US Interim Financial Results Announcement on Form 6-K
ASX
Release
8 May 2024
Westpac Banking Corporation US Interim Financial Results Announcement
on Form 6-K (for the six months ended 31 March 2024, prepared for
distribution in the United States)
Westpac Banking Corporation (Westpac) has filed with the US Securities and Exchange
Commission a Form 6-K, which attaches Westpac’s Interim Financial Results
Announcement for the six months ended 31 March 2024, prepared specifically for
distribution in the United States (US Interim Financial Results Announcement). This
filing has been prepared to meet US securities law requirements and is necessary to
update Westpac’s US debt issuance programs.
As the US Interim Financial Results Announcement has been prepared to meet US
requirements, its presentation differs in some limited respects from Westpac’s 2024
Interim Financial Results, incorporating the requirements of Appendix 4D, lodged with
the ASX Limited on 6 May 2024.
A copy of the Form 6-K is attached for release to the market.
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
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
May 7, 2024
Commission File Number 1-10167
WESTPAC BANKING CORPORATION
(Translation of registrant’s name into English)
275 KENT STREET, SYDNEY, NEW SOUTH WALES 2000, AUSTRALIA
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Incorporation by Reference
The information contained in Exhibit 1 to this Report on Form 6-K (excluding the “Independent auditor’s review report to the members of Westpac
Banking Corporation” on pages 115 and 116 of such Exhibit) and Exhibit 101 to this Report on Form 6-K shall be incorporated by reference in the
prospectuses relating to the Registrant’s securities contained in the Registrant’s Registration Statements on Form F-3 (File Nos. 333-260702 and 333-
260703), as such prospectuses may be amended or supplemented from time to time.
Index to Exhibits
Exhibit
No.Description
12024 Interim Financial Results – prepared for distribution in the United States of America
101.INSInline XBRL Instance Document
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Labels Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted in inline XBRL and contained in Exhibit 101)
Disclosure regarding forward-looking statements
The information contained in this Report on Form 6-K contains statements that constitute “forward-looking statements” within the meaning of section 21E
of the U.S. 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 Report and
include statements regarding our current intent, belief or expectations with respect to our business and operations, macro and micro economic and
market conditions, results of operations and financial condition and performance, 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 sustainability-related statements, commitments, targets, projections and metrics, and other estimated and proxy data.
Words such as ‘will’, ‘may’, ‘expect’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘estimate’, ‘anticipate’, ‘believe’, ‘probability’, ‘indicative’,
‘risk’, ‘aim’, ‘outlook’, ‘forecast’, ‘f’cast’, ‘f’, ‘assumption’, ‘projection’, ‘target’, ‘goal’, ‘guidance’, ‘ambition’ or other similar words, are used to identify
forward-looking statements. These statements reflect our current views on future events and are subject to change, certain known and unknown risks,
uncertainties and assumptions and other factors which are, in many instances, beyond our control (and the control of our officers, employees, agents and
advisors), and have been made based on management’s current expectations or beliefs concerning future developments and their potential effect upon
us. Forward-looking statements may also be made, verbally or in writing, by members of Westpac’s management or Board in connection with this Report.
Such statements are subject to the same limitations, uncertainties, assumptions and disclaimers set out in this Report.
There can be no assurance that future developments or performance will align with our expectations or that the effect of future developments on us will be
those anticipated. Actual results could differ materially from those we expect or which are expressed or implied in forward-looking statements, depending
on various factors including, but not limited to, those described in the section titled ‘Risk factors’ in Westpac’s 2024 Interim Financial Results on Form 6-K
filed with the U.S. Securities and Exchange Commission. When relying on forward-looking statements to make decisions with respect to us, investors and
others relying on information in this Report should carefully consider such factors and other uncertainties and events.
Except as required by law, we assume no obligation to revise or update any forward-looking statements contained in this Report, whether from new
information, future events, conditions or otherwise, after the date of this Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
WESTPAC BANKING CORPORATION
(Registrant)
Date: May 7, 2024By:/s/ Esther Choi
Esther Choi
Tier One Attorney
Exhibit 1
2024
Interim
Financial
Results
THE INTERIM FINANCIAL RESULTS ANNOUNCEMENT HAS BEEN
PREPARED FOR DISTRIBUTION IN THE UNITED STATES OF AMERICA
Westpac Banking Corporation
ABN 33 007 457 141
iiWESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
RESULTS ANNOUNCEMENT TO THE MARKET
Introduction
Our interim period refers to the six months ended 31 March 2024 (First Half 2024). Throughout this Interim Financial Results Announcement (Results Announcement), we also refer
to the six months ended 31 March 2023 (First Half 2023, or prior corresponding period), and the six months ended 30 September 2023 (Second Half 2023, or prior period).
The selected financial information for First Half 2024, First Half 2023 and Second Half 2023 contained in this Results Announcement is based on the financial statements contained
in the unaudited consolidated Interim Financial Report for Westpac Banking Corporation (Westpac) and its controlled entities (collectively referred to as ‘the Group’) for the six
months ended 31 March 2024. The Interim Financial Report has been prepared and presented in accordance with Australian Accounting Standards (AAS) as they relate to interim
financial reports. The Interim Financial Report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB) as they relate to interim financial reports.
This Results Announcement contains certain statements that constitute ‘forward-looking statements’. For an explanation of forward-looking statements and the risks, uncertainties
and assumptions to which they are subject, see Section 3.1. Please consider those important disclaimers when reading the forward-looking statements in this Results
Announcement.
In this Results Announcement references to ‘Westpac’, ‘WBC’, ‘Westpac Group’, ‘the Group’, ‘we’, ‘us’ and ‘our’ are to Westpac Banking Corporation and its controlled entities,
unless it clearly means just Westpac Banking Corporation. Percentage (%) movements are shown as % unless otherwise stated. This applies to all the tables in this Results
Announcement. Unless otherwise stated, average balances represents a daily average over the relevant half year.
All dollar values in this Results Announcement are in Australian dollars unless otherwise noted. References to ‘dollars’, ‘dollar amounts’, ‘$’, ‘AUD’ or ‘A$’ are to Australian dollars,
references to ‘US$’, ‘USD’ or ‘US dollars’ are to United States dollars, references to ‘NZ$’, ‘NZD’ or ‘NZ dollars’ are to New Zealand dollars and references to 'GBP' are to British
Pound Sterling. Refer to Section 3.7 for information regarding the rates of exchange between the Australian dollar and the US dollar applied by the Group as part of its operating
activities for First Half 2024, Second Half 2023 and First Half 2023.
Information on terms, acronyms and calculations used in this Results Announcement are provided in the Glossary of the document.
Non-AAS financial measures
The Group’s statutory results are prepared in accordance with AAS and are also compliant with IFRS.
In assessing the Group’s performance and that of our operating segments, we use certain financial measures, including amounts, measures and ratios that are presented on a non-
AAS basis, as described below.
Non-AAS financial measures and ratios do not have standardised meanings under AAS. As such they are unlikely to be directly comparable to similar measures presented by other
companies and should not be viewed in isolation from, or as a substitute for, the AAS results.
iii
RESULTS ANNOUNCEMENT TO THE MARKET
Our non-AAS measures fall within the following categories:
Measure/ratioDescription
Further
information
Performance measures
excluding the impact of
Notable Items and businesses
sold
The net interest income, non-interest income, operating expenses and segment reporting sections of this Results
Announcement include performance measures that exclude Notable Items, businesses sold and/or held-for-sale.
Notable Items are items that management believes are not reflective of the Group's ongoing business performance.
Details of Notable Items are included in Section 1.4.
Businesses sold reflect the contribution to the Group's results in the period prior to their sale. It also includes any
gains/losses related to their sale but excludes items that have been identified as Notable Items.
Performance measures which are adjusted for one or more of these items include:
●Net interest income
●Non-interest income (including net fee income, net wealth management income, trading income and other income)
●Operating expenses (including staff expenses, occupancy expenses, technology expenses and other expenses)
●Pre-provision profit
●Net profit
●Net profit attributable to owners of WBC
●Return on average ordinary equity
●Return on average tangible equity
Management considers this information useful as these measures provide a view that reflects the Group's ongoing
business performance.
Sections 1.2,
1.4,1.5.1, 1.5.6,
1.5.8 and 2
Pre-provision profitPre-provision profit is net profit/(loss) excluding credit impairment (charges)/benefits and income tax (expense)/benefit.
This is calculated as net interest income plus non-interest income less operating expenses. This includes
(charges)/benefits relating to provisions and impairment other than from expected credit losses.
Management considers this information useful as this measure provides readers with a view of the operating
performance of the Group.
Section 1.2, 2
and 3.9
Basic earnings per share
(excluding Notable Items) and
Diluted earnings per share
(excluding Notable Items)
Basic earnings per share (excluding Notable Items) is calculated as net profit attributable to owners of WBC (adjusted
for RSP dividends) excluding Notable items divided by the weighted average number of ordinary shares on issue
during the period, adjusted for treasury shares.
Diluted earnings per share is calculated by adjusting the basic earnings per share (excluding Notable Items) by
assuming all dilutive potential ordinary shares are converted.
Management considers this information useful as these measures provide a view of the basic and diluted earnings per
share based on the ongoing operating performance of the Group.
Sections 1.3
and 3.9
Core net interest income and
Core net interest margin (NIM)
Core net interest income is calculated as net interest income excluding Notable Items, and Treasury and Markets
income.
Core NIM is calculated as Core net interest income (annualised where applicable) divided by average interest earning
assets.
Management considers this information useful as these measures provide a view of the underlying performance of the
Group's net interest income and margin, for lending, deposit and wholesale funding.
Sections 1.3,
1.5.1, and 1.5.2
ivWESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
RESULTS ANNOUNCEMENT TO THE MARKET
Measure/ratioDescription
Further
information
Dividend payout ratio
(excluding Notable Items)
Calculated as ordinary dividend paid/declared on issued shares (net of Treasury shares) divided by the net profit
attributable to owners of WBC (adjusted for RSP dividends) excluding Notable Items.
Management considers this information useful as it provides a view of the dividend payout ratio based on the ongoing
operating performance of the Group.
Section 1.1
and 1.3
Expense to income ratio
(excluding Notable Items)
Calculated as operating expenses excluding Notable Items divided by net operating income excluding Notable Items.
Management considers this information useful as this measure provides a view of the efficiency of the ongoing
operating performance of the Group.
Sections 1.3
and 3.9
Average tangible ordinary
equity and Return on average
tangible ordinary equity (ROTE)
Average tangible ordinary equity is calculated as average ordinary equity less average goodwill and other intangible
assets (excluding capitalised software).
Return on average tangible ordinary equity is calculated as net profit attributable to owners of WBC adjusted for RSP
dividends (annualised where applicable) divided by average tangible ordinary equity.
Management considers this information useful as these measures are commonly used as a performance measure by
WBC, investors, analysts and others in assessing the Group's application of equity.
Sections 1.3
and 3.9
Presentation changes
In First Half 2024, we have made changes to both the composition of our segments and the measurement of segment performance. Comparatives have been restated to align to the
current period presentation. Refer to Section 2 for further details.
Certain comparative information has also been revised where appropriate to conform to changes in presentation in the current period to enhance comparability.
1
Contents
PERFORMANCE REVIEW2
1. Group performance3
2. Segment reporting38
DIRECTORS’ REPORT56
Directors’ Report57
2024 INTERIM FINANCIAL REPORT76
Notes to the consolidated financial statements82
Statutory statements114
OTHER INFORMATION117
3. Other information118
Glossary129
2WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
PERFORMANCE
REVIEW
1. GROUP PERFORMANCE
1.1.Performance overview
1.2.Performance summary
1.3.Key financial information
1.4.Impact of Notable Items
1.5.Review of earnings
1.6.Credit quality
1.7.Balance sheet and funding
1.8.Capital and dividends
1.9.Sustainability performance summary
2. SEGMENT REPORTING
2.1.Consumer
2.2.Business and Wealth
2.3.Westpac Institutional Bank
2.4.Westpac New Zealand
2.5.Group Businesses
3
1.GROUP PERFORMANCE
1.1.Performance overview
1
Financial highlights
$3,342m
Net profit,
up 5% on 2H23
9.3%
ROE,
up 40bps on 2H23
75cents
Interim ordinary dividend
per share, fully franked,
up 4% on 2H23
$3,506m
Net profit ex Notable Items,
down 1% on 2H23
10.5%
ROTE,
up 44bps on 2H23
12.5%
CET1 capital ratio,
up 17bps on Sep-23
1H24 results overview
In First Half 2024 we have managed growth and margins in a disciplined way while improving service for customers and strengthening our capital position.
Net profit of $3,342 million increased 5% on the prior period. Excluding Notable Items
2
, net profit decreased 1% to $3,506 million. The result reflects modest balance sheet growth,
effective management of the net interest margin with less margin contraction than prior periods and the impact of ongoing, although easing, inflationary pressures on expenses.
ROTE increased 44 basis points to 10.5%.
The interim ordinary dividend of 75 cents per share was up 4%. The payout ratio of 74%
3
was at the upper end of our sustainable payout ratio range of 65% to 75%. Shareholders
will also receive a special dividend of 15 cents per share, reflecting the strong capital position and franking credit balance. In addition, the previously announced $1.5 billion share
buyback has been increased by a further $1.0 billion.
We continue to strengthen the Westpac franchise through an emphasis on consistent service and improving the customer experience across each of the segments.
Improved servicing capability, enhanced products and a leading mobile banking app
4
were reflected in the Consumer net promoter score that consistently trended higher throughout
the half. We achieved system growth in Australian housing loans against the backdrop of some easing of competition in the mortgage market. The increased simplicity of everyday
banking offers, supported by our mobile banking app, continued to generate above system household deposit growth.
The Institutional bank continues to focus on deepening customer relationships, improving service and enhancing our product offering. Growth of 12% in average interest earning
asset balances and improved survey rankings across a range of Financial Market industry surveys are testament to enhancements to both product and service.
Process simplification in business lending reduced the time to make a credit decision to 7.7 days with solid lending growth across Health, Utilities and Entertainment sectors. We
continue to upgrade our merchant payment services with the launch of EFTPOS Flex this half. The recent acquisition of HealthPoint expands our payments capability in a strategic
sector.
Risk management remains a priority. Following the completion of all CORE Integrated Plan activities, we have commenced the transition phase which will continue throughout 2024.
Our focus is to ensure the sustainability and effectiveness of changes we have made to strengthen risk management and risk culture across the Group.
We maintained a strong financial position with capital, funding and liquidity all above regulatory minimums. The common equity tier 1 (CET1) capital ratio of 12.5% compares to the
target operating range of 11.0% to 11.5% equating to $4.7 billion of capital above the top end of the target range. Credit impairment provisions of $5.1 billion are $1.4 billion above
the expected losses of our base case economic scenario.
1.Unless otherwise stated, all figures relate to the half year ended 31 March 2024, and are compared to figures for the half year ended 30 September 2023.
2.Notable Items are discussed further in Section 1.4.
3.Excluding Notable Items.
4.The Forrester Digital Experience Review: Australian Mobile Banking Apps, Q4 2023.
4WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.1.Performance overview (Continued)
Solid financial performance
$5.2bn
Pre-provision profit,
up 5% on 2H23
$5.4bn
Pre-provision profit
ex Notable Items,
flat on 2H23
1.89%
NIM, down 5bps on 2H23
1.80%
Core NIM,
down 3bps on 2H23
Pre-provision profit was $5,195 million, an increase of 5% on the prior period. Excluding Notable Items, pre-provision profit was flat at $5,421 million driven by a 1% increase in net
operating income and a 3% increase in operating expenses.
●Net interest income decreased 1% to $9,127 million. Excluding Notable Items, net interest income increased 2% to $9,351 million reflecting disciplined management of price,
margin and volume. The slight contraction in net interest margin (NIM) was partly offset by the 2% increase in average interest-earning assets. Growth in average interest-
earning assets was driven by increases in owner occupied mortgages, and loans to business and institutional customers.
●NIM was 1.89% and comprised:
–Core NIM of 1.80%, which contracted by 3 basis points from tighter loan spreads due to lending competition and a narrowing of deposit spreads from both a mix shift towards
lower spread savings and term deposits and price competition. Higher earnings on capital and hedged deposits were a benefit;
–Treasury and Markets income of 14 basis points, up 3 basis points; and
–Notable Items, related to accounting for hedges, which reduced NIM by 5 basis points.
●Non-interest income of $1,463 million was 2% higher. Excluding Notable Items, non-interest income was flat at $1,465 million.
●Operating expenses of $5,395 million decreased 5% due to Notable Items in Second Half 2023. Excluding these items, operating expenses increased by 3% due to higher
software amortisation expenses and higher technology operating and related third-party vendor costs. Cost Reset actions, particularly fewer non-customer facing roles and
reduced property footprint, provided a partial offset.
Credit quality sound
We remain appropriately provisioned with credit impairment provisions of $5,135 million, $1.4 billion above the
expected losses of our base case economic scenario.
●Credit impairment charges were $362 million or 9 basis points of average loans, compared to 7 basis points in the prior
period. The charge reflects a rise in both Collectively Assessed Provisions (CAP) and Individually Assessed Provisions
(IAP).
●Deterioration in credit quality metrics was due to individual customer circumstances and a tougher economic
environment. Stressed exposures to total committed exposures were 1.36%, a rise of 10 basis points compared to 30
September 2023.
●Credit impairment provisions of $5,135 million were up 4% due to higher CAP and IAP. The increase in provisions from
the deterioration in credit quality was partly offset by reductions in overlays and the downside scenario weighting. The
ratio of CAP to credit RWA was 1.38%, an increase of 3 basis points compared to September 2023.
IMPAIRMENT CHARGES TO AVERAGE
LOANS (BPS)
CAP TO CREDIT RWA (%)
5
1.1.Performance overview (Continued)
Capital
LEVEL 2 CET1 CAPITAL RATIO (%)
The CET1 capital ratio rose by 17 basis points to 12.55%. This reflects the impact of:
●Net profit adding 75 basis points;
●Lower RWA adding 17 basis points;
●Dividends subtracting 57 basis points;
●Capital deductions and other items adding 1 basis point; and
●On market share buyback of $849 million subtracting 19 basis points.
Funding and liquidity
The March 2024 quarterly average liquidity coverage ratio (LCR) was 132% and the net stable funding ratio (NSFR) was
114%, both above regulatory minimums. The 114 basis point decrease in the LCR ratio reflects the impact of Term Funding
Facility (TFF) maturities over the half, as remaining TFF maturities move into the LCR maturity windows and LCR-
qualifying liquid assets reduce.
The deposit to loan ratio remained stable at 82.9%. The Group raised $19.8 billion of new long-term wholesale funding in
the half.
132%
LCR, above 100% regulatory
minimum requirement
Investment spend lower; planning for UNITE program
Investment spend was $736 million, 15% lower than the prior corresponding period due to completion of a number of large
programs in 2023.
●Spend on growth and productivity initiatives in First Half 2024 included investment in digital capability to improve
customer experience, continued development of the corporate cash management platform and commencement of our
technology simplification program, UNITE.
●Spend in First Half 2024 to support our risk and regulatory agenda included expansion of scam protection, payments
uplift and work to simplify our data environment.
INVESTMENT SPEND (%)
Shareholder returns improved
Surplus capital and solid capital generation in the half has provided scope to improve returns to shareholders.
Our interim ordinary dividend was 75 cents per share, fully franked, an increase of 4%. The payout ratio of 74%
1
was
at the upper end of our sustainable payout ratio range of 65% to 75%. Shareholders will also receive a fully franked
special dividend of 15 cents per share.
The Dividend Reinvestment Plan will apply to the interim ordinary dividend and the special dividend. No discount will
be offered to shareholders who elect to participate in the Dividend Reinvestment Plan (DRP). Shares are expected
to be purchased on market to satisfy the DRP.
The Group has completed 59%
2
of the $1.5 billion on market share buyback announced in November 2023. The
share buyback has been increased by a further $1.0 billion up to a total of $2.5 billion.
ROTE increased by 44 basis points to 10.5%. Earnings per ordinary share were 95.6 cents, up 5%.
Net tangible assets per ordinary share were up 1% at $17.82.
DIVIDEND PER ORDINARY
SHARE (CENTS)
ROTE (%)
1. Excluding Notable Items.
2. As at 6 May 2024.
6WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.1.Performance overview (Continued)
Outlook
The Australian economy has experienced a period of below trend activity. The household sector has displayed resilience while being challenged by rising cost of living, higher
interest rates and a drag from higher taxation. Strong employment, wage, and population growth have cushioned the impact on total consumption, although there has been a noted
divergence across households. Businesses have felt the pressure from lower demand and cost pressures. This has impacted both profitability, investment plans and more recently
hiring intentions.
Operating conditions are likely to remain challenging for some households and businesses in the near term, although the prospects for improved economic activity are encouraging.
Economic growth in the second half of 2023 was subdued at 1%. While forecast to remain below trend, it is expected to improve to 1.6% in 2024 and recover further to 2.5% in 2025.
Real household incomes are rising again as the impacts of inflation and interest rates have diminished. Tax relief from mid 2024 will provide a further boost followed by the prospect
for interest rate relief towards the end of the year and into 2025. This is likely to be associated with a modest rise in unemployment. Many business sectors have been resilient and
are likely to continue to employ and invest. Those exposed to the more discretionary components of consumer spending and interest rate sensitive sectors are expected to remain
cautious. Overall business investment should recover through 2025.
The Group is well positioned to navigate this environment, supporting customers that are facing challenges or looking to take advantage of opportunities. Our balance sheet is strong
and we expect credit provisioning levels will allow us to withstand further deterioration in credit quality.
The Group entered FY24 with focus on our strategy for growth and return. Our purpose of creating better futures together starts and ends with the customer. Progress has been
made on improving customer service.
Accelerating technology simplification is critical to achieving our strategy and ambition to be our customers' number one bank. UNITE, our business-led, technology-enabled
simplification program, is already underway. It has three objectives: a better experience for customers; making systems easier for our people; and improving shareholder returns. The
program is planned to extend through to 2028 with expected benefits mainly coming through in the latter years of the program.
