac’s key decision makers. In assessing financial performance, including divisional
results, Westpac Group uses a measure of performance referred to as ‘cash earnings’. Cash earnings is viewed as a measure
of the level of profit that is generated by ongoing operations and is therefore considered in assessing distributions, including
dividends. Cash earnings is neither a measure of cash flow nor net profit determined on a cash accounting basis, as it includes
both cash and non-cash adjustments to statutory net profit.
Management believes this allows the Group to more effectively assess performance for the current period against prior periods
and to compare performance across business divisions and across peer companies.
To determine cash earnings, three categories of adjustments are made to reported results:
zMaterial items that key decision makers at the Westpac Group believe do not reflect ongoing operations;
zItems that are not considered when dividends are recommended, such as the amortisation of intangibles, impact of Treasury
shares and economic hedging impacts; and
zAccounting reclassifications between individual line items that do not impact reported results.
In presenting divisional results on a management reporting basis, internal charges and transfer pricing adjustments are included
in the performance of each division reflecting the management structure rather than the legal entity (these results cannot be
compared to results for individual legal entities). Where management reporting structures or accounting classifications have
changed, financial results for comparative periods have been revised and may differ from results previously reported.
Our internal transfer pricing frameworks facilitate risk transfer, profitability measurement, capital allocation and business unit
alignment, tailored to the jurisdictions in which we operate. Transfer pricing allows us to measure the relative contribution of ou
r
products and divisions to the Group’s net interest margin and other dimensions of performance. Key components of our transfer
pricing frameworks are funds transfer pricing for interest rate and liquidity risk, and allocation of basis and contingent liquidity
costs, including capital allocation.
In First Half 2018, Westpac implemented a number of changes to the presentation of its divisional financial information. These
changes have no impact on the Group’s overall results or balance sheet but impact divisional results and balance sheets.
Comparative divisional financial information has been restated for these changes.
The changes include updates to the methodologies to allocate certain costs, revenues and capital to divisions. These changes
can be summarised as:
1. Allocating additional capital from Group Businesses to operating divisions, following greater clarity from APRA on updates to
its capital framework;
2. Updating the Group’s cost of funds transfer pricing methodology, including the allocation of revenue from balance sheet
management activities;
3. Realigning divisional earnings and balance sheet disclosures for recent customer transfers; and
4. Refining expense allocations to improve the allocation of support costs to divisions.
The discussion of our divisional results and certain data in Sections 3 and 5 are presented on a cash earnings basis, unless
otherwise stated. Cash earnings are not directly comparable to statutory results presented in other parts of this Interim Financial
Results Announcement.
2018 Interim financial results
Divisional results
Westpac Group 2018 Interim Financial Results Announcement | 43

3.1Consumer Bank
Consumer Bank (CB) is responsible for sales and service to consumer customers in Australia under the Westpac, St.George,
BankSA, Bank of Melbourne and RAMS brands. Activities are conducted through a dedicated team of specialist consume
r
relationship managers along with an extensive network of branches, call centres and ATMs. Customers are also supported by a
range of internet and mobile banking solutions. CB works in an integrated way with Business Bank, BTFG and WIB in the sales
and service of certain financial services and products including wealth and foreign exchange. The revenue from these products
is mostly retained by the product originator.
2018 Interim financial results
Divisional results
% Mov’t % Mov’t
Half Year Half Year Half Year Mar 18 -Mar 18 -
$m
March 18 Sept 17 March 17 Sept 17 Mar 17
Net interest income
4,0403,9613,677210
Non-interest income
377380433(1)(13)
Net operating income before operating expenses
and impairment charges4,4174,3414,11027
Operating expenses
(1,730)(1,727)(1,651)-5
Profit before impairment charges and income tax expense
2,6872,6142,45939
Impairment charges
(233)(293)(272)(20)(14)
Operating profit before tax
2,4542,3212,187612
Tax and non-controlling interests
(737)(697)(656)612
Cash earnings
1,7171,6241,531612
Cash earnings adjustments
(15)(58)(58)(74)(74)
Net profit after tax
1,7021,5661,473916
Operating expenses to net operating income
ratio (cash earnings basis)39.17%39.78%40.17%(61bps)(100bps)
As at As at As at % Mov’t % Mov’t
31 March 30 Sept 31 March Mar 18 -Mar 18 -
$b
n2018 2017 2017 Sept 17 Mar 17
Deposits
Term deposits58.157.956.3-3
Other
141.3138.6133.626
Total deposits
199.4196.5189.915
Net loans
Mortgages366.0357.4346.426
Other
13.613.914.6(2)(7)
Provisions
(0.9)(0.9)(1.0)-(10)
Total net loans
378.7370.4360.025
Total assets
386.0377.5367.025
44 | Westpac Group 2018 Interim Financial Results Announcement

Financial performance
First Half 2018 - Second Half 2017
Cash earnings of $1,717 million, was 6% higher than Second Half 2017, largely from a 2% increase in net interest income, flat
operating expenses and a $60 million reduction in impairment charges.
First Half 2018 - First Half 2017
12% rise in cash earnings largely due to balance sheet growth, disciplined margin management and a reduction in impairment
charges.
2018 Interim financial results
Divisional results
Net interest
income
up $79 million,
2%
zTotal lending was up 2% with all growth recorded in mortgages. Other lending was a little lower due to a
decline in personal lending. Mortgages grew just below system as the division prioritised returns over
growth;
zDeposits increased 1% with most growth in at call accounts, including a $1.6 billion increase in saving
accounts, including the Westpac Life product. Transaction accounts, including mortgage offset accounts,
were up $1.1 billion; and
zNet interest margin was 1 basis point higher mostly from higher term deposit spreads and from lower
wholesale funding costs early in the half. Mortgage spreads were higher from the full period effect of
pricing changes on certain mortgages although this was offset by customers switching out of interest
only facilities, increased competition and more customers choosing lower spread fixed rate mortgages.
These gains were partially offset by the full period impact of the Bank Levy (3 basis points).
Non-interest
income down $3
million, 1%
zThe decline was due to the elimination and reduction of certain fees (including ATM withdrawal fees and
some transaction and account keeping fees) of $24 million;
zCards income was also lower, mostly from changes to interchange income; and
zPartly offset by $24 million of provisions for customer refunds and payments incurred in Second Half
2017 which were not repeated.
Operating
expenses up $3
million, flat
zIncreased compliance costs and a rise in business as usual costs were largely offset by productivity
benefits of $59 million;
zSavings from reconfiguring the network contributed to productivity benefits including the closure of 21
branches in the half while digitisation contributed to a 4% reduction in branch transactions. A further
reduction in paper statements added to the savings; and
zCompliance costs were up from the Group’s comprehensive product review and more resources being
directed to reviewing new lending.
Impairment
charges
down $60
million, 20%
zCredit quality remains sound, with stressed asset to TCE at 0.65%, with delinquencies relatively stable
over the half; and
zImpairment charges were lower mostly from reduced write-offs direct which tend to be lower in the first
half of the year.
Net interest
income up $363
million, 10%
z5% increase in lending, with mortgages up 6%. Other lending was $1.0 billion lower across cards (with
lower balance transfer accounts) and line of credit personal loans;
z5% lift in deposits, with most of the increase in at call accounts, with online savings accounts up $5.5
billion and transaction accounts, including mortgage offset accounts, up $3.4 billion; and
zNet interest margin was up 10 basis points from the impact of repricing of certain mortgage types and
higher term deposit spreads. This was partly offset by customer switching from interest only lending to
principal and interest loans and the introduction of the Bank Levy on 1 July 2017 (6 basis points).
Non-interest
income down
$56 million, 13%
zThe decline was due to the elimination and reduction of certain fees (including ATM withdrawal fees and
transaction and account keeping fees) reduced non-interest income by $24 million; and
zCards income was $30 million lower, mostly from changes to interchange income.
Operating
expenses up
$79 million, 5%
zMost of the increase in operating expenses was due to higher spending on technology, investments and
regulatory and compliance;
zIncreased marketing spend and costs to improve the customer experience; and
zProductivity benefits largely offset business as usual expense increases.
Impairment
charges down
$39 million, 14
%
zCredit quality remains sound. Other consumer delinquencies improved 21 basis points to 1.65% from
improved collections processes; and
zThis, along with higher recoveries led to lower impairment charges.
Source: RBA March 2018.
Westpac Group 2018 Interim Financial Results Announcement | 45
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3.2Business Bank
Business Bank (BB) is responsible for sales and service to micro, SME and commercial business customers in Australia fo
r
facilities up to approximately $150 million. The division operates under the Westpac, St.George, BankSA and Bank of Melbourne
brands. Customers are provided with a wide range of banking and financial products and services to support their borrowing,
payments and transaction needs. In addition, specialist services are provided for cash flow finance, trade finance, automotive
and equipment finance, property finance and treasury. The division is also responsible for consumer customers with auto
finance loans. BB works in an integrated way with Consumer Bank, BTFG and WIB in the sales and service of certain financial
services and products including corporate superannuation, foreign exchange and interest rate hedging. The revenue from these
products is mostly retained by the product originator.
2018 Interim financial results
Divisional results
% Mov’t% Mov’t
Half YearHalf YearHalf YearMar 18 -Mar 18 -
$m
March 18Sept 17March 17Sept 17Mar 17
Net interest income
2,0211,9751,91026
Non-interest income
58958455716
Net operating income before operating expenses
and impairment charges2,6102,5592,46726
Operating expenses
(930)(921)(897)14
Profit before impairment charges and income tax expense
1,6801,6381,57037
Impairment charges
(137)(143)(200)(4)(32)
Operating profit before tax
1,5431,4951,370313
Tax and non-controlling interests
(463)(450)(412)312
Cash earnings
1,0801,045958313
Cash earnings adjustments
(2)(5)(5)(60)(60)
Net profit after tax
1,0781,040953413
Operating expenses to net operating income
ratio (cash earnings basis)35.63%35.99%36.36%(36bps) (73bps)
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
$bn
201820172017Sept 17Mar 17
Deposits
Term deposits45.043.741.738
Other
63.363.360.6-4
Total deposits
108.3107.0102.316
Net loans
Mortgages54.753.952.514
Business
89.587.986.224
Other
8.68.78.9(1)(3)
Provisions
(1.1)(1.1)(1.2)-(8)
Total net loans
151.7149.4146.424
Total assets
155.0153.1149.913
46 | Westpac Group 2018 Interim Financial Results Announcement

