WNZL Disclosure Statement – 30 Sep 2020

Westpac
New Zealand
Limited
A
nnual Report and Disclosure Statement
Fo
r the year ended 30 September 2020

This page has been intentionally left blank

Westpac New Zealand Limited 3
Contents
Westpac New Zealand sustainability performance
5
Annual report6
Directors’ statement7
Financial statements
Income statement8Note 16 Deposits and other borrowings
Note 18 Debt issues
36
37
Statement of comprehensive income8Note 17 Other financial liabilities36
Balance sheet9Note 18 Debt issues37
Statement of changes in equity10Note 19 Provisions38
Statement of cash flows11Note 20 Loan capital38
Note 1 Financial statements preparation12Note 21 Share capital40
Note 2 Net interest income17Note 22 Related entities41
Note 3 Non-interest income18Note 23 Derivative financial instruments43
Note 4 Operating expenses19Note 24 Fair values of financial assets and financial liabilities49
Note 5 Auditor’s remuneration20Note 25 Offsetting financial assets and financial liabilities53
Note 6 Impairment charges/(benefits)20Note 26 Lessee disclosures55
Note 7 Income tax expense21
Note 8 Imputation credit account21
Note 27 Credit related commitments, contingent assets and
contingent liabilities
56
Note 9 Trading securities and financial assets measured at FVIS22Note 28 Segment reporting58
Note 10 Investment securities22
Note 11 Loans23
Note 29 Securitisation, covered bonds and other transferred
assets
59
Note 12 Provision for expected credit losses24Note 30 Structured entities61
Note 13 Other financial assets33Note 31 Capital management62
Note 14 Deferred tax assets33Note 32 Financial risk
63
Note 15 Intangible assets34Note 33 Notes to the statement of cash flows79
Registered bank disclosures
i. General information80vi. Credit exposures to connected persons102
ii. Additional financial disclosures85
iii. Asset quality87
vii. Insurance business, securitisation, funds management,
other fiduciary activities, and marketing and distribution of
insurance products
103
iv. Capital adequacy under the internal models based approach,
and regulatory liquidity ratios
92
viii. Risk management policies104
v. Concentration of credit exposures to individual counterparties101
Conditions of registration
109
Independent auditor’s report115

4 Westpac New Zealand Limited
Glossary of terms
Certain information contained in this Disclosure Statement is required by the Registered Bank Disclosure Statements (New Zealand Incorporated
Registered Banks) Order 2014 (as amended) (‘Order’).
In this Disclosure Statement, reference is made to:
– Westpac New Zealand Limited (otherwise referred to as the ‘Bank’);
– Westpac New Zealand Limited and its controlled entities (otherwise referred to as the ‘Banking Group’). Controlled entities of the Bank as at 30
September 2020 are set out in Note 22;
– Westpac Banking Corporation (otherwise referred to as the ‘Ultimate Parent Bank’); and
– Ultimate Parent Bank and its controlled entities (otherwise referred to as the ‘Ultimate Parent Bank Group’).
Words and phrases not defined in this Disclosure Statement, but defined by the Order, have the meaning given by the Order when used in this
Disclosure Statement.

Westpac New Zealand Limited 5
Westpac New Zealand sustainability performance
Igniting financial possibilities
We are taking action to create a better future for the people who bank
with us, work with us, invest in us or are part of our broader
communities. We do this through our core business, and more widely
by using our financial and economic expertise to generate positive
economic, social and environmental outcomes for our customers and
New Zealand.
Our three year 2018-2020 sustainability strategy has come to an end,
and our 2025 Strategy will be launched early 2021.
Our commitment is Manaaki te ao, manaaki te tāngata, e tipu pūtea
ora, and we will continue to help Aotearoa take action on climate
change, support people and communities and help lift financial
wellbeing.
For more information on our approach to sustainability visit
www.westpacsustainability.co.nz.
Sustainability Strategy results for financial year 2020
Grow financial wellbeing – E tipu pūtea ora
Increased economic participation and inclusive prosperity is beneficial
to all. We want all New Zealanders to be financially secure and
independent, enabling them to reach their full potential. We aim to
grow the financial capability of our communities and increase financial
independence by helping Kiwis participate in the economy and grow
their wealth.
2020 targetsProgress
1.20,000 financial education workshop
participants
20,434
participants
2.Introduce a new product or service to tackle
financial exclusion
1

1 complete, 1 in
progress
3.Provide $300m in lending to social
and affordable housing
2
$280m
Highlights for the year ended 30 September 2020 include:
Partnered with MyMahi (an app to help young people become
work-ready) on financial wellbeing.
New Start initiative to ensure that when prisoners are released
they have a valid ID, a bank account, a debit card, and can access
online banking.
Collaborated with New Zealand Housing Foundation to enable
Waikato-Tainui to create a shared equity scheme helping their
tribal members buy their own homes.
SeniorNet partnership to support seniors throughout New
Zealand to be digitally confident and engage with online banking
safely.
Take action on climate change – Manaaki te ao
We want to lead New Zealand’s transition to a resilient, low-emissions
economy that continues to grow to the benefit of future generations.
TargetsProgress
1.Reduce our operational emissions by 30% by
2025 (2019 baseline)
3
19%
2.Convert 100% of our car fleet to
electric vehicles or PHEV
4
by 2025
34%
3.Provide $2 billion in lending to business
customers to climate change solutions as at 30
September 2020
$1.6b
Climate change is a major threat to our environment, economy and
wellbeing. It also presents opportunities for new products and
services, technologies and jobs. We believe business and the financial
sector has a major role to play.
Our strategy is to address climate change with urgency by disclosing,
reducing and offsetting our own emissions, better understanding our
exposure to climate risk and helping our customers manage their
transition to a net zero economy through innovative sustainable
finance structures. We want to ensure capital flows to those parts of
the economy where it is needed most to facilitate that transition
efficiently and effectively.
Highlights for the year ended 30 September 2020 include:
Becoming the first New Zealand bank to be Toitū carbonzero
certified. To achieve this, we are reducing our Carbon emissions
by a further 30% by 2025, and offsetting the remainder by
purchasing New Zealand native permanent forestry carbon
credits.
‘Westpac Warm Up’, offering our home loan customers an
interest-free loan of up to $10,000 to improve their homes’
energy-efficiency by installing heat pumps, solar panels,
ventilation, double glazing and insulation. To date, we have
received 2,531 applications and had $14.45m drawn down.
Entering into a $50 million, four-year sustainability-linked loan
facility with Contact Energy, the first such loan issued by Westpac
NZ and one of the first of its kind in New Zealand.
Enabling Meridian Energy to launch its Green Finance Programme
converting Meridian’s existing retail bonds to green bonds as
certified by the Climate Bonds Standard.
Publishing the Bank’s inaugural Climate Risk Report in line with
the recommendations of the Taskforce for Climate-Related
Financial Disclosure (TCFD).
Co-chairing the Aotearoa Circle’s Sustainable Finance Forum,
which published its Report on making Aotearoa’s financial system
more sustainable. www.theaotearoacircle.nz/sustainablefinance.
Care for people & communities – Manaaki te tāngata
We want to help create thriving New Zealand communities and a
workforce and society where everyone feels valued.
2020 targetsProgress
1.Raise $3 million for Westpac
Rescue Choppers
$3.13m
2.50% Women in Leadership50.4%
Highlights for the year ended 30 September 2020 include:
Receiving the Gender Tick, for initiatives including a gender
inclusive culture, parental leave, safe workplace, flexible work,
equal pay and leadership representation.
We're all in this together – supporting our communities
through COVID-19
We have all been impacted by COVID-19 in different ways. Westpac has
donated an extra $1 million to support New Zealand’s rescue
helicopters, which are facing a serious fundraising shortfall. We know
that lockdown increased stress and so we partnered with Kiwibank to
assist Sir John Kirwan to release his Mentemia mental health app free
of charge to all New Zealanders.
1
One initiative has been completed – Bank accounts for prisoners, and one initiative is in progress.
2
Does not include Kiwibuild or shared equity.
3
Environmental year runs 1 July to 30 June. CO
2
e results include all Westpac business units based in New Zealand. In 2019, we changed the way we measure and report carbon emissions, to align with the
Greenhouse Gas Protocol (2004) and ISO 14064-1:2006 Specification as required by Toitū Envirocare, our carbonzero programme certifier, which also resulted in setting a new 2025 target.
4
Plug-in hybrid electric vehicles. In March 2020 we announced a revised target of 100% conversion by 2025, replacing the prior target of 30% by 2020 which was achieved in FY2019.

6 Westpac New Zealand Limited
Annual report
Pursuant to section 211(3) of the Companies Act 1993, the shareholder of Westpac New Zealand Limited has agreed that the Annual Report of Westpac
New Zealand Limited need not comply with the requirements of paragraphs (a), and (e) to (j) of subsection (1) and subsection (2) of section 211.
Accordingly, there is no information to be included in the Annual Report other than the financial statements for the year ended 30 September 2020
and the independent auditor’s report on those financial statements.
For and on behalf of the Board of Directors:
J.A. Dawson
Chair
20 November 2020
D.A. McLean
Chief Executive
20 November 2020

Westpac New Zealand Limited 7
Directors’ statement
Each Director of the Bank believes, after due enquiry, that, as at the date on which this Disclosure Statement is signed, the Disclosure Statement:
(a) contains all the information that is required by the Order; and
(b) is not false or misleading.
Each Director of the Bank believes, after due enquiry, that over the year ended 30 September 2020:
(a) the Bank has complied with all conditions of registration that applied during that period, except as noted on pages 113 to 114;
(b) credit exposures to connected persons were not contrary to the interests of the Banking Group; and
(c) the Bank had systems in place to monitor and control adequately the Banking Group’s material risks, including credit risk, concentration of
credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operational risk and other business risks, and that those systems were
being properly applied.
This Disclosure Statement has been signed by all the Directors:
Janice Dawson
David McLean
Malcolm Bailey
Philippa Greenwood
Jonathan Mason
Mary Quin
Dated this 20
th
day of November 2020

Income statement for the year ended 30 September 2020
8 Westpac New Zealand Limited
THE BANKING GROUP
$ millionsNote20202019
Interest income:
Calculated using the effective interest rate method2 3,511 3,976
Other2 29 35
Total Interest income2 3,540 4,011
Interest expense2 (1,665) (2,068)
Net interest income 1,875 1,943
Net fees and commissions income3 228 281
Other income3 15 48
Net operating income before operating expenses and impairment charges 2,118 2,272
Operating expenses4 (1,030) (961)
Impairment (charges)/benefits6 (320) 10
Profit before income tax 768 1,321
Income tax expense7 (218) (357)
Net profit attributable to the owners of the Banking Group 550 964
The above income statement should be read in conjunction with the accompanying notes.
Statement of comprehensive income for the year ended 30 September 2020
THE BANKING GROUP
$ millions20202019
Net profit attributable to the owners of the Banking Group 550 964
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Gains/(losses) recognised in equity on:
Investment securities
74 (8)
Cash flow hedging instruments
(81) (106)
Transferred to income statement:
Cash flow hedging instruments
80 77
Income tax on items taken to or transferred from equity:
Investment securities
(21) 3
Cash flow hedging instruments
- 8
Items that will not be reclassified subsequently to profit or loss
Remeasurement of defined benefit obligation recognised in equity (net of tax)
(4) (10)
Other comprehensive income for the year (net of tax)
48 (36)
Total comprehensive income attributable to the owners of the Banking Group
598 928
The above statement of comprehensive income should be read in conjunction with the accompanying notes.

Balance sheet as at 30 September 2020
Westpac New Zealand Limited 9
THE BANKING GROUP
$ millionsNote20202019
Assets
Cash and balances with central banks33 4,360 1,864
Collateral paid 148 168
Trading securities and financial assets measured at fair value through income statement ('FVIS')9 2,437 1,661
Derivative financial instruments 23 599 616
Investment securities10 5,021 4,469
Loans11 87,959 84,160
Other financial assets13 196 178
Due from related entities22 1,094 2,502
Property and equipment 398 137
Deferred tax assets14 280 174
Intangible assets15 647 636
Other assets 53 42
Total assets 103,192 96,607
Liabilities
Collateral received 419 473
Deposits and other borrowings16 73,970 65,606
Other financial liabilities17 287 455
Derivative financial instruments 23 293 257
Debt issues18 15,799 17,846
Current tax liabilities 73 72
Provisions19 206 144
Other liabilities 356 96
Total liabilities excluding related entities liabilities 91,403 84,949
Due to related entities22 1,487 1,632
Loan capital20 2,612 2,609
Total related entities liabilities 4,099 4,241
Total liabilities 95,502 89,190
Net assets 7,690 7,417
Shareholder's equity
Share capital21 7,300 7,300
Reserves (25) (77)
Retained profits 415 194
Total shareholder's equity 7,690 7,417
The above balance sheet should be read in conjunction with the accompanying notes.
Signed on behalf of the Board of Directors.
J.A. DawsonJ.P. Mason
20 November 202020 November 2020

Statement of changes in equity for the year ended 30 September 2020
10 Westpac New Zealand Limited
THE BANKING GROUP
Reserves
Available-
for-saleInvestmentCash Flow
Share SecuritiesSecuritiesHedgeRetained
$ millionsCapital ReserveReserveReserveProfitsTotal
As at 30 September 2018 5,100 9 - (60) 2,229 7,278
Impact on adoption of new accounting standards - (9) 9 - (24) (24)
As at 1 October 2018 (restated) 5,100 - 9 (60) 2,205 7,254
Year ended 30 September 2019
Net profit attributable to the owners of the Banking Group - - - - 964 964
Net gains/(losses) from changes in fair value - - (8) (106) - (114)
Income tax effect - - 3 30 - 33
Transferred to income statement - - - 77 - 77
Income tax effect - - - (22) - (22)
Remeasurement of defined benefit obligations - - - - (14) (14)
Income tax effect - - - - 4 4
Total comprehensive income for the year
ended 30 September 2019 - - (5) (21) 954 928
Transactions with owners:
Ordinary share capital issued (refer to Note 21) 2,200 - - - - 2,200
Dividends paid on ordinary shares - - - - (2,965) (2,965)
As at 30 September 2019 7,300 - 4 (81) 194 7,417
Year ended 30 September 2020
Net profit attributable to the owners of the Banking Group - - - - 550 550
Net gains/(losses) from changes in fair value - - 74 (81) - (7)
Income tax effect - - (21) 22 - 1
Transferred to income statement - - - 80 - 80
Income tax effect - - - (22) - (22)
Remeasurement of defined benefit obligations - - - - (5) (5)
Income tax effect - - - - 1 1
Total comprehensive income for the year
ended 30 September 2020 - - 53 (1) 546 598
Transactions with owners:
Ordinary share capital issued (refer to Note 21) - - - - -
-
Dividends paid on ordinary shares (refer to Note 21) - - - - (325) (325)
As at 30 September 2020 7,300 - 57 (82) 415 7,690
The above statement of changes in equity should be read in conjunction with the accompanying notes.

Statement of cash flows for the year ended 30 September 2020
Westpac New Zealand Limited 11
THE BANKING GROUP
$ millionsNote20202019
Cash flows from operating activities
Interest received 3,511 4,042
Interest paid (1,836) (2,095)
Non-interest income received 241 289
Operating expenses paid (850) (817)
Income tax paid (342) (373)
Cash flows from operating activities before changes in operating assets and liabilities 724 1,046
Net (increase)/decrease in:
Collateral paid 20 (98)
Trading securities and financial assets measured at FVIS (773) (510)
Loans (4,018) (3,714)
Other financial assets (39) 21
Due from related entities 760 (747)
Other assets (5) -
Net increase/(decrease) in:
Collateral received (54) (3)
Deposits and other borrowings 8,364 2,504
Other financial liabilities (49) (83)
Due to related entities 293 33
Other liabilities 1 -
Net movement in external and related entity derivative financial instruments 382 417
Net cash provided by/(used in) operating activities33 5,606 (1,134)
Cash flows from investing activities
Purchase of investment securities (2,418) (2,009)
Proceeds from investment securities 1,909 1,387
Proceeds from disposal of associates - 48
Purchase of capitalised computer software (83) (62)
Purchase of property and equipment (29) (35)
Net cash provided by/(used in) investing activities (621) (671)
Cash flows from financing activities
Issue of ordinary share capital21 - 2,200
Net movement in due to related entities (100) (625)
Proceeds from debt issues18 5,175 8,707
Repayments of debt issues18 (7,193) (5,001)
Payments for the principal portion of lease liabilities (46) -
Dividends paid to ordinary shareholders21 (325) (2,965)
Net cash provided by/(used in) financing activities (2,489) 2,316
Net increase/(decrease) in cash and cash equivalents 2,496 511
Cash and cash equivalents at the beginning of the year 1,864 1,353
Cash and cash equivalents at the end of the year33 4,360 1,864
The above statement of cash flows should be read in conjunction with the accompanying notes. Details of the reconciliation of net cash provided
by/(used in) operating activities to net profit are provided in Note 33.

Notes to the financial statements
12 Westpac New Zealand Limited
Note 1 Financial statements preparation
In this Disclosure Statement, reference is made to:
– Westpac New Zealand Limited (otherwise referred to as the ‘Bank’);
– Westpac New Zealand Limited and its controlled entities (otherwise referred to as the ‘Banking Group’). Controlled entities of the Bank as at 30
September 2020 are set out in Note 22;
– Westpac Banking Corporation (otherwise referred to as the ‘Ultimate Parent Bank’); and
– Ultimate Parent Bank and its controlled entities (otherwise referred to as the ‘Ultimate Parent Bank Group’).
The Bank was incorporated as Westpac New Zealand Limited under the Companies Act 1993 (Company Number 1763882) on 14 February 2006. The
head office of the Bank is situated at Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand and the address for service of
process on the Bank is Westpac on Takutai Square, 53 Galway Street, Auckland 1010, New Zealand.
The Bank is a locally incorporated subsidiary of the Ultimate Parent Bank undertaking the Ultimate Parent Bank’s New Zealand consumer and
business banking operations.
The consolidated financial statements are for the Banking Group.
These financial statements were authorised for issue by the Board of Directors of the Bank (the ‘Board’) on 20 November 2020. The Board has the
power to amend and reissue the financial statements.
The principal accounting policies are set out below and in the relevant notes to the financial statements. These accounting policies provide details of
the accounting treatments adopted for complex balances and where accounting standards provide policy choices. These policies have been
consistently applied to all the years presented, unless otherwise stated.
a.Basis of preparation
(i) Basis of accounting
These financial statements are general purpose financial statements prepared in accordance with:
the requirements of the Financial Markets Conduct Act 2013; and
the requirements of the Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014 (as amended)
(‘Order’).
These financial statements comply with Generally Accepted Accounting Practice, applicable New Zealand equivalents to International Financial
Reporting Standards (‘NZ IFRS’) and other authoritative pronouncements of the External Reporting Board, as appropriate for for-profit entities.
These financial statements also comply with International Financial Reporting Standards, as issued by the International Accounting Standards Board
(‘IASB’).
All amounts in these financial statements have been rounded to the nearest million dollars unless otherwise stated.
(ii) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by applying fair value accounting to financial
assets and financial liabilities (including derivative instruments) measured at FVIS or in other comprehensive income (‘OCI’).
(iii) Comparative revisions
Comparative information has been restated where appropriate to conform to changes in presentation in the current year and to enhance
comparability. Where there has been a material restatement of comparative information the nature of, and the reason for, the restatement is
disclosed in the relevant note or below.
Restatement of related party balances
Comparative information for the year ended 30 September 2019 has been restated to correctly reflect exposures to the overseas bank in relation to
customer foreign currency deposits which were overstated. The impact of the restatement is a decrease of $69m in due from related entities and an
equivalent decrease in due to related entities.
(iv) Standards adopted during the year ended 30 September 2020
NZ IFRS 16 Leases
NZ IFRS 16 Leases (‘NZ IFRS 16’) was adopted by the Banking Group on 1 October 2019. NZ IFRS 16 requires all operating leases of greater than 12
months duration to be presented on balance sheet by the lessee as a right-of-use (‘ROU’) asset and lease liability. There are no significant changes
to lessor accounting.
The Banking Group adopted the standard using the simplified approach to transition with no restatement of comparative information and no effect
on retained earnings.
The lease liabilities are measured at the present value of the remaining lease payments, discounted at the lessee’s incremental borrowing rate at 1
October 2019. On transition to the new standard, the lease liability recognised in other liabilities was $292 million. The associated ROU assets were
measured at an amount equal to the lease liability. The ROU assets are recognised in property and equipment.

Notes to the financial statements
Westpac New Zealand Limited 13
Note 1 Financial statements preparation (continued)
All leases on balance sheet give rise to a combination of interest expense on the lease liability and depreciation of the ROU asset. Interest expense is
recognised in net interest income on an effective yield basis. Depreciation expense is recognised in operating expenses on a straight-line basis over
the lease term.
Extension options are included in a number of lease contracts. The extension options are only included in the lease term if the lease is reasonably
certain to be extended, which is assessed by the Banking Group at the lease commencement date. The assessment is reviewed if a significant event
or significant change in circumstances occurs which affects this assessment and is within the control of the Banking Group. The Banking Group
considered the impact of COVID-19 on our assessment of extension options and concluded that they were unchanged. The Banking Group also
considered the impact of COVID-19 on the carrying value of the ROU asset and determined there was no impairment.
The Banking Group used the incremental borrowing rate based on the remaining maturity of leases at the date of transition as the discount rate
when determining present value. The weighted average incremental borrowing rate applied was 2.40%.
The table below shows the reconciliation of operating lease commitments disclosed as at 30 September 2019 to the lease liability recognised on 1
October 2019:
THE BANKING GROUP
$ millions
Operating lease commitments at 30 September 2019 306
Recognition exemption for short-term leases
(2)
Adjustment for extension options reasonably certain to be exercised
21
Undiscounted lease payments as at 30 September 2019 325
Effect of discounting (weighted average incremental borrowing rate of 2.40%) (33)
Lease liability as at 1 October 2019 292
NZ IFRIC Interpretation 23 Uncertainty over Income Tax Treatments
NZ IFRIC Interpretation 23 Uncertainty over Income Tax Treatments (‘NZ IFRIC 23’) was adopted by the Banking Group on 1 October 2019 and
clarifies the recognition and measurement criteria in NZ IAS 12 Income Taxes where there is uncertainty over income tax treatments, and requires an
assessment of each uncertain tax position as to whether it is probable that a taxation authority will accept the position.
Where it is not considered probable, the effect of the uncertainty will be reflected in determining the relevant taxable profit or loss, tax bases,
unused tax losses and unused tax credits or tax rates. The amount will be determined as either the single most likely amount or the sum of the
probability weighted amounts in a range of possible outcomes, whichever better predicts the resolution of the uncertainty. Judgements will be
reassessed as and when new facts and circumstances are presented.
NZ IFRIC 23 did not have a material impact on the Banking Group.
Interest Rate Benchmark Reform
Interest Rate Benchmark Reform - amendments to NZ IFRS 9 Financial Instruments (‘NZ IFRS 9’), NZ IAS 39 Financial Instruments: Recognition and
Measurement (‘NZ IAS 39’) and NZ IFRS 7 Financial Instruments: Disclosures (‘NZ IFRS 7’) was early adopted, as permitted by the standard, by the
Banking Group on 1 October 2019. These amendments allow the Banking Group to apply certain exceptions to the standard hedging requirements in
respect of hedge relationships that are impacted by a market-wide interest rate benchmark reform.
The exceptions allowed by the amendments are being applied to the Banking Group’s London Interbank Offered Rate (‘LIBOR’) linked hedge
Relationships that mature after the LIBOR discontinuance date of 31 December 2021. Note 23 provides further information regarding the hedging
relationships affected by the IBOR reform.
Refer to Note 1 (e) – Future developments in accounting standards for details of the accounting standard issued but not yet effective dealing with
phase 2 of the IBOR reform.

