Westpac Banking Corporation/Announcement

Westpac 2018 Annual Report on Form 20-F

Annual Report7 November 2018WBCFinancials

8 November 2018

Market Announcements Office
ASX Limited
20 Bridge Street
SYDNEY NSW 2000

Dear Sir/Madam

Westpac Place
Level 18, 275 Kent Street
Sydney NSW 2000
T. (02) 9155 7713
westpac.com.au

Westpac Banking Corporation US Annual Report on Form 20- F

Westpac Banking Corporation (Westpac) has filed with the US Securities and Exchange Commission an
Annual Report on Form 20-F for the financial year ended 30 September 2018 which has been prepared
specifically for distribution in the United States (2018 Form 20-F). This filing has been prepared to meet
US securities law requirements and is necessary to update Westpac’s US debt issuance programs. As the
2018 Form 20-F has been prepared to meet US requirements, its presentation differs in some limited
respects from Westpac’s 2018 Annual Report lodged with ASX Limited on 7 November 2018.

Yours sincerely

Tim Hartin
Group Company Secretary

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
Commission File Number: 1-10167
WESTPAC BANKING CORPORATION
Australian Business Number 33 007 457 141
(Exact name of Registrant as specified in its charter)
New South Wales, Australia
(Jurisdiction of incorporation or organization)
275 Kent Street, Sydney, NSW 2000, Australia
(Address of principal executive offices)
Westpac Banking Corporation, New York branch,
575 Fifth Avenue, 39 Floor, New York, New York 10017-2422,
Attention: Branch Manager, telephone number: (212) 551-1800
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: 1.950% Notes due November 23, 2018, Floating Rate Notes due November
23, 2018, 2.25% Notes due January 17, 2019, Floating Rate Notes due January 17, 2019, 1.650% Notes due May 13, 2019, Floating Rate Notes due May 13,
2019, 1.600% Notes due August 19, 2019, Floating Rate Notes due August 19, 2019, 4.875% Notes due November 19, 2019, 2.150% Notes due March 6, 2020,
Floating Rate Notes due March 6, 2020, 3.050% Notes due May 15, 2020, Floating Rate Notes due May 15, 2020, 2.30% Notes due May 26, 2020, 2.600% Notes
due November 23, 2020, 2.650% Notes due January 25, 2021, Floating Rate Notes due January 25, 2021, 2.100% Notes due May 13, 2021, Floating Rate Notes
due May 13, 2021, 2.000% Notes due August 19, 2021, Floating Rate Notes due August 19, 2021, 2.800% Notes due January 11, 2022, Floating Rate Notes due
January 11, 2022, 2.500% Notes due June 28, 2022, Floating Rate Notes due June 28, 2022, 2.750% Notes due January 11, 2023, Floating Rate Notes due
January 11, 2023, 3.650% Notes due May 15, 2023, Floating Rate Notes due May 15, 2023, 2.850% Notes due May 13, 2026, 2.700% Notes due August 19,
2026, 3.350% Notes due March 8, 2027, 3.400% Notes due January 25, 2028, 4.322% Subordinated Notes due November 23, 2031, 5.000% Fixed Rate
Resetting Perpetual Subordinated Contingent Convertible Securities and notes issued under our Retail Medium-Term Notes program (Registration Statement
No. 333-172579)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes _ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Yes No _
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes _ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes _ No (not currently applicable to registrant)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards
Codification after April 5, 2012.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP International Financial Reporting Standards as issued by the International Accounting Standards Board _
Other
If this is an annual report, indicate by check mark whether the registrant is a shell company.
Yes No _
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
OF 1934
Or
_ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2018
Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Or
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Title of each className of each exchange on which registered
Ordinary sharesListed on the New York Stock Exchange, not for trading, but only in connection
with the registration of related American Depositary Shares, pursuant to the
requirements of the New York Stock Exchange.
American Depositary Shares, each representing the right to receive one
ordinar
y share
New York Stock Exchang
e
Ordinary shares3,434,796,711 fully paid
Large accelerated filer _Accelerated filer Non-accelerated filer Emerging growth company
th

Table of contents
Annual Report
Form 20-F cross-reference index2
Guide 3 cros
s-reference index4
Section 15
Information on Westpac6
Business strategy6
Outloo
k9
Si
gnificant developments11
Corporate governance23
Directors’report46
Remuneration Report62
Section 293
Five year summary94
Reading this report95
Review of Group operations97
Income statement revie
w99
Balance sheet review107
Capital resources111
Commitments113
Divisional performance114
Consumer Bank117
Business Bank118
BT Financial Group (Australia)119
Westpac Institutional Bank122
Westpac New Zealand123
Group Businesses125
Risk and risk management129
Risk factors129
Risk management142
Credit ris
k142
Liquidity risk143
In this Annual Report a reference to ‘Westpac’, ‘Group’, ‘Westpac Group’,
‘we’, ‘us’ and ‘our’ is to Westpac Banking Corporation
ABN 33 007 457 141 and its subsidiaries unless it clearly means just
Westpac Banking Corporation.
For certain information about the basis of preparing the financial
information in this Annual Report see ‘Reading this report’ in Section 2.
In addition, this Annual Report contains statements that constitute
‘forward-looking statements’ within the meaning of Section 21E of the US
Securities Exchange Act of 1934. For an explanation of forward-looking
statements and the risks, uncertainties and assumptions to which they
are subject, see ‘Reading this report’ in Section 2.
Information contained in or accessible through the websites mentioned in
this Annual Report does not form part of this report unless we specifically
state that it is incorporated by reference and forms part of this report. All
references in this report to websites are inactive textual references and
are for information onl
y.
Market risk144
Operational risk and compliance risk145
Other risks146
Westpac’s approach to sustainability150
Sustainability performance150
Five year non-financial summary155
Other Westpac business information160
Section 3163
Financial statements164
Notes to the financial statements170
Statutory statements287
Section 4291
Shareholding information292
Additional information307
Information for shareholders311
Glossary of abbreviations and defined terms315
2018 Westpac Group Annual Report1

(for the purpose of filing with the United States Securities and Exchange Commission)
Form 20-F cross-reference index
20-F item number and descriptionPage
Part I
Item 1.Identity of directors, senior management and advisersNot applicable
Item 2.Offer statistics and expected timetableNot applicable
Item 3.Key information
Selected financial data93, 99, 107-108, 310
Capitalisation and indebtednessNot applicable
Reasons for the offer and use of proceedsNot applicable
Risk factors129-141
Item 4.Information on Westpac
History and development of Westpac6, 9-22
Business overview6-22
Or
ganisational structure8, 270-272
Property, plants and equipment160
Item 4A.Unresolved staff commentsNot applicable
Item 5.Operating and financial review and prospects
Operating results97-112, 114-128
Liquidity and capital resources111-113, 143-144, 146-149
Research and development, patents and licences etc.Not applicable
Trend information103-111, 114-128
Off-balance sheet arrangements149
Tabular disclosure of contractual obligations113
Safe harbo
r95
Item 6.Directors, senior management and employees
Directors and senior management46-55, 57-59
Compensation62-89, 281-284
Board practices25-50
Employees160
Share ownership57-59, 281-284, 292
Item 7.Major shareholders and related party transactions
Major shareholders292-300
Related party transactions161, 282-284
Interests of ex
perts and counselNot applicable
Item 8.Financial information
Consolidated statements and other financial information163-290
Significant changes11-20, 284
Item 9.The offer and listing
Offer and listing details301
Plan of distributionNot applicable
Markets23, 311-313
Selling shareholdersNot applicable
DilutionNot applicable
Expenses of the issueNot applicable
2
2018 Westpac Group Annual Report

(for the purpose of filing with the United States Securities and Exchange Commission)
Form 20-F cross-reference index
Page
Item 10.Additional information
Share capitalNot applicable
Memorandum and articles of association307-309
Material contracts160
Exchange controls303-304
Taxation304-306
Dividends and paying agentsNot applicable
Statements by expertsNot applicable
Documents on display309
Subsidiary informationNot applicable
Item 11.Quantitative and qualitative disclosures about market risk144-145, 241-243
Item 12
.Description of securities other than equity securities
Debt securitiesNot applicable
Warrants and rightsNot applicable
Other securitiesNot applicable
American depositary shares302
Part II
Item 13.Defaults, dividend arrearages and delinquenciesNot applicable
Item 14.Material modifications to the rights of security holders and use of proceedsNot applicable
Item 15.Controls and procedures149, 288, 289
Item 16A
.Audit committee financial expert37
Item 16B.Code of ethics32-35
Item 16C.Principal accountant fees and services37, 281
Item 16D.Exemptions from the Listing Standards for audit committeesNot applicable
Item 16E.Purchases of equity securities by the issuer and affiliated purchasers113, 266-268
Item 16F.Changes in Registrant’s certifying accountantNot applicable
Item 16G.Corporate governance23
Item 16H.Mine safety disclosureNot applicable
Part III
Item 17. & 18. Financial statements163-290
Item 19.Exhibits
Consolidated income statements for the years ended 30 September 2018, 2017 and 2016164
Consolidated balance sheets as at 30 September 2018 and 2017166
Consolidated statements of comprehensive income for the years ended 30 September 2018, 2017 and 2016165
Consolidated statements of cash flows for the years ended 30 September 2018, 2017 and 2016169
Notes to the financial statements170-286
Management’s report on the internal control over financial reporting288
Report of independent registered public accounting firm289
2018 Westpac Group Annual Report
3

Guide 3 cross-reference index
Page
Part I Distribution of assets, liabilities and stockholders’ equity; interest rates and interest differential
Average balance sheets107, 189-191
Analysis of net interest earnings100-101, 189-191
Volume and rate movement100, 189-191
Part II Investment portfolio
Book value of investments193
Maturity profile194, 238-241
Book value and market value > 10% of shareholders193
Part III Loan portfolio
Types of loans195-198
Maturities and sensitivities of loans to changes in interest rates199
Risk element
s
Non-accrual, past due and restructured loans110-111, 229-233
Potential problem loans110-111
Foreign outstandings143
Loan concentrations143
Other interest bearing assets192-194, 227-228
Part IV Summary of loan loss experience
Analysis of the allowance for loan losses200-203
Allocation of the allowance for loan losses200-203
Part V Deposits206-207
Part VI Return on e
quity and assets94, 108
Part VII Short-term borrowings208-209
4
2018 Westpac Group Annual Report

Information on Westpac
Corporate governance
Directors’ report
(including Remuneration Report)
2018 Westpac Group Annual Report

Information on Westpac
62018 Westpac Group Annual Report
Westpac is one of the four major banking organisations in
Australia and one of the largest banking organisations in
New Zealand. We provide a broad range of banking and
financial services in these markets, including consumer ,
business and institutional banking and wealth
management services.
We have branches, affiliates and controlled entities throughout
Australia, New Zealand, Asia and in the Pacific region, and
maintain branches and offices in some of the key financial
centres around the world.
We were founded in 1817 and were the first bank established in
Australia. In 1850, we were incorporated as the Bank of
New South Wales by an Act of the New South Wales
Parliament. In 1982, we changed our name to Westpac
Banking Corporation following our merger with the Commercial
Bank of Australia. On 23 August 2002, we were registered as a
public company limited by shares under the Australian
Corporations Act 2001 (Cth) (Corporations Act).
At 30 September 2018, our market capitalisation was $96
billion and we had total assets of $880 billion.
External environment
Full Year 2018 has been a challenging year for the financial
services sector in Australia, including for Westpac. The sector
has been the subject of intense scrutiny from Government,
regulators, the media and the community in general. Among
various developments, legal actions have been filed by the
Australian Securities and Investments Commission, the
Banking Executive Accountability Regime, to be overseen by
the Australian Prudential Regulatory Authority, was introduced,
a review of competition in the sector was conducted by the
Productivity Commission, and the Australian Competition and
Consumer Commission established its Financial Services Unit.
In addition, the Royal Commission into Misconduct in the
Banking, Superannuation and Financial Services Industry
(Royal Commission) was established on 14 December 2017
and has generated a serious impact on public sentiment and
the financial services industry. 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 has been a valuable and rigorous
process.
Since its establishment, the Royal Commission has completed
the majority of its hearings, and on 28 September 2018
released its interim report. The interim report raised a number
of important points of policy and principle for consideration by
Westpac, the industry, its regulators and policy makers. It
signalled that financial services
A consumer is defined as a person who uses our products and services.
It does not include business entities.
Refer to Note 35 to the financial statements for a list of our material
controlled entities as at 30 September 2018.
Based on the closing share price of our ordinary shares on the ASX as
at 30 September 2018.
1
2
3
1
2
3
organisations, including Westpac, need to do more to meet the
needs of customers and the community, including by
preventing, detecting and addressing misconduct, and
consistently meeting legal and regulatory obligations. Westpac
provided a formal response to the interim report on 26
October 2018
.
Business strategy
The Royal Commission and the broader environment in which
we operate have reinforced the need to deliver better customer
outcomes and experiences, and underlined the importance of
continuing to deliver on our vision and strategy, including the
Service Revolution
.
Westpac’s vision is ‘To be one of the world’s great service
companies, helping our customers, communities and people to
prosper and gro
w’.
In delivering on our strategy, we are focused on our core
markets, including Australia and New Zealand, where we
provide a comprehensive range of financial products and
services that we believe assist us in meeting the financial
services needs of customers. With over 14 million customers,
our focus is on organic growth, growing customer numbers in
our chosen segments and building stronger and deeper
customer relationships.
A key element of this approach is our portfolio of financial
services brands, which we believe enables us to appeal to a
broader range of customers and provides us with the flexibility
to offer solutions that better meet individual customer needs.
As we continue to build the business, the financial services
environment remains challenging and has required us to
maintain focus on our financial position. This has involved
:
maintaining the high level and quality of our capital;
continuing to improve our funding and liquidity position;
and
seeking to maintain a high level of asset quality and
appropriate provisioning.
We continue to focus on ways to simplify our business to make
it easier for customers to do business with us and to make work
better for our people. We believe these improvement efforts
deliver better customer outcomes while also creating capacity
for investment.
Throughout 2018 we continued our focus on seeking to deliver
positive outcomes for our customers and shareholders through
our Service Revolution transformation.
The Service Revolution is seeking to:
provide a truly personal service for customers while better
anticipating their needs;
put customers in control of their finances;
respond to the increased pace of innovation, disruption and
changing customer behaviours through digitisation and
increasing our capacity for innovation; and
All customers with an active relationship (excludes channel only and
potential relationships) as at 30 September 2018.
4
4

Information on Westpac
2018 Westpac Group Annual Report
7
innovate and simplify to reinvent the customer experience.
As part of our delivery of the Service Revolution, we have
developed an integrated, multi-year plan that will be executed
across the Group. In 2018, we continued to deliver outcomes
and milestones on a number of our transformation programs
focused on the digitisation of the company through the design
and development of a single bank technology infrastructure.
We expect this will transform customer experiences and drive
operational efficiency. At the same time, we believe our
Consumer Bank and Business Bank transformation programs
continued to deliver market-leading customer services, while
lowering the cost to serve.
Over the year, substantial work has also continued on conduct
and culture, with work focused on continuing to strengthen our
conduct management across the Group. In the context of the
Royal Commission, much of the effort this year has been
focused on improving customer outcomes and on our product
reviews, as well as working to ensure we meet customer and
community expectations. We are continuing to make
adjustments and improvements to our business. In addition,
work continues on ensuring that we are responding to the
changing regulatory and industry landscape.
Sustainability is part of our strategy of seeking to anticipate and
shape the most pressing emerging social issues where we
have the skills and experience to make a meaningful difference
and drive business value. Our approach makes sustainability
part of the way we do business, embedded in our strategy,
values, culture and processes.
Supporting our customer-focused strategy is a strong set of
company-wide values, which are embedded in our culture.
These are:
integrity;
service;
one team;
courage; and
achievement.
Strategic priorities
In delivering our strategy, we have five strategic priorities that
help guide our activities:
a)Service leadership
provide a seamless customer experience across all
channels;
deepen relationships through context-based customer
experiences using our portfolio of brands;
acquire new customers by making it simpler, easier and
better for customers to choose us; and
resolve legacy customer issues and ensure that our service
creates good customer outcomes.
b)Digital transformation
create a 21st century, digitised bank with multi-brand
capabilities;
simplify products and processes by digitising end-to-end;
and
drive efficiency opportunities from digitisation and
consolidation of systems.
c
)Performance discipline
to be the region’s best performing bank;
manage the business in a balanced way across strength,
growth, return and productivity;
focus on reducing structural costs;
maintain strong levels of capital to meet the needs of all
our stakeholders and requirements of regulators;
continue to enhance our funding and liquidity position,
including ensuring a diversity of funding pools and meeting
new liquidity requirements; and
maintain a high quality portfolio of assets, coupled with
appropriate provisioning.
d
)Growth highways
focus on stronger growth in:
– specific business segments, in particular, small to
medium enterprises; and
– supporting our customers’ insurance and investment
needs.
e
)Workforce revolution
focus on a customer-centric culture;
strengthen the skills of our people to better serve
customers and meet their complete financial needs;
empower our people to drive innovation, deliver new and
improved ways of working and be responsive to change;
and
continue to enhance the diversit
y of our workforce.

Information on Westpac
8
2018 Westpac Group Annual Report
Organisational structure
Our operations comprise the following key customer-facing
business divisions operating under multiple brands.
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
consumer 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 also works in an integrated way with Business
Bank, BTFG and WIB in the sales and service of select
financial services and products, including in wealth and foreign
exchange. The revenue from these products is mostly retained
by the product originators.
Business Bank (BB) is responsible for sales and service to
micro, small to medium enterprises (SME) and commercial
business customers in Australia for 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 and property finance. The
division is also responsible for consumer customers with auto
finance loans. BB works in an integrated way with BTFG and
WIB in the sales, referral and service of select 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.
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 of investment, superannuation, 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 a third party 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 services brands along with
the banking brands of Westpac, St.George, Bank of Melbourne
and BankSA for Private Wealth and Insurance.
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, 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.
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 (WNZL), 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
.
Group Businesses include:
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;
Group Technology, which comprises functions for the
Australian businesses, is responsible for technology
strategy and architecture, infrastructure and operations,
applications development and business integration; and
Core Support, which comprises functions performed
centrally, including Australian banking operations, property
services, strategy, finance, risk, compliance, legal, human
resources and customer and corporate relations.
Group Technology costs are fully allocated to other divisions in
the Group. Core Support costs are partially allocated to other
divisions in the Group, with costs attributed to enterprise activity
retained in Group Businesses
.
Group Businesses also includes earnings on capital not
allocated to divisions, certain intr
a-group transactions that
facilitate the presentation of the performance of the Group’s
operating segments, earnings from non-core asset sales and
certain other head office items such as centrally raised
provisions.

Information on Westpac
2018 Westpac Group Annual Report9
Competition
The Group operates in a highly competitive environment.
We serve the banking, wealth and risk management needs of
customer segments from consumers and small businesses
through to large corporate and institutional clients. The Group
competes with other financial services providers in every
segment and every product or service. Our competitors include
financial services and advisory companies such as banks (both
domestic and global), investment banks, credit unions, building
societies, mortgage originators, credit card issuers, brokerage
firms, fund and asset management companies, insurance
companies, online financial services providers, and technology
companies large and small.
Like other financial services providers, our competitive position
across customer segments, products and geographies is
determined by a variety of factors. These include:
the quality, range, innovation and pricing of products and
services offered;
digital and technology solutions;
customer service quality and convenience;
the effectiveness of, and access to, distribution channels;
brand reputation and preference;
the types of customer served; and
the talent and experience of our employees.
We also operate in an environment where digital innovation is
changing the competitive landscape. We compete on our ability
to offer new products and services that align to evolving
customer preferences. The competitive nature of the industry
means that if we are not successful in developing or introducing
new products and services, or in responding or adapting to
changes in customer preferences and habits, we will lose
customers to our competitors.
Competition within Australia’s financial system is evidenced by
both the significant number of providers and the range of
products and services available to customers. In Australia,
competition for both deposits and lending continues to be
fierce, both from established banks as well as new entrants,
including technology firms. Slowing growth in some sectors
such as housing has heightened competitive intensity as
financial institutions work to win new customers and retain
existing ones.
In our wealth business, we expect the broader competitive
landscape to continue to undergo significant change with
ongoing consolidation in life insurance, continued regulatory
and structural change in financial advice, and increased
overseas interest and participation in superannuation.
In New Zealand, the Group is experiencing strong competition
as banks vie for new customers and seek to retain existing
ones. Competition for deposits and lending remains intense.
Outlook
The Australian economy has continued to grow solidly in 2018.
GDP increased by 3.4% for the year to June 2018, comfortably
above our estimate of potential growth of 2.75%
.
Recent GDP growth has been supported by strong population
growth, home construction levels remaining higher for longer,
solid business investment and healthy export levels.
Government spending has been particularly robust, highlighted
by health and infrastructure. Improved global growth and solid
commodity prices have also supported growth
.
Other measures of economic health remain solid with
unemployment recently falling to 5% (down from around 5.5% a
year earlier), and inflation remaining well under control at 1.9%.
Despite this solid activity, wage growth has remained subdued
with nominal earnings up by only 1.8% over the year. With
inflation well below target and ongoing questions about
consumer spending, the Reserve Bank has kept the cash rate
steady since August 2016. In particular household budgets
have been impacted by low income growth; falling house
prices; high debt levels and high energy prices
.
In New Zealand, the economy has also been sound with solid
growth in agriculture, retail and recreational services. New
Zealand GDP growth has held at around 2.7%, with
unemployment around 4.5% and inflation near 1.5%
.
Within Australia, the 2019 outlook is for real GDP growth to
ease back potentially to 2.7% before lifting to around 3% in
2020. This softening in growth is based on the expectation that
commodity prices will ease, the housing construction cycle
continues its slowdown and consumer spending moderates.
These conditions are also likely to weigh on business
investment that is likely to remain below trend
.
The housing market is likely to remain soft in the year ahead as
demand in Sydney and Melbourne markets adjust to
affordability and investors respond to falling prices and
uncertainty around tax policy. Supply may also ease as more
conservative lending policies continue to flow through the
system.
A sharp rebalancing of interest rate differentials has seen the
Australian dollar fall by around 12% against the US dollar. This
will particularly support Australia’s services exports and boost
the profitability of the resources sector. Public demand is also
likely to remain solid as the pipeline of infrastructure projects
continues to roll out and the Commonwealth government
benefits from a rapidly improving fiscal position. Employment
growth is likely to slow from its recent strength to around the
level of population growth. As a result, the unemployment rate
is anticipated to hold steady at around 5%
.
That growth slowdown coupled with ongoing soft wage
conditions will see little progress in moving inflation towards the
Reserve Ban
k’s target of 2.5%. Global economic growth is also
expected to slow somewhat. Accordingly the Reserve Bank is
expected to keep the cash rate on hold at 1.5% in 2019
.
All data and opinions under ‘Outlook’ are generated by our internal
economists and management.
1
1

Information on Westpac
102018 Westpac Group Annual Report
Financial System credit grew by around 4.5% in the year to
September 2018 with system housing credit rising 5.4%, and
system business credit expanding by 3.8%. Other consumer
credit declined by 1.4% over the year - this continues a path of
declining consumer credit for a number of years.
Given the economic backdrop, and the potential for a further
tightening of credit standards, growth in financial system credit
in the year to September 2019 is expected to slow to around
3.5%. Within this aggregate, housing growth is forecast to ease
to closer to 4.0%, business credit growth is expected to slow to
near 3.5% while personal credit growth is likely to contract by
1%.
Westpac Group remains focused on executing our vision of
being one of the world’s great service companies with our five
strategic priorities assisting this transformation. These include:
maintaining our performance discipline by continuing to be
prudent in the management of capital, funding and liquidity;
managing returns effectively seeking to achieve a ROE
between 13% and 14% and remaining disciplined on asset
growth;
continuing to build our customer base while also increasing
the depth of customer relationships;
utilising technology as part of our digital transformation to
materially improve efficiency and reduce the Group’s cost
to income ratio to below 40%;
wealth and small to medium business enterprises will
continue to be our areas of targeted growth and will include
focusing on growing funds on the Group’s wealth
management system, called Panorama, and using new
technologies to make business banking even easier to
access for customers; and
seeking to further build a stronger and more diverse
workforce where the best people want to work.
Over the last two years we have commenced a number of
initiatives to improve Westpac’s reputation. As part of these
initiatives Westpac has already provided for customer
payments and refunds where we may not have done the right
thing for customers, or have not been able to sufficiently
demonstrate that we have done the right thing for customers.
Our review of products, related systems and processes will
continue into 2019 and it may be that further provisions are
required in the future.
Following announcements from our regulator, APRA, we have
greater clarity on what sort of capital levels we need to be
considered ‘unquestionably strong’. APRA have indicated a
common equity Tier 1 capital ratio of 10.5% under the current
APRA framework would be considered consistent with having
an unquestionably strong balance sheet. At the same time
APRA is currently conducting a number of reviews into the
calculation of Australia’s capital ratios including changes to risk
weighted assets and how Australi
a’s ratios should be presented
against international peers. Further clarity on these changes is
expected in Full Year 2019. APRA has indicated that they
believe banks will be able to meet any changes organically.
Banks are expected to be required to meet these new
standards by 1 January 2020.
Given the strength of our business, and our balance sheet, in
both absolute terms and relative to peers, we believe we are
well placed to respond to any additional regulatory
requirements
.
Looking ahead, with our strong positioning, disciplined growth,
solid portfolio of businesses, and good progress on our
strategic priorities, Westpac believes it is well positioned to
continue delivering sustainable outcomes for shareholders and
customers
.

Information on Westpac
2018 Westpac Group Annual Report
11
Significant developments
Corporate significant developments
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 was
released and tabled in parliament on 28 September 2018.
The Royal Commission is inquiring into potential misconduct
and conduct, practices, behaviour or business activities by
financial services entities that may fall below community
standards and expectations. The Commission has sought and
received public submissions as to misconduct issues in
financial services and conducted a range of public hearings
which have considered case studies of alleged misconduct
issues.
Westpac has provided the Commission with documents and
witness statements and made submissions in all rounds of the
Royal Commission to date. The Interim Report of the
Commission released on 28 September 2018 outlined a range
of views the Commissioner has formed to date based on the
information and hearings so far and has requested submissions
on key areas of policy that might affect or address misconduct
in the financial services industry. Many of those matters could
have significant impacts on particular entities (including
Westpac) and the financial services industry generally, as well
as affecting the financial performance of financial institutions,
including banks. Recommendations may include matters which
could cause structural change to the financial services industry
and/or business models used in the industry, changes to the
compensation and incentive structures within the financial
services industry, and changes involving the way financial
services are regulated. Westpac made submissions in relation
to the questions posed in the Interim Report on 26
October 2018.
The Commission will ultimately make findings and
recommendations having considered the submissions Counsel
Assisting, relevant financial institutions, other relevant bodies
including regulators and the general public have made during
the course of the proceedings of the Commission. The
Commission’s findings and recommendations may include
recommendations as to civil or criminal prosecutions that
should be conducted against financial institutions and
individuals, recommendations as to legislative reform and in
respect of matters which regulatory or other policy bodies
should consider.
In the event that the Federal Government supports
recommended regulatory changes, the Royal Commission may
result in chan
ges to legislation and regulation. The
Royal Commission is also considering the regulation and
enforcement practices of our regulators. Any findings o
r
recommendations made by the Royal Commission are likely to
have and could continue to prompt regulators to commence
investigations into various financial services entities including
Westpac. Those steps could subsequently result in
administrative or enforcement action being taken. The
Commission may also prompt our regulators to alter thei
r
existing policies and practices (including increasing their
expectations for entities that they regulate, including Westpac)
and increase the number of potential contraventions they
choose to publicly litigate rather than otherwise resolve, which
could harm our reputation and increase our liabilities related to
legal proceedings. There is also a risk that matters considered
during the Royal Commission have resulted in or could
encourage civil claims against financial institutions including
class actions
.
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 wid
e-ranging, with
one area of focus being how individual banks and the industry
as a whole are responding to issues identified through othe
r
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, 11
October 2017 and 11 October 2018
.
The third report of the Parliamentary Review 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 interes
t-only mortgages that occurred in
June 2017, that legislation is introduced to mandate banks’
participation in Comprehensive Credit Reporting (discussed
below) and that the Attorne
y-General should review the
threshold transaction reporting obligations in light of the issues
identified in a case brought by the Australian Transaction
Reports and Analysis Centre against the Commonwealth Bank
of Australia.
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 reporting date has been revised to 15 November 2018
to allow for the interim report of the Royal Commission to be
handed down.
In addition to the reviews and inquiries mentioned above, the
ACCC is undertaking a specific inquiry into the pricing of
residential mortgages by those banks affected by the Bank
Levy (including Westpac), which include 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 in
November 2018
.

Information on Westpac
122018 Westpac Group Annual Report
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. The FSU has
commenced market studies work from July 2018. 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 2 October 2018, the ACCC announced it was holding an
inquiry into the supply of foreign currency conversion services
in Australia. The inquiry is the second task of the FSU, and will
examine the pricing of foreign currency conversion services
and evaluate whether there are impediments to effective price
competition in the sector. A report is due to be provided by the
ACCC to the Treasurer by 31 May 2019.
As these reviews and inquiries progress, they may lead to
further regulation and reform.
APRA self-assessment
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. Westpac’s
self-assessment is currently underway and the report is due to
APRA on 30 November 2018.
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 (FSI). The terms of reference were broad and
required 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 final report on 3
August 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
recommendations were aimed at addressing this perceived
regulatory imbalance, including that:
the Australian Government should implement an open
banking system (discussed below);
the ACCC should receive a mandate to ‘champion’
competition in the financial system;
trail commissions, volume-based commissions, campaign-
based commissions and volume-based payments should
be banned in mortgage broking and
clawback of commissions from brokers restricted to a
maximum 2 year period;
all brokers, aggregators, lenders and their employees who
provide home loans to customers should have a clear
legally-backed best interest obligation to their clients;
all banks should appoint a Principal Integrity Officer (PIO)
obliged by law to report directly to their board on the
alignment of any payments made by the institution with the
new customer best interest duty. The PIO would also have
an obligation to report independently to ASIC in instances
in which a board is not responsive to their advice;
the ACCC should undertake five-yearly market studies on
the effect of vertical and horizontal integration on
competition in the financial system. The first of these
studies should commence in 2019 and include establishing
a robust evidence base of integration activity in the
financial system;
ASIC should require all lenders to provide those borrowers
that are levied with lenders mortgage insurance (LMI) with
the option of such insurance being levied once at the
commencement of their home loan (whether paid as a
lump sum or as deferred payments) or it being levied
annually over the first 6 years of their loan, including
requiring them to also provide borrowers with transparency
in relation to the comparison of these options;
where LMI is levied at the commencement of the home
loan, all lenders should be required to set a schedule of
refunds on the cost of LMI when borrowers choose to
refinance or pay out their loan within 6 years of the loan
being originated. The refund schedule should be made
available to the borrower before any fee or charge is
levied; and
the Payments System Board should introduce a ban on
card payment interchange fees by mid-2019.
ASIC action on compliance breaches with fees disclosure and
renewal notices
On 12 October 2018, ASIC announced a review of compliance
with requirements for Fee Disclosure Statements (FDS) and
Renewal Notices. ASIC advised that it has received a numbe
r
of breach reports from licensees which indicate they may have
failed to comply with the FDS and Renewal Notice
requirements that were implemented as part of the FoFA
reforms. These reports are currently being investigated by
ASIC, and ASIC may take enforcement action where breaches
are substantiated. In addition to investigating these particula
r
instances, ASIC announced that it will test compliance with
FDS and Renewal Notice requirements across the financial
advice sector
.
ASIC will report its findings in 2019.

Information on Westpac
2018 Westpac Group Annual Report
13
Residential mortgage lending - reviews by and engagement
with regulators
In recent years, regulators have focused on aspects of
residential mortgage lending standards across the industry.
APRA has been looking at, and speaking publicly about, the
broader issue of bank serviceability standards pertaining to
residential mortgage lending.
During the year, Westpac further strengthened its controls on
mortgage serviceability requirements. This work has been
guided by the findings identified through the 2016/17 targeted
review of data used in residential mortgage serviceability
assessments, which was undertaken by Westpac (and other
large ADIs) at APRA’s request. The focus of the review was on
the adequacy of controls used to ensure borrower information
in serviceability assessments was complete and accurate.
Westpac engaged an independent third party to undertake the
targeted review which was completed in May 2017. Based on
the results of their evaluation of the design and operating
effectiveness of the controls in place, they issued a qualified
opinion on the basis of 8 of the 10 control objectives stipulated
by APRA. While they found that Westpac had implemented a
wide range of controls related to verifying certain categories of
borrower information (particularly in relation to income), they
noted that Westpac should give further consideration to
strengthening controls in certain areas, such as declared
expenses and other debts.
Westpac is continuing to engage with APRA in relation to its
progress in strengthening these controls together with its risk
management framework for residential mortgage lending,
including in relation to oversight, operating systems and
controls, and assurance.
Additionally, in line with APRA’s letter to ADIs dated 26
April 2018 (Embedding Sound Residential Mortgage Lending
Practices), Westpac has been engaging with APRA in relation
to its residential mortgage lending policies and practices.
In the mortgage area, ASIC continues to focus on interest only
mortgage origination and high risk customer groups (such as
customers with reverse mortgages). ASIC has also reviewed
public statements by some banks (including Westpac) about
interest rate changes, following the introduction of APRA’s
macro-prudential limits for ADIs in respect of interest only
lending flows. Westpac is working with ASIC on their reviews in
these areas.
Anti-Money laundering and counter-terrorism financing reforms
and initiatives
On 13 December 2017, the Anti-Money Laundering and
Counter-Terrorism Financing Amendment Act 2017 (Cth)
(Amendment Act) became effective and introduced a number of
reforms to the Anti-Money Laundering and Counter Terrorism
Financing Act 2006 (Cth) (AML/CTF Act), including:
expanding the Australian Transaction Reports and
Analysis Centre’s (AUSTRAC) power to issue infringement
notices and remedial directions;
refining the ‘tipping-off’ provisions so that reporting entities
can share information with certain related bodies
corporate; and
regulating digital currency exchange providers.
Many of the changes introduced by the Amendment Act arise
from a recent review of Australia’s AML/CTF framework
(Statutory Review), the findings of which were set out in the
Report on the Statutory Review of the AML/CTF Act and
Associated Rules and Regulations, which was tabled in
Parliament on 29 April 2016. The Statutory Review took into
account the relevant findings of the Financial Action Task
Forc
e’s mutual evaluation of Australia’s AML/CTF regime. The
Government has published a ‘Project Plan’ for implementing
the reforms recommended by the Statutory Review, and it is
likely further reforms will be legislated in the near future
.
In addition to the potential for ongoing legislative change, over
the past few years AUSTRAC has increasingly emphasised its
role in collecting, analysing and disseminating financial
intelligence data to its law enforcement partners. One way
AUSTRAC has sought to do this is through greater
collaboration with the financial services industry. In 2016,
AUSTRAC created the Fintel Alliance, an initiative which
involves AUSTRAC, various financial services entities
(including Westpac) and public sector bodies collaborating with
the aim of developing and sharing actionable intelligence and
insights that address key AML/CTF risks.
In this environment of ongoing legislative reform, regulatory
change and increased industry focus, Westpac continues to
engage with AUSTRAC and has been undertaking a review of
its AML/CTF control environment that is designed to conside
r
and assess our AML/CTF policies, the completeness of data
feeding into our AML/CTF systems and our anti-money
laundering and counte
r-terrorism financing processes and
controls. Westpac has been regularly updating AUSTRAC on
the progress of this review and has commenced implementing
a number of improvements to its AML/CTF policies, systems
and controls together with related remediation work in respect
of certain reporting practices. These efforts have related to
matters such as customer on-boarding and ongoing customer
due diligence
.
The Group has recently self-reported to AUSTRAC a failure to
report a large number of International Funds Transfe
r
Instructions (IFTIs) (as required under Australi
a’s AML/CTF
Act) in relation to one WIB product. These IFTIs relate to batch
instructions received from 2009 until recently from a small
number of correspondent banks for payments made
predominantly to beneficiaries in Australia in Australian dollars.
Through the product, Westpac facilitates payments on behalf of
clients of certain of its correspondent banks. The majority of the
payments are low value and made by Government pension
funds and corporates. The Group is investigating and working
with AUSTRAC to remediate the failure to report IFTIs. Further
details regarding the consequences of the failure to comply with
financial crime obligations are set out in the Risk Factors
section of this report.

Information on Westpac
142018 Westpac Group Annual Report
Banking Executive Accountability Regime
On 1 July 2018 the Banking Executive Accountability Regime
(BEAR), which applies to large ADIs such as Westpac, came
into effect. The Government’s stated intention of BEAR 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 involves a range of new measures, including:
imposing a set of requirements to be met by ADIs and
accountable persons, including accountability obligations;
requirements 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, to give APRA accountability
statements for each accountable person detailing that
individual’s roles and responsibilities and to report any
breaches by the ADI or an accountable person of their
respective accountability obligations to APRA; and
new 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’.
Westpac implemented BEAR, including filing all required
documents with APRA, by the required date of 1 July 2018.
Australian Securities and Investments Commission (ASIC)
Enforcement Review Taskforce
On 19 October 2016, the Australian Government announced
that the ASIC Enforcement Review Taskforce (Taskforce)
would conduct a review into the suitability of ASI
C’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:
reforms 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 for failing to report,
including through the introduction of an infringement notice
regime;
strengthening 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;
expanding ASIC’s powers to ban individuals working in
financial services businesses where they are found to be
unfit, improper or incompetent;
increasing fines and strengthening penalties for corporate
and financial sector misconduct;
providing ASIC with the power to issue directions to
financial services licensees and credit licensees in relation
to the conduct of their business; and
enhancing ASIC’s search warrant powers to provide them
with greater flexibility to use seized materials and granting
ASIC access to telecommunications intercept material.
Progress has been made in implementing these
recommendations, including
:
ASIC releasing a report on 25 September 2018 on the
breach reporting processes of 12 financial services groups,
including Westpac;
the Australian Government publicly endorsing the proposal
by the ASIC Enforcement Review Taskforce to expand
ASIC’s powers in respect of corporate and financial
services misconduct, including the criminal and civil
penalties which apply, and introducing the Treasury Laws
Amendment (Strengthening Corporate and Financial
Sector Penalties) Bill 2018 (Cth) (discussed below); and
the Australian Government announcing an increase in
ASIC’s funding in order to introduce a close and
continuous monitoring program, in which ASIC embeds
staff within the institutions which it supervises.
Enhanced penalties for corporate and financial sector
misconduct
On 24 October 2018, the Australian Government introduced
into Parliament the Treasury Laws Amendment (Strengthening
Corporate & Financial Sector Penalties) Bill 2018 (Cth), which
proposes to strengthen penalties for corporate and financial
sector misconduct consistent with the ASIC Enforcement
Review Taskforce recommendations. If passed in its current
form, the Bill will:
update the penalties for certain criminal offences in
legislation administered by ASIC, including increasing the
maximum imprisonment penalties for certain criminal
offences, introducing a formula to calculate financial
penalties for criminal offences, and removing imprisonment
as a penalty but increasing the financial penalties for all
strict and absolute liability offences;
introduce ordinary criminal offences that sit alongside strict
and absolute liability offences;
introduce the ability for courts to make relinquishment
orders for civil penalty provision contraventions;
modernise and expand the civil penalty regime by making
a wider range of offences subject to civil penalties;
harmonise and expand the infringement notice regime;

Information on Westpac
2018 Westpac Group Annual Report15
introduce a new test that applies to all dishonesty offences
under the Corporations Act 2001 (Cth); and
ensure the courts prioritise compensating victims over
ordering the payment of financial penalties.
Product design and distribution obligations and product
intervention power
On 21 December 2017, the Australian Treasury released draft
legislation that would amend the Corporations Act 2001 (Cth)
and the National 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. A further exposure draft
was released for consultation in July 2018
.
Westpac lodged a submission with the Australian Treasury on
12 February 2018 and on 16 August 2018 in response to the
draft legislation and its revision respectively.
On 20 September 2018, the Treasury Laws Amendment
(Design and Distribution Obligations and Product Intervention
Powers) Bill 2018 (Cth) was introduced into Parliament. The Bill
is currently before the House of Representatives. Exposure
draft regulations in relation to the Bill were released for
consultation on 23 October 2018.
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:
a review of product sales commissions and product based
payments;
the establishment of an independent customer advocate in
each bank;
supporting the broadening of external dispute resolution
schemes;
evaluating the establishment of an industry-wide,
mandatory, last resort compensation scheme;
strengthening protections available to whistleblowers;
the implementation of a new information sharing protocol
to help stop individuals with a history of poor conduct
moving around the industry;
strengthening the commitment to customers in the Banking
Code of Practice; and
supporting ASIC as a strong regulator.
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. Reporting by the banks to Ian McPhee about
their implementation of key industry initiatives has now
concluded. The ABA has committed to member banks
providing further bi-annual external reporting on their
im
plementation progress.
On 31 July 2018, ASIC approved the Banking Code of Practice
with an implementation date of 1 July 2019. The new code
replaces the previous version, the Code of Banking Practice
2013.
Westpac has fully implemented the recommendations from the
Retail Banking Remuneration review chaired by Mr Stephen
Sedgwick on 1 October 2018 for our employees, two years
ahead of schedule
.
Changes to wealth business
On 20 June 2018, BT Financial Advice announced that its
customers operating through the Westpac, St.George, Bank of
Melbourne and BankSA networks will benefit from the removal
of grandfathered payments attributable to their BT products.
The change to remove the majority of grandfathered payments
occurred on 1 October 2018 with the removal of certain more
complex grandfathered payments to follow shortly. The
introduction of the Future of Financial Advice (FoFA) reforms in
2013 included a prospective ban on conflicted remuneration.
Generally, arrangements in place prior to the commencement
of FoFA were grandfathered, permitting the continuation of
grandfathered payments, such as commissions, under those
arrangements.
On 23 July 2018, BT Financial Group announced three new
initiatives
:
significant pricing changes to its flagship platform, BT
Panorama, so that the pricing structure is significantly
lower, simpler and no longer based on scale;
the launch of a ‘compact’ BT Panorama offer for simpler
investment; and
an online adviser services hub, BT Open Services.
Open banking regim
e
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
:
the regulatory framework to support open banking;
what data should be shared and with whom;
what safeguards are needed to inspire confidence in data
sharing;
how data should be transferred; and
how open banking should be rolled out.
On 9 May 2018 the Government announced that it agreed with
the recommendations of the report, and that it would phase in
open banking in stages with all major banks (including
Westpac) required to make data available on credit and debit
cards, together with deposit and transaction accounts by 1
July 2019 and on mortgages by 1 February 2020. Data on all
products recommended by the report will be required to be
made available by 1 July 2020. All remaining banks will be
required to implement open banking with a 1
2-month delay on
the timelines set for the major banks. The ACCC will be
empowered to adjust timeframes if necessary
.
On 15 August 2018, the Australian Treasury released draft
legislation that would amend the Competition and Consumer
Act 2010 (Cth), the Privacy Act 1988 (Cth) and the

Information on Westpac
162018 Westpac Group Annual Report
Australian Information Commissioner Act 2010 (Cth) to
introduce a consumer data right which will apply to particular
sectors designated by the Treasurer, in response to which
Westpac lodged a submission. A further draft of the legislation
(including a draft designation) was released by the Australian
Treasury on 24 September 2018. The banking sector is the first
sector to which the right will apply. A Consumer Data Right
Rules Framework was also released by the ACCC in
September 2018 and Westpac lodged a submission on the
Framework on 12 October 2018.
Harper Competition Reforms
In November 2017, the Competition and Consumer
Amendment (Competition Policy Review) Act 2017 (Cth) and
the inter-related Competition and Consumer Amendment
(Misuse of Market Power) Act 2017 (Cth) came into effect,
making significant changes to the Competition and Consumer
Act 2010 (Cth) following recommendations by the Competition
Policy Review which was chaired by Professor Ian Harper.
These reforms included:
broadening the scope of the existing prohibition on misuse
of market power. Corporations with substantial market
power are prohibited from engaging in any conduct with
the purpose or likely effect of substantially lessening
competition in a market in which the corporation (or its
related bodies corporate) supplies or acquires goods or
services;
a new prohibition on engaging in a ‘concerted practice’ that
has the purpose, effect or likely effect of substantially
lessening competition;
in light of the new concerted practices prohibition, the
repeal of the bank-specific prohibition on price signalling;
providing the ACCC with a ‘class exemption’ power which
enables it to determine that various provisions in the
Competition and Consumer Act 2010 (Cth) do not apply to
certain types of conduct;
removing the per se prohibition on third line forcing or ‘third
party bundling’ of goods and services unless the conduct is
notified to the ACCC. Instead this practice will be subject
to a test of whether the bundling is likely to have the
purpose, effect or likely effect of substantially lessening
competition; and
streamlining the existing procedure to review proposed
mergers.
Comprehensive Credit Reporting (CCR)
On 28 March 2018, the National Consumer Credit Protection
Amendment (Mandatory Comprehensive Credit Reporting) Bill
2018 (Cth) was introduced into Parliament. Whilst the bill
remains in the Senate, if passed in its current form, the bill will
mandate the provision of CCR data to credit reporting bodies.
Westpac is committed to the use of CCR to support our
principles of responsible lending, and as such we voluntarily
supplied 55% of our consumer credit accounts on 17
September 2018.
Westpac will supply the residual 45% of consumer credit
accounts by 17 September 2019. To support our
im
plementation, Westpac is now a signatory of the Principles
of Reciprocity and Data Exchange, which provides governance
and most importantly key consumer data protection protocols
within the CCR data sharing environment.
Financial benchmarks reform
The Treasury Laws Amendment (2017 Measures No.5) Act
2018 (Cth) commenced on 12 April 2018 which strengthens the
regulation of financial benchmarks. The measures include
:
ASIC 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;
administrators of significant benchmarks being required to
hold a new ‘benchmark administrator’ licence issued by
ASIC (unless granted an exemption); and
the 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 offence and subject to civil penalties.
Issue of Westpac Capital Notes
5
On 13 March 2018, Westpac issued $1.69 billion of securities
known as Westpac Capital Notes 5, which qualify as Additional
Tier 1 capital under APRA’s capital adequacy framework.
Transfer and conversion of Westpac convertible preference
shares (CPS)
On 13 March 2018, $623 million of CPS were transferred to the
Westpac CPS nominated party for $100 each pursuant to the
Westpac Capital Notes 5 reinvestment offer. Those CPS were
subsequently bought back and cancelled by Westpac.
On 3 April 2018, the remaining $566 million of CPS were
transferred to the Westpac CPS nominated party for $100
each. Following the transfer, those remaining CPS were
converted into 19,189,765 ordinary shares
.
ASIC’s responsible lending litigation against Westpac
On 1 March 2017, ASIC commenced Federal Court
proceedings against Westpac in relation to home loans entered
into between December 2011 and March 2015, which were
automatically approved by Westpac’s systems as part of
broader processes. On 4 September 2018 Westpac and ASIC
agreed to settle the proceedings on the basis of a proposed
$35 million penalty and declarations that Westpac contravened
the National Consumer Credit Protection Act 2009 (Cth)
(NCCPA). The proposed settlement is subject to Court
approval, and involves Westpac accepting that during the
relevant period (December 2011 – March 2015), the way that
Westpac used the Household Expenditure Measure (HEM)
benchmark to assess home loans and the way that Westpac
assessed certain interest only loans breached the NCCPA. This
meant that during the relevant period, approximately 10,500
home loans should have been referred to manual assessment
by a credit officer. A hearing on the proposed settlement was
held on 24 October 2018 and judgment has been reserved
.

