Westpac Pillar 3 Report (December 2019)

ASX Release


19 FEBRUARY 2020

Pillar 3 Report as at 31 December 2019

Westpac Banking Corporation (“Westpac”) today provides the attached Pillar 3 Report
as at December 2019.








For further information:

David Lording Andrew Bowden
Group Head of Media Relations Head of Investor Relations
0419 683 411 T. (02) 8253 4008 (ext. 24008)
M. 0438 284 863


This document has been authorised for release by Tim Hartin, Group Company Secretary.


Level 18, 275 Kent Street
Sydney, NSW, 2000

Pillar 3 report
Table of contents


2 | Westpac Group December 2019 Pillar 3 Report

Structure of Pillar 3 report

Executive summary 3
Introduction 5
Group structure 7
Capital overview 8
Leverage ratio 12
Credit risk exposures 13
Securitisation 17
Liquidity coverage ratio 20
Appendix
Appendix I | APS330 Quantitative requirements 21
Disclosure regarding forward-looking statements 22




















In this report references to ‘Westpac’, ‘Westpac Group’, ‘the Group’, ‘we’, ‘us’ and ‘our’ are to Westpac
Banking Corporation and its controlled entities (unless the context indicates otherwise).
In this report, unless otherwise stated or the context otherwise requires, references to ‘$’, ‘AUD’ or ‘A$’ are
to Australian dollars.
Any discrepancies between totals and sums of components in tables contained in this report are due to
rounding.
In this report, unless otherwise stated, disclosures reflect the Australian Prudential Regulation Authority’s
(APRA) implementation of Basel III.
Information contained in or accessible through the websites mentioned in this report does not form part of
this report unless we specifically state that it is incorporated by reference and forms part of this report. All
references in this report to websites are inactive textual references and are for information only.

Pillar 3 report
Executive summary


Westpac Group December 2019 Pillar 3 Report | 3
%
31 December 201930 September 201931 December 2018
Level 2 Regulatory capital structure
Common equity Tier 1 capital ratio %10.8 10.7 10.4
Additional Tier 1 capital %2.1 2.2 2.4
Tier 1 capital ratio %12.8 12.8 12.8
Tier 2 capital %2.7 2.8 2.0
Total regulatory capital ratio %
15.5 15.6 14.8
APRA leverage ratio %
6.0 5.7 5.7
Level 1 Common equity Tier 1 capital ratio (CET1) %
11.1 11.0 10.2

Westpac’s common equity Tier 1 (CET1) capital ratio was 10.8% at 31 December 2019. The CET1 ratio
was higher than the 10.7% ratio reported in September 2019 reflecting earnings for the quarter, the
institutional placement completed in November 2019 (raising $2.0 billion of CET1 capital) and the share
purchase plan completed in December 2019 (raising approximately $0.77 billion of CET1 capital). These
were partly offset by the payment of the 2019 final dividend and an increase in risk weighted assets (RWA).

$m
31 December 201930 September 201931 December 2018
Risk weighted assets at Level 2
Credit risk361,400 367,864 361,173
Market risk9,005 9,350 8,129
Operational risk54,206 47,680 38,883
Interest rate risk in the banking book10,989 530 8,328
Other6,888 3,370
3,060
Total RWA
442,487 428,794 419,573
Total Exposure at Default
1,039,769 1,054,178 1,026,652

Total RWA increased $13.7 billion or 3.2% this quarter. This was due to an increase in non-credit risk RWA
partly offset by a reduction in credit risk RWA.
The $6.5 billion decrease in credit risk RWA included:
 A decrease in mark-to-market related credit risk and counterparty credit risk RWA of $3.9 billion,
including movements in market rates;
 A $2.2 billion reduction in RWA from a combination of: lower portfolio balances (Australian mortgages
and corporate); improvements in asset quality from lower consumer delinquencies; and some portfolio
mix effects;
 Model changes for a segment of the residential mortgage portfolio which reduced RWA by $1.4 billion;
and
 Foreign currency translation impacts which increased RWA by $1.0 billion mainly from the appreciation
of the NZ$ against the A$.

The $20.2 billion increase in non-credit RWA included:
 An increase in interest rate risk in the banking book (IRRBB) RWA of $10.5 billion from:
o Westpac’s implementation of a new IRRBB model more suited to low interest rates, which will
need to be approved by APRA. Until the model is finalised and approved, Westpac is including
an overlay in its IRRBB RWA. At December 2019 the overlay increased RWA by $6.3 billion
(which equates to $500 million of capital); and
o Higher repricing and yield risk and a lower embedded gain from rising interest rates over the
quarter ($4.2 billion);
 An increase of $6.5 billion in operational risk RWA mainly from the additional $500 million capital
overlay imposed by APRA in response to the magnitude and nature of issues alleged by AUSTRAC in
its Statement of Claim; and
 An increase of $3.5 billion mainly due to the adoption of AASB 16 Leases on 1 October 2019 in other
assets RWA.

Exposure at Default
Exposure at default (EAD) decreased $14.4 billion (or 1.4%), primarily due to a change in EAD
measurement for a segment of the residential mortgage portfolio and reductions in derivatives exposure
mainly reflecting movements in market rates.

Pillar 3 report
Executive summary


4 | Westpac Group December 2019 Pillar 3 Report
Leverage Ratio
The leverage ratio represents the amount of Tier 1 capital relative to exposure
1
. At 31 December 2019,
Westpac’s leverage ratio was 6.0%, up from 5.7% in September 2019, reflecting higher Tier 1 capital and
lower on balance sheet and derivatives exposures.

