WNZL Disclosure Statement – 30 September 2022

Classification: PROTECTED 
ASX
Release


28 November 2022

Westpac New Zealand Limited Disclosure Statement

Westpac Banking Corporation (“Westpac”) today provides the attached Westpac New
Zealand Limited Disclosure Statement for the year ended 30 September 2022.










For further information:

Hayden Cooper Andrew Bowden
Group Head of Media Relations Head of Investor Relations
0402 393 619 0438 284 863


This document has been authorised for release by Tim Hartin, Company Secretary.
 
 
 
Level 18, 275 Kent Street
Sydney, NSW, 2000

Classification: PROTECTED

Classification: PROTECTED

This page has been intentionally left blank

Westpac New Zealand Limited 3
Contents
Westpac New Zealand sustainability performance
5
Annual report6
Directors’ statement7
Financial statements
Income statement8Note 17 Deposits and other borrowings44
##T
Statement of comprehensive income8Note 18 Other financial liabilities44
Balance sheet9Note 19 Debt issues45
Statement of changes in equity10Note 20 Provisions46
Statement of cash flows11Note 21 Loan capital47
Note 1 Financial statements preparation12Note 22 Share capital49
Note 2 Net interest income16Note 23 Related entities50
Note 3 Non-interest income17Note 24 Derivative financial instruments53
Note 4 Operating expenses18Note 25 Fair values of financial assets and financial liabilities59
Note 5 Auditor’s remuneration19Note 26 Offsetting financial assets and financial liabilities63
Note 6 Impairment charges/(benefits)19
Note 7 Income tax expense20
Note 27 Credit related commitments, contingent assets and
contingent liabilities
64
Note 8 Imputation credit account20Note 28 Segment reporting66
Note 9 Trading securities and financial assets measured at FVIS21
Note 10 Investment securities21
Note 29 Securitisation, covered bonds and other transferred
assets
67
Note 11 Loans22Note 30 Structured entities69
Note 12 Provision for expected credit losses23Note 31 Capital management70
Note 13 Credit risk management32
Note 14 Other financial assets41
Note 32 Risk management, funding and liquidity risk and
market risk
71
Note 15 Deferred tax assets41Note 33 Notes to the statement of cash flows85
Note 16 Intangible assets42
Registered bank disclosures
i. General information86vi. Credit exposures to connected persons109
ii. Additional financial disclosures92
iii. Asset quality93
iv. Capital adequacy and regulatory liquidity ratios98
vii. Insurance business, securitisation, funds management,
other fiduciary activities, and marketing and distribution of
insurance products
110
v. Concentration of credit exposures to individual counterparties108viii. Risk management policies111
Conditions of registration
116
Independent auditor’s report122

Glossary of terms
4 Westpac New Zealand Limited
Certain information contained in this Disclosure Statement is required by the Registered Bank Disclosure Statements (New Zealand Incorporated
Registered Banks) Order 2014 (as amended) (‘Order’).
In this Disclosure Statement, reference is made to:
– Westpac New Zealand Limited (otherwise referred to as the ‘Bank’);
– Westpac New Zealand Limited and its controlled entities (otherwise referred to as the ‘Banking Group’). Controlled entities of the Bank as at 30
September 2022 are set out in Note 23;
– Westpac Banking Corporation (otherwise referred to as the ‘Ultimate Parent Bank’);
– Ultimate Parent Bank and its controlled entities (otherwise referred to as the ‘Ultimate Parent Bank Group’); and
– New Zealand Branch of the Ultimate Parent Bank (otherwise referred to as the ‘NZ Branch’).
Words and phrases not defined in this Disclosure Statement, but defined by the Order, have the meaning given by the Order when used in this
Disclosure Statement.
The Disclosure Statement also uses the following terms as defined below.
ADIAuthorised deposit-taking institutionFVISFair value through income statement
ALCOAsset and Liability Committee
ALMAsset and liability risk management
FVOCI
Fair value through other comprehensive
income
AMAAdvanced Measurement ApproachFXForeign exchange
GSTGoods and services tax
ANZSIC
Australian and New Zealand standard industrial
classification
IAPIndividually assessed provisions
APRAAustralian Prudential Regulation AuthorityIASBInternational Accounting Standards Board
IBORInterbank offered rates
APS 222
APRA’s Prudential Standard 222 Associations with
Related Entities
ICAAPInternal capital adequacy assessment process
AT1Additional Tier 1 capitalIRBInternal Rating Based
BACBoard Audit CommitteeIRRBBInterest rate risk in the banking book
BKBMBank bill benchmark rateLGDLoss given default
BoardBoard of Directors of the BankLVRLoan-to-value ratio
BPRsBanking Prudential RequirementsMoody'sMoody's investor services
NaRNet interest income-at-risk
BPS Act
Banking (Prudential Supervision) Act 1989 (formerly
the Reserve Bank of New Zealand Act 1989)
BRCCBoard Risk and Compliance Committee
New Zealand
Audit
The Banking Group's independent assurance unit
for New Zealand
BS13Reserve Bank document 'Liquidity Policy'NIINet interest income
BS2B
Capital Adequacy Framework (Internal Models Based
Approach)
NZ IFRS
New Zealand equivalents to International
Financial Reporting Standards
CAPCollectively assessed provisionsOCIOther comprehensive income
CCCFACredit Contracts and Consumer Finance Act 2003PDProbability of default
CCFCredit Conversion Factor PIEPortfolio investment entities
CGUCash generating unitReserve BankReserve Bank of New Zealand
CREDCOCredit Risk CommitteeRISKCOExecutive Risk Committee
CRGCustomer risk gradeRMBSResidential mortgage-backed securities
EADExposure at defaultRWARisk weighted assets
ECLExpected credit lossesS&PS&P Global ratings
ELEExtended licensed entitySMESmall and medium-sized enterprises
Fidelity LifeFidelity Life Assurance Company LimitedSPPISolely payments of principal and interest
Tier 2 notesTier 2 loan capital
Financial
statements
Consolidated financial statements
VaRValue-at-Risk
FitchFitch Ratings
FVHAFair value hedge accounting
Westpac Life
Westpac Life-NZ-Limited (renamed Fidelity
Insurance Limited on 28 February 2022)

Westpac New Zealand sustainability performance (Unaudited)
Westpac New Zealand Limited 5
2025 Sustainability Strategy. He rau ringa manaaki. Many hands working together.
We are taking action to create a better future for the people who bank with us,
work with us, invest in us or are part of our broader communities. We do this
through our core business, and more widely by using our financial and
economic expertise to generate positive economic, social and environmental
outcomes for our customers and New Zealand.
In April 2021 we launched our 2025 Strategy: He rau ringa manaaki – Many
hands working together. Our commitment is Manaaki te ao, manaaki te tāngata,
e tipu pūtea ora. Care for the planet, care for people and grow financial
wellbeing.
Sustainability Strategy results for the year ended 30 September 2022
Manaaki te ao: Care for the planet.
We want to support Aotearoa’s transition to a resilient, net zero economy for
the benefit of all New Zealanders.
2025 targets*FY22 Progress
1. Reduce annual Scope 1, 2, and Scope 3 Mandatory
operational emissions by 30% against a 2019 base
year.
1
Offset remaining emissions to be carbon
neutral.
45.7% reduction (see
Key climate risk
metrics)
2. Enable $10b in sustainable finance.
2
$7.31b
3. Manage our climate-related financial risks.Refer to Climate Risk
Update
Highlights for the year ended 30 September 2022 include:
Enabled over $3.87b of sustainable debt.
o Supported seven customers as Sustainability Coordinator to execute
Sustainability-Linked Loans

and participated in Sustainability-Linked
Loans executed by T&G Global and Auckland Council.
o Westpac NZ was Sole Sustainability Coordinator or Green Bond Advisor
on all four inaugural Green and Sustainability Bond issuances in FY22 by
Genesis, Transpower, Christchurch City Holdings and Goodman
(through GMT Bond Issuer Limited).
We won the INFINZ Award for Excellence in Institutional and Corporate
Banking for ‘Leading and Accelerating Sustainable Finance’ in 2022.
51% of our fleet is now electric or plug-in hybrid vehicles.
Climate Risk Update
We plan to release our third Climate Risk Report in November 2022, which is
based on the Task Force on Climate-related Financial Disclosures
recommendations. During the year ended 30 September 2022, our effort has
been focused on:
Establishing a work programme to prepare WNZL for the incoming
mandatory climate-related disclosure regime.
Estimating our financed emissions to understand the emissions profile of
our lending portfolio.
Progressing our AgriSector Climate Risk Assessment, in partnership with
Lincoln University’s Agri Economics Research Unit, with the intention to
publish key findings.
Key climate risk metrics
Our operational carbon emissions reductions of 45.7% for the year ended 30
June 2022 against a 2019 base year are largely due to COVID-19 border
restrictions and domestic lockdowns throughout the year reducing business
travel and business operations, alongside the shift to hybrid working patterns.
We purchased New Zealand native permanent forestry credits to offset our
residual operational carbon emissions to maintain our Toitū net carbonzero
certification.
The approximate proportion of our lending portfolio secured by properties
exposed to heightened risks from sea-level rise (coastal flooding and erosion)
was relatively stable and within the range of normal portfolio fluctuation and is
set out in the following table.
3
Industry segment30 Sep 2230 Sep 21
Residential mortgages2.1%2.3%
Commercial property lending2.1%2.2%
Agricultural lending3.4%3.4%
During the year ended 30 September 2022:
Lending to fossil fuel mining and production increased by 21% from
financing a gas-fired back-up power generator.
4

Climate change solution lending increased by 14%, strongly influenced by
the increase in lending to renewable energy.
Manaaki te tāngata: Care for people.
We want to help create thriving local communities and a workforce and society
where everyone feels valued.
2025 targets*FY22 Progress
4. Set a cultural diversity in leadership target.
5
Initiative in progress
5. 1% of annual pre-tax profits invested in
communities.
6
0.57%/ $8.26m
6. $700m in lending to healthy, affordable and social
housing.
7
$677m
Highlights for the year ended 30 September 2022 include:
$1.28m fundraised by WNZL staff and the community in the annual Chopper
Appeal for the Westpac Rescue Helicopters.
Our interest-free Westpac Warm Up loan expanded to $40k to help
encourage warmer, drier and more energy efficient homes. This expansion
also included increasing the types of items covered, including electric
vehicle chargers and solar batteries.
Contributed 10,328 hours to the community through WNZL staff
volunteering.
E tipu pūtea ora: Grow financial wellbeing.
We want to enable all New Zealanders to be financially secure and
independent.
2025 targets*FY22 Progress
7. 25,000 people to participate in Westpac
facilitated financial education workshops.
22,378
8. Help 15,000 New Zealanders who are at risk of
financial exploitation and exclusion.
6,251
9. Source 25% of annual supplier spend from local
businesses, including those owned by diverse and
under-represented groups.
14.6%
Highlights for the year ended 30 September 2022 include:
Launched our Money Makes Cents course, designed to help school-leavers
and those managing their money for the first time establish strong and
simple money habits early.
Increased support to vulnerable communities, including:
o Expanded resourcing to support vulnerable communities who need
support to overcome various barriers on the journey to financial
wellbeing
o Rolled out the New Start Initiative nationally, helping prisoners near
release obtain a valid ID, debit card and online banking access, making
it easier for them to reintegrate into the community
Partnered with IDCARE in 2022 to provide specialist aftercare support for
customers impacted by fraud or scams.  With free priority access to case
managers and counsellors, we hope to reduce the harm experienced from
compromised personal information.
For more information on our Sustainability activities, please read our 2022
Sustainability Report.
*Annual targets are to be achieved by 30 September 2025. Other targets are to be achieved during the period 1 October 2020 to 30 September 2025, unless stated otherwise.
1
Environmental Year runs 1 July to 30 June. CO2e results include all Westpac business units based in New Zealand. Scope 1 covers direct emissions from owned or controlled sources. Scope 2 covers indirect emissions
from the generation of purchased electricity. Scope 3 Mandatory covers the indirect emissions relevant to the day-to-day running of the business but excludes emissions from customers. These are sector specific, as
defined by the Toitū net carbonzero programme.
2
This is a cumulative target which comprises (a) $5b for lending to climate change solutions, $700m lending for healthy, affordable and social housing, and additional environmental, social, and sustainability-linked
lending (building on FY20 exposure), and (b) facilitation of sustainable bonds (for customers and Westpac New Zealand Limited Treasury) by Westpac Banking Corporation (acting through its New Zealand Branch). All
lending will meet the eligibility criteria set out in international sustainable finance principles. Our targets are a total commitment, measuring the cumulative flow of capital to support New Zealand becoming a net-zero emissions
economy.
3
Heightened risk is defined as annual exceedance probability of 10% or more, as well as general exposure to coastal erosion under NIWA’s Coastal Sensitivity Index.
4
As the borrowing entity’s main activity is fossil fuel extractions, this lending falls under this classification.
5
Progress on this target has been delayed due to challenges in collecting sufficient employee data, with which to set appropriate targets in-line with best practice. Work to collect data is ongoing, with targets to be set
within the next 6-18 months.
6
Community investment is made up of: monetary contributions (charitable gifts, matched giving and community partnerships), time contributions, in-kind gifts and donations, and management costs. It excludes commercial sponsorships.
7
This is a cumulative target (building on FY20 exposure) and includes Kiwibuild and shared equity (a form of shared home ownership, often between an individual and an organisation), as well as Westpac’s Warm Up lending.

Annual report
6 Westpac New Zealand Limited
Pursuant to section 211(3) of the Companies Act 1993, the shareholder of Westpac New Zealand Limited has agreed that the Annual Report of Westpac
New Zealand Limited need not comply with the requirements of paragraphs (a), and (e) to (j) of subsection (1) and subsection (2) of section 211.
Accordingly, there is no information to be included in the Annual Report other than the financial statements for the year ended 30 September 2022
and the independent auditor’s report on those financial statements.
For and on behalf of the Board of Directors:
P.M. Greenwood
Chair
25 November 2022
C.A. McGrath
Chief Executive
25 November 2022

Directors’ Statement
Westpac New Zealand Limited 7
Each Director of the Bank believes, after due enquiry, that, as at the date on which this Disclosure Statement is signed, the Disclosure Statement:
(a)contains all the information that is required by the Order; and
(b) is not false or misleading.
Each Director of the Bank believes, after due enquiry, that over the year ended 30 September 2022, except as noted on pages 91, 120 and 121:
(a)the Bank has complied in all material respects with each condition of registration that applied during that period;
(b) credit exposures to connected persons were not contrary to the interests of the Banking Group; and
(c)the Bank had systems in place to monitor and control adequately the Banking Group’s material risks, including credit risk, concentration of
credit risk, interest rate risk, currency risk, equity risk, liquidity risk, operational risk and other business risks, and that those systems were
being properly applied.
This Disclosure Statement has been signed by all the Directors:
Philippa GreenwoodCatherine McGrath
David GreenRob Hamilton
David HavercroftSam Knowles
Jonathan MasonChristine Parker
Michael Rowland
Dated this 25th day of November 2022

Income statement for the year ended 30 September 2022
8 Westpac New Zealand Limited
THE BANKING GROUP
$ millionsNote20222021
Interest income:
Calculated using the effective interest method2 3,704 3,001
Other2 37 11
Total interest income2 3,741 3,012
Interest expense2 (1,450) (946)
Net interest income 2,291 2,066
Net fees and commissions income3 252 236
Other income3 16 4
Net operating income before operating expenses and impairment charges 2,559 2,306
Operating expenses4 (1,131) (1,099)
Impairment (charges)/benefits6 27 84
Profit before income tax 1,455 1,291
Income tax expense7 (408) (360)
Net profit attributable to the owner of the Bank 1,047 931
The above income statement should be read in conjunction with the accompanying notes.
Statement of comprehensive income for the year ended 30 September 2022
THE BANKING GROUP
$ millions20222021
Net profit attributable to the owner of the Bank 1,047 931
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Gains/(losses) recognised in equity on:
Investment securities
(313) (162)
Cash flow hedging instruments
496 107
Transferred to income statement:
Cash flow hedging instruments
28 69
Income tax on items taken to or transferred from equity:
Investment securities
88 45
Cash flow hedging instruments
(147) (49)
Items that will not be reclassified subsequently to profit or loss
Remeasurement of defined benefit obligation recognised in equity (net of tax)
6 13
Net other comprehensive income for the year (net of tax)
158 23
Total comprehensive income attributable to the owner of the Bank
1,205 954
The above statement of comprehensive income should be read in conjunction with the accompanying notes.

Balance sheet as at 30 September 2022
Westpac New Zealand Limited 9
THE BANKING GROUP
$ millionsNote20222021
Assets
Cash and balances with central banks33 10,820 8,472
Collateral paid 42 185
Trading securities and financial assets measured at FVIS9 2,118 2,280
Derivative financial instruments 24 169 221
Investment securities10 5,623 4,680
Loans11 96,882 92,632
Other financial assets14 263 712
Due from related entities23 2,606 1,834
Property and equipment 402 410
Deferred tax assets15 39 216
Intangible assets16 785 673
Other assets 69 65
Total assets 119,818 112,380
Liabilities
Collateral received 82 188
Deposits and other borrowings17 80,848 79,367
Other financial liabilities18 4,348 2,900
Derivative financial instruments 24 118 178
Due to related entities23 2,961 1,836
Debt issues19 19,933 16,304
Current tax liabilities 58 43
Provisions20 233 241
Other liabilities 374 381
Loan capital21 2,083 2,579
Total liabilities 111,038 104,017
Net assets 8,780 8,363
Shareholder's equity
Share capital22 7,300 7,300
Reserves 137 (15)
Retained profits 1,343 1,078
Total shareholder's equity 8,780 8,363
The above balance sheet should be read in conjunction with the accompanying notes.
Signed on behalf of the Board of Directors.
P.M. GreenwoodJ.P. Mason
25 November 202225 November 2022

Statement of changes in equity for the year ended 30 September 2022
10 Westpac New Zealand Limited
THE BANKING GROUP
Reserves
InvestmentCash FlowTotal
Share SecuritiesHedgeRetainedShareholder's
$ millionsCapital ReserveReserveProfitsEquity
As at 30 September 2020 7,300 57 (82) 415 7,690
Impact from a change in accounting policy - - - (6) (6)
Restated opening balance 7,300 57 (82) 409 7,684
Year ended 30 September 2021
Net profit attributable to the owner of the Bank - - - 931 931
Net gains/(losses) from changes in fair value - (162) 107 - (55)
Income tax effect - 45 (30) - 15
Transferred to income statement - - 69 - 69
Income tax effect - - (19) - (19)
Remeasurement of defined benefit obligations - - - 18 18
Income tax effect - - - (5) (5)
Total comprehensive income for the year
ended 30 September 2021 - (117) 127 944 954
Transactions with owner:
Dividends paid on ordinary shares - - - (275) (275)
As at 30 September 2021 7,300 (60) 45 1,078 8,363
Year ended 30 September 2022
Net profit attributable to the owner of the Bank - - - 1,047 1,047
Net gains/(losses) from changes in fair value - (313) 496 - 183
Income tax effect - 88 (139) - (51)
Transferred to income statement - - 28 - 28
Income tax effect - - (8) - (8)
Remeasurement of defined benefit obligations - - - 8 8
Income tax effect - - - (2) (2)
Total comprehensive income for the year
ended 30 September 2022 - (225) 377 1,053 1,205
Transactions with owner:
Dividends paid on ordinary shares (refer to Note 22) - - - (788) (788)
As at 30 September 2022 7,300 (285) 422 1,343 8,780
The above statement of changes in equity should be read in conjunction with the accompanying notes.

Statement of cash flows for the year ended 30 September 2022
Westpac New Zealand Limited 11
THE BANKING GROUP
$ millionsNote20222021
Cash flows from operating activities
Interest received 3,756 3,168
Interest paid (1,212) (1,076)
Non-interest income received 223 211
Operating expenses paid (982) (919)
Income tax paid (278) (331)
Cash flows from operating activities before changes in operating assets and liabilities 1,507 1,053
Net (increase)/decrease in:
Collateral paid 143 (37)
Trading securities and financial assets measured at FVIS 153 154
Loans (4,581) (4,855)
Other financial assets 3 41
Due from related entities 920 (517)
Other assets (1) 5
Net increase/(decrease) in:
Collateral received (106) (231)
Deposits and other borrowings 1,481 5,397
Other financial liabilities 1,286 2,678
Due to related entities 466 465
Other liabilities 13 39
Net movement in external and related entity derivative financial instruments 266 (405)
Net cash provided by/(used in) operating activities33 1,550 3,787
Cash flows from investing activities
Purchase of investment securities (1,668) (648)
Proceeds from investment securities 310 673
Purchase of capitalised computer software (171) (104)
Purchase of property and equipment (27) (26)
Purchase of associates - (2)
Proceeds from other investing activities - 9
Net cash provided by/(used in) investing activities (1,556) (98)
Cash flows from financing activities
Net movement in due to related entities (54) 181
Proceeds from debt issues19 13,602 9,476
Repayments of debt issues19 (10,297) (8,369)
Payments for the principal portion of lease liabilities (62) (49)
Issue of loan capital (net of issue costs)21 590 -
Redemption of loan capital21 (1,178) -
Dividends paid to ordinary shareholder22 (788) (275)
Net cash provided by/(used in) financing activities 1,813 964
Net increase/(decrease) in cash and cash equivalents 1,807 4,653
Cash and cash equivalents at the beginning of the year 9,013 4,360
Cash and cash equivalents at the end of the year33 10,820 9,013
The above statement of cash flows should be read in conjunction with the accompanying notes. Details of the reconciliation of net cash provided
by/(used in) operating activities to net profit are provided in Note 33.

Notes to the financial statements
12 Westpac New Zealand Limited
Note 1 Financial statements preparation
The Bank was incorporated as Westpac New Zealand Limited under the Companies Act 1993 (Company Number 1763882) on 14 February 2006. The
head office of the Bank is situated at Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand and the address for service of
process on the Bank is S. O’Brien, Legal, Westpac on Takutai Square, 53 Galway Street, Auckland 1010, New Zealand.
The Bank is a locally incorporated subsidiary of the Ultimate Parent Bank providing consumer and business banking to New Zealand customers.
The financial statements are for the Banking Group.
These financial statements were authorised for issue by the Board of Directors of the Bank on 25 November 2022. The Board has the power to amend
and reissue the financial statements.
The principal accounting policies are set out below and in the relevant notes to the financial statements. These accounting policies provide details of
the accounting treatments adopted for complex balances and where accounting standards provide policy choices. These policies have been
consistently applied to all the years presented, unless otherwise stated.
a.Basis of preparation
(i) Basis of accounting
These financial statements are general purpose financial statements prepared in accordance with:
the requirements of the Financial Markets Conduct Act 2013; and
the requirements of the Order.
These financial statements comply with Generally Accepted Accounting Practice, applicable NZ IFRS and other authoritative pronouncements of the
External Reporting Board, as appropriate for for-profit entities. These financial statements also comply with International Financial Reporting
Standards, as issued by the International Accounting Standards Board.
All amounts in these financial statements have been rounded to the nearest million dollars unless otherwise stated.
(ii) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by applying fair value accounting to financial
assets and financial liabilities (including derivative instruments) measured at FVIS or in OCI.
(iii) Comparative revisions
Comparative information has been revised where appropriate to conform to changes in presentation in the current year and to enhance
comparability. Where there has been a material restatement of comparative information the nature of, and the reason for, the restatement is
disclosed in the relevant note.
(iv) Standards adopted during the year ended 30 September 2022
No new accounting standards have been adopted by the Banking Group for the year ended 30 September 2022. There have been no amendments to
existing accounting standards that have a material impact on the Banking Group.

