WBC – NZ Banking Group Disclosure Statement – 30 Sep 2022

Classification: PROTECTED
ASX
Release


2 December 2022

Westpac Banking Corporation – New Zealand Banking Group Disclosure
Statement

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










For further information:

Hayden Cooper Andrew Bowden
Group Head of Media Relations General Manager, 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 Banking Corporation - New Zealand Banking Group 3
Contents
Directors’ and the Chief Executive Officer, NZ Branch’s statement
5
Financial statements
Income statement6Note 16 Intangible assets 41
Statement of comprehensive income6Note 17 Deposits and other borrowings
Note 19 Debt issues
42
44
Balance sheet7Note 18 Other financial liabilities43
Statement of changes in equity8Note 19 Debt issues44
Statement of cash flows9Note 20 Provisions45
Note 1 Financial statements preparation10Note 21 Loan capital46
Note 2 Net interest income14Note 22 Related entities48
Note 3 Non-interest income15Note 23 Derivative financial instruments51
Note 4 Operating expenses17Note 24 Fair values of financial assets and financial liabilities57
Note 5 Auditor’s remuneration17Note 25 Offsetting financial assets and financial liabilities
Note 26 Credit related commitments, contingent assets and
contingent liabilities
62
64
Note 6 Impairment charges/(benefits)18
Note 7 Income tax expense19
Note 26 Credit related commitments, contingent assets and
contingent liabilities
64
Note 8 Imputation credit account19Note 27 Segment reporting
Note 28 Securitisation, covered bonds and other transferred
assets
65
67
Note 9 Trading securities and financial assets measured at
FVIS
20
Note 28 Securitisation, covered bonds and other transferred
assets
67
Note 10 Investment securities20Note 29 Structured entities68
Note 11 Loans21Note 30 Capital management70
Note 12 Provision for expected credit losses22
Note 13 Credit risk management31
Note 31 Risk management, funding and liquidity risk and market
risk
72
Note 14 Other financial assets39Note 32 Notes to the statement of cash flows86
Note 15 Deferred tax assets40Note 33 Assets and liabilities held for sale87
Registered bank disclosures
i. General information88
ii. Additional financial disclosures96
iii. Asset quality98
v. Insurance, securitisation, funds management, other
fiduciary activities, and marketing and distribution of
insurance products
101
iv. Credit and market risk exposures and capital adequacy100vi. Risk management policies102
Conditions of registration105
Independent auditor’s report107

Glossary of terms
4 Westpac Banking Corporation - New Zealand Banking Group
Certain information contained in this Disclosure Statement is required by the Registered Bank Disclosure Statements (Overseas Incorporated
Registered Banks) Order 2014 (as amended) (‘Order’).
In this Disclosure Statement, reference is made to five main reporting groups:
– Overseas Bank – refers to Westpac Banking Corporation;
– Overseas Banking Group – refers to the Overseas Bank and all other entities included in the Overseas Bank’s group for the purposes of public
reporting of the group financial statements in Australia;
– NZ Branch – refers to the New Zealand business (as defined in the Order) of the Overseas Bank;
– Westpac New Zealand – refers to Westpac New Zealand Limited; and
– NZ Banking Group – refers to the financial reporting group (as defined in the Order) of the Overseas Bank. Controlled entities of the NZ Banking
Group as at 30 September 2022 are set out in Note 22 Related entities.
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.
FVISFair value through income statement
ADIAuthorised deposit-taking institution
ALCOAsset and Liability Committee
FVOCI
Fair value through other comprehensive
income
ALMAsset and liability risk managementFXForeign exchange
Group AuditOverseas Banking Group's Group Audit
ANZSIC
Australian and New Zealand Standard Industrial
Classification
Group BRiskCOverseas Bank's Board Risk Committee
APRAAustralian Prudential Regulation AuthorityGSTGoods and services tax
AT1Additional Tier 1 capitalIAPIndividually assessed provisions
BACBoard Audit CommitteeIBORInterbank Offered Rates
BKBMBank bill benchmark rateIRBInternal Rating Based
BoardBoard of DirectorsIRRBBInterest rate risk in the Banking Book
BPRBanking Prudential RequirementLGDLoss given default
LVRLoan-to-value ratio
BPS Act
Banking (Prudential Supervision) Act 1998 (formerly
the Reserve Bank of New Zealand Act 1989)
MARCOMarket Risk Committee
BRCCBoard Risk and Compliance CommitteeMoody'sMoody's Investor Service
BS13Reserve Bank document 'Liquidity Policy'NaRNet interest income at risk
CAPCollectively assessed provisionsNIINet interest income
CCCFACredit Contracts and Consumer Finance Act 2003
CGUCash generating unit
NZ IFRS
New Zealand equivalents to International
Financial Reporting Standards
CRGCustomer Risk GradeOCIOther comprehensive income
EADExposure at defaultPDProbability of default
ECLExpected credit lossesPIEPortfolio Investment Entities
ELEExtended Licensed EntityRISKCOExecutive risk committee
ERCExecutive risk committeeRWARisk weighted assets
FCAFinancial Conduct AuthorityReserve BankReserve Bank of New Zealand
FCSFinancial Claims SchemeRMBSResidential mortgage-backed securities
Fidelity LifeFidelity Life Assurance Company LimitedS&PS&P Global Ratings
SMESmall and Medium-sized Enterprises
Financial
statements
Consolidated financial statements
SPPISolely payments of principal and interest
FMFinancial MarketsTier 2 notesTier 2 loan capital
FMAFinancial Markets AuthorityVaRValue-at-risk
FitchFitch Ratings
FVHAFair value hedge accounting
Westpac Life
Westpac Life-NZ- Limited (renamed Fidelity
Insurance Limited on 28 February 2022)

Directors’ and the Chief Executive Officer, NZ Branch’s statement
Westpac Banking Corporation - New Zealand Banking Group 5
Each Director of the Overseas Bank and the Chief Executive Officer, NZ Branch, 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 Overseas Bank and the Chief Executive Officer, NZ Branch, believes, after due enquiry, that, over the year ended 30
September 2022:
(a) the Overseas Bank has complied in all material respects with each condition of registration that applied during that period; and
(b) except as noted on page 94 in the first paragraph under the sub-heading ‘Overseas Bank risk management’, the NZ Branch and other members of
the NZ Banking Group had systems in place to monitor and control adequately the material risks of relevant members of the NZ Banking Group,
including credit risk, concentration of credit risk, interest rate risk, currency risk, equity risk, liquidity risk and other business risks, and that those
systems were being properly applied. For this purpose, a relevant member of the NZ Banking Group means a member of the NZ Banking Group
that is not a member of Westpac New Zealand’s banking group, as defined in Westpac New Zealand's Disclosure Statement for the year ended 30
September 2022. Refer to section vi. Risk Management Policies – Risk management frameworks on page 102 of this Disclosure Statement for
further detail regarding the entities which had systems in place to monitor and control the material risks of relevant members of the NZ
Banking Group.
The Disclosure Statement has been signed on behalf of all of the Directors by Catherine McGrath, Chief Executive Officer, Westpac New Zealand,
and by Christopher Leuschke as Chief Executive Officer, NZ Branch.
Catherine McGrath
Christopher Leuschke
Dated this 1
st
day of December 2022

Income statement for the year ended 30 September 2022
6 Westpac Banking Corporation - New Zealand Banking Group
NZ BANKING GROUP
$ millionsNote20222021
Interest income:
Calculated using the effective interest method23,7423,012
Other28229
Total interest income23,8243,041
Interest expense2(1,486)(983)
Net interest income2,3382,058
Net fees and commissions income3206158
Net wealth management and insurance income363126
Trading income3183203
Other income31325
Net operating income before operating expenses and impairment charges2,9222,550
Operating expenses4(1,186)(1,160)
Impairment (charges)/benefits62784
Profit before income tax1,7631,474
Income tax expense7(465)(417)
Net profit attributable to the owner of the NZ Banking Group1,2981,057
The above income statement should be read in conjunction with the accompanying notes.
Statement of comprehensive income for the year ended 30 September 2022
NZ BANKING GROUP
$ millions20222021
Net profit attributable to the owner of the NZ Banking Group 1,298 1,057
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
488 128
Transferred to income statement:
Cash flow hedging instruments
12 56
Income tax on items taken to or transferred from equity:
Investment securities
88 45
Cash flow hedging instruments
(140) (52)
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)
141 28
Total comprehensive income attributable to the owner of the NZ Banking Group
1,439 1,085
The above statement of comprehensive income should be read in conjunction with the accompanying notes.

Balance sheet as at 30 September 2022
Westpac Banking Corporation - New Zealand Banking Group 7
NZ BANKING GROUP
$ millionsNote20222021
Assets
Cash and balances with central banks32 11,162 8,604
Collateral paid 87 207
Trading securities and financial assets measured at FVIS9 3,501 4,535
Derivative financial instruments 23 9,383 3,852
Investment securities10 5,623 4,680
Loans11 97,392 93,025
Other financial assets14 644 1,388
Due from related entities22 6,609 1,739
Property and equipment 402 410
Deferred tax assets15 68 226
Intangible assets16 834 721
Other assets 75 79
Assets held for sale33 -382
Total assets 135,780 119,848
Liabilities
Collateral received 724 320
Deposits and other borrowings17 80,848 79,367
Other financial liabilities18 5,607 4,850
Derivative financial instruments 23 6,777 2,620
Due to related entities22 8,292 2,410
Debt issues19 19,933 16,304
Current tax liabilities 86 61
Provisions20 257 243
Other liabilities 376 382
Loan capital21 2,576 2,988
Liabilities held for sale33 -99
Total liabilities 125,476 109,644
Net assets 10,304 10,204
Head office account
Branch capital 1,300 1,300
Retained profits 1,324 1,187
Total head office account 2,624 2,487
NZ Banking Group equity
Share capital 6,045 488
Reserves 138 3
Retained profits 1,497 7,226
Total NZ Banking Group equity 7,680 7,717
Total equity attributable to the owner of the NZ Banking Group 10,304 10,204
The above balance sheet should be read in conjunction with the accompanying notes.
Signed on behalf of the Board of Directors.
Director
1
December 2022
Director
1 December 2022

