WBC – NZ Banking Group Disclosure Statement – 30 Sep 2019

Westpac Banking
Corporation - New
Zealand Banking
Group
Disclosure Statement
For the year ended 30 September 2019

This page has been intentionally left blank

Westpac Banking Corporation - New Zealand Banking Group 3
Contents
Directors’ and the Chief Executive Officer, NZ Branch’s statement5
Financial statements
Income statement6Note 16 Intangible assets38
Statement of comprehensive income6Note 17 Deposits and other borrowings
Note 19 Debt issues
39
41
Balance sheet7Note 18 Other financial liabilities39
Statement of changes in equity8Note 19 Debt issues41
Statement of cash flows9Note 20 Provisions42
Note 1 Financial statements preparation10Note 21 Loan capital42
Note 2 Net interest income20Note 22 Related entities44
Note 3 Non-interest income21Note 23 Derivative financial instruments47
Note 4 Operating expenses24Note 24 Fair values of financial assets and financial liabilities53
Note 5 Auditor’s remuneration24Note 25 Offsetting financial assets and financial liabilities58
Note 6 Impairment charges/(benefits)25Note 26 Operating lease commitments60
Note 7 Income tax expense26
Note 8 Imputation credit account26
Note 27 Credit related commitments, contingent assets and
contingent liabilities
60
Note 28 Segment reporting62
Note 9 Trading securities and financial assets measured at
FVIS
27
Note 10 Investment securities/Available-for-sale securities27
Note 29 Securitisation, covered bonds and other transferred
assets
64
Note 11 Loans28Note 30 Structured entities65
Note 31 Capital management67
Note 12 Provisions for expected credit losses/impairment
charges
29
Note 32 Financial risk68
Note 13 Other financial assets35Note 33 Notes to the statement of cash flows86
Note 14 Life insurance assets36Note 34 Subsequent events86
Note 15 Deferred tax assets37Note 35 Accounting policies relating to prior years87
Registered bank disclosures
i. General information89
ii. Additional financial disclosures96
iii. Asset quality99
v. Insurance, securitisation, funds management, other
fiduciary activities, and marketing and distribution of
insurance products
102
iv. Credit and market risk exposures and capital adequacy101vi. Risk management policies104
Conditions of registration107
Independent auditor’s report109

4 Westpac Banking Corporation - New Zealand Banking Group
Glossary of terms
Certain information contained in this Disclosure Statement is required by the Registered Bank Disclosure Statements (Overseas Incorporated
Registered Banks) Order 2014 (as amended) (‘Order’).
In this Disclosure Statement, reference is made to five main reporting groups:
– Overseas Bank – refers to Westpac Banking Corporation;
– Overseas Banking Group – refers to the Overseas Bank and all other entities included in the Overseas Bank’s group for the purposes of public
reporting of the group financial statements in Australia;
– NZ Branch – refers to the New Zealand business (as defined in the Order) of the Overseas Bank;
– Westpac New Zealand – refers to Westpac New Zealand Limited; and
– NZ Banking Group – refers to the financial reporting group (as defined in the Order) of the Overseas Bank. Controlled entities of the NZ Banking
Group as at 30 September 2019 are set out in Note 22 Related entities.
Words and phrases not defined in this Disclosure Statement, but defined by the Order, have the meaning given by the Order when used in this
Disclosure Statement.

Westpac Banking Corporation - New Zealand Banking Group 5
Directors’ and the Chief Executive Officer, NZ
Branch’s statement
Each Director of the Overseas Bank and the Chief Executive Officer, NZ Branch, believe, after due enquiry, that, as at the date on which this
Disclosure Statement is signed, the Disclosure Statement:
(a) contains all the information that is required by the Order; and
(b) is not false or misleading.
Each Director of the Overseas Bank and the Chief Executive Officer, NZ Branch, believe, after due enquiry, that, over the year ended 30
September 2019:
(a) the Overseas Bank has complied with all conditions of registration that applied during that period; and
(b) the NZ Branch and other members of the NZ Banking Group had systems in place to monitor and control adequately the material risks of relevant
members of the NZ Banking Group, including credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk and
other business risks, and that those systems were being properly applied. For this purpose, a relevant member of the NZ Banking Group means a
member of the NZ Banking Group that is not a member of Westpac New Zealand’s banking group. Refer to Note 32 of the financial statements for
further detail regarding the entities which had systems in place to monitor and control the material risks of relevant members of the NZ
Banking Group.
The Disclosure Statement has been signed on behalf of all of the Directors by David Alexander McLean, Chief Executive, Westpac New Zealand,
and by Karen Lee Silk as Chief Executive Officer, NZ Branch.
David McLean
Karen Silk
Dated this 28th day of November 2019

Income statement for the year ended 30 September 2019
6 Westpac Banking Corporation - New Zealand Banking Group
NZ BANKING GROUP
$ millionsNote2019
1
2018
1
Interest income:
Calculated using the effective interest rate method24,0293,980
Other29087
Total Interest income24,1194,067
Interest expense2(2,121)(2,155)
Net interest income1,9981,912
Net fees and commissions income3201268
Net wealth management and insurance income3197152
Trading income3115139
Other income34914
Net operating income before operating expenses and impairment charges2,5602,485
Operating expenses4(1,018)(940)
Impairment (charges)/benefits6103
Profit before income tax1,5521,548
Income tax expense7(423)(431)
Net profit attributable to the owners of the NZ Banking Group1,1291,117
1
The NZ Banking Group has adopted NZ IFRS 9 Financial Instruments (‘NZ IFRS 9’) and NZ IFRS 15 Revenue from Contracts with Customers (‘NZ IFRS 15’) from 1
October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has made a number of presentational changes to the balance sheet and
income statement. Comparatives have been restated. Refer to Note 1 for further detail.
The above income statement should be read in conjunction with the accompanying notes.
Statement of comprehensive income for the year ended 30 September 2019
NZ BANKING GROUP
$ millions2019
1
2018
1
Net profit attributable to the owners of the NZ Banking Group 1,129 1,117
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Gains/(losses) recognised in equity on:
Investment securities (8) -
Cash flow hedging instruments (86) (34)
Transferred to income statement:
Cash flow hedging instruments 74 46
Income tax on items taken to or transferred from equity:
Investment securities reserve 3 -
Cash flow hedge reserve 3 (3)
Items that will not be reclassified subsequently to profit or loss (net of tax)
Remeasurement of defined benefit obligation (10) (2)
Other comprehensive income for the year (net of tax) (24) 7
Total comprehensive income attributable to the owners of the NZ Banking Group 1,105 1,124
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
The above statement of comprehensive income should be read in conjunction with the accompanying notes.

Balance sheet as at 30 September 2019
Westpac Banking Corporation - New Zealand Banking Group 7
NZ BANKING GROUP
$ millionsNote2019
1
2018
1
Assets
Cash and balances with central banks33 2,002 1,472
Collateral paid 417 180
Trading securities and financial assets measured at fair value through income statement ('FVIS')9 4,871 3,016
Derivative financial instruments 23 6,257 3,509
Available-for-sale securities10 - 3,810
Investment securities10 4,469 -
Loans11 84,626 80,860
Other financial assets13 400 468
Life insurance assets 335 310
Due from related entities22 2,367 2,023
Property and equipment 137 144
Deferred tax assets15 138 127
Intangible assets16 685 683
Other assets 58 54
Total assets 106,762 96,656
Liabilities
Collateral received 623 591
Deposits and other borrowings17 65,606 63,105
Other financial liabilities18 1,748 1,622
Derivative financial instruments 23 5,825 3,569
Due to related entities22 2,892 2,440
Debt issues19 17,846 13,725
Current tax liabilities 91 111
Provisions20 150 120
Other liabilities 139 124
Loan capital21 3,185 2,866
Total liabilities 98,105 88,273
Net assets 8,657 8,383
Head office account
Branch capital 1,300 1,300
Retained profits 989 869
Total head office account 2,289 2,169
NZ Banking Group equity
Share capital 143 143
Reserves (69) (55)
Retained profits 6,294 6,126
Total NZ Banking Group equity 6,368 6,214
Total equity attributable to the owners of the NZ Banking Group 8,657 8,383
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
The above balance sheet should be read in conjunction with the accompanying notes.
Signed on behalf of the Board of Directors.
DirectorDirector
28 November 201928 November 2019

Statement of changes in equity for the year ended 30 September 2019
8 Westpac Banking Corporation - New Zealand Banking Group
NZ BANKING GROUP
NZ BRANCHOTHER MEMBERS OF THE NZ BANKING GROUP
Head Office AccountReserves
Available-
for-saleInvestmentCash Flow
BranchRetained Share SecuritiesSecuritiesHedgeRetainedTotal
$ millionsCapital ProfitsCapital ReserveReserveReserveProfitsEquity
As at 1 October 2017 1,300 740 143 9 - (73) 5,712 7,831
Year ended 30 September 2018
Net profit attributable to the owners of the
NZ Banking Group - 129 - - - - 988 1,117
Net gains/(losses) from changes in fair
value - - - - - (34) - (34)
Income tax effect - - - - - 10 - 10
Transferred to income statement - - - - - 46 - 46
Income tax effect - - - - - (13) - (13)
Remeasurement of defined benefit
obligations - - - - - - (3) (3)
Income tax effect - - - - - - 1 1
Total comprehensive income for the
year ended 30 September 2018 - 129 - - - 9 986 1,124
Transactions with owners:
Dividends paid on ordinary shares (refer to
Note 22)
- - - - - - (572) (572)
As at 30 September 2018 1,300 869 143 9 - (64) 6,126 8,383
Impact on adoption of new accounting
standards
1
- - - (9) 9 - (24) (24)
As at 1 October 2018 (restated) 1,300 869 143 - 9 (64) 6,102 8,359
Year ended 30 September 2019
Net profit attributable to the owners of the
NZ Banking Group - 120 - - - - 1,009 1,129
Net gains/(losses) from changes in fair
value - - - - (8) (86) - (94)
Income tax effect - - - - 3 24 - 27
Transferred to income statement - - - - - 74 - 74
Income tax effect - - - - - (21) - (21)
Remeasurement of defined benefit
obligations - - - - - - (14) (14)
Income tax effect - - - - - -
4
4
Total comprehensive income for the
year ended 30 September 2019 - 120 - - (5) (9) 999 1,105
Transactions with owners:
Dividends paid on ordinary shares (refer to
Note 22)
- - - - - - (807) (807)
As at 30 September 2019 1,300 989 143 - 4 (73) 6,294 8,657
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
The above statement of changes in equity should be read in conjunction with the accompanying notes.

Statement of cash flows for the year ended 30 September 2019
Westpac Banking Corporation - New Zealand Banking Group 9
NZ BANKING GROUP
$ millionsNote2019
1
2018
1
Cash flows from operating activities
Interest received 4,148 4,062
Interest paid (2,140) (2,175)
Non-interest income received 478 485
Operating expenses paid (868) (838)
Income tax paid (435) (402)
Cash flows from operating activities before changes in operating assets and liabilities 1,183 1,132
Net (increase)/decrease in:
Collateral paid (237) 251
Trading securities and financial assets measured at FVIS (1,841) 1,052
Loans (3,687) (3,172)
Other financial assets (19) (7)
Due from related entities 184 643
Net increase/(decrease) in:
Collateral received 32 400
Deposits and other borrowings 2,501 4,107
Other financial liabilities 237 (172)
Due to related entities 38 (880)
Other liabilities 1 1
Net movement in external and related entity derivative financial instruments 229 1,143
Net cash provided by/(used in) operating activities33 (1,379) 4,498
Cash flows from investing activities
Purchase of available-for-sale securities - (268)
Proceeds from available-for-sale securities - 499
Purchase of investment securities (2,009) -
Proceeds from investment securities 1,387 -
Net movement in life insurance assets (25) (6)
Proceeds from disposal of associates 48 -
Purchase of capitalised computer software (62) (64)
Purchase of property and equipment (35) (44)
Net cash provided by/(used in) investing activities (696) 117
Cash flows from financing activities
Net movement in due to related entities (279) (401)
Proceeds from debt issues19 8,707 550
Repayments of debt issues19 (5,001) (4,464)
Dividends paid to ordinary shareholders22 (807) (572)
Net cash provided by/(used in) financing activities 2,620 (4,887)
Net increase/(decrease) in cash and cash equivalents 545 (272)
Cash and cash equivalents at the beginning of the year 1,529 1,801
Cash and cash equivalents at the end of the year33 2,074 1,529
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
The above statement of cash flows should be read in conjunction with the accompanying notes. Details of the reconciliation of net cash provided
by/(used in) operating activities to net profit are provided in Note 33.

Notes to the financial statements
10 Westpac Banking Corporation - New Zealand Banking Group
Note 1 Financial statements preparation
In this Disclosure Statement, reference is made to five main reporting groups:
– Overseas Bank – refers to Westpac Banking Corporation;
– Overseas Banking Group – refers to the Overseas Bank and all other entities included in the Overseas Bank’s group for the purposes of public
reporting of the group financial statements in Australia;
– NZ Branch – refers to the New Zealand business (as defined in the Registered Bank Disclosure Statements (Overseas Incorporated Registered
Banks) Order 2014 (as amended) (‘Order’)) of the Overseas Bank;
– Westpac New Zealand – refers to Westpac New Zealand Limited; and
– NZ Banking Group – refers to the financial reporting group (as defined in the Order) of the Overseas Bank. Controlled entities of the NZ Banking
Group as at 30 September 2019 are set out in Note 22 Related entities.
The Overseas Bank is registered as a public company limited by shares under the Australian Corporations Act 2001 and is entered on the register
maintained under the Reserve Bank of New Zealand Act 1989 (‘Reserve Bank Act’). The Overseas Bank provides a broad range of banking and
financial services, including consumer, business and institutional banking and wealth management services.
The NZ Branch’s head office is situated at Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand and the address for service of
process on the NZ Branch is Westpac on Takutai Square, 53 Galway Street, Auckland 1010, New Zealand.
The financial statements are for the NZ Banking Group.
These financial statements were authorised for issue by the Overseas Bank’s Board of Directors (the ‘Board’) on 28 November 2019. The Board has
the power to amend the financial statements after they are authorised for issue.
The principal accounting policies are set out below and in the relevant notes to the financial statements. These policies have been consistently
applied to all the years presented, unless otherwise stated.
a.Basis of preparation
(i) Basis of accounting
These financial statements are general purpose financial statements prepared in accordance with:
the requirements of the Financial Markets Conduct Act 2013; and
the requirements of the Order.
These financial statements comply with Generally Accepted Accounting Practice, applicable New Zealand equivalents to International Financial
Reporting Standards (‘NZ IFRS’) and other authoritative pronouncements of the External Reporting Board, as appropriate for for-profit entities.
These financial statements also comply with International Financial Reporting Standards, as issued by the International Accounting Standards Board
(‘IASB’).
All amounts in these financial statements have been rounded to the nearest million dollars unless otherwise stated.
(ii) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by applying fair value accounting to financial
assets and financial liabilities (including derivative instruments) measured at FVIS, or in other comprehensive income (‘FVOCI’). The going concern
concept has been applied.
(iii) Comparative revisions
Comparative information has been restated where appropriate to conform to changes in presentation in the current year and to enhance
comparability. Where there has been a material restatement of comparative information the nature of, and the reason for, the restatement is
disclosed in the ‘Changes in accounting policies’ section below or the relevant note.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 11
Note 1 Financial statements preparation (continued)
(iv) Changes in accounting policies
Voluntary presentation changes
Balance sheet
The following voluntary presentation changes to the balance sheet (and related notes) have been made to improve consistency and provide more
relevant information to the users of the financial statements by reporting balances of a similar nature together in the same place in the balance
sheet. These changes have no effect on the measurement of these items and therefore had no impact on retained earnings or net profit.
These changes are:
the addition of new balance sheet lines for ‘collateral paid’, ‘other financial assets’, ‘collateral received’ and ‘other financial liabilities’;
removal of the balance sheet line ‘receivables due from other financial institutions’ and reclassification to ‘collateral paid’ and ‘other financial
assets’;
removal of the balance sheet line ‘payables due to other financial institutions’ and reclassification to ‘collateral received’ and ‘other financial
liabilities’;
removal of the balance sheet line ‘other financial liabilities at fair value through income statement’ and reclassification to ‘other financial
liabilities’; and
reclassification of financial assets or financial liabilities included in other assets or other liabilities, respectively, to other financial assets and
other financial liabilities, respectively.
Collateral paid/collateral received relates to cash provided to/received from counterparties as collateral over financial liabilities/assets arising from
derivative contracts. It includes initial and variation margin placed as security for derivative transactions.
Comparatives have been restated for these voluntary presentation changes and are detailed as follows:
NZ BANKING GROUP
2018
$ millions
Reported
Presentation
changes
Restated
Assets
Receivables due from other financial institutions 237 (237) -
Collateral paid - 180 180
Other financial assets - 468 468
Other assets 465 (411) 54
All other assets 95,954 - 95,954
Total assets 96,656 - 96,656
Liabilities
Payables due to other financial institutions 1,253 (1,253) -
Collateral received - 591 591
Other financial liabilities at fair value through income statement 223 (223) -
Other financial liabilities - 1,622 1,622
Other liabilities 861 (737) 124
All other liabilities 85,936 - 85,936
Total liabilities 88,273 - 88,273
Income statement
The following voluntary presentation changes to the income statement (and related notes) have been made to provide more relevant information to
the users of the financial statements. These changes have no effect on the measurement of these items and therefore had no impact on retained
earnings or net profit.
Net interest income
the components of interest income and interest expense relating to the balance sheet reclassifications have been restated accordingly. Note
that there was no net impact to total interest income, total interest expense or to net interest income. Comparatives have been restated for
these voluntary presentation changes. Refer to Note 2.
in addition, to comply with disclosure requirements, interest income calculated using the effective interest rate method has been presented
separately from other interest income. For consistency, within Note 2, interest expense is presented in the same way. The details are provided in
Note 2.

Notes to the financial statements
12 Westpac Banking Corporation - New Zealand Banking Group
Note 1 Financial statements preparation (continued)
Non-interest income and operating expenses
disaggregating the non-interest income line on the income statement into four separate lines for net fees and commissions income, net wealth
management and insurance income, trading income and other income.
separating net fees and commissions income in the non-interest income note into fees and commissions income and fees and commissions
expenses.
reclassifying credit card loyalty program expense included in purchased services from operating expenses to the new fees and commissions
expenses category in the non-interest income note.
Fees and commissions expenses include those expenses that are incremental external costs that vary directly with the provision of goods or services
to customers (excluding expenses which would qualify as transaction costs relating to the issue, acquisition or disposal of a financial asset or a
financial liability which are deferred and included in the effective interest rate and recognised in net interest income).
An incremental cost is one that would not have been incurred if a specific good or service had not been provided to a specific customer.
Comparatives have been restated for these voluntary presentation changes and are detailed in the table below.
NZ BANKING GROUP
2018
$ millions
Reported
Presentation
changesRestated
Income statement
Net interest income 1,912 - 1,912
Non-interest income 602 (602) -
Net fees and commissions income - 268 268
Net wealth management and insurance income - 152 152
Trading income - 139 139
Other income - 14 14
Net operating income before operating expenses and impairment charges 2,514 (29) 2,485
Operating expenses (969) 29 (940)
Impairment (charges)/benefits 3 - 3
Profit before income tax 1,548 - 1,548
Income tax expense (431) - (431)
Net profit attributable to the owners of the NZ Banking Group 1,117 - 1,117
Note 3: Non-interest income (extract)
Net fees and commissions income
Facility fees 61 - 61
Transaction fees and commissions 187 28 215
Other non-risk fee income 49 - 49
Fees and commissions income 297 28 325
Credit card loyalty programs - (29) (29)
Transaction fees and commissions related expenses - (28) (28)
Fees and commissions expenses - (57) (57)
Net fees and commissions income 297 (29) 268
Note 4: Operating expenses (extract)
Purchased services 129 (29) 100
Total operating expenses 969 (29) 940

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 13
Note 1 Financial statements preparation (continued)
(v) Standards adopted during the year ended 30 September 2019
NZ IFRS 9 Financial Instruments (September 2014) (NZ IFRS 9)
The NZ Banking Group adopted NZ IFRS 9 on 1 October 2018. The adoption of NZ IFRS 9 has been applied by adjusting the opening balance sheet at 1
October 2018, with no restatement of comparatives as permitted by the standard. The adoption of NZ IFRS 9 reduced retained earnings at 1 October
2018 by $27 million (net of tax), primarily due to the increase in impairment provisions under the new standard.
Impairment
NZ IFRS 9 introduces a revised impairment model which requires entities to recognise expected credit losses (‘ECL’) based on unbiased forward
looking information, replacing the incurred loss model under NZ IAS 39 Financial instruments: Recognition and Measurement (‘NZ IAS 39’) which
only recognised impairment if there was objective evidence that a loss had been incurred. The revised impairment model applies to all financial
assets at amortised cost, investment securities, and credit commitments.
The accounting policy for the provision for ECL under NZ IFRS 9 is detailed in Notes 6 and 12.
Classification and measurement
NZ IFRS 9 replaced the classification and measurement model in NZ IAS 39 with a new model that categorises financial assets based on: a) the
business model within which the assets are managed and b) whether the contractual cash flows under the instrument represent solely payments of
principal and interest (‘SPPI’).
The accounting policies for the classification and measurement of financial assets and financial liabilities are detailed in Note 1c and in the relevant
notes to the financial statements for financial assets and financial liabilities.
In the 2014 financial year, the NZ Banking Group early adopted part of NZ IFRS 9 which relates to the recognition of the changes in fair value of
financial liabilities designated at fair value attributable to the NZ Banking Group’s own credit risk in other comprehensive income (except where it
would create an accounting mismatch, in which case all changes in fair value are recognised in the income statement). As a result, the accounting
for this remains unchanged for the NZ Banking Group.
Hedging
NZ IFRS 9 changes hedge accounting by increasing the eligibility of both hedged items and hedging instruments and introducing a more principles
based approach to assessing hedge effectiveness. Adoption of the new hedge accounting model is optional until the IASB completes its accounting
for dynamic risk management project. Until this time, current hedge accounting under NZ IAS 39 can continue to be applied. The NZ Banking Group
has applied the option to continue hedge accounting under NZ IAS 39, however the NZ Banking Group has adopted the amended NZ IFRS 7 Financial
Instruments: Disclosures (‘NZ IFRS 7’) hedge accounting disclosures as required.
NZ IFRS 15 Revenue from Contracts with Customers (NZ IFRS 15)
The NZ Banking Group adopted NZ IFRS 15 on 1 October 2018. It replaced NZ IAS 18 Revenue and related interpretations and applies to all contracts
with customers, except leases, financial instruments and insurance contracts. The standard provides a systematic approach to revenue recognition
by introducing a five-step model governing revenue measurement and recognition. This includes:
identifying the contract with customer;
identifying each of the performance obligations included in the contract;
determining the amount of consideration in the contract;
allocating the consideration to each of the identified performance obligations; and
recognising revenue as each performance obligation is satisfied.
The NZ Banking Group has applied NZ IFRS 15 by increasing the opening balance of retained earnings at the date of initial application, 1 October
2018, by $3 million (net of tax) with no comparative restatement.
In addition, the NZ Banking Group identified certain income and expenses which were previously reported on a net basis primarily within fees and
commissions income which are now being presented on a gross basis. This resulted in an increase of $21 million in net fees and commissions income
and a corresponding increase in operating expenses for the current year.
Finally, certain facility fees have been reclassified from non-interest income to interest income. This resulted in a decrease of $56 million in net fees
and commissions income and a corresponding increase in interest income for the current year.

