Westpac US Annual Report on Form 20-F

4 November 2021
Market Announcements Office
ASX Limited
20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
Westpac Place
Level 18, 275 Kent Street
Sydney NSW 2000
T.(02) 9155 7713
F.(02) 8253 1215
westpac.com.au
Westpac Banking Corporation US Annual Report on Form 20-F
Westpac Banking Corporation (Westpac) has filed with the US Securities and Exchange
Commission an Annual Report on Form 20-F for the financial year ended 30 September 2021
which has been prepared specifically for distribution in the United States (2021 Form 20-F). This
filing has been prepared to meet US securities law requirements and is necessary to update
Westpac’s US debt issuance programs. As the 2021 Form 20-F has been prepared to meet US
requirements, its presentation differs in some limited respects from Westpac’s 2021 Annual
Report lodged with ASX Limited on 1 November 2021.
Yours sincerely
Tim Hartin
Company Secretary

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
Or
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2021
Or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Or
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-10167
WESTPAC BANKING CORPORATION
Australian Business Number 33 007 457 141
(Exact name of Registrant as specified in its charter)
New South Wales, Australia
(Jurisdiction of incorporation or organization)
275 Kent Street, Sydney, NSW 2000, Australia
(Address of principal executive offices)
Westpac Banking Corporation, New York branch,
575 Fifth Avenue, 39th Floor, New York, New York 10017-2422,
Attention: Branch Manager, telephone number: (212) 551-1800
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol Name of each exchange on which registered
Ordinary sharesListed on the New York Stock Exchange, not for trading, but only in connection
with the registration of related American Depositary Shares, pursuant to the
requirements of the New York Stock Exchange.
American Depositary Shares, each representing the right to receive one
ordinary share
WBKNew York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: 2.800% Notes due January 11, 2022, Floating Rate Notes due January 11, 2022, 2.500% Notes due June 28, 2022, Floating
Rate Notes due June 28, 2022, 2.750% Notes due January 11, 2023, Floating Rate Notes due January 11, 2023, 2.000% Notes due January 13, 2023, Floating Rate Notes due January 13, 2023, 3.650% Notes
due May 15, 2023, Floating Rate Notes due May 15, 2023, 3.300% Notes due February 26, 2024, Floating Rate Notes due February 26, 2024, 2.350% Notes due February 19, 2025, 2.850% Notes due May
13, 2026, 1.150% Notes due June 3, 2026, Floating Rate Notes due June 3, 2026, 2.700% Notes due August 19, 2026, 3.350% Notes due March 8, 2027, 3.400% Notes due January 25, 2028, 2.650% Notes
due January 16, 2030, 2.894% Subordinated Notes due February 4, 2030, 2.150% Notes due June 3, 2031, 4.322% Subordinated Notes due November 23, 2031, 4.110% Subordinated Notes due July 24,
2034, 2.668% Subordinated Notes due November 15, 2035, 4.421% Subordinated Notes due July 24, 2039, 2.963% Subordinated Notes due November 16, 2040 and 5.000% Fixed Rate Resetting Perpetual
Subordinated Contingent Convertible Securities
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
Ordinary shares3,668,591,808 fully paid
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒No ☐ (not currently applicable to registrant)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated
filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐Emerging growth company ☐

147WESTPAC GROUP 2021 ANNUAL REPORT
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5,
2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbannes-Oxley Act (15 U.S.C. 7262(b)) by the registered public account firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
“Item 17” ☐“Item 18” ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company.
Yes ☐No ☒

WESTPAC GROUP 2021 ANNUAL REPORT I
Table of contents
Form 20-F cross-reference indexii Section 4313
Financial statements1Shareholding information314
Income statements2Additional information330
Statements of comprehensive income3Glossary of abbreviations and defined terms335
Balance sheets4
Statements in changes in equity5
Cash flow statements7
Notes to the financial statements8
Statutory statements129
Exhibits index136
Section 1148
Strategic Review148
Corporate governance175
Directors’ report198
Remuneration report212
Information on Westpac235
Section 2243
Reding this report244
Review of Group’s operations246
Income statement review247
Balance sheet review256
Capital resources258
Divisional performance261
Consume268
Business269
Westpac Institutional Bank270
Westpac New Zealand272
Specialist Businesses274
Group Businesses276
Risk and risk management282
Risk management282
Risk factors290
Other Westpac business information304
Section 3 Financial statements311
In this Annual Report a reference to ‘Westpac’, ‘Group’, ‘Westpac Group’, ‘we’, ‘us’ and ‘our’ is to Westpac Banking Corporation ABN 33 007 457 141 and its
subsidiaries unless it clearly means just Westpac Banking Corporation.
For certain information about the basis of preparing the financial information in this Annual Report see ‘Reading this report’ in Section 2. In addition, this Annual
Report contains statements that constitute ‘forward-looking statements’ within the meaning of Section 21E of the US Securities Exchange Act of 1934. For an
explanation of forward-looking statements and the risks, uncertainties and assumptions to which they are subject, see ‘Reading this report’ in Section 2.
Information contained in or accessible through the websites mentioned in this Annual Report does not form part of this report unless we
specifically state that it is incorporated by reference and forms part of this report. All references in this report to websites are inactive textual
references and are for information only.

II WESTPAC GROUP 2021 ANNUAL REPORT
Form 20-F cross-reference index
20-F item number and description
Page
Part I
Item 1.Identity of directors, senior management and advisersNot applicable
Item 2.Offer statistics and expected timetableNot applicable
Item 3.Key information
Capitalisation and indebtednessNot applicable
Reasons for the offer and use of proceedsNot applicable
Risk factors290-303
Item 4.Information on Westpac
History and development of Westpac148, 235-42
Business overview148, 235-42
Organisational structure112, 148
Property, plants and equipment306
Item 4A.Unresolved staff commentsNot applicable
Item 5.Operating and financial review and prospects
Operating results246
Liquidity and capital resources258-59, 309
Research and development, patents and licences, etc.Not applicable
Trend information247-58, 261-75
Critical accounting estimates21-24, 35-45, 84-92, 97-106, 119
Item 6.Directors, senior management and employees
Directors and senior management199-205, 208
Compensation121-23, 212-33
Board practices177-201
Employees306
Share ownership121-23, 208-09, 314
Item 7.Major shareholders and related party transactions
Major shareholders314-22
Related party transactions122-23, 304
Interests of experts and counselNot applicable
Item 8.Financial information
Consolidated statements and other financial information1-146
Significant changes122, 235-41
Item 9.The offer and listing
Offer and listing details323
Plan of distributionNot applicable
Markets197, 315-20
Selling shareholdersNot applicable
DilutionNot applicable
Expenses of the issueNot applicable

WESTPAC GROUP 2021 ANNUAL REPORT III
Form 20-F cross-reference index
20-F item number and description
Page
Part I (continued)
Item 10.Additional information
Share capitalNot applicable
Memorandum and articles of association330-32
Material contracts306
Exchange controls325-26
Taxation326-28
Dividends and paying agentsNot applicable
Statements by expertsNot applicable
Documents on display333
Subsidiary informationNot applicable
Item 11.Quantitative and qualitative disclosures about market risk290-91
Item 12.Description of securities other than equity securities
Debt securitiesNot applicable
Warrants and rightsNot applicable
Other securitiesNot applicable
American depositary shares324
Part II
Item 13.Defaults, dividend arrearages and delinquenciesNot applicable
Item 14.Material modifications to the rights of security holders and use of proceedsNot applicable
Item 15.Controls and procedures130, 309
Item 16A.Audit committee financial expert194
Item 16B.Code of ethics187-89
Item 16C.Principal accountant fees and services121, 194-95
Item 16D.Exemptions from the Listing Standards for audit committeesNot applicable
Item 16E.Purchases of equity securities by Westpac and affiliated purchasers107-09, 308
Item 16F.Changes in Westpac’s certifying accountantNot applicable
Item 16G.Corporate governance175
Item 16H.Mine safety disclosureNot applicable
Item 16IDisclosure regarding foreign jurisdictions that prevent inspectionsNot applicable
Part III
Items 17. & 18.Financial statements1-146
Item 19.Exhibits
Consolidated income statements for the years ended 30 September 2021, 2020 and 20192
Consolidated balance sheets as at 30 September 2021 and 20204
Consolidated statements of comprehensive income for the years ended 30 September 2021, 2020 and 20193
Consolidated statements of cash flows for the years ended 30 September 2021, 2020 and 20197
Notes to the financial statements8
Management’s report on the internal control over financial reporting130
Report of independent registered public accounting firm131-35

IV WESTPAC GROUP 2021 ANNUAL REPORT
Form 20-F cross-reference index
Page
Item 1402: Distribution of assets, liabilities and stockholders’ equity; interest rates and interest differential
Average balance sheets26-28, 256
Analysis of net interest earnings23-24, 249-50
Interest rate and interest differential analysis23-24, 249-50
Item 1403: Investments in debt securities t II Investment portfolio
Weighted average yield of debt securities33
Calculation of weighted average yield; tax-exempt obligations33
Item 1404: Loan Portfolio
Maturity and interest rate profile of loan portfolio33-34
Item 1405: Allowances for Credit Losses
Credit ratios and material changes35-43
Allocation of the allowance for credit losses35-43
Item 1406: Deposits
Deposits by category46-47
Uninsured deposits47
Time deposits47

WESTPAC GROUP 2021 ANNUAL REPORT 1
Financial

statements
Income statementsIntangible assets, provisions, commitments and contingencies
Statements of comprehensive incomeNote 25Intangible assets
Balance sheetsNote 26Provisions, contingent liabilities, contingent assets and credit
commitments
Statements of changes in equity
Note 27Shareholders’ equity
Financial performanceNote 28Capital adequacy
Note 2Segment reportingNote 29Dividends
Note 3Net interest income
Note 4Non-interest incomeGroup structure
Note 5Operating expensesNote 30Investments in subsidiaries and associates
Note 6Impairment chargesNote 31Structured entities
Note 7Income tax
Note 8Earnings per shareOther
Note 9Average balance sheet and interest ratesNote 32Share-based payments
Note 33Superannuation commitments
Financial assets and financial liabilitiesNote 34Auditor’s remuneration
Note 10Trading securities and financial assets measured at fair value
through income statement (FVIS)
Note 35
Note 36
Note 37
Note 38
Related party disclosures
Notes to the cash flow statements
Assets and liabilities held for sale
Subsequent events
Note 11Investment securities
Note 12Loans
Note 13Provisions for expected credit losses
Note 14Other financial assets
Statutory statements
Directors’ declaration
Management’s report on internal control over financial reporting
Report of Independent Registered Public Accounting Firm
Note 15
Note 16
Note 17
Note 18
Note 19
Note 20
Note 21
Note 22
Note 23
Note 24
Life insurance assets and life insurance liabilities
Deposits and other borrowings
Other financial liabilities
Debt issues
Loan capital
Derivative financial instruments
Financial risk
Fair values of financial assets and financial liabilities
Offsetting financial assets and financial liabilities
Securitisation, covered bonds and other transferred assets
Cash flow statements
Capital and dividends
Note 1 Financial statements preparation

2 WESTPAC GROUP 2021 ANNUAL REPORT
Income statements
for the years ended 30 September
Westpac Banking Corporation
ConsolidatedParent Entity
$mNote20212020201920212020
Interest income:
Calculated using the effective interest rate method

3 22,132 26,596 32,518 21,648 26,025
Other

3 146 451 704 258 598
Total interest income22,27827,04733,22221,90626,623
Interest expense3(5,420)(10,351)(16,315)(7,870)(12,539)
Net interest income

16,858 16,696 16,907 14,036 14,084
Net fee income

4 1,482 1,592 1,655 1,224 1,359
Net wealth management and insurance income41,2117511,029--
Trading income4719895929661876
Other income49522491292,3081,597
Net operating income before operating expenses and impairment
(charges)/benefits

21,222 20,183 20,649 18,229 17,916
Operating expenses

5 (13,311) (12,739) (10,106) (11,915) (10,772)
Impairment (charges)/benefits

6 590 (3,178) (794) 447 (2,691)
Profit before income tax expense

8,501 4,266 9,749 6,761 4,453
Income tax expense

7 (3,038) (1,974) (2,959) (2,148) (1,795)
Net profit

5,463 2,292 6,790 4,613 2,658
Net profit attributable to non-controlling interests (NCI)

(5) (2) (6) - -
Net profit attributable to owners of Westpac Banking Corporation (WBC)

5,458 2,290 6,784 4,613 2,658
Earnings per share (cents)


Basic

8 149.4 63.7 196.5
Diluted

8 137.8 63.7 189.5
The above income statements should be read in conjunction with the accompanying notes.

WESTPAC GROUP 2021 ANNUAL REPORT 3
Statements of comprehensive income
for the years ended 30 September
Westpac Banking Corporation
ConsolidatedParent Entity
$m20212020201920212020
Net profit

5,463 2,292 6,790 4,613 2,658
Other comprehensive income/(expense)


Items that may be reclassified subsequently to profit or loss


Gains/(losses) recognised in equity on:


Debt securities measured at fair value through other comprehensive income (FVOCI)

578 357 (46) 729 289
Cash flow hedging instruments

296 (95) (203) 177 (28)
Transferred to income statements:


Debt securities measured at FVOCI(195)(79)(29)(195)(79)
Cash flow hedging instruments

39 218 197 (13) 150
Foreign currency translation reserve

- 55 (10) - 55
Loss allowance on debt securities measured at FVOCI

2 2 - 2 2
Exchange differences on translation of foreign operations (net of associated hedges)51(168)182(1)(131)
Income tax on items taken to or transferred from equity:
Debt securities measured at FVOCI

(119) (81) 20 (162) (62)
Cash flow hedging instruments

(97) (36) 2 (49) (37)
Items that will not be reclassified subsequently to profit or loss


Gains/(losses) on equity instruments measured at FVOCI (net of tax)

48 (21) 11 (2) 1
Own credit adjustment on financial liabilities designated at fair value (net of tax)

(10) (39) (10) (10) (39)
Remeasurement of defined benefit obligation recognised in equity (net of tax)119(115)(276)108(110)
Other comprehensive income/(expense) (net of tax)

712 (2) (162) 584 11
Total comprehensive income

6,175 2,290 6,628 5,197 2,669
Attributable to:


Owners of WBC

6,171 2,291 6,620 5,197 2,669
NCI

4 (1) 8 - -
Total comprehensive income

6,175 2,290 6,628 5,197 2,669
The above statements of comprehensive income should be read in conjunction with the accompanying notes.

4 WESTPAC GROUP 2021 ANNUAL REPORT
Balance sheets
as at 30 September
Westpac Banking Corporation
ConsolidatedParent Entity
$mNote2021202020212020
Assets


Cash and balances with central banks

36 71,353 30,129 62,754 25,436
Collateral paid

4,232 4,778 4,055 4,641
Trading securities and financial assets measured at fair value through income statement
(FVIS)

10 21,101 40,667 18,779 38,030
Derivative financial instruments

20 19,353 23,367 19,127 22,794
Investment securities1183,41791,53977,86385,826
Loans

12 709,784 693,059 618,413 607,824
Other financial assets

14 6,394 5,474 5,486 4,745
Current tax assets31-22-
Life insurance assets15-3,593--
Due from subsidiaries

- - 175,346 180,979
Investment in subsidiaries

- - 6,287 6,475
Investment in associates

58 61 34 57
Property and equipment

2,853 3,910 2,386 3,447
Deferred tax assets

7 2,437 3,064 2,093 2,497
Intangible assets

25 10,109 11,497 8,530 9,630
Other assets

567 808 499 421
Assets held for sale374,188-1,015-
Total assets

935,877 911,946 1,002,689 992,802
Liabilities


Collateral received

2,368 2,250 2,189 1,862
Deposits and other borrowings

16 626,955 591,131 550,187 521,613
Other financial liabilities

17 50,309 40,925 47,263 40,156
Derivative financial instruments

20 18,059 23,054 17,889 22,779
Debt issues

18 128,779 150,325 108,210 127,666
Current tax liabilities

71 70 15 13
Life insurance liabilities

15 - 1,396 - -
Due to subsidiaries

- - 178,816 186,263
Provisions

26 3,571 5,287 3,254 4,983
Deferred tax liabilities

7 90 126 - -
Other liabilities

3,679 5,359 2,990 3,770
Liabilities held for sale37837-10-
Total liabilities excluding loan capital

834,718 819,923 910,823 909,105
Loan capital

19 29,067 23,949 29,067 23,949
Total liabilities

863,785 843,872 939,890 933,054
Net assets

72,092 68,074 62,799 59,748
Shareholders’ equity


Share capital:


Ordinary share capital

27 41,601 40,509 41,601 40,509
Treasury shares and Restricted Share Plan (RSP) treasury shares

27 (606) (563) (664) (621)
Reserves

27 2,227 1,544 2,148 1,576
Retained profits

28,813 26,533 19,714 18,284
Total equity attributable to owners of WBC

72,035 68,023 62,799 59,748
NCI

27 57 51 - -
Total shareholders' equity and NCI

72,092 68,074 62,799 59,748
The above balance sheets should be read in conjunction with the accompanying notes.