Notes to the financial statements
Westpac New Zealand Limited 13
Note 1 Financial statements preparation (continued)
(v) Business combinations
Business combinations are accounted for using the acquisition method of accounting. Acquisition cost is measured as the aggregate of the fair value
at the date of acquisition of the assets given, equity instruments issued or liabilities incurred or assumed. Acquisition-related costs are expensed as
incurred (except for those costs arising on the issue of equity instruments which are recognised directly in equity).
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at fair value on the acquisition
date. Goodwill is measured as the excess of the acquisition cost, the amount of any non-controlling interest and the fair value of any previous
Banking Group’s equity interest in the acquiree, over the fair value of the identifiable net assets acquired.
(vi) Foreign currency translation
Functional and presentational currency
The financial statements are presented in New Zealand dollars which is the Banking Group’s functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. FX
gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in OCI for qualifying cash flow hedges.
(vii) Reserves
Investment securities reserve
This comprises the changes in the fair value of debt securities measured at FVOCI (except for interest income, impairment charges and FX gains and
losses which are recognised in the income statement), net of any related hedge accounting adjustments and tax. These changes are transferred to
non-interest income in the income statement when the asset is disposed.
Cash flow hedge reserve
This comprises the fair value gains and losses associated with the effective portion of designated cash flow hedging instruments, net of tax.
b.Principles of consolidation
The Banking Group subsidiaries are entities which the Bank controls and consolidates as it is exposed to, or has rights to, variable returns from the
entities, and can affect those returns through its power over the entities.
All transactions between entities within the Banking Group are eliminated. Subsidiaries are fully consolidated from the date on which control
commences and are de-consolidated from the date that control ceases.
c.Financial assets and financial liabilities
(i) Recognition
Purchases and sales by regular way of financial assets, except for loans and receivables, are recognised on trade-date; the date on which the
Banking Group commits to purchase or sell the asset. Loans and receivables are recognised on settlement date when cash is advanced to the
borrowers.
Financial liabilities are recognised when an obligation arises.
(ii) Derecognition
Financial assets are derecognised when the rights to receive cash flows from the asset have expired, or when the Banking Group has either
transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full under a ‘pass through’
arrangement and transferred substantially all the risks and rewards of ownership.
There may be situations where the Banking Group has partially transferred the risks and rewards of ownership but has neither transferred nor
retained substantially all the risks and rewards of ownership. In such situations, the asset continues to be recognised on the balance sheet to the
extent of the Banking Group’s continuing involvement in the asset.
Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. Where an existing financial liability is replaced by
another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, the exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability, with the difference in the respective carrying
amounts recognised in the income statement.
The terms are deemed to be substantially different if the discounted present value of the cashflows under the new terms (discounted using the
original effective interest rate) is at least 10% different from the discounted present value of the remaining cash flows of the original financial
liability. Qualitative factors such as a change in the currency the instrument is denominated in, a change in the interest rate from fixed to floating
and conversion features are also considered.

Notes to the financial statements
14 Westpac New Zealand Limited
Note 1 Financial statements preparation (continued)
(iii) Classification and measurement
Financial assets are grouped into the following classes: cash and balances with central banks, collateral paid, trading securities and financial assets
measured at FVIS, derivative financial instruments, investment securities, loans, other financial assets and due from related entities.
Financial assets
Financial assets are classified based on a) the business model within which the assets are managed, and b) whether the contractual cash flows of
the instrument represent SPPI.
The Banking Group determines the business model at the level that reflects how groups of financial assets are managed. When assessing the
business model the Banking Group considers factors including how performance and risks are managed, evaluated and reported and the frequency
and volume of, and reason for, sales in previous periods and expectations of sales in future periods.
When assessing whether contractual cash flows are SPPI, interest is defined as consideration primarily for the time value of money and the credit
risk of the principal outstanding. The time value of money is defined as the element of interest that provides consideration only for the passage of
time and not consideration for other risks or costs associated with holding the financial asset. Terms that could change the contractual cash flows
so that they may not meet the SPPI criteria include contingent and leverage features, non-recourse arrangements, and features that could modify
the time value of money.
Debt instruments
If the debt instruments have contractual cash flows which represent SPPI on the principal balance outstanding they are classified at:
amortised cost if they are held within a business model whose objective is achieved through holding the financial asset to collect these cash
flows; or
FVOCI if they are held within a business model whose objective is achieved both through collecting these cash flows or selling the financial asset;
or
FVIS if they are held within a business model whose objective is achieved through selling the financial asset.
Debt instruments are measured at FVIS where the contractual cash flows do not represent SPPI on the principal balance outstanding or where it is
designated at FVIS to eliminate or reduce an accounting mismatch.
Debt instruments at amortised cost are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method. They are presented net of provision for ECL determined using the ECL model. Refer to Notes 6 and 12 for further details.
Debt instruments at FVOCI are measured at fair value with unrealised gains and losses recognised in OCI except for interest income, impairment
charges and FX gains and losses, which are recognised in the income statement. Impairment on debt instruments at FVOCI is determined using the
ECL model and is recognised in the income statement with a corresponding amount in OCI. There is no reduction of the carrying value of the debt
security which remains at fair value.
The cumulative gain or loss recognised in OCI is subsequently recognised in the income statement when the instrument is derecognised.
Debt instruments at FVIS are measured at fair value with subsequent changes in fair value recognised in the income statement.
Financial liabilities
Financial liabilities are grouped into the following classes: collateral received, deposits and other borrowings, other financial liabilities, derivative
financial instruments, due to related entities, debt issues and loan capital.
Financial liabilities are measured at amortised cost if they are not held for trading or designated at FVIS, otherwise they are measured at FVIS.
Financial assets and financial liabilities measured at FVIS are recognised initially at fair value. All other financial assets and financial liabilities are
recognised initially at fair value plus or minus directly attributable transaction costs respectively.
Further details of the accounting policy for each category of financial asset or financial liability mentioned above is set out in the note for the relevant
item.
The Banking Group’s policies for determining the fair value of financial assets and financial liabilities are set out in Note 25.
d.Critical accounting assumptions and estimates
Applying the Banking Group’s accounting policies requires the use of judgement, assumptions and estimates which impact the financial information.
The significant assumptions and estimates used are discussed in the relevant notes below.
Note 7Income tax expense
Note 12Provision for expected credit losses
Note 15Deferred tax assets
Note 16Intangible assets
Note 20Provisions
Note 25Fair value of financial assets and financial liabilities

Notes to the financial statements
Westpac New Zealand Limited 15
Note 1 Financial statements preparation (continued)
Impact of COVID-19
The Banking Group has considered the impact of the COVID-19 pandemic on the assumptions and estimates impacting the financial statements for
the year ended 30 September 2022. The key areas requiring judgement include:
ECL (including portfolio overlays, as discussed in Note 12); and
recoverable amount assessment of goodwill.
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.
e.Future developments in accounting standards
Amendments to existing standards that are not yet effective are not expected to have a material impact on the Banking Group.

Notes to the financial statements
16 Westpac New Zealand Limited
Note 2 Net interest income
Accounting policy
Interest income and interest expense for all interest earning financial assets and interest bearing financial liabilities at amortised cost or FVOCI,
detailed within the table below, are recognised using the effective interest method. Net income from Treasury’s interest rate and liquidity
management activities are included in net interest income.
The effective interest method calculates the amortised cost of a financial instrument by discounting the financial instrument’s estimated future
cash receipts or payments to their present value and allocates the interest income or interest expense, including any fees, costs, premiums or
discounts integral to the instrument, over its expected life.
Interest income is calculated based on the gross carrying amount of financial assets in stages 1 and 2 of the Banking Group’s ECL model and on the
carrying amount net of the provision for ECL for financial assets in stage 3.
THE BANKING GROUP
$ millions
Note20222021
Interest income
Calculated using the effective interest method
Cash and balances with central banks 161 16
Investment securities 92 79
Loans 3,451 2,906
Total interest income calculated using the effective interest method 3,704 3,001
Other
Trading securities and financial assets measured at FVIS 33 11
Due from related entities23 4 -
Total other 37 11
Total interest income 3,741 3,012
Interest expense
Calculated using the effective interest method
Deposits and other borrowings 771 426
Due to related entities23 21 17
Debt issues 167 145
Loan capital 122 96
Other interest expense 43 6
Total interest expense calculated using the effective interest method 1,124 690
Other
Deposits and other borrowings 58 20
Due to related entities23 8 1
Debt issues 39 7
Other interest expense
1
221 228
Total other 326 256
Total interest expense 1,450 946
Net interest income 2,291 2,066
1
Includes the net impact of Treasury's interest rate and liquidity management activities.

Notes to the financial statements
Westpac New Zealand Limited 17
Note 3 Non-interest income
Accounting policy
Non-interest income includes net fees and commissions income and other income.
Net fees and commissions income
When another party is involved in providing goods or services to a Banking Group customer, the Banking Group assesses whether the nature of the
arrangement with its customer is as a principal provider or an agent of another party. Where the Banking Group is acting as an agent for another
party, the income earned by the Banking Group is the net consideration received (i.e. the gross amount received from the customer less amounts
paid to a third party provider). As an agent, the net consideration represents fees and commissions income for facilitating the transaction
between the customer and the third party provider with primary responsibility for fulfilling the contract.
Fees and commissions income
Fees and commissions income is recognised when the performance obligation is satisfied by transferring the promised good or service to the
customer. Fees and commissions income includes facility fees, transaction fees and commissions and other non-risk fee income. Commissions
income also includes commissions received for the distribution of general and life insurance products.
Facility fees include certain line fees, annual credit card fees and fees for providing customer bank accounts. They are recognised over the term of
the facility/period of service on a straight line basis.
Transaction fees and commissions are earned for facilitating banking transactions such as FX fees, telegraphic transfers and issuing bank cheques.
Fees and commissions for these one-off transactions are recognised once the transaction has been completed. Transaction fees and commissions
are also recognised for credit card transactions including interchange fees net of scheme charges. These are recognised once the transaction has
been completed, however, a component of interchange fees received is deferred as unearned income as the Banking Group has a future service
obligation to customers under the Banking Group’s credit card reward programmes.
Other non-risk fee income includes advisory and underwriting fees which are recognised when the related service is completed.
Income which forms an integral part of the effective interest rate of a financial instrument is recognised using the effective interest method and
recorded in interest income (for example, loan origination fees).
Fees and commissions expenses
Fees and commissions expenses include incremental external costs that vary directly with the provision of goods or services to customers. An
incremental cost is one that would not have been incurred if a specific good or service had not been provided to a specific customer. Fees and
commissions expenses which form an integral part of the effective interest rate of a financial instrument are recognised using the effective interest
method and recorded in net interest income. Fees and commissions expenses include the costs associated with credit card loyalty programmes
which are recognised as an expense when the services are provided on the redemption of points.
THE BANKING GROUP
$ millions20222021
Net fees and commissions income
Facility fees 41 53
Transaction fees and commissions
1
263 221
Other non-risk fee income
2
14 19
Fees and commissions income 318 293
Credit card loyalty programmes (35) (32)
Transaction fees and commissions related expenses (31) (25)
Fees and commissions expenses (66) (57)
Net fees and commissions income 252 236
Other income
Net ineffectiveness on qualifying hedges 5 (4)
Other non-interest income 11 8
Total other income 16 4
Total non-interest income 268 240
1
Includes transaction fees and commissions due from related entities. Refer to Note 23.
2
Includes management fees due from related entities. Refer to Note 23.
Deferred income in relation to the credit card loyalty programmes for the Banking Group was $31 million as at 30 September 2022 (30 September
2021: $31 million). This will be recognised as fees and commissions income as the credit card reward points are redeemed.
There were no other material contract assets or contract liabilities for the Banking Group.

Notes to the financial statements
18 Westpac New Zealand Limited
Note 3 Non-interest income (continued)
Non-interest income in scope of NZ IFRS 15 Revenue from Contracts with Customers can be further disaggregated into the following operating
segments and is consistent with the segment descriptions detailed in Note 28.
THE BANKING GROUP
$ millions
Consumer Banking
and Wealth
Institutional and
Business Banking
Investments and
Insurance
Reconciling
ItemsTotal
Year ended 30 September 2022
Fees and commissions income
Facility fees 24 14 - 3 41
Transaction fees and commissions 178 75 - 10 263
Other non-risk fee income 7 20 - (13) 14
Fees and commissions income 209 109 - - 318
Fees and commissions expenses (66) - - - (66)
Net fees and commissions income 143 109 - - 252
Year ended 30 September 2021
Fees and commissions income
Facility fees 26 16 - 11 53
Transaction fees and commissions 155 75 - (9) 221
Other non-risk fee income 9 14 - (4) 19
Fees and commissions income 190 105 -
(2)
293
Fees and commissions expenses (57) - - - (57)
Net fees and commissions income 133 105 -
(2)
236
Note 4 Operating expenses5967-2 04-18
THE BANKING GROUP
$ millionsNote20222021
Staff expenses 635 532
Lease expense 20 26
Depreciation 88 95
Technology services and telecommunications 145 165
Purchased services 81 99
Software amortisation costs 47 61
Related entities - management fees23 5 5
Other 110 116
Total operating expenses 1,131 1,099
Comparative information disclosed within certain operating expenses categories above has been restated as a result of review undertaken
during the year. The restatements relate to:
Certain expenses being reclassified due to change in scope of the technology services and telecommunications and purchased services
categories, and no longer separating out consultant costs from these two categories. As a result, comparative information for technology
services and telecommunications increased by $63 million, purchased services decreased by $15 million, other decreased by $14 million
and consultant costs decreased by $34 million.
Revising the presentation of capitalised staff expenses associated with internally generated software between staff expenses and
technology services and telecommunications categories. As a result, comparative information for staff expenses decreased by $34 million
and technology services and telecommunications increased by the corresponding amount.

Notes to the financial statements
Westpac New Zealand Limited 19
Note 5 Auditor’s remuneration5967-2 04-18
THE BANKING GROUP
$'000s20222021
Audit and audit related services
Audit and review of financial statements
1
2,957 2,493
Other audit related services
2,3
923 356
Total remuneration for audit and other audit related services 3,880 2,849
Other services - -
Total remuneration for non-audit services - -
Total remuneration for audit, other audit related services and non-audit services 3,880 2,849
1
Fees for the annual audit of the financial statements, the review or other procedures performed on the interim financial statements and Sarbanes-Oxley reporting
undertaken in the role of auditor.
2

Assurance or agreed upon procedures over the issue of comfort letters and debt issuance programmes. The amount for the year ended 30 September 2021 also
includes assurance or agreed upon procedures over regulatory liquidity returns and historical financial information in relation to the proposed demerger of the
Banking Group.
3
As at 30 September 2022, $414,366 out of other audit related services was paid to PwC Australia for the issue of comfort letters and work on the Banking Group's
debt issuance programme (30 September 2021: $53,872).
It is the Banking Group’s policy to engage the external auditor on assignments additional to their statutory audit duties only if their independence is not either
impaired or seen to be impaired, and where their expertise and experience with the Banking Group is important.
Note 6 Impairment charges/(benefits)
Accounting policy
Impairment charges are based on an expected loss model which measures the difference between the current carrying amount and the present value
of expected future cash flows taking into account past experience, current conditions and multiple probability-weighted macroeconomic scenarios for
reasonably supportable future economic conditions. Further details of the calculation of ECL and the critical accounting assumptions and estimates
relating to impairment charges are included in Note 12.
Impairment charges are recognised in the income statement, with a corresponding amount recognised as follows:
Loans at amortised cost: as a reduction of the carrying value of the financial asset through an offsetting provision account (refer to Note 12);
Investment securities: in reserves in OCI with no reduction of the carrying value of the debt security (refer to the statement of changes in equity);
and
Credit commitments: as a provision (refer to Note 20).
Uncollectable loans
A loan may become uncollectable in full or part if, after following the Banking Group’s loan recovery procedures, the Banking Group remains unable to
collect that loan’s contractual repayments. Uncollectable amounts are written off against their related provision for ECL, after all possible repayments
have been received.
Where loans are secured, amounts are generally written off after receiving the proceeds from the security, or in certain circumstances, where the net
realisable value of the security has been determined and this indicates that there is no reasonable expectation of full recovery, write-off may be earlier.
Unsecured consumer loans are generally written off after 180 days past due.
The Banking Group may subsequently be able to recover cash flows from loans written off. In the period which these recoveries are made, they are
recognised in the income statement.
THE BANKING GROUP
$ millions20222021
Provisions raised/(released):
Performing (38) (95)
Non-performing 1 (1)
Bad debts written-off/(recovered) directly to the income statement 10 12
Impairment charges/(benefits) (27) (84)
of which relates to:
Loans and credit commitments (27) (84)
Impairment charges/(benefits) (27) (84)
Impairment charges/(benefits) on all other financial assets are not material to the Banking Group.

Notes to the financial statements
20 Westpac New Zealand Limited
Note 7 Income tax expense
Accounting policy
The income tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it
relates to items recognised directly in OCI, in which case it is recognised in the statement of comprehensive income.
Current tax is the tax payable for the year using enacted or substantively enacted tax rates and laws. Current tax also includes adjustments to tax
payable for previous years.
Goods and services tax
Revenue, expenses and assets are recognised net of GST except to the extent that GST is not recoverable from the New Zealand Inland Revenue.
In these circumstances, GST is recognised as part of the expense or the cost of the asset.
Critical accounting assumptions and estimates
Significant judgement is required in determining the current tax liability. There may be transactions with uncertain tax outcomes and provisions
are determined based on the expected outcomes.
THE BANKING GROUP
$ millions
2022
2021
Income tax expense
Current tax:
Current year 384 348
Prior year adjustments (4) (1)
Deferred tax (refer to Note 15)
Current year 24 12
Prior year adjustments
4 1
Total income tax expense
408
360
Profit before income tax 1,455 1,291
Tax calculated at tax rate of 28%
407 361
Other non-assessable items
- (2)
Expenses not deductible for tax purposes
1 1
Total income tax expense 408 360
The effective tax rate for the year ended 30 September 2022 was 28.0% (30 September 2021: 27.9%).
Note 8 Imputation credit account
THE BANKING GROUP
$ millions20222021
Imputation credits available for use in subsequent reporting periods
971 1,090

Notes to the financial statements
Westpac New Zealand Limited 21
Note 9 Trading securities and financial assets measured at FVIS
Accounting policy
Trading securities
Trading securities include actively traded debt (government and other) and those acquired for sale in the near term and are held at fair value.
Reverse repurchase agreements
Securities purchased under these agreements are not recognised on the balance sheet, as the Banking Group has not obtained the risks and
rewards of ownership. The cash consideration paid is recognised as a reverse repurchase agreement, which forms part of a trading portfolio that
is measured at fair value.
Gains and losses on these financial assets are recognised in the income statement. Interest earned from debt securities is recognised in interest
income (refer to Note 2).
THE BANKING GROUP
$ millions20222021
Government and semi-government securities
954 1,839
Other debt securities
1,164
260
Reverse repurchase agreements
-
181
Total trading securities and financial assets measured at FVIS 2,118 2,280
Note 10 Investment securities
Accounting policy
Investment securities include debt securities (government and other) that are measured at FVOCI. These instruments are classified based on the
criteria disclosed under the heading “Financial assets and financial liabilities” in Note 1.
Debt securities measured at FVOCI
Include debt instruments that have contractual cash flows which represent SPPI on the principal balance outstanding and they are held within a
business model whose objective is achieved both through collecting these cash flows or selling the financial asset.
These securities are measured at fair value with gains and losses recognised in OCI except for interest income, impairment charges and FX gains
and losses 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 12 for further details.
The cumulative gain or loss recognised in OCI is subsequently recognised in the income statement when the instrument is disposed.
THE BANKING GROUP
$ millions20222021
Government and semi-government securities
3,6563,526
Other debt securities1,9671,154
Total investment securities5,6234,680

Notes to the financial statements
22 Westpac New Zealand Limited
Note 11 Loans
Accounting policy
Loans are financial assets initially recognised at fair value plus directly attributable transaction costs and fees.
Loans are subsequently measured at amortised cost using the effective interest method where they have contractual cash flows which represent
SPPI on the principal balance outstanding and they are held within a business model whose objective is achieved through holding the loans to
collect these cash flows. They are presented net of any provision for ECL.
Loan products that have both mortgage and deposit facilities are presented gross on the balance sheet, segregating the asset and liability
component, because they do not meet the criteria to be offset. Interest earned on these products is presented on a net basis in the income
statement as this reflects how the customer is charged.
The following table shows loans disaggregated by types of credit exposure:
THE BANKING GROUP
$ millions20222021
Residential mortgages 63,869 60,854
Other retail 2,829 2,976
Corporate 30,459 29,144
Other
121 129
Total gross loans 97,278 93,103
Provision for ECL on loans (refer to Note 12) (396) (471)
Total net loans 96,882 92,632

Notes to the financial statements
Westpac New Zealand Limited 23
Note 12 Provision for expected credit losses
Accounting policy
Note 6 provides details of impairment charges/(benefits).
Impairment applies to all financial assets at amortised cost, investment securities and credit commitments.
The ECL is recognised as follows:
Loans at amortised cost: as a reduction of the carrying value of the financial asset through an offsetting provision account (refer to Note 11);
Investment securities: in reserves in OCI with no reduction of the carrying value of the debt security itself (refer to the statement of changes
in equity); and
Credit commitments: as a provision (refer to Note 20).
Measurement
The Banking 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 timeframe. They are determined by evaluating a range of possible outcomes
and taking into account the time value of money, past events, current conditions and forecasts of future economic conditions.
The models use three main components to determine the ECL (as well as the time value of money) including:
PD: the probability that a counterparty will default;
LGD: the loss that is expected to arise in the event of a default; and
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
Financial assets in Stage 3 are those that are in default. A default occurs when:
The Banking Group considers that the customer is unable to repay its credit obligations in full, irrespective of recourse by the Banking Group
to action such as realising security. Indicators include a breach of contract with the Banking Group such as a default on interest or principal
payments, a borrower experiencing significant financial difficulties or observable economic conditions that correlate to defaults on an
individual basis; or
The customer is more than 90 days past due on any material credit obligation.
A provision for lifetime ECL is recognised on these financial assets.
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 CRG. Financial assets in Stage 3 are assessed on an individual basis and
calculated collectively for those below a specified threshold.
Expected life
In considering the lifetime timeframe for ECL in Stages 2 and 3, the standard generally requires use of the remaining contractual life adjusted,
where appropriate, for prepayments, extension and other options. For certain revolving credit facilities which include both a drawn and undrawn
component (e.g. credit cards and revolving lines of credit), the Banking Group’s contractual ability to demand repayment and cancel the undrawn
commitment does not limit the exposure to credit losses to the contractual notice period. For these facilities, lifetime is based on historical
behaviour.
Movement between stages
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.