Notes to the financial statements
14 Westpac New Zealand Limited
Note 1 Financial statements preparation (continued)
(v) Business combinations
Business combinations are accounted for using the acquisition method of accounting. Acquisition cost is measured as the aggregate of the fair value
at the date of acquisition of the assets given, equity instruments issued or liabilities incurred or assumed. Acquisition-related costs are expensed as
incurred (except for those costs arising on the issue of equity instruments which are recognised directly in equity).
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at fair value on the acquisition
date. Goodwill is measured as the excess of the acquisition cost, the amount of any non-controlling interest and the fair value of any previous
Banking Group’s equity interest in the acquiree, over the fair value of the identifiable net assets acquired.
(vi) Foreign currency translation
Functional and presentational currency
The consolidated financial statements are presented in New Zealand dollars which is the Banking Group’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange (‘FX’) gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in OCI for
qualifying cash flow hedges.
(vii) Reserves
Investment securities reserve
This comprises the changes in the fair value of debt securities measured at fair value through other comprehensive income (‘FVOCI’) (except for
interest income, impairment charges and FX gains and losses which are recognised in the income statement), net of any related hedge accounting
adjustments and tax. These changes are transferred to non-interest income in the income statement when the asset is disposed.
Cash flow hedge reserve
This comprises the fair value gains and losses associated with the effective portion of designated cash flow hedging instruments, net of tax.
b.Principles of consolidation
The Banking Group subsidiaries are entities which the Bank controls and consolidates as it is exposed to, or has rights to, variable returns from the
entities, and can affect those returns through its power over the entities.
All transactions between entities within the Banking Group are eliminated. Subsidiaries are fully consolidated from the date on which control
commences and are de-consolidated from the date that control ceases.

Notes to the financial statements
Westpac New Zealand Limited 15
Note 1 Financial statements preparation (continued)
c.Financial assets and financial liabilities
(i) Recognition
Purchases and sales by regular way of financial assets, except for loans and receivables, are recognised on trade-date; the date on which the
Banking Group commits to purchase or sell the asset. Loans and receivables are recognised on settlement date, when cash is advanced to the
borrowers.
Financial liabilities are recognised when an obligation arises.
(ii) Derecognition
Financial assets are derecognised when the rights to receive cash flows from the asset have expired, or when the Banking Group has either
transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full under a ‘pass through’
arrangement and transferred substantially all the risks and rewards of ownership.
There may be situations where the Banking Group has partially transferred the risks and rewards of ownership but has neither transferred nor
retained substantially all the risks and rewards of ownership. In such situations, the asset continues to be recognised in the balance sheet to the
extent of the Banking Group’s continuing involvement in the asset.
Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. Where an existing financial liability is replaced by
another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, the exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability, with the difference in the respective carrying
amounts recognised in the income statement.
The terms are deemed to be substantially different if the discounted present value of the cashflows under the new terms (discounted using the
original effective interest rate) is at least 10% different from the discounted present value of the remaining cash flows of the original financial
liability. Qualitative factors such as a change in the currency the instrument is denominated in, a change in the interest rate from fixed to floating
and conversion features are also considered.
(iii) Classification and measurement
Financial assets are grouped into the following classes: cash and balances with central banks, collateral paid, trading securities and financial assets
measured at FVIS, derivative financial instruments, investment securities, loans, other financial assets and due from related entities.
Financial assets
Financial assets are classified based on a) the business model within which the assets are managed, and b) whether the contractual cash flows of
the instrument represent solely payments of principal and interest (‘SPPI’).
The Banking Group determines the business model at the level that reflects how groups of financial assets are managed. When assessing the
business model the Banking Group considers factors including how performance and risks are managed, evaluated and reported and the frequency
and volume of, and reason for, sales in previous periods and expectations of sales in future periods.
When assessing whether contractual cash flows are SPPI, interest is defined as consideration primarily for the time value of money and the credit
risk of the principal outstanding. The time value of money is defined as the element of interest that provides consideration only for the passage of
time and not consideration for other risks or costs associated with holding the financial asset. Terms that could change the contractual cash flows
so that they may not meet the SPPI criteria include contingent and leverage features, non-recourse arrangements, and features that could modify
the time value of money.
Debt instruments
If the debt instruments have contractual cash flows which represent SPPI on the principal balance outstanding they are classified at:
amortised cost if they are held within a business model whose objective is achieved through holding the financial asset to collect these cash
flows; or
FVOCI if they are held within a business model whose objective is achieved both through collecting these cash flows or selling the financial asset;
or
FVIS if they are held within a business model whose objective is achieved through selling the financial asset.
Debt instruments are measured at FVIS where the contractual cash flows do not represent SPPI on the principal balance outstanding or where it is
designated at FVIS to eliminate or reduce an accounting mismatch.
Debt instruments at amortised cost are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
rate method. They are presented net of provision for expected credit losses (‘ECL’) determined using the ECL model. Refer to Notes 6 and 12 for
further details.
Debt instruments at FVOCI are measured at fair value with unrealised gains and losses recognised in OCI except for interest income, impairment
charges and FX gains and losses, which are recognised in the income statement. Impairment on debt instruments at FVOCI is determined using the
ECL model and is recognised in the income statement with a corresponding amount in OCI. There is no reduction of the carrying value of the debt
security which remains at fair value.

Notes to the financial statements
16 Westpac New Zealand Limited
Note 1 Financial statements preparation (continued)
The cumulative gain or loss recognised in OCI is subsequently recognised in the income statement when the instrument is derecognised.
Debt instruments at FVIS are measured at fair value with subsequent changes in fair value recognised in the income statement.
Financial liabilities
Financial liabilities are grouped into the following classes: collateral received, deposits and other borrowings, other financial liabilities, derivative
financial instruments, debt issues, due to related entities and loan capital.
Financial liabilities are measured at amortised cost if they are not held for trading or designated at FVIS, otherwise they are measured at FVIS.
Financial assets and financial liabilities measured at FVIS are recognised initially at fair value. All other financial assets and financial liabilities are
recognised initially at fair value plus or minus directly attributable transaction costs respectively.
Further details of the accounting policy for each category of financial asset or financial liability mentioned above is set out in the note for the relevant
item.
The Banking Group’s policies for determining the fair value of financial assets and financial liabilities are set out in Note 24.
d.Critical accounting assumptions and estimates
Applying the Banking Group’s accounting policies requires the use of judgement, assumptions and estimates which impact the financial information.
The significant assumptions and estimates used are discussed in the relevant notes below.
Note 7Income tax expense
Note 12Provision for expected credit losses
Note 14Deferred tax assets
Note 15Intangible assets
Note 24Fair value of financial assets and financial liabilities
Impact of COVID-19
The COVID-19 pandemic and the measures put in place domestically and globally to control the spread of the virus have had a significant impact on
global economies and financial markets. As a result, this has increased the uncertainty and judgement required in relation to our critical accounting
assumptions and estimates, primarily relating to:
ECL; and
recoverable amount assessments of intangible assets.
As there is a higher than usual degree of uncertainty associated with these assumptions and estimates, the actual economic conditions are likely to
be different from those forecast which may significantly impact accounting estimates included in these financial statements. The impact of COVID-
19 is discussed further in each of the related notes.
e.Future developments in accounting standards
On 17 September 2020, the External Reporting Board issued Interest Rate Benchmark Reform – Phase 2 which makes further amendments to NZ
IFRS 9, NZ IAS 39, and NZ IFRS 7 resulting from IBOR reform. The standard is effective for the 30 September 2022 year end unless early adopted. The
amendments:
allow the Banking Group to account for a change in contractual cash flows of a financial instrument or lease liability that result specifically from
IBOR reform by updating the effective interest rate rather than recognising a modification gain or loss;
allow the Banking Group to continue hedge accounting and not trigger a de-designation for certain changes arising specifically from IBOR
reform; and
require additional disclosures for financial instruments linked to LIBOR not yet converted to ARR, changes to risk management strategies
arising from IBOR reform, and management of transition to ARR.
These amendments will impact the Banking Group’s financial instruments that reference a LIBOR rate. The Banking Group is currently assessing the
impact of the standard and considering whether to early adopt the amendments as permitted by the standard.
A revised Conceptual Framework (‘Framework’) was issued on 10 May 2018. This will be effective for the Banking Group for the 30 September 2021
financial year. The revised Framework includes new definitions and recognition criteria for assets, liabilities, income and expenses and other relevant
financial reporting concepts. The changes are not expected to have a material impact on the Banking Group.
Other amendments to existing standards that are not yet effective are not expected to have a material impact on the Banking Group.

Notes to the financial statements
Westpac New Zealand Limited 17
Note 2 Net interest income
Accounting policy
Interest income and interest expense for all interest earning financial assets and interest bearing financial liabilities at amortised cost or FVOCI,
detailed within the following table, are recognised using the effective interest rate method. Net income from Treasury’s interest rate and liquidity
management activities is included in net interest income.
The effective interest rate method calculates the amortised cost of a financial instrument by discounting the financial instrument’s estimated
future cash receipts or payments to their present value and allocates the interest income or interest expense, including any fees, costs, premiums
or discounts integral to the instrument, over its expected life.
Interest income is calculated based on the gross carrying amount of financial assets in stages 1 and 2 of the Banking Group’s ECL model and on the
carrying amount net of the provision for ECL for financial assets in stage 3. Refer to Note 12 for further details of the Banking Group’s ECL model.
THE BANKING GROUP
$ millions
Note20202019
Interest income
Calculated using the effective interest rate method
Cash and balances with central banks 13 21
Collateral paid 1 4
Investment securities 102 138
Loans 3,393 3,809
Due from related entities22 2 3
Other interest income - 1
Total interest income calculated using the effective interest rate method 3,511 3,976
Other
Trading securities and financial assets measured at FVIS 22 29
Due from related entities22 7 6
Total other 29 35
Total interest income 3,540 4,011
Interest expense
Calculated using the effective interest rate method
Collateral received 3 7
Deposits and other borrowings 918 1,289
Debt issues 244 285
Due to related entities22 18 31
Loan capital22 110 137
Other interest expense 5 4
Total interest expense calculated using the effective interest rate method 1,298 1,753
Other
Deposits and other borrowings 18 18
Debt issues 33 22
Due to related entities22 - 1
Other interest expense
1, 2
316 274
Total other 367 315
Total interest expense 1,665 2,068
Net interest income 1,875 1,943
1
Included in other interest expense for 30 September 2020 is $7 million relating to interest expense on lease liabilities due to the adoption of NZ IFRS 16 from 1
October 2019. Comparatives have not been restated. Refer to Notes 1 and 26 for further details.
2
Includes the net impact of Treasury's interest rate and liquidity management activities.

Notes to the financial statements
18 Westpac New Zealand Limited
Note 3 Non-interest income
Accounting policy
Non-interest income includes net fees and commissions income and other income.
Net fees and commissions income
When another party is involved in providing goods or services to a Banking Group customer, the Banking Group assesses whether the nature of the
arrangement with its customer is as a principal provider or an agent of another party. Where the Banking Group is acting as an agent for another
party, the income earned by the Banking Group is the net consideration received (i.e. the gross amount received from the customer less amounts
paid to a third party provider). As an agent, the net consideration represents fees and commissions income for facilitating the transaction
between the customer and the third party provider with primary responsibility for fulfilling the contract.
Fees and commissions income
Fees and commissions income is recognised when the performance obligation is satisfied by transferring the promised good or service to the
customer. Fees and commissions income includes facility fees, transaction fees and commissions and other non-risk fee income.
Facility fees include certain line fees, annual credit card fees and fees for providing customer bank accounts. They are recognised over the term of
the facility/period of service on a straight line basis.
Transaction fees and commissions are earned for facilitating banking transactions such as FX fees, telegraphic transfers and issuing bank cheques.
Fees and commissions for these one-off transactions are recognised once the transaction has been completed. Transaction fees and commissions
are also recognised for credit card transactions including interchange fees net of scheme charges. These are recognised once the transaction has
been completed, however, a component of interchange fees received is deferred as unearned income as the Banking Group has a future service
obligation to customers under the Banking Group’s credit card reward programmes.
Other non-risk fee income includes advisory and underwriting fees which are recognised when the related service is completed.
Income which forms an integral part of the effective interest rate of a financial instrument is recognised using the effective interest method and
recorded in interest income (for example, loan origination fees).
Fees and commissions expenses
Fees and commissions expenses include incremental external costs that vary directly with the provision of goods or services to customers. An
incremental cost is one that would not have been incurred if a specific good or service had not been provided to a specific customer. Fees and
commissions expenses which form an integral part of the effective interest rate of a financial instrument are recognised using the effective interest
method and recorded in net interest income. Fees and commissions expenses include the costs associated with credit card loyalty programmes
which are recognised as an expense when the services are provided on the redemption of points as well as merchant transaction costs.
THE BANKING GROUP
$ millions20202019
Net fees and commissions income
Facility fees 54 50
Transaction fees and commissions
1
212 268
Other non-risk fee income
2
21 24
Fees and commissions income 287 342
Credit card loyalty programmes (33) (32)
Transaction fees and commissions related expenses (26) (29)
Fees and commissions expenses (59) (61)
Net fees and commissions income 228 281
Other income
Net ineffectiveness on qualifying hedges 8 2
Other non-interest income 7 46
Total other income 15 48
Total non-interest income 243 329
1
Includes transaction fees and commissions due from related entities. Refer to Note 22.
2
Includes management fees due from related entities. Refer to Note 22.
Deferred income in relation to the credit card loyalty programmes for the Banking Group was $31 million as at 30 September 2020 (30 September
2019: $31 million). This will be recognised as fees and commissions income as the credit card reward points are redeemed.
There were no other material contract assets or contract liabilities for the Banking Group.

Notes to the financial statements
Westpac New Zealand Limited 19
Note 3 Non-interest income (continued)
Non-interest income in scope of NZ IFRS 15 Revenue from Contracts with Customers can be further disaggregated into the following operating
segments and is consistent with the segment descriptions detailed in Note 28.
THE BANKING GROUP
$ millions
Consumer
Banking and
Wealth
Commercial,
Corporate and
Institutional
Investments and
Insurance
Reconciling
ItemsTotal
Year ended 30 September 2020
Fees and commissions income
Facility fees 33 16 - 5 54
Transaction fees and commissions 133 85 - (6) 212
Other non-risk fee income 13 14 - (6) 21
Fees and commissions income 179 115 - (7) 287
Fees and commissions expenses (59) - - - (59)
Net fees and commissions income 120 115 - (7) 228
Year ended 30 September 2019 (restated)
Fees and commissions income
Facility fees 28 15 - 7 50
Transaction fees and commissions 183 95 - (10) 268
Other non-risk fee income 15 14 - (5) 24
Fees and commissions income 226 124 - (8) 342
Fees and commissions expenses (62) - - 1 (61)
Net fees and commissions income 164 124 - (7) 281
Note 4 Operating expenses5967-2 04-18
THE BANKING GROUP
$ millionsNote20202019
Staff expenses 514 491
Operating lease rentals 25 58
Depreciation
1
99 39
Technology services and telecommunications 70 92
Purchased services 119 111
Software amortisation costs 66 55
Related entities - management fees22 9 4
Other 128 111
Total operating expenses 1,030 961
1
These balances include depreciation of ROU assets of $61 million due to the adoption of NZ IFRS 16 from 1 October 2019. Comparatives have not been restated.
Refer to Notes 1 and 26 for further details.

Notes to the financial statements
20 Westpac New Zealand Limited
Note 5 Auditor’s remuneration5967-2 04-18
THE BANKING GROUP
$'000s20202019
Audit and audit related services
Audit and review of financial statements
1
2,711 2,295
Other audit related services
2
361 224
Total remuneration for audit and other audit related services 3,072 2,519
Other services - -
Total remuneration for non-audit services - -
Total remuneration for audit, other audit related services and non-audit services 3,072 2,519
1
Fees for the annual audit of the financial statements, the review or other procedures performed on the interim financial statements and Sarbanes-Oxley reporting
undertaken in the role of auditor.
2
Assurance or agreed upon procedures provided on certain financial information performed in the role of auditor (or where most appropriate to be performed by
the auditor), being the issue of comfort letters and agreed procedures reports in relation to debt issuance programmes.
It is the Banking Group’s policy to engage the external auditor on assignments additional to their statutory audit duties only if their independence
is not either impaired or seen to be impaired, and where their expertise and experience with the Banking Group is important.
Note 6 Impairment charges/(benefits)
Accounting policy
Impairment charges are based on an expected loss model which measures the difference between the current carrying amount and the present value
of expected future cash flows taking into account past experience, current conditions and multiple probability-weighted macroeconomic scenarios for
reasonably supportable future economic conditions. Further details of the calculation of ECL and the critical accounting assumptions and estimates
relating to impairment charges are included in Note 12.
Impairment charges are recognised in the income statement, with a corresponding amount recognised as follows:
Loans at amortised cost: as a reduction of the carrying value of the financial asset through an offsetting provision account (refer to Note 12);
Investment securities: in reserves in OCI with no reduction of the carrying value of the debt security (refer to the statement of changes in equity);
and
Credit commitments: as a provision (refer to Note 19).
Uncollectable loans
A loan may become uncollectable in full or part if, after following the Banking Group’s loan recovery procedures, the Banking Group remains unable to
collect that loan’s contractual repayments. Uncollectable amounts are written off against their related provision for ECL, after all possible repayments
have been received.
Where loans are secured, amounts are generally written off after receiving the proceeds from the security, or in certain circumstances, where the net
realisable value of the security has been determined and this indicates that there is no reasonable expectation of full recovery, write-off may be earlier.
Unsecured consumer loans are generally written off after 180 days past due.
The Banking Group may subsequently be able to recover cash flows from loans written off. In the period which these recoveries are made, they are
recognised in the income statement.
THE BANKING GROUP
$ millions20202019
Provisions raised/(released):
Performing 205 (35)
Non-performing 105 (3)
Bad debts written-off/(recovered) directly to the income statement 10 28
Impairment charges/(benefits) 320 (10)
of which relates to:
Loans and credit commitments 320 (10)
Impairment charges/(benefits) 320 (10)
Impairment charges/(benefits) on all other financial assets are not material to the Banking Group. Refer to Note 12 for details on the impact of
COVID-19 on the provision for ECL.

Notes to the financial statements
Westpac New Zealand Limited 21
Note 7 Income tax expense
Accounting policy
The income tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it
relates to items recognised directly in OCI, in which case it is recognised in the statement of comprehensive income.
Current tax is the tax payable for the year using enacted or substantively enacted tax rates and laws. Current tax also includes adjustments to tax
payable for previous years.
Goods and services tax (‘GST’)
Revenue, expenses and assets are recognised net of GST except to the extent that GST is not recoverable from the New Zealand Inland Revenue.
In these circumstances, GST is recognised as part of the expense or the cost of the asset.
Critical accounting assumptions and estimates
Significant judgement is required in determining the current tax liability. There may be transactions with uncertain tax outcomes and provisions
are determined based on the expected outcomes.
THE BANKING GROUP
$ millions
2020
2019
Income tax expense
Current tax:
Current year 324 350
Prior year adjustments (1) 4
Deferred tax (refer to Note 14)
Current year (106) 8
Prior year adjustments
1 (5)
Total income tax expense
218
357
Profit before income tax 768 1,321
Tax calculated at tax rate of 28%
215 370
Income not subject to tax
- (12)
Expenses not deductible for tax purposes
3 -
Prior year adjustments
- (1)
Total income tax expense 218 357
The effective tax rate for the year ended 30 September 2020 was 28.4% (30 September 2019: 27.0%).
Note 8 Imputation credit account
THE BANKING GROUP
$ millions20202019
Imputation credits available for use in subsequent reporting periods
1,244 1,109

Notes to the financial statements
22 Westpac New Zealand Limited
Note 9 Trading securities and financial assets measured at FVIS
Accounting policy
Trading securities
Trading securities include actively traded debt (government, semi-government and other) and those acquired for sale in the near term and are
held at fair value.
Reverse repurchase agreements
Securities purchased under these agreements are not recognised in the balance sheet, as the Banking Group has not obtained the risks and
rewards of ownership. The cash consideration paid is recognised as a reverse repurchase agreement, which forms part of a trading portfolio that
is measured at fair value.
Gains and losses on these financial assets are recognised in the income statement. Interest earned from debt securities is recognised in interest
income (refer to Note 2).
THE BANKING GROUP
$ millions20202019
Government and semi-government securities
2,296 1,064
Other debt securities
141
486
Reverse repurchase agreements
-
111
Total trading securities and financial assets measured at FVIS 2,437 1,661
Note 10 Investment securities
Accounting policy
Investment securities include debt securities (government and other) that are measured at FVOCI. These instruments are classified based on the
criteria disclosed under the heading “Financial assets and financial liabilities” in Note 1.
Debt securities measured at FVOCI
Include debt instruments that have contractual cash flows which represent SPPI on the principal balance outstanding and they are held within a
business model whose objective is achieved both through collecting these cash flows or selling the financial asset.
These securities are measured at fair value with gains and losses recognised in OCI except for interest income, impairment charges and FX gains
and losses which are recognised in the income statement.
Impairment is measured using the same ECL model applied to financial assets measured at amortised cost. Impairment is recognised in the
income statement with a corresponding amount in OCI with no reduction of the carrying value of the debt security which remains at fair value.
Refer to Note 12 for further details.
The cumulative gain or loss recognised in OCI is subsequently recognised in the income statement when the instrument is disposed.
THE BANKING GROUP
$ millions20202019
Government and semi-government securities
3,8442,599
Other debt securities1,1771,870
Total investment securities5,0214,469

Notes to the financial statements
Westpac New Zealand Limited 23
Note 11 Loans
Accounting policy
Loans are financial assets initially recognised at fair value plus directly attributable transaction costs and fees.
Loans are subsequently measured at amortised cost using the effective interest rate method where they have contractual cash flows which
represent SPPI on the principal balance outstanding and they are held within a business model whose objective is achieved through holding the
loans to collect these cash flows. They are presented net of any provision for ECL.
Loan products that have both mortgage and deposit facilities are presented gross in the balance sheet, segregating the asset and liability
component, because they do not meet the criteria to be offset. Interest earned on these products is presented on a net basis in the income
statement as this reflects how the customer is charged.
The following table shows loans disaggregated by types of credit exposure:
THE BANKING GROUP
$ millions20202019
Residential mortgages 55,212 51,487
Other retail 3,299 3,753
Corporate 29,957 29,124
Other
92 111
Total gross loans 88,560 84,475
Provision for ECL on loans (refer to Note 12) (601) (315)
Total net loans 87,959 84,160

Notes to the financial statements
24 Westpac New Zealand Limited
Note 12 Provision for expected credit losses
Accounting policy
Note 6 provides details of impairment charges.
Impairment under NZ IFRS 9 applies to all financial assets at amortised cost, investment securities and credit commitments.
The ECL determined under NZ IFRS 9 is recognised as follows:
Loans at amortised cost: as a reduction of the carrying value of the financial asset through an offsetting provision account (refer to Note 11);
Investment securities: in reserves in OCI with no reduction of the carrying value of the debt security itself (refer to the statement of changes
in equity); and
Credit commitments: as a provision (refer to Note 19).
Measurement
The Banking Group calculates the provision for ECL based on a three stage approach. ECL are a probability-weighted estimate of the cash
shortfalls expected to result from defaults over the relevant timeframe. They are determined by evaluating a range of possible outcomes and
taking into account the time value of money, past events, current conditions and forecasts of future economic conditions.
The models use three main components to determine the ECL (as well as the time value of money) including:
Probability of default (‘PD’): the probability that a counterparty will default;
Loss given default (‘LGD’): the loss that is expected to arise in the event of a default; and
Exposure at default (‘EAD’): the estimated outstanding amount of credit exposure at the time of the default.
Model stages
The three stages are as follows:
Stage 1: 12 months ECL - performing
For financial assets where there has been no significant increase in credit risk since origination a provision for 12 months ECL is recognised.
Stage 2: Lifetime ECL – performing
For financial assets where there has been a significant increase in credit risk since origination but where the asset is still performing a provision for
lifetime ECL is recognised. The indicators of a significant increase in credit risk are described on the following page.
Stage 3: Lifetime ECL – non-performing
For financial assets that are non-performing a provision for lifetime ECL is recognised. Indicators include a breach of contract with the Banking
Group such as a default on interest or principal payments, a borrower experiencing significant financial difficulties or observable economic
conditions that correlate to defaults on an individual basis.
Financial assets in Stage 3 are those that are in default. A default occurs when the Banking Group considers that the customer is unable to repay
its credit obligations in full, irrespective of recourse by the Banking Group to actions such as realising security, or the customer is more than 90
days past due on any material credit obligation. This definition is aligned to the Reserve Bank regulatory definition of default.
Collective and individual assessment
Financial assets that are in Stages 1 and 2 are assessed on a collective basis. This means that they are grouped in pools of similar assets with
similar credit risk characteristics including the type of product and the customer risk grade. Financial assets in Stage 3 are assessed on an
individual basis and calculated collectively for those below a specified threshold.
Expected life
In considering the lifetime timeframe for ECL in Stages 2 and 3, the standard generally requires use of the remaining contractual life adjusted,
where appropriate, for prepayments, extension and other options. For certain revolving credit facilities which include both a drawn and undrawn
component (e.g. credit cards and revolving lines of credit), the Banking Group’s contractual ability to demand repayment and cancel the undrawn
commitment does not limit the exposure to credit losses to the contractual notice period. For these facilities, lifetime is based on historical
behaviour.
Movement between stages
Assets may move in both directions through the stages of the impairment model. Assets previously in Stage 2 may move back to Stage 1 if it is no
longer considered that there has been a significant increase in credit risk. Similarly, assets in Stage 3 may move back to Stage 1 or Stage 2 if they
are no longer assessed to be non-performing.