WESTPAC GROUP 2021 ANNUAL REPORT 5
Statements of changes in equity
for the years ended 30 September
Westpac Banking Corporation
Total equityTotal
attributableshareholders’
ConsolidatedShare capitalReservesRetainedto ownersNCIequity
$m (Note 27) (Note 27) profits of WBC (Note 27) and NCI
Balance as at 30 September 2018 35,561 1,077 27,883 64,521 52 64,573
Impact on adoption of new accounting standards-2(727)(725)-(725)
Restated opening balance35,5611,07927,15663,7965263,848
Net profit - - 6,784 6,784 6 6,790
Net other comprehensive income/(expense) - 122 (286) (164) 2 (162)
Total comprehensive income/(expense) - 122 6,498 6,620 8 6,628
Transactions in capacity as equity holders
Dividends on ordinary shares
1
- - (6,466) (6,466) - (6,466)
Dividend reinvestment plan 1,489 - - 1,489 - 1,489
Other equity movements
Share-based payment arrangements - 108 - 108 - 108
Purchase of shares (33) - - (33) - (33)
Net acquisition of treasury shares (62) - - (62) - (62)
Other - 2 - 2 (7) (5)
Total contributions and distributions 1,394 110 (6,466) (4,962) (7) (4,969)
Balance as at 30 September 2019 36,955 1,311 27,188 65,454 53 65,507
Net profit - - 2,290 2,290 2 2,292
Net other comprehensive income/(expense) - 155 (154) 1 (3) (2)
Total comprehensive income/(expense) - 155 2,136 2,291 (1) 2,290
Transactions in capacity as equity holders
Share issuances2,751--2,751-2,751
Dividends on ordinary shares
1
- - (2,791) (2,791) - (2,791)
Dividend reinvestment plan 273 - - 273 - 273
Other equity movements
Share-based payment arrangements - 78 - 78 - 78
Purchase of shares (29) - - (29) - (29)
Net acquisition of treasury shares (10) - - (10) - (10)
Other 6 - - 6 (1) 5
Total contributions and distributions 2,991 78 (2,791) 278 (1) 277
Balance as at 30 September 2020 39,946 1,544 26,533 68,023 51 68,074
Impact from a change in accounting policy
2
--(40)(40)-(40)
Restated opening balance39,9461,54426,49367,9835168,034
Net profit - - 5,458 5,458 5 5,463
Net other comprehensive income/(expense) - 604 109 713 (1) 712
Total comprehensive income/(expense) - 604 5,567 6,171 4 6,175
Transactions in capacity as equity holders
Dividends on ordinary shares
1
- - (3,247) (3,247) - (3,247)
Dividend reinvestment plan 401 - - 401 - 401
Dividend reinvestment plan underwrite719--719-719
Other equity movements
Share-based payment arrangements - 86 - 86 - 86
Purchase of shares (28) - - (28) - (28)
Net acquisition of treasury shares (43) - - (43) - (43)
Other - (7) - (7) 2 (5)
Total contributions and distributions 1,049 79 (3,247) (2,119) 2 (2,117)
Balance as at 30 September 2021 40,995 2,227 28,813 72,035 57 72,092
The above statements of changes in equity should be read in conjunction with the accompanying notes.
1.2021 consisted of 2021 interim dividend of 58 cents per share ($2,127 million) and 2020 final dividend of 31 cents per share ($1,120 million) (2020: 2019 final dividend of 80 cents per share
($2,791 million), 2019: 2019 interim dividend of 94 cents per share ($3,239 million) and 2018 final dividend of 94 cents per share ($3,227 million)), all fully franked at 30%.
2.Refer to Note 1 for further details.

6 WESTPAC GROUP 2021 ANNUAL REPORT
Statements of changes in equity
for the years ended 30 September
Westpac Banking Corporation
Total equity
attributable
Parent EntityShare capitalReservesRetainedto owners
$m (Note 27) (Note 27) profits of WBC
Balance as at 30 September 2019

36,933 1,338 18,567 56,838
Net profit

--2,6582,658
Net other comprehensive income/(expense)

-160(149)11
Total comprehensive income/(expense)

-1602,5092,669
Transactions in capacity as equity holders
Share issuances2,751--2,751
Dividends on ordinary shares
1

- - (2,792) (2,792)
Dividend reinvestment plan

273 - - 273
Other equity movements

Share-based payment arrangements

- 78 - 78
Purchase of shares

(29) - - (29)
Net acquisition of treasury shares

(46) - - (46)
Other6--6
Total contributions and distributions

2,955 78 (2,792) 241
Balance as at 30 September 2020

39,888 1,576 18,284 59,748
Impact from a change in accounting policy
2
--(34)(34)
Restated opening balance39,8881,57618,25059,714
Net profit

--4,6134,613
Net other comprehensive income/(expense)

-48698584
Total comprehensive income/(expense)

-4864,7115,197
Transactions in capacity as equity holders

Dividends on ordinary shares
1

- - (3,247) (3,247)
Dividend reinvestment plan

401 - - 401
Dividend reinvestment plan underwrite719--719
Other equity movements

Share-based payment arrangements

- 86 - 86
Purchase of shares

(28) - - (28)
Net acquisition of treasury shares

(43) - - (43)
Total contributions and distributions

1,049 86 (3,247) (2,112)
Balance as at 30 September 2021

40,937 2,148 19,714 62,799
The above statements of changes in equity should be read in conjunction with the accompanying notes.
1.2021 consisted of 2021 interim dividend of 58 cents per share ($2,127 million) and 2020 final dividend of 31 cents per share ($1,120 million) (2020: 2019 final dividend of 80 cents per share
($2,791 million)), all fully franked at 30%.
2.Refer to Note 1 for further details.

WESTPAC GROUP 2021 ANNUAL REPORT 7
Cash flow statements
for the years ended 30 September
Westpac Banking Corporation
ConsolidatedParent Entity
$m Note 2021 2020 2019 2021 2020
Cash flows from operating activities
Interest received 22,430 27,215 33,093 22,069 26,830
Interest paid (5,677) (11,466) (16,486) (8,054) (13,543)
Dividends received excluding life business 4 16 6 1,186 763
Other non-interest income received 3,340 2,894 3,865 3,313 2,330
Operating expenses paid (10,941) (8,598) (9,080) (10,022) (6,967)
Income tax paid excluding life business (2,639) (3,080) (3,406) (2,343) (2,732)
Life business:
Receipts from policyholders and customers 976 2,235 2,189 - -
Interest and other items of similar nature 22 21 6 - -
Dividends received 12 306 553 - -
Payments to policyholders and suppliers (1,168) (2,302) (2,250) - -
Income tax paid (49) (6) (94) - -
Cash flows from operating activities before changes in operating assets and liabilities 6,310 7,235 8,396 6,149 6,681
Net (increase)/decrease in:
Collateral paid305348(847)339329
Trading securities and financial assets measured at FVIS 19,316 (8,756) (7,629) 18,625 (8,266)
Derivative financial instruments (2,420) 1,851 7,605 (1,874) 2,103
Loans (15,098) 18,272 (4,188) (11,228) 21,273
Other financial assets (274) 273 336 258 283
Life insurance assets and life insurance liabilities (593) (277) (134) - -
Other assets 6 70 (13) (23) 50
Net increase/(decrease) in:
Collateral received 93 (1,096) 1,007 312 (1,072)
Deposits and other borrowings 33,737 28,910 1,113 28,696 20,859
Other financial liabilities 9,036 11,817 1,463 6,500 11,866
Other liabilities (8) 4 (5) (4) (7)
Net cash provided by/(used in) operating activities 36 50,410 58,651 7,104 47,750 54,099
Cash flows from investing activities
Proceeds from investment securities 34,066 33,080 19,768 32,006 29,807
Purchase of investment securities(28,840)(51,332)(29,527)(26,955)(47,311)
Net movement in amounts due to/from controlled entities - - - (1,852) (665)
Proceeds from disposal of controlled entities, net of cash disposed 36 1,272 - (1) - -
Net (increase)/decrease in investments in controlled entities - - - 125 (315)
Proceeds from disposal of associates 45 - 45 - -
Purchase of associates (8) (8) (25) (2) (6)
Proceeds from disposal of property and equipment62581573832
Purchase of property and equipment (234) (240) (280) (156) (165)
Purchase of intangible assets(740)(1,035)(906)(638)(955)
Net cash provided by/(used in) investing activities 5,623 (19,477) (10,769) 2,566 (19,578)
Cash flows from financing activities
Proceeds from debt issues (net of issue costs) 46,799 34,766 61,484 37,868 27,487
Redemption of debt issues (65,272) (65,160) (63,313) (54,425) (55,761)
Payments for the principal portion of lease liabilities(507)(543)-(455)(499)
Issue of loan capital (net of issue costs) 7,628 2,225 4,935 7,628 2,225
Redemption of loan capital (1,548) (262) (1,662) (1,548) (262)
Proceeds from issuances of shares-2,751--2,751
Proceeds from dividend reinvestment plan underwrite719--719-
Purchase of shares relating to share-based payment arrangements(28)(29)(33)(28)(29)
Purchase of RSP treasury shares (43) (46) (69) (43) (46)
Net sale/(purchase) of other treasury shares - 14 7 - -
Payment of dividends (2,846) (2,518) (4,977) (2,846) (2,519)
Dividends paid to NCI (2) (1) (5) - -
Net cash provided by/(used in) financing activities (15,100) (28,803) (3,633) (13,130) (26,653)
Net increase/(decrease) in cash and balances with central banks 40,933 10,371 (7,298) 37,186 7,868
Effect of exchange rate changes on cash and balances with central banks 298 (301) 569 132 (124)
Cash and balances with central banks included in assets held for sale(7)----
Cash and balances with central banks as at beginning of year 30,129 20,059 26,788 25,436 17,692
Cash and balances with central banks as at end of year 36 71,353 30,129 20,059 62,754 25,436
The above cash flow statements should be read in conjunction with the accompanying notes.

8 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 1. Financial statements preparation
This financial report of Westpac Banking Corporation (the Parent Entity), together with its controlled entities (the Group or Westpac), for the year ended 30
September 2021, was authorised for issue by the Board of Directors on 31 October 2021. The Directors have the power to amend and reissue the financial report.
The principal accounting policies are set out below and in the relevant notes to the financial statements. The accounting policy for the recognition and
derecognition of financial assets and financial liabilities precedes Note 10. 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
This financial report is a general purpose financial report prepared in accordance with:
●the requirements for an Authorised Deposit-taking Institution (ADI) under the Banking Act 1959 (as amended);
●Australian Accounting Standards (AAS) and Interpretations as issued by the Australian Accounting Standards Board (AASB); and
●the Corporations Act 2001.
Westpac Banking Corporation is a for-profit entity for the purposes of preparing this financial report.
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and
Interpretations as issued by the IFRS Interpretations Committee (IFRIC). It also includes additional disclosures required for foreign registrants by the United States
Securities and Exchange Commission (US SEC).
In September 2020, the SEC amended these disclosure requirements which are effective for the Group’s 30 September 2022 year end unless early adopted. The
Group has early adopted these requirements for the 30 September 2021 year end. The key changes are the removal of some disclosures considered to be
superseded or duplicated by other SEC reporting requirements or relevant accounting standards as well as introducing some additional disclosure requirements.
The key additional disclosure requirements for the Group are more granular maturity (refer to Note 12) and write-off disclosures for loans (refer to Note 13) and
disclosure of uninsured deposits, i.e. those deposits which either do not have a form of government based deposit insurance scheme or are in excess of the
insurance scheme limit (refer to Note 16).
All amounts have been rounded in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, to the nearest million
dollars, unless otherwise stated.
(ii) Historical cost convention
The financial report has 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 fair value through income statement (FVIS) or in other comprehensive income (OCI).
(iii) Changes in accounting policy
Software-as-a-Service (SaaS) arrangements
The Group previously capitalised costs incurred in configuring or customising Software-as-a-Service (SaaS) arrangements as intangible assets as the Group
considered that it would benefit from these implementation costs over the contract term of the SaaS arrangements. Following the IFRS Interpretations Committee
(IFRIC) agenda decision on Configuration or Customisation Costs in a Cloud Computing Arrangement which was published in April 2021, the Group has
reconsidered its accounting treatment and adopted the treatment set out in this IFRIC agenda decision. The revised accounting policy capitalises these costs as
intangible assets only if the implementation activities create an intangible asset that the entity controls and the intangible asset meets the recognition criteria.
Costs that do not meet these criteria are expensed as incurred, unless they are paid to the suppliers of the SaaS arrangement to significantly customise the cloud-
based software for the Group, in which case they are recognised as a prepayment for services and amortised over the expected period of use of the SaaS
arrangement.

WESTPAC GROUP 2021 ANNUAL REPORT 9
Notes to the financial statements
Note 1. Financial statements preparation (continued)
The change in policy has been applied retrospectively, however as the impact on prior years was not material the amount relating to prior years has been adjusted
through opening retained earnings and comparatives have not been restated. The impact on the Group’s financial statements to reflect the write-off of previously
capitalised costs is shown in the table below. A positive number indicates an increase in the relevant balance, while a negative number indicates a reduction in the
relevant balance:
ConsolidatedParent Entity
Prior year impactPrior year impact
Impact foron openingImpact foron opening
$m 2021 balance sheet Total 2021 balance sheet Total
Balance sheets
Intangible assets - computer software

(5) (57) (62) (3) (48) (51)
Deferred tax assets

1 17 18 1 14 15
Opening retained earnings

- (40) (40) - (34) (34)
Income statements


Operating expenses

5 - 5 3 - 3
Tax expense

(1) - (1) (1) - (1)
Net profit after tax

(4) - (4) (2) - (2)
In addition, the Group reclassified $32 million from intangible assets – computer software to other assets – prepayments (Parent Entity $29 million).
(iv) Standards adopted during the year ended 30 September 2021
A revised Conceptual Framework (Framework) was adopted by the Group on 1 October 2020. The Framework includes new definitions and recognition criteria for
assets, liabilities, income and expenses and other relevant financial reporting concepts. These changes did not have a material impact on the Group.
AASB 2020-8 was early adopted, as permitted by the standard, by the Group for the financial year ended 30 September 2021. AASB 2020-8 makes amendments
to AASB 9 Financial Instruments (December 2014) (AASB 9), AASB 139 Financial Instruments: Recognition and Measurement (AASB 139), and AASB 7
Financial Instruments: Disclosures (AASB 7) resulting from Interest Rate Benchmark Reform (IBOR reform). Amendments are also made to AASB 4 Insurance
contracts and AASB 16 Leases. The amendments:
●allow the Group to account for a change in contractual cash flows of a financial instrument or lease liability that are a direct result of the IBOR reform to be
accounted for prospectively by updating the effective interest rate rather than recognising a modification gain or loss provided that the change is made on an
economically equivalent basis;
●allow the Group to continue hedge accounting and not trigger a de-designation when the following occurs specific to IBOR reform:
–changes to hedge documentation to update the hedged risk, item and instrument;
–changes to the method of assessing hedge ineffectiveness;
–once the hedge relationship has been converted from LIBOR to alternative reference rates (ARR) the cumulative change in fair value for ineffectiveness
testing could be reset to zero if this would improve the retrospective effectiveness test;
–this amendment can apply to macro cash flow and fair value hedges where subgroups can be formed within the portfolio of hedges where some are
under the existing LIBOR rate and others have already changed to the ARR;
●require additional disclosures including:
–quantitative information regarding all financial instruments linked to IBOR which have not been yet converted to ARR;
–changes to the entity’s risk management strategy arising from IBOR reform; and
–the management of the Group’s transition to ARR.
There was no impact on opening retained earnings due to the adoption of the standard. Comparative information is not required to be restated. Note 21 provides
further information regarding the Group’s exposure to the IBOR reform.

10 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
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 Westpac 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 Australian dollars which is the Parent Entity’s functional and presentation currency. The functional currency
of offshore entities is usually the main currency of the economy it operates in.
Transactions and balances
Foreign currency transactions are translated into the functional currency of the relevant branch or subsidiary 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 and qualifying net investment hedges.
Foreign operations
Assets and liabilities of foreign branches and subsidiaries that have a functional currency other than the Australian dollar are translated at exchange rates
prevailing on the balance date. Income and expenses are translated at average exchange rates prevailing during the year. Equity balances are translated at
historical exchange rates.
The resulting exchange differences are recognised in the foreign currency translation reserve and in OCI.
Where the group hedges the currency translation risk arising from net investments in foreign operations, the gains or losses on the hedging instruments are also
reflected in OCI to the extent the hedge is effective. When all or part of a foreign operation is disposed or borrowings that are part of the net investments are
repaid, a proportionate share of such exchange differences is recognised in the income statement as part of the gain or loss on disposal or repayment of
borrowing.
(vii) Comparative revisions
Comparative information has been revised where appropriate to conform to changes in presentation in the current year and to enhance comparability.
b. Critical accounting assumptions and estimates
Applying the 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 7 Income tax
●Note 13 Provisions for expected credit losses
●Note 15 Life insurance assets and life insurance liabilities
●Note 22 Fair values of financial assets and financial liabilities
●Note 25 Intangible assets
●Note 26 Provisions, contingent liabilities, contingent assets and credit commitments
●Note 33 Superannuation commitments
Intangible assets – computer software
Effective from 1 October 2020, the Group made a prospective change to computer software capitalisation by increasing the threshold for capitalisation for software
development costs from a total project spend of $1 million to a total project spend of $20 million. This does not have a material effect on the Group’s financial
statements. The change increased operating expenses and reduced profit before income tax in the year by $191 million.