Notes to the financial statements
24 Westpac New Zealand Limited
Note 12 Provision for expected credit losses (continued)
Accounting policy (continued)
Critical accounting assumptions and estimates
Key judgements include when a significant increase in credit risk has occurred, 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 Banking
Group’s position relative to other claimants, the reliability of customer information and the likely cost and duration of recovering the loan.
Significant increase in credit risk
Determining when a financial asset has experienced a significant increase in credit risk since origination is a critical accounting judgement which is
based on the change in the 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.
The Banking Group does not rebut the presumption that instruments that are 30 days past due have experienced a significant increase in credit
risk, but this is used as a backstop rather than the primary indicator.
Forward-looking macroeconomic information
The measurement of ECL for each stage and the assessment of significant increase in credit risk consider information about past events and
current conditions as well as reasonable and supportable projections of future events and economic conditions. The estimation of forward-
looking information is a critical accounting judgement. The Banking Group considers three future macroeconomic scenarios including a base case
scenario along with upside and downside scenarios.
The macroeconomic variables used in these scenarios, based on current economic forecasts, include (but are not limited to) unemployment
rates, real gross domestic product growth rates, base interest rates and residential property price indices.
Base case scenario
This scenario utilises the internal Westpac Economics’ forecasts used for strategic decision making and forecasting.
Upside scenario
This scenario represents a modest improvement on the base case scenario.
Downside scenario
The downside scenario is a more severe scenario with ECL higher than those under the current base case scenario. The more severe loss
outcome for the downside is generated under a recession scenario in which the combination of negative GDP growth, declines in residential
property prices and an increase in the unemployment rate simultaneously impact ECL across all portfolios from the reporting date.
The three macroeconomic scenarios are probability weighted and together represent the Banking Group’s view of the forward looking distribution
of potential loss outcomes. The weighting applied to each of the three macroeconomic scenarios takes into account historical frequency, current
trends, and forward-looking conditions.
The macroeconomic variables and probability weightings of the three macroeconomic scenarios are subject to the approval of the Banking
Group’s Chief Financial Officer and Chief Risk Officer with oversight from the Board of Directors (and its Committees).
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.

Notes to the financial statements
Westpac New Zealand Limited 25
Note 12 Provision for expected credit losses (continued)
Loans and credit commitments
The following tables reconcile the provisions for ECL on loans and credit commitments by stage for the Banking Group.
THE BANKING GROUP
20222021
PerformingNon-performingPerformingNon-performing
Stage 1Stage 2Stage 3Stage 3Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
CAPCAPCAPIAP
Total
Provision for ECL on loans
Residential mortgages 40 87 43 9 179 41 69 46 8 164
Other retail 12 36 13 1 62 16 53 22 1 92
Corporate 33 92 13 17 155 27 122 6 60 215
Total provision for ECL on
loans (refer to Note 11)
85 215 69 27 396 84 244 74 69 471
Provision for ECL on credit
commitments
1
Residential mortgages 6 4 - - 10 5 1 - - 6
Other retail 5 7 - - 12 5 9 1 - 15
Corporate 7 14 - - 21 8 25 - - 33
Total provision for ECL on
credit commitments (refer to
Note 20)
18 25 - - 43 18 35 1 - 54
Total provision for ECL on
loans and credit commitments
103 240 69 27 439 102 279 75 69 525
Gross loans 85,362 11,374 482 60 97,278 84,661 7,833 500 109 93,103
Credit commitments 27,303 2,180 26 1 29,510 27,759 1,691 18 6 29,474
Gross loans and credit
commitments
112,665 13,554 508 61 126,788 112,420 9,524 518 115 122,577
Coverage ratio on loans (%) 0.10 1.89 14.32 45.00 0.41 0.10 3.12 14.80 63.30 0.51
Coverage ratio on loans and credit
commitments (%)
0.09 1.77 13.58 44.26 0.35 0.09 2.93 14.48 60.00 0.43
1
Includes provision for ECL on related entity credit commitments of $4 million classified as Due to Related Entities in the Balance Sheet.
Movements in components of loss allowance
The reconciliation of the provision for ECL 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:
“Transfers between stages” lines represent transfers between Stage 1, Stage 2 and Stage 3 prior to remeasurement of the provision for ECL.
“New financial assets originated” line represents new accounts originated during the year.
“Financial assets derecognised during the period” line represents loans derecognised due to final repayments during the year.
“Other charges/(credits) to the income statement” line represents the impact on the provision for ECL due to changes in credit quality during
the year (including transfers between stages), changes in portfolio overlays, changes due to forward-looking economic scenarios and partial
repayments and additional drawdowns on existing facilities over the year.
Amounts written off represent a reduction in the provision for ECL as a result of derecognition of exposures where there is no reasonable
expectation of full recovery.

Notes to the financial statements
26 Westpac New Zealand Limited
Note 12 Provision for expected credit losses (continued)
THE BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Provision for ECL on loans and credit commitments as at 30
September 2021
102 279 75 69 525
Due to changes in credit quality:
Transfers to Stage 1 141 (122) (19) - -
Transfers to Stage 2 (12) 52 (39) (1) -
Transfers to Stage 3 CAP - (24) 26 (2) -
Transfers to Stage 3 IAP - (7) (6) 13 -
Reversals of previously recognised impairment charges - - - (6) (6)
New financial assets originated 16 - - - 16
Financial assets derecognised during the year (11) (27) (19) - (57)
Changes in CAP due to amounts written off - - (23) - (23)
Other charges/(credits) to the income statement (133) 89 74 3 33
Total charges/(credits) to the income statement for ECL 1 (39) (6) 7 (37)
Amounts written off from IAP - - - (49) (49)
Total provision for ECL on loans and credit commitments as
at 30 September 2022
103 240 69 27 439
THE BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Provision for ECL on loans and credit commitments as at 30
September 2020
116 360 107 74 657
Due to changes in credit quality:
Transfers to Stage 1 133 (113) (20) - -
Transfers to Stage 2 (12) 88 (76) - -
Transfers to Stage 3 CAP - (31) 33 (2) -
Transfers to Stage 3 IAP - (1) (1) 2 -
Reversals of previously recognised impairment charges - - - (33) (33)
New financial assets originated 16 - - - 16
Financial assets derecognised during the year (12) (42) (23) - (77)
Changes in CAP due to amounts written off - - (34) - (34)
Other charges/(credits) to the income statement (139) 18 89 64 32
Total charges/(credits) to the income statement for ECL (14) (81) (32) 31 (96)
Amounts written off from IAP - - - (36) (36)
Total provision for ECL on loans and credit commitments as
at 30 September 2021
102 279 75 69 525

Notes to the financial statements
Westpac New Zealand Limited 27
Note 12 Provision for expected credit losses (continued)
Movements in components of loss allowance – by types of credit exposure
The provision for ECL on loans and credit commitments can be further disaggregated into the following types of credit exposure:
THE BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Residential mortgages
Provision for ECL as at 30 September 2021 46 70 46 8 170
Due to changes in credit quality:
Transfers to Stage 1 43 (36) (7) - -
Transfers to Stage 2 (2) 28 (26) - -
Transfers to Stage 3 CAP - (3) 3 - -
Transfers to Stage 3 IAP - - (5) 5 -
Reversals of previously recognised impairment charges - - - (1) (1)
New financial assets originated 5 - - - 5
Financial assets derecognised during the year (2) (3) (12) - (17)
Changes in CAP due to amounts written off - - - - -
Other charges/(credits) to the income statement (44) 35 44 - 35
Total charges/(credits) to the income statement for ECL - 21 (3) 4 22
Amounts written off from IAP - - - (3) (3)
Total provision for ECL on loans and credit commitments as
at 30 September 2022
46 91 43 9 189
Other retail
Provision for ECL as at 30 September 2021 21 62 23 1 107
Due to changes in credit quality:
Transfers to Stage 1 84 (76) (8) - -
Transfers to Stage 2 (6) 16 (10) - -
Transfers to Stage 3 CAP - (14) 14 - -
Transfers to Stage 3 IAP - - - - -
Reversals of previously recognised impairment charges - - - - -
New financial assets originated 4 - - - 4
Financial assets derecognised during the year (4) (13) (3) - (20)
Changes in CAP due to amounts written off - - (23) - (23)
Other charges/(credits) to the income statement (82) 68 20 1 7
Total charges/(credits) to the income statement for ECL (4) (19) (10) 1 (32)
Amounts written off from IAP - - - (1) (1)
Total provision for ECL on loans and credit commitments as
at 30 September 2022
17 43 13 1 74
Corporate
Provision for ECL as at 30 September 2021 35 147 6 60 248
Due to changes in credit quality:
Transfers to Stage 1 14 (10) (4) - -
Transfers to Stage 2 (4) 8 (3) (1) -
Transfers to Stage 3 CAP - (7) 9 (2) -
Transfers to Stage 3 IAP - (7) (1) 8 -
Reversals of previously recognised impairment charges - - - (5) (5)
New financial assets originated 7 - - - 7
Financial assets derecognised during the year (5) (11) (4) - (20)
Changes in CAP due to amounts written off - - - - -
Other charges/(credits) to the income statement (7) (14) 10 2 (9)
Total charges/(credits) to the income statement for ECL 5 (41) 7 2 (27)
Amounts written off from IAP - - - (45) (45)
Total provision for ECL on loans and credit commitments as
at 30 September 2022
40 106 13 17 176
The above movements in components of loss allowance table does not include ‘Other’ credit exposures on the basis that the provision for ECL is
nil.

Notes to the financial statements
28 Westpac New Zealand Limited
Note 12 Provision for expected credit losses (continued)
THE BANKING GROUP
PerformingNon-performing
Stage 1Stage 2Stage 3Stage 3
$ millions
CAPCAPCAPIAP
Total
Residential mortgages
Provision for ECL as at 30 September 2020 49 123 70 6 248
Due to changes in credit quality:
Transfers to Stage 1 37 (28) (9) - -
Transfers to Stage 2 (3) 54 (51) - -
Transfers to Stage 3 CAP - (6) 7 (1) -
Transfers to Stage 3 IAP - - (1) 1 -
Reversals of previously recognised impairment charges - - - (3) (3)
New financial assets originated 6 - - - 6
Financial assets derecognised during the year (3) (7) (17) - (27)
Changes in CAP due to amounts written off - - - - -
Other charges/(credits) to the income statement (40) (66) 47 5 (54)
Total charges/(credits) to the income statement for ECL (3) (53) (24) 2 (78)
Amounts written off from IAP - - - - -
Total provision for ECL on loans and credit commitments
as at 30 September 2021
46 70 46 8 170
Other retail
Provision for ECL as at 30 September 2020 28 81 31 3 143
Due to changes in credit quality:
Transfers to Stage 1 83 (76) (7) - -
Transfers to Stage 2 (7) 28 (21) - -
Transfers to Stage 3 CAP - (23) 24 (1) -
Transfers to Stage 3 IAP - - - - -
Reversals of previously recognised impairment charges - - - (1) (1)
New financial assets originated 4 - - - 4
Financial assets derecognised during the year (6) (20) (5) - (31)
Changes in CAP due to amounts written off - - (34) - (34)
Other charges/(credits) to the income statement (81) 72 35 1 27
Total charges/(credits) to the income statement for ECL (7) (19) (8) (1) (35)
Amounts written off from IAP - - - (1) (1)
Total provision for ECL on loans and credit commitments
as at 30 September 2021
21 62 23 1 107
Corporate
Provision for ECL as at 30 September 2020 39 156 6 65 266
Due to changes in credit quality:
Transfers to Stage 1 13 (9) (4) - -
Transfers to Stage 2 (2) 6 (4) - -
Transfers to Stage 3 CAP - (2) 2 - -
Transfers to Stage 3 IAP - (1) - 1 -
Reversals of previously recognised impairment charges - - - (29) (29)
New financial assets originated 6 - - - 6
Financial assets derecognised during the year (3) (15) (1) - (19)
Changes in CAP due to amounts written off - - - - -
Other charges/(credits) to the income statement (18) 12 7 58 59
Total charges/(credits) to the income statement for ECL (4) (9) - 30 17
Amounts written off from IAP - - - (35) (35)
Total provision for ECL on loans and credit commitments
as at 30 September 2021
35 147 6 60 248
The above movements in components of loss allowance table does not include ‘Other’ credit exposures on the basis that the provision for
ECL is nil.

Notes to the financial statements
Westpac New Zealand Limited 29
Note 12 Provision for expected credit losses (continued)
Impact of overlays on the provision for ECL
The following table attributes the provision for ECL between modelled ECL and portfolio overlays.
Portfolio overlays are used to capture risk of increased uncertainty relating to forward-looking economic conditions, or areas of potential risk and
uncertainty in the portfolio, that are not captured in the underlying modelled ECL.
THE BANKING GROUP
$ millions20222021
Modelled provision for ECL 313 448
Portfolio overlays 126 77
Total provision for ECL 439 525
Details of these changes, which are based on reasonable and supportable information up to the date of this disclosure statement, are provided
below.
Modelled provision for ECL
The modelled provision for ECL is a probability weighted estimate based on three scenarios which together represent the Banking Group’s view of
the forward-looking distribution of potential loss outcomes. The changes in provisions as a result of changes in modelled ECL are reflected
through the “Other charges/(credits) to the income statement” line in the “Movements in components of loss allowance” table. Portfolio overlays
are used to capture potential risk and uncertainty in the portfolio, that are not captured in the underlying modelled ECL.
The base case scenario uses Westpac Economics forecasts, which includes increasing interest rates and reducing residential property prices due
to the current high inflation environment. The forecasts also allow for a deterioration in GDP growth over FY23, driven by the impact on consumer
spending from higher interest rates and declining house prices.
The Banking Group’s forecast assumes the following:
Key macroeconomic assumptions
for base case scenario
30 September 2022
1
30 September 2021
Annual GDPForecasted to fall to 1.88% over the next 12 months.Forecasted growth of 10.9% over the next 12 months.
Residential property pricesForecasted to have a peak annual decrease of 10%
during the next 12 months, with an annual decrease
of 6.7% at September 2023.
Forecasted growth to peak at 26% during the
financial year and then fall to 1.6% at September
2022.
Cash rateIncrease of 100 bps expected over the next 12
months.
Increase of 100 bps expected over the next 12
months.
Unemployment rateForecast to increase to 3.7% by September 2023.Forecasted to peak at 4.2% in December 2021 then
ease to 3.5% by September 2022.
1
The Banking Group has used the forecast released on 22 August 2022. Any changes in inputs from updated forecasts reflecting assumptions as at 30 September
2022 do not have a material impact on the provision for ECL.
The downside scenario is a more severe scenario with expected credit losses higher than the base case. The more severe loss outcome for the
downside is generated under a recession in which the combination of negative GDP growth, declines in residential property prices and an
increase in the unemployment rate simultaneously impact expected credit losses across all portfolios from the reporting date. The assumptions
in this scenario and relativities to the base case will be monitored having regard to the emerging economic conditions and updated where
necessary. The upside scenario represents a modest improvement to the base case.
The following sensitivity table shows the reported provision for ECL based on the probability weighted scenarios and what the provision for ECL
would be assuming a 100% weighting is applied to the base case scenario and to the downside scenario (with all other assumptions, including
CRGs, held constant).
THE BANKING GROUP
$ millions20222021
Reported probability-weighted ECL439525
100% base case ECL330412
100% downside ECL578700

Notes to the financial statements
30 Westpac New Zealand Limited
Note 12 Provision for expected credit losses (continued)
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 $23 million (30 September 2021: $57 million) 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 Banking Group as at 30 September 2022 and 30 September 2021.
THE BANKING GROUP
Macroeconomic scenario weightings (%)20222021
Upside55
Base5055
Downside4540
The increase in weighting to the downside reflects an elevated level of uncertainty in potential credit losses driven by new geopolitical and
economic headwinds, supply chain disruptions, capacity constraints and rising inflation.
Portfolio overlays
Portfolio overlays are used to address areas of risk, including significant uncertainties that are 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. Overlays are continually reassessed and if the risk is judged to have changed (increased or decreased), or is subsequently
captured in the modelled ECL, the overlay will be released or remeasured.
Portfolio overlays were increased by $49 million due to additional uncertainty arising from the current geopolitical and economic
environment.
The total portfolio overlays as at 30 September 2022 were $126 million (30 September 2021: $77 million) for the Banking Group and primarily
comprise:
$52 million on the residential mortgages and other retail portfolios reflecting the expected lagged impact of increasing interest rates (30
September 2021: nil)
$40 million on the residential mortgages portfolio reflecting a worsening downside scenario (this impact is distinct from the increasing
interest rate overlay above) not factored into the modelled downside outcome (30 September 2021: nil)
$30 million on the corporate portfolio reflecting the continued expected delay in stress and observed losses (30 September 2021: nil)
$4 million (30 September 2021: $3 million) reflecting other related risks
Overlays at 30 September 2021 relating to COVID-19 of $74 million have been released on the basis that any delayed losses would have
emerged as conditions have normalised, except to the extent reflected in the new overlays recognised above.

Notes to the financial statements
Westpac New Zealand Limited 31
Note 12 Provision for expected credit losses (continued)
Impact of changes in credit exposures on the provision for ECL
Stage 1 credit exposures had a net increase of $0.7 billion (30 September 2021: increased by $3.8 billion), primarily driven by increases in the
residential mortgages and corporate portfolios, due to new lending in this financial year. The increase from portfolio growth is partially offset
by derecognitions, repayments and additional exposures transferred to Stage 2 to account for the increase in downside scenario severity and
overlays. Stage 1 ECL has increased in line with the increase in Stage 1 exposures, along with improvements due to portfolio movements
offset by an increase in overlays.
Stage 2 credit exposures increased by $3.5 billion (30 September 2021: increased by $0.8 billion), mainly driven by increases from the
residential mortgages and corporate portfolios due to additional exposures transferred to Stage 2 to account for the increase in downside
scenario severity and overlays, partially offset by improved portfolio performance from the other retail and corporate portfolios. Stage 2 ECL
has decreased, driven by the reduction in overlays and improvements from portfolio movements.
Stage 3 credit exposures had a net decrease of $0.1 billion (30 September 2021: decreased by $0.1 billion), driven by reductions in 90 days
past due exposures mainly from the residential mortgages portfolio, offset by the increases from the other retail and corporate portfolios,
coupled with releases due to write-offs across all portfolios. Stage 3 ECL has decreased in line with the decrease in Stage 3 exposures.
Refer to Section iii. Asset quality of the Registered bank disclosures for further details.
Write-offs still under enforcement activity
The amount of current year write-offs which remain subject to enforcement activity was $18 million (30 September 2021: $24 million).

Notes to the financial statements
32 Westpac New Zealand Limited
Note 13 Credit risk management
IndexNote nameNote number
Credit risk management framework13.1
Credit risk ratings system13.2
Credit risk concentrations and maximum exposure to credit risk13.3
Credit quality of financial assets13.4
Credit risk
The risk of financial loss where a customer or counterparty
fails to meet their financial obligations to the Banking
Group.
Credit risk mitigation, collateral and other credit enhancements13.5
13.1 Credit risk management framework
Please refer to Note 32.1 for details of the Banking Group’s overall risk management framework.
The Banking Group’s Credit Risk Management Framework describes the principles, methodologies, systems, roles and responsibilities, reports
and key controls for managing credit risk. Within the Credit Risk Management Framework, the Banking Group has its own credit approval limits
approved by the Banking Group’s Board as delegated by the Ultimate Parent Bank Group Chief Risk Officer.
The BRCC, RISKCO and CREDCO monitor the risk profile, performance and management of the Banking Group’s credit portfolio and the
development and review of key credit risk policies on at least a quarterly basis; other management reviews occur monthly or more frequently.
The Banking Group’s Credit Risk Rating System Policy describes the credit risk rating system philosophy, design, key features, IT systems and
uses of rating outcomes.
All models materially impacting the risk rating process are periodically reviewed in accordance with the Banking Group’s model risk policies.
An annual review is performed of the Credit Risk Rating System for approval by the BRCC.
Specific credit risk estimates (including PD, LGD and EAD) are reviewed by CREDCO, overseen, reviewed annually and approved by the Banking
Group’s Chief Risk Officer.
In determining the provision for ECL, the forward-looking economic inputs and the probability weightings of the forward-looking scenarios as
well as any adjustments made to the modelled outcomes are subject to the approval of the Banking Group’s Chief Financial Officer and the Chief
Risk Officer with oversight from the Board (and its Committees).
Policies for delegating credit approval authorities and formal limits for the extension of credit are established throughout the Banking Group.
These include policies for the approval and management of credit risk arising from other banks and related entities.
Credit policies are established throughout the Banking Group. They include policies governing the origination, evaluation, approval,
documentation, settlement and ongoing management of credit risks.
Sector policies guide credit extension where industry-specific guidelines are considered necessary (e.g. acceptable financial ratios or permitted
collateral).
The Ultimate Parent Bank’s Related Entity Risk Management Policy and supporting policies govern credit exposures to related entities to
minimise the spread of credit risk between the Ultimate Parent Bank Group.
Climate change related credit risks are considered in line with the Ultimate Parent Bank’s Climate Change Position Statement. Climate change
risks are managed in line with the Banking Group’s risk framework which is supported by the Ultimate Parent Bank’s Sustainability Risk
Management Framework, the Banking Group’s Environmental, Social and Governance (ESG) Credit Risk Policy and Board Risk Appetite
Statements. Where appropriate, these are applied at the portfolio, customer, and transaction level.
CREDCO oversees work to identify and manage the potential impact on credit exposures from climate change-related transition and physical
risks across the Banking Group.
The Banking Group’s ESG Credit Risk Policy details the overall approach to managing ESG risks in the credit risk process for applicable
transactions.