Notes to the financial statements
Westpac New Zealand Limited 25
Note 12 Provision for expected credit losses (continued)
Accounting policy (continued)
Critical accounting assumptions and estimates
Key judgements include when a significant increase in credit risk has occurred and estimation of forward-looking macroeconomic information.
Other factors which can impact the provision include the borrower’s financial situation, the realisable value of collateral, the Banking Group’s
position relative to other claimants, the reliability of customer information and the likely cost and duration of recovering the loan.
Significant increase in credit risk
Determining when a financial asset has experienced a significant increase in credit risk since origination is a critical accounting judgement which is
primarily based on changes in internal customer risk grades since origination of the facility. A change in an internal customer risk grade is based
on both quantitative and qualitative factors. The change in the internal customer risk grade that the Banking Group uses to represent a significant
increase in credit risk is based on a sliding scale. This means that a higher credit quality exposure at origination would require a more significant
downgrade compared to a lower credit quality exposure before it is considered to have experienced a significant increase in credit risk.
The Banking Group does not rebut the presumption that instruments that are 30 days past due have experienced a significant increase in risk but
this is used as a backstop rather than the primary indicator.
The deferral of payments by customers in hardship arrangements is generally treated as an indication of a significant increase in credit risk
(‘SICR’) but the deferral of payments under the current COVID-19 support packages for mortgages and business loans has not, in isolation, been
treated as an indication of SICR.
The Banking Group does not apply the low credit risk exemption which assumes investment grade facilities do not have a significant increase in
credit risk.
Forward-looking macroeconomic information
The measurement of ECL for each stage and the assessment of significant increase in credit risk consider information about past events and
current conditions as well as reasonable and supportable projections of future events and economic conditions. The estimation of forward-
looking information is a critical accounting judgement. The Banking Group considers three future macroeconomic scenarios including a base case
scenario along with upside and downside scenarios.
The macroeconomic variables used in these scenarios, based on current economic forecasts, include (but are not limited to) unemployment
rates, real gross domestic product growth rates, base interest rates and residential property price indices.
Base case scenario
This scenario utilises the internal Westpac economics forecast used for strategic decision making and forecasting.
Upside scenario
This scenario represents a modest improvement on the base case scenario.
Downside scenario
The downside scenario is a more severe scenario with ECL higher than those under the current base case scenario. The more severe loss
outcome for the downside is generated under a recession scenario in which the combination of negative GDP growth, declines in residential
property prices and an increase in the unemployment rate simultaneously impact ECL across all portfolios from the reporting date.
The macroeconomic scenarios are weighted based on the Banking Group’s best estimate of the relative likelihood of each scenario. The weighting
applied to each of the three macroeconomic scenarios takes into account historical frequency, current trends, and forward-looking conditions.
The macroeconomic variables and probability weightings of the three macroeconomic scenarios are subject to the approval of the Banking
Group’s Chief Financial Officer and Chief Risk Officer with oversight from the Board of Directors (and its Committees).
Where appropriate, adjustments will be made to modelled outcomes to reflect reasonable and supportable information not already incorporated
in the models.
Judgements can change with time as new information becomes available which could result in changes to the provision for ECL.

Notes to the financial statements
26 Westpac New Zealand Limited
Note 12 Provision for expected credit losses (continued)
Loans and credit commitments
The reconciliation of the provision for ECL tables for loans and credit commitments has been determined by an aggregation of monthly
movements over the year. The key line items in the reconciliation represent the following:
The “transfers between stages” lines represent transfers between Stage 1, Stage 2 and Stage 3 prior to remeasurement of the provision for
ECL.
The “other charges/(credits) to the income statement” line represents the impact on the provision for ECL due to changes in credit quality
during the year (including transfers between stages), changes due to forward-looking economic scenarios and partial repayments and
additional drawdowns on existing facilities over the year.
“Write-offs” represent a reduction in the provision for ECL as a result of derecognition of exposures where there is no reasonable expectation
of full recovery.
The following table shows the collectively assessed provisions (‘CAP’) and individually assessed provisions (‘IAP’) for loans and credit
commitments.
THE BANKING GROUP
20202019
PerformingNon-performingPerformingNon-performing
Stage 1Stage 2Stage 3Stage 3Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
CAPCAPCAPIAP
Total
Provision for ECL on loans
Residential mortgages 44 121 70 6 241 19 18 31 6 74
Other retail 21 70 31 2 124 37 51 19 - 107
Corporate 30 135 6 65 236 20 89 3 22 134
Total provision for ECL on
loans (refer to Note 11)
95 326 107 73 601 76 158 53 28 315
Provision for ECL on credit
commitments
Residential mortgages 5 2 - - 7 3 1 - - 4
Other retail 7 11 - 1 19 9 4 - - 13
Corporate 9 21 - - 30 3 17 - - 20
Total provision for ECL on
credit commitments (refer to
Note 19)
21 34 - 1 56 15 22 - - 37
Total provision for ECL on
loans and credit commitments
116 360 107 74 657 91 180 53 28 352
Gross carrying amount 80,836 7,023 572 129 88,560 80,055 3,972 379 69 84,475
Coverage ratio (%)
1
0.14 5.13 18.71 57.36 0.74 0.11 4.53 13.98 40.58 0.42
1
Coverage ratio is calculated using total provision for ECL on loans and credit commitments over gross carrying amount (excluding credit commitments).

Notes to the financial statements
Westpac New Zealand Limited 27
Note 12 Provision for expected credit losses (continued)
Movements in components of loss allowance – total
The following table reconciles the provision for ECL on loans and credit commitments for the Banking Group.
THE BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Provision for ECL on loans and credit commitments as at 30
September 2019
91 180 53 28 352
Due to changes in credit quality:
Transfers to Stage 1 425 (400) (25) - -
Transfers to Stage 2 (53) 143 (87) (3) -
Transfers to Stage 3 CAP - (85) 86 (1) -
Transfers to Stage 3 IAP - (21) (7) 28 -
Reversals of previously recognised impairment charges - - - (11) (11)
New financial assets originated 23 - - - 23
Financial assets derecognised during the year (14) (40) (19) - (73)
Changes in CAP due to amounts written off - - (33) - (33)
Other charges/(credits) to the income statement (356) 583 139 38 404
Total charges/(credits) to the income statement for ECL 25 180 54 51 310
Amounts written off from IAP - - - (5) (5)
Total provision for ECL on loans and credit commitments as
at 30 September 2020
116 360 107 74 657
THE BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Provision for ECL on loans and credit commitments as at 1
October 2018
103 203 53 36 395
Due to changes in credit quality:
Transfers to Stage 1 261 (245) (16) - -
Transfers to Stage 2 (16) 43 (26) (1) -
Transfers to Stage 3 CAP - (38) 42 (4) -
Transfers to Stage 3 IAP - - (8) 8 -
Reversals of previously recognised impairment charges - - - (15) (15)
New financial assets originated 24 - - - 24
Financial assets derecognised during the year (19) (41) (21) - (81)
Changes in CAP due to amounts written off - - (53) - (53)
Other charges/(credits) to the income statement (262) 258 82 9 87
Total charges/(credits) to the income statement for ECL (12) (23) - (3) (38)
Amounts written off from IAP - - - (5) (5)
Total provision for ECL on loans and credit commitments as
at 30 September 2019
91 180 53 28 352

Notes to the financial statements
28 Westpac New Zealand Limited
Note 12 Provision for expected credit losses (continued)
Movements in components of loss allowance – by types of credit exposure
The provision for ECL on loans and credit commitments can be further disaggregated into the following types of credit exposure:
THE BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Residential mortgages
Provision for ECL as at 30 September 2019 22 19 31 6 78
Due to changes in credit quality:
Transfers to Stage 1 200 (186) (14) - -
Transfers to Stage 2 (26) 86 (60) - -
Transfers to Stage 3 CAP - (46) 47 (1) -
Transfers to Stage 3 IAP - - (2) 2 -
Reversals of previously recognised impairment charges - - - (3) (3)
New financial assets originated 11 - - - 11
Financial assets derecognised during the year (4) (10) (14) - (28)
Changes in CAP due to amounts written off - - (1) - (1)
Other charges/(credits) to the income statement (154) 260 83 3 192
Total charges/(credits) to the income statement for ECL 27 104 39 1 171
Amounts written off from IAP - - - (1) (1)
Total provision for ECL on loans and credit commitments as
at 30 September 2020
49 123 70 6 248
Other retail
Provision for ECL as at 30 September 2019 46 55 19 - 120
Due to changes in credit quality:
Transfers to Stage 1 213 (202) (11) - -
Transfers to Stage 2 (25) 49 (24) - -
Transfers to Stage 3 CAP - (32) 32 - -
Transfers to Stage 3 IAP - - - - -
Reversals of previously recognised impairment charges - - - (1) (1)
New financial assets originated 6 - - - 6
Financial assets derecognised during the year (6) (19) (5) - (30)
Changes in CAP due to amounts written off - - (32) - (32)
Other charges/(credits) to the income statement (206) 230 52 4 80
Total charges/(credits) to the income statement for ECL (18) 26 12 3 23
Amounts written off from IAP - - - - -
Total provision for ECL on loans and credit commitments as
at 30 September 2020
28 81 31 3 143
Corporate
Provision for ECL as at 30 September 2019 23 106 3 22 154
Due to changes in credit quality:
Transfers to Stage 1 12 (12) - - -
Transfers to Stage 2 (2) 8 (3) (3) -
Transfers to Stage 3 CAP - (7) 7 - -
Transfers to Stage 3 IAP - (21) (5) 26 -
Reversals of previously recognised impairment charges - - - (7) (7)
New financial assets originated 6 - - - 6
Financial assets derecognised during the year (4) (11) - - (15)
Changes in CAP due to amounts written off - - - - -
Other charges/(credits) to the income statement 4 93 4 31 132
Total charges/(credits) to the income statement for ECL 16 50 3 47 116
Amounts written off from IAP - - - (4) (4)
Total provision for ECL on loans and credit commitments as
at 30 September 2020
39 156 6 65 266
The above movements in components of loss allowance table does not include ‘Other’ credit exposures on the basis that the provision for ECL is
nil.

Notes to the financial statements
Westpac New Zealand Limited 29
Note 12 Provision for expected credit losses (continued)
THE BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Residential mortgages
Provision for ECL as at 1 October 2018 33 25 25 7 90
Due to changes in credit quality:
Transfers to Stage 1 22 (16) (6) - -
Transfers to Stage 2 (3) 11 (8) - -
Transfers to Stage 3 CAP - (4) 5 (1) -
Transfers to Stage 3 IAP - - (3) 3 -
Reversals of previously recognised impairment charges - - - (3) (3)
New financial assets originated 5 - - - 5
Financial assets derecognised during the year (3) (3) (14) - (20)
Changes in CAP due to amounts written off - - (2) - (2)
Other charges/(credits) to the income statement (32) 6 34 2 10
Total charges/(credits) to the income statement for ECL (11) (6) 6 1 (10)
Amounts written off from IAP - - - (2) (2)
Total provision for ECL on loans and credit commitments as
at 30 September 2019
22 19 31 6 78
Other retail
Provision for ECL as at 1 October 2018 50 64 18 3 135
Due to changes in credit quality:
Transfers to Stage 1 232 (223) (9) - -
Transfers to Stage 2 (10) 26 (16) - -
Transfers to Stage 3 CAP - (30) 31 (1) -
Transfers to Stage 3 IAP - - - - -
Reversals of previously recognised impairment charges - - - (4) (4)
New financial assets originated 12 - - - 12
Financial assets derecognised during the year (13) (21) (4) - (38)
Changes in CAP due to amounts written off - - (51) - (51)
Other charges/(credits) to the income statement (225) 239 50 5 69
Total charges/(credits) to the income statement for ECL (4) (9) 1 - (12)
Amounts written off from IAP - - - (3) (3)
Total provision for ECL on loans and credit commitments as
at 30 September 2019
46 55 19 - 120
Corporate
Provision for ECL as at 1 October 2018 20 114 10 26 170
Due to changes in credit quality:
Transfers to Stage 1 7 (6) (1) - -
Transfers to Stage 2 (3) 6 (2) (1) -
Transfers to Stage 3 CAP - (4) 6 (2) -
Transfers to Stage 3 IAP - - (5) 5 -
Reversals of previously recognised impairment charges - - - (8) (8)
New financial assets originated 7 - - - 7
Financial assets derecognised during the year (3) (17) (3) - (23)
Changes in CAP due to amounts written off - - - - -
Other charges/(credits) to the income statement (5) 13 (2) 2 8
Total charges/(credits) to the income statement for ECL 3 (8) (7) (4) (16)
Amounts written off from IAP - - - - -
Total provision for ECL on loans and credit commitments as
at 30 September 2019
23 106 3 22 154
The above movements in components of loss allowance table does not include ‘Other’ credit exposures on the basis that the provision for ECL is
nil.

Notes to the financial statements
30 Westpac New Zealand Limited
Note 12 Provision for expected credit losses (continued)
Impact of Overlays on the provision for ECL
The following table attributes the breakup between modelled ECL and other economic overlays.
Where there is increased uncertainty regarding the required forward-looking economic conditions under NZ IFRS 9, or limitations of the historical
data used to calibrate the models to current stressed environments, overlays are typically used to address areas of potential risk not captured in
the underlying modelled ECL.
THE BANKING GROUP
$ millions20202019
Modelled provision for ECL 522 313
Overlays
1
135 39
Total provision for ECL 657 352
1
Included in 2020 is $128 million related to COVID-19.
Details of these changes, which are based on reasonable and supportable information up to the date of this disclosure statement are provided
below.
Modelled provision for ECL
The modelled provision for ECL is a probability weighted estimate based on three scenarios which together are representative of the Banking
Group’s view of the forward-looking distribution of potential loss outcomes. The increase in provisions as a result of changes in modelled ECL are
reflected through the “Other charges/(credits) to the income statement” line in the “Movements in components of loss allowance” table.
The base case scenario uses current Westpac Economics forecasts and reflects the latest available macroeconomic view which shows a
deterioration in the short term, with a subsequent recovery. The latest view considers both the economic and societal impacts of COVID-19 and
the government stimulus measures implemented to cushion the impacts. The Banking Group’s economic forecast assumes the following:
Key macroeconomic assumptions
for base case scenario
30 Sep 2030 Sep 19
Annual GDPForecasted growth of 6.7% over the next 12 monthsForecasted growth of 3.2% over the next 12 months
Residential property pricesForecasted growth of 6.8% over the next 12 monthsForecasted growth of 7% over the next 12 months
Cash rateReduction of 50 bps in the next 12 monthsRBNZ bill rate of 1.1% in the next 12 months
Unemployment rate
1
Forecast to peak at 7% (December 2020) and then
fall to 6.6% at September 2021
N/A (not used in NZ IFRS 9 models)
1
In this financial year, Credit Cards have moved from a Simplified approach to an Advanced model using Unemployment rate in the modelled ECL outcome.
The downside scenario is a more severe scenario with ECL higher than the base case scenario. The more severe loss outcome for the downside is
generated under a recession scenario in which the combination of negative GDP growth, declines in residential property prices and an increase in
the unemployment rate simultaneously impact ECL across all portfolios from the reporting date. The assumptions in this scenario and relativities
to the base case scenario will be monitored having regard to the emerging economic conditions and updated where necessary. The upside
scenario represents a modest improvement to the base case.
The following sensitivity table shows the reported provision for ECL based on the probability weighted scenarios and what the provision for ECL
would be assuming a 100% weighting is applied to the base case scenario and to the downside scenario (with all other assumptions, including
customer risk grades, held constant).
THE BANKING GROUP
$ millions20202019
Reported probability-weighted ECL657352
100% base case ECL492259
100% downside ECL902596
If 1% of the stage 1 gross exposure from loans and credit commitments (calculated on a 12 month ECL) was reflected in stage 2 (calculated on a
lifetime ECL) the provision for ECL would increase by $33 million (2019: $26 million) based on applying the average provision coverage ratios by
stage to the movement in the gross exposure by stage.

Notes to the financial statements
Westpac New Zealand Limited 31
Note 12 Provision for expected credit losses (continued)
The following table indicates the weightings applied by the Banking Group.
THE BANKING GROUP
Macroeconomic scenario weightings (%)20202019
Upside510
Base5562.5
Downside4027.5
The increase in weighting to the downside scenario since 30 September 2019 reflects the continuing uncertainty around the economic
assumptions used in the base case and the asymmetric impact of downside tail risk on ECL. In particular, the current base case economic forecast
indicates a relatively short and sharp economic impact followed by a subsequent recovery. There is a risk that the economic impacts of COVID-19
could be deeper or more prolonged which would result in higher credit losses than those modelled under the base case.
The COVID-19 pandemic is leading to material structural shifts in the behaviour of the economy and customers, and unprecedented actions by
banks, governments and regulators in response. ECL models are expected to be subject to a higher than usual level of uncertainty during this
period. In this environment, there is a heightened need for the application of judgement in order to reflect these evolving relationships and risks.
This judgement has been applied in the form of the revision to scenario weightings and a COVID-19 overlay.
COVID-19 overlay
Where there is increased uncertainty regarding the required forward-looking economic conditions under NZ IFRS 9, or limitations of the historical
data used to calibrate the models to current stressed environments, overlays are typically used to address areas of potential risk not captured in
the underlying modelled ECL.
The COVID-19 pandemic has had, and continues to have, an impact on businesses around the world and the economic environments in which they
operate. There also exists significant uncertainty regarding the duration and severity of COVID-19 impacts and the associated disruption to the
economy and our customers. While the impacts on the broader economy are included in the assumptions used in the economic scenarios and the
weightings applied to these scenarios, these general economy wide impacts may not fully reflect the specific impact on individual customers, and
therefore the potential risk is not captured in the underlying modelled ECL. As overlays require the application of expert judgment, they are
documented and subject to comprehensive internal governance and oversight. The Banking Group’s COVID-19 overlay as of September 2020 is
$128 million, of which, $8 million relates to COVID-19 deferral packages.
The deferral of payments by customers in hardship arrangements is generally treated as an indication of a SICR but the deferral of payments
under the current COVID-19 support packages for mortgages and business loans has not, in isolation, been treated as an indication of SICR. As
highlighted by the IASB in its guidance document ‘IFRS 9 and COVID-19’ issued on 27 March 2020, in these changed circumstances it is not
appropriate to apply previously established approaches to assessing SICR for payment holidays in a mechanistic manner.
These relief packages are available to customers who require assistance because of COVID-19 and who otherwise had up to date payment status
prior to the onset of COVID-19. The earlier relief packages allow for a deferral of payments for up to 6 months. During this period, the deferred
interest will be capitalised and the deferred principal along with the capitalised interest, will be repaid over the remaining term of the loan. These
packages have been designed to provide short-term cash flow support while the most significant COVID-19 restrictions are in place. A further
extension allowing for up to an additional 6 month deferral up to 31 March 2021 has been announced. The extension will not be automatic and will
require up-to-date financial information on each borrower to confirm that there is a reasonable prospect to repay the loan.
As the situation has evolved since March 2020, the Banking Group has classified the deferral packages into medium and high risk based on how
these customers are expected to perform following the expiry of the relief packages. The Banking Group has identified a proportion of deferral
packages as higher credit risk and has identified a SICR event to have occurred on these customers. An overlay estimation has been done on this
base of customers.
We continue to monitor our lending portfolios closely and reassess our provisioning levels as the situation around COVID-19 evolves. At the
cessation of the COVID-19 support packages, it is likely that some customers will move into general hardship arrangements (Stage 2). Exposures
allocated to Stage 3 relies only on individual evidence of default at September 2020.
Business lending (including institutional)
The business lending overlay relates to the increase in credit risk due to uncertainties including the effects of Government support to the business
community, suggesting that credit deterioration is yet to be seen in the underlying portfolios.
Based on this judgement, we have identified $0.8 billion of business exposures on which a lifetime ECL overlay has been determined. This has
resulted in a $58 million overlay which is included in stage 2 provisions. An additional overlay of $8 million has been calculated on a 12 month ECL
and included in stage 1 provisions.