Notes to the financial statements
14 Westpac Banking Corporation - New Zealand Banking Group
Note 1 Financial statements preparation (continued)
Transition (NZ IFRS 9 and NZ IFRS 15)
Impact of the adoption of NZ IFRS 9 – impairment
The following table shows the impact of the adoption of NZ IFRS 9 on impairment balances.
NZ BANKING GROUP
$ millions
Provisions on
loans
Provisions for
credit
commitments
Loss allowance
on investment
securities
Provisions on all
other financial
assets at amortised
costTotal
30 September 2018 - carrying amount 324 34 - - 358
Increase in provision for impairment 28 9 - - 37
1 October 2018 - NZ IFRS 9 carrying amount 352 43 - - 395
Impact of the adoption of NZ IFRS 9 – loss allowance on loans and credit commitments
The following table shows the impact of the adoption of NZ IFRS 9 on collectively assessed provisions (‘CAP’) and individually assessed provisions
(‘IAP’) for loans and credit commitments.
NZ BANKING GROUP
NZ IFRS 9NZ IAS 39
PerformingNon-performing
CAPCAPCAPIAP
$ millions
Stage 1Stage 2Stage 3Stage 3
CAPIAPTotal
Provision for impairment charges as at 30 September 2018 - - - - 322 36 358
Restatement for adoption of NZ IFRS 9 103 203 53 36 (322) (36)
37
Restated provision for ECL as at 1 October 2018 103 203 53 36 - - 395
Impact of the adoption of NZ IFRS 9 - classification and measurement
Available-for-sale securities / Investment securities
The balance sheet line item previously named Available-for-sale securities has been renamed to Investment securities. Investment securities consist
of debt securities at FVOCI as the business model is achieved by both collecting the contractual cash flows and selling the instruments and the
contractual cash flows represent SPPI.
Basis of measurement
There has been no change in the basis of measurement of financial assets and financial liabilities under NZ IFRS 9 as shown in the ‘Reconciliation of
the opening balance sheet’ section.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 15
Note 1 Financial statements preparation (continued)
Reconciliation of the opening balance sheet
The table below reconciles the restated 30 September 2018 balance sheet to the 1 October 2018 opening balance sheet on adoption of NZ IFRS 9 and
NZ IFRS 15 showing separately the impact of adjustments relating to reclassification and remeasurement, including the related tax impacts.
NZ BANKING GROUP
30 Sep 20181 Oct 201830 Sep 2018
1 Oct 2018
NZ IFRS 9 changes
$ millions
NZ IAS 39
measurement
basis
NZ IFRS 9
measurement
basis
Restated
carrying
amount
Reclass-
ification
Remeas-
urement
NZ IFRS 15
changes
Opening
carrying
amount
Assets
Cash and balances with central banks
Amortised costAmortised cost 1,472 - - - 1,472
Collateral paid
Amortised costAmortised cost 180 - - - 180
Trading securities and financial assets measured
at FVIS
FVISFVIS 3,016 - - - 3,016
Derivative financial instruments
FVISFVIS 3,509 - - - 3,509
Available-for-sale securities
FVOCIFVOCI 3,810 (3,810) - - -
Investment securities
FVOCIFVOCI - 3,810 - - 3,810
Loans
Amortised costAmortised cost 80,860 - (28) - 80,832
Other financial assets
Amortised costAmortised cost 468 - - - 468
Life insurance assets
FVISFVIS 310 - - - 310
Amortised costAmortised cost 1,564 - - - 1,564
Due from related entities
FVISFVIS 459 - - - 459
Property and equipment
N/AN/A 144 - - - 144
Deferred tax assets
N/AN/A 127 - 10 (1) 136
Intangible assets
N/AN/A 683 - - - 683
Other assets
N/AN/A 54 - - - 54
Total assets
96,656 - (18) (1) 96,637
Liabilities
Collateral received
Amortised costAmortised cost 591 - - - 591
Amortised costAmortised cost 61,884 - - - 61,884
Deposits and other borrowings
FVISFVIS 1,221 - - - 1,221
Amortised costAmortised cost 1,399 - - (4) 1,395
Other financial liabilities
FVISFVIS 223 - - - 223
Derivative financial instruments
FVISFVIS 3,569 - - - 3,569
Amortised costAmortised cost 1,796 - - - 1,796
Due to related entities
FVISFVIS 644 - - - 644
Debt issues
Amortised costAmortised cost 13,725 - - - 13,725
Current tax liabilities
N/AN/A 111 - - - 111
Provisions
N/AN/A 120 - 9 - 129
Other liabilities
N/AN/A 124 - - - 124
Loan capital
Amortised costAmortised cost 2,866 - - - 2,866
Total liabilities
88,273 - 9 (4) 88,278
Net assets
8,383 - (27) 3 8,359
Head office account
Branch capital
N/AN/A 1,300 - - - 1,300
Retained profits
N/AN/A 869 - - - 869
Total head office account
2,169 - - - 2,169
NZ Banking Group equity
Share capital
N/AN/A 143 - - - 143
Reserves
N/AN/A (55) - - - (55)
Retained profits
N/AN/A 6,126 - (27) 3 6,102
Total NZ Banking Group equity
6,214 - (27) 3 6,190
Total equity attributable to the owners of
the NZ Banking Group
8,383 - (27) 3 8,359
As permitted by NZ IFRS 9 and NZ IFRS 15, comparatives have not been restated. Comparatives have been restated for voluntary presentation
changes as detailed in the section ‘Changes in accounting policies’ on page 10.

Notes to the financial statements
16 Westpac Banking Corporation - New Zealand Banking Group
Note 1 Financial statements preparation (continued)
b. Basis of aggregation
The NZ Banking Group as at 30 September 2019 has been aggregated by combining the sum of the capital and reserves of the NZ Branch, and the
consolidated capital and reserves of Westpac New Zealand Group Limited, BT Financial Group (NZ) Limited, Westpac Financial Services Group-NZ-
Limited, Westpac Group Investment-NZ-Limited, Capital Finance New Zealand Limited and their subsidiaries (including structured entities). For
New Zealand entities acquired by the Overseas Banking Group, capital and reserves at acquisition are netted and recognised as capital contributed
to the NZ Banking Group.
Subsidiaries (including structured entities) are those entities over which the members of the NZ Banking Group have control. Control exists when it
is exposed to, or has rights to, variable returns from the subsidiaries, and has the ability to affect those returns through its power over the entities.
All transactions between entities within the NZ Banking Group are eliminated. Subsidiaries are fully consolidated from the date on which control
commences and are de-consolidated from the date that control ceases.
(i) Business combinations
Business combinations are accounted for using the acquisition method of accounting. Acquisition cost is measured as the aggregate of the fair value
at the date of acquisition of the assets given, equity instruments issued or liabilities incurred or assumed. Acquisition-related costs are expensed as
incurred (except for those costs arising on the issue of equity instruments which are recognised directly in equity).
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at fair value on the acquisition
date. Goodwill is measured as the excess of the acquisition cost, the amount of any non-controlling interest and the fair value of any previous NZ
Banking Group’s equity interest in the acquiree, over the fair value of the identifiable net assets acquired.
(ii) Foreign currency translation
Functional and presentational currency
The consolidated financial statements are presented in New Zealand dollars which is the NZ Banking Group’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in other
comprehensive income for qualifying cash flow hedges.
(iii) Head office account, share capital and reserves
Head office account - Branch capital
Branch capital comprises funds provided by the Overseas Bank. It is non-interest bearing and there is no fixed date for repatriation.
Ordinary shares
Ordinary shares are recognised at the amount paid up per ordinary share, net of directly attributable issue costs.
Investment securities reserve
This comprises the changes in the fair value of debt securities measured at FVOCI (except for interest income, impairment charges and foreign
exchange gains and losses which are recognised in the income statement), net of any related hedge accounting adjustments and tax. These changes
are transferred to non-interest income in the income statement when the asset is disposed.
Cash flow hedge reserve
This comprises the fair value gains and losses associated with the effective portion of designated cash flow hedging instruments, net of tax.
c.Financial assets and financial liabilities
(i) Recognition
Purchases and sales by regular way of financial assets, except for loans and receivables, are recognised on trade-date; the date on which the NZ
Banking Group commits to purchase or sell the asset. Loans and receivables are recognised on settlement date, when cash is advanced to the
borrowers.
Financial liabilities are recognised when an obligation arises.
(ii) Classification and measurement
As comparatives have not been restated upon the adoption of NZ IFRS 9 the accounting policy applied in 2019 differs to that applied in comparative
periods. The accounting policy applied in comparative periods is discussed in Note 35. The accounting policy applied in 2019 is as follows.
Financial assets are grouped into the following classes: cash and balances with central banks, collateral paid, trading securities and financial assets
measured at FVIS, derivative financial instruments, investment securities, loans, other financial assets, life insurance assets and due from related
entities.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 17
Note 1 Financial statements preparation (continued)
Financial assets
Financial assets are classified based on a) the business model within which the assets are managed, and b) whether the contractual cash flows of
the instrument represent SPPI.
The NZ Banking Group determines the business model at the level that reflects how groups of financial assets are managed. When assessing the
business model the NZ Banking Group considers factors including how performance and risks are managed, evaluated and reported and the
frequency and volume of, and reason for, sales in previous periods and expectations of sales in future periods.
When assessing whether contractual cash flows are SPPI, interest is defined as consideration primarily for the time value of money and the credit
risk of the principal outstanding. The time value of money is defined as the element of interest that provides consideration only for the passage of
time and not consideration for other risks or costs associated with holding the financial asset. Terms that could change the contractual cash flows
so that they may not meet the SPPI criteria include contingent and leverage features, non-recourse arrangements, and features that could modify
the time value of money.
Debt instruments
If the debt instruments have contractual cash flows which represent SPPI on the principal balance outstanding they are classified at:
amortised cost if they are held within a business model whose objective is achieved through holding the financial asset to collect these cash
flows; or
FVOCI if they are held within a business model whose objective is achieved both through collecting these cash flows or selling the financial asset;
or
FVIS if they are held within a business model whose objective is achieved through selling the financial asset.
Debt instruments are measured at FVIS where the contractual cash flows do not represent SPPI on the principal balance outstanding or where it is
designated at FVIS to eliminate or reduce an accounting mismatch.
Debt instruments at amortised cost are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
rate method. They are presented net of provisions for expected credit losses determined using the ECL model. Refer to Notes 6 and 12 for further
details.
Debt instruments at FVOCI are measured at fair value with unrealised gains and losses recognised in other comprehensive income except for
interest income, impairment charges and foreign exchange gains and losses, which are recognised in the income statement. Impairment on debt
instruments at FVOCI is determined using the ECL model and is recognised in the income statement with a corresponding amount in other
comprehensive income. There is no reduction of the carrying value of the debt security which remains at fair value.
The cumulative gain or loss recognised in other comprehensive income is subsequently recognised in the income statement when the instrument is
derecognised.
Debt instruments at FVIS are measured at fair value with subsequent changes in fair value recognised in the income statement.
Financial liabilities
Financial liabilities are grouped into the following classes: collateral received, deposits and other borrowings, other financial liabilities, derivative
financial instruments, due to related entities, debt issues and loan capital.
Financial liabilities are measured at amortised cost if they are not held for trading or designated at FVIS, otherwise they are measured at FVIS.
Financial assets and financial liabilities measured at FVIS are recognised initially at fair value. All other financial assets and financial liabilities are
recognised initially at fair value plus or minus directly attributable transaction costs respectively.
Further details of the accounting policy for each category of financial asset or financial liability mentioned above is set out in the note for the relevant
item.
The NZ Banking Group’s policies for determining the fair value of financial assets and financial liabilities are set out in Note 24.
(iii) Derecognition
Financial assets are derecognised when the rights to receive cash flows from the asset have expired, or when the NZ Banking Group has either
transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full under a ‘pass through’
arrangement and transferred substantially all the risks and rewards of ownership.
There may be situations where the NZ Banking Group has partially transferred the risks and rewards of ownership but has neither transferred nor
retained substantially all the risks and rewards of ownership. In such situations, the asset continues to be recognised on the balance sheet to the
extent of the NZ Banking Group’s continuing involvement in the asset.
Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. Where an existing financial liability is replaced by
another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, the exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability, with the difference in the respective carrying
amounts recognised in the income statement.
The terms are deemed to be substantially different if the discounted present value of the cashflows under the new terms (discounted using the
original effective interest rate) is at least 10% different from the discounted present value of the remaining cash flows of the original financial
liability. Qualitative factors such as a change in the currency the instrument is denominated in, a change in the interest rate from fixed to floating
and conversion features are also considered.

Notes to the financial statements
18 Westpac Banking Corporation - New Zealand Banking Group
Note 1 Financial statements preparation (continued)
d.Critical accounting assumptions and estimates
Applying the NZ Banking Group’s accounting policies requires the use of judgement, assumptions and estimates which impact the financial
information. The significant assumptions and estimates used are discussed in the relevant notes below.
Note 7Income tax expense
Note 12Provisions for expected credit losses/impairment charges
Note 14Life insurance assets
Note 15Deferred tax assets
Note 16Intangible assets
Note 24Fair value of financial assets and financial liabilities
e.Future developments in accounting standards
The following new standards and interpretations which may have a material impact on the NZ Banking Group have been issued but are not yet
effective, and unless otherwise stated, have not been early adopted by the NZ Banking Group:
NZ IFRS 16 Leases (‘NZ IFRS 16’) was issued on 11 February 2016 and will be effective for the 30 September 2020 financial year. The standard will not
result in significant changes for lessor accounting. The main changes under the standard are:
all operating leases of greater than 12 months duration will be required to be presented on balance sheet by the lessee as a right-of-use
(‘ROU’) asset and lease liability. The asset and liability will initially be measured at the present value of non-cancellable lease payments and
payments to be made in optional periods where it is reasonably certain that the option will be exercised; and
all leases on balance sheet will give rise to a combination of interest expense on the lease liability and depreciation of the ROU asset.
The NZ IFRS 16 implementation and governance program is led by Finance with representatives from the impacted areas of the business with
oversight from the Chief Financial Officer. The project has identified the portfolios impacted by that standard which are predominantly property
leases. In addition, the project has updated finance systems and processes, established a governance framework, updated relevant policies and
addressed key judgements including the transition option that will be applied in order to determine the expected impact to the NZ Banking Group.
The NZ Banking Group will adopt the standard using the simplified approach of transition with no restatement of comparative information. The
expected impact on adoption of the standard will be to recognise a ROU asset of approximately $292 million and an equivalent lease liability with no
impact on retained earnings.
The NZ Banking Group has determined that it will use the incremental borrowing rate as the discount rate when determining present value. This
discount rate will be based on the remaining maturity of the lease at the date of transition. The NZ Banking Group will also apply the practical
exemptions for low-value assets and short-term leases.
NZ IFRS 17 Insurance Contracts was issued on 10 August 2017 and will be effective for the 30 September 2022 year end unless early adopted. This will
replace NZ IFRS 4 Insurance Contracts. The main changes under the standard are:
the scope of the standard may result in some contracts that are currently “unbundled”, i.e. accounted for separately as insurance and
investment contracts being required to be “bundled” and accounted for as an insurance contract;
portfolios of contracts (with similar risks which are managed together) will be required to be disaggregated to a more granular level by both
the age of a contract and the likelihood of the contract being onerous in order to determine the recognition of profit over the contract period
(i.e. the contractual service margin). The contractual service margin uses a different basis to recognise profit to the current Margin on Services
approach for life insurance and therefore the pattern of profit recognition is likely to differ;
risk adjustments, which reflect uncertainties in the amount and timing of future cash flows, are required for both general and life insurance
contracts rather than just general insurance contracts under the current accounting standards;
the contract boundary, which is the period over which profit is recognised, differs and is determined based on the ability to compel the
policyholder to pay premiums or the substantive obligation to provide coverage/services. For some general insurance contracts (e.g. some
lender mortgage insurance and reinsurance contracts) this may result in the contract boundary being longer. For life insurance, in particular
term renewable contracts, the contract boundary is expected to be shorter. Both will be impacted by different patterns of profit recognition
compared to the current standards;
a narrower definition of what acquisition costs may be deferred;
an election to recognise changes in assumptions regarding discount rate in other comprehensive income rather than in profit and loss;
an election to recognise changes in the fair value of assets supporting policy liabilities in other comprehensive income rather than through
profit and loss;
reinsurance contracts and the associated liability are to be determined separately to the gross contract liability and may have different
contract boundaries; and
additional disclosure requirements.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 19
Note 1 Financial statements preparation (continued)
The standard is expected to result in a reduction in the level of deferred acquisition costs, however the quantum of this and the profit and loss
impacts to the NZ Banking Group are not yet practicable to determine.
On 26 June 2019, the IASB issued an exposure draft proposing a number of amendments to the insurance contracts standard. If approved, these
amendments would allow entities to:
defer acquisition costs for anticipated renewals outside of the initial contract boundary; and
recognise a gain in the P&L for reinsurance contracts, to offset losses from onerous contracts on initial recognition (to the extent the
reinsurance contracts held covers the losses of each contract on a proportionate basis).
In addition, the effective date of the standard would be deferred by one year to be applicable to the NZ Banking Group for the 30 September 2023
financial year.
NZ IFRIC 23 Uncertainty over Income Tax Treatments (‘NZ IFRIC 23’) was issued in August 2017 and will be effective for the 30 September 2020
financial year. NZ IFRIC 23 clarifies the recognition and measurement criteria in NZ IAS 12 Income Taxes where there is uncertainty over income tax
treatments, and requires an assessment of each uncertain tax position as to whether it is probable that a taxation authority will accept the position.
Where it is not considered probable, the effect of the uncertainty will be reflected in determining the relevant taxable profit or loss, tax bases,
unused tax losses and unused tax credits or tax rates. The amount will be determined as either the single most likely amount or the sum of the
probability weighted amounts in a range of possible outcomes, whichever better predicts the resolution of the uncertainty. Judgements will be
reassessed as and when new facts and circumstances are presented.
The interpretation is not expected to have a material impact on the NZ Banking Group.
A revised Conceptual Framework (‘Framework’) was issued on 10 May 2018. This will be effective for the NZ Banking Group for the 30 September
2021 financial year. The revised Framework includes new definitions and recognition criteria for assets, liabilities, income and expenses and other
relevant financial reporting concepts. The changes are not expected to have a material impact on the NZ Banking Group.
Other amendments to existing standards that are not yet effective are not expected to have a material impact to the NZ Banking Group.
Interbank-offered rates (‘IBOR’) reform
IBORs are interest rate benchmarks used in financial markets for pricing, valuing and hedging a wide variety of financial instruments such as
derivatives, loans and bonds. Examples of IBOR include the London Interbank Offered Rate (‘LIBOR’) and the Euro Interbank Offered Rate
(‘EURIBOR’).
A review of the global major IBORs is being conducted to reform or replace existing IBORs with more suitable alternative reference rates (‘ARRs’).
This IBOR reform will impact the accounting for financial instruments that reference IBORs including hedge accounting, fair value methodologies and
existing financial instruments that reference IBORs at transition. This replacement process is at different stages and is progressing at different
speeds in different jurisdictions. Therefore, there is uncertainty as to the basis, method, timing and implications of transition to the ARRs.
In November 2019, the External Reporting Board issued amendments to NZ IFRS 9, NZ IAS 39 and NZ IFRS 7 which enable hedge accounting to
continue for certain hedges that might otherwise need to be discontinued due to uncertainties arising from IBOR reform and requires certain
disclosures. These amendments are effective for the NZ Banking Group for the 30 September 2021 financial year with early application permitted.
As a result of these developments, the NZ Banking Group has applied judgement in the current reporting period to determine that hedge
relationships that include IBORs as a hedged risk continue to qualify for hedge accounting. The NZ Banking Group continues to monitor these
developments and the expected impact.

Notes to the financial statements
20 Westpac Banking Corporation - New Zealand Banking Group
Note 2 Net interest income
Accounting policy
Interest income and interest expense for all interest earning financial assets and interest bearing financial liabilities at amortised cost or FVOCI,
detailed within the table below, are recognised using the effective interest rate method. Net income from treasury’s interest rate and liquidity
management activities is included in net interest income.
The effective interest rate method calculates the amortised cost of a financial instrument by discounting the financial instrument’s estimated
future cash receipts or payments to their present value and allocates the interest income or interest expense, including any fees, costs, premiums
or discounts integral to the instrument, over its expected life.
Interest income is calculated based on the gross carrying amount of financial assets in stages 1 and 2 of the NZ Banking Group’s ECL model and on
the carrying amount net of the provision for ECL for financial assets in stage 3. Refer to Note 12 for further details of the NZ Banking Group’s ECL
model.
NZ BANKING GROUP
$ millionsNote2019
1
2018
1
Interest income
Calculated using the effective interest rate method
Cash and balances with central banks 21 24
Collateral paid 7 5
Available-for-sale securities - 148
Investment securities 138 -
Loans 3,832 3,774
Due from related entities22 27 27
Other interest income 4 2
Total interest income calculated using the effective interest rate method 4,029 3,980
Other
Trading securities and financial assets measured at FVIS 90 87
Total other 90 87
Total interest income 4,119 4,067
Interest expense
Calculated using the effective interest rate method
Collateral received 8 6
Deposits and other borrowings 1,289 1,290
Due to related entities22 46 53
Debt issues 285 306
Loan capital 147 146
Other interest expense 15 17
Total interest expense calculated using the effective interest rate method 1,790 1,818
Other
Deposits and other borrowings 18 13
Debt issues 21 11
Other interest expense
2
292 313
Total other 331 337
Total interest expense 2,121 2,155
Net interest income 1,998 1,912
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
2
Includes the net impact of treasury's interest rate and liquidity management activities.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 21
Note 3 Non-interest income
Accounting policy
Non-interest income includes net fees and commissions income, net wealth management and insurance income, trading income and other
income.
Net fees and commissions income
When another party is involved in providing goods or services to a NZ Banking Group customer, the NZ Banking Group assesses whether the
nature of the arrangement with its customer is as a principal provider or an agent of another party. Where the NZ Banking Group is acting as an
agent for another party, the income earned by the NZ Banking Group is the net consideration received (i.e. the gross amount received from the
customer less amounts paid to a third party provider). As an agent, the net consideration represents fees and commissions income for facilitating
the transaction between the customer and the third party provider with primary responsibility for fulfilling the contract.
Fees and commissions income
Fees and commissions income is recognised when the performance obligation is satisfied by transferring the promised good or service to the
customer. Fees and commissions income includes facility fees, transaction fees and commissions and other non-risk fee income.
Facility fees include certain line fees, annual credit card fees and fees for providing customer bank accounts. They are recognised over the term of
the facility/period of service on a straight line basis.
Transaction fees and commissions are earned for facilitating banking transactions such as foreign exchange fees, telegraphic transfers and issuing
bank cheques. Fees and commissions for these one-off transactions are recognised once the transaction has been completed. Transaction fees
and commissions are also recognised for credit card transactions including interchange fees net of scheme charges. These are recognised once
the transaction has been completed, however, a component of interchange fees received is deferred as unearned income as the NZ Banking
Group has a future service obligation to customers under the NZ Banking Group’s credit card reward programs.
Other non-risk fee income includes advisory and underwriting fees which are recognised when the related service is completed.
Income which forms an integral part of the effective interest rate of a financial instrument is recognised using the effective interest method and
recorded in interest income (for example, loan origination fees).
Fees and commissions expenses
Fees and commissions expenses include incremental external costs that vary directly with the provision of goods or services to customers. An
incremental cost is one that would not have been incurred if a specific good or service had not been provided to a specific customer. Fees and
commissions expenses which form an integral part of the effective interest rate of a financial instrument are recognised using the effective interest
method and recorded in net interest income. Fees and commissions expenses include the costs associated with credit card loyalty programs
which are recognised as an expense when the services are provided on the redemption of points as well as merchant transaction costs.
Net wealth management and insurance income
Wealth management income
Wealth management fees earned for the ongoing management of customer funds and investments are recognised when the performance
obligation is satisfied which is over the period of management.
Net life insurance income and change in policy liabilities
Net insurance policy assets relating to life insurance contracts are calculated by using the margin on service methodology in accordance with New
Zealand Society of Actuaries Professional Standard 3 Determination of Life Insurance Policy Liabilities. Under this methodology, planned profit
margins and an estimate of future liabilities are calculated separately for each major product line using applied assumptions at each reporting
date. Profit margins are released in line with the service that has been provided.
Life insurance premiums with a regular due date are recognised as revenue on an accrual basis. Premiums with no due date are recognised on a
cash received basis.
Life insurance contract claims are recognised as an expense when the liability has been established.
Trading income
realised and unrealised gains or losses from changes in the fair value of trading assets, liabilities and derivatives are recognised in the period
in which they arise (except day one profits or losses which are deferred, refer to Note 24);
net income related to Treasury’s interest rate and liquidity management activities is included in net interest income.