Liquidity Coverage Ratio (LCR)
Westpac’s average LCR for the quarter ending 31 December 2019 was 132% (September quarter 2019:
132%)
2
.

1
As defined under Attachment D of APS110: Capital Adequacy
2
Calculated as a simple average of the daily observations over the relevant quarter.

Pillar 3 report
Introduction


Westpac Group December 2019 Pillar 3 Report | 5
Westpac Banking Corporation is an Authorised Deposit –taking Institution (ADI) subject to regulation by the
APRA. APRA has accredited Westpac to apply advanced models permitted by the Basel III global capital
adequacy regime to the measurement of its regulatory capital requirements. Westpac uses the Advanced
Internal Ratings-Based approach (Advanced IRB) for credit risk and the Advanced Measurement Approach
(AMA) for operational risk.
In accordance with APS330 Public Disclosure, financial institutions that have received this accreditation,
such as Westpac, are required to disclose prudential information about their risk management practices on
a semi-annual basis. A subset of this information must be disclosed quarterly.
In addition to this report, the regulatory disclosures section of the Westpac website
1
contains the reporting
requirements for:
 Capital instruments under Attachment B of APS330; and
 The identification of potential Global-Systemically Important Banks (G-SIB) under Attachment H of
APS330 (disclosed annually).
Capital instruments disclosures are updated when:
 A new capital instrument is issued that will form part of regulatory capital; or
 A capital instrument is redeemed, converted into CET1 capital, written off, or its terms and conditions
are changed.





1
http://www.westpac.com.au/about-westpac/investor-centre/financial-information/regulatory-disclosures/

Pillar 3 report
Group structure


6 | Westpac Group December 2019 Pillar 3 Report
Westpac seeks to ensure that it is adequately capitalised at all times. APRA applies a tiered approach to
measuring Westpac’s capital adequacy
1
by assessing financial strength at three levels:
 Level 1, comprising Westpac Banking Corporation and its subsidiary entities that have been approved
by APRA as being part of a single 'Extended Licensed Entity' (ELE) for the purposes of measuring
capital adequacy;
 Level 2, the consolidation of Westpac Banking Corporation and all its subsidiary entities except those
entities specifically excluded by APRA regulations. The head of the Level 2 group is Westpac Banking
Corporation; and
 Level 3, the consolidation of Westpac Banking Corporation and all its subsidiary entities.
Unless otherwise specified, all quantitative disclosures in this report refer to the prudential assessment of
Westpac’s financial strength on a Level 2 basis
2
.
The Westpac Group
The following diagram shows the Level 3 conglomerate group and illustrates the different tiers of regulatory
consolidation.
Level 1 Consolidation
Level 2 Consolidation
Level 3 Consolidation
Regulatory
non-consolidated
subsidiaries
Westpac
New Zealand Ltd
Other Westpac Level 2
subsidiaries
Westpac Banking
Corporation
Westpac Level 1
subsidiaries


Accounting consolidation
3

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries (including
structured entities) controlled by Westpac. Westpac and its subsidiaries are referred to collectively as the
‘Group’. The effects of all transactions between entities in the Group are eliminated. Control exists when the
parent entity is exposed to, or has rights to, variable returns from its involvement with an entity, and has the
ability to affect those returns through its power over that entity. Subsidiaries are fully consolidated from the
date on which control commences and they are no longer consolidated from the date that control ceases.
Group entities excluded from the regulatory consolidation at Level 2
Regulatory consolidation at Level 2 covers the global operations of Westpac and its subsidiary entities,
including other controlled banking, securities and financial entities, except for those entities involved in the
following business activities:
 insurance;
 acting as manager, responsible entity, approved trustee, trustee or similar role in relation to funds
management;
 non-financial (commercial) operations; or
 special purpose entities to which assets have been transferred in accordance with the requirements of
APS120 Securitisation.
Retained earnings and equity investments in subsidiary entities excluded from the consolidation at Level 2
are deducted from capital, with the exception of securitisation special purpose entities.

1
APS110 Capital Adequacy outlines the overall framework adopted by APRA for the purpose of assessing the capital
adequacy of an ADI.
2
Impaired assets and provisions held in Level 3 entities are excluded from the tables in this report.
3
Refer to Note 31 of Westpac’s 2019 Annual Report for further details.