Notes to the financial statements
32 Westpac New Zealand Limited
Note 12 Provision for expected credit losses (continued)
Retail lending
The retail lending overlay relates to SICR events given the expected medium-term structural change in unemployment rate by 2.6% along with the
emerging credit risk from the residential mortgage and other retail customers who are currently on COVID-19 relief packages.
For customers not on relief packages, we have identified $1.3 billion of retail exposures on which a lifetime ECL overlay has been determined. This
has resulted in a $53 million overlay which is included in stage 2 provisions.
Customers with packages have been segmented into medium and high risk based on how these customers are expected to perform following the
expiry of the relief packages, on which a lifetime ECL overlay has been determined. We have identified $260 million of retail exposures on which a
lifetime ECL overlay has been determined. This has resulted in an $8 million overlay which is included in stage 2 provisions.
The judgements and assumptions used in estimating the above overlays will be reviewed and refined as both the COVID-19 pandemic and
portfolio evolves.
Impact of changes in credit exposures on the provision for ECL
Stage 1 exposures had a net increase of $0.8 billion (2019: net increase of $3.5 billion) for the Banking Group primarily driven by residential
mortgage and business segments. This increase is calculated after adjusting $2.3 billion transferred to Stage 2 to account for gross carrying
amounts (‘GCA’) associated with COVID-19 overlays. Stage 1 ECL has increased mainly from impacts from revised macro-economic forecasts and
weightings.
Stage 2 credit exposures increased by $3 billion (2019: increased by $0.3 billion) for the Banking Group mainly driven by the residential mortgage
segment and the impact of additional $2.3 billion transferred to Stage 2 to account for GCA associated with COVID-19 overlays. The Stage 2
underlying exposure increase has been driven by the residential mortgage segment resulting from increases from hardship segment. Stage 2 ECL
has increased driven by the COVID-19 overlay, impacts from revised macro-economic forecasts/weightings and underlying increase in Stage 2
exposures.
Stage 3 credit exposures had a net increase of $253 million (2019: decrease $15 million) for the Banking Group driven by net transfers to Stage 3
from Stage 1 and Stage 2 with the increase mainly driven by residential mortgage and business portfolios. The increase in Stage 3 exposures is in
line with increase in 90 days past due for home loans, and business loans downgrades to impaired. Stage 3 ECL has increased in line with the
increase in Stage 3 exposures.
Accordingly, as at 30 September 2020, the provision for ECL as a proportion of GCA has increased compared to 30 September 2019 for all types of
credit exposures across all stages, except for Stage 1 and Stage 2 for other retail which has decreased, primarily due to the impact associated with
the move from a Simplified approach to an Advanced model for Credit Cards.
Refer to Section iii. Asset quality of the Registered bank disclosures for further details on the impact of changes in gross financial assets on loss
allowances.
COVID-19 deferral packages
The customers with deferral of payments under COVID-19 support packages for retail and business loans at 30 September 2020 is $4.7 billion.
These loans and the related provision for ECL can be disaggregated as follows:
THE BANKING GROUP
2020
$ millionsGross loansProvision for ECL on loans
Residential mortgages
Stage 13,1887
Stage 21,35349
Stage 3539
Total residential mortgages4,59465
Other retail
Stage 1491
Stage 23514
Stage 353
Total other retail loans8918
Corporate
Stage 15-
Stage 2--
Stage 3--
Total corporate loans5-
Total loans
Stage 13,2428
Stage 21,38863
Stage 35812
Total loans4,68883

Notes to the financial statements
Westpac New Zealand Limited 33
Note 12 Provision for expected credit losses (continued)
If the balance of COVID-19 support packages in Stage 1 moved to Stage 2 the Banking Group estimates that the provision for ECL would increase by
$126 million.
Considering all COVID-19 support packages provided to customers, $470 million were in Stage 2/3 at the time of the modification, of which $77
million have since moved to Stage 1.
Business Finance Guarantee Scheme
The Bank has entered into a deed of indemnity with the New Zealand Government to implement the New Zealand Government’s business finance
guarantee scheme (‘Scheme’), whereby the New Zealand Government undertakes to indemnify the Bank for up to 80% of any loss incurred by the
Bank on a loan it makes under the Scheme, after the Bank has exhausted its recoveries procedures. As at 30 September 2020, the Banking Group
had advanced $15 million to customers under the Scheme.
Write-offs still under enforcement activity
The amount of current year write-offs which remain subject to enforcement activity was $27 million for the Banking Group (30 September 2019:
$43 million).
Note 13 Other financial assets
THE BANKING GROUP
$ millions20202019
Accrued interest receivable 109
129
Trade debtors 2
2
Other
85
47
Total other financial assets 196 178
Note 14 Deferred tax assets
Accounting policy
Deferred tax accounts for temporary differences between the carrying amounts of assets and liabilities in the financial statements and their values
for taxation purposes.
Deferred tax is determined using the enacted or substantively enacted tax rates and laws which are expected to apply when the assets will be
realised or the liabilities settled.
Deferred tax assets and liabilities have been offset where they relate to the same taxation authority, the same taxable entity or group and where
there is a legal right and intention to settle on a net basis.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available to utilise the assets.
Deferred tax is not recognised for the following temporary differences:
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither the accounting nor
taxable profit or loss; and
the initial recognition of goodwill in a business combination.
Critical accounting assumptions and estimates
On a similar basis to that described in Note 7, determining deferred tax assets and liabilities is considered one of the Banking Group’s critical
accounting assumptions and estimates.

Notes to the financial statements
34 Westpac New Zealand Limited
Note 14 Deferred tax assets (continued)
THE BANKING GROUP
$ millions20202019
Deferred tax assets/(liabilities) comprise the following temporary differences:
Provision for ECL on loans 168 88
Provision for ECL on credit commitments 16 10
Cash flow hedges 31 31
Provision for employee entitlements 27 20
Compliance, regulation and remediation provisions 12 12
Software, property and equipment (56) 9
Lease liabilities
1
79 -
Other temporary differences 3 4
Net deferred tax assets 280 174
The deferred tax (charge)/credit in income tax expense comprises the following temporary
differences:
Provision for ECL on loans 80 (14)
Provision for ECL on credit commitments 6 (2)
Provision for employee entitlements 6 2
Compliance, regulation and remediation provisions - 9
Software, property and equipment (65) (1)
Lease liabilities
1
79 -
Other temporary differences (1) 3
Total deferred tax (charge)/credit in income tax expense 105 (3)
The deferred tax (charge)/credit in OCI comprises the following temporary differences:
Cash flow hedges - 8
Provision for employee entitlements 1 4
Total deferred tax (charge)/credit in OCI 1 12
The deferred tax adjustment to opening retained earnings comprises the following temporary
differences:
Provision for ECL on loans - 8
Provision for ECL on credit commitments - 2
Other temporary differences - (1)
Total deferred tax adjustment to opening retained earnings - 9
1
The Banking Group adopted NZ IFRS 16 on 1 October 2019. Comparatives have not been restated. Refer to Note 1 for further details.
Note 15 Intangible assets
Accounting policy
Indefinite life intangible assets
Goodwill
Goodwill acquired in a business combination is initially measured at cost, generally being the excess of:
i.the consideration paid; over
ii.the net fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Subsequently, goodwill is not amortised but rather tested for impairment. Impairment is tested at least annually or whenever there is an
indication of impairment. An impairment charge is recognised when a cash generating unit’s (‘CGU’) carrying value exceeds its recoverable
amount. Recoverable amount means the higher of the CGU’s fair value less costs to sell and its value-in-use.
The Banking Group’s CGUs represent the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash
inflows from other assets or group of assets. They reflect the level at which the Banking Group monitors and manages its operations.

Notes to the financial statements
Westpac New Zealand Limited 35
Note 15 Intangible assets (continued)
Finite life intangible assets
Finite life intangibles include computer software which are recognised initially at cost and subsequently at amortised cost less any impairment.
IntangibleUseful lifeDepreciation method
GoodwillIndefiniteNot applicable
Computer software3 to 8 yearsStraight-line or diminishing balance method (using the Sum of the Years Digits)
Critical accounting assumptions and estimates
Judgement is required in determining the fair value of assets and liabilities acquired in a business combination. A different assessment of fair
values would have resulted in a different goodwill balance and different post-acquisition performance of the acquired entity.
When assessing impairment of intangible assets, significant judgement is needed to determine the appropriate cash flows and discount rates to
be applied to the calculations. The significant assumptions applied to the value-in-use calculations are outlined below.
THE BANKING GROUP
$ millions20202019
Goodwill 477 477
Computer software
170 159
Total intangible assets
647 636
Impairment testing and results
Impairment testing is performed at least once a year, or whenever there is an indication of impairment, by comparing the recoverable amount of
each CGU with the carrying amount. The primary test for the recoverable amount is determined based on value-in-use which refers to the present
value of expected cash flows under its current use.
Impairment testing in the current year confirmed that the Banking Group continues to have considerable headroom when determining whether
goodwill is recoverable, and no impairment should be recognised.
Significant assumptions used in recoverable amount calculations
The assumptions made for goodwill impairment testing for the Consumer Banking and Wealth CGU are provided in the following table and are
based on past experience and management’s expectations for the future. In the current year and given the present economic environment, the
Banking Group has reassessed these assumptions and revised them where necessary in order to provide a reasonable estimate of the value-in-
use of the CGU.
Discount rateCash flows
Equity rate / adjusted pre-tax equity rateForecast period / terminal growth rate
2020201920202019
Consumer Banking and Wealth11.0% / 14.5%11.0% / 15.3%3 years / 2%2 years / 0%
The Banking Group discounts the projected cash flows by the adjusted pre-tax equity rate.
The cash flows used are based on management approved forecasts. These forecasts utilise information about current and future economic
conditions, observable historical information and management expectations of future business performance. The terminal value growth rate
represents the growth rate applied to extrapolate cash flows beyond the forecast period and reflects the midpoint of RBNZ’s inflation target over
the medium term.
There are no reasonably possible changes in assumptions for Consumer Banking and Wealth CGU that would result in an indication of impairment
or have a material impact on the Banking Group’s reported results.

Notes to the financial statements
36 Westpac New Zealand Limited
Note 16 Deposits and other borrowings
Accounting policy
Deposits and other borrowings are initially recognised at fair value and subsequently either measured at amortised cost using the effective
interest rate method or at fair value.
Deposits and other borrowings are designated at fair value if they are managed on a fair value basis, reduce or eliminate an accounting mismatch,
or contain an embedded derivative.
Where they are measured at fair value, any changes in fair value (except those due to changes in credit risk) are recognised as non-interest
income.
The change in the fair value that is due to changes in credit risk is recognised in OCI except where it would create an accounting mismatch, in
which case it is also recognised in the income statement.
Interest expense incurred is recognised in net interest income using the effective interest rate method.
THE BANKING GROUP
$ millions20202019
Certificates of deposit 2,996 1,142
Non-interest bearing, repayable at call 11,571 6,871
Other interest bearing:
At call 28,412 24,053
Term
30,991 33,540
Total deposits and other borrowings 73,970 65,606
Deposits at fair value 2,996 1,142
Deposits at amortised cost 70,974 64,464
Total deposits and other borrowings 73,970 65,606
Note 17 Other financial liabilities
Accounting policy
Other financial liabilities include liabilities measured at amortised cost. Repurchase agreements are financial liabilities measured at FVIS and are
included in due to related entities (refer to Note 22).
Repurchase agreements
Where securities are sold subject to an agreement to repurchase at a predetermined price, they remain recognised in the balance sheet in their
original category (i.e. trading securities and financial assets measured at FVIS or investment securities).
The cash consideration received is recognised as a liability (repurchase agreements). Repurchase agreements are designated at fair value as they
are managed as part of a trading portfolio.
Where a repurchase agreement is designated at fair value, subsequent to initial recognition, these liabilities are measured at fair value with
changes in fair value (except credit risk) recognised through the income statement as they arise. The change in fair value that is attributable to
credit risk is recognised in OCI except where it would create an accounting mismatch, in which case it is also recognised through the income
statement.
THE BANKING GROUP
$ millions20202019
Accrued interest payable 208 331
Trade creditors and other accrued expenses 61 57
Interbank placements - 54
Other 18 13
Total other financial liabilities 287 455
Other financial liabilities at fair value - -
Other financial liabilities at amortised cost 287 455
Total other financial liabilities 287 455

Notes to the financial statements
Westpac New Zealand Limited 37
Note 18 Debt issues
Accounting policy
Debt issues are bonds, notes and commercial paper that have been issued by the Banking Group.
Debt issues are initially measured at fair value and subsequently either measured at amortised cost using the effective interest rate method or at
fair value.
Debt issues are designated at fair value if they reduce or eliminate an accounting mismatch.
The change in the fair value that is due to credit risk is recognised in OCI except where it would create an accounting mismatch, in which case it is
also recognised in non-interest income.
Interest expense incurred is recognised within net interest income using the effective interest rate method.
In the following table, the distinction between short-term (12 months or less) and long-term (greater than 12 months) debt is based on the original
maturity of the underlying security.
THE BANKING GROUP
$ millions20202019
Short-term debt
Commercial paper 2,502 2,312
Total short-term debt 2,502 2,312
Long-term debt
Non-domestic medium-term notes 5,329 7,343
Covered bonds 4,457 5,263
Domestic medium-term notes 3,511 2,928
Total long-term debt 13,297 15,534
Total debt issues 15,799 17,846
Debt issues at fair value 2,502 2,312
Debt issues at amortised cost 13,297 15,534
Total debt issues 15,799 17,846
THE BANKING GROUP
$ millions20202019
Movement reconciliation
Balance at beginning of the year
17,846 13,725
Issuances
5,175
8,707
Maturities, repayments, buy backs and reductions
(7,193)
(5,001)
Total cash movements (2,018) 3,706
FX translation impact
5
273
Fair value hedge accounting adjustments
(41)
144
Other
1
7
(2)
Total non-cash movements (29) 415
Balance at end of the year 15,799 17,846
1
Includes items such as amortisation of issue costs.

Notes to the financial statements
38 Westpac New Zealand Limited
Note 19 Provisions
Accounting policy
Provisions are recognised for present obligations arising from past events where a payment (or other economic transfer) is likely to be necessary
to settle the obligation and can be reliably estimated.
Employee benefits – annual leave and other employee benefits
The provision for annual leave and other employee benefits (including long service leave, wages and salaries, inclusive of non-monetary benefits,
and any associated on-costs (e.g. payroll tax)) is calculated based on expected payments.
Provision for ECL on credit commitments
The Banking Group is committed to provide facilities and guarantees as explained in Note 27. If it is probable that a facility will be drawn and the
resulting asset will be less than the drawn amount then a provision for impairment is recognised. The provision for impairment is calculated using
the same methodology as the provision for ECL (refer to Note 12).
Compliance, regulation and remediation provisions
The compliance, regulation and remediation provisions relate to matters pertaining to the provision of services to our customers identified both as
a result of regulatory action and internal reviews. An assessment of the likely cost to the Banking Group of these matters (including applicable
customer refunds) is made on a case-by-case basis and specific provisions are made where appropriate.
THE BANKING GROUP
$ millions20202019
Annual leave and other employee benefits 61 61
Provision for ECL on credit commitments (refer to Note 12) 56 37
Compliance, regulation and remediation provisions
1
42 44
Lease restoration obligations
2
31 -
Other 16 2
Total provisions 206 144
1
The Banking Group has raised an additional provision of $15 million during the year ended 30 September 2020 (30 September 2019: $42 million), This reflects an
increase in the identified number of instances where issues requiring remediation had occurred, together with associated interest and programme costs. $16
million has been paid to customers (30 September 2019: $10 million) and $1 million of unutilised provisions were reversed during the year ended 30 September
2020 (30 September 2019: nil).
2
The addition to the lease restoration provision reflects a reassessment of the cost of making good leasehold premises at the end of the Banking Group’s property
leases. The increase in the expected make-good cost has been treated as an addition to the cost of the ROU asset and is being depreciated over the remaining life
of those assets.
Note 20 Loan capital
Accounting policy
Loan capital are instruments which qualify for inclusion as regulatory capital under the Reserve Bank Capital Adequacy Framework. Loan capital is
initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method. Interest expense incurred is
recognised in net interest income.
THE BANKING GROUP
$ millions20202019
Additional Tier 1 loan capital - Convertible subordinated perpetual notes
1
1,489 1,488
Tier 2 loan capital - Convertible subordinated notes
1
1,123 1,121
Total loan capital 2,612 2,609
1
Net of capitalised transaction costs.
THE BANKING GROUP
$ millions20202019
Movement reconciliation
Balance at beginning of the year
2,609 2,622
Total cash movements - -
FX translation impact 2 (14)
Other
1
1 1
Total non-cash movements 3 (13)
Balance at end of the year 2,612 2,609
1
Includes items such as amortisation of issue costs.

Notes to the financial statements
Westpac New Zealand Limited 39
Note 20 Loan capital (continued)
Additional Tier 1 loan capital
A summary of the key terms and features of the Additional Tier 1 loan capital (‘AT1 notes’) is provided below:
$Issue dateCounterpartyInterest rateOptional redemption date
NZ$1,500 million notes
1
22 September 2017New Zealand Branch of the Ultimate
Parent Bank (‘NZ Branch’)
NZ 90 day bank bill
rate + 3.9594% p.a.
21 September 2027 and every fifth
anniversary thereafter

1
The AT1 notes were issued by the Bank and rank equally amongst themselves and are subordinated to the claims of depositors and senior or less subordinated
creditors of the Bank.
Interest payable
Quarterly interest payments on the AT1 notes are at the absolute discretion of the Bank and will only be paid if the payment conditions are satisfied,
including that the interest payment will not result in the Bank becoming insolvent immediately following the interest payment; not result in a breach of
the Reserve Bank Prudential Standards; and the payment date not falling on the date of a capital trigger event or non-viability trigger event. Interest
payments are non-cumulative. If interest is not paid in full, the Bank may not determine or pay any dividends on its ordinary shares or undertake a
discretionary buy back or capital reduction of the Bank’s ordinary shares (except in limited circumstances).
Redemption
The Bank may elect to redeem all or some of the AT1 notes for their face value on 21 September 2027 and every fifth anniversary thereafter, subject to
the Reserve Bank’s prior written approval. Early redemption of all of the AT1 notes for certain tax or regulatory reasons is permitted subject to the
Reserve Bank’s prior written approval.
Conversion
If a capital trigger event or non-viability trigger event occurs, the Bank must convert some or all of the AT1 notes into a variable number of ordinary
shares issued by the Bank (calculated with reference to the net assets of the Bank and the total number of ordinary shares on issue at the conversion
date) that is sufficient, in the case of a capital trigger event, to return the Bank’s Common Equity Tier 1 capital ratio to above 5.125% as determined by
the Bank in consultation with the Reserve Bank; or, in the case of a non-viability trigger event, to satisfy the direction of the Reserve Bank or the
decision of the statutory manager of the Bank. A capital trigger event occurs when the Bank determines, or the Reserve Bank notifies in writing that it
believes, the Bank’s Common Equity Tier 1 Capital ratio is equal to or less than 5.125%. A non-viability trigger event occurs when the Reserve Bank or
the statutory manager (appointed pursuant to section 117 of the Reserve Bank of New Zealand Act 1989 (‘Reserve Bank Act’)) directs the Bank to
convert or write off all or some of its AT1 notes.
If conversion of the AT1 notes does not occur within five business days of a capital trigger event or a non-viability trigger event, holders’ rights in
relation to the AT1 notes will be immediately and irrevocably terminated.
The Bank is able to elect to convert all the AT1 notes for certain tax or regulatory reasons (or in certain other circumstances).
Tier 2 loan capital
A summary of the key terms and features of the Tier 2 loan capital (‘Tier 2 notes’) is provided below.
$Issue dateCounterpartyInterest rateMaturity DateOptional redemption date
AU$1,040 million
notes
1
8 September 2015
London Branch of the
Ultimate Parent Bank
Australian 90 day bank
bill rate + 2.87% p.a.
22 March 2026
22 March 2021 and every interest
payment date thereafter
1
The Tier 2 notes were issued by the Bank and rank equally amongst themselves and are subordinated to the claims of depositors and senior or less subordinated
creditors of the Bank.
Interest payable
Interest payments on the Tier 2 notes are subject to the Bank being solvent at the time of, and immediately following the interest payment.
Early redemption
The Bank may elect to redeem all or some of the Tier 2 notes for their face value together with accrued interest (if any) on 22 March 2021 or any interest
payment date thereafter, subject to the Reserve Bank’s prior written approval. Early redemption of all of the Tier 2 notes for certain tax or regulatory
reasons is permitted on an interest payment date subject to the Reserve Bank’s prior written approval.
Conversion
If a non-viability trigger event occurs, the Bank must convert such number of the Tier 2 notes into a variable number of ordinary shares issued by the
Bank (calculated with reference to the net assets of the Bank and the total number of ordinary shares on issue on the conversion date) that is sufficient
to satisfy the direction of the Reserve Bank or the decision of the statutory manager. A non-viability trigger event occurs when the Reserve Bank or the
statutory manager (appointed pursuant to section 117 of the Reserve Bank Act) directs the Bank to convert or write off all or some of its Tier 2 notes. If
conversion of the Tier 2 notes fails to take effect within five business days, holders’ rights in relation to the Tier 2 notes will be immediately and
irrevocably terminated.

Notes to the financial statements
40 Westpac New Zealand Limited
Note 21 Share capital4-18
Accounting policy
Share capital
Ordinary shares are recognised at the amount paid up per ordinary share, net of directly attributable issue costs.
Ordinary shares fully paid
THE BANKING GROUP
20202019
Number ofNumber of
Shares IssuedShares Issued
and Authorisedand Authorised
Balance at beginning of the year 7,300,001,000 5,100,001,000
Share capital issued - 2,200,000,000
Balance at end of the year 7,300,001,000 7,300,001,000
In accordance with the Reserve Bank document BS2B ordinary share capital is classified as Common Equity Tier 1 capital.
The ordinary shares have no par value. Subject to the constitution of the Bank, each ordinary share of the Bank carries the right to one vote on a
poll at meetings of shareholders, the right to an equal share in dividends authorised by the Board and the right to an equal share in the
distribution of the surplus assets of the Bank in the event of liquidation.
On 13 February 2020, the Bank declared and paid a dividend of $325 million to its immediate parent company, Westpac New Zealand Group
Limited (‘WNZGL’).