Statement of changes in equity for the year ended 30 September 2022
8 Westpac Banking Corporation - New Zealand Banking Group
NZ BANKING GROUP
NZ BRANCHOTHER MEMBERS OF THE NZ BANKING GROUP
Head Office AccountReserves
InvestmentCash Flow
BranchRetained Share SecuritiesHedgeRetainedTotal
$ millionsCapital ProfitsCapital ReserveReserveProfitsEquity
As at 30 September 2020 1,300 1,078 143 57 (69) 6,536 9,045
Impact from a change in accounting policy - - - - - (6) (6)
Restated opening balance 1,300 1,078 143 57 (69) 6,530
9,039
Year ended 30 September 2021
Net profit attributable to the owner of the NZ
Banking Group - 109 - - - 948 1,057
Net gains/(losses) from changes in fair value - - - (162) 128 - (34)
Income tax effect - - - 45 (36) - 9
Transferred to income statement - - - - 56 - 56
Income tax effect - - - - (16) - (16)
Remeasurement of defined benefit obligations - - - - - 18 18
Income tax effect - - - - - (5) (5)
Total comprehensive income for the
year ended 30 September 2021 - 109 - (117) 132 961 1,085
Transactions with owner:
Ordinary share capital issued - - 345 - - - 345
Dividends paid on ordinary shares - - - - - (265) (265)
As at 30 September 2021 1,300 1,187 488 (60) 63 7,226 10,204
Year ended 30 September 2022
Net profit attributable to the owner of the NZ
Banking Group - 137 - - - 1,161 1,298
Net gains/(losses) from changes in fair value - - - (313) 488 - 175
Income tax effect - - - 88 (137) - (49)
Transferred to income statement - - - - 12 - 12
Income tax effect - - - - (3) - (3)
Remeasurement of defined benefit obligations - - - - - 8 8
Income tax effect - - - - -
(2)
(2)
Total comprehensive income for the
year ended 30 September 2022 - 137 - (225) 360 1,167 1,439
Transactions with owner:
Ordinary share capital issued (refer to Note 22) - - 5,616 - - -
5,616
Ordinary share capital buy-back (refer to Note 22) - - (59) - - -
(59)
Dividends paid on ordinary shares (refer to Note 22) - - - - - (6,896) (6,896)
As at 30 September 2022 1,300 1,324 6,045 (285) 423 1,497 10,304
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 Banking Corporation - New Zealand Banking Group 9
NZ BANKING GROUP
$ millionsNote20222021
Cash flows from operating activities
Interest received 3,830 3,199
Interest paid (1,289) (1,130)
Non-interest income received
1
291 281
Operating expenses paid (1,051) (983)
Income tax paid (352) (384)
Cash flows from operating activities before changes in operating assets and liabilities 1,429 983
Net (increase)/decrease in:
Collateral paid 120 190
Trading securities and financial assets measured at FVIS 1,046 (186)
Loans (4,731) (4,875)
Other financial assets 2 42
Due from related entities (1,941) 910
Other assets (1) 5
Net increase/(decrease) in:
Collateral received 404 (188)
Deposits and other borrowings 1,475 5,397
Other financial liabilities 953 2,443
Due to related entities (71) 33
Other liabilities 14 38
Net movement in external and related entity derivative financial instruments
1
2,563 (877)
Net cash provided by/(used in) operating activities32 1,262 3,915
Cash flows from investing activities
Purchase of investment securities (1,668) (648)
Proceeds from investment securities 310 673
Proceeds from disposal of controlled entities 417 -
Net movement in life insurance assets 60 (3)
Purchase of capitalised computer software (172) (103)
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 (1,080) (100)
Cash flows from financing activities
Issue of ordinary share capital - 345
Payment for share buy-back (59) -
Net movement in due to related entities 618 (351)
Proceeds from debt issues19 13,602 9,476
Repayments of debt issues19 (10,297) (8,369)
Issue of loan capital (net of issue costs)21 590 -
Redemption of loan capital21 (1,178) -
Payments for the principal portion of lease liabilities (62) (49)
Dividends paid to ordinary shareholders22 (1,280) (265)
Net cash provided by/(used in) financing activities 1,934 787
Net increase/(decrease) in cash and cash equivalents 2,116 4,602
Cash and cash equivalents at the beginning of the year 9,145 4,543
Cash and cash equivalents at the end of the year32 11,261 9,145
1
Comparatives have been restated to correctly reflect cash flows of ($271) million in non-interest income received relating to realised gains and losses on FX
trading derivatives which were previously presented in Net movement in external and related entity derivative financial instruments.
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 32.

Notes to the financial statements
10 Westpac Banking Corporation - New Zealand Banking Group
Note 1 Financial statements preparation
The Overseas Bank is registered as a public company limited by shares under the Australian Corporations Act 2001 and is entered on the register
maintained under the BPS Act. The Overseas Bank provides a broad range of banking and financial services, including consumer, business and
institutional banking and wealth management services.
The NZ Branch’s head office is situated at Westpac on Takutai Square, 16 Takutai Square, Auckland 1010, New Zealand and the address for service of
process on the NZ Branch is S. O’Brien, Legal, Westpac on Takutai Square, 53 Galway Street, Auckland 1010, New Zealand.
The financial statements are for the NZ Banking Group.
These financial statements were authorised for issue by the Overseas Bank’s Board of Directors on 1 December 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 NZ 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 NZ Banking Group.
(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 NZ
Banking Group’s equity interest in the acquiree, over the fair value of the identifiable net assets acquired.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 11
Note 1 Financial statements preparation (continued)
(vi) Foreign currency translation
Functional and presentational currency
The financial statements are presented in New Zealand dollars which is the NZ 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) Head office account, share capital and reserves
Head office account - Branch capital
Branch capital comprises funds provided by the Overseas Bank. It is non-interest bearing and there is no fixed date for repatriation.
Ordinary shares
Ordinary shares are recognised at the amount paid up per ordinary share, net of directly attributable issue costs.
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. Basis of aggregation
The NZ Banking Group as at 30 September 2022 has been aggregated by combining the sum of the capital and reserves of the NZ Branch, and the
consolidated capital and reserves of Westpac New Zealand Group Limited, BT Financial Group (NZ) Limited, Westpac Financial Services Group-NZ-
Limited, Westpac Group Investment-NZ-Limited, and their subsidiaries (including structured entities). For New Zealand entities acquired by the
Overseas Banking Group, capital and reserves at acquisition are netted and recognised as capital contributed to the NZ Banking Group.
Subsidiaries are entities over which the members of the NZ Banking Group have control as they are exposed to, or have rights to, variable returns
from the entities, and can affect those returns through their power over the entities. All transactions between entities within the NZ 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 NZ
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 NZ 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 NZ 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 NZ Banking Group’s continuing involvement in the asset.
Financial liabilities are derecognised when the obligation is discharged, cancelled or expires. Where an existing financial liability is replaced by
another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, the exchange or
modification is treated as a derecognition of the original liability and the recognition of a new liability, with the difference in the respective carrying
amounts recognised in the income statement.
The terms are deemed to be substantially different if the discounted present value of the cashflows under the new terms (discounted using the
original effective interest rate) is at least 10% different from the discounted present value of the remaining cash flows of the original financial
liability. Qualitative factors such as a change in the currency the instrument is denominated in, a change in the interest rate from fixed to floating
and conversion features are also considered.
(iii) Classification and measurement
Financial assets are grouped into the following classes: cash and balances with central banks, collateral paid, trading securities and financial assets
measured at FVIS, derivative financial instruments, investment securities, loans, other financial assets and due from related entities.

Notes to the financial statements
12 Westpac Banking Corporation - New Zealand Banking Group
Note 1 Financial statements preparation (continued)
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 NZ Banking Group determines the business model at the level that reflects how groups of financial assets are managed. When assessing the
business model the NZ 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 NZ Banking Group’s policies for determining the fair value of financial assets and financial liabilities are set out in Note 24.
d.Critical accounting assumptions and estimates
Applying the NZ 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 24Fair value of financial assets and financial liabilities

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 13
Note 1 Financial statements preparation (continued)
Impact of COVID-19
The NZ 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 assessments 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 NZ Banking Group.

Notes to the financial statements
14 Westpac Banking Corporation - New Zealand Banking Group
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 NZ Banking Group’s ECL model and on
the carrying amount net of the provision for ECL for financial assets in stage 3.
NZ BANKING GROUP
$ millionsNote20222021
Interest income
Calculated using the effective interest method
Cash and balances with central banks 162 16
Collateral paid 1 -
Investment securities 92 79
Loans 3,470 2,916
Due from related entities22 17 -
Other interest income - 1
Total interest income calculated using the effective interest method 3,742 3,012
Other
Trading securities and financial assets measured at FVIS 82 29
Total other 82 29
Total interest income 3,824 3,041
Interest expense
Calculated using the effective interest method
Collateral received 4 -
Deposits and other borrowings 771 426
Due to related entities22 32 18
Debt issues 167 145
Loan capital 137 122
Other interest expense 44 6
Total interest expense calculated using the effective interest method 1,155 717
Other
Deposits and other borrowings 58 20
Debt issues 39 7
Other interest expense
1
234 239
Total other 331 266
Total interest expense 1,486 983
Net interest income 2,338 2,058
1
Includes the net impact of Treasury's interest rate and liquidity management activities.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 15
Note 3 Non-interest income
Accounting policy
Non-interest income includes net fees and commissions income, net wealth management and insurance income, trading income and other
income.
Net fees and commissions income
When another party is involved in providing goods or services to a NZ Banking Group customer, the NZ 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 NZ Banking Group is acting as an
agent for another party, the income earned by the NZ 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 NZ Banking Group has a future
service obligation to customers under the NZ 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.
Net wealth management income
Wealth management fees earned for the ongoing management of customer funds and investments are recognised when the performance
obligation is satisfied which is over the period of management.
Net insurance income and change in policy liabilities
Net insurance policy assets relating to life insurance contracts were calculated by using the margin on service methodology in accordance with
New Zealand Society of Actuaries Professional Standard 20 Determination of Life Insurance Policy Liabilities. Under this methodology, planned
profit margins and an estimate of future liabilities were calculated separately for each major product line using applied assumptions at each
reporting date. Profit margins were released in line with the service that was provided.
Life insurance premiums with a regular due date were recognised as revenue on an accrual basis. Premiums with no due date were recognised on
a cash received basis.
Life insurance contract claims were recognised as an expense when the liability was established.
Trading income
Realised and unrealised gains or losses from changes in the fair value of trading assets, liabilities and derivatives are recognised in the period
in which they arise (except day one profits or losses which are deferred, refer to Note 24); and
Net income related to Treasury’s interest rate and liquidity management activities is included in net interest income.

Notes to the financial statements
16 Westpac Banking Corporation - New Zealand Banking Group
Note 3 Non-interest income (continued)
NZ BANKING GROUP
$ millions20222021
Net fees and commissions income
Facility fees 43 54
Transaction fees and commissions 207 140
Other non-risk fee income 22 21
Fees and commissions income 272 215
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 206 158
Net wealth management and insurance income
Net wealth management income 37 53
Net insurance income and change in policy liabilities
1
26 73
Net wealth management and insurance income 63 126
Trading income 183 203
Other income
Net ineffectiveness on qualifying hedges 3 (4)
Other non-interest income 3 9
Net gain on disposal of controlled entity
1
126 -
Total other income 132 5
Total non-interest income 584 492
1
On 28 February 2022, the sale of Westpac Life (renamed Fidelity Insurance Limited on 28 February 2022) to Fidelity Life was completed. As such, from 1 March 2022,
the NZ Banking Group does not conduct any insurance business. Refer to Note 33 for details.
Deferred income in relation to the credit card loyalty programmes for the NZ 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 NZ Banking Group.
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 27.
NZ BANKING GROUP
$ millions
Consumer
Banking and
Wealth
Institutional
and Business
Banking
Financial
Markets,
International
Trade and
Payments
Investments
and Insurance
Reconciling
ItemsTotal
Year ended 30 September 2022
Fees and commissions income
Facility fees 24 14 2 - 3 43
Transaction fees and commissions 150 52 (4) - 9 207
Other non-risk fee income 4 12 14 - (8) 22
Fees and commissions income 178 78 12 - 4 272
Fees and commissions expenses (66) - - - - (66)
Net fees and commissions income 112 78 12 - 4 206
Wealth management income 10 - - 27 - 37
Year ended 30 September 2021
Fees and commissions income
Facility fees 26 16 1 - 11 54
Transaction fees and commissions 100 45 - - (5) 140
Other non-risk fee income 9 14 11 - (13) 21
Fees and commissions income 135 75 12 - (7) 215
Fees and commissions expenses (57) - - - - (57)
Net fees and commissions income 78 75 12 - (7) 158
Wealth management income 15 - - 38 - 53

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 17
Note 4 Operating expenses5967-2 04-18
NZ BANKING GROUP
$ millionsNote20222021
Staff expenses 658 566
Lease expense 20 27
Depreciation 88 95
Technology services and telecommunications 155 175
Purchased services 96 112
Software amortisation costs 47 61
Related entities - management fees22 10 10
Other 112 114
Total operating expenses 1,186 1,160
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 $71 million, purchased services decreased by $20 million, other decreased by $14 million and
consultant costs decreased by $37 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.
Note 5 Auditor’s remuneration5967-2 04-18
NZ BANKING GROUP
$'000s20222021
Audit and audit related services
Audit and review of financial statements
1
3,5873,290
Other audit related services
2,3
926382
Total remuneration for audit and other audit related services4,5133,672
Other services--
Total remuneration for non-audit services--
Total remuneration for audit, other audit related services and non-audit services4,5133,672
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 Westpac New Zealand.
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 Westpac New Zealand’s
debt issuance programme (30 September 2021: $53,872).
It is the NZ 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 NZ Banking Group is important.
The external auditor also provides audit and non-audit assurance services to non-consolidated entities, including non-consolidated trusts and non-
consolidated superannuation funds or pension funds of which a member of the NZ Banking Group is manager or responsible entity. During the year
ended 30 September 2022, the fees in respect of these services were $452,897 (30 September 2021: $475,271).