Notes to the financial statements
Westpac New Zealand Limited 33
Note 13 Credit risk management (continued)
13.2 Credit risk ratings system
The principal objective of the credit risk rating system is to reliably assess the credit risk to which the Banking Group is exposed. The Banking Group
has two main approaches to this assessment:
Transaction-managed customers
Transaction managed customers are generally customers with business lending exposures. They are individually assigned a CRG, corresponding to
their expected PD. Each facility is assigned an LGD. The Banking Group’s risk rating system has a tiered scale of risk grades for both non-defaulted
customers and defaulted customers. Non-defaulted CRGs are mapped to Moody’s and S&P external senior ranking unsecured ratings.
The following table shows the Banking Group’s high level CRG’s for transaction-managed portfolios mapped to the Banking Group’s credit quality
disclosure categories and to their corresponding external rating.
Transaction-managed
Financial Statement DisclosureBanking Group’s CRGMoody’s RatingS&P Rating
StrongAAaa – Aa3AAA – AA-
BA1 – A3A+ – A-
CBaa1 – Baa3BBB+ – BBB-
Good/satisfactoryDBa1 – B1BB+ – B+
Banking Group Rating
WeakEWatchlist
FSpecial Mention
Weak/default/non-performingGSubstandard/Default
HDefault
Program-managed portfolio
The program-managed portfolio generally includes retail products including mortgages, personal lending (including credit cards) as well as certain
SME lending. These customers are grouped into pools of similar risk. Pools are created by analysing similar risk characteristics that have historically
predicted that an account is likely to go into default. Customers grouped according to these predictive characteristics are assigned a PD and LGD
relative to their pool. The credit quality of these pools is based on a combination of behavioural factors, delinquency trends, PD estimates and loan to
valuation ratio (housing loans only).
Program-managed
Financial Statement DisclosureAdvanced PM Model
1
Simplified PM Approach
2
StrongStage 1 facilities with PM Risk Grade between 13 and 10-
Good/satisfactoryStage 1 facilities with PM Risk Grade between 9 and 6Stage 1
Stage 2 facilities with PM Risk Grade between 13 and 6Stage 2 and 0 - 29 days past due
WeakAll facilities with PM Risk Grade between 5 and 1Stage 2 and 30 or more days past due
Weak/default/non-performingAll facilities with PM Risk Grade equal to 0Stage 3
1
Used for Residential Mortgages, Credit Cards & SME.
2
Used for Personal Lending.

Notes to the financial statements
34 Westpac New Zealand Limited
Note 13 Credit risk management (continued)
13.3 Credit concentrations and maximum exposure to credit risk
Credit risk is concentrated when a number of counterparties are engaged in similar activities, have similar economic characteristics and thus may
be similarly affected by changes in economic or other conditions.
The Banking Group monitors its credit portfolio to allow it to manage risk concentrations and rebalance the portfolio.
Individual customers or groups of related customers
The Banking Group has large exposure limits governing the aggregate size of credit exposure normally acceptable to individual customers and
groups of related customers. These limits are tiered by CRG.
Specific industries
Exposures to businesses, governments and other financial institutions are classified into a number of industry clusters based on related ANZSIC
codes and are monitored against the Banking Group’s industry risk appetite limits.
Individual countries
The Banking Group has limits governing risks related to individual countries, such as political situations, government policies and economic
conditions that may adversely affect either a customer’s ability to meet its obligations to the Banking Group, or the Banking Group’s ability to
realise its assets in a particular country.
Maximum exposure to credit risk
The maximum exposure to credit risk (excluding collateral received) is represented by the carrying amount of on-balance sheet financial assets
and undrawn credit commitments as set out in the following table.
THE BANKING GROUP
$ millions20222021
Financial assets
Cash and balances with central banks10,8208,472
Collateral paid42185
Trading securities and financial assets measured at FVIS2,1182,280
Derivative financial instruments169221
Investment securities5,6234,680
Loans96,88292,632
Other financial assets263712
Due from related entities2,6061,834
Total financial assets118,523111,016
Undrawn credit commitments
Letters of credit and guarantees
1
1,6091,338
Commitments to extend credit27,90128,136
Total undrawn credit commitments29,51029,474
Total maximum credit risk exposure148,033140,490
1
Comparatives have been restated to correctly reflect an additional $503 million in off-balance sheet credit exposures arising under the financial guarantee with
the NZ Branch.

Notes to the financial statements
Westpac New Zealand Limited 35
Note 13 Credit risk management (continued)
Concentration of credit exposures
THE BANKING GROUP
$ millions20222021
On-balance sheet credit exposures
Analysis of on-balance sheet credit exposures by geographical areas
New Zealand115,905
109,073
Overseas3,014
2,414
Subtotal118,919111,487
Provision for ECL on loans(396)(471)
Total on-balance sheet credit exposures118,523111,016
Analysis of on-balance sheet credit exposures by industry sector
Accommodation, cafes and restaurants395464
Agriculture9,2639,371
Construction495496
Finance and insurance6,0295,547
Forestry and fishing506481
Government, administration and defence16,08613,828
Manufacturing2,2121,598
Mining218212
Property8,0977,777
Property services and business services1,0401,152
Services1,3841,720
Trade2,2101,810
Transport and storage1,1811,270
Utilities1,8941,687
Retail lending65,19762,165
Subtotal116,207109,578
Provision for ECL on loans(396)(471)
Due from related entities2,6061,834
Other financial assets10675
Total on-balance sheet credit exposures118,523111,016
ANZSIC has been used as the basis for disclosing industry sectors.

Notes to the financial statements
36 Westpac New Zealand Limited
Note 13 Credit risk management (continued)
THE BANKING GROUP
$ millions2022
2021
1
Off-balance sheet credit exposures consists of
Credit risk-related instruments29,51029,474
Total off-balance sheet credit exposures29,51029,474
Analysis of off-balance sheet credit exposures by geographical areas
New Zealand29,00128,933
Overseas509
541
Total off-balance sheet credit exposures29,51029,474
Analysis of off-balance sheet credit exposures by industry sector
Accommodation, cafes and restaurants12696
Agriculture628699
Construction502570
Finance and insurance1,8742,077
Forestry and fishing183230
Government, administration and defence967808
Manufacturing1,5511,797
Mining10657
Property1,6511,627
Property services and business services806720
Services1,2931,148
Trade2,1962,165
Transport and storage789986
Utilities1,7771,827
Retail lending15,06114,667
Total off-balance sheet credit exposures 29,51029,474
1
Comparatives have been restated to correctly reflect an additional $503 million in off-balance sheet credit exposures arising under the financial guarantee with
the NZ Branch.
ANZSIC has been used as the basis for disclosing industry sectors.

Notes to the financial statements
Westpac New Zealand Limited 37
Note 13 Credit risk management (continued)
13.4 Credit quality of financial assets
The following table shows the credit quality of gross credit risk exposures measured at amortised cost or at FVOCI to which the impairment
requirements of NZ IFRS 9 apply. The credit quality is determined by reference to the credit risk ratings system (refer to Note 13.2) and
expectations of future economic conditions under multiple scenarios:
THE BANKING GROUP
20222021
$ millions
Stage 1Stage 2Stage 3Total
1
Stage 1Stage 2Stage 3Total
1
Loans - Residential Mortgages
Strong
55,768 - - 55,768 50,544--50,544
Good/satisfactory
1,569 6,000 - 7,569 6,0073,353-9,360
Weak
- 172 360 532 22525403950
Total Loans - Residential Mortgages
57,337 6,172 360 63,869 56,5733,87840360,854
Loans - Other retail
Strong
1,124 - - 1,124 1,141--1,141
Good/satisfactory
937 573 - 1,510 1,363226-1,589
Weak
2 135 58 195 1516665246
Total Loans - Other retail
2,063 708 58 2,829 2,519392652,976
Loans - Corporate
Strong
12,869 - - 12,869 10,706--10,706
Good/satisfactory
12,972 3,560 - 16,532 14,7341,288-16,022
Weak
- 934 124 1,058 -2,2751412,416
Total Loans - Corporate
25,841 4,494 124 30,459 25,4403,56314129,144
Loans - Other
Strong
121 - - 121 129--129
Good/satisfactory
- - - - ----
Weak
- - - - ----
Total Loans - Other
121 - - 121 129--129
Investment Securities
Strong
5,623 - - 5,623 4,680--4,680
Good/satisfactory
- - - - ----
Weak
- - - - ----
Total Investment Securities
5,623 - - 5,623 4,680--4,680
All other financial assets
Strong
11,532 - - 11,532 10,272--10,272
Good/satisfactory
25 16 - 41 235-28
Weak
- 2 1 3 -314
Total all other financial assets
11,557 18 1 11,576 10,2958110,304
Undrawn credit commitments
2
Strong
22,615 - - 22,615 22,6511-22,652
Good/Satisfactory
4,677 2,032 - 6,709 5,1011,553-6,654
Weak
11 148 27 186 713724168
Total undrawn credit commitments
27,303 2,180 27 29,510 27,7591,6912429,474
Total strong
109,652 - - 109,652 100,123 1 - 100,124
Total good/satisfactory
20,180 12,181 - 32,361 27,228 6,425 - 33,653
Total weak
13 1,391 570 1,974 44 3,106 634 3,784
Total on and off balance sheet
129,845 13,572 570 143,987 127,395 9,532 634 137,561
1
This credit quality disclosure differs to that of credit risk concentration as it relates only to financial assets measured at amortised costs or at FVOCI and
therefore excludes trading securities and financial assets measured at FVIS, and derivative financial instruments.
2
Comparatives have been restated to correctly reflect an additional $503 million in off-balance sheet credit exposures arising under the financial guarantee with
the NZ Branch.
Details of collateral held in support of these balances are provided in Note 13.5.

Notes to the financial statements
38 Westpac New Zealand Limited
Note 13 Credit risk management (continued)
13.5 Credit risk mitigation, collateral and other credit enhancements
The Banking Group uses a variety of techniques to reduce the credit risk arising from its lending activities.
This includes the Banking Group having processes in place to ensure that it has direct, irrevocable and unconditional recourse to collateral and other
credit enhancements through obtaining legally enforceable documentation.
The Banking Group includes the effect of credit risk mitigation through eligible guarantees within the calculation applied to LGD. Due to system
limitations, the value of the guarantee is not always separately recorded, and therefore, neither this value nor a close alternative is available for
disclosure under Clause 7 of Schedule 11 to the Order.
Collateral
The following table describes the nature of collateral or security held for each relevant class of financial asset:
Financial assetsNature of collateral
Loans – residential mortgages
1
Housing loans are secured by a mortgage over property and additional security may take the form of
guarantees and deposits.
Loans – other retail
1
Personal lending (including credit cards and overdrafts) is predominantly unsecured. Where security is
taken, it is restricted to eligible motor vehicles, caravans, campers, motor homes and boats.
SME loans may be secured, partially secured or unsecured. Security is typically taken by way of a mortgage
over property and/or a general security agreement over business assets or other assets.
Loans – corporate
1
Business loans may be secured, partially secured or unsecured. Security is typically taken by way of a
mortgage over property and/or a general security agreement over business assets or other assets.
Other security such as guarantees or standby letters of credit may also be taken as collateral, if
appropriate.
Trading securities and financial
assets measured at FVIS, due from
related entities and derivative
financial instruments
These exposures are carried at fair value which reflects the credit risk.
For trading securities, no collateral is sought directly from the issuer or counterparty; however this may be
implicit in the terms of the instrument (such as an asset-backed security). The terms of debt securities
may include collateralisation.
Master netting agreements are typically used to enable the effects of derivative assets and derivative
liabilities with the same counterparty to be offset when measuring these exposures. Additionally,
collateralisation agreements are also typically entered into with major institutional counterparties to avoid
the potential build-up of excessive mark-to-market positions. Derivative transactions are increasingly
being cleared through central clearers.
1
This includes collateral held in relation to associated credit commitments.
Management of risk mitigation
The Banking Group mitigates credit risk through controls covering:
Collateral and valuation
management
The Ultimate Parent Bank manages collateral under collateralisation agreements centrally for all
branches of the Ultimate Parent Bank and the Bank.
The estimated realisable value of collateral held in support of loans is based on a combination of:
formal valuations currently held for such collateral; and
management’s assessment of the estimated realisable value of all collateral held.
This analysis also takes into consideration any other relevant knowledge available to management at the
time. Updated valuations are obtained when appropriate.
The Banking Group revalues collateral related to financial markets positions on a daily basis and has
formal processes in place to promptly call for collateral top-ups, if required. These processes include
margining for non-centrally cleared customer derivatives where required under APRA Prudential
Standard CPS226. The collateralisation arrangements are documented via the Credit Support Annex of
the International Swaps and Derivatives Association dealing agreements and Global Master Repurchase
Agreements for repurchase transactions.

Notes to the financial statements
Westpac New Zealand Limited 39
Note 13 Credit risk management (continued)
Other credit enhancements
The Banking Group only recognises guarantees, standby letters of credit, or credit derivative protection
from entities meeting minimum eligibility requirements (provided they are not related to the entity with
which the Banking Group has a credit exposure) including but not limited to:
Sovereign;
Australia and New Zealand public sector;
Authorised deposit-taking institutions and overseas banks with a minimum risk grade equivalent of
A3 / A-; and
Other entities with a minimum risk grade equivalent of A3 / A-.
Credit Portfolio Management manages the Banking Group’s corporate, sovereign and bank credit
portfolios through monitoring the exposure and any offsetting hedge positions.
Offsetting
Creditworthy customers domiciled in New Zealand may enter into formal agreements with the Banking
Group, permitting the Banking Group to set-off gross credit and debit balances in their nominated
accounts. Cross-border set-offs are not permitted.
Close-out netting is undertaken with counterparties with whom the Banking Group has entered into a
legally enforceable master netting agreement for their off-balance sheet financial market transactions in
the event of default.
Further details of offsetting are provided in Note 26.
Central clearing
The Banking Group increasingly executes derivative transactions through central clearing counterparties.
Central clearing counterparties mitigate risk through stringent membership requirements, the collection
of margin against all trades placed, the default fund, and an explicitly defined order of priority of
payments in the event of default.

Notes to the financial statements
40 Westpac New Zealand Limited
Note 13 Credit risk management (continued)
Collateral held against loans
The Banking Group analyses the coverage of the loan portfolio which is secured by the collateral that it holds. Coverage is measured as follows:
CoverageSecured loan to collateral value ratio
Fully securedLess than or equal to 100%
Partially securedGreater than 100% but not more than 150%
Unsecured
Greater than 150%, or no security held (e.g. can include credit cards, personal loans, and exposure to highly rated
corporate entities)
The Banking Group's loan portfolio has the following coverage from collateral held:
THE BANKING GROUP
20222021
%
Residential
Mortgages
1
Other
Retail
Corporate Other Total
Residential
Mortgages
1
Other
Retail
Corporate Other Total
Performing Loans
Fully secured
100 48 71 53 90 100 49 68 37 88
Partially secured
- 2 11 3 3 - 3 15 1 5
Unsecured
- 50 18 44 7 - 48 17 62 7
Total 100 100 100 100 100 100 100 100 100 100
Non-performing loans
Fully secured
94 66 33 - 77 94 51 26 - 74
Partially secured
6 1 37 - 13 6 6 14 - 8
Unsecured
- 33 30 - 10 - 43 60 - 18
Total 100 100 100 - 100 100 100 100 - 100
1
For the purposes of collateral classifications, residential mortgages are classified as fully secured, unless they are non-performing in which case they may be
classified as partially secured. Refer to Section iv Additional mortgage information of the Registered bank disclosures for LVR analysis of residential mortgages.
Details of the carrying value and associated provision for ECL are disclosed in Note 11, Section iii. Asset quality of the Registered bank disclosures
and Note 12 respectively. The credit quality of loans is disclosed in Note 13.4.
Collateral held against financial assets other than loans
THE BANKING GROUP
$ millions20222021
Cash, primarily for derivatives 82 188
Securities under reverse repurchase agreements
1
57 671
Total other collateral held
139 859
1
Securities received as collateral are not recognised on the Banking Group's balance sheet.

Notes to the financial statements
Westpac New Zealand Limited 41
Note 14 Other financial assets
THE BANKING GROUP
$ millions20222021
Accrued interest receivable 157
96
Trade debtors 2
1
Interbank lending -
541
Other
104
74
Total other financial assets 263 712
Note 15 Deferred tax assets
Accounting policy
Deferred tax accounts for temporary differences between the carrying amounts of assets and liabilities in the financial statements and their values
for taxation purposes.
Deferred tax is determined using the enacted or substantively enacted tax rates and laws which are expected to apply when the assets will be
realised or the liabilities settled.
Deferred tax assets and liabilities have been offset where they relate to the same taxation authority, the same taxable entity or group and where
there is a legal right and intention to settle on a net basis.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available to utilise the assets.
Deferred tax is not recognised for the following temporary differences:
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither the accounting nor
taxable profit or loss; and
the initial recognition of goodwill in a business combination.
Critical accounting assumptions and estimates
On a similar basis to that described in Note 7, determining deferred tax assets and liabilities is considered one of the Banking Group’s critical
accounting assumptions and estimates.

Notes to the financial statements
42 Westpac New Zealand Limited
Note 15 Deferred tax assets (continued)
THE BANKING GROUP
$ millions20222021
Deferred tax assets/(liabilities) comprise the following temporary differences:
Provision for ECL on loans 111 132
Provision for ECL on credit commitments 12 15
Cash flow hedges (165) (18)
Provision for employee entitlements 20 22
Compliance, regulation and remediation provisions 18 21
Software, property and equipment (43) (48)
Lease liabilities 78 81
Other temporary differences 8 11
Net deferred tax assets 39 216
The deferred tax (charge)/credit in income tax expense comprises the following temporary
differences:
Provision for ECL on loans (21) (36)
Provision for ECL on credit commitments (3) (1)
Compliance, regulation and remediation provisions (3) 9
Software, property and equipment 5 5
Lease liabilities (3) 2
Other temporary differences (3) 8
Total deferred tax (charge)/credit in income tax expense (28) (13)
The deferred tax (charge)/credit in OCI comprises the following temporary differences:
Cash flow hedges (147) (49)
Provision for employee entitlements (2) (5)
Total deferred tax (charge)/credit in OCI (149) (54)
The deferred tax adjustment to opening retained earnings comprises the following temporary
differences:
Software, property and equipment - 3
Total deferred tax adjustment to opening retained earnings - 3
Note 16 Intangible assets
Accounting policy
Indefinite life intangible assets
Goodwill
Goodwill acquired in a business combination is initially measured at cost, generally being the excess of:
i.the consideration paid; over
ii.the net fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Subsequently, goodwill is not amortised but rather tested for impairment. Impairment is tested at least annually or whenever there is an
indication of impairment. An impairment charge is recognised when a CGU’s carrying value exceeds its recoverable amount. Recoverable amount
means the higher of the CGU’s fair value less costs to sell and its value-in-use.
The Banking Group’s CGUs represent the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash
inflows from other assets or group of assets. They reflect the level at which the Banking Group monitors and manages its operations.
Finite life intangible assets
Finite life intangibles such as computer software which are recognised initially at cost and subsequently at amortised cost less any impairment.
IntangibleUseful lifeDepreciation method
GoodwillIndefiniteNot applicable
Computer software3 to 5 yearsStraight-line or diminishing balance method (using the Sum of the Years Digits)

Notes to the financial statements
Westpac New Zealand Limited 43
Note 16 Intangible assets (continued)
Critical accounting assumptions and estimates
Judgement is required in determining the fair value of assets and liabilities acquired in a business combination. A different assessment of fair
values would have resulted in a different goodwill balance and different post-acquisition performance of the acquired entity.
When assessing impairment of intangible assets, significant judgement is needed to determine the appropriate cash flows and discount rates to
be applied to the calculations. The significant assumptions applied to the value-in-use calculations are outlined below.
THE BANKING GROUP
$ millions20222021
Goodwill 477 477
Computer software
308 196
Total intangible assets
785 673
Goodwill has been allocated to the Consumer Banking and Wealth CGU, which is a single CGU.
Impairment testing and results
Impairment testing is performed at least once a year, or whenever there is an indication of impairment, by comparing the recoverable amount of
each CGU with the carrying amount. The primary test for the recoverable amount is determined based on value-in-use which refers to the present
value of expected cash flows under its current use.
Impairment testing in the current year confirmed that the Banking Group continues to have considerable headroom when determining whether
goodwill is recoverable, and no impairment should be recognised.
Significant assumptions used in recoverable amount calculations
The assumptions made for goodwill impairment testing for the Consumer Banking and Wealth CGU are provided in the following table and are
based on past experience and management’s expectations for the future. In the current year and given the present economic environment, the
Banking Group has reassessed these assumptions and revised them where necessary in order to provide a reasonable estimate of the value-in-
use of the CGU.
Discount rateCash flows
Equity rate / adjusted pre-tax equity rateForecast period / terminal growth rate
2022202120222021
Consumer Banking and Wealth10.5% / 13.8%9.0% / 12.2%3 years / 2%3 years / 2%
The Banking Group discounts the projected cash flows by the adjusted pre-tax equity rate.
The cash flows used are based on management approved forecasts. These forecasts utilise information about current and future economic
conditions, observable historical information and management expectations of future business performance. The terminal value growth rate
represents the growth rate applied to extrapolate cash flows beyond the forecast period and reflects the midpoint of the Reserve Bank’s inflation
target over the medium term.
There are no reasonably possible changes in assumptions for Consumer Banking and Wealth CGU that would result in an indication of impairment
or have a material impact on the Banking Group’s reported results.

Notes to the financial statements
44 Westpac New Zealand Limited
Note 17 Deposits and other borrowings
Accounting policy
Deposits and other borrowings are initially recognised at fair value and subsequently either measured at amortised cost using the effective
interest method or at fair value.
Deposits and other borrowings are designated at fair value if they are managed on a fair value basis, reduce or eliminate an accounting mismatch,
or contain an embedded derivative.
Where they are measured at fair value, any changes in fair value (except those due to changes in credit risk) are recognised as non-interest
income. The change in the fair value that is due to changes in credit risk is recognised in OCI except where it would create an accounting
mismatch, in which case it is also recognised in the income statement.
Interest expense incurred is recognised in net interest income using the effective interest method.
THE BANKING GROUP
$ millions20222021
Certificates of deposit 2,939 3,450
Non-interest bearing, repayable at call 14,391 14,737
Other interest bearing:
At call 31,245 32,849
Term
32,273 28,331
Total deposits and other borrowings 80,848 79,367
Deposits at fair value 2,939 3,450
Deposits at amortised cost 77,909 75,917
Total deposits and other borrowings 80,848 79,367
Note 18 Other financial liabilities
Accounting policy
Other financial liabilities include liabilities measured at amortised cost as well as liabilities which are measured at FVIS. Financial liabilities
measured at FVIS include liabilities designated at FVIS (i.e. certain repurchase agreements).
Repurchase agreements
Where securities are sold subject to an agreement to repurchase at a predetermined price, they remain recognised on the balance sheet in their
original category (i.e. trading securities and financial assets measured at FVIS or investment securities).
The cash consideration received is recognised as a liability (repurchase agreements). Repurchase agreements are designated at fair value when
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.
THE BANKING GROUP
$ millions20222021
Accrued interest payable 293 118
Trade creditors and other accrued expenses 73 86
Repurchase agreements
1
3,967 2,676
Interbank placements 4 -
Other 11 20
Total other financial liabilities 4,348 2,900
Other financial liabilities at fair value - 580
Other financial liabilities at amortised cost 4,348 2,320
Total other financial liabilities 4,348 2,900
1
Repurchase agreements include those under the Funding for Lending Programme and Term Lending Facility. Refer to Note 32.2.2 for further details.

