Westpac Pillar 3 Report (March 2020)

ASX Release


4 MAY 2020

Pillar 3 Report as at 31 March 2020

Westpac Banking Corporation (“Westpac”) today provides the attached Pillar 3 Report
(March 2020).








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 March 2020 Pillar 3 report
Structure of Pillar 3 report

Executive summary
3
Introduction 6
Risk appetite and risk types 7
Controlling and managing risk 8
Group structure 14
Capital overview 16
Leverage ratio 21
Credit risk management 23
Credit risk exposures 33
Credit risk mitigation 57
Counterparty credit risk 59
Securitisation 62
Market risk 72
Interest rate risk in the banking book 76
Operational risk 78
Equity risk 80
Funding and liquidity risk management 82
Liquidity coverage ratio 83
Net stable funding ratio 84
Appendices

Appendix I – Regulatory capital reconciliation
86
Appendix II – Entities included in regulatory consolidation
92
Appendix III – Level 3 entities’ assets and liabilities
95
Appendix IV – Regulatory expected loss
96
Appendix V – APS330 quantitative requirements
97
Glossary
100
Disclosure regarding forward-looking statements
105



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 March 2020 Pillar 3 report | 3
Key capital ratios
31 March 202030 September 201931 March 2019
Level 2 Regulatory capital structure
Common equity Tier 1 capital after deductions $m47,982 45,752 44,680
Risk weighted assets (RWA) $m443,905 428,794 419,819
Common equity Tier 1 capital ratio %10.81 10.67 10.64
Additional Tier 1 capital ratio %2.13 2.17 2.20
Tier 1 capital ratio %12.94 12.84 12.84
Tier 2 capital %3.35 2.79 1.78
Total regulatory capital ratio %16.29 15.63 14.62
APRA leverage ratio %5.66 5.68 5.72
Level 1 Regulatory capital structure
Common equity Tier 1 capital after deductions ($m)48,482 46,380 43,850
Risk weighted assets (RWA) ($m)437,137 422,475 409,231
Level 1 Common equity Tier 1 capital ratio %11.09 10.98 10.72

CET1 capital ratio movement for First Half 2020
Westpac’s CET1 capital ratio was 10.81% at 31 March 2020. The CET1 ratio was 14 basis points higher than 30
September 2019 reflecting the institutional placement and share purchase plan (which together raised $2.8 billion
of capital) and earnings for the half, partially offset by payment of the final 2019 dividend and higher RWA.
Cash earnings for First Half 2020 were $993 million (22 basis point increase). Cash earnings included additional
impairment charges of $1,107 million after tax in anticipation of credit losses that Westpac expects to incur from
the COVID-19 pandemic. The net impact to the CET1 capital ratio of the increased impairment provisions related
to COVID-19 is an 11 basis point decrease reflecting the impact to cash earnings, the reduction in regulatory
expected loss deduction to nil and a higher deduction for deferred tax assets. Cash earnings were also impacted
by Notable Items ($1,285 million after tax) relating to provisions and costs associated with the AUSTRAC
proceedings and an increase in provisions for estimated customer refunds, payments, associated costs and
litigation (29 basis point impact)
1
.
CET1 movement – First Half 2020

Key movements over the half were as follows:
 Capital raised totalling $2.8 billion over the half (62 basis point increase);
 First Half 2020 cash earnings, including notable items (22 basis point increase);
 The 2019 final dividend payment, net of the dividend reinvestment plan (DRP) share issuance (57 basis point
decrease);
 Capital deductions and other capital movements (18 basis point increase). This mainly reflects the impact of
increased impairment provisions related to COVID-19, which reduced the regulatory expected loss deduction
to nil (25 basis point increase) and a higher deduction for deferred tax assets (13 basis point decrease). Other
capital items increased 6 basis points primarily driven by movements in fair value on economic hedges
recognised in net profit;

1
Notable Items impacting cash earnings for First Half 2020 includes the provision for AUSTRAC and related matters, additional
provisions for estimated customer refunds, payments and associated costs and litigation.

Pillar 3 report
Executive summary

4 | Westpac Group March 2020 Pillar 3 report
 Ordinary RWA growth (before model changes, overlays and foreign currency translation) decreased slightly
over the period (2 basis point increase); and
 Foreign currency impacts from the appreciation of the NZ$ against the A$ (3 basis point decrease)
1
.
RWA model changes and overlays increased RWA $12.3 billion leading to a 30 basis point decrease in the CET1
capital ratio. This was primarily driven by:
 Operational Risk capital overlay of $500 million imposed by APRA following AUSTRAC’s Statement of Claim
(15 basis point decrease, $6.25 billion increase in RWA);
 An increase in IRRBB capital from plans to implement a new IRRBB model more suited to low interest rates.
Until the model is finalised and approved, Westpac will include an IRRBB capital overlay of $500 million (15
basis point decrease, $6.25 billion increase in RWA);
 Adoption of AASB 16 Leases methodology from 1 October 2019 in other assets risk calculation (8 basis point
decrease, $3.3 billion increase in RWA); and
 Model changes for a segment of the Australian mortgage portfolio and also New Zealand mortgages (8 basis
point increase, $3.5 billion decrease in RWA).
Risk Weighted Assets (RWA)
$m31 March 202030 September 201931 March 2019
Risk weighted assets at Level 2
Credit risk369,142367,864362,762
Market risk8,3969,3508,338
Operational risk54,09347,68038,641
Interest rate risk in the banking book (IRRBB)5,3055307,076
Other 6,9693,3703,002
Total RWA443,905428,794419,819
Total Exposure at Default1,089,1041,054,1781,029,817

Total RWA increased $15.1 billion or 3.5% this half mainly driven by an increase in non-credit risk RWA.
The $1.3 billion increase in credit risk RWA included:
 A $1.1 billion increase in RWA from changes in asset quality within Australian mortgages including higher
consumer delinquencies;
 Lower lending primarily within retail products, which decreased RWA by $1.2 billion;
 Model changes detailed above which reduced RWA by $3.5 billion;
 Foreign currency translation impacts which increased RWA by $3.9 billion from the appreciation of the US$
and NZ$ against the A$ mainly impacting corporate and NZ mortgages; and
 An increase in mark-to-market related credit risk and counterparty credit risk RWA of $1.0 billion mostly within
corporate exposures.
A $13.8 billion increase in non-credit RWA mostly from the impact of the capital overlays and the adoption of
AASB 16 detailed above. These were partly offset by a $1.0 billion decrease in market risk RWA and a higher
embedded gain from lower interest rates in IRRBB RWA.


Additional Tier 1 and Tier 2 capital movement for First Half 2020
During the half, Westpac Issued US $1.5 billion of Tier 2 capital instruments (49 basis point increase) and
redeemed CNY 1.25 billion of Tier 2 capital instruments (6 basis point decrease). The higher new issuance was in
response to APRA’s increased total capital requirements to be met by 1 January 2024.


Exposure at Default
Exposure at default (EAD) increased $34.9 billion (or 3.3%) over the half, primarily due to higher sovereign
exposures associated with increased levels of liquidity.


Leverage Ratio
The leverage ratio represents the amount of Tier 1 capital relative to exposure
2
. At 31 March 2020, Westpac’s
leverage ratio was 5.66%, down 2 basis points since 30 September 2019.


1
Reflecting the net impact of movements in the foreign currency translation reserve and RWA
2
As defined under Attachment D of APS110: Capital Adequacy.

Pillar 3 report
Executive summary

Westpac Group March 2020 Pillar 3 report | 5
Liquidity Coverage Ratio (LCR)
Westpac’s LCR for 31 March 2020 calculated on a spot basis was 154% (31 December 2019: 130%). The
inclusion of Westpac’s allowance of the Term Funding Facility (TFF) added 14 percentage points to the ratio.
Other movements in the Group’s LCR reflect an increase in HQLA by $31.1 billion over the half, while net cash
outflows (NCOs) increased by $10.2 billion. Westpac’s average LCR for the quarter was 140%
1
(31 December
2019: 132%).

Net Stable Funding Ratio (NSFR)
Westpac had an NSFR of 117%
2
at 31 March 2020 (31 December 2019: 112%). The inclusion of Westpac’s
allowance of the TFF added 2 percentage points to the ratio. Other movements in the Group’s NSFR over the half
mainly reflect a $21 billion increase in available stable funding, due to deposits (up $9 billion), wholesale funding
(up $9 billion) and other (up $3 billion). Required stable funding increased by $2 billion excluding the impact of the
TFF.


1
Calculated as a simple average of the daily observations over the quarter.
2
Calculated as total available stable funding divided by total required stable funding as at end of the quarter.

Pillar 3 report
Introduction

6 | Westpac Group March 2020 Pillar 3 report
Westpac Banking Corporation is an Authorised Deposit-taking Institution (ADI) subject to regulation by 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.
This report describes Westpac’s risk management practices and presents the prudential assessment of Westpac’s
capital adequacy as at 31 March 2020.
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
Risk appetite and risk types

Westpac Group March 2020 Pillar 3 report | 7
Westpac’s appetite for risk is informed by our strategic objectives and business plans, regulatory rules and ratios,
and the potential for adverse outcomes that result in material impacts on our customers, our staff, our reputation,
our regulatory relationships and/or our financial position including the potential for capital and liquidity ratios to fall
below target levels in stressed scenarios.
Westpac distinguishes between different types of financial and non-financial risk and takes an integrated approach
toward identifying, assessing and managing risks. The annual review of Westpac’s Risk Management Framework,
which includes the Risk Management Strategy and Risk Appetite Statement, together with the establishment and
monitoring of key controls through supporting frameworks and policies all play vital roles.
Overview of key risk types
 governance – the risk that the right information does not get to the right people or governance fora in the right
format and timeframe to empower decision making. It is driven by organisational structures and relationships
including between the Board, management, its shareholders and other stakeholders, which leads to deficient
decision making, poor accountability and ineffective structures and processes;
 risk culture – the risk that our culture does not promote and reinforce behavioural expectations or structures to
identify, understand, discuss and act on risks. This leads to ineffective risk management, poor risk awareness,
risk-taking outside of risk appetite that is tolerated and a culture where key learnings are not integrated into
Group-wide and customer outcomes, impeding continuous improvement;
 strategic – the risks arising from key elements of the strategic objectives and business plans;
 capital adequacy – the risk that the firm has an insufficient level or composition of capital to support its normal
business activities and to meet its regulatory capital requirements under normal operating environments or
stressed conditions (both actual and as defined for internal planning or regulatory testing purposes). This
includes the risk from Westpac’s pension plans;
 credit – the risk of financial loss where a customer or counterparty fails to meet their financial obligations to
Westpac;
 funding and liquidity – the risk that Westpac 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;
 market – 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. This includes interest rate risk in the
banking book - the risk to interest income from a mismatch between the duration of assets and liabilities that
arises in the normal course of business activities;
 operational – the risk of loss resulting from inadequate or failed internal processes, people and systems or
from external events. This definition includes legal and regulatory risk but excludes strategic risk;
 conduct and compliance – the risk of failing to abide by compliance obligations required of us or otherwise
failing to have behaviours and practices that deliver suitable, fair and clear outcomes for our customers and
that support market integrity;
 cyber – the potential for loss or harm to the business and stakeholders related to the use of technology; and
 reputational - the risk that an action, inaction, transaction, investment or event will reduce trust in Westpac’s
integrity and competence by clients, counterparties, investors regulators, employees or the public.

Pillar 3 report
Controlling and managing risk

8 | Westpac Group March 2020 Pillar 3 report
We have adopted the Three Lines of Defence model to aid in holistic end-to-end management of risk, within which
all employees play an active role. This necessitates co-operation between businesses and functions, such that
there are no gaps in risk coverage. Effective risk management enables:
 accurate measurement of our risk profile and to balance risk and reward within our risk appetite, optimising
financial growth opportunities and mitigating potential loss or damage;
 protection of Westpac’s depositors, policyholders, and investors by maintaining a balance sheet with sound
credit quality and buffers over regulatory minimums;
 delivery of suitable, fair, clear and transparent outcomes for our customers that support market integrity;
 embedment of adequate controls to guard against excessive risk or undue risk concentration; and
 delivery of our regulatory and compliance obligations.
The Board is responsible for approving Westpac’s risk management framework, Risk Management Strategy and
Risk Appetite Statement and for monitoring the effectiveness of risk management by Westpac.
The Board has delegated to the Board Risk & Compliance Committee responsibility for establishing a view of the
Group’s current and future risk position relative to its risk appetite and capital strength; review and approval of
certain frameworks and policies for managing risk; and review and, where appropriate, approval of risks which
may be beyond the approval discretion provided to management.
Risk management governance structure as at 31 March 2020
Board
 approves our risk management framework, Risk Management Strategy and
Risk Appetite Statement; and
 makes an annual declaration to APRA on risk management.
Board Risk & Compliance
Committee (BRCC)
 assists the Board to consider and approve the Westpac’s overall risk
framework for managing financial and non-financial risks;
 reviews and recommends the Westpac Group Risk Management
Framework, Risk Management Strategy and Risk Appetite Statement to the
Board for approval on an annual basis;
 reviews and monitors Westpac’s risk profile and controls consistent with the
Westpac Risk Appetite Statement;
 reviews and approves material frameworks, and policies for managing risk;
 reviews and approves the limits and conditions that apply to credit risk
approval authority delegated to the CEO, CFO, CRO and any other officers
of Westpac to whom the Board has delegated credit approval authority;
 monitors changes anticipated for the economic and business environment
including consideration of emerging risks, and other factors considered
relevant to our risk profile and risk appetite;
 assists the Board to make its annual declaration to APRA on risk
management under APRA prudential standard CPS220 Risk Management;
 reviews and where appropriate approves risks beyond the approval
discretion provided to management; and
 assists the Board to oversee compliance management within Westpac.
From the perspective of specific types of risk, the Board Risk & Compliance
Committee’s role includes:
 credit risk – approving key policies and limits supporting the Credit Risk
Management Framework, and monitoring the risk profile, performance and
management of our credit portfolio;
 liquidity risk – approving key policies and limits supporting the Liquidity Risk
Management Framework, including our annual funding strategy, recovery
and resolution plans and monitoring the liquidity position and requirements;

Pillar 3 report
Controlling and managing risk

Westpac Group March 2020 Pillar 3 report | 9
Risk management governance structure (continued)

 market risk – approving key policies and limits supporting the Market Risk
Management Framework and monitoring the market risk profile;
 operational risk – approving key policies supporting the Operational Risk
Management Framework, and monitoring the performance of operational
risk management and controls;
 conduct risk – reviewing and approving the Westpac Group Conduct
Framework and reviewing and monitoring the performance of conduct risk
management and controls;
 reputation risk – reviewing and approving the Reputation Risk Management
Framework, and reviewing and monitoring the performance of reputation
risk management and controls; and
 compliance risk – reviewing and approving the Westpac Group Compliance
Management Framework and Financial Crime Risk Management
Framework, supporting policies and standards and monitoring the
performance of compliance and financial crime risk management and
controls.
The Board Risk & Compliance Committee also:
 oversees and approves the Internal Capital Adequacy Assessment Process
and in doing so reviews the outcomes of Westpac’s stress testing, sets the
target capital ranges for regulatory capital and reviews and monitors capital
levels for consistency with Westpac’s risk appetite;
 provides relevant periodic assurances and reports (as appropriate) to the
Board Audit Committee;
 reviews and approves other risk management frameworks
1
and the
monitoring of performance under those frameworks (as appropriate);
 forms a view on Westpac’s risk culture and oversees the identification of,
and steps taken to address, any desirable changes to risk culture and
periodically reports to the Board;
 refers to the Board or any other Board Committees relevant matters that
come to the attention of the Board Risk & Compliance; and
 in its capacity as the Westpac Group’s US Risk Committee, oversees the
key risks, risk management framework and policies of Westpac’s US
operations.
Board Committees with a
Risk Focus
Board Audit Committee (BAC)
 oversees the integrity of financial statements and financial reporting
systems and matters relating to taxation risks.
Board Financial Crime Committee (BFC)
 oversees the implementation of Westpac’s Financial Crime Strategic Plan,
the program of work established to support this Plan and the appointment
of external experts to conduct independent reviews.
Board Remuneration Committee (BRC)
 oversees remuneration policies and practices of Westpac, in the context
that these policies and practices reflect Westpac’s risk management
framework, including making recommendations to the Board for the
adjustment of variable components of remuneration for relevant employees
including as a result of risk or compliance failures.
Board Technology Committee (BTC)
 oversees the implementation of Westpac’s technology strategy, including
risks associated with major technology programs.

1
Additional frameworks include the Equity Risk Management Framework, Related Entity Risk Management Framework, and Insurance
Risk Management Framework.

Pillar 3 report
Controlling and managing risk

10 | Westpac Group March 2020 Pillar 3 report
Risk management governance structure (continued)
Executive Team
Westpac Executive Team (ET)
 executes the Board-approved strategy;
 delivers Westpac’s various strategic and performance goals within the
approved risk appetite;
 approves position statements that guide Westpac’s response to
sustainability issues; and
 monitors key risks within each business unit, capital adequacy and
Westpac’s reputation.
Executive risk
committees
Westpac Group Executive Risk Committee (RISKCO)
 leads the management and oversight of material risks across Westpac within
the context of the risk appetite approved by the Board;
 monitors the effectiveness of the Risk Management Framework and the
execution of the Risk Management Strategy;
 monitors and reviews Westpac’s risk profile for all identified material risks;
 shapes and promotes a strong risk culture; and
 identifies emerging risks and allocates responsibility for assessing impacts
and implementing appropriate actions to address these.

Westpac Group Asset & Liability Committee (ALCO)
 leads the optimisation of funding and liquidity risk-reward across Westpac;
 reviews the level and quality of capital to ensure that it is commensurate with
Westpac’s risk profile, business strategy and risk appetite;
 oversees the Liquidity Risk Management Framework and key policies;
 oversees the funding and liquidity risk profile and balance sheet risk profile;
and
 identifies emerging funding and liquidity risks and appropriate actions to
address these.

Westpac Group Credit Risk Committee (CREDCO)
 reviews and oversees the Credit Risk Management Framework and key
supporting policies;
 oversees Westpac’s credit risk profile; and
 identifies emerging credit risks, allocates responsibility for assessing impacts,
and responds as appropriate.