Pillar 3 report
Group structure


Westpac Group December 2019 Pillar 3 Report | 7
Subsidiary banking entities
Westpac New Zealand Limited (WNZL), a wholly owned subsidiary entity, is a registered bank incorporated
in New Zealand and regulated by the Reserve Bank of New Zealand (RBNZ). WNZL uses the Advanced
IRB approach for credit risk and the AMA for operational risk. Other subsidiary banking entities in the Group
include Westpac Bank-PNG-Limited and Westpac Europe Limited. For the purposes of determining
Westpac’s capital adequacy subsidiary banking entities are consolidated at Level 2.
Restrictions and major impediments on the transfer of funds or regulatory capital within the Group
Minimum capital (‘thin capitalisation’) rules
Tax legislation in most jurisdictions in which the Group operates prescribes minimum levels of capital that
must be retained in that jurisdiction to avoid a portion of the interest costs incurred in the jurisdiction ceasing
to be tax deductible. Capital for these purposes includes both contributed capital and non-distributed
retained earnings. Westpac seeks to maintain sufficient capital/retained earnings to comply with these rules.
Tax costs associated with repatriation
Repatriation of retained earnings (and capital) may result in tax being payable in either the jurisdiction from
which the repatriation occurs or Australia on receipt of the relevant amounts. This cost would reduce the
amount actually repatriated.
Intra-group exposure limits
Exposures to related entities are managed within the prudential limits prescribed by APRA in APS222
Associations with Related Entities
1
. Westpac has an internal limit structure and approval process governing
credit exposures to related entities. This limit structure and approval process, combined with APRA’s
prudential limits, is designed to reduce the potential for unacceptable contagion risk.
Prudential regulation of subsidiary entities
Certain subsidiary banking, insurance and trustee entities are subject to local prudential regulation in their
own right, including capital adequacy requirements and investment or intra-group exposure limits. Westpac
seeks to ensure that its subsidiary entities are adequately capitalised and adhere to regulatory requirements
at all times. There are no capital deficiencies in subsidiary entities excluded from the regulatory
consolidation at Level 2.
On 4 November 2019, the RBNZ advised it would change WNZL’s conditions of registration to remove the
2% overlay applying to its minimum capital requirements from 31 December 2019. This overlay had been in
place since 31 December 2017 following the RBNZ’s review of WNZL’s compliance with the RBNZ’s
‘Capital Adequacy Framework’ (Internal Models Based Approach) (BS2B).


1
For the purposes of APS222, subsidiaries controlled by Westpac, other than subsidiaries that form part of the ELE, represent
‘related entities’. Prudential and internal limits apply to intra-group exposures between the ELE and related entities, both on an
individual and aggregate basis.

Pillar 3 report
Capital overview


8 | Westpac Group December 2019 Pillar 3 Report
Capital management strategy
Westpac’s approach to capital management seeks to ensure that it is adequately capitalised as an ADI.
Westpac 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.
In light of APRA’s ‘unquestionably strong’ capital benchmarks, Westpac will seek to operate with a CET1
capital ratio above 10.5% in March and September as measured under the existing capital framework.
Additional buffers may also be held to reflect challenging or uncertain environments. This also takes into
consideration:
 current regulatory capital minimums and the capital conservation buffer (“CCB”), which together are the
total CET1 requirement. In line with the above, the total CET1 requirement for Westpac is at least 8.0%,
based upon an industry minimum CET1 requirement of 4.5% plus a capital buffer of at least 3.5%
applicable to domestic systemically important banks (D-SIBs)
1
;
 stress testing to calibrate an appropriate buffer against a downturn; and
 quarterly volatility of capital ratios due to the half yearly cycle of ordinary dividend payments.
Should the CET1 ratio fall below the total CET1 requirement, restrictions on the distribution of earnings will
apply. This includes restrictions on the amount of earnings that can be distributed through dividends,
Additional Tier 1 capital distributions and discretionary staff bonuses.
Westpac will revise its target capital levels once APRA finalises its review of the capital adequacy
framework.
Westpac’s capital adequacy ratios
%31 December 201930 September 201931 December 2018
The Westpac Group at Level 2
Common equity Tier 1 capital ratio10.8 10.7 10.4
Additional Tier 1 capital2.1 2.2 2.4
Tier 1 capital ratio12.8 12.8 12.8
Tier 2 capital2.7 2.8 2.0
Total regulatory capital ratio15.5 15.6 14.8
The Westpac Group at Level 1
Common equity Tier 1 capital ratio11.1 11.0 10.2
Additional Tier 1 capital2.1 2.2 2.5
Tier 1 capital ratio13.2 13.2 12.7
Tier 2 capital2.7 2.9 2.1
Total regulatory capital ratio15.9 16.1 14.8


Westpac New Zealand Limited’s capital adequacy ratios
%31 December 201930 September 201931 December 2018
Westpac New Zealand Limited
Common equity Tier 1 capital ratio11.4 11.3 12.0
Additional Tier 1 capital2.6 2.6 2.8
Tier 1 capital ratio 14.0 13.9 14.8
Tier 2 capital1.9 2.0 2.1
Total regulatory capital ratio15.9 15.9 16.9



1
Noting that APRA may apply higher CET1 requirements for an individual ADI.

Pillar 3 report
Capital overview


Westpac Group December 2019 Pillar 3 Report | 9
Recent regulatory capital developments
RBNZ Capital Review
On 5 December 2019 the RBNZ finalised its changes to the capital adequacy framework in New Zealand.
The changes reflect the RBNZ’s final decisions on the proposals outlined in the paper “Capital Review
Paper 4: How much capital is enough?” released in December 2018.
The new framework includes the following key components:
 Setting a Tier 1 capital requirement of 16% of risk weighted assets (RWA) for systemically important
banks (including Westpac New Zealand Limited (WNZL)) and 14% for all other banks;
 Additional Tier 1 capital (AT1) can comprise no more than 2.5% of the 16% Tier 1 capital requirement;
 Eligible Tier 1 capital will comprise common equity and redeemable perpetual preference shares.
Existing AT1 instruments will be phased out over a seven year period;
 Maintaining the existing Tier 2 capital requirement of 2% of RWA; and
 Recalibrating RWA for internal rating based banks, such as WNZL, such that aggregate RWA will
increase to 90% of standardised RWA.
The RBNZ’s new capital regime will take effect from 1 July 2020, and New Zealand banks will be given up
to seven years to fully comply.
Operational Risk Capital Overlay
On 17 December 2019 APRA announced an investigation into Westpac following AUSTRAC’s Statement of
Claim which was released on 20 November 2019. As part of the announcement, APRA imposed an
additional $500 million capital overlay in response to the magnitude and nature of issues alleged by
AUSTRAC in its statement of claim. The additional overlay applied from 31 December 2019.