Financial performance
First Half 2018 - Second Half 2017
Cash earnings of $1,080 million was $35 million, or 3% higher than Second Half 2017. The result was supported by a 2%
increase in net operating income before operating expenses and impairment charges, disciplined expense management and a
4% reduction in impairment charges.
First Half 2018 - First Half 2017
Cash earnings was $122 million, or 13% higher than First Half 2017 driven by profit before impairment charges and income tax
expense growth of 7% and a 32% decline in impairment charges. Growth in profit before impairment charges and income tax
expense was principally due to increased fee income and higher net interest margin.
2018 Interim financial results
Divisional results
Net interest
income up $46
million, 2%
zThe 2% increase in lending was due to 2% growth across SME (including mortgages) and Commercial
segments across a range of industries including property, entertainment and construction;
zDeposits increased $1.3 billion, or 1%, with most of the growth in term deposits (up 3%); and
zNet interest margin was 4 basis points higher from repricing on certain mortgages through 2017 and
higher term deposit spreads. These gains were partially offset by the Bank Levy (3 basis points).
Non-interest
income up $5
million, 1%
zThe rise was supported by higher business line fees from both portfolio growth and from pricing for
facilities including unused limits.
Operating
expenses up $9
million, 1%
zMost of the operating expense increase was due to higher investment related costs along with a rise in
regulatory and compliance costs; and
zIncreases from business as usual costs have largely been offset by productivity benefits from:
-Digital capabilities including increasing self-service and the take-up of e-statements;
-Process improvements including the extension of the simplified loan origination platform (LOLA),
greater use of electronic documents along with streamlining processes for customer on-boarding and
credit risk reviews; and
-Improving customer segmentation to better align customers to the right banker.
Impairment
charges down
$6 million, 4%
zCredit quality remains sound, although the level of stressed assets to TCE increased 35 basis points to
2.48% from 2.13%. Most of the increase in stress was from Commercial customers moving into
watchlist; and
zAuto finance delinquencies were higher, mostly due to seasonal trends; and
zLower impairment charges were driven by the reduction in impaired downgrades in the commercial
portfolio, particularly on larger exposures.
Net interest
income up $111
million, 6%
zLending growth of 4% was supported by an increase in SME (up 5%) and targeted industries, including
professional services and agriculture;
zAn 8% increase in both term deposits and transaction balances supported the 6% rise in deposits; and
zNet interest margin increased 8 basis points from an improvement in both asset and deposit spreads.
Margins increased from pricing changes on certain mortgages and business loans and higher deposit
spreads from the maturity of some highly priced term deposits. This was partly offset by the impact of
the Bank Lev
y (7 basis points).
Non-interest
income up $32
million, 6%
zHigher line fees from both portfolio growth and the full period impact of repricing for certain facilities,
including unused limits.
Operating
expenses up
$33 million, 4%
zIncreased investment spending and regulatory and compliance costs led to most of the increase; and
zBusiness as usual cost increases were largely offset by efficiency gains from digitisation of processes
including extending the LOLA loan origination platform to St.George business customers and improved
segmentation of SME customers to bankers.
Impairment
charges down
$63 million, 32%
zCredit quality remains sound, with total stressed assets to TCE of 2.48%. Auto delinquencies were
higher, but this was mostly due to the changes in treatment and reporting of hardship; and
zLower impairment charges were principally due to a decline in individual provisions in the commercial
portfolio.
Westpac Group 2018 Interim Financial Results Announcement|47

3.3BT Financial Group (Australia)
BT Financial Group (Australia) (BTFG) is the Australian wealth management and insurance arm of the Westpac Group providing
a broad range of associated services. BTFG’s funds management operations include the manufacturing and distribution o
f
investment, superannuation and retirement products, wealth administration platforms, private wealth, margin lending and
equities broking. BTFG’s insurance business covers the manufacturing and distribution of life, general and lenders mortgage
insurance. The division also uses third parties to manufacture certain general insurance products. In managing risk across all
insurance classes the division reinsures certain risks using external providers. In addition to the BT brand, BTFG operates a
range of financial service brands along with the banking brands of Westpac, St.George, Bank of Melbourne and BankSA fo
r
Private Wealth and Insurance.
Following the sell down of Westpac’s investment in BT Investment Management (BTIM) to 10% in May 2017, the business is
now accounted for as an available-for-sale investment. The only income from BTIM in First Half 2018 is $8 million of dividends
received.
2018 Interim financial results
Divisional results
% Mov’t% Mov’t
Half YearHalf YearHalf YearMar 18 -Mar 18 -
$
mMarch 18Sept 17March 17Sept 17Mar 17
Net interest income285274237420
Non-interest income
8988508946-
Net operating income before operating expenses
and impairment charges1,1831,1241,13155
Operating expenses
(601)(610)(589)(1)2
Profit before impairment charges and income tax expense
582514542137
Impairment charges
(3)(1)(3)200-
Operating profit before tax
579513539137
Tax and non-controlling interests
(175)(156)(160)129
Cash earnings
404357379137
Cash earnings adjustments
-170(10)(100)(100)
Net profit after tax
404527369(23)9
Operating expenses to net operating income
ratio (cash earnings basis)50.80%54.27%52.08%(347bps)(128bps)
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
$b
n201820172017Sept 17Mar 17
Total assets35.835.235.321
Total funds
197.7191.4191.533
48 | Westpac Group 2018 Interim Financial Results Announcement