Westpac Group Market Risk Committee (MARCO)
 reviews and monitors the Market Risk, and Insurance Risk Management
Frameworks and key market risk management policies;
 reviews policies and limits for managing traded and non-traded market risk;
and
 reviews and monitors the market risk, equity risk and insurance risk profile.

Westpac Group Operational Risk Committee (OPCO)
 reviews and monitors the Operational Risk Management Framework and the
Compliance and Conduct Risk Management Framework, and reviews and
approves key supporting policies;
 monitors Westpac’s operational risk profile; and
 identifies emerging operational, compliance and conduct risks, and
appropriate actions to address these.

Pillar 3 report
Controlling and managing risk

Westpac Group March 2020 Pillar 3 report | 11
Risk management governance structure (continued)

Westpac Group Remuneration Oversight Committee (ROC)
 supporting the CEO, BRC and the Board by reviewing and approving
remuneration frameworks, guidelines and short term variable reward plans
underpinning the Board-approved Westpac Group Remuneration Policy from
a Human Resources, Risk (including Compliance), Finance and Legal
perspective and in line with external requirements;
 assisting the BRC and the Board in fulfilling its responsibility to oversee
remuneration policies and practices of Westpac in the context that these
policies and practices fairly and responsibly reward individuals having regard
to customer and shareholder interests, long term financial soundness and
prudent risk management;
 recommending to the CEO for recommendation to the BRC remuneration
arrangements for Responsible Persons, risk and financial control employees,
Material Risk Takers and other individuals whose activities may impact the
financial soundness of Westpac below the Group Executive level; and
 recommending to the CEO for recommendation to the BRC the criteria and
rationale for determining the total quantum of Westpac’s variable reward
pool.
Prudential Reporting and Compliance Committee
 oversees from a Group-wide perspective, Westpac’s compliance with
prudential requirements and regulatory reporting;
 oversees the effective management of prudential compliance breaches,
incidents or issues including remediation actions; and
 monitors and reviews ongoing prudential governance activities, including
changes to prudential standards.
Reputation Risk Committee
 reviews issues with material reputation risk that arise in the operations of
Westpac’s business to mitigate reputation risk and detrimental customer
impacts.
Westpac Group Financial Crime Risk Committee
 oversees Anti-Money Laundering and Counter-Terrorism Financing, Anti-
Bribery and Corruption, Sanctions and Tax Transparency within the context
of the risk appetite approved by the Board;
 reviews and monitors the Financial Crime Risk Management Framework, key
supporting policies, programs and standards;
 review and track key Regulator (AUSTRAC) commitments and
communications;
 monitors and oversees Westpac’s financial crime risk profile; and
 identifies emerging financial crime risks, and appropriate actions to address
these.

Pillar 3 report
Controlling and managing risk

12 | Westpac Group March 2020 Pillar 3 report
Risk management governance structure (continued)
Risk function Risk Function
 promotes a strong risk culture;
 owns the design and content of the Risk Management Framework;
 defines the structure and coverage of risk appetite;
 defines the annual risk strategy to execute the Risk Management Framework
ensuring the management of risks is in alignment with risk appetite and
business strategy;
 establishes risk policies, procedures and limits;
 measures and reports on risk levels; and
 provides oversight of and direction on the management of risks.
Independent internal
review
Group Audit
 reviews the adequacy and effectiveness of management controls over risk.
Divisional business units
and Functions
Business Units and Functions
 responsible for identifying, evaluating and managing the risks that they
originate within approved risk appetite and policies; and
 establish and maintain appropriate risk management and compliance
controls, resources and self-assessment processes.

Pillar 3 report
Controlling and managing risk


Westpac Group March 2020 Pillar 3 report | 13
Roles and responsibilities
Our Three Lines of Defence approach is designed on a functional basis and covers all employees within Westpac.
The First Line of Defence – Business and support: manages the risks they originate
The First Line proactively identifies, evaluates, owns and manages the risks in their business/domain. It also
ensures that business activities are within approved risk appetite and policies. This accountability cannot be
abrogated. The First Line of defence is accountable for ‘self-certification’. In managing its risk, the First Line is
required to establish and maintain appropriate governance structures, controls, resources and self-assessment
processes, including issue identification, recording and escalation procedures.
The Second Line of Defence – Risk: provides oversight, insight and control of First Line activities
The Second Line sets frameworks, controls (including policies and limits), and standards for use across the
Westpac. They can require remediation or cessation of activity where these are not adhered to. Their approach will
be risk-based and proportionate. The Second Line reviews and challenges First Line activities and decisions that
may materially affect Westpac’s risk position, and independently evaluate the effectiveness of First Line’s controls,
monitoring, compliance, and monitors progress towards mitigating risks. In addition, the Second Line provides
insight to the First Line, assisting in developing, maintaining and enhancing the business’ approach to risk
management. The Second Line understands and reports on the aggregated risk profile of the Group to ensure
end-to-end oversight of risk and can accept risks outside of the business’ risk appetite.
The Third Line of Defence – Audit: provides independent audit
The Third Line is an independent assurance function that evaluates and opines on the adequacy and
effectiveness of both First and Second Line risk management approaches and tracks remediation progress, with
the aim of providing the Board, and senior executives, with comfort that Westpac’s governance, risk management
and internal controls are operating effectively.

Pillar 3 report
Group structure

14 | Westpac Group March 2020 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 March 2020 Pillar 3 report | 15
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).
On 2 April 2020, a decision was made by the RBNZ to freeze the distribution of dividends on ordinary shares by all
banks in New Zealand during the period of economic uncertainty caused by COVID-19.


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

16 | Westpac Group March 2020 Pillar 3 report
Capital Structure
This table shows Westpac’s capital resources under APS111 Capital Adequacy: Measurement of Capital.
31 March 30 September31 March
$m202020192019
Common equity Tier 1 capital
Paid up ordinary capital40,503 37,508 36,351
Treasury shares(619) (575) (571)
Equity based remuneration1,645 1,548 1,527
Foreign currency translation reserve59 (199) (331)
Accumulated other comprehensive income(190) (68) 15
Non-controlling interests - other61 58 54
Retained earnings25,985 27,188 26,949
Less retained earnings in life and general insurance, funds management
and securitisation entities(1,326) (1,407) (1,289)
Deferred fees229 267 234
Total common equity Tier 1 capital66,347 64,320 62,939
Deductions from common equity Tier 1 capital
Goodwill (excluding funds management entities)(8,673) (8,648) (8,665)
Deferred tax assets(2,610) (2,034) (1,710)
Goodwill in life and general insurance, funds management
and securitisation entities(935) (940) (941)
Capitalised expenditure(1,656) (1,719) (1,778)
Capitalised software(2,029) (2,019) (1,881)
Investments in subsidiaries not consolidated for regulatory purposes(1,633) (1,540) (1,522)
Regulatory expected loss in excess of eligible provisions
1
-(1,106) (1,148)
Defined benefit superannuation fund surplus(80) (73) (66)
Equity investments(327) (425) (482)
Regulatory adjustments to fair value positions(407) (63) (65)
Other Tier 1 deductions(15) (1) (1)
Total deductions from common equity Tier 1 capital(18,365) (18,568) (18,259)
Total common equity Tier 1 capital after deductions47,982 45,752 44,680
Additional Tier 1 capital
Basel III complying instruments9,473 9,299 9,216
Total Additional Tier 1 capital9,473 9,299 9,216
Net Tier 1 regulatory capital57,455 55,051 53,896
Tier 2 capital
Basel III complying instruments14,455 11,645 7,143
Basel III transitional instruments567 519 495
Eligible general reserve for credit loss79 62 66
Total Tier 2 capital15,101 12,226 7,704
Deductions from Tier 2 capital
Investments in subsidiaries not consolidated for regulatory purposes(140) (140) (140)
Holdings of own and other financial institutions Tier 2 capital instruments(102) (115) (103)
Total deductions from Tier 2 capital(242) (255) (243)
Net Tier 2 regulatory capital14,859 11,971 7,461
Total regulatory capital72,314 67,022 61,357


1
An explanation of the relationship between this deduction, regulatory expected loss and provisions for impairment charges is
contained in Appendix IV.

Pillar 3 report
Capital overview

Westpac Group March 2020 Pillar 3 report | 17
APRA announcements on capital
As part of its response to the current economic environment following COVID-19, APRA has adjusted its
expectations for bank capital. On 19 March 2020 APRA announced that during the period of disruption caused by
COVID-19 APRA would not be concerned if banks were not meeting its 10.5% “unquestionably strong” benchmark
for CET1. Banks may use their current capital buffers provided they remain above the current regulatory
requirement (currently at least 8.0% for domestic systemically important banks (D-SIBs)
1
). APRA has also
indicated that they do not envisage reinstating the “unquestionably strong” benchmarks for at least 12 months.
Accordingly, Westpac has updated its capital management strategy which is set out below.
APRA has also deferred implementation of the Basel III capital reforms by one year to January 2023 and
announced amendments to the calculation of RWA for COVID-19 relief packages which allow for payment
deferrals. These COVID-19 packages have not impacted RWA at 31 March 2020 due to the timing of these
packages being offered, however may impact future periods.
Further details of APRA’s regulatory changes are set out in the Significant Developments section of the 2020 Half
Year Financial Results.
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 as well as equity and debt
investors.
During the period of disruption caused by COVID-19, Westpac will seek to operate with the following principles in
relation to capital:
 prioritise maintaining capital strength;
 in line with APRA guidance, utilise some of the “unquestionably strong” buffer and seek to maintain a buffer
above the regulatory minimum;
 retain capital to absorb further downside on credit quality and acknowledge a high degree of uncertainty
regarding the length and depth of this stress; and
 allow for capital flexibility to support lending to customers.
These principles take 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 D-
SIBs
1,2
;
 stress testing to calibrate an appropriate buffer against a downturn; and
 quarterly volatility of capital ratios due to the half yearly cycle of ordinary dividend payments.
Westpac will revise its target capital levels once the medium to longer term impacts of COVID-19 are clearer,
taking into account APRA’s expectations for the timing of any capital rebuilding required and the finalisation of
APRA’s review of the capital adequacy framework.

1
Noting that APRA may apply higher CET1 requirements for an individual ADI.
2
If an ADI’s CET1 ratio falls below the Total CET1 Requirement (at least 8%), they face restrictions on the distribution of earnings, such
as dividends, distribution payments on AT1 capital instruments and discretionary staff bonuses.

Pillar 3 report
Capital overview

18 | Westpac Group March 2020 Pillar 3 report
Westpac’s capital adequacy ratios
%31 March 202030 September 201931 March 2019
The Westpac Group at Level 2
Common equity Tier 1 capital ratio10.8 10.7 10.6
Additional Tier 1 capital2.1 2.2 2.2
Tier 1 capital ratio12.9 12.8 12.8
Tier 2 capital3.4 2.8 1.8
Total regulatory capital ratio16.3 15.6 14.6
The Westpac Group at Level 1
Common equity Tier 1 capital ratio11.1 11.0 10.7
Additional Tier 1 capital2.2 2.2 2.3
Tier 1 capital ratio13.3 13.2 13.0
Tier 2 capital3.4 2.9 1.8
Total regulatory capital ratio16.7 16.1 14.8


Westpac New Zealand Limited’s capital adequacy ratios
%31 March 202030 September 201931 March 2019
Westpac New Zealand Limited
Common equity Tier 1 capital ratio11.4 11.3 11.7
Additional Tier 1 capital2.7 2.6 2.8
Tier 1 capital ratio 14.1 13.9 14.5
Tier 2 capital1.8 2.0 2.0
Total regulatory capital ratio15.9 15.9 16.5

Pillar 3 report
Capital overview

Westpac Group March 2020 Pillar 3 report | 19
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. Westpac’s approach to managing these risks, and more
detailed disclosures on the prudential assessment of capital requirements, are presented in the following sections
of this report.
234

31 March 2020IRBStandardisedTotal Risk Total Capital
$mApproach
Approach
2
Weighted Assets
Required
1
Credit risk
Corporate78,288 1,087
79,375
6,350
Business lending34,493 993
35,486
2,839
Sovereign2,192 1,354
3,546
284
Bank6,956 51
7,007
561
Residential mortgages131,424 4,714
136,138
10,891
Australian credit cards4,837 -
4,837
387
Other retail11,594 805
12,399
992
Small business16,812 -
16,812
1,345
Specialised lending56,004 503
56,507
4,521
Securitisation5,747 -
5,747
460
Mark-to-market related credit risk
3
- 11,289 11,289 903
Total348,347 20,795 369,142 29,533
Market risk8,396 672
Operational risk54,093 4,327
Interest rate risk in the banking book5,305 424
Other assets
4
6,969
558
Total443,905 35,514
30 September 2019IRBStandardisedTotal Risk Total Capital
$mApproach
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

20 | Westpac Group March 2020 Pillar 3 report
1234
31 March 2019IRBStandardisedTotal Risk Total Capital
$mApproach
Approach
2
Weighted Assets
Required
1
Credit risk
Corporate73,551 1,737
75,288
6,023
Business lending35,294 982
36,276
2,902
Sovereign1,653 1,042
2,695
216
Bank7,066 31
7,097
568
Residential mortgages132,133 5,273
137,406
10,992
Australian credit cards5,910 -
5,910
473
Other retail13,082 944
14,026
1,122
Small business16,092 -
16,092
1,287
Specialised lending54,833 446
55,279
4,422
Securitisation5,583 -
5,583
447
Mark-to-market related credit risk
3
- 7,110 7,110 569
Total345,197 17,565 362,762 29,021
Market risk8,338 667
Operational risk38,641 3,091
Interest rate risk in the banking book7,076 566
Other assets
4
3,002
240
Total419,819 33,585



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

Westpac Group March 2020 Pillar 3 report | 21
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 March 202031 December 201930 September 201930 June 2019
Tier 1 Capital57.5 56.8 55.1 53.7
Total Exposures1,014.2 948.7 968.8 946.7
Leverage ratio5.7%6.0%5.7%5.7%


Leverage ratio disclosure
$m31 March 2020
On-balance sheet exposures
1On-balance sheet items (excluding derivatives and securities financing transactions (SFTs), but including
collateral)
904,651
2(Asset amounts deducted in determining Tier 1 capital)(18,790)
3Total on-balance sheet exposures (excluding derivatives and SFTs) (sum of rows 1 and 2)885,861
Derivative exposures
4Replacement cost associated with all derivatives transactions (i.e. net of eligible cash variation margin)12,339
5Add-on amounts for potential future credit exposure (PFCE) associated with all derivatives transactions19,137
65,927
7(Deductions of receivables assets for cash variation margin provided in derivatives transactions)(8,313)
8(Exempted central counterparty (CCP) leg of client-cleared trade exposures)
9Adjusted effective notional amount of written credit derivatives4,852
10(Adjusted effective notional offsets and add-on deductions for written credit derivatives)(4,832)
11Total derivative exposures (sum of rows 4 to 10)29,111
SFT exposures
12Gross SFT assets (with no recognition of netting), after adjusting for sales accounting transactions20,571
13(Netted amounts of cash payables and cash receivables of gross SFT assets)
14Counterparty credit risk exposure for SFT assets4,858
15Agent transaction exposures
16Total SFT exposures (sum of rows 12 to 15)25,429
Other off-balance sheet exposures
17Off-balance sheet exposure at gross notional amount197,768
18(Adjustments for conversion to credit equivalent amounts)(123,956)
19Other off-balance sheet exposures (sum of rows 17 and 18)73,811
Capital and total exposures
20Tier 1 Capital57,455
21Total exposures (sum of rows 3, 11, 16 and 19)1,014,212
Leverage ratio %
22Leverage ratio5.7%
Gross-up for derivatives collateral provided where deducted from the balance sheet assets pursuant to the
Australian Accounting Standards

Pillar 3 report
Leverage ratio

22 | Westpac Group March 2020 Pillar 3 report
Summary comparison of accounting assets versus leverage ratio exposure measure

$m31 March 2020
1Total consolidated assets as per published financial statements967,662
2(2,648)
3-
4Adjustments for derivative financial instruments(27,550)
5Adjustment for SFTs (i.e. repos and similar secured lending)20,347
673,811
7Other adjustments(17,410)
8Leverage ratio exposure1,014,212
Adjustment for off-balance sheet exposures (i.e. conversion to credit equivalent amounts of off-balance sheet
exposures)
Adjustment for investments in banking, financial, insurance or commercial entities that are consolidated for
accounting purposes but outside the scope of regulatory consolidation
Adjustment for assets held on the balance sheet in a fiduciary capacity pursuant to the Australian Accounting
Standards but excluded from the leverage ratio exposure measure

Pillar 3 report
Credit risk management

Westpac Group March 2020 Pillar 3 report | 23
Credit risk is the potential for financial loss where a customer or counterparty fails to meet their financial
obligations to Westpac. Westpac maintains a credit risk management framework and a number of supporting
policies, processes and controls governing the assessment, approval and management of customer and
counterparty credit risk. These incorporate the assignment of risk grades, the quantification of loss estimates in the
event of default, and the segmentation of credit exposures.
Structure and organisation
The Chief Risk Officer (CRO) is responsible for the effectiveness of overall risk management throughout Westpac,
including credit risk. The Group Chief Credit Officer is responsible for the effectiveness of credit risk management,
including credit approval decisioning beyond business authority level and appointing our most senior authorised
credit officers. Authorised credit officers have delegated authority to approve credit risk exposures, including
customer risk grades, other credit parameters and their ongoing review. Our largest exposures are approved by
our most experienced authorised credit officers. Line business management is responsible for managing credit
risks originated in their business and for managing risk adjusted returns from their business credit portfolios, within
the approved risk appetite, risk management framework and policies.
Credit risk management framework and policies
Westpac maintains a credit risk management framework and supporting policies that are designed to clearly define
roles and responsibilities, acceptable practices, limits and key controls.
The Credit Risk Management Framework describes the principles, methodologies, systems, roles and
responsibilities, reports and controls that exist for managing credit risk in Westpac. The Credit Risk Rating System
policy describes the credit risk rating system philosophy, design, key features and uses of rating outcomes.
Concentration risk policies cover individual counterparties, specific industries (e.g. property) and individual
countries. In addition, we have policies covering risk appetite statements, environmental, social and governance
(ESG) risk, credit risks and the delegation of credit approval authorities.
At the divisional level, credit manuals embed the Group’s framework requirements for application in line
businesses. These manuals include policies covering the origination, evaluation, approval, documentation,
settlement and on-going management of credit risks, and sector policies to guide the extension of credit where
industry-specific guidelines are considered necessary.
Credit approval limits govern the extension of credit and represent the formal delegation of credit approval
authority to responsible individuals throughout the organisation.