Notes to the financial statements
18 Westpac Banking Corporation - New Zealand Banking Group
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 NZ Banking Group’s loan recovery procedures, the NZ 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 NZ 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.
NZ 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 NZ Banking Group.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 19
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.
NZ BANKING GROUP
$ millions
20222021
Income tax expense
Current tax:
Current year454419
Prior year adjustments(5)(2)
Deferred tax (refer to Note 15):
Current year 11(1)
Prior year adjustments
51
Total income tax expense
465417
Profit before income tax
1,7631,474
Tax calculated at tax rate of 28% 494413
Other non-assessable items(34)(2)
Expenses not deductible for tax purposes57
Prior year adjustments-(1)
Total income tax expense
465417
The effective tax rate for the year ended 30 September 2022 was 26.4% (30 September 2021: 28.3%).
Note 8 Imputation credit account
NZ BANKING GROUP
$ millions20222021
Imputation credits available for use in subsequent reporting periods
1,0471,254

Notes to the financial statements
20 Westpac Banking Corporation - New Zealand Banking Group
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 NZ 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).
NZ BANKING GROUP
$ millions20222021
Government and semi-government securities
1,5242,512
Other debt securities
1,804
1,326
Reverse repurchase agreements
173
697
Total trading securities and financial assets measured at FVIS3,5014,535
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.
NZ BANKING GROUP
$ millions20222021
Government and semi-government securities3,6563,526
Other debt securities1,9671,154
Total investment securities5,6234,680

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 21
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:
NZ BANKING GROUP
$ millions20222021
Residential mortgages 63,827 60,849
Other retail 2,829 2,976
Corporate 31,015 29,547
Other
121 129
Total gross loans 97,792 93,501
Provision for ECL on loans (refer to Note 12) (400) (476)
Total net loans 97,392 93,025

Notes to the financial statements
22 Westpac Banking Corporation - New Zealand Banking Group
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 NZ 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 NZ Banking Group considers that the customer is unable to repay its credit obligations in full, irrespective of recourse by the NZ Banking
Group to action such as realising security. Indicators include a breach of contract with the NZ 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 NZ 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
Westpac Banking Corporation - New Zealand Banking Group 23
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 NZ 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 NZ 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 NZ 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 NZ 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 NZ 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
24 Westpac Banking Corporation - New Zealand Banking Group
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 NZ Banking Group.
NZ 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 35 94 13 17 159 28 126 6 60 220
Total provision for ECL on
loans (refer to Note 11)
87 217 69 27 400 85 248 74 69 476
Provision for ECL on credit
commitments
Residential mortgages 6 4 - - 10 5 1 - - 6
Other retail 5 7 - - 12 5 9 1 - 15
Corporate 5 12 - - 17 7 21 - - 28
Total provision for ECL on
credit commitments (refer to
Note 20)
16 23 - - 39 17 31 1 - 49
Total provision for ECL on
loans and credit commitments
103 240 69 27 439 102 279 75 69 525
Gross loans 85,810 11,439 483 60 97,792 85,020 7,871 501 109 93,501
Credit commitments 26,783 2,120 25 1 28,929 27,412 1,653 17 6 29,088
Gross loans and credit
commitments
112,593 13,559 508 61 126,721 112,432 9,524 518 115 122,589
Coverage ratio on loans (%) 0.10 1.90 14.29 45.00 0.41 0.10 3.15 14.77 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
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
Westpac Banking Corporation - New Zealand Banking Group 25
Note 12 Provision for expected credit losses (continued)
NZ 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
NZ 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
26 Westpac Banking Corporation - New Zealand Banking Group
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:
NZ 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
Westpac Banking Corporation - New Zealand Banking Group 27
Note 12 Provision for expected credit losses (continued)
NZ 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
28 Westpac Banking Corporation - New Zealand Banking Group
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.
NZ 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 NZ 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 NZ 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 NZ 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).
NZ BANKING GROUP
$ millions20222021
Reported probability-weighted ECL 439 525
100% base case ECL 330 412
100% downside ECL 578 700

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 29
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 NZ Banking Group as at 30 September 2022 and 30 September 2021.
NZ 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 NZ 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
30 Westpac Banking Corporation - New Zealand Banking Group
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 $0.8 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 $3.6 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
Westpac Banking Corporation - New Zealand Banking Group 31
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 NZ Banking
Group.
Credit risk mitigation, collateral and other credit enhancements13.5
13.1 Credit risk management framework
Please refer to Note 31.1 for details of the NZ Banking Group’s overall risk management framework.
The Overseas Bank’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 NZ Banking Group has its own credit
approval limits approved by Westpac New Zealand’s Board as delegated by the Overseas Banking Group’s Chief Risk Officer.
The Group BRiskC and the NZ Banking Group ERC monitor the risk profile, performance and management of the NZ 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 NZ 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 NZ Banking Group’s model risk
policies.
An annual review is performed of the Credit Risk Rating System for approval by the Westpac New Zealand BRCC and ERC.
Specific credit risk estimates (including PD, LGD and EAD) are overseen, reviewed annually and supported by the Overseas Bank’s Credit Risk
Estimates Committee (a subcommittee of the Group BRiskC).
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 NZ Banking Group’s Chief Financial Officer and
Chief Risk Officer with oversight from the Westpac New Zealand Board (and its Committees).
Policies for delegating credit approval authorities and formal limits for the extension of credit are established throughout the NZ 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 NZ 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 Related Entity Risk Management Policy and supporting policies govern credit exposures to related entities to minimise the spread of
credit risk between Overseas Banking Group entities and to comply with prudential requirements prescribed by APRA.
Climate change related credit risks are considered in line with the Overseas Banking Group’s Climate Change Position Statement. Climate
change risks are managed in line with the NZ Banking Group’s risk framework which is supported by the Overseas Banking Group’s
Sustainability Risk Management Framework, Westpac New Zealand’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.
The Credit Risk Committee oversees work to identify and manage the potential impact on credit exposures from climate change-related
transition and physical risks across the NZ Banking Group.
Westpac New Zealand’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
32 Westpac Banking Corporation - New Zealand Banking Group
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 NZ Banking Group is exposed. The NZ
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 NZ 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 NZ Banking Group’s high level CRG’s for transaction-managed portfolios mapped to the NZ Banking Group’s credit
quality disclosure categories and to their corresponding external rating.
Transaction-managed
Financial Statement DisclosureNZ Banking Group’s CRGMoody’s RatingS&P Rating
StrongAAaa – Aa3AAA – AA-
BA1 – A3A+ – A-
CBaa1 – Baa3BBB+ – BBB-
Good/satisfactoryDBa1 – B1BB+ – B+
NZ 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.
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 NZ 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 NZ 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 NZ Banking Group’s industry risk appetite limits.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 33
Note 13 Credit risk management (continued)
Individual countries
The NZ 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 NZ Banking Group, or the NZ 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.
NZ BANKING GROUP
$ millions
20222021
Financial assets
Cash and balances with central banks
11,162 8,604
Collateral paid
87 207
Trading securities and financial assets measured at FVIS
3,501 4,535
Derivative financial instruments
9,383 3,852
Investment securities
5,623 4,680
Loans
97,392 93,025
Other financial assets
644
1,388
Due from related entities
6,609 1,739
Total financial assets 134,401 118,030
Undrawn credit commitments
Letters of credit and guarantees
1,025 948
Commitments to extend credit
27,904 28,140
Total undrawn credit commitments 28,929 29,088
Total maximum credit risk exposure 163,330 147,118

Notes to the financial statements
34 Westpac Banking Corporation - New Zealand Banking Group
Note 13 Credit risk management (continued)
Concentration of credit exposures
NZ BANKING GROUP
$ millions20222021
On-balance sheet credit exposures
Analysis of on-balance sheet credit exposures by geographical areas
New Zealand 119,076 111,607
Overseas 15,725 6,899
Subtotal 134,801 118,506
Provision for ECL on loans (400) (476)
Total on-balance sheet credit exposures 134,401 118,030
Analysis of on-balance sheet credit exposures by industry sector
Accommodation, cafes and restaurants 395 464
Agriculture 9,267 9,387
Construction 500 499
Finance and insurance 13,969 9,987
Forestry and fishing 515 488
Government, administration and defence 17,257 15,431
Manufacturing 3,731 1,768
Mining 227 215
Property 8,214 7,878
Property services and business services 1,296 1,202
Services 1,410 1,766
Trade 2,729 2,137
Transport and storage 1,193 1,298
Utilities 2,213 1,999
Retail lending 65,162 62,161
Other - 1
Subtotal 128,078 116,681
Provision for ECL on loans (400) (476)
Due from related entities 6,609 1,739
Other financial assets 114 86
Total on-balance sheet credit exposures 134,401 118,030
ANZSIC has been used as the basis for disclosing industry sectors.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 35
Note 13 Credit risk management (continued)
NZ BANKING GROUP
$ millions20222021
Off-balance sheet credit exposures consists of
Credit risk-related instruments 28,929 29,088
Total off-balance sheet credit exposures 28,929 29,088
Analysis of off-balance sheet credit exposures by geographical areas
New Zealand 28,421 28,547
Overseas 508 541
Total off-balance sheet credit exposures 28,929 29,088
Analysis of off-balance sheet credit exposures by industry sector
Accommodation, cafes and restaurants 126 95
Agriculture 626 694
Construction 509 578
Finance and insurance 1,880 2,082
Forestry and fishing 170 221
Government, administration and defence 966 769
Manufacturing 1,422 1,712
Mining 106 57
Property 1,648 1,621
Property services and business services 785 709
Services 1,285 1,143
Trade 1,717 1,872
Transport and storage 790 985
Utilities 1,838 1,883
Retail lending 15,061 14,667
Total off-balance sheet credit exposures 28,929 29,088
ANZSIC has been used as the basis for disclosing industry sectors.

Notes to the financial statements
36 Westpac Banking Corporation - New Zealand Banking Group
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:
NZ 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
1,527 6,000 - 7,527 6,002 3,353 - 9,355
Weak
- 172 360 532 22 525 403 950
Total Loans - Residential Mortgages
57,295 6,172 360 63,827 56,568 3,878 403 60,849
Loans - Other retail
Strong
1,124 - - 1,124 1,141 - - 1,141
Good/satisfactory
937 573 - 1,510 1,363 226 - 1,589
Weak
2 135 58 195 15 166 65 246
Total Loans - Other retail
2,063 708 58 2,829 2,519 392 65 2,976
Loans - Corporate
Strong
12,953 - - 12,953 10,757 - - 10,757
Good/satisfactory
13,378 3,613 - 16,991 15,047 1,316 - 16,363
Weak
- 946 125 1,071 - 2,285 142 2,427
Total Loans - Corporate
26,331 4,559 125 31,015 25,804 3,601 142 29,547
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
14,409 - - 14,409 10,787 - - 10,787
Good/satisfactory
27 17 - 44 28 5 - 33
Weak
- 2 1 3 - 3 1 4
Total all other financial assets
14,436 19 1 14,456 10,815 8 1 10,824
Undrawn credit commitments
Strong
22,561 6 - 22,567 22,639 1 - 22,640
Good/Satisfactory
4,211 1,979 - 6,190 4,766 1,525 - 6,291
Weak
11 135 26 172 7 127 23 157
Total undrawn credit commitments
26,783 2,120 26 28,929 27,412 1,653 23 29,088
Total strong
112,559 6 - 112,565 100,677 1 - 100,678
Total good/satisfactory
20,080 12,182 - 32,262 27,206 6,425 - 33,631
Total weak
13 1,390 570 1,973 44 3,106 634 3,784
Total on and off balance sheet
132,652 13,578 570 146,800 127,927 9,532 634 138,093
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.
Details of collateral held in support of these balances are provided in Note 13.5.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 37
Note 13 Credit risk management (continued)
13.5 Credit risk mitigation, collateral and other credit enhancements
The NZ Banking Group uses a variety of techniques to reduce the credit risk arising from its lending activities.
This includes the NZ 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.
Collateral
The table below 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 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 NZ Banking Group mitigates credit risk through controls covering:
Collateral and valuation
management
The Overseas Bank manages collateral under collateralisation agreements centrally for all branches of the
Overseas Bank and Westpac New Zealand.
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 NZ 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’s 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.
Other credit enhancements
The NZ 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 NZ 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 NZ Banking Group’s corporate, sovereign and bank credit portfolios
through monitoring the exposure and any offsetting hedge positions.
Credit Portfolio Management purchases credit protection from entities that meet minimum eligibility
requirements.