Financial performance
First Half 2018 - Second Half 2017
Cash earnings of $404 million, was $47 million or 13% higher than Second Half 2017. While the business continued to grow
with higher funds, increased insurance premiums and a rise in lending, performance was impacted by seasonally highe
r
insurance claims. Cash earnings growth for the half also benefited from the non-repeat of provisions for customer refunds and
payments raised in Second Half 2017 of $58 million (post-tax).
First Half 2018 - First Half 2017
Cash earnings was $25 million or 7% higher than First Half 2017, mostly due to higher net interest income from balance sheet
growth and an increase in net interest margin.
2018 Interim financial results
Divisional results
Net interest
income up $11
million, 4%
zContinued growth in Private Wealth was primarily driven by a 3% rise in deposits and 3% rise in loans;
and
zNet interest margin was up 8 basis points from pricing changes to certain mortgage types and higher
deposit spreads. These were partly offset by the impact of the Bank Levy ($5 million).
Non-interest
income up $48
million, 6%
zFunds Management contribution was up $94 million (or 18%):
-Lift in funds income mainly due to provisions raised in Second Half 2017 for customer refunds and
payments ($83 million) not repeated. This was partially offset by lower margins from product mix
changes, including the migration to MySuper products which has now been completed and a lower
regulatory change levy;
-Panorama has seen funds on the platform rise by around 40% to $9.4 billion. These gains have been
partially offset by net outflows on legacy platforms, with some third party advisors switching customers
to their own platforms;
-A higher contribution from investments in boutique funds also contributed to the rise; and
-Offsetting growth has been lower advice income ($6 million) mostly from reduced activity.
zInsurance income was $42 million (or 15%) lower:
-General insurance was $40 million lower from higher claims including for major weather events
(Victorian hailstorms, Cyclone Marcus in the Northern Territory along with New South Wales and
Victorian bushfires);
-Life insurance was higher from an increase in in-force premiums. The rise was principally due to BTFG
commencing management of Group Insurance for BTFG Corporate Super; and
-LMI contribution was $3 million lower, as the volume of higher LVR loans written was lower.
zReturns on capital were $4 million down due to a lower investment contribution.
Operating
expenses
down $9 million,
1%
zThe decline in operating expenses over the half was mostly due to seasonal factors as expenses tend to
be higher in the second half of the year to support end of financial year activities;
zProductivity savings, including from the centralisation of certain activities, more than offset business as
usual expense increases; and
zPartly offsetting this, investment expenses were higher mostly from costs associated with the continued
development of Panorama.
Net interest
income up $48
million, 20%
zBalance sheet growth was mostly due to Private Wealth with deposit growth of 7% and lending up 8%;
and
zNet interest margin was up 33 basis points mostly due to pricing changes of certain mortgage types and
term deposits. These were partly offset by the impact of the Bank Levy ($9 million).
Non-interest
income up $4
million, flat
zThe Funds Management contribution was down $15 million (or 2%), this was mostly due to lower
revenue following the further sale of shares in BTIM (with $23 million recorded in First Half 2017 and $8
million in First Half 2018);
-Funds revenue was also higher, with 8% growth in average funds, including from higher markets,
partially offset by lower margins from product mix changes; and
-Advice income was $20 million lower mostly from reduced activity, partly offset by higher Ascalon seed
pool performance ($14 million).
zInsurance income was up $29 million (or 14%);
-General insurance income was $34 million higher mostly from lower claims associated with seasonal
weather events which were $44 million lower in First Half 2018;
-Life insurance income was $7 million higher with growth in in-force premiums including from the
management of Group Insurance for BTFG Corporate Super. These gains were partly offset by higher
claims; and
-LMI contribution was lower from a reduction in loans originated with an LVR >90%.
zCapital and other income was down $10 million mostly related to higher hedging costs.
Operating
expenses up
$12 million, 2%
zMost of the increase in operating expenses was from investment related spending, including costs
associated with Panorama;
zRegulatory and compliance costs have remained high but were flat compared to the prior corresponding
period; and
zProductivity savings mostly offset business as usual expense increases.
Westpac Group 2018 Interim Financial Results Announcement | 49

3.3.1 Funds Management business
Movement of Group Funds
Market share in key Australian wealth products are displayed below.
2018 Interim financial results
Divisional results
% Mov’t% Mov’t
Half Year Half Year Half YearMar 18 - Mar 18 -
$
mMarch 18Sept 17March 17Sept 17Mar 17
Net interest income281268228523
Non-interest income
63153764618(2)
Net operating income before operating expenses
and impairment charges
912805874134
Operating expenses
(544)(549)(535)(1)2
Profit before impairment charges and income tax expense
368256339449
Impairment charges(4)(2)(1)100large
Operating profit before tax
364254338438
Tax and non-controlling interests
(111)(79)(100)4111
Cash earnings
253175238456
Cash earnings adjustments-170(10)(100)(100)
Net profit after tax253345228(27)11
Operating expenses to net operating income
ratio
(cash earnings basis)59.65%68.20%61.21%large(156bps)
As atAs atAs at% Mov’t% Mov’t
31 MarchNetOther30 Sept31 MarchMar 18 -Mar 18 -
$bn2018InflowsOutflowsFlowsMov’t20172017Sept 17Mar 17
Su
perannuation37.41.9(1.7)0.21.036.235.834
Platforms
118.612.0(12.2)(0.2)3.5115.3113.335
Packaged funds38.03.2(2.5)0.70.936.438.44(1)
Other3.7---0.23.54.06(8)
Total funds
197.717.1(16.4)0.75.6191.4191.533
Current Australian market shareMarket
Productshar
eRank
Platforms
(includes Wrap and Corporate Super)18.4%1
Retail
(excludes Cash)17.5%1
Corporate Super
12.6
%
3
Second Half 2017 includes investments revaluation loss of $32 million.
Other movement includes market movement and other client transactions including fund transfers, account fees and distributions.
Packaged funds include Advance and Management Accounts.
Other includes Capital and Reserves.
Market share of Group Funds based on published market share statistics from Strategic Insight as at 31 December 2017 and represents the addition
of St.Geor
ge Wealth and BT Wealth business market share at this time.
50 | Westpac Group 2018 Interim Financial Results Announcement
1
2
3
4
5
1
2
3
4
5