Pillar 3 report
Credit risk management

24 | Westpac Group March 2020 Pillar 3 report
Approach
Westpac adopts two approaches to managing credit risk depending upon the nature of the customer and the
product.
Transaction-managed approach
For larger customers, Westpac evaluates credit requests by undertaking detailed individual customer and
transaction risk analysis (the ‘transaction-managed’ approach). Such customers are assigned a customer risk
grade (CRG) representing Westpac’s estimate of their probability of default (PD). Each facility is assigned a loss
given default (LGD). The Westpac credit risk rating system has 20 risk grades for non-defaulted customers and 10
risk grades for defaulted customers. Non-defaulted CRGs down to the level of normally acceptable risk (i.e. D
grade – see table below) are mapped to Moody’s and Standard & Poor’s (S&P) external senior ranking unsecured
ratings. This mapping allows Westpac to integrate the rating agencies’ default history with internal historical data
when calculating PDs.
The final assignment of CRGs and LGDs is approved by authorised credit approvers with appropriate delegated
approval authority. All material credit exposures are approved by authorised Credit Officers who are part of the risk
management stream and operate independently of the areas originating the credit risk proposals. Authorised
Credit Officer decisions are subject to reviews to ensure consistent quality and confirm compliance with approval
authority. Separate teams are responsible for maintaining accurate and timely recording of all credit risk approvals
and changes to customer and facility data. These teams also operate independently of both the areas originating
the credit risk proposals and the credit risk approvers. Appropriate segregation of functions is one of the key
requirements of our credit risk management framework.
Mapping of Westpac risk grades
The table below shows the current alignment between Westpac’s internal CRGs and the corresponding external
rating. Note that only high-level CRG groupings are shown.
Westpac customer
risk grade
Standard & Poor’s
rating
Moody’s
rating
A AAA to AA– Aaa to Aa3
B A+ to A– A1 to A3
C BBB+ to BBB– Baa1 to Baa3
D BB+ to B+ Ba1 to B1
Westpac Rating
E Watchlist
F Special mention
G Substandard/default
H Default

For Specialised Lending Westpac maps exposures to the appropriate supervisory slot based on an assessment
that takes into account borrower strength and security quality, as required by APS 113.
Program-managed approach
High-volume retail customer credit portfolios with homogenous credit risk characteristics are managed on a
statistical basis according to pre-determined objective criteria (the ‘program-managed’ approach). Program-
managed exposure to a consumer customer may exceed $1 million. Business customer exposures may be
program managed for exposure up to $3 million. Quantitative scorecards are used to assign application and
behavioural scores to enable risk-based decision making within these portfolios. The scorecard outcomes and
decisions are regularly monitored and validated against subsequent customer performance and scorecards are
recalibrated or rebuilt when required. For capital estimation and other purposes, risk-based customer segments
are created based upon modelled expected PD, Exposure At Default (EAD) and LGD. Accounts are then assigned
to respective segments based on customer and account characteristics. Each segment is assigned a quantified
measure of its PD, LGD and EAD.
For both transaction-managed and program-managed approaches, CRGs, PDs and LGDs are reviewed at least
annually.

Pillar 3 report
Credit risk management

Westpac Group March 2020 Pillar 3 report | 25
Mapping of Basel categories to Westpac portfolios
APS113 Capital Adequacy: Internal Ratings-Based Approach to Credit Risk, states that under the Advanced IRB
approach to credit risk, an ADI must categorise banking book exposures into six broad IRB asset classes and
apply the prescribed treatment for those classes to each credit exposure within them for the purposes of deriving
its regulatory capital requirement. Standardised and Securitised portfolios are subject to treatment under APS112
Capital Adequacy: Standardised Approach to Credit Risk and APS120 Securitisation respectively.

APS Asset Class Sub-asset class Westpac category Segmentation criteria
Corporate Corporate Corporate All transaction-managed customers not
elsewhere classified where annual turnover
exceeds $50 million
1
.
SME Corporate Business Lending All transaction-managed customers not
elsewhere classified where annual turnover
is $50 million or less.
Project Finance Specialised Lending-
Project Finance
Applied to transaction-managed customers
where the primary source of debt service,
security and repayment is derived from the
revenue generated by a completed project
(e.g. infrastructure such as toll roads or
railways).
Income-
producing Real
Estate
Specialised Lending-
Property Finance
Applied to transaction-managed customers
where the primary source of debt service,
security and repayment is derived from
either the sale of a property development or
income produced by one or more
investment properties
2
.
Sovereign Sovereign Applied to transaction-managed exposures
backed by governments.
Bank Bank Applied to transaction-managed exposures
to deposit-taking institutions and foreign
equivalents.
Residential
Mortgage
Residential Mortgages Exposures secured by residential mortgages
not elsewhere classified.
Qualifying
Revolving Retail
Australian Credit
Cards
Program-managed credit cards with low
volatility in loss rates. The New Zealand
cards portfolio is not eligible for Qualifying
Revolving Retail treatment and is classified
in Other Retail.
Other Retail Small Business Program-managed business lending
exposures under $1 million where complex
products are not utilised by the customer.
Other Retail All other program-managed lending to retail
customers, including New Zealand credit
cards.


1
Includes all NZ agribusiness loans, regardless of turnover.
2
Excludes large diversified property groups and property trusts, which appear in the Corporate asset class.

Pillar 3 report
Credit risk management

26 | Westpac Group March 2020 Pillar 3 report
Mapping of Credit risk approach to Basel categories and exposure types

Approach APS asset class Types of exposures
Transaction-Managed
Portfolios
Corporate
Sovereign
Bank
Direct lending
Contingent lending
Derivative counterparty
Asset warehousing
Underwriting
Secondary market trading
Foreign exchange settlement
Other intra-day settlement
obligations
Program-Managed
Portfolios
Residential mortgage

Mortgages
Equity access loans

Qualifying revolving retail Australian credit cards
Other retail
Personal loans
Overdrafts
New Zealand credit cards
Auto and equipment finance
Business development loans
Business overdrafts
Other term products
Internal ratings process for transaction-managed portfolios
The process for assigning and approving individual customer PDs and facility LGDs involves:
 Business unit representatives recommend the CRG and facility LGDs under the guidance of criteria set out in
established credit policies. Each CRG is associated with an estimated PD;
 Authorised credit officers evaluate the recommendations and approve the final CRG and facility LGDs.
Authorised credit officers may override line business unit recommendations;
 An expert judgement decisioning process is employed to evaluate CRG and the outputs of various risk grading
models are used as one of several inputs into that process; and
 Authorised credit officers’ decisions are subject to reviews to ensure consistent quality and confirm
compliance with approval authority.
For on-going exposures to transaction-managed customers, risk grades and facility LGDs are required to be
reviewed at least annually, but also whenever material changes occur.
No material deviations from the reference definition of default are permitted.
Internal ratings process for program-managed portfolios
The process for assigning PDs, LGDs and EADs to the program-managed portfolio involves dividing the portfolio
into a number of pools per product. These pools are created by analysing risk characteristics that have historically
predicted that an account is likely to go into default or loss.
No material deviations from the reference definition of default are permitted.
Internal credit risk ratings system
In addition to using the credit risk estimates as the basis for regulatory capital purposes, they are also used for the
purposes described below:
Economic capital - Economic capital includes both credit and non-credit components. Economic credit capital is
calculated using a framework that considers estimates of PD, LGD, EAD, total committed exposure and loan tenor,
as well as measures of portfolio composition not reflected in regulatory capital formulae.
Provisioning - Credit provisions are held by Westpac to cover expected credit losses in the loan portfolio.
Provisioning includes both individual and collective components. Individual provisions are calculated on impaired
loans taking into account management’s best estimate of the present value of future cashflows.

Pillar 3 report
Credit risk management

Westpac Group March 2020 Pillar 3 report | 27
Collective provisions are established on a portfolio basis using a framework that considers PD, LGD, EAD, total
committed exposure, level of arrears, recent past experience and forward looking macro-economic forecasts.
Risk-adjusted performance measurement - Business performance is measured using allocated capital, which
incorporates charges for economic capital and regulatory capital, including credit capital and capital for other risk
types.
Pricing - Westpac prices loans to produce an acceptable return on the capital allocated to the loan. Returns
include interest income and fees after expected credit losses and other costs.
Credit approval - For transaction-managed facilities, approval authorities are tiered based on the CRG, with lower
limits applicable for customers with a higher PD. Program-managed facilities are approved on the basis of
application scorecard outcomes and product based approval authorities.
Control mechanisms for the credit risk rating system include:
 Westpac’s credit risk rating system is reviewed annually to confirm that the rating criteria and procedures are
appropriate given the current portfolio and external conditions;
 All models materially impacting the risk rating process are periodically reviewed in accordance with Westpac’s
model risk policy;
 Specific credit risk estimates (including PD, LGD and EAD levels) are overseen, reviewed annually and
supported by the Credit Risk Estimates Committee (a sub-committee of CREDCO) for approval by General
Manager, Risk Analytics and Insights;
 Credit Risk Assurance undertake an independent annual end-to-end technical and operational review of the
overall process; and
 CREDCO, RISKCO and BRCC monitor the risk profile, performance and management of Westpac’s credit
portfolio and the development and review of key credit risk policies.
Risk reporting
A comprehensive report on Westpac's credit risk portfolio is provided to CREDCO, RISKCO and BRCC quarterly.
It details the current level of impairment losses, stressed exposures, delinquency trends, provisions, impaired
assets and key performance metrics. It also reports on portfolio concentrations and large exposures.
Credit risk and asset quality are also reported to the Board each month, including details of impairment losses,
stressed exposures, delinquency trends and key performance metrics.
Response to COVID-19
Westpac remains focused on supporting customers. In response to the current COVID-19 pandemic Westpac has
introduced a range of support packages such as lowering interest rates on certain products, waiving certain fees
and providing impacted customers with an option to defer their repayments for between 3 and 6 months. In
accordance with guidance from APRA outlined below, customers approved for these deferrals will not be recorded
in traditional stress metrics while part of these packages but will be closely monitored, particularly once the
deferral period changes.
APRA has announced that it is providing a specific capital treatment for loans granted repayment deferrals of up to
six months. Where a borrower who has been meeting their repayment obligations until recently chooses to take up
the offer not to make repayments as part of a COVID-19 support package, a bank need not treat the period of the
repayment holiday as a period of arrears. Similarly, loans that have been granted a repayment deferral as part of a
COVID-19 support package need not be regarded as restructured. Westpac expects to apply this treatment.
However, APRA has advised that if there is objective evidence that an individual borrower on a repayment deferral
is unlikely to pay its modified credit obligations in full, the loan should be regarded as impaired if not fully secured,
and should also be considered as restructured.

Pillar 3 report
Credit risk management

28 | Westpac Group March 2020 Pillar 3 report
Summary credit risk disclosure
12

Regulatory
ExpectedSpecificActual
RiskRegulatoryLoss forProvisions Losses for
31 March 2020ExposureWeightedExpectednon-defaultedImpairedfor Impairedthe 6 months
$mat DefaultAssets
Loss
1
exposuresLoansLoansended
Corporate
146,529 78,288 787 547 363 232 (4)
Business lending54,428 34,493 669 413 347 195 35
Sovereign127,064 2,192 2 2 ---
Bank26,633 6,956 9 9 ---
Residential mortgages553,866 131,424 1,788 1,229 404 114 67
Australian credit cards18,601 4,837 314 238 123 92 164
Other retail15,223 11,594 601 419 312 218 135
Small business33,181 16,812 557 378 501 183 39
Specialised Lending65,866 56,004 813 583 52 26 1
Securitisation28,097 5,747 -----
Standardised
2
19,616 20,795 --52 19 -
Total1,089,104 369,142 5,540 3,818 2,154 1,079 437
Regulatory
ExpectedSpecificActual
RiskRegulatoryLoss forProvisions Losses for
30 September 2019ExposureWeightedExpectednon-defaultedImpairedfor Impairedthe 12 months
$mat DefaultAssetsLoss1exposuresLoansLoansended
Corporate139,173 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 March 2019ExposureWeightedExpectednon-defaultedImpairedfor Impairedthe 6 months
$mat DefaultAssetsLoss1exposuresLoansLoansended
Corporate135,502 73,551 561 468 176 79 (3)
Business lending54,299 35,294 642 424 279 161 23
Sovereign79,572 1,653 2 1 ---
Bank25,471 7,066 8 8 ---
Residential mortgages558,161 132,133 1,649 1,106 391 126 52
Australian credit cards18,850 5,910 363 292 101 63 150
Other retail16,583 13,082 640 459 297 173 162
Small business33,280 16,092 497 345 374 148 33
Specialised Lending64,781 54,833 798 562 118 44 10
Securitisation25,929 5,583 -----
Standardised
2
17,389 17,565 --13 6 1
Total1,029,817 362,762 5,160 3,665 1,749 800 428


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

Pillar 3 report
Credit risk management

Westpac Group March 2020 Pillar 3 report | 29
Loan impairment provisions
Expected credit losses (ECL) are a 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. Westpac
calculates provisions for ECL based on a three stage approach:
 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 and where the asset is still performing, a provision for lifetime ECL is recognised.
Determining when a financial asset has experienced a significant increase in credit risk is primarily based on
changes in internal risk grades since origination of the financial asset. An internal risk grade assessed using
both quantitative and qualitative factors. The number of notches (changes) in the internal risk grade that
Westpac uses to represent a significant increase in credit risk is determined on a sliding scale where the
number of notches will generally be greater for a financial asset with a lower credit risk compared to a financial
asset with a higher credit risk.
 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 Westpac such as a default on interest
or principal payments, a borrower experiencing significant financial difficulties.
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 exposure thresholds. Those financial assets in stage 3
above the specified exposure thresholds are assessed on an individual basis.
Expected life - Expected credit losses are determined as a lifetime ECL in stages 2 and 3.
Lifetime ECL represents the expected credit losses that result from default events over the expected life of a
financial instrument. In considering lifetime ECL, the remaining contractual life is used for non-retail portfolios. For
retail portfolios lifetime ECL is calibrated to historically observed portfolio behaviour.
Forward looking information - The measurement of ECL for each stage and the assessment of significant
increase in credit risk considers information about past events and current conditions as well as reasonable and
supportable projections of future events and economic conditions. In order to capture the asymmetry of the losses
expected over the range of plausible future events and economic conditions, Westpac considers three future
macroeconomic scenarios i.e. base case, upside and downside scenarios.
The macroeconomic variables used in these scenarios, include (but are not limited to) unemployment rates, real
gross domestic product growth rates and residential and commercial property price indices.
The ECL is a weighted average of the credit losses expected under these three scenarios. The scenarios are
weighted based on Westpac’s assessment of upside and downside risks taking into account current trends,
forward looking conditions and the degree of uncertainty attached to these projections.
Regulatory classification of loan impairment provisions
APS220 Credit Quality requires that Westpac report specific provisions and a General Reserve for Credit Loss
(GRCL). All IAPs raised under Australian Accounting Standards (AAS) are classified as specific provisions. All
Collectively Assessed Provisions (CAPs) raised under AAS are either classified into specific provisions or a GRCL.

Pillar 3 report
Credit risk management

30 | Westpac Group March 2020 Pillar 3 report
Expected credit loss provision
1

31 March 2020Total Regulatory
$mIAPsCAPs Provisions
Specific Provisions
for impaired loans606 473 1,079
for defaulted but not impaired loansNA628 628
For Stage 2NA2,184 2,184
Total Specific Provision
1
606 3,285 3,891
General Reserve for Credit Loss
1
NA1,900 1,900
Total provisions for ECL606 5,185 5,791
30 September 2019Total Regulatory
$mIAPsCAPs Provisions
Specific Provisions
for impaired loans412 380 792
for defaulted but not impaired loansNA554 554
For Stage 2NA1,234 1,234
Total Specific Provision
1
412 2,168 2,580
General Reserve for Credit Loss
1
NA1,344 1,344
Total provisions for ECL412 3,512 3,924
31 March 2019Total Regulatory
$mIAPsCAPs Provisions
Specific Provisions
for impaired loans433 367 800
for defaulted but not impaired loansNA558 558
For Stage 2NA1,264 1,264
Total Specific Provision
1
433 2,189 2,622
General Reserve for Credit Loss
1
NA1,375 1,375
Total provisions for ECL433 3,564 3,997
A-IFRS Provisions
A-IFRS Provisions
A-IFRS Provisions


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 management

Westpac Group March 2020 Pillar 3 report | 31
Movement in provisions for impairment
1

For the 6 months ended
31 March 2020
Non-
performing
Collectively
assessed
Individually
assessed
$mStage 1Stage 2Stage 3provisionsprovisionsTotal
Balance as at 30 September 2019 for Loans and
Credit Commitments
884 1,674 1,355 --3,913
Transfers to Stage 1600 (583) (17) ---
Transfers to Stage 2
(131) 466 (335) ---
Transfers to Stage 3
(2) (334) 336 ---
Business activity during the period120 114 (50) --184
Net remeasurement of provision for ECL(297) 1,527 911 --2,141
Write-offs--(537) --(537)
Exchange rate and other adjustments7 14 44 --65
Balance as at 31 March 2020 for Loans and Credit
Commitments
1,181 2,878 1,707 --5,766
Balance as at 30 September 2019 for debt securities
11 11
Provision for ECL on debt securities at amortised 10 3 -13
Provision for ECL on debt securities at FVOCI
1
1 --1
Total provision for ECL as at 31 March 202022 3 ---25
Total provision for ECL as at 31 March 20201,203 2,881 1,707 --5,791
Performing


For the 12 months ended
30 September 2019
Non-
performing
$mStage 1Stage 2Stage 3provisionsprovisionsTotal
Provision for impairment charges as at
30 September 2018---2,631 422 3,053
Restatement for adoption of AASB 9877 1,884 1,272 (2,631) (422) 980
Restated provision for ECL as at
1 October 2018877 1,884 1,272 --4,033
Transfers in/(out) of Stage 11,458 (1,404) (54) -
Transfers in/(out) of Stage 2(242) 956 (714) -
Transfers in/(out) of Stage 3(5) (621) 626 -
Business activity during the year179 (19) (330) (170)
Net remeasurement of provision for ECL(1,385) 874 1,647 1,136
Write-offs--(1,154) (1,154)
Exchange rate and other adjustments2 4 62 68
Total provision for ECL on loans and credit884 1,674 1,355 --3,913
commitments as at 30 September 2019
Presented as:
Provision for ECL loans763 1,496 1,349 3,608
Provision for ECL credit commitments121 178 6 305
Total provision for ECL on loans and credit884 1,674 1,355 --3,913
commitments as at 30 September 2019
Of which:
Individually assessed provisions412 412
Collectively assessed provisions884 1,674 943 3,501
Total provision for ECL on loans and credit
commitments as at 30 September 2019884 1,674 1,355 --3,913
Provision for ECL on debt securities at amortised cost9 --9
Provision for ECL on debt securities at FVOCI
1
2 --2
Total provision for ECL as at 30 September 2019895 1,674 1,355 --3,924
Collectively
assessed
Individually
assessed
Performing





1
Impairment of debt securities at Fair Value through Other Comprehensive Income (FVOCI) 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 securities which
remain at fair value.