Notes to the financial statements
Westpac New Zealand Limited 41
Note 22 Related entities
Related entities
The Banking Group’s related parties are those it controls or can exert significant influence over. Examples include subsidiaries, associates, joint
ventures and superannuation plans as well as key management personnel and their related parties.
Banking Group
The Bank is a controlled entity of WNZGL. The ultimate parent bank of the Bank is Westpac Banking Corporation.
The Banking Group consists of the Bank and all its controlled entities. As at 30 September 2020, the Bank had the following controlled entities:
Name of entityPrincipal activityNotes
Westpac NZ Operations Limited ('WNZOL')Holding company
Aotearoa Financial Services LimitedNon-active company
Number 120 LimitedFinance company
Red Bird Ventures LimitedCorporate venture capital companyEstablished on 5 August 2020
1
The Home Mortgage Company LimitedResidential mortgage company
Westpac New Zealand Staff Superannuation Scheme Trustee LimitedTrustee company
Westpac (NZ) Investments Limited ('WNZIL')Property company
Westpac Securities NZ Limited (‘WSNZL’)Funding company
Westpac NZ Covered Bond Holdings Limited (‘WNZCBHL’)Holding company9.5% owned
2
Westpac NZ Covered Bond Limited (‘WNZCBL’)Guarantor9.5% owned
2
Westpac NZ Securitisation Holdings Limited (‘WNZSHL’)Holding company9.5% owned
3
Westpac NZ Securitisation Limited (‘WNZSL’)Funding company9.5% owned
3
Westpac NZ Securitisation No.2 Limited (‘WNZSL2’)Non-active company9.5% owned
3
Westpac Cash PIE FundPortfolio investment entityNot owned
4
Westpac Notice Saver PIE FundPortfolio investment entityNot owned
4
Westpac Term PIE FundPortfolio investment entityNot owned
4
1
Red Bird Ventures Limited was incorporated on 5 August 2020 through the issue of 5,000 ordinary shares to WNZOL and is a wholly-owned subsidiary of WNZOL.
2
The Banking Group, through its subsidiary, WNZOL, has a qualifying interest of 9.5% in WNZCBHL and its wholly-owned subsidiary company, WNZCBL. The Bank is
considered to control both WNZCBHL and WNZCBL based on contractual arrangements in place, and as such both WNZCBHL and WNZCBL are consolidated within
the financial statements of the Banking Group.
3
The Banking Group, through its subsidiary WNZOL, has a qualifying interest of 9.5% in WNZSHL and its wholly-owned subsidiary companies, WNZSL and WNZSL2.
The Bank is considered to control WNZSHL, WNZSL and WNZSL2 based on contractual arrangements in place, and as such WNZSHL, WNZSL and WNZSL2 are
consolidated within the financial statements of the Banking Group.
4
Westpac Term PIE Fund, Westpac Cash PIE Fund and Westpac Notice Saver PIE Fund (collectively referred to as the ‘PIE Funds’) were established as unit trusts.
The PIE Funds are Portfolio Investment Entities (‘PIE’), where BT Funds Management (NZ) Limited (‘BTNZ’) (an indirectly wholly-owned subsidiary of the Ultimate
Parent Bank) is the manager and issuer. The manager has appointed the Bank to perform all customer management and account administration for the PIE Funds.
The Bank is the PIE Funds’ registrar and administration manager. The Bank does not hold any units in the PIE Funds, however is considered to control them based on
contractual arrangements in place, and as such the PIE Funds are consolidated in the financial statements of the Banking Group.
There have been no changes in the ownership percentages since 30 September 2019.
All entities in the Banking Group are 100% owned unless otherwise stated. All the entities within the Banking Group have a balance date of
30 September and are incorporated in New Zealand except the PIE Funds which have a balance date of 31 March.
Nature of transactions
The Banking Group has transactions with members of the Ultimate Parent Bank Group on commercial terms, including the provision of
management, distribution and administrative services.
Loan finance and current account banking facilities are provided by the Ultimate Parent Bank to members of the Banking Group on normal
commercial terms. The interest earned on these loans and the interest paid on deposits are at market rates.
The NZ Branch provides financial market services, foreign currency, trade and interest rate risk products to the Banking Group and its customers,
which includes derivative transactions (refer to Note 23).
Effective 1 October 2014, the Bank and the NZ Branch entered into an agreement whereby the Bank will reimburse the NZ Branch for any credit
losses incurred by it due to certain customers of the Bank defaulting on certain financial market and international products. The Banking Group
receives commission from the sale of these products to customers for providing this guarantee.
This is treated as a financial guarantee for accounting purposes. Financial guarantee contracts are recognised as financial liabilities (recorded
within provisions) when a payment under a contract has become probable. The liability is initially measured at fair value and subsequently at the
higher of the amount of the loss allowance determined in accordance with NZ IFRS 9 and the amount initially recognised less, when appropriate,
the cumulative amount of income recognised.
Refer to Note 20 for details of the loan capital transactions undertaken by the Banking Group with related entities.

Notes to the financial statements
42 Westpac New Zealand Limited
Note 22 Related entities (continued)
Transactions with related entities
THE BANKING GROUP
$ millionsNote20202019
Ultimate Parent Bank
Interest income
1
2 9 9
Interest expense:
Loan capital2 110 137
Other
2
2 18 31
Non-interest income:
Commissions received 45 55
Management fees received 3 3
Operating expenses - management fees4 9 4
Funding repaid - 710
Immediate Parent Company
Dividends paid21 325 2,965
Other controlled entities of the Ultimate Parent Bank
Interest expense:
Interest expense - other2 - 1
Non-interest income:
Distribution fees received on managed fund products 14 15
Distribution fees received on life and general insurance products 31 31
Management fees received 4 4
Associate
Dividends received - 3
1
Includes interest income on reverse repurchase agreements and cash held with the NZ Branch.
2
Includes interest expense on other funding provided by and repurchase agreements with the NZ Branch.

Due from and to related entities
THE BANKING GROUP
$ millions20202019
Due from related entities
Ultimate Parent Bank 1,085 2,492
Other controlled entities of the Ultimate Parent Bank 9 10
Total due from related entities 1,094 2,502
Due from related entities at fair value
1
252 1,703
Due from related entities at amortised cost 842 799
Total due from related entities 1,094 2,502
Due to related entities
Ultimate Parent Bank 1,432 1,596
Other controlled entities of the Ultimate Parent Bank 55 36
Total due to related entities 1,487 1,632
Due to related entities at fair value
2
671 820
Due to related entities at amortised cost 816 812
Total due to related entities 1,487 1,632
1
Consists of reverse repurchase agreements of $69 million (30 September 2019: $872 million) and derivative financial instruments of $183 million (30 September
2019: $831 million) (refer to Note 23).
2
Consists of repurchase agreements of $204 million (30 September 2019 : $10 million) and derivative financial instruments of $467 million (30 September 2019:
$810 million) (refer to Note 23).

Notes to the financial statements
Westpac New Zealand Limited 43
Note 22 Related entities (continued)
Key management personnel compensation
Key management personnel are those who, directly or indirectly, have authority and responsibility for planning, directing and controlling the
activities of the Banking Group. This includes all Executive/Non-Executive Directors and members of the executive team.
THE BANKING GROUP
$'000s20202019
Salaries and other short-term benefits 6,277 7,590
Post-employment benefits 667 497
Share-based payments 2,725 3,330
Total key management personnel compensation 9,669 11,417
Loans to key management personnel 27,763 26,876
Deposits from key management personnel 12,492 7,623
Interest income on amounts due from key management personnel 930 896
Interest expense on amounts due to key management personnel 155 67
The Directors have received remuneration from the Banking Group and these amounts are included in the table above.
Loans and deposits with key management personnel
All loans and deposits are made in the ordinary course of business of the Banking Group. Loans are on terms that range between variable, fixed
rate up to five years and interest only loans, all of which are in accordance with the Banking Group’s lending policies.
As at 30 September 2020, no individual provision has been recognised in respect of loans given to key management personnel and their related
parties (30 September 2019: nil). These loans have been included within the loan portfolio when determining collectively assessed provisions.
Other key management personnel transactions
All other transactions with key management personnel, their related entities and other related parties are conducted in the ordinary course of
business. These transactions principally involve the provision of financial, investment and insurance services.
Note 23 Derivative financial instruments
Accounting policy
Derivative financial instruments are instruments whose values are derived from the value of an underlying asset, reference rate or index and
include forwards, futures, swaps and options. Derivatives with related parties are included in due from/due to related entities.
The Banking Group uses derivative financial instruments for our asset and liability risk management (‘ALM’) activities.
Trading derivatives
Derivatives which are used in our ALM activities but are not designated into a hedge accounting relationship are considered economic hedges.
These derivatives are measured at FVIS and are disclosed as trading derivatives.
Hedging derivatives
Hedging derivatives are those which are used in our ALM activities and have also been designated into one of two hedge accounting relationships:
fair value hedge; or cash flow hedge. These derivatives are measured at fair value. These hedge designations and the associated accounting
treatment are detailed below.
For more details regarding the Banking Group’s ALM activities, refer to Note 32.
Fair value hedges
Fair value hedges are used to hedge the exposure to changes in the fair value of an asset or liability.
Changes in the fair value of derivatives and the hedged asset or liability in fair value hedges are recognised in non-interest income. The carrying
value of the hedged asset or liability is adjusted for the changes in fair value related to the hedged risk.
If a hedge is discontinued, any fair value adjustments to the carrying value of the asset or liability are amortised to net interest income over the
period to maturity. If the asset or liability is sold, any unamortised adjustment is immediately recognised in net interest income.

Notes to the financial statements
44 Westpac New Zealand Limited
Note 23 Derivative financial instruments (continued)
Cash flow hedges
Cash flow hedges are used to hedge the exposure to variability of cash flows attributable to an asset, liability or future forecast transaction.
For effective hedges, changes in the fair value of derivatives are recognised in the cash flow hedge reserve through OCI and subsequently
recognised in net interest income when the cash flows attributable to the asset or liability that was hedged impact the income statement.
For hedges with some ineffectiveness, the changes in the fair value of the derivatives relating to the ineffective portion are immediately recognised
in non-interest income.
If a hedge is discontinued, any cumulative gain or loss remains in OCI. It is amortised to net interest income over the period which the asset or
liability that was hedged also impacts the income statement.
If a hedge of a forecast transaction is no longer expected to occur, any cumulative gain or loss in OCI is immediately recognised in net interest
income.
The carrying values of derivative instruments are set out in the tables below:
THE BANKING GROUP
2020
TradingHedging
Total derivatives carrying
value
$ millions
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Interest rate contracts
Swap agreements
--165(553)165(553)
Total interest rate contracts
--165(553)165(553)
FX contracts
Cross currency swap agreements (principal and
interest)
10(13)607(194)617(207)
Total FX contracts
10(13)607(194)617(207)
Total of gross derivatives
10(13)772(747)782(760)
Impact of netting arrangements
------
Total of net derivatives
10(13)772(747)782(760)
Consisting of:
Derivatives held with external counterparties
--599(293)599(293)
Derivatives held with related parties
10(13)173(454)183(467)
THE BANKING GROUP
2019
TradingHedging
Total derivatives carrying
value
$ millions
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Interest rate contracts
Swap agreements
3-120(565)123(565)
Total interest rate contracts
3-120(565)123(565)
FX contracts
Cross currency swap agreements (principal and
interest)
498(378)826(124)1,324(502)
Total FX contracts
498(378)826(124)1,324(502)
Total of gross derivatives
501(378)946(689)1,447(1,067)
Impact of netting arrangements
------
Total of net derivatives
501(378)946(689)1,447(1,067)
Consisting of:
Derivatives held with external counterparties
--616(257)616(257)
Derivatives held with related parties
501(378)330(432)831(810)

Notes to the financial statements
Westpac New Zealand Limited 45
Note 23 Derivative financial instruments (continued)
Hedge accounting
The Banking Group designates derivatives into hedge accounting relationships in order to manage the volatility in earnings and capital that would
otherwise arise from interest rate and FX risks that may result from differences in the accounting treatment of derivatives and underlying
exposures. These hedge accounting relationships and the risks they are used to hedge are described below.
The Banking Group enters into one-to-one hedge relationships to manage specific exposures where the terms of the hedged item significantly
match the terms of the hedging instrument. The Banking Group also uses dynamic hedge accounting where the hedged items are part of a
portfolio of assets and/or liabilities that frequently change. In this hedging strategy, the exposure being hedged and the hedging instruments may
change frequently rather than there being a one-to-one hedge accounting relationship for a specific exposure.
Fair value hedges
Interest rate risk
The Banking Group hedges its interest rate risk to reduce exposure to changes in fair value due to interest rate fluctuations over the hedging
period. Interest rate risk arising from fixed rate debt issuances and fixed rate bonds classified as investment securities at FVOCI is hedged with
single currency fixed to floating interest rate derivatives. The Banking Group also hedges its benchmark interest rate risk from fixed rate foreign
currency denominated debt issuances using cross currency swaps. In applying fair value hedge accounting the Banking Group primarily uses one-
to-one hedge accounting to manage specific exposures.
The Banking Group also uses a dynamic hedge accounting strategy for fair value portfolio hedge accounting of some fixed rate mortgages to
reduce exposure to changes in fair value due to interest rate fluctuations over the hedging period. These fixed rate mortgages are allocated to
time buckets based on their expected repricing dates and the fixed-to-floating interest rate derivatives are designated according to the capacity
in the relevant time buckets.
The Banking Group hedges the benchmark interest rate which generally represents the most significant component of the changes in fair value.
The benchmark interest rate is a component of interest rate risk that is observable in the relevant financial markets, for example, LIBOR for USD
interest rates and Bank Bill Benchmark Rate (‘BKBM’) for NZD interest rates. Ineffectiveness may arise from timing or discounting differences on
repricing between the hedged item and the derivative. For portfolio hedge accounting, ineffectiveness also arises from prepayment risk (i.e. the
difference between actual and expected prepayment of loans). In order to manage the ineffectiveness from early repayments and accommodate
new originations the portfolio hedges are de-designated and redesignated periodically.
Cash flow hedges
Interest rate risk
The Banking Group’s exposure to the volatility of interest cash flows from customer deposits and loans is hedged with interest rate derivatives
using a dynamic hedge accounting strategy called macro cash flow hedges. Customer deposits and loans are allocated to time buckets based on
their expected repricing dates. The interest rate derivatives are designated according to the gross asset or gross liability positions for the relevant
time buckets. The Banking Group hedges the benchmark interest rate which generally represents the most significant component of the changes
in fair value. The benchmark interest rate is a component of interest rate risk that is observable in the relevant financial markets, for example,
Bank Bill Swap Rate for AUD interest rates, LIBOR for USD interest rates and BKBM for NZD interest rates. Ineffectiveness may arise from timing or
discounting differences on repricing between the hedged item and the interest rate derivative. Ineffectiveness also arises if the notional values of
the interest rate derivatives exceed the aggregate notional exposure for the relevant time buckets. The hedge accounting relationship is reviewed
on a monthly basis and the hedging relationships are de-designated and redesignated if necessary.
FX risk
The Banking Group’s exposure to foreign currency principal and credit margin cash flows from fixed rate foreign currency debt issuances is
hedged through the use of cross currency derivatives in a one-to-one hedging relationship to manage the changes between the foreign currency
and NZD. In addition, for floating rate foreign currency debt issuances, the Banking Group hedges from foreign floating to NZD floating interest
rates. Ineffectiveness may arise from timing or discounting differences on repricing between the hedged item and the cross currency derivative.
Economic hedges
As part of the Banking Group’s ALM activities, economic hedges may be entered into to hedge long-term funding transactions.

Notes to the financial statements
46 Westpac New Zealand Limited
Note 23 Derivative financial instruments (continued)
Interest Rate Benchmark Reform
The Banking Group’s hedging relationships include hedged items and hedging instruments that are impacted by IBOR reform. As described in
Note 1, the Banking Group has early adopted Interest Rate Benchmark Reform - amendments to NZ IFRS 9, NZ IAS 39 and NZ IFRS 7 which allows
certain exceptions to the standard hedging requirements in respect of hedge relationships that are impacted by this benchmark reform.
The following table summarises the Banking Group’s current exposures in hedging relationships maturing after 31 December 2021 that will be
impacted by the IBOR reform and the quantum of those risks expressed in NZD equivalent values. The extent of the risk exposure also reflects the
notional amounts of related hedging instruments.
THE BANKING GROUP
30 Sep 20
$ millionsNotional hedged exposure
Benchmark
USD LIBOR 91
Hedging instruments
The following tables show the carrying value of hedging instruments and a maturity analysis of the notional amounts of the hedging instruments in
one-to-one hedge relationships categorised by the types of hedge relationships and the hedged risk.
THE BANKING GROUP
2020
Notional amounts Carrying value
$ millions
Hedging
instrument Hedged risk
Within 1
year
Over 1 year
to 5 years
Over 5
years TotalAssetsLiabilities
One-to-one hedge relationships
Fair value hedges Interest rate swap
Interest rate risk
6731,761-2,4345(180)
Cross currency swap Interest rate risk 1,8234,4263566,605111(57)
Cash flow hedges Cross currency swap FX risk4,5095,82335610,688496(137)
Total one-to-one hedge relationships7,00512,01071219,727612(374)
Macro hedge relationships
Portfolio fair value hedges Interest rate swap Interest rate risk N/AN/AN/A18,875-(180)
Macro cash flow hedges Interest rate swap Interest rate risk N/AN/AN/A12,741160(193)
Total macro hedge relationships N/AN/AN/A31,616160(373)
Total of gross hedging derivatives N/AN/AN/A51,343772(747)
Impact of netting arrangements N/AN/AN/AN/A--
Total of net hedging derivatives N/AN/AN/AN/A772(747)
THE BANKING GROUP
2019
Notional amounts Carrying value
$ millionsHedging instrument Hedged risk
Within 1
year
Over 1 year
to 5 years
Over 5
years TotalAssetsLiabilities
One-to-one hedge relationships
Fair value hedges Interest rate swap
Interest rate risk
2,1572,0134214,59113(213)
Cross currency swap Interest rate risk 1,2516,1343497,734155(100)
Cash flow hedges Cross currency swap FX risk2,55810,33834913,245671(24)
Total one-to-one hedge relationships5,96618,4851,11925,570839(337)
Macro hedge relationships
Portfolio fair value hedges Interest rate swap Interest rate risk N/AN/AN/A16,375-(178)
Macro cash flow hedges Interest rate swap Interest rate risk N/AN/AN/A10,220107(174)
Total macro hedge relationships N/AN/AN/A26,595107(352)
Total of gross hedging derivatives N/AN/AN/A52,165946(689)
Impact of netting arrangements N/AN/AN/AN/A--
Total of net hedging derivatives N/AN/AN/AN/A946(689)

Notes to the financial statements
Westpac New Zealand Limited 47
Note 23 Derivative financial instruments (continued)
The following table shows the weighted average exchange rate related to significant hedging instruments in one-to-one hedge relationships:
THE BANKING GROUP
Currency /Weighted average rate
$ millionsHedging instrumentHedged risk Currency pair20202019
Cash flow hedges Cross currency swapFX riskCHF:NZD
0.67300.7001
EUR:NZD
0.61600.6079
GBP:NZD
0.45380.4538
NZD:AUD
1.12721.1272
HKD:NZD
4.96704.9670
USD:NZD
0.68550.7230
Impact of hedge accounting in the balance sheet and reserves
The following tables show the carrying amount of hedged items in a fair value hedge relationship and the component of the carrying amount related to
accumulated fair value hedge accounting (‘FVHA’) adjustments.
THE BANKING GROUP
20202019
$ millions
Carrying amount of
hedged item
Accumulated FVHA
adjustment included
in carrying amount
Carrying amount of
hedged item
Accumulated FVHA
adjustment included in
carrying amount
Interest rate risk
Investment securities
2,5201194,469120
Loans
1
18,99812316,496121
Debt issues and loan capital
(6,825)(128)(8,215)(169)
1
Comparatives have been restated to correctly present the carrying amount for loans in a fair value hedge relationship to include the accumulated FVHA
adjustment. The revision increases the carrying amount of hedged item balance for loans by $121m from $16,375m to $16,496m.
There were no (30 September 2019: nil) accumulated FVHA adjustments included in the above carrying amounts relating to hedged items that
have ceased to be adjusted for hedging gains and losses.
The pre-tax impact of cash flow hedges on reserves is detailed below:
THE BANKING GROUP
20202019
$ millions
Interest rate
riskFX risk Total
Interest rate
riskFX risk Total
Cash flow hedge reserve
Balance at beginning of the year
(39)(73)(112)(46)(37)(83)
Net gains/(losses) from changes in fair value
(30)(51)(81)(40)(66)(106)
Transferred to net interest income
453580473077
Balance at end of year
(24)(89)(113)(39)(73)(112)
There were no (30 September 2019: nil) balances remaining in the cash flow hedge reserve relating to hedge relationships for which hedge
accounting is no longer applied.

Notes to the financial statements
48 Westpac New Zealand Limited
Note 23 Derivative financial instruments (continued)
Hedge effectiveness
Hedge effectiveness is tested prospectively at inception and during the lifetime of hedge relationships. For one-to-one hedge relationships this testing uses a
qualitative assessment of matched terms where the critical terms of the derivatives used as the hedging instrument match the terms of the hedged item. In
addition, a quantitative effectiveness test is performed for all hedges which could include regression analysis, dollar offset and/or sensitivity analysis.
Retrospective testing is also performed to determine whether the hedge relationship remains highly effective so that hedge accounting can continue to be
applied and also to determine any ineffectiveness. These tests are performed using regression analysis and the dollar offset method.
The following tables provide information regarding the determination of hedge effectiveness:
THE BANKING GROUP
2020
$ millions
Hedging
instrument Hedged risk
Change in fair value of
hedging instrument
used for calculating
ineffectiveness
Change in value of
the hedged item
used for calculating
ineffectiveness
Hedge
ineffectiveness
recognised in non-
interest income
Fair value hedges
Interest rate swap Interest rate risk (5)4(1)
Cross currency swap Interest rate risk (40)39(1)
Cash flow hedges
Interest rate swap Interest rate risk 24(14)10
Cross currency swap FX risk(16)16-
Total
(37)458
THE BANKING GROUP
2019
$ millionsHedging instrument Hedged risk
Change in fair value of
hedging instrument used
for calculating
ineffectiveness
Change in value of the
hedged item used for
calculating
ineffectiveness
Hedge
ineffectiveness
recognised in non-
interest income
Fair value hedges
Interest rate swap Interest rate risk (146)1471
Cross currency swap Interest rate risk 150(147)3
Cash flow hedges
Interest rate swap Interest rate risk 4(6)(2)
Cross currency swap FX risk(35)35-
Total
(27)292

Notes to the financial statements
Westpac New Zealand Limited 49
Note 24 Fair values of financial assets and financial liabilities
Accounting policy
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
On initial recognition, the transaction price generally represents the fair value of the financial instrument unless there is observable information
from an active market to the contrary. Where unobservable information is used, the difference between the transaction price and the fair value
(day one profit or loss) is recognised in the income statement over the life of the instrument when the inputs become observable.
Critical accounting assumptions and estimates
The majority of valuation models used by the Banking Group employ only observable market data as inputs. However, for certain financial
instruments, data may be employed which is not readily observable in current markets.
The availability of observable inputs is influenced by factors such as:
– product type;
– depth of market activity;
– maturity of market models; and
– complexity of the transaction.
Where unobservable market data is used, more judgement is required to determine fair value. The significance of these judgements depends on
the significance of the unobservable input to the overall valuation. Unobservable inputs are generally derived from other relevant market data and
adjusted against:
– standard industry practice;
– economic models; and
– observed transaction prices.
In order to determine a reliable fair value for a financial instrument, management may apply adjustments to the techniques previously described.
These adjustments reflect the Banking Group’s assessment of factors that market participants would consider in setting the fair value.
These adjustments incorporate bid/offer spreads, credit valuation adjustments (‘CVA’) and funding valuation adjustments (‘FVA’).
Fair Valuation Control Framework
The Banking Group uses a Fair Valuation Control Framework where the fair value is either determined or validated by a function independent of the
transaction. This framework formalises the policies and procedures used to achieve compliance with relevant accounting, industry and regulatory
standards. The framework includes specific controls relating to:
– the revaluation of financial instruments;
– independent price verification;
– fair value adjustments; and
– financial reporting.
A key element of the framework is the Revaluation Committee, comprising senior valuation specialists from within the Ultimate Parent Bank Group.
The Revaluation Committee reviews the application of the agreed policies and procedures to assess that a fair value measurement basis has been
applied.
The method of determining fair value differs depending on the information available.
Fair value hierarchy
A financial instrument’s categorisation within the valuation hierarchy is based on the lowest level input that is significant to the fair value
measurement.
The Banking Group categorises all fair value instruments according to the hierarchy described below.
Valuation techniques
The Banking Group applies market accepted valuation techniques in determining the fair valuation of over-the-counter (‘OTC’) derivatives. This
includes CVA and FVA, which incorporate credit risk and funding costs and benefits that arise in relation to uncollateralised derivative positions,
respectively.
The specific valuation techniques, the observability of the inputs used in valuation models and the subsequent classification for each significant
product category are outlined as follows:

Notes to the financial statements
50 Westpac New Zealand Limited
Note 24 Fair values of financial assets and financial liabilities (continued)
Financial instruments measured at fair value
Level 1 instruments
The fair value of financial instruments traded in active markets is based on recent unadjusted quoted prices. These prices are based on actual arm’s
length basis transactions.
The valuations of Level 1 instruments require little or no management judgement.
InstrumentBalance sheet categoryIncludes:Valuation
Non-asset backed debt
instruments
Trading securities and
financial assets
measured at FVIS
Investment securities
New Zealand
Government bonds
These instruments are traded in liquid, active markets where
prices are readily observable. No modelling or assumptions
are used in the valuation.
Level 2 instruments
The fair value for financial instruments that are not actively traded is determined using valuation techniques which maximise the use of observable
market prices. Valuation techniques include:
– the use of market standard discounting methodologies;
– option pricing models; and
– other valuation techniques widely used and accepted by market participants.
InstrumentBalance sheet categoryIncludes:Valuation
Interest rate
products
Derivative financial instruments
Due from related entities
Due to related entities
Interest rate swaps,
forwards and options
– derivative financial
instruments
Industry standard valuation models are used to calculate the
expected future value of payments by product, which is
discounted back to a present value. The model’s interest rate
inputs are benchmark interest rates and active broker quoted
interest rates in the swap, bond and futures markets. Interest
rate volatilities are sourced from brokers and consensus data
providers. If consensus prices are not available, these are
classified as Level 3 instruments.
FX products
Derivative financial instruments
Due from related entities
Due to related entities
FX swaps – derivative
financial instruments
Derived from market observable inputs or consensus pricing
providers using industry standard models.
Non-asset backed
debt instruments
Trading securities and financial
assets measured at FVIS
Investment securities
Due from related entities
Due to related entities
Local authority and
NZ public securities,
other bank issued
certificates of deposit,
commercial paper, other
government securities,
off-shore securities and
corporate bonds
Repurchase
agreements and reverse
repurchase agreements
over non-asset backed
debt securities
Valued using observable market prices which are sourced from
independent pricing services, broker quotes or inter-dealer
prices.
Deposits and
other borrowings
at fair value
Deposits and other borrowingsCertificates of deposit
Discounted cash flow using market rates offered for
deposits of similar remaining maturities.
Debt issues at fair
value
Debt issuesCommercial paper
Discounted cash flows, using a discount rate which reflects
the terms of the instrument and the timing of cash flows
adjusted for market observable changes in the Bank’s implied
credit worthiness.