WESTPAC GROUP 2021 ANNUAL REPORT 11
Notes to the financial statements
Note 1. Financial statements preparation (continued)
Impact of COVID-19
The COVID-19 pandemic and the measures put in place domestically and globally to control the spread of the virus continue to impact global economies and
financial markets. As a result, this remains a source of uncertainty and judgement is required in relation to our critical accounting assumptions and estimates,
primarily relating to:
●expected credit losses (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 outcomes may differ significantly which may
impact accounting estimates included in these financial statements. The impact of COVID-19 is discussed further in each of the related notes.
c. Future developments in accounting standards
AASB 17 Insurance Contracts (AASB 17) was issued on 19 July 2017 and will be effective for the 30 September 2024 year end unless early adopted. This will
replace AASB 4 Insurance Contracts (AASB 4), AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. However, the Group’s
remaining insurance businesses are classified as held for sale with the sale transactions expected to complete prior to AASB 17 taking effect. As a result, we do
not anticipate the standard having any impact on the Group.
Other amendments to existing standards that are not yet effective are not expected to have a material impact to the Group.

12 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
FINANCIAL PERFORMANCE
Note 2. Segment reporting
Accounting policy
Operating segments are presented on a basis consistent with information provided internally to Westpac’s key decision makers and reflect the management of
the business, rather than the legal structure of the Group.
Internally, Westpac uses ‘cash earnings’ in assessing the financial performance of its divisions. Management believes this allows the Group to:
●more effectively assess current year performance against prior years;
●compare performance across business divisions; and
●compare performance across peer companies.
Cash earnings is viewed as a measure of the level of profit that is generated by ongoing operations and is therefore typically considered in assessing
distributions, including dividends. Cash earnings is neither a measure of cash flow nor net profit determined on a cash accounting basis, as it includes both
cash and non-cash adjustments to statutory net profit.
To determine cash earnings, three categories of adjustments are made to statutory results:
●material items that key decision makers at the Westpac Group believe do not reflect ongoing operations;
●items that are not typically considered when dividends are recommended, mainly economic hedging impacts; and
●accounting reclassifications between individual line items that do not impact statutory results.
Internal charges and transfer pricing adjustments have been reflected in the performance of each operating segment. Inter-segment pricing is determined on an
arm’s length basis.
Reportable operating segments
We are one of Australia and New Zealand’s leading providers of financial services, operating under multiple brands, with a small presence in Europe, North
America and Asia. We operate through an extensive branch and ATM network, significant online capability, and call centres supported by specialist relationship
and product managers. Our operations comprise the following key divisions:
●Consumer provides banking products, including mortgages, credit cards, personal loans, and savings and deposit products;
●Business serves the banking needs of SME and Commercial customers (including Agribusiness) and provides banking and advisory services to high net
worth individuals through Private Wealth;
●Westpac Institutional Bank (WIB) provides a broad range of financial products and services to corporate, institutional and government customers;
●Westpac New Zealand provides banking, wealth and insurance products and services for consumer, business and institutional customers in New Zealand;
●Specialist Businesses comprises the operations that Westpac ultimately plans to exit with agreements in place for the sale of Westpac Life Insurance and
motor vehicle dealer finance and novated leasing businesses. These sales are expected to finalise in 2022, subject to regulatory approvals. Other operations
include investment products and services (including margin lending and equities broking), superannuation and retirement products as well as wealth
administration platforms. It also manages Westpac Pacific which provides a full range of banking services in Fiji and Papua New Guinea; and
●Group Businesses includes the results of unallocated support functions such as Treasury, Chief Operating Office and Core Support. It also includes Group-
wide elimination entries arising on consolidation, centrally raised provisions and other unallocated revenue and expenses.
On 17 March 2021, Westpac announced that it was bringing together the leadership of its Consumer and Business divisions into a new Consumer and Business
Banking division. No change has been made to segment reporting for 30 September 2021 as these changes are not yet reflected in internal reporting to Westpac’s
key decision makers.

WESTPAC GROUP 2021 ANNUAL REPORT 13
Notes to the financial statements
Note 2. Segment reporting (continued)
The following tables present the segment results on a cash earnings basis for the Group.
WestpacWestpac Net cash
InstitutionalNewSpecialistGroupearningsIncome
$m Consumer Business Bank Zealand Businesses Businesses Total adjustments statement
2021
Net interest income

8,405 4,065 9191,987 503835 16,714 144 16,858
Net fee income

393 452 555140 69(127) 1,482 - 1,482
Net wealth management and insurance income-21-1131,176(104)1,20651,211
Trading income78724555833197154719
Other income174921221258492131952
Net operating income before operating expenses
and impairment (charges)/benefits

8,893 4,614 2,0212,310 1,9931,207 21,038 184 21,222
Operating expenses
1

(4,622) (2,530) (2,574)(1,062) (1,477)(1,018) (13,283) (28) (13,311)
Impairment (charges)/benefits

125 484 (162)79 66(2) 590 - 590
Profit before income tax (expense)/benefit

4,396 2,568 (715)1,327 582187 8,345 156 8,501
Income tax (expense)/benefit

(1,315) (779) 45(377) (387)(175) (2,988) (50) (3,038)
Net profit attributable to NCI

- - -- (2)(3) (5) - (5)
Cash earnings

3,081 1,789 (670)950 1939 5,352 106 5,458
Net cash earnings adjustments

- - -(2) -108 106
Net profit attributable to
owners of WBC

3,081 1,789 (670)948 193117 5,458
Balance sheet
Loans
2
407,786134,01567,03388,40912,550(9)709,784
Deposits and other borrowings
2
235,569158,74197,77075,75611,00848,111626,955
2020
Net interest income

8,547 4,163 1,1111,832 534899 17,086 (390) 16,696
Net fee income

471 438 544123 89(73) 1,592 - 1,592
Net wealth management and insurance income-22-158624(45)759(8)751
Trading income9097637275720928(33)895
Other income123111(8)242261(12)249
Net operating income before operating expenses
and impairment (charges)/benefits

9,120 4,723 2,2932,151 1,2961,043 20,626 (443) 20,183
Operating expenses
1

(4,176) (2,298) (1,316)(998) (1,548)(2,364) (12,700) (39) (12,739)
Impairment (charges)/benefits

(1,015) (1,371) (404)(302) (255)169 (3,178) - (3,178)
Profit before income tax (expense)/benefit

3,929 1,054 573851 (507)(1,152) 4,748 (482) 4,266
Income tax (expense)/benefit

(1,183) (320) (241)(239) 3(158) (2,138) 164 (1,974)
Net profit attributable to NCI

- - -- (2)- (2) - (2)
Cash earnings

2,746 734 332612 (506)(1,310) 2,608 (318) 2,290
Net cash earnings adjustments

- - -7 (31)(294) (318)
Net profit attributable to
owners of WBC

2,746 734 332619 (537)(1,604) 2,290
Balance sheet
Loans389,793140,69866,19281,43414,942-693,059
Deposits and other borrowings219,259151,939102,85168,4739,26039,349591,131
1.Included in the Westpac Institutional Bank division in operating expenses is $1,192 million relating to impairment of assets (including goodwill and other intangible assets) for 2021 (2020: $Nil).
For Specialist Businesses division, impairment of assets (including goodwill and other intangible assets) is $141 million for 2021 (2020: $571 million). For other divisions, there is no impairment
of goodwill and impairment of other intangibles assets is not material.
2.Specialist Businesses excludes balances presented as held for sale (refer to Note 37 for further details).

14 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 2. Segment reporting (continued)
WestpacWestpac Net cash
InstitutionalNewSpecialistGroupearningsIncome
$m

Consumer Business Bank Zealand Businesses Businesses Total adjustments statement
2019
Net interest income

8,130 4,456 1,3371,860 555615 16,953 (46) 16,907
Net fee income

594 463 570163 44(179) 1,655 - 1,655
Net wealth management and insurance income

-16-1771,319(489)1,02361,029
Trading income

941096363754(23)90722929
Other income

76(11)46(5)7411712129
Net operating income before operating expenses
and impairment (charges)/benefits

8,825 5,050 2,5322,283 1,967(2) 20,655 (6) 20,649
Operating expenses

(3,794) (2,094) (1,220)(939) (847)(1,137) (10,031) (75) (10,106)
Impairment (charges)/ benefits

(582) (172) (31)10 (111)92 (794) - (794)
Profit before income tax (expense)/benefit

4,449 2,784 1,2811,354 1,009(1,047) 9,830 (81) 9,749
Income tax (expense)/benefit

(1,333) (838) (356)(369) (292)213 (2,975) 16 (2,959)
Net profit attributable to NCI- - -- (5)(1) (6) - (6)
Cash earnings

3,116 1,946 925985 712(835) 6,849 (65) 6,784
Net cash earnings adjustments

- - -(1) (45)(19) (65)
Net profit attributable to owners of WBC

3,116 1,946 925984 667(854) 6,784
Balance sheet
Loans399,279146,86773,57278,00517,216(169)714,770
Deposits and other borrowings207,578142,55899,00560,8019,27744,028563,247
Reconciliation of cash earnings to net profit attributable to owners of WBC
$m 2021 2020 2019
Cash earnings

5,352 2,608 6,849
Cash earnings adjustments


Fair value gain/(loss) on economic hedges

138 (362) (35)
Ineffective hedges

(32) 61 20
Adjustments related to Pendal

- (31) (45)
Treasury shares

- 14 (5)
Total cash earnings adjustments (post-tax)

106 (318) (65)
Net profit attributable to owners of WBC

5,458 2,290 6,784
Revenue from products and services
Details of revenue from external customers by product or service are disclosed in Notes 3 and 4. No single customer amounted to greater than 10% of the Group’s
revenue.
Geographic segments
Geographic segments are based on the location of the office where the following items were recognised.
202120202019
$m%$m%$m%
Revenue


Australia

22,788 85.5 26,135 85.6 31,113 84.2
New Zealand

3,509 13.2 3,439 11.3 4,520 12.2
Other overseas
1

345 1.3 960 3.1 1,331 3.6
Total

26,642 100.0 30,534 100.0 36,964 100.0
Non-current assets
2


Australia

11,825 91.2 14,270 92.6 12,280 93.7
New Zealand

1,082 8.3 1,015 6.6 761 5.8
Other overseas
1

55 0.5 122 0.8 67 0.5
Total

12,962 100.0 15,407 100.0 13,108 100.0
1.Other overseas included Pacific Islands, Asia, the Americas and Europe.
2.Non-current assets represent property and equipment and intangible assets.

WESTPAC GROUP 2021 ANNUAL REPORT 15
Notes to the financial statements
Note 3. Net interest income
Accounting policy
Interest income and interest expense for all interest earning financial assets and interest bearing financial liabilities at amortised cost or FVOCI, detailed within
the table below, are recognised using the effective interest rate method. Net income from treasury’s interest rate and liquidity management activities and the
cost of the Bank levy are 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 Group’s ECL model and on the carrying amount
net of the provision for ECL for financial assets in stage 3.
ConsolidatedParent Entity
$m 2021 2020 2019 2021 2020
Interest income
1


Calculated using the effective interest rate method
Cash and balances with central banks

30 135 334 14 122
Collateral paid

16 75 201 15 74
Investment securities

1,200 1,521 1,919 1,120 1,385
Loans

20,756 24,848 30,029 17,971 21,488
Other financial assets

2 17 35 2 16
Due from subsidiaries

- - - 2,476 2,940
Assets held for sale128--50-
Total interest income calculated using the effective interest rate method22,13226,59632,51821,64826,025
Other
Net ineffectiveness on qualifying hedges(46)8728(42)77
Trading securities and financial assets measured at FVIS and loans192364676182343
Due from subsidiaries

- - - 118 178
Assets held for sale-----
Total other

146 451 704 258 598
Total interest income

22,278 27,047 33,222 21,906 26,623
Interest expense


Calculated using the effective interest rate method
Collateral received(4)(26)(57)(3)(23)
Deposits and other borrowings(1,801)(4,652)(7,967)(1,402)(3,782)
Debt issues(1,861)(2,907)(4,706)(1,655)(2,549)
Due to subsidiaries---(3,219)(3,601)
Loan capital(849)(800)(776)(849)(800)
Other financial liabilities(112)(98)(274)(110)(98)
Liabilities held for sale(11)--(9)-
Total interest expense calculated using the effective interest rate method(4,638)(8,483)(13,780)(7,247)(10,853)
Other


Deposits and other borrowings

(67) (402) (978) (48) (385)
Trading liabilities
2

(122) (787) (915) 297 (640)
Debt issues

(64) (107) (163) (58) (74)
Bank levy

(392) (408) (391) (392) (408)
Due to subsidiaries

- - - (296) (29)
Other interest expense

(136) (164) (88) (126) (150)
Liabilities held for sale(1)----
Total other

(782) (1,868) (2,535) (623) (1,686)
Total interest expense

(5,420) (10,351) (16,315) (7,870) (12,539)
Total net interest income

16,858 16,696 16,907 14,036 14,084
1.Interest income included items relating to compliance, regulation and remediation costs recognised as an addition in interest income of $106 million (2020: $170 million reduction, 2019: $372
million reduction) for the Group, and an addition of $149 million (2020: $164 million reduction) for the Parent Entity. Refer to Note 26 for further details.
2.Includes net impact of Treasury balance sheet management activities.

16 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 4. Non-interest income
Accounting policy
Non-interest income includes net fee income, net wealth management and insurance income, trading income and other income.
Net fee income
When another party is involved in providing goods or services to a Group customer, the Group assesses whether the nature of the arrangement with its
customer is as a principal provider or an agent of another party. Where the Group is acting as an agent for another party, the income earned by the 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 fee income for facilitating the transaction between the customer and the third party provider with primary responsibility for fulfilling the contract.
Fee income
Fee income is recognised when the performance obligation is satisfied by transferring the promised good or service to the customer. Fee income includes
facility fees, transaction fees 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 are earned for facilitating banking transactions such as FX fees, telegraphic transfers and issuing bank cheques. Fees for these one-off
transactions are recognised once the transaction has been completed. Transaction fees 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 Group has a future service obligation to customers under the Group’s credit card reward programs.
Other non-risk fee income includes advisory and underwriting fees which are recognised when the related service is completed.
Income which forms an integral part of the effective interest rate of a financial instrument is recognised using the effective interest method and recorded in
interest income (for example, loan origination fees).
Fee expenses
Fee 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. Fee 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. Fee expenses include the costs
associated with credit card loyalty programs which are recognised as an expense when the services are provided on the redemption of points as well as
merchant transaction costs.
Net wealth management and insurance income
Net wealth management income
Wealth management fees earned for the ongoing management of customer funds and investments are recognised when the performance obligation is satisfied
which is over the period of management.
Insurance premium income
Insurance premium income includes premiums earned for life insurance, life investment, loan mortgage insurance and general insurance products:
●life insurance premiums with a regular due date are recognised as revenue on an accrual basis;
●life investment premiums include a management fee component which is recognised as income over the period the service is provided. The deposit
components of life insurance and investment contracts are not revenue and are treated as movements in life insurance liabilities;
●general insurance premium comprises amounts charged to policyholders, excluding taxes, and is recognised based on the likely pattern in which the
insured risk is likely to emerge. The portion not yet earned based on the pattern assessment is recognised as unearned premium liability.

WESTPAC GROUP 2021 ANNUAL REPORT 17
Notes to the financial statements
Note 4. Non-interest income (continued)
Accounting policy (continued)
Insurance claims expense
●life and general insurance contract claims are recognised as an expense when the liability is established;
●claims incurred in respect of life investment contracts represent withdrawals and are recognised as a reduction in life insurance liabilities.
Changes in life insurance liabilities
Changes in life insurance liabilities includes the change in the value of life insurance contract liabilities calculated using the margin on services methodology
(MoS), specified in the Prudential Standard LPS 340 Valuation of Policy Liabilities (for discussion on MoS and critical accounting assumptions and estimates,
refer to Note 15).
Regulation, competition, interest rates, taxes, securities market conditions and general economic conditions also affect the estimation of life insurance liabilities.
Trading income
●realised and unrealised gains or losses from changes in the fair value of trading assets, liabilities and derivatives are recognised in the period in which they
arise (except day one profits or losses which are deferred, refer to Note 22);
●net income related to Treasury’s interest rate and liquidity management activities is included in net interest income.
Other income - dividend income
●dividends on quoted shares are recognised on the ex-dividend date;
●dividends on unquoted shares are recognised when the Company’s right to receive payment is established.