Pillar 3 report
Credit risk management

32 | Westpac Group March 2020 Pillar 3 report
31 March 2019CAPIAP
$mStage 1Stage 2Total
Provision for impairment charges as
at 30 September 20182,631 422 3,053
Restatement for adoption of AASB 9877 1,884 850 422 (2,631) (422) 980
Restated provision for ECL as
at 1 October 2018877 1,884 850 422 --4,033
Net changes in provisions34 (182) 457 94 403
Write-offs--(418) (81) (499)
Exchange rate and other adjustments5 9 36 (2) 48
Total provision for ECL on loans and credit
commitments as at 31 March 2019916 1,711 925 433 3,985
Provision for ECL on debt securities at amortised cost10 10
Provision for ECL on debt securities at FVOCI
1
2 2
Total provision for ECL as at 31 March 2019928 1,711 925 433 3,997
Non-performingCollectively
Assessed
Provision
Individually
Assessed
Provision
Performing
Stage 3


1

1
Impairment of debt securities at Fair Value through Other Comprehensive Income (FVOCI) 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 securities which
remain at fair value.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 33
The following tables segment the portfolio by characteristics that provide an insight into the assessment of credit
risk concentration.
Exposure at Default by major type
31 March 2020
On balance
Total ExposureAverage
$msheet Non-market relatedMarket relatedat Default
6 months ended
1
Corporate69,038 57,950 19,541 146,529 140,586
Business lending42,083 12,345 -54,428 54,546
Sovereign119,847 1,857 5,360 127,064 102,570
Bank14,899 2,415 9,319 26,633 27,505
Residential mortgages486,270 67,596 -553,866 555,459
Australian credit cards8,218 10,383 -18,601 18,434
Other retail11,881 3,342 -15,223 15,607
Small business26,181 7,000 -33,181 33,311
Specialised lending54,066 9,750 2,050 65,866 65,739
Securitisation
2
22,690 5,276 131 28,097 27,269
Standardised13,476 1,162 4,978 19,616 19,992
Total868,649 179,076 41,379 1,089,104 1,061,018
30 September 2019On balanceTotal ExposureAverage
$msheet 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 March 2019On balanceTotal ExposureAverage
$msheet Non-market relatedMarket relatedat Default
6 months ended
4
Corporate66,944 57,852 10,706 135,502 133,079
Business lending41,345 12,954 -54,299 54,272
Sovereign75,685 1,487 2,400 79,572 78,014
Bank16,034 2,184 7,253 25,471 24,458
Residential mortgages482,670 75,491 -558,161 555,897
Australian credit cards9,575 9,275 -18,850 19,401
Other retail13,145 3,438 -16,583 16,938
Small business26,246 7,034 -33,280 33,279
Specialised lending52,780 10,918 1,083 64,781 66,132
Securitisation
2
20,767 4,997 165 25,929 26,824
Standardised13,641 1,195 2,553 17,389 17,839
Total818,832 186,825 24,160 1,029,817 1,026,133
Off-balance sheet
Off-balance sheet
Off-balance sheet

1
Average is based on exposures as at 31 March 2020, 31 December 2019, and 30 September 2019.
2
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 at 31 March 2019, 31 December 2018, and 30 September 2018.

Pillar 3 report
Credit risk exposures

34 | Westpac Group March 2020 Pillar 3 report
Exposure at Default by measurement method
31 March 2020IRBStandardisedTotal Exposure
$mApproachApproachat Default
Corporate146,529 8,133 154,662
Business lending54,428 975 55,403
Sovereign127,064 1,354 128,418
Bank26,633 60 26,693
Residential mortgages553,866 6,844 560,710
Australian credit cards18,601 -18,601
Other retail15,223 1,758 16,981
Small business33,181 -33,181
Specialised lending65,866 492 66,358
Securitisation28,097 -28,097
Total1,069,488 19,616 1,089,104
30 September 2019IRBStandardisedTotal Exposure
$mApproachApproachat Default
Corporate139,173 10,580 149,753
Business lending54,570 931 55,501
Sovereign90,960 1,069 92,029
Bank28,761 53 28,814
Residential mortgages559,018 7,298 566,316
Australian credit cards17,541 -17,541
Other retail15,951 2,074 18,025
Small business33,365 -33,365
Specialised lending65,553 507 66,060
Securitisation26,774 -26,774
Total1,031,666 22,512 1,054,178
31 March 2019IRBStandardisedTotal Exposure
$mApproachApproachat Default
Corporate135,502 5,044 140,546
Business lending54,299 975 55,274
Sovereign79,572 1,042 80,614
Bank25,471 31 25,502
Residential mortgages558,161 7,700 565,861
Australian credit cards18,850 -18,850
Other retail16,583 2,160 18,743
Small business33,280 -33,280
Specialised lending64,781 437 65,218
Securitisation25,929 -25,929
Total1,012,428 17,389 1,029,817

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 35
Exposure at Default by industry classification
31 March 2020
$m
Corporate2,458 11,349 3,320 17,822 1,170 23,828 8,341 7,092 10,550 11,845 21,970 13,018 12,866 -900 146,529
Business lending5,853 8,759 4,280 2,437 19 4,842 544 1,230 6,794 5,914 8,929 2,435 505 -1,887 54,428
Sovereign-1 -47,479 79,069 8 95 146 6 187 -60 13 --127,064
Bank---26,582 ----50 --1 ---26,633
Residential mortgages-------------553,866 -553,866
Australian credit cards-------------18,601 -18,601
Other retail-------------15,223 -15,223
Small business973 2,378 4,111 1,779 699 1,776 568 2,176 5,242 3,650 3,354 1,840 363 -4,272 33,181
Specialised lending489 19 32 22 -4 823 56,845 26 1,272 17 3,340 2,426 -551 65,866
Securitisation---26,432 -162 --1,236 -267 ----28,097
Standardised132 27 176 7,358 1,354 240 62 494 142 60 694 198 23 8,601 55 19,616
Total9,905 22,533 11,919 129,911 82,311 30,860 10,433 67,983 24,046 22,928 35,231 20,892 16,196 596,291 7,665 1,089,104
Trade
2
Transport & storagePropertyManufacturingProperty services & business servicesUtilities
3
Retail lendingOtherTotal Exposureat DefaultMiningServices
1
Accommodation, cafes & restaurantsAgriculture, forestry & fishingGovernment administration & defenceConstructionFinance & insurance

1
Includes education, health & community services, cultural & recreational services and personal & other services.
2
Includes wholesale trade and retail trade.
3
Includes electricity, gas & water, and communication services.

Pillar 3 report
Credit risk exposures

36 | Westpac Group March 2020 Pillar 3 report
123

30 September 2019
$m
Corporate2,450 10,290 3,192 15,986 164 24,250 7,963 6,274 11,692 10,719 22,345 10,815 12,068 -965 139,173
Business lending5,691 8,277 4,272 2,541 14 4,709 629 1,331 6,710 5,969 9,022 2,647 434 -2,324 54,570
Sovereign-1 -21,720 68,586 126 95 139 6 168 -57 62 --90,960
Bank---28,557 20 ---138 --46 ---28,761
Residential mortgages-------------559,018 -559,018
Australian credit cards-------------17,541 -17,541
Other retail-------------15,951 -15,951
Small business991 2,401 4,153 1,847 649 1,771 555 2,221 5,271 3,522 3,404 1,860 366 -4,354 33,365
Specialised lending479 18 38 23 -7 955 55,984 27 1,296 15 3,424 2,696 -591 65,553
Securitisation---25,115 -148 --1,238 -250 ---23 26,774
Standardised114 22 170 9,778 1,069 245 12 511 142 56 721 199 11 9,373 89 22,512
Total9,725 21,009 11,825 105,567 70,502 31,256 10,209 66,460 25,224 21,730 35,757 19,048 15,637 601,883 8,346 1,054,178
Utilities
3
Retail lendingOtherTotal Exposureat DefaultTransport & storageManufacturingPropertyProperty services & business servicesTrade
2
Services
1
Accommodation, cafes & restaurantsAgriculture, forestry & fishingMiningConstructionFinance & insuranceGovernment administration & defence

1
Includes education, health & community services, cultural & recreational services and personal & other services.
2
Includes wholesale trade and retail trade.
3
Includes electricity, gas & water, and communication services.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 37
12
3

31 March 2019
$m
Corporate2,451 10,197 3,133 13,095 135 23,873 7,292 7,192 11,170 11,395 21,845 10,414 11,905 -1,405 135,502
Business lending5,724 7,945 4,197 2,520 6 4,710 577 987 6,619 6,118 9,117 2,663 450 -2,666 54,299
Sovereign-1 -15,659 63,308 128 92 -104 164 -55 59 -2 79,572
Bank---25,249 20 15 --187 ------25,471
Residential mortgages-------------558,161 -558,161
Australian credit cards-------------18,850 -18,850
Other retail-------------16,583 -16,583
Small business1,002 2,456 4,013 1,859 552 1,579 275 2,280 5,195 3,366 3,401 1,806 285 -5,211 33,280
Specialised lending619 6 259 34 -14 992 55,533 31 1,668 5 3,038 2,051 -531 64,781
Securitisation---24,492 ----1,219 -218 ----25,929
Standardised121 24 198 4,163 1,042 274 13 441 152 63 735 203 12 9,859 89 17,389
Total9,917 20,629 11,800 87,071 65,063 30,593 9,241 66,433 24,677 22,774 35,321 18,179 14,762 603,453 9,904 1,029,817
Total Exposureat DefaultTrade
2
Transport & storageUtilities
3
Retail lendingOtherManufacturingMiningPropertyProperty services & business servicesServices
1
Accommodation, cafes & restaurantsAgriculture, forestry & fishingConstructionFinance & insuranceGovernment administration & defence


1
Includes education, health & community services, cultural & recreational services and personal & other services.
2
Includes wholesale trade and retail trade.
3
Includes electricity, gas & water, and communication services.

Pillar 3 report
Credit risk exposures

38 | Westpac Group March 2020 Pillar 3 report
Exposure at Default by geography
1

31 March 2020Total Exposure
$mAustraliaNew ZealandAmericasAsiaEuropePacificat Default
Corporate86,984 24,577 10,991 16,829 7,148 -146,529
Business lending49,307 5,121 ----54,428
Sovereign97,932 10,359 16,633 1,655 485 -127,064
Bank20,388 2,408 139 3,646 52 -26,633
Residential mortgages494,238 59,404 -224 --553,866
Australian credit cards18,601 -----18,601
Other retail11,784 3,439 ----15,223
Small business30,646 2,534 -1 --33,181
Specialised lending57,147 8,673 46 ---65,866
Securitisation23,627 4,106 -364 --28,097
Standardised16,207 --42 -3,367 19,616
Total906,861 120,621 27,809 22,761 7,685 3,367 1,089,104
30 September 2019Total Exposure
$mAustraliaNew ZealandAmericasAsiaEuropePacificat Default
Corporate83,966 22,251 8,849 17,077 7,030 -139,173
Business lending49,891 4,679 ----54,570
Sovereign73,168 7,634 8,054 2,079 25 -90,960
Bank24,033 1,171 132 3,379 46 -28,761
Residential mortgages504,152 54,633 -233 --559,018
Australian credit cards17,541 -----17,541
Other retail12,297 3,654 ----15,951
Small business30,958 2,406 -1 --33,365
Specialised lending57,128 8,396 29 ---65,553
Securitisation23,009 3,604 -161 --26,774
Standardised19,284 --192 -3,036 22,512
Total895,427 108,428 17,064 23,122 7,101 3,036 1,054,178
31 March 2019Total Exposure
$mAustraliaNew ZealandAmericasAsiaEuropePacificat Default
Corporate86,093 22,115 7,278 16,691 3,325 -135,502
Business lending49,609 4,690 ----54,299
Sovereign56,268 6,917 15,940 447 --79,572
Bank20,760 1,265 113 3,301 32 -25,471
Residential mortgages503,271 54,647 -243 --558,161
Australian credit cards18,850 -----18,850
Other retail12,915 3,668 ----16,583
Small business30,781 2,498 -1 --33,280
Specialised lending57,042 7,739 ----64,781
Securitisation22,263 3,490 -176 --25,929
Standardised14,113 --315 -2,961 17,389
Total871,965 107,029 23,331 21,174 3,357 2,961 1,029,817


1
Geographic segmentation of exposures is based on the location of the office in which these items were booked.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 39
Exposure at Default by residual contractual maturity
31 March 2020Total Exposure
$mOn demand< 12 months1 to < 3 years3 to < 5 years> 5 yearsat Default
Corporate18,087 27,376 71,404 23,057 6,605 146,529
Business lending3,081 13,297 23,945 5,912 8,193 54,428
Sovereign1,899 44,635 18,625 22,685 39,220 127,064
Bank5,188 4,025 15,961 1,390 69 26,633
Residential mortgages28,723 4,658 13,725 2,760 504,000 553,866
Australian credit cards18,601 ----18,601
Other retail3,218 388 5,206 4,267 2,144 15,223
Small business4,658 2,786 9,028 8,224 8,485 33,181
Specialised lending408 19,699 32,119 9,198 4,442 65,866
Securitisation-1,706 12,585 2,075 11,731 28,097
Standardised1,574 398 10,150 252 7,242 19,616
Total85,437 118,968 212,748 79,820 592,131 1,089,104
30 September 2019Total Exposure
$mOn demand< 12 months1 to < 3 years3 to < 5 years> 5 yearsat Default
Corporate18,487 25,871 68,603 21,668 4,544 139,173
Business lending3,051 13,550 23,455 6,386 8,128 54,570
Sovereign1,774 21,634 19,742 18,643 29,167 90,960
Bank3,971 3,599 18,880 2,214 97 28,761
Residential mortgages36,004 4,501 15,235 2,731 500,547 559,018
Australian credit cards17,541 ----17,541
Other retail3,392 367 5,407 4,484 2,301 15,951
Small business4,671 2,679 9,105 8,252 8,658 33,365
Specialised lending451 21,120 30,001 8,438 5,543 65,553
Securitisation-6,991 6,331 2,024 11,428 26,774
Standardised1,860 1,025 11,821 244 7,562 22,512
Total91,202 101,337 208,580 75,084 577,975 1,054,178
31 March 2019Total Exposure
$mOn demand< 12 months1 to < 3 years3 to < 5 years> 5 yearsat Default
Corporate17,387 30,995 55,391 24,342 7,387 135,502
Business lending3,100 13,618 22,948 6,491 8,142 54,299
Sovereign1,743 22,234 12,947 13,797 28,851 79,572
Bank3,324 7,607 10,856 3,000 684 25,471
Residential mortgages36,648 4,599 17,922 2,850 496,142 558,161
Australian credit cards18,850 ----18,850
Other retail3,315 381 5,651 4,738 2,498 16,583
Small business4,759 2,645 8,993 8,188 8,695 33,280
Specialised lending532 23,732 28,985 6,904 4,628 64,781
Securitisation2 4,244 9,076 1,856 10,751 25,929
Standardised1,933 1,248 4,832 644 8,732 17,389
Total91,593 111,303 177,601 72,810 576,510 1,029,817

Pillar 3 report
Credit risk exposures

40 | Westpac Group March 2020 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 are broken down by concentrations
reflecting Westpac’s asset categories, industry and geography.
Impaired and past due loans by portfolio
1

SpecificSpecific Actual
31 March 2020DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
1
Loans Impaired LoansImpaired Loans6 months ended
Corporate91 363 232 64%(4)
Business lending474 347 195 56%35
Sovereign-----
Bank-----
Residential mortgages4,050 404 114 28%67
Australian credit cards-123 92 75%164
Other retail-312 218 70%135
Small business359 501 183 37%39
Specialised lending357 52 26 50%1
Securitisation-----
Standardised78 52 19 37%-
Total5,409 2,154 1,079 50%437
SpecificSpecific Actual
30 September 2019DefaultedImpairedProvisions 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 March 2019DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
1
Loans Impaired LoansImpaired Loans6 months ended
Corporate108 176 79 45%(3)
Business lending380 279 161 58%23
Sovereign-----
Bank-----
Residential mortgages3,376 391 126 32%52
Australian credit cards-101 63 62%150
Other retail-297 173 58%162
Small business310 374 148 40%33
Specialised lending314 118 44 37%10
Securitisation-----
Standardised34 13 6 46%1
Total4,522 1,749 800 46%428


1
Includes items past 90 days not impaired.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 41
Impaired and past due loans by industry classification
1

SpecificSpecific Actual
31 March 2020DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
1
Loans Impaired LoansImpaired Loans6 months ended
Accommodation, cafes & restaurants109 37 18 49%7
Agriculture, forestry & fishing233 90 34 38%3
Construction 50 107 45 42%9
Finance & insurance29 62 44 71%5
Government administration & defence- ----
Manufacturing81 221 149 67%7
Mining6 17 6 35%(1)
Property284 77 39 51%10
Property services & business services83 130 67 52%9
Services
2
243 72 38 53%4
Trade
3
124 327 152 46%6
Transport & storage27 72 25 35%9
Utilities
4
2 7 2 29%-
Retail lending4,097 851 431 51%366
Other41 84 29 35%3
Total5,409 2,154 1,079 50%437
SpecificSpecific Actual
30 September 2019DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
1
Loans Impaired LoansImpaired Loans12 months ended
Accommodation, cafes & restaurants84 28 14 50%12
Agriculture, forestry & fishing233 60 25 42%6
Construction 55 98 41 42%12
Finance & insurance27 30 19 63%4
Government administration & defence- ----
Manufacturing35 54 29 54%11
Mining9 17 7 41%(1)
Property212 101 47 47%23
Property services & business services76 103 53 51%23
Services
2
285 66 37 56%5
Trade
3
118 265 87 33%63
Transport & storage18 68 25 37%13
Utilities
4
3 5 1 20%1
Retail lending3,887 830 378 46%805
Other46 38 29 76%5
Total5,088 1,763 792 45%982
SpecificSpecific Actual
31 March 2019DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
1
Loans Impaired LoansImpaired Loans6 months ended
Accommodation, cafes & restaurants88 31 14 45%6
Agriculture, forestry & fishing242 74 29 39%2
Construction 53 78 40 51%6
Finance & insurance26 33 24 73%2
Government administration & defence- ----
Manufacturing29 76 46 61%2
Mining8 15 7 47%(1)
Property185 151 58 38%13
Property services & business services59 96 50 52%9
Services
2
277 50 29 58%1
Trade
3
124 228 83 36%11
Transport & storage17 59 24 41%8
Utilities
4
3 3 1 33%-
Retail lending3,386 791 363 46%366
Other25 64 32 50%3
Total4,522 1,749 800 46%428



1
Includes items past 90 days not impaired.
2
Includes education, health & community services, cultural & recreational services and personal & other services.
3
Includes wholesale trade and retail trade.
4
Includes electricity, gas & water, and communication services.