How we deliver value
SHAREHOLDERSCUSTOMERSEMPLOYEESCOMMUNITY
$3.3bn
Net profit, up 5% on 2H23
13m
Customers across the
Group
75
Organisational Health Index,
above global median
$1.7bn
Income tax expense,
including the bank
levy in 1H24
90c
Interim and special
dividends per share
$785bn
in lending
49%
Women in senior leadership
2
50-year
Westpac Lifesaver
Rescue Helicopter
Service partnership
9.3%
ROE, up 40bps on 2H23
#1
Mobile Banking App
1
10 Employee
Advocacy Groups
supporting diversity and
inclusion
$120m
stopped or recovered in
customer scam losses
1.The Forrester Digital Experience Review: Australian Mobile Banking Apps, Q4 2023.
2.Senior Leadership includes Executive Team, General Managers and their direct reports (excluding administrative or support roles).
7
1.2.Performance summary
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Net interest income
9,127 9,204 9,113 (1) -
Non-interest income
1,463 1,438 1,890 2 (23)
Net operating income
10,590 10,642 11,003 - (4)
Operating expenses
(5,395) (5,704) (4,988) (5) 8
Pre-provision profit 5,195 4,938 6,015 5 (14)
Impairment (charges)/benefits
(362) (258) (390) 40 (7)
Profit before income tax expense
4,833 4,680 5,625 3 (14)
Income tax expense
(1,491) (1,484) (1,620) - (8)
Profit after income tax expense
3,342 3,196 4,005 5 (17)
Profit attributable to non-controlling interests (NCI)
- (2) (4) (100) (100)
Net profit attributable to owners of WBC
3,342 3,194 4,001 5 (16)
Notable Items (164) (351) 178 (53)large
Effective tax rate
30.85% 31.71% 28.80%(86 bps) 205 bps
Performance Summary excluding Notable Items
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
$m
2024 20232023- Sept 23 - Mar 23
Net interest income 9,351 9,212 9,202 2 2
Non-interest income
1,465 1,459 1,669- (12)
Net operating income 10,816 10,671 10,871 1 (1)
Operating expenses
(5,395) (5,244) (4,988) 3 8
Pre-provision profit
5,421 5,427 5,883- (8)
Impairment (charges)/benefits (362) (258) (390) 40 (7)
Profit before income tax expense 5,059 5,169 5,493 (2) (8)
Income tax expense
(1,553) (1,622) (1,666) (4) (7)
Profit after income tax expense 3,506 3,547 3,827 (1) (8)
Profit attributable to non-controlling interests (NCI)
- (2) (4) (100) (100)
Net profit attributable to owners of WBC
3,506 3,545 3,823 (1) (8)
8WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.3.Key financial information
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
2024 20232023- Sept 23 - Mar 23
Shareholder value
Basic earnings per ordinary share (cents) 95.6 91.1 114.2 5 (16)
Basic earnings per ordinary share (ex Notable Items) (cents) 100.3 101.1 109.1 (1) (8)
Diluted earnings per ordinary share (cents) 91.6 87.6 107.7 5 (15)
Diluted earnings per ordinary share (ex Notable Items) (cents) 95.8 96.7 103.1 (1) (7)
Weighted average ordinary shares (millions) 3,494 3,504 3,501 - -
Fully franked ordinary dividends per share (cents) 75 72 70 4 7
Fully franked special dividend per share (cents) 15 - - - -
Dividend payout ratio
a
77.90%79.06%61.33%(116 bps)large
Dividend payout ratio (ex Notable Items)
a
74.25%71.22%64.19%303 bpslarge
Return on average ordinary equity9.30%8.90%11.30%40 bps(200 bps)
Return on average ordinary equity (ex Notable Items)9.75%9.88%10.80%(13 bps)(105 bps)
Return on average tangible equity (ROTE)
b
10.48%10.04%12.76%44 bps(228 bps)
ROTE (ex Notable Items)10.99%11.15%12.19%(16 bps)(120 bps)
Average ordinary equity ($m) 71,841 71,509 70,947 - 1
Average tangible ordinary equity ($m) 63,753 63,369 62,864 1 1
Average total equity ($m) 71,884 71,552 70,994 - 1
Net tangible asset per ordinary share ($) 17.82 17.58 17.67 1 1
Business performance
Group 1.89%1.94%1.96%(5 bps) (7 bps)
Core NIM
b
1.80%1.83%1.89%(3 bps)(9 bps)
Treasury & Markets impact on NIM
b
0.14%0.11%0.09%3 bps5 bps
Notable Items impact on NIM(0.05%) -(0.02%)(5 bps)(3 bps)
Average interest earning assets ($m) 965,785 948,505 934,208 2 3
Return on average assets (%) 0.64%0.62%0.79%2 bps (15 bps)
Expense to income ratio 50.94% 53.60%45.33%(266 bps) large
Expense to income ratio (ex Notable Items) 49.88%49.14%45.88%74 bps 400 bps
Full time equivalent employees (FTE) 35,348 36,146 38,503 (2) (8)
Revenue per FTE ($ '000's) 300 286 291 5 3
Capital, funding and liquidity
Level 2 common equity Tier 1 capital ratio
- Australian Prudential Regulation Authority (APRA) 12.55%12.38%12.28%17 bps 27 bps
- Internationally comparable18.55%18.73%18.14%(18 bps)41 bps
Credit RWA ($m) 339,741 339,758 340,558 - —
Total risk weighted assets (RWA) ($m) 444,417 451,418 452,946 (2) (2)
Liquidity coverage ratio (LCR) 132%134%135%(114 bps) (309 bps)
Net stable funding ratio (NSFR) 114%115%119%(118 bps) large
Deposit to loan ratio82.94%82.89%83.69%5 bps(75 bps)
Credit quality and impairment charges
Gross impaired exposures to gross loans 0.19%0.17%0.20%2 bps (1 bps)
Gross impaired exposures provisions to gross impaired exposures 46.60%43.47%42.80%313 bps 380 bps
Collectively assessed provisions to credit RWA 138 bps135 bps133 bps3 bps 5 bps
Total provisions to credit RWA 151 bps145 bps145 bps6 bps 6 bps
Total committed exposure (TCE) ($bn) 1,240 1,218 1,220 2 2
Total stressed exposures as a % of TCE 1.36%1.26%1.10%10 bps 26 bps
Total provisions to gross loans 65 bps 63 bps65 bps2 bps -
Mortgages 90+ day delinquencies 1.00%0.81%0.68%19 bps 32 bps
Other consumer loans 90+ day delinquencies 1.40%1.28%1.54%12 bps (14 bps)
Impairment charges/(benefits) to average loans9 bps 7 bps10 bps2 bps (1 bps)
Balance sheet ($m)
Loans 784,839 773,254 749,931 1 5
Total assets 1,052,661 1,029,774 1,019,108 2 3
Customer deposits 650,946 640,951 627,585 2 4
a.Excludes the impact of the special dividend.
b.Comparatives have been revised to conform with current period presentation.
9
1.4.Impact of Notable Items
To assist in explaining the Group's financial performance, the Group reports Notable Items, which represent certain items that are not considered to be reflective of the Group's
ongoing business performance.
Notable Items broadly fall into the following categories:
●Unrealised fair value gains and losses on economic hedges that do not qualify for hedge accounting
●Net ineffectiveness on qualifying hedges
●Large items that are not reflective of the Group's ordinary operations. In individual reporting periods large items may include:
–Provisions for remediation, litigation, fines and penalties
–The impact of asset sales and revaluations
–The write-down of assets (including goodwill and capitalised software)
–Restructuring costs
In determining dividends, the impact of Notable Items is typically excluded.
The impact of Notable Items (post tax) in First Half 2024 was a reduction to Net profit of $164 million (Second Half 2023: $351 million reduction; First Half 2023: $178 million benefit)
and was solely related to economic hedges and hedge ineffectiveness.
Details of Notable Items (post tax) impacting on the First Half 2024 result are:
Category Net profit impact 1H24 Detail
Unrealised fair value gains and losses on
economic hedges that do not qualify for
hedge accounting
$163 million reductionThe unrealised fair value gain/(loss) on hedges of accrual accounted term funding
transactions for the period was $163 million. This represents a timing difference for the
statutory results but does not affect the Group's profits over the life of the hedge.
Net ineffectiveness on qualifying hedges$1 million reductionThe net ineffectiveness on qualifying hedges of $1 million for the period arises from the fair
value movement in these hedges which reverses over time and therefore does not affect
the Group's profits over time.
For detailed explanations of Notable Items for Full Year 2023, refer to the 2023 Annual Report.
Provisions for
remediation,
litigation,Asset salesThe write-
EconomicHedgefines andanddownRestructuring
$mhedgesineffectivenesspenaltiesrevaluationsof assetscostsTotal
Half Year March 2024
Net interest income
(223) (1) - - - - (224)
Non-interest income
(2) - - - - - (2)
Net operating income
(225) (1) - - - - (226)
Operating expenses
- - - - - - -
Pre-provision profit (225) (1) - - - - (226)
Income tax (expense)/benefit and NCI
62 - - - - - 62
Net profit/(loss)
(163) (1) - - - - (164)
Half Year Sept 2023
Net interest income
38 32 (78) - - - (8)
Non-interest income
4 - (25) - - - (21)
Net operating income
42 32 (103) - - - (29)
Operating expenses
- - (132) - (126) (202) (460)
Pre-provision profit 42 32 (235) - (126) (202) (489)
Income tax (expense)/benefit and NCI
(13) (9) 59 - 39 62 138
Net profit/(loss)
29 23 (176) - (87) (140) (351)
Half Year March 2023
Net interest income
(151) 62 - - - - (89)
Non-interest income
(22) - - 243 - - 221
Net operating income
(173) 62 - 243 - - 132
Operating expenses
- - - - - - -
Pre-provision profit (173) 62 - 243 - - 132
Income tax (expense)/benefit and NCI
52 (19) - 13 - - 46
Net profit/(loss)
(121) 43 - 256 - - 178
10WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.5.Review of earnings
1.5.1.Net interest income
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
2024 2023 2023 - Sept 23 - Mar 23
Net interest Income ($m)
Net interest income 9,127 9,204 9,113 (1)-
Core net interest income
a
8,668 8,702 8,817- (2)
Notable Items (224) (8) (89)large 152
Treasury
a,b
560 424 305 32 84
Markets
a
123 86 80 43 54
Average interest earning assets ($m)
Loans 726,669 709,756 699,735 2 4
Housing 497,461 488,551 481,538 2 3
Personal 12,085 12,628 13,485 (4) (10)
Business 217,123 208,577 204,712 4 6
Liquid assets 208,340 213,439 208,467 (2)-
Other interest-earning assets 30,776 25,310 26,006 22 18
Average interest earning assets
965,785 948,505 934,208 2 3
NIM (%)
NIM1.89%1.94%1.96%(5 bps)(7 bps)
Core NIM
a
1.80%1.83%1.89%(3 bps)(9 bps)
Treasury & Markets impact on NIM
a
0.14%0.11%0.09%3 bps5 bps
Notable Items impact on NIM
(0.05%)-(0.02%)(5 bps) (3 bps)
a.Comparatives have been revised to conform with current period presentation.
b.Treasury net interest income in this table does not align to Section 1.5.7 as it excludes capital benefit.
First Half 2024 – Second Half 2023
Net interest income decreased 1% to $9,127 million. Key drivers included:
●Stable core net interest income with 3 basis points of margin contraction offset by 2% growth in average interest- earning assets;
●Notable Items reduced interest income by $224 million compared to a reduction of $8 million in the prior period; and
●Treasury and Markets income up 34% to $683 million due to stronger performance in the period as Treasury was well positioned for interest rate volatility and Markets grew its
customer franchise.
Average interest-earning assets increased by 2% to $965.8 billion, including growth of 4% in business lending and 2% in housing. This more than offset the continued planned run-
off in the auto finance book which is included in both Personal and Business loans. Average liquid assets decreased by 2%. Other interest-earning assets rose by 22% due to
increased trading securities mainly relating to holdings of reverse repurchase agreements in Markets.
First Half 2024 – First Half 2023
Net interest income of $9,127 million was flat on First Half 2023. Key drivers included:
●Core net interest income down 2% to $8,668 million, due to lower net interest margin which was partly offset by average interest-earning assets growth of 3%;
●Notable Items reduced income by $224 million compared to a reduction of $89 million in the prior corresponding period; and
●Treasury and Markets income up 77% to $683 million due to stronger performance as Treasury was well positioned for interest rate volatility in the half and Markets grew its
customer franchise.
Average interest-earning assets increased by 3% to $965.8 billion as a result of growth in average loans of 4%, reflecting growth of 6% in business lending and 3% in housing. This
more than offset the continued planned run-off in the auto finance book which is included in both Personal and Business loans. Average liquid assets were flat. Other interest-earning
assets rose by 18% due to increased holdings of trading securities mainly relating to holdings of reverse repurchase agreements in Markets.
11
1.5.Review of earnings (Continued)
1.5.2.Net interest margin
First Half 2024 – Second Half 2023
Net interest margin movement (%)
First Half 2024 – Second Half 2023
1.Wholesale Funding Cost.
2.Treasury & Markets contribution.
The NIM decreased by 5 basis points to 1.89%. NIM comprised:
●Core NIM of 1.80%, down 3 basis points with key drivers described below;
●Treasury and Markets contribution of 14 basis points, up 3 basis points primarily due to a higher contribution from favourable positioning for interest rate volatility; and
●Notable Items from unrealised fair value losses for accounting purposes related to economic hedges of term funding detracted 5 basis points compared to nil impact in the prior
period.
The 3 basis points decrease in Core NIM was driven by:
●Loan interest spread: 4 basis point decrease from tighter spreads on mortgage lending in Australia, albeit competition eased slightly in the half. Price competition for new and
existing customers and stronger growth in lower spread owner-occupied and principal and interest lending was evident. The change in portfolio mix with reductions in higher
spread lending average balances reduced margins slightly;
●Deposit interest spread: 2 basis point decrease included the impacts of price competition and some mix shift towards lower spread savings and term deposit products. Earnings
on hedged deposits were higher;
●Wholesale funding: 1 basis point decrease from higher wholesale funding costs as spreads on new term wholesale funding were slightly higher than the spreads on maturing
facilities; and
●Capital & Other: 4 basis point increase primarily from a rise in earnings on capital balances as a result of higher interest rates.
12WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.5.Review of earnings (Continued)
First Half 2024 – First Half 2023
Net interest margin movement (%)
First Half 2024 – First Half 2023
1.Wholesale Funding Cost.
2.Treasury & Markets contribution.
The NIM decreased by 7 basis points to 1.89%. NIM comprised:
●Core NIM of 1.80%, down 9 basis points with key drivers described below;
●Treasury and Markets contribution of 14 basis points, up 5 basis points due to a higher contribution from favourable positioning for interest rate volatility; and
●Notable Items from unrealised fair value losses for accounting purposes related to economic hedges of term funding detracted 5 basis points compared to negative 2 basis points
in the prior corresponding period.
The 9 basis points decrease in Core NIM was driven by:
●Loan interest spread: 14 basis point decrease from tighter spreads on mortgage lending in Australia and New Zealand due to price competition for new and existing customers,
and stronger growth in lower spread owner-occupied and principal and interest lending. Spreads on personal and business lending products were tighter and a change in
portfolio mix due to a reduction in higher spread lending average balances reduced margins slightly;
●Wholesale funding: 2 basis point decrease from higher wholesale funding costs as spreads on new term wholesale funding were higher than the spreads on maturing facilities;
●Deposit interest spread: 1 basis point decrease included the impacts of competition and a mix shift towards lower spread savings and term deposit products. Earnings on hedged
deposits were higher; and
●Capital & Other: 8 basis point increase primarily a rise in earnings on capital balances as a result of higher interest rates.
13
1.5.Review of earnings (Continued)
1.5.3.Loans
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Australia
685,810 674,422 650,639 2 5
Housing
495,058 485,474 472,570 2 5
Personal
9,707 9,638 9,728 1 -
Business
181,985 178,965 166,571 2 9
Auto finance (in run-off)
a
3,054 4,195 5,620 (27) (46)
Provisions
(3,994) (3,850) (3,850) 4 4
New Zealand (A$)
92,887 92,854 92,359 - 1
New Zealand (NZ$)
101,175 99,711 98,623 1 3
Housing
67,378 65,757 65,224 2 3
Personal
1,178 1,163 1,192 1 (1)
Business
33,143 33,298 32,748 - 1
Provisions
(524) (507) (541) 3 (3)
Other overseas (A$)
6,142 5,978 6,933 3 (11)
Total loans
784,839 773,254 749,931 1 5
a.Includes personal and business auto finance loans.
First Half 2024 – Second Half 2023
Loans increased by 1% to $784.8 billion. Lending movements included:
●Growth in Australian housing loans of 2% or 1.0x ADI system to $495.1 billion, mainly in owner occupied mortgages. Improved processing times for mortgage applications and
refinancing, more consistency in service and enhanced products, have translated to a better experience for our customers;
●Australian personal lending was $0.1 billion higher;
●Growth in Australian business lending of 2% to $182.0 billion. Business segment loan growth was predominantly in agriculture, diversified industries and third-party equipment
finance. WIB segment loan balances remained flat as customers managed facility utilisation;
●Auto finance loans were down $1.1 billion to $3.1 billion due to the decision to exit this business in March 2022;
●Growth in New Zealand lending of 1% in NZ$ terms to $101.2 billion with growth in owner occupied mortgages; and
●Growth in other overseas loan balances of 3% to $6.1 billion. This reflected growth in business loans in the Pacific business from successful execution of the commercial growth
strategy in the region.
First Half 2024 – First Half 2023
Loans increased by 5% to $784.8 billion. Lending movements included:
●Growth in Australian housing loans of 5% or 1.0x ADI system to $495.1 billion, mainly in owner occupied mortgages. Improved processing times for mortgage applications and
more consistency in service improved the customer experience;
●Australian personal lending was broadly flat;
●Growth in Australian business lending of 9% to $182.0 billion. Loan growth in WIB reflected additional activity with existing customers in the property, non-bank financial and
energy & infrastructure sectors and higher utilisation of funding commitments in the non-finance sector. Business segment loan growth was primarily in commercial property,
agriculture, diversified industries and third-party equipment finance;
●Auto finance loans were down $2.6 billion to $3.1 billion due to the decision to exit this business in March 2022;
●Growth in New Zealand lending of 3% in NZ$ terms to $101.2 billion with growth in owner occupied mortgages; and
●Contraction in other overseas loan balances of 11% to $6.1 billion. This reflected lower volumes in the US with higher interest rates impacting facility utilisation.
14WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.5.Review of earnings (Continued)
1.5.4.Deposits and other borrowings
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Customer deposits
Australia 570,488 557,781 545,090 2 5
Transactions
a
98,653 97,950 98,762 1 -
Savings
a
202,480 195,273 191,490 4 6
Term 148,110 144,220 140,704 3 5
Non-interest bearing
a
121,245 120,338 114,134 1 6
New Zealand (A$) 72,378 74,297 74,703 (3) (3)
New Zealand (NZ$) 78,837 79,783 79,769 (1) (1)
Transactions 9,737 9,373 10,090 4 (3)
Savings 19,904 19,929 20,230 - (2)
Term 37,685 38,472 36,367 (2) 4
Non-interest bearing 11,511 12,009 13,082 (4) (12)
Other overseas (A$) 8,080 8,873 7,792 (9) 4
Total customer deposits 650,946 640,951 627,585 2 4
Certificates of deposit 51,280 47,217 48,767 9 5
Australia 35,727 32,947 32,227 8 11
New Zealand (A$) 2,414 2,247 2,618 7 (8)
Other overseas (A$) 13,139 12,023 13,922 9 (6)
Total deposits and other borrowings 702,226 688,168 676,352 2 4
a.Comparatives have been revised to conform with current period presentation.
First Half 2024 – Second Half 2023
Customer deposits grew by 2% to $650.9 billion and comprised the following movements:
●Australian deposits grew 2% to $570.5 billion from growth in the Consumer segment, mainly in savings and term deposit products. Non-interest bearing deposits increased 1% to
$121.2 billion, due to an increase in mortgage offset balances, reflecting customer preference for variable rate mortgages;
●New Zealand deposits reduced 1% in NZ$ terms to $78.8 billion, reflecting lower institutional term deposits; and
●Decrease in other overseas deposits of 9% to $8.1 billion, mostly in Institutional due to lower offshore term deposits.
The deposit to loan ratio remained at 82.9% at 31 March 2024.
First Half 2024 – First Half 2023
Customer deposits grew by 4% to $650.9 billion. Growth comprised the following movements:
●Australian deposits were up 5% to $570.5 billion with growth in the Consumer segment, mainly in savings and term deposit products. Non-interest bearing deposits were up 6%
to $121.2 billion, due to an increase in mortgage offset balances, reflecting higher proportion of variable rate mortgages;
●New Zealand deposits reduced 1% in NZ$ terms to $78.8 billion driven by reductions in non-interest bearing products which more than offset growth in term deposits, resulting in
a composition shift; and
●Other overseas deposits were up 4% to $8.1 billion, primarily in WIB from higher volumes of offshore term deposits reflecting a higher interest rate environment and increased
client activity.
The deposit to loan ratio of 82.9% reduced slightly from 83.7% at 31 March 2023, as loan growth outpaced deposit growth over the last 12 months.