Notes to the financial statements
38 Westpac Banking Corporation - New Zealand Banking Group
Note 13 Credit risk management (continued)

Offsetting
Creditworthy customers domiciled in New Zealand may enter into formal agreements with the NZ Banking
Group, permitting the NZ 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 NZ Banking Group has entered into a legally
enforceable master netting agreement for their off-balance sheet financial market transactions in the event of
default.
Further details of offsetting are provided in Note 25.
Central clearing
The NZ 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.
Collateral held against loans
The NZ 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 NZ Banking Group's loan portfolio has the following coverage from collateral held:
NZ 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 70 53 89 100 49 68 37 88
Partially secured
- 2 11 3 4 - 3 15 1 5
Unsecured
- 50 19 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 27 - 74
Partially secured
6 1 37 - 13 6 6 14 - 8
Unsecured
- 33 30 - 10 - 43 59 - 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
NZ BANKING GROUP
$ millions20222021
Cash, primarily for derivatives 724 320
Securities under reverse repurchase agreements
1
171
692
Total other collateral held 895 1,012
1
Securities received as collateral are not recognised on the NZ Banking Group's balance sheet.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 39
Note 14 Other financial assets
NZ BANKING GROUP
$ millions20222021
Accrued interest receivable 168 98
Trade debtors 2 4
Securities sold not delivered 263 663
Interbank lending 99 541
Other 112 82
Total other financial assets 644 1,388

Notes to the financial statements
40 Westpac Banking Corporation - New Zealand Banking Group
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 NZ Banking Group’s critical
accounting assumptions and estimates.
NZ BANKING GROUP
$ millions20222021
Deferred tax assets/(liabilities) comprise the following temporary differences:
Provision for ECL on loans
112 133
Provision for ECL on credit commitments
11 14
Cash flow hedges
(164) (24)
Provision for employee entitlements
21 23
Compliance, regulation and remediation provisions
18 21
Software, property and equipment
(43) (48)
Lease liabilities
78 81
Net insurance policy assets
- -
Financial instruments
28 17
Other temporary differences
7 9
Net deferred tax assets
68 226
The deferred tax (charge)/credit in income tax expense comprises the following temporary
differences:
Provision for ECL on loans
(21) (37)
Provision for ECL on credit commitments
(3) -
Compliance, regulation and remediation provisions
(3) 9
Software, property and equipment
5 5
Lease liabilities
(3) 2
Net insurance policy assets
- 9
Financial instruments
11 4
Other temporary differences
(2) 8
Total deferred tax (charge)/credit in income tax expense
(16) -
Deferred tax balances reclassified to assets held for sale
Net insurance policy assets
- 38
Total deferred tax balances reclassified to assets held for sale
- 38
The deferred tax (charge)/credit in OCI comprises the following temporary differences:
Cash flow hedges
(140) (52)
Provision for employee entitlements
(2) (5)
Total deferred tax (charge)/credit in OCI
(142) (57)
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

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 41
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 NZ 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 NZ 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)
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.
NZ BANKING GROUP
$ millions20222021
Goodwill525525
Computer software
309196
Total intangible assets
834721
Goodwill has been allocated to the following CGUs:
Consumer Banking and Wealth512512
BT New Zealand
1
13
13
Net carrying amount of goodwill
525525
1
BT New Zealand forms part of the Investments and Insurance operating segment, as described in Note 27.
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 NZ Banking Group continues to have considerable headroom when determining whether
goodwill is recoverable, and no impairment should be recognised.

Notes to the financial statements
42 Westpac Banking Corporation - New Zealand Banking Group
Note 16 Intangible assets (continued)
Significant assumptions used in recoverable amount calculations
The assumptions made for goodwill impairment testing for each relevant significant 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 NZ 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
CGUs.
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%
BT New Zealand10.5% / 13.8%9.0% / 12.2%3 years / 2%3 years / 2%
The NZ 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 any significant CGU that would result in an indication of impairment or have a
material impact on the NZ Banking Group’s reported results.
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.
NZ BANKING GROUP
$ millions
20222021
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

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 43
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:
trading liabilities (i.e. securities sold short); and
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.
NZ BANKING GROUP
$ millions20222021
Accrued interest payable303130
Securities purchased not delivered
267
622
Trade creditors and other accrued expenses
79
93
Interbank placements
289
Securities sold short
640
962
Repurchase agreements
1
4,277
3,014
Other1320
Total other financial liabilities5,6074,850
Other financial liabilities at fair value
9501,880
Other financial liabilities at amortised cost4,6572,970
Total other financial liabilities5,6074,850
1
Repurchase agreements include those under the Funding for Lending Programme and Term Lending Facility. Refer to Note 31.2.2 for further details.

Notes to the financial statements
44 Westpac Banking Corporation - New Zealand Banking Group
Note 19 Debt issues
Accounting policy
Debt issues are bonds, notes and commercial paper that have been issued by the NZ 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.
NZ 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
NZ 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
Westpac Banking Corporation - New Zealand Banking Group 45
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 NZ Banking Group is committed to provide facilities and guarantees as explained in Note 26. 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 NZ 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.
NZ 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
Restructuring
provisions
OtherTotal
Balance as at 30 September 2021
86 49 76 30 - 2 243
Additions 47 - 27 3 23 - 100
Utilisation
(30) - (16) - (6) - (52)
Reversal of unutilised provisions (1) (10) (22) - - (1) (34)
Balance as at 30 September 2022 102 39 65 33 17 1 257
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 NZ 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 NZ 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 26 for further details on contingent liabilities.
Restructuring provisions
The NZ Banking Group carries restructuring provisions for changes in its business, primarily for separation and redundancy costs. The additions
and utilisations in the current year primarily relate to restructuring provisions arising from the sale of Westpac Life on 28 February 2022. Refer to
Note 33 for further details.

Notes to the financial statements
46 Westpac Banking Corporation - New Zealand Banking Group
Note 21 Loan capital
Accounting policy
Loan capital are debt instruments which qualify for inclusion as regulatory capital under either the Reserve Bank BPRs or, in relation to the
Overseas Bank, the APRA Prudential Standards. 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.
NZ BANKING GROUP
$ millions20222021
Additional Tier 1 loan capital - USD AT1 securities 1,986 1,900
Tier 2 loan capital - Subordinated notes
590
-
Tier 2 loan capital - Convertible subordinated notes -
1,088
Total loan capital 2,576 2,988
NZ BANKING GROUP
$ millions20222021
Movement reconciliation
Balance at beginning of the year
2,988 3,220
Issuances
1
590 -
Maturities, repayments, buy-backs and reductions
(1,178) -
Total cash movements (588)
-
FX translation impact 460 (115)
Fair value hedge accounting adjustments (284) (119)
Other (amortisation of bond issue costs, etc) - 2
Total non-cash movements 176 (232)
Balance at end of the year 2,576 2,988
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 USD AT1 securities is provided below:
$Issue dateInterest rateOptional redemption date
US$1,250 million securities
1
21 September 20175.00% p.a.
2
21 September 2027 and every fifth anniversary thereafter
1
The USD AT1 securities were issued by the Overseas Bank acting through its NZ Branch.
2
Fixed interest rate of 5.00% p.a., until, but excluding 21 September 2027 (the ‘first reset date’). Every fifth anniversary thereafter is a reset date. If the USD AT1
securities are not redeemed, converted or written-off by the first reset date, the interest rate from, and including, each reset date thereafter to, but excluding the
next succeeding reset date, will be a fixed rate per annum equal to the prevailing 5-year USD mid-market swap rate plus 2.888% per annum.
Interest payable
Semi-annual interest payments on the USD AT1 securities are at the absolute discretion of the Overseas Bank and will only be paid if the payment
conditions are satisfied, including that the interest payment will not result in a breach of the Overseas Bank’s capital requirements under APRA’s
prudential standards; not result in the Overseas Bank becoming, or being likely to become, insolvent; and if APRA does not object to the payment.
Broadly, if for any reason an interest payment has not been paid in full on the relevant payment date, the Overseas Bank must not determine or
pay any dividends on Overseas Bank ordinary shares or undertake a discretionary buy-back or capital reduction of Overseas Bank ordinary shares,
unless the unpaid interest is paid in full within 20 business days of the relevant payment date or in certain other circumstances.
Redemption
The Overseas Bank may redeem all (but not some) USD AT1 securities on 21 September 2027 and every fifth anniversary thereafter, or for certain
taxation or regulatory reasons, subject to APRA’s prior written approval.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 47
Note 21 Loan capital (continued)
Conversion
If a capital trigger event or non-viability trigger event occurs, the Overseas Bank must convert some or all of the USD AT1 securities into a variable
number of Overseas Bank ordinary shares calculated using the formula described in the terms of the USD AT1 securities but subject to a maximum
conversion number. The conversion number of the Overseas Bank’s ordinary shares will be calculated using the outstanding principal amount of
each USD AT1 security translated into Australian dollars and the Overseas Bank ordinary share price determined over the five business day period
prior to the capital trigger event date or non-viability trigger event date and includes a 1% discount. The maximum conversion number is
calculated using the outstanding principal amount of each USD AT1 security translated into Australian dollars at the time of issue and the Overseas
Bank share price which is broadly equivalent to 20% of the Overseas Bank ordinary share price at the time of issue of the USD AT1 securities.
A capital trigger event occurs when the Overseas Bank determines, or APRA notifies the Overseas Bank in writing that it believes, the Overseas
Bank’s Common Equity Tier 1 Capital ratio is equal to or less than 5.125% (on a level 1 or level 2 basis). A non-viability trigger event will occur when
APRA notifies the Overseas Bank in writing that it believes conversion of all or some USD AT1 securities (or conversion or write-down of relevant
capital instruments of the Overseas Banking Group), or public sector injection of capital (or equivalent support), in each case is necessary
because without it, the Overseas Bank would become non-viable. No conversion conditions apply in these circumstances.
If conversion of the USD AT1 securities does not occur within five business days, holders’ rights in relation to the USD AT1 securities will be
immediately and irrevocably terminated.
Tier 2 loan capital
On 16 September 2022, Westpac New Zealand issued $600m of subordinated notes. On 22 September 2022, Westpac New Zealand 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 Westpac New Zealand.
Interest payable
Quarterly interest payments on the subordinated notes are subject to Westpac New Zealand being solvent at the time of, and immediately following
the interest payment.
Early redemption
Westpac New Zealand 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
1
8 September
2015
London Branch of the
Overseas Bank
Australian 90 day bank bill
rate + 2.87% p.a.
22 March 2026Redeemed on 22 September
2022
1
The convertible subordinated notes were issued by Westpac New Zealand.
Interest payable
Quarterly interest payments on the convertible subordinated notes were subject to Westpac New Zealand being solvent at the time of, and
immediately following the interest payment.
Early redemption
Westpac New Zealand redeemed all of the convertible subordinated notes for their face value together with accrued interest on 22 September
2022.