18 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 4. Non-interest income
1
(continued)
ConsolidatedParent Entity
$m 2021 2020 2019 2021 2020
Net fee income


Facility fees

717 731 730 671 672
Transaction fees

993 1,021 1,225 851 891
Other non-risk fee income

- 48 (76) (123) (52)
Fee income

1,710 1,800 1,879 1,399 1,511
Credit card loyalty programs

(101) (102) (121) (71) (71)
Transaction fee related expenses

(127) (106) (103) (104) (81)
Fee expenses

(228) (208) (224) (175) (152)
Net fee income

1,482 1,592 1,655 1,224 1,359
Net wealth management and insurance income

Net wealth management income

657 631 276 - -
Life insurance premium income

1,077 1,297 1,443 - -
General insurance and lenders mortgage insurance (LMI) net premium earned

387 499 482 - -
Life insurance investment and other income
2

59 64 409 - -
General insurance and LMI investment and other income

76 42 52 - -
Total insurance premium, investment and other income

1,599 1,902 2,386 - -
Life insurance claims and changes in life insurance liabilities
3

(767) (1,284) (1,266) - -
General insurance and LMI claims and other expenses

(278) (498) (367) - -
Total insurance claims, changes in life insurance liabilities and other expenses

(1,045) (1,782) (1,633) - -
Net wealth management and insurance income

1,211 751 1,029 - -
Trading income

719 895 929 661 876
Other income


Dividends received from subsidiaries

- - - 1,184 762
Transactions with subsidiaries

- - - 973 579
Dividends received from other entities

4 1 6 2 1
Net gain/(loss) on sale/derecognition of associates

43 316 38 (11) 305
Net gain/(loss) on disposal of assets

7 11 61 - 9
Net gain/(loss) on hedging of overseas operations

(8) - - (150) (8)
Net gain/(loss) on derivatives held for risk management purposes
4

4 4 (11) 4 4
Net gain/(loss) on financial assets measured at fair value

655 (78) (39) 118 (35)
Net gain/(loss) on disposal of controlled entities and other businesses

188 - 3 - -
Rental income on operating leases

41 54 72 21 33
Share of associates’ net profit/(loss)

(6) (23) (23) (2) -
Other

24 (36) 22 169 (53)
Total other income9522491292,3081,597
Total non-interest income4,3643,4873,7424,1933,832
Deferred income in relation to the credit card loyalty programs for the Group was $362 million as at 30 September 2021 (2020: $361 million, 2019: $322 million)
and $35 million for the Parent Entity (2020: $30 million). This will be recognised as fee income as the credit card reward points are redeemed.
There were no other material contract assets or contract liabilities for the Group or the Parent Entity.
1.Non-interest income included items relating to compliance, regulation and remediation costs recognised as a reduction in non-risk fee income, net wealth management income and other
income of $320 million (2020: $225 million, 2019: $860 million) for the Group, and $278 million (2020: $190 million) for the Parent Entity. Refer to Note 26 for further details.
2.Includes policyholder tax recoveries.
3.Life insurance claims and changes in life insurance liabilities are nil for the Group (2020: $260 million; 2019: nil) recognised as a result of the liability adequacy test on life insurance contracts
(refer to Note 15). 2020 balance also includes a $97 million write-off of deferred acquisition costs for the Group (2019: nil) as a result of Westpac Life Insurance Limited (WLIS) ceasing to
provide group life insurance products to BT Super.
4.Income from derivatives held for risk management purposes reflects the impact of economic hedges of earnings.

WESTPAC GROUP 2021 ANNUAL REPORT 19
Notes to the financial statements
Note 5. Operating expenses
1
ConsolidatedParent Entity
$m 2021 2020 2019 2021 2020
Staff expenses


Employee remuneration, entitlements and on-costs

5,369 4,428 4,320 4,666 3,744
Superannuation expense
2

475 413 378 409 351
Share-based payments

97 80 108 94 76
Restructuring costs

93 94 232 92 76
Total staff expenses

6,034 5,015 5,038 5,261 4,247
Occupancy expenses


Lease expense

164 148 658 138 123
Depreciation and impairment of property and equipment
3

955 708 222 845 614
Other

107 160 143 95 145
Total occupancy expenses

1,226 1,016 1,023 1,078 882
Technology expenses


Amortisation and impairment of software assets
3

1,240 970 719 1,171 896
Depreciation and impairment of IT equipment
3

260 272 129 228 244
Technology services

820 698 810 764 569
Software maintenance and licences

531 398 371 463 343
Telecommunications

181 216 207 157 190
Data processing

96 89 83 96 88
Total technology expenses

3,128 2,643 2,319 2,879 2,330
Other expenses


Professional and processing services

1,410 1,374 1,060 1,236 1,184
Amortisation and impairment of intangible assets and deferred expenditure
3

599 523 9 512 116
Postage and stationery

156 164 179 130 130
Advertising

220 217 245 172 172
Non-lending losses

234 1,443 58 174 1,428
Impairment of investments in subsidiaries

- - - 19 272
Other

304 344 175 454 11
Total other expenses

2,923 4,065 1,726 2,697 3,313
Total operating expenses

13,311 12,739 10,106 11,915 10,772
1.Operating expenses included estimated costs associated with AUSTRAC proceedings of nil (2020: $1,478 million, 2019: nil) which included a provision for penalty of nil (2020: $1,300 million,
2019: nil) for the Group and the Parent Entity. They also included compliance, regulation and remediation costs of $359 million (2020: $317 million, 2019: $196 million) for the Group and $306
million (2020: $310 million) for the Parent Entity. Refer to Note 26 for further details.
2.Superannuation expense includes both defined contribution and defined benefit expense. Further details of the Group’s defined benefit plans are in Note 33.
3.Impairment expenses included:
●$275 million (2020: $5 million, 2019: nil) for property and equipment for the Group, and $248 million (2020: $4 million) for the Parent Entity;
●$485 million (2020: $171 million, 2019: $25 million) for computer software for the Group, and $475 million (2020: $165 million) for the Parent Entity;
●$45 million (2020: $23 million, 2019: nil) for IT equipment for the Group, and $41 million (2020: $23 million) for the Parent Entity.
●$571 million (2020: $518 million, 2019: nil) for goodwill and other intangible assets for the Group, and $487 million (2020: $116 million) for the Parent Entity.

20 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 6. Impairment charges
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 13.
Impairment charges are recognised in the income statement, with a corresponding amount recognised as follows:
● Loans, debt securities at amortised cost and due from subsidiaries balances: as a reduction of the carrying value of the financial asset through an offsetting
provision account (refer to Note 13);
● Debt securities at FVOCI: in reserves in OCI with no reduction of the carrying value of the debt security (refer to Note 27); and
● Credit commitments: as a provision (refer to Note 26).
Uncollectable loans
A loan may become uncollectable in full or part if, after following the Group’s loan recovery procedures, the 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 Group may subsequently be able to recover cash flows from loans written off. In the period which these recoveries are made, they are recognised in the
income statement.
The following table details impairment charges.
Consolidated Parent Entity
$m 2021 2020 2019 20212020
Provisions raised/(released)


Performing

(915) 1,437 (209) (785)1,147
Non-performing

567 1,934 1,175 5631,717
Recoveries

(242) (193) (172) (225)(173)
Impairment charges

(590) 3,178 794 (447)2,691
of which relates to:

Loans and credit commitments(567)3,158794(449)2,689
Debt securities at amortised cost(25)18---
Debt securities at FVOCI

2 2 - 22
Impairment charges/(benefit)

(590)3,178794(447)2,691
Further details are discussed in Note 13.

WESTPAC GROUP 2021 ANNUAL REPORT 21
Notes to the financial statements
Note 7. Income tax
Accounting policy
The 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 for each jurisdiction. Current tax also includes adjustments
to tax payable for previous years.
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 for each jurisdiction 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;
●the initial recognition of goodwill in a business combination; and
●retained earnings in subsidiaries which the Parent Entity does not intend to distribute for the foreseeable future.
The Parent Entity is the head entity of a tax consolidated group with its wholly owned Australian subsidiaries. All entities in the tax consolidated group have
entered into a tax sharing agreement which, in the opinion of the Directors, limits the joint and several liabilities in the case of a default by the Parent Entity.
Current and deferred tax are recognised using a ‘group allocation basis’. As head entity, the Parent Entity recognises all current tax balances and deferred tax
assets arising from unused tax losses and relevant tax credits for the tax-consolidated group. The Parent Entity fully compensates/is compensated by the other
members for these balances.
Critical accounting assumptions and estimates
The Group operates in multiple tax jurisdictions and significant judgement is required in determining the worldwide current tax liability. There are many
transactions with uncertain tax outcomes and provisions are determined based on the expected outcomes.

22 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 7. Income tax (continued)
Income tax expense
The following table reconciles income tax expense to the profit before income tax expense.
ConsolidatedParent Entity
$m 2021 2020 2019 2021 2020
Profit before income tax expense

8,501 4,266 9,749 6,761 4,453
Tax at the Australian company tax rate of 30%

2,550 1,280 2,925 2,028 1,336
The effect of amounts which are not deductible/(assessable) in calculating taxable income


Hybrid capital distributions

59 56 72 59 56
Life insurance:


Tax adjustment on policyholder earnings

3 (17) 8 - -
Adjustment for life business tax rates

- 1 (1) - -
Dividend adjustments

- - (1) (355) (228)
Other non-assessable items

(6) (3) (14) (5) (3)
Other non-deductible items

252 585 12 204 468
Adjustment for overseas tax rates

(16) 16 (32) 9 32
Income tax (over)/under provided in prior years

3 1 (10) (2) 1
Other items

193 55 - 210 133
Total income tax expense

3,038 1,974 2,959 2,148 1,795
Income tax expense comprises:


Current income tax

2,741 2,954 3,370 2,017 2,417
Movement in deferred tax

294 (981) (401) 133 (623)
Income tax (over)/under provision in prior years

3 1 (10) (2) 1
Total income tax expense

3,038 1,974 2,959 2,148 1,795
Total Australia

2,610 1,697 2,526 2,090 1,753
Total Overseas

428 277 433 58 42
Total income tax expense
1

3,038 1,974 2,959 2,148 1,795
The effective tax rate was 35.74% in 2021 (2020: 46.27%, 2019: 30.35%).
1.As the Bank levy is not a levy on income, it is not included in income tax. It is included in Note 3.

WESTPAC GROUP 2021 ANNUAL REPORT 23
Notes to the financial statements
Note 7. Income tax (continued)
Deferred tax assets
The balance comprises temporary differences attributable to:
ConsolidatedParent Entity
$m2021202020212020
Amounts recognised in the income statements and opening retained profits


Provisions for ECL on loans and credit commitments

1,481 1,788 1,269 1,507
Provision for long service leave, annual leave and other employee benefits386335365308
Financial instruments

- - - -
Property and equipment347223316198
Other provisions424606388570
Lease liabilities
1

743 899 665 825
All other liabilities
1

331 419 300 304
Total amounts recognised in the income statements and opening retained profits

3,712 4,270 3,303 3,712
Amounts recognised directly in OCI


Investment securities----
Cash flow hedges-25--
Defined benefit

103 155 101 149
Total amounts recognised directly in OCI

103 180 101 149
Gross deferred tax assets

3,815 4,450 3,404 3,861
Set-off of deferred tax assets and deferred tax liabilities

(1,378) (1,386) (1,311) (1,364)
Net deferred tax assets

2,437 3,064 2,093 2,497
Movements


Balance as at beginning of year

3,064 2,048 2,497 1,925
Impact on adoption of new accounting standards
1
(17)948(14)872
Restated opening balance3,0472,9962,4832,797
Recognised in the income statements

(529) 758 (395) 507
Recognised in OCI

(77) 13 (48) 9
Balances reclassified to assets held for sale(8)---
Balances disposed of on sale of businesses(4)---
Set-off of deferred tax assets and deferred tax liabilities

8 (703) 53 (816)
Balance as at end of year

2,437 3,064 2,093 2,497
1.The adoption of AASB 16 on 1 October 2019 resulted in an increase in deferred tax assets of $948 million for the Group and $872 million for the Parent Entity. A corresponding increase was
also recognised in deferred tax liabilities (refer to the following table), which resulted in a net nil impact on retained profits.

24 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 7. Income tax (continued)
Deferred tax liabilities
The balance comprises temporary differences attributable to:
ConsolidatedParent Entity
$m 2021202020212020
Amounts recognised in the income statements and opening retained profits


Finance lease transactions

296 253 290 232
Property and equipment
1

610 933 541 864
Life insurance assets

- 43 - -
All other assets

267 223 211 208
Total amounts recognised in the income statements and opening retained profits

1,173 1,452 1,042 1,304
Amounts recognised directly in OCI


Investment securities2145121151
Cash flow hedges819589
Total amounts recognised directly in OCI2956026960
Gross deferred tax liabilities

1,468 1,512 1,311 1,364
Set-off of deferred tax assets and deferred tax liabilities

(1,378) (1,386) (1,311) (1,364)
Net deferred tax liabilities

90 126 - -
Movements

Balance as at beginning of year

126 44 - -
Impact on adoption of new accounting standards
1

- 948 - 872
Restated opening balance126992-872
Recognised in the income statements(235)(223)(262)(116)
Recognised in OCI2356020960
Balances reclassified to liabilities held for sale(44)---
Balances disposed of on sale of businesses----
Set-off of deferred tax assets and deferred tax liabilities

8 (703) 53 (816)
Balance as at end of year

90 126 - -
1.The adoption of AASB 16 on 1 October 2019 resulted in an increase in deferred tax liabilities of $948 million for the Group and $872 million for the Parent Entity, which was recognised as an
opening adjustment in retained profits. A corresponding increase was also recognised in deferred tax assets (refer to the previous table), which resulted in a net nil impact on retained profits.
Unrecognised deferred tax balances
The following potential deferred tax balances have not been recognised. The tax effect of the gross balances would be based on the corporate tax rates applicable
in the relevant jurisdictions, which range between 16.5% and 30%.
ConsolidatedParent Entity
$m 2021 2020 2021 2020
Unrecognised deferred tax asset


Tax losses on revenue account

470 335 454 264
Unrecognised deferred tax liability


Gross retained earnings of subsidiaries which the Parent Entity does not intend to distribute in the foreseeable future

55 55 - -

WESTPAC GROUP 2021 ANNUAL REPORT 25
Notes to the financial statements
Note 8. Earnings per share
Accounting policy
Basic earnings per share (EPS) is calculated by dividing the net profit attributable to shareholders by the weighted average number of ordinary shares on issue
during the year, adjusted for treasury shares. Diluted EPS is calculated by adjusting the basic EPS by assuming all dilutive potential ordinary shares are
converted. Refer to Notes 19 and 32 for further information on the potential dilutive instruments.
202120202019
$m Basic Diluted Basic Diluted Basic Diluted
Net profit attributable to owners of WBC ($m)

5,458 5,458 2,290 2,290 6,784 6,784
Adjustment for RSP dividends ($m)
1

(2) - (2) (2) (6) (6)
Adjustment for potential dilution:


Distributions to convertible loan capital holders ($m)
2

- 218 - - - 290
Adjusted net profit attributable to owners of WBC ($m)

5,456 5,676 2,288 2,288 6,778 7,068
Weighted average number of ordinary shares (millions)


Weighted average number of ordinary shares on issue

3,657 3,657 3,595 3,595 3,456 3,456
Treasury shares (including RSP share rights)
1

(4) (4) (5) (5) (6) (6)
Adjustment for potential dilution:


Share-based payments

- 4 - 1 - 1
Convertible loan capital
2

- 461 - - - 278
Adjusted weighted average number of ordinary shares

3,653 4,118 3,590 3,591 3,450 3,729
Earnings per ordinary share (cents)

149.4 137.8 63.7 63.7 196.5 189.5
1.RSP is explained in Note 32. Some shares under the RSP have not vested and are not outstanding ordinary shares but do receive dividends. These RSP dividends are deducted to show the
profit attributable to ordinary shareholders. Shares under the RSP were dilutive in 2021 (2020: antidilutive, 2019: antidilutive).
2.The Group has issued convertible loan capital which may convert into ordinary shares in the future (refer to Note 19 for further details). These convertible loan capital instruments are
potentially dilutive instruments, and diluted EPS is therefore calculated as if the instruments had been converted at the beginning of the year or, if later, the instruments’ issue dates. In 2021, all
convertible loan capital instruments were dilutive (2020: antidilutive, 2019: dilutive).

26 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 9. Average balance sheet and interest rates
The daily average balances of the Group’s interest earning assets and interest bearing liabilities are shown below along with their interest income or expense.
202120202019
AverageInterestAverageAverageInterestAverageAverageInterestAverage
balanceincomeratebalanceincomeratebalanceincomerate
Consolidated$m$m%$m$m%$m$m%
Assets


Interest earning assets


Collateral paid:


Australia

10,748 7 0.1 13,555 56 0.4 8,428 152 1.8
New Zealand

372 - - 373 3 0.8 364 7 1.9
Other overseas

1,108 9 0.8 1,804 16 0.9 2,031 42 2.1
Trading securities and financial assets measured at
FVIS:
Australia

16,659 116 0.7 20,300 217 1.1 20,691 468 2.3
New Zealand

3,881 28 0.7 4,728 47 1.0 3,862 85 2.2
Other overseas

3,251 48 1.5 4,601 95 2.1 4,521 109 2.4
Investment securities:


Australia81,6651,1041.471,4021,3471.956,8751,6913.0
New Zealand4,492741.63,921962.43,8501303.4
Other overseas

1,552 22 1.4 2,858 78 2.7 3,062 98 3.2
Loans and other receivables
1:


Australia

585,416 17,859 3.1 585,643 21,315 3.6 589,427 25,931 4.4
New Zealand

91,732 2,747 3.0 85,184 3,237 3.8 79,255 3,650 4.6
Other overseas

14,437136 0.9 27,349540 2.0 26,558859 3.2
Assets held for sale:
Australia1,583281.8------
New Zealand---------
Other overseas

2,560100 3.9 -- - -- -
Total interest earning assets and interest income

819,456 22,278 2.7 821,718 27,047 3.3 798,924 33,222 4.2
Non-interest earning assets


Derivative financial instruments

20,305 31,334 25,959
Life insurance assets

226 4,614 9,610
Assets held for sale4,590--
All other assets
2

61,478 62,414 60,231
Total non-interest earning assets

86,599 98,362 95,800
Total assets

906,055 920,080 894,724
1.Loans and other receivables are net of Stage 3 provision for ECL, where interest income is determined based on their carrying value. Stages 1 and 2 provisions for ECL are not included in the
average interest earning assets balance, as interest income is determined based on the gross value of loans and other receivables.
2.Includes property and equipment, intangible assets, deferred tax assets, non-interest earning loans relating to mortgage offset accounts and all other non-interest earning assets.