15
1.5.Review of earnings (Continued)
1.5.5. Loan and deposits market share and system multiple metrics
As at
As at
As at
31 March30 Sept31 March
202420232023
Market Share
Australia
ADI System (APRA)
Housing credit
21%21%21%
Personal credit cards21%21%21%
Business credit
a
15%15%15%
Household deposits21%21%20%
Business deposits
b
18%18%18%
Financial system (Reserve Bank of Australia (RBA))
Housing credit21%21%20%
Business credit
c
14%15%15%
Retail and business deposits
d
19%19%19%
New Zealand (Reserve Bank of New Zealand (RBNZ))
e
Consumer lending18%18%18%
Business lending16%16%16%
Deposits
18%18%18%
Half Year
Half Year
Half Year
MarchSeptMarch
202420232023
System Multiples
Australia
ADI System (APRA)
Housing credit
1.0 1.2 0.5
Personal credit cards 1.0 0.5 0.5
Business credit
a,f
0.4 1.4n/a
Household deposits 1.1 1.3 1.3
Business deposits
b,f
1.2 n/a n/a
Financial system (RBA)
Housing credit 1.0 1.4 0.6
Business credit
c
0.1 1.1 -
Retail and business deposits
d
0.8 0.8 0.4
New Zealand (RBNZ)
e
Consumer lending 1.3 0.3 1.2
Business lending
f
n/a 2.5n/a
Deposits
f
n/a n/a 5.9
a.Westpac Group’s business credit growth rate and multiples are based on ADI System published by APRA in the Monthly ADI statistics, inclusive of Westpac Institutional Bank. Business credit includes loans with Non-
Financial businesses and community service organisations.
b.Westpac Group’s business deposit growth rate and multiples are based on ADI System as published in the Monthly ADI statistics by APRA, inclusive of Westpac Institutional Bank. Business deposits include deposits
from Non-Financial businesses and Community service organisations.
c.Westpac Group’s business credit growth rate and multiples are based on Financial System as published in the RBA Lending and Credit Aggregates, inclusive of Westpac Institutional Bank. Business credit includes
loans with Non-financial businesses, Community service organisations, and select Financial Institutions.
d.Retail and business deposits include deposits from households, non-financial businesses, and select financial institutions as defined in the RBA Monetary Aggregates.
e.New Zealand comprises New Zealand banking operations.
f.n/a indicates that system growth and/or Westpac growth was negative.
16WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.5.Review of earnings (Continued)
1.5.6.Non-interest income
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Net fee income
842 818 827 3 2
Net wealth management income
218 215 347 1 (37)
Trading income
363 330 387 10 (6)
Other income
40 75 329 (47) (88)
Total non-interest income
1,463 1,438 1,890 2 (23)
Non-interest income is composed of:
Half Year Half Year Half Year % Mov’t
MarchSeptMarchMar 24Mar 24
$m202420232023 - Sept 23 - Mar 23
Non-interest income (Ex Notable Items and Businesses sold)
Net fee income
842 818 827 3 2
Net wealth management income
218 225 232 (3) (6)
Trading income
365 341 409 7 (11)
Other income
40 75 61 (47) (34)
Total non-interest income (Ex Notable Items and Businesses sold)
1,465 1,459 1,529 - (4)
Notable Items
Net fee income
- - - - -
Net wealth management income
- (10) - (100) -
Trading income (2) (11) (22) (82) (91)
Other income - - 243 - (100)
Total non-interest income - Notable Items
(2) (21) 221 (90) large
Businesses sold
Net wealth management income
- - 115 - (100)
Other income
- - 25 - (100)
Total non-interest income - Businesses sold - - 140 - (100)
Total non-interest income
1,463 1,438 1,890 2 (23)
First Half 2024 – Second Half 2023
Non-interest income increased by 2% to $1,463 million. Excluding Notable Items, non-interest income remained flat at $1,465 million.
Net fee income
Net fee income increased by 3% to $842 million with the largest contributor higher Institutional lending fees from increased underwriting activity and fee income from higher average
balances.
Net wealth management income
Net wealth management income decreased by 3% to $218 million with higher funds under administration more than offset by lower revenue margin.
Trading income
Trading income increased by 10% to $363 million. Excluding Notable Items, trading income increased by 7% to $365 million due to higher income from foreign exchange trading
which was assisted by volatility in foreign exchange rates.
Other income
Other income decreased by 47% to $40 million mainly from lower fair value gains on commodities trades, with Second Half 2023 experiencing higher levels of price volatility.
17
1.5.Review of earnings (Continued)
First Half 2024 – First Half 2023
Non-interest income declined by 23% to $1,463 million. Excluding Notable Items and the impact of businesses sold, non-interest income decreased by 4% to $1,465 million.
Net fee income
Net fee income increased by 2% to $842 million. Key movements included:
●Higher Institutional lending fees of $39 million primarily from higher average balances, underwriting fees, guarantee fees and undrawn line facility fees;
●Lower auto finance fees of $5 million reflecting the sale of this business and the continued run-off in loan balances;
●Lower Australian cards income of $10 million, including costs associated with higher travel insurance premiums; and
●Lower merchants income of $6 million, reflecting a reduction in spend and transaction volumes.
Net wealth management income
Net wealth management income decreased by 37% to $218 million primarily due to Notable Items and impact of businesses sold in the prior corresponding period. Excluding these
impacts, net wealth management income decreased 6% with higher funds under administration more than offset by lower revenue margin.
Trading income
Trading income decreased by 6% to $363 million. Excluding Notable Items, trading income decreased by 11% to $365 million. Movements in the period included:
●Derivative valuation adjustments (DVA) reduced income by $3 million primarily from narrowing funding spreads, compared to income of $57 million in the prior corresponding
period which also included the benefit of a provision release; and
●Foreign exchange income benefited from higher rate volatility.
Other income
Other income of $40 million was 88% lower due to the $243 million gain on sale of Advance Asset Management Limited (AAML) in the prior corresponding period. Excluding Notable
Items and the impact of businesses sold, other income was down 34% mainly from lower fair value gains on commodities trades compared to First Half 2023.
Businesses sold
No businesses were sold in First Half 2024. Past contribution to revenue from businesses sold totalled $140 million in First Half 2023. This related to AAML and BT's Superannuation
business prior to their exit in 2023.
18WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.5.Review of earnings (Continued)
1.5.7.Markets related income
1
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Net interest income
123 86 80 43 54
Non-interest income
367 413 445 (11) (18)
Markets income
490 499 525 (2) (7)
Sales and risk management income
502 495 473 1 6
Derivative valuation adjustment
(12) 4 52 large large
Markets income
490 499 525 (2) (7)
Markets income comprises sales and risk management revenue derived from the creation, pricing and distribution of risk management products to the Group's customers. Dedicated
relationship specialists provide product solutions to these customers to help manage their interest rate, foreign exchange, commodity, credit and structured products exposures.
First Half 2024 – Second Half 2023
Markets income decreased by 2% to $490 million.
Sales and risk management income increased by 1% to $502 million. This was largely driven by higher customer sales volumes and effective risk management in interest rate
products. This was partly offset by lower FX related income largely driven by seasonality.
DVA had a negative impact of $12 million compared to a $4 million positive contribution in the prior period. This was primarily driven by the impact of narrowing funding spreads in
First Half 2024.
First Half 2024 – First Half 2023
Markets income decreased by 7% to $490 million.
Sales and risk management income increased by 6% to $502 million. This was largely driven by higher customer sales volumes and effective risk management in interest rate
products.
DVA had a negative impact of $12 million compared to a $52 million positive contribution in the prior corresponding period. This was largely due a non-repeat of the credit market
rally in First Half 2023 and the impact of narrowing funding spreads in First Half 2024.
1.Markets income includes WIB, Business and Wealth and Westpac New Zealand markets.
19
1.5.Review of earnings (Continued)
1.5.8.Operating expenses
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Staff expenses
(2,931) (3,206) (2,892) (9) 1
Occupancy expenses
(352) (414) (372) (15) (5)
Technology expenses
(1,373) (1,248) (1,054) 10 30
Other expenses
(739) (836) (670) (12) 10
Total operating expenses
(5,395) (5,704) (4,988) (5) 8
Excluding Notable Items
Staff expenses (2,931) (2,971) (2,892) (1) 1
Occupancy expenses (352) (350) (372) 1 (5)
Technology expenses (1,373) (1,215) (1,054) 13 30
Other expenses (739) (708) (670) 4 10
Total operating expenses excluding Notable Items (5,395) (5,244) (4,988) 3 8
Operating expenses - Businesses sold - 28 18 (100) (100)
Operating expenses excluding Notable Items and Business sold
(5,395) (5,272) (5,006) 2 8
Full Time Equivalent (FTE) employees
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
Number of FTE
2024 2023 2023 - Sept 23 - Mar 23
Permanent employees
33,395 33,664 34,749 (1) (4)
Temporary employees
1,953 2,482 3,754 (21) (48)
FTE 35,348 36,146 38,503 (2) (8)
Average FTE
35,337 37,185 37,821 (5) (7)
First Half 2024 – Second Half 2023
Total operating expenses decreased 5% to $5,395 million.
Excluding Notable Items and businesses sold, operating expenses increased 2% to $5,395 million, reflecting higher software amortisation and third-party technology vendor costs
which more than offset lower staff expenses. The expense to income ratio excluding Notable Items was 49.9%, up from 49.1%.
Staff expenses decreased by 9% to $2,931 million. Excluding Notable Items, staff expenses decreased by 1%, due to lower average FTE which decreased by 5% reflecting
continued Cost Reset actions. This was partly offset by higher average wages and salaries. Superannuation expenses were higher due to the 0.5% increase in the super guarantee
rate from July 2023.
Occupancy expenses decreased by 15% to $352 million. Excluding Notable Items, occupancy expenses increased by 1% to $352 million.
Technology expenses increased 10% to $1,373 million. Excluding Notable Items, technology expenses were 13% higher due to increased software maintenance and license costs
and higher third-party vendor costs. Software amortisation was $71 million higher following the completion of major projects.
Other expenses decreased 12% to $739 million. Excluding Notable Items, other expenses increased 4% due to a $32 million impairment of RAMS’ intangible assets.
Businesses sold provided a $28 million benefit in Second Half 2023 due to reimbursement of costs related to the BT Superannuation Fund Successor Fund Transfer (SFT).
20WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.5.Review of earnings (Continued)
First Half 2024 – First Half 2023
Total operating expenses increased 8% to $5,395 million. The increase mainly reflects persistent inflationary pressures on third-party vendor services and higher software
amortisation. The expense to income ratio excluding Notable Items was 49.9%, up from 45.9%.
Staff expenses increased 1% to $2,931 million. Higher average wages and salaries, including variable reward more than offset a decline in average FTE of 7%, including the impact
of businesses sold, and continued benefits of Cost Reset actions.
Occupancy expenses decreased by 5% to $352 million. This reflects the reduction of the Group’s corporate and branch footprint, including the reduction in corporate office space
by 12%, the closure of 29 branches and the establishment of 53 co-locations.
Technology expenses increased 30% to $1,373 million with a $192 million increase in software amortisation related to the completion of major growth and productivity investments.
Software maintenance and license costs were higher due to greater business demand and inflation contributed to higher third-party vendor costs.
Other expenses increased 10% to $739 million due to higher non-lending losses and a $32 million impairment of RAMS’ intangible assets.
Businesses sold provided an $18 million benefit in First Half 2023 due to reimbursement of certain wealth management costs.
Investment spend
Half YearHalf YearHalf Year% Mov’t
March Sept March Mar 24 Mar 24
$m202420232023- Sept 23- Mar 23
Expensed
414 529 287 (22) 44
Capitalised software, fixed assets and prepayments
322 525 581 (39) (45)
Total
736 1,054 868 (30) (15)
Risk and regulatory
492 658 536 (25) (8)
Growth and productivity
244 396 332 (38) (27)
Total
736 1,054 868 (30) (15)
Total investment spend of $736 million was 15% lower than the prior corresponding period. The decline reflects the completion of several large programs in 2023 and the focus in
First Half 2024 on the planning phase for the technology simplification program, UNITE. Seasonality is also a factor in the 30% decline relative to the prior period.
Of the investment spend, 56% was expensed in the First Half 2024 compared to 50% in the prior period and 33% in the prior corresponding period.
Growth and productivity initiatives accounted for 33% of investment spend and 67% remained focused on risk and regulatory agenda initiatives.
Growth and productivity investments included:
●Rollout of new features in the Westpac App;
●Launched EFTPOS Flex, a high-speed, cost-effective merchant terminal that integrates with more than 550 point of sale systems, including self-serve checkouts and kiosks;
●EFTPOS Air enhancements;
●PayTo rolled out to large corporate and institutional clients offering secure, real-time payments direct from their customers’ bank accounts;
●Continued development of the corporate cash management platform;
●Commencing development of the integrated business lending origination platform; and
●Commencement of the technology simplification program, UNITE.
21
1.5.Review of earnings (Continued)
Risk and regulatory investments included:
●Completion of all the CORE Integrated Plan activities. Westpac is now in a transition phase, which is focused on ensuring the sustainability of changes we have made to
strengthen risk management and risk culture across the Group;
●Expansion of scam protection through:
–Launch of Westpac SaferPay, an innovation using artificial intelligence to alert customers to potential scams through a series of questions presented for new payments
detected to have high scam risk; and
–Scam education messages displayed when creating or amending payee information and payment limits.
●Processing of incoming international payments for Westpac customers via the New Payments Platform (NPP) enabling faster transfers between accounts and compliance with
industry standards;
●Maintaining NPP Australia scheme compliance and improving payments resilience, stability, and risk; and
●Continued simplification of our data environment to reduce risk and provide consistent high-quality data for consumption.
Capitalised software
Half YearHalf YearHalf Year% Mov’t
March Sept March Mar 24 Mar 24
$m
202420232023- Sept 23- Mar 23
Balance as at beginning of period
2,797 2,632 2,264 6 24
Total additions
329 546 595 (40) (45)
Amortisation expense
(442) (371) (250) 19 77
Impairment expense
(19) (8) - 138 -
Foreign exchange movements and other adjustments
(7) (2) 23 large large
Balance as at end of period 2,658 2,797 2,632 (5) 1
Average amortisation period (years)
3.2 3.5 4.5 (0.3) years (1.3) years
Capitalised software increased by 1% on the prior corresponding period and declined 5% on September 2023 to $2,658 million. Amortisation increased due to the completion of
key projects such as One Banking Platform and investment to comply with the RBNZ's outsourcing policy, BS11. Additions included ongoing investment in our payments and data
infrastructure. The average amortisation period reduced by 1.3 years to 3.2 years from First Half 2023 and 0.3 years from Second Half 2023 as key projects began to amortise.
22WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.5.Review of earnings (Continued)
1.5.9.Credit impairment charges
Half YearHalf YearHalf Year% Mov’t
March Sept March Mar 24 Mar 24
$m
202420232023- Sept 23- Mar 23
Individually assessed provisions (IAPs)
New IAPs
(213) (121) (76) 76 180
Write-backs
30 41 86 (27) (65)
Recoveries
90 63 128 43 (30)
Total IAPs, write-backs and recoveries
(93) (17) 138 large large
Collectively assessed provisions (CAPs)
Write-offs
(211) (222) (218) (5) (3)
Other changes in CAPs
(58) (19) (310) large (81)
Total CAPs
(269) (241) (528) 12 (49)
Total credit impairment (charges)/benefits (362) (258) (390) 40 (7)
Impairment charges/(benefits) to average loans9 bps7 bps10 bps2 bps(1 bps)
Net write-offs to average gross loans
5 bps 5 bps 4 bps - 1 bps
First Half 2024 – Second Half 2023
The credit impairment charge of $362 million represents 9 basis points of average loans, up from 7 basis points. The increase in the impairment charge was driven by a higher new
IAP charge of $213 million and a 12% increase in the CAP charge.
The CAP charge of $269 million comprised other changes in CAP of $58 million and write-offs of $211 million mainly in consumer lending. The other changes in CAP charge
included:
●An increase in mortgage delinquencies from 0.81% to 1.00%;
●Less favourable outlook for interest rates and commercial property prices;
●A decrease in overlays of $172 million driven by the partial release of mortgage portfolio and construction industry overlays; and
●A reduction in the downside scenario weight of 2.5% reflecting a modest reduction in macroeconomic uncertainty.
The IAP charge of $93 million comprised:
●New IAPs of $213 million, mostly in the wholesale & retail trade, including one impaired exposure greater than $50 million, and manufacturing sectors;
●Recoveries of $90 million, mostly in credit card and personal loan portfolios; and
●Write-backs of $30 million.
First Half 2024 – First Half 2023
The credit impairment charge of $362 million represents 9 basis points of average loans, down from 10 basis points. The reduction in the impairment charge was due to a 49% lower
CAP charge which was partly offset by higher new IAPs of $213 million.
1.5.10.Income tax expense
First Half 2024 – Second Half 2023
The effective tax rate of 30.9% in First Half 2024 was lower than the Second Half 2023 effective tax rate of 31.7%. The key driver for the decrease was the reduction in expenses
that are not deductible for tax purposes.
First Half 2024 – First Half 2023
The effective tax rate of 30.9% in First Half 2024 was higher than the effective tax rate of 28.8% in First Half 2023 due to the sale of Advance Asset Management Limited in First Half
2023, which resulted in an accounting gain, but a loss for tax purposes.
The effective tax rate is above the Australian corporate tax rate of 30%.
23
1.6.Credit quality
Credit quality key metrics
As atAs atAs at
31 March30 Sept31 March
2024 2023 2023
Stressed exposures by credit grade as a % of TCE:
Impaired
0.12%0.11%0.12%
Non-performing, 90+ days past due
0.46%0.39%0.32%
Non-performing, less than 90 days past due
0.24%0.22%0.23%
Watchlist and substandard0.54%0.54%0.43%
Total stressed exposures
1.36%1.26%1.10%
Gross impaired exposures to TCE for business and institutional:
Business Australia
0.47%0.44%0.53%
Business New Zealand
0.38%0.12%0.20%
Institutional
0.03%0.02%0.03%
Mortgage 90+ day delinquencies:
Group
1.00%0.81%0.68%
Australia
1.06%0.86%0.73%
New Zealand
0.47%0.33%0.29%
Other consumer loans 90+ day delinquencies:
Group
1.40%1.28%1.54%
Australia
1.45%1.32%1.58%
New Zealand
0.96%0.92%1.13%
Other:
Gross impaired exposures to gross loans
0.19%0.17%0.20%
Gross impaired exposure provisions to gross impaired exposures
46.60%43.47%42.80%
Total provisions to gross loans
65 bps 63 bps 65 bps
Collectively assessed provisions to credit risk weighted assets
138 bps 135 bps 133 bps
Total provisions to credit risk weighted assets
151 bps 145 bps 145 bps
Movement in gross impaired exposures
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Balance as at beginning of period
1,302 1,521 1,514 (14) (14)
New and increased - individually managed
284 193 174 47 63
Write-offs
(277) (330) (271) (16) 2
Returned to performing or repaid
(122) (167) (282) (27) (57)
Portfolio managed - new/increased/returned/repaid
318 83 385 large (17)
Exchange rate and other adjustments
(5) 2 1 large large
Balance as at end of period
1,500 1,302 1,521 15 (1)
24WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.6.Credit quality (Continued)
First Half 2024 – Second Half 2023
Stressed exposures as a percentage of total committed exposures increased by 10 basis points to 1.36%.
The composition and drivers of stressed exposures were:
●Impaired exposures of 12 basis points: a 1 basis point increase reflecting higher impaired exposures in Business in Australian and New Zealand and Institutional;
●Non-performing, 90+ days past due and not impaired exposures of 46 basis points: a 7 basis point increase reflecting higher mortgage 90+ day delinquencies;
●Non-performing not 90 days past due and not impaired exposures of 24 basis points: a small 2 basis point increase since 30 September 2023, mostly within Australian Business;
and
●Watchlist and substandard exposures of 54 basis points: no change compared to 30 September 2023.
Gross impaired exposures to gross loans were 2 basis points higher at 0.19%, driven by higher impaired exposures in Business in Australia and New Zealand and Institutional. The
provision coverage of the impaired portfolio was 47%, up from 43% at 30 September 2023, reflecting a higher than average level of coverage on a number of counterparties that
became impaired during First Half 2024. Impaired exposures have an appropriate level of provision cover.
Portfolio segments First Half 2024 – Second Half 2023
Stressed exposures in WIB increased by 5 basis points to 0.63%, driven by downgrades in the wholesale & retail trade sector. Impaired exposures to TCE remained low at 0.05%.
Australian business stressed exposure increased by 6 basis points to 5.01% of TCE, driven by downgrades in the wholesale & retail trade sector. Impaired exposures to TCE
increased 3 basis points to 0.47% with deterioration in the wholesale & retail trade sector.
Australian mortgage 90+ day delinquencies increased 20 basis points to 1.06% due to elevated interest rates and cost of living pressures. Hardship increased by 34 basis points to
1.05% as customers requested additional assistance.
Properties in possession were 190, a reduction of 20 compared to 30 September 2023, reflecting increased turnover and price momentum in the residential property market.
Australian other consumer 90+ day delinquencies increased 13 basis points to 1.45% driven by cost of living pressures impacting the cards and personal loans portfolios.
In New Zealand, stressed exposure to TCE increased by 6 basis points to 1.55%, mostly driven by a 6 basis point increase in impaired exposures to 0.12%, mostly in the
manufacturing sector.
New Zealand mortgage 90+ day delinquencies were up 14 basis points to 0.47%. The increase reflected the impact of cost of living pressures. Other consumer 90+ day
delinquencies increased 4 basis points to 0.96%. The number of hardship cases has remained stable over the period.
25
1.6.Credit quality (Continued)
Provisioning First Half 2024 – Second Half 2023
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
$m202420232023- Sept 23- Mar 23
Provision for expected credit losses (ECL) on loans and credit commitments
Collectively assessed provisions
Modelled provision
4,400 4,147 3,810 6 15
Overlays
260 432 720 (40) (64)
Total collectively assessed provisions
4,660 4,579 4,530 2 3
Individually assessed provisions
461 351 382 31 21
Total provision for ECL on loans and credit commitments
5,121 4,930 4,912 4 4
Provision for ECL on debt securities at amortised cost
8 6 6 33 33
Provision for ECL on debt securities at FVOCI
a
6 5 5 20 20
Total provision for ECL
5,135 4,941 4,923 4 4
a.FVOCI represents fair value through other comprehensive income.
Total provisions increased 4% to $5,135 million. The increase was driven by higher CAP and IAP.
The increase in modelled CAP of $253 million was driven by:
●An increase in mortgage 90+ day delinquencies; and
●Less favourable outlook for interest rates and commercial property prices.