Pillar 3 report
Capital overview


10 | Westpac Group December 2019 Pillar 3 Report
Capital requirements
This table shows risk weighted assets and associated capital requirements
1
for each risk type included in
the regulatory assessment of Westpac’s capital adequacy. More detailed disclosures on the prudential
assessment of capital requirements are presented in the following sections of this report.
234

31 December 2019
IRBStandardisedTotal Risk Total Capital
$m
Approach
Approach
2
Weighted Assets
Required
1
Credit risk
Corporate73,249 1,072
74,321
5,946
Business lending35,096 896
35,992
2,879
Sovereign1,723 1,073
2,796
224
Bank7,758 35
7,793
623
Residential mortgages130,001 4,833
134,834
10,787
Australian credit cards4,897 -
4,897
392
Other retail12,222 881
13,103
1,048
Small business16,535 -
16,535
1,323
Specialised lending55,771 488
56,259
4,501
Securitisation5,647 -
5,647
452
Mark-to-market related credit risk
3
- 9,224 9,224 738
Total342,899 18,502 361,400 28,913
Market risk9,005 720
Operational risk54,206 4,336
Interest rate risk in the banking book10,989 879
Other assets
4
6,888
551
Total442,487 35,399
30 September 2019
IRBStandardisedTotal Risk Total Capital
$m
Approach
Approach
2
Weighted Assets
Required
1
Credit risk
Corporate74,807 1,166
75,973
6,078
Business lending35,470 950
36,420
2,914
Sovereign2,068 1,069
3,137
251
Bank8,339 46
8,385
671
Residential mortgages131,629 5,010
136,639
10,931
Australian credit cards5,089 -
5,089
407
Other retail12,395 894
13,289
1,063
Small business16,090 -
16,090
1,287
Specialised lending55,262 518
55,780
4,462
Securitisation5,749 -
5,749
460
Mark-to-market related credit risk
3
- 11,313 11,313 905
Total346,898 20,966 367,864 29,429
Market risk9,350 748
Operational risk47,680 3,814
Interest rate risk in the banking book530 42
Other assets
4
3,370
270
Total428,794 34,303



1
Total capital required is calculated as 8% of total risk weighted assets.
2
Westpac’s Standardised risk weighted assets are categorised based on their equivalent IRB categories.
3
Mark-to-market related credit risk is measured under the standardised approach. It is also known as Credit Valuation
Adjustment (CVA) risk.
4
Other assets include cash items, unsettled transactions, fixed assets and other non-interest earning assets.

Pillar 3 report
Capital overview


Westpac Group December 2019 Pillar 3 Report | 11
31 December 2018
IRBStandardisedTotal Risk Total Capital
$m
Approach
Approach
2
Weighted Assets
Required
1
Credit risk
Corporate72,452 1,921
74,373
5,950
Business lending35,367 1,038
36,405
2,912
Sovereign1,616 985
2,601
208
Bank6,440 36
6,476
518
Residential mortgages130,307 5,371
135,678
10,854
Australian credit cards6,136 -
6,136
491
Other retail13,650 989
14,639
1,171
Small business16,454 -
16,454
1,316
Specialised lending55,753 461
56,214
4,497
Securitisation5,735 -
5,735
459
Mark-to-market related credit risk
3
- 6,462 6,462 517
Total343,910 17,263 361,173 28,893
Market risk8,129 650
Operational risk38,883 3,111
Interest rate risk in the banking book8,328 666
Other assets
4
3,060
245
Total419,573 33,565
1234




1
Total capital required is calculated as 8% of total risk weighted assets.
2
Westpac’s Standardised risk weighted assets are categorised based on their equivalent IRB categories.
3
Mark-to-market related credit risk is measured under the standardised approach. It is also known as Credit Valuation
Adjustment (CVA) risk.
4
Other assets include cash items, unsettled transactions, fixed assets and other non-interest earning assets.

Pillar 3 report
Leverage ratio disclosure


12 | Westpac Group December 2019 Pillar 3 Report
Leverage ratio
The following table summarises Westpac’s leverage ratio. This has been determined using APRA’s
definition of the leverage ratio as specified in APS110 Capital Adequacy.
$ billion31 December 201930 September 201930 June 201931 March 2019
Tier 1 Capital56.8 55.1 53.7 53.9
Total Exposures948.7 968.8 946.7 942.4
Leverage ratio6.0%5.7%5.7%5.7%