Notes to the financial statements
22 Westpac Banking Corporation - New Zealand Banking Group
Note 3 Non-interest income (continued)
NZ BANKING GROUP
$ millions2019
1
2018
1
Net fees and commissions income
Facility fees 50 61
Transaction fees and commissions 182 215
Other non-risk fee income 30 49
Fees and commissions income 262 325
Credit card loyalty programs (32) (29)
Transaction fees and commissions related expenses (29) (28)
Fees and commissions expenses (61) (57)
Net fees and commissions income 201 268
Net wealth management and insurance income
Wealth management income 59 55
Net life insurance income and change in policy liabilities 138 97
Net wealth management and insurance income 197 152
Trading income 115 139
Other income
Net ineffectiveness on qualifying hedges 2 4
Other non-interest income
2
47 10
Total other income 49 14
Total non-interest income 562 573
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
2
Westpac NZ Operations Limited (‘WNZOL’) sold its 25% shareholding in Paymark Limited to Ingenico Group S.A, resulting in a gain on sale of $40 million for the
year ended 30 September 2019. Refer to Note 22 for details.
Deferred income in relation to the credit card loyalty programs for the NZ Banking Group was $31 million as at 30 September 2019 (30 September
2018: $29 million). This will be recognised as fees and commissions income as the credit card reward points are redeemed.
There were no other material contract assets or contract liabilities for the NZ Banking Group.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 23
Note 3 Non-interest income (continued)
Non-interest income in scope of NZ IFRS 15 can be further disaggregated into the following operating segments and is consistent with the segment
descriptions detailed in Note 28.
NZ BANKING GROUP
$ millions
Consumer
Banking and
Wealth
Commercial,
Corporate
and
Institutional
Investments
and
Insurance
NZ IFRS 9 and
NZ IFRS 15
changes
Reconciling
ItemsTotal
Year ended 30 September 2019
Fees and commissions income
Facility fees 30 15 - N/A 5 50
Transaction fees and commissions 100 64 - N/A 18 182
Other non-risk fee income 5 27 - N/A (2) 30
Fees and commissions income 135 106 - N/A 21 262
Fees and commissions expenses (56) - - N/A (5) (61)
Net fees and commissions income 79 106 - N/A 16 201
Wealth management income - - 65 N/A (6) 59
Year ended 30 September 2018
Fees and commissions income
Facility fees 36 14 - 10 1 61
Transaction fees and commissions 88 60 - 16 51 215
Other non-risk fee income 9 28 - 16 (4) 49
Fees and commissions income 133 102 - 42 48 325
Fees and commissions expenses (49) - - - (8) (57)
Net fees and commissions income 84 102 - 42 40 268
Wealth management income - - 62 - (7) 55

Notes to the financial statements
24 Westpac Banking Corporation - New Zealand Banking Group
Note 4 Operating expenses5967-2 04-18
NZ BANKING GROUP
$ millionsNote2019
1
2018
1
Staff expenses 523 484
Operating lease rentals 58 63
Depreciation 39 44
Technology services and telecommunications 94 100
Purchased services 123 100
Software amortisation costs 59 46
Related entities - management fees22 8 7
Other 114 96
Total operating expenses 1,018 940
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
Note 5 Auditor’s remuneration5967-2 04-18
NZ BANKING GROUP
$'000s20192018
Audit and audit related services
Audit and review of financial statements
1
3,1462,674
Other audit related services
2
241192
Total remuneration for audit and other audit related services3,3872,866
Other services--
Total remuneration for non-audit services--
Total remuneration for audit, other audit related services and non-audit services3,3872,866
1
Fees for the annual audit of the financial statements including audit procedures in relation to the transition impact of new accounting standards, the review or
other procedures performed on the interim financial statements and Sarbanes-Oxley reporting undertaken in the role of auditor.
2
Primarily assurance provided on certain financial information performed in the role of auditor (or where most appropriate to be performed by the auditor)
including the issue of comfort letters and agreed procedures reports in relation to debt issuance programmes.
It is the NZ Banking Group’s policy to engage the external auditor on assignments additional to their statutory audit duties only if their independence is
not either impaired or seen to be impaired, and where their expertise and experience with the NZ Banking Group is important.
The external auditor also provides audit and non-audit services to non-consolidated entities, including non-consolidated trusts of which a member of
the NZ Banking Group is manager or responsible entity and non-consolidated superannuation funds or pension funds. During the year ended 30
September 2019, the fees in respect of these services were approximately $ 513,895 (30 September 2018: $ 483,425).

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 25
Note 6 Impairment charges/(benefits)
Accounting policy
As comparatives have not been restated upon the adoption of NZ IFRS 9, the accounting policy applied in 2019 differs to that applied in comparative
periods. The accounting policy applied in comparative periods is discussed in Note 35. The accounting policy applied in 2019 is as follows.
Impairment charges are based on an expected loss model which measures the difference between the current carrying amount and the present value
of expected future cash flows taking into account past experience, current conditions and multiple probability-weighted macroeconomic scenarios for
reasonably supportable future economic conditions. Further details of the calculation of expected credit losses and the critical accounting
assumptions and estimates relating to impairment charges are included in Note 12.
Impairment charges are recognised in the income statement, with a corresponding amount recognised as follows:
Loans at amortised cost: as a reduction of the carrying value of the financial asset through an offsetting provision account (refer to Note 12);
Investment securities: in reserves in other comprehensive income with no reduction of the carrying value of the debt security (refer to the
statement of changes in equity); and
Credit commitments: as a provision (refer to Note 20).
Uncollectable loans
A loan may become uncollectable in full or part if, after following the NZ Banking Group’s loan recovery procedures, the NZ Banking Group remains
unable to collect that loan’s contractual repayments. Uncollectable amounts are written off against their related provision for expected credit losses,
after all possible repayments have been received.
Where loans are secured, amounts are generally written off after receiving the proceeds from the security, or in certain circumstances, where the net
realisable value of the security has been determined and this indicates that there is no reasonable expectation of full recovery, write-off may be earlier.
Unsecured consumer loans are generally written off after 180 days past due.
The NZ Banking Group may subsequently be able to recover cash flows from loans written off. In the period which these recoveries are made, they are
recognised in the income statement.
The following table details impairment charges for the year ended 30 September 2019 based on the requirements of NZ IFRS 9.
NZ BANKING GROUP
$ millions2019
Provisions raised/(released):
Performing (35)
Non-performing (3)
Bad debts written-off/(recovered) directly to the income statement 28
Impairment charges/(benefits) (10)
of which relates to:
Loans and credit commitments (10)
Investment securities -
Impairment charges/(benefits) (10)
Impairment losses on other financial assets are not material to the NZ Banking Group.
As comparatives have not been restated for the adoption of NZ IFRS 9, the following table details impairment charges for the year ended 30
September 2018 based on the requirements of NZ IAS 39. In subsequent reporting periods, as NZ IFRS 9 will have been effective for this disclosure
for all periods presented in the Disclosure Statement, this table will no longer be required.
NZ BANKING GROUP
$ millions2018
Individually assessed provisions raised 28
Reversal of previously recognised impairment charges (18)
Collectively assessed provisions raised/(released) (34)
Bad debts written-off/(recovered) directly to the income statement
21
Total impairment charges/(benefits) (3)

Notes to the financial statements
26 Westpac Banking Corporation - New Zealand Banking Group
Note 7 Income tax expense
Accounting policy
The income tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it
relates to items recognised directly in other comprehensive income, in which case it is recognised in the statement of comprehensive income.
Current tax is the tax payable for the year using enacted or substantively enacted tax rates and laws. Current tax also includes adjustments to tax
payable for previous years.
Goods and services tax (‘GST’)
Revenue, expenses and assets are recognised net of GST except to the extent that GST is not recoverable from the New Zealand Inland Revenue.
In these circumstances, GST is recognised as part of the expense or the cost of the asset.
Critical accounting assumptions and estimates
Significant judgement is required in determining the current tax liability. There may be transactions with uncertain tax outcomes and provisions
are determined based on the expected outcomes.
NZ BANKING GROUP
$ millions
2019
2018
Income tax expense
Current tax:
Current year414424
Prior year adjustments4-
Deferred tax (refer to Note 15):
Current year 1010
Prior year adjustments
(5)(3)
Total income tax expense
423
431
Profit before income tax1,5521,548
Tax calculated at tax rate of 28%
435433
Income not subject to tax
(11)-
Expenses not deductible for tax purposes
-2
Prior year adjustments
(1)(3)
Other items
-(1)
Total income tax expense423431
The effective tax rate for the year ended 30 September 2019 was 27.3% (30 September 2018: 27.8%).
Note 8 Imputation credit account
NZ BANKING GROUP
$ millions20192018
Imputation credits available for use in subsequent reporting periods
1,2351,072

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 27
Note 9 Trading securities and financial assets measured at FVIS
Accounting policy
Trading securities
Trading securities include actively traded debt (government, semi-government and other) and those acquired for sale in the near term and are
held at fair value.
Reverse repurchase agreements
Securities purchased under these agreements are not recognised on the balance sheet, as the NZ Banking Group has not obtained the risks and
rewards of ownership. The cash consideration paid is recognised as a reverse repurchase agreement, which forms part of a trading portfolio that
is measured at fair value.
Gains and losses on these financial assets are recognised in the income statement. Interest earned from debt securities is recognised in interest
income (refer to Note 2).
NZ BANKING GROUP
$ millions20192018
Government and semi-government securities1,4211,143
Other debt securities
2,409
1,657
Reverse repurchase agreements
1,041
216
Total trading securities and financial assets measured at FVIS4,8713,016
Note 10 Investment securities/Available-for-sale securities
Accounting policy
As comparatives have not been restated upon the adoption of NZ IFRS 9 the accounting policy applied in 2019 differs to that applied in
comparative years. The accounting policy applied in comparative years is discussed in Note 35. The accounting policy applied in 2019 is as follows.
Investment securities include debt securities (government and other) that are measured at FVOCI. These instruments are classified based on the
criteria disclosed under the heading “Financial assets and financial liabilities” in Note 1.
Debt securities measured at FVOCI
Includes debt instruments that have contractual cash flows which represent SPPI on the principal balance outstanding and they are held within a
business model whose objective is achieved both through collecting these cash flows or selling the financial asset.
These securities are measured at fair value with gains and losses recognised in other comprehensive income except for interest income,
impairment charges and foreign exchange gains and losses which are recognised in the income statement.
Impairment is measured using the same ECL model applied to financial assets measured at amortised cost. Impairment is recognised in the
income statement with a corresponding amount in other comprehensive income with no reduction of the carrying value of the debt security which
remains at fair value. Refer to Note 12 for further details.
The cumulative gain or loss recognised in other comprehensive income is subsequently recognised in the income statement when the instrument
is disposed.
Balances recognised under NZ IFRS 9
NZ BANKING GROUP
$ millions2019
1
Government and semi-government securities2,599
Other debt securities1,870
Total investment securities4,469
Balances recognised under NZ IAS 39
NZ BANKING GROUP
$ millions2018
1
Government and semi-government securities2,155
Other debt securities1,655
Total available-for-sale securities3,810
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated.

Notes to the financial statements
28 Westpac Banking Corporation - New Zealand Banking Group
Note 11 Loans
Accounting policy
As comparatives have not been restated upon the adoption of NZ IFRS 9 the accounting policy applied in 2019 differs to that applied in
comparative years. The accounting policy applied in comparative years is discussed in Note 35. The accounting policy applied in 2019 is as follows.
Loans are financial assets initially recognised at fair value plus directly attributable transaction costs and fees.
Loans are subsequently measured at amortised cost using the effective interest rate method where they have contractual cash flows which
represent SPPI on the principal balance outstanding and they are held within a business model whose objective is achieved through holding the
loans to collect these cash flows. They are presented net of any provisions for ECL.
Loan products that have both mortgage and deposit facilities are presented gross on the balance sheet, segregating the asset and liability
component, because they do not meet the criteria to be offset. Interest earned on these products is presented on a net basis in the income
statement as this reflects how the customer is charged.
The following table shows loans disaggregated by types of credit exposure:
NZ BANKING GROUP
$ millions2019
1,2
2018
1,2
Residential mortgages 51,504 48,893
Other retail 3,753 3,928
Corporate 29,579 28,085
Other
111 278
Total gross loans 84,947 81,184
Provisions for ECL/impairment charges on loans (refer to Note 12) (321) (324)
Total net loans 84,626 80,860
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
2
The NZ Banking Group has changed the presentation of loan categories for consistency with the types of credit exposures defined in the Reserve Bank of New
Zealand (‘Reserve Bank’) Capital Adequacy Framework (Internal Models Based Approach) (‘BS2B’). This has no effect on the balance sheet or income statement.
Comparatives have been restated.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 29
Note 12 Provisions for expected credit losses/impairment charges
Accounting policy
As comparatives have not been restated upon the adoption of NZ IFRS 9 the accounting policy applied in 2019 differs to that applied in
comparative years. The accounting policy applied in comparative years is discussed in Note 35. The accounting policy applied in 2019 is as follows.
Note 6 provides details of impairment charges.
Impairment under NZ IFRS 9 applies to all financial assets at amortised cost, investment securities and credit commitments.
The ECL determined under NZ IFRS 9 is recognised as follows:
Loans at amortised cost: as a reduction of the carrying value of the financial asset through an offsetting provision account (refer to Note 11);
Investment securities: in reserves in other comprehensive income with no reduction of the carrying value of the debt security itself (refer to
the statement of changes in equity); and
Credit commitments: as a provision (refer to Note 20).
Measurement
The NZ Banking Group calculates the provisions for ECL based on a three stage approach. ECL are a probability-weighted estimate of the cash
shortfalls expected to result from defaults over the relevant timeframe. They are determined by evaluating a range of possible outcomes and
taking into account the time value of money, past events, current conditions and forecasts of future economic conditions.
The models use three main components to determine the ECL (as well as the time value of money) including:
Probability of default (‘PD’): the probability that a counterparty will default;
Loss given default (‘LGD’): the loss that is expected to arise in the event of a default; and
Exposure at default (‘EAD’): the estimated outstanding amount of credit exposure at the time of the default.
Model stages
The three stages are as follows:
Stage 1: 12 months ECL - performing
For financial assets where there has been no significant increase in credit risk since origination a provision for 12 months ECL is recognised.
Stage 2: Lifetime ECL – performing
For financial assets where there has been a significant increase in credit risk since origination but where the asset is still performing a provision for
lifetime ECL is recognised. The indicators of a significant increase in credit risk are described on the following page.
Stage 3: Lifetime ECL – non-performing
For financial assets that are non-performing a provision for lifetime ECL is recognised. Indicators include a breach of contract with the NZ Banking
Group such as a default on interest or principal payments, a borrower experiencing significant financial difficulties or observable economic
conditions that correlate to defaults on a group of loans.
Financial assets in stage 3 are those that are in default. A default occurs when the NZ Banking Group considers that the customer is unlikely to
repay its credit obligations in full, irrespective of recourse by the NZ Banking Group to actions such as realising security, or the customer is more
than 90 days past due on any material credit obligation. This definition of default is aligned to the Reserve Bank regulatory definition of default.
Collective and individual assessment
Financial assets that are in stages 1 and 2 are assessed on a collective basis as are financial assets in stage 3 below specified thresholds. Financial
assets that are collectively assessed are grouped in pools of similar assets with similar credit risk characteristics including the type of product and
the customer risk grade. Those financial assets in stage 3 above the specified thresholds are assessed on an individual basis.
Expected life
In considering the lifetime time frame for expected credit losses in stages 2 and 3, the standard generally requires use of the remaining
contractual life adjusted where appropriate for prepayments, extension and other options. For certain revolving credit facilities which include
both a drawn and undrawn component (e.g. credit cards and revolving lines of credit), the NZ Banking Group’s contractual ability to demand
repayment and cancel the undrawn commitment does not limit our exposure to credit losses to the contractual notice period. For these facilities,
lifetime is based on historical behaviour.
Movement between stages
Assets may move in both directions through the stages of the impairment model. Assets previously in stage 2 may move back to stage 1 if it is no
longer considered that there has been a significant increase in credit risk. Similarly, assets in stage 3 may move back to stage 1 or stage 2 if they
are no longer assessed to be non-performing.

Notes to the financial statements
30 Westpac Banking Corporation - New Zealand Banking Group
Note 12 Provisions for expected credit losses/impairment charges (continued)
Accounting policy (continued)
Critical accounting assumptions and estimates
Key judgements include when a significant increase in credit risk has occurred and estimation of forward looking macroeconomic information.
Other factors which can impact the provision include the borrower’s financial situation, the realisable value of collateral, the NZ Banking Group’s
position relative to other claimants, the reliability of customer information and the likely cost and duration of recovering the loan.
Significant increase in credit risk
Determining when a financial asset has experienced a significant increase in credit risk since origination is a critical accounting judgement which is
primarily based on changes in internal customer risk grades since origination of the facility. A change in an internal customer risk grade is based
on both quantitative and qualitative factors. The change in the internal customer risk grade that the NZ Banking Group uses to represent a
significant increase in credit risk is based on a sliding scale. This means that a higher credit quality exposure at origination would require a more
significant downgrade compared to a lower credit quality exposure before it is considered to have experienced a significant increase in credit risk.
The NZ Banking Group does not rebut the presumption that instruments that are 30 days past due have experienced a significant increase in risk
but this is used as a backstop rather than the primary indicator.
The NZ Banking Group does not apply the low credit risk exemption which assumes investment grade facilities do not have a significant increase in
credit risk.
Forward looking macroeconomic information
The measurement of ECL for each stage and the assessment of significant increase in credit risk consider information about past events and
current conditions as well as reasonable and supportable projections of future events and economic conditions. The estimation of forward looking
information is a critical accounting judgement. The NZ Banking Group considers three future macroeconomic scenarios including a base case
scenario along with upside and downside scenarios.
The macroeconomic variables used in these scenarios, based on current economic forecasts, include (but are not limited to) Reserve Bank bill
rates, real gross domestic product growth rates and residential and commercial property price indices.
Base case scenario
This scenario utilises the internal NZ Banking Group economics forecast used for strategic decision making and forecasting.
Upside scenario
This scenario represents a modest improvement on the base case scenario.
Downside scenario
This scenario represents a moderate recession.
The macroeconomic scenarios are weighted based on the NZ Banking Group’s best estimate of the relative likelihood of each scenario. The
weighting applied to each of the three macroeconomic scenarios takes into account historical frequency, current trends, and forward looking
conditions.
The macroeconomic variables and probability weightings of the three macroeconomic scenarios are subject to the approval of the NZ Banking
Group’s Chief Financial Officer and Chief Risk Officer with oversight from the Board of Directors (and its Committees).
Where appropriate, adjustments will be made to modelled outcomes to reflect reasonable and supportable information not already incorporated
in the models.
Judgements can change with time as new information becomes available which could result in changes to the provision for expected credit
losses.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 31
Note 12 Provisions for expected credit losses/impairment charges (continued)
Loans and credit commitments
The reconciliation of the provision for ECL tables for loans and credit commitments as at 30 September 2019 below are based on the requirements
of NZ IFRS 9. They have been determined by an aggregation of monthly movements over the year. The key line items in the reconciliation
represent the following:
The transfers between stages lines represent transfers between stage 1, stage 2 and stage 3 prior to remeasurement of the provision for ECL.
The other charges/(credits) to the income statement line represents the impact on the provision for ECL due to changes in credit quality
during the period (including transfers between stages), changes due to forward looking economic scenarios and partial repayments and
additional drawdowns on existing facilities over the year.
Write-offs represent a reduction in the provision for ECL as a result of derecognition of exposures where there is no reasonable expectation
of full recovery.
Movements in components of loss allowance - total
NZ BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Restated provision for ECL as at 1 October 2018 103 203 53 36 395
Due to changes in credit quality:
Transfers to Stage 1 261 (245) (16) - -
Transfers to Stage 2 (16) 43 (26) (1) -
Transfers to Stage 3 CAP - (38) 42 (4) -
Transfers to Stage 3 IAP - - (8) 8 -
Reversals of previously recognised impairment charges - - - (15) (15)
New financial assets originated 24 - - - 24
Financial assets derecognised during the year (19) (41) (21) - (81)
Changes in CAP due to amounts written off - - (53) - (53)
Other charges/(credits) to the income statement (262) 258 82 9 87
Total charges/(credits) to the income statement for ECL (12) (23) - (3) (38)
Amounts written off from IAP - - - (5) (5)
Total provision for ECL on loans and credit commitments as
at 30 September 2019
91 180 53 28 352
Presented as:
Provision for ECL on loans (refer to Note 11) 76 164 53 28 321
Provision for ECL on credit commitments (refer to Note 20) 15 16 - - 31
Total provision for ECL on loans and credit commitments as
at 30 September 2019
91 180 53 28 352