This was partly offset by a decrease in the downside scenario weight of 2.5% reflecting a modest reduction in macroeconomic uncertainty.
There was a $172 million decrease in overlays as the expected risk did not materialise or is now reflected in modelled outcomes. The reduction reflects partial release of mortgage
portfolio and construction industry overlays.
The increase in IAP of $110 million was predominately driven by new IAPs in the wholesale & retail trade and manufacturing sectors.
The economic scenario weights, which underpin the provisions for expected credit losses, were updated in First Half 2024. The 2.5% decrease in the downside scenario weight to
42.5% reflects a modest reduction in macroeconomic uncertainty.
As at
As at
As at
31 March30 Sept31 March
Scenario weightings (%)202420232023
Upside
5.0 5.0 5.0
Base
52.5 50.0 50.0
Downside
42.5 45.0 45.0
26WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.7.Balance sheet and funding
1.7.1.Balance sheet
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Assets
Loans
784,839 773,254 749,931 1 5
Housing 557,263 547,074 534,021 2 4
Personal 11,951 12,379 13,151 (3) (9)
Business 220,207 218,234 207,229 1 6
Provision for expected credit losses (4,582) (4,433) (4,470) 3 3
Liquid assets 201,364 196,720 210,463 2 (4)
All other assets 66,458 59,800 58,714 11 13
Total assets
1,052,661 1,029,774 1,019,108 2 3
Liabilities
Customer deposits 650,946 640,951 627,585 2 4
Transactions
a
108,442 107,468 109,244 1 (1)
Savings
a
221,743 214,834 211,450 3 5
Term
187,625 185,770 179,166 1 5
Non-interest bearing
a
133,136 132,879 127,725 - 4
Certificates of deposit
51,280 47,217 48,767 9 5
Debt issues 159,781 156,573 148,952 2 7
Term funding from central banks 12,507 16,586 34,523 (25) (64)
Loan capital
37,280 33,176 31,025 12 20
All other liabilities 68,307 62,732 55,588 9 23
Total liabilities
980,101 957,235 946,440 2 4
Equity
Total equity attributable to owners of WBC
72,522 72,495 72,624 - -
Non-controlling interest
38 44 44 (14) (14)
Total equity
72,560 72,539 72,668 - -
a.Comparatives have been revised to conform with current period presentation.
27
1.7.Balance sheet and funding (Continued)
1.7.2.Funding and liquidity risk management
Liquidity risk is the risk that the Group will be unable to fund assets and meet obligations as they become due. This risk is inherent for all banks as intermediaries between depositors
and borrowers. The Group has a Liquidity Risk Management Framework which seeks to ensure we meet our cash flow obligations under a wide range of market conditions and
scenarios, as well as meeting the requirements of the LCR and NSFR.
The Group’s Liquidity Risk Management Framework is approved by the Board and sets out the funding and liquidity risk appetite. It also determines the roles and responsibilities of
key people managing funding and liquidity risk, risk reporting and control processes. In addition, it sets out the limits and targets used to manage Westpac’s balance sheet, including
wholesale funding limits, liquidity risk limits and stress testing.
Westpac maintained a strong liquidity position and conservative funding profile, with key ratios and metrics comfortably above minimum requirements. In March and April 2024, the
credit ratings for some term funding and capital instruments were upgraded by key ratings agencies, reflecting the Group’s low risk profile.
LCR
1
QuarterQuarterQuarter% Mov’t
MarchSeptMarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
High Quality Liquid Assets (HQLA)
181,530 181,882 186,480 - (3)
Total LCR liquid assets
181,530 181,882 186,480 - (3)
Cash outflows in a modelled 30-day APRA defined stressed scenario
Customer deposits
95,017 95,008 96,839 - (2)
Wholesale funding
13,521 11,249 14,990 20 (10)
Other flows
a
28,570 29,943 25,807 (5) 11
Total
137,108 136,200 137,636 1 -
LCR
132%134%135%(114 bps) (309 bps)
a.Other flows include credit and liquidity facilities, collateral outflows, inflows from customers and TFF maturities.
The LCR is designed to enhance banks’ short-term resilience, by measuring the level of HQLA, as defined, held against its liquidity needs for a 30 calendar day period under a
regulator-defined stress scenario.
Westpac’s average LCR for the quarter ended 31 March 2024 was 132%, a small decrease compared to the quarter ended 30 September 2023. It remains well above the regulatory
minimum of 100%. The decrease in the ratio largely reflects the impact of TFF maturities, as remaining TFF maturities move into the LCR maturity windows.
Westpac held an average of $182 billion in HQLA in the March 2024 quarter, which includes approximately $44 billion in HQLA above the 100% LCR minimum. The Group’s portfolio
of HQLA provides a buffer against periods of liquidity stress, as well as meeting regulatory requirements. HQLA include cash, deposits with central banks, government and semi-
government securities, and are recognised in the LCR calculation at market value.
Westpac uses derivatives to hedge the interest rate risk of the liquid asset portfolio and reduce exposure to changes in fair value. Changes in the fair value of liquid assets are
recognised in Other Comprehensive Income through the relevant equity reserve.
The Group also has access to non-HQLA and other assets that are eligible for re-purchase with a central bank under certain conditions and provide a source of additional liquidity for
the Group. These assets include private securities and self-originated AAA-rated mortgage-backed securities.
1.Reported balances are quarterly averages.
28WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.7.Balance sheet and funding (Continued)
NSFR
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Available stable funding
720,483 707,893 701,432 2 3
Required stable funding
632,775 615,341 589,569 3 7
Net stable funding ratio
114%115%119%(118 bps) large
The NSFR is designed to encourage banks’ longer-term funding resilience. To comply, banks are required to maintain an NSFR of at least 100% at all times. Westpac’s NSFR was
114% at 31 March 2024, well above the 100% minimum.
The ratio was down from 115% at 30 September 2023, reflecting:
●An increase in required stable funding due to TFF maturities, as mortgages backing those facilities are no longer used as collateral for the TFF and require more stable funding;
●The impact of regulatory changes to APS 112 Capital Adequacy, which resulted in a higher stable funding requirement for certain mortgages; and
●Growth in lending.
These factors were also the main driver of the reduction in the NSFR compared to 31 March 2023. There has been little change in the Group’s liquidity risk or structural term profile.
Funding
The Group monitors the composition and stability of its funding to comply with its funding risk appetite and regulatory requirements of both the LCR and NSFR. During the First Half
2024, the Group maintained a conservative funding profile, and took advantage of favourable credit market conditions.
Funding by residual maturity
As at 31 March 2024As at 30 Sept 2023As at 31 March 2023
$m Ratio % $m Ratio % $m Ratio %
Customer deposits 650,946 65.9 640,951 66.0 627,585 65.0
Wholesale funding
Short term
80,289 8.1 79,181 8.1 78,430 8.1
Long term - less than or equal to one year residual maturity
37,876 3.8 40,607 4.2 44,431 4.6
Long term - more than one year residual maturity
140,164 14.2 133,979 13.8 139,964 14.5
Securitisation
6,097 0.7 4,298 0.4 4,342 0.4
Total wholesale funding
264,426 26.8 258,065 26.5 267,167 27.6
Equity
a
72,407 7.3 72,543 7.5 71,759 7.4
Total funding
987,779 100.0 971,559 100.0 966,511 100.0
a.Includes total share capital, share-based payment reserve and retained profits.
29
1.7.Balance sheet and funding (Continued)
Long term wholesale funding
Long term funding with a residual maturity greater than 12 months made up 14.2% of total funding at 31 March 2024, up from 13.8% at 30 September 2023, as the Group took
advantage of favourable credit market conditions. Funding from securitisation accounted for a further 0.7% of total funding, an increase compared to 0.4% at 30 September 2023,
reflecting the $2.25 billion transaction issued in February 2024.
In total, the Group raised $19.8 billion of long-term wholesale funding in the First Half 2024. Leveraging the scale and diversity of its wholesale funding franchise, new issuance
included senior and covered bonds, RMBS and capital securities, in a range of tenors and currencies. Westpac New Zealand Limited contributed $2.3 billion to the Group’s term
issuance in the half.
Tier 2 capital securities issued by the Australian parent entity made up $2.7 billion of term funding in the half.
Short term wholesale funding
Wholesale funding with a residual maturity less than 12 months accounted for 8.1% of total funding at 31 March 2024, unchanged from 30 September 2023. Long term funding
where the residual maturity is less than one year, reduced to 3.8% at 31 March 2024, from 4.2% at 30 September 2023. The short term wholesale funding portfolio, including long-
term funding with a residual maturity of less than one year, had a weighted average maturity of 155 days, up from 149 days at 30 September 2023.
Deposit to loan ratio
As at 31 March 2024 As at 30 Sept 2023 As at 31 March 2023
$m Ratio % $m Ratio % $m Ratio %
Customer deposits
650,946 640,951 627,585
Loans
784,839 82.94 773,254 82.89 749,931 83.69
Customer deposits
Customer deposits accounted for 65.9% of the total funding at 31 March 2024, compared to 66.0% at 30 September 2023. Over the half, customer deposits grew strongly, up $10.0
billion or 1.6%. While this was exceeded by loan growth of $11.6 billion, loans grew at 1.5% and this resulted in the deposit to loan ratio remaining stable at 82.9%.
Equity
Funding from equity made up 7.3% of total funding at 31 March 2024, compared to 7.5% at 30 September 2023. This reflects the impact of the on market share buyback conducted
during First Half 2024.
30WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.8.Capital and dividends
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
2024 2023 2023 - Sept 23 - Mar 23
Level 2 regulatory capital structure
Common equity Tier 1 (CET1) capital after deductions ($m)
55,764 55,885 55,644 - -
Risk weighted assets (RWA) ($m)
444,417 451,418 452,946 (2) (2)
CET1 capital ratio
12.55%12.38%12.28%17 bps 27 bps
Additional Tier 1 capital ratio
2.46%2.21%2.20%25 bps 26 bps
Tier 1 capital ratio
15.01%14.59%14.48%42 bps 53 bps
Tier 2 capital ratio
6.42%5.86%5.27%56 bps 115 bps
Total regulatory capital ratio
21.43%20.45%19.75%98 bps 168 bps
APRA leverage ratio
5.49%5.50%5.46%(1 bps) 3 bps
Level 1 regulatory capital structure
CET1 capital after deductions ($m)
51,999 52,273 52,021 (1) -
Risk weighted assets ($m)
406,397 414,293 416,254 (2) (2)
Level 1 CET1 capital ratio
12.80%12.62%12.50%18 bps 30 bps
Capital management strategy
Westpac's capital management strategy is reviewed on an ongoing basis and annually through an Internal Capital Adequacy Assessment Process. Key considerations include:
●Regulatory capital minimums together with the capital conservation buffer and countercyclical capital buffer are the Total CET1 Requirement. The Total CET1 Requirement for
domestic systemically important banks (D-SIBs), including Westpac, is at least 10.25%;
1
●Strategy, business mix and operations and contingency plans;
●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 capital requirements including the impact of adverse economic scenarios.
The Board has determined that Westpac will target a CET1 operating capital range of between 11.0% and 11.5%, in normal operating conditions.
Westpac’s Level 2 CET1 capital ratio was 12.55% at 31 March 2024, 17 basis points higher than 30 September 2023. Key movements included:
●First Half 2024 net profit: 75 basis points increase;
●Payment of the 2023 final dividend: 57 basis points reduction;
●RWA: 17 basis points increase mainly from a reduction in Interest Rate Risk in the Banking Book (IRRBB) RWA;
●Capital deductions and other capital movements: 2 basis points increase mainly due to lower deductions for capitalised software;
●Foreign currency impacts: 1 basis point reduction; and
1.Noting that APRA may apply higher CET1 requirements for an individual ADI.
31
1.8.Capital and dividends (Continued)
●On market share buyback: 19 basis points reduction. As at 31 March 2024, approximately $0.85 billion of the $1.5 billion on market share buyback announced in November 2023
has been completed with a total of 34,442,450 shares bought back and cancelled at an average price of $24.65.
Westpac’s Level 1 CET1 capital ratio was 12.80% at 31 March 2024, 18 basis points higher than 30 September 2023 with movements in line with Level 2.
Additional Tier 1 and Tier 2 capital movement for First Half 2024
During the half the Group issued $1.75 billion of Additional Tier 1 capital instruments and redeemed $0.8 billion of Additional Tier 1 capital instruments. The net impact of these
transactions was an increase in the Tier 1 capital ratio of approximately 21 basis points.
The Group also issued $2.7 billion of Tier 2 capital instruments over the half. The impact of these transactions was an increase in the total capital ratio of approximately 59 basis
points. There were no Tier 2 capital instruments redeemed.
D-SIBs, including Westpac, have a total capital requirement of 18.25% from 1 January 2026.
Leverage ratio
The leverage ratio represents the amount of Tier 1 capital relative to exposure
1
. At 31 March 2024, Westpac’s leverage ratio was 5.49%, down 1 basis point from 30 September
2023, and above APRA's regulatory minimum requirement of 3.5%.
Internationally comparable capital ratios
APRA’s capital adequacy requirements are more conservative than those of the Basel Committee on Banking Supervision, leading to lower reported capital ratios when compared to
international peers.
The Group's international comparable capital ratios have been calculated using the methodology outlined in the Australian Banking Association study released on 10 March 2023.
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
%
2024 2023 2023 - Sept 23 - Mar 23
Internationally comparable capital ratios
CET1 capital ratio
18.55%18.73%18.14%(18 bps) 41 bps
Tier 1 capital ratio
21.83%21.76%21.07%7 bps 76 bps
Total regulatory capital ratio
30.41%29.87%28.24%54 bps 217 bps
Leverage ratio
5.95%5.98%5.91%(3 bps) 4 bps
1.As defined under Attachment D of APS110: Capital Adequacy.
32WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.8.Capital and dividends (Continued)
Risk Weighted Assets
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Credit risk:
Corporate
25,269 24,818 24,309 2 4
Business lending
23,426 23,860 25,928 (2) (10)
Property finance
30,386 30,416 31,234- (3)
Large corporate
20,558 20,570 21,228- (3)
Sovereign
1,919 2,143 2,357 (10) (19)
Financial institution
13,088 13,457 15,057 (3) (13)
Residential mortgages
115,918 112,948 109,164 3 6
Australian credit cards
3,789 3,712 3,957 2 (4)
Other retail
4,259 4,607 5,304 (8) (20)
Small business
17,378 17,040 18,219 2 (5)
Specialised lending
3,276 3,065 2,931 7 12
Securitisation 7,317 7,661 6,400 (4) 14
Standardised 26,668 28,813 29,139 (7) (8)
New Zealand
a
46,490 46,648 45,331- 3
Total credit risk
339,741 339,758 340,558 - -
Market risk
11,251 11,538 15,168 (2) (26)
Operational risk
54,934 55,175 56,900 - (3)
Interest rate risk in the banking book (IRRBB)
33,599 40,138 34,748 (16) (3)
Other
4,892 4,809 5,572 2 (12)
Total risk weighted assets
444,417 451,418 452,946 (2) (2)
a.Includes credit and securitisation exposures regulated under RBNZ prudential requirements.
Total RWA decreased by 1.6% to $444.4 billion over the half largely due to the decrease in non-credit RWA.
Credit RWAs were flat. Key movements included:
●A $2.2 billion increase from higher lending primarily in Corporates;
●A $3.0 billion increase due to deterioration in credit metrics mainly from an increase in delinquencies in Residential Mortgages:
●A $4.0 billion decrease from data refinements mainly related to Residential Mortgages and Corporate exposures;
●A $0.3 billion decrease from counterparty credit risk and mark-to-market related credit risk due to decreases in the mark to-market value of derivatives from changes in
underlying foreign currency rates; and
●A $0.8 billion decrease from foreign currency translation impacts, predominantly the appreciation of the A$ against the NZ$ and US$.
Non-credit RWA were $7.0 billion lower. Key movements included:
●IRRBB RWA: $6.5 billion decrease, driven by:
–Reduction of $8.4 billion from lower regulatory embedded loss due to lower swap rates; and
–Increase in repricing and yield curve risk of $1.4 billion in line with underlying banking book positions;
●Operational RWA: $0.2 billion decrease driven by the outcome of the annual Standardised Measurement Approach (SMA) capital revision and the roll-off of indemnities provided
as part of the exit of non-core businesses; and
●Market RWA: $0.3 billion decrease from changes in market risk exposures.
33
1.8.Capital and dividends (Continued)
Capital adequacy
As atAs atAs at
31 March30 Sept31 March
$m
2024 2023 2023
Tier 1 capital
CET1 capital
Paid up ordinary capital
38,944 39,826 39,824
Treasury shares
(815) (759) (759)
Equity based remuneration
1,994 1,929 1,907
Foreign currency translation reserve
(332) (171) (160)
Accumulated other comprehensive income
(238) (221) (38)
Non-controlling interests - other
38 44 44
Retained earnings
32,179 31,436 30,686
Less retained earnings in life and general insurance, funds management and securitisation entities
(399) (369) (343)
Deferred fees
305 334 276
Total CET1 capital
71,676 72,049 71,437
Deductions from CET1 capital
Goodwill (excluding funds management entities)
(7,901) (7,940) (7,943)
Deferred tax assets
(2,186) (2,144) (2,065)
Goodwill in life and general insurance, funds management and securitisation entities
(149) (149) (149)
Capitalised expenditure
(2,333) (2,375) (2,250)
Capitalised software
(2,658) (2,797) (2,631)
Investments in subsidiaries not consolidated for regulatory purposes
(136) (76) (201)
Regulatory expected downturn loss in excess of eligible provisions
- - (2)
Securitisation (16) (16) -
Defined benefit superannuation fund surplus
(146) (217) (67)
Equity investments
(234) (228) (209)
Regulatory adjustments to fair value positions
(153) (222) (276)
Total deductions from CET1 capital
(15,912) (16,164) (15,793)
Total CET1 capital after deductions
55,764 55,885 55,644
Additional Tier 1 capital
Basel III complying instruments
10,956 10,037 9,958
Total Additional Tier 1 capital
10,956 10,037 9,958
Deductions from Additional Tier 1 capital
Holdings of own and other financial institutions Additional Tier 1 capital instruments
(26) (46) (25)
Total deductions from Additional Tier 1 capital
(26) (46) (25)
Net Additional Tier 1 regulatory capital
10,930 9,991 9,933
Net Tier 1 regulatory capital
66,694 65,876 65,577
Tier 2 capital
Basel III complying instruments
28,067 25,740 23,160
Eligible general reserve for credit loss
896 1,051 1,103
Total Tier 2 capital
28,963 26,791 24,263
Deductions from Tier 2 capital
Holdings of own and other financial institutions Tier 2 capital instruments
(410) (370) (367)
Total deductions from Tier 2 capital
(410) (370) (367)
Net Tier 2 regulatory capital
28,553 26,421 23,896
Total regulatory capital
95,247 92,297 89,473
Risk weighted assets
444,417 451,418 452,946
CET1 capital ratio
12.55%12.38%12.28%
Additional Tier 1 capital ratio
2.46%2.21%2.20%
Tier 1 capital ratio
15.01%14.59%14.48%
Tier 2 capital ratio
6.42%5.86%5.27%
Total regulatory capital ratio
21.43%20.45%19.75%
34WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.8.Capital and dividends (Continued)
Dividends
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
2024 2023 2023 - Sept 23 - Mar 23
Ordinary dividend - Interim (cents per share)
75 - 70 - 7
Ordinary dividend - Final (cents per share)
- 72 - (100) -
Special dividend (cents per share) 15 - - - -
Ordinary dividend payout ratio
77.90%79.06%61.33%(116 bps) large
Ordinary dividend payout ratio (ex Notable Items)74.25%71.22%64.19%303 bpslarge
Adjusted franking credit balance ($m)
3,321 3,520 3,396 (6) (2)
The Board has determined to pay a fully franked 2024 interim ordinary dividend of 75 cents per share. The 2024 interim ordinary dividend represents a payout ratio (ex Notable
Items) of 74.25%. In addition, the Board has determined to pay a fully franked special dividend of 15 cents per share. Both the 2024 interim ordinary dividend and special dividend
will be paid on 25 June 2024 to shareholders on the register at the record date of 10 May 2024.
In addition to being fully franked, the 2024 interim ordinary dividend will carry NZ$0.06 in New Zealand imputation credits and the special dividend will carry NZ$0.012 in New
Zealand imputation credits, that may be used by New Zealand tax residents.
The Board has determined that the DRP will apply to the 2024 interim ordinary dividend and the special dividend and participants’ entitlement to shares under the DRP will be
satisfied by arranging for the purchase of shares in the market by a third party. The market price used to determine the number of shares to be provided to DRP participants will be
set over the 20 trading days commencing 15 May 2024 and will not include a discount.
Capital deduction for regulatory expected credit loss
For capital adequacy purposes APRA requires the amount of regulatory expected credit losses in excess of eligible provisions to be deducted from CET1 capital. The table below
shows the calculation of this capital deduction.
As atAs atAs at
31 March30 Sept31 March
$m
2024 2023 2023
Provisions associated with eligible portfolios
Total provisions for expected credit losses
5,135 4,941 4,923
plus provisions associated with partial write-offs
288 292 381
less ineligible provisions
a
(221) (192) (181)
Total eligible provisions
5,202 5,041 5,123
Regulatory expected downturn loss
4,383 4,078 4,101
Excess/(shortfall) in eligible provisions compared to regulatory expected downturn loss
819 963 1,022
CET1 capital deduction for regulatory expected downturn loss in excess of eligible provisions
b
- - (2)
a.Provisions associated with portfolios subject to the Basel standardised approach to credit risk are not eligible.
b.Regulatory expected loss is calculated for portfolios subject to the Basel advanced capital IRB approach to credit risk. The comparison between regulatory expected loss and eligible provisions is performed
separately for defaulted and non-defaulted exposures.