Notes to the financial statements
Westpac New Zealand Limited 45
Note 19 Debt issues
Accounting policy
Debt issues are bonds, notes and commercial paper that have been issued by the Banking Group.
Debt issues are initially measured at fair value and subsequently either measured at amortised cost using the effective interest 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.
Interest expense incurred is recognised within net interest income using the effective interest method.
In the following table, the distinction between short-term (12 months or less) and long-term (greater than 12 months) debt is based on the original
maturity of the underlying security.
THE BANKING GROUP
$ millions20222021
Short-term debt
Commercial paper 5,490 2,979
Total short-term debt 5,490 2,979
Long-term debt
Non-domestic medium-term notes 7,515 5,570
Covered bonds 3,563 4,347
Domestic medium-term notes 3,365 3,408
Total long-term debt 14,443 13,325
Total debt issues 19,933 16,304
Debt issues at fair value 5,490 2,979
Debt issues at amortised cost 14,443 13,325
Total debt issues 19,933 16,304
THE BANKING GROUP
$ millions20222021
Movement reconciliation
Balance at beginning of the year
16,304 15,799
Issuances
13,602
9,476
Maturities, repayments, buy-backs and reductions
(10,297)
(8,369)
Total cash movements 3,305 1,107
FX translation impact
1,394
(538)
Fair value adjustments
(10)
-
Fair value hedge accounting adjustments
(1,106)
(74)
Other
1
46
10
Total non-cash movements 324 (602)
Balance at end of the year 19,933 16,304
1
Includes items such as amortisation of issue costs.

Notes to the financial statements
46 Westpac New Zealand Limited
Note 20 Provisions
Accounting policy
Provisions are recognised for present obligations arising from past events where a payment (or other economic transfer) is likely to be necessary
to settle the obligation and can be reliably estimated.
Employee benefits – annual leave and other employee benefits
The provision for annual leave and other employee benefits (including long service leave, wages and salaries, inclusive of non-monetary benefits,
and any associated on-costs (e.g. payroll tax)) is calculated based on expected payments.
Provision for ECL on credit commitments
The Banking Group is committed to provide facilities and guarantees as explained in Note 27. If it is probable that a facility will be drawn and the
resulting asset will be less than the drawn amount then a provision for impairment is recognised. The provision for impairment is calculated using
the same methodology as the provision for ECL (refer to Note 12).
Compliance, regulation and remediation provisions
The compliance, regulation and remediation provisions relate to matters pertaining to the provision of services to our customers identified both as
a result of regulatory action and internal reviews. An assessment of the likely cost to the Banking Group of these matters (including applicable
customer refunds) is made on a case-by-case basis and specific provisions are made where appropriate.
Critical accounting assumptions and estimates
The financial reporting of provisions for compliance, regulation and remediation involves a significant degree of judgement in relation to
identifying whether a present obligation exists and also in estimating the probability, timing, nature and quantum of the outflows that may arise
from past events. These judgements are made based on the specific facts and circumstances relating to the individual events. Specific
judgements in respect of material items are included in the discussion below.
THE BANKING GROUP
$ millions
Annual leave
and other
employee
benefits
Provision for
ECL on credit
commitments
(refer to Note
12)
Compliance,
regulation and
remediation
provisions
Lease
restoration
obligations
OtherTotal
Balance as at 30 September 2021
79 54 76 30 2 241
Additions 43 - 27 3 1 74
Utilisation
(26) - (16) - - (42)
Reversal of unutilised provisions (1) (15) (22) - (2) (40)
Balance as at 30 September 2022 95 39 65 33 1 233
Compliance, regulation and remediation provisions
The compliance, regulation and remediation provisions relate to matters pertaining to the provision of services to our customers identified as a
result of regulatory action and internal reviews, including the Banking Group’s review of processes for some products relating to the requirements
of the CCCFA.
All potential claims and other liabilities are assessed on a case-by-case basis. A provision has been recognised where the Banking Group has
conducted an assessment which determines the likelihood of loss as probable and where its potential loss can be reliably estimated.
A number of different estimates and judgements have been applied in measuring the provision at 30 September 2022, including the number of
impacted customers, the refund per customer and the additional costs to run the remediation program. It is possible that the actual outcome for
these matters may differ from the assumptions used in estimating the provision. Remediation processes may change over time as further facts
emerge and such changes could result in a change to the final exposure.
Where a provision has not been recognised, a contingent liability may exist. Refer to Note 27 for further details on contingent liabilities.

Notes to the financial statements
Westpac New Zealand Limited 47
Note 21 Loan capital
Accounting policy
Loan capital are debt instruments which qualify for inclusion as regulatory capital under the Reserve Bank BPRs. Loan capital is initially measured
at fair value and subsequently measured at amortised cost using the effective interest method. Interest expense incurred is recognised in net
interest income.
THE BANKING GROUP
$ millions20222021
Additional Tier 1 loan capital - Convertible subordinated perpetual notes 1,493 1,491
Tier 2 loan capital - Subordinated notes
590 -
Tier 2 loan capital - Convertible subordinated notes
- 1,088
Total loan capital 2,083 2,579
THE BANKING GROUP
$ millions20222021
Movement reconciliation
Balance at beginning of the year
2,579 2,612
Issuances
1
590 -
Maturities, repayments, buy-backs and reductions
(1,178) -
Total cash movements (588) -
FX translation impact 90 (35)
Other (amortisation of bond issue costs, etc) 2 2
Total non-cash movements 92 (33)
Balance at end of the year 2,083 2,579
1
Consists of $600 million in loan capital issuances and is net of $8 million in issuance costs and $2 million in loan capital held by related entities.
Additional Tier 1 loan capital
A summary of the key terms and features of the AT1 notes is provided below:
$Issue dateCounterpartyInterest rateOptional redemption date
NZ$1,500 million notes
1
22 September 2017NZ BranchNZ 90 day bank bill
rate + 3.9594% p.a.
21 September 2027 and every fifth
anniversary thereafter

1
The AT1 notes were issued by the Bank and rank equally amongst themselves and are subordinated to the claims of depositors and senior or less subordinated
creditors of the Bank, but rank ahead of the Bank’s ordinary shares.
In accordance with the Reserve Bank BPRs, the AT1 notes are subject to a transitional phase-out from 1 January 2022. In line with the transitional
phase-out schedule contained in BPR110, 87.5% of the total nominal value of the AT1 notes will be recognised as regulatory capital between 1
January 2022 and 31 December 2022.
Interest payable
Quarterly interest payments on the AT1 notes are at the absolute discretion of the Bank and will only be paid if the payment conditions are satisfied,
including that the interest payment will not result in the Bank becoming insolvent immediately following the interest payment; not result in a breach of
the Reserve Bank Prudential Standards; and the payment date not falling on the date of a capital trigger event or non-viability trigger event. Interest
payments are non-cumulative. If interest is not paid in full, the Bank may not determine or pay any dividends on its ordinary shares or undertake a
discretionary buy-back or capital reduction of the Bank’s ordinary shares (except in limited circumstances).
Redemption
The Bank may elect to redeem all or some of the AT1 notes for their face value on 21 September 2027 and every fifth anniversary thereafter, subject to
the Reserve Bank’s prior written approval. Early redemption of all of the AT1 notes for certain tax or regulatory reasons is permitted subject to the
Reserve Bank’s prior written approval.
Conversion
If a capital trigger event or non-viability trigger event occurs, the Bank must convert some or all of the AT1 notes into a variable number of ordinary
shares issued by the Bank (calculated with reference to the net assets of the Bank and the total number of ordinary shares on issue at the conversion
date) that is sufficient, in the case of a capital trigger event, to return the Bank’s Common Equity Tier 1 capital ratio to above 5.125% as determined by
the Bank in consultation with the Reserve Bank; or, in the case of a non-viability trigger event, to satisfy the direction of the Reserve Bank or the
decision of the statutory manager of the Bank. A capital trigger event occurs when the Bank determines, or the Reserve Bank notifies in writing that it
believes, the Bank’s Common Equity Tier 1 Capital ratio is equal to or less than 5.125%. A non-viability trigger event occurs when the Reserve Bank or
the statutory manager (appointed pursuant to section 117 of the BPS Act) directs the Bank to convert or write off all or some of its AT1 notes.

Notes to the financial statements
48 Westpac New Zealand Limited
Note 21 Loan capital (continued)
If conversion of the AT1 notes does not occur within five business days of a capital trigger event or a non-viability trigger event, holders’ rights in
relation to the AT1 notes will be immediately and irrevocably terminated.
The Bank is able to elect to convert all the AT1 notes for certain tax or regulatory reasons (or in certain other circumstances).
Tier 2 loan capital
On 16 September 2022, the Bank issued $600m of subordinated notes. On 22 September 2022, the Bank redeemed its existing convertible
subordinated notes.
Subordinated notes
A summary of the key terms and features of the subordinated notes is provided below:
$Issue dateInterest rateMaturity dateOptional redemption date
NZ$600 million
notes
1
16 September
2022
Fixed at 6.19% until 16 September
2027. Resets on 16 September
2027 to a floating rate: New
Zealand 90 day Bank Bill Rate +
2.10% p.a.
16 September 2032
16 September 2027 and every quarterly
interest payment date thereafter
1
The subordinated notes were issued by the Bank. The subordinated notes rank equally amongst themselves and are subordinated to the claims of depositors and
senior or less subordinated creditors of the Bank, but rank ahead of the AT1 notes and the Bank's ordinary shares.
Interest payable
Quarterly interest payments on the subordinated notes are subject to the Bank being solvent at the time of, and immediately following the interest
payment.
Early redemption
The Bank may elect to redeem all or some of the subordinated notes for their face value together with accrued interest (if any) on 16 September 2027
or any interest payment date thereafter, subject to the Reserve Bank’s prior written approval. Early redemption of all of the subordinated notes for
certain tax or regulatory reasons is permitted on an interest payment date subject to the Reserve Bank’s prior written approval.
Convertible subordinated notes
A summary of the key terms and features of the convertible subordinated notes is provided below.
$Issue dateCounterpartyInterest rateMaturity dateOptional redemption date
AU$1,040 million
notes
8 September 2015
London Branch of the
Ultimate Parent Bank
Australian 90 day Bank
Bill Rate + 2.87% p.a.
22 March 2026
Redeemed on 22 September
2022
Interest payable
Quarterly interest payments on the convertible subordinated notes were subject to the Bank being solvent at the time of, and immediately following
the interest payment.
Early redemption
The Bank redeemed all of the convertible subordinated notes for their face value together with accrued interest on 22 September 2022.

Notes to the financial statements
Westpac New Zealand Limited 49
Note 22 Share capital4-18
Accounting policy
Share capital
Ordinary shares are recognised at the amount paid up per ordinary share, net of directly attributable issue costs.
Ordinary shares fully paid
THE BANKING GROUP
20222021
Number ofNumber of
Shares AuthorisedShares Authorised
and Issuedand Issued
Balance at beginning of the year 7,300,001,000 7,300,001,000
Share capital issued - -
Balance at end of the year 7,300,001,000 7,300,001,000
In accordance with the Reserve Bank document BPR110, ordinary share capital is classified as Common Equity Tier 1 capital.
The ordinary shares have no par value. Subject to the constitution of the Bank, each ordinary share of the Bank carries the right to one vote on a
poll at meetings of shareholders, the right to an equal share in dividends authorised by the Board and the right to an equal share in the
distribution of the surplus assets of the Bank in the event of liquidation.
On 21 February 2022 and 19 August 2022, the Bank declared and paid dividends of $465 million and $323 million to its immediate parent company,
Westpac New Zealand Group Limited, respectively.

Notes to the financial statements
50 Westpac New Zealand Limited
Note 23 Related entities
Related entities
The Banking Group’s related parties are those it controls or can exert significant influence over. Examples include subsidiaries, associates, joint
ventures and superannuation plans as well as key management personnel and their related parties.
Banking Group
The Bank is a controlled entity of Westpac New Zealand Group Limited. The ultimate parent bank of the Bank is Westpac Banking Corporation.
The Banking Group consists of the Bank and all its controlled entities. As at 30 September 2022, the Bank had the following controlled entities:
Name of entityPrincipal activityNotes
Westpac NZ Operations Limited ('WNZOL')Holding company
Aotearoa Financial Services LimitedNon-active company
Number 120 LimitedFinance company
Red Bird Ventures Limited
1
Corporate venture capital company
The Home Mortgage Company LimitedResidential mortgage company
Westpac New Zealand Staff Superannuation Scheme Trustee LimitedTrustee company
Westpac (NZ) Investments Limited ('WNZIL')Property company
Westpac Securities NZ Limited (‘WSNZL’)Funding company
Westpac NZ Covered Bond Holdings Limited (‘WNZCBHL’)Holding company9.5% owned
2
Westpac NZ Covered Bond Limited (‘WNZCBL’)Guarantor9.5% owned
2
Westpac NZ Securitisation Holdings Limited (‘WNZSHL’)Holding company9.5% owned
3
Westpac NZ Securitisation Limited (‘WNZSL’)Funding company9.5% owned
3
Westpac NZ Securitisation No.2 Limited (‘WNZSL2’)Non-active company9.5% owned
3
Westpac Cash PIE FundPortfolio investment entityNot owned
4
Westpac Notice Saver PIE FundPortfolio investment entityNot owned
4
Westpac Term PIE FundPortfolio investment entityNot owned
4
1
Red Bird Ventures Limited holds 29.6% diluted (31.87% undiluted) equity in Akahu Technologies Limited, an associate, which is not a controlled entity.
2
The Banking Group, through its subsidiary, WNZOL, has a qualifying interest of 9.5% in WNZCBHL and its wholly-owned subsidiary company, WNZCBL. The Bank is
considered to control both WNZCBHL and WNZCBL based on contractual arrangements in place, and as such both WNZCBHL and WNZCBL are consolidated within
the financial statements of the Banking Group.
3
The Banking Group, through its subsidiary WNZOL, has a qualifying interest of 9.5% in WNZSHL and its wholly-owned subsidiary companies, WNZSL and WNZSL2.
The Bank is considered to control WNZSHL, WNZSL and WNZSL2 based on contractual arrangements in place, and as such WNZSHL, WNZSL and WNZSL2 are
consolidated within the financial statements of the Banking Group.
4
Westpac Term PIE Fund, Westpac Cash PIE Fund and Westpac Notice Saver PIE Fund (collectively referred to as the ‘PIE Funds’) were established as unit trusts.
The PIE Funds are PIEs, where BT Funds Management (NZ) Limited (‘BTNZ’) (an indirectly wholly-owned subsidiary of the Ultimate Parent Bank) is the manager and
issuer. The manager has appointed the Bank to perform all customer management and account administration for the PIE Funds. The Bank is the PIE Funds’ registrar
and administration manager. The Bank does not hold any units in the PIE Funds, however is considered to control them, and as such the PIE Funds are consolidated
in the financial statements of the Banking Group.
Other than disclosed above, there have been no changes in the ownership percentages since 30 September 2021.
All entities in the Banking Group are 100% owned unless otherwise stated. All the entities within the Banking Group have a balance date of
30 September and are incorporated in New Zealand except the PIE Funds which have a balance date of 31 March.
On 28 February 2022, the sale of Westpac Life (renamed Fidelity Insurance Limited on 28 February 2022) to Fidelity Life was completed, at which
point Westpac Life ceased to be a subsidiary of the Ultimate Parent Bank and a related entity of the Banking Group.
Nature of transactions
The Banking Group has transactions with members of the Ultimate Parent Bank Group on commercial terms, including the provision of
management, distribution and administrative services.
Loan finance and current account banking facilities are provided by the Ultimate Parent Bank to members of the Banking Group on normal
commercial terms. The interest earned on these loans and the interest paid on deposits are at market rates.
The NZ Branch provides financial market services, foreign currency, trade and interest rate risk products to the Banking Group and its customers,
which includes derivative transactions (refer to Note 24).
Effective 1 October 2014, the Bank and the NZ Branch entered into an agreement whereby the Bank will reimburse the NZ Branch for any credit
losses incurred by it due to certain customers of the Bank defaulting on certain financial market and international products. The Banking Group
receives commission from the sale of these products to customers for providing this guarantee.
This is treated as a financial guarantee for accounting purposes. Financial guarantee contracts are recognised as financial liabilities (recorded
within provisions) when a payment under a contract has become probable. The liability is initially measured at fair value and subsequently at the

Notes to the financial statements
Westpac New Zealand Limited 51
Note 23 Related entities (continued)
higher of the amount of the loss allowance determined in accordance with NZ IFRS 9 and the amount initially recognised less, when appropriate,
the cumulative amount of income recognised.
The value of the exposures guaranteed at 30 September 2022 is $1,057 million (30 September 2021: $821 million
1
), for which a liability has been
recognised of $4.3 million (30 September 2021: $5.5 million).
Refer to Note 21 for details of the loan capital transactions undertaken by the Banking Group with related entities.
1
The comparative for 30 September 2021 has been restated to correctly reflect an additional $101 million in off-balance sheet credit exposures arising under the
financial guarantee with the NZ Branch.
Transactions with related entities
THE BANKING GROUP
$ millionsNote20222021
Ultimate Parent Bank
Interest income
1
2 4 -
Interest expense:
Loan capital2 122 96
Other
2
2 29 17
Non-interest income:
Commissions received 46 43
Management fees received 3 3
Operating expenses - management fees4 5 5
Immediate Parent Company
Dividends paid22 788 275
Other controlled entities of the Ultimate Parent Bank
Non-interest income:
Distribution fees received on managed fund products 15 16
Distribution fees received on life and general insurance products
3
5 31
Management fees received 3 6
Operational cost recharges 8 -
1
Includes interest income on reverse repurchase agreements and cash held with the NZ Branch.
2
Includes interest expense on other funding provided by and repurchase agreements with the NZ Branch.
3
On 28 February 2022, the sale of Westpac Life (renamed Fidelity Insurance Limited on 28 February 2022) to Fidelity Life was completed, at which point Westpac
Life ceased to be a controlled entity.
Due from and to related entities
THE BANKING GROUP
$ millions20222021
Due from related entities
Ultimate Parent Bank 2,602 1,821
Other controlled entities of the Ultimate Parent Bank 4 13
Total due from related entities 2,606 1,834
Due from related entities at fair value
1
2,155 899
Due from related entities at amortised cost 451 935
Total due from related entities 2,606 1,834
Due to related entities
Ultimate Parent Bank 2,895 1,754
Other controlled entities of the Ultimate Parent Bank 66 82
Total due to related entities 2,961 1,836
Due to related entities at fair value
2
2,200 1,080
Due to related entities at amortised cost 761 756
Total due to related entities 2,961 1,836
1
Consists of reverse repurchase agreements of $57 million (30 September 2021: $493 million) and derivative financial instruments of $2,098 million (30 September
2021: $406 million) (refer to Note 24).
2
Consists of repurchase agreements of $1,326 million (30 September 2021: $916 million) and derivative financial instruments of $874 million (30 September 2021:
$164 million) (refer to Note 24).

Notes to the financial statements
52 Westpac New Zealand Limited
Note 23 Related entities (continued)
Key management personnel compensation
Key management personnel are those who, directly or indirectly, have authority and responsibility for planning, directing and controlling the
activities of the Banking Group. This includes all Executive/Non-Executive Directors and members of the executive team.
THE BANKING GROUP
$'000s20222021
Salaries and other short-term benefits 9,105 8,287
Post-employment benefits 627 555
Termination benefits 684 1,087
Share-based payments
1
1,672 2,945
Total key management personnel compensation 12,088 12,874
Loans to key management personnel 3,805 10,370
Deposits from key management personnel 8,397 19,276
Interest income on amounts due from key management personnel 54 281
Interest expense on amounts due to key management personnel 56 56
1
Equity-settled remuneration is based on the amortisation over the performance and vesting period (normally two to four years). It is calculated using the fair value
at the grant date of hurdled and unhurdled share rights granted during the four years ending 30 September 2022.
The Directors have received remuneration from the Banking Group and these amounts are included in the table above.
Loans and deposits with key management personnel
All loans and deposits are made in the ordinary course of business of the Banking Group. Loans are on terms that range between variable, fixed
rate up to five years and interest only loans, all of which are in accordance with the Banking Group’s lending policies.
As at 30 September 2022, no amounts have been written off and no individual provision has been recognised in respect of loans given to key
management personnel and their related parties (30 September 2021: nil). These loans have been included within the loan portfolio when
determining collectively assessed provisions.
Other key management personnel transactions
All other transactions with key management personnel, their related entities and other related parties are conducted in the ordinary course of
business. These transactions principally involve the provision of financial, investment and insurance services.

Notes to the financial statements
Westpac New Zealand Limited 53
Note 24 Derivative financial instruments
Accounting policy
Derivative financial instruments are instruments whose values are derived from the value of an underlying asset, reference rate or index and
include forwards, futures, swaps and options. Derivatives with related parties are included in due from/due to related entities.
The Banking Group uses derivative financial instruments for our ALM activities.
Trading derivatives
Derivatives which are used in our ALM activities but are not designated into a hedge accounting relationship are considered economic hedges.
These derivatives are measured at FVIS and are disclosed as trading derivatives.
Hedging derivatives
Hedging derivatives are those which are used in our ALM activities and have also been designated into one of two hedge accounting relationships:
fair value hedge; or cash flow hedge. These derivatives are measured at fair value. These hedge designations and the associated accounting
treatment are detailed below.
For more details regarding the Banking Group’s ALM activities, refer to Note 32.
Fair value hedges
Fair value hedges are used to hedge the exposure to changes in the fair value of an asset or liability.
Changes in the fair value of derivatives and the hedged asset or liability in fair value hedges are recognised in non-interest income. The carrying
value of the hedged asset or liability is adjusted for the changes in fair value related to the hedged risk.
If a hedge is discontinued, any fair value adjustments to the carrying value of the asset or liability are amortised to net interest income over the
period to maturity. If the asset or liability is sold, any unamortised adjustment is immediately recognised in net interest income.
Cash flow hedges
Cash flow hedges are used to hedge the exposure to variability of cash flows attributable to an asset, liability or future forecast transaction.
For effective hedges, changes in the fair value of derivatives are recognised in the cash flow hedge reserve through OCI and subsequently
recognised in net interest income when the cash flows attributable to the asset or liability that was hedged impact the income statement.
For hedges with some ineffectiveness, the changes in the fair value of the derivatives relating to the ineffective portion are immediately recognised
in non-interest income.
If a hedge is discontinued, any cumulative gain or loss remains in OCI. It is amortised to net interest income over the period which the asset or
liability that was hedged also impacts the income statement.
If a hedge of a forecast transaction is no longer expected to occur, any cumulative gain or loss in OCI is immediately recognised in net interest
income.

