Westpac 1Q23 Capital, Credit Quality and Funding Update

ASX
Release


17 February 2023


WESTPAC 1Q23 CAPITAL, CREDIT QUALITY AND FUNDING UPDATE

Following is Westpac’s 1Q23 slides covering capital, credit quality and funding for
the three months ended December 2022.







For further information:

Hayden Cooper Justin McCarthy
Group Head of Media Relations General Manager, Investor Relations
0402 393 619 0422 800 321


This document has been authorised for release by Tim Hartin, Company Secretary.



Level 18, 275 Kent Street
Sydney, NSW, 2000

FOR THE 3 MONTHS ENDED 31 DECEMBER 2022
WESTPAC BANKING CORPORATION
ABN 33 007 457 141
This document should be read in conjunction with Westpac’s December 2022
Pillar 3 Report. Content principally covers and compares the 1Q23 and 2H22
quarterly average periods unless otherwise stated. All amounts are in Australian
dollars.
1Q23
Capital, Credit Quality
and Funding Update

1Q23 summary.
Summary
•Stressed assets to TCE
4
1.06%, down 1bp
•Mortgage 90+ day delinquencies:
-Australia 0.70%, down 5bps
-New Zealand 0.24%, up 2bps
•CAP
5
to credit RWA 121bps, up 5bps
•Impairment charge of $184m
-IAP
6
benefit of $107m
-CAP charge of $291m
Solid capital position
Sound credit quality
•CET1
1
capital ratio of 11.13%
•From 1 Jan-23 CET1 capital ratio increases ~45bps under APRA’s
revised capital framework
2
•RWA
3
up $2.8bn or 0.6%, mostly from higher lending
•LCR
7
at 139%, up 7 ppts
•NSFR
8
at 122%, up 1 ppt
•Deposit to loan ratio 84.0%, up 1.1 ppts
2Westpac Group 1Q23 Capital, Credit Quality and Funding Update
1 Common equity tier 1 (CET1). 2 The CET1 increase is an estimate and may change on the final implementation of APRA’s revised framework. 3 Risk weighted assets (RWA). 4 Total committed exposure (TCE). 5 Collectively assessed provisions
(CAP). 6 Individually assessed provisions (IAP). 7 Liquidity coverage ratio (LCR). 8 Net stable funding ratio (NSFR).
Strengthened funding and
liquidity

11.29
0.30
11.13
0.10
~0.45~11.68
(0.43)
(0.03)
Sep-22FY22
dividend
net of
DRP
RWA
excl
FX
OtherDec-22Asset
sales
Basel 3CET1
incl asset
sales and
Basel 3
2
RWA details on
page 4
CET1 capital ratio 11.13%.
3
Capital
Westpac Group 1Q23 Capital, Credit Quality and Funding Update
Level 2 CET1 capital ratio movements (%)
1Q23 earnings partly offset by
higher deductions
1 Reflects announced exits relating to Superannuation and the Advance Asset Management business, 10bps (subject to divestmentcompletion occurring). 2 Increase is an estimate and may change on the final implementation of APRA’s revised
framework. 3 Actual movement is $2.8bn in 1Q23, but does not add due to rounding. 4 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ dated 13 July 2015.
Key capital ratios (%)Dec-21Sep-22Dec-22
Level 2 CET1 capital ratio 12.211.311.1
Additional Tier 1 capital ratio2.22.12.1
Tier 1 capital ratio14.413.413.2
Tier 2 capital ratio4.85.04.9
Total regulatory capital ratio19.218.418.1
Risk weighted assets
(RWA)($bn)
3
442478480
Leverage ratio 5.85.65.5
Level 1 CET1 capital ratio12.411.311.1
Internationally comparable ratios
4
Leverage ratio
(internationally comparable)
6.36.05.9
CET1 capital ratio
(internationally comparable)
18.017.617.4
1