Notes to the financial statements
32 Westpac Banking Corporation - New Zealand Banking Group
Note 12 Provisions for expected credit losses/impairment charges (continued)
Impacts of changes in gross financial assets on loss allowances - total
The following table explains how changes in gross carrying amounts of loans during the year have contributed to changes in the provisions for ECL
on loans.
NZ BANKING GROUP
Performing Non-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Total gross carrying amount at the beginning of the year 76,946 3,775 383 80 81,184
Transfers:
Transfers to Stage 1 4,205 (4,108) (92) (5) -
Transfers to Stage 2 (5,058) 5,176 (115) (3) -
Transfers to Stage 3 CAP (158) (347) 519 (14) -
Transfers to Stage 3 IAP (6) (2) (40) 48 -
Net further lending/(repayment) (2,475) 228 (76) (24) (2,347)
New financial assets originated 17,749 - - - 17,749
Financial assets derecognised during the year (10,768) (658) (147) (8) (11,581)
Amounts written-off - - (53) (5) (58)
Total gross carrying amount as at 30 September 2019 80,435 4,064 379 69 84,947
Provision for ECL as at 30 September 2019 (76) (164) (53) (28) (321)
Total net carrying amount as at 30 September 2019 80,359 3,900 326 41 84,626
Sensitivity of the provision for ECL
As noted in the accounting policy, the critical accounting assumptions in determining the provision for ECL are the determination of a significant
increase in credit risk and the use of probability weighted forward looking macroeconomic scenarios.
Staging sensitivity
If 1% of the stage 1 gross exposure from loans and credit commitments (calculated on a 12 month ECL) was reflected in stage 2 (calculated on a
lifetime ECL) the provision for ECL would increase by $26 million for the NZ Banking Group based on applying the average provision coverage
ratios by stage to the movement in the gross exposure by stage.
Weighting of macroeconomic scenarios
The NZ Banking Group uses three macro-economic scenarios which are probability weighted based on the NZ Banking Group’s best estimate of
the relative likelihood of each scenario.
The NZ Banking Group assigned a weighting of 62.5% to the base case scenario, 27.5% to the downside scenario and 10% to the upside scenario
as at 30 September 2019. During September 2019 there was a 2.5% reduction in the weighting on the base case scenario from 65% and a
corresponding 2.5% increase in the weighting on the downside scenario from 25%. The increase in weighting to the downside scenario was
primarily driven by global economic uncertainties.
The base case scenario utilises the NZ Banking Group’s economic forecasts and assumes the following one-year outlook: GDP growth of 3.2%, an
increase in the rate of growth in commercial property prices and residential property prices to 7% and Reserve Bank bill rate of 1.15%.
The downside scenario represents a moderate recession. In this scenario there is negative GDP growth, declines in commercial and residential
property prices and lower interest rates.
The following table shows the reported provision for ECL based on the probability weighted scenarios and what the provisions for ECL would be
assuming a 100% weighting is applied to the base case scenario and to the downside scenario (with all other assumptions held constant).
NZ BANKING GROUP
$ millions2019
Reported probability-weighted ECL
352
100% base case ECL
259
100% downside ECL596
Write-offs still under enforcement activity
The amount of current year write-offs which remain subject to enforcement activity was $43 million for the NZ Banking Group.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 33
Note 12 Provisions for expected credit losses/impairment charges (continued)
Movements in components of loss allowance – by types of credit exposure
The provisions for ECL on loans and credit commitments can be further disaggregated into the following types of credit exposure:
NZ BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Residential mortgages
Restated provision for ECL as at 1 October 2018 33 25 25 7 90
Due to changes in credit quality:
Transfers to Stage 1 22 (16) (6) - -
Transfers to Stage 2 (3) 11 (8) - -
Transfers to Stage 3 CAP - (4) 5 (1) -
Transfers to Stage 3 IAP - - (3) 3 -
Reversals of previously recognised impairment charges - - - (3) (3)
New financial assets originated 5 - - - 5
Financial assets derecognised during the year (3) (3) (14) - (20)
Changes in CAP due to amounts written off - - (2) - (2)
Other charges/(credits) to the income statement (32) 6 34 2 10
Total charges/(credits) to the income statement for ECL (11) (6) 6 1 (10)
Amounts written off from IAP - - - (2) (2)
Total provision for ECL as at 30 September 2019 22 19 31 6 78
Other retail
Restated provision for ECL as at 1 October 2018 50 64 18 3 135
Due to changes in credit quality:
Transfers to Stage 1 232 (223) (9) - -
Transfers to Stage 2 (10) 26 (16) - -
Transfers to Stage 3 CAP - (30) 31 (1) -
Transfers to Stage 3 IAP - - - - -
Reversals of previously recognised impairment charges - - - (4) (4)
New financial assets originated 12 - - - 12
Financial assets derecognised during the year (13) (21) (4) - (38)
Changes in CAP due to amounts written off - - (51) - (51)
Other charges/(credits) to the income statement (225) 239 50 5 69
Total charges/(credits) to the income statement for ECL (4) (9) 1 - (12)
Amounts written off from IAP - - - (3) (3)
Total provision for ECL as at 30 September 2019 46 55 19 - 120
Corporate
Restated provision for ECL as at 1 October 2018 20 114 10 26 170
Due to changes in credit quality:
Transfers to Stage 1 7 (6) (1) - -
Transfers to Stage 2 (3) 6 (2) (1) -
Transfers to Stage 3 CAP - (4) 6 (2) -
Transfers to Stage 3 IAP - - (5) 5 -
Reversals of previously recognised impairment charges - - - (8) (8)
New financial assets originated 7 - - - 7
Financial assets derecognised during the year (3) (17) (3) - (23)
Changes in CAP due to amounts written off - - - - -
Other charges/(credits) to the income statement (5) 13 (2) 2 8
Total charges/(credits) to the income statement for ECL 3 (8) (7) (4) (16)
Amounts written off from IAP - - - - -
Total provision for ECL as at 30 September 2019 23 106 3 22 154
The above movements in components of loss allowance table does not include ‘Other’ credit exposures on the basis that the provision for ECL is
nil.

Notes to the financial statements
34 Westpac Banking Corporation - New Zealand Banking Group
Note 12 Provisions for expected credit losses/impairment charges (continued)
Impacts of changes in gross financial assets on loss allowances – by types of credit exposure
The impacts of changes in gross carrying amounts of loans on expected loss allowance can be further disaggregated into the following types of
credit exposure:
NZ BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
Total
$ millions
CAPCAPCAPIAP
Residential mortgages
Total gross carrying amount at the beginning of the year 47,254 1,364 264 11 48,893
Transfers:
Transfers to Stage 1 1,670 (1,598) (67) (5) -
Transfers to Stage 2 (2,068) 2,144 (74) (2) -
Transfers to Stage 3 CAP (125) (182) 311 (4) -
Transfers to Stage 3 IAP (6) (2) (21) 29 -
Net further lending/(repayment) (1,825) (51) (15) (3) (1,894)
New financial assets originated 10,307 - - - 10,307
Financial assets derecognised during the year (5,454) (226) (111) (7) (5,798)
Amounts written-off - - (2) (2) (4)
Total gross carrying amount as at 30 September 2019 49,753 1,449 285 17 51,504
Provision for ECL as at 30 September 2019 (19) (18) (31) (6) (74)
Total net carrying amount as at 30 September 2019 49,734 1,431 254 11 51,430
Other retail
Total gross carrying amount at the beginning of the year 3,668 208 48 4 3,928
Transfers:
Transfers to Stage 1 918 (903) (15) - -
Transfers to Stage 2 (900) 919 (19) - -
Transfers to Stage 3 CAP (19) (102) 123 (2) -
Transfers to Stage 3 IAP - - (4) 4 -
Net further lending/(repayment) (371) 120 (12) - (263)
New financial assets originated 832 - - - 832
Financial assets derecognised during the year (618) (52) (19) (1) (690)
Amounts written-off - - (51) (3) (54)
Total gross carrying amount as at 30 September 2019 3,510 190 51 2 3,753
Provision for ECL as at 30 September 2019 (37) (51) (19) - (107)
Total net carrying amount as at 30 September 2019 3,473 139 32 2 3,646
Corporate
Total gross carrying amount at the beginning of the year 25,748 2,201 71 65 28,085
Transfers:
Transfers to Stage 1 1,617 (1,607) (10) - -
Transfers to Stage 2 (2,090) 2,113 (22) (1) -
Transfers to Stage 3 CAP (14) (63) 85 (8) -
Transfers to Stage 3 IAP - - (15) 15 -
Net further lending/(repayment) (53) 127 (49) (21) 4
New financial assets originated 6,335 - - - 6,335
Financial assets derecognised during the year (4,482) (346) (17) - (4,845)
Amounts written-off - - - - -
Total gross carrying amount as at 30 September 2019 27,061 2,425 43 50 29,579
Provision for ECL as at 30 September 2019 (20) (95) (3) (22) (140)
Total net carrying amount as at 30 September 2019 27,041 2,330 40 28 29,439
The above gross carrying amount table does not include 'Other' credit exposures (refer to Note 11) on the basis that the provision for ECL is nil.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 35
Note 12 Provisions for expected credit losses/impairment charges (continued)
Comparative year information under NZ IAS 39
As comparatives have not been restated for the adoption of NZ IFRS 9, the following table reconciles the 30 September 2018 provision for
impairment charges on loans and credit commitments based on the requirements of NZ IAS 39. In subsequent reporting periods, as NZ IFRS 9 will
have been effective for this disclosure for all periods presented in the Disclosure Statement, this table will no longer be required.
NZ BANKING GROUP
2018
Residential
$ millions
MortgagesOther RetailCorporateOtherTotal
Neither past due nor impaired47,9743,72627,77527879,753
Past due but not impaired assets
Less than 30 days past due739143162-1,044
At least 30 days but less than 60 days past due80256-111
At least 60 days but less than 90 days past due33102-45
At least 90 days past due431825-86
Total past due assets not impaired895196195-1,286
Individually impaired assets
Balance at beginning of the year325136-173
Additions31840-79
Amounts written off(6)(2)(14)-(22)
Returned to performing or repaid(33)(5)(47)-(85)
Balance at end of the year246115-145
Total gross loans48,8933,92828,08527881,184
Individually assessed provisions
Balance at beginning of the year7536-48
Impairment charges/(benefits):
New provisions9217-28
Reversal of previously recognised impairment charges(3)(2)(13)-(18)
Amounts written off(6)(2)(14)-(22)
Balance at end of the year7326-36
Collectively assessed provisions
Balance at beginning of the year5497181-332
Impairment charges/(benefits)(2)(10)(22)-(34)
Interest adjustments21210-24
Balance at end of the year5499169-322
Total provisions for impairment charges on loans and credit
commitments
61 102 195 - 358
Provision for credit commitments (refer to Note 20)-(4)(30)-(34)
Total provisions for impairment charges on loans6198165-324
Total net loans
1
48,8323,83027,92027880,860
1
Total net loans represent the estimated recoverable amounts which are net of provisions for impairment.
Note 13 Other financial assets
NZ BANKING GROUP
$ millions2019
1
2018
1
Accrued interest receivable 137 160
Trade debtors 5 6
Securities sold not delivered 79 159
Interbank lending 72 57
Other 107 86
Total other financial assets 400 468
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.

Notes to the financial statements
36 Westpac Banking Corporation - New Zealand Banking Group
Note 14 Life insurance assets
Accounting policy
The NZ Banking Group conducts insurance business through one of its controlled entities, Westpac Life-NZ-Limited (‘Westpac Life’), which is
licensed under the Insurance (Prudential Supervision) Act 2010 (‘IPSA’).
Life insurance assets include investments held by the NZ Banking Group’s life insurance company and net insurance policy assets relating to life
insurance contracts.
Investments held by the NZ Banking Group's life insurance company, including investments in funds managed by the NZ Banking Group and other
debt securities, are designated at FVIS. Changes in the fair value are recognised in non-interest income. The determination of fair value involves
the same judgements as other financial assets, which are described in the critical accounting assumptions and estimates in Note 24.
The value of net insurance policy assets is calculated using the margin on services methodology ('MoS'), in accordance with New Zealand
Societies of Actuaries Professional Standard 20 Determination of Life Insurance Policy Liabilities.
MoS accounts for the associated risks and uncertainties of each type of life insurance contract written. At each reporting date, planned profit
margins and an estimate of future liabilities are calculated. Profit margins are released to non-interest income over the period that life insurance is
provided to the policyholders. The cost incurred in acquiring specific insurance contracts is deferred provided that these amounts are recoverable
out of planned profit margins. The deferred amounts are recognised as a reduction in life insurance policy liabilities and are amortised to non-
interest income over the same period as the planned profit margins.
It is a requirement of the IPSA that a life insurance company must have at least one statutory fund in respect of its life insurance business. A
statutory fund was established by Westpac Life on 1 October 2012. The statutory fund is subject to restrictions imposed under IPSA. The main
restrictions are:
that the assets in the statutory fund are only available to meet the liabilities and expenses of the life insurance business and cannot be used to
support any other business of the life insurance company; and
distribution of the retained profits of a statutory fund may only be made when certain solvency and other requirements are met.
Refer to Note 3 for details on the accounting policy related to net life insurance income and change in policy liabilities.
Critical accounting assumptions and estimates
The key factors that affect the estimation of net insurance policy assets are:
the cost of providing benefits and administrating contracts;
mortality and morbidity experience which includes policyholder benefit enhancements;
discontinuance rates, which affects the NZ Banking Group’s ability to recover the cost of acquiring new business over the life of the contracts;
and
the discount rate of projected future cash flows.
Regulation, competition, interest rates, taxes, securities market conditions and general economic conditions also affect the estimation of net
insurance policy assets.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 37
Note 15 Deferred tax assets
Accounting policy
Deferred tax accounts for temporary differences between the carrying amounts of assets and liabilities in the financial statements and their values
for taxation purposes.
Deferred tax is determined using the enacted or substantively enacted tax rates and laws which are expected to apply when the assets will be
realised or the liabilities settled.
Deferred tax assets and liabilities have been offset where they relate to the same taxation authority, the same taxable entity or group and where
there is a legal right and intention to settle on a net basis.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available to utilise the assets.
Deferred tax is not recognised for the following temporary differences:
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither the accounting nor
taxable profit or loss; and
the initial recognition of goodwill in a business combination.
Critical accounting assumptions and estimates
On a similar basis to that described in Note 7, determining deferred tax assets and liabilities is considered one of the NZ Banking Group’s critical
accounting assumptions and estimates.
NZ BANKING GROUP
$ millions20192018
Deferred tax assets/(liabilities) comprise the following temporary differences:
Provisions for ECL/impairment charges on loans
1
90 94
Provisions for ECL/impairment charges on credit commitments
1
9 10
Cash flow hedges
29 26
Provision for employee entitlements
22 16
Compliance, regulation and remediation provisions
13 5
Software, property and equipment
11 10
Life insurance policy liabilities
(43) (35)
Financial instruments
8 4
Other temporary differences
(1) (3)
Net deferred tax assets
138 127
The deferred tax (charge)/credit in income tax expense comprises the following temporary
differences:
Provisions for ECL/impairment charges on loans
1
(12) (7)
Provisions for ECL/impairment charges on credit commitments
1
(3) 2
Provision for employee entitlements
2 2
Compliance, regulation and remediation provisions
8 5
Software, property and equipment
1 1
Life insurance policy liabilities
(8) (2)
Financial instruments
4 (2)
Other temporary differences
3 (6)
Total deferred tax (charge)/credit in income tax expense
(5) (7)
The deferred tax (charge)/credit in other comprehensive income comprises the following
temporary differences:
Cash flow hedges
3 (3)
Provision for employee entitlements
4 1
Total deferred tax (charge)/credit in other comprehensive income
7 (2)
The deferred tax adjustment to opening retained earnings comprises the following temporary
differences:
Provisions for ECL/impairment charges on loans
1
8 -
Provisions for ECL/impairment charges on credit commitments
1
2 -
Other temporary differences
1
(1) -
Total deferred tax adjustment to opening retained earnings
9 -
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. Refer to Note 1 for further details.

Notes to the financial statements
38 Westpac Banking Corporation - New Zealand Banking Group
Note 16 Intangible assets
Accounting policy
Indefinite life intangible assets
Goodwill
Goodwill acquired in a business combination is initially measured at cost, generally being the excess of:
i. the consideration paid; over
ii. the net fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Subsequently, goodwill is not amortised but rather tested for impairment. Impairment is tested at least annually or whenever there is an
indication of impairment. An impairment charge is recognised when a cash generating unit’s (CGU) carrying value exceeds its recoverable
amount. Recoverable amount means the higher of the CGU’s fair value less costs to sell and its value-in-use.
Finite life intangible assets
Finite life intangibles include computer software which are recognised initially at cost and subsequently at amortised cost less any impairment.
IntangibleUseful lifeDepreciation method
GoodwillIndefiniteNot applicable
Computer software3 to 8 yearsStraight-line or diminishing balance method (using the Sum of the Years Digits)
Critical accounting assumptions and estimates
Judgement is required in determining the fair value of assets and liabilities acquired in a business combination. A different assessment of fair
values would have resulted in a different goodwill balance and different post-acquisition performance of the acquired entity.
When assessing impairment of intangible assets, significant judgement is needed to determine the appropriate cash flows and discount rates to
be applied to the calculations. The significant assumptions applied to the value-in-use calculations are outlined below.
NZ BANKING GROUP
$ millions20192018
Goodwill525525
Computer software
160158
Total intangible assets
685683
Significant assumptions used in recoverable amount calculations
Assumptions are used to determine the CGU’s recoverable amount for goodwill, which is based on value-in-use calculations. Value-in-use refers
to the present value of expected cash flows under its current use. The NZ Banking Group discounts the projected cash flows by its adjusted pre-
tax equity rate.
NZ Banking Group’s equity rate was 11.0% (2018: 11.0%)
NZ Banking Group’s adjusted pre-tax equity rate was 15.3% (2018: 15.3%)
For the purpose of goodwill impairment testing, the assumptions in the following table are made for each significant CGU. The forecasts applied
by management are not reliant on any one particular assumption.
AssumptionBased on:
Cash flowsZero growth rate beyond 2 year forecast
Economic market conditionsCurrent market expectations
Business performanceObservable historical information and current market expectations of the future
There are no reasonably possible changes in assumptions for any significant CGU that would result in an indication of impairment or have a
material impact on the NZ Banking Group’s reported results.
Goodwill has been allocated to the following CGUs:
NZ BANKING GROUP
$ millions20192018
Consumer Banking and Wealth512512
BT New Zealand
1
1313
Net carrying amount of goodwill
525525
1
BT New Zealand forms part of the Investments and Insurance operating segment, as described in Note 28.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 39
Note 17 Deposits and other borrowings
Accounting policy
Deposits and other borrowings are initially recognised at fair value and subsequently either measured at amortised cost using the effective
interest rate method or at fair value.
Deposits and other borrowings are designated at fair value if they are managed on a fair value basis, reduce or eliminate an accounting mismatch,
or contain an embedded derivative.
Where they are measured at fair value, any changes in fair value (except those due to changes in credit risk) are recognised as non-interest
income.
The change in the fair value that is due to changes in credit risk is recognised in other comprehensive income except where it would create an
accounting mismatch, in which case it is also recognised in the income statement.
Interest expense incurred is recognised in net interest income using the effective interest rate method.
NZ BANKING GROUP
$ millions
20192018
Certificates of deposit 1,142 1,218
Non-interest bearing, repayable at call 6,871 5,903
Other interest bearing:
At call 24,053 23,335
Term 33,540
32,649
Total deposits and other borrowings 65,606 63,105
Deposits at fair value 1,142 1,221
Deposits at amortised cost 64,464 61,884
Total deposits and other borrowings 65,606 63,105
Note 18 Other financial liabilities
Accounting policy
Other financial liabilities include liabilities measured at amortised cost as well as liabilities which are measured at FVIS. Financial liabilities
measured at FVIS include:
trading liabilities (i.e. securities sold short); and
liabilities designated at fair value through income statement (i.e. certain repurchase agreements)
Repurchase agreements
Where securities are sold subject to an agreement to repurchase at a predetermined price, they remain recognised on the balance sheet in their
original category (i.e. trading securities and financial assets measured at FVIS or investment securities).
The cash consideration received is recognised as a liability (repurchase agreements). Repurchase agreements are designated at fair value as they
are managed as part of a trading portfolio and recognised as part of other financial liabilities.
Where a repurchase agreement is designated at fair value, subsequent to initial recognition, these liabilities are measured at fair value with
changes in fair value (except credit risk) recognised through the income statement as they arise. The change in fair value that is attributable to
credit risk is recognised in other comprehensive income except where it would create an accounting mismatch, in which case it is also recognised
through the income statement.

Notes to the financial statements
40 Westpac Banking Corporation - New Zealand Banking Group
Note 18 Other financial liabilities (continued)
NZ BANKING GROUP
$ millions2019
1
2018
1
Accrued interest payable337361
Securities purchased not delivered
92
184
Trade creditors and other accrued expenses
65
56
Interbank placements
1,032662
Securities sold short
188
182
Repurchase agreements
19
41
Other15136
Total other financial liabilities1,7481,622
Other financial liabilities at fair value
207223
Other financial liabilities at amortised cost1,5411,399
Total other financial liabilities1,7481,622
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 41
Note 19 Debt issues
Accounting policy
Debt issues are bonds, notes and commercial paper that have been issued by the NZ Banking Group.
Debt issues are initially measured at fair value and subsequently either measured at amortised cost using the effective interest rate method or at
fair value.
Debt issues are designated at fair value if they reduce or eliminate an accounting mismatch.
The change in the fair value that is due to credit risk is recognised in other comprehensive income except where it would create an accounting
mismatch, in which case it is also recognised in non-interest income.
Interest expense incurred is recognised within net interest income using the effective interest rate method.
In the following table, the distinction between short-term (12 months or less) and long-term (greater than 12 months) debt is based on the original
maturity of the underlying security.
NZ BANKING GROUP
$ millions20192018
Short-term debt
Commercial paper 2,312 -
Total short-term debt 2,312 -
Long-term debt
Non-domestic medium-term notes 7,343 6,100
Covered bonds 5,263 5,640
Domestic medium-term notes 2,928 1,985
Total long-term debt 15,534 13,725
Total debt issues 17,846 13,725
Debt issues at fair value 2,312 -
Debt issues at amortised cost 15,534 13,725
Total debt issues 17,846 13,725
NZ BANKING GROUP
$ millions20192018
Movement reconciliation
Balance at beginning of the year
13,725 16,729
Issuances
8,707
550
Maturities, repayments, buy backs and reductions
(5,001)
(4,464)
Total cash movements 3,706 (3,914)
Foreign exchange translation impact
273
933
Fair value adjustments
-
(1)
Fair value hedge accounting adjustments
144
(27)
Other
1
(2)
5
Total non-cash movements 415 910
Balance at end of the year 17,846 13,725
1
Includes items such as amortisation of issue costs.