3.3.2 Insurance business
The Insurance business result includes the Westpac and St.George Life Insurance, General Insurance and Lenders Mortgage
Insurance (LMI) businesses.
2018 Interim financial results
Divisional results
% Mov’t% Mov’t
Half Year Half Year Half YearMar 18 -Mar 18 -
$
mMarch 18Sept 17March 17Sept 17Mar 17
Net interest income346(25)(50)
Non-interest income243285214(15)14
Net o
perating income before operating expenses
and impairment charges246289220(15)12
Operating expenses(55)(49)(50)1210
Profit before impairment charges and income tax expense
191240170(20)12
Impairment (charges) / benefits-2(2)(100)(100)
Operating profit before tax
191242168(21)14
Tax and non-controlling interests
(58)(69)(51)(16)14
Cash earnings
133173117(23)14
Cash earnings adjustments
-----
Net profit after tax
133173117(23)14
Operating expenses to net operating income
ratio (cash earnings basis)22.36%16.96%22.73%large(37bps)
Cash earnings% Mov’t% Mov’t
Half Year Half Year Half YearMar 18 -Mar 18 -
$
mMarch 18Sept 17March 17Sept 17Mar 17
Life Insurance758476(11)(1)
General Insurance437318(41)139
Lenders Mortgage Insurance
151623(6)(35)
Total cash earnings
133173117(23)14
Insurance key metrics
Life Insurance in-force premiums% Mov’t% Mov’t
Half Year Half Year Half YearMar 18 -Mar 18 -
$
mMarch 18Sept 17March 17Sept 17Mar 17
Life Insurance in-force premiums at start of period1,0681,030973410
Sales / New Business
283112122153132
Lapses(75)(74)(65)115
Life Insurance in-force premiums at end of period
1,2761,0681,0301924
Claims ratios for Insurance Business% Mov’t% Mov’t
Half Year Half Year Half YearMar 18 -Mar 18 -
(%)
March 18Sept 17 March 17Sept 17Mar 17
Life Insurance
4435382616
General Insurance
54357154(24)
Lenders Mortgage Insurance20277(26)186
Gross written premiums% Mov’t% Mov’t
Half Year Half Year Half YearMar 18 -Mar 18 -
$
mMarch 18Sept 17March 17Sept 17Mar 17
General Insurance gross written premium251258250(3)-
Lenders Mortgage Insurance gross written premium90109141(17)(36)
First Half 2017 includes a methodology change for the calculation of premium discounts, creating a one-off increase of $32 million. This has no impact
on earned premiums. Sales/New Business for First Half 2018 includes $201 million from Group Life insurance for BTFG Corporate Super.
As at 1 January 2018, Westpac Life Insurance Services Limited became the preferred insurer for BTFG Corporate Superannuation members. The life
insurance in-force premium for First Half 2018 consists of $1 billion retail, $276 million Group Life Insurance. (Second Half 2017: $993 million retail,
$75 million Group Life Insurances; First Half 2017: $966 million retail, $64 million Group Life insurance).
Claims ratios are claims over earned premium plus reinsurance rebate. The lenders mortgage insurance claims ratios have been calculated to include
exchange commission.
LMI gross written premium includes loans >90% LVR reinsured with Arch Reinsurance Limited. First Half 2018 gross written premiums includes $62
million from the arrangement (Second Half 2017: $73 million; First Half 2017 $107 million).
Westpac Group 2018 Interim Financial Results Announcement | 51
1
2
3
4
1
2
3
4

3.4Westpac Institutional Bank
Westpac Institutional Bank (WIB) delivers a broad range of financial products and services to commercial, corporate, institutional
and government customers with connections to Australia and New Zealand. WIB operates through dedicated industry
relationship and specialist product teams, with expert knowledge in financing, transactional banking, and financial and debt
capital markets. Customers are supported throughout Australia as well as via branches and subsidiaries located in New
Zealand, the US, UK and Asia. WIB is also responsible for Westpac Pacific currently providing a range of banking services in Fiji
and PNG. WIB works in an integrated way with all the Group’s divisions in the provision of more complex financial needs
including across foreign exchange and fixed interest solutions.
Revenue contribution
2018 Interim financial results
Divisional results
% Mov’t% Mov’t
Half Year Half Year Half YearMar 18 -Mar 18 -
$m
March 18Sept 17 March 17Sept 17Mar 17
Net interest income
675672656-3
Non-interest income
749749958-(22)
Net operating income before operating expenses
and impairment charges
1,4241,4211,614-(12)
Operating expenses
(675)(680)(671)(1)1
Profit before impairment charges and income tax expense
7497419431(21)
Impairment (charges) / benefits
178(64)113large
Operating profit before tax
7667498792(13)
Tax and non-controlling interests
(215)(219)(250)(2)(14)
Cash earnings
5515306294(12)
Cash earnings adjustments
-----
Net profit after tax
5515306294(12)
Operating expenses to net operating income ratio
(cash earnings basis)
47.40%47.85%41.57%(45bps)large
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept 31 MarchMar 18 -Mar 18 -
$bn
201820172017Sept 17Mar 17
Deposits
98.992.198.57-
Net loans
Loans76.474.472.136
Provisions
(0.3)(0.3)(0.5)-(40)
Total net loans
76.174.171.636
Total assets
104.8103.1104.021
Total funds
6.612.511.3(47)(42)
% Mov’t% Mov’t
Half Year Half YearHalf YearMar 18 -Mar 18 -
$m
March 18Sept 17March 17Sept 17Mar 17
Lending and deposit revenue
79078576413
Markets, sales and fee income
4514475041(11)
Total customer revenue
1,2411,2321,2681(2)
Derivative valuation adjustments-2719(100)(100)
Trading revenue
16171246127(35)
Hastings
236330(63)(23)
Other
(1)2851largelarge
Total WIB revenue
1,4241,4211,614-(12)
Includes capital benefit and the Bank Levy.
52 | Westpac Group 2018 Interim Financial Results Announcement
1
1

Financial performance
First Half 2018 - Second Half 2017
Cash earnings of $551 million was $21 million, or 4%, higher than Second Half 2017. This was supported by the 1% increase in
profit before impairment charges and income tax expense and an impairment benefit.
First Half 2018 - First Half 2017
Cash earnings was $78 million or 12% lower compared to First Half 2017. The primary reason for the decline was the highe
r
markets performance in the prior corresponding period which was not repeated.
2018 Interim financial results
Divisional results
Net interest
income up $3
million, flat
xLoans increased 3% primarily with growth in Asia trade finance ($1.2 billion) and lending across
financial institutions, natural resources and large corporates;
xDeposits were up 7% primarily from higher Australian term deposits and term deposits originating in
Asia supporting the higher lending in that region; and
xNet interest margin declined 4 basis points, primarily from the full period impact of the Bank Levy (3
basis points).
Non-interest
income flat
xMarkets income was higher mostly from higher income across commodities and foreign exchange; and
xPartially offset by a lower Hastings contribution including seasonally lower performance fees ($30
million).
Operating
expenses down
$5 million, 1
%
xProductivity initiatives, including refinement of the division’s operating model, led to the 1% reduction in
operating expenses.
Impairment
benefit of $17
million, up $9
million
xImpaired assets to TCE reduced 3 basis points to 0.04% with no new large impaired assets emerging
over the period; and
xImpairment charges were a benefit from write-backs following the successful work-out of several
impaired facilities.
Net interest
income up $19
million, 3%
xLoans increased 6% with growth in Asia (including trade finance of $1.7 billion) and utilisation of
mortgage warehouse facilities following the run-down of balances in First Half 2017 as loans were
securitised;
xDeposits were up $0.4 billion although there was a shift in the composition of Australian deposits with
higher transaction balances offset by lower term deposits. Offshore deposits were up, consistent with
the growth in lending in Asia; and
xNet interest margin was 2 basis points higher from disciplined loan pricing and changes in deposit mix,
partly offset by the impact of the Bank Levy (7 basis points).
Non-interest
income down
$209 million,
22%
xMarkets revenue was lower compared to First Half 2017, which benefited from strong trading income
and fees associated with a number of large customer transactions. By comparison, fewer large
transactions occurred in First Half 2018.
Operating
expenses up $4
million, 1
%
xOperating expense growth of 1% was mainly due to increased risk and compliance costs. Productivity
savings largely offset business as usual expenses.
Impairment
benefit $17
million
compared to an
impairment
charge of $64
million
xCredit quality remained sound, with the ratio of impaired assets to TCE down 14 basis points following
the work-out and write-off of some larger facilities; and
xThe movement in impairment charges was due primarily to a small number of large impairments in First
Half 2017 that were not repeated.
Westpac Group 2018 Interim Financial Results Announcement | 53