Notes to the financial statements
48 Westpac Banking Corporation - New Zealand Banking Group
Note 22 Related entities
Related entities
The NZ 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.
NZ Banking Group
The NZ Banking Group consists of the New Zealand operations of the Overseas Banking Group including the NZ Branch and the following
controlled entities as at 30 September 2022 whose business is required to be reported in the financial statements of the Overseas Banking Group’s
New Zealand business:
Name of entityPrincipal activityNotes
BT Financial Group (NZ) Limited (‘BTFGNZL’)Holding company
BT Funds Management (NZ) Limited (‘BTNZ’)Funds management company
Westpac Financial Services Group-NZ-Limited (‘WFSGNZL’)Holding company
Westpac Nominees-NZ-Limited (‘WNNZL’)Nominee company
Westpac Superannuation Nominees-NZ-Limited (‘WSNNZL’)Nominee company
Westpac Group Investment-NZ-Limited (‘WGINZL’)Holding company
Westpac Holdings-NZ-Limited (‘WHNZL’)Holding company
Westpac Capital-NZ-Limited (‘WCNZL’)Finance company
Westpac Equity Investments NZ LimitedNon-active company
Westpac New Zealand Group Limited (‘WNZGL’)Holding company
Westpac New Zealand LimitedRegistered bank
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
Limited
Trustee company
Westpac (NZ) Investments Limited (‘WNZIL’)Property company
Westpac Securities NZ Limited (‘WSNZL’)Funding company
Westpac NZ Covered Bond Holdings Limited (‘WNZCBHL’)Holding company19% owned
2
Westpac NZ Covered Bond Limited (‘WNZCBL’)Guarantor19% owned
2
Westpac NZ Securitisation Holdings Limited (‘WNZSHL’)Holding company19% owned
3
Westpac NZ Securitisation Limited (‘WNZSL’)Funding company19% owned
3
Westpac NZ Securitisation No.2 Limited (‘WNZSL2’)Non-active company19% 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 NZ Banking Group, through WNZOL (9.5%) and WHNZL (9.5%), has a total qualifying interest of 19% in WNZCBHL and its wholly-owned subsidiary company,
WNZCBL. Westpac New Zealand 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 NZ Banking Group.
3
The NZ Banking Group, through WNZOL (9.5%) and WHNZL (9.5%), has a total qualifying interest of 19% in WNZSHL and its wholly-owned subsidiaries, WNZSL and
WNZSL2. Westpac New Zealand 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 NZ 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 PIEs, where BTNZ is the manager and issuer. The manager has appointed Westpac New Zealand to perform all customer management and account
administration for the PIE Funds. Westpac New Zealand is the PIE Funds’ registrar and administration manager. Westpac New Zealand 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 NZ Banking Group.
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. The transaction resulted in a gain on sale of $126 million. Refer to Note 33 for more details.
On 16 June 2022, WNZGL issued 5,616,000,000 ordinary shares to its immediate parent company, Westpac Overseas Holdings No.2 Pty Limited,
for $1 per share which was settled through dividends declared of equivalent value on the same day.
On 28 June 2022, WFSGNZL acquired 59,140,734 ordinary shares from its sole shareholder, Westpac Equity Holdings Pty Limited, for $1 per share.
Other than disclosed above, there have been no changes in the ownership percentages since 30 September 2021.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 49
Note 22 Related entities (continued)
All entities in the NZ Banking Group are 100% owned unless otherwise stated. All the entities within the NZ 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.
Other significant related entities of the NZ Banking Group include the Overseas Bank and branches of the Overseas Bank based in London and New
York.
Nature of transactions
The NZ Banking Group has transactions with members of the Overseas Banking Group on commercial terms, including the provision of
management, distribution and administrative services and data processing facilities.
Loan finance and current account banking facilities are provided by the NZ Branch and the Overseas Bank to members of the NZ Banking Group on
normal commercial terms. The interest earned on these loans and the interest paid on deposits are at market rates.
The NZ Banking Group enters into derivative transactions with the Overseas Bank (refer to Note 23). They are accounted for as trading derivatives
except for cross currency swaps in place with the Overseas Bank, which are designated in a cash flow hedge relationship to hedge the currency
risk exposure of funding from the London Branch and Tier 2 notes issued to the London Branch up until redemption date (refer to Note 21).
Transactions with related entities
NZ BANKING GROUP
$ millionsNote20222021
Overseas Bank
Interest income2 17 -
Interest expense:
Loan capital
1
37 33
Other
2
2 32 18
Operating expenses - management fees4 10 10
Funding repaid
- 29
Other controlled entities of the Overseas Bank
WGINZL dividend paid to Westpac Overseas Holdings Pty Limited
3
82 -
WFSGNZL dividend paid to Westpac Equity Holdings Pty Limited (‘WEHPL’)
4
400 -
BTFGNZL dividend paid to WEHPL
5
35 -
WNZGL dividend paid to Westpac Overseas Holdings No. 2 Pty Limited ('WOHN2PL')
6
6,379 265
1
Interest expense paid on the Tier 2 notes issued by the NZ Banking Group and held by related parties.
2
Includes interest expense incurred on funding from the Overseas Banking Group.
3
On 23 March 2022, WGINZL declared and paid dividend of $82 million to Westpac Overseas Holdings Pty Limited.
4
On 22 March 2022, WFSGNZL declared and paid a dividend of $400 million to WEHPL, predominantly reflecting the distribution proceeds from the sale of Westpac
Life.
5
On 23 March 2022, BTFGNZL declared and paid a dividend of $35.4 million to WEHPL.
6
On 22 February 2022, 16 June 2022 and 22 August 2022, WNZGL declared and paid a dividend of $455 million, $5,616 million (which was settled through the
issuance of an equivalent value of ordinary shares on the same day) and $308 million to WOHN2PL.
Due from and to related entities
NZ BANKING GROUP
$ millions20222021
Due from related entities
Overseas Bank6,6091,739
Total due from related entities6,6091,739
Due from related entities at fair value
1
4,0451,115
Due from related entities at amortised cost2,564624
Total due from related entities6,6091,739
Due to related entities
Overseas Bank8,2912,410
Other controlled entities of the Overseas Banking Group1-
Total due to related entities8,2922,410
Due to related entities at fair value
2
6,5161,184
Due to related entities at amortised cost1,7761,226
Total due to related entities8,2922,410
1
Consists of derivative financial instruments of $4,044 million (30 September 2021: $1,115 million) (refer to Note 23) and trading securities of $1 million (30
September 2021: nil).
2
Consists of derivative financial instruments of $6,516 million (30 September 2021: $1,184 million) (refer to Note 23).

Notes to the financial statements
50 Westpac Banking Corporation - New Zealand Banking Group
Note 22 Related entities (continued)
Key management personnel compensation
Key management personnel are those who, directly or indirectly, have authority and responsibility for planning, directing and controlling the
activities of the NZ Banking Group. This includes all Executive/Non-Executive Directors and the executive team of Westpac New Zealand, and
other members of the executive team of the NZ Banking Group.
NZ BANKING GROUP
$'000s20222021
Salaries and other short-term benefits 9,936 9,224
Post-employment benefits 696 626
Termination benefits 684 1,087
Share-based payments 1,766 3,333
Total key management personnel compensation 13,082 14,270
Loans to key management personnel 7,675 10,370
Deposits from key management personnel 8,415 19,276
Interest income on amounts due from key management personnel 111 281
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.
Where the Directors of the Overseas Bank have received remuneration from the NZ Banking Group, the amounts are included above. Details of
Directors’ remuneration are disclosed in the Overseas Banking Group’s 30 September 2022 Annual Financial Report.
Loans and deposits with key management personnel
All loans and deposits are made in the ordinary course of business of the NZ 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 NZ 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 Banking Corporation - New Zealand Banking Group 51
Note 23 Derivative financial instruments
Accounting policy
Derivative financial instruments are instruments whose values are derived from the value of an underlying asset, reference rate or index and
include forwards, futures, swaps and options. Derivatives with related parties are included in due from/due to related entities.
The NZ Banking Group uses derivative financial instruments for meeting customers’ needs; our ALM activities, and undertaking market making and
positioning activities.
Trading derivatives
Derivatives which are used in our ALM activities but are not designated into a hedge accounting relationship are considered economic hedges.
These derivatives, along with derivatives used for meeting customers’ needs and undertaking market making and positioning activities are
measured at FVIS and are disclosed as trading derivatives.
Hedging derivatives
Hedging derivatives are those which are used in our ALM activities and have also been designated into one of 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 NZ Banking Group’s ALM activities, refer to Note 31.
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
52 Westpac Banking Corporation - New Zealand Banking Group
Note 23 Derivative financial instruments (continued)
The carrying values of derivative instruments are set out in the tables below:
NZ BANKING GROUP
2022
TradingHedging
Total derivatives carrying
value
$ millions
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Interest rate contracts
Swap agreements13,157(13,026)1,303(567)14,460(13,593)
Total interest rate contracts13,157(13,026)1,303(567)14,460(13,593)
FX contracts
Spot and forward contracts5,072(4,829)--5,072(4,829)
Cross currency swap agreements (principal and
interest)3,836(4,508)386(690)4,222(5,198)
Total FX contracts8,908(9,337)386(690)9,294(10,027)
Total of gross derivatives22,065(22,363)1,689(1,257)23,754(23,620)
Impact of netting arrangements(10,327)10,327--(10,327)10,327
Total of net derivatives11,738(12,036)1,689(1,257)13,427(13,293)
Consisting of:
Derivatives held with external counterparties7,694(5,520)1,689(1,257)9,383(6,777)
Derivatives held with related parties4,044(6,516)--4,044(6,516)
NZ BANKING GROUP
2021
TradingHedging
Total derivatives carrying
value
$ millions
AssetsLiabilitiesAssetsLiabilitiesAssetsLiabilities
Interest rate contracts
Swap agreements6,282(5,629)403(185)6,685(5,814)
Total interest rate contracts6,282(5,629)403(185)6,685(5,814)
FX contracts
Spot and forward contracts988(968)--988(968)
Cross currency swap agreements (principal and
interest)1,178(977)240(169)1,418(1,146)
Total FX contracts2,166(1,945)240(169)2,406(2,114)
Total of gross derivatives8,448(7,574)643(354)9,091(7,928)
Impact of netting arrangements(4,124)4,124--(4,124)4,124
Total of net derivatives4,324(3,450)643(354)4,967(3,804)
Consisting of:
Derivatives held with external counterparties3,209(2,287)643(333)3,852(2,620)
Derivatives held with related parties1,115(1,163)-(21)1,115(1,184)

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 53
Note 23 Derivative financial instruments (continued)
Hedge accounting
The NZ 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 NZ 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 NZ 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 NZ 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 NZ 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 NZ Banking Group primarily uses
one-to-one hedge accounting to manage specific exposures.
The NZ 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 NZ 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 NZ 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 NZ 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 NZ 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 NZ 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 NZ Banking Group’s ALM activities, economic hedges may be entered into to hedge long-term funding transactions.
Interest Rate Benchmark Reform
The NZ Banking Group’s hedging relationships include hedged items and hedging instruments that are impacted by IBOR reform. Refer to Note
31.4 for further details of the NZ Banking Group’s exposure to IBOR reform.

Notes to the financial statements
54 Westpac Banking Corporation - New Zealand Banking Group
Note 23 Derivative financial instruments (continued)
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.
NZ 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
347 3,190 - 3,537 39 (208)
Cross currency swap Interest rate risk 269 9,890 1,911 12,070 (196) (876)
Cash flow hedges Cross currency swap FX risk 269 9,890 1,911 12,070 583 186
Total one-to-one hedge relationships 885 22,970 3,822 27,677 426 (898)
Macro hedge relationships
Portfolio fair value hedges Interest rate swap Interest rate risk N/AN/AN/A 22,365 339 (12)
Macro cash flow hedges Interest rate swap Interest rate risk N/AN/AN/A 24,548 924 (347)
Total macro hedge relationships N/AN/AN/A 46,913 1,263 (359)
Total of gross hedging derivatives N/AN/AN/A 74,590 1,689 (1,257)
Impact of netting arrangements N/AN/AN/AN/A - -
Total of net hedging derivatives N/AN/AN/AN/A 1,689 (1,257)
NZ 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
410 1,351 1,816 3,577 89 (54)
Cross currency swap Interest rate risk 1,686 3,739 3,035 8,460 64 16
Cash flow hedges Cross currency swap FX risk 2,931 4,827 3,035 10,793 176 (185)
Total one-to-one hedge relationships 5,027 9,917 7,886 22,830 329 (223)
Macro hedge relationships
Portfolio fair value hedges Interest rate swap Interest rate risk N/AN/AN/A 26,596 56 (25)
Macro cash flow hedges Interest rate swap Interest rate risk N/AN/AN/A 21,798 258 (106)
Total macro hedge relationships N/AN/AN/A 48,394 314 (131)
Total of gross hedging derivatives N/AN/AN/A 71,224 643 (354)
Impact of netting arrangements N/AN/AN/AN/A - -
Total of net hedging derivatives N/AN/AN/AN/A 643 (354)