Notes to the financial statements
42 Westpac Banking Corporation - New Zealand Banking Group
Note 20 Provisions
Accounting policy
Provisions are recognised for present obligations arising from past events where a payment (or other economic transfer) is likely to be necessary
to settle the obligation and can be reliably estimated.
Employee benefits – annual leave and other employee benefits
The provision for annual leave and other employee benefits (including long service leave, wages and salaries, inclusive of non-monetary benefits,
and any associated on-costs (e.g. payroll tax)) is calculated based on expected payments.
Provision for impairment on credit commitments
The NZ Banking Group is committed to provide facilities and guarantees as explained in Note 27. If it is probable that a facility will be drawn and
the resulting asset will be less than the drawn amount then a provision for impairment is recognised. The provision for impairment is calculated
using the same methodology as the provision for expected credit losses (refer to Note 12).
Compliance, regulation and remediation provisions
The compliance, regulation and remediation provisions relate to matters pertaining to the provision of services to our customers identified both as
a result of regulatory action and internal reviews. An assessment of the likely cost to the NZ Banking Group of these matters (including applicable
customer refunds) is made on a case-by-case basis and specific provisions are made where appropriate.
NZ BANKING GROUP
$ millions20192018
Annual leave and other employee benefits 69 66
Provision for impairment on credit commitments (refer to Note 12) 31 34
Compliance, regulation and remediation provisions
1
48 17
Other 2 3
Total provisions 150 120
1
The NZ Banking Group has raised an additional provision of $44 million during the year ended 30 September 2019. This reflects an increase in the identified number
of instances where issues requiring remediation had occurred, together with associated interest and program costs. $11 million has been paid to customers and $2
million of unutilised provisions were reversed during the year ended 30 September 2019.
Note 21 Loan capital
Accounting policy
Loan capital are instruments which qualify for inclusion as regulatory capital under either the Reserve Bank Capital Adequacy Framework or, in
relation to the Overseas Bank, the Australian Prudential Regulation Authority (‘APRA’) Prudential Standards. Loan capital is initially measured at
fair value and subsequently measured at amortised cost using the effective interest rate method. Interest expense incurred is recognised in net
interest income.
NZ BANKING GROUP
$ millionsNote20192018
Additional Tier 1 loan capital - USD AT1 securities
1
2,064 1,731
Tier 2 loan capital - Convertible subordinated notes
1
22 1,121 1,135
Total loan capital 3,185 2,866
1
Net of capitalised transaction costs.
NZ BANKING GROUP
$ millions20192018
Movement reconciliation
Balance at beginning of the year
2,866 2,822
Total cash movements -
-
Foreign exchange translation impact 89 163
Fair value hedge accounting adjustments 229 (120)
Other
1
1 1
Total non-cash movements 319 44
Balance at end of the year 3,185 2,866
1
Includes items such as amortisation of issue costs.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 43
Note 21 Loan capital (continued)
Additional Tier 1 loan capital
A summary of the key terms and features of the Additional Tier 1 loan capital (‘USD AT1 securities’) is provided below.
$Issue dateInterest rateOptional redemption date
US$1,250 million securities
1
21 September 20175.00% p.a.
2
21 September 2027 and every fifth anniversary thereafter
1
The USD AT1 securities are issued by the Overseas Bank acting through its NZ Branch.
2
Fixed interest rate of 5.00% p.a., until, but excluding 21 September 2027 (the ‘first reset date’). Every fifth anniversary thereafter is a reset date. If the USD AT1
securities are not redeemed, converted or written-off by the first reset date, the interest rate from, and including, each reset date thereafter to, but excluding the
next succeeding reset date, will be a fixed rate per annum equal to the prevailing 5-year USD mid-market swap rate plus 2.888% per annum.
Interest payable
Semi-annual interest payments on the USD AT1 securities are at the absolute discretion of the Overseas Bank and will only be paid if the payment
conditions are satisfied, including that the interest payment will not result in a breach of the Overseas Bank’s capital requirements under APRA’s
prudential standards; not result in the Overseas Bank becoming, or being likely to become, insolvent; and if APRA does not object to the payment.
Broadly, if for any reason an interest payment has not been paid in full on the relevant payment date, the Overseas Bank must not determine or
pay any dividends on Overseas Bank ordinary shares or undertake a discretionary buy back or capital reduction of Overseas Bank ordinary shares,
unless the unpaid interest is paid in full within 20 business days of the relevant payment date or in certain other circumstances.
Redemption
The Overseas Bank may redeem all (but not some) USD AT1 securities on 21 September 2027 and every fifth anniversary thereafter, or for certain
taxation or regulatory reasons, subject to APRA’s prior written approval.
Conversion
If a capital trigger event or non-viability trigger event occurs, the Overseas Bank must convert some or all of the USD AT1 securities into a variable
number of Overseas Bank ordinary shares calculated using the formula described in the terms of the USD AT1 securities but subject to a maximum
conversion number. The conversion number of the Overseas Bank’s ordinary shares will be calculated using the outstanding principal amount of
each USD AT1 security translated into Australian dollars and the Overseas Bank ordinary share price determined over the five business day period
prior to the capital trigger event date or non-viability trigger event date and includes a 1% discount. The maximum conversion number is
calculated using the outstanding principal amount of each USD AT1 security translated into Australian dollars at the time of issue and the Overseas
Bank share price which is broadly equivalent to 20% of the Overseas Bank ordinary share price at the time of issue of the USD AT1 securities.
A capital trigger event occurs when the Overseas Bank determines, or APRA notifies the Overseas Bank in writing that it believes, the Overseas
Bank’s Common Equity Tier 1 Capital ratio is equal to or less than 5.125% (on a level 1 or level 2 basis). A non-viability trigger event will occur when
APRA notifies the Overseas Bank in writing that it believes conversion of all or some USD AT1 securities (or conversion or write-down of relevant
capital instruments of the Overseas Banking Group), or public sector injection of capital (or equivalent support), in each case is necessary
because without it, the Overseas Bank would become non-viable. No conversion conditions apply in these circumstances.
If conversion of the USD AT1 securities does not occur within five business days, holders’ rights in relation to the USD AT1 securities will be
immediately and irrevocably terminated.
Tier 2 loan capital
A summary of the key terms and features of the Tier 2 loan capital (‘Tier 2 notes’) is provided below.
$Issue dateCounterpartyInterest rateMaturity dateOptional redemption date
AU$1,040 million
notes
8 September
2015
London Branch of the
Overseas Bank
Australian 90 day bank bill
rate + 2.87% p.a.
22 March 2026
22 March 2021 and every interest
payment date thereafter
Interest payable
Interest payments on the Tier 2 notes are subject to Westpac New Zealand being solvent at the time of, and immediately following the interest
payment. Refer to Note 22.
Early redemption
Westpac New Zealand may elect to redeem all or some of the Tier 2 notes for their face value together with accrued interest (if any) on 22 March
2021 or any interest payment date thereafter, subject to the Reserve Bank’s prior written approval. Early redemption of all of the Tier 2 notes for
certain tax or regulatory reasons is permitted on an interest payment date subject to the Reserve Bank’s prior written approval.
Conversion
If a non-viability trigger event occurs, Westpac New Zealand must convert such number of the Tier 2 notes into a variable number of ordinary
shares issued by Westpac New Zealand (calculated with reference to the net assets of Westpac New Zealand and the total number of ordinary
shares on issue on the conversion date) that is sufficient to satisfy the direction of the Reserve Bank or the decision of the statutory manager. A
non-viability trigger event occurs when the Reserve Bank or the statutory manager (appointed pursuant to section 117 of the Reserve Bank Act)
directs Westpac New Zealand to convert or write off all or some of Westpac New Zealand’s Tier 2 notes. If conversion of the Tier 2 notes fails to
take effect within five business days, holders’ rights in relation to the Tier 2 notes will be immediately and irrevocably terminated.

Notes to the financial statements
44 Westpac Banking Corporation - New Zealand Banking Group
Note 22 Related entities
Related entities
The NZ Banking Group’s related parties are those it controls or can exert significant influence over. Examples include subsidiaries, associates, joint
ventures and superannuation plans as well as key management personnel and their related parties.
NZ Banking Group
The NZ Banking Group consists of the New Zealand operations of the Overseas Banking Group including the NZ Branch and the following
controlled entities as at 30 September 2019 whose business is required to be reported in the financial statements of the Overseas Banking Group’s
New Zealand business:
Name of entityPrincipal activityNotes
BT Financial Group (NZ) Limited (‘BTFGNZL’)Holding company
BT Funds Management (NZ) Limited (‘BTNZ’)Funds management company
Capital Finance New Zealand LimitedFinance company
Sie-Lease (New Zealand) Pty LimitedLeasing company
Westpac Financial Services Group-NZ-Limited (‘WFSGNZL’)Holding company
Westpac Life-NZ-Limited (‘Westpac Life’)Life insurance company
Westpac Nominees-NZ-Limited (‘WNNZL’)Nominee company
Westpac Superannuation Nominees-NZ-Limited (‘WSNNZL’)Nominee company
Westpac Group Investment-NZ-Limited (‘WGINZL’)Holding company
Westpac Holdings-NZ-Limited (‘WHNZL’)Holding company
Westpac Capital-NZ-Limited (‘WCNZL’)Finance company
Westpac Equity Investments NZ LimitedNon-active company
Westpac New Zealand Group Limited (‘WNZGL’)Holding company
Westpac New Zealand LimitedRegistered bank
Westpac NZ Operations Limited
1
Holding company
Aotearoa Financial Services LimitedNon-active company
Number 120 LimitedFinance company
The Home Mortgage Company LimitedResidential mortgage company
Westpac New Zealand Staff Superannuation Scheme Trustee
Limited
Trustee company
Westpac (NZ) Investments Limited (‘WNZIL’)Property company
Westpac Securities NZ Limited (‘WSNZL’)Funding company
Westpac NZ Covered Bond Holdings Limited (‘WNZCBHL’)Holding company19% owned
2
Westpac NZ Covered Bond Limited (‘WNZCBL’)Guarantor19% owned
2
Westpac NZ Securitisation Holdings Limited (‘WNZSHL’)Holding company19% owned
3
Westpac NZ Securitisation Limited (‘WNZSL’)Funding company19% owned
3
Westpac NZ Securitisation No.2 Limited (‘WNZSL2’)Non-active company19% owned
3
Westpac Cash PIE FundPortfolio investment entityNot owned
4
Westpac Notice Saver PIE FundPortfolio investment entityNot owned
4
Westpac Term PIE FundPortfolio investment entityNot owned
4
1
On 11 January 2019, WNZOL sold its 25% shareholding in Paymark Limited to Ingenico Group S.A, resulting in a gain on sale of $40 million which is recognised in
other non-interest income. Refer to Note 3.
2
The NZ Banking Group, through WNZOL (9.5%) and WHNZL (9.5%), has a total qualifying interest of 19% in WNZCBHL and its wholly-owned subsidiary company,
WNZCBL. Westpac New Zealand is considered to control both WNZCBHL and WNZCBL based on contractual arrangements in place, and as such both WNZCBHL
and WNZCBL are consolidated within the financial statements of the NZ Banking Group.
3
The NZ Banking Group, through WNZOL (9.5%) and WHNZL (9.5%), has a total qualifying interest of 19% in WNZSHL and its wholly-owned subsidiaries, WNZSL and
WNZSL2. Westpac New Zealand is considered to control WNZSHL, WNZSL and WNZSL2 based on contractual arrangements in place, and as such WNZSHL, WNZSL
and WNZSL2 are consolidated within the financial statements of the NZ Banking Group.
4
Westpac Term PIE Fund, Westpac Cash PIE Fund and Westpac Notice Saver PIE Fund (collectively referred to as the ‘PIE Funds’) were established as unit trusts.
The PIE Funds are Portfolio Investment Entities (‘PIE’), where BTNZ is the manager and issuer. The manager has appointed Westpac New Zealand to perform all
customer management and account administration for the PIE Funds. Westpac New Zealand is the PIE Funds’ registrar and administration manager. Westpac New
Zealand does not hold any units in the PIE Funds, however is considered to control them based on contractual arrangements in place, and as such the PIE Funds are
consolidated in the financial statements of the NZ Banking Group.
There have been no changes in the ownership percentages since 30 September 2018.
All entities in the NZ Banking Group are 100% owned unless otherwise stated. All the entities within the NZ Banking Group have a balance date of
30 September and are incorporated in New Zealand except the PIE Funds which have a balance date of 31 March.
Other significant related entities of the NZ Banking Group include branches of the Overseas Bank based in London, Sydney and New York.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 45
Note 22 Related entities (continued)
Nature of transactions
The NZ Banking Group has transactions with members of the Overseas Banking Group on commercial terms, including the provision of
management, distribution and administrative services and data processing facilities.
Loan finance and current account banking facilities are provided by the NZ Branch and the Overseas Bank to members of the NZ Banking Group on
normal commercial terms. The interest earned on these loans and the interest paid on deposits are at market rates.
The NZ Banking Group enters into derivative transactions with the Overseas Bank (refer to Note 23). They are accounted for as trading derivatives
except for cross currency swaps in place with the Overseas Bank, which are designated in a cash flow hedge relationship to hedge the currency
risk exposure of funding from the London Branch and Tier 2 notes issued to the London Branch (refer to Note 21).
Transactions with related entities
NZ BANKING GROUP
$ millionsNote20192018
Overseas Bank
Interest income2 27 27
Interest expense:
Loan capital
1
51 55
Other
2
2 46 53
Operating expenses - management fees 8 7
Funding repaid
263 400
Other controlled entities of the Overseas Bank
WGINZL dividend paid to Westpac Overseas Holdings Pty Limited and Westpac Custodian
Nominees Pty Limited 4 4
WFSGNZL dividend paid to Westpac Equity Holdings Pty Limited (‘WEHPL’) 38 58
BTFGNZL dividend paid to WEHPL 25 10
WNZGL dividend paid to Westpac Overseas Holdings No. 2 Pty Limited
735 500
Capital Finance New Zealand Limited dividend paid to Capital Finance Australia Limited
5 -
1
Interest expense paid on the Tier 2 notes issued by the NZ Banking Group and held by related parties.
2
Includes interest expense incurred on funding from the Overseas Banking Group.
Due from and to related entities
NZ BANKING GROUP
$ millions20192018
Due from related entities
Overseas Bank2,3662,017
Other controlled entities of the Overseas Banking Group16
Total due from related entities2,3672,023
Due from related entities at fair value
1
985459
Due from related entities at amortised cost1,3821,564
Total due from related entities2,3672,023
Due to related entities
Overseas Bank2,8902,436
Other controlled entities of the Overseas Banking Group24
Total due to related entities2,8922,440
Due to related entities at fair value
2
1,334644
Due to related entities at amortised cost1,5581,796
Total due to related entities2,8922,440
1
Consists of derivative financial instruments of $981 million (2018: $453 million) (refer to Note 23) and trading securities of $4 million (2018: $6 million).
2
Consists of derivative financial instruments of $1,334 million (2018: $644 million) (refer to Note 23).

Notes to the financial statements
46 Westpac Banking Corporation - New Zealand Banking Group
Note 22 Related entities (continued)
Key management personnel compensation
Key management personnel are those who, directly or indirectly, have authority and responsibility for planning, directing and controlling the
activities of the NZ Banking Group. This includes all Executive/Non-Executive Directors and members of the executive team.
NZ BANKING GROUP
$'000s20192018
Salaries and other short-term benefits 7,970 8,441
Post-employment benefits 846 653
Other termination benefits - 615
Share-based payments 3,526 2,711
Total key management personnel compensation 12,342 12,420
Loans to key management personnel 26,876 22,349
Deposits from key management personnel 7,623 6,006
Interest income on amounts due from key management personnel 896 819
Interest expense on amounts due to key management personnel 67 107
Where the Directors of the Overseas Bank have received remuneration from the NZ Banking Group, the amounts are included above. Details of
Directors’ remuneration are disclosed in the Overseas Banking Group’s 30 September 2019 Annual Financial Report.
Loans and deposits with key management personnel
All loans and deposits are made in the ordinary course of business of the NZ Banking Group. Loans are on terms that range between variable, fixed
rate up to five years and interest only loans, all of which are in accordance with the NZ Banking Group’s lending policies.
As at 30 September 2019, no individual provision has been recognised in respect of loans given to key management personnel and their related
parties (30 September 2018: nil). These loans have been included within the loan portfolio when determining collectively assessed provisions.
Other key management personnel transactions
All other transactions with key management personnel, their related entities and other related parties are conducted in the ordinary course of
business. These transactions principally involve the provision of financial, investment and insurance services.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 47
Note 23 Derivative financial instruments
Accounting policy
Derivative financial instruments are instruments whose values are derived from the value of an underlying asset, reference rate or index and
include forwards, futures, swaps and options. Derivatives with related parties are included in due from/due to related entities.
The NZ Banking Group uses derivative financial instruments for meeting customers’ needs; our asset and liability risk management (‘ALM’)
activities, and undertaking market making and positioning activities.
Trading derivatives
Derivatives which are used in our ALM activities but are not designated into a hedge accounting relationship are considered economic hedges.
These derivatives, along with derivatives used for meeting customers’ needs and undertaking market making and positioning activities are
measured at FVIS and are disclosed as trading derivatives.
Hedging derivatives
Hedging derivatives are those which are used in our ALM activities and have also been designated into one of two hedge accounting relationships:
fair value hedge; or cash flow hedge. These derivatives are measured at fair value. These hedge designations and the associated accounting
treatment are detailed below.
For more details regarding the NZ Banking Group’s ALM activities, refer to Note 32.
Fair value hedges
Fair value hedges are used to hedge the exposure to changes in the fair value of an asset or liability.
Changes in the fair value of derivatives and the hedged asset or liability in fair value hedges are recognised in non-interest income. The carrying
value of the hedged asset or liability is adjusted for the changes in fair value related to the hedged risk.
If a hedge is discontinued, any fair value adjustments to the carrying value of the asset or liability are amortised to net interest income over the
period to maturity. If the asset or liability is sold, any unamortised adjustment is immediately recognised in net interest income.
Cash flow hedges
Cash flow hedges are used to hedge the exposure to variability of cash flows attributable to an asset, liability or future forecast transaction.
For effective hedges, changes in the fair value of derivatives are recognised in the cash flow hedge reserve through other comprehensive income
and subsequently recognised in net interest income when the cash flows attributable to the asset or liability that was hedged impact the income
statement.
For hedges with some ineffectiveness, the changes in the fair value of the derivatives relating to the ineffective portion are immediately recognised
in non-interest income.
If a hedge is discontinued, any cumulative gain or loss remains in other comprehensive income. It is amortised to net interest income over the
period which the asset or liability that was hedged also impacts the income statement.
If a hedge of a forecast transaction is no longer expected to occur, any cumulative gain or loss in other comprehensive income is immediately
recognised in net interest income.

Notes to the financial statements
48 Westpac Banking Corporation - New Zealand Banking Group
Note 23 Derivative financial instruments (continued)
The carrying values of derivative instruments are set out in the tables below:
NZ BANKING GROUP
2019
TradingHedging
Total derivatives carrying
value
$ millions
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Interest rate contracts
Swap agreements7,622(7,242)198(594)7,820(7,836)
Total interest rate contracts7,622(7,242)198(594)7,820(7,836)
Foreign exchange contracts
Spot and forward contracts730(721)--730(721)
Cross currency swap agreements (principal and
interest)2,015(2,395)604(138)2,619(2,533)
Total foreign exchange contracts2,745(3,116)604(138)3,349(3,254)
Total of gross derivatives10,367(10,358)802(732)11,169(11,090)
Impact of netting arrangements(3,931)3,931--(3,931)3,931
Total of net derivatives6,436(6,427)802(732)7,238(7,159)
Consisting of:
Derivatives held with external counterparties5,455(5,163)802(662)6,257(5,825)
Derivatives held with related parties981(1,264)-(70)981(1,334)
NZ BANKING GROUP
2018
TradingHedging
Total derivatives carrying
value
$ millions
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Interest rate contracts
Swap agreements3,119(2,989)54(480)3,173(3,469)
Options1(1)--1(1)
Total interest rate contracts3,120(2,990)54(480)3,174(3,470)
Foreign exchange contracts
Spot and forward contracts291(291)--291(291)
Cross currency swap agreements (principal and
interest)983(1,390)568(116)1,551(1,506)
Total foreign exchange contracts1,274(1,681)568(116)1,842(1,797)
Total of gross derivatives4,394(4,671)622(596)5,016(5,267)
Impact of netting arrangements(1,054)1,054--(1,054)1,054
Total of net derivatives3,340(3,617)622(596)3,962(4,213)
Consisting of:
Derivatives held with external counterparties2,887(3,026)622(543)3,509(3,569)
Derivatives held with related parties453(591)-(53)453(644)

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 49
Note 23 Derivative financial instruments (continued)
Hedge accounting
The NZ Banking Group designates derivatives into hedge accounting relationships in order to manage the volatility in earnings and capital that
would otherwise arise from interest rate risk and foreign exchange risk that may result from differences in the accounting treatment of derivatives
and underlying exposures. These hedge accounting relationships and the risks they are used to hedge are described below.
The NZ Banking Group enters into one-to-one hedge relationships to manage specific exposures where the terms of the hedged item significantly
match the terms of the hedging instrument. The NZ Banking Group also uses dynamic hedge accounting where the hedged items are part of a
portfolio of assets and/or liabilities that frequently change. In this hedging strategy, the exposure being hedged and the hedging instruments may
change frequently rather than there being a one-to-one hedge accounting relationship for a specific exposure.
Fair value hedges
Interest rate risk
The NZ Banking Group hedges its interest rate risk to reduce exposure to changes in fair value due to interest rate fluctuations over the hedging
period. Interest rate risk arising from fixed rate debt issuances and fixed rate bonds classified as investment securities at FVOCI is hedged with
single currency fixed to floating interest rate derivatives. The NZ Banking Group also hedges its benchmark interest rate risk from fixed rate foreign
currency denominated debt issuances using cross currency swaps. In applying fair value hedge accounting the NZ Banking Group primarily uses
one-to-one hedge accounting to manage specific exposures.
The NZ Banking Group also uses a dynamic hedge accounting strategy for fair value portfolio hedge accounting of some fixed rate mortgages to
reduce exposure to changes in fair value due to interest rate fluctuations over the hedging period. These fixed rate mortgages are allocated to
time buckets based on their expected repricing dates and the fixed-to-floating interest rate derivatives are designated according to the capacity
in the relevant time buckets.
The NZ Banking Group hedges the benchmark interest rate which generally represents the most significant component of the changes in fair
value. The benchmark interest rate is a component of interest rate risk that is observable in the relevant financial markets, for example, LIBOR for
USD interest rates and Bank Bill Benchmark Rate (‘BKBM’) for NZD interest rates. Ineffectiveness generally arises from timing differences on
repricing between the hedged item and the derivative. For portfolio hedge accounting ineffectiveness also arises from prepayment risk (i.e. the
difference between actual and expected prepayment of loans). In order to manage the ineffectiveness from early repayments and accommodate
new originations the portfolio hedges are de-designated and redesignated periodically.
Cash flow hedges
Interest rate risk
The NZ Banking Group’s exposure to the volatility of interest cash flows from customer deposits and loans is hedged with interest rate derivatives
using a dynamic hedge accounting strategy called macro cash flow hedges. Customer deposits and loans are allocated to time buckets based on
their expected repricing dates. The interest rate derivatives are designated according to the gross asset or gross liability positions for the relevant
time buckets. The NZ Banking Group hedges the benchmark interest rate which generally represents the most significant component of the
changes in fair value. The benchmark interest rate is a component of interest rate risk that is observable in the relevant financial markets, for
example, Bank Bill Swap Rate for AUD interest rates, LIBOR for USD interest rates and BKBM for NZD interest rates. Ineffectiveness arises from
timing differences on repricing between the hedged item and the interest rate derivative. Ineffectiveness also arises if the notional values of the
interest rate derivatives exceed the aggregate notional exposure for the relevant time buckets. The hedge accounting relationship is reviewed on a
monthly basis and the hedging relationships are de-designated and redesignated if necessary.
Foreign exchange risk
The NZ Banking Group’s exposure to foreign currency principal and credit margin cash flows from fixed rate foreign currency debt issuances is
hedged through the use of cross currency derivatives in a one-to-one hedging relationship to manage the changes between the foreign currency
and NZD. In addition, for floating rate foreign currency debt issuances, the NZ Banking Group hedges from foreign floating to NZD floating interest
rates. Ineffectiveness may arise from foreign currency basis risk and may arise from timing differences on repricing between the hedged item and
the cross currency derivative.
Economic hedges
As part of the NZ Banking Group’s ALM activities, economic hedges are entered into to hedge long term funding transactions.