Pillar 3 report
Credit risk exposures


Westpac Group December 2019 Pillar 3 Report | 13
Summary credit risk disclosure12
Regulatory
ExpectedSpecificActual
RiskRegulatoryLoss forProvisions Losses for
31 December 2019
ExposureWeightedExpectednon-defaultedImpairedfor Impairedthe 3 months
$m
at DefaultAssets
Loss
1
exposuresLoansLoansended
Corporate
136,056 73,249 589 462 198 126 (3)
Business lending54,640 35,096 614 414 317 162 23
Sovereign89,687 1,723 1 1 ---
Bank27,120 7,758 16 16 ---
Residential mortgages553,492 130,001 1,657 1,099 394 122 34
Australian credit cards19,159 4,897 309 235 118 73 83
Other retail15,646 12,222 582 411 295 172 54
Small business33,388 16,535 530 362 380 168 20
Specialised Lending65,798 55,771 769 576 60 29 -
Securitisation26,935 5,647 -----
Standardised
2
17,848 18,502 --55 20 -
Total1,039,769 361,401 5,067 3,576 1,817 871 211
Regulatory
ExpectedSpecificActual
RiskRegulatoryLoss forProvisions Losses for
30 September 2019
ExposureWeightedExpectednon-defaultedImpairedfor Impairedthe 12 months
$m
at DefaultAssets
Loss
1
exposuresLoansLoansended
Corporate
139,173 74,807 523 473 135 50 30
Business lending54,570 35,470 635 431 316 168 54
Sovereign90,960 2,068 2 2 ---
Bank28,761 8,339 10 10 ---
Residential mortgages559,018 131,629 1,642 1,088 414 127 111
Australian credit cards17,541 5,089 328 248 121 80 340
Other retail15,951 12,395 582 417 283 165 354
Small business33,365 16,090 512 351 367 152 78
Specialised Lending65,553 55,262 748 557 69 29 13
Securitisation26,774 5,749 -----
Standardised
2
22,512 20,966 --58 21 2
Total1,054,178 367,864 4,982 3,577 1,763 792 982
Regulatory
ExpectedSpecificActual
RiskRegulatoryLoss forProvisions Losses for
31 December 2018
ExposureWeightedExpectednon-defaultedImpairedfor Impairedthe 3 months
$m
at DefaultAssets
Loss
1
exposuresLoansLoansended
Corporate
134,917 72,452 532 476 68 22 -
Business lending54,663 35,367 673 433 274 170 8
Sovereign75,439 1,616 2 2 ---
Bank24,255 6,440 8 8 ---
Residential mortgages556,171 130,307 1,574 1,055 387 138 21
Australian credit cards19,713 6,136 354 297 91 69 74
Other retail17,116 13,650 635 464 301 172 73
Small business33,336 16,454 506 338 185 76 11
Specialised Lending66,184 55,753 820 568 138 54 -
Securitisation26,896 5,735 -----
Standardised
2
17,962 17,263 --19 8 -
Total1,026,652 361,173 5,104 3,641 1,463 709 187


1
Includes regulatory expected losses for defaulted and non-defaulted exposures.
2
Includes mark-to-market related credit risk.

Pillar 3 report
Credit risk exposures


14 | Westpac Group December 2019 Pillar 3 Report
Exposure at Default by major type
123
31 December 2019
On balance
Total ExposureAverage
$m
sheet Non-market relatedMarket relatedat Default
3 months ended
1
Corporate62,314 60,621 13,121 136,056 137,615
Business lending42,111 12,529 -54,640 54,605
Sovereign79,117 1,773 8,797 89,687 90,323
Bank15,811 2,133 9,176 27,120 27,940
Residential mortgages485,438 68,054 -553,492 556,255
Australian credit cards8,651 10,508 -19,159 18,350
Other retail12,143 3,503 -15,646 15,799
Small business26,411 6,977 -33,388 33,376
Specialised lending53,903 10,034 1,861 65,798 65,676
Securitisation
2
21,740 5,085 110 26,935 26,855
Standardised12,985 1,123 3,740 17,848 20,180
Total820,624 182,340 36,805 1,039,769 1,046,974
30 September 2019
On balance
Total ExposureAverage
$m
sheet Non-market relatedMarket relatedat Default
12 months ended
3
Corporate63,994 58,903 16,276 139,173 134,619
Business lending42,385 12,185 -54,570 54,532
Sovereign80,891 1,711 8,358 90,960 81,034
Bank16,291 2,026 10,444 28,761 25,672
Residential mortgages485,049 73,969 -559,018 557,762
Australian credit cards8,720 8,821 -17,541 18,847
Other retail12,415 3,536 -15,951 16,628
Small business26,520 6,845 -33,365 33,326
Specialised lending52,745 10,761 2,047 65,553 65,495
Securitisation
2
22,559 4,037 178 26,774 26,683
Standardised13,459 1,131 7,922 22,512 18,657
Total825,028 183,925 45,225 1,054,178 1,033,255
31 December 2018
On balance
Total ExposureAverage
$m
sheet Non-market relatedMarket relatedat Default
3 months ended
4
Corporate66,392 57,112 11,413 134,917 131,868
Business lending41,697 12,966 -54,663 54,258
Sovereign70,929 1,817 2,693 75,439 77,235
Bank14,668 2,315 7,272 24,255 23,952
Residential mortgages480,607 75,564 -556,171 554,765
Australian credit cards9,763 9,950 -19,713 19,676
Other retail13,529 3,587 -17,116 17,115
Small business26,168 7,168 -33,336 33,279
Specialised lending53,402 11,911 871 66,184 66,807
Securitisation
2
21,754 5,009 133 26,896 27,272
Standardised13,807 1,240 2,915 17,962 18,064
Total812,716 188,639 25,297 1,026,652 1,024,291
Off-balance sheet
Off-balance sheet
Off-balance sheet



1
Average is based on exposures as at 31 December 2019 and 30 September 2019.
2
The EAD associated with securitisations is for the banking book only.
3
Average is based on exposures as at 30 September 2019, 30 June 2019, 31 March 2019, 31 December 2018, and 30
September 2018.
4
Average is based on exposures as 31 December 2018 and 30 September 2018.