Notes to the financial statements
54 Westpac New Zealand Limited
Note 24 Derivative financial instruments (continued)
The carrying values of derivative instruments are set out in the tables below:
THE BANKING GROUP
2022
TradingHedging
Total derivatives carrying
value
$ millions
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Interest rate contracts
Swap agreements
35-1,185(315)1,220(315)
Total interest rate contracts
35-1,185(315)1,220(315)
FX contracts
Cross currency swap agreements (principal and
interest)
64823399(700)1,047(677)
Total FX contracts
64823399(700)1,047(677)
Total of gross derivatives
683231,584(1,015)2,267(992)
Total of net derivatives
683231,584(1,015)2,267(992)
Consisting of:
Derivatives held with external counterparties
--169(118)169(118)
Derivatives held with related parties
683231,415(897)2,098(874)
THE BANKING GROUP
2021
TradingHedging
Total derivatives carrying
value
$ millions
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Interest rate contracts
Swap agreements
10(5)271(167)281(172)
Total interest rate contracts
10(5)271(167)281(172)
FX contracts
Cross currency swap agreements (principal and
interest)
1068240(178)346(170)
Total FX contracts
1068240(178)346(170)
Total of gross derivatives
1163511(345)627(342)
Total of net derivatives
1163511(345)627(342)
Consisting of:
Derivatives held with external counterparties
--221(178)221(178)
Derivatives held with related parties
1163290(167)406(164)

Notes to the financial statements
Westpac New Zealand Limited 55
Note 24 Derivative financial instruments (continued)
Hedge accounting
The Banking Group designates derivatives into hedge accounting relationships in order to manage the volatility in earnings and capital that would
otherwise arise from interest rate and FX risks that may result from differences in the accounting treatment of derivatives and underlying
exposures. These hedge accounting relationships and the risks they are used to hedge are described below.
The Banking Group enters into one-to-one hedge relationships to manage specific exposures where the terms of the hedged item significantly
match the terms of the hedging instrument. The Banking Group also uses dynamic hedge accounting where the hedged items are part of a
portfolio of assets and/or liabilities that frequently change. In this hedging strategy, the exposure being hedged and the hedging instruments may
change frequently rather than there being a one-to-one hedge accounting relationship for a specific exposure.
Fair value hedges
Interest rate risk
The Banking Group hedges its interest rate risk to reduce exposure to changes in fair value due to interest rate fluctuations over the hedging
period. Interest rate risk arising from fixed rate debt issuances and fixed rate bonds classified as investment securities at FVOCI is hedged with
single currency fixed to floating interest rate derivatives. The Banking Group also hedges its benchmark interest rate risk from fixed rate foreign
currency denominated debt issuances using cross currency swaps. In applying fair value hedge accounting the Banking Group primarily uses one-
to-one hedge accounting to manage specific exposures.
The Banking Group also uses a dynamic hedge accounting strategy for fair value portfolio hedge accounting of some fixed rate mortgages to
reduce exposure to changes in fair value due to interest rate fluctuations over the hedging period. These fixed rate mortgages are allocated to
time buckets based on their expected repricing dates and the fixed-to-floating interest rate derivatives are designated according to the capacity
in the relevant time buckets.
The Banking Group hedges the benchmark interest rate which generally represents the most significant component of the changes in fair value.
The benchmark interest rate is a component of interest rate risk that is observable in the relevant financial markets, for example, LIBOR/SOFR for
USD interest rates and BKBM for NZD interest rates. Ineffectiveness may arise from timing or discounting differences on repricing between the
hedged item and the derivative. For portfolio hedge accounting, ineffectiveness also arises from prepayment risk (i.e. the difference between
actual and expected prepayment of loans). In order to manage the ineffectiveness from early repayments and accommodate new originations the
portfolio hedges are de-designated and redesignated periodically.
Cash flow hedges
Interest rate risk
The Banking Group’s exposure to the volatility of interest cash flows from customer deposits and loans is hedged with interest rate derivatives
using a dynamic hedge accounting strategy called macro cash flow hedges. Customer deposits and loans are allocated to time buckets based on
their expected repricing dates. The interest rate derivatives are designated according to the gross asset or gross liability positions for the relevant
time buckets. The Banking Group hedges the benchmark interest rate which generally represents the most significant component of the changes
in fair value. The benchmark interest rate is a component of interest rate risk that is observable in the relevant financial markets, for example,
Bank Bill Swap Rate for AUD interest rates, LIBOR/SOFR for USD interest rates and BKBM for NZD interest rates. Ineffectiveness may arise from
timing or discounting differences on repricing between the hedged item and the interest rate derivative. Ineffectiveness also arises if the notional
values of the interest rate derivatives exceed the aggregate notional exposure for the relevant time buckets. The hedge accounting relationship is
reviewed on a monthly basis and the hedging relationships are de-designated and redesignated if necessary.
FX risk
The Banking Group’s exposure to foreign currency principal and credit margin cash flows from fixed rate foreign currency debt issuances is
hedged through the use of cross currency derivatives in a one-to-one hedging relationship to manage the changes between the foreign currency
and NZD. In addition, for floating rate foreign currency debt issuances, the Banking Group hedges from foreign floating to NZD floating interest
rates. Ineffectiveness may arise from timing or discounting differences on repricing between the hedged item and the cross currency derivative.
Economic hedges
As part of the Banking Group’s ALM activities, economic hedges may be entered into to hedge long-term funding transactions.

Notes to the financial statements
56 Westpac New Zealand Limited
Note 24 Derivative financial instruments (continued)
Interest Rate Benchmark Reform
The Banking Group’s hedging relationships include hedged items and hedging instruments that are impacted by IBOR reform. Refer to Note 32.4
for further details of the Banking Group’s exposure to IBOR reform.
Hedging instruments
The following tables show the carrying value of hedging instruments and a maturity analysis of the notional amounts of the hedging instruments in
one-to-one hedge relationships categorised by the types of hedge relationships and the hedged risk.
THE BANKING GROUP
2022
Notional amounts Carrying value
$ millions
Hedging
instrument Hedged risk
Within 1
year
Over 1 year
to 5 years
Over 5
years TotalAssetsLiabilities
One-to-one hedge relationships
Fair value hedges Interest rate swap
Interest rate risk
3471,004-1,35139(3)
Cross currency swap Interest rate risk 2699,8901,91112,070(17)(708)
Cash flow hedges Cross currency swap FX risk3042,4563433,1034168
Total one-to-one hedge relationships92013,3502,25416,524438(703)
Macro hedge relationships
Portfolio fair value hedges Interest rate swap Interest rate risk N/AN/AN/A23,800264(14)
Macro cash flow hedges Interest rate swap Interest rate risk N/AN/AN/A20,230882(298)
Total macro hedge relationships N/AN/AN/A44,0301,146(312)
Total of gross hedging derivatives N/AN/AN/A60,5541,584(1,015)
Impact of netting arrangements N/AN/AN/AN/A--
Total of net hedging derivatives N/AN/AN/AN/A1,584(1,015)
THE BANKING GROUP
2021
Notional amounts Carrying value
$ millionsHedging instrument Hedged risk
Within 1
year
Over 1 year
to 5 years
Over 5
years TotalAssetsLiabilities
One-to-one hedge relationships
Fair value hedges Interest rate swap
Interest rate risk
4101,351-1,7612(55)
Cross currency swap Interest rate risk 1,6863,7383,0358,45971(33)
Cash flow hedges Cross currency swap FX risk4,0192,5913376,947169(145)
Total one-to-one hedge relationships6,1157,6803,37217,167242(233)
Macro hedge relationships
Portfolio fair value hedges Interest rate swap Interest rate risk N/AN/AN/A20,92543(19)
Macro cash flow hedges Interest rate swap Interest rate risk N/AN/AN/A15,493226(93)
Total macro hedge relationships N/AN/AN/A36,418269(112)
Total of gross hedging derivatives N/AN/AN/A53,585511(345)
Impact of netting arrangements N/AN/AN/AN/A--
Total of net hedging derivatives N/AN/AN/AN/A511(345)

Notes to the financial statements
Westpac New Zealand Limited 57
Note 24 Derivative financial instruments (continued)
The following table shows the weighted average exchange rate related to significant hedging instruments in one-to-one hedge relationships:
THE BANKING GROUP
Currency /Weighted average rate
$ millionsHedging instrumentHedged risk Currency pair20222021
Cash flow hedges Cross currency swapFX riskCHF:NZD
0.67300.6730
EUR:NZD
0.59650.6086
NZD:AUD
-1.0665
HKD:NZD
5.11144.9670
USD:NZD
0.69470.7046
Impact of hedge accounting on the balance sheet and reserves
The following tables show the carrying amount of hedged items in a fair value hedge relationship and the component of the carrying amount related to
accumulated FVHA adjustments.
THE BANKING GROUP
20222021
$ millions
Carrying amount of
hedged item
Accumulated FVHA
adjustment included
in carrying amount
Carrying amount of
hedged item
Accumulated FVHA
adjustment included in
carrying amount
Interest rate risk
Investment securities
1,325(57)1,72817
Loans
23,456(343)20,872(52)
Debt issues
(10,973)1,052(8,531)(54)
There were no accumulated FVHA adjustment losses (30 September 2021: $3.75 million) included in the above carrying amounts relating to
hedged items that have ceased to be adjusted for hedging gains and losses.
The pre-tax impact of cash flow hedges on reserves is detailed below:
THE BANKING GROUP
20222021
$ millions
Interest rate
riskFX risk Total
Interest rate
riskFX risk Total
Cash flow hedge reserve
Balance at beginning of the year
146(83)63(24)(89)(113)
Net gains/(losses) from changes in fair value
45640496147(40)107
Transferred to net interest income
12728234669
Balance at end of year
603(16)587146(83)63
There were no balances remaining in the cash flow hedge reserve (30 September 2021: nil) relating to hedge relationships for which hedge
accounting is no longer applied.

Notes to the financial statements
58 Westpac New Zealand Limited
Note 24 Derivative financial instruments (continued)
Hedge effectiveness
Hedge effectiveness is tested prospectively at inception and during the lifetime of hedge relationships. For one-to-one hedge relationships this testing uses a
qualitative assessment of matched terms where the critical terms of the derivatives used as the hedging instrument match the terms of the hedged item. In
addition, a quantitative effectiveness test is performed for all hedges which could include regression analysis, dollar offset and/or sensitivity analysis.
Retrospective testing is also performed to determine whether the hedge relationship remains highly effective so that hedge accounting can continue to be
applied and also to determine any ineffectiveness. These tests are performed using regression analysis and the dollar offset method.
The following tables provide information regarding the determination of hedge effectiveness:
THE BANKING GROUP
2022
$ millions
Hedging
instrument Hedged risk
Change in fair value of
hedging instrument
used for calculating
ineffectiveness
Change in value of
the hedged item
used for calculating
ineffectiveness
Hedge
ineffectiveness
recognised in non-
interest income
Fair value hedges
Interest rate swap Interest rate risk 355(363)(8)
Cross currency swap Interest rate risk (1,103)1,1041
Cash flow hedges
Interest rate swap Interest rate risk 470(458)12
Cross currency swap FX risk66(66)-
Total
(212)2175
THE BANKING GROUP
2021
$ millionsHedging instrument Hedged risk
Change in fair value of
hedging instrument used
for calculating
ineffectiveness
Change in value of the
hedged item used for
calculating
ineffectiveness
Hedge
ineffectiveness
recognised in non-
interest income
Fair value hedges
Interest rate swap Interest rate risk 272(274)(2)
Cross currency swap Interest rate risk (71)70(1)
Cash flow hedges
Interest rate swap Interest rate risk 169(170)(1)
Cross currency swap FX risk7(7)-
Total
377(381)(4)

Notes to the financial statements
Westpac New Zealand Limited 59
Note 25 Fair values of financial assets and financial liabilities
Accounting policy
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
On initial recognition, the transaction price generally represents the fair value of the financial instrument unless there is observable information
from an active market to the contrary. Where unobservable information is used, the difference between the transaction price and the fair value
(day one profit or loss) is recognised in the income statement over the life of the instrument when the inputs become observable.
Critical accounting assumptions and estimates
The majority of valuation models used by the Banking Group employ only observable market data as inputs. However, for certain financial
instruments, data may be employed which is not readily observable in current markets.
The availability of observable inputs is influenced by factors such as:
product type;
depth of market activity;
maturity of market models; and
complexity of the transaction.
Where unobservable market data is used, more judgement is required to determine fair value. The significance of these judgements depends on
the significance of the unobservable input to the overall valuation. Unobservable inputs are generally derived from other relevant market data and
adjusted against:
standard industry practice;
economic models; and
observed transaction prices.
In order to determine a reliable fair value for a financial instrument, management may apply adjustments to the techniques previously described.
These adjustments reflect the Banking Group’s assessment of factors that market participants would consider in setting the fair value.
These adjustments incorporate bid/offer spreads, Credit Valuation Adjustment and Funding Valuation Adjustment.
Fair Valuation Control Framework
The Banking Group uses a Fair Valuation Control Framework where the fair value is either determined or validated by a function independent of the
transaction. This framework formalises the policies and procedures used to achieve compliance with relevant accounting, industry and regulatory
standards. The framework includes specific controls relating to:
the revaluation of financial instruments;
independent price verification;
fair value adjustments; and
financial reporting.
A key element of the framework is the Revaluation Committee, comprising senior valuation specialists from within the Ultimate Parent Bank Group.
The Revaluation Committee reviews the application of the agreed policies and procedures to assess that a fair value measurement basis has been
applied.
The method of determining fair value differs depending on the information available.
Fair value hierarchy
A financial instrument’s categorisation within the valuation hierarchy is based on the lowest level input that is significant to the fair value
measurement.
The Banking Group categorises all fair value instruments according to the hierarchy described below.
Valuation techniques
The Banking Group applies market accepted valuation techniques in determining the fair valuation of over-the-counter derivatives. This includes
credit valuation adjustment and funding valuation adjustment, which incorporate credit risk and funding costs and benefits that arise in relation to
uncollateralised derivative positions, respectively.
The specific valuation techniques, the observability of the inputs used in valuation models and the subsequent classification for each significant
product category are outlined as follows:

Notes to the financial statements
60 Westpac New Zealand Limited
Note 25 Fair values of financial assets and financial liabilities (continued)
Financial instruments measured at fair value
Level 1 instruments
The fair value of financial instruments traded in active markets is based on recent unadjusted quoted prices. These prices are based on actual arm’s
length basis transactions.
The valuations of Level 1 instruments require little or no management judgement.
InstrumentBalance sheet categoryIncludes:Valuation
Debt instrumentsTrading securities and
financial assets
measured at FVIS
Investment securities
New Zealand
Government bonds
These instruments are traded in liquid, active markets where
prices are readily observable. No modelling or assumptions
are used in the valuation.
Level 2 instruments
The fair value for financial instruments that are not actively traded is determined using valuation techniques which maximise the use of observable
market prices. Valuation techniques include:
the use of market standard discounting methodologies;
option pricing models; and
other valuation techniques widely used and accepted by market participants.
InstrumentBalance sheet categoryIncludes:Valuation
Interest rate
products
Derivative financial instruments
Due from related entities
Due to related entities
Interest rate swaps,
forwards and options
– derivative financial
instruments
Industry standard valuation models are used to calculate the
expected future value of payments by product, which is
discounted back to a present value. The model’s interest rate
inputs are benchmark interest rates and active broker quoted
interest rates in the swap, bond and futures markets. Interest
rate volatilities are sourced from brokers and consensus data
providers. If consensus prices are not available, these are
classified as Level 3 instruments.
FX products
Derivative financial instruments
Due from related entities
Due to related entities
FX swaps – derivative
financial instruments
Derived from market observable inputs or consensus pricing
providers using industry standard models. If consensus
prices are not available, these are classified as Level 3
instruments.
Non-asset backed
debt instruments
Trading securities and financial
assets measured at FVIS
Investment securities
Due from related entities
Due to related entities
Other financial liabilities
Local authority and
NZ public securities,
other bank issued
certificates of deposit,
commercial paper, other
government securities,
off-shore securities and
corporate bonds
Repurchase
agreements and reverse
repurchase agreements
over non-asset backed
debt securities
Valued using observable market prices which are sourced from
independent pricing services, broker quotes or inter-dealer
prices. If consensus prices are not available, these are classified
as Level 3 instruments.
Deposits and
other borrowings
at fair value
Deposits and other borrowingsCertificates of deposit
Discounted cash flow using market rates offered for
deposits of similar remaining maturities.
Debt issues at fair
value
Debt issuesCommercial paper
Discounted cash flows, using a discount rate which reflects
the terms of the instrument and the timing of cash flows
adjusted for market observable changes in the Bank’s implied
credit worthiness.

Notes to the financial statements
Westpac New Zealand Limited 61
Note 25 Fair values of financial assets and financial liabilities (continued)
Level 3 instruments
Financial instruments valued where at least one input that could have a significant effect on the instrument’s valuation is not based on observable
market data due to illiquidity or complexity of the product. These inputs are generally derived and extrapolated from other relevant market data and
calibrated against current market trends and historical transactions.
These valuations are calculated using a high degree of management judgement.
As at 30 September 2022, the Banking Group has no financial instruments valued under this category (30 September 2021: nil).
The following table summarises the attribution of financial instruments measured at fair value to the fair value hierarchy:
THE BANKING GROUP
20222021
$ millionsLevel 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Financial assets measured at fair value on a
recurring basis
Trading securities and financial assets measured at FVIS862,032-2,118 636 1,644 - 2,280
Derivative financial instruments-169-169 - 221 - 221
Investment securities1,9823,641-5,623 2,152 2,528 - 4,680
Due from related entities-2,155-2,155 - 899 - 899
Total financial assets measured at fair value2,0687,997-10,065 2,788 5,292 - 8,080
Financial liabilities measured at fair value on a
recurring basis
Deposits and other borrowings at fair value
1
-2,939-2,939 - 3,450 - 3,450
Other financial liabilities
1
---- - 580 - 580
Derivative financial instruments-118-118 - 178 - 178
Due to related entities-2,200-2,200 - 1,080 - 1,080
Debt issues at fair value
1
-5,490-5,490 - 2,979 - 2,979
Total financial liabilities measured at fair value-10,747-10,747 - 8,267 - 8,267
1
There are no differences between the fair values disclosed and the contractual outstanding amount payable at maturity for these financial liabilities measured at
fair value on a recurring basis.
Analysis of movements between fair value hierarchy levels
During the year, there were no material transfers between levels of the fair value hierarchy (30 September 2021: no material transfers between
levels).
Financial instruments not measured at fair value
For financial instruments not measured at fair value on a recurring basis, fair value has been derived as follows:
InstrumentValuation
Loans
Where available, the fair value of loans is based on observable market transactions; otherwise fair value is
estimated using discounted cash flow models. For variable rate loans, the discount rate used is the current
effective interest rate. The discount rate applied for fixed rate loans reflects the market rate for the maturity of the
loan and the credit worthiness of the borrower.
Deposits and other
borrowings
Fair values of deposit liabilities payable on demand (interest free, interest bearing and savings deposits)
approximate their carrying value. Fair values for term deposits are estimated using discounted cash flows, applying
market rates offered for deposits of similar remaining maturities.
Due to related entities
The fair value of the loan due to related entities is estimated using a discounted cash flow model. The discount rate
applied reflects the terms of the loan and the timing of the estimated cash flows. The carrying value of all other
balances due to related entities approximates the fair value. These items are either short-term in nature or re-price
frequently, and are of a high credit rating.
Debt issues and
loan capital
The fair values of these instruments are calculated based on quoted market prices, where available. Where quoted
market prices are not available, fair values are calculated using a discounted cashflow model. The discount rates
applied reflect the terms of the instruments and the timing of the estimated cash flows and are adjusted for any
changes in the Banking Group’s credit spreads.
All other financial assets
and financial liabilities
For all other financial assets and financial liabilities, the carrying value approximates the fair value. These items are
either short-term in nature or re-price frequently, and are of a high credit rating.

Notes to the financial statements
62 Westpac New Zealand Limited
Note 25 Fair values of financial assets and financial liabilities (continued)
The following table summarises the estimated fair value and fair value hierarchy of the Banking Group’s financial instruments not measured at fair value:
THE BANKING GROUP
2022
Fair Value
$ millions
Carrying
Amount
Level 1Level 2Level 3Total
Financial assets not measured at fair value
Cash and balances with central banks 10,820 10,820 - - 10,820
Collateral paid 42 42 - - 42
Loans 96,882 - - 95,528 95,528
Other financial assets 263 - - 263 263
Due from related entities
451 - 446 5
451
Total financial assets not measured at fair value 108,458 10,862 446 95,796 107,104
Financial liabilities not measured at fair value
Collateral received 82 82 - - 82
Deposits and other borrowings 77,909 - 75,487 2,408 77,895
Other financial liabilities 4,348 - 4,348 - 4,348
Due to related entities 761 - 761 -
761
Debt issues
1
14,443 - 14,242 - 14,242
Loan capital
1
2,083 - 599 1,625
2,224
Total financial liabilities not measured at fair value 99,626 82 95,437 4,033 99,552
THE BANKING GROUP
2021
Fair Value
$ millions
Carrying
Amount
Level 1Level 2Level 3Total
Financial assets not measured at fair value
Cash and balances with central banks 8,472 8,472 - - 8,472
Collateral paid 185 185 - - 185
Loans 92,632 - - 92,485 92,485
Other financial assets 712 - 541 171 712
Due from related entities 935 - 922 13 935
Total financial assets not measured at fair value 102,936 8,657 1,463 92,669 102,789
Financial liabilities not measured at fair value
Collateral received 188 188 - - 188
Deposits and other borrowings 75,917 - 74,307 1,641 75,948
Other financial liabilities 2,320 - 2,320 - 2,320
Due to related entities 756 - 756 - 756
Debt issues
1
13,325 - 13,423 - 13,423
Loan capital
1
2,579 - - 2,744
2,744
Total financial liabilities not measured at fair value 95,085 188 90,806 4,385 95,379
1
The estimated fair value of debt issues and level 3 loan capital include the impact of changes in the Banking Group's credit spreads since origination.

Notes to the financial statements
Westpac New Zealand Limited 63
Note 26 Offsetting financial assets and financial liabilities
Accounting policy
Financial assets and financial liabilities are presented net on the balance sheet when the Banking Group has a legally enforceable right to offset
them in all circumstances and there is an intention to settle the asset and liability on a net basis, or to realise the asset and settle the liability
simultaneously. The gross assets and liabilities behind the net amounts reported on the balance sheet are disclosed in the following table.
Some of the Banking Group’s offsetting arrangements are not enforceable in all circumstances. The amounts in the tables below may not tie back
to the balance sheet if there are balances which are not subject to offsetting or enforceable netting arrangements. The amounts presented in this
note do not represent the credit risk exposure of the Banking Group. Refer to Note 13 for information on credit risk management. The offsetting
and collateral arrangements and other credit risk mitigation strategies used by the Banking Group are further explained in the ‘Management of risk
mitigation’ section under Note 13.5.
THE BANKING GROUP
2022
Amounts Subject to Enforceable Netting Arrangements
Amounts Offset on the Balance Sheet Amounts Not Offset on the Balance Sheet
$ millions
Gross
Amounts
Amounts
Offset
Net Amounts
Reported on
the Balance
Sheet
Other
Recognised
Financial
Instruments
Cash
Collateral
Financial
Instrument
CollateralNet Amount
Assets
Derivative financial instruments
169 - 169 - (77) - 92
Due from related entities - reverse
repurchase agreements
1
57 - 57 - - (57) -
Due from related entities - derivative
financial instruments
1
2,098 - 2,098 (874) - - 1,224
Total assets 2,324 - 2,324 (874) (77) (57) 1,316
Liabilities
Repurchase agreements
2
3,967 - 3,967 - - (3,967)
-
Derivative financial instruments
118 - 118 - (33) - 85
Due to related entities - repurchase
agreements
3
1,326 - 1,326 - - (1,326) -
Due to related entities - derivative
financial instruments
3
874 - 874 (874) - - -
Total liabilities 6,285 - 6,285 (874) (33) (5,293) 85
1
Forms part of due from related entities on the balance sheet (refer to Note 23).
2
Forms part of other financial liabilities on the balance sheet (refer to Note 18).
3
Forms part of due to related entities on the balance sheet (refer to Note 23).