35
1.9.Sustainability performance summary
Westpac’s sustainability approach
Westpac’s purpose is Creating better futures together. Our Sustainability Strategy supports our purpose and comprises six objectives that respond to the issues that are material for
our stakeholders:
1.Enhance financial inclusion and equality;
2.Strengthen data security and protection;
3.Become a net-zero, climate resilient bank;
4.Become a nature positive bank;
5.Respect and advance human rights; and
6.Enable diversity and inclusion.
These objectives extend across our stakeholders, including customers, suppliers, communities, and our employees. Our approach focuses on areas where we seek to have a
genuine impact and use our experience to advocate for change. Refer to our Sustainability Strategy on our website for full details.
Our Sustainability Strategy is supported by a broad range of policies, procedures, and plans, including our Sustainability Risk Management Framework, Climate Change Position
Statement and Action Plan, Human Rights Position Statement and Action Plan, Natural Capital Position Statement, Code of Conduct, Responsible Sourcing Code of Conduct and
Reconciliation Action Plan.
Demonstrating our progress and accountability through disclosure is important. Most of our disclosures are updated annually, including through our Annual Report, Climate Report,
Investor Discussion Pack and on the sustainability section of our website. A Sustainability Index and Datasheet brings together most of our sustainability metrics in a spreadsheet
and is available on our website. This Datasheet also summarises how we align with key reporting initiatives including the Global Reporting Initiative, and previous initiatives now led
by the International Sustainability Standards Board (ISSB). This incorporates the Sustainability Accounting Standards Board and the Task Force on Climate-Related Financial
Disclosures (TCFD) Recommendations.
First Half 2024 highlights
●Held a Sustainability Market Update for our stakeholders in November 2023, launching our new Sustainability Strategy. Objectives within the Strategy are supported by goals and
metrics which we will report on regularly. These are on our website;
●Released our 2023 Modern Slavery Statement in response to the Australian Modern Slavery Act 2018 (Cth) and the UK Modern Slavery Act (2015). The statement outlines our
actions to assess and address modern slavery risk across our operations and supply chain over Full Year 2023;
●Received 92.3% of shareholder votes in support of our Climate Change Position Statement and Action Plan at our 2023 AGM;
●Released our first Natural Capital Position Statement, outlining our ambition to become a nature positive bank;
●Set our Net-Zero Banking Alliance (NZBA) Agriculture 2030 targets, including a commitment for no further conversion of natural forest to agricultural land use within farm
systems from 31 December 2025 for customers in scope of the targets
1
. This aligns with the SBTi FLAG Target Setting Guidance; and
●Released our Sustainable Finance Framework and sustainable finance 2030 targets ($55 billion in lending and $40 billion in bond facilitation)
2
. We are currently assessing our
prior lending and bond facilitation transactions against this Framework and will report progress from Full Year 2024.
Our Climate Action Plan
Our 2023 Climate Report details our climate strategy and outlines our ambition to become a net-zero, climate resilient bank. Aligned to the former TCFD Recommendations, now
integrated into ISSB's Standards, the Climate Report outlines our three areas of focus.
1.For full details, including definition of natural forest, see our 2023 Climate Report.
2.Our lending target will be the total committed exposure or balance (applicable for residential mortgages) at 30 September 2030. Reported progress against the target will be TCE or balance at a point-in-time based
on transactions completed during the year, along with previous transactions assessed as sustainable under the Framework. The target requires continued growth in TCE or balance, including replacing balances paid
down. Our bond facilitation target and progress will be measured as the cumulative sum of our proportionate share of qualifying bond issuances facilitated from 1 October 2021.
36WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
1.GROUP PERFORMANCE
1.9.Sustainability performance summary (Continued)
Action Areas Description
1. Net-zero and climate resilience in our
operations
Reducing the climate change impacts of our operations by reducing of our scope 1, 2 and upstream scope 3 emissions. This includes emission reduction targets,
supporting employees and suppliers to reduce their emissions, and sourcing the equivalent of 100% of direct electricity demand from renewables by June 2025. We
are developing plans to improve the climate resilience of our operations.
2. Supporting customers’ transition to net-zero
and to build their climate resilience
Our aim is to be customers’ transition partner of choice, working with them to support their emission reduction plans and help mobilise capital to facilitate their
transition. This action includes reducing our financed emissions via emission reduction targets for some of our most carbon intensive sectors - in line with our
commitment to the NZBA. It also includes developing and providing products and services to support transition opportunities and help customers build their climate
resilience.
3. Collaborate for impact on initiatives towards
net-zero and climate resilience
Climate change requires collective action across governments, businesses, communities, industry and peak bodies. We aim to collaborate for impact on initiatives
towards net-zero and climate resilience.
1. Net-zero and climate resilience in our operations
Under our plans to reduce the climate change impacts of our direct operations we have operational emissions reduction targets of:
●Scope 1 and 2 absolute emissions reduction of 64% by June 2025 and 76% by June 2030 (from 2021 baseline
1
); and
●Scope 3 upstream absolute emissions reduction of 50% by June 2030 (from 2021 baseline
1
).
In Full Year 2023, we achieved our scope 1 and 2 absolute emissions reduction 2025 target two years ahead of plan.
In First Half 2024 progress includes:
●Working to further reduce our scope 1 and 2 absolute emissions and are on track to meet our 2030 target;
●Sourced the equivalent of 100% of our direct electricity demand from renewables in Australia. This will be supported by the surrender of large-scale generation certificates for the
period;
●On track to source the equivalent of 100% of our global direct electricity demand from renewables by June 2025 with around 95% of the renewables expected to be sourced from
the markets in which the electricity is used;
●Installed electric vehicle charging stations powered by renewables
2
at a second corporate site (our Barangaroo (NSW) office); and
●Maintained certification for our Australian and New Zealand direct operations, respectively, under the Australian Government’s Climate Active Carbon Neutral Standard for
Organisations since 2012, and Toitū net carbonzero certification since 2019.
First Half
Full Year 2021
2024 (estimated)Full Year 2023baseline
Market-based direct operational Scope 1 and Scope 2 greenhouse gas (GHG) emissions
a,b
before carbon credits (tCO
2
-e)
5,252 21,048 62,360
Reduction to 2021 baseline (Half Year annualised) (%)
(83) (66) n/a
Share of Australian operational electricity demand sourced from renewables (% equivalent)
b
10086n/a
Share of global operational electricity demand sourced from renewables (% equivalent)
b
80 70n/a
a.For our scope 1 & 2 direct operational emissions we are using a market-based accounting method for emissions calculation. The 2021 baseline for this target was adjusted for COVID-19 pandemic and other impacts.
b.Refer to our 2023 Sustainability Index and Datasheet for metric definition.
2. Supporting customers’ transition to net-zero and to build their climate resilience
At March 2024, we have emission reduction targets for the following lending sectors: Power generation, Cement production, Upstream Oil and Gas, Thermal coal mining, Aviation
(passenger aircraft operators), Steel production, Commercial real estate (Offices), Residential real estate (Australia), Australian Beef and Sheep, Australian Dairy, New Zealand Beef
and Sheep, and New Zealand Dairy. Full details of these targets, along with our sector positions, are in our 2023 Climate Report.
In First Half 2024, our focus has been on:
●Establishing an Aluminium target, the final sector under our NZBA commitment.
●Enhancing our processes for assessing transactions in scope of our NZBA targets.
●Improving the capture, storage, and analysis of the data to monitor and manage our NZBA targets.
●Continued engaging corporate and institutional customers on a broad range of ESG topics, with a particular focus on net-zero.
1.For our scope 1 & 2 direct operational and scope 3 upstream targets we are using a market-based accounting method for emissions calculation. The 2021 baselines for these targets have been adjusted for COVID-
19 pandemic and other impacts.
2.Supported by surrender of large-scale generation certificates.
37
1.9.Sustainability performance summary (Continued)
●Updating our customer transition plan assessment framework to substantially align with the UK’s Transition Plan Taskforce framework. Commencing in February 2024, we have
already assessed 41 customers using the updated framework and aim to complete more than 100 assessments by September 2024.
●Continuing engagement with customers, and working with industry groups, on definitions and implementation of our no deforestation commitment.
●Supporting our bankers on ESG with specific ESG knowledge experts and targeted training.
●Commencing the implementation of our Sustainable Finance Framework. Reporting under the Framework will replace previous disclosure on climate change solutions exposure.
While our exposure aligned to the Framework will be reported with our Full Year 2024 results, some First Half 2024 highlights include:
–Contributed $2.5 billion in lending to 23 labelled sustainable finance transactions
1
in Westpac Institutional Bank
2
.
–Supported 426 unique New Zealand customers with labelled sustainable loans
1
with total committed exposure of NZ$5.2 billion at 31 March 2024 (of which NZ$2.4 billion
was in the agriculture sector)
3
.
–Distributed 10 bonds
1
into the capital markets with a value of $7.5 billion across Westpac.
–Arranged 5 renewable power generation loans in Australia.
–Identified and mapped the changes needed to classify transactions under our sustainable finance targets.
●Supporting small and medium sized customers to reduce their emissions and/or improve climate resilience through existing products and services. These include:
–Standard business loans to retrofit existing commercial buildings and obtain higher energy efficiency and sustainability ratings; and
–Providing 330 loans for EV/Hybrid vehicles to Australian customers totalling $14.8 million.
●Improving our climate scenario analysis capability to enhance our assessment of climate risks and opportunities.
3. Collaborate for impact on initiatives towards net-zero and climate resilience
In First Half 2024, we:
●Participated with the Australian Banking Association (ABA) and the Business Council of Australia, on review and input to the new Australian Accounting Standards Board climate
reporting standards;
●Reviewed the Australian Government’s Climate Active Program through the ABA;
●Contributed to the Australian Government’s consultation paper on an Australian sustainable finance strategy; and
●Contributed to the Australian Sustainable Finance Institute’s Taxonomy Advisory Group for the priority sectors: buildings and construction (built environment), electricity
generation and supply (energy), and minerals, mining and metals (resources).
1.When structuring or participating in labelled sustainable finance transactions, Westpac was guided by national sustainable finance taxonomies, and global sustainable finance market standards, principles and
guidance commonly used to label or categorise loans and bonds as green, social, sustainability or sustainability-linked (such as, principles and guidance issued by the Loan Market Association, International Capital
Markets Association and/or the Climate Bond Initiative).
2.Excludes Westpac Institutional Bank in New Zealand.
3.Unique customers are identified as individual legal entities. The increase in the number of unique customers and total committed exposure is predominantly due to the 2023 launch of two new products in New
Zealand, the Sustainable Business Loan and the Sustainable Farm Loan.
38WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2.SEGMENT REPORTING
For reporting purposes, Westpac identifies the impact of Notable Items on income and expenses and includes a subtotal titled “Pre-provision profit”. Pre-provision profit represents
profit before impairment charges and income tax expenses.
During First Half 2024, the Group established a new operating segment called Business and Wealth and dissolved the Specialist Business Division (SBD). The remaining operating
businesses of SBD, which included the Platforms business, Pacific Banking, Margin lending and some residual unsold auto finance loans have been aggregated into the Business
and Wealth segment. The past contribution from SBD’s sold businesses were aggregated with Group Businesses.
In addition, we have made some changes to enhance performance reporting and assessment:
●Funds transfer pricing: The methodology by which the costs of wholesale funding and liquidity are allocated to segments has been refined.
●Capital allocations: We have revised capital allocations to align to the Basel III framework adopted by the Group in January 2023.
●Expense allocations: We have refined the allocation of expenses to segments which has in some cases changed the relative allocation between segments.
These changes have been reflected in segment reporting so that the information presented aligns with information reported internally to the Group's key decision makers.
Comparatives have been restated to align with the current period presentation.
39
Westpac
Business
Westpac
New Zealand
$m
Consumerand Wealth
Institutional Bank
(A$)
a
Group BusinessesGroup
Half Year March 2024
Net interest income
3,771 2,616 1,090 1,171 703 9,351
Non-interest income
255 409 666 122 13 1,465
Notable Items
- - - (6) (220) (226)
Net operating income
4,026 3,025 1,756 1,287 496 10,590
Operating expenses
(2,330) (1,302) (698) (646) (419) (5,395)
Notable Items
- - - - - -
Total operating expenses
(2,330) (1,302) (698) (646) (419) (5,395)
Pre-provision profit
1,696 1,723 1,058 641 77 5,195
Impairment (charges)/benefits
(144) (95) (101) (22) - (362)
Profit before income tax (expense)/benefit
1,552 1,628 957 619 77 4,833
Income tax (expense)/benefit and NCI
b
(470) (485) (268) (174) (94) (1,491)
Net profit/(loss)
1,082 1,143 689 445 (17) 3,342
Net profit includes impact of:
Notable Items (post tax)
b
- - - (4) (160) (164)
Profit/(loss) attributable to businesses sold
c
- - - - - -
Half Year September 2023
Net interest income
3,866 2,573 1,019 1,171 583 9,212
Non-interest income
251 415 663 124 6 1,459
Notable Items
- (88) - - 59 (29)
Net operating income
4,117 2,900 1,682 1,295 648 10,642
Operating expenses
(2,307) (1,301) (679) (613) (344) (5,244)
Notable Items
(202) (64) (15) (9) (170) (460)
Total operating expenses
(2,509) (1,365) (694) (622) (514) (5,704)
Pre-provision profit
1,608 1,535 988 673 134 4,938
Impairment (charges)/benefits
(13) (172) (91) 18 - (258)
Profit before income tax (expense)/benefit
1,595 1,363 897 691 134 4,680
Income tax (expense)/benefit and NCI
b
(484) (410) (256) (196) (140) (1,486)
Net profit/(loss)
1,111 953 641 495 (6) 3,194
Net profit includes impact of:
Notable Items (post tax)
b
(148) (107) (10) (7) (79) (351)
Profit/(loss) attributable to businesses sold
c
- - - - 20 20
a.Refer to section 2.4 for the Westpac New Zealand NZ$ segment reporting.
b.The tax impact of Notable Items was a reduction to income tax (expense)/benefit of $62 million in First Half 2024 (Second Half 2023: $138 million reduction, First Half 2023: $46 million reduction).
c.Refer to section 3.8 for further details.
40WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2.SEGMENT REPORTING
Westpac
Business
WestpacNew Zealand
$m
Consumer
and WealthInstitutional Bank(A$)
a
Group BusinessesGroup
Half Year 31 March 2023
Net interest income
4,311 2,419 907 1,146 419 9,202
Non-interest income
273 429 704 116 147 1,669
Notable Items
- - - - 132 132
Net operating income
4,584 2,848 1,611 1,262 698 11,003
Operating expenses
(2,145) (1,244) (619) (573) (407) (4,988)
Notable Items
- - - - - -
Total operating expenses
(2,145) (1,244) (619) (573) (407) (4,988)
Pre-provision profit
2,439 1,604 992 689 291 6,015
Impairment (charges)/benefits
(166) (85) 4 (142) (1) (390)
Profit before income tax (expense)/benefit
2,273 1,519 996 547 290 5,625
Income tax (expense)/benefit and NCI
b
(682) (446) (287) (154) (55) (1,624)
Net profit/(loss)
1,591 1,073 709 393 235 4,001
Net profit includes impact of:
Notable Items (post tax)
b
- - - - 178 178
Profit/(loss) attributable to businesses sold
c
- - - - 111 111
a.Refer to section 2.4 for the Westpac New Zealand NZ$ segment reporting.
b.The tax impact of Notable Items was a reduction to income tax (expense)/benefit of $62 million in First Half 2024 (Second Half 2023: $138 million reduction, First Half 2023: $46 million reduction).
c.Refer to section 3.8 for further details.
Businesses sold
The table below shows the profit/(loss) attributable to businesses sold in the Group businesses segment by the relevant period. No businesses were sold in First Half 2024.
Further details are provided in Section 3.8.
Half YearHalf Year Half Year
MarchSept March
$m202420232023
Net interest income
- - -
Non-interest income
- - 140
Net operating income
- - 140
Operating expenses
- 28 18
Pre-provision profit
- 28 158
Impairment (charges)/benefits
- - -
Profit before income tax (expense)/benefit
- 28 158
Income tax (expense)/benefit and NCI
- (8) (47)
Net profit
- 20 111
41
2.1.Consumer
The Consumer segment provides a full range of banking products and services to customers in Australia through three lines of business consisting of mortgages, consumer finance
and cash and transactional banking. Products and services are provided through a portfolio of brands comprising Westpac, St.George, BankSA, Bank of Melbourne and RAMS using
digital channels, call centres, mobile bankers, branches and third-party brokers.
Half Year Half Year Half Year % Mov’t
MarchSeptMarchMar 24 Mar 24
$m202420232023- Sept 23- Mar 23
Net interest income
3,771 3,866 4,311 (2) (13)
Non-interest income
255 251 273 2 (7)
Net operating income
4,026 4,117 4,584 (2) (12)
Operating expenses
(2,330) (2,307) (2,145) 1 9
Notable Items
- (202) - (100) -
Total operating expenses
(2,330) (2,509) (2,145) (7) 9
Pre-provision profit
1,696 1,608 2,439 5 (30)
Impairment (charges)/benefits
(144) (13) (166) large (13)
Profit before income tax expense
1,552 1,595 2,273 (3) (32)
Income tax expense and NCI
(470) (484) (682) (3) (31)
Net profit
1,082 1,111 1,591 (3) (32)
Notable Items (post tax)
- (148) - (100) -
Expense to income ratio (Ex Notable Items)
57.87% 56.04% 46.79% 183 bps large
Net interest margin (Ex Notable Items)
1.69%1.76%2.00%(7 bps) (31 bps)
FTE
13,066 13,472 14,672 (3) (11)
As at As at As at % Mov’t
31 March30 Sept31 MarchMar 24 Mar 24
$bn202420232023- Sept 23- Mar 23
Customer deposits
Transactions
31.5 32.9 35.4 (4) (11)
Savings 163.9 154.9 140.0 6 17
Term
66.0 63.9 64.3 3 3
Mortgage offsets
59.9 56.6 53.8 6 11
Total customer deposits
321.3 308.3 293.5 4 9
Loans
Mortgages
495.2 485.6 472.7 2 5
Other
9.0 8.9 9.0 1 -
Provisions
(1.8) (1.8) (1.9) - (5)
Total loans
502.4 492.7 479.8 2 5
Deposit to loan ratio63.95%62.58%61.18%137 bps277 bps
Total assets 514.7 504.2 491.9 2 5
TCE 586.4 577.7 567.5 2 3
Risk weighted assets 174.8 174.7 174.6--
Average interest earning assets 446.1 438.2 432.2 2 3
Average allocated capital 24.0 24.0 24.7- (3)
Credit quality
Impairment charges/(benefits) to average loans0.06%0.01%0.07%5 bps(1 bps)
Mortgage 90+ day delinquencies1.06%0.86%0.73%20 bps33 bps
Other consumer loans 90+ day delinquencies1.17%1.01%1.26%16 bps(9 bps)
Total stressed exposures to TCE
1.04% 0.86% 0.75% 18 bps 29 bps
42WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2.SEGMENT REPORTING
2.1.Consumer (Continued)
First Half 2024 – Second Half 2023
Net profit decreased 3% to $1,082 million.
Pre-provision profit rose 5% to $1,696 million. Excluding Notable Items mostly associated with restructuring charges and the branch transformation program in Second Half 2023,
pre-provision profit declined by 6%. This was the result of operating income falling 2% while operating expenses increased 1%. The decline in operating income reflected continued
contraction of net interest margin which more than offset lending growth while expenses rose reflecting a write-down of the carrying value of certain assets in the distribution network
and higher software amortisation.
Net interest income down 2% ●The net interest margin contracted by 7 basis points primarily reflecting retention pricing for mortgage customers who were looking to
refinance home loans at the end of the fixed rate period and competition for new mortgages. The rate of contraction slowed in the half
due to a combination of both lower refinance activity and reduced discounting on new lending. Deposit spreads were down slightly as
the impacts of a mix shift towards higher interest rate, lower margin savings accounts and competition for term deposits were largely
offset by higher returns on hedged deposits and rising rates. Higher returns on capital balances also provided a benefit;
●Net loans increased by 2% to $502.4 billion. Mortgage growth of 2%, mostly in owner occupied mortgages, represented 1.0x APRA
housing system growth. During the half, $37 billion of fixed rate mortgages expired, most of which were retained. Almost all borrowers
elected to switch onto variable rates which now account for 85% of mortgages, up from 76% in the prior period;
●Deposits were up 4% to $321.3 billion. The growth was from new and existing customers, with a focus on growing the youth and
migrant segments. This represents 1.1x APRA system growth. Higher interest rates continued to result in customers favouring savings
deposits which grew 6%. The increase in savings deposits more than offset the decline in transaction balances and account for 51% of
all deposits. Term deposits grew by 3% with their share of total deposits steady at 21%. Mortgage offset balances increased by 6% to
$59.9 billion as more home owner customers shifted to variable rate mortgages with deposit offset features; and
●With deposit growth continuing to exceed loan growth, the deposit to loan ratio improved 137 basis points to 63.95%.
Non-interest income up 2% ●Non-interest income increased 2% to $255 million due to seasonally higher consumer finance spending.
Expenses down 7% ●Operating expenses excluding Notable Items in Second Half 2023 were up a modest 1%. Cost Reset initiatives offset most of the
inflationary pressures from both wages and salaries and third-party vendor costs, in addition to higher amortisation. The main drivers
included:
–FTE reduction of 3% from a simpler operating model;
–A smaller property footprint, including our corporate office, branch and ATMs; and
–Write-downs in relation to RAMS intangible assets.
Impairment charge of $144 million ●Impairment charges to average loans were 6 basis points, up 5 basis points from the prior period. The charge reflects higher mortgage
and other consumer loans delinquencies, which was partly offset by reductions in the mortgage overlay and downside scenario weight;
and
●Stressed exposure to TCE deteriorated by 18 basis points to 1.04%. Mortgage 90+ day delinquencies increased 20 basis points to
1.06%, reflecting higher mortgage interest rates and the higher cost of living. Other consumer loan 90+ day delinquencies increased 16
basis points to 1.17%, due to seasonality and cost of living pressures impacting customers.