Pillar 3 report
Credit risk exposures


Westpac Group December 2019 Pillar 3 Report | 15
Loan impairment provisions
APS220 Credit Quality requires that Westpac report specific provisions and a General Reserve for Credit
Loss (GRCL). All Individually Assessed Provisions (IAP) raised under Australian Accounting Standards
(AAS) are classified as specific provisions. All Collectively Assessed Provisions (CAP) raised under AAS
are either classified into specific provisions or a GRCL.
1

31 December 2019 A-IFRS ProvisionsGRCLTotal Regulatory
$m
IAPsCAPsTotalAdjustment Provisions
Specific Provisions
for impaired loans483 388 871 NA871
for defaulted but not impaired loansNA558 558 NA558
For Stage 2NA1,246 1,246 NA1,246
Total Specific Provision
1
483 2,192 2,675 NA2,675
General Reserve for Credit Loss
1
NA1,303 1,303 NA1,303
Total provisions for ECL483 3,495 3,978 NA3,978
30 September 2019 A-IFRS ProvisionsGRCLTotal Regulatory
$m
IAPsCAPsTotalAdjustment Provisions
Specific Provisions
for impaired loans412 380 792 NA792
for defaulted but not impaired loansNA554 554 NA554
For Stage 2NA1,234 1,234 NA1,234
Total Specific Provision
1
412 2,168 2,580 NA2,580
General Reserve for Credit Loss
1
NA1,344 1,344 NA1,344
Total provisions for ECL412 3,512 3,924 NA3,924
31 December 2018 AAS ProvisionsGRCLTotal Regulatory
$m
IAPsCAPsTotalAdjustment Provisions
Specific Provisions
for impaired loans426 283 709 NA709
for defaulted but not impaired loansNA663 663 NA663
for Stage 2NA1,255 1,255 NA1,255
Total Specific Provisions
1
426 2,201 2,627 NA2,627
General Reserve for Credit Loss
1
NA1,439 1,439 NA1,439
Total provisions for impairment charges426 3,640 4,066 NA4,066


1
Provisions classified according to APRA’s letter dated 4 July 2017 “Provisions for regulatory purposes and AASB 9 financial
instruments”.

Pillar 3 report
Credit risk exposures


16 | Westpac Group December 2019 Pillar 3 Report
Impaired and past due loans
The following tables disclose the crystallisation of credit risk as impairment and loss. Analysis of exposures
defaulted not impaired, impaired loans, related provisions and actual losses is broken down by
concentrations reflecting Westpac’s asset categories.
1

SpecificSpecific Actual
31 December 2019
DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
1
Loans Impaired LoansImpaired Loans3 months ended
Corporate94 198 126 64%(3)
Business lending430 317 162 51%23
Sovereign-----
Bank-----
Residential mortgages3,732 394 122 31%34
Australian credit cards-118 73 62%83
Other retail-295 172 58%54
Small business371 380 168 44%20
Specialised lending273 60 29 48%-
Securitisation-----
Standardised72 55 20 36%-
Total4,972 1,817 871 48%211
SpecificSpecific Actual
30 September 2019
DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
1
Loans Impaired LoansImpaired Loans12 months ended
Corporate98 135 50 37%30
Business lending455 316 168 53%54
Sovereign-----
Bank-----
Residential mortgages3,839 414 127 31%111
Australian credit cards-121 80 66%340
Other retail-283 165 58%354
Small business345 367 152 41%78
Specialised lending279 69 29 42%13
Securitisation-----
Standardised72 58 21 36%2
Total5,088 1,763 792 45%982
SpecificSpecific Actual
31 December 2018
DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
1
Loans Impaired LoansImpaired Loans3 months ended
Corporate87 68 22 32%-
Business lending308 274 170 62%8
Sovereign-----
Bank-----
Residential mortgages3,235 387 138 36%21
Australian credit cards-91 69 76%74
Other retail-301 172 57%73
Small business257 185 76 41%11
Specialised lending318 138 54 39%-
Securitisation-----
Standardised77 19 8 42%-
Total4,282 1,463 709 48%187


1
Includes items past 90 days not impaired.

Pillar 3 report
Securitisation


Westpac Group December 2019 Pillar 3 Report | 17
Banking book summary of securitisation activity by asset type
For the 3 months ended
31 December 2019
AmountRecognised gain or
$m
securitisedloss on sale
Residential mortgages370 -
Credit cards--
Auto and equipment finance81 -
Business lending--
Investments in ABS--
Other--
Total451 -
For the 12 months ended
30 September 2019
AmountRecognised gain or
$m
securitisedloss on sale
Residential mortgages30,899 -
Credit cards--
Auto and equipment finance600 -
Business lending--
Investments in ABS--
Other--
Total31,499 -
For the 3 months ended
31 December 2018AmountRecognised gain or
$m
securitisedloss on sale
Residential mortgages5,892 -
Credit cards--
Auto and equipment finance295 -
Business lending--
Investments in ABS--
Other--
Total6,187 -