Information on Westpac
2018 Westpac Group Annual Report17
Outbound scaled advice division proceedings
On 22 December 2016, ASIC commenced Federal Court
proceedings against BT Funds Management Limited (BTFM)
and Westpac Securities Administration Limited in relation to a
number of superannuation account consolidation campaigns
conducted between 2013 and 2016. ASIC has alleged that in
the course of some of these campaigns, customers were
provided with personal advice in contravention of a number of
Corporations Act 2001 (Cth) provisions. ASIC has selected 15
specific customers as the focus of their claim. The proceedings
were heard in February 2018. Judgment is pending
.
ASIC’s proceedings against Westpac for poor financial advice
by a financial planner
On 14 June 2018, ASIC commenced proceedings in the
Federal Court against Westpac in relation to alleged poor
financial advice provided by a former financial planner, Mr
Sudhir Sinha. Mr Sinha was dismissed by Westpac in
November 2014 and subsequently banned by ASIC. Westpac
has proactively initiated remediation to identify and compensate
affected customers and has completed remediation activities.
ASIC’s proceedings relate to advice provided by Mr Sinha in
respect of four specific customer files. Westpac has filed a
response to ASIC’s allegations.
Class action against Westpac Banking Corporation and
Westpac Life Insurance Services Limited
On 12 October 2017, a class action was filed in the Federal
Court of Australia on behalf of customers who, since
October 2011, obtained insurance issued by Westpac Life
Insurance Services Limited (WLIS) on the recommendation of
financial advisers employed within the Westpac Group. The
plaintiffs have alleged that aspects of the financial advice
provided by those advisers breached fiduciary and statutory
duties owed to the advisers’ clients, including the duty to act in
the best interests of the client, and that WLIS was knowingly
involved in those alleged breaches. Westpac and WLIS are
defending the proceedings. These proceedings are currently
stayed by order of the Court, pending the outcome of an appeal
concerning a procedural issue unrelated to the substantive
claims made in the class action.
BBSW proceedings
Following ASIC’s investigations into the interbank short-term
money market and its impact on the setting of the bank bill
swap reference rate (BBSW), on 5 April 2016, ASIC
commenced civil proceedings against Westpac in the Federal
Court of Australia, alleging certain misconduct, including marke
t
manipulation and unconscionable conduct. The conduct that
was the subject of the proceedings was alleged to have
occurred between 6 April 2010 and 6 June 2012. ASIC sought
declarations from the court that Westpac breached various
provisions of the Corporations Act 2001 (Cth) and the
Australian Securities and Investments Commission Act 2001
(Cth), pecuniary penalties of unspecified amounts and orders
requiring Westpac to implement a comprehensive compliance
program for persons involved in Westpac’s trading in the
relevant market. The proceedings were heard in late 2017. On
24 May 2018, Justice Beach found that Westpac had not
engaged in market manipulation or misleading or deceptive
conduct under the Corporations Act 2001 (Cth). His Honour
also found that there was no ‘trading practice’ of manipulating
the
BBSW rate. However, the Court found that Westpac engaged
in unconscionable conduct on 4 occasions and that Westpac
breached its supervisory duty. Costs and penalties will be
determined in the coming months
.
In August 2016, a class action was filed in the United States
District Court for the Southern District of New York against
Westpac and a large number of other Australian and
international banks alleging misconduct in relation to BBSW.
These proceedings are at an early stage and the level of
damages sought has not been specified. Westpac is defending
these proceedings.
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. In the first 12
months following the introduction of the Bank Levy, Westpac
paid $376 million to the Australian Government
.
Taxation of cross-border financing arrangements
The Australian and New Zealand Governments have each
decided to implement the Organisation for Economic C
o-
operation and Development’s (OECD) proposals relating to the
taxation treatment of cross-border financing arrangements.
These proposals affect the taxation arrangements for certain
‘hybrid’ regulatory capital instruments issued by Westpac. The
Australian provisions were enacted on 24 August 2018 and
provide for limited grandfathering of certain previously issued
Additional Tier 1 capital securities. The New Zealand provisions
were enacted on 27 June 2018 and similarly provide for limited
grandfathering of certain previously issued Tier 2 capital
securities.
APRA’s proposed changes to capital standards
The final report of the FSI in 2014 recommended that APRA set
capital standards such that the capital ratios of Australian ADIs
are “unquestionably strong”.
On 19 July 2017, APRA released an Information Paper titled
‘Strengthening Banking System Resilience - Establishing
Unquestionably Strong Capital Ratio
s’. In its release, APRA
concluded that the four major Australian banks, including
Westpac, need to have a CET1 ratio of at least 10.5%, as
measured under the existing capital framework, to be
considered “unquestionably strong.” Banks are expected to
meet this new benchmark by 1 January 2020. APRA has
announced that it expects to consult on draft prudential
standards giving effect to the new framework in 2018, leading
to the determination of final prudential standards in 2019. The
new framework is anticipated to take effect in early 2021.
During 2018, APRA commenced consultation and issued the
following discussion papers:
‘Revision to the Capital Framework for Authorised Deposit-
Taking Institutions’. The paper included proposed revisions
to the capital framework which incorporates the finalisation
of the Basel Committee on Banking Supervision (BCBS)
Basel III reforms in December 2017, as well as other
changes to better align the framework to risks, including in
relation t
o

Information on Westpac
18
2018 Westpac Group Annual Report
home lending. In relation to proposed traded market risk
reforms published by the BCBS (also referred to as
“Fundamental Review of the Trading Book”), APRA have
advised that it will defer its decision on the scope and
timing of any domestic implementation of the market risk
framework until after it has been finalised by the BCBS.
‘Leverage Ratio Requirements for Authorised Deposit-
Taking Institutions’. This discussion paper proposes to
impose a minimum leverage ratio requirement of 4% for
ADIs that use the internal ratings-based approach to
determine capital adequacy from 1 July 2019. Australian
banks are currently required to report leverage ratios under
the existing requirements as part of Pillar 3 disclosures.
‘Improving the transparency, comparability and flexibility of
the ADI capital framework’. The discussion paper outlines
options APRA is considering for the presentation of capital
ratios, minimum capital requirements and capital
instrument triggers. This could result in changes to capital
ratios and minimum capital requirements and the Capital
Trigger Event level of 5.125% could stay the same or
increase. The dollar amount of CET1 surplus above the
Capital Trigger Event level of 5.125% will depend on the
final option implemented by APRA. As the proposals are
at an early consultation stage it is too soon to determine
final impacts.
APRA has announced that its revisions to the capital framework
are not intended to necessitate further capital increases for the
industry above the 10.5% benchmark. However, given the
proposals include higher risk weights for certain mortgage
products, such as interest only loans and loans for investment
purposes, the impact on individual banks may vary. Given that
the proposals are at the early consultation stage and final
details remain unclear, it is too soon to determine the impact on
Westpac.
Resolution planning including additional loss absorbing
capacity and APRA’s crisis management powers
In response to the FSI recommendations, the Australian
Government also agreed to further reforms regarding crisis
management and to establish a framework for minimum loss-
absorbing and recapitalisation capacity.
On 5 March 2018, legislation came into effect which
strengthens APRA’s crisis management powers. The intention
of these reforms is to strengthen APRA’s powers to facilitate
the orderly resolution of an institution so as to protect the
interests of depositors and to protect the stability of the financial
system. The reforms also enhance APRA’s ability to take
actions in relation to resolution planning, including measures to
ensure regulated entities and their groups are better prepared
for resolution.
APRA expects to commence consultation on a framework for
minimum loss-absorbing and recapitalisation capacity later in
2018. The intention of this would be to facilitate the orderly
resolution of banks and minimise taxpayer support.
Macro-prudential regulation
From December 2014, APRA began using macro-prudential
measures targeting mortgage lending. This included limiting
investment property lending growth to below 10%, imposing
additional levels of conservatism in serviceability assessments,
and restricting mortgage lending with interest only terms to 30%
of new mortgage lending. APRA also indicated that it expects
ADIs to place strict internal limits on the volume of interest only
loans with loan-to-valuation ratios (LVR) above 80%.
Westpac has implemented steps to achieve these limits,
including introducing differential pricing for investor property
loans and interest only loans, a restriction on the volume of
interest only loans with an LVR of greater than 80% (includes
limit increases, interest only term extension and switches), no
repayment switch fee for customers switching to principal and
interest from interest only loans and no longer accepting
external refinances (from other financial institutions) for owne
r
occupied interest only loans. Interest only residential mortgages
constituted 22.6% of new mortgage lending for the quarte
r
ended 30 September 2018 (currently 34.7% of Westpac’s
overall Australian residential mortgage portfolio as at 30
September 2018).
On 26 April 2018, APRA announced its intention to remove the
existing 10% limit on investment property lending growth and
replace it with more permanent measures to strengthen lending
standards. In order to no longer be subject to this limit from 1
July 2018, ADIs will be required to demonstrate to APRA that
they have been operating below the 10% limit for at least the
past 6 months. In addition, an AD
I’s Board will be required to
provide an assurance to APRA in relation to its lending policies
and practices. Westpac is currently subject to the 10% limit
.
Net Stable Funding Ratio
In December 2016, APRA released an updated prudential
standard on liquidity (APS 210) which took effect from 1
January 2018. The revised APS 210 includes the Net Stable
Funding Ratio (NSFR) requirement; a measure designed to
encourage longe
r-term funding of assets and better match the
duration of assets and liabilities
.
Westpac’s NSFR as at 30 September 2018 was 114%, above
the NSFR requirement of 100%.
Committed Liquidity Facility - annual application
The Reserve Bank of Australia makes available to ADIs a
Committed Liquidity Facility (CLF) that, subject to qualifying
conditions, can be accessed to meet LCR requirements unde
r
APS210: Liquidity. Westpac’s CLF allocation has been
decreased from $57.0 billion in 2018 to $54.0 billion for 2019.
Transition to AASB 9
AASB 9: Financial Instruments (AASB 9) will replace AASB 139
Financial Instruments: Recognition and Measurement from 1
October 2018. AASB 9 includes a forward looking ‘expected
credit los
s’ impairment model, revised classification and
measurement model and modifies the approach to hedge
accounting
.
The adoption of AASB 9 is expected to reduce retained
earnings at 1 October 2018 by approximately $709 million (net
of tax) primarily due to the increase in impairment provisions
under the new standard. The Group continues to assess and
refine certain aspects of our impairment provisioning process.
There is no significant impact to our regulatory capital.

Information on Westpac
2018 Westpac Group Annual Report19
Further details of the changes under the new standard are
included in Note 1 to the financial statements.
Transition to AASB 15
AASB 15: Revenue from Contracts with Customers (AASB 15)
will replace AASB 118 Revenue and related Interpretations
from 1 October 2018. AASB 15 provides a systematic
approach to revenue recognition by introducing a five-step
model governing revenue measurement and recognition. The
application of AASB 15 will not have a material impact on the
Group’s net profit or retained earnings.
Further details of the changes under the new standard are
included in Note 1 to the financial statements.
APRA Prudential Standard APS 222: Associations with Related
Entities
On 2 July 2018, APRA released a Discussion Paper and
consultation draft in relation to prudential standard APS 222:
Associations with Related Entities. The Discussion Paper
proposes changes to the requirements for ADIs in managing
their risks from associations with related parties. The proposals
include changes to the definition and measurement of
exposures to related entities, prudential limits and broadening
the definition of related entities to include substantial
shareholders, individual board directors and other related
individuals. The proposals are at consultation stage and final
details remain unclear. It is expected that once finalised, the
framework will be implemented from 1 January 2020.
APRA Prudential Standard CPS 234: Information Security
Management
On 7 March 2018, APRA released a consultation draft of a new
cross-industry prudential standard CPS 234: Information
Security Management. APRA announced that the proposed
standard is aimed at improving the ability of APRA-regulated
entities to detect cyber adversaries and respond swiftly and
effectively in the event of a breach.
The proposed prudential standard would require APRA-
regulated entities to (amongst other things):
define the information security related roles and
responsibilities of the board, senior management and
governing bodies;
maintain an information security capability that is
commensurate with the size and extent of threats the entity
faces;
implement information security controls to protect
information assets;
undertake regular testing and assurance on the
effectiveness of those information security controls;
have mechanisms to detect and respond to information
security incidents in a timely manner; and
notify APRA of material information security incidents.
APRA announced that it intends to finalise the proposed
prudential standard towards the end of 2018, with a view to
implementing from 1 July 2019. Westpac continues to enhance
its systems and processes to further mitigate cybersecurity
risks
.
Brexit
On 29 March 2017, the Prime Minister of the United Kingdom
(UK) notified the European Council in accordance with
Article 50 of the Treaty on European Union of the UK’s intention
to withdraw from the European Union (EU), triggering a two
year period for the negotiation of the UK’s withdrawal from the
EU
.
As Westpac’s business and operations are based
predominantly in Australia and New Zealand, the direct impact
of the UK’s departure from the EU is unlikely to be material to
Westpac. However, it remains difficult to predict the impact that
Brexit may have on financial markets, the global economy and
the global financial services industry. Westpac has contingency
planning in place and is continuing to monitor the implications
of Brexit.
London Interbank Offered Rate
In July 2017, the Financial Conduct Authority, which regulates
the London Interbank Offered Rate (LIBOR), announced that it
would not require panel banks to continue to submit rates for
the calculation of the LIBOR benchmark after 2021.
Accordingly, the continuation of LIBOR in its current form will
not be guaranteed after 2021, and it is likely that LIBOR will be
discontinued or modified by 2021. It is currently uncertain what
developments or future changes will occur in the administration
of LIBOR or any other benchmarks. Any such developments or
changes could impact the return on, value of and market for,
securities and other instruments whose returns are linked to
any such benchmarks, including those securities or othe
r
instruments issued by the Group.
European Union General Data Protection Regulation
The European Union (EU) General Data Protection Regulation
(GDPR) contains new data protection requirements that came
into effect from 25 May 2018. The GDPR is intended to
‘strengthen and unify’ data protection for individuals across the
EU and supersedes the existing EU Data Protection Directive.
Australian businesses of any size may need to comply if they
have an establishment in the EU, if they offer goods or services
in the EU, or if they monitor the behaviour of individuals in the
EU. Westpac implemented a number of changes and updates
to policies and systems prior to the commencement of the
GDPR, and those changes to policies and systems are
continuing
.
OTC derivatives reform
International regulatory reforms relating to over-the-counter
(OTC) derivatives continue to be implemented across the
globe, with a current focus on initial margin and risk mitigation
practices for no
n-centrally cleared derivatives.
Australian standards for risk mitigation practices relating to
trading relationship documentation, trade confirmations,
portfolio reconciliation and compression and valuation and
dispute resolution processes came into force in March 2018
and have now been implemented
.
Global initial margin requirements commenced on 1
September 2016. These requirements are being introduced in
phases until 1 September 2020 and work is underway within
Westpac to comply with these regulations.
New Zealand
Regulatory reforms and significant developments in New
Zealand include:

Information on Westpac
202018 Westpac Group Annual Report
RBNZ - Revised Outsourcing Policy
On 19 September 2017, the RBNZ advised Westpac New
Zealand Limited (WNZL) of changes to its conditions of
registration that will give effect to the RBNZ’s revised
Outsourcing Policy (BS11) (Revised Outsourcing Policy). Both
the changes to the conditions of registration and the Revised
Outsourcing Policy came into effect on 1 October 2017. The
Revised Outsourcing Policy sets out requirements that banks
need to meet when outsourcing particular functions and
services, especially if the service provider is a related party of
the bank. WNZL will have two years before it must fully comply
with the requirement to maintain a compendium of outsourcing
arrangements and five years to fully comply with other aspects
of the Revised Outsourcing Policy.
RBNZ Capital Review
The RBNZ is undertaking a Bank Capital Adequacy Framework
review on the makeup of bank capital. The RBNZ has now
made “in principle” decisions on the risk weighted assets
framework, including the introduction of dual reporting, a
standardised methodology for operational risk, and capital
floors to internal rating models. These changes will be reflected
in the revised framework which is scheduled to be released in
Q4 2019. The RBNZ will progress the in principle decisions
over 2018 and 2019, informed by a quantitative impact study
and feedback on the minimum capital settings during Q4 2018.
Reform of the regulation of financial advice
In July 2016, the New Zealand Government announced plans
for changes to the regime regulating financial advice. The new
regime is set out in the Financial Services Legislation
Amendment Bill (FSLAB), which had its second reading in
Parliament in September 2018. Under FSLAB, financial advice
will be provided by licensed firms who will employ financial
advisers and nominated representatives. A Code of Conduct
will apply to all advice and advisers and representatives will be
subject to the same duties and ethical standards. Firms will be
responsible for ensuring that their advisers and representatives
comply with these duties. The reforms will also remove
legislative barriers to the provision of robo-advice.
A two stage transition is proposed. At this stage, the Code of
Conduct is expected to be approved in Q2 2019. There will be
a 9-month period from the Code’s approval to initial
implementation of the new regime, after which a 2-year safe
harbour for competency requirements will apply.
RBNZ - Review under section 95 of the Reserve Bank of New
Zealand Act 1989
On 10 February 2017, the RBNZ issued WNZL with a notice
under section 95 of the Reserve Bank of New Zealand Act
1989, requiring WNZL to obtain an independent review of its
compliance with advanced internal rating-based aspects of the
RBNZ’s ‘Capital Adequacy Framework (Internal Models Based
Approach)’ (BS2B). WNZL has disclosed non-compliance with
BS2B (compliance with which is a condition of registration for
WNZL) in its quarterly disclosure statements. On 15
November 2017, the RBNZ advised WNZL of changes to its
conditions of registration resulting from the review. The
changes to WNZL’s conditions of registration came into effect
on 31 December 2017 and increase the minimum Total Capital
ratio, Tier 1 Ca
pital ratio
and Common Equity Tier 1 Capital ratio of WNZL and its
controlled entities by 2%. WNZL has also undertaken to the
RBNZ to maintain the Total Capital ratio of WNZL and its
controlled entities above 15.1%. WNZL and its controlled
entities retain an appropriate amount of capital to comply with
the increased minimum ratios. The RBNZ requires WNZL to
sufficiently address non-compliance issues by 30 June 2019. A
remediation plan has been provided to the RBNZ. WNZL is
providing regular updates on the scope of its remediation
activity to the RBNZ to ensure compliance by 30 June 2019
.
Review of the Reserve Bank of New Zealand Act
In November 2017, the New Zealand Government announced it
will undertake a review of the Reserve Bank of New Zealand
Act 1989 (Act) (RBNZ Review). The RBNZ Review aims to
ensure the RBNZ’s monetary and financial policy framework
still provides the most efficient and effective model for New
Zealand. The RBNZ Review will consist of two phases. Phase
1 focuses on whether the RBNZ’s decision-making process for
monetary policy is robust, and draft legislation for the proposed
Phase 1 related changes to the Act has been published. The
terms of reference for Phase 2 were released in June 2018 and
will consider broader issues, including the macro-prudential
framework, the current prudential supervision model and trans-
Tasman coordination. The first consultation on Phase 2 was
issued on 1 November 2018
.
Residential Mortgage Bond Collateral Standard Review
When the RBNZ lends to banks and other counterparties it
does so against ‘eligible collateral’ (mortgage bonds). In New
Zealand, mortgage bonds are not generally traded. On 17
December 2017, the RBNZ published an issues pape
r
proposing an enhanced mortgage bond standard aimed at
supporting confidence and liquidity in the financial system, and
a more standardised and transparent framework for mortgage
bonds, which would improve their quality and make them more
marketable and a new format for mortgage bonds. The RBNZ is
engaging with industry to develop this new mortgage bond
standard.
RBNZ/FMA – Financial Services Conduct & Culture Review
In May 2018, the RBNZ and FMA commenced a review in
respect of New Zealand’s 10 major banks & 15 life insurers,
including WNZL and Westpac Life-NZ-Limited, to explain why
conduct issues highlighted by the Australian Royal Commission
are not present in New Zealand. WNZL and Westpac Life have
provided the regulators with information in relation to this
review. An industry thematic review report for the banks is
expected to be released in November 2018 and for the life
insurers in December 2018
.

Information on Westpac
2018 Westpac Group Annual Report21
Supervision and regulation
Australia
Within Australia, we are subject to supervision and regulation
by six principal agencies: the Australian Prudential Regulation
Authority (APRA); the Reserve Bank of Australia (RBA); the
Australian Securities and Investments Commission (ASIC); the
Australian Securities Exchange (ASX); the Australian
Competition and Consumer Commission (ACCC); and the
Australian Transaction Reports and Analysis Centre
(AUSTRAC).
APRA is the prudential regulator of the Australian financial
services industry. It oversees banks, credit unions, building
societies, general insurance, re-insurance, life insurance and
private health insurance companies, friendly societies and most
of the superannuation (pension) industry. APRA’s role includes
establishing and enforcing prudential standards and practices
designed to ensure that, under all reasonable circumstances,
financial promises made by the institutions it supervises are
met within a stable, efficient and competitive financial system.
APRA has recently received new and strengthened powers
under the Banking Executive Accountability Regime. For further
information, refer to ‘Significant developments’ above.
As an ADI, we report prudential information to APRA, including
information in relation to capital adequacy, large exposures,
credit quality and liquidity. Our controlled entities in Australia
that are authorised insurers and trustees of superannuation
funds are also subject to the APRA regulatory regime.
Reporting is supplemented by consultations, on-site inspections
and targeted reviews. Our external auditor also has an
obligation to report on compliance with certain statutory and
regulatory banking requirements and on any matters that in
their opinion may have the potential to materially prejudice the
interests of depositors and other stakeholders.
Australia’s risk-based capital adequacy guidelines are based on
the approach agreed upon by the BCBS. National discretion is
then applied to that approach, which has resulted in Australia’s
capital requirements being more stringent. Refer to ‘Capital
resources – Basel Capital Accord’ in Section 2.
The RBA is responsible for monetary policy, maintaining
financial system stability and promoting the safety and
efficiency of the payments system. The RBA is an active
participant in the financial markets, manages Australia’s foreign
reserves, issues Australian currency notes and serves as
banker to the Australian Government.
ASIC is the national regulator of Australian companies and
consumer protection within the financial sector. Its primary
responsibility is to regulate and enforce company, consumer
credit, financial markets and financial products and services
laws that protect consumers, investors and creditors. With
respect to financial services, it promotes fairness and
transparency by providing consumer protection, using
regulatory powers to enforce laws relating to deposit-taking
activities, general insurance, life insurance, superannuation,
retirement savings accounts, securities (such as shares,
debentures and managed investments) and futures contracts
and financial advice. ASIC has responsibility for supervising
trading on Australia’s domestic licensed markets and of trading
participants. There are currently proposals to strengthen ASIC’s
existin
g powers and to provide ASIC with
a product intervention power. For further information, refer to
‘Significant developments’ above.
The ASX operates Australia’s primary national market for
trading of securities issued by listed companies. Some of our
securities (including our ordinary shares) are listed on the ASX
and we therefore have obligations to comply with the ASX
Listing Rules, which have statutory backing under the
Corporations Act 2001 (Cth). The ASX has responsibility for the
oversight of listed entities under the ASX Listing Rules and for
monitoring and enforcing compliance with the ASX Operating
Rules by its market, clearing and settlement participants. ASX
is now also the benchmark administrator of BBSW
.
The ACCC is the regulator responsible for the regulation and
prohibition of anti-competitive and unfair market practices and
mergers and acquisitions in Australia. Its broad objective is to
administer the Competition and Consumer Act 2010 (Cth) and
related legislation to bring greater competitiveness, fair trading,
consumer protection and product safety to the Australian
economy. The ACC
C’s role in consumer protection
complements that of ASIC (for financial services) and
Australian state and territory consumer affairs agencies that
administer the unfair trading legislation of their jurisdictions
.
The Australian Government’s present policy, known as the ‘four
pillars polic
y’, is that there should be no fewer than four major
banks to maintain appropriate levels of competition in the
banking sector. Under the Financial Sector (Shareholdings) Act
1998 (Cth), the Australian Government’s Treasurer must
approve an entity acquiring a stake of more than 15% in a
particular financial sector company
.
Proposals for foreign acquisitions of a stake in Australian banks
are subject to the Australian Governmen
t’s foreign investment
policy and, where required, approval by the Australian
Government under the Australia
n Foreign Acquisitions and
Takeovers Act 197
5 (Cth). For further details refer to
‘Limitations affecting security holders’ in Section 4.
AUSTRAC oversees the compliance of Australian reporting
entities (including Westpac) with the requirements under the
Anti-Money Laundering and Counter-Terrorism Financing Act
200
6 (Cth) and the Financial Transaction Reports Act 1988
(Cth). These requirements include
:
implementing programs for identifying and monitoring
customers, and for managing the risks of money
laundering and terrorism financing;
reporting suspicious matters, threshold transactions and
international funds transfer instructions; and
submitting an annual compliance report.
AUSTRAC provides financial information to Australian federal
law enforcement, national security, human services and
revenue agencies, and certain international counterparts
.

Information on Westpac
222018 Westpac Group Annual Report
New Zealand
The Reserve Bank of New Zealand (RBNZ) is responsible for
supervising New Zealand registered banks and protects the
financial stability of New Zealand through the application of
minimum prudential obligations. The New Zealand prudential
supervision regime requires that registered banks publish
disclosure statements, which contain information on financial
performance and risk positions as well as attestations by the
directors about the bank’s compliance with its conditions of
registration and certain other matters.
The Financial Markets Authority (FMA) and the New Zealand
Commerce Commission (NZCC) are the two primary conduct
and enforcement regulators. The FMA and NZCC are
responsible for ensuring that markets are fair and transparent
and are supported by confident and informed investors and
consumers. Regulation of markets and their participants is
undertaken through a combination of market supervision,
corporate governance and licensing approvals.
In New Zealand, other relevant regulator mandates include
those relating to taxation, privacy and foreign affairs and trade.
Banks in New Zealand are also subject to a number of self-
regulatory regimes. Examples include NZ Payments, the New
Zealand Bankers’ Association and the Financial Services
Council (FSC). Examples of industry agreed codes include the
New Zealand Bankers’ Association’s Code of Banking Practice
and FSC’s Code of Conduct.
United States
Our New York branch is a US federally licensed branch and
therefore is subject to supervision, examination and regulation
by the US Office of the Comptroller of the Currency and the
Board of Governors of the Federal Reserve System (the US
Federal Reserve) under the US International Banking Act of
1978 (IBA) and related regulations.
A US federal branch must maintain, with a US Federal Reserve
member bank, a capital equivalency deposit as prescribed by
the US Comptroller of the Currency, which is at least equal to
5% of its total liabilities (including acceptances, but excluding
accrued expenses, and amounts due and other liabilities to
other branches, agencies and subsidiaries of the foreign bank).
In addition, a US federal branch is subject to periodic onsite
examination by the US Comptroller of the Currency. Such
examination may address risk management, operations, asset
quality, compliance with the record-keeping and reporting, and
any additional requirements prescribed by the US Comptroller
of the Currency from time to time.
A US federal branch of a foreign bank is, by virtue of the IBA,
subject to the receivership powers exercisable by the US
Comptroller of the Currency.
As of 22 June 2016, we elected to be treated as a financial
holding company in the US pursuant to the Bank Holding
Company Act of 1956 and Federal Reserve Board Regulation
Y. Our election will remain effective so long as we meet certain
capital and management standards prescribed by the US
Federal Reserve.
Westpac and some of its affiliates are engaged in various
activities that are sub
ject to regulation by other US federal
regulatory agencies, including the US Securities and Exchange
Commission, the US Commodity Futures Trading Commission
and the National Futures Association
.
Anti-money laundering regulation and related
requirements
Australia
Westpac has a Group-wide program to manage its obligations
under the Anti-Money Laundering and Counter-Terrorism
Financing Act 200
6 (Cth). We continue to actively engage with
the regulator, AUSTRAC, on our activities.
Our Anti-Money Laundering and Counter-Terrorism Financing
Policy (AML/CTF Policy) sets out how the Westpac Group
complies with its legislative obligations
.
The AML/CTF Policy applies to all business divisions and
employees (permanent, temporary and third party providers)
working in Australia, New Zealand and overseas.
United States
The USA PATRIOT Act of 2001 requires US financial
institutions, including the US branches of foreign banks, to take
certain steps to prevent, detect and report individuals and
entities involved in international money laundering and the
financing of terrorism. The required actions include verifying the
identity of financial institutions and other customers and
counterparties, terminating correspondent accounts for foreign
‘shell banks’ and obtaining information about the owners of
foreign bank clients and the identity of the foreign bank’s agent
for service of process in the US. The anti-money laundering
compliance requirements of the USA PATRIOT Act include
requirements to adopt and implement an effective ant
i-money
laundering program, report suspicious transactions or activities,
and implement due diligence procedures for correspondent and
other customer accounts. Westpac’s New York branch and
Westpac Capital Markets LLC maintain an anti-money
laundering compliance program designed to address US
legal requirements
.
US economic and trade sanctions, as administered by the
Office of Foreign Assets Control (OFAC), prohibit o
r
significantly restrict US financial institutions, including the US
branches and operations of foreign banks, and other US
persons from doing business with certain persons, entities and
jurisdictions. Westpac’s New York branch and Westpac Capital
Markets LLC maintain compliance programs designed to
comply with OFAC sanctions programs, and Westpac has a
Grou
p-wide program to ensure adequate compliance.
Legal proceeding
s
Our entities are defendants from time to time in legal
proceedings arising from the conduct of our business. Material
legal proceedings, if any, are described in Note 31 to the
financial statements and under ‘Significant developments’
above. Where appropriate as required by the accounting
standards, a provision has been raised in respect of these
proceedings and disclosed in the financial statements
.
Principal office
Our principal office is located at 275 Kent Street, Sydney,
New South Wales, 2000, Australia. Our telephone number fo
r
calls within Australia is (+61) 2 9155 7713 and our international
telephone number is (+61) 2 9155 7700.

Corporate governance
2018 Westpac Group Annual Report
23
Introduction
This Corporate Governance Statement, which has been
approved by the Board, describes our corporate governance
framework, policies and practices as at 5 November 2018.
Framework and approach
Our approach to corporate governance is based on a set of
values and behaviours that underpin day-to-day activities,
provide transparency and fair dealing and seek to protect
stakeholder interests.
This approach includes a commitment to excellence in
governance standards, which Westpac sees as fundamental to
the sustainability of our business and our performance. It
includes monitoring local and global developments in corporate
governance and assessing their implications.
We have equity securities quoted on securities exchanges in
Australia, New Zealand and the United States.
Australia
The principal listing of Westpac ordinary shares is on the ASX,
trading under the code WBC. Westpac also has hybrid
securities, capital notes, senior notes and subordinated notes
listed on the ASX.
We comply with the ASX Corporate Governance Principles and
Recommendations (third edition) (ASXCGC
Recommendations) published by the ASX Limited’s Corporate
Governance Council (ASXCGC). We must also comply with the
Corporations Act, the Banking Act, including Part IIAA – The
Banking Executive Accountability Regime amongst other laws,
and, as an Authorised Deposit-taking Institution, with
governance requirements prescribed by APRA under
Prudential Standard CPS 510 Governance.
This Corporate Governance Statement addresses each of the
ASXCGC Recommendations with an explanation of our
corporate governance practices, demonstrating our compliance
with each Recommendation
.
Further details about the ASXCGC Recommendations can be
found on the ASX website www.asx.com.au.
New Zealand
Westpac’s ordinary shares are also quoted on the NZX, which
is the main board equity security market operated by NZX
Limited. Westpac also has subordinated notes quoted on the
NZX Debt Market. As an overseas listed issuer in New
Zealand, we are deemed to satisfy and comply with the NZX
Listing Rules, provided that we remain listed on the ASX and
comply with the ASX Listing Rules.
The ASX, through the ASXCGC Recommendations and the
NZX, through the NZX Corporate Governance Code, have
adopted similar ‘comply or explain’ approaches to corporate
governance. The ASXCGC Recommendations may, however,
materially differ from the corporate governance rules and the
principles of NZX’s Corporate Governance Code.
United States
Westpac has American Depositary Shares (ADS) representing
its ordinary shares quoted on the New York Stock Exchange
(NYSE), trading under the symbol WBK. Under the NYSE
Listing Rules, foreign private issuers (like Westpac) are
permitted to follow home country practice in
respect of corporate governance in lieu of the NYSE Listing
Rules. However, we are still required to comply with certain
audit committee and additional notification requirements
.
We comply in all material respects with all NYSE Listing
Rules applicable to us.
Under the NYSE Listing Rules, foreign private issuers are
required to disclose any significant ways in which their
corporate governance practices differ from those followed by
domestic US companies. We have compared our corporate
governance practices to the corporate governance
requirements of the NYSE Listing Rules and note the significant
differences below
.
The NYSE Listing Rules require that, subject to limited
exceptions, shareholders be given the opportunity to vote on
equity compensation plans and material revisions to those
plans. In Australia, there are no laws or ASX Listing Rules that
require shareholder approval of equity based incentive plans o
r
individual grants under those plans (other than for Directors,
including the Chief Executive Officer (CEO))
.
Westpac’s employee equity plans have been disclosed in the
Remuneration Report in Section 10 of the Director
s’ report,
which is subject to a non-binding shareholder vote at the
Annual General Meeting (AGM) and grants to our CEO are
approved by shareholders. The details of grants under ou
r
equity-based incentive plans have been disclosed in Note 37 of
our financial statements for the year ended
30 September 2018
.
The NYSE Listing Rules set out specific requirements for
determining whether a director will be regarded as
independent. While these requirements are broadly consistent
with Westpac’s criteria for independence (described below
unde
r ‘Board, Committees and oversight of management’),
under Australian independence requirements, the Board is able
to apply discretion in its determination of a director’s
independence that differs from the NYSE Listing Rules
.
The NYSE Listing Rules provide that the Board Nominations
Committee’s responsibilities should include selecting, or
recommending that the Board select, the Director nominees fo
r
the next annual meeting for shareholders, and overseeing the
evaluation of the Board. The Board, rather than the Board
Nominations Committee, reviews and recommends the Directo
r
nominees for election at the AGM and undertakes an annual
review of its
performance.

Governance framework
The diagram above shows Westpac’s current governance framework, including the current Committees of the Board. From time to time,
the Board may form other Committees or request Directors to undertake specific extra duties.
In addition, from time to time, the Board participates (either directly or through representatives) in due diligence committees in relation
to strategic decisions, capital and funding activities.
The Executive Team, Disclosure Committee and Executive Risk Committees are not Board Committees (that is, they have no
delegation of authority from the Board) but sit beneath the CEO and the Board Committees to implement Board-approved strategies,
policies and management of risk across the Group.
The key functions of the Board and each of the Board Committees are outlined in this Corporate Governance Statement. All Board
Committee Charters are available on our website at www.westpac.com.au/corpgov.
Corporate governance
242018 Westpac Group Annual Report

Corporate governance
2018 Westpac Group Annual Report25
Board, Committees and oversight of management
The roles, responsibilities and accountabilities of the Board and
Committees were amended during the year by updating the
Board and Committee charters.
Board of Directors
Roles and responsibilities
The Board Charter outlines the roles and responsibilities of the
Board. Key responsibilities are:
overseeing the sound and prudent management of the
Westpac Group;
approving, and overseeing management’s implementation
of, the strategic direction of Westpac Group, its business
plan and significant corporate strategic initiatives;
evaluating Board performance and determining Board size
and composition;
approving the Westpac Board Renewal Policy and the
Westpac Group Remuneration Policy;
selecting, appointing and determining the duration,
remuneration and other terms of appointment of the CEO
and Chief Financial Officer (CFO);
approving individual remuneration levels for
Group Executives, other executives who report directly to
the CEO, any other accountable persons under the
Banking Executive Accountability Regime, and any other
person the Board determines;
evaluating the performance of the CEO;
succession planning for the CEO and Group Executives;
approving the appointment of Group Executives and the
General Manager Group Audit and monitoring the
performance of Group Executives;
approving the annual targets and financial statements and
monitoring performance against forecast and prior periods;
determining our dividend policy;
considering and approving our overall risk management
framework, approving our Group Risk Management
Strategy and Group Risk Appetite Statement and
monitoring the effectiveness of risk management by the
Group;
forming a view of our risk culture and identifying any
desirable changes;
considering the social, ethical and environmental impact of
our activities and monitoring compliance with our
sustainability policies and practices;
overseeing and monitoring Workplace Health and Safety
(WHS) issues in the Group and considering appropriate
WHS reports and information;
maintaining an ongoing dialogue with Westpac’s external
auditor and, where appropriate, principal regulators;
overseeing internal governance, including delegated
authorities and approving policies for appointments to our
controlled entity boards; and
overseeing and monitoring customer complaints.
Delegated authorit
y
The Constitution and the Board Charter enable the Board to
delegate to Committees and management
.
The roles and responsibilities delegated to the Board
Committees are captured in the Charters of each of the five
established Committees, namely
:
Audit;
Risk & Compliance;
Nominations;
Remuneration; and
Technology.
The Board Charter, Board Committee Charters and the
Constitution are available on our website at
www.westpac.com.au/corpgov.
The Delegated Authority Policy Framework outlines principles
to govern decision-making within the Westpac Group, including
appropriate escalation and reporting to the Board. The Board
has also delegated to the CEO, and through the CEO to othe
r
executives, responsibility for the da
y-to-day management of our
business. The scope of, and limitations to, management
delegated authority is clearly documented and covers areas
such as operating and capital expenditure, funding and
securitisation, and lending. These delegations balance effective
oversight with appropriate empowerment and accountability of
management
.

Corporate governance
262018 Westpac Group Annual Report
Independence
Together, the Board members have a broad range of relevant
financial and other skills and knowledge, combined with the
extensive experience necessary to guide our business. Details
are set out in Section 1 of the Directors’ report.
All of our Non-executive Directors satisfy our criteria for
independence, which align with the guidance provided in the
ASXCGC Recommendations and the criteria applied by the
NYSE and the US Securities and Exchange
Commission (SEC).
The Board assesses the independence of our Directors on
appointment and annually. Each Director provides an annual
attestation of his or her interests and independence.
Directors are considered independent if they are independent
of management and free from any business or other
relationship that could materially interfere with, or reasonably
be perceived to materially interfere with, the exercise of their
unfettered and independent judgement. Materiality is assessed
on a case by case basis by reference to each Director’s
individual circumstances rather than by applying general
materiality thresholds.
Each Director is expected to disclose any business or other
relationship that he or she has directly, or as a partner,
shareholder or officer of a company or other entity that has an
interest in Westpac or a related entity. The Board considers
information about any such interests or relationships, including
any related financial or other details, when it assesses the
Directo
r’s independence.

Size and membership of Board Committees as at 30 September 2018
Composition requirements for each Committee are set out in the relevant Committee Charter.
Corporate governance
Board Audit
Committee
Board Risk &
Compliance
Committee
Board Nominations
Committee
Board Remuneration
Committee
Board
Technology
Committee
Committee Composition
Minimum three
members
All members are
Independent Non-
executive
Directors
Chair is
Independent Non-
executive
Director, who is
not the Board
Chairman
Minimum three
members
All members are
Non-executive
Directors
Majority of
members are
Independent Non-
executive Directors
Chair is
Independent
Director, who is not
the Board
Chairman
Composed of all
Board Committee
Chairs, Board
Chairman and such
other members as
determined by the
Board
All members are
Independent Non-
executive Directors
Chair determined
by the Board
Minimum three
members
All members are
Independent Non-
executive Directors
Chair determined by
the Board
Minimum three
members
Maximum one
Executive
Director
All other
members are
Independent
Non-executive
Directors
Chair determined
by the Board
Lindsay Maxsted
Chairman, Non-
executive,
Independent
99
Chair
9
Brian HartzerCEO, Executive9
Nerida Caesar
Non-executive,
Independent
99
Ewen Crouch
Non-executive,
Independent
Chair
9
99
Alison Deans
Non-executive,
Independent
999
Chair
9
Craig Dunn
Non-executive,
Independent
99
Chair
9
Peter Hawkins
Non-executive,
Independent
999
Peter Marriott
Non-executive,
Independent
Chair
9
999
Peter Nash
Non-executive,
Inde
pendent
99
2018 Westpac Group Annual Report
27
1
1

Corporate governance
28
2018 Westpac Group Annual Report
Chairman
The Board elects one of the independent Non-executive
Directors as Chairman. Our Chairman is Lindsay Maxsted, who
became Chairman on 14 December 2011. The Chairman’s role
includes:
providing effective leadership to the Board in relation to all
Board matters;
guiding the agenda and conducting all Board meetings to
facilitate discussions, challenge and decision-making;
in conjunction with the Company Secretaries, arranging
regular Board meetings throughout the year, confirming
that minutes of meetings accurately record decisions taken
and, where appropriate, the views of individual Directors;
overseeing the process for appraising Directors and the
Board as a whole;
overseeing Board succession;
acting as a conduit between management and the Board,
and being the primary point of communication between the
Board and CEO;
representing the views of the Board to the public; and
taking a leading role in creating and maintaining an
effective corporate governance system.
CEO
Our CEO is Brian Hartzer. The CEO’s role includes:
leadership of the management team;
developing strategic objectives for the business and
achievement of planned results; and
the day-to-day management of the Westpac Group’s
operations, subject to the specified delegations of authority
approved by the Board.
Board meetings
The Board had ten scheduled meetings for the financial year
ended 30 September 2018, with additional meetings held as
required. In addition to the Board considering strategic matters
at each Board meeting, the Board also discusses our strategic
plan and approves our overall strategic direction on an annual
basis. The Board also conducts a half year review of our
strategy. The Board conducts workshops on specific subjects
relevant to our business throughout the year. Board meetings
are characterised by robust exchanges of views, with Directors
bringing their experience and independent judgement to bear
on the issues and decisions at hand.
Non-executive Directors regularly meet without management
present, so that they can discuss issues appropriate to such a
forum. In all other respects, senior executives are invited,
where considered appropriate, to participate in Board meetings.
They are also available to be contacted by Directors between
meetings.
Meetings attended by Directors for the financial year ended
30 September 2018 are reported in Section 9 of the Directors’
report.
Nomination and appointment
As set out in its Charter, key responsibilities of the Board
Nominations Committee are
:
assessing the skills required to discharge competently the
Board’s duties having regard to Westpac’s performance,
financial position and strategic direction;
developing, reviewing, assessing and recommending to the
Board policies on Director tenure, Board composition and
size;
reviewing and making recommendations to the Board
annually on diversity generally within the Group,
measurable objectives for achieving diversity and progress
in achieving those objectives;
developing and implementing succession planning for the
Non-executive Directors;
reviewing the process for the orientation and education of
new Directors and any continuing education for existing
Directors;
reviewing eligibility criteria for the appointment of Directors;
considering and recommending candidates for
appointment as Directors to the Board and determining the
terms and conditions (excluding remuneration) on which
Non-executive Directors are appointed and hold office;
considering and recommending candidates for
appointment to the Boards of significant subsidiaries
(including Westpac New Zealand Limited and our
insurance and superannuation businesses); and
reviewing and where necessary, developing the Group’s
corporate governance policies to provide reasonable
assurance that they meet international corporate
governance standards.
Board skills, experience and attributes
Westpac seeks to maintain a Board of Directors with a broad
range of financial and other skills, experience and knowledge
necessary to guide the business of the Group. In addition,
Westpac seeks to maintain a diverse Board, which at a
minimum, collectively has the skills and experience detailed in
Figure 1 overleaf. Figure 1 also illustrates Board tenure and
diversity
.