43
2.1.Consumer (Continued)
First Half 2024 – First Half 2023
Net profit decreased 32% to $1,082 million.
Pre-provision profit decreased 30% to $1,696 million as operating income fell 12% while operating expenses rose 9%. The decline in operating income was due to continued net
interest margin contraction which more than offset balance sheet growth. Operating expense growth reflected higher software amortisation costs, the write-down in the carrying value
of certain assets in the distribution network and employee and third-party inflationary pressures.
Net interest income down 13% ●The net interest margin contracted by 31 basis points primarily reflecting retention pricing for existing mortgage customers and
price competition for new mortgages. Deposit spreads also declined due to the mix shift towards lower margin savings accounts
and rising price competition for term deposits. Higher returns on both hedged deposits and capital provided a benefit;
●Net loans increased by 5% to $502.4 billion. Mortgage growth of 5% was mostly achieved in owner occupied mortgages. Over
the year, $88 billion of fixed rate mortgages expired of which most were retained. Almost all borrowers elected to switch onto
variable rates which now account for 85% of mortgages, up from 67% in the prior corresponding period;
●Deposits were up 9% to $321.3 billion. The growth was from new and existing customers, with a focus on growing the youth and
migrant segments. Higher interest rates resulted in an increase in savings deposits which more than offset the decline in
transaction deposits. Savings accounts made up 51% of all deposits, up from 48% in the prior year. Term deposits increased
slightly and account for 21% of total deposits. Mortgage offset balances increased 11% to $59.9 billion as customers shifted to
variable rate mortgages which benefit from deposit offset features; and
●With deposit growth continuing to exceed loan growth, the deposit to loan ratio improved 277 basis points to 63.95%.
Non-interest income down 7% ●Non-interest income fell 7% to $255 million driven by higher scheme fees due to a change in spend mix which was partly offset
by repricing of annual credit card fees.
Expenses up 9% ●Operating expenses increased 9% to $2,330 million. The main contributors included:
–Higher software amortisation costs for investment in the mortgage origination platform;
–Write-downs in relation to RAMS intangible assets; and
–Inflationary pressures on wages and salaries and third-party vendor costs.
●Expense increases were partly offset by benefits of a simpler operating model which resulted in an 11% reduction in FTE and a
smaller corporate footprint, including the branch and ATM transformation program.
Impairment charge of $144 million ●Impairment charges to average loans were 6 basis points, down from 7 basis points. The $144 million charge reflects higher
mortgage and other consumer loans delinquencies, which was partly offset by reductions in the mortgage overlay and downside
scenario weight; and
●Stressed exposures to TCE deteriorated by 29 basis points to 1.04%. Mortgage 90+ day delinquencies increased 33 basis
points to 1.06%, reflecting higher mortgage interest rates and the higher cost of living. Positively, other consumer 90+ day
delinquencies decreased 9 basis points lower to 1.17%, reflecting an uplift in collection practices.
44WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2.SEGMENT REPORTING
2.2.Business and Wealth
The Business and Wealth segment comprises Business Banking, Wealth Management, Private Wealth, Westpac Pacific and auto finance. Business provides a range of banking
services and products to Australian small to medium businesses, including commercial businesses and agribusiness customers. It offers business lending generally up to $200
million in exposure, merchant services using eCommerce solutions and transaction banking services. The segment includes Private Wealth, supporting the needs of high-net-worth
individuals, as well as BT Financial Group, which provides wealth management platform services. It also includes Westpac Pacific and our auto finance business, which is in run-off.
The segment operates under the Westpac, St.George, BankSA, Bank of Melbourne and BT brands.
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Net interest income
2,616 2,573 2,419 2 8
Non-interest income
409 415 429 (1) (5)
Notable Items- (88)- (100)-
Net operating income
3,025 2,900 2,848 4 6
Operating expenses
(1,302) (1,301) (1,244) - 5
Notable Items- (64)- (100)-
Total operating expenses (1,302) (1,365) (1,244) (5) 5
Pre-provision profit
1,723 1,535 1,604 12 7
Impairment (charges)/benefits
(95) (172) (85) (45) 12
Profit before income tax expense
1,628 1,363 1,519 19 7
Income tax expense and NCI
(485) (410) (446) 18 9
Net profit
1,143 953 1,073 20 7
Notable Items (post tax)
- (107) - (100) -
Expense to income ratio (Ex Notable Items)43.04%43.54%43.68%(50 bps)(64 bps)
Net interest margin (Ex Notable Items)
5.34%5.30%5.03%4 bps 31 bps
FTE
5,859 6,008 6,170 (2) (5)
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24 Mar 24
$bn
2024 2023 2023 - Sept 23 - Mar 23
Customer deposits
Transactions54.1 56.5 59.6 (4) (9)
Savings
38.9 39.6 42.1 (2) (8)
Term
47.6 44.4 41.1 7 16
Total customer deposits
140.6 140.5 142.8 - (1)
Loans
Commercial/SME 93.0 90.5 87.1 3 7
Pacific 1.3 1.2 1.1 8 18
Business lending 94.3 91.7 88.2 3 7
Other 1.4 1.5 1.7 (7) (18)
Auto finance (in run-off)
a
3.1 4.2 5.6 (27) (46)
Provisions
(1.9) (1.9) (1.8) - 6
Total loans
96.9 95.5 93.7 1 3
Deposit to loan ratio145.10%147.08%152.43%(198 bps)large
Total assets 102.4 101.2 99.3 1 3
TCE 131.2 129.7 127.6 1 3
Risk weighted assets 89.1 87.1 88.7 2-
Average interest earning assets 98.0 96.8 96.5 1 2
Average allocated capital 11.5 11.7 10.9 (2) 6
Credit quality
Impairment charges/(benefits) to average loans0.20%0.36%0.18%(16 bps)2 bps
Impaired exposures to TCE0.54%0.52%0.63%2 bps(9 bps)
Total stressed exposures to TCE
5.52% 5.46% 5.24% 6 bps 28 bps
a.Includes personal and business loans.
45
2.2.Business and Wealth (Continued)
First Half 2024 – Second Half 2023
Net profit increased 20% to $1,143 million.
Pre-provision profit rose 12% to $1,723 million. Excluding Notable Items associated with remediation provisions and restructuring charges in Second Half 2023, pre-provision profit
was up 2%. The growth was driven by a 1% increase in operating income and flat operating expenses. Operating income benefited from a higher net interest margin and lending
growth while operating expenses reflected lower risk and compliance investment and productivity benefits which were offset by higher remediation costs.
Net interest income up 5%
Excluding the impact of Notable Items in Second Half 2023 net interest income was up 2%;
The net interest margin was up 4 basis points excluding Notable Items. Rising interest rates generated wider deposit spreads and
returns on both hedged deposits and capital which was partially offset by the impacts of the mix shift to, and greater price
competition for, term deposits. This more than offset compression on the lending side due to competitive pressures and the run-off of
the higher spread auto finance portfolio;
Net loans increased by 1% to $96.9 billion. Business lending growth of 3% was well diversified with consistent growth across most
industries. The run-off in the auto finance portfolio continued with $3.1 billion remaining to wind down across business and personal
lending; and
Deposits were flat at $140.6 billion. Softer economic and trading conditions for business customers reduced working capital and
therefore constrained deposits. Customers continue to shift from transaction and savings accounts to higher-yielding term deposits
which comprised 34% of total customer deposits, up from 32% in the prior comparative period.
Non-interest income up 1%
Non-interest income excluding Notable Items in Second Half 2023 decreased 1% due to lower platform revenue.
Expenses down 5%
Operating expenses excluding Notable Items in Second Half 2023 were flat reflecting:
Lower investment spend following the completion of some risk and regulatory projects;
Productivity benefits from a simpler organisational structure, primarily in middle to back office functions with FTE down 2%; and
Higher customer remediation costs.
Impairment charge of $95 million
The impairment charge of 20 basis points of average loans compared to 36 basis points in the prior period. The charge reflects new
IAPs and higher CAP due to the less favourable outlook for commercial property prices and interest rates. This was offset by a
reduction in the downside scenario weight; and
Credit quality metrics deteriorated with stressed exposures to TCE up 6 basis points to 5.52%, mostly within the wholesale & retail
trade sector. The proportion of impaired TCE increased 2 basis points to 0.54%.
46WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2.SEGMENT REPORTING
2.2.Business and Wealth (Continued)
First Half 2024 – First Half 2023
Net profit increased 7% to $1,143 million.
Pre-provision profit increased 7% to $1,723 million. The growth was driven by a 6% increase in operating income, which more than offset the 5% rise in operating expenses.
Operating income benefited from higher lending volumes and higher interest rates on deposits while increased operating expenses reflected inflationary pressures and remediation
costs.
Net interest income up 8%
The net interest margin was up 31 basis points, supported by the larger deposit portfolio relative to lending, which is reflected in a deposit
to loan ratio of 145.10%. Rising interest rates supported higher deposit spreads and returns on both hedged deposits and capital. These
were partially offset by the impact of the continued mix shift to term deposits along with greater price competition for term deposits. The
run-off of the higher spread auto finance portfolio reduced margin and lending spreads were impacted by competition for new lending.
Net loans increased by 3% to $96.9 billion. Business lending growth of 7%, was driven by growth across most industries. The auto
finance portfolio continued to run-off; and
Deposits decreased 1% to $140.6 billion reflecting a weaker system and increased competition. Following interest rate rises, customers
continue to shift from transaction and savings accounts to higher-yielding term deposits which comprised 34% of total customer deposits,
up from 29% in the prior comparative period.
Non-interest income down 5%
Non-interest income decreased by 5% to $409 million due to:
Lower auto finance fees from the continued run-off in loan balances; and
Lower merchants income from higher terminal amortisation costs following the migration to new terminals.
Expenses up 5%
Operating expenses were up 5% to $1,302 million due to:
Wage inflation and increased bankers to support loan growth; and
Higher remediation costs.
Expense increases were partly offset by lower middle to back office FTE and other productivity initiatives.
Impairment charge of $95 million
The impairment charge of 20 basis points of average loans compared to 18 basis points in the prior corresponding period. The charge
reflects new IAPs and higher CAP due to the less favourable outlook for commercial property prices and interest rates. This was partly
offset by a reduction in the downside scenario weight; and
Stressed exposures to TCE increased 28 basis points to 5.52%, reflecting higher watchlist exposures in the agriculture and wholesale &
retail trade sectors. The proportion of impaired TCE decreased 9 basis points to 0.54%.
Platforms and Investments
As at As at % Mov't As at % Mov't
31 MarchNetOther30 SeptMar 2431 MarchMar 24
$bn2024InflowsOutflowsFlowsMov't2023- Sept 232023- Mar 23
Platforms
147.0 9.1 (11.2) (2.1) 13.4 135.7 8 136.7 8
Packaged funds
- - (1.4) (1.4) (0.1) 1.5 (100) 1.8 (100)
Total funds
147.0 9.1 (12.6) (3.5) 13.3 137.2 7 138.5 6
Platforms funds increased 8% to $147.0 billion over the half reflecting higher equity markets and dividend distributions.
Packaged funds decreased by $1.5 billion over the half, reflecting the completion of the sale of the private portfolio management business.
47
2.3.Westpac Institutional Bank
The Westpac Institutional Bank (WIB) comprises three lines of business: Corporate & Institutional Bank (CIB); Global Transaction Services (GTS); and Financial Markets (FM). It
services predominantly corporate, institutional and government clients. CIB uses dedicated industry relationship and specialist product teams to support clients’ lending needs. GTS
is responsible for the provision of payments and liquidity management solutions to WIB’s clients and the group's domestic and international payments infrastructure. FM provides a
range of risk management, investment and debt capital markets solutions to WIB clients and access to financial markets products for consumer and business customers. Clients are
supported throughout Australia and via branches and subsidiaries located in New Zealand, New York, London, Frankfurt and Singapore.
Half Year
Half Year
Half Year
% Mov’t
March
Sept
March
Mar 24
Mar 24
$m
2024
2023
2023
- Sept 23
- Mar 23
Net interest income
1,090 1,019 907 7 20
Non-interest income
666 663 704 - (5)
Net operating income
1,756 1,682 1,611 4 9
Operating expenses
(698) (679) (619) 3 13
Notable Items- (15)- (100)-
Total operating expenses
(698) (694) (619) 1 13
Pre-provision profit
1,058 988 992 7 7
Impairment (charges)/benefits
(101) (91) 4 11 large
Profit before income tax expense
957 897 996 7 (4)
Income tax expense and NCI
(268) (256) (287) 5 (7)
Net profit
689 641 709 7 (3)
Notable Items (post tax)- (10)- (100)-
Expense to income ratio (Ex Notable Items)
39.75% 40.37% 38.42%(62 bps) 133 bps
Net interest margin (Ex Notable Items)
1.85% 1.93% 1.86%(8 bps) (1 bps)
FTE
2,790 2,776 2,758 1 1
As at
As at
As at
% Mov’t
31 March
30 Sept
31 March
Mar 24
Mar 24
$bn
2024
2023
2023
- Sept 23
- Mar 23
Customer deposits
Transactions and others
66.2 64.2 63.6 3 4
Savings
9.8 10.5 10.4 (7) (6)
Term
39.3 41.4 39.5 (5) (1)
Total customer deposits
115.3 116.1 113.5 (1) 2
Loans
Loans
93.4 92.9 85.0 1 10
Provisions
(0.4) (0.3) (0.3) 33 33
Total loans
93.0 92.6 84.7 - 10
Deposit to loan ratio
124.00%125.37%133.95%(137 bps) large
Total assets
123.1 106.3 100.0 16 23
TCE
215.7 207.4 205.6 4 5
Risk weighted assets 81.0 82.1 80.2 (1) 1
Average interest earning assets
117.9 105.3 98.0 12 20
Average allocated capital
9.6 9.6 8.8- 9
Credit quality
Impairment charges to average loans
0.22%0.21%(0.01%)1 bps large
Impaired exposures to TCE
0.05%0.04%0.06%1 bps (1 bps)
Total stressed exposures to TCE
0.63%0.58%0.28%5 bps 35 bps
48WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2.SEGMENT REPORTING
2.3.Westpac Institutional Bank (Continued)
Net operating income contribution
1
Half Year
Half Year
Half Year
% Mov’t
March
Sept
March
Mar 24
Mar 24
$m
2024
2023
2023
- Sept 23
- Mar 23
Lending and deposit revenue
1,272 1,207 1,132 5 12
Sales and risk management income
455 452 434 1 5
DVA
(12) 4 52 large large
Other
a
41 19 (7) 116 large
Net operating income contribution
1,756 1,682 1,611 4 9
a.Includes capital benefit and the Bank Levy
First Half 2024 – Second Half 2023
Net profit was up 7% to $689 million.
Pre-provision profit increased 7% to $1,058 million. Excluding Notable Items in Second Half 2023, pre-provision profit increased 5% with operating income increasing 4% and
expenses up 3%. The growth in operating income reflects average lending growth while the rise in operating expenses was driven by higher software amortisation costs and a 1%
increase in front line resourcing to support growth.
Net interest income up 7%•The net interest margin decreased 8 basis points reflecting a shift in deposits towards lower margin products, an increase in trading
securities to support more customer activity and slightly higher funding costs. These impacts were partly offset by higher loan spreads
and the benefit of higher interest rates on capital;
•Average interest earning assets rose by 12% reflecting the averaging impact of strong prior period growth in lending and growth in
average trading assets as we do more business with customers through our financial markets capabilities;
•Net loans were stable at $93.0 billion as growth in financing, and structured finance was largely offset by a contraction in trade finance;
and
•Deposits decreased 1% to $115.3 billion reflecting a targeted and selective deposit strategy.
Non-interest income flat•Non-interest income was flat at $666 million. Key drivers included:
–Higher fee income from increased underwriting activity and fee income from a larger loan book;
–Lower sales and risk management income due to the impact of the funding mix of derivatives, which is offset in net interest income
and lower foreign exchange; and
–A $16 million reduction in contribution from DVA.
Expenses Up 1%•Expenses excluding Notable Items were up 3% to $698 million. Movements reflected:
–Higher software amortisation costs from investments including the payments platform; and
–A 1% increase in front line resourcing to support growth.
Impairment charge of $101 million•The impairment charge to average loans was 22 basis points, compared to a 21 basis point charge in the prior period. The charge was
driven by a new IAP for one exposure and higher CAP due to an increase in stressed exposures; and
•Stressed exposures to TCE deteriorated 5 basis points to 0.63%, reflecting higher watchlist and substandard exposures in the
wholesale & retail trade and property sectors. The proportion of impaired exposures to TCE deteriorated modestly to 0.05%.
1.DVA includes Funding Value Adjustment (FVA) and Credit Value Adjustment (CVA). Sales and risk management income includes both customer and non-customer income.
49
2.3.Westpac Institutional Bank (Continued)
First Half 2024 – First Half 2023
Net profit was down 3% to $689 million.
Pre-provision profit increased 7% to $1,058 million driven by a 9% increase in operating income more than offsetting a 13% increase in operating expenses. The improvement in
operating income reflects strong balance sheet momentum while operating expense growth was largely the result of higher software amortisation costs and an increase in front line
resourcing to support growth.
Net interest income up 20%•The net interest margin was down 1 basis point from the prior corresponding period. Higher interest rates and a favourable mix shift
supported loan spreads, as well as higher returns on capital. This was offset by an increase in trading securities, pricing competition in
deposits and a mix shift to lower margin products and higher funding costs;
•Net loans increased 10% to $93.0 billion, from growth in Second Half 2023 from deepening relationship with existing clients,
predominately across our target sectors, property and non-bank financial institutions; and
•Deposits increased by 2% to $115.3 billion from growth in transactional balances.
Non-interest income down 5%•Non-interest income declined by 5% to $666 million. The benefit of tightening credit spreads during First Half 2023 was reflected in a
$60 million lower contribution from DVA in the current period. Excluding DVA, non-interest income was up 3% due to higher fee income
from a larger loan book and increased underwriting activities and guarantees.
Expenses up 13%•Expenses increased 13% reflecting:
–Higher software amortisation costs as some projects were finalised; and
–An increase of 4% in front line resourcing to support growth.
Impairment charge of $101 million•The impairment charge to average loans was 22 basis points, compared to a benefit of 1 basis point in the prior comparative period. The
charge was driven by one new IAP and higher CAP due to an increase in stressed exposures; and
•Stressed exposures to TCE deteriorated 35 basis points to 0.63%, reflecting an increase in watchlist loans in the wholesale & retail
trade and property sectors.
50WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2.SEGMENT REPORTING
2.4.Westpac New Zealand
Westpac New Zealand provides banking and wealth products and services for consumer, business and institutional customers in New Zealand.
All figures are in NZ$ unless noted otherwise.
Half Year
Half Year
Half Year
% Mov’t
March
Sept
March
Mar 24
Mar 24
NZ$m
2024
2023
2023
- Sept 23
- Mar 23
Net interest income
1,258 1,267 1,247 (1) 1
Non-interest income
131 134 127 (2) 3
Notable Items
(6) - - - -
Net operating income
1,383 1,401 1,374 (1) 1
Operating expenses
(695) (662) (624) 5 11
Notable Items- (10)- (100)-
Total operating expenses
(695) (672) (624) 3 11
Pre-provision profit
688 729 750 (6) (8)
Impairment (charges)/benefits
(23) 19 (154) large (85)
Profit before income tax expense
665 748 596 (11) 12
Income tax expense and NCI
(188) (213) (168) (12) 12
Net profit
477 535 428 (11) 11
Notable Items (post tax)
(5) (7) - (29) -
Expense to income ratio (Ex Notable Items)
50.04% 47.25% 45.41%279 bps large
Net interest margin (Ex Notable Items)
2.09% 2.12% 2.11%(3 bps) (2 bps)
FTE
5,263 5,288 5,374- (2)
As at
As at
As at
% Mov’t
31 March
30 Sept
31 March
Mar 24
Mar 24
NZ$bn
2024
2023
2023
- Sept 23
- Mar 23
Customer deposits
Transactions and others
21.2 21.4 23.2 (1) (9)
Savings
19.9 19.9 20.2 - (1)
Term
37.7 38.5 36.4 (2) 4
Total customer deposits
78.8 79.8 79.8 (1) (1)
Loans
Mortgages
67.4 65.8 65.2 2 3
Business
32.7 32.8 32.3 - 1
Other
1.2 1.2 1.2 - -
Provisions
(0.5) (0.5) (0.5) - -
Total loans
100.8 99.3 98.2 2 3
Deposit to loan ratio
78.17%80.36%81.26%(219 bps) (309 bps)
Total assets
123.5 121.8 121.9 1 1
TCE
148.1 147.1 147.3 1 1
Risk weighted assets 61.8 60.3 58.6 2 5
Liquid assets
18.6 19.2 20.5 (3) (9)
Average interest earning assets
120.2 119.1 118.8 1 1
Average allocated capital
8.1 8.3 7.5 (2) 8
Total funds
12.6 11.4 11.5 11 10
Credit quality
Impairment charges/(benefits) to average loans
0.05%(0.04%)0.32%large (27 bps)
Mortgage 90+ day delinquencies
0.47%0.33%0.29%14 bps 18 bps
Other consumer loans 90+ day delinquencies
0.96%0.92%1.13%4 bps (17 bps)
Impaired exposures to TCE
0.12%0.06%0.07%6 bps 5 bps
Total stressed exposures to TCE
1.55%1.49%1.33%6 bps 22 bps
51
2.4.Westpac New Zealand (Continued)
First Half 2024 – Second Half 2023
Net profit decreased 11% to $477 million.
Pre-provision profit declined 6% to $688 million. Excluding Notable Items, pre-provision profit decreased by 6% to $694 million. This reflected operating expense growth of 5% and a
decrease in operating income of 1%.
Operating expenses were higher reflecting increased technology and onshoring costs, software amortisation and inflationary impacts.