WESTPAC GROUP 2021 ANNUAL REPORT 27
Notes to the financial statements
Note 9. Average balance sheet and interest rates (continued)
202120202019
AverageInterestAverageAverageInterestAverageAverageInterestAverage
balanceexpenseratebalanceexpenseratebalanceexpenserate
Consolidated$m$m%$m$m%$m$m%

Liabilities


Interest bearing liabilities


Collateral received:


Australia

1,914 2 0.1 2,586 11 0.4 2,039 41 2.0
New Zealand

307 - - 596 3 0.5 390 8 2.1
Other overseas

3,965 2 0.1 4,399 12 0.31,188 8 0.7
Repurchase agreements
1
Australia32,600540.216,120730.511,2661721.5
New Zealand98620.238010.326851.9
Other overseas------2015.0
Deposits and other borrowings:


Australia

457,675 1,400 0.3 435,877 3,745 0.9 425,799 7,023 1.6
New Zealand

60,066 418 0.7 57,096 882 1.554,720 1,235 2.3
Other overseas

13,610 50 0.4 25,660 427 1.7 26,270 687 2.6
Loan capital:


Australia

24,573 754 3.1 19,554 663 3.4 15,080 632 4.2
New Zealand

1,653 85 5.1 1,833 94 5.1 1,777 91 5.1
Other overseas

368 10 2.7 1,324 43 3.2 1,324 53 4.0
Other interest bearing liabilities
1,2
:


Australia

121,338 2,234 1.8 160,830 3,776 2.3177,470 5,765 3.2
New Zealand

15,836 368 2.3 18,130 557 3.1 15,397 570 3.7
Other overseas

110 29 26.4 1,256 64 5.1 1,274 24 1.9
Liabilities held for sale:
Australia---------
New Zealand---------
Other overseas

1,335 12 0.9 - - - - - -
Total interest bearing liabilities and interest expense

736,336 5,420 0.7 745,641 10,351 1.4 734,282 16,315 2.2
Non-interest bearing liabilities


Deposits and other borrowings:


Australia

49,592 45,231 42,455
New Zealand

12,426 8,760 5,996
Other overseas

7 901 819
Derivative financial instruments

20,612 33,249 26,568
Life insurance liabilities

253 2,999 7,653
Liabilities held for sale2,728--
All other liabilities
3

13,202 15,233 13,187
Total non-interest bearing liabilities

98,820 106,373 96,678
Total liabilities

835,156 852,014 830,960
Shareholders’ equity

70,849 68,014 63,714
NCI

50 52 50
Total equity

70,899 68,066 63,764
Total liabilities and equity

906,055 920,080 894,724

Net interest income may vary from year to year due to changes in the volume of, and interest rates associated with, interest earning assets and interest bearing
liabilities. The following table allocates the change in net interest income between changes in volume and interest rate for those assets and liabilities.
1.Repurchase agreements, previously included in Other interest bearing liabilities, have been separately disclosed. Comparatives have been restated.
2.Includes net impact of Treasury balance sheet management activities and the Bank levy.
3.Includes other financial liabilities, provisions, current and deferred tax liabilities and all other non-interest bearing liabilities.

28 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 9. Average balance sheet and interest rates (continued)
Calculation of variances
●Volume changes are determined based on the movements in average asset and liability balances; and
●interest rate changes are determined based on the change in interest rate associated with those assets and liabilities. Variances that arise due to a
combination of volume and interest rate changes are allocated to interest rate changes.
20212020
ConsolidatedChange due toChange due to
$m Volume Rate Total Volume RateTotal
Interest earning assets
Collateral paid:
Australia (11)(38)(49) 93(189)(96)
New Zealand -(3)(3) -(4)(4)
Other overseas (6)(1)(7) (5)(21)(26)
Trading securities and financial assets measured at FVIS:
Australia (34)(67)(101) (9)(242)(251)
New Zealand (9)(10)(19) 19(57)(38)
Other overseas (28)(19)(47) 2(16)(14)
Investment securities:
Australia202(445)(243)433(777)(344)
New Zealand14(36)(22)2(36)(34)
Other overseas (20)(36)(56) (7)(13)(20)
Loans and other receivables:
Australia (469)(2,987)(3,456) (167)(4,449)(4,616)
New Zealand 151(641)(490) 274(687)(413)
Other overseas (241)(163)(404) 26(345)(319)
Assets held for sale:
Australia141428---
Other overseas6238100---
Total change in interest income (375)(4,394)(4,769) 661(6,836)(6,175)
Interest bearing liabilities
Collateral received:
Australia (3)(6)(9) 11(41)(30)
New Zealand (1)(2)(3) 4(9)(5)
Other overseas (1)(9)(10) 22(18)4
Repurchase agreements
1
Australia87(106)(19)83(182)(99)
New Zealand2(1)12(6)(4)
Other overseas---(1)-(1)
Deposits and other borrowings:
Australia 270(2,615)(2,345) 167(3,445)(3,278)
New Zealand 45(509)(464) 54(407)(353)
Other overseas (179)(198)(377) (16)(244)(260)
Loan capital:
Australia 176(85)91 188(157)31
New Zealand (9)-(9) 3-3
Other overseas (31)(2)(33) -(10)(10)
Other interest bearing liabilities:
Australia (716)(826)(1,542) (455)(1,534)(1,989)
New Zealand (28)(161)(189) 103(116)(13)
Other overseas (20)(15)(35) -4040
Liabilities held for sale:
Other overseas21012---
Total change in interest expense (406)(4,525)(4,931) 165(6,129)(5,964)
Change in net interest income:
Australia (112)1153 356(298)58
New Zealand 147(17)130 129(246)(117)
Other overseas (4)3329 11(163)(152)
Total change in net interest income 31131162 496(707)(211)
1.Repurchase agreements, previously included in Other interest bearing liabilities, have been separately disclosed. Comparatives have been restated.

WESTPAC GROUP 2021 ANNUAL REPORT 29
Notes to the financial statements
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Accounting policy
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 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.
Derecognition
Financial assets are derecognised when the rights to receive cash flows from the asset have expired, or when the 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 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, where the Group retains control of the transferred asset, it will continue to be recognised in the balance
sheet to the extent of the 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 cash flows 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.
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 life insurance assets.
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 payment of principal and interest (SPPI).
The Group determines the business model at the level that reflects how groups of financial assets are managed. When assessing the business model the
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.

30 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
FINANCIAL ASSETS AND FINANCIAL LIABILITIES (continued)
Accounting policy (continued)
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 ECL determined using the ECL model. Refer to Notes 6 and 13 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.
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.
Equity securities
Equity securities are measured at FVOCI where they:
● are not held for trading; and
● an irrevocable election is made by the Group.
Otherwise, they are measured at FVIS.
Equity securities at FVOCI are measured at fair value with unrealised gains and losses recognised in OCI, except for dividend income which is recognised in
the income statement. The cumulative gain or loss recognised in OCI is not subsequently recognised in the income statement when the instrument is disposed.
Equity securities 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 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 Group’s policies for determining the fair value of financial assets and financial liabilities are set out in Note 22.

WESTPAC GROUP 2021 ANNUAL REPORT 31
Notes to the financial statements
Note 10. Trading securities and financial assets measured at FVIS
Accounting policy
Trading securities
Trading securities include actively traded debt (government and other) and equity instruments and those acquired for sale in the near term.
As part of its trading activities, the Group also lends and borrows securities on a collateralised basis. Securities lent remain on the Group’s balance sheet and
securities borrowed are not reflected on the Group’s balance sheet, as the risks and rewards of ownership remain with the initial holder. Where cash is provided
as collateral, the amount advanced to or received from third parties is recognised as a receivable in collateral paid or as a borrowing in collateral received
respectively.
Reverse repurchase agreements
Securities purchased under these agreements are not recognised in the balance sheet, as Westpac 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.
Other financial assets measured at FVIS
Other financial assets measured at FVIS include:
●non-trading securities managed on a fair value basis;
●non-trading debt securities that do not have contractual cash flows that represent SPPI on the principal balance outstanding; or
●non-trading equity securities for which we have not made irrevocable designation to be measured at FVOCI.
Gains and losses on these financial assets are recognised in the income statement. Interest earned from debt securities is recognised in interest income (Note
3) while dividends on equity securities are recognised in non-interest income (Note 4).
ConsolidatedParent Entity
$m 2021 2020 2021 2020
Trading securities

15,019 17,77613,01815,519
Reverse repurchase agreements

2,937 20,4012,76320,401
Other financial assets measured at FVIS

3,145 2,4902,9982,110
Total trading securities and financial assets measured at FVIS

21,101 40,66718,77938,030
Trading securities include the following:
Government and semi-government securities

11,432 14,667 9,535 12,542
Other debt securities

3,064 3,044 2,960 2,913
Equity securities

3 4 3 3
Other

520 61 520 61
Total trading securities

15,019 17,776 13,018 15,519
Other financial assets measured at FVIS include:
Other debt securities

3,038 2,045 2,975 1,703
Equity securities

107 445 23 407
Total other financial assets measured at FVIS

3,145 2,490 2,998 2,110

32 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 11. Investment securities
Accounting policy
Investment securities include debt securities (government and other) and equity securities. It includes debt and equity securities that are measured at FVOCI
and debt securities measured at amortised cost. These instruments are classified based on the criteria disclosed under the heading “Financial assets and
financial liabilities” prior to Note 10.
Debt securities measured at FVOCI
Includes debt instruments that have contractual cash flows which represent SPPI on the principal balance outstanding and they are held within a business
model whose objective is achieved both through collecting these cash flows or selling the financial asset.
These securities are measured at fair value with gains and losses recognised in OCI except for interest income, impairment charges, FX gains and losses and
fair value hedge adjustments 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 13 for further details.
The cumulative gain or loss recognised in OCI is subsequently recognised in the income statement when the instrument is disposed.
Debt securities measured at amortised cost
Include debt instruments that have contractual cash flows which represent SPPI on the principal balance outstanding and are held within a business model
whose objective is achieved through holding the financial asset to collect these cash flows.
These securities are initially recognised at fair value plus directly attributable transaction costs. They are subsequently measured at amortised cost using the
effective interest rate method and are presented net of any provision for ECL.
Equity securities
Equity securities are measured at FVOCI where they are not held for trading, the Group does not have control or significant influence over the investee and
where an irrevocable election is made to measure them at FVOCI.
These securities are measured at fair value with unrealised gains and losses recognised in OCI except for dividend income which is recognised in the income
statement. The cumulative gain or loss recognised in OCI is not subsequently recognised in the income statement when the instrument is disposed.
Consolidated Parent Entity
$m2021 2020 2021 2020
Investment securities


Investments securities measured at FVOCI


Government and semi-government debt securities

66,421 73,486 63,057 69,929
Other debt securities

15,784 16,916 14,682 15,826
Equity securities

277 153 75 68
Total investment securities measured at FVOCI
1

82,482 90,555 77,814 85,823
Investment securities measured at amortised cost


Government and semi-government debt securities

900 881 48 -
Other debt securities

38 130 2 3
Total investment securities measured at amortised cost

938 1,011 50 3
Provision for ECL on debt securities at amortised cost

(3) (27) (1) -
Total net investment securities measured at amortised cost

935 984 49 3
Total investment securities

83,417 91,539 77,863 85,826
1.Impairment is recognised in the income statement with a corresponding amount in OCI (refer to Note 27). There is no reduction of the carrying value of the debt securities which remains at fair
value.

WESTPAC GROUP 2021 ANNUAL REPORT 33
Notes to the financial statements
Note 11. Investment securities (continued)
The following table shows the maturities and the weighted average yield of the Group’s outstanding investment securities as at 30 September 2021. There are no
tax-exempt securities.
Over 1Over 5
Up toyear to 5years toOverNo specificWeighted
1 yearyears10 years10 yearsmaturityTotalaverage
2021 $m % $m % $m % $m % $m % $m %
Carrying Amount


Government and semi-government
securities

5,476 2.829,1501.131,0091.51,6831.3--67,3181.4
Other debt securities

2,354 1.313,4661.021.9----15,8221.0
Equity securities

- -------277-277-
Total by maturity

7,830 42,61631,0111,68327783,417
The maturity profile is determined based upon contractual terms for investment securities.
Note 12. 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.
Loans are subsequently measured at FVIS where they do not have cash flows which represent SPPI, are held within a business model whose objective is
achieved by selling the financial asset, or are designated at FVIS to eliminate or reduce an accounting mismatch.
Refer to Note 22 for balances which are measured at fair value and amortised cost.
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 loan portfolio is disaggregated by location of booking office and product type, as follows.
ConsolidatedParent Entity
$m2021202020212020
Australia
Housing455,604440,933455,599440,926
Personal14,73717,08114,69416,938
Business148,453147,584145,950144,354
Total Australia618,794605,598616,243602,218
New Zealand
Housing58,08151,126--
Personal1,1751,360--
Business29,99129,864384354
Total New Zealand89,24782,350384354
Total other overseas6,33210,7135,6889,945
Total loans714,373698,661622,315612,517
Provision for ECL on loans (refer to Note 13)(4,589)(5,602)(3,902)(4,693)
Total net loans
1
709,784693,059618,413607,824
1.Total net loans included securitised loans of $4,829 million (2020: $7,367 million) for the Group and $129,270 million (2020: $132,506 million) for the Parent Entity. The level of securitised
loans excludes loans where Westpac is the holder of related debt securities.

34 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 12. Loans (continued)
The following table shows the Group’s contractual maturity distribution of all loans as at 30 September 2021.
Over 1 Over 5
ConsolidatedUp toyear toyears toOver
$m1 year5 years15 years15 yearsTotal
Australia
Housing7,3142,08318,238427,969455,604
Personal6,3127,1111,314-14,737
Business49,36787,7746,8674,445148,453
Total Australia62,99396,96826,419432,414618,794
New Zealand
Housing2326304,79752,42258,081
Personal93522812-1,175
Business19,38210,58226129,991
Total New Zealand20,54911,4404,83552,42389,247
Total other overseas2,2153,715402-6,332
Total loans85,757112,12331,656484,837714,373
The following table shows the Group’s interest rate segmentation of loans maturing after one year as at 30 September 2021.
Loans atLoans at
variablefixed
Consolidatedinterestinterest
$mratesrates Total
Interest rate segmentation of loans maturing after one year
Australia
Housing275,772172,518448,290
Personal2,7775,6488,425
Business88,67010,41699,086
Total Australia367,219188,582555,801
New Zealand
Housing6,82651,02357,849
Personal2373240
Business7599,85010,609
Total New Zealand7,82260,87668,698
Total other overseas3,8602574,117
Total loans maturing after one year378,901249,715628,616

WESTPAC GROUP 2021 ANNUAL REPORT 35
Notes to the financial statements
Note 13. Provisions for expected credit losses
Accounting policy
Note 6 provides details of impairment charges.
Impairment applies to all financial assets at amortised cost, lease receivables, debt securities measured at FVOCI, due from subsidiaries and credit
commitments.
The ECL is recognised as follows:
●Loans (including lease receivables), debt securities at amortised cost and due from subsidiaries: as a reduction of the carrying value of the financial asset
through an offsetting provision account (refer to Notes 11 and 12);
●Debt securities at FVOCI: in reserves in OCI with no reduction of the carrying value of the debt security itself (refer to Notes 11 and 27); and
●Credit commitments: as a provision (refer to Note 26).
Measurement
The Group calculates the provision for ECL based on a three stage approach. The provision for ECL is a probability-weighted estimate of the cash shortfalls
expected to result from defaults over the relevant time frame. 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 counter-party 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 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 Westpac considers that the customer is unable to repay its credit obligations in
full, irrespective of recourse by the 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 Australian Prudential Regulation Authority (APRA) 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 time frame 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 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.

36 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 13. Provisions for expected credit losses (continued)
Accounting policy (continued)
Movement between stages
Financial assets may move in both directions through the stages of the impairment model. Financial 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, financial assets in Stage 3 may move back to Stage 1 or Stage 2 if they
are no longer assessed to be non-performing.
Critical accounting assumptions and estimates
Key judgements include when a significant increase in credit risk has occurred, the estimation of forward- looking macroeconomic information and overlays.
Other factors which can impact the provision include the borrower’s financial situation, the realisable value of collateral, the 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 (SICR)
Determining when a financial asset has experienced a SICR since origination is a critical accounting judgement. In the current period the Group has revised the
methodology to determine a significant increase in risk from one which was primarily based on changes in internal customer risk grades since origination of the
facility and based on a sliding scale to one which is directly driven by the change in the probability of default (PD) since origination. In determining whether a
change in PD represents a significant increase in risk, relative changes in PD and absolute PD thresholds are both considered based on the portfolio of the
exposure. This change did not have a material impact to the Group.
The Group does not rebut the presumption that instruments that are 30 days past due have experienced a SICR 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 SICR. In the prior year COVID-19 support packages
for mortgages and business loans was not, in isolation, treated as an indication of SICR. The Group classified these deferral packages into different categories of
risk which were assessed for an increased likelihood of a risk of default to determine whether a SICR has occurred. In the current year, deferral packages for
mortgages and business loans are based on the specific circumstances of the customers and as such, the deferral packages could be an indication of SICR.
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 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) employment to population rates,
real gross domestic product growth rates and residential and commercial 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 commercial and 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 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 Group Chief Financial Officer
and Group Chief Risk Officer with oversight from the Board of Directors (and its Committees).
Overlays
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.