3.5Westpac New Zealand
Westpac New Zealand is responsible for sales and service of banking, wealth and insurance products for consumers, business
and institutional customers in New Zealand. Westpac conducts its New Zealand banking business through two banks in New
Zealand: Westpac New Zealand Limited, which is incorporated in New Zealand and Westpac Banking Corporation (New
Zealand Branch), which is incorporated in Australia. Westpac New Zealand operates via an extensive network of branches and
ATMs across both the North and South Islands. Business and institutional customers are also served through relationship and
specialist product teams. Banking products are provided under the Westpac brand while insurance and wealth products are
provided under Westpac Life and BT brands, respectively. Westpac New Zealand also maintains its own infrastructure, including
technology, operations and treasury. All figures are in New Zealand dollars (NZ$).
2018 Interim financial results
Divisional results
% Mov’t% Mov’t
Half YearHalf YearHalf YearMar 18 -Mar 18 -
NZ$
mMarch 18Sept 17March 17Sept 17Mar 17
Net interest income922899839310
Non-interest income
244252259(3)(6)
Net operating income before operating expense
s
and impairment charges1,1661,1511,09816
Operating expenses(468)(475)(487)(1)(4)
Profit before impairment charges and income tax expense698676611314
Im
pairment (charges) / benefits
(27)4036largelarge
Operating profit before tax
671716647(6)4
Tax and non-controllin
g interests
(189)(208)(184)(9)3
Cash earnings482508463(5)4
Cash earnin
gs adjustments
10(8)(7)largelarge
Net
profit after tax
492500456(2)8
Operating expenses to net operating income
ratio (cash earnings basis)40.14%41.27%44.35%(113bps)large
As atAs atAs at% Mov’t% Mov’t
31 March30 Sept31 MarchMar 18 -Mar 18 -
NZ$b
n201820172017Sept 17Mar 17
Deposits
Term deposits31.630.027.8514
Other
30.028.429.063
Total deposits61.658.456.858
Net loans
Mortgages47.946.946.224
Business
29.528.628.633
Other2.12.22.1(5)-
Provisions
(0.4)(0.4)(0.4)--
Total net loans79.177.376.523
Total asset
s
89.888.387.123
Total funds
10.310.19.726
Total deposits in this table refer to total customer deposits.
54 | Westpac Group 2018 Interim Financial Results Announcement
1
1

Financial performance (NZ$)
First Half 2018 - Second Half 2017
Profit before impairment changes and income tax expense increased 3% over the half supported by a 6 basis point increase in
net interest margin and productivity benefits. An impairment charge of NZ$27 million in First Half 2018, compared to an
impairment benefit of NZ$40 million in Second Half 2017, resulted in cash earnings being 5% lower than Second Half 2017.
2018 Interim financial results
Divisional results
Net interest
income
up $23 million,
3%
xLending increased 2%, a little below system as the division focused on return over growth. The
increase was split across mortgages and business lending. Three quarters of the mortgage growth was
in owner occupied lending while business growth was across a broad range of sectors;
xDeposits increased 5% over the half, fully funding loan growth. Growth was spread evenly across term
and at call accounts from both consumers and businesses; and
xNet interest margin was up 6 basis points from some repricing of mortgages and business lending.
These were partly offset by lower deposit spreads from changes in deposit mix (as customers switched
to higher yield term deposits) and competition for term deposits.
Non-interest
income
down $8 million,
3%
xDecline was due primarily to lower cards income and a decline in institutional fees; and
xHigher income from a further rise in total funds which was up 2%, partly offset the decline.
Operating
expenses
down $7 million,
1%
xIn 2017 New Zealand completed the first phase of its transformation program, with the benefits from that
program continuing to flow through. Project spend associated with the program was also lower; and
xProductivity savings from this program included lower network costs with fewer branches (a further five
branches closed in First Half 2018), increased self-serve and digitising more activity.
Impairment
charge of $27
million
compared to an
impairment
benefit of $40
million
xCredit quality improved with stressed assets to TCE reducing 20 basis points to 1.86%. The decline
was mostly due to the continued improvement in the dairy sector. Other consumer delinquencies
increased 29 basis points to 86 basis points, mostly from an operational issue in credit card collections;
and
xThe movement in impairment charges was principally due to increasing consumer delinquencies and
Second Half 2017 benefiting from write-backs on some large facilities and improvements in the dairy
industry.
Westpac Group 2018 Interim Financial Results Announcement | 55

First Half 2018 - First Half 2017
Profit before impairment changes and income tax expense increased 14% supported by a 19 basis point rise in net interest
margin and productivity benefits leading to lower expenses. An impairment charge of NZ$27 million in First Half 2018,
compared to an impairment benefit of NZ$36 million in First Half 2017, resulted in lower cash earnings growth (4%).
2018 Interim financial results
Divisional results
Net interest
income up $83
million, 10%
xTwo thirds of the 3% growth in lending was in mortgages with most of the remainder in business lending
across a broad range of sectors;
xDeposit balances grew around twice the level of lending resulting in the deposit to loan ratio increasing
by over three percentage points. Most deposit growth was in term products as customers sought higher
yields in the low interest rate environment; and
xNet interest margin was 19 basis points higher, supported by disciplined growth and repricing of certain
mortgages and business loans. First Half 2017 also included a one-off $10 million adjustment (a cost)
associated with accelerating the amortisation of deferred mortgage costs (this contributed 2 basis points
to the rise in margins). These benefits were partly offset by lower deposit spreads from competition for
term de
posits.
Non-interest
income down
$15 million, 6%
xDecline was primarily from the full period impact of removing certain consumer fees in 2017.
Institutional banking fees were also lower given reduced activity; and
xDeclines were partially offset by fees from a 6% increase in total funds balances and higher insurance
income from lower claims. Merchant fees were also higher following some repricing through the half.
Operating
expenses down
$19 million, 4%
xThe decline in expenses was due to productivity initiatives flowing from the division’s transformation
program. This included increased self-serve and digitisation of activity, which supported a net reduction
of six branches along with savings from reviews of major contracts. Project spend associated with the
program was also lower.
Impairment
charge of $27
million
compared to an
impairment
benefit of $36
million
xCredit quality remained sound with stressed assets to TCE reducing 55 basis points to 1.86%. The
decline was due mostly to improved conditions in the dairy sector. Consumer 90+ day delinquencies
were higher but continued to be at near historic lows; and
xThe movement in impairment charges was mostly due to the absence of the benefits reflected in First
Half 2017 from the work-out and write-back of a few large facilities.
56 | Westpac Group 2018 Interim Financial Results Announcement

3.5.1 Westpac New Zealand division performance (A$ Equivalent)
Results have been translated into Australian dollars (A$) at the average exchange rates for each reporting period, First Hal
f
2018: $1.0926 (Second Half 2017: $1.0731; First Half 2017: $1.0599). Unless otherwise stated, assets and liabilities have been
translated at spot rates as at the end of the period, First Half 2018: $1.0652 (Second Half 2017: $1.0867; First Half 2017:
$1.0938).
2018 Interim financial results
Divisional results
% Mov’t % Mov’t
Half Year Half Year Half Year Mar 18 -Mar 18 -
$mMarch 18 Sept 17 March 17 Sept 17 Mar 17
Net interest income843 838 791 1 7
Non-interest income
224 235 245 (5)(9)
Net operating income before operating expenses
and impairment charges1,067 1,073 1,036 (1)3
Operating expenses
(429)(442)(461)(3)(7)
Profit before impairment charges and income tax expense638 631 575 1 11
Impairment (charges) / benefits
(24)37 35 large large
Operating profit before tax614 668 610 (8)1
Tax and non-controlling interests
(173)(187)(174)(7)(1)
Cash earnings441 481 436 (8)1
Cash earnings adjustments
10 (7)(7)large large
Net profit after tax
451 474 429 (5)5
Operating expenses to net operating income
ratio (cash earnings basis)40.14%41.27%44.35%(113bps)large
As at As at As at % Mov’t % Mov’t
31 March 30 Sept 31 March Mar 18 -Mar 18 -
$bn2018 2017 2017 Sept 17 Mar 17
Deposits57.9 53.7 51.9 8 12
Net loans74.3 71.1 70.0 5 6
Total assets84.3 81.3 79.6 4 6
Total funds9.7 9.3 8.9 4 9
Ratios calculated using NZ$.
Deposits refer to total customer deposits.
Westpac Group 2018 Interim Financial Results Announcement | 57
1
2
1
2