Net interest income down 1% ●The net interest margin was down 3 basis points driven by an unfavourable mix impact offset by an improvement in loan
spreads and the benefit of rising rates on capital and transactional deposit spreads;
●Net loans increased 2% to $100.8 billion, comprising housing loan growth of 2% while business lending remained flat. A
challenging macroeconomic environment was reflected in reduced demand for credit. Key drivers included:
–An improved consumer offering, supported above lending system mortgage growth of 1.3x lending system. The stabilisation
in interest rates, including expectations that interest rates have peaked, drove a preference for variable rate loans with half
of the $1.6 billion growth in mortgages from variable rate products. The New Zealand mortgage market remains
overwhelmingly a fixed rate market and accounts for 90% of the portfolio; and
–Subdued business confidence, softer economic activity and higher interest rates all weighed on the appetite for business
credit with business loans flat during the period.
●Deposits decreased 1% to $78.8 billion with reductions in transaction accounts and term deposits. Retail term deposits grew as
customer preferences continued to shift towards higher rate accounts and this was more than offset by a reduction in
Institutional term products.
Non-interest income down 2% ●Non-interest income decreased 2% to $131 million driven by a slight decline in cards income.
Expenses up 3% ●Operating expenses excluding Notable Items, all in the prior period, increased 5% reflecting:
–Higher staff and technology costs to provide ongoing operational support following the completion of activities to comply with
the RBNZ’s outsourcing policy;
–Increased software amortisation costs for investments relating to projects delivered addressing the RBNZ’s outsourcing
policy; and
–Inflationary impacts from both wage increases and increased supplier costs.
Impairment charge of $23 million ●The impairment charge to average loans was 5 basis points, compared to a benefit of 4 basis points in the prior period. This
charge is due to higher new IAPs partly offset by a small CAP benefit reflecting the partial release of overlays and a reduction in
downside scenario weight; and
●Stressed exposures to TCE increased 6 basis points to 1.55% mostly due to deterioration in mortgage 90+ day delinquencies.
Impaired exposures to TCE increased 6 basis points to 0.12%.
52WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2.SEGMENT REPORTING
2.4.Westpac New Zealand (Continued)
First Half 2024 – First Half 2023
Net profit increased 11% to $477 million.
Pre-provision profit declined 8% to $688 million. Excluding Notable Items, pre-provision profit decreased by 7%, with operating expense growth of 11% more than offsetting operating
income growth of 1%. Operating expenses were higher reflecting higher technology and onshoring costs, software amortisation expenses and inflationary impacts.
Net interest income up 1% ●The net interest margin was down 2 basis points due to a contraction in loan spreads and higher wholesale funding costs.
Returns on capital balances increased and higher spreads on transaction accounts offset the mix shift to lower margin term
deposits;
●Net loans increased 3% to $100.8 billion, supported by growth in both mortgages and business lending. Mortgages increased
3% to $67.4 billion with greater focus on managing the margin and volume trade-off in a highly competitive market during
Second Half 2023. Growth was driven by both fixed and variable rate owner occupied mortgages. Business loans increased 1%
to $32.7 billion with growth largely in institutional banking; and
●Deposits decreased 1% to $78.8 billion. Growth in term deposits was more than offset by reductions in transaction and savings
accounts. Term deposits grew as customer preferences continued to shift towards higher rate accounts, albeit at a slower rate
than the prior period. Term deposits now account for 48% of deposits, close to the long-run average of 50%.
Non-interest income up 3% ●Non-interest income increased 3% to $131 million largely due to improved cards income and increased funds under
management.
Expenses up 11% ●Operating expenses rose 11% to $695 million due to:
–Higher staff and technology costs to provide ongoing operational support following the completion of the RBNZ’s outsourcing
policy;
–Increased software amortisation costs for investments relating to projects delivered addressing the RBNZ's outsourcing
policy; and
–Inflationary impacts from both wage increases and increased supplier costs.
Impairment charge of $23 million ●The impairment charge to average loans was 5 basis points, compared to a charge of 32 basis points in the prior comparative
period. The charge is due to new IAPs which was partly offset by a small CAP benefit reflecting the reductions in overlays and
the downside scenario weight; and
●Stressed exposures to TCE increased 22 basis points to 1.55% due to deterioration in business lending stress and mortgage
90+ day delinquencies. Impaired exposures to TCE increased 5 basis points to 0.12%.
53
2.4.Westpac New Zealand (Continued)
2.4.1.Westpac New Zealand segment performance (A$ Equivalent)
Results have been translated into Australian dollars (A$) at the average exchange rates for each reporting period. First Half 2024: $1.0759 (Second Half 2023: $1.0816; First Half
2023: $1.0876). Unless otherwise stated, assets and liabilities have been translated at spot rates as at the end of the period, 31 March 2024: $1.0892 (30 September 2023: $1.0738;
31 March 2023: $1.0678).
Half Year
Half Year
Half Year
% Mov’t
March
Sept
March
Mar 24
Mar 24
$m
2024
2023
2023
- Sept 23
- Mar 23
Net interest income
1,171 1,171 1,146 - 2
Non-interest income
122 124 116 (2) 5
Notable Items
(6) - - - -
Net operating income
1,287 1,295 1,262 (1) 2
Operating expenses
(646) (613) (573) 5 13
Notable Items- (9)- (100)-
Total operating expenses
(646) (622) (573) 4 13
Pre-provision profit
641 673 689 (5) (7)
Impairment (charges)/benefits
(22) 18 (142) large (85)
Profit before income tax expense
619 691 547 (10) 13
Income tax expense and NCI
(174) (196) (154) (11) 13
Net profit
445 495 393 (10) 13
Notable Items (post tax)
(4) (7) - (43) -
Expense to income ratio (Ex Notable Items)
a
50.04%47.25%45.41%279 bps large
Net interest margin (Ex Notable Items)
a
2.09%2.12%2.11%(3 bps) (2 bps)
a.Ratios calculated using NZ$.
As atAs atAs at% Mov’t
MarchSeptMarchMar 24 Mar 24
$bn
2024 2023 2023 - Sept 23 - Mar 23
Customer deposits
72.4 74.3 74.7 (3) (3)
Loans
92.6 92.5 91.9- 1
Deposit to loan ratio
a
78.17%80.36%81.26%(219 bps)(309 bps)
Total assets 113.4 113.5 114.1- (1)
TCE 136.0 136.9 137.9 (1) (1)
Risk weighted assets 56.8 56.2 54.9 1 3
Liquid assets 17.0 17.9 19.2 (5) (11)
Average interest earning assets 111.7 110.2 109.3 1 2
Average allocated capital
7.5 7.7 6.9 (3) 9
Total funds
11.5 10.6 10.7 8 7
a.Ratios calculated using NZ$.
54WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2.SEGMENT REPORTING
2.5.Group Businesses
The segment comprises:
●Treasury, which is responsible for the management of the Group’s balance sheet including wholesale funding, capital, and liquidity. Treasury also manages interest rate risk and
foreign exchange risks;
●Technology, except for UNITE, these costs are allocated to segments across the Group;
●Customer & Corporate Services, which provides shared corporate functions such as property, procurement, finance services, Corporate Affairs, and HR services. Excluding
Corporate Affairs, these costs are allocated to other segments across the Group; and
●Enterprise services, which includes earnings on capital not allocated to segments, certain intra-group transactions and gains/losses from asset sales, earnings and costs
associated with the Group’s fintech investments and other costs including certain customer remediation expenses and centrally held provisions.
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24 Mar 24
$m
2024 2023 2023 - Sept 23- Mar 23
Net interest income
703 583 419 21 68
Non-interest income 13 6 147 117 (91)
Notable Items
(220) 59 132 large large
Net operating income
496 648 698 (23) (29)
Operating expenses (419) (344) (407) 22 3
Notable Items
- (170) - (100) -
Total operating expenses
(419) (514) (407) (18) 3
Pre-provision profit
77 134 291 (43) (74)
Impairment (charges)/benefits
- - (1) - (100)
Profit before income tax expense
77 134 290 (43) (73)
Income tax expense and NCI
(94) (140) (55) (33) 71
Net profit/(loss)
(17) (6) 235 183 large
Notable Items (post tax) (160) (79) 178 103large
Profit/(loss) attributable to businesses sold- 20 111 (100) (100)
Treasury
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24 Mar 24
$m
2024 2023 2023 - Sept 23- Mar 23
Net interest income
554 404 261 37 112
Non-interest income
13 8 6 63 117
Notable Items
(220) 69 (89) large 147
Net operating income
347 481 178 (28) 95
Net profit
166 262 54 (37) large
55
2.5.Group Businesses (Continued)
First Half 2024 – Second Half 2023
Net loss of $17 million compared to a loss of $6 million in the prior period.
Pre-provision profit of $77 million was down from profit of $134 million in the prior period. Excluding Notable Items, pre-provision profit was $297 million compared with a $245 million
profit in the prior period.
Net operating income down
23%
●Excluding Notable Items, income was up 22% or $127 million. Movements included:
Higher Treasury contribution from favourable positioning for interest rate volatility; partly offset by
Lower realised gains on sale of liquid assets.
Expenses down 18%●Excluding Notable Items, expenses were up 22% or $75 million primarily driven by:
Higher technology investment spend relating to the technology simplification program, UNITE; and
Increases in certain employee provisions.
First Half 2024 - First Half 2023
Net loss of $17 million compared to a net profit of $235 million in the prior corresponding period.
Pre-provision profit of $77 million was lower than the profit of $291 million in the prior corresponding period. Excluding Notable Items, pre-provision profit was $297 million compared
with $159 million profit in the prior corresponding period.
Net operating income down
29%
●Excluding Notable Items, income was up 27% or $150 million. Movements included:
Higher Treasury contribution from positioning for interest rate volatility;
Earnings growth on capital balances due to higher interest rates; and
Higher income from businesses that were exited in the prior corresponding period.
Expenses up 3%●Excluding Notable Items, expenses were up 3% or $12 million primarily driven by higher technology investment spend relating to the
technology simplification program, UNITE.
56WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’
REPORT
DIRECTORS’ REPORT
Directors
Review and results of the Group’s operations
Significant developments
Risk factors
Rounding of amounts
Auditor's Independence Declaration
Responsibility Statement
57
DIRECTORS’ REPORT
The Directors of Westpac present their report together with the financial statements of Westpac and its controlled entities (collectively referred to as ‘the Group’) for the half year
ended 31 March 2024.
Directors
The names of the Directors of Westpac holding office at any time during, and since the end of, the half year and the period for which each has served as a Director are set out below:
Name
Position
Steven Gregg
Director since November 2023 and Chairman since December 2023.
Peter King
Managing Director and Chief Executive Officer since December 2019.
Tim BurroughsDirector since March 2023.
Nerida Caesar
Director since September 2017.
Audette Exel AO
Director since September 2021.
Peter Nash
Director since March 2018.
Nora Scheinkestel
Director since March 2021.
Margaret Seale
Director since March 2019.
Michael Ullmer AODirector since April 2023.
John McFarlane
Retired 14 December 2023. Chairman from April 2020 and Director from February 2020.
Christopher Lynch
Retired 14 December 2023. Director from September 2020.
Review and results of the Group’s operations
Net profit attributable to owners of Westpac for First Half 2024 was $3,342 million, 16% lower than First Half 2023. Non- interest income was lower as First Half 2023 included a non-
recurring $268 million gain on sale of businesses and revenue from the businesses sold of $140 million. Operating expenses increased, primarily as a result of higher depreciation
and amortisation charges as certain major projects were completed. Compared to Second Half 2023, net profit was 5% higher.
A summary of the movements in the major line items in Net Profit for First Half 2024 compared to First Half 2023 is discussed below.
Net interest income was stable at $9,127 million, with a 3% increase in average interest earning assets and a 7 basis point decline in the net interest margin. The main contributors
to the movement in net interest margin included:
●Tighter spreads on mortgages in response to competition and a shift towards both lower spread owner occupier, and principal and interest loans;
●Higher spreads on new term wholesale fundings as lower spread facilities matures; and
●Earnings on capital balances as a result of higher interest rates.
Non-interest income was $427 million lower compared to First Half 2023, mostly due to a reduction of $140 million in revenue from businesses sold in 2023 and the $268 million
profit on sale of businesses recognised in First Half 2023.
Operating expenses were $407 million, or 8% higher compared to First Half 2023. The increase was mainly due to:
●Higher depreciation and amortisation of assets of $198 million; and
●Higher technology services, and software maintenance and licence costs of $113 million.
Impairment charges were $362 million compared to $390 million in First Half 2023. While credit quality saw some deterioration compared to First Half 2023, the overall quality
remains sound and provisions are well in excess of expected losses for the base case economic scenario.
58WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’ REPORT
Review and results of the Group’s operations (Continued)
The effective tax rate was 30.9%. This was higher than the 28.8% effective tax rate in First Half 2023 due to the recognition of an accounting gain but a tax loss in First Half 2023
related to the sale of Advance Asset Management Limited.
The Board has determined an interim ordinary dividend of 75 cents and a special dividend of 15 cents per share, which will be fully franked.
A review of the operations and results of the Group and its segments for the half year ended 31 March 2024 is set out in the Performance review (see pages 2-55) of this Results
Announcement and in Risk factors, which forms part of the Directors' Report.
Further information about our financial position and financial results is included in the financial statements and accompanying notes, which form part of the 2024 Interim Financial
Report.
Significant developments
Westpac significant developments – Australia
Changes to Board of Directors
On 16 October 2023, Westpac announced the appointment of Mr Steven Gregg as Non-executive Director and Chairman- elect effective 7 November 2023. Mr Gregg succeeded Mr
McFarlane as Chairman of the Board following Mr McFarlane’s retirement from the Board at the conclusion of the AGM on 14 December 2023.
Independent Non-executive Director Chris Lynch retired from the Board at the conclusion of the AGM on 14 December 2023.
On market buyback
As at 31 March 2024, Westpac had completed $849.1 million of the $1.5 billion on market share buyback previously announced on 6 November 2023, with 34.4 million Westpac
shares purchased at an average price of $24.65. The shares bought back were subsequently cancelled. On 6 May 2024, Westpac announced an increase in the amount of Westpac
shares it intends to buyback up to a further $1 billion, to an aggregate total buyback amount of up to $2.5 billion of Westpac shares. Westpac reserves the right to vary, suspend or
terminate the buyback at any time.
External auditor
On 8 March 2024, Westpac announced that KPMG was the preferred firm to be appointed as Westpac’s external auditor for the 2025 financial year, beginning 1 October 2024.
Subject to KPMG becoming independent and regulatory consent being obtained, the approval of Westpac shareholders will be sought at the 2024 Annual General Meeting.
Technology Simplification
On 27 March 2024, Westpac shared an update on its technology simplification project, UNITE, a multi-year programme of work commenced in FY24. Further discussion on risks
around technology projects including the UNITE program is set out in the Risk factors section in the Directors' Report in this Results Announcement.
Regulatory and risk developments
Enforceable undertaking on risk governance remediation, Integrated Plan and CORE program
Our CORE program has delivered the Integrated Plan (IP) required under the enforceable undertaking (EU) entered into with APRA in December 2020 in relation to our risk
governance remediation and supporting the strengthening of our risk governance, accountability and culture. In its final report issued 30 April 2024, the Independent Reviewer
(Promontory Australia) has confirmed that Westpac has successfully completed the IP and the CORE Program associated with it. Westpac is continuing to focus on the sustainability
and effectiveness of the uplift delivered by the Integrated Plan through a 12-month transition phase in 2024 with independent review by Promontory Australia.
Promontory Australia has provided quarterly reports to APRA on our compliance with the EU and Integrated Plan. Promontory Australia’s final report, along with reports issued
previously, are available on our website at https:// www.westpac.com.au/about-westpac/media/core/ .
Risk management
We are continuing to invest in strengthening our end-to-end management of risk, with a focus on continuous improvement. Areas of particular focus include embedding our risk
management framework, policies, systems, data quality and management, product governance, prudential compliance management, reporting to regulators and our risk capabilities.
Further information about our risk management is set out in the ‘Risk Management’ section our 2023 Annual Report.
59
Significant developments (Continued)
APRA releases final Prudential Standard CPS230 Operational Risk Management
On 17 July 2023, APRA released the final version of the Prudential Standard CPS 230 Operational Risk Management which will come into effect from 1 July 2025. CPS 230 brings
new and enhanced requirements for our operational risk management, service provider management and business continuity planning; and we are undertaking a programme of
work to assist in implementing these requirements. Details about operational risk and the consequences of failing to comply with regulatory requirements are set out in the Risk
factors section in the Directors' Report in this Results Announcement.
Financial crime
We continue to make progress on improving our financial crime risk management with significant ongoing work, as we implement a multi-year program of work (including AML/CTF,
Sanctions, Anti-Bribery and Corruption, the US Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS)).
Through this work, we continue to undertake activities to strengthen our AML/CTF Program, including our Transaction Monitoring Program, and remediate and improve our financial
crime controls in multiple areas including: initial, enhanced and ongoing customer due diligence and associated record keeping; upgrading customer and payment screening,
enhancing transaction monitoring and associated processes; improving Electronic Funds Transfer Instruction processes; establishing data reconciliations and checks to ensure the
completeness of data feeding into our financial crime systems; and improving regulatory reporting, including in relation to International Funds Transfer Instructions, Threshold
Transaction Reports, Suspicious Matter Reports (including ‘tipping off’ controls), and FATCA and CRS reporting and equivalent reports in jurisdictions outside Australia.
With increased focus on financial crime, further areas of potential non-compliance have been, and may continue to be identified, and we continue to liaise with AUSTRAC and the
ATO and local regulators in jurisdictions outside Australia, as appropriate, including to remediate findings and adopt recommendations from regulators with significant ongoing
programmes of work across the Group. Details about the consequences of failing to comply with financial crime obligations are set out in the Risk factors section in the Directors'
Report in this Results Announcement.
Scams
The National Anti-Scam Centre launched on 1 July 2023 to coordinate scam disruption and prevention activity across industry sectors and government.
On 24 November 2023, Westpac announced that it had joined forces with other Australian banks to launch a Scam- Safe Accord to enhance protection for customers against scams.
The collaboration lays out six initiatives to help improve safeguards.
In November 2023, the Government commenced consultation on new mandatory industry codes to outline the responsibilities of the private sector in relation to scam activity, with a
focus on banks, digital communications platforms and telecommunications providers. The consultation ended on 29 January 2024.
Financial Accountability Regime
On 15 March 2024, the Financial Accountability Regime (FAR) commenced for authorised deposit-taking institutions and their authorised non-operating holdings companies
(NOHCs). The FAR replaces the Banking Executive Accountability Regime which commenced in 2018, and imposes a strengthened responsibility and accountability framework for
entities in the banking, insurance and superannuation industries and their directors and senior executives. It will apply to insurance entities, their authorised or registered NOHCs,
and Registrable Superannuation Entity licensees from 15 March 2025.
New climate reporting standards
On 27 March 2024, a bill proposing new mandatory climate reporting legislation was introduced to the Australian Parliament. If passed, it will require Westpac to make climate
disclosures in accordance with new Australian Sustainability Reporting Standards (which are being finalised by the Australian Accounting Standards Board) in its annual reporting
starting with financial year ended 30 September 2026.
On 6 March 2024, the U.S. Securities and Exchange Commission (SEC) adopted final rules requiring registrants, including foreign private issuers such as Westpac, to disclose
climate-related information in their registration statements and periodic reports. As of 4 April 2024, the SEC rules have been stayed pending the outcome of a lawsuit challenging the
rules in the United States Court of Appeals for the Eighth Circuit.
APRA capital requirements
Operational risk capital overlays
The following additional capital overlays are currently applied by APRA to our operational risk capital requirement:
60WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’ REPORT
Significant developments (Continued)
●$500 million in response to Westpac’s Culture, Governance and Accountability self-assessment (this overlay has applied since 30 September 2019); and
●$500 million in response to the magnitude and nature of issues that were the subject of the AUSTRAC proceedings (this overlay has applied since 31 December 2019).
These overlays have been applied through an increase in risk weighted assets (RWA). The impact on our Level 2 common equity Tier 1 (CET1) capital ratio at 31 March 2024 was a
reduction of 36 basis points.
Additional loss absorbing capacity
On 2 December 2021, APRA announced a requirement for domestic systemically important banks (D-SIBs), including Westpac, to increase total capital requirements by 4.5
percentage points of RWA to meet additional loss absorbing capacity. From 1 January 2026, the total capital requirement is 18.25%. The increase in total capital is expected to be
managed through the issuance of additional Tier 2 capital.
APRA Consultation: Enhancing Bank Resilience- Additional Tier 1 Capital in Australia
On 21 September 2023, APRA released a discussion paper seeking feedback on potential policy options aimed at improving the effectiveness of Additional Tier 1 (AT1) capital
instruments and ensuring that such instruments are operating as intended. APRA has identified potential areas of concern or challenges with how AT1 capital instruments have
performed or could perform in times of stress, reflecting on significant challenges internationally in using AT1 capital instruments to absorb losses. Following feedback on the
discussion paper, APRA has indicated that it intends to undertake a formal consultation on proposals in the first half of the 2024 calendar year.
APRA Consultation: Interest Rate Risk in the Banking Book
In November 2022, APRA released a consultation paper on changes to the calculation of interest rate risk in the banking book (IRRBB). The consultation closed in March 2023. In
December 2023 APRA released a revised draft APS 117 Capital Adequacy: Interest Rate Risk in the Banking Book. Consultation is expected to complete by mid-2024, and the
revised standard is scheduled to commence 1 October 2025.
Westpac significant developments – New Zealand
RBNZ review of overseas bank branches
On 7 November 2023, the RBNZ announced key decisions following the review of its policy for branches of overseas banks. The key decisions include restricting branches of
overseas banks in New Zealand to engaging in wholesale business and restricting dual-registered branches (such as the Westpac’s New Zealand Branch) to only conducting
business with “large” wholesale customers. It is proposed that “large” be determined based on consolidated annual turnover or net assets greater than NZ$50 million and the
implementation date is expected to be in 2028.
Westpac’s New Zealand Branch currently provides financial markets, trade finance and international payment products and services to customers referred by WNZL. Based on key
decisions announced, we expect the RBNZ’s revised policy on overseas bank branches will require changes to the activities Westpac’s New Zealand Branch undertakes, and as a
result, WNZL may also make changes to the scope of activities it undertakes.