Figure 1 – Board skills, experience and attributes as at 30 September 2018
Corporate governance
2018 Westpac Group Annual Report29

Corporate governance
302018 Westpac Group Annual Report
The Board Nominations Committee considers and makes
recommendations to the Board on candidates for appointment
as Directors. Such recommendations pay particular attention to
the mix of skills, experience, expertise, diversity, independence
and other qualities of existing Directors, and how the
candidate’s attributes will balance and complement those
qualities and address any potential skills gaps in relation to the
current composition of the Board. External consultants are used
to access a wide base of potential Directors.
Board appointments are also made with regard to the Group’s
Service Revolution vision and five strategic
priorities of:
service leadership;
digital transformation;
performance discipline;
growth highways; and
workforce revolution.
Prior to a Director’s appointment or consideration for election or
re-election by shareholders, Westpac conducts due diligence
and provides shareholders with all material information relevant
to a decision on whether or not to elect or re-elect a Director.
New Directors receive an induction pack which includes a letter
of appointment setting out the expectations of the role,
conditions of appointment including the expected term of
appointment, and remuneration. This letter conforms to the
ASXCGC Recommendations.
Term of office
The Board may appoint a new Director, either to fill a casual
vacancy or as an addition to the existing Directors, provided the
total number of Directors does not exceed fifteen Non-
executive Directors and three Executive Directors. Except for
the Managing Director, a Director appointed by the Board holds
office only until the close of the next AGM but is eligible for
election by shareholders at that meeting.
Our Constitution states that at each AGM, one-third of eligible
Directors, and any other Director who has held office for three
or more years since their last election, must retire. In
determining the number of Directors to retire by rotation, no
account is to be taken of Directors holding casual vacancy
positions or of the CEO. The Directors to retire by rotation are
those who have been the longest in office. A retiring Director
holds office until the conclusion of the meeting at which he or
she retires but is eligible for re-election by shareholders at that
meeting. The Board makes recommendations concerning the
election or re-election of any Director by shareholders. In
considering whether to support a candidate, the Board takes
into account the results of the Board performance evaluation
conducted during the year.
The Westpac Board Renewal Policy limits the maximum tenure
of office that any Non-executive Director other than the
Chairman may serve to nine years, from the date of first
election by shareholders. The maximum tenure for the
For further information about the Service Revolution and our strategic
priorities please refer to ‘Information on Westpac’ in Section 1.
1
1
Chairman is twelve years (inclusive of any term as a Director
prior to being elected as Chairman), from the date of first
election by shareholders. The Board, on its initiative and on an
exceptional basis, may exercise discretion to extend the
maximum terms specified above where it considers that such
an extension would benefit the Group. Such discretion will be
exercised on an annual basis and the Director concerned will
be required to stand for r
e-election annually.
Director induction and continuing education
All new Directors participate in an induction program to
familiarise themselves with our business and strategy, culture
and values and any current issues before the Board. The
induction program includes meetings with the Chairman, the
CEO, the Board Committee Chairs and each Group Executive
.
The Board encourages Directors to undertake continuing
education and training to develop and maintain the skills and
knowledge needed to perform their role as Directors effectively,
including by participating in workshops held throughout the
year, attending relevant site visits and undertaking relevant
external education
.
Access to information and advice
All Directors have unrestricted access to company records and
information, and receive regular detailed financial and
operational reports from senior management. Each Director
also enters into an access and indemnity agreement, which
among other things, provides for access to documents for up to
seven years after his or her retirement as a Director.
The Chairman and other Non-executive Directors regularly
consult with the CEO, CFO and other senior executives, and
may consult with, and request additional information from, any
of our employees.
All Directors have access to advice from senior internal legal
advisors including the Group Executive, Legal & Secretaria
t.
In addition, the Board collectively, and all Directors individually,
have the right to seek independent professional advice, at ou
r
expense, to help them carry out their responsibilities. While the
Chairma
n’s prior approval is needed, it may not be
unreasonably withheld.
Rebecca Lim’s role and title was changed from Group Executive,
Compliance, Legal & Secretariat to Group Executive, Legal & Secretariat
effective from 1 October 2018.
2
2

Corporate governance
2018 Westpac Group Annual Report31
Company Secretaries
Westpac has two Company Secretaries:
The Senior Company Secretary is our Group Executive,
Legal & Secretariat. The Senior Company Secretary
attends Board and Board Committee meetings and is
responsible for providing Directors with advice on legal and
corporate governance issues.
The Group Company Secretary also attends Board and
Board Committee meetings and is responsible for the
operation of the secretariat function, including
implementing our governance framework and, in
conjunction with management, giving practical effect to the
Board’s decisions. The Group Company Secretary is
accountable to the Board, through the Chairman, on all
matters to do with the proper functioning of the Board.
Profiles of our Company Secretaries for the financial year
ended 30 September 2018 are set out in Section 1 of the
Directors’ report.
Board Committees
Composition and independence
Board Committee members are chosen for the skills and
experience they can contribute to the respective Board
Committees and their qualifications are set out in Section 1 of
the Directors’ report. The membership of each Board
Committee is set out in the table entitled ‘Size and membership
of Board Committees as at 30 September 2018’ in this
Corporate Governance Statement. All of the Board Committees
are comprised of independent Non-executive Directors, save
for the Board Technology Committee, of which the CEO is also
a member.
Operation and reporting
Scheduled meetings of the Board Committees occur at least
quarterly. Each member’s attendance at Board Committee
meetings held during the financial year ended
30 September 2018 is reported in Section 9 of the Directors’
report. All Board Committees are able to meet more frequently
as necessary. Each Board Committee is entitled to the
resources and information it requires and has direct access to
our employees and advisers. The CEO attends all Board
Committee meetings, except where he has a material personal
interest in a matter being considered. Senior executives and
other selected employees are invited to attend Board
Committee meetings as required. All Directors can receive all
Board Committee papers and can attend any Board Committee
meeting, provided there is no conflict of interest.
Performance
Board, Board Committees and Directors
The Board undertakes ongoing self-assessment as well as
commissioning an annual performance review by an
independent consultant
.
The review process conducted in 2018 included an assessment
of the performance of the Board, the Board Committees and
each Director, with outputs collected, analysed and presented
to the Board. The Board discussed the results and agreed
follow up action on matters relating to Board composition,
process, priorities and continuing education
.
The Chairman also discusses the results with individual
Directors and Board Committee Chairs. The full Board
(excluding the Chairman) reviews the results of the
performance review of the Chairman and results are then
privately discussed by the Chairman of the Board Risk &
Compliance Committee with the Chairman
.
Management
The Board, in conjunction with its Board Remuneration
Committee, is responsible for:
determining the corporate goals and objectives relevant to
the remuneration of the CEO, and the performance of the
CEO in light of these objectives; and
approving individual remuneration for Group Executives,
other executives who report directly to the CEO, any other
accountable persons under the Banking Executive
Accountability Regime, and any other person the Board
determines.
The Board Risk & Compliance Committee and the Board Audit
Committee also refer to the Board Remuneration Committee
any matters that come to their attention that are relevant,
including with respect to risk adjusted remuneration
.
Management performance evaluations for the financial year
ended 30 September 2018 were conducted following the end of
the financial year.
There is a further discussion on performance objectives and
performance achieved in the Remuneration Report in
Section 10 of the Director
s’ report.
All new senior executives receive a letter of appointment setting
out the conditions and expectations of the role, together with an
extensive briefing on our strategies and operations and the
respective roles and responsibilities of the Board and senio
r
management
.
Advisory Boards
Westpac has established Advisory Boards for its operations in
Asia and for each of BankSA and Bank of Melbourne, to advise
management on the strategies and initiatives of those
businesses within the overall Group strategy
.
Responsibilities of the Advisory Boards include:
providing advice to management on management’s
strategies and initiatives to continue to strengthen the
position and identity of the business;
providing advice to management of the relevant business
so as to promote and preserve its distinct

Corporate governance
322018 Westpac Group Annual Report
position and identity and align business values with those
of the relevant communities served;
considering and assessing reports provided by
management on the health of the relevant business;
acting as ambassadors for the business, including by
supporting community and major corporate promotional
events to assist in building relationships with the bank’s
customers, local communities and the business and
government sector, and advising senior management on
community matters relevant to the provision of financial
services in the community it serves; and
alerting management to local market opportunities and
issues of which Advisory Board members are aware that
would enhance the provision of services to customers and
potential customers and the position of the bank in its local
communities.
Ethical and responsible decision-making
At Westpac, our vision is to become one of the world’s great
service companies, helping our customers, communities and
people to prosper and grow. One of the ways we seek to
achieve this vision is through our core values.
Westpac is also focused on the impact of its organisational
culture on the Group’s operations, including its management of
risk. We take an integrated approach to sustainably
embedding a strong risk culture, including through leadership
and communication, risk appetite and governance, risk
awareness and transparency, accountability and reinforcement,
and behaviours and relationships.
Our Values
Our Values support our customer-focused strategy and are
embedded in our culture. These are:
integrity – we earn trust by demonstrating the highest
standards of honesty and ethical behaviour;
service – we are here to help and delight our customers;
one team – we collaborate to deliver the best outcomes for
our customers and the company overall;
courage – we challenge the status quo and find a way to
make things better; and
achievement – we strive for excellence and deliver results.
Our values guide our behaviour and reflect our commitment to
our customers, communities and each other
.
Our Compass
We have developed Our Compass, which captures Our Vision,
Values, Behaviours and the non-negotiables of our Code of
Conduct, to consistently guide us in everything we do
.
Our Compass is a simple framework to help our people display
the right behaviours and make the right decisions and
incorporates
:
Our Vision – why we are here
Our Values – how we behave
Our Service Promise – how we serve
Our Code of Conduct – how we deliver
Code of Conduct and Principles for Doing Busines
s
Our Code of Conduct (Code) describes the standards of
conduct expected of our people, both employees and
contractors. The seven principles making up the Code are
:
we act with honesty, integrity, and due skill, care and
diligence;
we comply with laws and with our policies;
we do the right thing by our customers;
we respect confidentiality and do not misuse information;
we value and maintain our professionalism;
we work as a team; and
we manage conflicts of interest responsibly.
The Code provides a set of guiding principles to help us make
the right decisions, ensuring we uphold the reputation of the
Group. As employees of the banking and finance industry, we
are also committed to creating greater accountability,
transparency and trust with our customers and the broader
community. With that in mind, the principles within our Code
also reflect the communit
y’s expectations of us, such as those
outlined in the Banking and Finance Oath. The Code has the
full support of the Board and the Executive Team and we take
compliance with the Code very seriously.
Our Principles for Doing Business (Principles) underpin the
Grou
p’s commitment to sustainable business practice and
community involvement. In summary:
we believe our success depends on the trust and
confidence placed in us by our customers, people,
shareholders, suppliers, advisers and the community;
we believe in maintaining the highest level of governance
and ethical practice while protecting the interests of our
stakeholders;
we believe in putting our customers at the centre of
everything we do;
we believe our people are a crucial element of a successful
service business;
we are committed to managing our direct and indirect
im
pacts on the environment;

Corporate governance
2018 Westpac Group Annual Report33
we believe being actively involved in our community is
fundamental to the sustainability of our business; and
we believe our suppliers should be viewed as partners in
our sustainability journey.
The Principles align with key global initiatives that promote
responsible business practices. The Principles apply to all
Directors, employees and contractors.
We also have the following frameworks in place which apply to
support both our Code and Principles, internally and externally
across our value chain:
a range of internal guidelines, policies, frameworks,
communications and training processes and tools,
including an online learning module entitled ‘Doing the
Right Thing’; and
a range of externally-facing codes, frameworks, operating
principles, policies, and position statements, addressing
issues such as human rights, climate change and the
environment.
Key policies
We have a number of key policies to manage our regulatory
compliance and human resource requirements. We also
voluntarily subscribe to a range of external industry codes, such
as the Code of Banking Practice and the ePayments Code.
Code of Ethics for Senior Finance Officers
The Code of Accounting Practice and Financial Reporting
complements our own Code. The Code of Accounting Practice
and Financial Reporting is designed to assist our CEO, CFO
and other principal financial officers in applying the highest
ethical standards to the performance of their duties and
responsibilities with respect to accounting practice and financial
reporting by requiring those officers to:
act honestly and ethically, particularly with respect to
conflicts of interest;
provide full, fair, accurate and timely disclosure in reporting
and other communications;
comply with applicable laws, rules and regulations;
promptly report violations of the Code; and
be accountable for adherence to the Code.
The Code of Accounting Practice and Financial Reporting is
available on our website at www.westpac.com.au/corpgov.
Conflicts of interest
The Group has a detailed conflicts of interest framework, which
includes a Group policy supported by specific divisional policies
and guidelines aimed at identifying and managing actual,
potential or apparent conflicts of interest.
The conflicts of interest framework includes a separate
Westpac Group Gifts and Hospitality Policy. This Policy
provides our employees with guidance to manage their
obligations relating to the giving and receiving of gifts or
hospitality.
The Board
All Directors are required to disclose any actual, potential or
apparent conflicts of interest upon appointment and are
required to keep these disclosures to the Board up to date
.
Any Director with a material personal interest in a matter being
considered by the Board must declare their interest and, unless
the Board resolves otherwise, may not be present during the
boardroom discussions or vote on the relevant matter.
Our employees and contractors
We expect our employees and contractors to:
have in place adequate arrangements for the management
of actual, potential or apparent conflicts of interest;
obtain consent from senior management before accepting
a directorship on the board of a non-Westpac Group
company;
disclose any material interests they have with our
customers or suppliers to their manager and not be
involved with customer relationships where they have such
an interest;
not participate in business activities outside their
employment with us (whether as a principal, partner,
director, agent, guarantor, investor or employee) without
approval or when it could adversely affect their ability to
carry out their duties and responsibilities; and
not solicit, provide facilitation payments, accept or offer
money, gifts, favours or entertainment that might influence,
or might appear to influence, their business judgement.
Fit and Proper Person assessment
s
We have a Board-approved Westpac Group Fit and Proper
Policy that meets the requirements of the related APRA
Prudential Standards and covers the requirements of Part IIAA
of the Banking Act 1959—The Banking Executive
Accountability Regime, which applies to ADIs and their
subsidiaries. In accordance with that Policy, we assess the
fitness and propriety of our Directors and also of individuals
who perform specified statutory roles required by APRA
Prudential Standards or ASIC licensing requirements. The
Chairman of the Board (and in the case of the Chairman, the
Board) is responsible for assessing the Directors and No
n-
executive Directors of the Westpac and subsidiary Boards,
Group Executives, external auditors and actuaries. A Fit and
Proper Committee is responsible under delegated authority of
the Westpac Board for undertaking fit and proper assessments
of all other employees who hold statutory roles. In all cases, the
individual is asked to provide a detailed declaration and
background checks are completed
.
Concern reporting and whistleblower protection
Under the Westpac Group Speaking Up Policy, we encourage
our employees, contractors, secondees, former employees,
brokers, service providers (such as auditors, accountants and
consultants) and our suppliers to raise any concerns about
activities or behaviour that may be unlawful or unethical. Ou
r
attitude is ‘when in doubt report’and our senior management
are committed to protecting the dignity, well-being, career and
good name of anyone reporting wrongdoing, as well as
providing them with the necessary

Corporate governance
342018 Westpac Group Annual Report
support. Westpac does not tolerate retaliation or adverse action
related to a whistleblowing disclosure.
The Speaking Up Policy outlines all reporting channels,
including our concern reporting system ‘Concern Online’ and
our Whistleblower Hotline. Both channels enable reporting on
an anonymous basis. Concerns may include suspected
breaches of our Code, Westpac policies or regulatory
requirements.
When a whistleblower raises a concern they may choose to
involve the Whistleblower Protection Officer, who is responsible
for protecting the whistleblower against personal disadvantage
as a result of making a report.
We investigate reported concerns in a manner that is
confidential, fair and objective. If the investigation shows that
wrongdoing has occurred, we are committed to changing ou
r
processes and taking action in relation to those parties who
have behaved incorrectly. Outcomes may also involve reporting
the matter to relevant authorities and regulators.
Relevant Board Committees charged with overseeing
Westpac’s whistleblower program and the Westpac Group
Executive Risk Committee are provided with quarterly reporting
on whistleblowing. These reports include a number of metrics,
including statistics about concerns raised.
A summary of Westpac’s Speaking Up Policy is available on
our website at https://www.westpac.com.au/about-
westpac/westpac-group/corporate-governance/principles-
policies/.
Securities trading
Under the Westpac Group Securities Trading Policy, Directors,
employees, secondees and contractors (and their ‘associates’)
are prohibited from dealing in any securities and other financial
products if they possess inside information. They are also
prohibited from passing on inside information to others who
may use that information to trade in securities. In addition,
Directors and any employees, secondees or contractors who,
because of their seniority or the nature of their position, may
have access to material non-public information about Westpac
(known as Prescribed Employees) are subject to further
restrictions, including prohibitions on trading prior to and
immediately following annual and half year results
announcements.
We manage and monitor these obligations through:
the insider trading provisions of our Policy, which prohibit
any dealing in any securities where a Director or employee
has access to inside information that may affect the price
of those securities;
restrictions limiting the periods in which the Directors and
Prescribed Employees can trade in Westpac securities and
other Westpac financial products (Blackout Periods);
a prohibition on short-selling Westpac securities by
Directors and Prescribed Employees;
requiring Directors and Prescribed Employees to either
obtain approval or notify their intention to trade outside
Blackout Periods and confirm that they have no inside
information
;
monitoring the trading of Westpac securities by Directors
and Prescribed Employees;
maintaining a register of Prescribed Employees, which is
regularly updated;
notifying ASX of trades by Directors of Westpac securities
as required under the ASX Listing Rules; and
forbidding employees from entering into hedging
arrangements in relation to their unvested employee
shares or securities, whether directly or indirectly.
The Westpac Group Securities Trading Policy is available in the
Corporate Governance section of our website
.
Customer Advocate
Westpac’s Customer Advocate provides an independent
avenue of review for complaints outcomes in relation to
personal and small business customers, which is separate to
our standard internal review processes. The Customer
Advocate has the power to review and make independent,
binding decisions about these complaints outcomes where
customers are not satisfied with the outcome of the internal
dispute resolution process
.
Further details on our Customer Advocate is available on our
website.
Anti-Bribery and Corruption
Westpac requires compliance with anti-bribery and corruption
(AB&C) laws in all markets and jurisdictions in which it
operates. These laws include, but are not limited to, the
Australian Criminal Code Act 1995, the UK Bribery Act 2010
and the US Foreign Corrupt Practices Act 1977. Where a
conflict arises between applicable country AB&C legislative
requirements, Westpac’s position is that it will always adopt the
more onerous requirement
.
Westpac’s Anti-Bribery and Corruption Compliance Program
includes a global Anti-Bribery & Corruption Policy, with Board
endorsement and oversight and clear emphasis that Westpac
does not tolerate the giving or receiving of bribes, including the
making of facilitation payments. Westpac expects that books
and records must be fair and accurate and reasonably detailed.
We expect all employees to comply with these principles in the
performance of their services for or on behalf of Westpac. We
also require third parties who provide services for or on behalf
of Westpac to comply with all applicable AB&C laws.
Slavery and Human Trafficking
Westpac publishes its Slavery and Human Trafficking
Statement in accordance with the Transparency in Supply
Chains provision (section 54) of the UK’s Modern Slavery Act
2015 on an annual basis. The statement outlines the Group’s
commitment to sustainable business practices and advancing
human rights, and the steps we have taken to prevent modern
slavery in our business and supply chains globally during the
financial year.
The statement is available on our website.
Diversity
Westpac has an Inclusion & Diversity Policy that sets out the
inclusion and diversity initiatives for the Group. This is

Corporate governance
2018 Westpac Group Annual Report35
coupled with a comprehensive Inclusion & Diversity strategy to
enable execution of key priorities and actions. In this context,
diversity covers both the visible and invisible differences that
make our employees unique, whether that be gender, gender
identity, age, ethnicity, accessibility requirements, cultural
background, sexual orientation or religious beliefs, or the
differences we have based on our experiences, insights and
perspectives.
The objectives of the policy and the 2018-20 Inclusion &
Diversity strategy are to ensure that the Group:
has a workforce profile that delivers competitive advantage
through the ability to garner a deep understanding of
customer needs;
has a truly inclusive workplace where every individual can
shine regardless of gender, cultural identity, age, work
style or approach;
leverages the value of diversity for all our stakeholders to
deliver the best customer experience, improved financial
performance and a stronger corporate reputation; and
continues to take a leadership position on inclusion and
diversity practices and setting the agenda in the
external community.
To achieve these objectives, the Group:
has set Board-determined, measurable objectives for
achieving gender diversity. The Board assesses annually
both the objectives and progress in achieving them;
assesses pay equity on an annual basis;
encourages and supports the application of flexibility
policies across the business;
is committed to proactively assisting Aboriginal and Torres
Strait Islander Australians wishing to access employment
across our brands;
implements our Accessibility Action Plan for employees
and customers with accessibility requirements, including
ensuring employment opportunities are accessible for
people with a disability; and
actively promotes an environment of inclusion for lesbian,
gay, bisexual, transgender and intersex (LGBTI)
employees.
The implementation of these objectives is overseen by the
Westpac Group Inclusion & Diversity Council, which is chaired
by the CEO and meets bi-annually.
The Board, or an appropriate Board Committee, receives
regular updates from the Inclusion & Diversity Council on
inclusion and diversity initiatives.
During the financial year ended 30 September 2017, the
Inclusion & Diversity Governance Framework was implemented
and resulted in the establishment of:
Inclusion & Diversity Business Unit Councils, chaired by
the relevant Group Executive of that business unit; and
the Inclusion & Diversity Working Group, consisting of
a
ppointed general manager representatives across
each business unit and chaired by the Head of Inclusion &
Diversity.
We continue to listen to the needs of our employees through
the engagement of our employee action groups and our annual
employee survey (which includes questions that constitute an
‘Inclusion Index’).
Our Inclusive Leadership program ensures we are investing in
the right capabilities for an inclusive culture. The majority of
senior leaders and Group Executives have already completed
the program in 2018.
In October 2010, the Board set an objective to increase the
proportion of women in leadership roles (over 5,000 leaders
from our Executive Team through to our bank managers) from
33% to 40% by 2014, which was achieved in September 2012,
two years ahead of schedule. Westpac has now attained 50%
women in leadership roles. The focus will now shift to
maintaining this equality
.
At 30 September 2018, the proportion of women employed by
the Group was as follows:
Board of Directors : 22%;
leadership roles: 50%; and
total Westpac workforce: 57%.
In addition to the Grou
p’s commitment to achieving its targets,
in 2015 our CEO signed up as a Pay Equity Ambassador
through the Workplace Gender Equality Agency.
Westpac offers a range of flexible working options for our
people based on their needs, work preferences and the needs
of the business. These include:
flexible work hours;
mobile working;
working part-time; and
job sharing.
In addition, Westpac offers a variety of leave options that
support flexibility, including parental leave, wellbeing and
lifestyle leave and domestic violence support leave
.
Following the appointment of Anita Fung on 1 October 2018, the
proportion of women on the Board of Directors is 30%.
Women in Leadership refers to the proportion of women (permanent and
maximum term) in leadership roles across the Group. It includes the
CEO, Group Executives, General Managers, senior leaders with
significant influence on business outcomes (direct reports to General
Managers and their direct reports), large (3+) team people leaders three
levels below General Manager, and Bank and Assistant Bank Managers.
1
2
1
2

Corporate governance
362018 Westpac Group Annual Report
Sustainability
We view sustainable and responsible business practices as
important for our business and shareholder value. Sustainabilit
y
is about managing risks and opportunities in a way that best
balances the long term needs of all our stakeholders – our
customers, employees, suppliers, investors and community
partners – as well as the wider community and the environment
at large.
Our management of sustainability aims to address the matters
that we believe are the most material for our business and
stakeholders, now and in the future. We also understand that
this is an evolving agenda and seek to progressively embed the
management of sustainability matters into business as usual
practice, while also anticipating and shaping emerging social
issues where we have the skills and experience to make a
meaningful difference and drive business value.
Reporting
We report on the most material sustainability matters to
Westpac, details of how we manage the associated risks and
opportunities and our performance against our sustainability
strategy in the Annual Review and Sustainability Report, this
Annual Report, the Sustainability Performance Report and the
full year and half year ASX results.
Our sustainability reporting is subject to independent limited
assurance, performed in accordance with the Australian
Standard on Assurance Engagements 3000 (revised)
Assurance Engagements Other Than Audits or Reviews of
Historical Financial Information (‘ASAE 3000’). The assurance
provider also assesses whether our sustainability reporting is
prepared in accordance with AA1000 and the GRI Standards.
Financial reporting
Approach to financial reporting
Our approach to financial reporting reflects three
core principles:
that our financial reports present a true and fair view;
that our accounting methods comply with applicable
accounting standards and policies; and
that our external auditor is independent and serves securit
y
holders’ interests.
The Board, through the Board Audit Committee, monitors
Australian and international developments relevant to these
principles, and reviews our practices accordingly.
The Board delegates oversight responsibility for risk
management between the Board Audit Committee and the
Board Risk & Compliance Committee. Similarly, the Board
delegates oversight responsibility for the preparation of
remuneration reports and disclosures to the Board
Remuneration Committee
.
Board Audit Committee
As set out in its charter, key responsibilities of the Board Audit
Committee are
:
overseeing the integrity of the financial statements and
financial reporting systems of Westpac and its related
bodies corporate;
overseeing the external audit engagement, including the
external auditor’s qualifications, performance,
independence and fees;
overseeing the performance of the internal audit function;
overseeing the integrity of the Group’s corporate reporting,
including the Group’s financial reporting and compliance
with prudential regulatory reporting and professional
accounting requirements; and
reviewing and approving policies and procedures for the
receipt, retention and treatment of information submitted
confidentially by employees and third parties about
accounting, internal control, compliance, audit or other
matters about which an employee has concerns, and
monitoring employee awareness of these policies and
procedures.
The Board Audit Committee reviews, discusses with
management and the external auditor, and assesses
:
any significant financial reporting issues and judgments
made in connection with the preparation of the
financial reports;
the processes used to monitor and comply with laws and
regulations over financial information, reporting and
disclosure; and
the process surrounding the disclosures made by the CEO
and CFO in connection with their personal certifications of
the Group’s half year and full year financial statements.
In addition, the Board Audit Committee maintains an ongoing
dialogue with management, the external auditor and Group
Audit, including regarding those matters that are likely to be
designated as Key Audit Matters in the external audito
r’s report.
Key Audit Matters are those matters which, in the opinion of the
external auditor, are of the most significance in their audit of the
financial report.
As part of its oversight responsibilities, the Board Audit
Committee also conducts discussions with a wide range of
internal and external stakeholders including
:
the external auditor, about our major financial reporting risk
exposures and the steps management has taken to
monitor and control such exposures;
Group Audit and the external auditor concerning their
audits and any significant findings, and the adequacy of
management’s responses;
management and the external auditor concerning the half
year and full year financial statements;
management and the external auditor regarding any
correspondence with regulators or government agencies,
and any published reports which raise

Corporate governance
2018 Westpac Group Annual Report37
material issues or could impact on matters regarding the
Westpac Group’s financial statements or accounting
policies; and
the Group Executive, Legal & Secretariat regarding any
legal matters that may have a material impact on, or
require disclosure in, the financial statements.
Periodically, the Board Audit Committee consults with the
external auditor without the presence of management about
internal controls over financial information, reporting and
disclosure and the fullness and accuracy of the Group’s
financial statements. The Board Audit Committee also meets
with the General Manager Group Audit without other members
of management being present.
The Board Audit Committee also refers to the Board or any
other Board Committees any matters that come to the attention
of the Board Audit Committee that are relevant for the Board or
the respective Board Committees.
Financial knowledge
The Board Audit Committee comprises four independent, Non-
executive Directors and is chaired by Peter Marriott.
All Board Audit Committee members have appropriate financial
experience, an understanding of the financial services industry
and satisfy the independence requirements under the ASXCGC
Recommendations, the United States Securities Exchange Act
of 1934 (as amended) and its related rules, and the NYSE
Listing Rules.
The Board has determined that Mr Marriott is an ‘audit
committee financial expert’ and independent in accordance with
US securities law.
The designation of Mr Marriott as an audit committee financial
expert does not impose duties, obligations or liability on him
that are greater than those imposed on him as a Board Audit
Committee member, and does not affect the duties, obligations
or liability of any other Board Audit Committee member or
Board member. Audit committee financial experts are not
deemed as an ‘expert’ for any other purpose.
CEO and CFO assurance
The Board receives regular reports from management about
our financial condition and operational results, as well as that of
our controlled entities. Before the Board approves the financial
statements for a financial period, the CEO and the CFO provide
formal statements to the Board, and have done so for the
financial year ended 30 September 2018, that state that in all
material respects:
Westpac’s financial records have been properly maintained
in that they:
–correctly record and explain its transactions, and
financial position and performance;
–enable true and fair financial statements to be
prepared and audited; and
–are retained for seven years after the transactions
covered by the records are completed;
the financial statements and notes comply with the
a
ppropriate accounting standards;
the financial statements and notes give a true and fair view
of Westpac’s and its consolidated entities’ financial position
and of their performance;
any other matters that are prescribed by the Corporations
Act and regulations as they relate to the financial
statements and notes are satisfied; and
the declarations provided in accordance with section 295A
of the Corporations Act are founded on a sound system of
risk management and internal control, and that the system
is operating effectively in all material respects in relation to
financial reporting risks.
External audito
r
The role of the external auditor is to provide an independent
opinion that our financial reports are true and fair, and comply
with applicable regulations.
Our external auditor is PricewaterhouseCoopers (PwC),
appointed by shareholders at the 2002 Annual General Meeting
(AGM). Prior to 2002, individuals who were partners of PwC o
r
its antecedent firms were our external auditors from 1968. Ou
r
PwC lead audit partner is Lona Mathis and the quality review
partner is Wayne Andrews. Ms Mathis and Mr Andrews
assumed responsibility for these roles in June 2017 and
January 2015, respectively.
The external auditor receives all Board Audit Committee, Board
Risk & Compliance Committee and Board Technology
Committee papers, attends all meetings of these committees
and is available to Committee members at any time. The
external auditor also attends the AGM to answer questions
from shareholders regarding the conduct of its audit, the audit
report and financial statements and its independence.
As our external auditor, PwC is required to confirm its
independence and compliance with specified independence
standards on a semi-annual basis (at half and full year),
however in practice it confirms its independence on a quarterly
basis
.
We strictly govern our relationship with the external auditor,
including restrictions on employment, business relationships,
financial interests and use of our financial products by the
external auditor
.
Engagement of the external auditor
To avoid possible independence or conflict issues, the external
auditor is not permitted to carry out certain types of no
n-audit
services for Westpac and may be limited as to the extent to
which it can perform other non-audit services as specified in
our ‘Pre-approval of engagement of PwC for audit and non-
audit services’ (Guidelines). Use of the external audit firm for
any no
n-audit services must be assessed and approved in
accordance with the pr
e-approval process determined by the
Board Audit Committee and set out in the Guidelines
.
The breakdown of the aggregate fees billed by the external
auditor in respect of each of the two most recent financial years
for audit, audit-related, tax and other services is provided in
Note 39 to our financial statements for the year ended
30 September 2018. A declaration regarding the Board’s
satisfaction that the provision of non-audit services by PwC is
compatible with the general standards of auditor independence
is provided in Section 11 of the Director
s’ report.

Corporate governance
382018 Westpac Group Annual Report
Group Audit (internal audit)
Group Audit is Westpac’s internal audit function and includes
the Credit Portfolio & Model Review team, both of which
provide the Board and Executive Management with an
independent and objective evaluation of the adequacy and
effectiveness of management’s control over risk. Group Audit is
governed by a Charter approved by the Board Audit Committee
that sets out the purpose, role, scope and high level standards
for the function. Group Audit covers the governance, risk
management and internal control frameworks of Westpac and
our wholly owned subsidiaries. It has access to all of our wholly
owned entities and conducts audits and reviews following a
risk-based planning approach. The General Manager Group
Audit has a direct reporting line to the Chairman of the Board
Audit Committee and an administrative line to the Chief
Financial Officer. Group Audit also has direct access to the
Chief Executive Officer.
Group Audit’s responsibilities include regularly reporting to the
Board Audit Committee and the Board Risk & Compliance
Committee and Board Technology Committee and raising any
significant issues with those committees.
Market disclosure
We maintain a level of disclosure that seeks to provide all
investors with equal, timely, balanced and meaningful
information. Consistent with these standards, the Group
maintains a Board-approved Market Disclosure Policy, which
governs how we communicate with our shareholders and the
investment community.
The policy reflects the requirements of the ASX, NZX and other
offshore stock exchanges where we have disclosure
obligations, as well as relevant securities and corporations
legislation. Under our policy, information that a reasonable
person would expect to have a material effect on the price or
value of our securities must first be disclosed via the ASX
unless an exception applies under regulatory requirements.
Our Disclosure Committee is responsible for determining what
information should be disclosed publicly under the policy, and
for assisting employees in understanding what information may
require disclosure to the market on the basis that it is price
sensitive. The Disclosure Committee is comprised of the CEO
and the Executive Team.
The Group Executive, Legal & Secretariat is the Disclosure
Officer. The Disclosure Officer is ultimately responsible for all
communication with relevant stock exchanges and notifying
regulators in any jurisdiction as a result of market disclosure.
Once relevant information is disclosed to the market and
available to investors, it is also published on our website. This
includes investor discussion packs, presentations on and
explanations about our financial results. Our website
information also includes Annual Review and Sustainability
Reports, Annual Reports, results announcements, CEO and
executive briefings (including webcasts, recordings or
transcripts of all major events), notices of meetings and key
media releases
.
Shareholder communication and participation
We seek to keep shareholders fully informed about our
strategy, business operations, performance and governance.
As part of our investor relations program, we continually review
our communications approach, seeking to maintain best
practice and effective tw
o-way communication with
shareholders. This includes:
Designing and maintaining the Investor Centre on the
Group’s website to make all relevant company information
available and to structure that information in a way that
makes it easy to find and access;
Responding to shareholder queries directly via phone,
email and mail;
Preparing company presentations that seek to respond to
the questions frequently asked by shareholders along with
major industry and company topics of interest; and
Ensuring appropriate access to all major market briefings
and shareholder meetings, including via webcasts and
maintaining that information on our website.
Shareholders can access our financial calendar which lists all
major market briefings and shareholder meetings.
Announcements on these events may also be made through
ASX announcements.
Shareholders are given the option to receive information in print
or electronic format from both Westpac and its share registry.
We regard our Annual General Meeting (AGM) as an important
opportunity for engaging and communicating with shareholders,
and rotate the location of our AGM throughout capital cities to
give as many shareholders as possible the opportunity to
attend. While shareholders are encouraged to attend and
actively participate, the AGM is webcast and can also be
viewed at a later time from our website. Shareholders who are
unable to attend the AGM are able to lodge a direct vote o
r
their proxies through a number of channels, including via the
internet. At the time of receiving the Notice of Meeting,
shareholders are also invited to put forward questions they
would like addressed at the AGM.
Risk management
Roles and responsibilitie
s
The Board is responsible for approving the Westpac Group
Risk Management Strategy and Westpac Group Risk Appetite
Statement and for monitoring the effectiveness of risk
management by the Westpac Group. The Board has delegated
to the Board Risk & Compliance Committee responsibility to:
review and recommend the Westpac Group Risk Management
Strategy and Westpac Group Risk Appetite Statement to the
Board for approval; establish a view of the Grou
p’s current and
future risk position relative to its risk appetite and capital
strength; review and approve frameworks, policies and
processes for managing risk; and review and, where
appropriate, approve risks beyond the approval discretion
provided to management
.
Westpac’s Risk Management Strategy and Risk Appetite
Statement were reviewed by the Board Risk & Compliance
Committee and were approved by the Board during the
financial year ended 30 September 2018.

Corporate governance
2018 Westpac Group Annual Report39
The Board Risk & Compliance Committee reviews and
monitors the risk profile and controls of the Group for
consistency with the Group Risk Appetite Statement and
reviews and monitors capital levels for consistency with the
Group’s risk appetite. The Board Risk & Compliance
Committee receives regular reports from management on the
effectiveness of our management of Westpac’s material risks.
More detail about the role of the Board Risk & Compliance
Committee is set out later in this section under ‘Board Risk &
Compliance Committee’.
The CEO and Executive Team are responsible for
implementing our risk management strategy and frameworks,
and for developing policies, controls, processes and
procedures for identifying and managing risk in all of Westpac’s
activities.
We have adopted a Three Lines of Defence approach to risk
management, which reflects our culture of ‘risk is everyone’s
business’ in which all employees are responsible for identifying
and managing risk and operating within the Group’s desired
risk profile. Effective risk management enables us to:
accurately measure our risk profile and balance risk and
reward within our risk appetite, optimising financial growth
opportunities and mitigating potential loss or damage;
protect Westpac Group’s depositors, policyholders and
investors by maintaining a balance sheet with sound credit
quality and buffers over regulatory minimums;
deliver suitable, fair and clear outcomes for our customers
that support market integrity;
embed adequate controls to guard against excessive risk
or undue risk concentration; and
meet our regulatory and compliance obligations.
The 1st Line of Defence – Risk identification, risk
management and self-assessment
Divisional business units are responsible for identifying,
evaluating and managing the risks that they originate within
approved risk appetite and policies. They are required to
establish and maintain appropriate risk management controls,
resources and self-assessment processes.
The 2nd Line of Defence – Establishment of risk
management frameworks and policies and risk
management oversight
Risk and compliance advisory, control, assurance and
monitoring functions established frameworks, policies, limits
and processes for the management, monitoring and reporting
of risk. The 2nd Line evaluates and provides assurance over
the adequacy and effectiveness of 1st Line controls and
application of frameworks and policies and monitors the 1st
Line’s progress toward remediation of identified deficiencies.
The 2nd Line can also approve certain risks outside of the
authorities granted to the 1st Line.
The 3rd Line of Defence – Independent assurance
Group Audit is an independent assurance function that
evaluates and opines on the adequacy and effectiveness of
both 1st and 2nd Line risk management approaches and tracks
remediation progress, with the aim of providing the
Board, and senior executives, with comfort that the Grou
p’s
governance, risk management and internal controls are
operating effectively.

Corporate governance
40
2018 Westpac Group Annual Report
Our overall risk management approach is summarised in the
following diagram:
Our overall risk management governance structure is set out in
more detail in the table ‘Risk Management Governance
Structure’ included in this Corporate Governance Statement.
Westpac distinguishes between different types of risk:
credit risk– the risk of financial loss where a customer or
counterparty fails to meet their financial obligations to
Westpac;
liquidity risk– the risk that the Group will be unable to fund
assets and meet obligations as they become due;
market risk– the risk of an adverse impact on earnings
resulting from changes in market factors, such as foreign
exchange rates, interest rates, commodity prices or equity
prices. This includes interest rate risk in the banking book -
the risk to interest income from a mismatch between the
duration of assets and liabilities that arises in the normal
course of business activities;
conduct risk– the risk that our provision of services and
products results in unsuitable or unfair outcomes for our
stakeholders or undermines market integrity;
operational risk– the risk of loss resulting from inadequate
or failed internal processes, people and systems or from
external events, such as financial crime. This definition is
aligned to the regulatory (Basel II) definition of Operational
Risk which includes legal and regulatory risk but excludes
strategic risk;
compliance risk– the risk of legal or regulatory sanction,
financial or reputational loss, arising from our failure to
abide by the compliance obligations required of us;
business risk– the risks arising from the strategic
objectives and business plans;
sustainability risk– the risk of reputational or financial loss
due to failure to recognise or address material existing or
emerging sustainability related environmental, social or
governance issues;
equity risk– the potential for financial loss arising from
movements in equity values. Equity risk may be direct,
indirect or contingent;
insurance risk– the risk in our insurance entities of claims
costs being greater than expected, due to a failure in
product design, underwriting, reinsurance
arrangements or an increase in severity and frequency of
insured events;
related entity (contagion) risk– the risk that problems
arising in other Westpac Group members compromise the
financial and operational position of the authorised deposit-
taking institution in the Westpac Group; and
reputation risk– the risk of the loss of reputation,
stakeholder confidence, or public trust and standing.
Westpac has received advanced accreditation from APRA and
the RBNZ under the Basel II capital framework, and uses the
Advanced Internal Ratings Based (Advanced IRB) approach for
credit risk and the Advanced Measurement Approach (AMA) for
operational risk when calculating regulatory capital.
Material exposure to economic, environmental and social
sustainability risks
Westpac’s material exposures to economic, environmental and
social sustainability risks are managed in accordance with our
risk management strategy and frameworks
.
Board Risk & Compliance Committee
The Board Risk & Compliance Committee comprises all of
Westpac’s independent, Non-executive Directors and is chaired
by Ewen Crouch.
As set out in its charter, the Board Risk & Compliance
Committee:
reviews and recommends the Risk Management Strategy
and Westpac Group Risk Appetite Statement to the Board
for approval;
reviews and monitors the risk profile and controls of the
Group consistent with the Westpac Group Risk Appetite
Statement;
reviews and approves the frameworks, policies and
processes for managing risk;
reviews and approves the limits and conditions that apply
to credit risk approval authority delegated to the CEO, CFO
and CRO and any other officers of the Westpac Group to
whom the Board has delegated credit approval authority;
monitors changes anticipated for the economic and
business environment including consideration of emerging
risks and other factors considered relevant to our risk
profile and risk appetite;
assists the Board to make its annual declaration to APRA
on risk management under APRA prudential standard CPS
220 Risk Management;
reviews and where appropriate approves risks beyond the
approval discretion provided to management; and
assists the Board to oversee compliance management
within the Group.
From the perspective of specific types of risk, the Board Risk &
Compliance Committe
e’s role includes:
credit risk– approving key policies and limits supporting
the Credit Risk Management Framework, and monitoring
the risk profile, performance and management of our credit
portfolio;

Corporate governance
2018 Westpac Group Annual Report
41
liquidity risk– approving key policies and limits supporting
the Liquidity Risk Management Framework, including our
annual funding strategy, recovery and resolutions plans
and monitoring the liquidity position and requirements;
market risk – approving key policies and limits supporting
the Market Risk Management Framework, including, but
not limited to, the Value at Risk limits and Net Interest
Income at Risk limits, and monitoring the market risk
profile;
conduct risk– reviewing and approving the Westpac Group
Conduct Framework and reviewing and monitoring the
performance of conduct risk management and controls;
operational risk– approving key policies supporting both
the Operational Risk Management Framework and the
Financial Crime Risk Management Framework, and
monitoring the performance of operational and financial
crime risk management and controls;
compliance risk– reviewing and approving the Westpac
Group Compliance Management Framework and reviewing
compliance processes and our compliance with applicable
laws, regulations and regulatory requirements, discussing
with management and the external auditor any
correspondence with regulators or government agencies
and any published reports that raise material issues, and
reviewing complaints and whistleblower concerns; and
reputation risk– reviewing and approving the Reputation
Risk Management Framework and reviewing and
monitoring the performance of reputation risk management
and controls.
The Board Risk & Compliance Committee also:
oversees and approves the Internal Capital Adequacy
Assessment Process and in doing so reviews the
outcomes of Westpac Group stress testing, sets the target
capital ranges for regulatory capital and reviews and
monitors capital levels for consistency with the
Westpac Group’s risk appetite;
provides relevant periodic assurances and reports (as
appropriate) to the Board Audit Committee;
reviews and approves other risk management
frameworks and/or the monitoring of performance under
those frameworks (as appropriate);
forms a view of Westpac’s risk culture and oversees the
identification of, and steps taken to address, any desirable
changes to risk culture and periodically reports to the
Board;
refers to the Board or any other Board Committees any
matters that come to the attention of the Board Risk &
Compliance Committee that are relevant for the Board or
the respective Board Committees; and
in its capacity as the Westpac Group’s US Risk Committee,
oversees the key risks, risk management framework and
policies of the Group’s US operations.
Compliance Management Framework
The Compliance Management Framework sets out our
approach to managing compliance with our obligations and
mitigating compliance risk. It is an integral part of the broade
r
risk management strategy and is regularly assessed and
enhanced as appropriate to ensure it responds to the internal
and external environment and supports our strategic
compliance direction
.
To proactively manage our compliance risks, our compliance
objective is to:
comply with our legal obligations, regulatory requirements,
voluntary codes of practice to which we subscribe, and
Group policies, including the Westpac Code of Conduct;
establish frameworks, policies and processes designed to
manage, monitor and report compliance and to minimise
the potential for breaches, fines or penalties, or loss of
regulatory accreditations; and
ensure that appropriate remedial action is taken to address
instances of non-compliance.
Remuneration
The Board Remuneration Committee assists the Board by
ensuring that Westpac has coherent remuneration policies and
practices that fairly and responsibly reward individuals having
regard to performance and that reflect Westpac’s risk
management framework, the law and the highest standards
of governance.
The Board Remuneration Committee has been in place for the
whole of the financial year and is comprised of three
independent No
n-executive Directors and is chaired by Craig
Dunn. All members of the Board Remuneration Committee are
also members of the Board Risk & Compliance Committee,
which assists in the integration of effective risk management
into the remuneration framework
.
As set out in its charter, the Board Remuneration Committee:
reviews and makes recommendations to the Board in
relation to the Westpac Group Remuneration Policy
Additional frameworks include the Sustainability Risk Management
Framework, Equity Risk Management Framework, Related Entity Risk
Management Framework, Financial Crime Risk Management Framework
and Insurance Risk Management Framework.
1
1

Corporate governance
422018 Westpac Group Annual Report
(Group Remuneration Policy) and assesses the Group
Remuneration Policy’s effectiveness and its compliance
with laws, regulations and prudential standards;
reviews and makes recommendations to the Board in
relation to the individual remuneration levels of the CEO,
Non-executive Directors, Group Executives, other
Executives who report directly to the CEO, any other
Accountable Persons under the Banking Executive
Accountability Regime, other persons whose activities in
the Board Remuneration Committee’s opinion affect the
financial soundness of Westpac, any person specified by
APRA, and any other person the Board determines;
reviews and makes recommendations to the Board in
relation to the remuneration structures for each category of
persons covered by the Group Remuneration Policy;
reviews and makes recommendations to the Board on
corporate goals and objectives relevant to the
remuneration of the CEO, and the performance of the CEO
in light of these objectives;
reviews and makes recommendations to the Board on the
short and long-term variable reward plans for
Group Executives and any other Accountable Person
under the Banking Executive Accountability Regime;
reviews and makes recommendations to the Board in
relation to approving equity based remuneration plans; and
oversees general remuneration practices across
the Group.
The Board Remuneration Committee reviews and recommends
to the Board the size of variable reward pools each year based
on consideration of pre-determined business performance
indicators and the financial soundness of Westpac. The Board
Remuneration Committee also approves remuneration
arrangements outside of the Group Remuneration Policy
relating to individuals or groups of individuals which are
significant because of their sensitivity, precedent or disclosure
implications. In addition, the Board Remuneration Committee
considers and evaluates the performance of senior executives
when making remuneration determinations and otherwise as
required.
The Board Remuneration Committee also reviews and makes
recommendations to the Board for the reduction or lapsing of
incentiv
e-based equity grants to employees where:
subsequent information or circumstances indicate that the
grant was not justified; or
the Board Remuneration Committee determines that an
adjustment should be made as a result of risk or
compliance failures, poor customer outcomes, where an
Accountable Person under the Banking Executive
Accountability Regime has failed to comply with their
accountability obligations or any other matter it considers
relevant.
Independent remuneration consultants are engaged by the
Board Remuneration Committee to provide information across
a range of issues, including remuneration benchmarking,
market practices and emerging trends and regulatory reforms
.
The Board Remuneration Committee refers to the Board or any
other Board Committees any matters that come to the attention
of the Board Remuneration Committee that are relevant for the
Board or the respective Board Committee
s
Further details of our remuneration framework are included in
the Remuneration Report in Section 10 of the Directors’ report.
The Board Remuneration Committee reviews and recommends
the report for approval.