3.6Group Businesses
This segment comprises:
2018 Interim financial results
Divisional results
x
Treasury which is responsible for the management of the Group’s balance sheet including wholesale funding, capital and
management of liquidity. Treasury also manages the interest rate risk and foreign exchange risks inherent in the balance
sheet, including managing the mismatch between Group assets and liabilities. Treasury’s earnings are primarily sourced from
managing the Group’s balance sheet and interest rate risk, (excluding Westpac New Zealand) within set risk limits;
x
Group Technology , which comprises functions for the Australian businesses, is responsible for technology strategy and
architecture, infrastructure and operations, applications development and business integration;
x
Core Support , which comprises functions performed centrally, including Australian banking operations, property services,
strate
gy, finance, risk, compliance, legal and human resources; and
x
Group Businesses also includes earnings on capital not allocated to divisions, accounting entries for certain intra-group
transactions that facilitate presentation of performance of the Group’s operating segments, earnings from non-core asset
sales, earnings and costs associated with the Group’s Fintech investments, and certain other head office items such as
centrall
y raised provisions.
% Mov’t % Mov’t
Half Year Half Year Half Year Mar 18 -Mar 18 -
$mMarch 18 Sept 17 March 17 Sept 17 Mar 17
Net interest income437 291 422 50 4
Non-interest income
13 (14)(19)largelarge
Net operating income before operating expenses
and impairment charges450 277 403 62 12
Operating expenses
(289)(224)(232)29 25
Profit before impairment charges and income tax expense161 53 171 large(6)
Impairment (charges) / benefits
(13)32 11 largelarge
Operating profit before tax148 85 182 74 (19)
Tax and non-controlling interests
(90)(77)(98)17 (8)
Cash earnings58 8 84 large(31)
Cash earnings adjustments
(46)(62)(30)(26)53
Net profit after tax12 (54)54 large(78)
Treasury% Mov’t % Mov’t
Half Year Half Year Half Year Mar 18 -Mar 18 -
$mMarch 18 Sept 17 March 17 Sept 17 Mar 17
Net interest income406 272 403 49 1
Non-interest income
6 5 3 20 100
Net operating income before operating expenses
and impairment charges
412 277 406 49 1
Cash earnings269 172 264 56 2
Cash earnings adjustments
(37)(119)(50)(69)(26)
Net profit after tax232 53 214 large8
Treasury Value at Risk (VaR)
$mAverage High Low
Six months ended 31 March 2018
39.3 56.7 27.0
Six months ended 30 September 2017
33.2 57.4 24.2
Six months ended 31 March 2017
43.6 56.4 31.4
Costs are fully allocated to other divisions in the Group.
Costs are partially allocated to other divisions in the Group, with costs attributed to enterprise activity retained in Group Businesses.
VaR includes trading book and banking book exposures. The banking book component includes interest rate risk, credit spread risk in liquid assets
and other basis risks as used for internal mana
gement purposes.
58 | Westpac Group 2018 Interim Financial Results Announcement
1
2
3
1
2
3

Financial performance
First Half 2018 - Second Half 2017
Cash earnings increased $50 million in the half primarily from higher Treasury revenue, offset by increased expenses and highe
r
impairment charges.
First Half 2018 - First Half 2017
Cash earnings decreased $26 million primarily from increased expenses and higher impairment charges, partly offset by highe
r
non-interest income.
2018 Interim financial results
Divisional results
Net operating
income
up $173 million,
62
%
‚
zNet interest income increased $146 million primarily from Treasury related to interest rate risk
management, including management of short-term basis risk; and
zNon-interest income increased $27 million due to the impact of New Zealand earnings hedges and a
$10m
gain on asset sales.
Expenses
up $65 million,
29%
‚
‚
zIncrease in costs associated with the Royal Commission;
zAdditional employee costs; and
zLower GST and payroll tax recoveries.
Impairment
charges
$45 million
movement
zMovement in impairments reflecting a change to centrally held overlays, predominantly from an increase
in the overlays provision in the half ($12 million), compared to a $32 million benefit in Second Half 2017.
Tax and non-
controlling
interests
up $13 million,
17%
zEffective tax rate is higher than the Australian company tax rate of 30%, mostly due to the impact of
hybrid distributions that are not tax deductible.
Net operating
income
up $47 million,
12
%
‚
zImpact of New Zealand earnings hedges and gain from asset sales; and
zTreasury revenue was little changed.
Expenses
up $57 million,
25%
‚
‚
‚
zHigher regulatory and compliance costs, including costs associated with the Royal Commission;
zAn increase in employee costs; and
zExpenses associated with the Group’s fintech investments.
Impairment
charges
$24 million
movement
‚
zMovement in impairments reflecting a $13 million charge, primarily from an increase in the centrally held
overlay provision during the half, compared to an $11 million benefit in First Half 2017.
Westpac Group 2018 Interim Financial Results Announcement | 59

2018 Interim financial report
Table of contents
4.0Interim financial report 2018
4.1 Directors’ report61
4.2 Consolidated income statement86
4.3 Consolidated statement of comprehensive income87
4.4 Consolidated balance sheet88
4.5 Consolidated statement of changes in equity89
4.6 Consolidated cash flow statement90
4.7 Notes to the consolidated financial statements91
Note 1Basis of preparation 91
Note 2Segment reportin
g94
Note 3Net interest income98
Note 4Non-interest income99
Note 5Operating expenses100
Note 6Income ta
x101
Note 7Earnings per share102
Note 8
Average balance sheet and interest rates103
Note 9Loans104
Note 10Provisions for impairment charges105
Note 11Credit quality106
Note 12Deposits and other borrowings108
Note 13Fair values of financial assets and liabilities109
Note 14Contingent liabilities, contingent assets and credit commitments115
Note 15Shareholders’ equity118
Note 16Notes to the consolidated cash flow statement120
Note 17Subsequent events121
4.8 Statutory statements122
60 | Westpac Group 2018 Interim Financial Results Announcement

4.0Interim financial report 2018
4.1Directors’ report
The Directors of Westpac present their report together with the financial statements of Westpac and its controlled entities
(collectively referred to as ‘the Group’) for the half year ended 31 March 2018.
Directors
The names of the Directors of Westpac holding office at any time during, and since the end of, the half year and the period fo
r
which each has served as a Director are set out below:
Review and results of the Group’s operations during the half year
Net profit attributable to owners of Westpac Banking Corporation for First Half 2018 was $4,198 million, an increase of $291
million or 7% compared to First Half 2017. Features of this result included a $384 million or 4% increase in net operating income
before operating expenses and impairment charges, a $92 million or 2% increase in operating expenses and a $100 million o
r
20% decrease in impairment charges.
Net interest income increased $665 million or 9% compared to First Half 2017, with total loan growth of 5%, mostly from
Australian housing which grew 6%. Reported net interest margin increased 11 basis points to 2.16%, reflecting higher spreads
on certain mortgage types (including investor lending and loans with an interest-only feature), and increased deposit spreads.
These were partly offset by the Bank Levy which was effective from July 2017.
Non-interest income decreased $281 million or 9% compared to First Half 2017 primarily due to a decrease in trading income o
f
$226 million and the impact of economic hedges on New Zealand earnings ($63 million lower).
Operating expenses increased $92 million or 2% compared to First Half 2017. The rise in operating expenses includes annual
salary increases and higher technology expenses related to the Group’s investment program and a rise in regulatory and
compliance costs, including costs associated with the Royal Commission. These increases were partly offset by productivity
benefits and lower amortisation of intangibles.
Impairment charges were $100 million or 20% lower compared to First Half 2017. Asset quality remained sound, with stressed
exposures as a percentage of total committed exposures at 1.09%, down 5 basis points compared to First Half 2017. The
decrease in the impairment charges was primarily due to reduced individual provisions for larger facilities.
The effective tax rate of 30.4% was lower than the First Half 2017 effective tax rate of 30.7%.
The Board has determined an interim dividend of 94 cents per share, unchanged compared to the interim dividend determined
for First Half 2017. The interim dividend is fully franked.
A review of the operations and results of the Group and its divisions for the half year ended 31 March 2018 is set out in
Section 2 and Section 3 of this Interim Financial Results Announcement and in ‘Risk factors’, which forms part of the Directors’
Report.
Further information about our financial position and financial results is included in the financial statements, which form part of the
Interim financial report.
2018 Interim financial report
Directors’ report
NamePosition
Lindsay MaxstedChairman since December 2011 and Director since March 2008
.
Brian HartzerManaging Director & Chief Executive Officer since February 2015.
Nerida CaesarDirector since September 2017.
Ewen Crouch AMDirector since February 2013.
Alison DeansDirector since April 2014.
Craig DunnDirector since June 2015.
Robert ElstoneRetired in December 2017. Director from February 2012.
Peter HawkinsDirector since December 2008.
Peter MarriottDirector since June 2013.
Peter NashDirector since March 2018.
Westpac Group 2018 Interim Financial Results Announcement | 61