WESTPAC GROUP 2021 ANNUAL REPORT 37
Notes to the financial statements
Note 13. Provisions 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 “Business activity during the year” line represents new accounts originated during the year net of those that were de-recognised due to final repayments
during the year.
●The “Net remeasurement of provision for ECL” 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, overlays and partial repayments and additional draw downs on existing
facilities over the year.
●”Write-offs” represent a reduction in the provision for ECL as a result of de-recognition of exposures where there is no reasonable expectation of full recovery.
2021 2020
Non-Non-
PerformingperformingPerformingperforming
$mStage 1Stage 2Stage 3TotalStage 1Stage 2Stage 3Total
Consolidated
Provision for ECL on loans


Housing

154 735 607 1,496 185 742 977 1,904
Personal

124 314 173 611 180 362 232 774
Business

495 822 1,172 2,489 537 1,433 954 2,924
Total provision for ECL on loans

773 1,871 1,952 4,596 902 2,537 2,163 5,602
Provisions for ECL on credit commitments


Housing

6 6 - 12 7 5 - 12
Personal

29 41 1 71 36 46 - 82
Business

128 173 19 320 139 287 10 436
Total provision for ECL on credit commitments

163 220 20 403 182 338 10 530
Total provisions for ECL on loans and credit commitments

936 2,091 1,972 4,999 1,084 2,875 2,173 6,132
Presented as provision for ECL on:
Loans (Note 12)766 1,871 1,952 4,5899022,5372,1635,602
Loans included in assets held for sale (Note 37)7--7----
Credit commitments (Note 26)1612202040118233810530
Credit commitments included in liabilities held for sale (Note
37)2--2----
Total provisions for ECL on loans and credit commitments9362,0911,9724,9991,0842,8752,1736,132
Of which:


Individually assessed provisions

- - 832 832 - - 611 611
Collectively assessed provisions

936 2,091 1,140 4,167 1,084 2,875 1,562 5,521
Total provisions for ECL on loans and credit commitments

936 2,091 1,972 4,999 1,084 2,875 2,173 6,132
Gross loans and credit commitments

828,770 76,946 9,770 915,486 812,450 71,841 11,311 895,602
Coverage ratio on loans (%)0.122.7020.560.640.144.0219.500.80
Coverage ratio on loans and credit commitments (%)

0.11 2.72 20.18 0.55 0.13 4.00 19.21 0.68

38 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 13. Provisions for expected credit losses (continued)
2021 2020
Non-Non-
PerformingperformingPerformingperforming
$mStage 1Stage 2Stage 3TotalStage 1Stage 2Stage 3Total
Parent Entity
Provision for ECL on loans


Housing

114 669 552 1,335 145 630 904 1,679
Personal

111 270 151 532 162 297 193 652
Business

409 607 1,026 2,042 445 1,154 763 2,362
Total provision for ECL on loans

634 1,546 1,729 3,909 752 2,081 1,860 4,693
Provision for ECL on credit commitments


Housing

4 5 - 9 4 5 - 9
Personal

23 34 - 57 28 35 - 63
Business

119 150 19 288 129 269 9 407
Total provision for ECL on credit commitments

146 189 19 354 161 309 9 479
Total provisions for ECL on loans and credit commitments

780 1,735 1,748 4,263 913 2,390 1,869 5,172
Presented as provision for ECL on:
Loans (Note 12)6271,5461,7293,9027522,0811,8604,693
Loans included in assets held for sale (Note 37)7--7----
Credit commitments (Note 26)144189193521613099479
Credit commitments included in liabilities held for sale (Note
37)2--2----
Total provisions for ECL on loans and credit commitments7801,7351,7484,2639132,3901,8695,172
Of which:


Individually assessed provisions

- - 724 724 - - 520 520
Collectively assessed provisions

780 1,735 1,024 3,539 913 2,390 1,349 4,652
Total provisions for ECL on loans and credit commitments

780 1,735 1,748 4,263 913 2,390 1,869 5,172
Gross loans and credit commitments

720,659 68,179 8,980 797,818 712,381 61,822 10,293 784,496
Coverage ratio on loans (%)0.112.5019.810.630.143.8418.390.77
Coverage ratio on loans and credit commitments (%)

0.11 2.54 19.47 0.53 0.13 3.87 18.16 0.66

WESTPAC GROUP 2021 ANNUAL REPORT 39
Notes to the financial statements
Note 13. Provisions for expected credit losses (continued)
The following tables reconcile the provisions for ECL on loans and credit commitments for the Group and Parent Entity.
Movement in provision for ECL on loans and credit commitments
ConsolidatedParent Entity
Non-Non-
Performingperforming Performingperforming
$m Stage 1 Stage 2 Stage 3 TotalStage 1Stage 2 Stage 3 Total
Balance as at 30 September 2019

884 1,674 1,3553,9137471,4201,2113,378
Transfers to Stage 1

1,578(1,528)(50)-1,150(1,125)(25)-
Transfers to Stage 2

(345)1,161(816)-(266)930(664)-
Transfers to Stage 3

(7)(955)962-(6)(773)779-
Business activity during the year21260(77)19518864(45)207
Net remeasurement of provision for ECL

(1,233)2,4741,9153,156(897)1,8801,6722,655
Write-offs

--(1,170)(1,170)--(1,105)(1,105)
Exchange rate and other adjustments

(5)(11)5438(3)(6)4637
Balance as at 30 September 2020

1,0842,8752,1736,1329132,3901,8695,172
Transfers to Stage 1

1,246(1,128)(118)-1,058(960)(98)-
Transfers to Stage 2

(200)1,290(1,090)-(173)1,094(921)-
Transfers to Stage 3

(8)(507)515-(7)(449)456-
Business activity during the year

122(223)(343)(444)110(199)(298)(387)
Net remeasurement of provision for ECL

(1,284)(200)1,603119(1,121)(140)1,424163
Write-offs

--(836)(836)--(739)(739)
Exchange rate and other adjustments

(24)(16)6828-(1)5554
Balance as at 30 September 2021

9362,0911,9724,9997801,7351,7484,263
The provisions for ECL on loans and credit commitments can be further disaggregated into the following classes:
Consolidated Parent Entity
Non-Non-
Performingperforming Performingperforming
$mStage 1Stage 2Stage 3TotalStage 1Stage 2Stage 3Total
Housing
Balance as at 30 September 2019

163 354 5911,1081413355571,033
Transfers to Stage 1

566(542)(24)-376(365)(11)-
Transfers to Stage 2

(68)472(404)-(44)391(347)-
Transfers to Stage 3-(276)276--(233)233-
Business activity during the year25(53)(142)(170)19(45)(128)(154)
Net remeasurement of provision for ECL

(492)7987721,078(343)552686895
Write-offs

--(120)(120)--(111)(111)
Exchange rate and other adjustments

(2)(6)2820--2525
Balance as at 30 September 2020

1927479771,9161496359041,688
Transfers to Stage 1283(265)(18)-246(237)(9)-
Transfers to Stage 2(36)677(641)-(32)624(592)-
Transfers to Stage 3-(120)120--(115)115-
Business activity during the year42(49)(180)(187)39(43)(165)(169)
Net remeasurement of provision for ECL(322)(253)387(188)(284)(190)328(146)
Write-offs--(76)(76)--(63)(63)
Exchange rate and other adjustments143843--3434
Balance as at 30 September 2021

1607416071,5081186745521,344

40 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 13. Provisions for expected credit losses (continued)
ConsolidatedParent Entity
Non-Non-
Performingperforming Performingperforming
$m Stage 1 Stage 2 Stage 3 TotalStage 1 Stage 2 Stage 3Total
Personal
Balance as at 30 September 2019 268 459 248975229401213843
Transfers to Stage 1744(732)(12)-549(547)(2)-
Transfers to Stage 2(154)368(214)-(131)313(182)-
Transfers to Stage 3(1)(342)343-(1)(307)308-
Business activity during the year35(37)(50)(52)36(31)(43)(38)
Net remeasurement of provision for ECL(676)694617635(492)503573584
Write-offs--(728)(728)--(699)(699)
Exchange rate and other adjustments-(2)2826--2525
Balance as at 30 September 2020 216408232856190332193715
Transfers to Stage 1476(469)(7)-403(401)(2)-
Transfers to Stage 2(98)281(183)-(92)251(159)-
Transfers to Stage 3(1)(202)203-(1)(182)183-
Business activity during the year27(25)(35)(33)28(20)(30)(22)
Net remeasurement of provision for ECL(468)360402294(394)324386316
Write-offs--(461)(461)--(438)(438)
Exchange rate and other adjustments122326--1818
Balance as at 30 September 2021 153355174682134304151589
ConsolidatedParent Entity
Non-Non-
Performingperforming Performingperforming
$m Stage 1 Stage 2 Stage 3 TotalStage 1Stage 2 Stage 3 Total
Business
Balance as at 30 September 2019453 861 5161,8303776844411,502
Transfers to Stage 1268(254)(14)-225(213)(12)-
Transfers to Stage 2(123)321(198)-(91)226(135)-
Transfers to Stage 3(6)(337)343-(5)(233)238-
Business activity during the year152150115417133140126399
Net remeasurement of provision for ECL(65)9825261,443(62)8254131,176
Write-offs--(322)(322)--(295)(295)
Exchange rate and other adjustments(3)(3)(2)(8)(3)(6)(4)(13)
Balance as at 30 September 2020 6761,7209643,3605741,4237722,769
Transfers to Stage 1487(394)(93)-409(322)(87)-
Transfers to Stage 2(66)332(266)-(49)219(170)-
Transfers to Stage 3(7)(185)192-(6)(152)158-
Business activity during the year53(149)(128)(224)43(136)(103)(196)
Net remeasurement of provision for ECL(494)(307)81413(443)(274)710(7)
Write-offs--(299)(299)--(238)(238)
Exchange rate and other adjustments(26)(22)7(41)-(1)32
Balance as at 30 September 2021 6239951,1912,8095287571,0452,330
Reconciliation of impairment charges
ConsolidatedParent Entity
$m

2021 2020 2021 2020
Loans and credit commitments:


Business activity during the year

(444) 195 (387) 207
Net remeasurement of provision for ECL

119 3,156 163 2,655
Impairment charges for debt securities at amortised cost

(25) 18 - -
Impairment charges for debt securities at FVOCI

2 2 2 2
Recoveries

(242) (193) (225) (173)
Impairment charges (Note 6)

(590) 3,178 (447) 2,691

WESTPAC GROUP 2021 ANNUAL REPORT 41
Notes to the financial statements
Note 13. Provisions for expected credit losses (continued)
Total write-offs net of recoveries to average loans
Consolidated
%20212020
Write-offs net of recoveries to average loans


Housing0.010.02
Personal

1.46 2.75
Business0.150.15
Total write-offs net of recoveries to average loans

0.08 0.14
Impact of Portfolio Overlays on the provision for ECL
The following table attributes the breakup between modelled ECL and other portfolio overlays.
Where there is increased uncertainty regarding the required forward-looking economic conditions, or areas of potential risk, including significant uncertainty, not
captured in the underlying modelled ECL, overlays are used to capture that risk.
ConsolidatedParent Entity
$m 2021 2020 2021 2020
Modelled provision for ECL

4,352 5,480 3,712 4,659
Portfolio Overlays

647652 551 513
Total provision for ECL

4,999 6,132 4,263 5,172
Details of these changes related to forward-looking economic inputs and portfolio overlays, which are based on reasonable and supportable information up to the
date of this report 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 Group’s view of the forward-
looking distribution of potential loss outcomes. The change in provisions as a result of changes in modelled ECL or overlays are reflected through the “Net
remeasurement of provision for ECL” line.
The base case scenario uses current Westpac Economics forecasts and reflects the latest available forward- looking economic inputs which shows a deterioration
in the short term due to the impact of recent lock downs, with a subsequent recovery. The latest view considers both the economic and societal impacts of COVID-
19, the Australian Government stimulus measures implemented to cushion the impacts, and the New Zealand Government stimulus package. The Westpac
Australian economics forecast assumes the following:
Key macroeconomic assumptions for base case scenario 30 September 2021 30 September 2020
Annual GDP:
AustraliaForecast growth of 0.1% for calendarForecast growth of 2.5% for calendar
year 2021 and 7.4% for calendar yearyear 2021
2022
New ZealandForecast growth of 5.6% for calendarForecast growth of 3.9% for calendar
year 2021 and 2.3% for calendar yearyear 2021
2022
Forecast price contraction of 0.7% Forecast price contraction of 19.3% for
Commercial property indexfor calendar year 2021 and 4.7% forcalendar year 2021
calendar year 2022
Residential property prices:
AustraliaForecast price appreciation of 11.8%Forecast price contraction of 0.4% for
for calendar year 2021 and 5.0% forcalendar year 2021
calendar year 2022
New ZealandForecast price appreciation of 20% forForecast price appreciation of 8.0% for
calendar year 2021 and 0% for calendarcalendar year 2021
year 2022
Cash rate Forecast to remain at 10bps over Forecast to remain at 10bps over
calendar years 2021 and 2022calendar year 2021
Unemployment rate:
AustraliaForecast rate of 5.4% at December 2021Forecast to peak at 7.9% (February
and 4% at December 20222021) and fall to 7.5% at December 2021
Forecast rate of 4.2% at December 2021Forecast to peak at 7% (December
New Zealandand 3.5% at December 20222020) and then fall to 6.4% at
December 2021

42 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 13. Provisions for expected credit losses (continued)
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 commercial and 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 decline in provisions for loans and commitments over the financial year ended 30 September 2021 was due to more positive forward- looking economic
inputs, improved portfolio performance and a decline in some higher risk exposures. These declines were partly offset by higher IAPs which were driven by one
matter.
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).
Consolidated Parent Entity
$m2021202020212020
Reported probability-weighted ECL

4,999 6,132 4,263 5,172
100% base case ECL

3,411 4,750 2,877 4,051
100% downside ECL

7,399 8,315 6,354 6,956
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 $252 million (2020: $296 million) for the Group and $200 million (2020: $266 million) for the Parent Entity based on
applying the average provision coverage ratios by stage to the movement in the gross exposure by stage.
The following table indicates the weightings applied by the Group and Parent Entity:
Macroeconomic scenario weightings (%) 2021 2020
Upside

5.0 5.0
Base

55.0 55.0
Downside

40.0 40.0
Scenario weights have remained unchanged since 30 September 2020 mainly to reflect the high degree of risk around severe loss outcomes. Extraordinary policy
measures have eased financial conditions and supported the economy, helping to contain financial stability risks. As the COVID-19 pandemic and associated
impacts extend, this could lead to higher credit losses than those modelled under the base case. In particular, the current base case economic forecast indicates a
relatively short and sharp economic impact from recent lock downs followed by a subsequent recovery.
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 to reflect these evolving relationships and risks.
This judgement has been applied in the consideration of scenario weights and COVID-19 overlays.