363.9
359.8
362.1
4.1
1.6
(1.1)
(2.8)
Dec-21Sep-22Credit
quality
LendingCounterparty
credit and
mark-to-market
risk
FX
translation
Dec-22
1.3
0.7
442.4
477.6
1.8
1.1
480.4
(2.1)
Dec-21Sep-22CreditMarketIRRBBOperationalOtherDec-22
1
Risk weighted assets movements.
4
Risk weighted assets (RWA) ($bn)
•RWA up $2.8bn or 0.6% from:
-Credit RWA increased $1.8bn (4bps impact) due to loan growth partly
offset by lower counterparty credit risk
-Market RWA up $1.3bn (3bps impact) mainly from underlying portfolio
movements
-IRRBB RWA up $1.1bn (3bps impact) mainly from the underlying
portfolio which impacted the repricingandyield curve risk component of
the IRRBB calculation, while regulatory embedded loss was lower
-Operational RWA down $2.1bn (5bps impact) due to reduced
operational risk assessed under APRA’s Standardised Measurement
Approach
2
Movement in credit risk weighted assets ($bn)IRRBB RWA ($bn)
1 Interest rate risk in the banking book (IRRBB). 2 Westpac adopted the Standardised Measurement Approach to calculate operational risk capital from Jan-22. Under the revised standard, operational risk was calculated using the FY22 audited financial
statements.
Capital
Up $1.8bn or 0.5%
Specialised lending and
mortgages
12
27
4343
44
1.28
2.60
3.63
4.05
4.04
Dec-21Mar-22Jun-22Sep-22Dec-22
3y Swap rate (%)
Up $2.8bn or 0.6%
Westpac Group 1Q23 Capital, Credit Quality and Funding Update
Lower mark-to-market value of
derivatives from FX

832
528
452
398
1,131
903
947
981
1,601
1,315
1,685
1,830
788
1,002
841
865
647
1,018
700
706
4,999
4,766
4,625
4,780
Sep-21Dec-21Sep-22Dec-22
Overlay Stage 1 CAP
Stage 2 CAP Stage 3 CAP
Stage 3 IAP
Provision coverage.
Forecasts used in economic scenarios
3
Provisioning
Total impairment provisions
1
($m)Provision coverage
Sep-21Dec-21Sep-22Dec-22
Provisions to credit RWA140bps132bps128bps132bps
CAP to credit RWA117bps118bps116bps121bps
Provisions to TCE44bps41bps39bps40bps
Impaired provisions to
impaired assets
54%49%48%44%
2
5Westpac Group 1Q23 Capital, Credit Quality and Funding Update
1 Excludes provisions for debt securities. 2 Reduction in impaired provisions to impaired assets ratio reflects writebacks. 3Forecast provided by Westpac Economics at 13 December 2022. 4 These key economic indicators represent trough or peak
values that characterise the scenarios considered in setting downside severity.
Movement in overlays
driven by exchange rate
volatility
Reduction in IAP mainly
from write-backs
Base caseDownside
4
Sep-22Dec-22
202220222023Trough / peak
GDP growth3.4%2.6%1.0%(6%)
Unemployment3.1%3.2%4.5%11%
Residential property prices(6.5%)(2.7%)(7.8%)(27%)
CAP (ex overlays)
higher:
-Updated Westpac
Economics forecast
-Portfolio growth
-Marginal improvement
in credit quality

2.92
1.55
1.0
2.0
3.0
4.0
5.0
6.0
Dec-19Jun-20Dec-20Jun-21Dec-21Jun-22Dec-22
30+ day delinquencies90+ day delinquencies
1.24
0.70
0.0
1.0
2.0
3.0
4.0
Dec-19Jun-20Dec-20Jun-21Dec-21Jun-22
Dec-22
30+ day delinquencies90+ day delinquencies
0.17
0.26
0.19
0.13
0.12
0.48
0.80
0.68
0.51
0.52
0.55
0.85
0.49
0.43
0.42
1.20
1.91
1.36
1.07
1.06
Sep-19Sep-20Sep-21Sep-22Dec-22
Stressed exposures and delinquencies.
6
1 Facilities 90 days or more past due date not impaired. These facilities, while in default, are not treated as impaired for accounting purposes. 2 Consumer finance includes personal loans, overdrafts, credit cards and auto loans.
Credit quality
Australian consumer finance delinquencies
2
(%)
Westpac Group 1Q23 Capital, Credit Quality and Funding Update
Stressed exposures as a % of TCE
Australian mortgage delinquencies (%)
Watchlist and substandard
90+ day past due and not impaired
1
Impaired
COVID-19 deferrals
Small increase in 30+ day
delinquencies mainly due to
seasonality and cost of living
pressures
30+ day delinquencies up 13bps due to
seasonality and cost of living pressures
and balance contraction