Risk Management Governance Structure
Westpac’s risk management governance structure is set out in the table below:
Corporate governance
Board
approves our overall Westpac Group Risk Management Strategy and the Westpac Group Risk Appetite Statement; and
makes an annual declaration to APRA on risk management.
Board Risk & Compliance Committee (BRCC)
reviews and recommends the Risk Management Strategy and Westpac Group Risk Appetite Statement to the Board for approval;
reviews and monitors the risk profile and controls of the Group consistent with the Westpac Group Risk Appetite Statement;
reviews and approves frameworks, policies and processes for managing risk;
reviews and approves the limits and conditions that apply to credit risk approval authority delegated to the CEO, CFO, CRO and
any other officers of the Westpac Group to whom the Board has delegated credit approval authority;
monitors changes anticipated for the economic and business environment including consideration of emerging risks and other
factors considered relevant to our risk profile and risk appetite;
assists the Board to make its annual declaration to APRA on risk management under APRA prudential standard CPS220 Risk
Management;
reviews and where appropriate approves risks beyond the approval discretion provided to management; and
assists the Board to oversee compliance management within the Group.
Other Board Committees with a risk focus
Board Audit Committee
oversees the integrity of financial statements and financial reporting systems, and matters relating to taxation risks.
Board Remuneration Committee
oversees remuneration policies and practices of the Westpac Group in the context that these policies and practices reflect
Westpac’s risk management framework, including making recommendations to the Board for the reduction or lapsing of
incentive-based equity grants to employees as a result of risk or compliance failures.
Board Technology Committee
oversees the implementation of the Westpac Group’s technology strategy, including risks associated with major technology
programs.
Executive Team
executes the Board-approved strategy;
delivers the Westpac Group’s various strategic and performance goals within the approved risk appetite; and
monitors key risks within each business unit, capital adequacy and the Westpac Group’s reputation.
Executive risk committees
Westpac Group Executive Risk Committee
leads the management and oversight of material risks across the Westpac Group within the context of the risk appetite approved
by the Board;
oversees the embedding of the Risk Management Strategy in the Group’s approach to risk governance;
oversees risk-related management frameworks and key supporting policies;
oversees the Group’s material risks;
oversees reputation risk and sustainability risk management frameworks, compliance and conduct management frameworks and
key supporting policies; and
identifies emerging credit, operational, compliance and market risks and allocates responsibility for assessing impacts and
implementing appropriate actions to address these.
2018 Westpac Group Annual Report
43

Risk Management Governance Structure (continued)
Corporate governance
Executive risk committees (continued)
Westpac Group Asset & Liability Committee
leads the optimisation of funding and liquidity risk-reward across the Group;
reviews the level and quality of capital to ensure that it is commensurate with the Group’s risk profile, business strategy and
risk appetite;
oversees the Liquidity Risk Management Framework and key policies;
oversees the funding and liquidity risk profile and balance sheet risk profile; and
identifies emerging funding and liquidity risks and appropriate actions to address these.
Westpac Group Credit Risk Committee
leads the optimisation of credit risk-reward across the Group;
reviews and oversees the Credit Risk Management Framework and key supporting policies;
oversees Westpac’s credit risk profile; and
identifies emerging credit risks, allocates responsibility for assessing impacts, and responds as appropriate.
Westpac Group Market Risk Committee
leads the optimisation of market risk, equity risk and insurance risk across the Group;
reviews and oversees the Market Risk, Equity Risk and Insurance Risk Management Frameworks and key market risk
management policies;
reviews policies and limits for managing traded and non-traded market risk; and
reviews and overseas the market risk, equity risk and insurance risk profile.
Westpac Group Operational Risk and Financial Crime Committee
leads the optimisation of operational risk across the Group;
reviews and oversees the Operational Risk and Financial Crime Risk Management Frameworks and key supporting policies;
oversees Westpac’s operational risk and financial crime risk profile; and
identifies emerging operational and financial crime risks, and appropriate actions to address these.
Westpac Group Remuneration Oversight Committee
provides assurance that the remuneration arrangements across the Group are considered from a human resources, risk, finance,
legal and compliance perspective in line with any external requirements;
reviews and makes recommendations to the CEO for recommendation to the Board Remuneration Committee on the Group
Remuneration Policy and provides assurance that remuneration arrangements across the Group encourage behaviour that
supports Westpac’s long-term financial soundness and the Risk Management Framework;
reviews and monitors the remuneration arrangements (other than for Group Executives) for Responsible Persons (as defined in
the Group’s Statutory Officers Fit and Proper Policy), risk and financial control employees, and all other employees for whom a
significant portion of total remuneration is based on performance and whose activities, either individually or collectively, may
affect the financial soundness of Westpac; and
reviews and recommends to the CEO for recommendation to the Board Remuneration Committee the criteria and rationale for
determining the total quantum of the Group variable reward pool.
44
2018 Westpac Group Annual Report

Risk Management Governance Structure (continued)
Corporate governance
Risk and compliance functions
Risk Function
assists the Board, Board Committees and senior management to establish, maintain and review the Risk Management Strategy,
supporting risk management frameworks and policies and risk appetite;
documents and monitors risk appetite across all risk types and classes (including financial crime), risk limits and authorities;
notifies the Board or Board Committees of any significant breach, or material deviation from the Risk Management Strategy,
supporting risk management frameworks and policies or risk appetite;
monitors and provides advice on risk policies, procedures, incidents and issues including emerging risk issues;
monitors and provides assurance including testing risk controls as the 2nd Line of Defence;
monitors and maintains the required resources and capabilities (including Risk systems and Risk data) to support the Risk
Management Strategy; and
oversees the management of credit risk and making credit decisions in accordance with delegations from the Board.
Compliance Function
assists the Board, Board Committees and senior management to establish, maintain and review the compliance management
framework;
designs, implements and monitors key compliance processes and controls in support of the compliance management framework;
provides independent advice on the design, implementation, operating effectiveness and monitoring of controls to ensure
compliance with internal, regulatory and legislative requirements;
directs the review and development of compliance policies, compliance plans, controls and procedures;
reports on the performance of the compliance management framework; and
maintains resources with the skills and tools required to fulfil their compliance responsibilities and support the strategy.
Independent internal review
Group Audit
reviews the adequacy and effectiveness of management controls over risk.
Divisional business units
Business Units
responsible for identifying, evaluating and managing the risks that they originate within approved risk appetite and policies; and
establish and maintain appropriate risk management and compliance controls, resources and self-assessment processes.
2018 Westpac Group Annual Report
45

Our Directors present their report together with the financial statements of the Group for the financial year ended 30 September 2018.
1. Directors
The names of the persons who have been Directors, or appointed as Directors, during the period since 1 October 2017 and up to the
date of this report are: Lindsay Philip Maxsted, Brian Charles Hartzer, Nerida Frances Caesar, Ewen Graham Wolseley Crouch,
Catriona Alison Deans (Alison Deans), Craig William Dunn, Robert George Elstone (retired as a Director on 8 December 2017), Yuen
Mei Anita Fung (Anita Fung) (Director from 1 October 2018), Peter John Oswin Hawkins, Peter Ralph Marriott and Peter Stanley Nash
(Director from 7 March 2018).
Particulars of the skills, experience, expertise and responsibilities of the Directors at the date of this report, including all directorships of
other listed companies held by a Director at any time in the past three years immediately before 30 September 2018 and the period for
which each directorship has been held, are set out belo
w.
Directors’report
Name: Lindsay Maxsted,
DipBus (Gordon), FCA, FAICD
Age: 64
Term of office: Director since
March 2008 and Chairman since
December 2011.
Date of next scheduled
re-election: December 2020.
Independent: Yes.
Current directorships of listed
entities and dates of office:
Transurban Group (since March
2008, and Chairman since
August 2010), BHP Billiton Limited
(since March 2011) and BHP
Billiton plc (since March 2011).
Other principal directorships:
Managing Director of Align Capital
Pty Ltd and Director of Baker Heart
and Diabetes Institute.
Other interests: Nil.
Other Westpac related entities
directorships and dates of office:
Nil.
Skills, experience and expertise:
Lindsay was formerly a partner at
KPMG and was the CEO of that firm
from 2001 to 2007. His principal area
of practice prior to his becoming CEO
was in the corporate recovery field
managing a number of Australia’s
largest
insolvency/workout/turnaround
engagements including
Linter Textiles (companies
associated with Abraham Goldberg),
Bell Publishing Group, Bond
Brewing, McEwans Hardware and
Brashs. He is also a former Director
and Chairman of the Victorian
Public Transport Corporation.
Westpac Board Committee
membership: Chairman of the
Board Nominations Committee.
Member of each of the Board Audit
and Board Risk & Compliance
Committees.
Directorships of other listed
entities over the past three years
and dates of office: Nil.
Name: Brian Hartzer,
BA, CFA
Age: 51
Term of office: Managing
Director & Chief Executive Officer
since February 2015.
Date of next scheduled
re-election: Not applicable.
Independent: No.
Current directorships of listed
entities and dates of office: Nil.
Other principal directorships:
The Australian National University
Business and Industry Advisory
Board (Chairman since March
2017), the Financial Markets
Foundation for Children and
Australian Banking Association
Incorporated.
Other interests: Nil.
Other Westpac related entities
directorships and dates of office:
Nil.
Skills, experience and expertise:
Brian was appointed Managing
Director & Chief Executive Officer in
February 2015. Brian joined Westpac
as Chief Executive, Australian
Financial Services in June 2012
encompassing Westpac Retail &
Business Banking, St.George
Banking Group and BT Financial
Group. Prior to joining Westpac,
Brian spent three years in the UK as
CEO for Retail, Wealth and Ulster
Bank at the Royal Bank of Scotland
Group.
Prior to that, he spent ten years with
Australia and New Zealand Banking
Group Limited (ANZ) in Australia in
a variety of roles, including his final
role as CEO, Australia and Global
Segment Lead for Retail and
Wealth. Before joining ANZ, Brian
spent ten years as a financial
services consultant in New York,
San Francisco and Melbourne.
Westpac Board Committee
membership: Member of the Board
Technology Committee.
Directorships of other listed
entities over the past three years
and dates of office: Nil.
462018 Westpac Group Annual Report

Directors’report
Name: Nerida Caesar,
BCom, MBA, GAICD
Age: 54
Term of office: Director since
September 2017.
Date of next scheduled
re-election: December 2020.
Independent: Yes.
Current directorships of listed
entities and dates of office: Nil.
Other principal directorships: Nil.
Other interests: Member of the
Advisory Board of IXUP Limited
and the Federal Government’s
FinTech Advisory Group. Advisor to
Equifax Australia and New
Zealand.
Other Westpac related entities
directorships and dates of office:
Nil.
Skills, experience and expertise:
Nerida has 32 years of broad-
ranging commercial and business
management experience. Most
recently, Nerida was Group
Managing Director and Chief
Executive Officer, Australia and
New Zealand, of Equifax (formerly
Veda Group Limited) from
February 2011. She is also a
former director of Genome.One Pty
Ltd and Stone and Chalk Limited.
Prior to joining Veda, Nerida was
formerly Group Managing Director,
Telstra Enterprise and
Government. She also worked as
Group Managing Director, Telstra
Wholesale, and prior to that held
the position of Executive Director
National Sales.
Prior to joining Telstra, Nerida held
several senior management and
sales positions with IBM within
Australia and internationally over a
20 year period, including as Vice
President of IBM’s Intel Server
Division for the Asia Pacific region.
Westpac Board Committee
membership: Member of each of
the Board Risk & Compliance and
Board Technology Committees.
Directorships of other listed
entities over the past three years
and dates of office: Veda Group
Limited (December 2013 –
February 2016). Veda Group
Limited was a listed entity from
December 2013 to February 2016
when it was delisted upon its
acquisition by Equifax Inc.
Name: Ewen Crouch AM,
BEc (Hons.), LLB, FAICD
Age: 62
Term of office: Director since
February 2013.
Date of next scheduled
re-election: December 2019.
Independent: Yes.
Current directorships of listed
entities and dates of office:
BlueScope Steel Limited (since
March 2013).
Other principal directorships:
Sydney Symphony Orchestra
Holdings Pty Limited and Jawun.
Other interests: Member of the
Commonwealth Remuneration
Tribunal, Law Committee of the
Australian Institute of Company
Directors, Corporations
Committee of the Law Council of
Australia and ASIC’s Director
Advisory Panel.
Other Westpac related entities
directorships and dates of office:
Nil.
Skills, experience and expertise:
Ewen was a Partner at Allens from
1988 to 2013, where he was one of
Australia’s most accomplished
mergers and acquisitions lawyers.
He served as a member of the
firm’s board for 11 years, including
four years as Chairman of Partners.
His other roles at Allens included
Co-Head Mergers and Acquisitions
and Equity Capital Markets,
Executive Partner, Asian offices
and Deputy Managing Partner. He
is now a Consultant to Allens.
Ewen served as a director of
Mission Australia from 1995 and
as Chairman from 2009, before
retiring in November 2016. From
2010 to 2015, Ewen was a
member of the Takeovers Panel.
In 2013, Ewen was awarded an
Order of Australia in recognition of
his significant service to the law as
a contributor to legal professional
organisations and to the
community.
Westpac Board Committee
membership: Chairman of the
Board Risk & Compliance
Committee. Member of each of the
Board Nominations and Board
Remuneration Committees.
Directorships of other listed
entities over the past three
years and dates of office: Nil.
2018 Westpac Group Annual Report47

Directors’report
Name: Alison Deans,
BA, MBA, GAICD
Age: 50
Term of office: Director since
April 2014.
Date of next scheduled
re-election: December 2020.
Independent: Yes.
Current directorships of listed
entities and dates of office:
Cochlear Limited (since
January 2015).
Other principal directorships:
SCEGGS Darlinghurst Limited.
Other interests: Senior Advisor,
McKinsey & Company and
Investment Committee member of
the CSIRO Innovation Fund (Main
Sequence Ventures).
Other Westpac related entities
directorships and dates of office:
Nil.
Skills, experience and expertise:
Alison has more than 20 years’
experience in senior executive
roles focused on building digital
businesses and digital
transformation across
e-commerce, media and financial
services. During this time, Alison
served as the CEO of eCorp
Limited, CEO of Hoyts Cinemas,
CEO of netus Pty Ltd and CEO of
eBay, Australia and New Zealand.
Alison was an Independent
Director of Social Ventures
Australia from September 2007 to
April 2013 and a director of kikki.K
Holdings Pty Ltd from October
2014 to June 2018.
Westpac Board Committee
membership: Chairman of the
Board Technology Committee.
Member of each of the Board
Nominations, Board Remuneration
and Board Risk & Compliance
Committees.
Directorships of other listed
entities over the past three
years and dates of office:
Insurance Australia Group Limited
(February 2013 – October 2017).
Name: Craig Dunn,
BCom, FCA
Age: 55
Term of office: Director since
June 2015.
Date of next scheduled
re-election: December 2018.
Independent: Yes.
Current directorships of listed
entities and dates of office:
Telstra Corporation Limited (since
April 2016).
Other principal directorships:
Chairman of The Australian Ballet
and Chairman of Stone and Chalk
Limited (retires 27 November
2018).
Other interests: Chairman of the
International Standards Technical
Committee on Blockchain and
Distributed Ledger Technologies
(ISO/TC 307) and Co-Chair of the
Australian Government’s Fintech
Advisory Group.
Member of the ASIC External
Advisory Panel, and the New South
Wales Government’s Quantum
Computing Fund Advisory Panel.
Board member of Jobs for New
South Wales and Consultant to
King & Wood Mallesons.
Other Westpac related entities
directorships and dates of office:
Nil.
Skills, experience and expertise:
Craig has more than 20 years’
experience in financial services,
including as CEO of AMP Limited
from 2008 to 2013. Craig was
previously a director of Financial
Literacy Australia Limited, a Board
member of each of the Australian
Japanese Business Cooperation
Committee and the New South
Wales Government’s Financial
Services Knowledge Hub, and
former Chairman of the Investment
and Financial Services Association
(now the Financial Services
Council). He was also a member of
the Financial Services Advisory
Committee, the Australian
Financial Centre Forum, the
Consumer and Financial Literacy
Taskforce and a Panel member of
the Australian Government’s
Financial System Inquiry.
Westpac Board Committee
membership: Chairman of the
Board Remuneration Committee.
Member of each of the Board
Nominations and Board Risk &
Compliance Committees.
Directorships of other listed
entities over the past three
years and dates of office: Nil.
482018 Westpac Group Annual Report

Directors’report
Name: Anita Fung,
BSocSc, MAppFin
Age: 57
Term of office: Director since
October 2018.
Date of next scheduled
re-election: December 2018.
Independent: Yes.
Current directorships of listed
entities and dates of office: Hong
Kong Exchanges and Clearing
Limited (since April 2015, Hong
Kong listed), China Construction
Bank Corporation (since
October 2016, Hong Kong Listed)
and Hang Lung Properties Limited
(since May 2015, Hong Kong
listed).
Other principal directorships:
Board member of the Airport
Authority Hong Kong.
Other interests: Member of the
Hong Kong Museum Advisory
Committee.
Other Westpac related entities
directorships and dates of office:
Member of Westpac’s Asia
Advisory Board since
October 2018.
Skills, experience and expertise:
Anita’s career in the banking
industry spans over 30 years,
including 19 years at HSBC.
During her time at HSBC, Anita
held a number of senior
management roles including Group
General Manager, HSBC Group
and most recently as Chief
Executive Officer, Hong Kong from
2011 to 2015.
Prior to joining HSBC, Anita held
various positions at Standard
Chartered Bank in its Treasury and
Capital markets business.
Westpac Board Committee
membership: Member of the
Board Risk & Compliance
Committee.
Directorships of other listed
entities over the past three
years and dates of office: Nil.
Name: Peter Hawkins,
BCA (Hons.), SF Fin, ACA (NZ),
FAICD
Age: 64
Term of office: Director since
December 2008.
Date of next scheduled
re-election: Not applicable. Peter
Hawkins will retire following the
2018 AGM.
Independent: Yes.
Current directorships of listed
entities and dates of office:
Mirvac Group (since January
2006).
Other principal directorships:
Liberty Financial Pty Ltd and
Crestone Holdings Limited.
Other interests: Nil.
Other Westpac related entities
directorships and dates of office:
Member of the Bank of Melbourne
Advisory Board since November
2010.
Skills, experience and expertise:
Peter’s career in the banking and
financial services industry spans
over 40 years in Australia and
overseas at both the highest levels
of management and directorship of
major organisations. Peter has held
various senior management and
directorship positions with Australia
and New Zealand Banking Group
Limited from 1971 to 2005.
He was also previously a Director of
BHP (NZ) Steel Limited, ING
Australia Limited, Esanda Finance
Corporation, Visa Inc and Clayton
Utz.
Westpac Board Committee
membership: Member of each of
the Board Audit, Board Risk &
Compliance and Board Technology
Committees.
Directorships of other listed
entities over the past three years
and dates of office: MG
Responsible Entity Limited, which is
the responsible entity for ASX listed
MG Unit Trust (April 2015 to
October 2016).
Name: Peter Marriott,
BEc (Hons.), FCA
Age: 61
Term of office: Director since
June 2013.
Date of next scheduled
re-election: December 2019.
Independent: Yes.
Current directorships of listed
entities and dates of office: ASX
Limited (since July 2009).
Other principal directorships:
ASX Clearing Corporation Limited,
ASX Settlement Corporation
Limited and Austraclear Limited.
Other interests: Member of the
Review Panel & Policy Council of
the Banking & Finance Oath.
Other Westpac related entities
directorships and dates of office:
Nil.
Skills, experience and expertise:
Peter has over 30 years’
experience in senior management
roles in the finance industry
encompassing international
banking, finance and auditing.
Peter joined Australia and New
Zealand Banking Group Limited
(ANZ) in 1993 and held the role of
Chief Financial Officer from
July 1997 to May 2012.
Prior to his career at ANZ, Peter
was a banking and finance, audit
and consulting partner at KPMG
Peat Marwick. Peter was formerly a
Director of ANZ National Bank
Limited in New Zealand and various
ANZ subsidiaries.
Westpac Board Committee
membership: Chairman of the
Board Audit Committee. Member of
each of the Board Nominations,
Board Risk & Compliance and
Board Technology Committees.
Directorships of other listed
entities over the past three years
and dates of office: Nil.
2018 Westpac Group Annual Report
49

Directors’report
Name: Peter Nash
BCom, FCA, F Fin
Age: 56
Term of office: Director since
March 2018.
Date of next scheduled
re-election: December 2018.
Independent: Yes.
Current directorships of listed
entities and dates of office:
Johns Lyng Group Limited
(Chairman since October 2017).
Johns Lyng Group Limited became
a listed entity in October 2017.
Other principal directorships:
Reconciliation Australia Limited and
Golf Victoria Limited.
Other interests: Board member of
the Koorie Heritage Trust and
Migration Council Australia.
Member of the University of
Melbourne Centre for
Contemporary Chinese Studies
Advisory Board.
Other Westpac related entities
directorships and dates of office:
Nil
Skills, experience and expertise:
Peter was formerly a Senior
Partner with KPMG until
September 2017, having been
admitted to the partnership of
KPMG Australia in 1993. He most
recently served as the National
Chairman of KPMG Australia from
2011 until August 2017, where he
was responsible for the overall
governance and strategic
positioning of KPMG in Australia. In
this role, Peter also served as a
member of KPMG’s Global and
Regional Boards.
Peter has experience providing
advice on a range of topics including
business strategy, risk
management, internal controls,
business processes and regulatory
change. He has also provided both
financial and commercial advice to
many Government businesses at
both a Federal and State level.
Peter is a former member of the
Business Council of Australia and its
Economic and Regulatory
Committee.
Westpac Board Committee
membership: Member of each of
the Board Audit and Board Risk &
Compliance Committees.
Directorships of other listed
entities over the past three years
and dates of office: Nil.
5
02018 Westpac Group Annual Report

Company Secretary
Our Company Secretaries as at 30 September 2018 were Rebecca Lim and Tim Hartin.
Rebecca Lim (B Econ, LLB (Hons.)) was appointed Group Executive, Compliance, Legal & Secretariat and Company Secretary in
October 2016. Rebecca joined Westpac in 2002 and has held a variety of senior leadership roles including General Manager, Human
Resources for St.George Bank and General Manager, St.George Private Clients. She was appointed Group General Counsel in
November 2011 and Chief Compliance Officer from 2013 to 2017. Rebecca held an in-house role in investment banking at Goldman
Sachs in London before returning to Australia and joining Westpac. Rebecca was previously with US firm Skadden Arps where she
worked in the Corporate Finance area in both New York and London. Prior to that she worked at Blake Dawson Waldron (now Ashurst)
as a solicitor.
Tim Hartin (LLB (Hons.)) was appointed Group Company Secretary in November 2011. Before that appointment, Tim was Head of
Legal - Risk Management & Workouts, Counsel & Secretariat and prior to that, he was Counsel, Corporate Core. Before joining
Westpac in 2006, Tim was a Consultant with Gilbert + Tobin, where he provided corporate advisory services to ASX listed companies.
Tim was previously a lawyer at Henderson Boyd Jackson W.S. in Scotland and in London in Herbert Smith’s corporate and corporate
finance division.
2. Executive Team
As at 30 September 2018 our Executive Team was:
There are no family relationships between or among any of our Directors or Executive Team members.
From 1 October 2018, Rebecca Lim’s role and title is Group Executive, Legal & Secretariat.
Peter King was the Chief Financial Officer until 25 June 2018 when he was appointed Acting Chief Risk Officer. From 1 October 2018, Peter returned to the
role of Chief Financial Officer.
Alexandra Holcomb was Chief Risk Officer until her retirement from the role effective from 25 June 2018.
David Stephen commenced as Chief Risk Officer effective from 1 October 2018, with responsibility for risk and compliance.
David Lees was appointed Acting Chief Financial Officer effective from 25 June 2018. From 1 October 2018, David ceased to be a member of the Executive
Team and returned to the role of Deputy Chief Financial Officer.
Directors’report
NamePosition
Year Joined
Group
Year Appointed
to Position
Brian HartzerManaging Director & Chief Executive Officer20122015
Lyn CobleyChief Executive, Westpac Institutional Bank20152015
Brad CooperChief Executive Officer, BT Financial Group20072010
Dave CurranChief Information Officer20142014
George FrazisChief Executive, Consumer Bank20092015
Peter KingActing Chief Risk Officer19942014
David LeesActing Chief Financial Officer19972018
Rebecca LimGroup Executive, Compliance, Legal & Secretariat20022016
David LindbergChief Executive, Business Bank20122015
Carolyn McCannGroup Executive, Customer & Corporate Relations20132018
David McLeanChief Executive Officer, Westpac New Zealand Limited19992015
Christine ParkerGroup Executive, Human Resources20072011
Gary ThursbyGroup Executive, Strategy & Enterprise Services20082016
2018 Westpac Group Annual Report51
1
23,
4
5
1
2
3
4
5

Directors’report
Brian Hartzer BA, CFA. Age 51
Managing Director & Chief Executive Officer
Brian was appointed Managing Director & Chief Executive Officer in February 2015. Brian joined Westpac as
Chief Executive, Australian Financial Services in June 2012 encompassing Westpac Retail & Business Banking,
St.George Banking Group and BT Financial Group.
Brian is a Director of the Australian Banking Association and was formerly the Chairman until December 2015.
Prior to joining Westpac, Brian spent three years in the UK as CEO for Retail, Wealth and Ulster Bank at the
Royal Bank of Scotland Group. Prior to that, he spent ten years with Australia and New Zealand Banking Group
Limited (ANZ) in Australia in a variety of roles, including his final role as CEO, Australia and Global Segment Lead
for Retail and Wealth. Before joining ANZ, Brian spent ten years as a financial services consultant in New York,
San Francisco and Melbourne.
Brian graduated from Princeton University with a degree in European History and is a Chartered Financial
Analyst.
Lyn Cobley BEc, SF FIN, GAICD. Age 55
Chief Executive, Westpac Institutional Bank
Lyn was appointed Chief Executive, Westpac Institutional Bank in September 2015. She has responsibility for
Westpac’s global relationships with corporate, institutional and government clients as well as all products across
financial and capital markets, transactional banking, structured finance and working capital payments. In addition,
Lyn is responsible for Westpac’s International and Pacific Island businesses.
Lyn has over 25 years’ experience in financial services. Prior to joining Westpac, Lyn held a variety of senior
positions at the Commonwealth Bank of Australia including serving as Group Treasurer from 2007 to 2013 and
most recently as Executive General Manager, Retail Products & Third Party Banking. She also held senior roles
at Barclays Capital in Australia and Citibank in Australia and Asia Pacific, and was CEO of Trading Room (a joint
venture between Macquarie Bank and Fairfax).
Lyn is a Board member of the Australian Financial Markets Association (AFMA), the Banking & Finance Oath and
the Westpac Foundation. She is Chairman of Westpac’s Asia Advisory Board and is also a member of Chief
Executive Women.
Lyn has a Bachelor of Economics from Macquarie University, is a Senior Fellow of the Financial Services Institute
of Australia and is a graduate of the Australian Institute of Company Directors.
Brad Cooper DipBM, MBA. Age 56
Chief Executive Officer, BT Financial Group
Brad was appointed Chief Executive Officer, BT Financial Group in February 2010. Brad initially joined Westpac
in April 2007 as Chief Executive, Westpac New Zealand Limited and after successfully leading a change program
in that market, moved to the role of Group Chief Transformation Officer, leading the Westpac Group’s St.George
merger implementation.
Prior to joining Westpac, Brad was Chairman of GE Capital Bank and CEO of GE Consumer Finance UK &
Ireland. He drove GE’s UK Six Sigma program and was certified as a Quality Leader (Black Belt) in December
2002. He was promoted to CEO of GE Consumer Finance UK in January 2003 and appointed Chairman of GE
Capital Bank in April 2004.
Dave Curran BCom. Age 53
Chief Information Officer
Dave was appointed Chief Information Officer in September 2014. Dave has almost 30 years of experience with
proven expertise in IT and financial services and the implementation of large, complex projects.
Since 2015, Dave has been on the Board of the Westpac Bicentennial Foundation, a $100 million scholarship
fund with exclusive focus on Australian education and leadership.
Before joining Westpac, Dave spent ten years in senior roles at the Commonwealth Bank of Australia (CBA).
Before joining CBA, he spent sixteen years at Accenture, where he was a partner, primarily consulting on financial
services.
52
2018 Westpac Group Annual Report

Directors’report
George Frazis B Eng (Hons.), MBA (AGSM/Wharton). Age 54
Chief Executive, Consumer Bank
George was appointed Chief Executive, Consumer Bank in June 2015, responsible for managing the end to end
relationship with consumer customers. This includes all consumer distribution, digital, marketing, transformation
and banking products and services under the Westpac, St.George, BankSA, Bank of Melbourne and RAMS
brands.
Prior to this appointment, he was CEO, St.George Banking Group. George joined the Westpac Group in
March 2009 as Chief Executive, Westpac New Zealand Limited. George is highly experienced in the financial
services industry. He was formerly Group Executive General Manager at National Australia Bank. Prior to that,
George was a senior executive in Commonwealth Bank of Australia’s Institutional Banking Division and has also
been a partner with the Boston Consulting Group and an officer in the Royal Australian Air Force.
George is a Governor of the St.George Foundation and is Chair of the Prime Minister’s Industry Advisory
Committee on Veterans’ Employment.
Peter King BEc, FCA. Age 48
Acting Chief Risk Officer
Peter acted as the Chief Risk Officer from June 2018 to September 2018. Westpac’s Chief Risk Officer is
responsible for key risk management activities across the enterprise. Prior to this appointment, Peter was Chief
Financial Officer from April 2014 to June 2018. He has returned to this role in October 2018.
Since joining Westpac in 1994, Peter has held senior finance positions across the Group, including in Group
Finance, Business and Consumer Banking, Business and Technology Services, Treasury and Financial Markets.
Peter commenced his career at Deloitte Touche Tohmatsu. He has a Bachelor of Economics from Sydney
University and completed the Advanced Management Programme at INSEAD. He is a Fellow of the Institute of
Chartered Accountants.
David Lees BCom, LLB. Age 48
Acting Chief Financial Officer
David acted as the Chief Financial Officer from June 2018 to September 2018. Westpac’s Chief Financial Officer
is responsible for Westpac’s Finance, Group Audit, Tax, Treasury and Investor Relations functions. Prior to this
appointment, David was Deputy Chief Financial Officer from January 2016 to June 2018. He has returned to this
role in October 2018.
Since joining Westpac in 1997, David has held other senior roles across the Westpac Group, including General
Manager, BT Solutions, where he was responsible for BT Financial Group’s insurance and asset management
businesses.
David holds a Bachelor of Commerce and Bachelor of Laws from Durban University.
Rebecca Lim B Econ, LLB (Hons). Age 46
Group Executive, Compliance, Legal & Secretariat
Rebecca was appointed as Westpac’s Group Executive responsible for compliance, legal and secretariat
functions globally from October 2016. She was appointed Group General Counsel in November 2011 and was
Chief Compliance Officer from 2013 to 2017.
Rebecca joined Westpac in 2002 and has held a variety of other senior leadership roles including General
Manager, Human Resources for St.George Bank and General Manager, St.George Private Clients.
Rebecca began her career at Blake Dawson Waldron (now Ashurst) before joining the US firm Skadden Arps
where she worked in both New York and London. Rebecca then moved into an in-house role in investment
banking at Goldman Sachs in London before returning to Australia and joining Westpac.
Rebecca is Deputy Chair of the GC100 Executive Committee and a member of Chief Executive Women.
2018 Westpac Group Annual Report53

Directors’report
David Lindberg HBA (Hons. Economics). Age 43
Chief Executive, Business Bank
David was appointed Chief Executive, Business Bank in June 2015. He manages the Group’s end to end
relationships with business customers for the Westpac, St.George, BankSA and Bank of Melbourne brands. The
Business Bank provides a wide range of banking and financial products and services to Australia’s small,
commercial, corporate and agri businesses.
Prior to this appointment, David was Chief Product Officer, responsible for the Group’s retail and business
products across all brands, as well as overseeing the Group’s digital activities. Before joining Westpac in 2012,
David was Executive General Manager, Cards, Payments & Retail Strategy at the Commonwealth Bank of
Australia. David was also formerly Managing Director, Strategy, Marketing & Customer Segmentation at Australia
and New Zealand Banking Group Limited and Managing Vice President and Head of Australia for First
Manhattan.
Carolyn McCann BBus (Com), BA, GradDipAppFin, GAICD. Age 46
Group Executive, Customer & Corporate Relations
Carolyn was appointed as Westpac’s Group Executive responsible for customer and corporate relations in
June 2018. Carolyn is responsible for the management of the Group’s customer resolution and reporting, in
addition to the corporate affairs, communications, government relations and sustainability functions, recognising
the importance of setting high service standards and quickly resolving customer issues in managing the Group’s
relationship with its customers.
Carolyn joined the Westpac Group in 2013, as General Manager, Corporate Affairs & Sustainability, during which
time she played an instrumental role in leading the Group’s bicentenary program, including the launch of the $100
million Westpac Bicentennial Foundation.
Prior to joining Westpac, Carolyn spent 13 years at Insurance Australia Group in various positions, including
Group General Manager, Corporate Affairs & Investor Relations. Carolyn began her career in consulting and has
extensive experience in financial services.
David McLean LLB (Hons.). Age 60
Chief Executive Officer, Westpac New Zealand Limited
David was appointed Chief Executive Officer, Westpac New Zealand Limited in February 2015. Since joining
Westpac in February 1999, David has held a number of senior roles, including Head of Debt Capital Markets New
Zealand, General Manager, Private, Wealth and Insurance New Zealand and Head of Westpac Institutional Bank
New Zealand, and most recently, Managing Director of the Westpac New York branch.
Before joining Westpac, David was Director, Capital Markets at Deutsche Morgan Grenfell from 1994. He also
established the New Zealand branch of Deutsche Bank and was New Zealand Resident Branch Manager. In
1988, David joined Southpac/National Bank as a Capital Markets Executive. Prior to this, David worked as a
lawyer in private practice and also served as in-house counsel for NatWest NZ from 1985.
Christine Parker BGDipBus (HRM). Age 58
Group Executive, Human Resources
Christine was appointed to Westpac Group’s Executive Team in October 2011. As Group Executive, Human
Resources, Christine leads the HR function and is responsible for key HR activities across the Group, including
attracting and retaining staff, training and development, reward and recognition and health, safety and wellbeing.
Christine also oversees the Group’s Customer Advocate function and supports the CEO and Board on culture and
conduct. Prior to June 2018, Christine also had responsibility for Corporate Affairs and Sustainability.
Since joining Westpac in 2007, Christine has held a variety of senior leadership roles including Group General
Manager, Human Resources and General Manager, Human Resources for Westpac New Zealand Limited.
Before joining Westpac, Christine held senior HR roles in a number of high profile organisations and across a
range of industries, including Carter Holt Harvey and Restaurant Brands New Zealand.
Christine was previously a Director of Women’s Community Shelters and is a current member of the Chief
Executive Women, Governor of the St.George Foundation and member of the Veterans’ Employment Industry
Advisory Committee.
542018 Westpac Group Annual Report

Directors’report
Gary Thursby BEc, DipAcc, FCA. Age 56
Group Executive, Strategy & Enterprise Services
Gary was appointed Group Executive Strategy & Enterprise Services in October 2016. In addition to leading the
Group’s strategy function, his role is designed to support delivery of the Group’s Service Revolution and provide
services to support the Group’s operating businesses.
Gary’s responsibilities also include banking operations, procurement, property, data and analytics, group strategy
and enterprise investments. In addition, Gary oversees the Group’s corporate and business development
portfolios.
Before joining Westpac in 2008, Gary held a number of senior finance roles at Commonwealth Bank of Australia
(CBA) including Deputy CFO and CFO Retail Bank. Gary has over 20 years’ experience in financial services,
covering finance, M&A and large scale program delivery. He commenced his career at Deloitte Touche
Tohmatsu.
Gary has a Bachelor of Economics and a Post Graduate Diploma in Accounting from Flinders University of South
Australia and is a Fellow of the Institute of Chartered Accountants
.
2018 Westpac Group Annual Report55

3. Report on the business
a) Principal activities
The principal activities of the Group during the financial year ended 30 September 2018 were the provision of financial services
including lending, deposit taking, payments services, investment portfolio management and advice, superannuation and funds
management, insurance services, leasing finance, general finance, interest rate risk management and foreign exchange services.
There have been no significant changes in the nature of the principal activities of the Group during 2018.
b) Operating and financial review
The net profit attributable to owners of Westpac Banking Corporation for the year ended 30 September 2018 was $8,095 million, an
increase of $105 million or 1% compared to 2017. Key features of this result were:
a 2% increase in net operating income before operating expenses and impairment charges with:
–net interest income of $16,505 million, an increase of $989 million or 6% compared to 2017, with total loan growth of 4% and a
7 basis point increase in net interest margin to 2.13%; and
–non-interest income of $5,628 million, a decrease of $658 million or 10% compared to 2017, primarily due to a decrease in
trading income of $257 million, the non-repeat of a large gain of $279 million on disposal of an associate in 2017 (BTIM), an
impairment loss of $104 million on the Pendal (formerly BTIM) investment in 2018, and additional provisions for estimated
customer refunds and payments recorded as negative income. These items were partly offset by income related to the exit of
the Hastings business ($135 million);
operating expenses were $9,692 million, an increase of $258 million or 3% compared to 2017. The rise in operating expenses
included annual salary increases and higher technology expenses related to the Group’s investment program, an increase in
regulatory and compliance costs and costs associated with the exit of the Hastings business. These increases were partly offset by
productivity benefits and lower amortisation of intangibles; and
impairment charges were $710 million, a decrease of $143 million or 17% compared to 2017. Asset quality remained sound, with
stressed exposures as a percentage of total committed exposures at 1.08%, up 3 basis points over the year. The decrease in
impairment charges was primarily due to reduced individual provisions on larger facilities.
A review of the operations of the Group and its divisions and their results for the financial year ended 30 September 2018 is set out in
Section 2 of the Annual Report under the sections ‘Review of Group operations’, ‘Divisional performance’ and ‘Risk and risk
management’, which form part of this report.
Further information about our financial position and financial results is included in the financial statements in Section 3 of this Annual
Report, which form part of this report.
c) Dividends
Since 30 September 2018, Westpac has announced a final ordinary dividend of 94 cents per Westpac ordinary share, totalling
approximately $3,229 million for the year ended 30 September 2018 (2017 final ordinary dividend of 94 cents per Westpac ordinary
share, totalling $3,191 million). The dividend will be fully franked and will be paid on 20 December 2018.
An interim ordinary dividend for the current financial year of 94 cents per Westpac ordinary share for the half year ended 31
March 2018, totalling $3,218 million, was paid as a fully franked dividend on 4 July 2018 (2017 interim ordinary dividend of 94 cents per
Westpac ordinary share, totalling $3,156 million). The payment comprised direct cash disbursements of $2,897 million with $321 million
being reinvested by participants through the DRP.
Further, in respect of the year ended 30 September 2017, a fully franked final dividend of 94 cents per ordinary share totalling
$3,191 million was paid on 22 December 2017. The payment comprised direct cash disbursements of $2,881 million with $310 million
being reinvested by participants through the DRP.
New shares were issued to satisfy the DRP for each of the 2017 final ordinary dividend and the 2018 interim ordinary dividend.
d) Significant changes in state of affairs and events during and since the end of the 2018 financial year
Significant changes in the state of affairs of the Group were:
increased public scrutiny of financial institutions (including Westpac) and regulators from the Royal Commission into Misconduct in
the Banking, Superannuation and Financial Services Industry, with Westpac participating in the Royal Commission to date, and in
the course of that participation, providing the Royal Commission with documents, witness statements and submissions;
the issuance of A$1.69 billion AT1 securities, known as Westpac Capital Notes 5, which qualify as Additional Tier 1 capital under
APRA’s capital adequacy framework;
the buy back and cancellation of $623 million of Westpac convertible preference shares and the conversion of $566 million of
Westpac convertible preference shares into ordinary Westpac shares; and
Directors’report
562018 Westpac Group Annual Report

ongoing regulatory changes and developments, which have included changes relating to competition, capital, financial services
(including the provision of additional powers to regulators), taxation, accounting standards, executive accountability and other
regulatory requirements.
For a discussion of these matters, please refer to ‘Significant developments’ in Section 1 under ‘Information on Westpac’.
The Directors are not aware of any other matter or circumstance that has occurred since the end of the financial year that has
significantly affected or may significantly affect the operations of the Group, the results of these operations or the state of affairs of the
Group in subsequent financial years.
e) Business strategies, developments and expected results
Our business strategies, prospects and likely major developments in the Group’s operations in future financial years and the expected
results of those operations are discussed in Section 1 of the Annual Report under ‘Information on Westpac’, including under ‘Outlook’
and ‘Significant developments’.
Further information on our business strategies and prospects for future financial years and likely developments in our operations and
the expected results of operations have not been included in this report because the Directors believe it would be likely to result in
unreasonable prejudice to us.
4. Directors’ interests
a) Directors’ interests in securities
The following particulars for each Director are set out in the Remuneration Report in Section 10 of the Directors’ report for the year
ended 30 September 2018 and in the tables below:
their relevant interests in our shares or the shares of any of our related bodies corporate;
their relevant interests in debentures of, or interests in, any registered managed investment scheme made available by us or any of
our related bodies corporate;
their rights or options over shares in, debentures of, or interests in, any registered managed investment scheme made available by
us or any of our related bodies corporate; and
any contracts:
–to which the Director is a party or under which they are entitled to a benefit; and
–that confer a right to call for or deliver shares in, debentures of, or interests in, any registered managed investment scheme
made available by us or any of our related bodies corporate.
Directors’report
2018 Westpac Group Annual Report57

Directors’ interests in Westpac and related bodies corporate as at 5 November 2018
Brian Hartzer’s interest in Westpac ordinary shares includes 23,692 restricted shares held under the CEO Restricted Share Plan.
Share rights issued under the CEO Long Term Incentive Plan and Long Term Incentive Plan.
Ewen Crouch and his related bodies corporate also hold relevant interests in 250 Westpac Capital Notes 2.
Peter Hawkins and his related bodies corporate also hold relevant interests in 850 Westpac Capital Notes 3, 882 Westpac Capital Notes 4 and 1,370 Westpac
Capital Notes 5.
Figure displayed is as at Robert Elstone’s retirement date of 8 December 2017.
Note: Certain subsidiaries of Westpac offer a range of registered schemes. The Directors from time to time invest in these schemes and are required to provide a
statement to the ASX when any of their interests in these schemes change. ASIC has exempted each Director from the obligation to notify the ASX of a relevant
interest in a security that is an interest in BT Cash Management Trust (ARSN 087 531 539), BT Premium Cash Fund (ARSN 089 299 730), Westpac Cash
Management Trust (ARSN 088 187 928), BT Wholesale Managed Cash Fund (ARSN 088 832 491), BT Wholesale Enhanced Cash Fund (ARSN 088 863 469),
Advance Cash Multi-Blend Fund (ARSN 094 113 050) or BT Cash (ARSN 164 257 854).
Directors’report
Number of Relevant Interests in WestpacNumber of Westpac
Ordinary SharesShare Rights
Westpac Banking Corporation
Current Directors
Lindsay Maxsted22,017-
Brian Hartzer109,611613,341
Nerida Caesar9,985-
Ewen Crouc
h78,450-
Alison Deans14,392-
Crai
g Dunn8,869-
Anita Fung--
Peter Hawkins15,880-
Peter Marriot
t20,870-
Peter Nash8,020-
Former Directors
Robert Elstone12,096-
582018 Westpac Group Annual Report
12
3
4
5
1
2
3
4
5

b) Indemnities and insurance
Under the Westpac Constitution, unless prohibited by statute, we indemnify each of the Directors and Company Secretaries of Westpac
and of each of our related bodies corporate (except related bodies corporate listed on a recognised stock exchange), each employee of
Westpac or our subsidiaries (except subsidiaries listed on a recognised stock exchange), and each person acting as a responsible
manager under an Australian Financial Services Licence of any of Westpac’s wholly-owned subsidiaries against every liability (other
than a liability for legal costs) incurred by each such person in their capacity as director, company secretary, employee or responsible
manager, as the case may be; and all legal costs incurred in defending or resisting (or otherwise in connection with) proceedings,
whether civil or criminal or of an administrative or investigatory nature, in which the person becomes involved because of that capacity
.
Each of the Directors named in this Directors’ report and each of the Company Secretaries of Westpac has the benefit of this indemnity.
Consistent with shareholder approval at the 2000 Annual General Meeting, Westpac has entered into a Deed of Access and Indemnity
with each of the Directors, which includes indemnification in identical terms to that provided in the Westpac Constitution
.
Westpac also executed a deed poll in September 2009 providing indemnification equivalent to that provided under the Westpac
Constitution to individuals acting as:
statutory officers (other than as a director) of Westpac;
directors and other statutory officers of wholly-owned subsidiaries of Westpac; and
directors and statutory officers of other nominated companies as approved by Westpac in accordance with the terms of the deed
poll and Westpac’s Contractual Indemnity Policy.
Some employees of Westpac’s related bodies corporate and responsible managers of Westpac and its related bodies corporate are
also currently covered by a deed poll that was executed in November 2004, which is in similar terms to the September 2009 deed poll.
The Westpac Constitution also permits us, to the extent permitted by law, to pay or agree to pay premiums for contracts insuring any
person who is or has been a Director or Company Secretary of Westpac or any of its related bodies corporate against liability incurred
by that person in that capacity, including a liability for legal costs, unless:
we are forbidden by statute to pay or agree to pay the premium; or
the contract would, if we paid the premium, be made void by statute.
Under the September 2009 deed poll, Westpac also agrees to provide directors’ and officers’ insurance to Directors of Westpac and
Directors of Westpac’s wholly-owned subsidiaries.
For the year ended 30 September 2018, the Group has insurance cover which, in certain circumstances, will provide reimbursement for
amounts which we have to pay under the indemnities set out above. That cover is subject to the terms and conditions of the relevant
insurance, including but not limited to the limit of indemnity provided by the insurance. The insurance policies prohibit disclosure of the
premium payable and the nature of the liabilities covered.
c) Share rights outstanding
As at the date of this report there are 4,632,271 share rights outstanding in relation to Westpac ordinary shares. The latest dates for
exercise of the share rights range between 1 October 2019 and 1 October 2033.
Holders of outstanding share rights in relation to Westpac ordinary shares do not have any rights under the share rights to participate in
any share issue or interest of Westpac or any other body corporate.
d) Proceedings on behalf of Westpac
No application has been made and no proceedings have been brought or intervened in, on behalf of Westpac under section 237 of the
Corporations Act.
Directors’report
2018 Westpac Group Annual Report59

Formerly known as the Carbon Disclosure Project.
Directors’report
602018 Westpac Group Annual Report
5. Environmental disclosure
As part of our 2018 Sustainability Strategy, we have set targets
for our environmental performance. The Westpac Group’s
environmental framework starts with ‘Our Principles for Doing
Business’, which outline our broad environmental principles.
This framework includes:
our Westpac Group Environment Policy, which has been in
place since 1992;
our Sustainability Risk Management Framework;
our Responsible Sourcing Code of Conduct; and
public reporting of our environmental performance.
We also participate in a number of voluntary initiatives including
the Dow Jones Sustainability Index (#17 in global banking
group), CDP , the Equator Principles, the Principles for
Responsible Investment, the United Nations Global Compact
and the Banking Environment Initiative’s Soft Commodities
Compact.
The National Greenhouse and Energy Reporting Act 2007(Cth)
(National Greenhouse Act) came into effect in July 2008. The
Group reports on greenhouse gas emissions, energy
consumption and production under the National Greenhouse
Act for the period 1 July through 30 June each year.
The Group was previously subject to the reporting requirements
of the Energy Efficiency Opportunities Act 2006 (Cth) (EEO
Act). The Commonwealth Government repealed the EEO Act,
effective from 29 June 2014. Accordingly, all obligations and
activities under the EEO Program, including reporting
requirements, have ceased.
Our operations are not subject to any other significant
environmental regulation under any law of the Commonwealth
of Australia or of any state or territory of Australia. We may,
however, become subject to environmental regulation as a
result of our lending activities in the ordinary course of business
and we have policies in place to ensure that this potential risk is
addressed as part of our normal processes.
We have not incurred any liability (including for rectification
costs
) under any environmental legislation.
1
6. Human rights supply chain disclosure
Westpac’s overall approach to human rights is set out in our
Westpac Group Human Rights Position Statement, and this
references our Responsible Sourcing Code of Conduct as the
primary framework for managing human rights in our supply
chain
.
The Group is subject to the United Kingdom’s Transparency in
Supply Chains provisions under the Modern Slavery Act 2015,
which came into effect in March 2015. Westpac releases an
annual statement each year for the period ended 30
September to disclose the steps taken during the year to help
prevent modern slavery from occurring within the Grou
p’s
operations and supply chain.
7. Rounding of amounts
Westpac is an entity to which ASIC Corporations Instrument
2016/191 dated 24 March 2016, relating to the rounding of
amounts in director
s’ reports and financial reports, applies.
Pursuant to this Instrument, amounts in this Director
s’ report
and the accompanying financial report have been rounded to
the nearest million dollars, unless indicated to the contrary.
8. Political expenditure
In line with Westpac policy, no cash donations were made to
political parties during the financial year ended 30
September 2018
.
In Australia, political expenditure for the financial year ended
30 September 2018 was $189,195. This relates to payment fo
r
participation in legitimate political activities where they were
assessed to be of direct business relevance to Westpac. Such
activities include business observer programs attached to
annual party conferences, policy dialogue forums and othe
r
political functions, such as speeches and events with industry
participants
.
In New Zealand, political expenditure for the financial year
ended 30 September 2018 was NZD$19,150.
1