Pillar 3 report
Securitisation


18 | Westpac Group December 2019 Pillar 3 Report
Banking book summary of on and off-balance sheet securitisation by exposure type
31 December 2019Off-balanceTotal Exposure
$m
Securitisation retainedSecuritisation purchasedsheetat Default
Securities-8,806 38 8,844
Liquidity facilities--288 288
Funding facilities2,967 -1,077 4,043
Underwriting facilities----
Lending facilities512 -
217
729
Warehouse facilities9,456 -3,575 13,031
Total12,935 8,806 5,195 26,935
30 September 2019
Off-balanceTotal Exposure
$m
Securitisation retainedSecuritisation purchasedsheetat Default
Securities-8,685 37 8,722
Liquidity facilities147 -384 531
Funding facilities2,989 -1,054 4,043
Underwriting facilities----
Lending facilities428 -
169
597
Warehouse facilities10,310 -2,571 12,881
Total13,874 8,685 4,215 26,774
31 December 2018Off-balanceTotal Exposure
$m
Securitisation retainedSecuritisation purchasedsheetat Default
Securities-9,164 33 9,197
Liquidity facilities--250 250
Funding facilities2,377 -1,379 3,756
Underwriting facilities----
Lending facilities9 -8 17
Warehouse facilities10,086 -3,590 13,676
Total12,473 9,164 5,259 26,896
On balance sheet
On balance sheet
On balance sheet

Pillar 3 report
Securitisation


Westpac Group December 2019 Pillar 3 Report | 19
Trading book summary of on and off-balance sheet securitisation by exposure type
1

31 December 2019Off-balanceTotal Exposure
$m
Securitisation retainedSecuritisation purchasedsheetat Default
Securities-55 -55
Liquidity facilities----
Funding facilities----
Underwriting facilities----
Lending facilities----
Warehouse facilities----
Credit enhancements----
Basis swaps--109 109
Other derivatives--18 18
Total-55 127 182
30 September 2019Off-balanceTotal Exposure
$m
Securitisation retainedSecuritisation purchasedsheetat Default
Securities-44 -44
Liquidity facilities----
Funding facilities----
Underwriting facilities----
Lending facilities----
Warehouse facilities----
Credit enhancements----
Basis swaps--59 59
Other derivatives--13 13
Total-44 72 116
31 December 2018Off-balanceTotal Exposure
$m
Securitisation retainedSecuritisation purchasedsheetat Default
Securities-54 -54
Liquidity facilities----
Funding facilities----
Underwriting facilities----
Lending facilities----
Warehouse facilities----
Credit enhancements----
Basis swaps--65 65
Other derivatives--27 27
Total-54 92 146
On balance sheet
On balance sheet
On balance sheet




1
EAD associated with trading book securitisation is not included in EAD by major type on page 14. Trading book securitisation
exposure is captured and risk weighted under APS116 Capital Adequacy: Market Risk.

Pillar 3 report
Liquidity Coverage Ratio


20 | Westpac Group December 2019 Pillar 3 Report
Liquidity Coverage Ratio (LCR)
Westpac’s LCR as at 31 December 2019 was 130%
1
(30 September 2019: 127%) and the average LCR for
the quarter was 132%
2
(30 September 2019: 132%).
Liquid assets included in the LCR comprise High Quality Liquid Assets (HQLA), the Committed Liquidity
Facility (CLF) from the Reserve Bank of Australia and additional qualifying Reserve Bank of New Zealand
securities. Westpac received approval from APRA for a CLF of $54.0 billion for the calendar year 2019
(2018 calendar year: $57.0 billion). Westpac maintains a portfolio of HQLA and these averaged $87.1 billion
over the quarter
2
.
Funding is sourced from retail, small business, corporate and institutional customer deposits and wholesale
funding. Westpac seeks to minimise the outflows associated with this funding by targeting customer
deposits with lower LCR outflow rates and actively manages the maturity profile of its wholesale funding
portfolio. Westpac maintains a buffer over the regulatory minimum of 100%.
Total unweighted
value (average)
2
Total weighted
value (average)
2
Total unweighted
value (average)
2
Total weighted
value (average)
2
Liquid assets, of which:
1High-quality liquid assets (HQLA)87,120 85,420
2Alternative liquid assets (ALA)47,950 47,985
3Reserve Bank of New Zealand (RBNZ) securities8,098 7,272

Cash Outflows

4Retail deposits and deposits from small business
customers, of which:
250,147 22,638 240,156 21,809
5Stable deposits121,356 6,068 116,023 5,801
6Less stable deposits128,791 16,570 124,133 16,008

7Unsecured wholesale funding, of which:131,192 65,100 131,064 64,923
8Operational deposits (all counterparties) and deposits
in networks for cooperative banks
50,784 12,624 50,081 12,450
9Non-operational deposits (all counterparties)68,156 40,224 69,068 40,558
10Unsecured debt12,252 12,252 11,915 11,915
11Secured wholesale funding1 2

12Additional requirements, of which:188,922 25,166 188,678 25,306
13Outflows related to derivatives exposures and other
collateral requirements
10,856 10,856 10,908 10,908
14Outflows related to loss of funding on debt products183 183 241 241
15Credit and liquidity facilities177,883 14,127 177,529 14,157

16Other contractual funding obligations1,256 1,256 763 763
17Other contingent funding obligations42,224 3,630 44,415 3,927

18Total cash outflows117,791 116,730

Cash inflows

19Secured lending (e.g. reverse repos)7,730 -8,102 -
20Inflows from fully performing exposures11,734 6,910 11,508 6,786
21Other cash inflows2,642 2,642 3,114 3,114
22Total cash inflows
22,106
9,552
22,724
9,900
23Total liquid assets143,168 140,677
24Total net cash outflows108,239 106,830
25Liquidity Coverage Ratio (%)132%132%
Number of data points used6567
$m
30 September 201931 December 2019

1
Calculated as total liquid assets divided by total net cash outflows.
2
Calculated as a simple average of the daily observations over the quarter.