Notes to the financial statements
50 Westpac Banking Corporation - New Zealand Banking Group
Note 23 Derivative financial instruments (continued)
Hedging instruments
The following table shows the carrying value of hedging instruments and a maturity analysis of the notional amounts of the hedging instruments in
one-to-one hedge relationships categorised by the types of hedge relationships and the hedged risk.
NZ BANKING GROUP
2019
Notional amounts Carrying value
$ millions
Hedging
instrument Hedged risk
Within
1 year
Over 1 year
to 5 years
Over 5
years TotalAssetsLiabilities
One-to-one hedge relationships
Fair value hedges Interest rate swap
Interest rate risk
2,157 2,013 2,416 6,586 84 (214)
Cross currency swap Interest rate risk 1,251 6,134 349 7,734 155 (100)
Cash flow hedges Cross currency swap
Foreign exchange
risk
1,251 10,278 349 11,878 449 (38)
Total one-to-one hedge relationships 4,659 18,425 3,114 26,198 688 (352)
Macro hedge relationships
Portfolio fair value hedges Interest rate swap Interest rate risk N/AN/AN/A 20,301 - (209)
Macro cash flow hedges Interest rate swap Interest rate risk N/AN/AN/A 10,629 114 (171)
Total macro hedge relationships N/AN/AN/A 30,930 114 (380)
Total of gross hedging derivatives N/AN/AN/A 57,128 802 (732)
Impact of netting arrangements N/AN/AN/AN/A - -
Total of net hedging derivatives N/AN/AN/AN/A 802 (732)
The following table shows the weighted average exchange rate related to significant hedging instruments in one-to-one hedge relationships:
NZ BANKING GROUP
2019
Currency /Weighted average
$ millionsHedging instrumentHedged risk Currency pairrate
Cash flow hedges Cross currency swapForeign exchange riskCHF:NZD
0.7001
EUR:NZD
0.6079
GBP:NZD
0.4538
NZD:AUD
1.1272
HKD:NZD
4.9670

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 51
Note 23 Derivative financial instruments (continued)
Impact of hedge accounting on the balance sheet and reserves
The following table shows the carrying amount of hedged items in a fair value hedge relationship and the component of the carrying amount
related to accumulated hedge accounting adjustments.
NZ BANKING GROUP
2019
$ millions
Carrying amount of
hedged item
Accumulated fair value
hedge adjustment included
in carrying amount
Interest rate risk
Investment securities4,469120
Loans
20,301139
Debt issues and loan capital
(10,279)(254)
There were no accumulated fair value hedge adjustments included in the above carrying amounts relating to hedged items that have ceased to
be adjusted for hedging gains and losses.
The pre-tax impact of cash flow hedges on reserves is detailed below:
NZ BANKING GROUP
2019
$ millionsInterest rate riskForeign exchange risk Total
Cash flow hedge reserve
Balance at beginning of the year(48)(41)(89)
Net gains/(losses) from changes in fair value
(28)(58)(86)
Transferred to net interest income
472774
Balance at end of year
(29)(72)(101)
There were no balances remaining in the cash flow hedge reserve relating to hedge relationships for which hedge accounting is no longer
applied.

Notes to the financial statements
52 Westpac Banking Corporation - New Zealand Banking Group
Note 23 Derivative financial instruments (continued)
Hedge effectiveness
Hedge effectiveness is tested prospectively at inception and during the lifetime of hedge relationships. For one-to-one hedge relationships this testing uses a
qualitative assessment of matched terms where the critical terms of the derivatives used as the hedging instrument match the terms of the hedged item. In
addition, a quantitative effectiveness test is performed for all hedges which could include regression analysis, dollar offset and/or sensitivity analysis.
Retrospective testing is also performed to determine whether the hedge relationship remains highly effective so that hedge accounting can continue to be
applied and also to determine any ineffectiveness. These tests are performed using regression analysis and the dollar offset method.
The following table provides information regarding the determination of hedge effectiveness:
NZ BANKING GROUP
2019
$ millions
Hedging
instrument Hedged risk
Change in fair value of
hedging instrument
used for calculating
ineffectiveness
Change in value of
the hedged item
used for calculating
ineffectiveness
Hedge
ineffectiveness
recognised in non-
interest income
Fair value hedges
Interest rate swap Interest rate risk
67(66)1
Cross currency swap Interest rate risk
146(143)3
Cash flow hedges
Interest rate swap Interest rate risk
17(19)(2)
Cross currency swap Foreign exchange risk
(31)31-
Total
199(197)2
Comparative year information under prior NZ IFRS 7 disclosure requirements
Ineffectiveness of hedge relationships
Fair value hedges
NZ BANKING GROUP
$ millions
2018
Change in fair value of hedging instruments 6
Change in fair value of hedged items attributed to hedged risk
(6)
Ineffectiveness in non-interest income -
Cash flow hedges
NZ BANKING GROUP
$ millions
2018
Cash flow hedge ineffectiveness 4
Hedging instruments
Gross cash inflows and outflows on derivatives designated in cash flow hedges are, as a proportion of total gross cash flows, expected to occur in
the following periods:
NZ BANKING GROUP
2018
Less Than 1 Month to 3 Months to 1 Year to 2 Years to 3 Years to 4 Years to Over
1 Month3 Months 1 Year2 Years3 Years 4 Years5 Years5 Years
Cash inflows0%0%19%18%24%22%3%14%
Cash outflows1%1%18%19%24%20%3%
14%

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 53
Note 24 Fair values of financial assets and financial liabilities
Accounting policy
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
On initial recognition, the transaction price generally represents the fair value of the financial instrument unless there is observable information
from an active market to the contrary. Where unobservable information is used, the difference between the transaction price and the fair value
(day one profit or loss) is recognised in the income statement over the life of the instrument when the inputs become observable.
Critical accounting assumptions and estimates
The majority of valuation models used by the NZ Banking Group employ only observable market data as inputs. However, for certain financial
instruments, data may be employed which is not readily observable in current markets.
The availability of observable inputs is influenced by factors such as:
–product type;
–depth of market activity;
–maturity of market models; and
–complexity of the transaction.
Where unobservable market data is used, more judgement is required to determine fair value. The significance of these judgements depends on
the significance of the unobservable input to the overall valuation. Unobservable inputs are generally derived from other relevant market data and
adjusted against:
–standard industry practice;
–economic models; and
–observed transaction prices.
In order to determine a reliable fair value for a financial instrument, management may apply adjustments to the techniques previously described.
These adjustments reflect the NZ Banking Group’s assessment of factors that market participants would consider in setting the fair value.
These adjustments incorporate bid/offer spreads, credit valuation adjustments (‘CVA’) and funding valuation adjustments (‘FVA’).
Fair Valuation Control Framework
The NZ Banking Group uses a Fair Valuation Control Framework where the fair value is either determined or validated by a function independent of
the transaction. This framework formalises the policies and procedures used to achieve compliance with relevant accounting, industry and
regulatory standards. The framework includes specific controls relating to:
– the revaluation of financial instruments;
– independent price verification;
– fair value adjustments; and
– financial reporting.
A key element of the framework is the Revaluation Committee, comprising senior valuation specialists from within the Overseas Banking Group. The
Revaluation Committee reviews the application of the agreed policies and procedures to assess that a fair value measurement basis has been
applied.
The method of determining fair value differs depending on the information available.
Fair value hierarchy
A financial instrument’s categorisation within the valuation hierarchy is based on the lowest level input that is significant to the fair value
measurement.
The NZ Banking Group categorises all fair value instruments according to the hierarchy described below.
Valuation techniques
The NZ Banking Group applies market accepted valuation techniques in determining the fair valuation of over-the-counter (‘OTC’) derivatives. This
includes CVA and FVA, which incorporate credit risk and funding costs and benefits that arise in relation to uncollateralised derivative positions,
respectively.
The specific valuation techniques, the observability of the inputs used in valuation models and the subsequent classification for each significant
product category are outlined as follows:

Notes to the financial statements
54 Westpac Banking Corporation - New Zealand Banking Group
Note 24 Fair values of financial assets and financial liabilities (continued)
Financial instruments measured at fair value
Level 1 instruments
The fair value of financial instruments traded in active markets is based on recent unadjusted quoted prices. These prices are based on actual arm’s
length basis transactions.
The valuations of Level 1 instruments require little or no management judgement.
InstrumentBalance sheet categoryIncludes:Valuation technique
Exchange traded
products
Derivative financial
instruments
Due from related entities
Due to related entities
Exchange traded
interest rate futures -
derivative financial
instruments
Foreign exchange
products
Derivative financial
instruments
FX spot contracts
Non-asset
backed debt
instruments
Trading securities and
financial assets measured at
FVIS
Available-for-sale
securities/Investment
securities
Other financial liabilities
New Zealand
Government bonds
These instruments are traded in liquid, active markets where
prices are readily observable. No modelling or assumptions are
used in the valuation.
Level 2 instruments
The fair value for financial instruments that are not actively traded is determined using valuation techniques which maximise the use of observable
market prices. Valuation techniques include:
– the use of market standard discounting methodologies;
– option pricing models; and
– other valuation techniques widely used and accepted by market participants.
InstrumentBalance sheet categoryIncludes:Valuation technique
Interest rate
products
Derivative financial instruments
Due from related entities
Due to related entities
Interest rate swaps,
forwards and options
– derivative financial
instruments
Industry standard valuation models are used to calculate the
expected future value of payments by product, which is
discounted back to a present value. The model’s interest rate
inputs are benchmark interest rates and active broker quoted
interest rates in the swap, bond and futures markets. Interest
rate volatilities are sourced from brokers and consensus data
providers. If consensus prices are not available, these are
classified as Level 3 instruments.
Foreign exchange
products
Derivative financial instruments
Due from related entities
Due to related entities
FX swaps and FX
forward contracts -
derivative financial
instruments
Derived from market observable inputs or consensus pricing
providers using industry standard models.
Asset backed
debt
instruments
Trading securities and financial
assets measured at FVIS
Available-for-sale
securities/Investment securities
Asset backed securities
Valued using an industry approach to value floating rate debt
with prepayment features. The main inputs to the model are the
trading margin and the weighted average life of the security.
These inputs are sourced from a consensus data provider. If
consensus prices are not available these are classified as Level 3
instruments.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 55
Note 24 Fair values of financial assets and financial liabilities (continued)
InstrumentBalance sheet categoryIncludes:Valuation technique
Non-asset backed
debt instruments
Trading securities and financial
assets measured at FVIS
Available-for-sale
securities/Investment
securities
Other financial liabilities
Local authority and
NZ public securities,
other bank issued
certificates of deposit,
commercial paper,
other government
securities, off-shore
securities and
corporate bonds
Repurchase
agreements and reverse
repurchase agreements
over non-asset backed
debt securities
Valued using observable market prices which are sourced from
independent pricing services, broker quotes or inter-dealer
prices.
Deposits and
other borrowings
at fair value
Deposits and other borrowingsCertificates of deposit
Discounted cash flow using market rates offered for
deposits of similar remaining maturities.
Debt issues at fair
value
Debt issuesCommercial paper
Discounted cash flows, using a discount rate which reflects the
terms of the instrument and the timing of cash flows adjusted
for market observable changes in the applicable credit rating of
the NZ Banking Group.
Life insurance
assets
Life insurance assets
Local authority securities,
investment grade
corporate bonds, life
insurance contract
liabilities and units in
unlisted unit trusts
Valued using observable market prices or other widely used
and accepted valuation techniques utilising observable
market inputs.
Level 3 instruments
Financial instruments valued where at least one input that could have a significant effect on the instrument’s valuation is not based on observable
market data due to illiquidity or complexity of the product. These inputs are generally derived and extrapolated from other relevant market data and
calibrated against current market trends and historical transactions.
These valuations are calculated using a high degree of management judgment.
InstrumentBalance sheet categoryIncludes:Valuation technique
Asset
backed debt
instruments
Trading securities and financial
assets measured at FVIS
Residential mortgage-
backed securities (‘RMBS’)
and certain other asset
backed securities
RMBS are classified as Level 3 as consensus prices are not
available as valuation inputs. Quotes by a third party
broker or lead manager are used to derive the fair value for
these instruments.
Interest rate
derivatives
Derivative financial instruments
Non-vanilla interest rate
(inflation indexed)
derivatives and long
dated NZD caps
Valued using industry standard valuation models
utilising observable market inputs which are determined
separately for each parameter. Where unobservable,
inputs will be set with reference to an observable proxy.

Notes to the financial statements
56 Westpac Banking Corporation - New Zealand Banking Group
Note 24 Fair values of financial assets and financial liabilities (continued)
The table below summarises the attribution of financial instruments measured at fair value to the fair value hierarchy:
NZ BANKING GROUP
2019
1
2018
1
$ millionsLevel 1Level 2Level 3
2
TotalLevel 1Level 2Level 3Total
Financial assets measured at fair value on a
recurring basis
Trading securities and financial assets measured at FVIS 29 4,842 - 4,871 159 2,857 - 3,016
Derivative financial instruments - 6,256 1 6,257 - 3,509 - 3,509
Investment securities/Available-for-sale securities 1,049 3,420 - 4,469 1,167 2,643 - 3,810
Life insurance assets - 335 - 335 - 310 - 310
Due from related entities - 985 - 985 1 458 - 459
Total financial assets measured at fair value 1,078 15,838 1 16,917 1,327 9,777 - 11,104
Financial liabilities measured at fair value on a
recurring basis
Deposits and other borrowings at fair value - 1,142 - 1,142 - 1,221 - 1,221
Other financial liabilities 180 27 - 207 145 78 - 223
Derivative financial instruments - 5,807 18 5,825 - 3,569 - 3,569
Due to related entities - 1,334 - 1,334 2 642 - 644
Debt issues at fair value - 2,312 - 2,312 - - - -
Total financial liabilities measured at fair value 180 10,622 18 10,820 147 5,510 - 5,657
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
2
Balances within this category of the fair value hierarchy are not considered material to the total derivative financial instruments balances.
There were no material amounts of changes in fair value estimated using a valuation technique incorporating significant non-observable inputs that
were recognised in the income statement or the statement of comprehensive income of the NZ Banking Group during the year ended 30 September
2019 (30 September 2018: no material changes in fair value).
Analysis of movements between fair value hierarchy levels
During the year, there were no material transfers between levels of the fair value hierarchy (30 September 2018: no material transfers between
levels).

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 57
Note 24 Fair values of financial assets and financial liabilities (continued)
Financial instruments not measured at fair value
For financial instruments not measured at fair value on a recurring basis, fair value has been derived as follows:
InstrumentValuation technique
Loans
Where available, the fair value of loans is based on observable market transactions; otherwise fair value is estimated
using discounted cash flow models. For variable rate loans, the discount rate used is the current effective interest
rate. The discount rate applied for fixed rate loans reflects the market rate for the maturity of the loan and the credit
worthiness of the borrower.
Deposits and other
borrowings
Fair values of deposit liabilities payable on demand (interest free, interest bearing and savings deposits) approximate
their carrying value. Fair values for term deposits are estimated using discounted cash flows, applying market rates
offered for deposits of similar remaining maturities.
Debt issues and
loan capital
Fair values are calculated using a discounted cash flow model. The discount rates applied reflect the terms of the
instruments, the timing of the estimated cash flows and are adjusted for any changes in the NZ Banking Group’s
credit spreads.
Due to related entities
Fair values are calculated in respect of long-term debt using a discounted cash flow model. The discount rate applied
reflects the terms of the loan and the timing of the estimated cash flows. The carrying value of all other balances due
to related entities approximates the fair value. These items are either short-term in nature or re-price frequently and
are of a high credit rating.
All other financial assets
and financial liabilities
For all other financial assets and financial liabilities, the carrying value approximates the fair value. These items are
either short-term in nature or re-price frequently and are of a high credit rating.
The following table summarises the estimated fair value and fair value hierarchy of the NZ Banking Group’s financial instruments not measured at fair
value:
NZ BANKING GROUP
2019
1
Fair Value
$ millions
Carrying
Amount
Level 1Level 2Level 3Total
Financial assets not measured at fair value
Cash and balances with central banks 2,002 2,002 - - 2,002
Collateral paid 417 417 - - 417
Loans 84,626 - - 84,880 84,880
Other financial assets 400 - - 400 400
Due from related entities
1,382 - 1,381 1
1,382
Total financial assets not measured at fair value 88,827 2,419 1,381 85,281 89,081
Financial liabilities not measured at fair value
Collateral received 623 623 - - 623
Deposits and other borrowings 64,464 - 63,974 563 64,537
Other financial liabilities 1,541 - 1,541 - 1,541
Due to related entities 1,558 - 1,565 -
1,565
Debt issues
2
15,534 - 15,701 - 15,701
Loan capital
2
3,185 - 1,954 1,158 3,112
Total financial liabilities not measured at fair value 86,905 623 84,735 1,721 87,079
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
2
The estimated fair value of debt issues and loan capital include the impact of changes in the NZ Banking Group's credit spreads since origination.

Notes to the financial statements
58 Westpac Banking Corporation - New Zealand Banking Group
Note 24 Fair values of financial assets and financial liabilities (continued)
NZ BANKING GROUP
2018
1
Fair Value
$ millions
Carrying
Amount
Level 1Level 2Level 3Total
Financial assets not measured at fair value
Cash and balances with central banks 1,472 1,472 - - 1,472
Collateral paid 180 180 - - 180
Loans 80,860 - - 80,989 80,989
Other financial assets 468 - 57 411 468
Due from related entities
1,564 - 1,558 6
1,564
Total financial assets not measured at fair value 84,544 1,652 1,615 81,406 84,673
Financial liabilities not measured at fair value
Collateral received 591 591 - - 591
Deposits and other borrowings 61,884 - 61,276 647 61,923
Other financial liabilities 1,399 - 1,399 - 1,399
Due to related entities 1,796 - 1,806 -
1,806
Debt issues
2
13,725 - 13,845 - 13,845
Loan capital
2
2,866 - 1,692 1,180
2,872
Total financial liabilities not measured at fair value 82,261 591 80,018 1,827 82,436
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
2
The estimated fair value of debt issues and loan capital include the impact of changes in the NZ Banking Group's credit spreads since origination.
Note 25 Offsetting financial assets and financial liabilities
Accounting policy
Financial assets and financial liabilities are presented net on the balance sheet when the NZ Banking Group has a legally enforceable right to offset
them in all circumstances and there is an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability
simultaneously. The gross assets and liabilities behind the net amounts reported on the balance sheet are disclosed in the table below.
Some of the NZ Banking Group’s offsetting arrangements are not enforceable in all circumstances. The amounts in the tables below may not tie
back to the balance sheet if there are balances which are not subject to offsetting or enforceable netting arrangements. The amounts presented in
this note do not represent the credit risk exposure of the NZ Banking Group. Refer to Note 32.2 for information on credit risk management. The
offsetting and collateral arrangements and other credit risk mitigation strategies used by the NZ Banking Group are further explained in the
‘Management of risk mitigation’ section under Note 32.2.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 59
Note 25 Offsetting financial assets and financial liabilities (continued)
NZ BANKING GROUP
2019
1
Effects of Offsetting on Balance Sheet
Amounts Subject to Enforceable
Netting Arrangements But Not Offset
$ millions
Gross
Amounts
Amounts
Offset
Net Amounts
Reported
on the
Balance Sheet
Other
Recognised
Financial
Instruments
Cash
Collateral
Financial
Instrument
CollateralNet Amount
Assets
Reverse repurchase agreements
2
1,041 - 1,041 - - (1,041) -
Derivative financial instruments
10,188 (3,931) 6,257 (3,057) (569) - 2,631
Due from related entities - derivative
financial instruments
3
981 - 981 (981) - - -
Total assets 12,210 (3,931) 8,279 (4,038) (569) (1,041) 2,631
Liabilities
Repurchase agreements
4
19 - 19 - - (19) -
Derivative financial instruments
9,756 (3,931) 5,825 (3,057) (393) - 2,375
Due to related entities - derivative
financial instruments
5
1,334 - 1,334 (981) - - 353
Total liabilities 11,109 (3,931) 7,178 (4,038) (393) (19) 2,728
NZ BANKING GROUP
2018
1
Effects of Offsetting on Balance Sheet
Amounts Subject to Enforceable Netting
Arrangements But Not Offset
$ millions
Gross
Amounts
Amounts
Offset
Net Amounts
Reported
on the
Balance Sheet
Other
Recognised
Financial
Instruments
Cash
Collateral
Financial
Instrument
CollateralNet Amount
Assets
Reverse repurchase agreements
2
216 - 216 - - (216) -
Derivative financial instruments
4,563 (1,054) 3,509 (1,598) (495) - 1,416
Due from related entities - derivative
financial instruments
3
453 - 453 (453) - - -
Total assets 5,232 (1,054) 4,178 (2,051) (495) (216) 1,416
Liabilities
Repurchase agreements
4
41 - 41 - - (41) -
Derivative financial instruments
4,623 (1,054) 3,569 (1,598) (71) - 1,900
Due to related entities - derivative
financial instruments
5
644 - 644 (453) - - 191
Total liabilities 5,308 (1,054) 4,254 (2,051) (71) (41) 2,091
1
The NZ Banking Group has adopted NZ IFRS 9 and NZ IFRS 15 from 1 October 2018. Comparatives have not been restated. In addition, the NZ Banking Group has
made a number of presentational changes to the balance sheet and income statement. Comparatives have been restated. Refer to Note 1 for further detail.
2
Forms part of trading securities and financial assets measured at FVIS (refer to Note 9).
3
Forms part of due from related entities on the balance sheet (refer to Note 22).
4
Forms part of other financial liabilities on the balance sheet (refer to Note 18).
5
Forms part of due to related entities on the balance sheet (refer to Note 22).