9. Directors’ meetings
Each Director attended the following meetings of the Board and Committees of the Board during the financial year ended 30 September
2018:
This table shows membership of standing Committees of the Board. From time to time the Board may form other committees or request
Directors to undertake specific extra duties.
A - Meetings eligible to attend as a memberB - Meetings attended as a member
Unless otherwise stated, each Director has been a member, or the Chairman, of the relevant Committee for the whole of the period
from 1 October 2017.
Chairman of the Board Nominations Committee. Member of the Board Audit Committee and the Board Risk & Compliance Committee.
Member of the Board Technology Committee.
Member of the Board Risk & Compliance Committee and Board Technology Committee.
Chairman of the Board Risk & Compliance Committee. Member of the Board Nominations Committee and the Board Remuneration Committee.
Chairman of the Board Technology Committee from 8 December 2017. Member of the Board Technology Committee until 8 December 2017. Member of the
Board Risk & Compliance Committee, and from 8 December 2017, a member of each of Board Nominations Committee and Board Remuneration Committee.
Chairman of the Board Remuneration Committee. Member of the Board Risk & Compliance Committee and the Board Nominations Committee.
Robert Elstone retired from the Board and its Committees on 8 December 2017.
Chairman of the Board Technology Committee and a member of the Board Nominations Committee until 8 December 2017. Member of the Board Audit
Committee, the Board Risk & Compliance Committee, and from 8 December 2017, a member of the Board Technology Committee.
Chairman of the Board Audit Committee. Member of the Board Risk & Compliance Committee, the Board Technology Committee and the Board Nominations
Committee.
Peter Nash was appointed as a Director and member of the Board Audit Committee and Board Risk & Compliance Committee on 7 March 2018.
In addition to 8 scheduled Board meetings, there were 2 additional special purpose Board meetings convened during the year. Mr Crouch was unable to
attend one of these special purpose Board meetings and the meeting material was reviewed and discussed with the Chairman, and his views were
subsequently conveyed by the Chairman to the other Directors at the meeting.
Directors’report
AuditRisk & ComplianceNominationsRemunerationTechnology
NotesBoardCommitteeCommitteeCommitteeCommitteeCommittee
Number of meetings
held during the year
Director
ABABABABABAB
Lindsay Maxsted
1
1010444444----
Brian Hartzer
2
1010--------44
Nerida Caesar
3
1010--44- ---44
Ewen Crouch
4
109--444455- -
Alison Deans
5
1010--44334444
Craig Dunn
6
1010--444455- -
Robert Elstone
7
2 21111- -11- -
Peter Hawkins
8
1010444411--43
Peter Marriott
9
1010444444--44
Peter Nash10
7 73333- -----
2018 Westpac Group Annual Report
61
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10. Remuneration Report
Introduction from the Chairman of the Board Remuneration Committee
Dear shareholders
On behalf of the Board I am pleased to present Westpac’s 2018 remuneration report.
I outline below the context behind the key remuneration decisions made by the Board and the Board Remuneration Committee this year. In
addition, I summarise the key enhancements we have made to strengthen our remuneration policy and practices to support appropriate
outcomes for our shareholders, customers, employees and the communities we serve.
Overview of performance outcomes
2018 has been a challenging year for Westpac from a financial performance perspective. In addition, the Royal Commission into Misconduct in
the Banking, Superannuation and Financial Services Industry (Royal Commission) has highlighted that financial services organisations,
including Westpac, need to do more to meet the needs of customers and the community.
Key financial outcomes for 2018 can be summarised as follows:
Cash earnings were flat due to slower loan and deposit growth, the full period impact of the bank levy and an increase in provisions for
customer refunds and payments;
The Group’s balance sheet was further strengthened. In particular, our capital ratios exceeded the Australian Prudential Regulation
Authority’s (APRA’s) ‘unquestionably strong’benchmark, liquidity ratios are higher and the funding mix has continued to improve;
Return on equity (ROE) declined to 13% due to higher capital levels combined with flat cash earnings. This is at the lower end of the range
the Group is seeking to achieve; and
Earnings per share (EPS) of 232.6 cents was down 1% on the prior year.
Strategically, we have made good progress in modernising our platforms and digitising the company resulting in productivity gains and
improvements to the customer experience. Customer satisfaction, as measured by net promoter scores, showed relative improvement though
the year. In addition, a range of initiatives were deployed to strengthen our culture and enhance the agility and capability of our workforce.
In terms of the Royal Commission, the misconduct issues that have been examined are confronting for Westpac and the industry, and have
raised a number of important considerations for the industry, regulators and policy makers. The Chairman and CEO both discuss the Royal
Commission in their respective letters in this Annual Report.
The Board recognises that Westpac needs to continue to improve the way it prevents, detects and addresses misconduct. The Royal
Commission has highlighted examples of areas where our actions have given rise to poor outcomes for some of our customers. This has
contributed to a loss of trust and reputational damage to Westpac and the industry. The Board also recognises that the value of your shares
has declined over the year as a result of a range of factors.
Variable reward adjustments and outcomes
Variable reward outcomes reflect appropriate executive accountability for both performance and the matters discussed above.
2015 Long Term Variable Reward (LTVR): The performance hurdles for both the CEO and Group Executive 2015 LTVR plans were not met
and, as a result, the awards were forfeited in full for the third consecutive year.
2018 Short Term Variable Reward (STVR): 2018 STVR outcomes for the CEO and Group Executives in Australia were on average 25% lower
than 2017 with the largest individual year on year reduction being 50%. These outcomes include the application of discretion as follows:
The assessment of performance against the 2018 scorecard for the CEO and Group Executives in Australia included discretionary
downward adjustments for customer and service related areas of the scorecard of up to 25%.
Targeted downwards adjustments were applied to three Group Executives to reflect a range of matters relevant to the business for which
they are responsible, including risk and remediation issues and, where relevant, business performance not otherwise reflected in the
scorecard. These adjustments ranged from 10% to 30% of the target opportunity for these individuals.
In addition, to reflect appropriate executive accountability for Group-wide risk and reputation matters, the Board applied a scorecard
modifier to reduce further the STVR outcomes as follows:
–15% of the outcome for the CEO (which equates to 13.5% of the target opportunity); and
–10% of the target opportunity for each Group Executive excluding David McLean (CEO, Westpac New Zealand Limited) and David
Lees (Acting Chief Financial Officer for three months only).
Directors’report
622018 Westpac Group Annual Report

These reductions result in a 2018 STVR outcome for the CEO of 77.5% of the target opportunity, which is 52% of the maximum opportunity.
The 2018 STVR outcomes for Group Executives ranged from 50% to 110% of the target opportunity and 34% to 73% of the maximum
opportunity.
Total Target Reward adjustments
The Board reviewed Total Target Reward (TTR) for the CEO and Group Executives for 2018. No changes were made to TTR for the CEO.
Increases in TTR for Group Executives of between 4% and 12.3% were made in circumstances where TTR was below market benchmarks and
to recognise individual capability and demonstrated capacity to deliver business outcomes since initial appointment to their roles.
Key enhancements and future developments
We are committed to ensuring that our remuneration arrangements meet regulatory requirements and align with emerging stakeholder
expectations and better practice. This includes:
under the Australian Banking Association’s 6 Point Plan, implementing Stephen Sedgwick AO’s recommendations for our employees two
years earlier than required. This includes targeted changes to our STVR arrangements for customer-facing employees in the Consumer
Bank and Business Bank to support our service-based approach and reinforce a sound conduct and risk culture;
implementing changes to our remuneration and governance arrangements consistent with the findings from APRA’s review of
remuneration practices at large financial institutions. For example, we have strengthened the process and documentation around the
Board’s existing discretion to adjust overall outcomes for matters such as behaviour, risk and reputation, with the introduction of a
scorecard modifier;
updating our remuneration policy to align with the letter and spirit of the new Banking Executive Accountability Regime legislation; and
implementing a Group-wide consequence management framework building on existing policies and practices to provide greater
consistency in the management of employee conduct. In 2018, we managed 1,091 employee conduct matters in Australia, of which 209
resulted in the employee exiting the business, 532 resulted in a formal disciplinary outcome, and a range of other consequences were
applied, including ineligibility for STVR, reductions to STVR and role changes.
During 2018, the Board Remuneration Committee reviewed the remuneration framework for the CEO and Group Executives with the aim of
ensuring it continues to remain fit for purpose and is simple, transparent and appropriately aligned with our strategic intent and the expectations
of our key stakeholders.
Given the ongoing review of remuneration practices across the industry and feedback from key stakeholders, we decided not to make any
changes to the design features of the 2019 STVR and LTVR plans for the CEO and Group Executives. We will continue to review the executive
remuneration framework in 2019 and, as always, engage with regulators, shareholders and shareholder representative groups and value the
insight these discussions provide.
Group Executive changes
Changes to Westpac’s leadership team during the year included:
Carolyn McCann was appointed to the new Group Executive, Customer & Corporate Relations role on 18 June 2018;
Alexandra Holcomb ceased in her role as the Chief Risk Officer on 25 June 2018 and will retire on 31 December 2018. David Stephen
commenced with Westpac on 1 October 2018;
Peter King was the Chief Financial Officer for most of the year and acted as the Chief Risk Officer from 25 June 2018 to 1 October 2018.
During this time, David Lees acted as the Chief Financial Officer;
Christine Parker’s role and title changed from Group Executive, Human Resources, Corporate Affairs & Sustainability to Group Executive,
Human Resources on 18 June 2018;
Rebecca Lim’s role and title changed from Group Executive, Compliance, Legal & Secretariat to Group Executive, Legal & Secretariat on 1
October 2018; and
Dave Curran will retire from the Chief Information Officer role on 29 January 2019. Craig Bright will commence with Westpac on 4
December 2018.
Non-executive Directors
The Board is pleased to have welcomed Peter Nash on 7 March 2018 and Anita Fung on 1 October 2018 as Non-executive Directors. No
changes were made to Non-executive Director fees for 2018.
Changes to the remuneration report
Finally, we have made further improvements to the transparency, simplicity and readability of our remuneration report. On behalf of the Board, I
invite you to read our remuneration report and welcome your feedback.
Craig Dunn, Chairman
Board Remuneration Committee
Directors’report
2018 Westpac Group Annual Report
63

Directors’report
642018 Westpac Group Annual Report

Directors’report
2018 Westpac Group Annual Report65

\Directors’report
662018 Westpac Group Annual Report

3. Key Management Personnel
The remuneration of Key Management Personnel (KMP) for the Group is disclosed in the Report. In 2018, KMP comprised the CEO,
Group Executives and Non-executive Directors as set out in the table below.
Peter King was the Chief Financial Officer until 25 June 2018 when he was appointed as the Acting Chief Risk Officer. Peter King returned to the Chief
Financial Officer role effective 1 October 2018.
David Lees was the Deputy Chief Financial Officer until 25 June 2018 when he was appointed as the Acting Chief Financial Officer. David Lees returned to the
Deputy Chief Financial Officer role effective 1 October 2018.
Rebecca Lim’s role and title changed to the Group Executive, Legal & Secretariat effective 1 October 2018.
Carolyn McCann was the General Manager, Corporate Affairs & Sustainability until 18 June 2018 when she was appointed as the Group Executive, Customer
& Corporate Relations.
Christine Parker’s role and title changed from the Group Executive, Human Resources, Corporate Affairs & Sustainability to the Group Executive, Human
Resources on 18 June 2018.
Alexandra Holcomb ceased in her KMP role as the Chief Risk Officer on 25 June 2018 and will retire on 31 December 2018. David Stephen commenced as the
Chief Risk Officer effective 1 October 2018.
Directors’report
NamePositionTerm as KMP
Managing Director & Chief Executive Officer
Brian Hartze
rManaging Director & Chief Executive OfficerFull Year
Current Group Executives
L
yn CobleyChief Executive, Westpac Institutional BankFull Year
Brad CooperChief Executive Officer, BT Financial GroupFull Year
Dave CurranChief Information OfficerFull Year
George FrazisChief Executive, Consumer BankFull Year
Peter KingActing Chief Risk OfficerFull Year
David Lees
Acting Chief Financial OfficerCommenced in KMP role on 25 June 2018
Rebecca LimGroup Executive, Compliance, Legal & SecretariatFull Year
David LindbergChief Executive, Business BankFull Year
Carolyn McCannGroup Executive, Customer & Corporate RelationsCommenced in KMP role on 18 June 2018
David McLeanChief Executive Officer, Westpac New Zealand LimitedFull Year
Christine ParkerGroup Executive, Human ResourcesFull Year
Gary ThursbyGroup Executive, Strategy & Enterprise ServicesFull Year
Former Grou
p Executive
Alexandra HolcombChief Risk OfficerCeased in KMP role on 25 June 2018
Current Non-executive Directors
Lindsay Maxsted ChairmanFull Year
Nerida CaesarDirectorFull Year
Ewen CrouchDirectorFull Year
Alison DeansDirectorFull Year
Craig DunnDirectorFull Year
Peter Hawkin
sDirectorFull Year
Peter MarriottDirectorFull Year
Peter NashDirectorCommenced on 7 March 2018
Former Non-executive Director
Robert ElstoneDirectorRetired on 8 December 2017
2018 Westpac Group Annual Report67
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4. Total remuneration outcomes
4.1. Chief Executive Officer and Group Executive remuneration – realised remuneration
The table below shows the actual remuneration paid and the equity vested to the CEO and Group Executives in 2018 and 2017
(unaudited). This includes:
fixed remuneration earned during the year;
cash STVR awarded in respect of 2018 and 2017;
deferred STVR awarded in prior years that vested in 2018 and 2017; and
LTVR awarded in prior years that vested in 2018 and 2017.
The value of deferred STVR and LTVR is based on the number of restricted shares or share rights multiplied by the five day volume
weighted average share price up to and including the date of vesting. The value of equity differs from the disclosure in Section 7 which
provides the annualised accounting value for unvested equity awards prepared in accordance with the Australian Accounting Standards
(AAS).
Directors’report
Fixed
remuneration
Cash STVR
awarded
Vesting of prior
year deferred
STVR awards
Vesting of prior
year LTVR
awards
Total realised
remuneration
Prior year LTVR
forfeited
Name$$$$$$
Managing Director & Chief Executive Officer
Brian Hartzer
20182,686,0001,040,8251,217,694-4,944,5194,263,037
20172,686,0001,490,7301,280,114-5,456,8443,046,592
Current Group Executives
Lyn Cobley, Chief Executive, Westpac Institutional Bank
20181,122,000465,500494,049-2,081,549-
20171,122,000640,000244,864-2,006,864-
Brad Cooper, Chief Executive Officer, BT Financial Group
20181,102,517400,000665,608-2,168,1252,064,040
20171,102,517792,500779,625-2,674,6422,206,129
Dave Curran, Chief Information Officer
20181,054,000485,000444,719-1,983,7191,761,322
2017952,000552,500510,291-2,014,791-
George Frazis, Chief Executive, Consumer Bank
20181,150,000480,000735,319-2,365,3191,614,690
20171,150,000872,500876,225-2,898,7251,155,565
Peter King, Acting Chief Risk Officer
20181,288,000517,000505,612-2,310,6121,824,211
20171,088,000615,000536,202-2,239,2021,132,480
David Lees, Acting Chief Financial Officer
2018324,87790,500--415,377-
2017-----------------------------------------Not a KMP in 2017 -----------------------------------------
Rebecca Lim, Group Executive, Compliance, Legal & Secretariat
2018950,000356,500287,412-1,593,912383,299
2017750,000412,500248,227-1,410,727388,674
David Lindberg, Chief Executive, Business Bank
20181,088,000440,500440,199-1,968,699817,702
2017952,000532,500419,808-1,904,308709,083
Carolyn McCann, Group Executive, Customer & Corporate Relations
2018212,87774,500202,173-489,550393,143
2017-----------------------------------------Not a KMP in 2017 -----------------------------------------
David McLean, Chief Executive Officer, Westpac New Zealand Limited
2018900,613498,439370,211-1,769,263988,873
2017864,889412,570430,410-1,707,869-
68
2018 Westpac Group Annual Report
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Equity that vested on 1 October 2018 is included in the 2018 figures. Equity that vested on 1 October 2017 is included in the 2017 figures.
Peter King was the Chief Financial Officer until 25 June 2018 when he was appointed as the Acting Chief Risk Officer.
David Lees commenced his KMP role as the Acting Chief Financial Officer on 25 June 2018.
Carolyn McCann commenced her KMP role as the Group Executive, Customer & Corporate Relations on 18 June 2018.
Alexandra Holcomb ceased in her KMP role as the Chief Risk Officer on 25 June 2018 and will retire on 31 December 2018.
Directors’report
Fixed
remuneration
Cash STVR
awarded
Vesting of prior
year deferred
STVR awards
Vesting of prior
year LTVR
awards
Total realised
remuneration
Prior year LTVR
forfeited
Name$$$$$$
Current Group Executives (cont.)
Christine Parker, Group Executive, Human Resources
2018884,000427,500421,759-1,733,2591,474,298
2017850,000517,500481,816-1,849,3161,365,665
Gary Thursby, Group Executive, Strategy & Enterprise Services
2018840,000395,500368,685-1,604,185471,754
2017840,000485,000371,764-1,696,764409,680
Former Group Executive
Alexandra Holcomb, Chief Risk Officer
2018736,449411,000446,660-1,594,1091,761,322
20171,003,000532,500498,536-2,034,036772,487
2018 Westpac Group Annual Report69
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4.2. Chief Executive Officer and Group Executive remuneration – equity awarded
The table below shows the value of equity awarded under the STVR and LTVR plans in respect of 2018 and 2017.
The final value of equity received by the CEO and Group Executives will depend on the share price at the time of vesting and the
number of restricted shares or share rights that vest, subject to performance hurdles (where applicable), continued service and malus
provisions.
The value of equity differs from the disclosure in Section 7 which is prepared in accordance with the AAS.
The value of deferred STVR (granted as restricted shares or unhurdled share rights) is 50% of the total STVR award for the year. The number of restricted
shares granted is determined by reference to the five day volume weighted average share price (VWAP) up to and including the grant date. This is adjusted for
non-payment of dividends over the vesting period for unhurdled share rights. The five day VWAP for the 2017 award was $31.46.
For the purposes of determining the number of performance share rights to grant, the Board Remuneration Committee caps the fair value at a maximum
discount of 60% of the share price at the start of the performance period. The fair value of the 2018 and 2017 awards were capped at $12.79 and $11.95
respectively.
The face value is calculated by multiplying the number of performance share rights granted during the year by the five day VWAP up to and including the grant
date. For the 2018 awards, the five day VWAP was $31.46, and for the 2017 awards, the five day VWAP was $32.20.
Peter King was the Chief Financial Officer until 25 June 2018 when he was appointed as the Acting Chief Risk Officer.
David Lees commenced his KMP role as the Acting Chief Financial Officer on 25 June 2018.
Carolyn McCann commenced her KMP role as the Group Executive, Customer & Corporate Relations on 18 June 2018.
Alexandra Holcomb ceased in her KMP role as the Chief Risk Officer on 25 June 2018 and will retire on 31 December 2018.
Directors’report
Deferred STVR
LTVR award
awardFair valueFace value
Name$$$
Managing Director & Chief Executive Officer
Brian Hartzer20181,040,8252,528,0006,218,959
20171,490,7302,528,0006,811,269
Current Group Executives
Lyn Cobley2018465,5001,056,0002,597,783
Chief Executive, Westpac Institutional Bank2017640,0001,056,0002,845,209
Brad Cooper2018400,0001,050,0002,582,994
Chief Executive Officer, BT Financial Group2017792,5001,050,0002,829,046
Dave Curran2018485,000992,0002,440,337
Chief Information Officer2017552,500896,0002,414,087
George Frazis2018480,0001,000,0002,460,034
Chief Executive, Consumer Bank2017872,5001,000,0002,694,332
Peter King2018517,0001,024,0002,519,060
Acting Chief Risk Officer2017615,0001,024,0002,758,984
David Lees201890,500--
Acting Chief Financial Officer2017------------Not a KMP in 2017------------
Rebecca Lim2018356,500700,0001,722,017
Group Executive, Compliance, Legal & Secretariat2017412,500700,0001,885,988
David Lindberg2018440,5001,024,0002,519,060
Chief Executive, Business Bank2017532,500912,0002,457,167
Carolyn McCann201874,500159,658364,743
Group Executive, Customer & Corporate Relations2017------------Not a KMP in 2017------------
David McLean2018498,439872,5082,146,339
Chief Executive Officer, Westpac New Zealand Limited2017412,570810,1382,160,244
Christine Parker2018427,500816,0002,007,332
Group Executive, Human Resources2017517,500750,0002,020,701
Gary Thursby2018395,500700,0001,722,017
Group Executive, Strategy & Enterprise Services2017485,000700,0001,885,988
Former Group Executive
Alexandra Holcomb2018411,000944,0002,322,222
Chief Risk Officer2017532,500944,0002,543,391
702018 Westpac Group Annual Report
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4.3. Summary of 2018 Short Term Variable Reward outcomes
Assessment approach
STVR awards are determined with reference to an assessment of performance against a balanced scorecard.
The Board and the Board Remuneration Committee recognise that the scorecard approach may not always appropriately reflect overall
performance of the Group.
For 2018, the scorecard was split into two sections to support decision making and enhance disclosure in relation to the Board’s
application of discretion when determining STVR outcomes.
Focus areas: This includes consideration of financial and non-financial measures aligned to Westpac’s key strategic priorities to
support an initial scorecard result.
In assessing outcomes for each focus area, a number of factors are taken into account. For example:
matters not known or not relevant at the beginning of the performance period which are relevant to the under or over
performance of the employee over the performance period;
the degree of difficulty associated with achieving the targets that had been set in the scorecard (and the context of those
targets);
whether the budgetary assumptions that were present when performance targets were set remain correct (and whether the
financial environment is better or worse compared with those assumptions); and
comparisons with the performance of Westpac’s main competitors having regard to major shareholder and customer
benchmarks as well as the composition and/or consistency of financial result performance.
Modifier: This includes further consideration of significant matters not covered in the focus areas, including behaviour, people
management matters, risk and reputation matters, and any other matters determined by the Board, as a tool to support the
adjustment of the overall scorecard result upwards or downwards (including to nil).
Group balanced scorecard – Chief Executive Officer performance objectives
The table below sets out the Group balanced scorecard for 2018 which forms the CEO scorecard and the resulting outcomes against
stretching targets.
Westpac’s strategic priorities are cascaded from the CEO’s scorecard to Group Executive scorecards in combination with other
divisional or functional measures.
Directors’report
Focus areas

CommentaryOutcome
Economic
performance (40%)
Delivering long term
returns for our
shareholders through
high quality and
consistent financial
results

Delivered economic profit of $3,444 million and a ROE of 13.00% at the bottom of the
13-14% range that we seek to achieve. Cash earnings were flat at $8,065 million.
Core earnings decreased 1% including the impact of infrequent items. Excluding the
impact of these items, core earnings grew 1%. Customer deposit growth of 6% funded
lending growth of 4%. Margins increased 2bps over the year.
Expenses increased 5% impacted by infrequent items. Excluding these items,
operating expenses increased 3% including higher regulatory and compliance costs,
costs associated with the Royal Commission and investment related spend.
Productivity benefits increased 16% to $304 million more than offsetting growth in
operating costs.
Balance sheet
management (10%)
Holding sufficient
capital and liquidity to
remain strong, meet
regulatory
requirements and
su
pport growth

Further strengthened funding and liquidity with an increase in the Group’s Net Stable
Funding Ratio to 114% and Liquidity Coverage Ratio to 133%, exceeding the target
and regulatory requirements.
Maintained ‘unquestionably strong’ capital levels with Common Equity Tier 1 Capital at
10.6%, including absorbing regulatory measurement changes of 30 basis points for
mortgage risk weights and operational risk RWA.
Achieved housing balance sheet growth of 4%.
Risk management
(10%)
Ensuring we are and
remain strong

Remained within the Group Risk Appetite overall; financial risks continue to be
managed well while the management of non-financial risks requires further
improvement.
Maintained sound credit quality across the portfolio, with ratio of stressed assets to
total committed exposures at 1.1%. Balance sheet settings, liquidity and market risks
are within appetite.
Ongoing significant focus on resolving and remediating compliance, regulatory and
customer issues, including enhancing risk management of sales practices, product
design and maintenance and financial crime systems and processes.
2018 Westpac Group Annual Report
71

In addition to qualitative downward adjustments made in assessing performance against the scorecard outcomes for the customer outcomes
and customer service transformation focus areas, the Board applied a further reduction of 15% to the CEO’s scorecard outcome (which
equates to 13.5% of the target opportunity) based on an overall assessment of risk and reputation matters.
Directors’report
Focus areas (continued)

CommentaryOutcome
Customer outcomes
(15%)
Helping our
customers,
communities and
people to prosper and
grow by delivering
great customer
outcomes, and by
securing the Group’s
future

Delivered significant improvements in service quality for our customers resulting in
solid customer growth and an improvement in net promoter scores (NPS). Business
Bank finished the year as Number 1 on both Customer Satisfaction and NPS and
Consumer Bank ranked Number 2 on NPS.
Continued to roll out new, market-leading digital innovations for our customers
including, but not limited to, Mobile Cheque Deposit, conversational banking through
Siri, Amazon, Alexa and Google Home, and digital mortgage origination.
Took a leading role in achieving ASIC approval of the new Banking Code of Practice,
offering enhanced commitments and protections to our customers.
Continued to implement the “Get it Right. Put it Right” initiative to identify and fix legacy
issues.
Closed out more than a third (250) of outstanding Financial Ombudsman Service
Australia matters.
While improvements have been made across the organisation to deliver better
customer outcomes, the Royal Commission has also highlighted certain areas where
we need to do more to meet the needs of customers and the community. The Board
believes it is appropriate to ensure executive accountability and has reduced the
overall result for this focus area b
y 25%.
Customer service
transformation (15%)
Creating superior
customer experiences
for each customer,
every time

Transformation of complaint handling through the establishment of our new Customer
and Corporate Relations division. This has resulted in a significant improvement in
resolving longstanding customer issues and more proactive identification of ‘vulnerable’
customers. Consumer and Business Bank long dated complaints were reduced by
90%.
Undertook substantive work on alleviating the source of customer complaints through
better designed products that meet the needs of customers. Completed a lifecycle
review of certain products and made changes, including: removing grandfathered
payments to salaried BT Financial Advisers benefitting more than 140,000 BT Financial
Advice customers; and simplifying and lowering transaction fees for 1.3 million
personal transaction account customers.
Continuing culture change across the Group with targeted messaging in People Leader
Forums and Culture Immersion helping people to consider complaints as part of our
Service Revolution.
Delivered key milestones in line with the Australian Banking Association’s 6 point plan
which commenced in 2016.
Delivered customer benefits from the Service Revolution Transformation programs.
In line with the approach taken for the customer outcomes focus area, the Board also
decided to reduce the overall result for the customer service transformation focus area
b
y 25%.
People and culture
(10%)
Delivering key people
initiatives that drive
further the Group’s
change agenda

Delivered significant milestones as part of our Workforce Revolution Program.
Maintained 50% Women in Leadership and our female General Manager population
has increased over the last two years from 39% in 2016 to 47% in 2018.
Continued to strengthen our culture through initiatives including: conducting the
Navigate program which was held for all employees and led by the CEO, to review and
recommit to our Group Compass which articulates our values, service standards, code
of conduct, and expectations of standards of behaviour and ethical treatment of our
customers; launching ‘Recruit for Culture Fit’ tools designed to help ensure new
recruits fit our service culture; holding various leadership development programs;
refreshing our values and code of conduct; and rolling out a Group Consequence
Management Framework.
Accelerated implementation of the Sedgwick review recommendations for employees
which means that variable reward for Consumer and Business Bank customer facing
employees is further weighted towards service and doing the right thing, rather than
product sales.
Modifier
722018 Westpac Group Annual Report

Short Term Variable Reward outcomes for 2018
The table below sets out the CEO and Group Executive STVR outcomes for 2018 as determined by the Board using the balanced
scorecard outcomes, including the modifier.
Peter King was the Chief Financial Officer until 25 June 2018 when he was appointed as the Acting Chief Risk Officer.
David Lees commenced his KMP role as the Acting Chief Financial Officer on 25 June 2018 and was not considered KMP prior to his appointment. His target
STVR opportunity has been apportioned to reflect his time in a Group Executive role.
Carolyn McCann commenced her KMP role as the Group Executive, Customer & Corporate Relations on 18 June 2018. Her target STVR opportunity has been
apportioned to reflect her time in a Group Executive role.
Alexandra Holcomb ceased in her KMP role as the Chief Risk Officer on 25 June 2018 and will retire on 31 December 2018. Her target STVR opportunity was
assessed on a full year basis.
Directors’report
Name
Target STVR
opportunity
STVR award
(as % of
tar
get)
STVR award
(as % o
f
maximum)
Cash STVR
award
(50%)
Deferred
STVR award
(50%)
Managing Director & Chief Executive Officer
Brian Hartze
r 2,686,00077.5%52%1,040,8251,040,825
Current Group Executives
Lyn Cobley
Chief Executive, West
pac Institutional Bank
1,122,00083%55%465,500465,500
Brad Cooper
Chief Executive Officer, BT Financial Grou
p
1,600,00050%33%400,000400,000
Dave Curran
Chief Information Office
r
1,054,00092%61%485,000485,000
George Frazis
Chief Executive, Consumer Bank
1,600,00060
%40%480,000480,000
Peter King
Actin
g Chief Risk Officer
1,088,00095%63%517,000517,000
David Lees
Actin
g Chief Financial Officer
181,250100%67%90,50090,500
Rebecca Lim
Group Executive, Compliance, Legal & Secretariat
750,00095
%63%356,500356,500
David Lindberg
Chief Executive, Business Bank
1,088,00081%54%440,500440,500
Carolyn McCann
Grou
p Executive, Customer & Corporate Relations
161,87592%61%74,50074,500
David McLean
Chief Executive Officer, West
pac New Zealand Limited
905,919110%73%498,439498,439
Christine Parke
r
Group Executive, Human Resources
900,00095
%63%427,500427,500
Gary Thursby
Grou
p Executive, Strategy & Enterprise Services
860,00092%61%395,500395,500
Former Group Executive
Alexandra Holcomb
Chief Risk Office
r
1,003,00082%55%411,000411,000
2018 Westpac Group Annual Report
73
1
2
3
4
1
2
3
4

4.4. Summary of Long Term Variable Reward vesting outcomes
The table below shows the vesting outcomes for LTVR awards to the CEO and Group Executives that reached the end of their
performance periods in 2018 and 2017.
Commencement date is the start of the performance period. The 2014 and 2015 LTVR were granted to Group Executives on 3 December 2014. The 2015 LTVR
was granted to the CEO on 11 December 2015.
Compound annual growth rate.
The EPS hurdled performance share rights reached the end of their performance period on 30 September 2017 and were subject to an additional one year
holding lock through to 30 September 2018.
Other equity vested during 2018
Lyn Cobley had 18,115 restricted shares granted under the Restricted Share Plan which vested in July 2018. The restricted shares
were allocated in respect of equity forfeited from her previous employer on joining Westpac
.
Directors’report
PerformanceCommencementPerformance range%
AwardhurdledateTest dateThresholdMaximumOutcomevested% lapsed
2015 LTVR
TSR
50% of award
1 October 20141 October 2018
Equal to composite
TSR index
Exceeds
composite TSR
index by 21.55 (i.e.
5% CAGR)
Westpac: 8.35
Index: 26.54
0%100%
EPS
50% of award
1 October 20141 October 20174.0% CAGR6.0% CAGR(0.8%) CAGR0%100%
2014 LTVR
TSR
50% of award
1 October 20141 October 201750 percentile75 percentile20 percentile0%100%
EPS
50% of award
1 October 20141 October 20175.0% CAGR7.0% CAGR(0.8%) CAGR0%100%
742018 Westpac Group Annual Report
1
2
3
t
hthth
1
2
3

4.5. Aligning pay with performance and shareholder return – five year perspective
The table below summarises key performance indicators for the Group and variable reward outcomes over the last five years.
Cash earnings are not prepared in accordance with AAS and have not been subject to audit.
Directors’report
Year ended 30 September
201
82017201620152014
CEO STVR award
(% of target)77.5%111%97%108%127%
LTVR award (% vested)0%0%0%36%72%
Cash earnings ($m)8,0658,0627,8227,8207,628
Economic profit ($m)3,4443,7743,7744,4184,491
ROE13.00%13.77%14.00%15.80%16.40%
TSR –three years8.27%11.79%15.24%62.30%102.03%
TSR –five years25.67%81.32%100.72%92.78%103.74%
Dividends per Westpac share (cents)188188188187182
Cash earnings per Westpac share
$2.36$2.40$2.35$2.48$2.45
Share price – high
$33.68$35.39$33.74$40.07$35.99
Share
price –low$27.24$28.92$27.57$29.10$30.00
Share
price –close$27.93$31.92$29.51$29.70$32.14
Graph 1: Cash earnings and CEO STVR award (2014 to 2018)Graph 2: Cash earnings per share performance and average
share count (2014 to 2018)
Graph 3: Total shareholder return (from 1 October 2013)Graph 4: Return on equity and LTVR vesting (2014 to 2018)
2018 Westpac Group Annual Report
75
1
1

5. Further detail on the 2018 Chief Executive Officer and Group Executive total reward framework
5.1. Fixed remuneration
Fixed remuneration is set based on market benchmarks within the financial services industry. The Board also takes into account the
size, responsibilities and complexity of the role, as well as the skills and experience of the executive.
5.2. Short Term Variable Reward
The table below sets out the key design features of the 2018 STVR plan.
5.3. Long Term Variable Reward
The table below sets out the key design features of the 2018 LTVR Plan awarded in December 2017.
Directors’report
2018 Short Term Variable Reward Plan
Plan
structure
50% of STVR is awarded in cash and 50% is deferred into equity in the form of restricted shares (or unhurdled share
rights for the Group Executive based outside Australia).
The deferred STVR vests in equal portions one and two years after the grant date, subject to continued service and
malus provisions. Dividends are paid on restricted shares from the grant date.
The 2018 plan structure remains unchanged from 2017.
Target
opportunity
The target opportunity for the CEO and Group Executives is expressed as a percentage of fixed remuneration. The
target opportunity is set by the Board following recommendation from the Board Remuneration Committee.
The Board and Board Remuneration Committee take into account a range of factors including market competitiveness
and the nature of the role.
Target opportunities range between 75% and 145% of fixed remuneration for the CEO and Group Executives.
Maximum
opportunity
The maximum opportunity is 150% of the target opportunity.
Performance
measures
Performance is assessed against a balanced scorecard which contains financial and non-financial measures aligned
to Westpac’s strategic priorities at a Group, divisional and individual level as relevant.
Further information on focus areas for the 2018 scorecard is provided at Section 4.3.
Deferred STVR awards recognise past performance and are not subject to any further conditions, other than
continued service and malus provisions.
Assessment
of
performance
outcomes
The Board determines STVR awards for the CEO and Group Executives with reference to performance against
individual scorecards, including an assessment of performance against measures under the focus areas and other
significant matters not covered in the focus areas via the modifier.
The Board has the ability to adjust awards upwards or downwards (including to nil) based on an overall assessment
of behaviour, risk and reputation, and people management matters, and any other matters determined by the Board.
In addition, the Board has the ability to apply malus to unvested deferred awards if having regard to circumstances or
information which has come to light after the grant of the equity, all or part of the initial award was not justified.
2018 Long Term Variable Reward Plan
Plan
structure
LTVR is awarded in performance share rights which vest after four years subject to the achievement of performance
hurdles, continued service and malus provisions.
One performance share right entitles the holder to one ordinary share at the time of vesting with no exercise cost.
Dividends are not accumulated on performance share rights.
Award
opportunity
The value of LTVR awarded to the CEO and Group Executives is expressed as a percentage of fixed remuneration.
The value of LTVR is set by the Board following recommendation from the Board Remuneration Committee.
LTVR opportunities range between 75% and 95% of fixed remuneration for the CEO and Group Executives.
76
2018 Westpac Group Annual Report

Directors’report
2018 Long Term Variable Reward Plan (continued)
Allocation
methodology
The number of performance share rights each executive receives is determined by dividing the dollar value of the
LTVR award by the fair value of the performance share rights at the beginning of the performance period.
The fair value of the performance share rights is determined by an independent valuer using a Monte Carlo simulation
pricing model, taking into consideration the life of the awards, the performance hurdles and likelihood of vesting, non-
payment of dividends prior to vesting and appropriate discount rates.
The Board Remuneration Committee caps the valuation at a maximum discount of 60% of the share price. The value
of a TSR hurdled performance share right may be different to the value of a ROE hurdled share performance right.
Performance
hurdles
Total shareholder return
50% of the award
Return on equity
50% of the award
The performance hurdle measures Westpac’s TSR
performance over a four year period against a composite
index.
TSR is a measure of the total return delivered to
shareholders over the performance period assuming
dividends are reinvested.
The composite index is comprised of a group of ten peers
with more weight placed on the three other major
Australian banks.
At the end of the performance period, TSR performance
of each index company is multiplied by its index
weighting, and the total of the ten scores determines the
composite TSR index.
50% will vest if Westpac’s TSR performance equals the
composite TSR index. For 100% to vest, Westpac’s TSR
outcome must exceed the index by 21.55 (i.e. 5%
compound annual growth over the four year performance
period) as illustrated below.
The performance hurdle measures the average cash
return on average ordinary equity over a three year
performance period.
The performance hurdle aims to reward the achievement
of returns above Westpac’s cost of capital while
generating shareholder value and improving how
efficiently the Group uses capital resources within its risk
appetite.
Performance share rights subject to ROE performance
will be tested against the performance hurdle on
30 September 2020 and will be subject to an additional
one year holding lock through to 30 September 2021.
The graph below shows the performance levels required
for the ROE performance share rights to vest.
Total shareholder return vesting
The companies in the 2018 peer group and their relative
weightings are:
Return on equity vesting
CompanyTSR index weighting
ANZ Banking Group16.67%
Commonwealth Bank
16.67%
National Australia Bank16.67%
AMP7.14%
Bank of Queensland7.14%
Bendigo and Adelaide Bank7.14%
Challenger7.14%
Macquarie Group7.14%
Perpetual7.14%
Suncorp Group7.14%
2018 Westpac Group Annual Report77

The table below details LTVR awards currently on foot.
Long Term Variable Reward structure 2019
The LTVR structure for the 2019 award will retain the same design features as the 2018 award.
The TSR hurdle, as detailed above, will remain unchanged in 2019.
The performance range for the ROE component of the 2019 LTVR has been set at an average ROE of between 13% and 14%. The
range is 25 basis points lower than the 2018 LTVR ROE target to reflect the current external environment including continuing
competitive intensity, the ongoing cost of meeting regulatory requirements, further increases in capital requirements and the likelihood
of higher impairment charges for the industry across the cycle.
The Board retains the discretion to ensure that vesting outcomes deliver alignment between performance and shareholder outcomes.
Directors’report
2018 Long Term Variable Reward Plan (continued)
Assessment
of
performance
outcomes
Total shareholder return
The TSR result is calculated independently to ensure
objectivity and external validation before being
provided to the Board to determine the vesting
outcome.
The Board may exercise discretion in determining the
final vesting outcome.
Performance share rights subject to TSR performance
will be tested against the performance hurdle on 30
September 2021.
Return on equity
The ROE outcome is determined by the Board based on
ROE disclosed in the Group’s results over the performance
period.
The Board may exercise discretion in determining the final
vesting outcome.
No re-testing
There has been no re-testing of awards since 2011. No current award is subject to re-testing. Awards that have not
vested after the measurement period lapse immediately.
Early vesting
For awards made after 1 October 2009, unvested awards may vest before a test date if the executive is no longer
employed by the Group due to death or disability. In these cases, vesting is generally not subject to the performance
hurdles being met.
Treatment of
awards on
cessation of
employment
The Board has the discretion to determine the treatment of unvested performance share rights where the CEO or a
Group Executive resigns, retires or otherwise leaves the Group before vesting occurs.
The Board may choose to accelerate the vesting of performance share rights or leave the awards on foot for the
remainder of the performance period.
In exercising its discretion, the Board will take into account relevant circumstances including those relating to the
departure.
The Board also has the ability to adjust the number of performance share rights downwards (including to nil) in the
event of misconduct, resulting in significant financial and/or reputational impact to the Group and in other
circumstances considered appropriate.
Where an executive acts fraudulently or dishonestly, or is in material breach of their obligations under the relevant
equity plan, unexercised performance share rights (whether vested or unvested) will lapse unless the Board
determines otherwise.
Vesting datePerformance hurdlesFurther detail
2016 LTVR
award
30 September 2019
TSR performance against a weighted composite index of
comparator companies (50%)
Cash EPS CAGR performance (50%)
Refer to the 2016
Annual Report
2017 LTVR
award
30 September 2020
TSR performance against a weighted composite index of
comparator companies (50%)
Average ROE performance (50%)
Refer to the 2017
Annual Report
782018 Westpac Group Annual Report

5.4. Minimum shareholding requirements
The CEO and Group Executives are required to build and maintain a substantial Westpac shareholding within five years of their
appointment. The requirement supports alignment with shareholders’ interests.
The table below sets out the minimum shareholding requirement for the CEO and Group Executives.
The table below details whether the requirement is exceeded or if the executive has been in the role for the less than five years.
5.5. Hedging policy
Participants in Westpac’s equity plans are forbidden from entering, either directly or indirectly, into hedging arrangements for unvested
awards in the STVR and LTVR plans. No financial products may be used to mitigate the risk associated with these awards. Any attempt
to hedge awards will result in forfeiture and the Board may consider other disciplinary action. These restrictions satisfy the requirements
of the Corporations Act which prohibits hedging of unvested awards.
Directors’report
Minimum shareholding requirement
CE
OFive times annual fixed remuneration excluding superannuation, equivalent to $12.26 million
Group ExecutivesEquivalent to $1.2 million
Name
Commencement date in CEO o
r
Group Executive role
Assessment against
minimum shareholding
requirement
Brian Hartzer
Managing Director & Chief Executive Officer
2 February 2015
Less than five years in
role
Lyn Cobley
Chief Executive, Westpac Institutional Bank
7 September 2015Exceeds
Brad Coope
r
Chief Executive Officer, BT Financial Group
1 October 2010Exceeds
Dave Curran
Chief Information Officer
8 September 2014Exceeds
George Frazis
Chief Executive, Consumer Bank
5 March 2009Exceeds
Peter King
Acting Chief Risk Officer
1 April 2014Exceeds
Rebecca Lim
Group Executive, Compliance, Legal & Secretariat
1 October 2016Exceeds
David Lindber
g
Chief Executive, Business Bank
10 June 2015Exceeds
Carolyn McCann
Group Executive, Customer & Corporate Relations
18 June 2018Exceeds
David McLean
Chief Executive Officer, Westpac New Zealand Limited
2 February 2015Exceeds
Christine Parker
Group Executive, Human Resources
1 October 2011Exceeds
Gary Thursby
Group Executive, Strategy and Enterprise Services
1 October 2016Exceeds
2018 Westpac Group Annual Report79

5.6. Employment agreements
The remuneration and other terms of employment for the CEO and Group Executives are formalised in their employment agreements.
Each agreement provides for the payment of fixed and variable reward, employer superannuation contributions and other benefits such
as death and disablement insurance cover.
The table below details the key terms including termination provisions of the employment agreements for the CEO and Group
Executives in 2018.
Payment in lieu of notice may in certain circumstances be approved by the Board for some or all of the notice period.
The maximum liability for termination benefits for the CEO and Group Executives at 30 September 2018 was $14.1 million (2017: $13.4 million).
Directors’report
TermWhoConditions
Duration of agreementCEO and Group ExecutivesOngoing until notice given by either
party
Notice (by the executive or the Group) to
terminate employment
CEO and Group Executives12 months
Termination payments on termination
without cause
CEO and Group ExecutivesDeferred STVR and LTVR awards vest
according to the applicable equity plan
rules
Termination for causeCEO and Group Executives
(excluding Brad Cooper)
Immediately for misconduct
3 months’ notice for poor performance
Brad CooperImmediately for misconduct
Contractual notice period for poor
performance
Post-employment restraintsCEO and Group Executives12 month non-solicitation restraint
802018 Westpac Group Annual Report
1
2
1
2

6. Non-executive Director remuneration
6.1. Structure and policy
Westpac’s Non-executive Director remuneration strategy is designed to attract and retain experienced, qualified Board members and
provide appropriate remuneration for their time and expertise.
Non-executive Directors fees are not related to Westpac’s results. All fees are paid in cash and no discretionary payments are made for
performance. Non-executive Directors are required to build and maintain a minimum shareholding to align their interests with those of
shareholders.
The table below sets out the components of Non-executive Director remuneration.
6.2. Non-executive Director remuneration in 2018
Non-executive Director remuneration did not change in 2018. The Board last reviewed Non-executive Director fees in 2016 and
approved an increase to the member fees for the Board Technology Committee based on market data and changes in the workload of
members.
Fee pool
The Non-executive Director fee pool of $4.5 million per annum has not changed for ten years since it was approved by shareholders at
the 2008 Annual General Meeting. For 2018, $3.09 million (69%) of the fee pool was used. The fee pool includes employer
superannuation contributions.
Fee framework
The table below sets out the Board and standing Committee fees for 2018.
Committee fees are not payable to the Chairman of the Board and members of the Board Nominations Committee.
Subsidiary Board and Advisory Board fees
During the reporting period, additional fees of $35,000 were paid to Peter Hawkins as a member of the Bank of Melbourne Advisory
Board.
Directors’report
Non-executive Director remuneration
Base feeRelates to service on the Westpac Banking Corporation Board. The base fee for the Chairman covers
all responsibilities, including for Board Committees.
Committee feesAdditional fees are paid to Non-executive Directors (other than the Board Chairman) for chairing or
participating in Board Committees.
Employer superannuation
contributions
Reflects statutory superannuation contributions which are capped at the superannuation maximum
contributions base as prescribed under the Superannuation Guarantee legislation.
Subsidiary Board and
Advisory Board fees
Relates to service on Subsidiary Boards and Advisory Boards and are paid by the relevant subsidiary.
Annual fee
Base fee$
Chairman810,000
Other Non-executive Directors225,000
Committee Chairman fees
Board Audit Committee70,400
Board Risk & Compliance Committee70,400
Board Remuneration Committee63,800
Board Technology Committee35,200
Committee membership fees
Board Audit Committee32,000
Board Risk & Compliance Committee32,000
Board Remuneration Committee29,000
Board Technology Committee20,000
2018 Westpac Group Annual Report81

6.3. Changes to Board and Committee composition
The table below outlines the changes that were made to the Board and Committee composition in 2018.
6.4. Non-executive Director minimum shareholding requirement
Non-executive Directors are required to build and maintain a holding in Westpac ordinary shares to align their interests with those of
shareholders. Each Non-executive Director is required to hold an interest in shares in Westpac with a market value not less than the
Board base fee, within five years of appointment to the Board.
All Non-executive Directors comply with the minimum shareholding requirement.
In addition to their direct holdings in Westpac ordinary shares, Non-executive Directors may also have control of Westpac shares
through related bodies corporate. Shares held under this extended definition are set out in Section 7.4.
Directors’report
Name Change in positionEffective date
Robert ElstoneRetired from the Board 8 December 2017 following the
completion of the 2017 Annual
General Meeting
Alison DeansAppointed Chairman of the Board Technology Committee
Appointed member of the Board Remuneration Committee
A
ppointed member of the Board Nominations Committee
8 December 2017
Peter Hawkin
sStepped down as Chairman of the Board Technology Committee
(remaining a member of that Committee)
Ceased to be a member of the Board Nominations Committee
8 December 201
7
Peter NashAppointed Non-executive Director
Appointed member of the Board Audit Committee
Appointed member of the Board Risk & Compliance Committee
7 March 2018
NameCommencement date on Board
Assessment against minimum
shareholdin
g requirement
Lindsay Maxsted
Chairman
1 March 200
8Exceeds
Nerida Caesar
Director
1 September 2017Exceeds
Ewen Crouch
Director
1 February 2013Exceeds
Alison Deans
Director
1 April 2014Exceeds
Craig Dunn
Director
1 June 2015Exceeds
Peter Hawkin
s
Director
1 December 2008Exceeds
Peter Marriott
Director
1 June 2013Exceeds
Peter Nash
Director
7 March 2018Exceeds
822018 Westpac Group Annual Report