Notes to the financial statements
Westpac New Zealand Limited 51
Note 24 Fair values of financial assets and financial liabilities (continued)
Level 3 instruments
Financial instruments valued where at least one input that could have a significant effect on the instrument’s valuation is not based on observable
market data due to illiquidity or complexity of the product. These inputs are generally derived and extrapolated from other relevant market data and
calibrated against current market trends and historical transactions.
These valuations are calculated using a high degree of management judgement.
The following table summarises the attribution of financial instruments measured at fair value to the fair value hierarchy:
THE BANKING GROUP
20202019
$ millionsLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Financial assets measured at fair value on a
recurring basis
Trading securities and financial assets measured at FVIS1,0641,373-2,437 - 1,661 - 1,661
Derivative financial instruments-599-599 - 616 - 616
Investment securities2,5042,517-5,021 1,049 3,420 - 4,469
Due from related entities-252-252 - 1,703 - 1,703
Total financial assets measured at fair value3,5684,741-8,309 1,049 7,400 - 8,449
Financial liabilities measured at fair value on a
recurring basis
Deposits and other borrowings at fair value-2,996-2,996 - 1,142 - 1,142
Derivative financial instruments-293-293 - 257 - 257
Debt issues at fair value-2,502-2,502 - 2,312 - 2,312
Due to related entities-671-671 - 820 - 820
Total financial liabilities measured at fair value-6,462-6,462 - 4,531 - 4,531
Analysis of movements between fair value hierarchy levels
During the year, there were no material transfers between levels of the fair value hierarchy (30 September 2019: no material transfers between
levels).
Financial instruments not measured at fair value
For financial instruments not measured at fair value on a recurring basis, fair value has been derived as follows:
InstrumentValuation
Loans
Where available, the fair value of loans is based on observable market transactions; otherwise fair value is estimated
using discounted cash flow models. For variable rate loans, the discount rate used is the current effective interest rate.
The discount rate applied for fixed rate loans reflects the market rate for the maturity of the loan and the credit
worthiness of the borrower.
Deposits and other
borrowings
Fair values of deposit liabilities payable on demand (interest free, interest bearing and savings deposits) approximate
their carrying value. Fair values for term deposits are estimated using discounted cash flows, applying market rates
offered for deposits of similar remaining maturities.
Debt issues and
loan capital
Fair values are calculated using a discounted cash flow model. The discount rates applied reflect the terms of the
instruments, the timing of the estimated cash flows and are adjusted for any changes in the Banking Group’s credit spreads.
Due to related
entities
The fair value of the loan due to related entities is estimated using a discounted cash flow model. The discount rate
applied reflects the terms of the loan and the timing of the estimated cash flows. The carrying value of all other balances
due to related entities approximates the fair value. These items are either short-term in nature or re-price frequently,
and are of a high credit rating.
All other financial
assets and financial
liabilities
For all other financial assets and financial liabilities, the carrying value approximates the fair value. These items are either
short-term in nature or re-price frequently, and are of a high credit rating.

Notes to the financial statements
52 Westpac New Zealand Limited
Note 24 Fair values of financial assets and financial liabilities (continued)
The following table summarises the estimated fair value and fair value hierarchy of the Banking Group’s financial instruments not measured at fair value:
THE BANKING GROUP
2020
Fair Value
$ millions
Carrying
Amount
Level 1Level 2Level 3Total
Financial assets not measured at fair value
Cash and balances with central banks 4,360 4,360 - - 4,360
Collateral paid 148 148 - - 148
Loans 87,959 - - 88,298 88,298
Other financial assets 196 - - 196 196
Due from related entities
842 - 833 9
842
Total financial assets not measured at fair value 93,505 4,508 833 88,503 93,844
Financial liabilities not measured at fair value
Collateral received 419 419 - - 419
Deposits and other borrowings 70,974 - 69,937 1,179 71,116
Other financial liabilities 287 - 287 - 287
Debt issues
1
13,297 - 13,517 - 13,517
Due to related entities 816 - 816 -
816
Loan capital
1
2,612 - - 2,737
2,737
Total financial liabilities not measured at fair value 88,405 419 84,557 3,916 88,892
THE BANKING GROUP
2019
Fair Value
$ millions
Carrying
Amount
Level 1Level 2Level 3Total
Financial assets not measured at fair value
Cash and balances with central banks 1,864 1,864 - - 1,864
Collateral paid 168 168 - - 168
Loans 84,160 - - 84,412 84,412
Other financial assets 178 - - 178 178
Due from related entities 799 - 789 10 799
Total financial assets not measured at fair value 87,169 2,032 789 84,600 87,421
Financial liabilities not measured at fair value
Collateral received 473 473 - - 473
Deposits and other borrowings 64,464 - 63,974 564 64,538
Other financial liabilities 455 - 455 - 455
Debt issues
1
15,534 - 15,701 - 15,701
Due to related entities 812 - 812 - 812
Loan capital
1
2,609 - - 2,703
2,703
Total financial liabilities not measured at fair value 84,347 473 80,942 3,267 84,682
1
The estimated fair value of debt issues and loan capital include the impact of changes in the Banking Group's credit spreads since origination.

Notes to the financial statements
Westpac New Zealand Limited 53
Note 25 Offsetting financial assets and financial liabilities
Accounting policy
Financial assets and financial liabilities are presented net in the balance sheet when the Banking Group has a legally enforceable right to offset
them in all circumstances and there is an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability
simultaneously. The gross assets and liabilities behind the net amounts reported in the balance sheet are disclosed in the following table.
Some of the Banking Group’s offsetting arrangements are not enforceable in all circumstances. The amounts in the tables below may not tie back
to the balance sheet if there are balances which are not subject to offsetting or enforceable netting arrangements. The amounts presented in this
note do not represent the credit risk exposure of the Banking Group. Refer to Note 32.2 for information on credit risk management. The offsetting
and collateral arrangements and other credit risk mitigation strategies used by the Banking Group are further explained in the ‘Management of risk
mitigation’ section under Note 32.2.
THE BANKING GROUP
2020
Amounts Subject to Enforceable Netting Arrangements
Amounts Offset on the Balance Sheet Amounts Not Offset on the Balance Sheet
$ millions
Gross
Amounts
Amounts
Offset
Net Amounts
Reported in
the Balance
Sheet
Other
Recognised
Financial
Instruments
Cash
Collateral
Financial
Instrument
CollateralNet Amount
Assets
Derivative financial instruments
599 - 599 (144) (408) - 47
Due from related entities - reverse
repurchase agreements
1
69 - 69 - - (69) -
Due from related entities - derivative
financial instruments
1
183 - 183 (183) - - -
Total assets 851 - 851 (327) (408) (69) 47
Liabilities
Derivative financial instruments
293 - 293 (144) (148) - 1
Due to related entities - repurchase
agreements
2
204 - 204 - - (204) -
Due to related entities - derivative
financial instruments
2
467 - 467 (183) - - 284
Total liabilities 964 - 964 (327) (148) (204) 285
1
Forms part of due from related entities on the balance sheet (refer to Note 22).
2
Forms part of due to related entities in the balance sheet (refer to Note 22).

Notes to the financial statements
54 Westpac New Zealand Limited
Note 25 Offsetting financial assets and financial liabilities (continued)
THE BANKING GROUP
2019
Amounts Subject to Enforceable Netting Arrangements
Amounts Offset on the Balance SheetAmounts Not Offset on the Balance Sheet
$ millions
Gross
Amounts
Amounts
Offset
Net Amounts
Reported in the
Balance Sheet
Other
Recognised
Financial
Instruments
Cash
Collateral
Financial
Instrument
CollateralNet Amount
Assets
Reverse repurchase agreements
1
111 - 111 - - (111) -
Derivative financial instruments
616 - 616 (89) (473) - 54
Due from related entities - reverse
repurchase agreements
2
872 - 872 - - (872) -
Due from related entities - derivative
financial instruments
2
831 - 831 (810) - - 21
Total assets 2,430 - 2,430 (899) (473) (983) 75
Liabilities
Derivative financial instruments 257 - 257 (89) (166) - 2
Due to related entities - repurchase
agreements
3
10 - 10 - - (10) -
Due to related entities - derivative
financial instruments
3
810 - 810 (810) - - -
Total liabilities 1,077 - 1,077 (899) (166) (10) 2
1
Forms part of trading securities and financial assets measured at FVIS (refer to Note 9).
2
Forms part of due from related entities in the balance sheet (refer to Note 22).
3
Forms part of due to related entities on the balance sheet (refer to Note 22).
Other recognised financial instruments
These financial assets and financial liabilities are subject to master netting agreements which are not enforceable in all circumstances, so they are
recognised gross in the balance sheet. The offsetting rights of the master netting arrangements can only be enforced if a predetermined event
occurs in the future, such as a counterparty defaulting.
Cash collateral and financial instrument collateral
These amounts are received or pledged under master netting arrangements against the gross amounts of assets and liabilities. Financial
instrument collateral typically comprises securities which can be readily liquidated in the event of counterparty default. The offsetting rights of the
master netting arrangement can only be enforced if a predetermined event occurs in the future, such as a counterparty defaulting.

Notes to the financial statements
Westpac New Zealand Limited 55
Note 26 Lessee disclosures
Accounting policy
Accounting policy for 30 September 2020 under NZ IFRS 16
At the lease commencement date (or the inception date for certain leases), a right-of-use asset and a lease liability are recognised in the balance
sheet for all leases with the exception of short term leases (12 months or less) and low value leases (underlying asset is less than $10,000).
ROU asset
The ROU asset is initially measured at cost being the amount of the initial measurement of the lease liability, plus any payments made at or before
the commencement date, initial direct costs and estimated make-good costs, less any lease incentives received. It is subsequently measured at
cost less accumulated depreciation and impairment losses. The asset is also adjusted for any subsequent remeasurement of the lease liability
(refer below).
Depreciation expense is recognised in operating expenses on a straight-line basis over the lease term.
Lease liability
The lease liability is initially measured at the present value of the future lease payments using a discount rate based on the Banking Group’s
incremental borrowing rate. It is subsequently increased by interest, reduced by principal payments and remeasured for any reassessment or
lease modification.
The lease liability may be remeasured in certain circumstances. For the Banking Group’s leases, it is expected that the lease liability will only be
required to be remeasured to reflect a change in the Banking Group’s assessment of the exercise of an extension option (refer below) or for a
change in future lease payments for a change in rate or index.
Interest expense is recognised in net interest income on an effective yield basis.
Lease term
Extension options are included in a number of lease contracts. The extension options are only included in the lease term if the lease is reasonably
certain to be extended, which is assessed by the Banking Group at the lease commencement date. The assessment is reviewed if a significant
event or significant change in circumstances occurs which affects this assessment and is within the control of the Banking Group.
A reassessment of the lease term (to determine whether it has become ‘reasonably certain’ that an extension option will be exercised) must be
undertaken for each of the Banking Group’s property and technology leases at a specific point prior to the lease expiry date.
Scope exemptions
For certain short-term and low value leases, lease payments are recognised in operating expenses on a straight-line basis over the lease term.
Accounting policy for 30 September 2019 under NZ IAS 17
An operating lease under NZ IAS 17 is a lease where substantially all of the risks and rewards of the leased assets remain with the lessor.
Where the Banking Group is the lessee, lease rentals payable are recognised as an expense in the income statement on a straight-line basis over
the lease term unless another systematic basis is more appropriate.
The Banking Group leases various commercial and retail premises and related property and equipment. The ROU asset recognised as a result of
these lease arrangements is included in property and equipment in the balance sheet and detailed in the following table:
ROU assets
THE BANKING GROUP
$ millionsPropertyOtherTotal
Balance at 30 September 2019---
Impact on adoption of NZ IFRS 1625438292
Restated opening balance as at 1 October 201925438292
Additions41-41
Depreciation (48)(13)(61)
Other(5)-(5)
Balance as at 30 September 202024225267

Notes to the financial statements
56 Westpac New Zealand Limited
Note 26 Lessee disclosures (continued)
Lease liabilities
Lease liabilities included in other liabilities in the balance sheet were:
THE BANKING GROUP
$ millions2020
Lease liabilities – property227
Lease liabilities - other 26
Total lease liabilities as at 30 September 2020253
The following table presents the future contractual undiscounted cash flows relating to lease liabilities by remaining contractual maturity based
on the requirements of NZ IFRS 16 applicable for the current period:
THE BANKING GROUP
$ millions2020
Due within 1 year52
Due after 1 year but not later than 5 years121
Due after 5 years107
Total undiscounted lease liabilities as at 30 September 2020280
As comparatives have not been restated on the adoption of NZ IFRS 16, the table below presents the operating lease commitments by remaining
contractual maturity based on the requirements of NZ IAS 17 applicable for the prior year:
THE BANKING GROUP
$ millions2019
Due within 1 year52
Due after 1 year but not later than 5 years130
Due after 5 years124
Total undiscounted lease liabilities as at 30 September 2019306
The total cash outflow for the year ended 30 September 2020 for leases was $114 million, of which $52 million relate to expenses recognised for
variable lease payments not included in the measurement of lease liabilities.
Note 27 Credit related commitments, contingent assets and contingent liabilities
Accounting policy
Undrawn credit commitments
The Banking Group enters into various arrangements with customers which are only recognised in the balance sheet when called upon.
These arrangements include commitments to extend credit, bill endorsements, financial guarantees, standby letters of credit and underwriting
facilities.
Contingent assets
Contingent assets are possible assets whose existence will be confirmed only by uncertain future events. Contingent assets are not recognised in
the balance sheet but are disclosed if an inflow of economic benefits is probable.
Contingent liabilities
Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events, and present obligations where
the transfer of economic resources is not probable or cannot be reliably measured. Contingent liabilities are not recognised in the balance sheet
but are disclosed unless the outflow of economic resources is remote.

Notes to the financial statements
Westpac New Zealand Limited 57
Note 27 Credit related commitments, contingent assets and contingent liabilities (continued)
Undrawn credit commitments
Undrawn credit commitments expose the Banking Group to liquidity risk when called upon and also to credit risk if the customer fails to repay the
amounts owed at the due date. The maximum exposure to credit loss is the contractual or notional amount of the instruments disclosed below.
Some of the arrangements can be cancelled by the Banking Group at any time. The actual liquidity and credit risk exposure varies in line with
drawings and may be less than the amounts disclosed. The Banking Group uses the same credit policies when entering into these arrangements
as it does for on-balance sheet instruments. Refer to Note 32 for further details on liquidity risk and credit risk management.
The Banking Group is obliged to repurchase any loan sold to and held by:
(a) WNZSL (pursuant to its securitisation programme) where the loan does not meet certain terms and conditions of the WNZSL securitisation
programme;
(b) WNZCBL (pursuant to the Bank’s Global Covered Bond Programme (‘CB Programme’)) where:
(i)it is discovered that there has been a material breach of a sale warranty (or any such sale warranty is materially untrue);
(ii) the loan becomes materially impaired or is enforced prior to the second monthly covered bond payment date falling after the assignment of
the loan; or
(iii) at the cut-off date relating to the loan, there were arrears of interest and that loan subsequently becomes a delinquent loan prior to the
second monthly covered bond payment date falling after the assignment of the loan.
It is not envisaged that any liability resulting in material loss to the Banking Group will arise from these obligations.
THE BANKING GROUP
$ millions
20202019
Letters of credit and guarantees
1
833 828
Commitments to extend credit
2
27,891 25,858
Total undrawn credit commitments 28,724 26,686
1
Standby letters of credit and guarantees are undertakings to pay, against presentation documents, an obligation in the event of a default by a customer.
Guarantees are unconditional undertakings given to support the obligations of a customer to third parties. The Banking Group may hold cash as collateral for
certain guarantees issued.
2
Commitments to extend credit include all obligations on the part of the Banking Group to provide credit facilities. As facilities may expire without being drawn
upon, the notional amounts do not necessarily reflect future cash requirements.
Contingent assets
The credit commitments shown in the table above also constitute contingent assets. These commitments would be classified as loans in the balance
sheet on the contingent event occurring.
Contingent liabilities
The Banking Group is exposed to contingent liabilities in respect of actual and potential claims and proceedings. An assessment of the Banking
Group’s likely loss in respect of these matters has been made on a case-by-case basis and provision has been made in these financial statements
where appropriate and is probable.
Compliance, regulation and remediation
The Banking Group is subject to continued regulatory action and internal reviews relating to matters pertaining to the provision of services to our
customers. Contingent liabilities may exist in respect of actual or potential claims, compensation payments and/or refunds identified as part of
these reviews. An assessment of the Banking Group’s likely loss has been made on a case-by-case basis for the purpose of the Disclosure Statement
but cannot always be reliably estimated. As at 30 September 2020, appropriate provision has been made in Note 19.
Guarantees
As disclosed in Note 22, the Bank has an agreement with the NZ Branch whereby the Bank will reimburse the NZ Branch for any credit losses
incurred by it due to certain customers of the Bank defaulting on certain financial market and international products.

Notes to the financial statements
58 Westpac New Zealand Limited
Note 28 Segment reporting
Accounting policy
Operating segments are presented on a basis that is consistent with information provided internally to the Banking Group’s chief operating
decision-maker and reflects the management of the business, rather than the legal structure of the Banking Group. The chief operating decision-
maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Banking Group
has determined that the Bank’s executive team is its chief operating decision-maker.
Inter-segment revenue and costs are eliminated at head office. Income and expenses directly associated with each segment are included in
determining business segment performance.
The Banking Group’s segment reporting incorporates consumer banking and wealth, commercial, corporate and institutional banking, and
investments and insurance sectors within New Zealand. On this basis, no geographical segment reporting is provided.
The operating segment results have been presented on a management reporting basis and consequently internal charges and transfer pricing
adjustments have been reflected in the performance of each operating segment. Intersegment pricing is determined on a cost recovery basis.
The Banking Group does not rely on any single major customer for its revenue base.
Segment comparative information for the year 30 September 2019 has been restated to ensure consistent presentation with the current reporting
period.
Operating segments are defined by the customers they serve and the services they provide. The Banking Group has identified the following main
operating segments:
–Consumer Banking and Wealth provides financial services predominantly for individuals;
–Commercial, Corporate and Institutional Banking provides a broad range of financial services for commercial, corporate, property finance,
agricultural, institutional and government customers; and
–Investments and Insurance provides funds management and insurance services.
Reconciling items primarily represent:
–business units that do not meet the definition of operating segments under NZ IFRS 8 Operating Segments;
–elimination entries on consolidation of the results, assets and liabilities of the Banking Group’s controlled entities in the preparation of the
consolidated financial statements of the Banking Group;
–results of certain entities included for management reporting purposes including insurance and investments, but excluded from the consolidated
financial statements of the Banking Group for statutory financial reporting purposes; and
–results of certain business units excluded for management reporting purposes but included within the consolidated financial statements of the
Banking Group for statutory financial reporting purposes.

Notes to the financial statements
Westpac New Zealand Limited 59
Note 28 Segment reporting (continued)
THE BANKING GROUP
ConsumerCommercial,Investments
Banking andCorporate andandReconciling
$ millionsWealth InstitutionalInsuranceItemsTotal
Year ended 30 September 2020
Net interest income1,0029081(36)
1,875
Non-interest income
120115109(101)243
Net operating income before operating expenses and
impairment charges
1,1221,023110(137)2,118
Operating expenses(772)(250)(33)25
(1,030)
Impairment (charges)/benefits
(165)(155)--(320)
Profit before income tax18561877(112)768
Year ended 30 September 2019 (restated)
Net interest income1,032887-24
1,943
Non-interest income
164124126(85)329
Net operating income before operating expenses and
impairment charges
1,1961,011126(61)2,272
Operating expenses(724)(238)(29)30(961)
Impairment (charges)/benefits
(17)27--10
Profit before income tax45580097(31)1,321
As at 30 September 2020
Total gross loans48,97939,457-12488,560
Total deposits and other borrowings38,63732,337-2,99673,970
As at 30 September 2019
Total gross loans45,73038,624-12184,475
Total deposits and other borrowings35,12529,340-1,14165,606
Note 29 Securitisation, covered bonds and other transferred assets
The Banking Group enters into transactions in the normal course of business by which financial assets are transferred to counterparties or structured
entities. Depending on the circumstances, these transfers may result in derecognition of the assets in their entirety, partial derecognition or no
derecognition of the assets subject to the transfer. For the Banking Group’s accounting policy on derecognition of financial assets, refer to Note 1.
Securitisation
Securitisation is the transferring of assets (or an interest in either the assets or the cash flows arising from the assets) to a structured entity which then
issues interest bearing debt securities to third party investors.
Own assets securitised
Securitisation of its own assets is used by the Banking Group as a funding and liquidity tool.
For securitisation structured entities which the Banking Group controls, as defined in Note 30, the structured entities are classified as subsidiaries and
consolidated. When assessing whether the Banking Group controls a structured entity, it considers its exposure to and ability to affect variable
returns. The Banking Group may have variable returns from a structured entity through ongoing exposures to the risks and rewards associated with
the assets, the provision of derivatives, liquidity facilities, trust management and operational services.
In October 2008, WNZSL was set up as part of the Bank’s internal residential mortgage-backed securitisation programme. Under this programme the
Bank sold the rights (but not the obligations) of a pool of housing loans to WNZSL. The purchase was funded by WNZSL’s issuance of residential
mortgage-backed securities (‘RMBS’). The RMBS and an equivalent liability in the form of a deemed loan from the Bank to WNZSL are fully eliminated
in the Banking Group’s financial statements. Refer to Note 27 for a description of the Banking Group’s obligation to repurchase certain housing loans
sold to WNZSL.