Notes to the financial statements
60 Westpac Banking Corporation - New Zealand Banking Group
Note 25 Offsetting financial assets and financial liabilities (continued)
Other recognised financial instruments
These financial assets and financial liabilities are subject to master netting agreements which are not enforceable in all circumstances, so they are
recognised gross on the balance sheet. The offsetting rights of the master netting arrangements can only be enforced if a predetermined event
occurs in the future, such as a counterparty defaulting.
Cash collateral and financial instrument collateral
These amounts are received or pledged under master netting arrangements against the gross amounts of assets and liabilities. Financial
instrument collateral typically comprises securities which can be readily liquidated in the event of counterparty default. The offsetting rights of the
master netting arrangement can only be enforced if a predetermined event occurs in the future, such as a counterparty defaulting.
Note 26 Operating lease commitments
The NZ Banking Group leases various commercial and retail premises and related plant and equipment. The lease commitments at 30 September
are as follows:
NZ BANKING GROUP
$ millions20192018
1
Due within one year 52 54
Due after one year but not later than five years 130 122
Due after five years 124 141
Total lease commitments 306 317
1
Comparative information for the year ended 30 September 2018 has been restated to ensure consistent presentation with the current reporting period. This has
no effect on the balance sheet or income statement.
Operating leases are entered into to meet the business needs of entities in the NZ Banking Group. Lease rentals are determined in accordance
with market conditions when leases are entered into or on rental review dates.
Note 27 Credit related commitments, contingent assets and contingent liabilities
Accounting policy
Undrawn credit commitments
The NZ Banking Group enters into various arrangements with customers which are only recognised in the balance sheet when called upon. These
arrangements include commitments to extend credit, bill endorsements, financial guarantees, standby letters of credit and underwriting facilities.
Contingent assets
Contingent assets are possible assets whose existence will be confirmed only by uncertain future events. Contingent assets are not recognised on
the balance sheet but are disclosed if an inflow of economic benefits is probable.
Contingent liabilities
Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events, and present obligations where
the transfer of economic resources is not probable or cannot be reliably measured. Contingent liabilities are not recognised on the balance sheet
but are disclosed unless the outflow of economic resources is remote.
Undrawn credit commitments
Undrawn credit commitments expose the NZ Banking Group to liquidity risk when called upon and also to credit risk if the customer fails to repay
the amounts owed at the due date. The maximum exposure to credit loss is the contractual or notional amount of the instruments disclosed
below. Some of the arrangements can be cancelled by the NZ Banking Group at any time and a significant portion is expected to expire without
being drawn. The actual required liquidity and credit risk exposure is therefore less than the amounts disclosed. The NZ Banking Group uses the
same credit policies when entering into these arrangements as it does for on-balance sheet instruments. Refer to Note 32 for further details on
liquidity risk and credit risk management.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 61
Note 27 Credit related commitments, contingent assets and contingent liabilities (continued)
Westpac New Zealand is obliged to repurchase any loan sold to and held by:
(a) WNZSL (pursuant to its securitisation programme) where the loan does not meet certain terms and conditions of the WNZSL securitisation
programme;
(b) WNZCBL (pursuant to Westpac New Zealand’s Global Covered Bond Programme (‘CB Programme’)) where:
(i) it is discovered that there has been a material breach of a sale warranty (or any such sale warranty is materially untrue);
(ii) the loan becomes materially impaired or is enforced prior to the second monthly covered bond payment date falling after the assignment of
the loan; or
(iii) at the cut-off date relating to the loan, there were arrears of interest and that loan subsequently becomes a delinquent loan prior to the
second monthly covered bond payment date falling after the assignment of the loan.
It is not envisaged that any liability resulting in material loss to the NZ Banking Group will arise from these obligations.
NZ BANKING GROUP
$ millions
20192018
Letters of credit and guarantees
1
9641,104
Commitments to extend credit
2
25,88124,722
Other
-
60
Total undrawn credit commitments26,84525,886
1
Standby letters of credit and guarantees are undertakings to pay, against presentation documents, an obligation in the event of a default by a customer.
Guarantees are unconditional undertakings given to support the obligations of a customer to third parties. The NZ Banking Group may hold cash as collateral for
certain guarantees issued.
2
Commitments to extend credit include all obligations on the part of the NZ Banking Group to provide credit facilities. As facilities may expire without being drawn
upon, the notional amounts do not necessarily reflect future cash requirements.
Contingent assets
The credit commitments shown in the table above also constitute contingent assets. These commitments would be classified as loans on the
balance sheet on the contingent event occurring.
Contingent liabilities
The NZ Banking Group has contingent liabilities in respect of actual and potential claims and proceedings. An assessment of the NZ Banking Group’s
likely loss in respect of these matters has been made on a case-by-case basis and provision has been made in these financial statements where
appropriate.
Compliance, regulation and remediation
The NZ Banking Group is subject to continued regulatory action and internal reviews relating to matters pertaining to the provision of services to our
customers. Contingent liabilities may exist in respect of actual or potential claims, compensation payments and/or refunds identified as part of
these reviews. An assessment of the NZ Banking Group’s likely loss has been made on a case-by-case basis for the purpose of the Disclosure
Statement but cannot always be reliably estimated.

Notes to the financial statements
62 Westpac Banking Corporation - New Zealand Banking Group
Note 28 Segment reporting
Accounting policy
Operating segments are presented on a basis that is consistent with information provided internally to the NZ Banking Group’s chief operating
decision-maker and reflects the management of the business, rather than the legal structure of the NZ Banking Group. The chief operating
decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The NZ
Banking Group has determined that the NZ Banking Group executive team is its chief operating decision-maker.
All transactions between business segments are conducted on an arm’s length basis, with inter-segment revenue and costs being eliminated at
head office. Income and expenses directly associated with each segment are included in determining business segment performance.
The NZ Banking Group operates predominantly in the consumer banking and wealth, commercial, corporate and institutional banking, and
investments and insurance sectors within New Zealand. On this basis, no geographical segment reporting is provided.
The operating segment results have been presented on a management reporting basis and consequently internal charges and transfer pricing
adjustments have been reflected in the performance of each operating segment. Intersegment pricing is determined on a cost recovery basis.
The NZ Banking Group does not rely on any single major customer for its revenue base.
Segment comparative information for the year ended 30 September 2018 has been restated to ensure consistent presentation with the current
reporting period. This includes adjustments for:
– changes in the segmentation classification for small business customers;
– changes to expense allocations and the Overseas Bank’s capital allocation framework; and
– NZ IFRS 9 and NZ IFRS 15 that were adopted on 1 October 2018. Segment comparatives have been restated as though the standards were adopted
on 1 October 2017, except for ECL provisioning. This resulted in comparative reclassifications between individual line items that do not impact total
results. These adjustments are comprised of:
– facility fees: The NZ Banking Group has reclassified facility fees (mostly business) from non-interest income to net interest income to more
appropriately reflect the relationship with drawn lines of credit;
– other fees and expenses: The NZ Banking Group has restated the classification of a number of fees and expenses which has resulted in the
grossing up of non-interest income and operating expenses;
– card scheme: Support payments received from Mastercard have been reclassified to non-interest income and related expenses have been
reclassified to operating expenses; and
– interest carrying adjustments: Interest on performing loans (stage 1 and stage 2 loans) is now measured on the gross loan value. Previously,
interest on performing loans was recognised on the loan balance net of provisions. This adjustment increases interest income and impairment
charges.
The NZ Banking Group’s operating segments are defined by the customers they serve and the services they provide. The NZ Banking Group has
identified the following main operating segments:
– Consumer Banking and Wealth provides financial services predominantly for individuals;
– Commercial, Corporate and Institutional Banking provides a broad range of financial services for commercial, corporate, property finance,
agricultural, institutional and government customers, and the supply of derivatives and risk management products to the entire Westpac
customer base in New Zealand; and
– Investments and Insurance provides funds management and insurance services.
Reconciling items primarily represent:
– business units that do not meet the definition of operating segments under NZ IFRS 8 Operating Segments;
– elimination entries on consolidation/aggregation of the results, assets and liabilities of the NZ Banking Group’s controlled entities in the
preparation of the aggregated financial statements of the NZ Banking Group; and
– results of certain business units excluded for management reporting purposes, but included within the aggregated financial statements of the NZ
Banking Group for statutory financial reporting purposes.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 63
Note 28 Segment reporting (continued)
NZ BANKING GROUP
ConsumerCommercial,InvestmentsNZ IFRS 9 and
Banking and
Corporate
and
andNZ IFRS 15Reconciling
$ millionsWealth InstitutionalInsurancechangesItemsTotal
Year ended 30 September 2019
Net interest income1,042933-N/A23
1,998
Non-interest income
131225147N/A59562
Net operating income before operating
expenses and impairment charges
1,1731,158147N/A822,560
Operating expenses(721)(269)(29)N/A1
(1,018)
Impairment (charges)/benefits
(17)33-N/A(6)10
Profit before income tax435922118N/A771,552
Year ended 30 September 2018
(restated)
Net interest income1,0749001(85)22
1,912
Non-interest income
1402291384224573
Net operating income before operating
expenses and impairment charges
1,2141,129139(43)462,485
Operating expenses(672)(250)(29)21(10)
(940)
Impairment (charges)/benefits
(45)3-22233
Profit before income tax497882110-591,548
As at 30 September 2019
Total gross loans45,73039,079-N/A13884,947
Total deposits and other borrowings35,12529,839-N/A64265,606
As at 30 September 2018
Total gross loans43,26637,890-N/A2881,184
Total deposits and other borrowings33,84028,507-N/A75863,105

Notes to the financial statements
64 Westpac Banking Corporation - New Zealand Banking Group
Note 29 Securitisation, covered bonds and other transferred assets
The NZ Banking Group enters into transactions in the normal course of business by which financial assets are transferred to counterparties or
structured entities. Depending on the circumstances, these transfers may result in derecognition of the assets in their entirety, partial derecognition or
no derecognition of the assets subject to the transfer. For the NZ Banking Group’s accounting policy on derecognition of financial assets, refer to Note
1.
Securitisation
Securitisation is the transferring of assets (or an interest in either the assets or the cash flows arising from the assets) to a structured entity which then
issues interest bearing debt securities to third party investors.
Own assets securitised
Securitisation of its own assets is used by the NZ Banking Group as a funding and liquidity tool.
For securitisation structured entities which the NZ Banking Group controls, as defined in Note 30, the structured entities are classified as subsidiaries
and consolidated. When assessing whether the NZ Banking Group controls a structured entity, it considers its exposure to and ability to affect variable
returns. The NZ Banking Group may have variable returns from a structured entity through ongoing exposures to the risks and rewards associated with
the assets, the provision of derivatives, liquidity facilities, trust management and operational services.
In October 2008, WNZSL was set up as part of Westpac New Zealand’s internal residential mortgage-backed securitisation programme. Under this
programme Westpac New Zealand sold the rights (but not the obligations) of a pool of housing loans to WNZSL. The purchase was funded by WNZSL’s
issuance of RMBS. The RMBS and an equivalent liability in the form of a deemed loan from Westpac New Zealand to WNZSL are fully eliminated in the
NZ Banking Group’s financial statements. Refer to Note 27 for a description of the NZ Banking Group’s obligation to repurchase certain housing loans
sold to WNZSL.
Covered bonds
The NZ Banking Group has a covered bond programme whereby selected pools of housing loans it originates are assigned to a bankruptcy remote
structured entity. WNZCBL is a special purpose entity established to purchase from time to time, and hold the rights, but not the obligations, of a pool
of housing loans (‘cover pool’) and to provide a financial guarantee (in addition to that of Westpac New Zealand) in respect of obligations under the
covered bonds issued from time to time by WSNZL under the CB Programme. That financial guarantee is supported by WNZCBL granting security in
favour of the covered bondholders over the cover pool.
The intercompany loan made by Westpac New Zealand to WNZCBL to fund the initial purchase (and subsequent further purchases which increased
the cover pool) and the liability representing the deemed loan from WNZCBL to Westpac New Zealand are fully eliminated in the NZ Banking Group’s
financial statements. Refer to Note 27 for a description of the NZ Banking Group’s obligation to repurchase certain housing loans sold to WNZCBL.
Repurchase agreements
Where securities are sold subject to an agreement to repurchase at a predetermined price, they remain recognised on the balance sheet in their
original category (i.e. trading securities and financial assets measured at FVIS or investment securities/available-for-sale securities).
The cash consideration received is recognised as a liability (repurchase agreements). Refer to Note 18 for further details.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 65
Note 29 Securitisation, covered bonds and other transferred assets (continued)
The following table presents the NZ Banking Group’s assets transferred and their associated liabilities:
NZ BANKING GROUP
For those liabilities that only have recourse to
the transferred assets:
$ millions
Carrying
amount of
transferred
assets
Carrying
amount of
associated
liabilities
Fair value of
transferred
assets
Fair value of
associated
liabilities
Net fair value
position
2019
Securitisation - own assets
1
7,537 7,518 7,522 7,518 4
Covered bonds
2
7,530 5,274 n/an/an/a
Repurchase agreements 19 19 n/an/an/a
Total 15,086 12,811 7,522 7,518 4
2018
Securitisation - own assets
1
5,033 5,015 5,021 5,015 6
Covered bonds
2
7,533 5,656 n/an/an/a
Repurchase agreements 41 41 n/an/an/a
Total 12,607 10,712 5,021 5,015 6
1
The most senior rated securities at 30 September 2019 of $6,900 million (30 September 2018: $4,700 million) qualify as eligible collateral for repurchase
agreements with the Reserve Bank. Westpac New Zealand complies with the Reserve Bank’s guidelines for its overnight reverse repurchase agreement facility and
open market operations, which allows banks in New Zealand to offer RMBS as collateral for the Reserve Bank’s repurchase agreements.
2
The difference between the carrying values of the covered bonds and the assets pledged allows for the immediate issuance of additional covered bonds if required.
These additional assets can be repurchased by Westpac New Zealand at its discretion, subject to the conditions set out in the transaction documents. The cover
pool is comprised of housing loans up to a value of $7,500 million as at 30 September 2019 (30 September 2018: $7,500 million). Over time, the composition of the
cover pool will include, in addition to housing loans, accrued interest (representing accrued and unpaid interest on the outstanding housing loans) and cash
(representing collections of principal and interest from the underlying housing loans).
Note 30 Structured entities
Accounting policy
Structured entities are generally created to achieve a specific, defined objective and their operations are restricted such as only purchasing
specific assets. Structured entities are commonly financed by debt or equity securities that are collateralised by and/or indexed to their
underlying assets. The debt and equity securities issued by structured entities may include tranches with varying levels of subordination.
Structured entities are classified as subsidiaries and consolidated if they meet the definition in Note 1. If the NZ Banking Group does not control a
structured entity then it will not be consolidated.
The NZ Banking Group engages in various transactions with both consolidated and unconsolidated structured entities that are mainly involved in
securitisations, asset backed structures and managed funds.
Consolidated structured entities
Securitisation and covered bonds
The NZ Banking Group uses structured entities to securitise its financial assets through the CB Programme and Westpac New Zealand’s internal
residential mortgage-backed securitisation programme. Refer to Note 29 for further details.
NZ Banking Group managed funds
As disclosed in Note 22, the PIE Funds are consolidated within the financial statements of the NZ Banking Group.
Non-contractual financial support
The NZ Banking Group does not provide non-contractual financial support to these consolidated structured entities.

Notes to the financial statements
66 Westpac Banking Corporation - New Zealand Banking Group
Note 30 Structured entities (continued)
Unconsolidated structured entities
The NZ Banking Group has interests in various unconsolidated structured entities including debt instruments, guarantees, liquidity arrangements,
lending, loan commitments, certain derivatives and investment management agreements.
Interests exclude non-complex derivatives (e.g. interest rate swap agreements) and lending to a structured entity with recourse to a wider
operating entity, not just the structured entity.
The NZ Banking Group’s main interests in unconsolidated structured entities, which arise in the normal course of business, are:
Trading securities and
financial assets
measured at FVIS
The NZ Banking Group actively trades interests in structured entities and normally has no other involvement with
the structured entity. This includes RMBS or other asset-backed securities. These assets are highly rated,
investment grade and eligible for repurchase agreements with the Reserve Bank or another central bank. The NZ
Banking Group earns interest income on these securities and also recognises fair value changes through trading
income in non-interest income.
Loans and other
credit commitments
The NZ Banking Group lends to unconsolidated structured entities, subject to the NZ Banking Group’s collateral
and credit approval processes, in order to earn interest and fees and commissions income. The structured entities
are mainly securitisation entities.
Investment
management
agreements
The NZ Banking Group manages funds that provide customers with investment opportunities. The NZ Banking
Group also manages superannuation funds for its employees. The NZ Banking Group earns management fee
income which is recognised in non-interest income.
The NZ Banking Group may also retain units in these investment management funds, primarily through its
consolidated life insurance entity. The NZ Banking Group earns fund distribution income and recognises fair value
movements through non-interest income.
The following table shows the NZ Banking Group’s interests in unconsolidated structured entities and its maximum exposure to loss in relation to
those interests. The maximum exposure does not take into account any collateral or hedges that will reduce the risk of loss.
For on-balance sheet instruments, including debt instruments in and loans to unconsolidated structured entities, the maximum exposure to
loss is the carrying value; and
For off-balance sheet instruments, including liquidity facilities and loan and other credit commitments and guarantees, the maximum exposure
to loss is the notional amounts.
NZ BANKING GROUP
20192018
$ millions
Investment in Third
Party Mortgage and
other Asset-
Backed Securities
1
Financing to
Securitisation
Vehicles
Group
Managed
FundsTotal
Investment in Third
Party Mortgage and
other Asset-
Backed Securities
1
Financing to
Securitisation
Vehicles
Group
Managed
FundsTotal
Assets
Trading securities and
financial assets measured at
FVIS
- - - - 50--50
Loans - 2,784 - 2,784 -2,632-2,632
Life insurance assets - - 188 188 --191191
Total on-balance sheet
exposures
- 2,784 188 2,972 502,6321912,873
Total notional amounts of off-
balance sheet exposures
- 1,104 87 1,191 -76587852
Maximum exposure to loss - 3,888 275 4,163 503,3972783,725
Size of structured entities
2
- 3,888 11,251 15,139 8133,39710,21914,429
1
The NZ Banking Group’s interests in third party mortgage and other asset-backed securities are senior tranches of notes and are investment grade rated.
2
Represented by the total assets or market capitalisation of the entity, or if not available, the NZ Banking Group’s total committed exposure (for lending
arrangements and external debt holdings), funds under management (for Group managed funds) or the total value of notes on issue (for investments in third-party
asset-backed securities).
Non-contractual financial support
The NZ Banking Group does not provide non-contractual financial support to these unconsolidated structured entities.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 67
Note 31 Capital Management
Under APRA’s Prudential Standards, Australian authorised deposit-taking institutions (‘ADI’), including the Overseas Banking Group and the
Overseas Bank are required to maintain minimum ratios of capital to risk weighted assets, as determined by APRA. For the calculation of risk
weighted assets, the Overseas Banking Group and the Overseas Bank is accredited by APRA to apply advanced models permitted by the Basel III
global capital adequacy regime. The Overseas Banking Group uses the Advanced Internal Ratings Based (‘Advanced IRB’) 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 for
calculating regulatory capital. APRA’s prudential standards 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.
The Overseas Banking Group (excluding entities specifically excluded by APRA regulations), and the Overseas Bank (Extended Licensed Entity as
defined by APRA), exceeded the minimum capital adequacy requirements as specified by APRA as at 30 September 2019.
The Overseas Banking Group’s approach to capital management seeks to ensure that it is adequately capitalised as an ADI.
The Overseas Banking Group evaluates its approach to capital management 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 regulatory and economic 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.
The table below represents the capital adequacy calculation for the Overseas Banking Group and Overseas Bank as at 30 September 2019 based on
APRA’s application of the Basel III capital adequacy framework.
30 Sep 1930 Sep 18
%
UnauditedUnaudited
Overseas Banking Group (excluding entities specifically excluded by APRA regulations)
1, 2
Common Equity Tier 1 capital ratio 10.7 10.6
Additional Tier 1 capital ratio 2.2 2.2
Tier 1 capital ratio 12.8 12.8
Tier 2 capital ratio 2.8 1.9
Total regulatory capital ratio 15.6 14.7
Overseas Bank (Extended Licensed Entity)
1, 3
Common Equity Tier 1 capital ratio 11.0 10.5
Additional Tier 1 capital ratio 2.2 2.3
Tier 1 capital ratio 13.2 12.8
Tier 2 capital ratio 2.9 2.0
Total regulatory capital ratio 16.1 14.8
1
The capital ratios represent information mandated by APRA. The capital ratios of the Overseas Banking Group are publicly available in the Overseas Banking
Group’s Pillar 3 report. This information is made available to users via the Overseas Bank’s website (www.westpac.com.au).
2
Overseas Banking Group (excluding entities specifically excluded by APRA regulations) comprises the consolidation of the Overseas Bank and its subsidiary
entities except those entities specifically excluded by APRA regulations for the purposes of measuring capital adequacy (Level 2). The head of the Level 2 group is
the Overseas Bank.
3
Overseas Bank (Extended Licensed Entity) comprises the Overseas Bank and its subsidiary entities that have been approved by APRA as being part of a single
Extended Licensed Entity for the purpose of measuring capital adequacy (Level 1).