7. Statutory remuneration details
7.1. Details of Non-executive Director remuneration
The table below details Non-executive Director remuneration.
Includes fees paid to the Chairman and members of Board Committees.
Peter Nash commenced as a Non-executive Director on 7 March 2018.
Robert Elstone retired as a Non-executive Director on 8 December 2017.
The total fees for 2017 reflect the prior year remuneration for the 2017 reported Non-executive Directors.
Directors’report
Short-term benefitsPost-employment benefits
Westpac Banking
Corporation Board fees
Subsidiary and
Advisory Board feesSuperannuationTotal
Name
$$$$
Current Non-executive Directors
Lindsay Maxsted, Chairman
2018810,000-20,181830,181
2017810,000-19,734829,734
Nerida Caesar
2018277,000-20,181297,181
201718,921-1,61920,540
Ewen Crouch
2018324,400-20,181344,581
2017323,719-19,734343,453
Alison Deans
2018312,965-20,181333,146
2017277,000-19,734296,734
Craig Dunn
2018320,800-20,181340,981
2017314,221-19,734333,955
Peter Hawkins
2018311,83235,00020,103366,935
2017324,20035,00019,658378,858
Peter Marriott
2018347,400-20,181367,581
2017347,400-19,734367,134
Peter Nash
2018164,690-11,744176,434
Former Non-executive Director
Robert Elstone
201860,115-3,89564,010
2017318,000-19,734337,734
Total fees
20182,929,20235,000156,8283,121,030
20172,795,67535,000143,3902,974,065
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7.2. Remuneration details – CEO and Group Executives
The table below sets out details of remuneration for the CEO and Group Executives calculated in accordance with AAS.
Fixed remuneration is the total cost of salary, salary sacrificed benefits (including motor vehicles, parking and associated fringe benefits tax (FBT)) and an
accrual for annual leave entitlements.
2018 STVR awards reflect annual cash performance awards accrued but not yet paid in respect of the year ended 30 September 2018. STVR awards are paid
in December.
Non-monetary benefits are determined on the basis of the cost to the Group (including associated FBT, where applicable) and include annual health checks,
provision of taxation advice, relocation costs, living away from home expenses and allowances.
Directors’report
Short-term benefits
Post-
employment
benefits
Other
long-
term
benefits Share-based payments
Fixed
remuneration
Cash STVR
award
Non-
monetary
benefits
Other
short-
term
benefits
Superannuation
benefits
Long
service
leave
Restricted
shares
Share
rightsTotal
Name
$$$$$$$$$
Managing Director & Chief Executive Officer
Brian Hartzer
20182,730,714 1,040,825 20,618 -42,235 40,697 1,449,964 1,247,127 6,572,180
20172,665,2491,490,73019,494-41,22640,6971,287,5901,136,7246,681,710
Current Group Executives
Lyn Cobley, Chief Executive, Westpac Institutional Bank
20181,085,585 465,500 4,039 -29,993 17,000 749,930 394,975 2,747,022
20171,089,650640,0004,014-37,81816,995767,014591,6013,147,092
Brad Cooper, Chief Executive Officer, BT Financial Group
20181,136,073 400,000 4,014 -29,366 16,700 778,096 538,531 2,902,780
20171,064,384792,5002,924-39,503(41,160)754,634347,3912,960,176
Dave Curran, Chief Information Officer
20181,021,322 485,000 2,924 -28,806 20,703 531,367 480,835 2,570,957
2017941,632552,5004,014-28,45114,424487,089404,406 2,432,516
George Frazis, Chief Executive, Consumer Bank
20181,109,913 480,000 2,924 -38,132 17,425 858,110 489,032 2,995,536
20171,127,559872,5004,014-40,50917,419842,782401,5633,306,346
Peter King, Acting Chief Risk Officer
20181,232,059 517,000 2,924 -34,957 90,204 597,487 512,401 2,987,032
20171,047,360615,0004,014-34,42116,485537,796405,8752,660,951
David Lees, Acting Chief Financial Officer
2018315,773 90,500 393 -35,518 21,045 99,521 15,247 577,997
Rebecca Lim, Group Executive, Compliance, Legal & Secretariat
2018903,728 356,500 2,924 -29,912 55,507 512,169 348,768 2,209,508
2017756,722412,5003,512-28,20145,641425,776206,0691,878,421
David Lindberg, Chief Executive, Business Bank
20181,049,010 440,500 4,014 -28,365 25,006 518,657 435,208 2,500,760
2017928,528532,50011,901-27,24418,507453,174398,6552,370,509
Carolyn McCann, Group Executive, Customer & Corporate Relations
2018241,365 74,500 1,915 -5,579 12,665 144,344 25,395 505,763
David McLean, Chief Executive Officer, Westpac New Zealand Limited
2018849,488 498,439 55,885 -81,444 --785,206 2,270,462
2017736,628412,57039,739-76,082-39837,3602,102,418
Christine Parker, Group Executive, Human Resources
2018865,802 427,500 2,924 -26,848 (8,854)500,697 399,535 2,214,452
2017824,006517,5004,604-26,643(3,479)464,335260,1412,093,750
Gary Thursby, Group Executive, Strategy & Enterprise Services
2018794,889 395,500 2,924 -28,616 12,693 453,951 344,305 2,032,878
2017820,262485,0002,924-29,81912,642372,119225,3541,948,120
Former Group Executive
Alexandra Holcomb, Chief Risk Officer
2018717,564 411,000 2,147 -22,032 (23,296)657,557 2,218,208 4,005,212
2017950,564532,5002,924-39,6454,669520,145386,1312,436,578
842018 Westpac Group Annual Report
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Includes payments on cessation of employment or other contracted amounts.
The CEO and Group Executives are provided with life insurance cover under the Westpac Group Plan at no cost. Superannuation benefits have been
calculated consistent with AASB 119 Employee Benefits.
The value of restricted shares is amortised over the applicable vesting period and the amount shown is the amortisation relating to 2018 (and 2017 for
comparison).
Equity-settled remuneration is based on the amortisation over the vesting period (normally three or four years) of the fair value at grant date of hurdled and
unhurdled options and share rights that were granted during the four years ended 30 September 2018. Details of prior year grants are disclosed in previous
Annual Reports. The value for David McLean includes 51% attributed to deferred STVR awards. Refer to footnote 13 for the treatment of Alexandra Holcomb’s
equity.
The expensed value of the 2016 LTVR EPS hurdled performance share rights has been reduced to nil. The expensed value of the 2017 and 2018 LTVR ROE
hurdled performance share rights have been reduced by 50%. This reflects the Board’s current assessment of the probability of vesting.
The percentage of the total remuneration which is performance-related (i.e. cash STVR award plus share-based payments) was: Brian Hartzer 57%, Lyn
Cobley 59%, Brad Cooper 59%, Dave Curran 58%, George Frazis 61%, Alexandra Holcomb 82%, Peter King 54%, David Lees 36%, Rebecca Lim 55%, David
Lindberg 56%, Carolyn McCann 48%, David McLean 57%, Christine Parker 60% and Gary Thursby 59%. The percentage of total remuneration delivered in the
form of options (including share rights) was: Brian Hartzer 19%, Lyn Cobley 14%, Brad Cooper 19%, Dave Curran 19%, George Frazis 16%, Alexandra
Holcomb 55%, Peter King 17%, David Lees 3%, Rebecca Lim 16%, David Lindberg 17%, Carolyn McCann 5%, David McLean 35%, Christine Parker 18% and
Gary Thursby 17%.
Peter King was the Chief Financial Officer until 25 June 2018 when he was appointed as the Acting Chief Risk Officer.
David Lees commenced his KMP role as the Acting Chief Financial Officer on 25 June 2018.
Carolyn McCann commenced her KMP role as the Group Executive, Customer & Corporate Relations on 18 June 2018.
Alexandra Holcomb ceased in her KMP role as the Chief Risk Officer on 25 June 2018 and will retire on 31 December 2018. The share based payment values
for Alexandra Holcomb reflect the accruals for all unvested equity up to the end of each performance period. For example, the 2018 LTVR will include the
accrual for four years until the vesting date in lieu of a single year accrual value for 2017. While the full value is being accrued for all unvested equity, the
awards may or may not vest subject to the relevant performance hurdles.
Directors’report
2018 Westpac Group Annual Report85
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7.3. Movement in equity-settled instruments during the year
The table shows the movements in the number and value of equity instruments for the CEO and Group Executives under the relevant
plan during 2018.
Directors’report
NameType of equity-based instrument
Number
granted
Number
vested
Number
exercised
Value
granted
$
Value
exercised
$
Value
forfeited or
lapsed
$
Managing Director & Chief Executive Officer
Brian HartzerCEO Performance share rights197,654--3,527,136--
Performance share rights-----3,115,692
Shares under the CEO Restricted Share Plan47,38439,967-1,490,884--
Current Group Executives
Lyn CobleyPerformance share rights82,564--1,476,657--
Shares under Restricted Share Plan20,34325,760-640,069--
Brad CooperPerformance share rights82,094--1,468,251-2,256,166
Shares under Restricted Share Plan25,19024,341-792,575--
Dave CurranPerformance share rights77,560--1,387,161--
Shares under Restricted Share Plan17,56115,932-552,537--
George FrazisPerformance share rights78,186--1,398,357-1,181,775
Shares under Restricted Share Plan27,73327,357-872,587--
Peter KingPerformance share rights80,062--1,431,909-1,158,166
Shares under Restricted Share Plan19,54816,741-615,056--
David LeesPerformance share rights------
Shares under Restricted Share Plan------
Rebecca LimPerformance share rights54,730--978,846-397,489
Shares under Restricted Share Plan13,11114,728-412,523--
David LindbergPerformance share rights80,062--1,431,909-725,166
Shares under Restricted Share Plan16,92613,107-532,557--
Carolyn McCannPerformance share rights12,482--206,364--
Shares under Restricted Share Plan------
David McLeanPerformance share rights68,216--1,220,043--
Unhurdled share rights14,38216,710-418,832--
Shares under Restricted Share Plan------
Christine ParkerPerformance share rights63,798--1,141,027-1,396,640
Shares under Restricted Share Plan16,44915,043-517,549--
Gary ThursbyPerformance share rights54,730--978,846-418,972
Shares under Restricted Share Plan15,41611,607-485,047--
Former Group Executive
Alexandra HolcombPerformance share rights73,806--1,320,020-790,008
Performance options------
Shares under Restricted Share Plan16,92615,565-532,557--
No performance options were granted in 2018. Deferred STVR awards in the form of restricted shares or unhurdled share rights (for David McLean based in
New Zealand) are awarded in December. David McLean’s unhurdled share rights were granted on 18 December 2017 at a fair value of $29.57 (unhurdled
share rights vesting on 1 October 2018) and $28.00 (unhurdled rights vesting on 1 October 2019).
No hurdled share rights granted in 2014 vested in October 2017 when assessed against the TSR and EPS performance hurdles.
Vested options and share rights that were awarded prior to October 2009 can be exercised up to a maximum of ten years from their commencement date.
Vested share rights awarded between October 2009 and July 2015 are automatically exercised at vesting. Vested share rights granted after July 2015 may be
exercised at will up to a maximum of 15 years from their commencement date. For each vested share right and each performance option exercised during the
year, the relevant executive received one fully paid Westpac ordinary share. The exercise price for share rights is nil.
862018 Westpac Group Annual Report
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Fair value of Long Term Variable Reward awards made during the year
The table below provides a summary of the fair value of LTVR awards granted to the CEO and Group Executives during 2018
calculated in accordance with AASB 2 Share-based Payment and is used for accounting purposes only. LTVR awards will only vest if
performance hurdles are achieved and service conditions are met in future years.
7.4. Details of Westpac equity holdings of Non-executive Directors
The table below sets out details of relevant interests in Westpac ordinary shares held by Non-executive Directors (including their related
parties) during the year ended 30 September 2018 .
Directors’report
For performance share rights, the value granted represents the number of securities granted multiplied by the fair value per instrument as set out in the table
in the sub-section titled ‘Fair value of Long Term Variable Reward awards made during the year’ below. For restricted shares, the value granted represents
the number of ordinary shares granted multiplied by the five day VWAP of a Westpac ordinary share on the date the shares were granted. These values,
which represent the full value of the equity-based awards made to the CEO and Group Executives in 2018, do not reconcile with the amount shown in the
table in Section 7.2 which shows the amount amortised in the current year of equity awards over their vesting period. The minimum total value of the grants
for future financial years is nil and an estimate of the maximum possible total value in future financial years is the fair value, as shown above.
The value of each option or share right exercised or lapsed is calculated based on the five day VWAP of Westpac ordinary shares on the date of exercise (or
lapse), less the relevant exercise price (if any). Where the exercise price is greater than the five day VWAP of Westpac ordinary shares, the value has been
calculated as nil.
Fair
PerformanceCommencementvalue per
Plan nameGranted tohurdleGrant datedateTest dateExpiryinstrument
CEO Long Term
Variable Reward Plan
Brian HartzerTSR 8 December 20171 October 20171 October 20211 October 2032$10.55
ROE8 December 20171 October 20171 October 20201 October 2032$25.14
Westpac Long Term
Variable Reward Plan
Group
Executives
TSR 1 December 20171 October 20171 October 20211 October 2032$10.58
ROE1 December 20171 October 20171 October 20201 October 2032$25.19
The commencement date is the start of the performance period.
The fair values of performance share rights granted during the year have been independently calculated at their respective grant dates based on the
requirements of AASB 2 Share-based Payment. The fair value of performance share rights with ROE hurdles has been assessed with reference to the share
price at grant date and a discount rate reflecting the expected dividend yield over their vesting periods which for the performance share rights valued at
$25.19 is four years to the 1 October 2020 vesting date. For the purpose of allocating performance share rights with ROE hurdles, the valuation also takes
into account the average ROE outcome using a Monte Carlo pricing simulation model. The fair value of performance share rights with hurdles based on TSR
performance relative to that of a group of comparator companies also takes into account the average TSR outcome determined using a Monte Carlo
simulation pricing model.
Name
Number held at
start of the year
Changes
during the year
Number held at
end of the year
Current Non-executive Directors
Lindsay Maxsted20,7671,32822,095
Nerida Caesar-9,9859,985
Ewen Crouch40,26442,00082,264
Alison Deans9,3925,00014,392
Craig Dunn8,869-8,869
Peter Hawkins15,880-15,880
Peter Marriott20,87020,20241,072
Peter Nashn/a2,8768,020
Former Non-executive Director
Robert Elstone12,096-n/a
Other than as disclosed below, no share interests include non-beneficially held shares.
In addition to holdings of ordinary shares, Ewen Crouch and his related parties held interests in 250 Westpac Capital Notes 2 at year end.
Ewen Crouch holds the securities following the grant of probate in a deceased estate for which he is one of the executors.
In addition to holdings of ordinary shares, Peter Hawkins and his related parties held interests in 850 Westpac Capital Notes 3, 882 Westpac Capital Notes 4
and 1,370 Westpac Capital Notes 5 at year end.
In addition to holdings of ordinary shares, Peter Marriott and his related parties held interests in 740 Westpac Capital Notes 2 at year end.
Peter Nash commenced as a Non-executive Director on 7 March 2018. The information relates to the period he was a Non-executive Director.
Robert Elstone retired on 8 December 2017. The information relates to the period he was a Non-executive Director.
2018 Westpac Group Annual Report87
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7.5. Details of Westpac equity holdings of Executive Key Management Personnel
The table below details Westpac equity held (and movement in that equity) by the CEO and Group Executives (including their related
parties) for the year ended 30 September 2018 .
Directors’report
Name
Type of equity-based
instrument
Number
held at
start of
the year
Number
granted
during the
year as
remuneration
Received on
exercise
and/or
exercised
during the
year
Number
lapsed
during the
year
Other
changes
during the
year
Number
held at
end of the
year
Number
vested and
exercisable
at end of
the year
Managing Director & Chief Executive Officer
Brian HartzerOrdinary shares77,42747,384--(15,200)109,611
-
CEO performance share rights535,163197,654---732,817
-
Performance share rights129,547--(95,284)-34,263-
Current Group Executives
Lyn CobleyOrdinary shares71,65020,343---91,993-
Performance share rights179,28282,564---261,846
-
Brad CooperOrdinary shares106,79225,190---131,982
-
Performance share rights316,12082,094-(68,998)-329,216
-
Dave CurranOrdinary shares31,86417,561---49,425-
Performance share rights210,87677,560---288,436-
George FrazisOrdinary shares71,56927,733--(18,000)81,302
-
Performance share rights258,83578,186-(36,141)-300,880
-
Peter KingOrdinary shares78,24319,548--97,791
-
Performance share rights269,61680,062-(35,419)-314,259-
David LeesOrdinary sharesn/a----29,402-
Performance share rightsn/a----31,402
-
Performance optionsn/a----25,56225,562
Rebecca LimOrdinary shares26,27013,111--(8,505)30,876
-
Performance share rights101,51854,730-(12,156)-144,092-
David LindbergOrdinary shares48,02616,926---64,952-
Performance share rights196,48480,062-(22,177)-254,369
-
Carolyn McCannOrdinary sharesn/a----49,435
-
Performance share rightsn/a12,482---42,816
-
David McLeanOrdinary shares9,613----9,613
-
Performance share rights169,70268,216---237,9182,148
Unhurdled share rights42,83614,382---57,21836,480
Christine ParkerOrdinary shares22,02816,449--(11,046)27,431-
Performance share rights219,22563,798-(42,712)-240,311
-
Gary ThursbyOrdinary shares77,02915,416---92,445
-
Performance share rights112,63654,730-(12,813)-154,553
-
Former Group Executive
Alexandra HolcombOrdinary shares23,21016,926--(15,565)n/a-
Performance share rights242,93073,806-(24,160)-n/a-
The highest number of shares held by an executive in the table is 0.0038% of total Westpac ordinary shares outstanding as at 30 September 2018.
The information relates to the period that David Lees was a KMP. David Lees commenced his KMP role as the Acting Chief Financial Officer on 25 June
2018.
The information relates to the period that Carolyn McCann was a KMP. Carolyn McCann commenced her KMP role as the Group Executive, Customer &
Corporate Relations on 18 June 2018.
The information relates to the period that Alexandra Holcomb was a KMP. She ceased in her KMP role as the Chief Risk Officer on 25 June 2018 and will
retire on 31 December 2018.
88
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7.6. Loans to Non-executive Directors and Executive Key Management Personnel disclosures
Financial instrument transactions that occurred during the financial year between Directors, the CEO or Group Executives and the
Group are in the ordinary course of business on terms and conditions (including interest and collateral) as they apply to other
employees and certain customers. These transactions consisted principally of normal personal banking and financial investment
services.
The table below details loans to Non-executive Directors, the CEO and Group Executives (including their related parties) of the Group.
The table below details KMP (including their related parties) with loans above $100,000 during 2018.
Directors’report
Balance at start of
the year
$
Interest paid
and payable
for the year
$
Interest not
charged during
the year
$
Balance at
end of the
year
$
Number in
Group at end of
the year
Non-executive Directors3,199,593165,155-3,544,6103
CEO and Group Executives12,090,727485,814-13,953,91610
15,290,320650,969-17,498,52613
Balance at start of
the year
$
Interest paid
and payable
for the year
$
Interest not
charged during
the year
$
Balance at
end of the
year
$
Highest
indebtedness
during the year
$
Non-executive Directors
Lindsay Maxsted2,061,911109,565-1,572,8892,320,000
Ewen Crouch1,137,68239,107-979,9471,302,742
Peter Nashn/a16,483-991,7741,155,383
CEO and Group Executives
Brian Hartzer83,6174,979-9,847187,050
Lyn Cobley-21,784-2,000,0002,007,287
Brad Cooper2,037,998126,984-2,791,3602,989,743
Alexandra Holcomb4,114,727102,551-n/a4,177,933
Peter King----4,000,000
David Leesn/a38,930-4,434,5344,547,358
Rebecca Lim711,64218,889-732,845736,770
Carolyn McCannn/a2,588-145,000153,736
David McLean534,82827,467-620,841652,073
Christine Parker2,647,38667,778-1,308,4862,814,600
Gary Thursby1,960,52973,864-1,911,0032,061,594
Peter Nash commenced as a Non-executive Director on 7 March 2018.
Alexandra Holcomb ceased in her KMP role as the Chief Risk Officer on 25 June 2018 and will retire on 31 December 2018.
David Lees commenced his KMP role as the Acting Chief Financial Officer on 25 June 2018.
Carolyn McCann commenced her KMP role as the Group Executive, Customer & Corporate Relations on 18 June 2018.
2018 Westpac Group Annual Report89
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11. Auditor
a) Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act is below:
Directors’report
Auditor’s Independence Declaration
As lead auditor for the audit of Westpac Banking Corporation for the year ended 30
September 2018, I declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the
audit.
This declaration is in respect of Westpac Banking Corporation and the entities it controlled
during the period.
Lona Mathis
Partner
PricewaterhouseCooper
s
Sydney
5 November 2018
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
90
2018 Westpac Group Annual Report

b) Non-audit services
We may decide to engage PwC on assignments additional to their statutory audit duties where their expertise or experience with
Westpac or a controlled entity is important.
Details of the non-audit service amounts paid or payable to PwC for non-audit services provided during the 2017 and 2018 financial
years are set out in Note 39 to the financial statements.
PwC also provides audit and non-audit services to non-consolidated entities, non-consolidated trusts of which a Westpac Group entity
is trustee, manager or responsible entity and non-consolidated superannuation funds or pension funds. The fees in respect of these
services were approximately $7.5 million in total (2017: $6 million). PwC may also provide audit and non-audit services to other entities
in which Westpac holds a minority interest and which are not consolidated. Westpac is not aware of the amount of any fees paid to
PwC by those entities.
Westpac has a policy on engaging PwC, details of which are set out in the ‘Corporate governance’ section, including the subsection
entitled ‘Engagement of the external auditor’, which forms part of this Directors’ report.
The Board has considered the position and, in accordance with the advice received from the Board Audit Committee, is satisfied that
the provision of the non-audit services during 2018 by PwC is compatible with the general standard of independence for auditors
imposed by the Corporations Act. The Directors are satisfied, in accordance with advice received from the Board Audit Committee, that
the provision of non-audit services by PwC, as set out above, did not compromise the auditor independence requirements of the
Corporations Act for the following reasons:
all non-audit services provided by PwC for the year have been reviewed by the Board Audit Committee, which is of the view that
they do not impact the impartiality and objectivity of PwC; and
based on Board quarterly independence declarations made by PwC to the Board Audit Committee, none of the services undermine
the general principles relating to auditor independence including reviewing or auditing PwC’s own work, acting in a management or
a decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risk and rewards.
Signed in accordance with a resolution of the Board.
Directors’report
Lindsay Maxsted
Chairman
5 November 2018
Brian Hartzer
Managing Director & Chief Executive Officer
5 November 2018
2018 Westpac Group Annual Report91

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2018 Westpac Group Annual Report

Five year summary
Reading this report
Review of Group operations
Divisional performance
Risk and risk management
Westpac’s approach to sustainability
Other Westpac business information

Where accounting classifications have changed or where changes in accounting policy are adopted retrospectively, comparatives have been revised and may
differ from results previously reported.
The above income statement extracts for 2018, 2017 and 2016 and balance sheet extracts for 2018 and 2017 are derived from the consolidated financial
statements included in this Annual Report. The above income statement extracts for 2015 and 2014 and balance sheet extracts for 2016, 2015 and 2014 are
derived from financial statements previously published.
Adjusted for Treasury shares.
Total equity attributable to owners of Westpac Banking Corporation, after deducting intangible assets divided by the number of ordinary shares outstanding,
less Treasury shares held.
Full-time equivalent employees include full-time, pro-rata part-time, overtime, temporary and contract staff.
Five year summary
(in $m unless otherwise indicated)20182017201620152014
Income statements for the years ended 30 September
Net interest income16,50515,51615,14814,26713,542
Non-interest income
5,6286,2865,8377,3756,395
Net operating income before operating expenses
and impairment charges22,13321,80220,98521,64219,937
Operating expenses(9,692)(9,434)(9,217)(9,473)(8,547)
Impairment charges(710)(853)(1,124)(753)(650)
Profit before income tax11,73111,51510,64411,41610,740
Income tax expense(3,632)(3,518)(3,184)(3,348)(3,115)
Profit attributable to non-controlling interests
(4)(7)(15)(56)(64)
Net profit attributable to owners of Westpac
Banking Corporation8,0957,9907,4458,0127,561
Balance sheet as at 30 September
Loans709,690684,919661,926623,316580,343
Other assets
169,902166,956177,276188,840190,499
Total assets
879,592851,875839,202812,156770,842
Deposits and other borrowings559,285533,591513,071475,328460,822
Debt issues172,596168,356169,902171,054152,251
Loan capital17,26517,66615,80513,84010,858
Other liabilities
65,87370,92082,24398,01997,574
Total liabilities
815,019790,533781,021758,241721,505
Total shareholders’ equity and non-controlling interests64,57361,34258,18153,91549,337
Key financial ratios
Shareholder value
Dividends per ordinary share (cents)188188188187182
Dividend payout ratio (%)79.5279.2884.1973.3974.68
Return on average ordinary equity (%)13.0513.6513.3216.2316.27
Basic earnings per share (cents)237.5238.0224.6255.0242.5
Net tangible assets per ordinary share ($)15.3914.6613.9013.0211.51
Share price ($):
High33.6835.3933.7440.0735.99
Low27.2428.9227.5729.1030.00
Close27.9331.9229.5129.7032.14
Business performance
Operating expenses to operating income ratio (%)43.7943.2743.9243.7742.87
Net interest margin (%)2.132.062.102.092.09
Capital adequacy
Total equity to total assets (%)7.37.26.96.66.4
Total equity to total average assets (%)7.37.16.96.86.7
APRA Basel III:
Common equity Tier 1 (%)10.6310.569.489.508.97
Tier 1 ratio (%)12.7812.6611.1711.3810.56
Total capital ratio (%)14.7414.8213.1113.2612.28
Credit quality
Net impaired assets to equity and collectively assessed provisions (%)1.141.291.791.802.49
Total provisions for impairment on loans and credit commitments to total
loans (basis points)4345545360
Other information
Full time equivalent employees (number at financial year end)35,02935,09635,58035,48436,596
942018 Westpac Group Annual Report
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Disclosure regarding forward-looking statements
This Annual Report 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 Annual Report and include statements regarding Westpac’s intent, belief or 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’ or 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:
the effect of, and changes in, laws, regulations, taxation or accounting standards or practices and government policy, particularly
changes to liquidity, leverage and capital requirements;
regulatory 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;
internal and external events which may adversely impact Westpac’s reputation;
information security breaches, including cyberattacks;
reliability and security of Westpac’s technology and risks associated with changes to technology systems;
the 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;
market volatility, including uncertain conditions in funding, equity and asset markets;
adverse asset, credit or capital market conditions;
an increase in defaults in credit exposures because of a deterioration in economic conditions;
the conduct, behaviour or practices of Westpac or its staff;
changes to Westpac’s credit ratings or the methodology used by credit rating agencies;
levels of inflation, interest rates, exchange rates and market and monetary fluctuations;
market liquidity and investor confidence;
changes 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;
the 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;
the timely development and acceptance of new products and services and the perceived overall value of these products and
services by customers;
the effectiveness of Westpac’s risk management policies, including internal processes, systems and employees;
the incidence or severity of Westpac-insured events;
the 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;
changes to the value of Westpac’s intangible assets;
changes in political, social or economic conditions in any of the major markets in which Westpac or its customers or counterparties
operate;
the success of strategic decisions involving diversification or innovation, in addition to business expansion activity, business
acquisitions and the integration of new businesses; and
various other factors beyond Westpac’s control.
The above list is not exhaustive. For certain other factors that may impact on forward-looking statements made by Westpac, refer to
‘Risk factors’ under the section ‘Risk and risk management’. 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 Annual Report, whether as a result of new
information, future events or otherwise, after the date of this Annual Report.
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2018 Westpac Group Annual Report95

Significant developments
For a discussion of significant developments impacting the Group, refer to ‘Significant developments’ under ‘Information on Westpac’ in
Section 1.
Currency of presentation, exchange rates and certain definitions
In this Annual Report, ‘financial statements’ means our audited consolidated balance sheets as at 30 September 2018 and 30
September 2017 and income statements, statements of comprehensive income, changes in equity and cash flows for each of the years
ended 30 September 2018, 2017 and 2016 together with accompanying notes which are included in this Annual Report.
Our financial year ends on 30 September. As used throughout this Annual Report, the financial year ended 30 September 2018 is
referred to as 2018 and other financial years are referred to in a corresponding manner.
We publish our consolidated financial statements in Australian dollars. In this Annual Report, unless otherwise stated or the context
otherwise requires, 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 dollar 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 translations of Australian dollars into US dollars
have been made at the rate of A$1.00 = US$0.7238, 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’) as of Friday, 28 September 2018. The
Australian dollar equivalent of New Zealand dollars at 28 September 2018 was A$1.00 = NZ$1.0920, being the closing spot exchange
rate on that date. Refer to ‘Exchange rates’ in Section 4 for information regarding the rates of exchange between the Australian dollar
and the US dollar for the financial years ended 30 September 2014 to 30 September 2018.
Any discrepancies between totals and sums of components in tables contained in this Annual Report are due to rounding.
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962018 Westpac Group Annual Report

Selected consolidated financial and operating data
We have derived the following selected financial information as of, and for the financial years ended, 30 September 2018, 2017, 2016,
2015 and 2014 from our audited consolidated financial statements and related notes.
This information should be read together with our audited consolidated financial statements and the accompanying notes included
elsewhere in this Annual Report.
Accounting standards
The financial statements and other financial information included elsewhere in this Annual Report, unless otherwise indicated, have
been prepared and presented in accordance with Australian Accounting Standards (AAS). Compliance with AAS ensures that the
financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).
The financial statements have been prepared in accordance with the accounting policies described in the Notes to the financial
statements.
Recent accounting developments
For a discussion of recent accounting developments refer to Note 1 to the financial statements.
Critical accounting estimates
Our reported results are sensitive to the accounting policies, assumptions and estimates that underlie the preparation of the income
statement and the balance sheet. Note 1(b) includes details of the areas of our critical accounting assumptions and estimates and a
reference to the relevant note in the financial statements providing further information. Each of the assumptions and estimates have
been discussed at our Board Audit Committee (BAC). The following is a summary of the areas involving our most critical accounting
estimates.
Fair value of financial instruments
Financial instruments classified as held-for-trading (including derivatives) or designated at fair value through income statement and
financial assets classified as available-for-sale are recognised in the financial statements at fair value. All derivatives are measured and
recognised at fair value. As far as possible, financial instruments are valued with reference to quoted, observable market prices or by
using models which employ observable valuation parameters. Where valuation models rely on parameters for which inputs are not
observable, judgements and estimation may be required.
As at 30 September 2018, the fair value of trading securities and financial assets designated at fair value through profit or loss,
available-for-sale securities, loans designated at fair value, life insurance assets and regulatory deposits with central banks overseas
was $96,951 million (2017: $101,923 million). The fair value of deposits and other borrowings at fair value, other financial liabilities at
fair value through income statement, debt issues at fair value and life insurance liabilities was $56,427 million (2017: $64,317 million).
The fair value of outstanding derivatives was a net liability of $306 million (2017: $1,342 million net liability). The fair value of financial
assets and financial liabilities determined by valuation models that use unobservable market prices was $964 million (2017: $1,399
million) and $6 million (2017: $9 million), respectively. The fair value of financial assets and financial liabilities, including derivatives, is
largely determined based on valuation models using observable market prices and rates. Where observable market inputs are not
available, day one profits or losses are not recognised.
We believe that the judgements and estimates used are reasonable in the current market. However, a change in these judgements and
estimates would lead to different results as future market conditions can vary from those expected.
Provisions for impairment charges on loans
Provisions for credit impairment represent management’s best estimate of the impairment charges incurred in the loan portfolios as at
the balance date. There are two components of our loan impairment provisions: Individually Assessed Provisions (IAPs) and
Collectively Assessed Provisions (CAPs).
IAPs are raised where loans exceeding specified thresholds are assessed as impaired. In determining IAPs, considerations that have a
bearing on the amount and timing of expected future cash flows are taken into account. For example, the business prospects of the
customer, the realisable value of collateral, our position relative to other claimants, the reliability of customer information and the likely
cost and duration of the work-out process. These judgements and estimates can change with time as new information becomes
available or as work-out strategies evolve, resulting in revisions to the impairment provision as individual decisions are made.
CAPs are raised for impaired loans below specified thresholds and for all loans which are not individually identified as impaired. The
CAPs are established on a portfolio basis taking into account the level of arrears, collateral and security, past loss experience, current
economic conditions, expected default and timing of recovery based on portfolio trends. The most significant factors in establishing
these provisions are estimated loss rates and related emergence periods. The future credit quality of these portfolios is subject to
uncertainties that could cause actual credit losses to differ from reported loan impairment provisions. These uncertainties include the
economic environment, notably interest rates, unemployment levels, payment behaviour and bankruptcy rates.
Review of Group operations
2018 Westpac Group Annual Report97

As at 30 September 2018, gross loans to customers were $712,504 million (2017: $687,785 million) and the provision for impairment
charges on loans was $2,814 million (2017: $2,866 million).
Goodwill
Goodwill represents the excess of purchase consideration, the amount of any non-controlling interest in the acquiree and the
acquisition date fair value of any previous equity interest in the acquiree, over the fair value of the identified net assets of acquired
businesses. The determination of the fair value of the assets and liabilities of acquired businesses requires the exercise of management
judgement. Different fair values would result in changes to the goodwill and to the post-acquisition performance of the acquisitions.
Goodwill is tested for impairment annually by determining if the carrying value of the cash-generating unit (CGU) that it has been
allocated to is recoverable. The recoverable amount is the higher of the CGU’s fair value less costs to sell and its value-in-use.
Determination of appropriate cash flows and discount rates for the calculation of the value in use is subjective. As at 30 September
2018, the carrying value of goodwill was $8,890 million (2017: $9,012 million).
Superannuation obligations
The actuarial valuation of our defined benefit plan obligations are dependent upon a series of assumptions, the key ones being price
inflation, salary growth, mortality, morbidity, discount rate and investment returns. Different assumptions could significantly alter the
amount of the difference between plan assets and defined benefit obligations and the amount recognised directly in retained profits.
The net superannuation surplus across all our plans as at 30 September 2018 was $64 million (2017: net superannuation surplus of $5
million). As at 30 September 2018, two superannuation plans were in surplus of $89 million (2017: one plan in surplus of $48 million)
and two superannuation plans were in deficit of $25 million (2017: three plans in deficit of $43 million).
Provisions (other than loan impairment charges)
Provisions are held in respect of a range of obligations such as employee entitlements, litigation and non-lending losses, impairment
charges on credit commitments, surplus lease space, restructuring costs and compliance, regulation and remediation provisions. Some
of the provisions involve significant judgement about the likely outcome of various events and estimated future cash flows. Refer Note
28.
Income taxes
The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. All our businesses predominantly
operate in jurisdictions with similar tax rates to the Australian corporate tax rate. Significant judgement is required in determining the
worldwide provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business
for which the ultimate tax determination is uncertain. For these circumstances, we hold appropriate provisions. Where the final outcome
of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax
provisions in the period where such determination is made.
Life insurance contract liabilities
The actuarial valuation of life insurance contract liabilities and associated deferred policy acquisition costs are dependent upon a
number of assumptions. The key factors impacting the valuation of these liabilities and related assets are the cost of providing benefits
and administering the contracts, mortality and morbidity experience, discontinuance experience and the rate at which projected future
cash flows are discounted.
Review of Group operations
982018 Westpac Group Annual Report

Income statement review
Consolidated income statement
Overview of performance – 2018 v 2017
Net profit attributable to owners of Westpac Banking Corporation for 2018 was $8,095 million, an increase of $105 million or 1%
compared to 2017. Features of this result included a $331 million or 2% increase in net operating income before operating expenses
and impairment charges, a $258 million or 3% increase in operating expenses and a $143 million or 17% decrease in impairment
charges.
Net interest income increased $989 million or 6% compared to 2017, with total loan growth of 4%, mostly from Australian housing which
grew 4%. Net interest margin increased 7 basis points to 2.13% reflecting increased spreads on certain Australian mortgages, a rise in
Treasury income and contribution from fair value gains on economic hedges and higher deposit spreads. These increases were partly
offset by the full period impact of the Bank Levy which was effective from July 2017. Wholesale funding costs were little changed, as
short term funding costs increased while long term funding costs decreased.
Non-interest income decreased $658 million or 10% compared to 2017 primarily due to a decrease in trading income of $257 million,
the non-repeat of a large gain of $279 million on disposal of an associate (BTIM ) in 2017, an impairment loss of $104 million on the
Pendal investment in 2018, and additional provisions for estimated customer refunds and payments recorded as negative income.
These items were partly offset by income related to the exit of the Hastings business ($135 million).
Operating expenses increased $258 million or 3% compared to 2017. The rise included annual salary increases, higher technology
expenses related to the Group’s investment program, an increase in regulatory and compliance costs and costs associated with the exit
of the Hastings business. These increases were partly offset by productivity benefits and lower amortisation of intangibles.
Impairment charges were $143 million or 17% lower compared to 2017. Asset quality remained sound, with stressed exposures as a
percentage of total committed exposures (TCE) at 1.08%, up 3 basis points over the year. The decrease in impairment charges was
primarily due to reduced individual provisions for larger facilities.
The effective tax rate of 31.0% was higher than the 2017 effective tax rate of 30.6% mostly related to an increase in non-deductible
expenses.
2018 basic earnings per share were 237.5 cents per share compared to 238.0 cents per share in 2017.
Where accounting classifications have changed or where changes in accounting policy are adopted retrospectively, comparatives have been revised and may
differ from results previously reported.
Australian dollar amounts have been translated into US dollars solely for the convenience of the reader at the rate of A$1.00 = US$0.7238, the noon buying
rate in New York City on 28 September 2018.
Based on basic earnings per share, with the weighted average number of fully paid ordinary shares outstanding adjusted for the conversion of dilutive potential
ordinary shares, issued for no consideration, and after adjusting earnings for distributions on dilutive potential ordinary shares.
Adjusted for Treasury shares.
Pendal Group Limited (Pendal) was previously called BT Investment Management (BTIM).
Review of Group operations
For the years ending 30 September201820182017201620152014
(in $m unless otherwise indicated)US$ A$ A$A$A$A$
Interest income23,575
32,57131,23231,82232,29532,248
Interest expense(11,629)
(16,066)(15,716)(16,674)(18,028)(18,706)
Net interest income
11,946
16,50515,51615,14814,26713,542
Non-interest income4,074
5,6286,2865,8377,3756,395
Net operating income before operating expenses and impairment charges
16,020
22,13321,80220,98521,64219,937
Operating expenses(7,015)
(9,692)(9,434)(9,217)(9,473)(8,547)
Impairment charges(514)
(710)(853)(1,124)(753)(650)
Profit before income tax8,491
11,73111,51510,64411,41610,740
Income tax expense(2,629)
(3,632)(3,518)(3,184)(3,348)(3,115)
Net profit for the year5,862
8,0997,9977,4608,0687,625
Net profit attributable to non-controlling interests(3)
(4)(7)(15)(56)(64)
Net profit attributable to owners of Westpac Banking Corporation5,859
8,0957,9907,4458,0127,561
Weighted average number of ordinary shares (millions)3,406
3,4063,3553,3133,1403,114
Basic earnings per ordinary share (cents)171.9
237.5238.0224.6255.0242.5
Diluted earnings per share (cents)166.5
230.1229.3217.8248.2237.6
Dividends per ordinary share (cents)136
188188188187182
Dividend payout ratio (%)79.52
79.5279.2884.1973.3974.68
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The Board has determined a final dividend of 94 cents per ordinary share. The full year ordinary dividends of 188 cents is unchanged
over ordinary dividends declared in 2017 and represents a pay-out ratio of 79.52%. The full year ordinary dividend is fully franked.
Income statement review – 2018 v 2017
Net interest income – 2018 v 2017
Net interest income increased $989 million or 6% compared to 2017. Key features include:
A 3% growth in average interest-earning assets, primarily from Australian housing which grew 4%;
Group net interest margin increased 7 basis points. The full period impact of pricing changes for certain Australian mortgages in
2017, including investor lending and interest only loans, higher New Zealand mortgage spreads and higher term deposits spreads,
were partly offset by the full period impact of the Bank Levy. Wholesale funding costs were little changed, as short term costs
increased and long term costs reduced. In addition, Treasury and Markets income was higher in 2018 primarily due to increased
revenue from interest risk management and a rise in contributions from fair value gains on economic hedges.
Total net loans increased $24.8 billion or 4% compared to 2017. Excluding foreign currency translation impacts, total net loans
increased $24.0 billion or 3%.
Key features of total loan growth were:
Australian housing loans increased $17.6 billion or 4% (slightly below system growth ). Owner occupied loans increased 6% over
the year, while the Group’s investor property lending grew by 2%. Principal and interest loan flows represented 77% of all new
flows and now comprise 61% of the portfolio (2017: 50%);
Australian business loans increased $3.8 billion or 3% from broad based growth in Business Bank including SME, agriculture,
manufacturing and property;
New Zealand lending increased NZ$3.2 billion or 4%. Housing loans grew at 4% mostly in fixed rate products, while business
lending increased 4% supported by growth across agriculture, property and corporate lending; and
Other overseas lending increased $1.7 billion or 12%, across trade finance and institutional lending in Asia.
Total deposits and other borrowings excluding certificates of deposits increased $31.1 billion or 6% compared to 2017, with the
increase more than fully funding loan growth in the year. Excluding foreign currency translation impacts, deposits and other borrowings
excluding certificates of deposits increased $29.5 billion or 6%.
Key features of total deposits and other borrowings excluding certificates of deposits growth were:
Australian deposits and other borrowings excluding certificates of deposits increased $25.8 billion or 6%, particularly across term
deposits (up 10%). Household deposits growth was in line with system and non-financial corporation deposits grew above
system . Customers continued to direct funds to mortgage offset accounts, supporting 4% growth in Australian non-interest bearing
deposits;
New Zealand deposits and other borrowings excluding certificates of deposits increased NZ$3.5 billion or 6%, with the increase
fully funding loan growth during the year. Term deposits grew 9%, particularly across household and institutional segments. Non-
interest bearing deposits increased 12% from growth in business and consumer transaction deposits, including growth in mortgage
offset accounts; and
Other overseas deposits and other borrowings excluding certificates of deposits increased $2.3 billion or 19% due to growth in
deposits across Asia.
Certificates of deposits decreased $5.4 billion or 11%, reflecting reduced short-term wholesale funding issuance in this form.
Source: Reserve Bank of Australia (RBA).
Source: Australian Prudential Regulation Authority (APRA).
Review of Group operations
$m201820172016
Interest income
32,57131,23231,822
Interest expense
(16,066)(15,716)(16,674)
Net interest income
16,50515,51615,148
Increase/(decrease) in net interest income
Due to change in volume6488551,313
Due to change in rate
341(487)(432)
Change in net interest income
989368881
100
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Interest spread and margin – 2018 v 2017
Net interest margin was 2.13% in 2018, up 7 basis points compared to 2017. Key drivers of the margin increase were:
2 basis points increase from loan spreads. This reflected the full period impact of pricing changes for certain Australian mortgages
in late 2017, including interest only and investor lending, along with higher spreads on New Zealand mortgages. These gains were
partly offset by the impact of customers switching from interest only to principal and interest loans, retention pricing, customer
preference for lower spread basic products and competition across loan markets;
2 basis points increase related to customer deposit spreads, mainly from term deposits, partly offset by the impact of lower rates on
the hedging of transaction deposits;
2 basis points decrease from a rise in short term wholesale funding costs, particularly in the second half of 2018;
2 basis points increase from term wholesale funding as pricing for new term issuance was lower than the portfolio average;
4 basis points decrease from the full period impact of the Bank Levy, which was introduced on 1 July 2017;
1 basis point increase in capital and other largely from the positive effect of higher capital balances, partly offset by the impact of
lower interest rates; and
6 basis points increase from Treasury and Markets, due to increased Treasury revenue from interest rate risk management and a
rise in contributions from fair value gains on economic hedges.
Non-interest income – 2018 v 2017
Non-interest income decreased $658 million or 10% over the year. 2018 was impacted by a number of infrequent items, including
income related to the exit of the Hastings business ($135 million) partly offset by an increase in provisions for estimated custome
r
refunds and payments (up $52 million from $111 million in 2017 to $163 million in 2018).
Excluding the impact of these infrequent items and the partial sale of BTIM shares of $279 million in 2017, non-interest income was
$462 million or 8% lower, primarily due to reduced markets income and lower banking fee income from the full period impact of
regulatory changes to Australian credit card interchange fees and removal of ATM withdrawal fees.
Fees and commissions decreased $205 million or 7% compared to 2017, largely due to:
additional provisions for estimated customer refunds and payments ($101 million), related to Advice and retail banking products;
lower revenue from the removal of ATM withdrawal fees and changes to transaction fees ($64 million);
lower credit card income ($49 million) from the full period impact of regulatory changes to Australian interchange rates from 1
July 2017 and lower rewards redemptions; and
lower corporate and institutional lending fees ($23 million) from a reduction in unused customer limits; partly offset by
higher business lending fees ($40 million) primarily driven by portfolio growth.
Interest spread is the difference between the average yield on all interest earning assets and the average yield on all interest bearing liabilities.
The benefit of net non-interest bearing assets, liabilities and equity is determined by applying the average yield paid on all interest bearing liabilities to the
average level of net non-interest bearing funds as a percentage of average interest earning assets.
Net interest margin is calculated by dividing net interest income by average interest earning assets.
Review of Group operations
$m201820172016
Group
Net interest income16,50515,51615,148
Average interest earning assets
774,944752,294721,843
Average interest bearing liabilities
715,509694,924667,276
Average net non-interest bearing assets, liabilities and equity
59,43557,37054,567
Interest spread
1.95%1.89%1.91%
Benefit of net non-interest bearing assets, liabilities and equity
0.18%0.17%0.19%
Net interest margin
2.13%2.06%2.10%
$m201820172016
Fees and commissions
2,5502,7552,755
Wealth management and insurance income
2,0611,8001,899
Trading income
9451,2021,124
Other income
7252959
Non-interest income
5,6286,2865,837
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Wealth management and insurance income increased $261 million or 15% compared to 2017, reflecting:
a rise in Hastings revenue which included fees of $144 million related to the exit of the business, the associated costs can be seen
in other expenses;
a fall in provisions for estimated customer refunds and payments for wealth products ($49 million);
higher revenue from investments in boutique funds ($43 million); and
higher insurance income ($41 million) reflecting:
–increase in general insurance income ($24 million) from lower claims, with the prior year impacted by Cyclone Debbie, and a 2%
increase in net earned premiums;
–increase in life insurance income ($34 million) from movements in policyholder tax recoveries and a 17% increase to earned
premiums, primarily due to BTFG commencing the management of Group Insurance for BTFG Corporate Super in 2018. This
was partly offset by a rise in claims; and
–lower LMI contribution ($17 million) due to a reduction in loans written at higher LVR bands; partly offset by
lower platforms income ($14 million), impacted by margin compression and pricing changes to BT Panorama in July 2018. This
was partly offset by the benefit of higher asset markets.
Trading income decreased $257 million or 21% compared to 2017. The majority of the reduction was due to a lower fixed income
trading result.
Other income decreased $457 million or 86% compared to 2017 reflecting the partial sale of BTIM shares ($279 million) in 2017 that did
not repeat, impairment loss on the remaining Pendal shares ($104 million), the impact of hedging future earnings (down $44 million)
and lower rental income ($36 million).
Operating expenses – 2018 v 2017
Operating expenses increased $258 million or 3% compared to 2017. The key factors of the result were:
higher costs from infrequent items of $233 million related to exit of the Hastings business ($121 million), costs associated with
implementing customer refunds and payments ($62 million) and provisions for litigation ($50 million);
growth in regulation and compliance expenses of $184 million, including expenses related to the Royal Commission of $62 million;
higher investment related expenses of $125 million largely across our banking and wealth platforms; and
growth in other operating costs of $178 million; partly offset by
lower intangible asset amortisation of $158 million; and
productivity benefits of $304 million.
Staff expenses increased $186 million or 4% compared to 2017 from the full period impact of annual salary increases, higher
restructuring costs (up $39 million) and additional FTE for regulatory and compliance activities and the Group’s investment program.
This was partly offset by lower bonuses and productivity benefits largely related to simplifying the organisation and digitising processes
across the branch network and operations.
Occupancy expenses decreased $40 million or 4% from lower depreciation on operating leases (down $30 million) and benefits from
retail property consolidation (branch numbers down by 47 across the Group), partly offset by higher energy costs.
Technology expenses increased $102 million or 5% compared to 2017, primarily due to the Group’s investment program. Higher
technology services costs (up $82 million) and software maintenance and licensing costs (up $29 million) were driven by continued
investment spend, increased volumes and new software licences following upgraded capability. This was partly offset by lower IT
equipment depreciation (down $17 million) as prior investment in data centres was fully depreciated.
Review of Group operations
$m201820172016
Staff expenses
4,8874,7014,601
Occupancy expenses
1,0331,0731,032
Technology expenses
2,1102,0081,929
Other expenses
1,6621,6521,655
Total operating expenses
9,6929,4349,217
Total operating expenses to net operating income ratio
43.79%43.27%43.92%
1022018 Westpac Group Annual Report