Pillar 3 report
Credit risk exposures

42 | Westpac Group March 2020 Pillar 3 report
Impaired and past due loans by geography
12

SpecificSpecific Actual
31 March 2020DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
2
Loans Impaired LoansImpaired Loans6 months ended
Australia4,964 1,681 818 49%423
New Zealand390 208 99 48%13
Americas-----
Asia2 216 145 67%-
Europe-----
Pacific53 49 17 35%1
Total5,409 2,154 1,079 50%437
SpecificSpecific Actual
30 September 2019DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
2
Loans Impaired LoansImpaired Loans12 months ended
Australia4,684 1,615 730 45%944
New Zealand340 94 44 47%36
Americas-----
Asia18 ----
Europe-----
Pacific46 54 18 33%2
Total5,088 1,763 792 45%982
SpecificSpecific Actual
31 March 2019DefaultedImpairedProvisions forProvisions to Losses for the
$m
not impaired
2
Loans Impaired LoansImpaired Loans6 months ended
Australia4,295 1,595 734 46%414
New Zealand192 140 60 43%13
Americas-----
Asia-----
Europe-----
Pacific35 14 6 43%1
Total4,522 1,749 800 46%428


1
Geographic segmentation of exposures is based on the location of the office in which these items were booked.
2
Includes items past 90 days not impaired.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 43
Portfolios subject to the standardised approach
This table presents exposures subject to the standardised approach for the calculation of risk weighted assets.
As at 31 March 2020, exposures subject to the standardised approach and categorised by risk weight are primarily
Westpac Pacific, Asian retail exposures, the margin lending portfolio, self-managed superannuation fund
exposures and some other small portfolios. Mark-to-market related credit risk and qualifying central clearing
counterparties exposure
1
is also included in the standardised approach.
31 March 2020Total ExposureRisk Weighted
Risk Weight %at Default $mAssets $m
0%1,650 -
2%5,481 110
20%1,190 238
35%478 167
50%1,340 670
75%4,631 3,473
100%4,651 4,651
150%67 100
Default fund contributions
1
128 98
Mark-to-market related credit risk-11,289
Total19,616 20,795
30 September 2019Total ExposureRisk Weighted
Risk Weight %at Default $mAssets $m
0%1,442 -
2%8,136 163
20%1,472 294
35%614 215
50%1,352 676
75%4,884 3,663
100%4,435 4,435
150%66 99
Default fund contributions1
111 108
Mark-to-market related credit risk-11,313
Total22,512 20,966
31 March 2019Total ExposureRisk Weighted
Risk Weight %at Default $mAssets $m
0%1,110 -
2%2,863 57
20%1,516 303
35%732 256
50%1,349 675
75%5,108 3,832
100%4,554 4,554
150%42 64
Default fund contributions1115 714
Mark-to-market related credit risk-7,110
Total17,389 17,565


1
Portfolios subject to the standardised approach include exposures to qualifying central clearing counterparties used to clear derivative
transactions. Derivative counterparty exposure and initial margin are risk weighted at 2%. Default fund contributions to qualifying
central clearing counterparties are shown separately and are subject to higher risk weights.

Pillar 3 report
Credit risk exposures

44 | Westpac Group March 2020 Pillar 3 report
Portfolios subject to supervisory risk-weights in the IRB approach
Exposures subject to supervisory risk-weights in the IRB approach include assets categorised as specialised
lending, where a regulatory capital ‘slotting’ approach applies.
Westpac has property finance and project finance credit risk exposures categorised as specialised lending. The
‘Credit Risk Management’ section of this report describes the mapping of Westpac risk grades to both external
rating equivalents and regulatory capital ‘slots’.
Property finance
31 March 2020Exposure atRegulatoryRisk Weighted
$mRisk WeightDefaultExpected LossAssets
Strong70%23,013 92 16,110
Good90%29,436 236 26,491
Satisfactory115%4,479 125 5,151
Weak250%795 64 1,988
DefaultNA297 148 -
Total58,020 665 49,740
30 September 2019Exposure atRegulatoryRisk Weighted
$mRisk WeightDefaultExpected LossAssets
Strong70%23,270 92 16,289
Good90%28,607 229 25,746
Satisfactory115%4,383 123 5,041
Weak250%729 58 1,823
DefaultNA215 108 -
Total57,204 610 48,899
31 March 2019Exposure atRegulatoryRisk Weighted
$mRisk WeightDefaultExpected LossAssets
Strong70%22,165 89 15,516
Good90%29,126 233 26,213
Satisfactory115%4,840 136 5,566
Weak250%676 54 1,690
DefaultNA304 152 -
Total57,111 664 48,985

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 45
Project finance
31 March 2020Exposure atRegulatoryRisk Weighted
$mRisk WeightDefaultExpected LossAssets
Strong70%5,803 23 4,063
Good90%1,064 9 957
Satisfactory115%589 16 677
Weak250%227 18 567
DefaultNA163 82 -
Total7,846 148 6,264
30 September 2019Exposure atRegulatoryRisk Weighted
$mRisk WeightDefaultExpected LossAssets
Strong70%6,526 26 4,568
Good90%1,236 10 1,112
Satisfactory115%276 8 317
Weak250%146 12 366
DefaultNA165 82 -
Total8,349 138 6,363
31 March 2019Exposure atRegulatoryRisk Weighted
$mRisk WeightDefaultExpected LossAssets
Strong70%5,827 23 4,079
Good90%1,328 11 1,195
Satisfactory115%217 6 250
Weak250%130 10 325
DefaultNA168 84 -
Total7,670 134 5,849

Pillar 3 report
Credit risk exposures

46 | Westpac Group March 2020 Pillar 3 report
Portfolios subject to IRB approaches
In the table below Westpac’s transaction-managed exposures are classified by the external credit rating. Each
external credit rating aligns to one or more internally assigned credit risk grades, as outlined in the ‘Credit Risk
Management’ section of this report. Westpac’s internal rating scale has more risk grades than does the external
rating scale, and as a result, average PD can vary from portfolio to portfolio for the same external grade.
Westpac’s program-managed exposures are classified by PD band and the average PD within a band can,
likewise, vary from portfolio to portfolio.
For both non-defaulted and defaulted exposures, regulatory expected loss is defined at facility level. For non-
defaulted exposures, regulatory expected loss is the product of PD, LGD and EAD while for defaulted exposures,
this is the best estimates of loss. Total regulatory expected loss as shown in the table below is the sum of both
non-defaulted and defaulted regulatory expected loss and given the difference in methodology, regulatory
expected loss reported is not equal to the product of the corresponding reported average PD, average LGD and
aggregate EAD.
Corporate portfolio by external credit rating
Risk Average
31 March 2020CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA101 - 101 0.01%50%- 28 28%
AA7,126 2,490 9,611 0.03%50%1 1,487 15%
A19,424 13,330 32,702 0.07%52%12 8,898 27%
BBB39,261 22,664 61,632 0.22%49%64 29,637 48%
BB28,062 8,919 36,876 1.13%37%152 27,522 75%
B1,554 209 1,719 4.78%44%36 2,671 155%
Other2,765 616 3,382 21.23%41%282 7,083 209%
Subtotal98,293 48,228 146,023 0.94%46%547 77,326 53%
Default365 142 506 NA65%240 962 190%
Total98,658 48,370 146,529 1.29%47%787 78,288 53%
Risk Average
30 September 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA109 23 109 0.01%49%- 27 25%
AA4,223 2,292 6,001 0.03%52%1 843 14%
A18,806 18,557 31,996 0.07%54%11 8,560 27%
BBB37,160 24,807 61,361 0.22%49%65 30,119 49%
BB28,121 8,705 35,566 1.21%38%160 27,679 78%
B1,342 92 1,428 4.27%44%28 2,269 159%
Other1,842 603 2,447 21.59%39%208 4,901 200%
Subtotal91,603 55,079 138,908 0.85%47%473 74,398 54%
Default246 17 265 NA30%50 409 154%
Total91,849 55,096 139,173 1.04%47%523 74,807 54%
Risk Average
31 March 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA52 - 52 0.01%52%- 7 13%
AA3,035 1,652 4,678 0.03%52%1 733 16%
A18,095 12,562 30,668 0.07%53%11 8,195 27%
BBB36,124 24,101 59,979 0.22%49%63 29,530 49%
BB27,763 8,433 36,165 1.18%39%161 28,207 78%
B1,186 157 1,342 4.25%40%23 1,795 134%
Other1,731 557 2,309 22.94%39%209 4,638 201%
Subtotal87,986 47,462 135,193 0.86%47%468 73,105 54%
Default295 9 309 NA37%93 446 144%
Total88,281 47,471 135,502 1.09%47%561 73,551 54%



1
Outstandings are balances that were drawn down as at the reporting date and include certain off-balance sheet items.
2
Committed undrawn balances are committed exposures that were not drawn down as at the reporting date.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 47
Business lending portfolio by external credit rating
Risk Average
31 March 2020CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA- - - - - - - -
AA- - - - - - - -
A218 65 282 0.08%42%- 60 21%
BBB1,469 502 1,969 0.21%26%1 430 22%
BB38,131 10,024 48,015 1.56%30%221 28,438 59%
B1,063 142 1,206 4.78%33%19 1,036 86%
Other1,833 266 2,099 21.74%37%172 3,516 168%
Subtotal42,714 10,999 53,571 2.37%30%413 33,480 62%
Default828 26 857 100.00%35%256 1,013 118%
Total43,542 11,025 54,428 3.90%30%669 34,493 63%
Risk Average
30 September 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA- - - - - - - -
AA- - - - - - - -
A175 22 196 0.09%48%- 39 20%
BBB1,475 491 1,964 0.22%26%1 433 22%
BB38,439 9,938 48,228 1.57%30%228 29,031 60%
B1,166 124 1,290 4.62%32%19 1,074 83%
Other1,870 206 2,075 22.66%38%183 3,646 176%
Subtotal43,125 10,781 53,753 2.40%30%431 34,223 64%
Default788 29 817 NA32%204 1,247 153%
Total43,913 10,810 54,570 3.86%30%635 35,470 65%
Risk Average
31 March 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA- - - - - - -
AA- 4 4 0.03%60%- - 0%
A186 26 212 0.09%50%- 44 21%
BBB1,480 559 2,036 0.22%26%1 454 22%
BB37,701 10,626 48,193 1.58%30%231 29,303 61%
B1,126 138 1,263 4.66%32%19 1,060 84%
Other1,655 196 1,851 23.74%39%173 3,338 180%
Subtotal42,148 11,549 53,559 2.36%30%424 34,199 64%
Default709 20 740 NA34%218 1,095 148%
Total42,857 11,569 54,299 3.69%30%642 35,294 65%


1
Outstandings are balances that were drawn down as at the reporting date and include certain off-balance sheet items.
2
Committed undrawn balances are committed exposures that were not drawn down as at the reporting date.

Pillar 3 report
Credit risk exposures

48 | Westpac Group March 2020 Pillar 3 report
Sovereign portfolio by external credit rating
Risk Average
31 March 2020CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA56,238 150 60,998 0.01%6%- 718 1%
AA59,725 1,160 64,805 0.02%7%2 1,220 2%
A594 233 828 0.05%27%- 84 10%
BBB407 7 414 0.21%33%- 154 37%
BB8 11 19 2.07%36%- 16 84%
B- - - - - - - -
Other- - - - - - - -
Subtotal116,972 1,561 127,064 0.02%7%2 2,192 2%
Default- - - NA- - - -
Total116,972 1,561 127,064 0.02%7%2 2,192 2%
Risk Average
30 September 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA40,003 143 43,383 0.01%7%- 820 2%
AA42,333 997 46,146 0.02%7%2 947 2%
A650 245 898 0.05%28%- 91 10%
BBB496 16 512 0.24%33%- 189 37%
BB10 10 21 1.96%43%- 21 100%
B- - - - - - - -
Other- - - - - - - -
Subtotal83,492 1,411 90,960 0.02%7%2 2,068 2%
Default- - - NA- - - -
Total83,492 1,411 90,960 0.02%7%2 2,068 2%
Risk Average
31 March 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA33,513 140 36,401 0.01%7%1 601 2%
AA39,349 778 41,948 0.02%7%- 781 2%
A605 222 829 0.05%27%- 106 13%
BBB336 15 352 0.25%33%- 129 37%
BB11 27 38 1.89%38%- 33 87%
B- - - - 0%- - -
Other- - - - - - - -
Subtotal73,814 1,182 79,568 0.02%7%1 1,650 2%
Default4 - 4 NA18%1 3 1
Total73,818 1,182 79,572 0.02%7%2 1,653 2%


1
Outstandings are balances that were drawn down as at the reporting date and include certain off-balance sheet items.
2
Committed undrawn balances are committed exposures that were not drawn down as at the reporting date.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 49
Bank portfolio by external credit rating
Risk Average
31 March 2020CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA625 55 680 0.01%11%- 24 4%
AA8,861 173 9,015 0.03%58%2 1,762 20%
A14,412 473 14,800 0.05%54%4 4,057 27%
BBB1,984 173 2,110 0.19%54%3 1,091 52%
BB15 12 27 0.60%48%- 19 70%
B- - - - - - - -
Other1 - 1 12.11%60%- 3 300%
Subtotal25,898 886 26,633 0.05%54%9 6,956 26%
Default- - - NA- - - -
Total25,898 886 26,633 0.05%54%9 6,956 26%
Risk Average
30 September 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA515 - 516 0.01%14%- 14 3%
AA11,111 312 11,488 0.03%58%2 2,686 23%
A14,278 303 14,583 0.05%56%5 4,328 30%
BBB1,837 161 2,001 0.19%55%2 1,082 54%
BB125 47 172 1.58%54%1 225 131%
B- - - - - - - -
Other1 - 1 12.11%60%- 4 400%
Subtotal27,867 823 28,761 0.06%56%10 8,339 29%
Default- - - NA- - - -
Total27,867 823 28,761 0.06%56%10 8,339 29%
Risk Average
31 March 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
AAA418 66 485 0.01%13%- 21 4%
AA10,656 237 11,018 0.03%59%2 2,737 25%
A11,374 346 11,736 0.05%55%3 2,902 25%
BBB1,773 218 1,996 0.20%56%2 1,247 62%
BB218 18 236 0.77%42%1 159 67%
B- - - - - - - -
Other- - - - - - - -
Subtotal24,439 885 25,471 0.06%56%8 7,066 28%
Default- - - NA- - - -
Total24,439 885 25,471 0.06%56%8 7,066 28%


1
Outstandings are balances that were drawn down as at the reporting date and include certain off-balance sheet items.
2
Committed undrawn balances are committed exposures that were not drawn down as at the reporting date.