Notes to the financial statements
64 Westpac New Zealand Limited
Note 26 Offsetting financial assets and financial liabilities (continued)
THE BANKING GROUP
2021
Amounts Subject to Enforceable Netting Arrangements
Amounts Offset on the Balance SheetAmounts Not Offset on the Balance Sheet
$ millions
Gross
Amounts
Amounts
Offset
Net Amounts
Reported on
the Balance
Sheet
Other
Recognised
Financial
Instruments
Cash
Collateral
Financial
Instrument
CollateralNet Amount
Assets
Reverse repurchase agreements
1
181 - 181 - - (181) -
Derivative financial instruments
221 - 221 - (186) - 35
Due from related entities - reverse
repurchase agreements
2
493 - 493 - - (490) 3
Due from related entities - derivative
financial instruments
2
406 - 406 (164) - - 242
Total assets 1,301 - 1,301 (164) (186) (671) 280
Liabilities
Repurchase agreements
3
2,676 - 2,676 - - (2,676) -
Derivative financial instruments 178 - 178 - (142) - 36
Due to related entities - repurchase
agreements
4
916 - 916 - - (916) -
Due to related entities - derivative
financial instruments
4
164 - 164 (164) - - -
Total liabilities 3,934 - 3,934 (164) (142) (3,592) 36
1
Forms part of trading securities and financial assets measured at FVIS (refer to Note 9).
2
Forms part of due from related entities on the balance sheet (refer to Note 23).
3
Forms part of other financial liabilities on the balance sheet (refer to Note 18).
4
Forms part of due to related entities on the balance sheet (refer to Note 23).
Other recognised financial instruments
These financial assets and financial liabilities are subject to master netting agreements which are not enforceable in all circumstances, so they are
recognised gross on the balance sheet. The offsetting rights of the master netting arrangements can only be enforced if a predetermined event
occurs in the future, such as a counterparty defaulting.
Cash collateral and financial instrument collateral
These amounts are received or pledged under master netting arrangements against the gross amounts of assets and liabilities. Financial
instrument collateral typically comprises securities which can be readily liquidated in the event of counterparty default. The offsetting rights of the
master netting arrangement can only be enforced if a predetermined event occurs in the future, such as a counterparty defaulting.
Note 27 Credit related commitments, contingent assets and contingent liabilities
Accounting policy
Undrawn credit commitments
The Banking Group enters into various arrangements with customers which are only recognised on the balance sheet when called upon.
These arrangements include commitments to extend credit, bill endorsements, financial guarantees, standby letters of credit and underwriting
facilities.
Contingent assets
Contingent assets are possible assets whose existence will be confirmed only by uncertain future events. Contingent assets are not recognised on
the balance sheet but are disclosed if an inflow of economic benefits is probable.
Contingent liabilities
Contingent liabilities are possible obligations whose existence will be confirmed only by uncertain future events, and present obligations where
the transfer of economic resources is not probable or cannot be reliably measured. Contingent liabilities are not recognised on the balance sheet
but are disclosed unless the outflow of economic resources is remote.

Notes to the financial statements
Westpac New Zealand Limited 65
Note 27 Credit related commitments, contingent assets and contingent liabilities (continued)
Undrawn credit commitments
Undrawn credit commitments expose the Banking Group to liquidity risk when called upon and also to credit risk if the customer fails to repay the
amounts owed at the due date. The maximum exposure to credit loss is the contractual or notional amount of the instruments disclosed below.
Some of the arrangements can be cancelled by the Banking Group at any time. The actual liquidity and credit risk exposure varies in line with
drawings and may be less than the amounts disclosed. The Banking Group uses the same credit policies when entering into these arrangements
as it does for on-balance sheet instruments. Refer to Note 13 and Note 32 for further details on liquidity risk and credit risk management.
THE BANKING GROUP
$ millions
20222021
Letters of credit and guarantees
1,2
1,609 1,338
Commitments to extend credit
3
27,901 28,136
Total undrawn credit commitments 29,510 29,474
1
Standby letters of credit and guarantees are undertakings to pay, against presentation documents, an obligation in the event of a default by a customer.
Guarantees are unconditional undertakings given to support the obligations of a customer to third parties. The Banking Group may hold cash as collateral for
certain guarantees issued.
2
Letters of credit and guarantees includes the value of exposures guaranteed by the Bank to NZ Branch, as disclosed in Note 23 Related entities. Comparatives
have been restated to correctly reflect an additional $503 million in off-balance sheet credit exposures arising under the financial guarantee with the NZ Branch.
3
Commitments to extend credit include all obligations on the part of the Banking Group to provide credit facilities. As facilities may expire without being drawn
upon, the notional amounts do not necessarily reflect future cash requirements.
Contingent assets
The credit commitments shown in the table above also constitute contingent assets. These commitments would be classified as loans on the balance
sheet on the contingent event occurring.
Contingent liabilities
The Banking Group is reviewing its processes for some products relating to the requirements of the CCCFA. The outcome of this complex review is
uncertain and could result in customer remediation, regulatory action, litigation and reputational damage.
All potential claims and other liabilities are assessed on a case-by-case basis. A provision will be recognised where the Banking Group has
conducted an assessment which determines the likelihood of loss as probable and where its potential loss can be reliably estimated. A contingent
liability exists in respect of actual or potential claims where the likely loss is not assessed as probable, where the law is uncertain or, in rare
circumstances, where the outflow of resources cannot be reliably estimated.
Guarantees
As disclosed in Note 23, the Bank has an agreement with the NZ Branch whereby the Bank will reimburse the NZ Branch for any credit losses
incurred by it due to certain customers of the Bank defaulting on certain financial market and international products.

Notes to the financial statements
66 Westpac New Zealand Limited
Note 28 Segment reporting
Accounting policy
Operating segments are presented on a basis that is consistent with information provided internally to the Banking Group’s chief operating
decision-maker and reflect the management of the business, rather than the legal structure of the Banking Group. The chief operating decision-
maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Banking Group
has determined that the Bank’s executive team is its chief operating decision-maker.
Inter-segment revenue and costs are eliminated at head office. Income and expenses directly associated with each segment are included in
determining business segment performance.
The Banking Group’s segment reporting incorporates Consumer Banking and Wealth, Institutional and Business Banking, and Investments and
Insurance sectors within New Zealand. On this basis, no geographical segment reporting is provided.
The operating segment results have been presented on a management reporting basis and consequently internal charges and transfer pricing
adjustments have been reflected in the performance of each operating segment. Intersegment pricing is determined on a cost recovery basis.
The Banking Group does not rely on any single major customer for its revenue base.
On 28 February 2022, the sale of Westpac Life to Fidelity Life was completed. As such, from 1 March 2022, the Investments and Insurance segment
no longer provides insurance services.
Operating segments are defined by the customers they serve and the services they provide. The Banking Group has identified the following main
operating segments:
Consumer Banking and Wealth provides financial services predominantly for individuals;
Institutional and Business Banking provides a broad range of financial services for commercial, corporate, property finance, agricultural,
institutional and government customers; and
Investments and Insurance provided funds management and insurance services until 28 February 2022. From 1 March 2022, it only provides funds
management services.
Reconciling items primarily represent:
business units that do not meet the definition of operating segments under NZ IFRS 8 Operating Segments;
elimination entries on consolidation of the results, assets and liabilities of the Banking Group’s controlled entities in the preparation of the
consolidated financial statements of the Banking Group;
results of certain entities included for management reporting purposes including insurance and investments, but excluded from the consolidated
financial statements of the Banking Group for statutory financial reporting purposes; and
results of certain business units excluded for management reporting purposes, but included within the consolidated financial statements of the
Banking Group for statutory financial reporting purposes.

Notes to the financial statements
Westpac New Zealand Limited 67
Note 28 Segment reporting (continued)
THE BANKING GROUP
ConsumerInstitutionalInvestments
Banking andand BusinessandReconciling
$ millionsWealthBankingInsuranceItemsTotal
Year ended 30 September 2022
Net interest income1,1381,106245
2,291
Non-interest income
14310956(40)268
Net operating income before operating expenses and
impairment charges
1,2811,2155852,559
Operating expenses(648)(433)(43)(7)
(1,131)
Impairment (charges)/benefits
324--27
Profit before income tax63680615(2)1,455
Year ended 30 September 2021
Net interest income1,1179591(11)
2,066
Non-interest income
133105107(105)240
Net operating income before operating expenses and
impairment charges
1,2501,064108(116)2,306
Operating expenses(677)(386)(44)8(1,099)
Impairment (charges)/benefits
786--84
Profit before income tax65168464(108)1,291
As at 30 September 2022
Total gross loans57,96839,684-(374)97,278
Total deposits and other borrowings
43,57434,335-2,93980,848
As at 30 September 2021
Total gross loans54,37438,809-(80)93,103
Total deposits and other borrowings40,37135,546-3,45079,367
Note 29 Securitisation, covered bonds and other transferred assets
The Banking Group enters into transactions in the normal course of business by which financial assets are transferred to counterparties or structured
entities. Depending on the circumstances, these transfers may result in derecognition of the assets in their entirety, partial derecognition or no
derecognition of the assets subject to the transfer. For the Banking Group’s accounting policy on derecognition of financial assets, refer to Note 1.
Securitisation
Securitisation is the transferring of assets (or an interest in either the assets or the cash flows arising from the assets) to a structured entity which then
issues interest bearing debt securities to third party investors for funding deals and to the Banking Group for liquidity deals.
Securitisation of its own assets is used by the Banking Group as a funding and liquidity tool.
For securitisation structured entities which the Banking Group controls, as defined in Note 30, the structured entities are classified as subsidiaries and
consolidated. When assessing whether the Banking Group controls a structured entity, it considers its exposure to and ability to affect variable
returns. The Banking Group may have variable returns from a structured entity through ongoing exposures to the risks and rewards associated with
the assets, the provision of derivatives, liquidity facilities, trust management and operational services.
In October 2008, WNZSL was set up as part of the Bank’s internal residential mortgage-backed securitisation programme. Under this programme the
Bank sold the rights (but not the obligations) of a pool of housing loans to WNZSL. The purchase was funded by WNZSL’s issuance of RMBS. The RMBS
and an equivalent liability in the form of a deemed loan from the Bank to WNZSL are fully eliminated in the Banking Group’s financial statements.
The Bank is obliged to repurchase any loan sold to and held by WNZSL (pursuant to its securitisation programme) where the loan does not meet
certain terms and conditions of the WNZSL securitisation programme. It is not envisaged that any liability resulting in material loss to the Banking
Group will arise from these obligations.

Notes to the financial statements
68 Westpac New Zealand Limited
Note 29 Securitisation, covered bonds and other transferred assets (continued)
Covered bonds
The Banking Group has a covered bond programme whereby selected pools of housing loans it originates are assigned to a bankruptcy remote
structured entity. WNZCBL is a special purpose entity established to purchase from time to time, and hold the rights, but not the obligations, of a pool
of housing loans (cover pool) and to provide a financial guarantee (in addition to that of the Bank) in respect of obligations under the covered bonds
issued from time to time by WSNZL under the Covered Bond Programme. That financial guarantee is supported by WNZCBL granting security in favour
of the covered bondholders over the cover pool.
The intercompany loan made by the Bank to WNZCBL to fund the initial purchase (and subsequent further purchases which increased the cover pool)
and the liability representing the deemed loan from WNZCBL to the Bank are fully eliminated in the Banking Group’s financial statements.
The Banking Group is obliged to repurchase any loan sold to and held by WNZCBL (pursuant to the Bank’s Global Covered Bond Programme) where:
it is discovered that there has been a material breach of a sale warranty (or any such sale warranty is materially untrue);
the loan becomes materially impaired or is enforced prior to the second monthly covered bond payment date falling after the assignment of the
loan; or
at the cut-off date relating to the loan, there were arrears of interest and that loan subsequently becomes a delinquent loan prior to the second
monthly covered bond payment date falling after the assignment of the loan.
It is not envisaged that any liability resulting in material loss to the Banking Group will arise from these obligations.
Repurchase agreements
Where securities are sold subject to an agreement to repurchase at a predetermined price, they remain recognised on the balance sheet in their
original category (i.e. trading securities and financial assets measured at FVIS or investment securities). Repurchase agreements are designated at fair
value when they are managed as part of a trading portfolio, otherwise they are measured on an amortised cost basis.
The cash consideration received is recognised as a liability (repurchase agreements). Refer to Note 18 for further details.
The following table presents the Banking Group’s assets transferred and their associated liabilities:
THE BANKING GROUP
For those liabilities that only have recourse to
the transferred assets:
$ millions
Carrying
amount of
transferred
assets
Carrying
amount of
associated
liabilities
Fair value of
transferred
assets
Fair value of
associated
liabilities
Net fair value
position
2022
Securitisation - own assets
1
15,075 15,066 15,079 15,066 13
Covered bonds
2
7,528 3,576 n/an/an/a
Repurchase agreements 6,395 5,293 n/an/an/a
Total 28,998 23,935 15,079 15,066 13
2021
Securitisation - own assets
1
13,988 13,966 13,967 13,966 1
Covered bonds
2
7,520 4,347 n/an/an/a
Repurchase agreements 4,009 3,592 n/an/an/a
Total 25,517 21,905 13,967 13,966 1
1
The most senior rated securities at 30 September 2022 of $13,800 million (30 September 2021: $12,750 million) qualify as eligible collateral for repurchase
agreements with the Reserve Bank. The Bank complies with the Reserve Bank’s guidelines for its overnight reverse repurchase agreement facility and open market
operations, which allows banks in New Zealand to offer RMBS as collateral for the Reserve Bank’s repurchase agreements.
2
The difference between the carrying values of the covered bonds and the assets pledged allows for the immediate issuance of additional covered bonds if required.
These additional assets can be repurchased by the Bank at its discretion, subject to the conditions set out in the transaction documents. The cover pool is
comprised of housing loans up to a value of $7,500 million as at 30 September 2022 (30 September 2021: $7,500 million). Over time, the composition of the cover
pool will include, in addition to housing loans, accrued interest (representing accrued and unpaid interest on the outstanding housing loans) and cash (representing
collections of principal and interest from the underlying housing loans).

Notes to the financial statements
Westpac New Zealand Limited 69
Note 30 Structured entities
Accounting policy
Structured entities are generally created to achieve a specific, defined objective and their operations are restricted such as only purchasing
specific assets. Structured entities are commonly financed by debt or equity securities that are collateralised by and/or indexed to their
underlying assets. The debt and equity securities issued by structured entities may include tranches with varying levels of subordination.
Structured entities are classified as subsidiaries and consolidated if they meet the definition in Note 1. If the Banking Group does not control a
structured entity then it will not be consolidated.
The Banking Group engages in various transactions with both consolidated and unconsolidated structured entities that are mainly involved in
securitisations, asset backed structures and managed funds.
Consolidated structured entities
Securitisation and covered bonds
The Banking Group uses structured entities to securitise its financial assets through the Covered Bond Programme and the Bank’s internal
residential mortgage-backed securitisation programme. Refer to Note 29 for further details.
Funds managed by a member of the Ultimate Parent Bank Group
As disclosed in Note 23, the PIE Funds are consolidated within the financial statements of the Banking Group.
Non-contractual financial support
The Banking Group does not provide non-contractual financial support to these consolidated structured entities.
Unconsolidated structured entities
The Banking Group has interests in various unconsolidated structured entities including debt instruments, liquidity arrangements, lending, loan
commitments and certain derivatives.
Interests exclude non-complex derivatives (e.g. interest rate swap agreements) and lending to a structured entity with recourse to a wider
operating entity, not just the structured entity.
The Banking Group’s main interests in unconsolidated structured entities, which arise in the normal course of business, are loans and other credit
commitments. The Banking Group lends to unconsolidated structured entities, subject to the Banking Group’s collateral and credit approval
processes, in order to earn interest and fees and commissions income. The structured entities are mainly securitisation entities.
The following table shows the Banking Group’s interests in unconsolidated structured entities and its maximum exposure to loss in relation to
those interests. The maximum exposure does not take into account any collateral or hedges that will reduce the risk of loss.
For on-balance sheet instruments, including debt instruments in and loans to unconsolidated structured entities, the maximum exposure to loss
is the carrying value; and
For off-balance sheet instruments, including liquidity facilities and loan and other credit commitments, the maximum exposure to loss is the
notional amounts.
THE BANKING GROUP
20222021
$ millionsFinancing to Securitisation VehiclesFinancing to Securitisation Vehicles
Assets
Loans
3,892
3,128
Total on-balance sheet exposures3,8923,128
Total notional amounts of off-balance sheet exposures
1,322
1,563
Maximum exposure to loss5,2144,691
Size of structured entities
1
5,214
4,691
1
Represented by the total assets or market capitalisation of the entity, or if not available, the Banking Group’s total committed exposure (for lending arrangements
and external debt holdings).
Non-contractual financial support
The Banking Group does not provide non-contractual financial support to these unconsolidated structured entities.

Notes to the financial statements
70 Westpac New Zealand Limited
Note 31 Capital management
The primary objectives of the Banking Group’s capital management activities are to ensure that the Banking Group complies with the regulatory
capital requirements prescribed by the Reserve Bank, maintains strong credit ratings and a strong capital position to support its business objectives
and maximises shareholder value.
The Banking Group manages and adjusts its capital structure in light of changing economic conditions and the risk characteristics of its activities. To
maintain or adjust the capital structure, the Banking Group may adjust the amount of dividend payments to its shareholders, reduce discretionary
expenditure, return or issue capital to its shareholders or issue capital securities.
Three independent processes, undertaken by Directors and senior management of the Bank, are designed to manage the Banking Group’s capital
adequacy to support its current and future activities:
1.The Banking Group actively monitors its capital adequacy as part of the annual Banking Group ICAAP and reports this to senior management
and the Bank’s BRCC. This process supports the Board approved risk appetite statement, which outlines the target debt rating, target capital
ratios and the degree of earnings volatility that Banking Group determines to be acceptable. The Bank sets its target capital ratios at a higher
level than required by the regulator, which both reduces the risk of breaching the conditions of registration and provides investor confidence.
2.The Banking Group calculates the capital required to be held for its current risk profile and forecasts the estimated capital position based on
expected future activities. The forecast capital required is assessed against the target ranges that have been approved by the Board in regard
to capital ratios. The Banking Group also reviews its capital positions in this process against other stakeholder requirements to ensure capital
efficiency.
3.The Ultimate Parent Bank Group takes capital considerations into account during its Board Strategy Review, which is an annual process where
the current strategic direction of the Ultimate Parent Bank Group is reviewed and refined.
The following tables show the Banking Group’s capital summary and capital ratios.
THE BANKING GROUP
20222021
$ millionsUnauditedUnaudited
Tier 1 capital
Common Equity Tier 1 capital
Total shareholder's equity 8,780 8,363
Less deductions from Common Equity Tier 1 capital (1,276) (947)
Total Common Equity Tier 1 capital 7,504 7,416
Additional Tier 1 capital instruments
1
1,313 1,500
Total Tier 1 capital 8,817 8,916
Tier 2 capital instruments
1
600 1,088
Total capital 9,417 10,004
1
Classified as a liability and excludes capitalised transaction costs. Additional Tier 1 capital instruments and Tier 2 capital instruments are itemised in Note 21. Further
details on convertibility for Additional Tier 1 and Tier 2 capital instruments are noted in Note 21.
THE BANKING GROUP
Reserve Bank2022¹2021
% Minimum RatiosUnauditedUnaudited
Capital ratios
Common Equity Tier 1 capital ratio4.511.013.8
Tier 1 capital ratio6.013.016.6
Total capital ratio8.013.918.6
Prudential capital buffer ratio3.55.99.3
1
Due to changes in BPRs effective from 1 January 2022, the ratios for the Banking Group as at 30 September 2022 are not comparable to 30 September 2021. Refer to
page 105 for more detail.