Other expenses increased $10 million or 1% during the year and contained a number of infrequent items, including the write-off of
Hastings goodwill ($105 million) following the exit of that business, provisions for litigation ($50 million) and costs associated with
implementing customer refunds and payments ($25 million). Excluding these items, expenses reduced by $170 million primarily due to
lower amortisation of intangible assets (down $158 million) as a number of intangible assets were fully amortised during the year;
postage and stationery costs decreased ($35 million) as customers migrated to electronic statements; and lower credit card loyalty
program costs down ($26 million) from changes to reward programs; and benefits from disciplined cost management. These were partly
offset by costs associated with the Royal Commission.
Impairment charges – 2018 v 2017
Asset quality remained sound through 2018 with stressed assets to total committed exposures increasing by 3 basis points to 1.08%.
The increase in stress mostly reflects higher mortgage delinquencies and a small rise in stressed exposures in Business Bank.
Impaired assets were lower, with gross impaired assets to gross loans 2 basis points lower at 0.20% compared to 30 September 2017.
Provisioning levels at 30 September 2018 of $3,053 million were $66 million lower compared to 30 September 2017. IAPs were $58
million lower in line with the decline in impaired facilities while CAPs were $8 million lower. Within CAPs the overlay was down $22
million to $301 million at 30 September 2018.
Impairment charges for 2018 of $710 million are equivalent to 10 basis points of average loans and were down $143 million when
compared to 2017.
Key movements included:
total new IAPs less write-backs and recoveries were $112 million lower than 2017. This was due to lower new IAPs (down $239
million) partially offset by lower write-backs. The reduction in new IAPs was due to a small number of large impairments in WIB in
2017 while in 2018 no new large impaired loans (greater than $50 million) emerged during the year. New IAPs in Business Bank
were also lower. This was partially offset by higher new IAPs in New Zealand; and
total new CAPs were $31 million lower due to a $110 million reduction in write-offs partially offset by a $79 million fall in the benefit
from other changes in CAPs. Write-offs were lower, principally in Consumer Bank from the credit card portfolio and in Business
Bank related to the auto finance and commercial portfolios. The overlay was $22 million lower in 2018 compared to a $66 million
reduction in 2017.
Income tax expense – 2018 v 2017
The effective tax rate of 31.0% in 2018 was higher than the 2017 effective tax rate of 30.6%. The effective tax rate was higher than the
Australian corporate tax rate of 30% due to the non-deductibility of certain expenses, including penalties and the write-off of Hastings
goodwill associated with the exit of that business.
Overview of performance – 2017 v 2016
Net profit attributable to owners of Westpac Banking Corporation for 2017 was $7,990 million, an increase of $545 million or 7%
compared to 2016. Features of this result included a $817 million or 4% increase in net operating income before operating expenses
and impairment charges, a $217 million or 2% increase in operating expenses and a $271 million or 24% decrease in impairment
charges.
Net interest income increased $368 million or 2% compared to 2016, with total loan growth of 3%, primarily from Australian housing
which grew 6%. Reported net interest margin decreased 4 basis points to 2.06% from higher funding costs, the impact of lower interest
rates, and lower treasury earnings, partly offset by loan repricing.
Non-interest income increased $449 million or 8% compared to 2016 primarily due to a $279 million gain associated with sale of shares
in BTIM, a rise in trading income of $78 million and the impact of volatility in economic hedges of $140 million. These increases were
partly offset by provisions for customer refunds, and lower wealth management and insurance income.
Operating expenses increased $217 million or 2% compared to 2016. The rise in operating expenses includes annual salary and rental
increases, higher technology expenses related to the Group’s investment program, a rise in regulatory and compliance costs and
expenses associated with the sale of shares in BTIM. These increases were partially offset by productivity benefits.
Review of Group operations
$m201820172016
Impairment charges
7108531,124
Impairment charges to average gross loans (basis points)
101317
$m201820172016
Income tax expense
3,6323,5183,184
Tax as a percentage of profit before income tax expense (effective tax rate)
30.96%30.55%29.91%
2018 Westpac Group Annual Report103

Impairment charges were $271 million lower or 24% compared to 2016. Asset quality remained sound, with stressed exposures as a
percentage of total committed exposures (TCE) at 1.05%, down 15 basis points over the year. The decrease in impairment charges
was primarily due to significantly lower large individual provisions. Additional provisioning for these larger facilities was required in 2016,
following the downgrade to impaired.
The effective tax rate of 30.6% in 2017 was higher than the 2016 effective tax rate of 29.9% as 2016 benefited from the finalisation of
some prior period taxation matters.
2017 basic earnings per share were 238.0 cents per share compared to 224.6 cents per share in 2016.
The Board has determined a final dividend of 94 cents per ordinary share. The full year ordinary dividends of 188 cents is unchanged
over ordinary dividends declared in 2016 and a pay-out ratio of 79.3%. The full year ordinary dividend is fully franked.
The Board considered the impact of the Bank Levy on shareholders (which equated to 2 cents per share in 2017), and decided to leave
the dividend unchanged.
Income statement review – 2017 v 2016
Net interest income – 2017 v 2016
Net interest income increased $368 million or 2% compared to 2016. Key features include:
4% increase in average interest-earning assets, primarily from growth in Australian housing. Third party liquid assets increased $11
billion or 13% in response to a $10 billion lower Committed Liquidity Facility (CLF), which reduced from $59 billion to $49 billion on 1
January 2017;
Group net interest margin decreased 4 basis points. Higher funding costs primarily from term deposit competition, the impact of
lower interest rates and lower Treasury earnings were, partly offset by loan repricing and economic hedge volatility.
Total loans increased $23.0 billion or 3% compared to 2016. Excluding foreign currency translation impacts, total loans increased $26.0
billion or 4%.
Key features of total loan growth were:
Australian housing loans increased $23.0 billion or 6%. During the year, the Group further tightened origination standards, reduced
new lending discounts and adjusted interest rates on different loan categories. Based on the APRA definition of investor lending, the
Group’s investor property lending grew 6%, below the 10% cap. Fixed rate loans increased from 17% of the portfolio in 2016 to 21%
in 2017;
Australian business loans increased $0.3 billion, with growth in Business Bank (BB) across SME, professional services and health,
largely offset by lower institutional lending including a decline in the utilisation of mortgage warehouse facilities; and
New Zealand lending increased NZ$2.1 billion or 3%. Housing loans grew at 4% and business lending increased 1% primarily from
growth in SME and agriculture. Following the Loan to Value Ratio (LVR) restrictions imposed by the RBNZ on investor property
loans (with an LVR of greater than 60%), the proportion of new flows for investor property lending decreased by 9 percentage points
to 22%.
Total customer deposits increased $20.1 billion or 4% compared to 2016. Excluding foreign currency translation impacts, customer
deposits increased $22.3 billion or 5%.
Key features of total customer deposits growth were:
Australian customer deposits increased $23.8 billion or 6%, with above system growth in household deposits and growth in
institutional deposits. Customers continued to direct funds to mortgage offset accounts, supporting 8% growth in Australian non-
interest bearing deposits. The Group continues to focus on growing higher quality deposits in preparation for the introduction of the
Net Stable Funding Ratio (NSFR) on 1 January 2018;
New Zealand customer deposits increased NZ$0.9 billion or 2%, with a 14% increase in non-interest bearing deposits from growth in
business and consumer transaction accounts; and
Other overseas deposits decreased $2.6 billion or 18% due to a decline in Asian deposits.
Certificate of deposits increased $0.5 billion or 1%, with lower balances offshore more than offset by growth in Australia.
Source: APRA.
Review of Group operations
104
2018 Westpac Group Annual Report
1
1

Interest spread and margin – 2017 v 2016
Net interest margin was 2.06% in 2017, down 4 basis points compared to 2016. Key drivers of the margin decrease were:
9 basis points increase from loan spreads primarily from the full year impact of Australian mortgage and business lending repricing in
2016 and changes to Australian mortgage rates for interest-only and investor loans during 2017. This was partly offset by broad
based competition and higher short term funding costs;
5 basis points decrease from customer deposit spreads, driven by increased competition for term deposits in late 2016 and early
2017 and the impact of lower interest rates on the hedging of transaction deposits;
2 basis points decrease from higher term wholesale funding costs as the Group lengthened average tenors in preparation for the
implementation of NSFR on 1 January 2018 and an increase in Additional Tier 1 and Tier 2 capital balances and the higher cost of
these instruments;
1 basis point decrease from the introduction of the Bank Levy;
Capital and other decreased 2 basis points primarily from the impact of lower interest rates;
2 basis points decrease from liquidity, due to increased holdings of third party liquid assets; and
1 basis point decrease from Treasury and Markets, with lower market volatility impacting returns from interest rate risk management.
Non-interest income – 2017 v 2016
Non-interest income was $6,286 million in 2017, an increase of $449 million or 8% compared to 2016. The increase was impacted by a
number of infrequent items ($136 million), including the profit on the further sale of BTIM shares ($279 million), provisions for customer
refunds and payments related to Advice and wealth products ($111 million) and a revaluation loss on the Group’s investments in
boutique funds ($32 million). Excluding these items, non-interest income increased $313 million or 5% due to the impact of hedging
New Zealand future earnings, higher Westpac Institutional Bank (WIB) markets income, increase in operating lease rental income and
higher business lending fees, partly offset by lower wealth management and insurance income and a reduction in Australian credit card
interchange fees.
Fees and commissions of $2,755 million in 2017 were flat compared to 2016, due to:
lower Advice income including provisions for customer refunds and payments ($55 million);
lower Australian credit card income ($39 million) primarily from lower revenue associated with rewards programs and regulatory
impacts on interchange rates from 1 July 2017; partly offset by
increased business lending fees ($50 million) supported by higher line fees from business growth;
higher New Zealand credit card income ($41 million) primarily from a change to accounting treatment for credit card rewards scheme
to align with Group practice; and
higher transaction fees ($15 million) from an increase in account numbers, pricing changes, and transaction volumes across the
Group.
Wealth management and insurance income was $1,800 million in 2017, a decrease of $99 million or 5% compared to 2016 with:
provisions for customer refunds and payments related to wealth products ($56 million);
insurance income decreased $29 million, primarily from;
-general insurance income reduced $32 million from higher claims, including the impact of Cyclone Debbie, partly offset by a 2%
increase in net earned premiums; and
-life insurance income was little changed (down $3 million) with higher claims partly offset by a 6% increase in net earned
premiums; partly offset by
-higher Lenders mortgage insurance (LMI) income ($6 million) related to arrangements for mortgages with an LVR >90%;
lower contribution from investments in boutique funds ($26 million); and
a decrease in funds under management (FUM) and funds under administration (FUA) income ($13 million), with the benefit from
higher asset markets and positive net flows more than offset by margin compression from the transfer of legacy products to lower fee
‘MySuper’ products; partly offset by
increase in WIB wealth management income ($6 million).
Some of the items provided for include: payments to superannuation customers with pre-existing conditions who did not have the benefit of our improved
disclosure practices and had their claims denied; payments to customers who did not receive all the benefits to which they were entitled under their ‘packaged
accounts’; and refunds where ongoing advice fees were paid but we were unable to demonstrate that advice service was provided in the relevant period.
Review of Group operations
2018 Westpac Group Annual Report105
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Trading income was $1,202 million in 2017, an increase of $78 million or 7% compared to 2016. This was primarily driven by higher
WIB markets income from an increase in risk management income across fixed income, foreign exchange and commodities and higher
derivative valuation adjustments.
Other income was $529 million in 2017, an increase of $470 million compared to 2016. This result was driven by the profit on a further
sale of BTIM shares ($279 million), the impact of hedging New Zealand future earnings ($140 million) and higher rental income on
operating leases ($34 million) from portfolio growth.
Operating expenses – 2017 v 2016
Operating expenses increased $217 million or 2% compared to 2016. The key factors of the result were:
growth in regulation and compliance expenses of $84 million;
higher investment related expenses of $82 million;
separation costs related to the sale of shares in BTIM of $35 million; and
productivity benefits of $262 million largely offset growth in other operating costs.
Staff expenses were $4,701 million, an increase of $100 million or 2% compared to 2016. Annual salary increases, higher investment
costs and separation costs related to the further sale of shares in BTIM were partly offset by productivity benefits, lower restructuring
costs and reduced share based payments.
Occupancy expenses increased $41 million or 4% compared to 2016 due to higher expenses relating to annual rental expenses and
exit costs associated with retail property consolidation and branch network optimisation.
Technology expense increased $79 million or 4% compared to 2016 largely from the completion of key elements of the Group’s
investment programs. This included higher amortisation of software assets ($57 million) and higher software maintenance and licensing
costs ($36 million) from programs including the Customer Service Hub, Panorama, new payment platform and systems for regulatory
and compliance purposes.
Other expenses decreased $3 million compared to 2016. The increase in regulatory and compliance costs have been mostly offset by
lower outsourced operational costs. In addition, non-lending losses were $8 million lower from reduced credit card and digital fraud,
which has benefitted from recent enhancements to early detection capability and additional security
.
Impairment charges – 2017 v 2016
Asset quality improved through 2017 with stressed assets to total committed exposures reducing 15 basis points to 1.05%. The
reduction in stress mostly reflects the work-out or return to health of a number of watchlist and substandard facilities. Impaired assets
were also lower, with gross impaired assets to gross loans reducing 10 basis points to 0.22%. The reduction in impaired assets
principally related to the work-out or write-off of a small number of institutional facilities. Where stress in the portfolio has emerged it can
mostly be traced back to the slowdown in mining investment, sectors undergoing structural change, along with a rises in delinquencies
and properties in possession in these regions, particularly in Western Australia and Queensland.
The improved asset quality and the write-off of a small number of larger impaired facilities led to a reduction in provisions which were
down $483 million. IAPs were $389 million lower while collectively assessed provisions were $94 million lower. Within collectively
assessed provisions the economic overlay was reduced by $66 million, ending at $323 million as at 30 September 2017.
This trend of improved asset quality and work-out of existing stressed facilities has contributed to the reduction in impairment charges in
2017.
Impairment charges of $853 million were down $271 million or 24% compared to 2016.
Key movements included:
total new IAPs less write-backs and recoveries were $226 million lower than 2016. New IAPs decreased $117 million primarily due to
a small number of large impairments in WIB in 2016 whereas there were only two larger facilities that migrated to impaired over
2017. This was partially offset by higher new IAPs in the Business Bank and in mortgages. 2017 also benefited from a larger number
of write-backs and recoveries which were $109 million higher than 2016 as impaired facilities were worked out; and
CAPs were $45 million lower due to a $66 million reduction in the economic overlay provision and a $45 million benefit from
improvement in asset quality, partially offset by a $66 million lift in write-offs principally in personal lending associated with changes
to reporting of customers granted hardship assistance.
Income tax expense – 2017 v 2016
The effective tax rate of 30.6% in 2017 was higher than the 2016 effective tax rate of 29.9% as 2016 benefited from the finalisation of
some prior period taxation matters. The effective tax rate above the Australian corporate tax rate of 30% reflects several Additional Tier
1 instruments whose distributions are not deductible for Australian taxation purposes.
Review of Group operations
1062018 Westpac Group Annual Report

Balance sheet review
Selected consolidated balance sheet data
The detailed components of the balance sheet are set out in the notes to the financial statements.
Where accounting classifications have changed or where changes in accounting policy are adopted retrospectively, comparatives have been revised and may
differ from results previously reported.
Australian dollar amounts have been translated into US dollars solely for the convenience of the reader at the rate of A$1.00 = US$0.7238, the noon buying
rate in New York City on 28 September 2018.
Includes interest earning balances. Loans and other receivables are stated net of provisions for impairment charges on loans. Other receivables include cash
and balances with central banks and other interest earning assets.
Review of Group operations
As at 30 September201820182017201620152014
US$mA$mA$mA$mA$mA$m
Cash and balances with central banks19,131
26,43118,39717,01514,77025,760
Receivables due from other financial institutions4,191
5,7907,1289,9519,5837,424
Trading securities and financial assets designated at fair value and
available-for-sale securities
60,259
83,25386,03481,83382,28781,933
Derivative financial instruments17,444
24,10124,03332,22748,17341,404
Loans513,674
709,690684,919661,926623,316580,343
Life insurance assets6,840
9,45010,64314,19213,12511,007
All other assets15,110
20,87720,72122,05820,90222,971
Total assets
636,649
879,592851,875839,202812,156770,842
Payables due to other financial institutions
13,128
18,13721,90718,20918,73118,636
Deposits and other borrowings404,810
559,285533,591513,071475,328460,822
Other financial liabilities at fair value through income statement3,110
4,2974,0564,7529,22619,236
Derivative financial instruments17,666
24,40725,37536,07648,30439,539
Debt issues124,925
172,596168,356169,902171,054152,251
Life insurance liabilities5,499
7,5979,01912,36111,5599,637
All other liabilities8,277
11,43510,56310,84510,19910,526
Total liabilities excluding loan capital
577,415
797,754772,867765,216744,401710,647
Loan capital12,496
17,26517,66615,80513,84010,858
Total liabilities
589,911
815,019790,533781,021758,241721,505
Net assets
46,738
64,57361,34258,18153,91549,337
Total equity attributable to owners of Westpac Banking Corporation
46,700
64,52161,28858,12053,09848,456
Non-controlling interests38
525461817881
Total shareholders’ equity and non-controlling interests
46,738
64,57361,34258,18153,91549,337
Average balances
Total assets640,291884,624864,525843,555798,703737,124
Loans and other receivables494,757
683,555658,058629,159594,200559,789
Total equity attributable to owners of Westpac Banking Corporation44,888
62,01758,55655,89649,36146,477
Non-controlling interests22
3120575854862
2018 Westpac Group Annual Report107
1
2
3
1
2
3

Summary of consolidated ratios
Balance sheet review
Assets – 2018 v 2017
Total assets as at 30 September 2018 were $879.6 billion, an increase of $27.7 billion or 3% compared to 30 September 2017.
Significant movements during the year included:
cash and balances with central banks increased $8.0 billion or 44% reflecting higher liquid assets held in this form;
receivables due from other financial institutions decreased $1.3 billion or 19% mainly due to a reduction in collateral posted with
derivative counterparties and lower interbank lending;
trading securities and financial assets designated at fair value and available-for-sale securities decreased $2.8 billion or 3%
reflecting lower holdings of liquid assets in this form;
loans grew $24.8 billion or 4%. Refer to loan quality – 2018 v 2017 below for further information; and
life insurance assets decreased $1.2 billion or 11%, due to the transfer by an investor to another Group managed fund that is not
consolidated.
Australian dollar amounts have been translated into US dollars solely for the convenience of the reader at the rate of A$1.00 = US$0.7238, the noon buying
rate in New York City on 28 September 2018.
Calculated by dividing net interest income by average interest earning assets.
Calculated by dividing net profit attributable to owners of Westpac Banking Corporation by average total assets.
Calculated by dividing net profit attributable to owners of Westpac Banking Corporation by average ordinary equity.
Calculated by dividing net profit attributable to owners of Westpac Banking Corporation by average ordinary equity and non-controlling interests.
Based on the weighted average number of fully paid ordinary shares.
Based on basic earnings per share, with the weighted average number of fully paid ordinary shares outstanding adjusted for the conversion of dilutive potential
ordinary shares, issued for no consideration, and after adjusting earnings for distributions on dilutive potential ordinary shares.
Review of Group operations
As at 30 September201820182017201620152014
(in $m unless otherwise indicated)US$ A$A$A$A$A$
Profitability ratios (%)
Net interest margin2.132.132.062.102.092.09
Return on average assets0.92
0.920.920.881.001.03
Return on average ordinary equity13.05
13.0513.6513.3216.2316.27
Return on average total equity13.05
13.0513.6413.1815.9615.97
Capital ratios (%)
Average total equity to average total assets7.017.016.786.696.296.42
Common equity Tier 110.63
10.6310.569.489.508.97
Tier 1 ratio12.78
12.7812.6611.1711.3810.56
Total capital ratio14.74
14.7414.8213.1113.2612.28
Earning ratios
Basic earnings per ordinary share (cents)171.9237.5238.0224.6255.0242.5
Diluted earnings per ordinary share (cents)166.5
230.1229.3217.8248.2237.6
Dividends per ordinary share (cents)136
188188188187182
Dividend payout ratio (%)79.52
79.5279.2884.1973.3974.68
Credit quality ratios
Impairment charges on loans written off (net of recoveries)6869481,4881,0521,1071,302
Impairment charges on loans written off (net of recoveries) to average loans
(bps)
14
1422161823
108
2018 Westpac Group Annual Report
1
2
3
4
5
6
7
1
2
3
4
5
6
7

Liabilities and equity – 2018 v 2017
Total liabilities as at 30 September 2018 were $815.0 billion, an increase of $24.5 billion or 3% compared to 30 September 2017.
Significant movements during the year included:
payables due to other financial institutions decreased $3.8 billion or 17% due to lower securities sold under agreements to
repurchase, interbank borrowings and collateral posted by derivative counterparties, partly offset by higher offshore central bank
deposits;
deposits and other borrowings increased $25.7 billion or 5%;
debt issues increased $4.2 billion or 3% ($6.8 billion or 4% decrease excluding foreign currency translation impacts); and
life insurance liabilities decreased $1.4 billion or 16%, due to the transfer by an investor to another Group managed fund that is not
consolidated.
Equity attributable to owners of Westpac Banking Corporation increased $3.2 billion reflecting retained profits less dividends paid during
the period, shares issued under the 2018 interim DRP and 2017 final DRP and the conversion of some convertible preference shares to
ordinary share capital.
Loan quality – 2018 v 2017
Total gross loans represented 81% of the total assets of the Group as at 30 September 2018, unchanged from 2017.
Australia average gross loans were $611.4 billion in 2018, an increase of $22.5 billion or 4% from $588.9 billion in 2017. This increase
was primarily due to growth in housing loans.
New Zealand average gross loans were $73.0 billion in 2018, an increase of $0.7 billion or 1% from $72.3 billion in 2017. This increase
was primarily due to growth in housing loans.
Other overseas average loans were $16.2 billion in 2018, an increase of $3.4 billion or 26% from $12.8 billion in 2017. This was
primarily due to an increase in Asia.
Approximately 13% of the loans at 30 September 2018 mature within one year and 18% mature between one year and five years.
Retail lending comprises the majority of the loan portfolio maturing after five years.
Gross loans are stated before related provisions for impairment.
Review of Group operations
As at 30 September
$m201820172016
Total gross loans
712,504687,785665,256
Average gross loans
Australia611,398588,920562,633
New Zealand
73,00072,26967,686
Other overseas
16,22812,83715,112
Total average gross loans
700,626674,026645,431
2018 Westpac Group Annual Report109
1
1

The credit quality remained sound over 2018, with total stressed exposures to TCE increasing by 3 basis points to 1.08%. Total
impaired loans as a percentage of total gross loans were 0.20% at 30 September 2018, a decrease of 0.02% from 0.22% at 30
September 2017.
At 30 September 2018, we had one impaired counterparty with exposure greater than $50 million, accounting for 4% of total impaired
loans. This compares to one impaired counterparty with exposure greater than $50 million in 2017 accounting for 5% of total impaired
loans. There were two impaired counterparties at 30 September 2018 that were less than $50 million and greater than $20 million
(2017: four impaired counterparties).
At 30 September 2018, 79% of our exposure was to either investment grade or secured consumer mortgage segment (2017: 78%,
2016: 78%, 2015: 77%, 2014: 77%) and 95% of our exposure as at 30 September 2018 was in Australia, New Zealand and the Pacific
region (2017: 96%, 2016: 96%, 2015: 95%, 2014: 95%).
We believe that Westpac remains appropriately provisioned. Total impairment provisions for impaired loans to total impaired loans
coverage at 46.1% at 30 September 2018 compared to 46.3% at 30 September 2017. Total provisions for impairment on loans and
credit commitments to total impaired loans represented 215.6% of total impaired loans as at 30 September 2018, up from 202.3% at 30
September 2017. Total provisions for impairments on loans and credit commitments to total loans were 0.43% at 30 September 2018,
down from 0.45% at 30 September 2017 (2016: 0.54%).
Group mortgage loans 90 days past due at 30 September 2018 were 0.67% of outstandings, up from 0.62% of outstandings at 30
September 2017 (2016: 0.61%).
Group other consumer loan delinquencies (including credit card and personal loan products) were 1.64% of outstandings as at 30
September 2018, up from 1.57% of outstandings as at 30 September 2017 (2016: 1.11%).
Potential problem loans as at 30 September 2018 amounted to $1,691 million, an increase of 36% from $1,247 million at 30
September 2017. The increase in potential problem loans was mainly due to the downgrade of a small number of companies in the
Australian and New Zealand business portfolios.
Non-performing loans are loans with an impaired internal risk grade, excluding restructured assets.
Impairment provisions relating to impaired loans include IAP plus the proportion of the CAP that relate to impaired loans. The proportion of the CAP that relates
to impaired loans was $231 million as at 30 September 2018 (2017: $234 million, 2016: $198 million, 2015: $208 million, 2014: $180 million). This sum is
compared to the total gross impaired loans to determine this ratio.
Review of Group operations
As at 30 September
$m20182017201620152014
Impaired loans
Non-performing loans :
Gross1,0191,1421,8511,5932,030
Impairment provisions
(458)(507)(885)(689)(862)
Net
5616359669041,168
Restructured loans:
Gross2627313993
Impairment provisions
(6)(12)(16)(16)(44)
Net
2015152349
Overdrafts, personal loans and revolving credit facilities greater than 90 days past due:
Gross371373277263217
Impairment provisions
(189)(195)(166)(172)(141)
Net
1821781119176
Net impaired loans
7638281,0921,0181,293
Provisions for impairment on loans and credit commitments
Individually assessed provisions422480869669867
Collectively assessed provisions
2,6312,6392,7332,6632,614
Total provisions for impairment on loans and credit commitments
3,0533,1193,6023,3323,481
Loan quality
Total impairment provisions for impaired loans to total impaired loans46.12%46.30%49.42%46.28%44.76%
Total impaired loans to total loans
0.20%0.22%0.32%0.30%0.40%
Total provisions for impairment on loans and credit commitments to total loans
0.43%0.45%0.54%0.53%0.60%
Total provisions for impairment on loans and credit commitments to total impaired loans
215.6%202.3%166.8%175.8%148.8%
110
2018 Westpac Group Annual Report
1
2
1
2

Potential problem loans are facilities that are performing and no loss is expected, but the customer demonstrates significant weakness
in debt servicing or security cover that could jeopardise repayment of debt on current terms if not rectified. Potential problem loans are
identified using established credit frameworks and policies, which include the ongoing monitoring of facilities through the use of
watchlists
.
Capital resources
APRA measures an ADI’s regulatory capital using three measures:
Common Equity Tier 1 Capital (CET1) comprises the highest quality components of capital that consists of paid-up share capital,
retained profits and certain reserves, less certain intangible assets, capitalised expenses and software, and investments and
retained profits in insurance and funds management subsidiaries that are not consolidated for capital adequacy purposes;
Tier 1 Capital being the sum of CET1 and Additional Tier 1 Capital. Additional Tier 1 Capital comprises high quality components of
capital that consists of certain securities not included in CET1, but which include loss absorbing characteristics; and
Total Capital being the sum of Tier 1 Capital and Tier 2 Capital. Tier 2 Capital includes subordinated instruments and other
components of capital that, to varying degrees, do not meet the criteria for Tier 1 Capital, but nonetheless contribute to the overall
strength of an ADI and its capacity to absorb losses.
Under APRA’s Prudential Standards, Australian ADIs, including Westpac, are required to maintain a minimum CET1 ratio of at least
4.5%, Tier 1 ratio of at least 6.0% and Total Regulatory Capital of at least 8.0%. APRA may also require ADIs, including Westpac, to
meet Prudential Capital Requirements (PCRs) above the minimum capital ratios. APRA does not allow the PCRs for individual ADIs to
be disclosed.
APRA also requires ADIs to hold additional CET1 buffers comprising of:
a capital conservation buffer (CCB) of 3.5%, for ADI’s designated by APRA as domestic systemically important banks (D-SIBs)
(unless otherwise determined by APRA), which includes a 1.0% surcharge for D-SIBs. APRA has determined that Westpac is a D-
SIB; and
a countercyclical buffer. The countercyclical buffer is set on a jurisdictional basis and APRA is responsible for setting the
requirement in Australia. The countercyclical buffer requirement is currently set to zero for Australia and New Zealand.
Collectively, the above buffers are referred to as the “Capital Buffer”. Should the CET1 capital ratio fall within the capital buffer range,
restrictions on the distributions 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.
Capital management strategy
Westpac’s approach to capital management seeks to balance the fact that capital is an expensive form of funding with the need to be
adequately capitalised. Westpac considers the need to balance efficiency, flexibility and adequacy when determining sufficiency of
capital and when developing capital management plans.
Westpac evaluates these considerations through an Internal Capital Adequacy Assessment Process (ICAAP), the key features of which
include:
the development of a capital management strategy, including consideration of regulatory minimums, capital buffers and
contingency plans;
consideration of both economic and regulatory capital requirements;
a stress testing framework that challenges the capital measures, coverage and requirements including the impact of adverse
economic scenarios; and
consideration of the perspectives of external stakeholders including rating agencies and equity and debt investors.
In light of APRA’s announcement on ‘unquestionably strong’ capital benchmarks on 19 July 2017, 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:
current regulatory capital minimums and the CCB, which together are the total CET1 requirement;
stress testing to calibrate an appropriate buffer against a downturn; and
quarterly volatility of capital ratios due to the half yearly cycle of ordinary dividend payments.
Westpac will revise its target capital level once APRA finalises its review of the capital adequacy framework.
Review of Group operations
2018 Westpac Group Annual Report111

Basel Capital Accord
APRA’s Prudential Sandards are generally consistent with the International Regulatory Framework for Banks, also known as Basel III,
issued by the Basel Committee on Banking Supervision (BCBS), except where APRA has exercised certain discretions. On balance,
the application of these discretions acts to reduce capital ratios reported under APRA’s Prudential Standards relative to the BCBS
approach and to those reported in some other jurisdictions.
Westpac is accredited by APRA to apply advanced models permitted by the Basel III global capital adequacy regime to the
measurement of its regulatory capital requirements. Westpac uses the Advanced Internal Ratings Based approach for credit risk, the
Advanced Measurement Approach (AMA) for operational risk and the internal model approach for Interest Rate Risk in the Banking
Book (IRRBB).
Westpac’s Level 2 regulatory capital ratios as at 30 September are summarised in the table below. As the table summarises Westpac’s
Level 2 regulatory capital structure, the capital amounts shown are not the same as the Westpac Group’s consolidated financial
statements. Westpac’s Pillar 3 Report provides further details regarding Westpac’s capital structure.
Refer to ‘Significant developments’ in Section 1 for a discussion on future regulatory developments that may impact upon capital
requirements.
Review of Group operations
$m
20182017
Common equity
63,57660,520
Deductions from common equity
(18,337)(17,850)
Total common equity after deductions
45,23942,670
Additional Tier 1 capital
9,1448,505
Net Tier 1 regulatory capital
54,38351,175
Tier 2 capital
8,5658,952
Deductions from Tier 2 capital
(233)(217)
Total Tier 2 capital after deductions
8,3328,735
Total regulatory capital
62,71559,910
Credit risk
362,749349,258
Market risk
6,7238,094
Operational risk
39,11331,229
Interest rate risk in the banking book
12,98911,101
Other assets
3,8104,553
Total risk weighted assets
425,384404,235
Common Equity Tier 1 capital ratio
10.63%10.56%
Additional Tier 1 capital ratio
2.15%2.10%
Tier 1 capital ratio
12.78%12.66%
Tier 2 capital ratio
1.96%2.16%
Total regulatory capital ratio
14.74%14.82%
1122018 Westpac Group Annual Report

Purchase of equity securities
The following table details share repurchase activity for the year ended 30 September 2018:
Purchases of ordinary shares during the year were made on market and relate to the following:
to deliver to eligible employees under the Employee Share Plan (ESP): 854,267 ordinary shares;
to deliver to employees upon the exercise of options and performance share rights: 263,306 ordinary shares;
Treasury shares held by statutory life funds and managed investment schemes and ordinary shares held by Westpac in respect of
equity derivatives sold to customers: 93,052 ordinary shares; and
to allocate to eligible employees under the Restricted Share Plan (RSP): 2,291,897 ordinary shares.
Refer to Note 32 to the financial statements for a discussion of Treasury share purchases.
Commitments
Contractual obligations and commitments
In connection with our operating activities we enter into certain contractual obligations and commitments. The following table shows our
significant contractual obligations as at 30 September 2018:
The above table excludes deposits and other liabilities taken in the normal course of banking business and short-term and undated
liabilities.
Commercial commitments
The following table shows our significant commercial commitments as at 30 September 2018:
Refer to Note 19 to the financial statements for details of on balance sheet long-term debt.
Refer to Note 30 to the financial statements for details of operating leases.
The numbers in this table are notional amounts (refer to Note 31 to the financial statements).
Review of Group operations
Total Number ofMaximum Number
Ordinar
y Shares(or Approximate $ Value)
Total Number ofAverage Price PaidPurchased asof Ordinary Shares that
Ordinary Sharesper Ordinary Shar
ePart of a PubliclyMay Yet Be Purchased
Purchased$Announced ProgramUnder the Plans or Programs
Month
October (2017)
75,15332.53-n/a
November (2017)
873,90031.87-n/a
December (2017)
2,230,28
931.42-n/a
January (2018)
2,40231.33-n/a
February (2018)
36,67
130.85-n/a
March (2018
)
---n/a
April (2018)
117,95928.95-n/a
May (2018
)
21,65529.21-n/a
June (2018)
33,466
28.27-n/a
July (2018)
23,95
128.89-n/a
August (2018)
18,40429.28-n/a
September (2018)
68,67
227.88-n/a
Tota
l
3,502,52231.32--
Up toOver 1Over 3Over
$
m1 Yearto 3 Yearsto 5 Years5 YearsTotal
On balance sheet long-term debt27,66433,82752,20532,634146,330
O
perating leases5709046601,8193,953
Total contractual cash obli
gations
28,23434,73152,86534,453150,283
Up toOver 1Over 3Over
$
m1 Yearto 3 Yearsto 5 Years5 YearsTotal
Letters of credit and guarantees8,9832,7178902,99515,585
Commitments to extend credit50,29249,32014,63760,409174,658
Other-742555154
Total commercial commitment
s
59,27552,11115,55263,459190,397
2018 Westpac Group Annual Report113
1
2
3
1
2
3

Divisional performance – 2018 v 2017
Westpac reports under the following five primary customer-facing business divisions:
Consumer Bank, which we refer to as CB: responsible for all Australian consumer relationships and operates under the Westpac,
St.George, BankSA, Bank of Melbourne and RAMS brands;
Business Bank, which we refer to as BB: responsible for all Australian SME and commercial business relationships with facilities up
to approximately $150 million, and operates under the Westpac, St.George, BankSA and Bank of Melbourne brands;
BT Financial Group (Australia), which we refer to as BTFG: responsible for the Group’s Australian wealth management, insurance
and private wealth businesses;
Westpac Institutional Bank, which we refer to as WIB: responsible for the relationship with commercial, corporate, institutional and
government customers, with customers supported throughout Australia, as well as via branches and subsidiaries located in New
Zealand, US, UK, Asia, Fiji and Papua New Guinea; and
Westpac New Zealand: responsible for all customer segments in New Zealand.
Group Businesses include Treasury, Group Technology and Core Support.
The Group revised its allocations of capital, funds transfer pricing and expenses in 2018. In addition, balance sheet disclosure and
associated revenue and expenses related to customer transfer have also been aligned. Divisional results have been restated for 2017
and 2016 to ensure comparability with 2018 results (refer to Note 2 to the financial statements for the disclosure of the Group’s
reportable operating segments and revisions to segment allocation).
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 net profit attributable to owners of Westpac Banking Corporation. 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.
A reconciliation of cash earnings to net profit attributable to owners of Westpac Banking Corporation for each business division is set
out in Note 2 to the financial statements.
To determine cash earnings, three categories of adjustments are made to statutory results:
material items that key decision makers at the Westpac Group believe do not reflect ongoing operations;
items that are not considered when dividends are recommended, such as the amortisation of intangibles, impact of Treasury
shares and economic hedging; and
accounting reclassifications between individual line items that do not impact statutory results.
The discussion of our divisional performance in this section is presented on a cash earnings basis unless otherwise stated. Cash
earnings is not directly comparable to statutory results presented in other parts of this Annual Report.
Outlined below are the cash earnings adjustments to the reported result:
amortisation of intangible assets: Identifiable intangible assets arising from business acquisitions are amortised over their useful
lives, ranging between four and twenty years. This amortisation (excluding capitalised software) is a cash earnings adjustment
because it is a non-cash flow item and does not affect cash distributions available to shareholders. The last of these intangible
assets were fully amortised in December 2017;
acquisition, transaction and integration expenses: Costs associated with the acquisition of select Lloyds’ Australian businesses
were treated as a cash earnings adjustment as they do not reflect the earnings expected from the acquired businesses following
the integration period;
fair value (gain)/loss on economic hedges (which do not qualify for hedge accounting under AAS) comprise:
-the unrealised fair value (gain)/loss on foreign exchange hedges of future New Zealand earnings impacting non-interest income
is reversed in deriving cash earnings as they may create a material timing difference on reported results but do not affect the
Group’s cash earnings over the life of the hedge; and
-the unrealised fair value (gain)/loss on hedges of accrual accounted term funding transactions are reversed in deriving cash
earnings as they may create a material timing difference on reported results but do not affect the Group’s cash earnings over
the life of the hedge;
Divisional performance
114
2018 Westpac Group Annual Report

ineffective hedges: The unrealised (gain)/loss on ineffective hedges is reversed in deriving cash earnings because the gain or loss
arising from the fair value movement in these hedges reverses over time and does not affect the Group’s profits over time;
adjustment related to Pendal (previously BTIM): The Group recognised a gain, net of costs, associated with the partial sale of
shares in Pendal Group Limited in 2017. In 2018, the Group recorded an impairment on its current holding of Pendal shares.
Consistent with prior years these items have been treated as a cash earnings adjustment given their size and that it does not
reflect ongoing operations. The Group has indicated that it may sell the remaining 10% shareholding in Pendal at some future date.
Any future gain or loss on this shareholding will similarly be excluded from the calculation of cash earnings;
Treasury shares: Under AAS, Westpac shares held by the Group in the managed funds and life businesses are deemed to be
Treasury shares and the results of holding these shares cannot be recognised in the reported results. In deriving cash earnings,
these results are included to ensure there is no asymmetrical impact on the Group’s profits because the Treasury shares support
policyholder liabilities and equity derivative transactions which are re-valued in determining income; and
accounting reclassifications between individual line items that do not impact reported results comprise:
-in 2017 the Group changed the accounting treatment for Westpac New Zealand credit card rewards scheme to align with Group
practice. This change has no impact on cash earnings or reported profit but it has led to the restatement of non-interest income
and operating expenses, within cash earnings, in prior periods. Components of reported profit have not been changed;
-policyholder tax recoveries: Income and tax amounts that are grossed up to comply with the AAS covering Life Insurance
Business (policyholder tax recoveries) are reversed in deriving income and taxation expense on a cash earnings basis; and
-operating leases: Under AAS rental income on operating leases is presented gross of the depreciation of the assets subject to
the lease. These amounts are offset in deriving non-interest income and operating expenses on a cash earnings basis.
The guidance provided in Australian Securities and Investments Commission (ASIC) Regulatory Guide 230 has been followed when
presenting this information.
Divisional performance
2018 Westpac Group Annual Report115

Cash earnings and assets by division
The following tables present, for each of the key divisions of our business, the cash earnings and total assets at the end of the financial
years ended 30 September 2018, 2017 and 2016. Refer to Note 2 to the financial statements for the disclosure of our geographic and
business segments and the reconciliation to net profit attributable to owners of Westpac Banking Corporation.
Cash earnings by business division
Total assets by business division
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 our products and
divisions to the Group’s 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.
Divisional performance
$m201820172016
Consumer Bank
3,1403,1553,011
Business Bank
2,1592,0031,885
BT Financial Group (Australia)
645736832
Westpac Institutional Bank
1,0861,159979
Westpac New Zealand
934917825
Group Businesses
10192290
Total cash earnings
8,0658,0627,822
$bn201820172016
Consumer Bank
392.5377.5359.2
Business Bank
156.5153.1148.9
BT Financial Group (Australia)
34.935.238.2
Westpac Institutional Bank
102.4103.1110.6
Westpac New Zealand
82.481.382.1
Group Businesses
110.9101.7100.2
Total assets
879.6851.9839.2
1162018 Westpac Group Annual Report

Consumer 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 consumer 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
originators.
Financial performance
2018 v 2017
Cash earnings were broadly unchanged even though there was a 7 basis point decline in net interest margin, the removal of certain
ATM fees, changes in card interchange fees and increased regulatory and compliance costs. A $114 million decline in impairment
charges resulted in cash earnings of $3,140 million, down $15 million, over the year.
Source: APRA September 2018.
Divisional performance
$m201820172016
Net interest income
7,7487,6387,268
Non-interest income
746813863
Net operating income before operating expenses and impairment charges
8,4948,4518,131
Operating expenses
(3,542)(3,378)(3,312)
Impairment charges
(451)(565)(516)
Profit before income tax
4,5014,5084,303
Income tax expense
(1,361)(1,353)(1,292)
Cash earnings for the year
3,1403,1553,011
Net cash earnings adjustments
(15)(116)(116)
Net profit attributable to owners of Westpac Banking Corporation
3,1253,0392,895
$bn$bn$bn
Deposits and other borrowings
206.2196.5185.0
Net loans
385.4370.4352.5
Total assets
392.5377.5359.2
Total operating expenses to net operating income ratio
41.70%39.97%40.73%
Net interest
income up
$110 million,
1%
Lending increased 4% mostly in mortgages. Other lending decreased 4% mostly due to a 3% decline in credit
cards, which was in line with the decline in the overall system ;
A 10% increase in term deposits, and a 5% rise in transaction accounts (including offsets) supported the 5%
rise in deposits; and
Net interest margin was down 7 basis points. The decline was due to higher short term wholesale funding
costs, the full period impact of the Bank Levy, and higher provisions for estimated customer refunds and
payments. The decline was partly offset by higher deposit spreads.
Non-interest
income down
$67 million, 8%
The decline was mostly due to the removal of certain ATM fees and changes to account keeping fees
announced in 2017; and
Lower credit card income, mostly from changes in interchange fees, contributed to the fall.
Operating
expenses up
$164 million,
5%
Most of the operating expense increase was due to:
-Provisions for costs associated with implementing customer refunds and payments and estimated litigation;
-Compliance costs (up $61 million) and investment related costs (up $61 million); and
-Investment to improve financial crime systems and processes, cyber security and complaints management.
Other cost increases including annual salary reviews and inflationary rises were more than offset by
productivity benefits from:
-Digital capabilities increasing customer self-service including take-up of e-statements;
-Full period benefit of 45 branches closed in 2017 and 40 branches closed in 2018; and
-Benefits from organisation redesign.
Impairment
charges down
$114 million,
20%
Credit quality remains sound. Other consumer delinquencies reduced 10 basis points to 1.54% from improved
collections processes; and
Impairment charges were lower from reduced write-offs due to improved collection processes and higher
recoveries from the maturin
g of hardship changes.
2018 Westpac Group Annual Report117
1
1

Business Bank
Business Bank (BB) is responsible for sales and service to SME and commercial business customers in Australia for 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, and
property finance. The division is also responsible for consumer customers with auto finance loans. BB works in an integrated way with
BTFG and WIB in the sales, referral 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.
Financial performance
2018 v 2017
Cash earnings increased 8% ($156 million), compared to 2017 from net operating income before operating expenses and impairment
charges growth of 5% and a 15% decline in impairment charges. The result was supported by increased fee income and higher net
interest margins.
Divisional performance
$m201820172016
Net interest income
4,0653,8853,766
Non-interest income
1,1891,1411,089
Net operating income before operating expenses and impairment charges
5,2545,0264,855
Operating expenses
(1,876)(1,818)(1,774)
Impairment charges
(291)(343)(386)
Profit before income tax
3,0872,8652,695
Income tax expense
(928)(862)(810)
Cash earnings for the year
2,1592,0031,885
Net cash earnings adjustments
(2)(10)(10)
Net profit attributable to owners of Westpac Banking Corporation
2,1571,9931,875
$bn$bn$bn
Deposits and other borrowings
110.8107.099.8
Net loans
152.7149.4145.5
Total assets
156.5153.1148.9
Total operating expenses to net operating income ratio
35.71%36.17%36.54%
Net interest
income up
$180 million,
5%
Lending growth of 2% was supported by diversified growth across industries including property, agriculture and
manufacturing and in equipment finance. Mortgage growth slowed through the year as demand for investment
lending slowed;
The 7% increase in term deposits, and 5% higher transaction balances supported the 4% increase in deposits;
and
Net interest margin was up 5 basis points from repricing of certain mortgages types in the second half of 2017
and higher deposits spreads. These were partly offset by the full period impact of the Bank Levy (5 basis
points).
Non-interest
income up $48
million, 4%
Higher business line fees from portfolio growth and pricing for facilities, including unused limits.
Operating
expenses up
$58 million, 3%
Most of the increase was due to higher investment related costs and regulatory and compliance costs;
Increases from other costs were largely offset by productivity benefits from:
-Improved banker coverage and support structures;
-Better alignment of customers to bankers across SME and industries; and
-Process improvements from the extension of LOLA, improved online functionality and standardising risk
reviews
.
Impairment
charges down
$52 million,
15
%
Impairment charges benefited from lower credit card and auto write-offs; and
The level of stressed assets to TCE increased 58 basis points to 2.71% from 2.13%. Most of the increase was
from Commercial customers moving into stressed risk grades.
1182018 Westpac Group Annual Report

BT 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 of 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 a
third party 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 for Private Wealth and Insurance.
Financial performance
Cash earnings
Divisional performance
$m201820172016
Net interest income
578511460
Non-interest income
1,6481,7441,908
Net operating income before operating expenses and impairment charges
2,2262,2552,368
Operating expenses
(1,291)(1,199)(1,184)
Impairment (charges)/benefits
(6)(4)-
Profit before income tax
9291,0521,184
Income tax expense
(284)(316)(352)
Profit attributable to non-controlling interests
---
Cash earnings for the year
645736832
Net cash earnings adjustments
(73)160(32)
Net profit attributable to owners of Westpac Banking Corporation
572896800
$bn$bn$bn
Deposits and other borrowings
33.030.726.6
Net loans
21.020.118.6
Total assets
34.935.238.2
Total funds
205.6191.4179.2
Total operating expenses to net operating income ratio
58.00%53.17%50.00%
$m201820172016
Funds management business
327413498
Insurance
278290305
Capital and other
403329
Total cash earnings
645736832
2018 Westpac Group Annual Report119

2018 v 2017
Cash earnings were 12% lower ($91 million) than 2017 impacted by additional provisions for estimated customer refunds and payments
and associated costs. Excluding these items, performance was down 1% over the year. Disciplined balance sheet growth, and lower
weather related insurance claims were offset by a lower Advice contribution, fund margin compression and higher life insurance claims
.
Divisional performance
Net interest
income up $67
million, 13%
The 4% increase in lending was mostly in mortgages in Private Wealth. Deposits increased 7%, supported by
an increase in term deposits, as customers looked for yield; and
Net interest margin was up 20 basis points due to disciplined margin management combined with repricing of
certain mortgage types and term deposits. This was partly offset by the full period impact of the Bank Levy, an
increase of $15 million.
Non-interest
income down
$96 million, 6%
Funds Management contribution was down $103 million (or 9%):
-Increase in provisions for estimated customer refunds and payments ($57 million);
-Lower advice income, mostly from reduced activity ($37 million);
-Contribution from Pendal (previously BT Investment Management) was $17 million lower, following the
further sale of shares in Pendal in May 2017;
-Partly offset by a reduced revaluation loss from investments in boutique funds ($22 million) and higher
seed pool performance ($5 million);
-Funds related revenue was also higher ($10 million), from a 7% growth in funds, partly offset by lower
margins from repricing and product mix changes; and
-Panorama has seen funds on the platform increased from $6.7 billion to $12.4 billion (up 85%). These
gains have been partially offset by net outflows on legacy platforms.
Insurance income was $13 million or 3% higher;
-General insurance was $29 million higher, mostly from lower claims for major weather events;
-Life insurance was $8 million higher from an increase in in-force premiums relating to Group Insurance for
BTFG Corporate Super. These gains were partly offset by higher claims and lapses;
-Provisions for estimated customer refunds and payments reduced insurance income by $6 million; and
-LMI contribution was lower ($17 million) from a reduction in loans originated with an LVR >90%.
Return on capital decreased $6 million mostly due to higher hedging costs.
Operating
expenses up
$92 million, 8%
Increase mostly due to:
-Provisions for the costs associated with customer refunds and payments ($55 million);
-Investment costs ($44 million) from the roll-out of additional functionality in Panorama, the implementation of
BT Open Services and removing grandfathered commissions across systems;
Regulatory costs were lower due to the completion of the MySuper migration and FoFA (Future of Financial
Advice); and
Productivity savings largely offset other costs increases, including annual salary reviews, property and
technology related spending.
1202018 Westpac Group Annual Report