WESTPAC GROUP 2021 ANNUAL REPORT 43
Notes to the financial statements
Note 13. Provisions for expected credit losses (continued)
Portfolio Overlays
Portfolio overlays are used to address areas of potential risk, including significant uncertainty, not captured in the underlying modelled ECL. Determination of
portfolio overlays requires expert judgement and is thoroughly documented and subject to comprehensive internal governance and oversight. If the risk of delayed
losses is judged to have dissipated or actual stress emerges, the overlay will be removed or reduced.
The total portfolio overlays as at 30 September 2021 were $647 million (2020: $652 million) for the Group and $551 million (2020: $513 million) for the Parent
Entity. Included in the total overlays were:
●$557 million (2020: $577 million) for the Group and $461 million (2020: $438 million) for the Parent Entity related to COVID-19 overlay; and
●$90 million (2020: $75 million) for the Group and $90 million (2020: $75 million) for the Parent Entity reflecting other risks. No material overlays were held for
extreme weather events.
Overlays associated with COVID-19 decreased in 2021 as deferral packages which expired 31 March 2021 have had six months of performance post exit and the
risk is now reflected in underlying ECL. This decrease was partially offset by new overlay for the deferral packages provided from July 2021 to cater for the recent
lock downs in New South Wales and Victoria.
An overlay was introduced in 2021 to reflect the risk that some businesses may have been protected from default or stress because of COVID-19 related support
packages and government stimulus and may become stressed once when these measures are removed. The overlay was retained at 30 September 2021 due to
the uncertainty around the impact of recent lock downs in New South Wales and Victoria, and associated support measures, increasing the likelihood of
temporarily suppressing losses. As at 30 September 2021 this overlay is $347 million for the Group and $298 million for the Parent.
Impact of changes in credit exposures on the provision for ECL
●Stage 1 exposures had a net increase of $16.3 billion (2020: net decrease of $52.9 billion) for the Group and $8.3 billion (2020: net decrease of $51.9 billion)
for the Parent Entity primarily driven by increases in housing segment due to new lending and in business segment due to transfer back of exposures from
Stage 2. The increase from portfolio growth is offset by an additional $11.2 billion transferred to Stage 2 to account for staging methodology changes and
overlays. Stage 1 ECL has decreased mainly from impacts from revised macro-economic forecasts.
●Stage 2 credit exposures increased by $5.1 billion (2020: increased by $34.3 billion) for the Group and $6.4 billion (2020: increased by $34.3 billion) for the
Parent Entity mainly driven by increases from the housing segment due to the additional $11.2 billion transferred to Stage 2 to account for staging
methodology changes and overlays. Stage 2 ECL has decreased driven by the reductions in overlay and impacts from revised macro-economic forecasts.
●Stage 3 credit exposures had a net decrease of $1.5 billion (2020: increased by $4.5 billion) for the Group and $1.3 billion (2020: increased by $4.5 billion) for
the Parent Entity driven by reductions in 90 days past due exposures in the housing portfolio. Stage 3 ECL has decreased in line with the decrease in Stage 3
exposures.
Note 14. Other financial assets
ConsolidatedParent Entity
$m 2021 2020 2021 2020
Accrued interest receivable

720 905 624 797
Securities sold not delivered

3,542 2,358 3,542 2,352
Trade debtors

574 992 397 502
Interbank lending59229973295
Clearing and settlement balances564630524558
Accrued fees and commissions

264 170 187 117
Other

138 120 139 124
Total other financial assets

6,394 5,474 5,486 4,745

44 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 15. Life insurance assets and life insurance liabilities
Accounting policy
The Group conducts its life insurance business in Australia primarily through Westpac Life Insurance Services Limited and separate statutory funds registered
under the Life Insurance Act 1995 (Life Act) and in New Zealand through Westpac Life-NZ-Limited which are separate statutory funds licensed under the
Insurance (Prudential Supervision) Act 2010.
Life insurance assets
Life insurance assets, including investments in funds managed by the Group, are designated at FVIS. Changes in fair value are recognised in non-interest
income. The determination of fair value of life insurance assets involves the same judgements as other financial assets, which are described in the critical
accounting assumptions and estimates in Note 22.
The Life Act places restrictions on life insurance assets, including that they can only be used:
● to meet the liabilities and expenses of that statutory fund;
● to acquire investments to further the business of the statutory fund; or
● as a distribution, when the statutory fund has met its solvency and capital adequacy requirements.
Life insurance liabilities
Life insurance liabilities primarily consist of life investment contract liabilities and life insurance contract liabilities. Claims incurred in respect of life investment
contracts are withdrawals of customer deposits, and are recognised as a reduction in life insurance liabilities.
Life investment contract liabilities
Life investment contract liabilities are designated at FVIS. Fair value is the higher of the valuation of life insurance assets linked to the life investment contract, or
the minimum current surrender value (the minimum amount the Group would pay to a policyholder if their policy is voluntarily terminated before it matures or the
insured event occurs). Changes in fair value are recognised in non-interest income.
Life insurance contract liabilities
The value of life insurance contract liabilities is calculated using the margin on services methodology (MoS), specified in the Prudential Standard LPS 340
Valuation of Policy Liabilities.
MoS accounts for the associated risks and uncertainties of each type of life insurance contract written. At each reporting date, planned profit margins and an
estimate of future liabilities are calculated. Profit margins are released to non-interest income over the period that life insurance is provided to policyholders
(Note 4). The cost incurred of acquiring specific insurance contracts is deferred provided that these amounts are recoverable out of planned profit margins. The
deferred amounts are recognised as a reduction in life insurance policy liabilities and are amortised to non-interest income over the same period as the planned
profit margins.
Life insurance contract liability adequacy test
Life insurance contract policy liabilities are tested for liability adequacy by comparing them to the best estimate of future cash flows. Liabilities are grouped into
related product groups and each group is tested against the best estimate of future cash flows. If the liability of a related product group is less than best estimate
the liability is increased with the expense being recognised in non-interest income.
External unit holder liabilities of managed investment schemes
The life insurance statutory funds include controlling interests in managed investment schemes which are consolidated. When the managed investment scheme
is consolidated, the external unit holder liabilities are recognised as a liability and included in life insurance liabilities. They are designated at FVIS.
Critical accounting assumptions and estimates
The key factors that affect the estimation of life insurance liabilities and related assets are:
● the cost of providing benefits and administering contracts;
● mortality and morbidity experience, which includes policyholder benefits enhancements;
● discontinuance rates, which affects the Group’s ability to recover the cost of acquiring new business over the life of the contracts; and
● the discount rate of projected future cash flows.
Regulation, competition, interest rates, taxes, securities market conditions and general economic conditions also affect the estimation of life insurance liabilities.

WESTPAC GROUP 2021 ANNUAL REPORT 45
Notes to the financial statements
Note 15. Life insurance assets and life insurance liabilities (continued)
Life insurance assets
Consolidated
$m20212020
Investments held directly and in unit trusts


Unit trusts-333
Debt securities-2,818
Loans and other assets

- 442
Total life Insurance assets

- 3,593
In 2021, the entire life insurance assets for the Group were reclassified as assets held for sale (refer to Note 37). There were no life insurance assets in the Parent
Entity as at 30 September 2021 (2020: nil).
Life insurance liabilities
ConsolidatedLife investmentLife insurance
Reconciliation of movements in policy liabilitiescontractscontractsTotal
$m 2021 2020 2021 2020 2021 2020
Balance as at beginning of year

1,887 8,206 (491) (829) 1,396 7,377
Movements in policy liabilities reflected in the income statement

23 221 (21) 338 2 559
Contract contributions recognised in policy liabilities

1 368 - - 1 368
Contract withdrawals recognised in policy liabilities

(15) (8,322) - - (15) (8,322)
Contract fees, expenses and tax recoveries

(4) (44) - - (4) (44)
Change in external unit holders of managed investment schemes

(933) 1,458 - - (933) 1,458
Balances reclassified to liabilities held for sale (refer to Note 37)

(959) — 512 - (447) -
Balance as at end of year

- 1,887 - (491) - 1,396
There were no life insurance liabilities in the Parent Entity as at 30 September 2021 (2020: nil).

46 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 16. Deposits and other borrowings
1
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.
Refer to Note 22 for balances measured at fair value and amortised cost.
Interest expense incurred is recognised in net interest income using the effective interest rate method.
ConsolidatedParent Entity
$m 2021 2020 2021 2020
Australia


Certificates of deposit

31,506 25,647 31,506 25,647
Non-interest bearing, repayable at call

52,819 48,303 52,819 48,303
Other interest bearing at call

345,416 304,761 345,416 304,761
Other interest bearing term

102,775 125,820 102,775 125,820
Total Australia

532,516 504,531 532,516 504,531
New Zealand


Certificates of deposit

3,293 2,773 - -
Non-interest bearing, repayable at call

14,066 10,711 - -
Other interest bearing at call

31,354 26,300 - -
Other interest bearing term

27,042 28,689 - 1
Total New Zealand

75,755 68,473 - 1
Other overseas


Certificates of deposit

11,839 7,258 11,839 7,258
Non-interest bearing, repayable at call

919 868 357 333
Other interest bearing at call

1,751 1,864 1,446 1,559
Other interest bearing term

4,175 8,137 4,029 7,931
Total other overseas

18,684 18,127 17,671 17,081
Total deposits and other borrowings

626,955 591,131 550,187 521,613
The following table shows average balances and average rates in each of the past two years for major categories of deposits.
20212020
Average Average Average Average
balanceratebalancerate
Consolidated$m% $m%
Australia


Non-interest bearing, repayable at call

49,59245,231
Certificates of deposit

28,2420.125,0410.8
Other interest bearing at call

322,3330.2275,4750.5
Other interest bearing term

107,1000.6135,3611.5
Total Australia

507,267481,108
Overseas

Non-interest bearing, repayable at call

12,4339,661
Certificates of deposit

11,0350.414,3761.4
Other interest bearing at call

30,2310.225,9990.5
Other interest bearing term

32,4101.142,3812.3
Total overseas

86,10992,417
1. Non-interest bearing relates to instruments which do not carry a rate of interest.

WESTPAC GROUP 2021 ANNUAL REPORT 47
Notes to the financial statements
Note 16. Deposits and other borrowings (continued)
Certificates of deposit and term deposits
Uninsured deposits refer to deposits that are in excess of, or ineligible for, a government based deposit insurance scheme in their relevant country of domicile. For
the Group, this primarily relates to deposit in excess of, or ineligible for, the Australian Government’s Financial Claims Scheme (FCS) limit. The table below shows
the balances of uninsured certificates of deposits and term deposits by remaining maturity:

Over Over
ConsolidatedUp to3 months to6 months toOver
$m3 months6 months1 year1 yearTotal
Certificates of deposit in excess of insured amounts


Australia

25,720 5,503 265 18 31,506
New Zealand

2,490 784 19 - 3,293
Other overseas

2,382 3,353 6,104 - 11,839
Total certificates of deposit in excess of insured amounts

30,592 9,640 6,388 18 46,638
Term deposits in excess of insured amounts


Australia

36,929 14,271 17,535 4,811 73,546
New Zealand

12,739 8,840 4,100 1,363 27,042
Other overseas

2,504 693 930 44 4,171
Total term deposits in excess of insured amounts

52,172 23,804 22,565 6,218 104,759
Interbank term deposits in excess of insured amounts
1


Australia

2,199 1,661 50 7 3,917
New Zealand

- - - - -
Other overseas

132 - - - 132
Total interbank term deposits in excess of insured amounts

2,331 1,661 50 7 4,049
1. Interbank term deposits are included in Note 17.
Note 17. Other financial liabilities
Accounting policy
Other financial liabilities include liabilities measured at amortised cost as well as liabilities which are measured at FVIS. Financial liabilities measured at FVIS
include:
● trading liabilities (i.e. securities sold short); and
● liabilities designated at FVIS (i.e. certain repurchase agreements).
Refer to Note 22 for balances measured at fair value and amortised cost.
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’ or ‘Investment securities’).
The cash consideration received is recognised as a liability (‘Repurchase agreements’). Repurchase agreements are designated at fair value where they are
managed as part of a trading portfolio, otherwise they are measured on an amortised cost basis.
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.
ConsolidatedParent Entity
$m

2021 2020 2021 2020
Repurchase agreements

35,899 27,763 33,346 27,763
Interbank placements4,0804,9814,0794,710
Accrued interest payable9441,3678291,169
Securities purchased not delivered3,2862,2913,2862,291
Trade creditors and other accrued expenses1,3921,2501,1241,045
Settlement and clearing balances7081,005695989
Securities sold short2,3318462,331846
Other1,6691,4221,5731,343
Total other financial liabilities

50,309 40,925 47,263 40,156

48 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 18. Debt issues
Accounting policy
Debt issues are bonds, notes, commercial paper and debentures that have been issued by entities in the 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 or contain an embedded derivative.
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.
Refer to Note 22 for balances measured at fair value and amortised cost.
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.
ConsolidatedParent Entity
$m 2021 2020 2021 2020
Short-term debt


Own issuances

19,595 16,477 16,752 14,160
Total short-term debt

19,595 16,477 16,752 14,160
Long-term debt


Covered bonds

31,374 36,051 27,234 31,926
Senior

72,804 89,766 64,224 81,580
Securitisation

5,000 8,000 - -
Structured notes

6 31 - -
Total long-term debt

109,184 133,848 91,458 113,506
Total debt issues

128,779 150,325 108,210 127,666
Movement reconciliation ($m)
Balance as at beginning of year150,325181,457127,666156,674
Issuances46,79934,76637,86827,487
Maturities, repayments, buy backs and reductions(65,272)(65,160)(54,425)(55,761)
Total cash movements(18,473)(30,394)(16,557)(28,274)
FX translation impact(1,428)(1,977)(1,311)(2,005)
Fair value adjustments(115)81(115)81
Fair value hedge accounting adjustments(1,674)1,038(1,607)1,076
Other (amortisation of bond issue costs, etc.)144120134114
Total non-cash movements(3,073)(738)(2,899)(734)
Balance as at end of year128,779150,325108,210127,666

WESTPAC GROUP 2021 ANNUAL REPORT 49
Notes to the financial statements
Note 18. Debt issues (continued)
Consolidated
$m 2021 2020
Short-term debt


Own issuances:
US commercial paper

19,595 13,864
Senior debt:
GBP-2,437
Other-176
Total own issuances

19,595 16,477
Total short-term debt

19,595 16,477
Long-term debt (by currency):


AUD

27,634 36,062
CHF

3,052 3,177
EUR

31,380 34,498
GBP

3,049 3,440
JPY

1,141 2,439
NZD

3,522 3,519
USD

36,031 45,917
Other

3,375 4,796
Total long-term debt

109,184 133,848
The Group manages FX exposure from debt issuances as part of its hedging activities. Further details of the Group’s hedge accounting are in Note 20.
Note 19. Loan capital
Accounting policy
Loan capital are instruments issued by the Group which qualify for inclusion as regulatory capital under APRA Prudential Standards. Loan capital is initially
measured at fair value and subsequently measured at amortised cost using the effective interest rate method. Interest expense incurred is recognised in net
interest income.
Consolidated and
Parent Entity
$m

2021 2020
Additional Tier 1 (AT1) loan capital


Westpac capital notes

8,403 7,423
USD AT1 securities

1,813 1,941
Total AT1 loan capital

10,216 9,364
Tier 2 loan capital


Subordinated notes

18,362 14,090
Subordinated perpetual notes

489 495
Total Tier 2 loan capital

18,851 14,585
Total loan capital

29,067 23,949
Movement reconciliation ($m)
Balance as at beginning of year23,94921,826
Issuances7,6282,225
Maturities, repayments, buy-backs and reductions(1,548)(262)
Total cash movements6,0801,963
FX translation impact(86)(564)
Fair value hedge accounting adjustments(902)703
Other (amortisation of bond issue costs, etc)2621
Total non-cash movements(962)160
Balance as at end of year29,06723,949

50 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 19. Loan capital (continued)
Additional Tier 1 loan capital
A summary of the key terms and common features of AT1 instruments are provided below
1
.
Consolidated and
Parent EntityPotential scheduledOptional
$mDistribution/Interest rateconversion date
2
redemption date
3
20212020
Westpac capital notes (WCN)


AUD 1,311 million WCN2 (90 day bank bill rate + 3.05% p.a.) 23 September 2024 23 September 2022 1,309 1,307
x (1 - Australian corporate tax rate)
AUD 1,324 million WCN3

(90 day bank bill rate + 4.00% p.a.) 22 March 2023 22 March 2021
4
- 1,323
x (1 - Australian corporate tax rate)
AUD 1,702 million WCN4

(90 day bank bill rate + 4.90% p.a.) 20 December 2023 20 December 2021
5
549 1,698
x (1 - Australian corporate tax rate)
AUD 1,690 million WCN5(90 day bank bill rate + 3.20% p.a.)22 September 202722 September 20251,6821,680
x (1 - Australian corporate tax rate)
AUD 1,423 million WCN6(90 day bank bill rate + 3.70% p.a.)31 July 202631 July 20241,4171,415
x (1 - Australian corporate tax rate)
AUD 1,723 million WCN7(90 day bank bill rate + 3.40% p.a.)22 March 202922 March 20271,709-
x (1 - Australian corporate tax rate)
AUD 1,750 million WCN8(90 day bank bill rate + 2.90% p.a.)21 June 203221 September 2029
6
1,737-
x (1 - Australian corporate tax rate)
Total Westpac capital notes

8,403 7,423
USD AT1 securities


USD 1,250 million securities 5.00% p.a. until but excluding 21 n/a 21 September 2027
8
1,813 1,941
September 2027 (first reset date). If
not redeemed, converted or written-
off earlier, from, and including, each
reset date
7
to, but excluding, the
next succeeding reset date, at a
fixed rate p.a. equal to the prevailing
5-year USD midmarket swap rate
plus 2.89% p.a.
Total USD AT1 securities

1,813 1,941
1.AUD unless otherwise noted.
2.Conversion is subject to the satisfaction of the scheduled conversion conditions. If the conversion conditions are not satisfied on the relevant scheduled conversion date, conversion will not
occur until the next distribution payment date on which the scheduled conversion conditions are satisfied.
3.Westpac may elect to redeem the relevant AT1 instrument, subject to APRA’s prior written approval.
4.On 4 December 2020, AUD 866 million of WCN3 were transferred to the WCN3 nominated party for AUD 100 each pursuant to the WCN7 reinvestment offer. Those WCN3 were subsequently
redeemed and cancelled by Westpac. On 22 March 2021, the remaining AUD 458 million of WCN3 were redeemed and cancelled by Westpac for AUD 100 each.
5.On 15 September 2021, AUD 1,152 million of WCN4 were transferred to the WCN4 nominated party for AUD 100 each pursuant to the WCN8 reinvestment offer. Those WCN4 were
subsequently redeemed and cancelled by Westpac. On 15 October 2021, Westpac issued a redemption notice notifying WCN4 holders that all outstanding WCN4 will be redeemed on the
optional redemption date, being 20 December 2021.
6.Westpac may also elect to redeem on 21 December 2029, 21 March 2030 and 21 June 2030, each an optional redemption date.
7.Every fifth anniversary after the first reset date is a reset date.
8.Westpac may elect to redeem on 21 September 2027 and every fifth anniversary after the first reset date.
Common features of AT1 instruments
Payment conditions
Quarterly distributions on the Westpac capital notes and semi-annual interest payments on the USD AT1 securities are discretionary and will only be paid if the
payment conditions are satisfied, including that the payment will not result in a breach of Westpac’s capital requirements under APRA’s prudential standards; not
result in Westpac becoming, or being likely to become, insolvent; and if APRA does not object to the payment.
Broadly, if for any reason a distribution or interest payment has not been paid in full on the relevant payment date, Westpac must not determine or pay any
dividends on Westpac ordinary shares or undertake a discretionary buy-back or capital reduction of Westpac ordinary shares, unless the unpaid amount is paid in
full within 20 business days of the relevant payment date or in certain other circumstances.