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 55
Note 23 Derivative financial instruments (continued)
The following table shows the weighted average exchange rate related to significant hedging instruments in one-to-one hedge relationships:
NZ 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
0.69490.7057
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.
NZ 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 securities1,325(57)1,72817
Loans
21,979(385)26,539(57)
Debt issues
(12,960)1,241(10,431)(149)
There were no accumulated FVHA adjustments (30 September 2021: nil) 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:
NZ BANKING GROUP
20222021
$ millions
Interest rate
riskFX risk Total
Interest rate
riskFX risk Total
Cash flow hedge reserve
Balance at beginning of the year160(72)88(9)(87)(96)
Net gains/(losses) from changes in fair value
44147488158(30)128
Transferred to net interest income
(13)2512114556
Balance at end of year
588-588160(72)88
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
56 Westpac Banking Corporation - New Zealand Banking Group
Note 23 Derivative financial instruments (continued)
Hedge effectiveness
Hedge effectiveness is tested prospectively at inception and during the lifetime of hedge relationships. For one-to-one hedge relationships this testing uses a
qualitative assessment of matched terms where the critical terms of the derivatives used as the hedging instrument match the terms of the hedged item. In
addition, a quantitative effectiveness test is performed for all hedges which could include regression analysis, dollar offset and/or sensitivity analysis.
Retrospective testing is also performed to determine whether the hedge relationship remains highly effective so that hedge accounting can continue to be
applied and also to determine any ineffectiveness. These tests are performed using regression analysis and the dollar offset method.
The following tables provide information regarding the determination of hedge effectiveness:
NZ 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
109(118)(9)
Cross currency swap Interest rate risk
(1,103)1,1041
Cash flow hedges
Interest rate swap Interest rate risk
440(429)11
Cross currency swap FX risk
72(72)-
Total
(482)4853
NZ 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
176(178)(2)
Cross currency swap Interest rate risk
(71)70(1)
Cash flow hedges
Interest rate swap Interest rate risk
167(169)(2)
Cross currency swap FX risk
15(15)-
Total
287(292)(5)

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 57
Note 24 Fair values of financial assets and financial liabilities
Accounting policy
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
On initial recognition, the transaction price generally represents the fair value of the financial instrument unless there is observable information
from an active market to the contrary. Where unobservable information is used, the difference between the transaction price and the fair value
(day one profit or loss) is recognised in the income statement over the life of the instrument when the inputs become observable.
Critical accounting assumptions and estimates
The majority of valuation models used by the NZ 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 NZ 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 NZ 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 Overseas Banking 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 NZ Banking Group categorises all fair value instruments according to the hierarchy described below.
Valuation techniques
The NZ Banking Group applies market accepted valuation techniques in determining the fair valuation of over-the-counter derivatives. This includes
credit valuation adjustments and funding valuation adjustments, 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
58 Westpac Banking Corporation - New Zealand Banking Group
Note 24 Fair values of financial assets and financial liabilities (continued)
Financial instruments measured at fair value
Level 1 instruments
The fair value of financial instruments traded in active markets is based on recent unadjusted quoted prices. These prices are based on actual
arm’s length basis transactions.
The valuations of Level 1 instruments require little or no management judgement.
InstrumentBalance sheet categoryIncludes:Valuation
Exchange traded
products
Derivative financial
instruments
Due from related entities
Due to related entities
Exchange traded
interest rate futures -
derivative financial
instruments
FX products
Derivative financial
instruments
FX spot contracts
Debt instruments
Trading securities and
financial assets measured at
FVIS
Investment securities
Other financial liabilities
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 and FX
forward contracts -
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.
Asset backed
debt
instruments
Trading securities and financial
assets measured at FVIS
Investment securities
Asset backed securities
Valued using an industry approach to value floating rate debt
with prepayment features. The main inputs to the model are the
trading margin and the weighted average life of the security.
These inputs are sourced from a consensus data provider. If
consensus prices are not available, these are classified as Level
3 instruments.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 59
Note 24 Fair values of financial assets and financial liabilities (continued)
InstrumentBalance sheet categoryIncludes:Valuation
Non-asset backed
debt instruments
Trading securities and financial
assets measured at FVIS
Investment securities
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 applicable credit rating of
the NZ Banking Group.
Life insurance
assets
Life insurance assets included in
assets held for sale
Local authority securities,
investment grade
corporate bonds, life
insurance contract
liabilities and units in
unlisted unit trusts
Valued using observable market prices or other widely used
and accepted valuation techniques utilising observable
market inputs.
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.
InstrumentBalance sheet categoryIncludes:Valuation
Interest rate
derivatives
Derivative financial instruments
Non-vanilla interest rate
(inflation indexed)
derivatives and long-
dated NZD caps
Valued using industry standard valuation models utilising
observable market inputs which are determined separately
for each parameter. Where unobservable, inputs will be set
with reference to an observable proxy.

Notes to the financial statements
60 Westpac Banking Corporation - New Zealand Banking Group
Note 24 Fair values of financial assets and financial liabilities (continued)
The following table summarises the attribution of financial instruments measured at fair value to the fair value hierarchy:
NZ BANKING GROUP
20222021
$ millionsLevel 1Level 2Level 3
1
TotalLevel 1Level 2Level 3
1
Total
Financial assets measured at fair value on a
recurring basis
Trading securities and financial assets measured at FVIS 335 3,166 - 3,501 891 3,644 - 4,535
Derivative financial instruments 1 9,382 - 9,383 1 3,851 - 3,852
Investment securities 1,982 3,641 - 5,623 2,152 2,528 - 4,680
Assets held for sale - - - - - 370 - 370
Due from related entities 5 4,040
-
4,045 16 1,099 - 1,115
Total financial assets measured at fair value 2,323 20,229 - 22,552 3,060 11,492 - 14,552
Financial liabilities measured at fair value on a
recurring basis
Deposits and other borrowings at fair value
2
- 2,939 - 2,939 - 3,450 - 3,450
Other financial liabilities
2
598 352 - 950 932 948 - 1,880
Derivative financial instruments 2 6,773 2 6,777 10 2,607 3 2,620
Due to related entities 3 6,513 - 6,516 7 1,177 - 1,184
Debt issues at fair value
2
- 5,490 - 5,490 - 2,979 - 2,979
Total financial liabilities measured at fair value 603 22,067 2 22,672 949 11,161 3 12,113
1
Balances within this category of the fair value hierarchy are not considered material to the total derivative financial instruments balances.
2
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.
There were no material amounts of changes in fair value estimated using a valuation technique incorporating significant non-observable inputs that
were recognised in the income statement or the statement of comprehensive income of the NZ Banking Group during the year ended 30 September
2022 (30 September 2021: no material changes in fair value).
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).

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 61
Note 24 Fair values of financial assets and financial liabilities (continued)
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
Fair values are calculated in respect of long-term debt 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.
Liabilities held for sale
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.
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.
The following table summarises the estimated fair value and fair value hierarchy of the NZ Banking Group’s financial instruments not measured at fair
value:
NZ 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 11,162 11,162 - - 11,162
Collateral paid 87 87 - - 87
Loans 97,392 - - 96,041 96,041
Other financial assets 644 - - 644 644
Due from related entities
2,564 - 2,564 -
2,564
Total financial assets not measured at fair value 111,849 11,249 2,564 96,685 110,498
Financial liabilities not measured at fair value
Collateral received 724 724 - - 724
Deposits and other borrowings 77,909 - 75,487 2,408 77,895
Other financial liabilities 4,657 - 4,657 - 4,657
Due to related entities 1,776 - 1,776 -
1,776
Debt issues
1
14,443 - 14,242 - 14,242
Loan capital
1
2,576 - 2,428 - 2,428
Total financial liabilities not measured at fair value 102,085 724 98,590 2,408 101,722
1
The estimated fair value of debt issues includes the impact of changes in the NZ Banking Group's credit spreads since origination.

Notes to the financial statements
62 Westpac Banking Corporation - New Zealand Banking Group
Note 24 Fair values of financial assets and financial liabilities (continued)
NZ 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 8,604 8,604 - - 8,604
Collateral paid 207 207 - - 207
Loans 93,025 - - 92,880 92,880
Other financial assets 1,388 - 541 847 1,388
Due from related entities
624 - 624 -
624
Total financial assets not measured at fair value 103,848 8,811 1,165 93,727 103,703
Financial liabilities not measured at fair value
Collateral received 320 320 - - 320
Deposits and other borrowings 75,917 - 74,307 1,641 75,948
Other financial liabilities 2,970 - 2,970 - 2,970
Due to related entities 1,226 - 1,226 -
1,226
Debt issues
1
13,325 - 13,423 - 13,423
Loan capital
1
2,988 - 1,942 1,095
3,037
Liabilities held for sale
2 - 2 -
2
Total financial liabilities not measured at fair value 96,748 320 93,870 2,736 96,926
1
The estimated fair value of debt issues and level 3 loan capital include the impact of changes in the NZ Banking Group's credit spreads since origination.
Note 25 Offsetting financial assets and financial liabilities
Accounting policy
Financial assets and financial liabilities are presented net on the balance sheet when the NZ 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 NZ 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 NZ 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 NZ Banking Group are further explained in the
‘Management of risk mitigation’ section under Note 13.5.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 63
Note 25 Offsetting financial assets and financial liabilities (continued)
NZ BANKING GROUP
2022
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
173 - 173 - - (171) 2
Derivative financial instruments
2
18,158 (10,327) 7,831 (3,885) (526) - 3,420
Due from related entities - derivative
financial instruments
3
4,044 - 4,044 (4,044) - - -
Total assets 22,375 (10,327) 12,048 (7,929) (526) (171) 3,422
Liabilities
Repurchase agreements
4
4,277 - 4,277 - - (4,277) -
Derivative financial instruments
2
16,282 (10,327) 5,955 (3,885) (37) - 2,033
Due to related entities - derivative
financial instruments
5
6,516 - 6,516 (4,044) - - 2,472
Total liabilities 27,075 (10,327) 16,748 (7,929) (37) (4,277) 4,505
NZ 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
697 - 697 - - (692) 5
Derivative financial instruments
2
7,739 (4,124) 3,615 (2,019) (314) - 1,282
Due from related entities - derivative
financial instruments
3
1,115 - 1,115 (1,115) - - -
Total assets 9,551 (4,124) 5,427 (3,134) (314) (692) 1,287
Liabilities
Repurchase agreements
4
3,014 - 3,014 - - (3,014) -
Derivative financial instruments
2
6,607 (4,124) 2,483 (2,019) (144) - 320
Due to related entities - derivative
financial instruments
5
1,184 - 1,184 (1,115) - - 69
Total liabilities 10,805 (4,124) 6,681 (3,134) (144) (3,014) 389
1
Forms part of trading securities and financial assets measured at FVIS (refer to Note 9).
2
$1,552 million (30 September 2021: $236 million) of derivative financial assets and $822 million (30 September 2021: $136 million) of derivative financial liabilities
are not subject to enforceable netting arrangements.
3
Forms part of due from related entities on the balance sheet (refer to Note 22).
4
Forms part of other financial liabilities on the balance sheet (refer to Note 18).
5
Forms part of due to related entities on the balance sheet (refer to Note 22).