Australian mortgage portfolio composition.
Westpac Group 1Q23 Capital, Credit Quality and Funding Update7
1 Includes amortisation. Calculated at account level, where split loans represent more than one account. 2 Mortgage loss rates for Dec-22 balances are annualised, based on losses for the 3 months. Mortgage loss rates for September are actual losses
for the 12 months ending. 3 Dynamic LVR is the loan-to-value ratio taking into account the current loan balance, changes in security value, offset account balances and other loan adjustments. Property valuation source: CoreLogic.
Mortgage credit quality
Australian mortgage portfolio
Sep-21
balance
Sep-22
balance
Dec-22
balance
Total portfolio ($bn)
455.6
467.6470.9
Owner occupied (OO) (%)
63.7
65.866.2
Investment property loans (IPL) (%)
33.8
32.632.3
Portfolio loan/line of credit (LOC) (%)
1.9
1.61.5
Variable rate / Fixed rate (%)
62/38
63/3765/35
Interest only (I/O) (%)
15.8
13.513.4
Proprietary channel (%)
52.8
51.851.6
First home buyer (%)
9.6
10.19.9
Mortgage insured (%)
15.8
14.714.5
Sep-21Sep-22Dec-22
Average loan size
1
($’000)277286289
Customers ahead on repayments
including offset account balances(%)
706868
Annual mortgage loss rate
2
(bps)2<1<1
Fixed rate mortgage expiry schedule
at 31 December 2022 ($bn)
Australian housing loan-to-value ratios (LVRs)
at 31 December 2022
3
(%)
20
15
44
12
7
1
63
15
12
7
1
0.7
0.7
0<=6060<=7070<=8080<=9090<=9595<=100>100
At originationDynamic
11
18
29
56
36
21
21
9
2
2
2
2
1H232H231H242H241H252H251H262H261H272H27
Expired 1Q23Yet to expire

44%
45%
11%
Originated since Jul-22
Originated between Aug-19 and Jun-22
Originated before Aug-19
Analysis of minimum contractual
repayment at December 2022
Dynamic LVR with no LMI
>80%Of which >85%Of which >90%
Repayment buffer<12months
(Total: $159bn)
$13.4bn$7.0bn$3.5bn
Of which repayment buffer <3months
(Total: $137bn)
$12.1bn$6.4bn$3.2bn
Australian mortgage portfolio analysis.
Westpac Group 1Q23 Capital, Credit Quality and Funding Update8
Focus on mortgages originated between Aug-19 and Jun-22
2,4
Mortgage credit quality
1 Includes all mortgage products. 2 Between Aug-19 and Jun-22, Australian mortgages were assessed using a serviceability buffer of 2.5%-3.0%. Assuming a cash rate of 3.85% (Westpac Economics peak forecast), the serviceability buffer for these
mortgages is expected to be exceeded. 3 Captures accounts active in both Jun-22 and Dec-22. Increase is measured based on the actual repayment made in Jun-22 and the contractual mortgage rates at a cash rate of 3.1% assuming rates changed by
an equivalent amount. Analysis assumes an IO mortgage remains an IO mortgage. 4 Excludes equity/line of credit products as thereare no scheduled principal payments. 5 Analysis based on minimum repayments. Includes fixed and variable rate
mortgages.
Australian mortgage book by
origination period at
31 Dec-22: $471 billion
1
Percentage increase in variable-rate repayment following interest rate
changes (accounts at 31 Dec-22)
3,4
31
18
38
4
9
25
8
25
31
12
No change>0%<20%20%-40%40%-60%>60%
Originated before Aug-19Originated between Aug-19 and Jun-22
Mortgages
originated at lower
interest rates
2
Accounts >12 months
ahead
4,5
: 32%
Accounts >12 months
ahead
4,5
: 44%