WESTPAC GROUP 2021 ANNUAL REPORT 51
Notes to the financial statements
Note 19. Loan capital (continued)
The AT1 instruments convert into Westpac ordinary shares in the following circumstances:
●Scheduled Conversion
On the scheduled conversion date, provided certain conversion conditions are satisfied, it is expected that the relevant AT1 instrument
1
will be converted and
holders will receive a variable number of Westpac ordinary shares calculated using the formula described in the terms of the relevant AT1 instrument, subject
to a maximum conversion number. The conversion number of Westpac ordinary shares will be calculated using the face value of the relevant AT1 instrument
and the Westpac ordinary share price determined over the 20 business day period prior to the scheduled conversion date, including a 1% discount.
●Capital Trigger Event or Non-Viability Trigger Event
Westpac will be required to convert some or all AT1 instruments into a variable number of Westpac ordinary shares upon the occurrence of a capital trigger
event or non-viability trigger event. No conversion conditions apply in these circumstances.
A capital trigger event occurs when Westpac determines, or APRA notifies Westpac in writing that it believes, Westpac’s Common Equity Tier 1 Capital ratio
is equal to or less than 5.125% (on a level 1 or level 2 basis
2
).
A non-viability trigger event will occur when APRA notifies Westpac in writing that it believes conversion of all or some AT1 instruments (or conversion, write-
off or write-down of relevant capital instruments of the Westpac Group), or public sector injection of capital (or equivalent support), in each case is necessary
because without it, Westpac would become non-viable.
For each AT1 instrument converted, holders will receive a variable number of Westpac ordinary shares calculated using the formula described in the terms of
the relevant AT1 instrument, subject to a maximum conversion number. The conversion number of Westpac ordinary shares is calculated using the face value
or outstanding principal amount of the relevant AT1 instrument and the Westpac ordinary share price determined over the five business day period prior to the
capital trigger event date or non-viability trigger event date and includes a 1% discount. For each AT1 instrument, the maximum conversion number is set
using a Westpac ordinary share price which is broadly equivalent to 20% of the Westpac ordinary share price at the time of issue.
Following the occurrence of a capital trigger event or non-viability trigger event, if conversion of an AT1 instrument does not occur within five business days,
holders’ rights in relation to the relevant AT1 instrument will be immediately and irrevocably terminated.
●Conversion in other circumstances
Westpac is able to elect to convert
3
, or may be required to convert
3
, AT1 instruments early in certain circumstances. The terms of conversion and the
conversion conditions are broadly similar to scheduled conversion, however the share price floor in the maximum conversion number will depend on the
conversion event.
●Early Redemption
Westpac is able to elect to redeem the relevant AT1 instrument on the optional redemption dates or for certain taxation or regulatory reasons, subject to
APRA’s prior written approval.
1.Scheduled conversion does not apply to USD AT1 securities.
2.Level 1 comprises Westpac Banking Corporation and its subsidiary entities that have been approved by APRA as being part of a single 'Extended Licensed Entity' for the purpose of measuring
capital adequacy. Level 2 is the consolidation of Westpac Banking Corporation and all its subsidiary entities except those entities specifically excluded by APRA regulations. The head of the
Level 2 group is Westpac Banking Corporation.
3.Excludes USD AT1 securities.

52 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 19. Loan capital (continued)
Tier 2 loan capital
A summary of the key terms and common features of Westpac’s Tier 2 instruments is provided below
1
:
Consolidated and
Parent EntityOptional
$m Interest rate
2
Maturity date redemption date
3
2021 2020
Subordinated notes
AUD 350 million 4.50% p.a. until but excluding 11 March 2022. 11 March 2027 11 March 2022 351 361
subordinated notesThereafter, if not redeemed, a fixed rate per annum
equal to the five-year AUD semi-quarterly mid-swap
reference rate plus 1.95% p.a., the sum of which will
be annualised.
SGD 325 million 4.00% p.a. until but excluding 12 August 2022. 12 August 2027 12 August 2022 337 347
subordinated notesThereafter, if not redeemed, a fixed rate per annum equal
to the five-year SGD swap offer rate plus 1.54% p.a.
AUD 175 million 4.80% p.a. until but excluding 14 June 2023. 14 June 2028 14 June 2023 181 185
subordinated notesThereafter, if not redeemed, a fixed rate per annum
equal to the five-year AUD semi-quarterly mid-swap
reference rate plus 2.65% p.a., each of which will be
annualised.
USD 100 million Fixed 5.00% p.a. 23 February 2046 n/a 148 175
subordinated notes
AUD 700 million 90 day bank bill rate + 3.10% p.a. 10 March 2026 10 March 2021
4
- 700
subordinated notes
JPY 20,000 million Fixed 1.16% p.a. 19 May 2026 n/a 249 270
subordinated notes
JPY 10,200 million Fixed 1.16% p.a. 2 June 2026 n/a 127 137
subordinated notes
JPY 10,000 million Fixed 0.76% p.a. 9 June 2026 n/a 124 134
subordinated notes
NZD 400 million 4.6950% p.a. until but excluding 1 September 2021. 1 September 2026 1 September 2021
4
- 376
subordinated notesThereafter, if not redeemed, a fixed rate per annum
equal to the New Zealand 5-year swap rate on 1
September 2021 plus 2.60% p.a.
JPY 8,000 million 0.9225% p.a. until but excluding 7 October 2021. 7 October 2026 7 October 2021 99 107
subordinated notesThereafter, if not redeemed, a fixed rate per annum
equal to the five-year JPY mid-swap rate plus
1.0005% p.a.
USD 1,500 million 4.322% p.a. until but excluding 23 November 2026. 23 November 2031 23 November 2026 2,181 2,320
subordinated notesThereafter, if not redeemed, a fixed rate per annum
equal to the five-year USD mid-swap rate plus 2.236% p.a.
JPY 12,000 million 0.87% p.a. until but excluding 6 July 2022. Thereafter, 6 July 2027 6 July 2022 149 161
subordinated notesif not redeemed, a fixed rate per annum equal to the
five-year JPY mid-swap rate plus 0.78% p.a.
JPY 13,500 million 0.868% p.a. until but excluding 6 July 2022. 6 July 2027 6 July 2022 168 181
subordinated notesThereafter, if not redeemed, a fixed rate per annum
equal to the five-year JPY mid-swap rate plus 0.778% p.a.
HKD 600 million 3.15% p.a. until but excluding 14 July 2022. Thereafter, 14 July 2027 14 July 2022 108 111
subordinated notesif not redeemed, a fixed rate per annum equal to the
five-year HKD mid-swap rate plus 1.34% p.a.
AUD 350 million 4.334% p.a. until but excluding 16 August 2024. 16 August 2029 16 August 2024 350 349
subordinated notesThereafter, if not redeemed, a fixed rate per annum
equal to the five-year AUD semi-quarterly mid-swap
reference rate plus 1.83% p.a., each of which will be
annualised.
AUD 185 millionFixed 5.00% p.a.24 January 2048n/a185185
subordinated notes
AUD 250 million90 day bank bill rate + 1.40% p.a.16 February 202816 February 2023250250
subordinated notes
AUD 130 millionFixed 5.00% p.a.2 March 2048n/a130130
subordinated notes
AUD 725 million90 day bank bill rate + 1.80% p.a.22 June 202822 June 2023724714
subordinated notes
USD 1,000 millionFixed 4.421% p.a.24 July 2039n/a1,4811,707
subordinated notes
1.Excludes subordinated perpetual notes.
2.Interest payments are made periodically as set out in the terms of the subordinated notes.
3.Westpac may elect to redeem the relevant Tier 2 instrument on the optional redemption date or dates, subject to APRA’s prior written approval. If not redeemed on the first optional redemption
date, Westpac may elect to redeem the relevant Tier 2 instrument on any interest payment date after the first optional redemption date (except for USD 1,500 million subordinated notes with
an optional redemption date in November 2026, USD 1,250 million subordinated notes with an optional redemption date in July 2029, USD 1,500 million subordinated notes with an optional
redemption date in February 2025, USD 1,500 million subordinated notes with an optional redemption date in November 2030, and EUR 1,000 million subordinated notes with an optional
redemption date in May 2026), subject to APRA’s prior written approval.
4.The subordinated notes were redeemed in full on the optional redemption date.

WESTPAC GROUP 2021 ANNUAL REPORT 53
Notes to the financial statements
Note 19. Loan capital (continued)
Tier 2 loan capital (continued)
A summary of the key terms and common features of Westpac’s Tier 2 instruments is continued below
1
:
Consolidated and Parent EntityOptional
$m Interest rate
2
Maturity date redemption date
3
2021 2020
Subordinated notes
USD 1,250 million4.110% p.a. until but excluding 24 July 2029.24 July 203424 July 20291,8131,970
subordinated notesThereafter, if not redeemed a fixed rate per annum
equal to the five-year USD treasury rate plus 2% p.a.
AUD 1,000 million90 day bank bill rate + 1.98% p.a.27 August 202927 August 20249991,000
subordinated notes
USD 1,500 million2.894% p.a. until but excluding 4 February4 February 20304 February 20252,1332,220
subordinated notes2025. Thereafter, if not redeemed, a fixed rate per
annum equal to the five-year USD treasury
rate plus 1.350% p.a.
USD 1,500 million2.668% p.a. until but excluding 15 November 2030.15 November 203515 November 20301,970-
subordinated notesThereafter, if not redeemed, a fixed rate per annum
equal to the five-year USD treasury rate plus 1.750% p.a.
USD 1,000 millionFixed 2.963% p.a.16 November 2040n/a1,264-
subordinated notes
AUD 1,250 million90 day bank bill rate + 1.55% p.a.29 January 203129 January 20261,237-
subordinated notes
EUR 1,000 million0.766% p.a. until but excluding 13 May 2026.13 May 203113 May 20261,604-
subordinated notesThereafter, if not redeemed, a fixed rate per annum
equal to the prevailing 5-year EUR mid-market swap
rate plus 1.05% p.a.
Total subordinated notes 18,362 14,090
1.Excludes subordinated perpetual notes.
2.Interest payments are made periodically as set out in the terms of the subordinated notes.
3.Westpac may elect to redeem the relevant Tier 2 instrument on the optional redemption date or dates, subject to APRA’s prior written approval. If not redeemed on the first optional redemption
date, Westpac may elect to redeem the relevant Tier 2 instrument on any interest payment date after the first optional redemption date (except for USD 1,500 million subordinated notes with an
optional redemption date in November 2026, USD 1,250 million subordinated notes with an optional redemption date in July 2029, USD 1,500 million subordinated notes with an optional
redemption date in February 2025, USD 1,500 million subordinated notes with an optional redemption date in November 2030, and EUR 1,000 million subordinated notes with an optional
redemption date in May 2026), subject to APRA’s prior written approval.
Common features of subordinated notes
Interest payments are subject to Westpac being solvent at the time of, and immediately following, the interest payment. These subordinated notes contain non-
viability loss absorption requirements.
Non-viability trigger event
Westpac will be required to convert some or all subordinated notes into a variable number of Westpac ordinary shares upon the occurrence of a non-viability
trigger event. A non-viability trigger event will occur on similar terms as described under AT1 loan capital.
For each subordinated note converted, holders will receive a variable number of Westpac ordinary shares calculated using the formula described in the terms of
the relevant Tier 2 instrument, subject to a maximum conversion number. The conversion number of Westpac ordinary shares will be calculated in a manner
similar to that described under AT1 loan capital for a non-viability trigger event. For each Tier 2 instrument, the maximum conversion number is set using a
Westpac ordinary share price which is broadly equivalent to 20% of the Westpac ordinary share price at the time of issue.
Following the occurrence of a non-viability trigger event, if conversion of a Tier 2 instrument does not occur within five business days, holders’ rights in relation to
the relevant Tier 2 instrument will be immediately and irrevocably terminated.
Subordinated perpetual notes
These notes have no final maturity but Westpac can choose to redeem them at par on any interest payment date falling on or after September 1991, subject to
APRA approval and certain other conditions. Interest is cumulative and payable on the notes semi-annually at a rate of 6 month US$ LIBOR plus 0.15% p.a.,
subject to Westpac being solvent immediately after making the payment and having paid any dividend on any class of share capital of Westpac within the prior 12-
month period.
These notes qualify for transitional treatment as Tier 2 capital of Westpac under APRA’s Basel III capital adequacy framework.
The rights of the noteholders and coupon holders are subordinated to the claims of all creditors (including depositors) of Westpac other than creditors whose
claims against Westpac rank equally with, or junior to, these notes.

54 WESTPAC GROUP 2021 ANNUAL REPORT
Notes to the financial statements
Note 20. 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.
The Group uses derivative financial instruments for meeting customers’ needs, our asset and liability risk management (ALM) activities, and undertaking market
making and positioning activities.
Trading derivatives
Derivatives which are used in our ALM activities but are not designated into a hedge accounting relationship are considered economic hedges, and are adjusted
for cash earnings purposes due to the accounting mismatch between the fair value of the derivatives and the accounting treatment of the underlying exposure
(refer to Note 2 for further details). These derivatives, along with derivatives used for meeting customers’ needs and undertaking market making and positioning
activities, are measured at FVIS and are disclosed as trading derivatives.
Hedging derivatives
Hedging derivatives are those which are used in our ALM activities and have also been designated into one of three hedge accounting relationships: fair value
hedge; cash flow hedge; or hedge of a net investment in a foreign operation. These derivatives are measured at fair value. These hedge designations and the
associated accounting treatment are detailed below.
For more details regarding the Group’s ALM activities, refer to Note 21.
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 interest income. The carrying value of the hedged
asset or liability is adjusted for the changes in fair value related to the hedged risk.
If a hedge is discontinued, any fair value adjustments to the carrying value of the asset or liability are amortised to net interest income over the period to maturity.
If the asset or liability is sold, any unamortised adjustment is immediately recognised in net interest income.
Cash flow hedges
Cash flow hedges are used to hedge the exposure to variability of cash flows attributable to an asset, liability or future forecast transaction.
For effective hedges, changes in the fair value of derivatives are recognised in the cash flow hedge reserve through OCI and subsequently recognised in 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 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 in 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.
Net investment hedges
Net investment hedges are used to hedge FX risks arising from a net investment of a foreign operation.
For effective hedges, changes in the fair value of derivatives are recognised in the foreign currency translation reserve through OCI.
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 foreign operation is disposed of, any cumulative gain or loss in OCI is immediately recognised in non-interest income.

WESTPAC GROUP 2021 ANNUAL REPORT 55
Notes to the financial statements
Note 20. Derivative financial instruments (continued)
Total derivatives
The carrying values of derivative instruments are set out in the tables below.
Total derivatives
ConsolidatedTradingHedgingcarrying value
$m Assets Liabilities Assets Liabilities Assets Liabilities
2021
Interest rate contracts
1

Forward rate agreements

1(1)--1(1)
Swap agreements

30,491(29,630)3,530(5,437)34,021(35,067)
Options

115(121)--115(121)
Total interest rate contracts

30,607(29,752)3,530(5,437)34,137(35,189)
FX contracts

Spot and forward contracts

5,896(5,554)38(51)5,934(5,605)
Cross currency swap agreements

6,433(6,912)749(175)7,182(7,087)
Options

198(173)--198(173)
Total FX contracts

12,527(12,639)787(226)13,314(12,865)
Credit default swaps
Credit protection bought-(15)---(15)
Credit protection sold13---13-
Total credit default swaps13(15)--13(15)
Commodity contracts

227(360)--227(360)
Equities

2---2-
Total of gross derivatives

43,376(42,766)4,317(5,663)47,693(48,429)
Impact of netting arrangements

(25,010)25,240(3,330)5,130(28,340)30,370
Total of net derivatives

18,366(17,526)987(533)19,353(18,059)
2020
Interest rate contracts
1


Forward rate agreements

14(14)--14(14)
Swap agreements

44,366(42,724)5,916(10,331)50,282(53,055)
Options

161(165)--161(165)
Total interest rate contracts

44,541(42,903)5,916(10,331)50,457(53,234)
FX contracts

Spot and forward contracts

5,595(4,797)61(46)5,656(4,843)
Cross currency swap agreements

4,977(8,872)1,450(141)6,427(9,013)
Options

383(200)--383(200)
Total FX contracts

10,955(13,869)1,511(187)12,466(14,056)
Credit default swaps
Credit protection bought-(59)---(59)
Credit protection sold57---57-
Total credit default swaps57(59)--57(59)
Commodity contracts

352(204)--352(204)
Equities

3---3-
Total of gross derivatives

55,908(57,035)7,427(10,518)63,335(67,553)
Impact of netting arrangements

(34,402)34,819(5,566)9,680(39,968)44,499
Total of net derivatives

21,506(22,216)1,861(838)23,367(23,054)
1.The fair value of futures contracts is settled daily with the exchange, and therefore have been excluded from this table.