Notes to the financial statements
60 Westpac New Zealand Limited
Note 29 Securitisation, covered bonds and other transferred assets (continued)
Covered bonds
The Banking Group has a covered bond programme whereby selected pools of housing loans it originates are assigned to a bankruptcy remote
structured entity. WNZCBL is a special purpose entity established to purchase from time to time, and hold the rights, but not the obligations, of a pool
of housing loans (‘cover pool’) and to provide a financial guarantee (in addition to that of the Bank) in respect of obligations under the covered bonds
issued from time to time by WSNZL under the CB Programme. That financial guarantee is supported by WNZCBL granting security in favour of the
covered bondholders over the cover pool.
The intercompany loan made by the Bank to WNZCBL to fund the initial purchase (and subsequent further purchases which increased the cover pool)
and the liability representing the deemed loan from WNZCBL to the Bank are fully eliminated in the Banking Group’s financial statements. Refer to
Note 27 for a description of the Banking Group’s obligation to repurchase certain housing loans sold to WNZCBL.
Repurchase agreements
Where securities are sold subject to an agreement to repurchase at a predetermined price, they remain recognised in the balance sheet in their
original category (i.e. trading securities and financial assets measured at FVIS or investment securities).
The cash consideration received is recognised as a liability (repurchase agreements). Refer to Note 17 for further details.
The following table presents the Banking Group’s assets transferred and their associated liabilities:
THE BANKING GROUP
For those liabilities that only have recourse to
the transferred assets:
$ millions
Carrying
amount of
transferred
assets
Carrying
amount of
associated
liabilities
Fair value of
transferred
assets
Fair value of
associated
liabilities
Net fair value
position
2020
Securitisation - own assets
1
14,437 14,403 14,404 14,403 1
Covered bonds
2
7,524 4,468 n/an/an/a
Repurchase agreements 204 204 n/an/an/a
Total 22,165 19,075 14,404 14,403 1
2019
Securitisation - own assets
1
7,537 7,518 7,522 7,518 4
Covered bonds
2
7,530 5,274 n/an/an/a
Repurchase agreements 10 10 n/an/an/a
Total 15,077 12,802 7,522 7,518 4
1
The most senior rated securities at 30 September 2020 of $13,186 million (30 September 2019: $6,900 million) qualify as eligible collateral for repurchase
agreements with the Reserve Bank. The Bank complies with the Reserve Bank’s guidelines for its overnight reverse repurchase agreement facility and open market
operations, which allows banks in New Zealand to offer RMBS as collateral for the Reserve Bank’s repurchase agreements.
2
The difference between the carrying values of the covered bonds and the assets pledged allows for the immediate issuance of additional covered bonds if required.
These additional assets can be repurchased by the Bank at its discretion, subject to the conditions set out in the transaction documents. The cover pool is
comprised of housing loans up to a value of $7,500 million as at 30 September 2020 (30 September 2019: $7,500 million). Over time, the composition of the cover
pool will include, in addition to housing loans, accrued interest (representing accrued and unpaid interest on the outstanding housing loans) and cash (representing
collections of principal and interest from the underlying housing loans).

Notes to the financial statements
Westpac New Zealand Limited 61
Note 30 Structured entities
Accounting policy
Structured entities are generally created to achieve a specific, defined objective and their operations are restricted such as only purchasing
specific assets. Structured entities are commonly financed by debt or equity securities that are collateralised by and/or indexed to their
underlying assets. The debt and equity securities issued by structured entities may include tranches with varying levels of subordination.
Structured entities are classified as subsidiaries and consolidated if they meet the definition in Note 1. If the Banking Group does not control a
structured entity then it will not be consolidated.
The Banking Group engages in various transactions with both consolidated and unconsolidated structured entities that are mainly involved in
securitisations, asset backed structures and managed funds.
Consolidated structured entities
Securitisation and covered bonds
The Banking Group uses structured entities to securitise its financial assets through the CB Programme and the Bank’s internal residential
mortgage-backed securitisation programme. Refer to Note 29 for further details.
Funds managed by a member of the Ultimate Parent Bank Group
As disclosed in Note 22, the PIE Funds are consolidated within the financial statements of the Banking Group.
Non-contractual financial support
The Banking Group does not provide non-contractual financial support to these consolidated structured entities.
Unconsolidated structured entities
The Banking Group has interests in various unconsolidated structured entities including debt instruments, liquidity arrangements, lending, loan
commitments and certain derivatives.
Interests exclude non-complex derivatives (e.g. interest rate swap agreements) and lending to a structured entity with recourse to a wider
operating entity, not just the structured entity.
The Banking Group’s main interests in unconsolidated structured entities, which arise in the normal course of business, are loans and other credit
commitments. The Banking Group lends to unconsolidated structured entities, subject to the Banking Group’s collateral and credit approval
processes, in order to earn interest and fees and commissions income. The structured entities are mainly securitisation entities.
The following table shows the Banking Group’s interests in unconsolidated structured entities and its maximum exposure to loss in relation to
those interests. The maximum exposure does not take into account any collateral or hedges that will reduce the risk of loss.
For on-balance sheet instruments, including debt instruments in and loans to unconsolidated structured entities, the maximum exposure to
loss is the carrying value; and
For off-balance sheet instruments, including liquidity facilities and loan and other credit commitments, the maximum exposure to loss is the
notional amounts.
THE BANKING GROUP
20202019
$ millionsFinancing to Securitisation VehiclesFinancing to Securitisation Vehicles
Assets
Loans
3,321
2,784
Total on-balance sheet exposures3,3212,784
Total notional amounts of off-balance sheet exposures
1,319
1,104
Maximum exposure to loss4,6403,888
Size of structured entities
1
4,640
3,888
1
Represented by the total assets or market capitalisation of the entity, or if not available, the Banking Group’s total committed exposure (for lending arrangements
and external debt holdings).
Non-contractual financial support
The Banking Group does not provide non-contractual financial support to these unconsolidated structured entities.

Notes to the financial statements
62 Westpac New Zealand Limited
Note 31 Capital management
The primary objectives of the Banking Group’s capital management are to ensure that the Banking Group complies with the regulatory capital
requirements prescribed by the Reserve Bank, maintains strong credit ratings and holds a strong capital position in order to support its business
objectives and maximise shareholders’ value.
The Banking Group manages its capital structure and makes adjustments to this in light of changing economic conditions and the risk characteristics
of its activities. In order to maintain or adjust the capital structure, the Banking Group may adjust the amount of dividend payments to shareholders,
reduce discretionary expenditure, return/issue capital to shareholders or issue capital securities.
Three independent processes, undertaken by Directors and senior management of the Bank, are designed to manage the Banking Group’s capital
adequacy to support its current and future activities:
1.The Banking Group actively monitors its capital adequacy as part of the annual Banking Group internal capital adequacy assessment process
('ICAAP') and reports this to senior management and the Bank’s Board Risk and Compliance Committee (‘BRCC’). This process supports the
Board approved risk appetite statement. This statement outlines the target debt rating, target capital ratios and the degree of earnings
volatility that is acceptable. Capital ratios are set at a higher level than required by the regulator, which both reduces the risk of breaching the
conditions of registration and provides investor confidence.
2.The Banking Group calculates the capital required to be held for its current risk profile and forecasts the estimated capital position based on
expected future activities. The forecast capital required is assessed against the target ranges that have been approved by the Board in regard
to capital ratios. The Banking Group also reviews its positions in this process against other stakeholder requirements to ensure capital
efficiency.
3.The Ultimate Parent Bank Group takes capital considerations into account during its Board Strategy Review (‘BSR’). The BSR is an annual
process where the current strategic direction of the Ultimate Parent Bank Group is reviewed and refinements are made.
The following tables show the Banking Group’s capital summary and capital ratios.
THE BANKING GROUP
20202019
$ millionsUnauditedUnaudited
Tier 1 capital
Common Equity Tier 1 capital
Total shareholder's equity 7,690 7,417
Less deductions from Common Equity Tier 1 capital (858) (1,009)
Total Common Equity Tier 1 capital 6,832 6,408
Additional Tier 1 capital instruments
1
1,500 1,500
Total Tier 1 capital 8,332 7,908
Tier 2 capital instruments
1
1,123 1,122
Eligible impairment allowance in excess of expected loss 43 -
Total Tier 2 capital 1,166 1,122
Total capital 9,498 9,030
1

Classified as a liability and excludes capitalised transaction costs. Additional Tier 1 capital instruments and Tier 2 capital instruments are itemised in Note 20. Further
details on convertibility for Additional Tier 1 and Tier 2 capital instruments are noted in Note 20.
THE BANKING GROUP
Reserve Bank20202019¹
% Minimum Ratios
1
UnauditedUnaudited
Capital ratios
Common Equity Tier 1 capital ratio4.512.311.3
Tier 1 capital ratio6.015.013.9
Total capital ratio8.017.115.9
Buffer ratio2.57.84.8
1
Changes to the Bank’s conditions of registration, effective from 31 December 2017, increased the Common Equity Tier 1 capital ratio, Tier 1 capital ratio and Total
capital ratio (‘minimum capital ratios’) by 2% compared to the minimum capital ratios as at 30 September 2017. The increased minimum capital ratios were to
remain in place until the Bank had satisfied the Reserve Bank that all existing issues in relation to the matters of non-compliance had been resolved. Effective from 31
December 2019, the Reserve Bank amended the Bank’s conditions of registration to remove the two percentage point overlay applying to its minimum capital
requirements. Refer to the ‘Non-compliance with conditions of registration’ section on page 113 for further details.
Freeze on dividends and restrictions on the distributions of additional Tier 1 capital instruments by NZ Banks
On 2 April 2020, a decision was made by the Reserve Bank to freeze the distribution of dividends on ordinary shares and to restrict the extent to
which distributions on additional Tier 1 capital instruments are permitted by all locally incorporated banks in New Zealand (including the Bank)
during the period of economic uncertainty caused by COVID-19. On 11 November 2020, the Reserve Bank announced that these restrictions will be
retained until at least 31 March 2021.

Notes to the financial statements
Westpac New Zealand Limited 63
Note 31 Capital management (continued)
Reserve Bank Capital Review
On 5 December 2019, the Reserve Bank announced changes to the capital adequacy framework in New Zealand. The new framework includes the
following key components:
Setting a Tier 1 capital requirement of 16% of risk weighted assets (‘RWA’) for systemically important banks (including the Bank) and 14% for all
other banks;
Additional Tier 1 capital (‘AT1’) can comprise no more than 2.5% of the 16% Tier 1 capital requirement;
Eligible Tier 1 capital will comprise common equity and redeemable perpetual preference shares. Existing AT1 instruments will be phased out
over a seven-year period;
Maintaining the existing Tier 2 capital requirement of 2% of RWA; and
Recalibrating RWA for internal rating based banks, such as the Bank, such that aggregate RWA will increase to approximately 90% of
standardised RWA.
The Bank is already strongly capitalised with a Tier 1 capital ratio of 15% as at 30 September 2020 based on the current Reserve Bank rules. On a pro
forma basis, (including the new RWA and capital requirements) as at 30 September 2020 and assuming a Tier 1 capital ratio of 16-17%, the Bank
would require a further NZ$1.6-$2.2 billion (Unaudited) of Tier 1 capital to meet the new requirements that are fully effective in 2028.
In response to the impacts of COVID-19, and to support credit availability, the Reserve Bank has delayed the start date of the new capital regime
until 1 July 2022. Banks will be given up to seven years to comply.
Note 32 Financial risk
Financial instruments are fundamental to the Banking Group’s business of providing banking and financial services. The associated financial risks
(including credit risk, funding and liquidity risk and market risk) are a significant proportion of the total risks faced by the Banking Group.
This note details the financial risk management policies, practices and quantitative information of the Banking Group’s principal financial risk
exposures.
Principal risksNote nameNote number
OverviewRisk management frameworks32.1
Credit risk ratings system32.2.1
Credit risk mitigation, collateral and other credit enhancements32.2.2
Credit risk concentrations32.2.3
Credit quality of financial assets32.2.4
Non-performing loans and credit commitments32.2.5
Credit risk
The risk of financial loss where a customer or counterparty
fails to meet their financial obligations.
Collateral held32.2.6
Liquidity modelling32.3.1
Sources of funding32.3.2
Assets pledged as collateral32.3.3
Contractual maturity of financial liabilities32.3.4
Funding and liquidity risk
The risk that the Banking Group cannot meet its payment
obligations or that it does not have the appropriate amount,
tenor and composition of funding and liquidity to support its
assets.
Expected maturity32.3.5
Value-at-Risk (‘VaR’)32.4.1
Market risk
The risk of an adverse impact on earnings resulting from
changes in market factors, such as FX rates, interest rates,
commodity prices and equity prices.
Non-traded market risk32.4.2
32.1 Risk management frameworks
The Board is responsible for approving the Banking Group’s Risk Management Framework and Risk Appetite Statement and monitoring the
effectiveness of risk management by the Banking Group. The Bank is wholly owned by the Ultimate Parent Bank and, therefore, a member of the
group of companies comprising the Ultimate Parent Bank Group. Accordingly, the Banking Group’s Risk Management Framework is closely aligned
with the Ultimate Parent Bank’s Risk Management Framework.

Notes to the financial statements
64 Westpac New Zealand Limited
Note 32 Financial risk (continued)
The Board has delegated to the BRCC to:
review and recommend the Banking Group’s Risk Management Framework and Risk Appetite Statement to the Board for approval;
review and monitor the risk profile and controls of the Banking Group consistent with the Banking Group’s Risk Appetite Statement;
approve frameworks, policies and processes for managing risk (consistent with the Banking Group’s Risk Management Framework and Risk
Appetite Statement); and
review and, where appropriate, approve risks beyond the approval discretion provided to management.
For each of its primary financial risks, the Banking Group maintains risk management frameworks and a number of supporting policies that define
roles and responsibilities, acceptable practices, limits and key controls:
RiskRisk management framework and controls
Credit risk
- The Banking Group’s Credit Risk Management Framework
describes the principles, methodologies, systems, roles and
responsibilities, reports and key controls for managing credit
risk. Within the Credit Risk Management Framework, the
Banking Group has its own credit approval limits approved by
the Banking Group’s Board as delegated by the Ultimate Parent
Bank Group Chief Risk Officer.
- The BRCC, Executive Risk Committee (‘RISKCO’) and Credit Risk
Committee (‘CREDCO’) monitor the risk profile, performance
and management of the Banking Group’s credit portfolio and
the development and review of key credit risk policies on at
least a quarterly basis; other management reviews occur
monthly or more frequently.
- The Banking Group’s Credit Risk Rating System Policy describes
the credit risk rating system philosophy, design, key features, IT
systems and uses of rating outcomes.
- All models materially impacting the risk rating process are
periodically reviewed in accordance with the Banking Group’s
model risk policies.
- An annual review is performed of the Credit Risk Rating System
for approval by the BRCC.
- Specific credit risk estimates (including PD, LGD and EAD) are
reviewed by CREDCO, overseen, reviewed annually and approved
by the Chief Risk Officer and by the Ultimate Parent Bank’s Credit
Risk Estimates Committee (a subcommittee of the Ultimate
Parent Bank’s BRCC).
- In determining the provision for ECL, the macroeconomic
variables and the probability weightings of the forward-looking
scenarios as well as any adjustments made to the modelled
outcomes are subject to the approval of the Chief Financial
Officer and the Chief Risk Officer with oversight from the Board of
Directors (and its Committees).
- Policies for delegating credit approval authorities and formal
limits for the extension of credit are established throughout
the Banking Group. These include those for the approval and
management of all credit risk arising from other banks and
related entities.
- Credit policies are established throughout the Banking Group.
They include policies governing the origination, evaluation,
approval, documentation, settlement and ongoing management
of credit risks.
- Sector policies guide credit extension where industry-specific
guidelines are considered necessary (e.g. acceptable financial
ratios or permitted collateral).
- The Ultimate Parent Bank’s Related Entity Risk Management
Framework and supporting policies govern credit exposures to
related entities to minimise the spread of credit risk between the
Ultimate Parent Bank Group.
Funding and
liquidity
risk
- Funding and liquidity risk is measured and managed in
accordance with the policies and processes defined in the
Board-approved Liquidity Risk Management Framework which
is part of the Banking Group’s Board-approved Risk
Management Framework.
- Responsibility for managing the Banking Group's liquidity and
funding positions in accordance with the Liquidity Risk
Management Framework is delegated to Treasury, under the
oversight of the Banking Group’s Asset and Liability Committee
(‘ALCO’) and Banking Group Liquidity Risk.
- The Banking Group’s Liquidity Risk Management Framework
sets out the Banking Group’s funding and liquidity risk appetite,
roles and responsibilities of key people managing funding and
liquidity risk within the Banking Group, risk reporting and
control processes and limits and targets used to manage the
Banking Group’s balance sheet.
- Treasury undertakes an annual funding review that outlines the
Banking Group's balance sheet funding strategy over a three
year period. This review encompasses trends in global markets,
peer analysis, wholesale funding capacity, expected funding
requirements and a funding risk analysis. This strategy is
continuously reviewed to take account of changing market
conditions, investor sentiment and estimations of asset and
liability growth rates.
- The Banking Group monitors the composition and stability of its
funding so that it remains within the Banking Group’s funding
risk appetite. This includes compliance with both the Liquidity
Coverage Ratio (‘LCR’) and Net Stable Funding Ratio (‘NSFR’).
- The Banking Group holds a portfolio of liquid assets for several
purposes, including as a buffer against unforeseen funding
requirements. The level of liquid assets held takes into account
the liquidity requirements of the Banking Group's balance sheet
under normal and stress conditions.
- Treasury also maintains a contingent funding plan that outlines
the steps that should be taken by the Banking Group in the
event of an emerging ‘funding crisis’. The plan is aligned with
the Banking Group’s broader Liquidity Crisis Management Policy
which is approved annually by the Board.
- Daily liquidity risk reports are reviewed by Treasury and the
Banking Group’s Liquidity Risk teams. Liquidity reports are
presented to ALCO monthly and to the BRCC quarterly.

Notes to the financial statements
Westpac New Zealand Limited 65
Note 32 Financial risk (continued)
RiskRisk management framework and controls
Market risk
- The Market Risk Framework describes the Banking Group’s
approach to managing non-traded market risk.
- As the Ultimate Parent Bank’s financial markets business in New
Zealand is conducted by the NZ Branch, the market risks faced
by the Banking Group are only of a non-traded nature. Non-
traded market risk includes interest rate and FX risks. The
Banking Group does not carry material foreign currency or
equity price risk due to the risks being hedged.
- Market risk is managed using VaR limits, Net interest income at
risk (‘NaR’) and structural risk limits (including credit spread
and interest rate basis point value limits) as well as scenario
analysis and stress testing.
- The BRCC approves the VaR and NaR limits for non-traded risk.
- Market risk limits are assigned to business management based
upon the Banking Group’s risk appetite and business strategies
in addition to the consideration of market liquidity and
concentration of risks.
- Market risk positions are managed by the trading desks and
ALM unit consistent with their delegated authorities and the
nature and scale of the market risks involved.
- Daily monitoring of current exposure and limit utilisation is
conducted independently by the Banking Group’s Market Risk
unit, which monitors market risk exposures against VaR and
structural risk limits. Daily VaR position reports are produced by
risk type, by product lines and by geographic region. Monthly and
quarterly reports are produced for the Banking Group’s and
Ultimate Parent Bank’s risk forums and Ultimate Parent Bank’s
BRCC, respectively, to ensure transparency of material market
risks and issues.
- Daily stress testing and backtesting of VaR results are performed
to support model integrity and to analyse extreme or unexpected
movements. A review of the potential profit and loss outcomes is
also undertaken to monitor any skew created by the historical
data. RISKCO has ratified an approved escalation framework.
- Treasury’s ALM unit is responsible for managing the non-traded
interest rate risk including risk mitigation through hedging using
derivatives. This is overseen by the Market Risk unit and reviewed
by the Ultimate Parent Bank’s Market Risk Committee, RISKCO
and BRCC.
32.2 Credit risk
32.2.1 Credit risk ratings system
The principal objective of the credit risk rating system is to reliably assess the credit risk to which the Banking Group is exposed. The Banking Group
has two main approaches to this assessment.
Transaction-managed customers
Transaction managed customers are generally customers with business lending exposures. They are individually assigned a Customer Risk Grade
(‘CRG’), corresponding to their expected PD. Each facility is assigned an LGD. The Banking Group’s risk rating system has a tiered scale of risk grades
for both non-defaulted customers and defaulted customers. Non-defaulted CRGs are mapped to Moody’s Investor Service (‘Moody’s’) and S&P Global
Ratings (‘S&P’) external senior ranking unsecured ratings.
The following table shows the Banking Group’s high level CRG’s for transaction-managed portfolios mapped to the Banking Group’s credit quality
disclosure categories and to their corresponding external rating.
Transaction-managed
Financial Statement DisclosureBanking Group’s CRGMoody’s RatingS&P Rating
StrongAAaa – Aa3AAA – AA-
BA1 – A3A+ – A-
CBaa1 – Baa3BBB+ – BBB-
Good/satisfactoryDBa1 – B1BB+ – B+
Banking Group Rating
WeakEWatchlist
FSpecial Mention
Weak/default/non-performingGSubstandard/Default
HDefault
Program-managed portfolio
The program-managed portfolio generally includes retail products including mortgages, personal lending (including credit cards) as well as Small and
Medium-sized Enterprises (‘SME’) lending. These customers are grouped into pools of similar risk. Pools are created by analysing similar risk
characteristics that have historically predicted that an account is likely to go into default. Customers grouped according to these predictive
characteristics are assigned a PD and LGD relative to their pool. The credit quality of these pools is based on a combination of behavioural factors,
delinquency trends, PD estimates and loan to valuation ratio (housing loans only).