New Zealand credit quality.
Business stressed exposures as
a % of New Zealand business TCE
1
9
Credit quality
Westpac Group 1Q23 Capital, Credit Quality and Funding Update
1 Chart does not add due to rounding.
0.1
0.3
0.2
0.1
0.1
0.1
0.1
0.2
0.2
0.2
2.9
2.2
1.6
1.3
1.2
3.1
2.6
2.0
1.5
1.5
Sep-19Sep-20Sep-21Sep-22Dec-22
Watchlist & substandard
90+ day past due and not impaired
Impaired
0.24
0.54
0.0
0.2
0.4
0.6
0.8
1.0
Dec-20Mar-21Jun-21Sep-21Dec-21Mar-22Jun-22Sep-22Dec-22
Mortgage 30+ and 90+ day delinquencies (%)
Unsecured Consumer 30+ and 90+ day delinquencies (%)
0.97
2.19
0.0
1.0
2.0
3.0
4.0
5.0
Dec-20Mar-21Jun-21Sep-21Dec-21Mar-22Jun-22Sep-22Dec-22
Increase in delinquencies
due to seasonality and
higher cost of living
Increase in delinquencies
due to seasonality and
higher cost of living

34
31
35
43
9
34
40
30
23
24
13
24
FY19FY20FY21FY221Q23FY23FY24FY25FY26FY27FY28>FY28
Covered bondHybrid
Senior/SecuritisationSubordinated debt
Term Funding Facility (Aus)Funding for Lending Programme (NZ)
Funding and liquidity.
Funding and liquidity
10
1 Based on residual maturity and FX spot currency translation. Includes all debt issuance with contractual maturity greater than13 months excluding US Commercial Paper and Yankee Certificates of Deposit. Contractual maturity date for hybrids and
callable subordinated instruments is the first scheduled conversion date or call date for the purposes of this disclosure. Perpetual sub-debt has been included in >FY28 maturity bucket. Maturities exclude securitisation amortisation.
2 Excludes Funding for Lending Programme. 3 As at 12 February 2023.
Key funding and liquidity measures
Westpac Group 1Q23 Capital, Credit Quality and Funding Update
Term debt issuance and maturity profile
1
($bn)
IssuanceMaturities
1Q23 term debt issuance
2
by product (%)
remaining
142
132
139
Dec-21Sep-22Dec-22
83.6
82.9
84.0
Dec-21Sep-22Dec-22
Customer deposits to net loans ratio (%)
Quarterly average
127
121
122
Dec-21Sep-22Dec-22
Net stable funding ratio (%)Liquidity coverage ratio (%)
Regulatory
requirement
100%
86
14
Senior bonds
Covered bonds
• LCR elevated in advance of final CLF drop
($9.25bn) effective 1 January 2023
• Additional $9bn issued in January and
February
3
2023 in senior and covered bonds
• NSFR increase reflects deposit growth and
long-term issuance
• Strong household deposit growth over the
quarter
133%
ex-CLF

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reinvestment plan
Investor Relations ContactShare Registry Contact
For all matters relating to Westpac’s strategy,
performance and results
11
Justin McCarthy
General Manager Investor Relations
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Manager, Shareholder Services
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Head of Corporate Reporting and ESG
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Head of Ratings Agencies and Analysis
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Head of Debt Investor Relations
Contact us
westpac@linkmarketservices.com.auinvestorrelations@westpac.com.au
investorcentre.linkmarketservices.com.auwestpac.com.au/investorcentre
1800 804 255+61 2 9178 2977
Investor Relations Team.
James Wibberley
Manager, Investor Relations
Catherine Garcia
Head of Institutional Investors
Westpac Group 1Q23 Capital, Credit Quality and Funding Update

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The material contained in this presentation is intended to be general background information on Westpac Banking Corporation (Westpac) and its activities.
The information is supplied in summary form and is therefore not necessarily complete. It is not intended that it be relied uponas advice to investors or potential investors, who should consider
seeking independent professional advice depending upon their specific investment objectives, financial situation or particular needs. The material contained in this presentation may include
information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the
information.
All amounts are in Australian dollars unless otherwise indicated.
This presentation contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the US Securities Exchange Act of 1934. Forward-looking statements are
statements that are not historical facts. Forward-looking statements appear in a number of places in this presentation and include statements regarding our intent, belief or current expectations with
respect to our business and operations, macro and micro economic and market conditions, results of operations and financial condition, capital adequacy and risk management, including, without
limitation, future loan loss provisions and financial support to certain borrowers, forecasted economic indicators and performance metric outcomes, indicative drivers, climate-and other
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Disclaimer
12
Westpac Group 1Q23 Capital, Credit Quality and Funding Update