Notes to the financial statements
68 Westpac Banking Corporation - New Zealand Banking Group
Note 32 Financial risk
Financial instruments are fundamental to the NZ Banking Group’s business of providing banking and financial services. The associated financial risks
(including credit risk, funding and liquidity risk and market risk) are a significant proportion of the total risks faced by the NZ Banking Group.
This note details the financial risk management policies, practices and quantitative information of the NZ Banking Group’s principal financial risk
exposures.
Principal risksNote nameNote number
OverviewRisk management frameworks32.1
Credit risk ratings system32.2.1
Credit risk mitigation, collateral and other credit enhancements32.2.2
Credit risk concentrations32.2.3
Credit quality of financial assets32.2.4
Non-performing loans and credit commitments32.2.5
Credit risk
The risk of financial loss where a customer or counterparty
fails to meet their financial obligations.
Collateral held32.2.6
Funding and liquidity risk
The risk that the NZ Banking Group cannot meet its
payment obligations or that it does not have the
appropriate amount, tenor and composition of funding and
liquidity to support its assets.
Liquidity modelling
Sources of funding
Assets pledged as collateral
Contractual maturity of financial liabilities
Expected maturity
32.3.1
32.3.2
32.3.3
32.3.4
32.3.5
Value-at-Risk (‘VaR’)
Traded market risk
32.4.1
32.4.2
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 and equity prices.
Non-traded market risk32.4.3
Note 32.1 Risk management frameworks
The Board is responsible for approving the Overseas Banking Group’s Risk Management Framework, Risk Management Strategy and Risk Appetite
Statement and monitoring the effectiveness of risk management by the Overseas Banking Group.
The Board has delegated to the Overseas Bank’s Board Risk and Compliance Committee (‘Group BRCC’) responsibility to:
review and recommend the Overseas Banking Group’s Risk Management Framework, Risk Management Strategy and Risk Appetite Statement
to the Board for approval;
review and monitor the risk profile and controls of the NZ Banking Group consistent with the Overseas Banking Group’s Risk Appetite
Statement;
approve frameworks, policies and processes for managing risk (consistent with the Overseas Banking Group’s Risk Management Framework
and Risk Appetite Statement); and
review and, where appropriate, approve risks beyond the approval discretion provided to management.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 69
Note 32 Financial risk (continued)
For each of its primary financial risks, the NZ Banking Group maintains risk management frameworks and a number of supporting policies that
define roles and responsibilities, acceptable practices, limits and key controls:
RiskRisk management framework and controls
Credit risk
 The Overseas Bank’s Credit Risk Management Framework
describes the principles, methodologies, systems, roles and
responsibilities, reports and key controls for managing credit
risk. Within the Credit Risk Management Framework, the NZ
Banking Group has its own credit approval limits approved by
Westpac New Zealand’s Board as delegated by the Overseas
Banking Group’s Chief Risk Officer.
 The Group BRCC and the WBC NZ Banking Group Executive
Risk Committee (‘ERC’) monitor the risk profile, performance
and management of the NZ Banking Group’s credit portfolio
and the development and review of key credit risk policies.
 The NZ Banking Group’s Credit Risk Rating System Policy
describes the credit risk rating system philosophy, design, key
features, IT systems and uses of rating outcomes.
 All models materially impacting the risk rating process are
periodically reviewed in accordance with the NZ Banking
Group’s model risk policies.
 An annual review is performed of the Credit Risk Rating
System by the Westpac New Zealand Board Risk and
Compliance Committee (‘WNZL BRCC’) and ERC and is
approved by the Group BRCC.
 Specific credit risk estimates (including PD, LGD and EAD) are
overseen, reviewed annually and supported by the Overseas
Bank’s Credit Risk Estimates Committee (a subcommittee of
the Group BRCC).
 In determining the provision for expected credit losses, the
macroeconomic variables and the probability weightings of
the forward looking scenarios as well as any adjustments
made to the modelled outcomes are subject to the approval
of the NZ Banking Group’s Chief Financial Officer and Chief
Risk Officer with oversight from the Board of Directors (and its
Committees).
 Policies for delegating credit approval authorities and formal
limits for the extension of credit are established throughout
the NZ Banking Group. These include those for the approval
and management of all credit risk arising from other banks
and related entities.
 Credit manuals are established throughout the NZ Banking
Group including policies governing the origination, evaluation,
approval, documentation, settlement and ongoing
management of credit risks.
 Sector policies guide credit extension where industry-specific
guidelines are considered necessary (e.g. acceptable financial
ratios or permitted collateral).
 The Related Entity Risk Management Framework and
supporting policies govern credit exposures to related entities
to minimise the spread of credit risk between Overseas
Banking Group entities and to comply with prudential
requirements prescribed by APRA.
Funding and
liquidity
risk
 Funding and liquidity risk is measured and managed in
accordance with the policies and processes defined in the
Board-approved Liquidity Risk Management Framework
which is part of the Overseas Banking Group’s Board-
approved Risk Management Strategy.
 Responsibility for managing the NZ Banking Group's liquidity
and funding positions in accordance with the Liquidity Risk
Management Framework is delegated to Treasury, both under
the oversight of the Overseas Banking Group’s Asset and
Liability Committee (‘Group ALCO’) as regards APRA APS 210
obligations and under Westpac New Zealand’s Asset and
Liability Committee (‘WNZL ALCO’) as regards Reserve Bank’s
BS13 prudential standard. Group BRCC oversees Group ALCO
with regard to APRA APS 210 obligations and WNZL BRCC
oversees WNZL ALCO’s reporting and monitoring of BS13
liquidity measures.
 Treasury undertakes an annual funding review that outlines
the NZ Banking Group's balance sheet funding strategy over a
three year period. This review encompasses trends in global
markets, peer analysis, wholesale funding capacity, expected
funding requirements and a funding risk analysis. This
strategy is continuously reviewed to take account of changing
market conditions, investor sentiment and estimations of
asset and liability growth rates. This review is subsequently
submitted to WNZL BRCC for approval.
 The Overseas Banking Group monitors the composition and
stability of its funding so that it remains within its funding risk
appetite. This includes compliance with both the Liquidity
Coverage Ratio (‘LCR’) and Net Stable Funding Ratio (‘NSFR’).
 Treasury also maintains a contingent funding plan that
outlines the steps that should be taken by the NZ Banking
Group in the event of an emerging ‘funding crisis’. The plan is
aligned with the Overseas Banking Group’s broader Liquidity
Crisis Management Policy and is submitted annually to WNZL
BRCC for approval.
 Daily liquidity risk reports are reviewed by Treasury and the
Overseas Banking Group’s Liquidity Risk teams. Liquidity
reports are presented to Group ALCO monthly and to the
Group BRCC quarterly, as well as WNZL ALCO and WNZL
BRCC on a similar schedule.

Notes to the financial statements
70 Westpac Banking Corporation - New Zealand Banking Group
Note 32 Financial risk (continued)
RiskRisk management framework and controls
Market risk
 The Market Risk Framework describes the Overseas Banking
Group’s approach to managing traded and non-traded
market risk and is approved by the Group BRCC. Westpac
New Zealand operates its own Market Risk Management
Framework that is closely aligned with that of the Overseas
Banking Group. The Westpac New Zealand Framework is
approved by the WNZL BRCC.
 Traded market risk includes interest rate, foreign exchange,
commodity, equity price, credit spread and volatility risks.
Non-traded market risk includes interest rate and foreign
exchange risks.
 Market risk is managed using VaR limits, Net interest income
at risk (‘NaR’) and structural risk limits (including credit
spread and interest rate basis point value limits) as well as
scenario analysis and stress testing.
 The Group BRCC approves the risk appetite for traded and
non-traded risks through the use of VaR, NaR and specific
structural risk limits.
 The Overseas Banking Group’s RISKCO (‘Group RISKCO’) has
approved separate VaR sub-limits for the trading activities of
the Overseas Banking Group’s Financial Markets and Treasury
units.
 Market risk limits are assigned to business management
based upon the Overseas Banking Group’s risk appetite and
business strategies in addition to the consideration of market
liquidity and concentration.
 Market risk positions are managed by the trading desks and
ALM unit consistent with their delegated authorities and the
nature and scale of the market risks involved.
 Daily monitoring of current exposure and limit utilisation is
conducted independently by the Overseas Banking Group’s
Market Risk unit, which monitors market risk exposures
against VaR and structural risk limits. Oversight of risk specific
to the NZ Banking Group is monitored by the NZ Branch’s
Trading Risk Management Unit. Daily VaR position reports are
produced by risk type, by product lines and by geographic
region. Quarterly reports are produced for the Overseas
Banking Group’s Market Risk Committee (‘Group MARCO’),
Group RISKCO and Group BRCC.
 Daily stress testing and backtesting of VaR results are
performed to support model integrity and to analyse extreme
or unexpected movements. A review of both the potential
profit and loss outcomes is also undertaken to monitor any
skew created by the historical data.
 The Group BRCC has approved a framework for profit or loss
escalation which considers both single day and 20 day
cumulative results.
 Treasury’s ALM unit is responsible for managing the non-
traded interest rate risk including risk mitigation through
hedging using derivatives. This is overseen by the Market Risk
unit and reviewed by the Group MARCO, Group RISKCO and
Group BRCC.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 71
Note 32 Financial risk (continued)
32.2 Credit risk
32.2.1 Credit risk ratings system
The principal objective of the credit risk rating system is to reliably assess the credit risk to which the NZ Banking Group is exposed. The NZ
Banking Group has two main approaches to this assessment.
Transaction-managed customers
Transaction managed customers are generally customers with business lending exposures. They are individually assigned a Customer Risk Grade
(‘CRG’), corresponding to their expected PD. Each facility is assigned an LGD. The NZ Banking Group’s risk rating system has a tiered scale of risk
grades for both non-defaulted customers and defaulted customers. Non-defaulted CRGs are mapped to Moody’s Investor Service (‘Moody’s’) and
S&P Global Ratings (‘S&P’) external senior ranking unsecured ratings.
The following table shows the NZ Banking Group’s high level CRG’s for transaction-managed portfolios mapped to the NZ Banking Group’s credit
quality disclosure categories and to their corresponding external rating.
Transaction-managed
Financial Statement DisclosureNZ Banking Group’s CRGMoody’s RatingS&P Rating
StrongAAaa – Aa3AAA – AA-
BA1 – A3A+ – A-
CBaa1 – Baa3BBB+ – BBB-
Good/satisfactoryDBa1 – B1BB+ – B+
NZ Banking Group Rating
WeakEWatchlist
FSpecial Mention
Weak/default/non-performingGSubstandard/Default
HDefault
Program-managed portfolio
The program-managed portfolio generally includes retail products including mortgages, personal lending (including credit cards) as well as Small and
Medium-sized Enterprises (‘SME’) lending. These customers are grouped into pools of similar risk. Pools are created by analysing similar risk
characteristics that have historically predicted that an account is likely to go into default. Customers grouped according to these predictive
characteristics are assigned a PD and LGD relative to their pool. The credit quality of these pools is based on a combination of behavioural factors,
delinquency trends, PD estimates and loan to valuation ratio (housing loans only).
32.2.2 Credit risk mitigation, collateral and other credit enhancements
The NZ Banking Group uses a variety of techniques to reduce the credit risk arising from its lending activities.
This includes the NZ Banking Group establishing that it has direct, irrevocable and unconditional recourse to collateral and other credit
enhancements through obtaining legally enforceable documentation.

Notes to the financial statements
72 Westpac Banking Corporation - New Zealand Banking Group
Note 32 Financial risk (continued)
Collateral
The table below describes the nature of collateral or security held for each relevant class of financial asset:
Financial assetsNature of collateral
Loans – residential
mortgages
1
Housing loans are secured by a mortgage over property and additional security may take the form of guarantees
and deposits.
Loans – other retail
1
Personal lending (including credit cards and overdrafts) is predominantly unsecured. Where security is taken, it
is restricted to eligible motor vehicles, caravans, campers, motor homes and boats.
SME loans may be secured, partially secured or unsecured. Security is typically taken by way of a mortgage over
property and/or a general security agreement over business assets or other assets.
Loans – corporate
1
Business loans may be secured, partially secured or unsecured. Security is typically taken by way of a mortgage
over property and/or a general security agreement over business assets or other assets.
Other security such as guarantees or standby letters of credit may also be taken as collateral, if appropriate.
Trading securities and
financial assets measured
at FVIS and derivative
financial instruments
These exposures are carried at fair value which reflects the credit risk.
For trading securities, no collateral is sought directly from the issuer or counterparty; however this may be implicit
in the terms of the instrument (such as an asset-backed security). The terms of debt securities may include
collateralisation.
Master netting agreements are typically used to enable the effects of derivative assets and derivative liabilities with
the same counterparty to be offset when measuring these exposures. Additionally, collateralisation agreements
are also typically entered into with major institutional counterparties to avoid the potential build-up of excessive
mark-to-market positions. Derivative transactions are increasingly being cleared through central clearers.
1
This includes collateral held in relation to associated credit commitments.
Management of risk mitigation
The NZ Banking Group mitigates credit risk through controls covering:
Collateral and valuation
management
The Overseas Bank manages collateral under collateralisation agreements centrally for all branches of the
Overseas Bank and Westpac New Zealand.
The estimated realisable value of collateral held in support of loans is based on a combination of:
formal valuations currently held for such collateral; and
management’s assessment of the estimated realisable value of all collateral held.
This analysis also takes into consideration any other relevant knowledge available to management at the time.
Updated valuations are obtained when appropriate.
The NZ Banking Group revalues collateral related to financial markets positions on a daily basis and has formal
processes in place to promptly call for collateral top-ups, if required. These processes include margining for
non-centrally cleared customer derivatives where required under APRA’s Prudential Standard CPS226. The
collateralisation arrangements are documented via the Credit Support Annex of the International Swaps and
Derivatives Association dealing agreements and Global Master Repurchase Agreements for repurchase
transactions.
Other credit enhancements
The NZ Banking Group only recognises guarantees, standby letters of credit, or credit derivative protection
from the following entities (provided they are not related to the entity with which the NZ Banking Group has a
credit exposure):
Sovereign;
Australia and New Zealand public sector;
Authorised deposit-taking institutions and overseas banks with a minimum risk grade equivalent of A3 / A-;
and
Other entities with a minimum risk grade equivalent of A3 / A-.
Offsetting
Creditworthy customers domiciled in New Zealand may enter into formal agreements with the NZ Banking
Group, permitting the NZ Banking Group to set-off gross credit and debit balances in their nominated
accounts. Cross-border set-offs are not permitted.
Close-out netting is undertaken with counterparties with whom the NZ Banking Group has entered into a legally
enforceable master netting agreement for their off-balance sheet financial market transactions in the event of
default.
Further details of offsetting are provided in Note 25.
Central clearing
The NZ Banking Group increasingly executes derivative transactions through central clearing counterparties.
Central clearing counterparties mitigate risk through stringent membership requirements, the collection of
margin against all trades placed, the default fund, and an explicitly defined order of priority of payments in the
event of default.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 73
Note 32 Financial risk (continued)
32.2.3 Credit risk concentrations
Credit risk is concentrated when a number of counterparties are engaged in similar activities, have similar economic characteristics and thus may
be similarly affected by changes in economic or other conditions.
The NZ Banking Group monitors its credit portfolio to manage risk concentrations and rebalance the portfolio.
Individual customers or groups of related customers
The NZ Banking Group has large exposure limits governing the aggregate size of credit exposure normally acceptable to individual customers and
groups of related customers. These limits are tiered by customer risk grade.
Specific industries
Exposures to businesses, governments and other financial institutions are classified into a number of industry clusters based on related Australian
and New Zealand Standard Industrial Classification (‘ANZSIC’) codes and are monitored against the NZ Banking Group’s industry risk appetite
limits.
Individual countries
The NZ Banking Group has limits governing risks related to individual countries, such as political situations, government policies and economic
conditions that may adversely affect either a customer’s ability to meet its obligations to the NZ Banking Group, or the NZ Banking Group’s ability
to realise its assets in a particular country.
Maximum exposure to credit risk
The maximum exposure to credit risk (excluding collateral received) is represented by the carrying amount of on-balance sheet financial assets
and undrawn credit commitments as set out in the following table. Life insurance assets held as an investment in unit trusts are excluded as the
unit price is affected by movements in equity prices which are a market risk.
NZ BANKING GROUP
$ millions
20192018
Financial assets
Cash and balances with central banks
2,002 1,472
Collateral paid
417 180
Trading securities and financial assets measured at FVIS
4,871 3,016
Derivative financial instruments
6,257 3,509
Investment securities/Available-for-sale securities
4,469 3,810
Loans
84,626 80,860
Other financial assets
400
468
Life insurance assets
4 9
Due from related entities
2,367 2,023
Total financial assets 105,413 95,347
Undrawn credit commitments
Letters of credit and guarantees
964 1,104
Commitments to extend credit
25,881 24,722
Other commitments - 60
Total undrawn credit commitments 26,845 25,886
Total maximum credit risk exposure 132,258 121,233

Notes to the financial statements
74 Westpac Banking Corporation - New Zealand Banking Group
Note 32 Financial risk (continued)
Concentration of credit exposures
NZ BANKING GROUP
$ millions20192018
On-balance sheet credit exposures
Analysis of on-balance sheet credit exposures by geographical areas
New Zealand 97,283 89,199
Australia 3,685 2,572
United Kingdom 2,459 1,726
United States of America 154 173
Other 1,832 1,677
Total on-balance sheet credit exposures 105,413 95,347
Analysis of on-balance sheet credit exposures by industry sector
Accommodation, cafes and restaurants 465 443
Agriculture 8,836 8,498
Construction 572 551
Finance and insurance 10,687 8,135
Forestry and fishing 444 464
Government, administration and defence 9,044 6,381
Manufacturing 2,229 2,443
Mining 311 243
Property 7,512 6,851
Property services and business services 1,451 1,321
Services 2,125 1,858
Trade 2,554 2,564
Transport and storage 1,280 1,194
Utilities 2,297 1,804
Retail lending 53,446 50,805
Other 2 1
Subtotal 103,255 93,556
Provisions for impairment charges on loans (321) (324)
Due from related entities 2,367 2,023
Other financial assets 112 92
Total on-balance sheet credit exposures 105,413 95,347
Off-balance sheet credit exposures consists of
Credit risk-related instruments 26,845 25,886
Total off-balance sheet credit exposures 26,845 25,886
Analysis of off-balance sheet credit exposures by industry sector
Accommodation, cafes and restaurants 116 93
Agriculture 624 606
Construction 502 528
Finance and insurance 1,636 1,608
Forestry and fishing 204 143
Government, administration and defence 891 756
Manufacturing 1,870 1,776
Mining 35 175
Property 1,986 1,544
Property services and business services 705 529
Services 592 600
Trade 1,682 1,750
Transport and storage 812 879
Utilities 1,720 1,779
Retail lending 13,470 13,120
Total off-balance sheet credit exposures 26,845 25,886
ANZSIC has been used as the basis for disclosing industry sectors.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 75
Note 32 Financial risk (continued)
32.2.4 Credit quality of financial assets
Credit quality disclosures (NZ IFRS 9)
The following table shows the credit quality of gross credit risk exposures measured at amortised cost or at FVOCI to which the impairment
requirements of NZ IFRS 9 apply. The credit quality is determined by reference to the credit risk ratings system (refer to Note 32.2.1) and
expectations of future economic conditions under multiple scenarios:
NZ BANKING GROUP
$ millions
Stage 1Stage 2Stage 3Total
1
Loans - Residential Mortgages
Strong
42,096 - - 42,096
Good/satisfactory
7,629 1,201 - 8,830
Weak
28 248 302 578
Total Loans - Residential Mortgages
49,753 1,449 302 51,504
Loans - Other retail
Strong
610 - - 610
Good/satisfactory
2,881 172 - 3,053
Weak
19 18 53 90
Total Loans - Other retail
3,510 190 53 3,753
Loans - Corporate
Strong
11,437 - - 11,437
Good/satisfactory
15,624 1,126 - 16,750
Weak
- 1,299 93 1,392
Total Loans - Corporate
27,061 2,425 93 29,579
Loans - Other
Strong
111 - - 111
Good/satisfactory
- - - -
Weak
- - - -
Total Loans - Other
111 - - 111
Investment Securities
Strong
4,469 - - 4,469
Good/satisfactory
- - - -
Weak
- - - -
Total Investment Securities
4,469 - - 4,469
All other financial assets
Strong
4,151 - - 4,151
Good/satisfactory
42 4 - 46
Weak
- 3 1 4
Total all other financial assets
4,193 7 1 4,201
Undrawn credit commitments
Strong
18,567 - - 18,567
Good/Satisfactory
7,832 237 - 8,069
Weak
10 179 20 209
Total undrawn credit commitments
26,409 416 20 26,845
Total strong
81,441 - - 81,441
Total good/satisfactory
34,008 2,740 - 36,748
Total weak
57 1,747 469 2,273
Total on and off balance sheet
115,506 4,487 469 120,462
1
This credit quality disclosure differs to that of credit risk concentration as it relates only to financial assets measured at amortised costs or at FVOCI and therefore
excludes trading securities and financial assets measured at FVIS, and derivative financial instruments.
Details of collateral held in support of these balances are provided in Note 32.2.6.

Notes to the financial statements
76 Westpac Banking Corporation - New Zealand Banking Group
Note 32 Financial risk (continued)
Credit quality disclosures (NZ IAS 39)
An asset is considered to be past due when any payment under the contractual terms has been missed. The entire contractual balance is
considered to be past due, rather than only the overdue portion. Assets may be overdue for a number of reasons, including late payments or
incomplete documentation. Late payment may be influenced by the timing of weekends and holidays. This does not always align with the
underlying basis by which credit risk is managed.
As comparatives have not been restated for the adoption of NZ IFRS 9, the following table presents the credit quality of financial assets of the NZ
Banking Group that are neither past due nor impaired as determined by reference to the credit risk ratings system under NZ IAS 39. As these
tables do not reflect the adoption of NZ IFRS 9 they are not directly comparable to the credit quality disclosures under NZ IFRS 9.
All the financial assets of the NZ Banking Group as at 30 September 2018, other than loans, are neither past due nor impaired.
All the financial assets of the NZ Banking Group that are neither past due nor impaired fall into the ‘Strong’ category in their entirety except those
financial assets disclosed below:
NZ BANKING GROUP
2018
$ millionsStrong
Good/
Satisfactory
WeakTotal
Accrued interest receivable (refer to Note 13) 70 87 3 160
Trading securities and financial assets measured at FVIS (refer to Note 9) 3,015 1 - 3,016
Derivative financial instruments (refer to Note 23) 3,342 167 - 3,509
Loans (refer to Note 12) 35,119 43,202 1,432 79,753
32.2.5 Non-performing loans and credit commitments
The loans and credit commitments balance in stage 3 (non-performing) is represented by those loans and credit commitments which are in
default. A default occurs when the NZ Banking Group considers that the customer is unlikely to repay its credit obligations in full, irrespective of
recourse by the NZ Banking Group to actions such as realising security, or the customer is more than 90 days past due on any material credit
obligation. This definition of default is aligned to the Reserve Bank regulatory definition of default.
The determination of the provision for expected credit losses is one of the NZ Banking Group’s critical accounting assumptions and estimates.
Details of this and the NZ Banking Group’s accounting policy for the provision for expected credit losses are discussed in Notes 6 and 12 along with
the total provision for expected credit losses on loans and credit commitments and the total for those loans and credit commitments that are
considered non-performing (i.e. stage 3).

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 77
Note 32 Financial risk (continued)
32.2.6 Collateral held
Loans
The NZ Banking Group analyses the coverage of the loan portfolio which is secured by the collateral that it holds. Coverage is measured as follows:
CoverageSecured loan to collateral value ratio
Fully securedLess than or equal to 100%
Partially securedGreater than 100% but not more than 150%
Unsecured
Greater than 150%, or no security held (e.g. can include credit cards, personal loans, and exposure to highly rated
corporate entities)
The NZ Banking Group's loan portfolio has the following coverage from collateral held based on the requirements of NZ IFRS 9:
Performing Loans
%
Residential
Mortgages
1
Other
Retail
Corporate Other Total
Fully secured
100 39 61 37 84
Partially secured
- 4 20 11 7
Unsecured
- 57 19 52 9
Total 100 100 100 100 100
Non-performing loans
%
Residential
Mortgages
1
Other
Retail
Corporate Other Total
Fully secured
94 53 10 - 72
Partially secured
6 4 50 - 15
Unsecured
- 43 40 - 13
Total 100 100 100 - 100
1
For the purposes of collateral classifications, residential mortgages are classified as fully secured, unless they are non-performing in which case they may be
classified as partially secured. Refer to Section iv ‘Additional mortgage information’ for loan-to-value ratio ('LVR') analysis of residential mortgages.
Details of the carrying value and associated provisions for ECL are disclosed in Notes 11 and 12 respectively. The credit quality of loans is
disclosed in Note 32.2.4.
As the comparatives have not been restated for the adoption of NZ IFRS 9, the NZ Banking Group’s loan portfolio has the following coverage from
collateral held based on the requirements of NZ IAS 39 for prior years. Once NZ IFRS 9 has been effective for the comparative year end, these
tables will no longer be presented.
NZ BANKING GROUP
%2018
1
Fully secured84
Partially secured6
Unsecured10
Total net loans 100
1
Comparative information for the year ended 30 September 2018 has been restated. Certain exposures have been re-classified between ‘fully secured’ and
‘partially secured’. The impact of the restatement is an increase in ‘fully secured’ loans from 78% to 84% and a corresponding decrease in ‘partially secured’ loans
from 12% to 6%.
Collateral held against financial assets other than loans
NZ BANKING GROUP
$ millions20192018
Cash, primarily for derivatives 623 591
Securities under reverse repurchase agreements
1
1,041
216
Total other collateral held 1,664 807
1
Securities received as collateral are not recognised on the NZ Banking Group's balance sheet.