Pillar 3 report
Credit risk exposures

50 | Westpac Group March 2020 Pillar 3 report
Residential mortgages portfolio by PD band
Risk Average
31 March 2020CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
0.0 to 0.10145,843 40,976 185,030 0.06%20%23 10,384 6%
0.10 to 0.2575,031 11,716 86,067 0.22%20%37 12,272 14%
0.25 to 1.0194,476 19,051 209,423 0.57%20%237 52,333 25%
1.0 to 2.536,418 3,655 38,978 1.44%21%118 17,782 46%
2.5 to 10.015,317 669 15,657 4.69%21%150 14,043 90%
10.0 to 99.9914,062 200 14,215 23.35%20%664 19,141 135%
Subtotal481,147 76,267 549,370 1.11%20%1,229 125,955 23%
Default4,486 30 4,496 NA20%559 5,469 122%
Total485,633 76,297 553,866 1.91%20%1,788 131,424 24%
Risk Average
30 September 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
0.0 to 0.10148,591 38,041 186,899 0.06%20%23 10,472 6%
0.10 to 0.2575,806 11,352 86,873 0.21%20%37 12,165 14%
0.25 to 1.0182,589 22,417 204,268 0.54%20%223 52,592 26%
1.0 to 2.543,736 3,657 46,813 1.41%20%133 19,616 42%
2.5 to 10.017,377 423 17,761 4.72%20%171 15,277 86%
10.0 to 99.9912,079 80 12,177 20.54%20%501 16,630 137%
Subtotal480,178 75,970 554,791 0.97%20%1,088 126,752 23%
Default4,216 21 4,227 NA20%554 4,877 115%
Total484,394 75,991 559,018 1.72%20%1,642 131,629 24%
Risk Average
31 March 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
0.0 to 0.10146,376 38,513 185,186 0.06%20%23 10,369 6%
0.10 to 0.2575,550 11,709 86,992 0.21%20%37 12,192 14%
0.25 to 1.0181,306 23,260 203,842 0.54%20%222 52,410 26%
1.0 to 2.544,529 3,518 47,470 1.41%20%134 20,006 42%
2.5 to 10.018,350 448 18,765 4.73%20%181 16,249 87%
10.0 to 99.9911,913 64 11,998 21.20%20%509 16,364 136%
Subtotal478,024 77,512 554,253 0.99%20%1,106 127,590 23%
Default3,895 19 3,908 NA20%543 4,543 116%
Total481,919 77,531 558,161 1.68%20%1,649 132,133 24%


1
Outstandings are balances that were drawn down as at the reporting date.
2
Committed undrawn balances are committed exposures that were not drawn down as at the reporting date.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 51
Australian credit cards portfolio by PD band
Risk Average
31 March 2020CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
0.0 to 0.101,704 9,799 7,793 0.05%70%3 181 2%
0.10 to 0.251,146 4,397 3,603 0.16%73%4 247 7%
0.25 to 1.01,260 1,335 2,109 0.46%73%7 346 16%
1.0 to 2.52,350 1,146 3,124 1.70%74%39 1,373 44%
2.5 to 10.01,060 245 1,222 6.22%73%55 1,295 106%
10.0 to 99.99608 95 629 29.22%70%130 1,186 189%
Subtotal8,128 17,017 18,480 1.80%72%238 4,628 25%
Default121 17 121 NA72%76 209 173%
Total8,249 17,034 18,601 2.44%72%314 4,837 26%
Risk Average
30 September 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
0.0 to 0.101,808 9,814 6,254 0.05%70%2 146 2%
0.10 to 0.251,206 4,662 3,529 0.16%73%4 242 7%
0.25 to 1.01,315 1,463 2,173 0.46%73%8 358 16%
1.0 to 2.52,525 1,294 3,418 1.71%74%43 1,511 44%
2.5 to 10.01,176 289 1,405 6.20%73%63 1,488 106%
10.0 to 99.99606 99 649 27.81%70%128 1,213 187%
Subtotal8,636 17,621 17,428 1.98%72%248 4,958 28%
Default113 15 113 NA72%80 131 116%
Total8,749 17,636 17,541 2.61%72%328 5,089 29%
Risk Average
31 March 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
0.0 to 0.101,808 9,784 6,245 0.05%70%2 146 2%
0.10 to 0.251,234 4,900 3,727 0.16%73%4 256 7%
0.25 to 1.01,366 1,590 2,315 0.46%73%8 384 17%
1.0 to 2.53,037 1,443 4,050 1.68%74%50 1,760 43%
2.5 to 10.01,341 353 1,626 6.23%73%74 1,736 107%
10.0 to 99.99717 114 772 27.96%71%154 1,461 189%
Subtotal9,503 18,184 18,735 2.16%72%292 5,743 31%
Default115 17 115 NA72%71 167 145%
Total9,618 18,201 18,850 2.76%72%363 5,910 31%


1
Outstandings are balances that were drawn down as at the reporting date.
2
Committed undrawn balances are committed exposures that were not drawn down as at the reporting date.

Pillar 3 report
Credit risk exposures

52 | Westpac Group March 2020 Pillar 3 report
Other retail portfolio by PD band
Risk Average
31 March 2020CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
0.0 to 0.10215 940 786 0.05%48%- 59 8%
0.10 to 0.25365 1,376 1,307 0.19%60%2 329 25%
0.25 to 1.03,469 961 4,252 0.67%56%16 2,068 49%
1.0 to 2.53,114 919 3,837 1.66%66%45 3,232 84%
2.5 to 10.03,197 340 3,486 4.90%67%121 3,630 104%
10.0 to 99.991,185 46 1,254 27.19%66%235 1,854 148%
Subtotal11,545 4,582 14,922 4.07%62%419 11,172 75%
Default298 11 301 NA67%182 422 140%
Total11,843 4,593 15,223 5.96%62%601 11,594 76%
Risk Average
30 September 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
0.0 to 0.1023 20 36 0.07%65%- 5 14%
0.10 to 0.25326 811 965 0.18%57%1 226 23%
0.25 to 1.03,870 2,136 5,362 0.61%58%19 2,514 47%
1.0 to 2.53,645 1,221 4,745 1.78%64%58 3,990 84%
2.5 to 10.02,989 251 3,236 4.77%67%110 3,386 105%
10.0 to 99.991,255 64 1,333 25.71%64%229 1,914 144%
Subtotal12,108 4,503 15,677 3.93%62%417 12,035 77%
Default271 10 274 NA65%165 360 131%
Total12,379 4,513 15,951 5.58%62%582 12,395 78%
Risk Average
31 March 2019CommittedExposureProbabilityLoss GivenRegulatoryWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultExpected LossAssetsWeight
0.0 to 0.1025 21 39 0.07%65%- 5 13%
0.10 to 0.25354 948 1,072 0.18%55%1 239 22%
0.25 to 1.03,941 2,455 5,544 0.60%58%19 2,603 47%
1.0 to 2.53,878 938 4,678 1.76%65%57 3,957 85%
2.5 to 10.03,192 271 3,455 4.81%68%118 3,635 105%
10.0 to 99.991,398 72 1,475 26.56%64%264 2,133 145%
Subtotal12,788 4,705 16,263 4.15%63%459 12,572 77%
Default316 10 320 NA64%181 510 159%
Total13,104 4,715 16,583 6.01%63%640 13,082 79%

1
Outstandings are balances that were drawn down as at the reporting date.
2
Committed undrawn balances are committed exposures that were not drawn down as at the reporting date.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 53
Small business portfolio by PD band
RegulatoryRisk Average
31 March 2020CommittedExposureProbabilityLoss GivenExpectedWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultLossAssetsWeight
0.0 to 0.10241 361 435 0.07%50%- 46 11%
0.10 to 0.25131 191 314 0.19%21%- 27 9%
0.25 to 1.06,267 3,602 9,770 0.47%28%13 2,039 21%
1.0 to 2.514,668 1,805 16,447 1.64%39%104 8,476 52%
2.5 to 10.03,331 309 3,643 5.25%36%71 2,534 70%
10.0 to 99.991,762 66 1,831 27.83%38%190 2,039 111%
Subtotal26,400 6,334 32,440 3.14%35%378 15,161 47%
Default731 19 741 NA37%179 1,651 223%
Total27,131 6,353 33,181 5.30%35%557 16,812 51%
RegulatoryRisk Average
30 September 2019CommittedExposureProbabilityLoss GivenExpectedWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultLossAssetsWeight
0.0 to 0.10295 537 601 0.06%57%- 60 10%
0.10 to 0.2598 114 213 0.23%20%- 20 9%
0.25 to 1.05,454 3,187 8,666 0.45%28%10 1,725 20%
1.0 to 2.515,940 1,945 17,809 1.66%38%110 8,800 49%
2.5 to 10.03,485 316 3,806 5.27%35%73 2,448 64%
10.0 to 99.991,569 58 1,631 26.19%37%158 1,729 106%
Subtotal26,841 6,157 32,726 2.94%35%351 14,782 45%
Default630 14 639 NA36%161 1,308 205%
Total27,471 6,171 33,365 4.80%35%512 16,090 48%
RegulatoryRisk Average
31 March 2019CommittedExposureProbabilityLoss GivenExpectedWeighted Risk
$m
Outstandings
1
Undrawn
2
at Defaultof DefaultDefaultLossAssetsWeight
0.0 to 0.10291 549 605 0.06%58%- 61 10%
0.10 to 0.2599 108 208 0.23%20%- 20 10%
0.25 to 1.05,463 3,270 8,759 0.45%28%11 1,756 20%
1.0 to 2.515,556 2,003 17,480 1.66%38%107 8,703 50%
2.5 to 10.03,644 363 4,012 5.18%34%73 2,643 66%
10.0 to 99.991,574 66 1,644 25.62%37%154 1,801 110%
Subtotal26,627 6,359 32,708 2.93%35%345 14,984 46%
Default561 13 572 NA36%152 1,108 194%
Total27,188 6,372 33,280 4.60%35%497 16,092 48%



1
Outstandings are balances that were drawn down as at the reporting date and include certain off-balance sheet items.
2
Committed undrawn balances are committed exposures that were not drawn down as at the reporting date.

Pillar 3 report
Credit risk exposures

54 | Westpac Group March 2020 Pillar 3 report
Credit Quality
Prior to the onset of the Covid-19 pandemic the portfolio was performing well across retail, business and
institutional portfolios. While stressed assets and retail delinquencies had risen moderately in recent periods, these
metrics were rising from a low base.
The impact of the COVID-19 pandemic on the Australian economy and Westpac remains uncertain. The severity
of its impact will depend on the spread and duration of the pandemic, customer responses, and the effectiveness
of the responses from governments and central banks.
Actual losses
31 March 2020Write-offsLegal and Write-offs fromActual Losses for the
$mdirectrecovery costs
provisions
1
Recoveries6 months ended
Corporate1 -1 (6) (4)
Business lending21 -19 (5) 35
Sovereign-----
Bank-----
Residential mortgages8 -59 -67
Australian credit cards197 --(33) 164
Other retail181 7 1 (54) 135
Small business20 -19 -39
Specialised lending1 2 -(2) 1
Securitisation-----
Standardised-----
Total429 9 99 (100) 437
30 September 2019Write-offsLegal and Write-offs fromActual Losses for the
$mdirectrecovery costs
provisions
1
Recoveries12 months ended
Corporate2 -35 (7) 30
Business lending40 2 21 (9) 54
Sovereign-----
Bank-----
Residential mortgages14 -98 (1) 111
Australian credit cards383 --(43) 340
Other retail438 17 6 (107) 354
Small business44 2 32 -78
Specialised lending3 6 9 (5) 13
Securitisation-----
Standardised2 ---2
Total926 27 201 (172) 982
31 March 2019Write-offsLegal and Write-offs fromActual Losses for the
$mdirectrecovery costs
provisions
1
Recoveries6 months ended
Corporate-2 2 (7) (3)
Business lending18 1 9 (5) 23
Sovereign-----
Bank-----
Residential mortgages6 -46 -52
Australian credit cards162 --(12) 150
Other retail198 7 2 (45) 162
Small business20 -13 -33
Specialised lending1 2 9 (2) 10
Securitisation-----
Standardised1 ---1
Total406 12 81 (71) 428


1
Write-offs from individually assessed provisions.

Pillar 3 report
Credit risk exposures

Westpac Group March 2020 Pillar 3 report | 55
Regulatory loss estimates and actual losses
The table below compares regulatory credit risk estimates used in the calculation of risk weighted assets to the
average of actual outcomes observed since the time of Advanced IRB accreditation for each portfolio.
Predicted parameters represent average internally predicted long-run probabilities of default for non-defaulted
obligors at the start of each year, as well as downturn estimates of loss (or the regulatory minimum where
required). They are averaged using data from the financial years beginning at the time of Advanced IRB
accreditation (2008 for most portfolios) and compared to observed outcomes over the same period
1
.
Predicted parameters are reviewed annually utilising observed outcomes from prior periods as a key input.
Default rates
At the start of each year, a predicted default probability is assigned to all non-defaulted obligors. This is averaged
over the portfolio for the period since IRB accreditation and reported as the predicted default rate. The actual
default rate reflects the fraction of obligors who start the year not in default but default during the one year period.
The observed annual default rates are averaged over the period since IRB accreditation.
Loss Given Default (LGD)
The LGD analysis excludes recent defaults in order to allow sufficient time for the full workout of the facility and
hence an accurate LGD to be determined. The workout period varies by portfolio: a two year workout period is
assumed for transaction-managed and residential mortgage lending; and a one year period for other program-
managed portfolios.
Exposure at Default (EAD)
The EAD variance compares the observed EAD to the predicted EAD one year prior to default. For transaction-
managed portfolios, predicted EAD is currently mandated to be 100% of committed exposures. The observed EAD
is averaged for all obligors that defaulted over the observation period.
23

Observed EAD
31 March 2020Regulatory variance to
$m
Expected Loss
2
PredictedObservedPredictedObserved
Predicted
3
Corporate787 2.25%0.93%47%36%(23%)
Business lending669 2.24%1.56%34%17%(13%)
Sovereign2 0.23% - - -
Bank9 0.43%0.13% - -
Residential mortgages1,788 0.66%0.53%20%1%(1%)
Australian credit cards314 1.68%1.63%75%59%(2%)
Other retail601 4.83%3.80%69%45%(8%)
Small business557 3.28%2.21%39%12%(9%)
Specialised lending813 NA1.93%NA22%(9%)
Securitisation-NANANANANA
Standardised-NANANANANA
Total5,540
Default rate Loss Given Default


1
Predicted parameters are not available for specialised lending, securitisation or standardised exposures because risk weights for
these portfolios do not rely on credit estimates and are shown as NA in the tables above.
2
Includes regulatory expected losses for defaulted and non-defaulted exposures.
3
A negative outcome indicates observed EAD was lower than predicted EAD, which can happen because exposures were managed
down prior to default or off-balance sheet items or undrawn limits were not fully drawn prior to default.

Pillar 3 report
Credit risk exposures

56 | Westpac Group March 2020 Pillar 3 report
Observed EAD
30 September 2019Regulatory variance to
$m
Expected Loss
1
PredictedObservedPredictedObserved
Predicted
2
Corporate523 2.24%0.93%47%36%(23%)
Business lending635 2.24%1.52%34%17%(13%)
Sovereign2 0.23% - - - -
Bank10 0.44%0.14% - - -
Residential mortgages1,642 0.64%0.51%20%2%(1%)
Australian credit cards328 1.68%1.64%75%59%(2%)
Other retail582 4.82%3.79%69%46%(8%)
Small business512 3.19%2.11%39%13%(9%)
Specialised lending748 NA1.90%NA22%(9%)
Securitisation-NANANANANA
Standardised-NANANANANA
Total4,982
Observed EAD
31 March 2019Regulatory Default rate variance to
$m
Expected Loss
1
PredictedObservedPredictedObserved
Predicted
2
Corporate561 2.24%0.95%47%37%(23%)
Business lending642 2.24%1.53%34%17%(13%)
Sovereign2 0.23%- - - -
Bank8 0.44%0.14%- - -
Residential mortgages1,649 0.64%0.50%20%2%(1%)
Australian credit cards363 1.68%1.65%75%58%(2%)
Other retail640 4.82%3.81%69%47%(8%)
Small business497 3.07%2.01%39%14%(9%)
Specialised lending798 NA1.93%NA22%(8%)
SecuritisationNANANANANANA
StandardisedNANANANANANA
Total5,160
Loss Given Default Default rate
Loss Given Default



1
Includes regulatory expected losses for defaulted and non-defaulted exposures
2
A negative outcome indicates observed EAD was lower than predicted EAD, which can happen because exposures were managed
down prior to default or off-balance sheet items or undrawn limits were not fully drawn prior to default.

Pillar 3 report
Credit risk mitigation

Westpac Group March 2020 Pillar 3 report | 57
This section describes the way in which Westpac reduces its credit risk by using financial collateral, guarantees or
credit derivatives for the Corporate, Sovereign and Bank asset classes.
Approach
Westpac recognises credit risk mitigation only when formal legal documentation is held that establishes Westpac’s
direct, irrevocable and unconditional recourse to the collateral or to an unrelated credit risk mitigation provider.
Minimum standards for recognising credit risk mitigation are set out in Westpac's credit rules and policies. All
proposals for recognising risk mitigation require approval by an authorised credit officer. Authorised credit officer
approval is also required for existing risk mitigation to be discontinued or withdrawn.
The amount of credit risk mitigation recognised is the face value of the mitigation instrument, adjusted by the
application of discounts for any maturity and/or currency mismatch with the underlying obligation, so that a
discounted amount is recognised when calculating the residual exposure after mitigation.
For regulatory capital purposes:
 exposures secured by eligible financial collateral, either cash or certain government or semi-government
securities, or where protection is bought via credit linked notes, provided proceeds are invested in eligible
financial collateral, are included at the gross value, with risk weighted assets for the portion thus secured
calculated by applying a 5% LGD
1
;
 exposures mitigated by eligible guarantees, standby letters of credit or similar instruments, where Westpac
has direct recourse to an unrelated third party, or credit protection bought via credit default swaps where
Westpac is entitled to recover either full principal or credit losses on occurrence of defined credit events, are
treated under double default rules where the protection provider is rated A-/A3 or better. The GCCO has the
authority to approve exceptions to the A-/A3 minimum; and
 exposures mitigated by guarantees, letters of credit, credit default swaps or similar instruments, which are not
eligible for double default treatment are treated under the substitution approach.
When Westpac uses credit risk mitigation techniques to reduce counterparty exposure, limits are applied to both
gross (i.e. pre-mitigation) and net exposure. Furthermore, exposure is recorded against the provider of any credit
risk mitigation and a limit framework prevents excessive concentration to such counterparties.
Netting
Risk reduction by way of current account set-offs is recognised for exposures to creditworthy customers domiciled
in Australia and New Zealand only. Customers are required to enter into formal agreements giving Westpac the
unfettered right to set-off gross credit and debit balances in their nominated accounts to determine Westpac’s net
exposure within each of these two jurisdictions. Cross-border set-offs are not permitted.
Close-out netting is undertaken for off-balance sheet financial market transactions with counterparties with whom
Westpac has entered into master netting agreements which allow such netting in specified jurisdictions. Close-out
netting effectively aggregates pre-settlement risk exposure at time of default, thus reducing overall exposure.
Collateral valuation and management
Westpac revalues financial markets and associated collateral positions on a daily basis to monitor the net risk
position, and has formal processes in place so that calls for collateral top-up or exposure reduction are made
promptly. An independent operational unit has responsibility for monitoring these positions. The collateralisation
arrangements are documented via the Credit Support Annex of the International Swaps and Derivatives
Association (ISDA) master agreement for derivatives transactions and Global Master Repurchase Agreement
(GMRA) for repurchase transactions and Clearing Agreements for cleared trades.