Notes to the financial statements
64 Westpac Banking Corporation - New Zealand Banking Group
Note 25 Offsetting financial assets and financial liabilities (continued)
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 26 Credit related commitments, contingent assets and contingent liabilities
Accounting policy
Undrawn credit commitments
The NZ 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.
Undrawn credit commitments
Undrawn credit commitments expose the NZ 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 NZ 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 NZ 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 31 for further details on credit risk management and liquidity
risk.
NZ BANKING GROUP
$ millions
20222021
Letters of credit and guarantees
1
1,025948
Commitments to extend credit
2
27,90428,140
Total undrawn credit commitments28,92929,088
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 NZ Banking Group may hold cash as collateral for
certain guarantees issued.
2
Commitments to extend credit include all obligations on the part of the NZ Banking Group to provide credit facilities. As facilities may expire without being drawn
upon, the notional amounts do not necessarily reflect future cash requirements.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 65
Note 26 Credit related commitments, contingent assets and contingent liabilities (continued)
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 NZ 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 NZ 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.
The NZ Banking Group has potential exposure relating to warranties, indemnities and other commitments it has provided to Fidelity Life and
Westpac Life in connection to the sale of Westpac Life outlined in Note 33. The warranties, indemnities and other commitments cover a range of
matters and risks, including certain accounting, compliance and taxation matters.
Note 27 Segment reporting
Accounting policy
Operating segments are presented on a basis that is consistent with information provided internally to the NZ Banking Group’s chief operating
decision-maker and reflect the management of the business, rather than the legal structure of the NZ 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 NZ
Banking Group has determined that the NZ Banking Group 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 NZ Banking Group operates predominantly in the Consumer Banking and Wealth, Institutional and Business Banking, Financial Markets,
International Trade and Payments, 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 NZ 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. Refer to Note 33 for details.
The NZ Banking Group’s operating segments are defined by the customers they serve and the services they provide. The NZ 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;
Financial Markets provides foreign exchange, interest rate derivatives, government and credit products, commodities, carbon and energy
capabilities. International Trade and Payments provide international trade solutions, payments products and services to consumer, business
and institutional 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/aggregation of the results, assets and liabilities of the NZ Banking Group’s controlled entities in the
preparation of the aggregated financial statements of the NZ Banking Group; and
results of certain business units excluded for management reporting purposes, but included within the aggregated financial statements of
the NZ Banking Group for statutory financial reporting purposes.

Notes to the financial statements
66 Westpac Banking Corporation - New Zealand Banking Group
Note 27 Segment reporting (continued)
NZ BANKING GROUP
$ millions
Consumer
Banking and
Wealth
Institutional
and Business
Banking
Financial
Markets,
International
Trade and
Payments
Investments
and
Insurance
Reconciling
Items
Total
Year ended 30 September 2022
Net interest income1,1381,10640252
2,338
Non-interest income143
1099456182584
Net operating income before operating expenses and
impairment charges
1,2811,215134582342,922
Operating expenses(648)(433)(37)(43)(25)
(1,186)
Impairment (charges)/benefits324---
27
Profit before income tax63680697152091,763
Year ended 30 September 2021
Net interest income1,117959281(47)
2,058
Non-interest income
13310513110716492
Net operating income before operating expenses and
impairment charges
1,2501,064159108(31)2,550
Operating expenses(677)(386)(27)(44)(26)
(1,160)
Impairment (charges)/benefits786---
84
Profit before income tax65168413264(57)1,474
As at 30 September 2022
Total gross loans57,96839,684556-(416)97,792
Total deposits and other borrowings43,57434,334--2,94080,848
As at 30 September 2021
Total gross loans54,37438,809403-(85)93,501
Total deposits and other borrowings40,37135,546--3,45079,367

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 67
Note 28 Securitisation, covered bonds and other transferred assets
The NZ 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 NZ 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 NZ Banking Group for liquidity deals.
Securitisation of its own assets is used by the NZ Banking Group as a funding and liquidity tool.
For securitisation structured entities which the NZ Banking Group controls, as defined in Note 29, the structured entities are classified as subsidiaries
and consolidated. When assessing whether the NZ Banking Group controls a structured entity, it considers its exposure to and ability to affect variable
returns. The NZ 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 Westpac New Zealand’s internal residential mortgage-backed securitisation programme. Under this
programme Westpac New Zealand 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 Westpac New Zealand to WNZSL are fully eliminated in the
NZ Banking Group’s financial statements.
Westpac New Zealand 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 NZ Banking Group will arise from these obligations.
Covered bonds
The NZ 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 Westpac New Zealand) 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 Westpac New Zealand 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 Westpac New Zealand are fully eliminated in the NZ Banking Group’s
financial statements.
Westpac New Zealand is obliged to repurchase any loan sold to and held by WNZCBL (pursuant to Westpac New Zealand’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 NZ 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.

Notes to the financial statements
68 Westpac Banking Corporation - New Zealand Banking Group
Note 28 Securitisation, covered bonds and other transferred assets (continued)
The following table presents the NZ Banking Group’s assets transferred and their associated liabilities:
NZ 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 5,345 4,277 n/an/an/a
Total 27,948 22,919 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 3,431 3,014 n/an/an/a
Total 24,939 21,327 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. Westpac New Zealand 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 Westpac New Zealand 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).
Note 29 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 NZ Banking Group does not control a
structured entity then it will not be consolidated.
The NZ 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 NZ Banking Group uses structured entities to securitise its financial assets through the Covered Bond Programme and Westpac New Zealand’s
internal residential mortgage-backed securitisation programme. Refer to Note 28 for further details.
NZ Banking Group managed funds
As disclosed in Note 22, the PIE Funds are consolidated within the financial statements of the NZ Banking Group.
Non-contractual financial support
The NZ Banking Group does not provide non-contractual financial support to these consolidated structured entities.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 69
Note 29 Structured entities (continued)
Unconsolidated structured entities
The NZ Banking Group has interests in various unconsolidated structured entities including debt instruments, guarantees, liquidity arrangements,
lending, loan commitments, certain derivatives and investment management agreements.
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 NZ Banking Group’s main interests in unconsolidated structured entities, which arise in the normal course of business, are:
Loans and other
credit commitments
The NZ Banking Group lends to unconsolidated structured entities, subject to the NZ 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.
Investment
management
agreements
The NZ Banking Group manages funds that provide customers with investment opportunities. The NZ Banking
Group also manages superannuation funds for its employees. The NZ Banking Group earns management fee income
which is recognised in non-interest income.
The NZ Banking Group may also retain units in these investment management funds, primarily through its
consolidated life insurance entity up until its date of sale on 28 February 2022. The NZ Banking Group earns fund
distribution income and recognises fair value movements through non-interest income.
The following table shows the NZ 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 and guarantees, the maximum exposure
to loss is the notional amounts.
NZ BANKING GROUP
20222021
$ millions
Financing to
Securitisation
Vehicles
Group Managed
FundsTotal
Financing to
Securitisation
Vehicles
Group Managed
FundsTotal
Assets
Loans 3,892 - 3,892 3,128-3,128
Held for sale assets - - - -237237
Total on-balance sheet
exposures
3,892 - 3,892 3,1282373,365
Total notional amounts of
off-balance sheet exposures
1,322 16 1,338 1,563161,579
Maximum exposure to
loss
5,214 16 5,230 4,6912534,944
Size of structured entities
1
5,214 10,967 16,181 4,69112,17516,866
1
Represented by the total assets or market capitalisation of the entity, or if not available, the NZ Banking Group’s total committed exposure (for lending
arrangements and external debt holdings), funds under management (for Group managed funds).
Non-contractual financial support
The NZ Banking Group does not provide non-contractual financial support to these unconsolidated structured entities.

Notes to the financial statements
70 Westpac Banking Corporation - New Zealand Banking Group
Note 30 Capital management
The Overseas Bank is a registered bank in New Zealand and conducts business in New Zealand through the NZ Banking Group. The capital held by
the NZ Banking Group comprises of the head office account, NZ Banking Group equity and loan capital.
Most of the NZ Banking Group’s capital is held in, and managed by Westpac New Zealand. Westpac New Zealand’s Board is responsible for
ensuring that capital adequacy of Westpac New Zealand is maintained and complies with the regulatory capital requirements prescribed by the
Reserve Bank.
There are no current regulatory capital requirements that apply specifically to the NZ Branch or the NZ Banking Group. The Overseas Bank’s Board
is responsible for ensuring that capital adequacy of the Overseas Banking Group and the Overseas Bank is maintained. The NZ Banking Group’s
capital is managed as part of the Overseas Banking Group’s Internal Capital Adequacy Process. Westpac New Zealand is also required to maintain
its own Internal Capital Adequacy Process under the Reserve Bank of New Zealand’s capital adequacy requirements.
Under APRA’s Prudential Standards, Australian ADIs, including the Overseas Banking Group and the Overseas Bank are required to maintain
minimum ratios of capital to risk weighted assets, as determined by APRA. The minimum capital ratios are at least equal to those specified under
the Basel III capital framework. For the calculation of risk weighted assets, the Overseas Banking Group and the Overseas Bank are accredited by
APRA to apply advanced models permitted by the Basel III global capital adequacy regime. The Overseas Banking Group and the Overseas Bank
use the IRB approach for credit risk, the Standardised Measurement Approach for operational risk and the internal model approach for interest
rate risk in the banking book for calculating regulatory capital.
APRA’s prudential standards are generally consistent with the International Regulatory Framework for Banks, also known as Basel III, issued by the
Basel Committee on Banking Supervision, except where APRA has exercised certain discretions.
The Overseas Banking Group (excluding entities specifically excluded by APRA regulations), and the Overseas Bank (Extended Licensed Entity as
defined by APRA), exceeded the minimum capital adequacy requirements as specified by APRA as at 30 September 2022.
The Overseas Banking Group’s approach to capital management seeks to ensure that it is adequately capitalised as an ADI.
The Overseas Banking Group evaluates its approach to capital management through an Internal Capital Adequacy Process, the key features of
which include:
the development of a capital management strategy, including consideration of regulatory minimums, capital buffers and contingency plans.
The current APRA regulatory capital minimums together with the capital conservation buffer are the Total Common Equity Tier 1 (CET1)
Requirement. The Total CET1 Requirement for the Overseas Banking Group is at least 8.0%, based upon an industry minimum CET1
requirement of 4.5% plus a capital buffer of at least 3.5% applicable to Domestic Systemically Important Banks (D-SIBs)
1,2,3
;
consideration of regulatory capital requirements and the perspectives of external stakeholders including rating agencies as well as equity
and debt investors; and
a stress testing framework that challenges the capital measures, coverage and requirements, including the impact of adverse economic
scenarios.
From 1 January 2023, APRA’s revised capital framework, including updated prudential standards for capital adequacy and credit risk capital, will
become effective. As part of the revised framework, APRA has set a Total CET1 Requirement for D-SIBs of 10.25%. This requirement includes a
capital conservation buffer of 4.75% applicable to D-SIBs and a base level for the countercyclical capital buffer of 1.0%. APRA has also indicated
that it expects that D-SIBs (including the Overseas Bank) will likely operate with CET1 capital ratio above 11% in normal operating conditions under
the new framework. The Overseas Bank and the Overseas Banking Group will seek to operate with a CET1 capital ratio of between 11.0% and 11.5%
(operating capital range) in normal operating conditions as measured under the new capital framework from 1 January 2023.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 71
Note 30 Capital management (continued)
The table below represents the capital adequacy calculation for the Overseas Banking Group and Overseas Bank as at 30 September 2022 based on
APRA’s application of the Basel III capital adequacy framework.
30 Sep 2230 Sep 21
%
UnauditedUnaudited
Overseas Banking Group (excluding entities specifically excluded by APRA)
4,5
Common Equity Tier 1 capital ratio 11.3 12.3
Additional Tier 1 capital ratio 2.1 2.3
Tier 1 capital ratio 13.4 14.6
Tier 2 capital ratio 5.0 4.2
Total regulatory capital ratio 18.4 18.9
Overseas Bank (Extended Licensed Entity)
4,6
Common Equity Tier 1 capital ratio 11.3 12.6
Additional Tier 1 capital ratio 2.2 2.3
Tier 1 capital ratio 13.6 14.9
Tier 2 capital ratio 5.4 4.3
Total regulatory capital ratio 19.0 19.2
1
Noting that APRA may apply higher Common Equity Tier 1 (CET1) requirements for an individual ADI.
2
If an ADI's CET1 ratio falls below the Total CET1 Requirement (at least 8%), they face restrictions on the distribution of earnings, such as dividends, distribution
payments on AT1 capital instruments and discretionary staff bonuses.
3
The Overseas Bank and the Overseas Banking Group are required to hold minimum capital as determined by APRA, which is at least equal to that specified under
the Basel III capital framework.
4
The capital ratios represent information mandated by APRA. The capital ratios of the Overseas Banking Group are publicly available in the Overseas Banking
Group’s Pillar 3 report. This information is made available to users via the Overseas Bank’s website (www.westpac.com.au).
5
Overseas Banking Group (excluding entities specifically excluded by APRA regulations) comprises the consolidation of the Overseas Bank and its subsidiary
entities except those entities specifically excluded by APRA regulations for the purposes of measuring capital adequacy (Level 2). The head of the Level 2 group is
the Overseas Bank.
6
Overseas Bank (Extended Licensed Entity) comprises the Overseas Bank and its subsidiary entities that have been approved by APRA as being part of a single
Extended Licensed Entity for the purpose of measuring capital adequacy (Level 1).
The Overseas Banking Group is required to disclose additional detailed information on its risk management practices and capital adequacy on a
quarterly basis. This information is made available to users via the Overseas Banking Group’s website (www.westpac.com.au).