Notes to the financial statements
Westpac New Zealand Limited 71
Note 31 Capital management (continued)
Reserve Bank Capital Review
On 5 December 2019, the Reserve Bank announced changes to the capital adequacy framework that applies to New Zealand incorporated registered
banks (including the Bank). The new framework includes the following components:
Progressively increasing the total capital requirements from 10.5% of RWA to 18% for domestic systemically important banks (including the
Bank) and 16% for all other banks over a seven-year period ending 1 July 2028, including:
oIncreasing the Tier 1 capital requirement from 8.5% to 16% of RWA for domestic systemically important banks and 14% for all other
banks;
oIncreasing the AT1 limit from 1.5% to 2.5% of the Tier 1 capital requirement ; and
oMaintaining the existing Tier 2 capital limit of 2% of the total capital requirement.
These ratios include the minimum capital ratios that banks must maintain and the prudential capital buffer above the minimum capital ratios
that banks must maintain to avoid restrictions on distributions (among other things).
Eligible Tier 1 capital under the new framework comprises common equity and redeemable perpetual preference shares. Existing AT1
instruments are being progressively phased out by 1 July 2028;
The RWA for Sovereign and Banks asset classes are classified under a standardised approach from 1 January 2022;
Credit IRB RWA is subject to a floor of 85% of the standardised requirement from 1 January 2022;
The IRB scalar increased from 1.06 to 1.2 from 1 October 2022; and
The scalar for standardised exposures reduced from 1.06 to 1.0 from 1 October 2022.
The increases in the required level of bank capital started to come into effect on 1 July 2022 with the increase in the prudential capital buffer from
2.5% to 3.5% and will be fully implemented on 1 July 2028. The new definitions of eligible capital came into effect on 1 October 2021.
Changes to Operational Risk measurement from AMA to Standardised Approach applied with effect from 1 July 2022 pursuant to a change to the
Bank's Conditions of Registration.
Note 32 Risk management, funding and liquidity risk and market risk
Financial instruments are fundamental to the Banking Group’s business of providing banking and financial services. The associated financial risks
(including credit risk, funding and liquidity risk and market risk) are a significant proportion of the total risks faced by the Banking Group.
This note details the financial risk management policies, practices and quantitative information of the Banking Group’s principal financial risk
exposures.
Principal risksNote nameNote number
OverviewRisk management frameworks32.1
Credit riskRefer to Note 13 Credit risk management13
Liquidity modelling32.2.1
Sources of funding32.2.2
Assets pledged as collateral32.2.3
Contractual maturity of financial liabilities32.2.4
Funding and liquidity risk
The risk that the Banking Group cannot meet its payment
obligations or that it does not have the appropriate amount,
tenor and composition of funding and liquidity to support its
assets.
Expected maturity32.2.5
VaR32.3.1
Market risk
The risk of an adverse impact on earnings resulting from
changes in market factors, such as foreign exchange rates,
interest rates, commodity prices and equity prices.
Non-traded market risk32.3.2
Benchmark interest rate exposureInterest rate benchmark reform32.4

Notes to the financial statements
72 Westpac New Zealand Limited
Note 32 Risk management, funding and liquidity risk and market risk (continued)
32.1 Risk management frameworks
The Board is responsible for approving the Banking Group’s Risk Management Framework, Risk Management Strategy and Risk Appetite Statement
and monitoring the effectiveness of risk management by the Banking Group. The Banking Group is wholly owned by the Ultimate Parent Bank and,
therefore, a member of the group of companies comprising the Ultimate Parent Bank Group. Accordingly, the Banking Group’s Risk Management
Framework is closely aligned with the Ultimate Parent Bank’s Risk Management Framework.
The Board has delegated to the BRCC to:
review and recommend the Banking Group’s Risk Management Framework, Risk Management Strategy and Risk Appetite Statement to the
Board for approval;
review and monitor the risk profile and controls of the Banking Group consistent with the Banking Group’s Risk Appetite Statement;
approve frameworks, policies and processes for managing risk (consistent with the Banking Group’s Risk Management Framework, Risk
Management Strategy and Risk Appetite Statement); and
review and, where appropriate, approve risks beyond the approval discretion provided to management.
For each of its primary financial risks, the Banking Group maintains risk management frameworks and a number of supporting policies that define
roles and responsibilities, acceptable practices, limits and key controls:
RiskRisk management framework and controls
Funding and
liquidity
risk
- Funding and liquidity risk is measured and managed in
accordance with the policies and processes defined in the BRCC
approved Liquidity Risk Management Framework which is part
of the Banking Group’s Board-approved Risk Management
Framework.
- Responsibility for managing the Banking Group's liquidity and
funding positions in accordance with the Liquidity Risk
Management Framework is delegated to Treasury, under the
oversight of the Banking Group’s ALCO and the Financial
Markets and Treasury Risk unit.
- The Banking Group’s Liquidity Risk Management Framework
sets out the Banking Group’s funding and liquidity risk appetite,
roles and responsibilities of key people managing funding and
liquidity risk within the Banking Group, risk reporting and
control processes and limits and targets used to manage the
Banking Group’s balance sheet.
- Treasury undertakes an annual funding review that outlines the
Banking Group's balance sheet funding strategy over a three
year period. This review encompasses trends in global markets,
peer analysis, wholesale funding capacity, expected funding
requirements and a funding risk analysis. This strategy is
continuously reviewed to take account of changing market
conditions, investor sentiment and estimations of asset and
liability growth rates.
- The Banking Group monitors the composition and stability of its
funding to allow it to remain within the Banking Group’s funding
risk appetite and complies with regulatory requirements.
- The Banking Group holds a portfolio of liquid assets for several
purposes, including as a buffer against unforeseen funding
requirements. The level of liquid assets held takes into account
the liquidity requirements of the Banking Group's balance sheet
under normal and stress conditions.
- Treasury also maintains a contingent funding plan that outlines
the steps that should be taken by the Banking Group in the
event of an emerging ‘funding crisis’. The plan is aligned with
the Banking Group’s broader Liquidity Crisis Management Policy
which is approved by the BRCC.
- Daily liquidity risk reports are reviewed by Treasury and the
Financial Markets and Treasury Risk unit. Liquidity reports are
presented to ALCO monthly and to the RISKCO and BRCC
quarterly.
Market risk
- Market risk is measured and managed in accordance with the
policies and processes defined in the BRCC approved Market
Risk Management Framework which is part of the Banking
Group’s Board-approved Risk Management Framework.
- Responsibility for managing the Banking Group’s non-traded
market risk in accordance with the Market Risk Management
Framework is delegated to Treasury, under the oversight of the
Banking Group’s ALCO and the Financial Markets and Treasury
Risk unit.
- The Banking Group’s Market Risk Management Framework sets
out the Banking Group’s market risk appetite, roles and
responsibilities of key people managing market risk within the
Banking Group, risk reporting and control processes and limits
and targets used to manage market risk.
- The Banking Group’s Market Risk Management Framework
makes a distinction between traded and non-traded market risk
for the purposes of risk management, measurement and
reporting.
- The Banking Group’s Market Risk Management Framework does
not allow for traded market risk, including equity and commodity
price risks. Any traded market risk activities are conducted by the
Ultimate Parent Bank’s financial markets business through its NZ
Branch and in accordance with the Ultimate Parent Bank’s Market
Risk Management Framework.
- Non-traded market risk arises from banking book activities and
is primarily comprised of IRRBB. The Banking Group does not
carry material foreign exchange risks due to the risks being
hedged through the NZ branch.
- Market risk is managed using VaR limit, NaR and structural risk
limits (including credit spread and interest rate basis point
value limits) as well as scenario analysis and stress testing.
- Daily market risk reports are reviewed by Treasury, and the
Financial Markets and Treasury Risk unit. Key market risk
metrics are presented to ALCO monthly and to RISKCO and
BRCC quarterly.

Notes to the financial statements
Westpac New Zealand Limited 73
Note 32 Risk management, funding and liquidity risk and market risk (continued)
Climate change risk
The Banking Group recognises climate change as a major threat to our collective wellbeing and is committed to transparency and action across its
business to address climate change. While this is not a material financial risk as at 30 September 2022, climate change risk is evolving and is
expected to have a more significant impact on the Banking Group’s material financial risks in the future.
The two main sources of financial risks arising from climate change are physical risks and transition risks. Physical risks emanating from climate
change can be event-driven (acute) such as increased severity of extreme weather events (e.g., cyclones, droughts, floods, and fires). They can also
relate to longer-term shifts (chronic) in precipitation and temperature and increased variability in weather patterns or other long-term changes such
as sea level rise. Transition risks are risks associated with the transition to a lower-carbon global economy, the most common of which relate to
policy and legal actions, technology changes, market responses, and reputational considerations.
The Banking Group seeks to understand the potential for climate-related transition and physical risks to impact its business, including their possible
impact on credit risk, regulatory and reporting obligations, and our reputation.
The Banking Group has voluntarily published a Climate Risk Report each year since 2020, based on the recommendations of the Taskforce for
Climate-related Financial Disclosures (TCFD). A summary of the Banking Group’s approach to managing climate change risks against the four TCFD
pillars is described below.
Governance:
The Banking Group’s Board is responsible for considering the social, ethical, and environmental impact of the Banking Group’s activities and
setting standards and monitoring compliance with the Banking Group's sustainability policies and practices. The Banking Group’s RISKCO
oversees material risks, including climate-related risks. The Banking Group’s CREDCO, a subcommittee of RISKCO, oversees climate-related
risks that present a credit risk to the Banking Group.
The Banking Group is also represented on the Ultimate Parent Bank Group’s Climate Change Financial Risk Committee which oversees work to
identify and manage the potential impact on credit exposures from climate change-related transition and physical risks across the Ultimate
Parent Bank Group and reports to the Ultimate Parent Bank Group’s CREDCO.
Strategy:
The Banking Group has integrated climate-related risks and opportunities into its wider business strategy. It focuses on the most relevant
aspects of climate change on its business, and their implications on its customers, communities, and the Banking Group.
During the year ended 30 September 2022, the Ultimate Parent Bank joined the United Nations-convened Net Zero Banking Alliance reinforcing
its commitment to the global transition to a net-zero economy by 2050.
As part of an Agri-sector Climate Risk Assessment, the Banking Group identified a range of viable options to decarbonise and adapt to the
physical impacts of climate change. This work is ongoing, with the aim to provide adaptation support to the Banking Group's customers.
The Banking Group continues to evolve its ability to conduct climate-related scenario analysis.
Risk Management:
Climate change risks are managed in accordance with the Banking Group’s Risk Management Framework which is supported by the Banking
Group’s Sustainability Risk Management Framework (SRMF), the Banking Group’s Environmental, Social and Governance Credit Risk Policy and
Board Risk Appetite Statements. The SRMF sets out the overall approach to climate risk, defining roles and responsibilities in accordance with
the Three Lines of Defence standard. This framework is reviewed annually and has evolved to meet the Banking Group’s changing needs and
expectations.
Metrics and Targets:
The Banking Group monitors its climate-related risks through a range of related metrics and targets covering its exposure to coastal hazards,
sustainable finance, and its own operational emissions.
The Banking Group’s suite of metrics and targets is evolving as the understanding of risks improves, better data becomes available and
supporting processes and data infrastructure develop. Financed emissions are a particular focus in this area.
The Banking Group has considered the impact of climate-related risks on its financial position and performance and while the effects of climate
change represent a source of uncertainty, the Banking Group has concluded that climate-related risks do not have a material impact on the
judgements, assumptions and estimates for the year ended 30 September 2022. Refer to Note 13.1 for further information on how climate change
risk is considered as part of credit risk.
For a comprehensive and detailed outline of the Banking Group’s approach to climate-related risks, refer to the Climate Risk Report for
September 2022 and prior iterations which can be accessed at www.westpac.co.nz/about-us/legal-information-privacy/disclosure-statements/.

Notes to the financial statements
74 Westpac New Zealand Limited
Note 32 Risk management, funding and liquidity risk and market risk (continued)
32.2 Funding and liquidity risk
The Banking Group aims to maintain a mix of retail and wholesale funding, with emphasis on the value of core funding consistent with the principles
inherent in BS13.
32.2.1 Liquidity modelling
The Banking Group is subject to the conditions of BS13. The following metrics are calculated and reported on a daily basis in accordance with BS13:
the level of liquid assets held;
the one-week mismatch ratio;
the one-month mismatch ratio; and
the one-year core funding ratio.
In addition, the Banking Group calculates the following liquidity ratios in accordance with the Ultimate Parent Bank’s liquidity risk framework under
APRA Prudential Standard APS 210 Liquidity:
liquidity coverage ratio; and
net stable funding ratio.
32.2.2 Sources of funding
Sources of funding are regularly reviewed to maintain a wide diversification by currency, geography, product and term. Sources include, but are not
limited to:
deposits;
debt issues;
proceeds from sale of marketable securities;
repurchase agreements with central bank;
related entities;
principal repayments on loans;
interest income; and
fees and commissions income.
Term Lending Facility and Funding for Lending Programme
From 26 May 2020 until 29 October 2020, the Reserve Bank made available a Term Lending Facility, to offer loans for a fixed term of three years at the
rate of the Official Cash Rate, with access to the funds linked to banks’ lending under the Scheme. On 20 August 2020, the Reserve Bank announced it
would extend the availability of the Term Lending Facility to 1 February 2021 with loans for a term of five years. In December 2020, the Reserve Bank
announced that it would extend the window for the Term Lending Facility to 28 July 2021. As at 30 September 2022, the Bank has drawn down $96
million under the Term Lending Facility (30 September 2021: $96 million).
On 11 November 2020, the Reserve Bank announced that additional stimulus would be provided through a Funding for Lending Programme,
commencing in December 2020. The Funding for Lending Programme provides funding to banks at the prevailing OCR for a term of three years,
secured by high quality collateral. The size of funding available under the Funding for Lending Programme includes an initial allocation of 4% of each
bank’s total loans and advances to New Zealand households, private non-financial businesses, and non-profit institutions serving households (eligible
loans). A conditional additional allocation of up to 2% of eligible loans is also available, subject to growth in eligible loans, for a total size of up to 6% of
eligible loans. The Funding for Lending Programme ran from 7 December 2020 to 6 June 2022 for the initial allocations and remains open to 6
December 2022 for the additional allocations. The Funding for Lending Programme term sheet is available on the Reserve Bank’s website. As at 30
September 2022, the Bank has drawn down $3,871 million under the Funding for Lending Programme (30 September 2021: $2,000 million).

Notes to the financial statements
Westpac New Zealand Limited 75
Note 32 Risk management, funding and liquidity risk and market risk (continued)
Liquid assets
The Banking Group holds a portfolio of high-quality liquid assets as a buffer against unforeseen funding requirements. These assets are eligible for
repurchase agreements with the Reserve Bank and are held in cash, government, local government and highly rated investment grade securities.
The level of liquid asset holdings is reviewed frequently and is consistent with both the requirements of the balance sheet and market conditions.
The following table shows the Banking Group’s holding of liquid assets. Liquid assets include high quality assets readily convertible to cash to
meet the Banking Group’s liquidity requirements. In management’s opinion, liquidity is sufficient to meet the Banking Group’s present
requirements.
THE BANKING GROUP
$ millions20222021
Cash and balances with central banks10,8208,472
Interbank lending-541
Receivables due from the Ultimate Parent Bank-424
Supranational securities1,900873
NZ Government securities7882,193
NZ public securities2,5442,384
NZ corporate securities1,236507
Residential mortgage-backed securities7,3978,603
Available liquid assets24,68523,997

Notes to the financial statements
76 Westpac New Zealand Limited
Note 32 Risk management, funding and liquidity risk and market risk (continued)
Concentration of funding
THE BANKING GROUP
$ millions20222021
Funding consists of
Collateral received 82 188
Deposits and other borrowings 80,848 79,367
Other financial liabilities
1
3,971 2,676
Due to related entities
2
2,060 1,652
Debt issues
3
19,933 16,304
Loan capital 2,083 2,579
Total funding 108,977 102,766
Analysis of funding by geographical areas
3
New Zealand 88,873 84,206
Australia 709 728
United Kingdom 8,220 9,188
United States of America 5,810 3,496
China 2,775 1,756
Other 2,590 3,392
Total funding 108,977 102,766
Analysis of funding by industry sector
Accommodation, cafes and restaurants 553 503
Agriculture 1,821 1,740
Construction 2,645 2,438
Finance and insurance 40,056 38,839
Forestry and fishing 180 226
Government, administration and defence 3,204 3,085
Manufacturing 2,297 2,078
Mining 68 69
Property services and business services 7,882 8,151
Services 5,328 4,802
Trade 2,053 2,009
Transport and storage 750 458
Utilities 1,056 776
Households 34,917 31,912
Other
4
4,107 4,028
Subtotal 106,917 101,114
Due to related entities
2
2,060 1,652
Total funding 108,977 102,766
1
Other financial liabilities, as presented above, are in respect of repurchase agreements and interbank placements.
2
Amounts due to related entities, as presented above, are in respect of deposits and borrowings and exclude amounts which relate to derivative financial
instruments and other liabilities.
3
The geographic region used for debt issues is based on the nature of the debt programmes. The nature of the debt programmes is used as a proxy for the location
of the original purchaser. Where the nature of the debt programmes does not necessarily represent an appropriate proxy, the debt issues are classified as 'Other’.
These instruments may have subsequently been on-sold.
4
Includes deposits from non-residents.
ANZSIC has been used as the basis for disclosing industry sectors.

Notes to the financial statements
Westpac New Zealand Limited 77
Note 32 Risk management, funding and liquidity risk and market risk (continued)
32.2.3 Assets pledged as collateral
The Banking Group is required to provide collateral to other financial institutions, as part of standard terms, to secure liabilities. In addition to
assets supporting the Covered Bond Programme disclosed in Note 29, the carrying value of these financial assets pledged as collateral is:
THE BANKING GROUP
$ millions20222021
Cash
42 185
Securities pledged under repurchase agreements:
Investment securities
1
1,397 1,496
Residential mortgage-backed securities
2
4,998 2,513
Total amount pledged to secure liabilities (excluding Covered Bond Programme) 6,437 4,194
1
As at 30 September 2022, $1,397 million of investment securities were pledged as collateral to the New Zealand Branch of the Ultimate Parent Bank, which is
recorded within due to related entities on the balance sheet (30 September 2021: $916 million) and no investment securities were pledged to third parties which is
recorded within other financial liabilities on the balance sheet (30 September 2021: $580 million).
2
As at 30 September 2022, the Banking Group has undertaken repurchase agreements with the Reserve Bank, under the Funding for Lending Programme and Term
Lending Facility, using residential mortgage-backed securities. For the Funding for Lending Programme, the repurchase cash amount at 30 September 2022 is $3,871
million (30 September 2021: $2,000 million), which is recorded within other financial liabilities on the balance sheet, with underlying securities to the value of $4,883
million provided under the arrangement (30 September 2021: $2,398 million). For the Term Lending Facility, the repurchase cash amount at 30 September 2022 is $96
million (30 September 2021: $96 million), which is recorded within other financial liabilities on the balance sheet, with underlying securities to the value of $115 million
provided under the arrangement (30 September 2021: $115 million).
32.2.4 Contractual maturity of financial liabilities
The following table presents cash flows associated with financial liabilities, payable at the balance sheet date, by remaining contractual maturity. The
amounts disclosed in the table are the future contractual undiscounted cash flows, whereas the Banking Group manages inherent liquidity risk based on
expected cash flows.
Cash flows associated with these financial liabilities include both principal payments as well as fixed or variable interest payments incorporated into the
relevant coupon period. Principal payments reflect the earliest contractual maturity date. Derivative financial instruments designated for hedging
purposes are expected to be held for their remaining contractual lives, and reflect gross cash flows over the remaining contractual term.
Derivatives held for trading and certain liabilities classified in “Other financial liabilities” which are measured at FVIS are not managed for liquidity
purposes on the basis of their contractual maturity, and accordingly these liabilities are presented in either the on demand or up to 1 month columns.
Only the liabilities that the Banking Group manages based on their contractual maturity are presented on a contractual undiscounted basis in the
following table.

Notes to the financial statements
78 Westpac New Zealand Limited
Note 32 Risk management, funding and liquidity risk and market risk (continued)
THE BANKING GROUP
2022
OverOver
1 Month3 MonthsOver 1
Year
OnUp toand Up toand Up toand Up toOver
$ millions
Demand1 Month3 Months1 Year5 Years5 YearsTotal
Financial liabilities
Collateral received-82----82
Deposits and other borrowings43,2776,96011,87317,7441,656-81,510
Other financial liabilities483-964,296-4,479
Derivative financial instruments:
Held for hedging purposes (net settled)-3-1--4
Held for hedging purposes (gross settled):
Cash outflow-915891,8504022,365
Cash inflow--(5)(7)(1,743)(370)(2,125)
Due to related entities:
Non-derivative balances6851,32643-3122,087
Derivative financial instruments:
Held for trading (22)-----(22)
Held for hedging purposes (net settled)-783421981331
Held for hedging purposes (gross settled):
Cash outflow-25452706,1511,4797,970
Cash inflow--(5)(28)(5,282)(1,457)(6,772)
Debt issues-6702,6133,49512,9681,94421,690
Loan capital--9281492,3062,492
Total undiscounted financial liabilities43,9449,16514,67121,73020,2744,307114,091
Total contingent liabilities and commitments
Letters of credit and guarantees1,609-----1,609
Commitments to extend credit27,901-----27,901
Total undiscounted contingent liabilities and
commitments
29,510-----29,510

Notes to the financial statements
Westpac New Zealand Limited 79
Note 32 Risk management, funding and liquidity risk and market risk (continued)
THE BANKING GROUP
2021
OverOver
1 Month3 MonthsOver 1 Year
OnUp toand Up toand Up toand Up toOver
$ millions
Demand1 Month3 Months1 Year5 Years5 YearsTotal
Financial liabilities
Collateral received -188 - - - -188
Deposits and other borrowings46,1516,51510,95714,5121,470 -79,605
Other financial liabilities406280 -962,079 -2,861
Derivative financial instruments:
Held for hedging purposes (net settled) -851318 -44
Held for hedging purposes (gross settled):
Cash outflow -391,3781,793 -3,183
Cash inflow - -(2)(1,253)(1,700) -(2,955)
Due to related entities:
Non-derivative balances629916531351101,672
Derivative financial instruments:
Held for trading (3) - - - - -(3)
Held for hedging purposes (net settled) -10272069 -126
Held for hedging purposes (gross settled):
Cash outflow -41,123373582,7974,319
Cash inflow - -(1,096)(2)(65)(2,700)(3,863)
Debt issues -7097245,6006,5703,06816,671
Loan capital - -6181,1741,5002,698
Total undiscounted financial liabilities47,1838,63311,80620,43211,8174,675104,546
Total contingent liabilities and commitments
Letters of credit and guarantees
1
1,338 - - - - -1,338
Commitments to extend credit28,136 - - - - -28,136
Total undiscounted contingent liabilities and
commitments
29,474 - - - - -29,474
1
Comparatives have been restated to correctly reflect an additional $503 million in off-balance sheet credit exposures arising under the financial guarantee with
the NZ Branch.

Notes to the financial statements
80 Westpac New Zealand Limited
Note 32 Risk management, funding and liquidity risk and market risk (continued)
32.2.5 Expected maturity
The following table presents the balance sheet based on expected maturity dates, except for deposits, based on historical behaviours. The liability
balances in the following table will not agree to the contractual maturity tables due to the analysis below being based on expected rather than
contractual maturities, the impact of discounting and the exclusion of interest accruals beyond the reporting period. Deposits are presented in the
following table on a contractual basis, however as part of our normal banking operations, the Banking Group expects a large proportion of these
balances to be retained.
THE BANKING GROUP
20222021
Due within
Greater
than
Due withinGreater than
$ millions
12 months12 months
Total
12 months12 months
Total
Assets
Cash and balances with central banks10,820-10,8208,472-8,472
Collateral paid42-42185-185
Trading securities and financial assets measured at
FVIS
1,3257932,1182,1171632,280
Derivative financial instruments5811116915170221
Investment securities5585,0655,6233174,3634,680
Loans14,44382,43996,88213,59879,03492,632
Due from related entities1,3221,2842,6061,5762581,834
All other assets4691,0891,5589691,1072,076
Total assets29,03790,781119,81827,38584,995112,380
Liabilities
Collateral received82-82188-188
Deposits and other borrowings79,2831,56580,84877,9391,42879,367
Derivative financial instruments311511810969178
Due to related entities2,1038582,9611,6811551,836
Debt issues6,54113,39219,9336,9059,39916,304
Loan capital-2,0832,083-2,5792,579
All other liabilities3994,6145,0131,1642,4013,565
Total liabilities88,41122,627111,03887,98616,031104,017
32.3 Market risk
32.3.1 Value-at-Risk
The Banking Group uses VaR as one of the mechanisms for controlling non-traded market risk.
VaR is a statistical estimate of the potential loss in earnings over a specified period of time and to a given level of confidence based on historical
market movements. The confidence level indicates the probability that the loss will not exceed the VaR estimate on any given day.
VaR seeks to take account of all material market variables that may cause a change in the value of the portfolio, including interest rates, foreign
exchange rates, price changes, volatility and the correlations between these variables. Daily monitoring of current exposure and limit utilisation is
conducted independently by the Financial Markets and Treasury Risk unit which monitors market risk exposures against VaR and structural limits.
These are supplemented by escalation triggers for material profits or losses and stress testing of risks beyond the 99% confidence interval.
Daily stress testing and backtesting of VaR results are performed to support model integrity and to analyse extreme or unexpected movements. A
review of the potential profit and loss outcomes is also undertaken to monitor any skew created by the historical data.
The key parameters of VaR are:
Holding period1 day
Confidence level99%
Period of historical data used1 year