1
Excludes collateralised derivative transactions.

Pillar 3 report
Credit risk mitigation

58 | Westpac Group March 2020 Pillar 3 report
Total exposure covered by collateral, credit derivatives and guarantees
Impact Total exposure for
31 March 2020Total before of creditTotal after which some creditEligible FinancialCovered byCovered by
$mmitigation
mitigation
1
mitigationrisk is mitigatedCollateralGuaranteesCredit Derivatives
Corporate150,294 (3,765) 146,529 8,562 5,617 305 -
Sovereign127,690 (626) 127,064 1,422 626 103 -
Bank34,129 (7,496) 26,633 15,088 7,496 --
Standardised19,616 -19,616 4,932 ---
Total331,729 (11,887) 319,842 30,004 13,739 408 -
Impact Total exposure for
30 September 2019Total before of creditTotal after which some creditEligible FinancialCovered byCovered by
$mmitigation
mitigation
1
mitigationrisk is mitigatedCollateralGuaranteesCredit Derivatives
Corporate139,598 (425) 139,173 3,351 2,028 258 -
Sovereign91,284 (324) 90,960 905 324 221 -
Bank30,496 (1,735) 28,761 4,639 1,735 --
Standardised22,512 -22,512 ----
Total283,890 (2,484) 281,406 8,895 4,087 479 -
Impact Total exposure for
31 March 2019Total before of creditTotal after which some creditEligible FinancialCovered byCovered by
$mmitigation
mitigation
1
mitigationrisk is mitigatedCollateralGuaranteesCredit Derivatives
Corporate135,725 (223) 135,502 2,855 1,859 394 3
Sovereign79,681 (109) 79,572 284 109 101 -
Bank26,749 (1,278) 25,471 3,790 1,278 --
Standardised18,249 (860) 17,389 3,057 860 --
Total260,404 (2,470) 257,934 9,986 4,106 495 3
Credit Risk Mitigants
Credit Risk Mitigants
Credit Risk Mitigants


1
Impact of credit mitigation under the substitution approach.

Pillar 3 report
Counterparty credit risk

Westpac Group March 2020 Pillar 3 report | 59
This section describes Westpac’s exposure to credit risk arising from derivative and treasury products.
Approach
Westpac actively assesses and manages the derivative and treasury credit risk (known collectively as counterparty
credit risk) arising from its derivatives business. Westpac’s process for managing counterparty credit risk is based
on its assessment of the potential future credit risk Westpac is exposed to when dealing in derivatives products
and securities financing transactions. Westpac quantifies this risk through a daily simulation of future market price
and rate shocks and converts the effect of these shocks on the mark-to-market value of Westpac’s positions to a
credit exposure using Westpac’s Derivative Risk Equivalent (DRE) methodology. Exposures are loaded into
Westpac’s credit limit management system where they are checked against pre-settlement risk limits that are set
at the counterparty level. Limit excesses are reported to credit managers and actioned within strict timeframes.
Structure and organisation
The Financial Markets Credit management team is charged with managing the counterparty credit exposure
arising from derivatives and treasury products.
Market related credit risk
There are two components to the regulatory capital requirements for credit risk arising from derivative products:
 capital to absorb losses arising from the default of derivative counterparties; and
 capital to absorb losses arising from mark-to-market valuation movements resulting from changes in the credit
quality of derivative counterparties. These valuation movements are referred to as credit valuation
adjustments (CVA) and this risk is sometimes labelled as CVA risk. Westpac refers to this requirement as
mark-to-market related credit risk.
Risk mitigation
Mitigation is achieved in a number of ways:
 the limit system monitors for excesses of the pre-determined limits, with any excesses being notified to
authorised credit officers;
 Westpac has netting agreements with counterparties to allow the exposure across a portfolio of trades to be
netted;
 Westpac has collateral agreements with its largest counterparties. The market value of the counterparty’s
portfolio is used to recalculate the credit position at each end of day, with collateral being called for when
certain pre-set limits are met or exceeded. Westpac exchanges Initial Margin with eligible counterparties for
eligible products as protection against potential future exposure to changes in market value;
 Westpac has initial margin agreements with qualifying counterparties subject to relevant international
regulations. The exchange of initial margin for eligible products covers the potential future exposure that could
arise from changes in the market value of derivative transactions over the close-out period in the event of a
counterparty default;
 credit derivatives are used to mitigate credit exposure against certain counterparties; and
 regular marking to market and settling of the foreign exchange components of foreign exchange reset
contracts.
Counterparty derivative exposures and limits
The risk management methodology for counterparty derivatives exposures is similar to the credit methodology for
transaction-managed loans. The main difference is in the estimation of the exposure for derivatives which is based
on the DRE methodology. DRE is a credit exposure measure for derivative trades which is calibrated to a ‘loan-
equivalent’ exposure.
Counterparty credit limits are approved on an uncommitted and unadvised basis by authorised credit officers. This
follows an evaluation of each counterparty’s credit worthiness and establishing an agreed credit risk appetite for
the nature and extent of prospective business.

Pillar 3 report
Counterparty credit risk

60 | Westpac Group March 2020 Pillar 3 report
Wrong-way risk exposures
Westpac defines wrong-way risk as exposure to a counterparty which is adversely correlated with the credit quality
of that counterparty. With respect to credit derivatives, wrong-way risk refers to credit protection purchased from a
counterparty highly correlated to the reference obligation.
Wrong-way risk exposures using credit derivatives are controlled by only buying protection from highly rated
counterparties. These transactions are assessed by an authorised credit officer who has the right to decline any
transaction where they feel there is an unacceptably high correlation between the ability to perform under the trade
and the performance of the underlying counterparty.
Consequences of a downgrade in Westpac’s credit rating
A downgrade in Westpac’s credit rating can have an impact on Westpac’s collateral agreements. Where an
outright threshold and minimum transfer amount are agreed, there will not be any impact on the amount of
collateral posted by Westpac in the event of a credit rating downgrade. Where the threshold and minimum transfer
amount are tiered according to credit rating, the impact of Westpac being downgraded below its current credit
rating would be: for a one notch downgrade, postings of $31 million; while for a two notch downgrade, postings
would be $33 million
1
.
Counterparty credit risk summary
31 March30 September31 March
$m202020192019
Gross positive fair value of contracts92,175 89,963 71,944
Netting benefits(32,468) (41,834) (45,159)
Netted current credit exposure59,707 48,129 26,785
Collateral held(11,887) (2,798) (2,471)
Mark-to-market credit related risk reduction(263) (159) (112)
Net derivatives credit exposure47,557 45,172 24,202
Exposure at default
Gross credit exposure amount of credit derivative
hedges
--
Credit exposure--
Interest rate contracts17,070 19,587 7,665
Foreign exchange contracts20,403 18,251 9,702
Equity contracts5 6 414
Credit derivatives141 155 263
Commodity contracts1,201 1,186 4,762
Other8,737 5,987 1,396
Total47,557 45,172 24,202

Credit derivative transactions that create exposures to counterparty credit risk
31 March 2020 Intermediation activities
Credit derivatives products used ($m)BoughtSoldBoughtSold
Credit Default Swaps69 72 -
Total Return Swaps
Credit options
Credit linked notes
Collateralised Loan Obligations
Other
Total69 72 --
30 September 2019 Intermediation activities
Credit derivatives products used ($m)BoughtSoldBoughtSold
Credit Default Swaps
29 126 1 5
Total Return Swaps
----
Credit options
----
Credit linked notes
----
Collateralised Loan Obligations
----
Other
----
Total29 126 1 5
Westpac Portfolio
Westpac Portfolio



1
Credit rating downgrade postings are cumulative.

Pillar 3 report
Counterparty credit risk

Westpac Group March 2020 Pillar 3 report | 61
31 March 2019 Westpac Portfolio Intermediation activities
Credit derivatives products used ($m)BoughtSoldBoughtSold
Credit Default Swaps129 132 -3
Total Return Swaps----
Credit options----
Credit linked notes----
Collateralised Loan Obligations----
Other----
Total129 132 -3

Pillar 3 report
Securitisation

62 | Westpac Group March 2020 Pillar 3 report
A securitisation is a financial structure where the cash flow from a pool of assets is used to service obligations to at
least two different tranches or classes of creditors (typically holders of debt securities), with each class or tranche
reflecting a different degree of credit risk (i.e. one class of creditors is entitled to receive payments from the pool
before another class of creditors).
Securitisation transactions are generally grouped into two broad categories:
 traditional or true sale securitisations, which involve the transfer of ownership of the underlying asset pool to a
third party; and
 synthetic transactions, where the ownership of the pool remains with the originator and only the credit risk of
the pool is transferred to a third party, using credit derivatives or guarantees.
Covered bond transactions, in which bonds issued by Westpac are guaranteed by assets held in a special
purpose vehicle, are not considered to be securitisation transactions.
Approach
Westpac’s involvement in securitisation activities ranges from a seller of its own assets to an investor in third-party
transactions and includes the arranging of transactions, the provision of securitisation services and the provision of
funding for clients, including clients requiring access to capital markets.
Securitisation of Westpac originated assets - Securitisation is a funding, liquidity and capital management tool.
It allows Westpac the ability to liquefy a pool of assets and increase Westpac’s wholesale funding capacity.
Westpac may provide arm’s length facilities to the securitisation vehicles. The facilities entered into typically
include the provision of liquidity, funding, underwriting and derivative contracts.
Westpac has entered into on balance sheet securitisation transactions whereby loans originated by Westpac are
transformed into stocks of saleable mortgage backed securities and held in the originating bank’s liquid asset
portfolio. These ‘self securitisations’ do not change risk weighted assets
1
. No securitisation transactions for
Westpac originated assets are classified as a resecuritisation.
Securitisation in the management of Westpac’s credit portfolio - Westpac uses securitisation, including
portfolio credit default swaps, to manage its corporate and institutional loan and counterparty credit risk portfolios.
Single name credit default swaps are not treated as securitisations but as credit risk mitigation facilities.
Transactions are entered into to manage counterparty credit risk or concentration risks.
Provision of securitisation services, including funding and management of conduit vehicles - Westpac
provides services to clients wishing to access asset-backed financing through securitisation. Those services
include access to the Asset Backed Commercial Paper market through the Waratah conduit, which is the
Westpac-sponsored securitisation conduit; the provision of warehouse and term funding of securitised assets on
Westpac’s balance sheet; and arranging asset backed bond issues. Westpac provides facilities to the Waratah
securitisation conduit including liquidity, funding, underwriting, credit enhancement and derivative contracts.
Securitisation facilities provided by Westpac include resecuritisation exposures which are securitisation exposures
in which the risk associated with an underlying pool of exposures is tranched and at least one of the underlying
exposures is itself a securitisation exposure. Westpac also buys and sells securitisation exposures in the
secondary market to facilitate portfolio management activity by its institutional customers who hold asset backed
bonds.
Westpac’s role in the securitisation process
Securitisation activity Role played by Westpac
Securitisation of Westpac originated assets
 Arranger
 Asset originator
 Bond distributor
 Facility provider
 Note holder
 Trust manager
 Swap provider
 Servicer
Securitisation in the management of Westpac’s credit
portfolio
 Hedger - protection purchaser
 Investor - protection seller
 Investor - purchaser of securitisation exposures

1
The credit exposures of the underlying loans are measured in accordance with APS113.

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Westpac Group March 2020 Pillar 3 report | 63
Provision of securitisation services including funding
and management of conduit vehicle
 Arranger
 Bond distributor
 Credit enhancement
provider
 Funder
 Liquidity facility
provider
 Swap counterparty
servicer
 Market maker and
broker for distributed
bonds
Key Objectives
Securitisation of Westpac originated assets - The securitisation of Westpac's own assets provides funding
diversity, and is a core tool of liquidity management.
Securitisation in the management of Westpac’s credit portfolio - Westpac acts as principal in transactions and
will buy and sell protection in order to meet its portfolio management objectives. Westpac also purchases
securitisation exposures in order to earn income. All securitisation activity must follow Westpac’s credit policies
and approval processes.
Provision of securitisation services including funding and management of conduit vehicles - Westpac
receives market-based fees in return for its services as servicer, swap counterparty, arranger and facility provider
and program fees, interest margins and bond distribution fees on warehouse and term funding facilities. Westpac
facilitates portfolio management activity by its institutional customers by buying and selling securitisation
exposures in the secondary market and is compensated through an interest margin and bid-offer spread on the
transactions.
Structure and organisation
Securitisation of Westpac originated assets - Westpac’s Treasury operations are responsible for all Westpac
originated securitisation activity including funding, liquidity and capital management.
Securitisation in the management of Westpac’s credit portfolio - Westpac’s exposure arising from
securitisation, including portfolio hedging, is managed by Westpac Institutional Bank (WIB) and integrated within
Westpac’s standard risk reporting and management systems.
Provision of securitisation services including funding and management of conduit vehicles - These
services are provided by WIB and include the provision of liquidity, credit enhancement, funding and derivative
facilities, servicer and arranger services, and market-making and broking of asset-backed bonds.
Risk reporting
Credit exposure - Funding, liquidity, credit enhancement and redraw facilities, swap arrangements and
counterparty exposures are captured and monitored in key source systems along with other facilities/derivatives
entered into by Westpac.
Operational risk exposure - The operational risk review process for Westpac includes the identification of risks,
controls and key performance indicators in relation to all securitisation activity and services provided by Westpac
or any of its subsidiaries.
Market risk exposure - Exposures arising from transactions with the securitisation conduit and other
counterparties are captured as part of Westpac’s traded and non-traded market risk reporting and limit
management framework.
Liquidity risk exposure - Exposure to, and the impact of, securitisation transactions are managed under the
Liquidity Risk Management Framework and are integrated into routine reporting for capital and liquidity positions,
net interest margin analysis, balance sheet forecasting and funding scenario testing. The annual funding plan
incorporates consideration of overall liquidity risk limits and the securitisation of Westpac originated assets.
Risk mitigation
Securitisation of Westpac originated assets - The interest rate and basis risks generated by Westpac’s hedging
arrangements to each securitisation trust are captured and managed within Westpac’s asset and liability
management framework. The liquidity risk generated by Westpac’s liquidity and redraw facilities to each
securitisation trust is captured and managed in accordance with Westpac’s liquidity management policies along
with all other contingent liquidity facilities.
Securitisation in the management of Westpac’s credit portfolio - Transactions are approved in accordance
with Westpac’s credit risk mitigation approach (see pages 57 and 58).
Provision of securitisation services including funding and management of conduit vehicles - All
securitisation transactions are approved within the context of a securitisation credit policy that sets detailed

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64 | Westpac Group March 2020 Pillar 3 report
transaction-specific guidelines that regulate servicer counterparty risk appetite, transaction tenor, asset class, third
party credit support and portfolio quality. This policy is applied in conjunction with other credit and market risk
policies that governs the provision of derivative and other services that support securitisation transactions. In
particular, credit hedging transactions are subject to Westpac’s credit risk mitigation approach (see pages 57 and
58). Any interest rate or currency hedging is subject to counterparty credit risk management (see pages 59 and
60) and market risk management (see pages 72 and 73) policies and processes.
Regulatory capital approaches
The regulatory capital treatment of all securitisation exposures is measured in accordance with APS120
1
. APS120
specifies that securitisation exposures held in the trading book are subject to the requirements of Prudential
Standard APS 116 Capital Adequacy: Market Risk.
Under APS120 the approaches employed include the External Rating Based Approach (ERBA) and the
Supervisory Formula Approach (SFA). Under the ERBA, APRA provides risk-weights that are matched to external
credit ratings and takes into account tranche maturity and tranche thickness. The SFA applicable to unrated
exposures dynamically looks at the type and performance of underlying asset pools funded by the securitisation
exposure as well as the structural features of the transaction to determine capital requirements. The Internal
Assessment Approach (IAA) is not permitted under APS120.
Securitisation of Westpac originated assets - The assets sold by Westpac to a securitisation trust are excluded
from Westpac’s calculation of credit risk weighted assets if capital relief is sought and the requirements of APS120
are satisfied
2
. Westpac cannot rely on external rating when risk weighting its exposure to these trusts and must
use the SFA instead.
In instances where insufficient risk transfer is achieved by the transaction for regulatory purposes, the capital
calculation is performed on the underlying asset pool while the facilities provided to such securitisation vehicles do
not attract regulatory capital charges.
Securitisation in the management of Westpac’s credit portfolio - Securitisation exposures are assessed using
either the ERBA or SFA approaches.
Provision of securitisation services including funding - Westpac uses the ERBA and the SFA methodology
when determining regulatory capital requirements for warehouse and term funding facilities related to securitised
assets on Westpac’s balance sheet.
The External Credit Assessment Institutions that can be used by Westpac for securitisations are Standard &
Poor’s, Moody’s and Fitch.
Westpac’s accounting policies for securitisation activities
Securitisation of Westpac originated assets - The assets sold by Westpac to a securitisation trust remain on
Westpac’s balance sheet for accounting purposes.
Securitisation in the management of Westpac’s credit portfolio - For risk mitigation using synthetic
securitisation, the underlying assets remain on Westpac's balance sheet for accounting purposes. The accounting
treatment of the assets will depend on their nature. They could include loans and receivables, available for sale
securities or derivatives. The most common form of synthetic securitisation is via a credit default swap, which is
treated as a derivative and recognised in the profit and loss statement at fair value.
For investment in securitisation exposures, if the instrument has been designated on initial recognition at fair value
(including instruments containing a credit default swap), the exposure will be measured at fair value through the
Income Statement. All other investments in securitisation exposures will be classified as available-for-sale (AFS)
and measured at fair value through Other Comprehensive Income (within the AFS securities reserve).
Provision of securitisation services including funding and management of conduit vehicles - Fee income
from these services is recognised on an accrual basis. Liquidity and funding facilities are treated as commitments
to provide finance, with fee and margin income recognised on an accrual basis. Warehouse and term funding
facilities are treated as loans.

1
The latest version of APS120 came into effect from 1 January 2019.
2
Including the requirements to achieve capital relief.

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Westpac Group March 2020 Pillar 3 report | 65
Banking book summary of assets securitised by Westpac
This table shows outstanding banking book securitisation assets and assets intended to be securitised
1
2
for
Westpac originated assets by underlying asset type. It includes the amount of impaired and past due assets, along
with any losses recognised by Westpac during the current period.
Securitised assets are held in securitisation trusts. Trusts which meet requirements to achieve capital relief do not
form part of the Level 2 consolidated group. Self securitisation trusts remain consolidated at Level 2 and the
assets transferred to these trusts are risk weighted in accordance with APS113.
AssetsWestpac
31 March 2020Traditional Syntheticintended to beImpairedPast duerecognised
$m
Securitisation
2
Securitisationsecuritisedloansassetslosses
Residential mortgages106,523 --68 838 -
Credit cards------
Auto and equipment finance2,306 --38 --
Business lending------
Investments in ABS------
Other------
Total108,829 --106 838 -
AssetsWestpac
30 September 2019Traditional Syntheticintended to beImpairedPast duerecognised
$m
Securitisation
2
Securitisationsecuritisedloansassetslosses
Residential mortgages96,725 --70 781 -
Credit cards------
Auto and equipment finance2,710 --36 --
Business lending------
Investments in ABS------
Other------
Total99,435 --106 781 -
Assets
Westpac
31 March 2019Traditional Syntheticintended to beImpairedPast duerecognised
$m
Securitisation
2
Securitisationsecuritisedloansassetslosses
Residential mortgages92,969 --66 737 -
Credit cards------
Auto and equipment finance3,256 --46 --
Business lending------
Investments in ABS------
Other------
Total96,225 --112 737 -
Total outstanding securitised by ADI
Total outstanding securitised by ADI
Total outstanding securitised by ADI

Banking book summary of total Westpac sponsored third party assets securitised
This table represents banking book third party assets where Westpac acts as a sponsor.
$m
31 March
2020
30 September
2019
31 March
2019
Residential mortgages122 310 87
Credit cards---
Auto and equipment finance---
Business lending---
Investments in ABS---
Other---
Total122 310 87


1
Represents securitisation activity from the end of the reporting period to the disclosure date of this report.
2
Includes self-securitisation assets of $98,212 million as at 31 March 2020 ($90,184 million as at 30 September 2019 and $85,449
million at 31 March 2019).