Funds management business
Insurance business
The Insurance business result includes the Westpac and St.George Life Insurance, General Insurance and Lenders Mortgage
Insurance (LMI) businesses.
Divisional performance
$m201820172016
Net interest income
572496445
Non-interest income
1,0801,1831,334
Net operating income before operating expenses and impairment charges
1,6521,6791,779
Operating expenses
(1,171)(1,084)(1,069)
Impairment (charges)/benefits
(7)(3)-
Profit before income tax
474592710
Income tax expense
(147)(179)(212)
Profit attributable to non-controlling interests
---
Cash earnings for the year
327413498
Net cash earnings adjustments
(73)160(32)
Net profit attributable to owners of Westpac Banking Corporation
254573466
Total operating expenses to net operating income ratio
70.88%64.56%60.09%
$m201820172016
Net interest income
510 7
Non-interest income
512499525
Net operating income before operating expenses and impairment charges
517509532
Operating expenses
(115)(99)(95)
Profit before income tax
402410437
Income tax expense
(124)(120)(132)
Cash earnings for the year
278290305
Net cash earnings adjustments
---
Net profit attributable to owners of Westpac Banking Corporation
278290305
Total operating expenses to net operating income ratio
22.24%19.45%17.86%
2018 Westpac Group Annual Report121

Westpac 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.
Financial performance
2018 v 2017
Cash earnings were $73 million or 6% lower than 2017 mostly due to lower markets revenue. The decline was partially offset by higher
net interest margins and an impairment benefit. In 2018 the division exited the Hastings business which lifted both revenues and
expenses (and contributed to a higher tax rate) but had little impact on cash earnings.
Divisional performance
$m201820172016
Net interest income
1,4161,3281,421
Non-interest income
1,5561,7071,537
Net operating income before operating expenses and impairment charges
2,9723,0352,958
Operating expenses
(1,446)(1,351)(1,374)
Impairment (charges)/benefits
38(56)(177)
Profit before income tax
1,5641,6281,407
Income tax expense
(473)(462)(421)
Profit attributable to non-controlling interests
(5)(7)(7)
Cash earnings for the year
1,0861,159979
Net cash earnings adjustments
---
Net profit attributable to owners of Westpac Banking Corporation
1,0861,159979
$bn$bn$bn
Deposits and other borrowings
104.892.193.7
Net loans
77.274.174.0
Total assets
102.4103.1110.6
Total operating expenses to net operating income ratio
48.65%44.51%46.45%
Net interest
income up $88
million, 7%
Lending was up 4%, from increased utilisation of mortgage warehouse facilities and a fall in the A$ lifting Asia
trade finance and loan balances;
Deposits increased 14% from higher Australian transaction balances and term deposits. Asia term deposits
also increased due to foreign exchange translation impacts and to support lending in that region; and
Net interest margin was up 6 basis points, from higher transaction deposit margins and reduced wholesale
fundin
g costs. This was partially offset by the full period impact of the Bank Levy (5 basis points).
Non-interest
income down
$151 million,
9%
Hastings contribution up $110 million, mainly from income associated with the exit of Hastings business;
Excluding Hastings, non-interest income was down $261 million, or 16%, primarily from the non-repeat of
several large infrastructure transactions and lower markets revenue in fixed income sales and trading; and
Fee income was also lower from increased utilisation of existing credit limits.
Operating
expenses
up $95 million,
7%
Hastings operating expenses up $87 million, from goodwill write-off and restructuring costs associated with the
exit of the business; and
Excluding Hastings, operating expenses were up $8 million, or 1%, due to higher technology, regulatory and
com
pliance expenses.
Impairment
charge positive
movement of
$94 million
Stressed and impaired assets to TCE decreased over the year; and
The movement in impairment charges was due to the absence of any large downgrade over the year.
1222018 Westpac Group Annual Report

Westpac 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. New Zealand also maintains its own infrastructure, including technology, operations and treasury.
Financial performance
Refers to total customer deposits in this table.
Divisional performance
$m201820172016
Net interest income
1,7201,6291,606
Non-interest income
438480483
Net operating income before operating expenses and impairment charges
2,1582,1092,089
Operating expenses
(860)(903)(889)
Impairment (charges)/benefits
(2)72(54)
Profit before income tax
1,2961,2781,146
Income tax expense
(362)(361)(321)
Profit attributable to non-controlling interests
---
Cash earnings for the year
934917825
Net cash earnings adjustments
13(14)2
Net profit attributable to owners of Westpac Banking Corporation
947903827
$bn$bn$bn
Deposits and other borrowings
56.753.754.9
Net loans
73.671.171.7
Total assets
82.481.382.1
Total funds
9.89.39.1
Total operating expenses to net operating income ratio
39.85%42.82%42.56%
2018 Westpac Group Annual Report123
1
1

2018 v 2017
Cash earnings increased 2% over the year supported by a 13 basis point increase in net interest margin, and a 5% decline in
expenses, partly offset by lower non-interest income. 2018 recorded an impairment charge of $2 million compared to an impairment
benefit in 2017.
Source: RBNZ
Calculated in NZ$.
Divisional performance
Net interest
income up $91
million, 6%
Loans increased $2.5 billion (4%), with the majority ($1.6 billion) in mortgages. Business growth of $1.0 billion
was across a broad range of sectors. Overall consumer lending was below system as the division balanced
return with growth;
Deposits increased $3 billion, more than funding loan growth over the year, and resulting in the deposit to loan
ratio increasing 144 basis points to 77.0% . Most deposit growth was in term products as customers sought
higher yields; and
Net interest margin was 13 basis points higher from increased mortgage and business lending spreads, partly
offset b
y lower deposit spreads.
Non-interest
income down
$42 million,9%
Decline was driven by lower cards income, product simplification (reducing some fees on existing accounts)
and customer migration to lower/no fee digital channels; and
Higher investment income from a 5% rise in funds and higher merchant and business lending fees, partly offset
these declines.
Operating
expenses down
$43 million, 5%
Benefits from the transformation program include a reduction in branch numbers (down 6 over the year), lower
FTE, and increased self-service from digitisation;
Project costs associated with the transformation program were also lower; and
Partly offsetting these benefits were increased risk management and regulatory costs and higher costs from
annual salar
y reviews and inflation.
Impairment
charge of $2m
compared to an
impairment
benefit of $72
million
Credit quality improved with stressed assets to TCE reducing 49 basis points to 1.57% . The decline was
mostly due to the continued improvement in the dairy sector. Consumer 90+ day delinquencies remain low;
and
Impairment charges were higher due to the non-repeat of write-backs of some large facilities and improvement
in the dairy industry across 2017.
1242018 Westpac Group Annual Report
1
22
22
1
2

Group Businesses
This segment comprises:
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;
Group Technology , which comprises functions for the Australian businesses, is responsible for technology strategy and
architecture, infrastructure and operations, applications development and business integration;
Core Support , which comprises functions performed centrally, including Australian banking operations, property services, strategy,
finance, risk, compliance, legal, human resources and customer and corporate relations; and
Group Businesses also includes earnings on capital not allocated to divisions, 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 Grou
p’s Fintech investments, and certain other head office items such as centrally raised provisions.
Financial performance
2018 v 2017
Cash earnings increased $9 million primarily from higher Treasury revenue and earnings on capital, partly offset by increased operating
expenses and a lower impairment benefit.
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.
Divisional performance
$m201820172016
Net interest income812713827
Non-interest income35(33)8
Net operating income before operating expenses and impairment charges847680835
Operating expenses(571)(456)(398)
Impairment benefits
2439
Profit before income tax278267446
Income tax (expense)/benefit(178)(175)(148)
Profit attributable to non-controlling interests1-(8)
Cash earnings for the year10192290
Net cash earnings adjustments107(92)(221)
Net profit attributable to owners of Westpac Banking Corporation
208-69
Net operating
income before
operating
expenses and
impairment
charges up
$167 million,
25%
Net interest income increased $99 million primarily from Treasury revenue related to Australian interest rate
risk management and increased earnings from centrally held capital; and
Non-interest income increased $68 million primarily due to the impact of New Zealand earnings hedges and
a $10 million gain on asset sales.
Operating
expenses up
$115 million,
25%
Higher regulatory and compliance costs, including costs associated with the Royal Commission, and
estimated provisions for litigation;
Higher restructuring costs; and
Expenses associated with the Group’s fintech investments.
Impairment
benefit down
$41 millio
n
Movements in impairments reflect a $2 million benefit from a reduction to centrally held overlays during 2018,
compared to a $43 million benefit in 2017.
2018 Westpac Group Annual Report
125
1
2
1
2

Divisional performance – 2017 v 2016
Consumer Bank
2017 v 2016
The 5% rise in cash earnings to $3,155 million, was due to balance sheet growth and disciplined expense management.
Business Bank
2017 v 2016
Cash earnings of $2,003 million was $118 million, or 6% higher than 2017 from net operating income before operating expenses and
impairment charges growth of 4% and an 11% decline in impairment charges. The result was supported by increased fee income,
balance sheet growth and productivity gains.
Source: RBA September 2017.
Divisional performance
Net interest
income up $370
million, 5%
Mortgages growth was slightly below system . The decline in other lending was in credit cards and personal
loans (in line with lower system balances);
The above system growth in deposits included a 9% lift in transaction account balances; and
Net interest margin was 3 basis points lower primarily from higher wholesale funding and deposits costs,
partly offset by some repricing and continued discipline on discounting.
Non-interest
income down
$50 million, 6%
Decline mostly due to lower cards income (net impact of interchange fee changes, loyalty point redemption
costs, and a prior year benefit not repeated) and provisions for customer refunds and payments, partly offset
by;
Some fee repricing and higher foreign exchange income.
Operating
expenses up
$66 million, 2%
Higher technology and investment related costs;
A rise in regulatory and compliance spending;
Increased product development and marketing costs; and
Productivity benefits largely offset business as usual expense increases.
Impairment
charges up $49
million, 9%
Higher impairments were mostly due to an increase in mortgage IAPs for regions impacted by the slowing of
the mining investment cycle and CAPs for hardship changes in the other consumer lending portfolio; and
90+ day other consumer loan delinquencies were higher mostly due to changes in the measurement and
reporting of customers in hardship arrangements. Excluding hardship changes, 90+ day delinquencies
improved.
Net interest
income up $119
million, 3%
Lending growth of 3% was due to growth in SME and targeted industries while commercial property lending
was lower from optimising risk return profile;
The 7% increase in deposits was supported by an increase in transactional balances; and
Net interest margin was little changed over the year. Asset spreads were higher following some repricing,
althou
gh these were offset by lower deposit spreads and higher wholesale funding costs.
Non-interest
income up $52
million, 5%
Higher line fees from both portfolio growth and some repricing for facilities; and
Fees were also supported by the growth in transaction balances and repricing.
Operating
expenses up
$44 million, 2%
Business as usual cost increases were largely offset by efficiency gains from digitisation of processes and
streamlining in the division’s service model including specialist industry teams and more targeted handling of
customer service requests; and
Increased investment spending and technology costs led to most of the increase
Impairment
charges down
$43 million,
11%
Lower impairments were principally due to improved collections processes for auto finance. This was partly
offset by increased provisions across the property, construction, mining and manufacturing sectors,
particularly in Queensland; and
Credit quality remains sound, with total stressed assets to TCE lower. Auto delinquencies were higher due
to the changes in hardship reporting.
1262018 Westpac Group Annual Report
1
1

BT Financial Group (Australia)
2017 v 2016
Cash earnings was 12% lower than full year 2016, impacted by a number of infrequent items totalling $129 million before tax. The cash
earnings impact of infrequent items (after tax) includes provisions for customer refunds and payments ($58 million), revaluation loss on
investments in boutique funds ($24 million) and lower revenue following the further sale of shares in BTIM ($10 million). The underlying
business was flat over the year with volume growth partly offset by lower FUM and FUA margins, lower Advice activity levels, higher
insurance claims and increased regulatory and compliance costs.
Westpac Institutional Bank
2017 v 2016
Cash earnings of $1,159 million, was $180 million or 18% higher compared to 2016, supported by higher customer and trading income,
disciplined expense management and lower impairments.
Divisional performance
Net interest
income up $51
million, 11%
Balance sheet growth in Private Wealth, deposits up 15% and loans up 8%; and
Net interest margin was up 14 basis points mostly due to repricing of certain mortgages and improved term
deposit spreads.
Non-interest
income down
$164 million,
9%
Funds Management contribution was down $151 million:
-infrequent items indicated above ($129 million);
-advice income was lower mostly from reduced activity ($33 million); and
-FUM and FUA revenue was higher with growth in average FUM and FUA (10% and 7% respectively)
offsetting lower margins from product mix changes, including the migration to MySuper products. FUM
and FUA net flows were $4 billion for the year.
Insurance income was down $26 million (or 5%);
-general insurance income was lower ($33 million) mostly from higher claims concentrated in the first half
of the year;
-life insurance income was flat as the 10% growth in in-force premiums and improved lapses were offset
by higher claims; and
-LMI contribution was higher mostly due to the arrangements for loans with a LVR >90%.
Partly offsetting this was improved returns on capital mostly related to lower hedging costs.
Operating
expenses up
$15 million, 1%
Regulatory and compliance costs were $28 million higher over the year;
Investment related spending was up from costs associated with the launch of Panorama; and
Productivity benefits mostly offset these increases.
Net interest
income down
$93 million, 7%
Average loan balances were lower over the year, which contributed to lower net interest income; partly offset
by
2 basis points improvement in net interest margin from the run-down in lower returning assets and pricing
disciplines.
Non-interest
income up $170
million, 11%
Higher trading revenue across both fixed income and commodities;
Customer revenue was higher reflecting some larger customer transactions; and
Positive movement in derivative valuation adjustments.
Operating
expenses down
$23 million, 2
%
Disciplined operating expense management, productivity initiatives and lower investment in Asia contributed
to the 2% reduction in operating expenses.
Impairment
charges down
$121 million,
68%
Asset quality was sound, with the ratio of impaired assets to TCE down 26 basis points following the work-
out and write-off of some larger facilities; and
The lower charge was partly due to higher impairment charges in 2016 with increased provisions for the
downgrade of a small number of large names.
2018 Westpac Group Annual Report127

Westpac New Zealand
2017 v 2016
Cash earnings up 11% to $917 million, with an impairment benefit of $72 million, from higher write-back and recoveries. Net operating
income before operating expenses and impairment charges was up 1%, with volume growth offset by margin decline. Operating
expenses were up 2% driven by investment in the division’s transformation program.
Group Businesses
2017 v 2016
Cash earnings decreased by $198 million from lower Treasury revenue, increased expenses and a higher tax expense.
Divisional performance
Net interest
income up $23
million, 1%
Excluding foreign currency translation impacts, loan growth of 3% was mostly in mortgages, up 4% with
business lending 1% higher;
Excluding foreign currency translation impacts, deposits growth of 2% was mostly in term deposits (3%) with
customers preferring higher rate term products over at call accounts;
Net interest margin was 13 basis points lower mostly from increased deposit competition and increased
wholesale funding costs, partly offset by;
Repricing of certain mortgages and business loans.
Non-interest
income down
$3 million, 1%
Increased investment income (from a 6% increase in FUM and FUA excluding foreign currency translation
impacts) and higher cards income were offset by higher insurance claims and lower banking fees following
the removal of some consumer fees.
Operating
expenses up
$14 million, 2%
The increase was principally due to costs of and investment in the division’s transformation program; and
Outside of this increase operating expenses were 3% lower through a range of productivity initiatives
including a net reduction of 20 branches, a 3% reduction in FTE, increased self-serve adoption and the
di
gitisation of more processes.
Impairment
benefit of $72
million
compared to a
$54 million
impairment
char
ge.
Asset quality remained sound with stressed assets to TCE reducing 48 basis points to 2.06%. The decline
was due to reduction of stress in the dairy sector (improving milk prices). Consumer 90+ day delinquencies
were a little higher but continue to be near historical lows; and
The impairment benefit reflects the work-out and write-back of a few large facilities combined with the lower
levels of stress.
Net operating
income down
$155 million,
19%
Net interest income decreased $114 million largely from lower Treasury revenue related to interest rate risk
management; and
Non-interest income decreased $41 million primarily due to the impact of exchange rate movements on the
hed
ging of New Zealand earnings.
Operating
expenses up
$58 million,
15
%
Increase in operating expenses primarily from higher expenses associated with the Group’s fintech
investments and higher regulatory and compliance costs.
Impairment
charges up $34
million
Impairment charge increased $34 million due to an increase to the centrally held economic overlay
provisions, largely related to the mining sector. This reduction offsets provisions raised in divisions.
Tax and non-
controlling
interests up $19
million, 12%
Tax and non-controlling interests increased $19 million, as 2016 benefitted from the finalisation of prior
period taxation matters, and hybrid distributions (not deductible for tax purposes) were also higher in 2017.
1282018 Westpac Group Annual Report

Risk factors
Our business is subject to risks that can adversely impact our financial performance, financial condition and future performance. If any
of the following risks occur, our business, prospects, reputation, financial performance or financial condition could be materially
adversely affected, with the result that the trading price of our securities could decline and as a security holder you could lose all, or
part, of your investment. You should carefully consider the risks described and the other information in this Annual Report before
investing in our securities. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties
that we are unaware of, or that we currently deem to be immaterial, may also become important factors that affect us.
Risks relating to our business
Our businesses are highly regulated and we could be adversely affected by changes in laws, regulations or regulatory policy
As a financial institution, we are subject to detailed laws and regulations in each of the jurisdictions in which we operate or obtain
funding, including Australia, New Zealand, the United Kingdom, the United States and various jurisdictions in Asia and the Pacific. We
are also supervised by a number of different regulatory and supervisory authorities which have broad administrative powers over our
businesses. In Australia, the relevant regulatory authorities include the Australian Prudential Regulation Authority (APRA), Reserve
Bank of Australia (RBA), Australian Securities and Investments Commission (ASIC), Australian Securities Exchange (ASX), Australian
Competition and Consumer Commission (ACCC), the Australian Transaction Reports and Analysis Centre (AUSTRAC) and the
Australian Taxation Office (ATO). The Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA) have
supervisory oversight of our New Zealand operations. In the United States, we are subject to supervision and regulation by the US
Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Commodity Futures
Trading Commission (CFTC), the US Securities and Exchange Commission (SEC), the Office of Foreign Assets Control (OFAC) and
the National Futures Association (NFA). In the United Kingdom, we are subject to supervision and regulation by the Financial Conduct
Authority (FCA) and the Prudential Regulation Authority (PRA). In Asia, we are subject to supervision and regulation by local
authorities, including the Monetary Authority of Singapore (MAS), the China Banking Regulatory Commission (CBRC) and the Hong
Kong Monetary Authority (HKMA). In other jurisdictions in which we operate, we are also required to comply with relevant requirements
of the local regulatory bodies.
The Group’s business, prospects, reputation, financial performance and financial condition could all be affected by changes to law and
regulation, changes to policies and changes in the supervisory activities and expectations of our regulators.
As with other financial services providers, we face increasing supervision and regulation in most of the jurisdictions in which we operate
or obtain funding particularly in the areas of funding, liquidity, capital adequacy, prudential regulation, tax, anti-money laundering and
counter-terrorism financing, conduct, consumer protection (including in the design and distribution of financial products), remuneration,
competition (including through the introduction of changes to the Competition and Consumer Act 2010 (Cth) following recommendations
by the Competition Policy Review chaired by Professor Ian Harper), privacy (including mandatory data breach notification obligations),
data access and data protection (including through the introduction of the EU General Data Protection Regulation), information security,
anti-bribery and corruption, and economic and trade sanctions.
Regulatory changes could impact us in a number of ways. For example, new regulation could require us to have increased levels of
liquidity and higher levels of, and better quality, capital and funding. Regulatory change could also result in restrictions on how we
operate our business by imposing restrictions on the types of businesses we can conduct, requiring us or our competitors to change our
business models or requiring us to amend our corporate structure. For example, Westpac’s business model may change with the
phasing in of open banking. Further details about open banking are set out in ‘Significant developments’ in Section 1.
If regulatory change has any such effect, it could adversely affect one or more of our businesses, restrict our flexibility, require us to
incur substantial costs and could impact the profitability of one or more of our business lines. Any such costs or restrictions could
adversely affect our business, prospects, financial performance or financial condition.
Regulation may also affect how we provide products and services to our customers. New laws and regulations could restrict our ability
to provide products and services to certain customers (including by imposing regulatory limits on certain types of lending and on lending
to certain customer segments), require us to alter our product and service offerings, restrict our ability to set prices for certain products
and services or require us to alter the pricing that applies to products and services provided to new and existing customers. These
types of changes could affect our profitability by adversely affecting our ability to maintain or increase margins and fees. This could
occur because a regulation seeks to place a cap on the price of a product or service we provide, or because, in response to new
regulation, we increase the price we charge for a product or service. This price increase could lead to customers seeking out alternative
products or services, whether within the Group or with a competitor (including customers switching residential mortgages from interest-
only to principal and interest).
Risk and risk management
2018 Westpac Group Annual Report
129

There are numerous sources of regulatory change that could affect our business. In some cases, changes to regulation are driven by
international bodies. For example, in December 2010, the Basel Committee on Banking Supervision (BCBS) announced a revised
global regulatory framework known as Basel III. Basel III, among other things, increased the required quality and quantity of capital held
by banks and introduced new standards for the management of liquidity risk. The BCBS announced the finalisation of this framework in
December 2017, while, in July 2017, APRA took steps to implement the next wave of capital requirements for banks by clarifying its
expectations for banks to hold ‘unquestionably strong’ levels of capital, and during 2018 released further discussion papers on the
implementation of the revised capital framework, which APRA has stated is likely to come into effect on 1 January 2021. In other cases,
authorities in the various jurisdictions in which we operate or obtain funding may propose regulatory change for financial institutions.
Examples of proposed regulatory change that could impact us include changes to accounting and reporting standards, derivatives
reform and changes to tax legislation (including dividend imputation). Further details on regulatory changes that may impact Westpac
(including the Basel III framework) are set out in ‘Significant developments’ in Section 1.
Further changes may occur driven by policy, prudential or political factors. Westpac is currently operating in an environment where
there is increased political scrutiny of the Australian financial services sector. This environment has served to increase the pace and
scope of regulatory change. For example, as part of the Federal Government’s 2017 Budget, a series of reforms impacting the banking
sector were announced, including the introduction of the Bank Executive Accountability Regime (BEAR) and the Bank Levy on ADIs
with liabilities of at least A$100 billion. Further details about the Bank Levy and BEAR are set out in ‘Significant developments’ in
Section 1.
Legislation introduced in one jurisdiction may lead to other governments seeking to introduce similar legislation in their jurisdiction. This
was demonstrated by the South Australian Governmen
t’s proposal to introduce a levy on the banks that are subject to the Federal
Government’s Bank Levy. While the South Australian Government has announced that it will not proceed with the proposed South
Australian levy, it is possible that other governments may attempt to introduce their own version of the Bank Levy or similar legislation
in the future.
As part of the heightened political scrutiny on the financial services sector, the Australian Government, other regulators and
parliamentary bodies are increasingly initiating reviews and inquiries (such as the Royal Commission into Misconduct in the Banking,
Superannuation and Financial Services Industry, the House of Representatives Standing Committee on Economics’ ongoing ‘Review of
Australia’s Four Major Banks’, the Senate Economics References Committee’s inquiry into consumer protection in the banking,
insurance and financial sector, the Productivity Commission’s Inquiry into Competition in the Australian Financial System and the
ACCC’s Residential Mortgage Price Inquiry and Inquiry into foreign currency conversion services). These reviews and commissions of
inquiry could lead to substantial regulatory change or investigations, which could have a material impact on our business, prospects,
reputation, financial performance or financial condition.
It is also possible that governments or regulators in jurisdictions in which we operate or obtain funding might revise their application of
existing regulatory policies that apply to, or impact, our business (including by instituting macro-prudential limits on lending). Regulators
or governments may take this action for a variety of reasons, including for reasons relating to national interest and/or systemic stability.
Regulatory changes and the timing of their introduction continue to evolve and we manage our businesses in the context of regulatory
uncertainty and complexity. The nature and impact of future changes are not predictable and are beyond our control. Regulatory
compliance and the management of regulatory change are an important part of our planning processes. We expect that we will continue
to invest significantly in compliance and the management and implementation of regulatory change and, at the same time, significant
management attention and resources will be required to update existing, or implement new, processes to comply with new regulations.
Furthermore, the challenge in managing regulatory change may be heightened by multiple jurisdictions seeking to adopt a coordinated
approach to the introduction of new regulations. Where these jurisdictions elect not to adopt regulation in a uniform manner across each
jurisdiction, this may result in conflicts between the specific requirements of the different jurisdictions in which we operate.
For further information refer to ‘Significant developments’ in Section 1 and the sections ‘Critical accounting assumptions and estimates’
and ‘Future developments in Note 1 to the financial statements’.
Our businesses are highly regulated and we could be adversely affected by failing to comply with laws, regulations or
regulatory policy
We are responsible for ensuring that we comply with all applicable legal and regulatory requirements (including accounting standards)
and industry codes of practice in the jurisdictions in which we operate or obtain funding, as well as meeting our ethical standards.
The Group is subject to compliance risk, which is the risk of legal or regulatory sanction or financial or reputational loss, arising from our
failure to abide by the compliance obligations required of us. This risk is exacerbated by the increasing complexity and volume of
domestic and global regulation. Compliance risk can also arise where we interpret our regulatory obligations, compliance requirements
and rights (including in relation to tax incentives and GST recoveries) differently to our regulators or a court. The potential for this to
occur may be heightened in the period that follows the introduction of significant changes to regulation, particularly where that new
regulation is untested and/or not subject to extensive regulatory guidance.
Risk and risk management
1302018 Westpac Group Annual Report

The Group employs a compliance management system which is designed to identify, assess and manage compliance risk. This system
includes (amongst other things) frameworks, policies, procedures, controls and assurance oversight. While this system is currently in
place, it may not always have been or continue to be effective. Breakdowns may occur in this compliance management system due, for
example, to flaws in the design of controls or underlying processes. This could result in potential breaches of our compliance
obligations, as well as poor customer outcomes.
The Group also depends on its employees, contractors, agents, authorised representatives and external service providers to ‘do the
right thing’ in order for it to meet its compliance obligations. If an employee, contractor or external service provider fails to act in an
appropriate manner, such as by neglecting to follow a policy or by engaging in misconduct, these actions could result in poor customer
outcomes and a failure by the Group to comply with its compliance obligations.
The Group’s failure, or suspected failure, to comply with a compliance obligation could lead to a regulator commencing surveillance or
an investigation into the Group, which may, depending on the circumstances, result in the regulator taking administrative or
enforcement action against us (including seeking fines or other monetary penalties). In addition, the failure or alleged failure of our
competitors to comply with their compliance obligations could lead to increased regulatory scrutiny across the financial services sector.
In many cases, our regulators have broad administrative and enforcement powers. For example, under the Banking Act 1959 (Cth),
APRA can, in certain circumstances, investigate our affairs and/or issue a direction to us (such as a direction to comply with a
prudential requirement, to conduct an audit, to remove a Director, executive officer or employee, or not to undertake transactions),
disqualify an ‘Accountable Person’ under the Banking and Executive Accountability Regime or require us to hold additional capital.
Other regulators also have the power to investigate, including looking into past conduct.
The powers exercisable and penalties that can be imposed by our regulators may also be expanded in the future. For example, the
Australian Government has released an exposure draft of the Treasury Laws Amendment (Design and Distribution Obligations and
Product Intervention Power) Bill 2018 (Cth), which proposes to introduce design and distribution obligations in relation to financial
products and provide ASIC with a product intervention power. The Australian Government has also publicly endorsed a proposal by the
ASIC Enforcement Review Taskforce to expand ASIC’s powers to ban individuals working in the financial services sector, with an
exposure draft of legislation released in September 2018. In addition, the Australian Treasury released the Treasury Laws Amendment
(ASIC Enforcement) Bill 2018, which proposes to strengthen penalties for corporate and financial sector misconduct. Further details are
set out in ‘Significant developments’ in Section 1.
Changes may also occur in the oversight approach of regulators which could result in a regulator exercising its enforcement powers
rather than adopting a more consultative approach. There have also been recent announcements for regulators to embed staff within
the institutions they supervise, with the Australian Government announcing an increase in ASIC’s funding in order to implement this
type of supervisory approach.
In recent years, there have been significant increases in the nature and scale of regulatory investigations, enforcement actions and the
quantum of fines issued by global regulators. The nature of regulatory activity can be wide-ranging and may result in litigation, fines,
penalties, infringement notices, reputational damage, revocation, suspension or variation of conditions of relevant regulatory licences
(including potentially requiring us to change or adjust our business model) or other enforcement or administrative action or agreements
(such as enforceable undertakings).
For example:
In April 2016, ASIC commenced civil proceedings against Westpac in the Federal Court of Australia, alleging certain misconduct in
relation to the setting of the bank bill swap reference rate in the period April 2010 to June 2012, including market manipulation and
unconscionable conduct. Westpac defended these proceedings with the trial concluding in late 2017. On 24 May 2018, Justice
Beach found that Westpac had not engaged in market manipulation or misleading or deceptive conduct under the Corporations Act
2001 (Cth). His Honour also found that there was no ‘trading practice’ of manipulating the BBSW rate. However, the Court found
that Westpac engaged in unconscionable conduct on 4 occasions and that Westpac breached its supervisory duty. Costs and
penalties will be determined in the coming months;
On 1 March 2017, ASIC commenced civil proceedings against Westpac in the Federal Court of Australia in relation to certain home
loan responsible lending practices (including interest-only lending). On 4 September 2018, Westpac and ASIC agreed to settle the
proceedings on the basis of a proposed $35 million penalty and declarations that Westpac contravened the National Consumer
Credit Protection Act 2009 (Cth). The proposed settlement is subject to Court approval; and
On 15 March 2017, Westpac entered into an enforceable undertaking with ASIC following ASIC’s industry-wide investigation into
wholesale Spot Foreign Exchange (FX) trading activity between January 2008 and June 2013. As part of the enforceable
undertaking, Westpac undertook, amongst other things, to continue to progress its program of strengthening its policies and
processes in its Spot FX trading business, with input from an independent expert.
Furthermore, regulatory action may result in Westpac being exposed to the risk of litigation brought by third parties (including through
class action proceedings). The outcome of such litigation (including class action proceedings) may be payment of compensation to third
parties and/or further remediation activities. In addition, action taken in one jurisdiction may prompt similar action to be taken in another
jurisdiction.
Risk and risk management
2018 Westpac Group Annual Report131

During the year ended 30 September 2018, Westpac has responded to requirements, compulsory notices and requests for information
from its regulators and the Royal Commission as part of both industry-wide and Westpac-specific reviews, including in relation to
matters involving the quality of advice, ongoing advice services, employers and superannuation, insurance and superannuation, life
insurance and total and permanent disability arrangements, remuneration arrangements, responsible lending (including collections and
hardship), credit cards, loan application fraud, mortgage-related conduct, commercial lending, consumer credit insurance and anti-
money laundering and counter-terrorism financing.
Regulatory investigations, inquiries, litigation, fines, penalties, revocation, suspension or variation of conditions of relevant regulatory
licences or other enforcement or administrative action or agreements (such as enforceable undertakings) could, either individually or in
aggregate with other regulatory action, adversely affect our business, prospects, reputation, financial performance or financial condition.
The failure to comply with financial crime obligations could have an adverse effect on our business and reputation
The Group is subject to anti-money laundering and counter-terrorism financing laws, anti-bribery and corruption laws and economic and
trade sanctions laws in the jurisdictions in which it operates. These laws can be complex and in some circumstances, impose a diverse
range of obligations. For example, anti-money laundering and counter-terrorism financing laws require Westpac and other regulated
institutions to (amongst other things) undertake customer identification and verification, conduct ongoing due diligence on certain
classes of customer, maintain and comply with an AML/CTF program, undertake ongoing risk assessments and report certain matters
and transactions to regulators (including in relation to International Funds Transfer Instructions, Threshold Transaction Reports and
Suspicious Matter Reports). Furthermore, financial crime laws are also undergoing change in a number of jurisdictions.
In recent years there has been increased focus on compliance with financial crime obligations, with regulators around the globe
commencing large-scale investigations and taking enforcement action where they have identified non-compliance (often seeking
significant monetary penalties).
While the Group has systems, policies, processes and controls in place that are designed to manage its financial crime obligations
(including its reporting obligations), these may not always have been or continue to be effective. If we fail to comply with these
obligations, we could face regulatory action such as litigation, fines, penalties and the revocation, suspension or variation of licence
conditions. Non-compliance could also lead to litigation commenced by third parties (including class action proceedings) and cause
reputational damage. These actions could, either individually or in aggregate, adversely affect our business, prospects, reputation,
financial performance or financial condition.
Reputational damage could harm our business and prospects
Our ability to attract and retain customers and our prospects could be adversely affected if our reputation is damaged.
Reputation risk is the risk of loss of reputation, stakeholder confidence or public trust and standing. It arises where there are differences
between stakeholders’ current and emerging perceptions, beliefs and expectations and our current and planned activities, processes,
performance and behaviours.
Westpac is currently undertaking a number of reviews to identify and resolve prior issues that have the potential to impact customers
and reputation. As part of these reviews, we are strengthening our processes and controls in certain businesses and we have identified
some prior instances where we are now taking action to put things right so that our customers are not at a disadvantage from certain
past practices. For further information about these and other internal reviews, refer to Note 31 to the financial statements.
There are various potential sources of reputational damage. Westpac’s reputation may be damaged where any of its policies,
processes, practices or behaviours result in a negative outcome for a customer or a class of customers. Other potential sources of
reputational damage include the failure to effectively manage risks in accordance with our risk management frameworks, potentia
l
confli
cts of in
terest, failure to comply with legal and regulatory requirements, failure to meet our market disclosure obligations,
regulatory investigations into past conduct, adverse findings from regulatory reviews (including Westpac-specific and industry-wide
reviews), making inaccurate public statements, environmental, social and ethical issues, engagement and conduct of external suppliers,
failure to comply with anti-money laundering and counter-terrorism financing laws, anti-bribery and corruption laws, economic and trade
sanctions legislation or privacy laws, litigation, failure of information security systems, improper sales and trading practices, failure to
comply with personnel and supplier policies, improper conduct of companies in which we hold strategic investments, technology failures
and security breaches and inadequate record keeping which may prevent Westpac from demonstrating that a past decision was
appropriate at the time it was made.
Westpac may incur reputational damage where its conduct, practices, behaviours or business activities fall below evolving community
standards and expectations. As these expectations may exceed the standard required in order to comply with the law, Westpac may
incur reputational damage even where it has met its legal obligations. A divergence between community expectations and Westpac’s
practices could arise in a number of ways, including in relation to our product and services disclosure practices, the features and
benefits available under our products, lending practices, remuneration structures, pricing policies and the use and protection of data.
Our reputation could also be adversely affected by the actions of the financial services industry in general or from the actions of our
competitors, customers, suppliers, joint-venture partners, strategic partners and other counterparties.
Risk and risk management
132
2018 Westpac Group Annual Report

Furthermore, the risk of reputational damage may be heightened by factors such as the increasing use of social media or the increasing
prevalence of groups which seek to publicly challenge the Group’s strategy or approach to aspects of its business.
Failure, or perceived failure, to appropriately address issues that could or do give rise to reputational risk could also impact the
regulatory change agenda, give rise to additional legal risk, subject us to regulatory investigations, regulatory enforcement actions, fines
and penalties or litigation brought by third parties (including class actions), require us to remediate and compensate customers and
incur remediation costs or harm our reputation among customers, investors and the marketplace. This could lead to loss of business
which could adversely affect our business, prospects, financial performance or financial condition
.
The Royal Commission may lead to regulatory enforcement activity, litigation and changes in laws, regulations or regulatory
policy, as well as potentially result in further and ongoing reputational damage to the Group, all of which is and may continue
to have an adverse effect on our business and prospects
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is currently investigating
(amongst other things) whether any conduct, practices, behaviours or business activities engaged in by financial services entities
amounted to potential misconduct, or fell below community standards and expectations. The Royal Commission is currently scheduled
to provide its final report and recommendations to the Australian Government by 1 February 2019. There is a possibility that the
deadline for the report will be extended in the future.
The Royal Commission’s inquiries have made public, and are likely to continue to make public, instances where the Group or entities or
persons associated with the Group engaged in potential misconduct or failed to meet community standards and expectations. The
Royal Commission’s Terms of Reference are broad and enable the Royal Commission to investigate potential misconduct in a wide
range of areas. The public hearings of the Royal Commission have to date examined consumer lending practices, the provision of
financial advice, business lending to small and medium enterprises, experiences with financial entities in regional and remote
communities, superannuation and insurance. These investigations, including the public hearings, submissions, evidence and eventual
findings of the Royal Commission, have had, and are likely to continue to have, an adverse impact on the Group’s reputation and
potentially the financial performance of the business. The Royal Commission may make findings that Westpac (including persons or
entities acting on its behalf) has engaged in misconduct. These findings may lead to regulators commencing investigations and/or
enforcement action against the Group. The Group may also be exposed to an increased risk of litigation involving third parties
(including class action proceedings) in connection with matters raised publicly at the Royal Commission, particularly if the Royal
Commission makes a finding of misconduct affecting the Group or the industry in a way that affects the Group.
The Interim Report of the Commission released on 28 September 2018 outlined a range of views the Commissioner has formed to date
based on the information and hearings so far and has requested submissions on key areas of policy that might affect or address
misconduct in the financial services industry. Many of those matters could have significant impacts on particular entities (including
Westpac), the banking sector and the financial performance of banks. Recommendations may include matters which could cause
structural change to the market and/or business models employed within the market. Westpac made submissions in relation to the
questions posed in the Interim Report on 26 October.
Under the Royal Commission’s Terms of Reference, it is required 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, the Royal Commission is likely, in its final
report, to recommend changes to Australia’s legal framework, which the Federal Government may pass into legislation. The Royal
Commission is also considering the regulation and enforcement practices of our regulators. Any findings or recommendations made by
the Royal Commission, may result in our regulators altering their existing policies and practices (including increasing their expectations
for entities that they regulate). Depending on the nature of any changes to Australia’s legal framework and/or the policies and practices
of our regulators which might be prompted by the Royal Commission, there may be an adverse effect on our business, prospects,
financial performance or financial condition.
The Royal Commission may also lead to increased political or regulatory scrutiny of the financial industry in New Zealand.
We could suffer information security risks, including cyberattacks
The proliferation of new technologies, the increasing use of the internet and telecommunications to conduct financial transactions and
the growing sophistication and activities of attackers (including organised crime and state-sponsored actors) have resulted in increased
information security risks for major financial institutions such as Westpac and our external service providers.
While Westpac has systems in place to protect against, detect and respond to cyberattacks, these systems may not always be effective
and there can be no assurance that we will not suffer losses from cyberattacks or other information security breaches in the future. If a
cyberattack is successful, technology systems might fail to operate properly or become disabled and it could result in the unau
thorised
re
le
ase, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information of the Group, its employees,
customers or third parties or otherwise adversely impact network access, business operations or availability of services.
In addition, as cyber threats continue to evolve, we may be required to expend significant additional resources to modify or enhance our
systems or to investigate and remediate any vulnerabilities or incidents.
Risk and risk management
2018 Westpac Group Annual Report
133

Our operations rely on the secure processing, storage and transmission of information on our computer systems and networks, and the
systems and networks of external suppliers. Although we implement measures to protect the security, integrity and confidentiality of our
information, there is a risk that the computer systems, software and networks on which we rely may be subject to security breaches,
unauthorised access, malicious software, external attacks or internal breaches that could have an adverse impact on our confidential
information or that of our customers and counterparties.
Major banks in other jurisdictions have suffered security breaches from sophisticated cyberattacks. Our external service providers or
other parties that facilitate our business activities (such as vendors, exchanges, clearing houses, central depositories and financial
intermediaries) are also subject to the risk of cyberattacks. Any such security breach could result in the loss of customers and business
opportunities, significant disruption to Westpac’s operations, misappropriation of Westpac’s confidential information and/or that of our
customers and damage to Westpac’s computers or systems and/or those of our customers. Such a security breach could also result in
reputational damage, claims for compensation and regulatory investigations and penalties, which could adversely affect our business,
prospects, financial performance or financial condition.
Our risk and exposure to such threats remains heightened because of the evolving nature of technology, Westpac’s prominence within
the financial services industry, the prominence of our customers (including government, mining and health) and our plans to continue to
improve and expand our internet and mobile banking infrastructure.
We could suffer losses due to technology failures
The reliability, integrity and security of our information and technology is crucial in supporting our customers’ banking requirements and
meeting our compliance obligations and our regulators’ expectations.
While the Group has a number of processes in place to provide for and monitor the availability and recovery of our systems, there is a
risk that our information and technology systems might fail to operate properly or become disabled as a result of events that are wholly
or partially beyond our control. If we incur a technology failure we may fail to meet a compliance obligation (such as the obligation to
retain records and data for requisite periods of time), or our customers may be adversely affected (such as where they are unable to
access online banking services for an extended period of time or where an underlying technology issue results in a customer not
receiving a product or service on the terms and conditions they agreed to). This could potentially result in reputational damage,
remediation costs and a regulator commencing an investigation and/or taking administrative or enforcement action against us.
Further, in order to continue to deliver new products and services to customers, comply with our regulatory obligations and meet the
ongoing expectations of our regulators, we need to regularly renew and enhance our technology. We are constantly managing
technology projects including projects to consolidate technology platforms, simplify and enhance our technology and operations
environment, improve productivity and provide for a better customer experience. Failure to implement these projects or manage
associated change effectively could result in cost overruns, unrealised productivity, operational instability or reputational damage. In
turn, this could place us at a competitive disadvantage and adversely affect our financial performance.
Adverse credit and capital market conditions or depositor preferences may significantly affect our ability to meet funding and
liquidity needs and may increase our cost of funding
We rely on deposits, and credit and capital markets, to fund our business and as a source of liquidity. Our liquidity and costs of
obtaining funding are related to credit and capital market conditions.
Global credit and capital markets can experience periods of extreme volatility, disruption and decreased liquidity as was demonstrated
during the Global Financial Crisis. While there have now been extended periods of stability in these markets, the environment remains
unpredictable. The main risks we face are damage to market confidence, changes to the access and cost of funding and a slowing in
global activity or other impacts on entities with whom we do business. Capital markets may also be affected by proposed changes to
US repatriation tax rules.
As of 30 September 2018, approximately 29% of our total funding originated from domestic and international wholesale markets. Of
this, around 66% was sourced outside Australia and New Zealand. Customer deposits provide around 63% of total funding. Customer
deposits held by Westpac are comprised of both term deposits which can be withdrawn after a certain period of time and at call
deposits which can be withdrawn at any time.
A shift in investment preferences could result in deposit withdrawals by customers which could increase our need for funding from
other, potentially less stable, or more expensive, forms of funding.
If market conditions deteriorate due to economic, financial, political or other reasons, there may also be a loss of confidence in bank
deposits and we could experience unexpected deposit withdrawals. In this situation our funding costs may be adversely affected and
our liquidity and our funding and lending activities may be constrained.
If our current sources of funding prove to be insufficient, we may be forced to seek alternative financing. The availability of such
alternative financing, and the terms on which it may be available, will depend on a variety of factors, including prevailing market
conditions, the availability of credit, our credit ratings and credit market capacity. Even if available, these alternatives may be more
expensive or on unfavourable terms, which could adversely affect our financial performance, liquidity, capital resources or financial
condition. There is no assurance that we will be able to obtain adequate funding, do so at acceptable prices, or that we will be able to
recover any additional costs.
Risk and risk management
1342018 Westpac Group Annual Report

If Westpac is unable to source appropriate funding, we may also be forced to reduce our lending or begin selling liquid securities. Such
actions may adversely impact our business, prospects, liquidity, capital resources, financial performance or financial condition.
Westpac enters into collateralised derivative obligations, which may require Westpac to post additional collateral based on movements
in market rates, which has the potential to adversely affect Westpac’s liquidity or ability to use derivative obligations to hedge its interest
rate, currency and other financial instrument risks.
For a more detailed description of liquidity risk, refer to ‘Funding and liquidity risk’ in Note 22 to the financial statements’.
Sovereign risk may destabilise financial markets adversely
Sovereign risk is the risk that governments will default on their debt obligations, will be unable to refinance their debts as they fall due or
will nationalise parts of their economy including assets of financial institutions such as Westpac. Sovereign defaults could negatively
impact the value of our holdings of high quality liquid assets. There may also be a cascading effect to other markets and countries, the
consequences of which, while difficult to predict, may be similar to or worse than those experienced during the Global Financial Crisis.
Such an event could destabilise global financial markets, adversely affecting our liquidity, financial performance or financial condition.
Failure to maintain credit ratings could adversely affect our cost of funds, liquidity, competitive position and access to capital
markets
Credit ratings are independent opinions on our creditworthiness. Our credit ratings can affect the cost and availability of our funding
from capital markets and other funding sources and they may be important to customers or counterparties when evaluating our
products and services. Therefore, maintaining high credit ratings is important.
The credit ratings assigned to us by rating agencies are based on an evaluation of a number of factors, including our financial strength,
the quality of our governance, structural considerations regarding the Australian financial system and the credit rating of the Australian
Government. A credit rating downgrade could be driven by a downgrade of the Australian Government, the occurrence of one or more
of the other risks identified in this section or by other events including changes to the methodologies used by the rating agencies to
determine ratings.
A downgrade or series of downgrades to our credit ratings could have an adverse effect on our cost of funds and related margins,
collateral requirements, liquidity, competitive position and our access to capital markets. The extent and nature of these impacts would
depend on various factors, including the extent of any ratings change, whether our ratings differ among agencies (split ratings) and
whether any ratings changes also impact our competitors or the sector
.
A systemic shock in relation to the Australian, New Zealand or other financial systems could have adverse consequences for
Westpac or its customers or counterparties that would be difficult to predict and respond to
There is a risk that a major systemic shock could occur that causes an adverse impact on the Australian, New Zealand or other
financial systems.
As outlined above, during the past decade the financial services industry and capital markets have been, and may continue to be,
adversely affected by market volatility, global economic conditions, geopolitical instability (such as threats of or actual conflict occurring
around the world) and political developments. In particular, there have been significant global political developments in recent times,
including Brexit and the introduction of tariffs and other protectionist measures by various countries, such as the US and China. A shock
to one of the major global economies could again result in currency and interest rate fluctuations and operational disruptions that
negatively impact the Group.
Any such market and economic disruptions could adversely affect financial institutions such as Westpac because consumer and
business spending may decrease, unemployment may rise and demand for the products and services we provide may decline, thereby
reducing our earnings. These conditions may also affect the ability of our borrowers to repay their loans or our counterparties to meet
their obligations, causing us to incur higher credit losses and affect investors’ willingness to invest in the Group. These events could
also result in the undermining of confidence in the financial system, reducing liquidity, impairing our access to funding and impairing our
customers and counterparties and their businesses. If this were to occur, our business, prospects, financial performance or financial
condition could be adversely affected.
The nature and consequences of any such event are difficult to predict and there can be no certainty that we could respond effectively
to any such event.
Declines in asset markets could adversely affect our operations or profitability
Declines in Australian, New Zealand or other asset markets, including equity, residential and commercial property and other asset
markets, could adversely affect our operations and profitability.
Declining asset prices also impact our wealth management business. Earnings in our wealth management business are, in part,
dependent on asset values because we typically receive fees based on the value of securities and/or assets held or managed. A
decline in asset prices could negatively impact the earnings of this business.
Risk and risk management
2018 Westpac Group Annual Report135

Declining asset prices could also impact customers and counterparties and the value of security (including residential and commercial
property) we hold against loans and derivatives. This may impact our ability to recover amounts owing to us if
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Westpac 2018 Proxy Forms WBC notes APRA’s announcement on loss-absorbing capacity

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