Notes to the financial statements
66 Westpac New Zealand Limited
Note 32 Financial risk (continued)
Program-managed
Financial Statement DisclosureAdvanced PM Model
1
Simplified PM Approach
2
StrongStage 1 facilities with PM Risk Grade between 13 and 10-
Good/satisfactoryStage 1 facilities with PM Risk Grade between 9 and 6Stage 1
Stage 2 facilities with PM Risk Grade between 13 and 6Stage 2 and 0 - 29 days past due
WeakAll facilities with PM Risk Grade between 5 and 1Stage 2 and 30 or more days past due
Weak/default/non-performingAll facilities with PM Risk Grade equal to 0Stage 3
1
Used for Residential Mortgages, Credit Cards & SME.
2
Used for Personal Lending.
32.2.2 Credit risk mitigation, collateral and other credit enhancements
The Banking Group uses a variety of techniques to reduce the credit risk arising from its lending activities.
This includes the Banking Group establishing that it has direct, irrevocable and unconditional recourse to collateral and other credit enhancements
through obtaining legally enforceable documentation.
The Banking Group includes the effect of credit risk mitigation through eligible guarantees within the calculation applied to LGD. Due to system
limitations, the value of the guarantee is not always separately recorded, and therefore, neither this value nor a close alternative is available for
disclosure under Clause 7 of Schedule 11 to the Order.
Collateral
The following table describes the nature of collateral or security held for each relevant class of financial asset:
Financial assetsNature of collateral
Loans – residential mortgages
1
Housing loans are secured by a mortgage over property and additional security may take the form of
guarantees and deposits.
Loans – other retail
1
Personal lending (including credit cards and overdrafts) is predominantly unsecured. Where security is
taken, it is restricted to eligible motor vehicles, caravans, campers, motor homes and boats.
SME loans may be secured, partially secured or unsecured. Security is typically taken by way of a mortgage
over property and/or a general security agreement over business assets or other assets.
Loans – corporate
1
Business loans may be secured, partially secured or unsecured. Security is typically taken by way of a
mortgage over property and/or a general security agreement over business assets or other assets.
Other security such as guarantees or standby letters of credit may also be taken as collateral, if
appropriate.
Trading securities and financial
assets measured at FVIS, due from
related entities and derivative
financial instruments
These exposures are carried at fair value which reflects the credit risk.
For trading securities, no collateral is sought directly from the issuer or counterparty; however this may be
implicit in the terms of the instrument (such as an asset-backed security). The terms of debt securities
may include collateralisation.
Master netting agreements are typically used to enable the effects of derivative assets and derivative
liabilities with the same counterparty to be offset when measuring these exposures. Additionally,
collateralisation agreements are also typically entered into with major institutional counterparties to avoid
the potential build-up of excessive mark-to-market positions. Derivative transactions are increasingly
being cleared through central clearers.
1
This includes collateral held in relation to associated credit commitments.

Notes to the financial statements
Westpac New Zealand Limited 67
Note 32 Financial risk (continued)
Management of risk mitigation
The Banking Group mitigates credit risk through controls covering:
Collateral and valuation
management
The Ultimate Parent Bank manages collateral under collateralisation agreements centrally for all branches
of the Ultimate Parent Bank and the Bank.
The estimated realisable value of collateral held in support of loans is based on a combination of:
formal valuations currently held for such collateral; and
management’s assessment of the estimated realisable value of all collateral held.
This analysis also takes into consideration any other relevant knowledge available to management at the
time. Updated valuations are obtained when appropriate.
The Banking Group revalues collateral related to financial markets positions on a daily basis and has formal
processes in place to promptly call for collateral top-ups, if required. These processes include margining
for non-centrally cleared customer derivatives where required under Australian Prudential Regulation
Authority’s (‘APRA’) Prudential Standard CPS226. The collateralisation arrangements are documented via
the Credit Support Annex of the ISDA dealing agreements and Global Master Repurchase Agreements for
repurchase transactions.
Other credit enhancements
The Banking Group only recognises guarantees, standby letters of credit, or credit derivative protection
from the following entities (provided they are not related to the entity with which the Banking Group has a
credit exposure):
Sovereign;
Australia and New Zealand public sector;
Authorised deposit-taking institutions and overseas banks with a minimum risk grade equivalent
of A3 / A-; and
Other entities with a minimum risk grade equivalent of A3 / A-.
Offsetting
Close-out netting is undertaken with counterparties with whom the Banking Group has entered into a
legally enforceable master netting agreement for their off-balance sheet financial market transactions in
the event of default.
Further details of offsetting are provided in Note 25.
Central clearing
The Banking Group increasingly executes derivative transactions through central clearing counterparties.
Central clearing counterparties mitigate risk through stringent membership requirements, the collection of
margin against all trades placed, the default fund, and an explicitly defined order of priority of payments in
the event of default.
32.2.3 Credit risk concentrations
Credit risk is concentrated when a number of counterparties are engaged in similar activities, have similar economic characteristics and thus may
be similarly affected by changes in economic or other conditions.
The Banking Group monitors its credit portfolio to manage risk concentrations and rebalance the portfolio.
Individual customers or groups of related customers
The Banking Group has large exposure limits governing the aggregate size of credit exposure normally acceptable to individual customers and
groups of related customers. These limits are tiered by customer risk grade.
Specific industries
Exposures to businesses, governments and other financial institutions are classified into a number of industry clusters based on related Australian
and New Zealand Standard Industrial Classification (‘ANZSIC’) codes and are monitored against the Banking Group’s industry risk appetite limits.

Notes to the financial statements
68 Westpac New Zealand Limited
Note 32 Financial risk (continued)
Individual countries
The Banking Group has limits governing risks related to individual countries, such as political situations, government policies and economic
conditions that may adversely affect either a customer’s ability to meet its obligations to the Banking Group, or the Banking Group’s ability to
realise its assets in a particular country.
Maximum exposure to credit risk
The maximum exposure to credit risk (excluding collateral received) is represented by the carrying amount of on-balance sheet financial assets
and undrawn credit commitments as set out in the following table.
THE BANKING GROUP
$ millions20202019
Financial assets
Cash and balances with central banks4,3601,864
Collateral paid148168
Trading securities and financial assets measured at FVIS2,4371,661
Derivative financial instruments599616
Investment securities5,0214,469
Loans87,95984,160
Other financial assets196178
Due from related entities1,0942,502
Total financial assets101,81495,618
Undrawn credit commitments
Letters of credit and guarantees833828
Commitments to extend credit27,89125,858
Total undrawn credit commitments28,72426,686
Total maximum credit risk exposure130,538122,304

Notes to the financial statements
Westpac New Zealand Limited 69
Note 32 Financial risk (continued)
Concentration of credit exposures
THE BANKING GROUP
$ millions20202019
On-balance sheet credit exposures
Analysis of on-balance sheet credit exposures by geographical areas
New Zealand99,239
92,871
Australia695
857
United Kingdom603
603
United States of America67
58
China730
684
Other480
545
Total on-balance sheet credit exposures101,81495,618
Analysis of on-balance sheet credit exposures by industry sector
Accommodation, cafes and restaurants480465
Agriculture9,3308,773
Construction581557
Finance and insurance5,1164,970
Forestry and fishing505434
Government, administration and defence10,6026,681
Manufacturing1,7381,937
Mining220300
Property7,9757,387
Property services and business services1,0761,319
Services2,2262,056
Trade1,7672,131
Transport and storage1,2441,198
Utilities1,6051,751
Retail lending56,76953,423
Subtotal101,23493,382
Provision for ECL on loans(601)(315)
Due from related entities1,0942,502
Other financial assets8749
Total on-balance sheet credit exposures101,81495,618
Off-balance sheet credit exposures consists of
Credit risk-related instruments28,72426,686
Total off-balance sheet credit exposures28,72426,686
Analysis of off-balance sheet credit exposures by industry sector
Accommodation, cafes and restaurants104116
Agriculture837624
Construction543492
Finance and insurance1,9161,625
Forestry and fishing233204
Government, administration and defence899884
Manufacturing1,9201,840
Mining11135
Property1,2151,986
Property services and business services928700
Services861592
Trade2,0771,672
Transport and storage944801
Utilities1,9091,646
Retail lending14,22713,469
Total off-balance sheet credit exposures 28,72426,686
ANZSIC has been used as the basis for disclosing industry sectors.

Notes to the financial statements
70 Westpac New Zealand Limited
Note 32 Financial risk (continued)
32.2.4 Credit quality of financial assets
The following table shows the credit quality of gross credit risk exposures measured at amortised cost or at FVOCI to which the impairment
requirements of NZ IFRS 9 apply. The credit quality is determined by reference to the credit risk ratings system (refer to Note 32.2.1) and
expectations of future economic conditions under multiple scenarios:
THE BANKING GROUP
20202019
$ millions
Stage 1Stage 2Stage 3Total
1
Stage 1Stage 2Stage 3Total
1
Loans - Residential Mortgages
Strong
42,916 - - 42,916 42,096--42,096
Good/satisfactory
7,695 3,578 - 11,273 7,6121,201-8,813
Weak
49 501 473 1,023 28248302578
Total Loans - Residential Mortgages
50,660 4,079 473 55,212 49,7361,44930251,487
Loans - Other retail
2
Strong
1,206 - - 1,206 610--610
Good/satisfactory
1,646 203 - 1,849 2,88156-2,937
Weak
18 152 74 244 1913453206
Total Loans - Other retail
2,870 355 74 3,299 3,510190533,753
Loans - Corporate
Strong
11,571 - - 11,571 11,368--11,368
Good/satisfactory
15,643 979 - 16,622 15,3301,104-16,434
Weak
- 1,610 154 1,764 -1,229931,322
Total Loans - Corporate
27,214 2,589 154 29,957 26,6982,3339329,124
Loans - Other
Strong
92 - - 92 111--111
Good/satisfactory
- - - - ----
Weak
- - - - ----
Total Loans - Other
92 - - 92 111--111
Investment Securities
Strong
5,021 - - 5,021 4,469--4,469
Good/satisfactory
- - - - ----
Weak
- - - - ----
Total Investment Securities
5,021 - - 5,021 4,469--4,469
All other financial assets
Strong
5,505 - - 5,505 2,963--2,963
Good/satisfactory
31 6 - 37 394-43
Weak
- 3 1 4 -213
Total all other financial assets
5,536 9 1 5,546 3,002613,009
Undrawn credit commitments
Strong
21,774 - - 21,774 18,435--18,435
Good/Satisfactory
6,469 279 - 6,748 7,812230-8,042
Weak
12 146 44 202 1017920209
Total undrawn credit commitments
28,255 425 44 28,724 26,2574092026,686
Total strong
88,085 - - 88,085 80,052 - - 80,052
Total good/satisfactory
31,484 5,045 - 36,529 33,674 2,595 - 36,269
Total weak
79 2,412 746 3,237 57 1,792 469 2,318
Total on and off balance sheet
119,648 7,457 746 127,851 113,783 4,387 469 118,639
1
This credit quality disclosure differs to that of credit risk concentration as it relates only to financial assets measured at amortised costs or at FVOCI and
therefore excludes trading securities and financial assets measured at FVIS, and derivative financial instruments.
2
Comparatives have been restated to correctly classify Stage 2 credit exposures of $116m related to ‘Loans – Other retail’ from ‘Good/satisfactory' to ‘Weak’.
Details of collateral held in support of these balances are provided in Note 32.2.6.

Notes to the financial statements
Westpac New Zealand Limited 71
Note 32 Financial risk (continued)
32.2.5 Non-performing loans and credit commitments
The loans and credit commitments balance in stage 3 (non-performing) is represented by those loans and credit commitments which are in
default. A default occurs when the Banking Group considers that the customer is unlikely to repay its credit obligations in full, irrespective of
recourse by the Banking Group to actions such as realising security, or the customer is more than 90 days past due on any material credit
obligation. This definition of default is aligned to the Reserve Bank regulatory definition of default except for customers’ exposures availing COVID-
19 assistance, which follow the supplementary guidelines provided by the Reserve Bank for regulatory capital and the IASB guidance for
provisioning.
The determination of the provision for ECL is one of the Banking Group’s critical accounting assumptions and estimates. Details of this and the
Banking Group’s accounting policy for the provision for ECL are discussed in Notes 6 and 12 along with the total provision for ECL on loans and
credit commitments and the total for those loans and credit commitments that are considered non-performing (i.e. stage 3).
32.2.6 Collateral held
Loans
The Banking Group analyses the coverage of the loan portfolio which is secured by the collateral that it holds. Coverage is measured as follows:
Coverage
Secured loan to collateral value ratio
Fully secured
Less than or equal to 100%
Partially secured
Greater than 100% but not more than 150%
Unsecured
Greater than 150%, or no security held (e.g. can include credit cards, personal loans, and
exposure to highly rated corporate entities)
The Banking Group’s loan portfolio has the following coverage from collateral held:
THE BANKING GROUP
20202019
%
Residential
Mortgages
1
Other
Retail
Corporate Other Total
Residential
Mortgages
1
Other
Retail
Corporate Other Total
Performing Loans
Fully secured
100 44 63 44 85 100 39 61 37 84
Partially secured
- 4 19 1 7 - 4 20 11 7
Unsecured
- 52 18 55 8 - 57 19 52 9
Total 100 100 100 100 100 100 100 100 100 100
Non-performing loans
Fully secured
96 39 13 - 71 94 53 10 - 72
Partially secured
4 7 14 - 7 6 4 50 - 15
Unsecured
- 54 73 - 22 - 43 40 - 13
Total 100 100 100 - 100 100 100 100 - 100
1
For the purposes of collateral classifications, residential mortgages are classified as fully secured, unless they are non-performing in which case they may be
classified as partially secured. Refer to Section iv ‘Additional mortgage information’ of the Registered bank disclosures for loan-to-value ratio ('LVR') analysis of
residential mortgages.
Details of the carrying value and associated provision for ECL are disclosed in Note 11, Section iii. of the Registered bank disclosures and Note 12
respectively. The credit quality of loans is disclosed in Note 32.2.4.
Collateral held against financial assets other than loans
THE BANKING GROUP
$ millions20202019
Cash, primarily for derivatives 419 473
Securities under reverse repurchase agreements
1
69 983
Total other collateral held
488 1,456
1
Securities received as collateral are not recognised on the Banking Group's balance sheet

Notes to the financial statements
72 Westpac New Zealand Limited
Note 32 Financial risk (continued)
32.3 Funding and liquidity risk
The Bank aims to maintain a mix of retail and wholesale funding, with emphasis on the value of core funding consistent with the principles inherent in
the Reserve Bank’s document entitled ‘Liquidity Policy’ (‘BS13’).
32.3.1 Liquidity modelling
The Bank is subject to the conditions of BS13. The following metrics are calculated and reported on a daily basis in accordance with BS13:
the level of liquid assets held;
the one-week mismatch ratio;
the one-month mismatch ratio; and
the one-year core funding ratio.
In addition, the Bank calculates the following liquidity ratios in accordance with the Ultimate Parent Bank’s liquidity risk framework under APRA
Prudential Standard APS 210 Liquidity:
liquidity coverage ratio; and
net stable funding ratio.
32.3.2 Sources of funding
Sources of funding are regularly reviewed to maintain a wide diversification by currency, geography, product and term. Sources include, but are not
limited to:
deposits;
debt issues;
proceeds from sale of marketable securities;
repurchase agreements with central banks;
principal repayments on loans;
interest income; and
fees and commissions income.
Liquid assets
The Banking Group holds a portfolio of high-quality liquid assets as a buffer against unforeseen funding requirements. These assets are eligible for
repurchase agreements with the Reserve Bank and are held in cash, government, local government and highly rated investment grade securities.
The level of liquid asset holdings is reviewed frequently and is consistent with both the requirements of the balance sheet and market conditions.
The following table shows the Banking Group’s holding of liquid assets and represents the key liquidity information provided to management.
Liquid assets include high quality assets readily convertible to cash to meet the Banking Group’s liquidity requirements. In management’s opinion,
liquidity is sufficient to meet the Banking Group’s present requirements.
THE BANKING GROUP
$ millions20202019
Cash and balances with central banks4,3601,864
Receivables due from the Ultimate Parent Bank86122
Supranational securities1,0201,712
NZ Government securities3,4412,022
NZ public securities2,5632,614
NZ corporate securities300645
Residential mortgage-backed securities11,0815,798
Total liquid assets22,85114,777

Notes to the financial statements
Westpac New Zealand Limited 73
Note 32 Financial risk (continued)
Concentration of funding
THE BANKING GROUP
$ millions20202019
Funding consists of
Collateral received 419 473
Deposits and other borrowings 73,970 65,606
Other financial liabilities
1
- 54
Debt issues
2
15,799 17,846
Due to related entities
3
998 801
Loan capital 2,612 2,609
Total funding 93,798 87,389
Analysis of funding by geographical areas
2
New Zealand 76,023 66,730
Australia 1,007 1,397
United Kingdom 7,677 8,714
United States of America 3,270 2,961
China 3,178 4,455
Other 2,643 3,132
Total funding 93,798 87,389
Analysis of funding by industry sector
Accommodation, cafes and restaurants 493 421
Agriculture 1,579 1,425
Construction 2,212 1,918
Finance and insurance 33,051 34,390
Forestry and fishing 192 193
Government, administration and defence 3,303 2,626
Manufacturing 2,083 1,589
Mining 82 65
Property services and business services 6,865 5,790
Services 4,729 4,112
Trade 2,062 1,533
Transport and storage 787 386
Utilities 754 450
Households 30,256 27,229
Other
4
4,352 4,461
Subtotal 92,800 86,588
Due to related entities
3
998 801
Total funding 93,798 87,389
1
Other financial liabilities, as presented above, are in respect of interbank placements.
2
The geographic region used for debt issues is based on the nature of the debt programmes. The nature of the debt programmes is used as a proxy for the location
of the original purchaser. Where the nature of the debt programmes does not necessarily represent an appropriate proxy, the debt issues are classified as 'Other’.
These instruments may have subsequently been on-sold.
3
Amounts due to related entities, as presented above, are in respect of deposits and borrowings and exclude amounts which relate to derivative financial
instruments and other financial liabilities.
4
Includes deposits from non-residents.
ANZSIC has been used as the basis for disclosing industry sectors.

Notes to the financial statements
74 Westpac New Zealand Limited
Note 32 Financial risk (continued)
32.3.3 Assets pledged as collateral
The Banking Group is required to provide collateral (predominantly to other financial institutions), as part of standard terms, to secure liabilities.
In addition to assets supporting the CB Programme disclosed in Note 29, the carrying value of these financial assets pledged as collateral is:
THE BANKING GROUP
$ millions20202019
Cash
148 168
Securities pledged under repurchase agreements:
1
Investment securities
204 1
Trading securities and financial assets measured at FVIS
- 9
Total amount pledged to secure liabilities (excluding CB Programme) 352 178
1
Securities were pledged as collateral to the NZ Branch which is recorded within due to related entities in the balance sheet.
32.3.4 Contractual maturity of financial liabilities
The following table presents cash flows associated with financial liabilities, payable at the balance sheet date, by remaining contractual maturity. The
amounts disclosed in the table are the future contractual undiscounted cash flows, whereas the Banking Group manages inherent liquidity risk based on
expected cash flows.
Cash flows associated with these financial liabilities include both principal payments as well as fixed or variable interest payments incorporated into the
relevant coupon period. Principal payments reflect the earliest contractual maturity date. Derivative financial instruments designated for hedging
purposes are expected to be held for their remaining contractual lives, and reflect gross cash flows over the remaining contractual term.
Derivatives held for trading and certain liabilities classified in “Other financial liabilities” which are measured at FVIS are not managed for liquidity
purposes on the basis of their contractual maturity, and accordingly these liabilities are presented in either the on demand or up to 1 month columns.
Only the liabilities that the Banking Group manages based on their contractual maturity are presented on a contractual undiscounted basis in the
following table.

Notes to the financial statements
Westpac New Zealand Limited 75
Note 32 Financial risk (continued)
THE BANKING GROUP
2020
OverOver
1 Month3 MonthsOver 1
Year
OnUp toand Up toand Up toand Up toOver
$ millions
Demand1 Month3 Months1 Year5 Years5 YearsTotal
Financial liabilities
Collateral received-419----419
Deposits and other borrowings38,5586,44611,19316,0912,098-74,386
Other financial liabilities-736---79
Derivative financial instruments:
Held for hedging purposes (net settled)-8153987-149
Held for hedging purposes (gross settled):
Cash outflow-391,9191,349-3,280
Cash inflow--(6)(1,824)(1,312)-(3,142)
Debt issues-166256,5658,95039516,101
Due to related entities:
Non-derivative balances75220552110-1,020
Derivative financial instruments:
Held for trading 13-----13
Held for hedging purposes (net settled)-26661461634405
Held for hedging purposes (gross settled):
Cash outflow--101,182--1,192
Cash inflow--(8)(1,131)--(1,139)
Loan capital--8241302,6392,801
Total undiscounted financial liabilities39,3237,34611,37023,01211,4753,03895,564
Total contingent liabilities and commitments
Letters of credit and guarantees833-----833
Commitments to extend credit27,891-----27,891
Total undiscounted contingent liabilities and
commitments
28,724-----28,724

Notes to the financial statements
76 Westpac New Zealand Limited
Note 32 Financial risk (continued)
THE BANKING GROUP
2019
OverOver
1 Month3 MonthsOver 1 Year
OnUp toand Up toand Up toand Up toOver
$ millions
Demand1 Month3 Months1 Year5 Years5 YearsTotal
Financial liabilities
Collateral received-473----473
Deposits and other borrowings29,6646,85313,53114,4201,788-66,256
Other financial liabilities-1168---124
Derivative financial instruments:
Held for hedging purposes (net settled)-1714511053190
Held for hedging purposes (gross settled):
Cash outflow-55911558-1,479
Cash inflow---(889)(503)-(1,392)
Debt issues-1229474,30912,74639318,517
Due to related entities:
Non-derivative balances656113637652834
Derivative financial instruments:
Held for trading 377-----377
Held for hedging purposes (net settled)-13661351655384
Held for hedging purposes (gross settled):
Cash outflow--12351,195-1,242
Cash inflow--(11)(31)(1,142)-(1,184)
Loan capital--11311592,6812,882
Total undiscounted financial liabilities30,6977,61014,61918,97515,1473,13490,182
Total contingent liabilities and commitments
Letters of credit and guarantees828-----828
Commitments to extend credit25,858-----25,858
Total undiscounted contingent liabilities and
commitments
26,686-----26,686

Notes to the financial statements
Westpac New Zealand Limited 77
Note 32 Financial risk (continued)
32.3.5 Expected maturity
The following table presents the balance sheet based on expected maturity dates, except for deposits, based on historical behaviours. The liability
balances in the following table will not agree to the contractual maturity tables due to the analysis below being based on expected rather than
contractual maturities, the impact of discounting and the exclusion of interest accruals beyond the reporting period. Deposits are presented in the
following table on a contractual basis, however as part of our normal banking operations, the Banking Group would expect a large proportion of these
balances to be retained.
THE BANKING GROUP
20202019
Due within
Greater
than
Due withinGreater than
$ millions
12 months12 months
Total
12 months12 months
Total
Assets
Cash and balances with central banks4,360-4,3601,864-1,864
Collateral paid148-148168-168
Trading securities and financial assets measured at
FVIS
2,0274102,4371,5201411,661
Derivative financial instruments10849159984532616
Investment securities6944,3275,0211,9482,5214,469
Loans12,19575,76487,95911,87172,28984,160
Due from related entities9491451,0942,3671352,502
All other assets4611,1131,5743518161,167
Total assets20,94282,250103,19220,17376,43496,607
Liabilities
Collateral received419-419473-473
Deposits and other borrowings71,9472,02373,97063,9201,68665,606
Derivative financial instruments12317029349208257
Debt issues6,5929,20715,7995,11312,73317,846
Due to related entities1,1992881,4871,1904421,632
Loan capital1,1231,4892,612-2,6092,609
All other liabilities547375922635132767
Total liabilities81,95013,55295,50271,38017,81089,190
32.4 Market risk
32.4.1 Value-at-Risk
The Banking Group uses VaR as one of the mechanisms for controlling non-traded market risk.
VaR is a statistical estimate of the potential loss in earnings over a specified period of time and to a given level of confidence based on historical
market movements. The confidence level indicates the probability that the loss will not exceed the VaR estimate on any given day.
VaR seeks to take account of all material market variables that may cause a change in the value of the portfolio, including interest rates, FX rates,
price changes, volatility and the correlations between these variables. Daily monitoring of current exposure and limit utilisation is conducted
independently by the Market Risk unit which monitors market risk exposures against VaR and structural concentration limits. These are
supplemented by escalation triggers for material profits or losses and stress testing of risks beyond the 99% confidence level.
The key parameters of VaR are:
Holding period1 day
Confidence level99%
Period of historical data used1 year