Pillar 3 report
Appendix I - APS330 quantitative requirements


Westpac Group December 2019 Pillar 3 Report | 21
The following table cross-references the quantitative disclosure requirements outlined in Attachment C of
APS330 to the quantitative disclosures made in this report.
APS330 reference
 Westpac disclosure
Page
General Requirements
Paragraph 49 Summary leverage ratio 12

Attachment C

Table 3:
Capital Adequacy
(a) to (e)
(f)
Capital requirements
Westpac’s capital adequacy ratios
Capital adequacy ratios of major subsidiary banks
10
8
8

Table 4:
Credit Risk - general
disclosures
(a)
(b)
(c)
Exposure at Default by major type
Impaired and past due loans
General reserve for credit loss

14
16
15

Table 5:
Securitisation exposures
(a)

(b)

Banking Book summary of securitisation activity by asset type
Banking Book summary of on and off-balance sheet
securitisation by exposure type
Trading Book summary of on and off-balance sheet
securitisation by exposure type

17

18

19

Attachment F

Table 20: Liquidity
Coverage Ratio disclosure
template
Liquidity Coverage Ratio disclosure 20




Exchange rates
The following exchange rates were used in this report, and reflect spot rates for the period end.

$31 December 201930 September 201931 December 2018
USD0.7005 0.6755 0.7062
GBP0.5340 0.5493 0.5564
NZD1.0410 1.0791 1.0518
EUR0.6252 0.6176 0.6180

Pillar 3 report
Disclosure regarding forward-looking statements


22 | Westpac Group December 2019 Pillar 3 Report
This report contains statements that constitute ‘forward-looking statements’ within the meaning of Section 21E of
the US Securities Exchange Act of 1934.
Forward-looking statements are statements about matters that are not historical facts. Forward-looking statements
appear in a number of places in this report and include statements regarding Westpac’s intent, belief or current
expectations with respect to its business and operations, market conditions, results of operations and financial
condition, including, without limitation, future loan loss provisions and financial support to certain borrowers. Words
such as ‘will’, ‘may’, ‘expect’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘estimate’, ‘anticipate’,
‘believe’, ‘probability’, ‘risk’, ‘aim’ or other similar words are used to identify forward-looking statements. These
forward-looking statements reflect Westpac’s current views with respect to future events and are subject to
change, certain risks, uncertainties and assumptions which are, in many instances, beyond Westpac’s control, and
have been made based upon management’s expectations and beliefs concerning future developments and their
potential effect upon Westpac. There can be no assurance that future developments will be in accordance with
Westpac’s expectations or that the effect of future developments on Westpac will be those anticipated. Actual
results could differ materially from those expected, depending on the outcome of various factors, including, but not
limited to:
 the effect of, and changes in, laws, regulations, taxation or accounting standards or practices and government
policy, particularly changes to liquidity, leverage and capital requirements;
 regulatory investigations, and other actions, inquiries, litigation, fines, penalties, restrictions or other regulator
imposed conditions, including as a result of our actual or alleged failure to comply with laws (such as financial
crime laws), regulations or regulatory policy;
 internal and external events which may adversely impact Westpac's reputation;
 information security breaches, including cyberattacks;
 reliability and security of Westpac's technology and risks associated with changes to technology systems;
 the stability of Australian and international financial systems and disruptions to financial markets and any
losses or business impacts Westpac or its customers or counterparties may experience as a result;
 market volatility, including uncertain conditions in funding, equity and asset markets;
 adverse asset, credit or capital market conditions;
 an increase in defaults in credit exposures because of a deterioration in economic conditions;
 the conduct, behaviour or practices of Westpac or its staff;
 changes to Westpac's credit ratings or to the methodology used by credit rating agencies;
 levels of inflation, interest rates (including low or negative rates), exchange rates and market and monetary
fluctuations;
 market liquidity and investor confidence;
 changes in economic conditions, consumer spending, saving and borrowing habits in Australia, New Zealand
and in other countries (including as a result of tariffs and protectionist trade measures) in which Westpac or its
customers or counterparties conduct their operations and Westpac’s ability to maintain or to increase market
share, margins and fees, and control expenses;
 the effects of competition, including from established providers of financial services and from non-financial
service entities in the geographic and business areas in which Westpac conducts its operations;
 the timely development and acceptance of new products and services and the perceived overall value of these
products and services by customers;
 the effectiveness of Westpac's risk management policies, including internal processes, systems and
employees;
 the incidence or severity of Westpac insured events;
 the occurrence of environmental change (including as a result of climate change) or external events in
countries in which Westpac or its customers or counterparties conduct their operations;
 changes to the value of Westpac's intangible assets;
 changes in political, social or economic conditions in any of the major markets in which Westpac or its
customers or counterparties operate;
 the success of strategic decisions involving diversification or innovation, in addition to business expansion
activity, business acquisitions and the integration of new businesses; and
 various other factors beyond Westpac's control.
The above list is not exhaustive. For certain other factors that may impact on forward-looking statements made by
Westpac refer to ‘Risk factors’ in Westpac’s 2019 Annual Report. When relying on forward-looking statements to
make decisions with respect to Westpac, investors and others should carefully consider the foregoing factors and
other uncertainties and events.
Westpac is under no obligation to update any forward-looking statements contained in this report, whether as a
result of new information, future events or otherwise, after the date of this report.