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66 | Westpac Group March 2020 Pillar 3 report
Banking book summary of securitisation activity by asset type
This table shows assets transferred into securitisation schemes by underlying asset type (ADI originated) for the
relevant period.
For the 6 months ended
31 March 2020AmountRecognised gain or
$msecuritisedloss on sale
Residential mortgages19,547 -
Credit cards--
Auto and equipment finance318 -
Business lending--
Investments in ABS--
Other--
Total19,865 -
For the 12 months ended
30 September 2019AmountRecognised gain or
$msecuritisedloss on sale
Residential mortgages30,899 -
Credit cards--
Auto and equipment finance600 -
Business lending--
Investments in ABS--
Other--
Total31,499 -
For the 6 months ended
31 March 2019AmountRecognised gain or
$msecuritisedloss on sale
Residential mortgages17,444 -
Credit cards--
Auto and equipment finance295 -
Business lending--
Investments in ABS--
Other--
Total17,739 -

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Westpac Group March 2020 Pillar 3 report | 67
Banking book summary of on and off-balance sheet securitisation by exposure type
31 March 2020Off-balanceTotal Exposure
$mSecuritisation retainedSecuritisation purchasedsheetat Default
Securities-8,583 39 8,622
Liquidity facilities--306 306
Funding facilities3,163 -783 3,946
Underwriting facilities----
Lending facilities536 -
299
835
Warehouse facilities10,408 -3,980 14,388
Total14,107 8,583 5,407 28,097
30 September 2019Off-balanceTotal Exposure
$mSecuritisation 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 March 2019Off-balanceTotal Exposure
$mSecuritisation retainedSecuritisation purchasedsheetat Default
Securities-8,746 34 8,780
Liquidity facilities--299 299
Funding facilities2,577 -1,168 3,745
Underwriting facilities----
Lending facilities9 -
8
17
Warehouse facilities9,435 -3,653 13,088
Total12,021 8,746 5,162 25,929
On balance sheet
On balance sheet
On balance sheet

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68 | Westpac Group March 2020 Pillar 3 report
Banking book securitisation exposure at default by risk weight band
31 March 2020Total ExposureTotal Risk
$m
SecuritisationResecuritisation
at Default
SecuritisationResecuritisation
Weighted Assets
Less than or equal to 10%5 -5 ---
Greater than 10 - 20%22,579 -22,579 3,887 -3,887
Greater than 20 - 30%2,787 -2,787 680 -680
Greater than 30 - 50%2,109 -2,109 814 -814
Greater than 50 - 75%554 -554 306 -306
Greater than 75 - 100%2 -2 2 -2
Greater than 100 - 250%48 -48 57 -57
Greater than 250 - 425%------
Greater than 425 - 650%------
Other------
Deductions14 -14 ---
Total28,097 -28,097 5,747 -5,747
30 September 2019Total ExposureTotal Risk
$m
SecuritisationResecuritisation
at Default
SecuritisationResecuritisation
Weighted Assets
Less than or equal to 10%------
Greater than 10 - 20%21,676 -21,676 3,743 -3,743
Greater than 20 - 30%2,007 -2,007 498 -498
Greater than 30 - 50%2,225 -2,225 859 -859
Greater than 50 - 75%464 -464 266 -266
Greater than 75 - 100%373 -373 350 -350
Greater than 100 - 250%30 -30 33 -33
Greater than 250 - 425%------
Greater than 425 - 650%------
Other------
Deductions------
Total26,774 -26,774 5,749 -5,749
31 March 2019Total ExposureTotal Risk
$m
SecuritisationResecuritisation
at Default
SecuritisationResecuritisation
Weighted Assets
Less than or equal to 10%------
Greater than 10 - 20%21,621 -21,621 3,771 -3,771
Greater than 20 - 30%1,825 -1,825 461 -461
Greater than 30 - 50%1,723 -1,723 714 -714
Greater than 50 - 75%439 -439 252 -252
Greater than 75 - 100%267 -267 249 -249
Greater than 100 - 250%36 -36 40 -40
Greater than 250 - 425%------
Greater than 425 - 650%18 -18 96 -96
Other------
Deductions------
Total25,929 -25,929 5,583 -5,583
Risk Weighted AssetsExposure
Risk Weighted AssetsExposure
ExposureRisk Weighted Assets

Banking book securitisation exposure deducted from capital
$m
31 March 2020
30 September 2019
31 March 2019
Securities---
Liquidity facilities---
Funding facilities14 --
Underwriting facilities---
Credit enhancements---
Derivative transactions---
Total14 --

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Westpac Group March 2020 Pillar 3 report | 69
Banking book securitisation subject to early amortisation treatment
There is no securitisation exposure in the banking book that is subject to early amortisation treatment as at 31
March 2020 (nil as at 30 September 2019).
Banking book resecuritisation exposure subject to credit risk mitigation (CRM)
As at 31 March 2020 resecuritisation exposures subject to CRM was nil (nil at 30 September 2019).
Banking book resecuritisation exposure to guarantors
Westpac has no third party guarantors providing guarantees for securitised assets, principal or interest
repayments as at 31 March 2020 (nil as at 30 September 2019).
Trading book summary of assets securitised by Westpac
As at 31 March 2020 there was nil in outstanding securitisation exposures for Westpac originated assets held in
the trading book (nil as at 30 September 2019).
Trading book summary of total Westpac sponsored third party assets securitised
There are no third party assets held in the trading book where Westpac is responsible for the establishment of the
securitisation program and subsequent management as at 31 March 2020 (nil as at 30 September 2019).
Trading book summary of securitisation activity by asset type
There is no originated securitisation activity in the trading book for the 12 months to 31 March 2020 (nil for the 6
months to 30 September 2019).
Trading book aggregated amount of exposure securitised by Westpac and subject to APS116 Capital
Adequacy: Market Risk
As at 31 March 2020 there is no Westpac originated outstanding securitisation exposure held in the trading book
subject to APS116 Capital Adequacy: Market Risk (nil as at 30 September 2019).

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70 | Westpac Group March 2020 Pillar 3 report
Trading book summary of on and off-balance sheet securitisation by exposure type
1

31 March 2020Off-balanceTotal Exposure
$mSecuritisation retainedSecuritisation purchasedsheetat Default
Securities-92 -92
Liquidity facilities----
Funding facilities----
Underwriting facilities----
Lending facilities----
Warehouse facilities----
Credit enhancements----
Basis swaps--116 116
Other derivatives--16 16
Total-92 132 224
30 September 2019Off-balanceTotal Exposure
$mSecuritisation 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 March 2019Off-balanceTotal Exposure
$mSecuritisation retainedSecuritisation purchasedsheetat Default
Securities-30 -30
Liquidity facilities----
Funding facilities----
Underwriting facilities----
Lending facilities----
Warehouse facilities----
Credit enhancements----
Basis swaps--48 48
Other derivatives--7 7
Total-30 55 85
On balance sheet
On balance sheet
On balance sheet

Trading book securitisation exposure subject to specific risk
There is no trading book securitisation exposure subject to specific risk for 31 March 2020 (nil for 30 September
2019).
Trading book securitisation exposure subject to APS120 Securitisation specific risk by risk weight band
There is no trading book securitisation exposure subject to APS120 specific risk for 31 March 2020 (nil for 30
September 2019).
Trading book capital requirements for securitisation exposures subject to internal models approach (IMA)
by risk classification
There is no trading book capital requirement for securitisation subject to IMA for 31 March 2020 (nil for 30 September
2019).
Trading book capital requirements for securitisation regulatory capital approaches by risk weight band
There is no trading book capital requirement for securitisation subject to regulatory capital approaches for 31 March
2020 (nil for 30 September 2019).


1
EAD associated with trading book securitisation is not included in the EAD by Major Type on page 33. Trading book securitisation
exposure is captured and risk weighted under APS116.

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Securitisation

Westpac Group March 2020 Pillar 3 report | 71
Trading book securitisation exposure deducted from capital
There is no trading book capital deduction for 31 March 2020 (nil for 30 September 2019).
Trading book securitisation subject to early amortisation treatment
There is no securitisation exposure in the trading book that is subject to early amortisation treatment for 31 March
2020 (nil for 30 September 2019).
Trading book resecuritisation exposure subject to CRM
Westpac has no resecuritisation exposure subject to CRM at 31 March 2020 (nil for 30 September 2019).
Trading book resecuritisation by guarantor creditworthiness
Westpac has no third party guarantors providing guarantees for securitised assets, principal or interest repayments
for 31 March 2020 (nil for 30 September 2019).

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Market risk

72 | Westpac Group March 2020 Pillar 3 report
Westpac’s exposure to market risk arises out of its Financial Markets and Treasury trading activities. This is
quantified for regulatory capital purposes using both the standard method and the internal model approach, details
of which are provided below.
Approach
Financial Markets’ trading activity includes dealings that encompass book running and distribution activity. The
types of market risk arising from these activities include interest rate, foreign exchange, commodity, equity price,
credit spread and volatility risk.
Treasury’s trading activity includes the management of interest rate, foreign exchange and credit spread risks
associated with the wholesale funding book, liquid asset portfolios and foreign exchange repatriations. Treasury
also manages banking book risk which is discussed in the Interest Rate Risk in the Banking Book section.
Trading activities are managed within a BRCC approved market risk framework that incorporates BRCC approved
value at risk (VaR) and stressed value at risk (SVaR) limits. VaR and SVaR are the primary mechanisms for
measuring and managing market risk. Market risk is managed using VaR, SVaR and structural risk limits (including
volume limits and basis point value limits) in conjunction with scenario analysis and stress testing. Market risk
limits are allocated to business management based upon Westpac’s risk appetite and business strategies, in
addition to the consideration of market liquidity and concentration risk.
Trades are fair valued daily using rates that have been captured from an independent market data source that has
been approved by the Revaluation Committee (RC). Where there is no source of independent rates, data will
either be derived using a methodology approved by the RC or sourced from dealer contributions. Rates that are
dealer-sourced or have limited independent sources are reviewed at least on a monthly basis. The RC will meet
monthly to review the results of independent price verification performed by the Finance valuation function. In
addition, valuation adjustments may be made as deductions from Common Equity Tier 1 Capital for exposures
which are not be captured through the fair valuation framework.
VaR and SVaR limits
Market risk arising from trading book activities is primarily measured using VaR based on an historical simulation
methodology. Westpac estimates VaR as the potential loss in earnings from adverse market movements and is
calculated to a 99% confidence level using the most recent 12 months of historical market data. SVaR is an
additional VaR measure which uses 12 months of historical market data that includes a period of significant
financial stress. VaR and SVaR take account of all material market variables that may cause a change in the value
of the trading portfolio, including interest rates, foreign exchange rates, price changes, volatility, and the
correlation between these variables.
The BRCC approved market risk VaR and SVaR limits for trading activities include separate VaR and SVaR sub-
limits for the trading activities of Financial Markets and Treasury.
Backtesting
Daily backtesting of VaR results is performed to ensure that model integrity is maintained. A review of both the
actual and potential profit and loss outcomes is also undertaken to monitor any skew created by the historical
data.
Stress testing
Daily stress testing against pre-determined scenarios is carried out to analyse potential losses beyond the 99%
confidence level. An escalation framework around selective stress tests is approved by the Head of Market Risk.
Profit and loss notification framework
The BRCC has approved a profit and loss notification framework. Included in this framework are levels of
escalation in accordance with the size of the profit or loss. Triggers are applied to both a 1-day and a rolling 20-
day cumulative total.

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Market risk

Westpac Group March 2020 Pillar 3 report | 73
Risk reporting
Daily monitoring of current exposure and limit utilisation is conducted independently by risk managers in the
Market Risk and Treasury Risk teams, who monitor market risk exposures against VaR, SVaR and structural
limits. Daily VaR and SVaR position reports are produced by risk type, by product lines and by geographic region.
These are supplemented by structural risk reporting, advice of profit and loss trigger levels and stress test
escalation trigger points. Model accreditation has been granted by APRA for the use of an internal model for the
determination of regulatory capital for the key classes of interest rate (general market), foreign exchange,
commodity and equity risks (including equity specific risk). Under the model, regulatory capital is derived from both
the current VaR window (based upon the most recent 12 months of historical market data) and a SVaR window
(12 months of market data that includes a period of significant financial stress), where these VaR measures are
calculated over a 10-day time horizon to a 99th percentile, one-tailed confidence interval. Specific risk refers to the
variations in individual security prices that cannot be explained by general market movements, and event and
default risk. Interest rate specific risk capital (specific issuer risk) is calculated using the Standard method and is
added to the VaR regulatory capital measure.
Risk mitigation
Market risk positions are managed by the trading desks consistent with delegated trading and product authorities.
Risks are consolidated into portfolios based on product and risk type. Risk management is carried out by qualified
personnel with varying levels of seniority commensurate with the nature and scale of market risks under
management.
The following controls allow monitoring by management:
 trading authorities and responsibilities are clearly delineated at all levels;
 a structured system of limits and reporting of risk exposures, including stress testing;
 surveillance of dealing room conduct;
 all new products and significant product variations undergo a rigorous approval process to identify business
risks prior to launch;
 models that are used to determine risk or profit and loss for Westpac’s accounts are independently reviewed;
 duties are segregated so that employees involved in the origination, processing and valuation of transactions
operate under separate reporting lines, minimising the opportunity for collusion; and
 legal personnel review documentation for compliance with relevant laws and regulations. In addition, internal
audit independently reviews compliance with policies, procedures and limits.
In addition, Group Audit independently reviews compliance with policies, procedures and limits.
Market risk regulatory capital and risk weighted assets
The Internal model approach uses VaR and Stressed VaR, while the Standard approach is used for interest rate
specific risk.
$m
31 March 2020
30 September 2019
31 March 2019
Internal model approach571652596
Standard approach1019671
Total capital required672748667
Risk weighted assets8,3969,3508,338

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74 | Westpac Group March 2020 Pillar 3 report
VaR by risk type
31 March 2020
$mHigh Low Average Period end
Interest rate risk21.7 7.0 9.9 15.4
Foreign exchange risk11.2 0.5 3.9 1.5
Equity risk0.4 0.0 0.1 0.4
Commodity risk3.4 1.2 2.2 2.7
Other market risks32.9 2.4 6.5 28.1
Diversification benefitNA NA (10.9) (25.1)
Net market risk
1
31.8 7.1 11.6 23.0
30 September 2019
$mHigh Low Average Period end
Interest rate risk14.3 6.6 10.1 8.2
Foreign exchange risk7.0 0.8 3.6 3.0
Equity risk0.2 0.0 0.1 0.0
Commodity risk42.0 1.7 8.2 2.6
Other market risks4.6 2.8 3.7 4.0
Diversification benefitNA NA (11.5) (8.8)
Net market risk
1
45.3 7.9 14.1 9.2
31 March 2019
$mHigh Low Average Period end
Interest rate risk14.9 8.7 11.8 10.5
Foreign exchange risk8.6 1.4 4.5 3.5
Equity risk0.1 0.0 0.0 0.1
Commodity risk14.5 4.6 8.1 13.5
Other market risks5.5 2.0 3.3 3.7
Diversification benefitNA NA (13.2) (15.0)
Net market risk
1
18.8 10.7 14.6 16.3
For the 6 months ended
For the 6 months ended
For the 6 months ended


Stressed VaR by risk type
31 March 2020
$mHigh Low Average Period end
Interest rate risk85.7 39.5 58.0 55.5
Foreign exchange risk34.3 0.9 10.8 2.4
Equity risk0.3 0.0 0.1 0.2
Commodity risk13.1 2.2 5.0 5.9
Other market risks23.3 16.2 18.8 19.0
Diversification benefitNA NA (66.6) (22.5)
Net market risk
1
89.4 34.0 56.0 60.6
30 September 2019
$mHigh Low Average Period end
Interest rate risk93.6 38.4 57.9 48.0
Foreign exchange risk26.2 1.4 11.4 9.3
Equity risk0.3 0.0 0.1 0.1
Commodity risk105.4 4.0 14.1 5.6
Other market risks19.6 12.4 16.7 19.0
Diversification benefitNA NA (89.5) (28.0)
Net market risk
1
106.2 37.9 56.4 54.0
For the 6 months ended
For the 6 months ended




1
VaR and SVaR measures shown here use a 1 day time horizon. The net market risk measure reflects the aggregate diversified risk
position for the period. Therefore, individual risk factors will not sum to this total.

Pillar 3 report
Market risk

Westpac Group March 2020 Pillar 3 report | 75
31 March 2019
$mHigh Low Average Period end
Interest rate risk90.3 33.7 58.6 63.4
Foreign exchange risk36.6 2.4 14.6 6.5
Equity risk0.2 0.1 0.2 0.2
Commodity risk34.0 6.7 17.0 30.3
Other market risks14.4 8.8 12.7 14.4
Diversification benefitNA NA (89.0) (48.0)
Net market risk
1
86.8 39.8 57.8 66.8
For the 6 months ended

Back-testing results
1

The following graph gives a comparison of actual profit and loss to VaR over the 6 months ended 31 March 2020.

Each point on the graph represents 1 day’s trading profit or loss. This result is placed on the graph relative to the
associated VaR utilisation. The downward sloping line represents the point where a loss is equal to VaR utilisation.






1
The net market risk measure reflects the aggregate diversified risk position for the period. Therefore, individual risk factors will not
sum to this total.