Significant developments
Corporate significant developments
Bank Levy for Authorised Deposit-taking Institutions (ADIs)
On 23 June 2017, legislation was enacted that introduced a new levy on ADIs with liabilities of at least $100 billion (Bank Levy).
The Bank Levy became effective from 1 July 2017 and the rate is set at 0.06% per annum of certain ADI liabilities. There is no
end date provided for the Bank Levy.
Royal Commission into the banking, superannuation and financial services industries
On 14 December 2017, the Australian Government established a Royal Commission into potential misconduct in Australia’s
banks and other financial services entities. The terms of reference for the Royal Commission require it to consider (amongst
other things) the conduct of banks, insurers, financial service providers, superannuation funds (not including self-managed
superannuation funds) and intermediaries between borrowers and lenders, and the effectiveness of Australian regulators in
addressing misconduct in financial institutions. The Royal Commission is not required to inquire into matters such as the
financial stability of Australia’s banks. A final report is to be provided by the Commission to the Australian Government by 1
February 2019, and an interim report may be produced no later than 30 September 2018.
The Royal Commission is currently investigating potential misconduct and conduct, practices, behaviour or business activities by
financial services entities that may fall below community standards and expectations. The Commission has invited public
submissions to identify instances of alleged misconduct and systemic issues which may have contributed to such conduct as
well as the public’s views on what changes the Royal Commission should recommend. Public hearings have also taken place
(with more expected to be scheduled) to consider aspects of alleged conduct in the financial services industry in greater detail,
in which a number of consumers have given evidence of their particular experiences.
Westpac participated in the first and second round of public hearings relating to consumer lending practices and the provision o
f
financial advice. In closing submissions for these hearings, Counsel Assisting identified a number of issues that have the
potential to impact the broader financial services industry. These issues included matters such as the appropriateness of various
industry practices, including the treatment of customers, remuneration, governance and compliance with legal and regulatory
obligations, as well as aspects of industry structure.
In addition, Counsel Assisting identified a number of findings it regarded as open to the Commission to make in respect of the
case studies the Commission considered during the hearing phases. These include certain breaches of the Corporations Ac
t
2001 (Cth), National Consumer Credit Protection Act 2009 (Cth) and Australian Securities and Investments Commission Ac
t
2001 (Cth) by various financial services entities including Westpac.
The Commission will consider Counsel Assisting’s submissions and determine whether or not to make findings of misconduct by
relevant financial services entities including, potentially, Westpac. The terms of reference also require the Royal Commission to
investigate the adequacy of existing laws and policies of the Federal Government relating to the provision of banking,
superannuation and financial services, and whether any further changes to the legal framework are necessary to minimise the
likelihood of misconduct. Consequently, as part of its findings, the Royal Commission is likely to recommend changes to
Australia’s legal framework regarding certain aspects of financial services. In the event that the Federal Government supports
the recommended changes, it may make changes to legislation and regulation. The Royal Commission will also investigate the
practices of our regulators. These investigations, and any findings or recommendations made by the Royal Commission, may
lead to regulators commencing investigations into various financial services entities including Westpac, which could
subsequently result in administrative or enforcement action being taken. It could also lead to our regulators altering their existing
policies and practices (including increasing their expectations for entities that they regulate, including Westpac).
Parliamentary inquiries and other reviews
On 16 September 2016, the Chairman of the House of Representatives Standing Committee on Economics announced that the
Committee had commenced its Review of the Four Major Banks (Parliamentary Review). The terms of reference for the
Parliamentary Review are wide-ranging, with one area of focus being how individual banks and the industry as a whole are
responding to issues identified through other inquiries, including through the Australian Banking Association (ABA) action plan.
Westpac attended public hearings of the Parliamentary Review on 6 October 2016, 8 March 2017 and 11 October 2017.
Westpac will appear at the next round of public hearings on 11 October 2018.
The first report of the Parliamentary Review was published on 24 November 2016 and contained ten recommendations.
The second report was published on 21 April 2017. In its second report, the Committee restated its support for the
recommendations in the first report and supported a recommendation of the Australian Small Business and Family Enterprise
Ombudsman to remove non-monetary default clauses in small business loan contracts.
2018 Interim financial report
Directors’ report
62 | Westpac Group 2018 Interim Financial Results Announcement

The third report was published on 7 December 2017. In its third report, the Committee made recommendations to ensure
merchants have the choice of how to process “tap and go” payments on dual network cards, that the Australian Competition and
Consumer Commission (ACCC) as part of its inquiry into residential mortgage products should assess the repricing of interest-
only mortgages that occurred in June 2017, that legislation is introduced to mandate banks’ participation in Comprehensive
Credit Reporting and that the Attorney-General should review the threshold transaction reporting obligations in light of the issues
identified in the Australian Transaction Reports and Analysis Centre’s case against the Commonwealth Bank of Australia.
In May 2017, the Australian Government announced that it supported nine of the ten recommendations made by the Committee
in its first report and announced a range of measures designed to implement these recommendations, such as:
zthe introduction of the Banking Executive Accountability Regime (discussed below);
zan independent review to recommend the best approach to implement an open banking regime with respect to banking
product and consumer data (discussed below); and
zthe creation of a new dispute resolution framework, including the establishment of the Australian Financial Complaints
Authority, which is designed to be a single external dispute resolution body for the handling of financial and superannuation
disputes and is expected to be operational by 1 November 2018.
On 29 November 2016, the Senate referred an inquiry into the regulatory framework for the protection of consumers, including
small businesses, in the banking, insurance and financial services sector to the Senate Economics References Committee. The
terms of reference for the inquiry focus on a range of matters relating to the protection of consumers against wrongdoing in the
sector. They also require the inquiry to examine the availability and adequacy of redress and support for consumers who have
been victims of wrongdoing. The inquiry is scheduled to produce a report by 26 June 2018.
In addition to the reviews and inquiries mentioned above, the ACCC is undertaking a specific inquiry, until 30 June 2018, into the
pricing of residential mortgages by those banks affected by the Bank Levy (including Westpac), which includes monitoring the
extent to which the Bank Levy is passed on to customers. An interim report was published in March 2018 and a final report is
due later in 2018.
The inquiry into the pricing of residential mortgages is the first task of the Financial Services Unit (FSU), established by the
ACCC in 2017 to undertake regular inquiries into specific financial services competition issues. From July 2018 onwards, the
FSU will commence market studies work. The precise scope of that work has not yet been determined, and could include a
review of the impact of regulatory measures which affect the ability of smaller banks to compete against the major banks,
barriers to entry in financial services markets and consumer switching.
On 1 May 2018, in the context of the publication of the final report in relation to the prudential inquiry into The Commonwealth
Bank of Australia, APRA indicated that all regulated financial institutions would benefit from conducting a self-assessment into
their frameworks and practices in relation to governance, culture and accountability. For large financial institutions such as
Westpac, APRA noted it will also be seeking written assessments in relation to these matters that have been reviewed and
endorsed by their Board. It is expected that matters relating to governance, culture and accountability will continue to be ongoing
areas of focus for APRA.
As these reviews and inquiries progress, they may lead to further regulation and reform.
Open banking regime
On 9 February 2018 the final report of the Review into Open Banking in Australia was released. The report makes 50
recommendations in total, including recommendations on:
zthe regulatory framework to support open banking;
zwhat data should be shared and with whom;
zwhat safeguards are needed to inspire confidence in data sharing;
zhow data should be transferred; and
zhow open banking should be rolled out.
A Government response to the report is expected in 2018. The report recommends that the major banks, including Westpac,
would need to achieve compliance 12 months after the Government response. Westpac lodged a submission with Treasury on
23 March 2018 in response to the review.
2018 Interim financial report
Directors’ report
Westpac Group 2018 Interim Financial Results Announcement|63