Notes to the financial statements
72 Westpac Banking Corporation - New Zealand Banking Group
Note 31 Risk management, funding and liquidity risk and market risk
Financial instruments are fundamental to the NZ 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 NZ Banking Group.
This note details the financial risk management policies, practices and quantitative information of the NZ Banking Group’s principal financial risk
exposures.
Principal risksNote nameNote number
OverviewRisk management frameworks31.1
Credit riskRefer to Note 13 Credit risk management13
Funding and liquidity risk
The risk that the NZ 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.
Liquidity modelling
Sources of funding
Assets pledged as collateral
Contractual maturity of financial liabilities
Expected maturity
31.2.1
31.2.2
31.2.3
31.2.4
31.2.5
VaR
Traded market risk
31.3.1
31.3.2
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 risk31.3.3
Benchmark interest rate exposureInterest rate benchmark reform31.4
31.1 Risk management frameworks
The Board is responsible for approving the Overseas Banking Group’s Risk Management Framework, Risk Management Strategy and Risk Appetite
Statement and monitoring the effectiveness of risk management by the Overseas Banking Group.
The Board has delegated to the Group BRiskC responsibility to:
review and recommend the Overseas 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 NZ Banking Group consistent with the Overseas Banking Group’s Risk Appetite
Statement;
approve frameworks, policies and processes for managing risk (consistent with the Overseas Banking Group’s Risk Management Framework
and Risk Appetite Statement); and
review and, where appropriate, approve risks beyond the approval discretion provided to management.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 73
Note 31 Risk management, funding and liquidity risk and market risk (continued)
For each of its primary financial risks, the NZ 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
 Westpac New Zealand funding and liquidity risk is measured
and managed in accordance with the policies and processes
defined in the Westpac New Zealand BRCC approved Liquidity
Risk Management Framework.
 Responsibility for managing Westpac New Zealand’s liquidity
and funding positions in accordance with the Liquidity Risk
Management Framework is delegated to Westpac New
Zealand Treasury, under the oversight of Westpac New
Zealand’s ALCO and the Financial Markets and Treasury Risk
unit.
 Westpac New Zealand Treasury undertakes an annual funding
review that outlines Westpac New Zealand’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. This review is subsequently submitted to
Westpac New Zealand BRCC for approval.
 Daily liquidity risk reports are reviewed by Westpac New
Zealand Treasury and the Westpac New Zealand Financial
Markets and Treasury Risk unit. Liquidity reports are
presented to Westpac New Zealand ALCO monthly and to the
Westpac New Zealand BRCC quarterly.
 Westpac New Zealand Treasury also maintains a contingent
funding plan that outlines the steps that should be taken by
Westpac New Zealand in the event of an emerging ‘funding
crisis’. The plan is approved by Westpac New Zealand BRCC.
 The NZ Branch funding and liquidity risk is measured and
managed in accordance with the policies and processes
defined in the Group BRiskC approved Liquidity Risk
Management Framework, which is part of the Group’s Board
approved Risk Management Strategy.
 Responsibility for managing the NZ Branch liquidity and
funding positions in accordance with the Liquidity Risk
Management Framework is delegated to Group Treasury,
under the oversight of Overseas Banking Group’s ALCO and
Treasury Risk. Group BRiskC oversees the Overseas Banking
Group’s ALCO with regards to APRA APS 210 obligations.
 The Overseas Banking Group monitors the composition and
stability of its funding to allow it to remain within its funding
risk appetite. This includes compliance with both the LCR and
NSFR.
Market risk
 The Market Risk Management Framework describes the
Overseas Banking Group’s approach to managing traded and
non-traded market risk and is approved by the Group BRiskC.
Westpac New Zealand operates its own Market Risk
Management Framework that is closely aligned with that of
the Overseas Banking Group. The Westpac New Zealand
Framework is approved by the Westpac New Zealand BRCC.
 Traded market risk includes interest rate, foreign exchange,
commodity, credit spread and volatility risks. Non-traded
market risk includes interest rate and foreign exchange risks.
 The NZ Banking Group’s framework does not allow for equity
risk to be held.
 Market risk is managed using VaR limits, NaR and structural
risk limits (including credit spread and interest rate basis
point value limits) as well as scenario analysis and stress
testing.
 The Group BRiskC approves the risk appetite for traded and
non-traded risks through the use of VaR, NaR and specific
structural risk limits.
 The Overseas Banking Group’s RISKCO has approved separate
VaR sub-limits for the trading activities of the Overseas
Banking Group’s Financial Markets and Treasury units.
 Market risk limits are assigned to business management
based upon the Overseas Banking Group’s risk appetite and
business strategies in addition to the consideration of market
liquidity and concentration of risks.
 Market risk positions are managed by the trading and
Treasury desks consistent with their delegated authorities
and the nature and scale of the market risks involved.
 Daily monitoring of current exposure and limit utilisation is
conducted independently by Financial Markets and Treasury
Risk, which monitors market risk exposures against VaR and
structural risk limits. Oversight of risk specific to the NZ
Banking Group is monitored by the NZ Branch’s Trading Risk
Management Unit. Daily VaR position reports are produced by
risk type, by product lines and by geographic region.
Quarterly reports are produced for the Overseas Banking
Group’s MARCO, Overseas Banking Group’s RISKCO and
Group BRiskC.
 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 Group BRiskC has approved a framework for profit or loss
escalation which considers both single day and 20 day
cumulative results.
 Treasury’s ALM unit is responsible for managing the non-
traded interest rate risk including risk mitigation through
hedging using derivatives. This is overseen by the Financial
Markets and Treasury Risk unit and reviewed by the Group
MARCO, Overseas Banking Group’s RISKCO and Group
BRiskC.

Notes to the financial statements
74 Westpac Banking Corporation - New Zealand Banking Group
Note 31 Risk management, funding and liquidity risk and market risk (continued)
Climate change risk
The NZ 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 NZ 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 NZ 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.
Westpac New Zealand 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 Westpac New Zealand’s approach to managing climate change risks against the four
TCFD pillars is described below.
Governance:
Westpac New Zealand’s Board is responsible for considering the social, ethical, and environmental impact of Westpac New Zealand’s
activities, and setting standards and monitoring compliance with Westpac New Zealand's sustainability policies and practices. Westpac New
Zealand’s RISKCO oversees material risks, including climate-related risks. Westpac New Zealand’s Credit Risk Committee, a subcommittee of
RISKCO, oversees climate-related risks that present a credit risk to Westpac New Zealand.
Westpac New Zealand is also represented on the Overseas Banking 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 Overseas
Banking Group and reports to the Overseas Banking Group’s Credit Risk Committee.
Strategy:
Westpac New Zealand 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 Westpac New Zealand.
During the year ended 30 September 2022, the Overseas 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, Westpac New Zealand 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 Westpac New Zealand's customers.
Westpac New Zealand continues to evolve its ability to conduct climate-related scenario analysis.
Risk Management:
Climate change risks are managed in accordance with Westpac New Zealand’s Risk Management Framework which is supported by Westpac
New Zealand’s Sustainability Risk Management Framework (SRMF), Westpac New Zealand’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 Westpac New Zealand’s
changing needs and expectations.
Metrics and Targets:
Westpac New Zealand 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.
Westpac New Zealand’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 NZ 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 NZ 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 Westpac New Zealand's approach to climate-related risks, refer to Westpac New Zealand's 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
Westpac Banking Corporation - New Zealand Banking Group 75
Note 31 Risk management, funding and liquidity risk and market risk (continued)
31.2 Funding and liquidity risk
31.2.1 Liquidity modelling
Westpac New Zealand is subject to the conditions specified in the Reserve Bank document ‘BS13 Liquidity Policy.’ The following metrics are calculated
and reported on a daily basis by Westpac New Zealand 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 Overseas Banking Group calculates the following liquidity ratios for Westpac New Zealand in accordance with the Overseas Bank’s
liquidity risk framework under APRA Prudential Standard APS 210 Liquidity:
liquidity coverage ratio; and
net stable funding ratio.
31.2.2 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 terms 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, Westpac New Zealand 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 resident 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, Westpac New Zealand has drawn down $3,871 million under the Funding for Lending Programme (30 September 2021: $2,000
million).

Notes to the financial statements
76 Westpac Banking Corporation - New Zealand Banking Group
Note 31 Risk management, funding and liquidity risk and market risk (continued)
Liquid assets
The NZ 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 NZ Banking Group’s holding of liquid assets. Liquid assets include high quality assets readily convertible to cash to
meet the NZ Banking Group’s liquidity requirements. In management’s opinion, liquidity is sufficient to meet the NZ Banking Group’s present
requirements.
NZ BANKING GROUP
$ millions20222021
Cash and balances with central banks11,1628,604
Interbank lending99541
Supranational securities1,900873
NZ Government securities1,5351,942
NZ public securities2,5442,383
NZ corporate securities1,5911,386
Residential mortgage-backed securities7,3978,603
Available liquid assets26,22824,332

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 77
Note 31 Risk management, funding and liquidity risk and market risk (continued)
Concentration of funding
NZ BANKING GROUP
$ millions20222021
Funding consists of
Collateral received 724 320
Deposits and other borrowings 80,848 79,367
Other financial liabilities
1
4,945 3,985
Due to related entities
2
1,753 1,209
Debt issues
3
19,933 16,304
Loan capital 2,576 2,988
Total funding 110,779 104,173
Analysis of funding by geographical areas
3
New Zealand 86,665 82,208
Australia 2,124 2,141
United Kingdom 8,822 9,191
United States of America 7,796 5,396
China 3,940 1,756
Other 1,432 3,481
Total funding 110,779 104,173
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 40,436 39,489
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
5,836 5,228
Subtotal 109,026 102,964
Due to related entities
2
1,753 1,209
Total funding 110,779 104,173
1
Other financial liabilities, as presented above, are in respect of securities sold under agreements to repurchase, securities sold short 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
78 Westpac Banking Corporation - New Zealand Banking Group
Note 31 Risk management, funding and liquidity risk and market risk (continued)
31.2.3 Assets pledged as collateral
The NZ 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 28, the carrying value of these financial assets pledged as collateral is:
NZ BANKING GROUP
$ millions20222021
Cash 87 207
Securities pledged under repurchase agreements:
Investment securities - 580
Trading securities and financial assets measured at FVIS 347 338
Residential mortgage-backed securities
1
4,998 2,513
Total amount pledged to secure liabilities (excluding Covered Bond Programme) 5,432 3,638
1
As at 30 September 2022, the NZ 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).
31.2.4 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 NZ 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 NZ Banking Group manages based on their contractual maturity are presented on a contractual undiscounted basis in the
following table.

Notes to the financial statements
Westpac Banking Corporation - New Zealand Banking Group 79
Note 31 Risk management, funding and liquidity risk and market risk (continued)
NZ 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-724----724
Deposits and other borrowings43,2776,96011,87317,7441,656-81,510
Other financial liabilities295401640964,296-5,728
Derivative financial instruments:
Held for trading 5,521-----5,521
Held for hedging purposes (net settled)-7116993771600
Held for hedging purposes (gross settled):
Cash outflow-33603598,0021,88110,335
Cash inflow--(11)(35)(7,024)(1,827)(8,897)
Due to related entities:
Non-derivative balances1,751---2411,776
Derivative financial instruments:
Held for trading 6,516-----6,516
Debt issues-6702,6133,49512,9681,94421,690
Loan capital--9281492,9923,178
Total undiscounted financial liabilities57,3608,79515,30021,78620,4484,992128,681
Total contingent liabilities and commitments
Letters of credit and guarantees1,025-----1,025
Commitments to extend credit27,904-----27,904
Total undiscounted contingent liabilities and
commitments
28,929-----28,929