Banking Executive Accountability Regime
In February 2018, the Australian Parliament enacted the Banking Executive Accountability Regime (BEAR), which will be
included in the Banking Act 1959. The Government’s stated intention is to introduce a strengthened responsibility and
accountability framework for the most senior and influential directors and executives in ADI groups (referred to as ‘accountable
persons’ under BEAR). BEAR applies to large ADIs, such as Westpac, from 1 July 2018 (with transitional arrangements fo
r
certain aspects of BEAR).
BEAR involves a range of new measures, including:
zimposing a set of requirements to be met by ADIs and accountable persons, including accountability obligations;
zrequirements for ADIs to register accountable persons with APRA prior to their commencement in an accountable person
role, to maintain and provide APRA with a map of the roles and responsibilities of accountable persons across the ADI group,
and to give APRA accountability statements for each accountable person detailing that individual’s roles and responsibilities;
and
znew and stronger APRA enforcement powers, including disqualification powers in relation to accountable persons who
breach the obligations of BEAR and a new civil penalty regime that will enable APRA to seek civil penalties in the Federal
Court of up to $210 million (for large ADIs, such as Westpac) where an ADI breaches its obligations under BEAR and the
breach relates to ‘prudential matters’.
Productivity Commission Inquiry into Competition in the Australian Financial System
In May 2017, the Australian Government announced a Productivity Commission inquiry into competition in the financial system.
This review was a recommendation of the Financial System Inquiry. The terms of reference are broad and require the
Productivity Commission to review competition in Australia’s financial system with a view to improving consumer outcomes, the
productivity and international competitiveness of the financial system and the economy more broadly, and supporting ongoing
financial system innovation, while balancing these with financial stability objectives.
The Productivity Commission released its draft report on 7 February 2018 in which it found that financial system regulation since
the Global Financial Crisis had favoured stability over competition. A number of the Productivity Commission’s draft
recommendations were aimed at addressing this perceived regulatory imbalance, including that:
zthe Australian Government implement an open banking system (refer to section on open banking regime above);
zan existing regulator receive a mandate to ‘champion’ competition in the financial system;
zASIC impose a clear duty on mortgage aggregators that are owned by lenders to act in the consumer’s best interest;
zthe Australian Government require all lenders to offer customers refunds for the cost of lenders mortgage insurance when
customers elect to refinance or pay out their loan; and
zthe Payments System Board introduce a ban on card payment interchange fees by mid-2019.
Westpac has responded to the draft report and the proposed recommendations. The Productivity Commission is due to hand its
final report to the Government by 1 July 2018, after which it is expected that the Government will consider and respond to the
Productivity Commission’s findings.
Australian Banking Association Banking Reform Program and industry initiatives
On 21 April 2016, the ABA announced an action plan to protect consumer interests, increase transparency and accountability
and build trust and confidence in banks.
The reform program includes a number of industry-led initiatives including:
za review of product sales commissions and product based payments;
zthe establishment of an independent customer advocate in each bank;
zsupporting the broadening of external dispute resolution schemes;
zevaluating the establishment of an industry-wide, mandatory, last resort compensation scheme;
zstrengthening protections available to whistleblowers;
zthe implementation of a new information sharing protocol to help stop individuals with a history of poor conduct moving
around the industry;
zstrengthening the commitment to customers in the Banking Code of Practice; and
zsupporting ASIC as a strong regulator.
2018 Interim financial report
Directors’ report
64 | Westpac Group 2018 Interim Financial Results Announcement

The banks have committed to transition to the new Banking Code of Practice within 12 months of ASIC approving the Code. The
banks are also continuing to implement the recommendations from the Retail Banking Remuneration Review chaired by M
r
Stephen Sedgwick. This review considered product sales commissions and product based payments in retail banking and
recommended that retail bank staff and managers no longer receive incentives based directly or solely on sales performance.
The banks have committed to implement these recommendations by 2020.
On 17 April 2018, the independent governance expert overseeing the ABA action plan, Mr Ian McPhee, released his eighth and
final report titled, Australian banking industry: Package of Initiatives, which noted that banks have made good progress in
delivering the initiatives, with most initiatives now implemented. The banks will continue to provide information about thei
r
implementation of key industry initiatives through an external reporting framework.
Australian Securities and Investments Commission (ASIC) Enforcement Review Taskforce
On 19 October 2016, the Australian Government announced that the ASIC Enforcement Review Taskforce (Taskforce) will
conduct a review into the suitability of ASIC’s existing regulatory tools (including the penalties available) and whether they need
to be strengthened.
The Taskforce completed its report in December 2017 and made 50 recommendations to the Australian Government. On 20
April 2018, the Australian Government announced that it has agreed, or agreed in principle, to all 50 recommendations and will
prioritise the implementation of 30 of those recommendations. The remaining 20 recommendations will be considered with the
final report of the Royal Commission.
The Taskforce made recommendations on, among other things:
zreforms to the mandatory breach reporting framework including when a reporting obligation is triggered, expanding the class
of reports that must be made to include misconduct by individual advisers and employees and strengthening the penalties fo
r
failing to report, including through the introduction of an infringement notice regime;
zstrengthening ASIC’s licensing powers, which would enable ASIC to take action to refuse to grant, or to suspend or cancel, a
licence where the applicant or licensee is not considered to be a fit and proper person;
zexpanding ASIC’s powers to ban individuals working in financial services businesses where they are found to be unfit,
improper or incompetent;
zincreasing fines and strengthening penalties for corporate and financial sector misconduct;
zproviding ASIC with the power to issue directions to financial services licensees and credit licensees in relation to the conduct
of their business; and
zenhancing ASIC’s search warrant powers to provide them with greater flexibility to use seized materials and granting ASIC
access to telecommunications intercept material.
In progressing these recommendations, the Australian Government will require legislative amendments and has announced that
it will consult on draft legislation.
Product design and distribution obligations and product intervention power
On 21 December 2017, Treasury released draft legislation that would amend the Corporations Act 2001 (Cth) and the Nationa
l
Consumer Credit Protection Act 2009 (Cth) in order to grant ASIC a product intervention power and introduce a new ‘principles-
based’ product design and distribution obligation on issuers and distributors.
Westpac lodged a submission with Treasury on 12 February 2018 in response to the draft legislation.
Financial benchmarks reform
Legislation designed to strengthen the regulation of financial benchmarks commenced on 12 April 2018. The measures set out
in the Treasury Laws Amendment (2017 Measures No.5) Act 2018 include:
zASIC being empowered to develop enforceable rules for administrators and entities that make submissions to significant
benchmarks (such as Westpac), including the power to compel submissions to benchmarks in the case that other calculation
mechanisms fail;
zadministrators of significant benchmarks being required to hold a new ‘benchmark administration’ licence issued by ASIC
(unless granted an exemption); and
zthe manipulation of any financial benchmark or financial product used to determine a financial benchmark (such as
negotiable certificates of deposit) being made a specific criminal and civil offence.
2018 Interim financial report
Directors’ report
Westpac Group 2018 Interim Financial Results Announcement | 65