General regulatory changes affecting our businesses
Cyber security
Regulators have continued their focus on cyber security, given the high profile cyber-related incidents. APRA is seeking to ensure that regulated entities improve their cyber security
practices and has been focusing on the effective implementation of Prudential Standard CPS 234 Information Security. ASIC has similarly indicated a focus on improving
cybersecurity at the companies it regulates. The Australian Signals Department and the Australian Cyber Security Centre are increasingly providing threat intelligence and tailored
guidance to help organisations enhance their information security measures. We will continue to engage with regulators and the government more broadly as it relates to cyber-
related regulation, legislation and policy.
In December 2023, the Australian Government released a consultation paper as part of its 2023-2030 Cyber Security Strategy. Significant proposed changes include the creation of
a:
●statutory obligation requiring businesses to report ransomware incidents and payments; and
●consequence management power in the Security of Critical Infrastructure Act 2018 (Cth) that will allow the Government to direct an entity to take specified actions to manage the
consequences of significant incidents.
The consultation process closed on 1 March 2024. The consultation paper notes that the Department of Home Affairs will provide advice to Government on new legislation
implementing the proposals to be considered in 2024.
61
Significant developments (Continued)
We continue to work on enhancing our systems and processes to mitigate cyber security risks, including in relation to third parties, and to respond to changes in regulation. Details
about operational risks and information security risks, including cyberattacks, are set out in the Risk factors section in the Directors' Report in this Results Announcement.
Artificial Intelligence
On 17 January 2024 the Australian Government released its interim response to safe and responsible Artificial Intelligence (AI) consultation. The Government indicated that it will
consider mandatory guardrails for AI development and use, and is taking immediate action through:
●working with industry to develop a voluntary AI Safety Standard, implementing risk- based guardrails for industry;
●working with industry to develop options for voluntary labelling and watermarking of AI generated materials; and
●establishing an expert advisory body to support the development of options for further AI guardrails.
We continue to work on enhancing our systems and processes to mitigate risks that may be amplified by AI and collaborating with industry and government to shape development of
AI regulation. Details about operational risks and information security risks, including AI, are set out in the Risk factors section in the Directors' Report in this Results Announcement.
Reforms to the Privacy Act
In September 2023, the Australian Government released its response to the Privacy Act Review Report (Report). The Government ‘agrees’ or ‘agrees-in-principle’ with most of the
proposed reforms in the Report, including new enforcement powers for the Australian Information Commissioner and the introduction of new low-level and mid-tier civil penalties for
privacy breaches.
At the time of releasing the response, the Attorney-General’s Department indicated that it would conduct an impact analysis and work with stakeholders to inform the development of
legislation and guidance material in this term of Parliament for the ‘agreed’ proposals. The Department subsequently announced that, in early 2024, it will:
●conduct targeted consultations on the ‘agreed-in principle’ proposals; and
●support the development of a detailed impact analysis to ensure the range of benefits and economic costs of the reforms are fully understood.
Legal proceedings
Our entities are parties to legal proceedings from time to time arising from the conduct of our business. Certain litigation (including regulatory proceedings) and class actions are
described as required in Note 13 to the financial statements in this Results Announcement.
Risk factors
Our business is subject to risks that can adversely impact our financial performance, financial condition and future performance. If any of the following risks occur, our business,
prospects, reputation, financial performance or financial condition could be materially adversely affected, with the result that the trading price of our securities or the level of
dividends could decline and, as a security holder, you could lose all, or part, of your investment. You should carefully consider the risks described (individually and in combination)
and the other information in this Results Announcement and in our 2023 Annual Report and subsequent disclosures before investing in, or continuing to own, our securities. The
risks and uncertainties described below can emerge together or quickly in succession in a fashion that is uncorrelated with the order in which they are presented below, and they are
not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently deem to be immaterial, may also become important factors that affect us.
Risks relating to our business
We have suffered, and could in the future suffer, information security risks, including cyberattacks
Our operations rely on the secure processing, storage and transmission of information on our computer systems and networks, and the systems and networks of external suppliers.
Although we implement measures to protect the confidentiality, availability and integrity of our information, our information assets (including the computer systems, software and
networks on which we, or our customers, shareholders, employees, suppliers, counterparties or others rely) may be subject to security breaches, unauthorised access, malicious
software, social engineering, denial of service attacks, ransomware, employee misconduct, or other forms of external attacks, internal breaches or human error that could have an
adverse impact on our and others' confidential information.
The Information security risks we face are heightened by a range of factors including: the inherent risks in existing and new technologies; increasing digitisation of business
processes within, and transactions among, organisations; the increased volume of data (including sensitive data) that organisations collect, generate, hold, use and disclose;
62WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’ REPORT
Risk factors (Continued)
the global increase in the sophistication, severity and volume of cyber crime (including the increased occurrence of cyberattacks globally); supply chain disruptions; the prevalence of
remote and hybrid working for employees, staff of service providers, and customers; the targeting of local service providers; ongoing and emerging geo-political tensions or wars;
other external events such as acts of terrorism and attacks from state sponsored actors, which could compromise our information assets and interrupt our usual operations and
those of our customers, suppliers and counterparties; and the prevalence and increased use of Artificial Intelligence systems, which can increase the speed, complexity and
effectiveness of cyberattacks.
Adverse information security events such as data breaches, cyberattacks, espionage and/or errors are occurring at an unprecedented pace, scale and reach. Cyberattacks and other
information security breaches have the potential to cause a range of impacts, including: financial system instability; reputational damage; serious disruption to customer banking
services; economic and non-economic losses to us, our customers, shareholders, suppliers, counterparties and others; compromise data privacy of customers, shareholders,
employees and others; and exposure to contagion risk. While we have systems in place to protect against, detect, contain and respond to cyberattacks and other information security
threats, these systems have not always been, and may not always be, effective and human error can occur.
Westpac, its customers, shareholders, employees, suppliers, counterparties or others could suffer losses from cyberattacks, information security breaches or ineffective cyber
resilience. Consequences could be heightened where Westpac is holding customer data in breach of legal or regulatory obligations, and that data is compromised as part of a
cyberattack or other information security incident. We may not be able to anticipate and prevent a cyberattack or other information security incident, or effectively respond to and/or
rectify the resulting damage. Our suppliers and counterparties, and other parties that facilitate our activities, financial platforms and infrastructure (such as payment systems and
exchanges that hold data in relation to our existing or potential customers) as well as our customers’ suppliers and counterparties are also subject to the risk of cyberattacks and
other information security breaches, which could in turn impact us. As the scale and volume of cyberattacks increases globally, there is an increased likelihood of enforcement action
from global and domestic regulators and other action from customers or shareholders, such as class action litigation, for information security risk management failures, for failing to
protect our information assets (including customer and other data), for misleading statements made about our information security practices or for deficiencies in our response to
cyberattacks and information security threats (including any delayed, deficient or misleading notifications).
Consequences of a successful cyberattack or information security breach (whether targeting Westpac or third parties) could include: damage to technology infrastructure; the
potential use of incident response and intervention powers by the Australian Government under the Security of Critical Infrastructure Act 2018 (Cth); disruptions or other adverse
impacts to network access, operations or availability of services; loss of customers, suppliers and market share or reputational damage; loss of data or information; cyber extortion;
customer remediation and/or claims for compensation; breach of applicable laws and regulations; increased vulnerability to fraud and scams; litigation and adverse regulatory action
including fines or penalties, and increased regulatory scrutiny and enforcement action (including the imposition of licence conditions).
All these potential consequences could have regulatory impacts and negatively affect our business, prospects, reputation, financial performance or financial condition. As cyber
threats evolve, we may need to allocate significant resources and incur additional costs to modify or enhance our systems, investigate and remediate any vulnerabilities or incidents
and respond to changing regulatory environments (including regulatory inquiries).
We could be adversely affected by legal or regulatory change
We operate in an environment of sustained legal and regulatory change and ongoing scrutiny of financial services providers. Our business, prospects, reputation, financial
performance and financial condition have been, and could in the future be, adversely affected by changes to law, regulation, policies, supervisory activities, the expectations of our
regulators, and the requirements of industry codes of practice, such as the Banking Code of Practice.
Such changes may affect how we operate and have altered, and may in the future alter, the way we provide our products and services, in some cases requiring us to change or
discontinue our offerings. This includes possible future changes in laws, regulations, policy or regulatory expectations arising from industry-wide reviews and inquiries - for example,
in relation to the cash-in-transit industry, and the Senate inquiry into regional and rural branch closures. The effects of such changes and reviews in the past have included, and
could continue to include, limiting our flexibility, requiring us to incur substantial costs (such as costs of systems changes, the levies associated with the Compensation Scheme of
Last Resort, or if our liability for scams or operational costs relating to scam management or other industry wide issues are increased as a result of legal or regulatory change),
absorbing specialist resources, impacting the profitability of our businesses, requiring us to retain additional capital, impacting our ability to pursue strategic initiatives or implement
other changes, resulting in us being unable to increase or maintain market share and/or creating pressure on margins and fees. Changes to regulations in relation to cyber, data,
privacy, fraud and scams may also affect the level of threat acting in Australia.
63
Risk factors (Continued)
A failure to manage legal or regulatory changes effectively and in the timeframes required has resulted, and could in the future result, in the Group not meeting its compliance
obligations. It could also result in enforcement action, penalties, fines, civil litigation, capital impacts and ultimately loss of business licences. Managing large volumes of regulatory
change contributes to execution risk. Updates to our technology, systems and processes to keep pace with legal and regulatory change may not always be successful, and such
changes can increase the risk of flaws, human error or unintended consequences. This is exacerbated by frequent requirements for change. Significant management attention, costs
and resources may be required to update existing, or implement new, processes to comply with such changes. The availability of skilled personnel required to implement changes
may be limited.
There is additional information on certain aspects of regulatory changes affecting the Group in ‘Significant developments’ and the sections ‘Critical accounting assumptions and
estimates’ and ‘Future developments in accounting standards’ in Note 1 to the financial statements.
We have been and could be adversely affected by failing to comply with laws, regulations or regulatory policy
We are responsible for ensuring that we comply with all applicable legal and regulatory requirements and industry codes of practice in the jurisdictions in which we operate or obtain
funding.
We are subject to compliance and conduct risks. These risks are exacerbated by the complexity and volume of regulation, and the level of ongoing regulatory change, including
where we interpret our obligations and rights differently to regulators or a Court, tribunal or other body, or where applicable laws (in different jurisdictions or between regimes in
Australia) conflict. The potential for this is heightened when regulation is new, untested or is not accompanied by extensive regulatory guidance, or where industry consultation is
limited.
Our compliance and conduct management system (which is designed to support our commitment to satisfying regulatory requirements and the effective management of compliance
and conduct risk for the benefit of customers, other stakeholders and financial markets) has not always been, and may not always be, effective. Breakdowns have occurred, and may
in the future occur, due to a failure to exercise good judgement in the decisions we make, flaws in the design or implementation of controls or processes, or when new measures are
implemented in short periods of time. These factors can result in a failure by the Group to meet its compliance obligations (including obligations to report or provide information to
regulators). As reviews and change programs are progressed, compliance issues have been, and will likely continue to be, identified.
Conduct risk has occurred, and could continue to occur, through the provision of products and services to customers (including vulnerable customers and customers in hardship) that
do not meet their needs or do not meet the expectations of the market. It has occurred, and could continue to occur, through the deliberate, reckless, negligent, accidental or
unintentional conduct of our employees, contractors, agents, authorised representatives, credit representatives (for example, in our RAMS franchise networks) and/or external
services providers that results in the circumvention or inadequate implementation of our controls, processes, policies or procedures. This could occur through a failure to meet
professional obligations to specific clients (including fiduciary, suitability, responsible lending and hardship requirements), conflicts of interest, use of unlicensed referrers, weakness
in risk culture, corporate governance or organisational culture, poor product design and implementation, failure to adequately consider customer needs or selling products and
services outside of customer target markets, or human error. These risks are heightened where there has been, or is in the future, inadequate supervision and oversight of our
distribution channels. A failure by our people to comply with the behaviours we expect, our policies, procedures, or the law could also negatively impact other employees, which
could lead to outcomes including litigation and reputational damage for Westpac. Where third parties have contributed to conduct risk, Westpac and its related entities may have
limited recourse against these third parties, and regulatory outcomes may not be mitigated by third party culpability.
These factors have resulted, and could continue to result, in poor customer outcomes (including for vulnerable customers and customers in hardship), a failure by the Group to meet
its compliance obligations (or to promptly detect, report and/or remedy non-compliance) and other outcomes including impacts which may compromise the integrity of the markets in
which we operate or to data we report, reputational damage, increased regulatory surveillance or investigation and employment disputes in relation to consequence management.
We are currently subject to a number of investigations, reviews and industry inquiries by, and are responding to a number of requests from, domestic and international regulators
including APRA, ASIC, the ATO, the ACCC, AUSTRAC, BCCC, FINRA, AFCA, RBNZ and the Fair Work Ombudsman, BaFin, BPNG and BPNG’s Financial Analysis and
Supervision Unit, involving significant resources and costs (which may divert specialist resources from other programs of work).
Regulatory reviews and investigations have in the past, and may in the future, result in a regulator taking administrative or enforcement action against the Group and/or its
representatives. Regulators have broad powers, and in certain circumstances, can issue directions to us (including in relation to product design and distribution and remedial action).
Regulators could also pursue civil or criminal proceedings, seek substantial fines, civil penalties, compliance regimes or other enforcement outcomes. Penalties can be (and have
been) more significant where it has taken some time to identify contraventions, or to investigate, correct or remediate contraventions, where there are patterns of similar conduct, or
where there has been awareness of contraventions. These risks are heightened where we fail to meet our obligations (or the expectations of regulators) in areas of particular
regulatory focus, for example, in relation to vulnerable customers, customers in hardship and indigenous customers or where regulators consider issues to be material or indicate
systemic issues. In addition, regulatory investigations may lead to adverse findings against directors and management, including potential disqualification. The allocation of
resources to regulatory reviews and investigations can also impede other activities, including change, simplification and remediation activities.
64WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’ REPORT
Risk factors (Continued)
APRA can also require the Group to hold additional capital either through a capital overlay or higher risk weighted assets (including in response to a failure to comply with prudential
standards and/or expectations including in relation to, for example, stress testing and liquidity management). Following the commencement of civil penalty proceedings, APRA
imposed a $500 million Culture, Governance and Accountability Review overlay and a further $500 million Risk Governance overlay to our required operational risk capital in 2019.
Both overlays continue to apply. If the Group incurs additional capital overlays, we may need to raise additional capital, which could have an adverse impact on our financial
performance.
The political and regulatory environment that we operate in has seen (and may continue to see) the expansion of powers of regulators along with materially increased civil penalties
for corporate and financial sector misconduct or non-compliance and an increase in criminal prosecutions against institutions and/or their employees and representatives (including
where there is no fault element). This could also result in reputational damage and impact the willingness of customers, investors and other stakeholders to deal with Westpac. Given
the size of Westpac and scale of its activities, a failure by Westpac may result in multiple contraventions, which could lead to significant financial and other penalties. The introduction
of the Financial Accountability Regime may heighten these risks as it replaces the Banking Executive Accountability Regime and imposes a strengthened responsibility and
accountability framework.
Regulatory investigations or actions commenced against the Group have exposed, and may in the future expose, the Group to an increased risk of litigation brought by third parties
(including through class action proceedings), which may require us to pay compensation to third parties and/or to undertake further remediation activities. In some cases, the
amounts claimed and/or to be paid may be substantial. Market developments suggest the scope and nature of potential claims is expanding, including in relation to cyber incidents,
financial crime and environmental, social and governance issues. We have incurred significant remediation costs on a number of occasions (including compensation payments and
costs of correcting issues) and new issues may arise requiring remediation. We have faced, and may continue to face, challenges in effectively and reliably scoping, quantifying and
implementing remediation activities, including determining how to compensate impacted parties properly, fairly and in a timely way. Remediation activities may be affected or delayed
by a number of factors including the number of customers (or other parties) affected, the commencement of investigations or litigation (including regulatory or class action
proceedings), requirements of regulators (including as to the method or timeframe for remediation) or difficulties in locating or contacting affected parties and any reluctance of
affected parties to respond to contact. Investigation of the underlying issue may be impeded due to the passage of time, technical system constraints, or inadequacy of records.
Remediation programs may not prevent regulatory action or investigations, litigation or other proceedings from being pursued, or sanctions being imposed.
Regulatory investigations, inquiries, litigation, fines, penalties, infringement notices, revocation, suspension or variation of conditions of regulatory licences or other enforcement or
administrative action or agreements (such as enforceable undertakings) have and could, either individually or in aggregate with other regulatory action, adversely affect our
business, prospects, reputation, financial performance or financial condition and increases class action risk.
There is additional information on certain regulatory and other matters that may affect the Group (including class actions) in ‘Significant developments’ and in the sections ‘Critical
accounting assumptions and estimates’ and ‘Future developments in accounting standards’ in Note 1 to the financial statements.
We have suffered, and in the future could suffer, losses and be adversely affected by the failure to implement effective risk management
Our risk management framework has not always been, and may not in the future be, effective. The resources we have in place for identifying, measuring, evaluating, monitoring,
reporting and controlling or mitigating material risks may not always be adequate. This may arise due to inadequacies in the design of the framework or key risk management
policies, controls and processes, the design or operation of our remuneration structures and consequence management processes, technology failures, our corporate structure,
incomplete implementation or embedment, or failure by our people (including contractors, agents, authorised representatives and credit representatives) to comply with or properly
implement our policies and processes. The potential for these types of failings is heightened if we do not have appropriately skilled, trained and qualified people in key positions or
we do not have sufficient capacity, including people, processes and technology, to appropriately manage risks.
There are also inherent limitations with any risk management framework. Risks may exist, or emerge in the future, that we have not anticipated or identified.
The risk management framework may also prove ineffective because of weaknesses in risk culture or risk governance practices and policies. For example: where there is a lack of
awareness of our policies, controls and processes or where they are not adequately complied with, monitored, audited or enforced. This may result in poor decision-making or risk
and control weaknesses not being identified, escalated or acted upon.
We periodically review our risk management framework to determine if it remains appropriate. Our ongoing analysis and reviews, in addition to regulatory feedback, have highlighted
that while there have been improvements, the risk management framework is still not operating satisfactorily in a number of respects and needs continued focus.
65
Risk factors (Continued)
As part of our risk management framework, we measure and monitor risks against our risk appetite. When a risk is out of appetite, we aim to take steps to bring this risk back into
appetite in a timely way. This may include improving the design of our risk class frameworks and supporting policies. However, we may not always be able to bring a risk back within
appetite within proposed timeframes or implement effective improvements. This may occur because, for example, the required changes involve significant complexity, or because we
experience delays in enhancing our information technology systems, or we do not have sufficient appropriately trained staff for required activities (including where staff are occupied
by other regulatory change or remediation projects), or because of an operational failure. It is also possible that due to external factors beyond our control, certain risks may be
inherently outside of appetite for periods of time.
Our Integrated Plan (IP) in relation to risk governance remediation was developed to address the root causes of Westpac’s risk governance shortcomings which led to the
establishment of the Enforceable Undertaking (EU) with APRA in December 2020. The IP was completed at the end of December 2023, as committed in the IP. Promontory Australia
(as Independent Reviewer providing regular updates to APRA) issued its final report on 30 April 2024 confirming that Westpac has successfully completed the IP and the CORE
Program associated with it. This report, along with previous reports, has been published on our website at https://www.westpac.com.au/about-westpac/media/core/. Westpac is
continuing to focus on the sustainability and effectiveness of the uplift delivered by the Integrated Plan through a 12 month transition phase in 2024, with independent review by
Promontory Australia.
If any of our governance or risk management processes and procedures prove ineffective or inadequate or are otherwise not appropriately implemented or we do not bring risks into
appetite, we could be exposed to higher levels of risk than expected and sustained or increased regulatory scrutiny and action. While improvements in risk culture can drive early
and increased self-identification and remediation of compliance concerns, this can also highlight concerns that may lead to further regulatory action. This may result in financial
losses, imposition of capital requirements, breaches of compliance obligations, fines and reputational damage, and significant remediation which could adversely affect our business,
prospects, financial performance or financial condition.
We could suffer losses due to technology failures
Maintaining the reliability, availability, integrity, confidentiality, security and resilience of our information and technology is crucial to our business. While the Group has a number of
processes in place to preserve and monitor the availability, and facilitate the recovery, of our systems, there is a risk that our information and technology systems may be inadequate,
fail to operate properly or result in outages, including from events wholly or partially beyond our control.
If we experience a technology failure, we may fail to meet a compliance obligation (such as a requirement to retain records and/or data for a certain period, or to destroy records
and/or data after a certain period, or other risk management, privacy, business continuity management or outsourcing obligations), or our employees and our customers may be
adversely affected, including through the inability for them to access our products and services, privacy breaches, or the loss of personal data. This could result in reputational
damage, remediation costs and a regulator commencing an investigation and/or taking action, or others commencing litigation, against us. Technology issues in the financial sector
can also affect multiple institutions. This means we could impact, or be impacted by, other institutions.
The use of legacy systems, as well as work underway to uplift our technological capabilities, may heighten the risk of a technology failure, change management issues and the risk
of non-compliance with our regulatory obligations or poor customer outcomes. Projects aimed at simplifying/streamlining our systems (including our UNITE program) will require the
allocation of significant resources (including specialist expertise) and incur costs. In addition, the risk of technology failure, regulatory non-compliance or poor customer outcomes
may be heightened while those projects are being undertaken, or post-implementation where there are unanticipated outcomes or impacts. We are also exposed to the risk that such
projects may not be completed on time or may require further resources or funding than anticipated. The success of such projects relies in part on having robust governance
arrangements and appropriate oversight at board and senior executive level, and the risk of regulatory non-compliance, poor customer outcomes, delays, increased cost or demand
on resources can be heightened where we fall short in these areas.
Failure to regularly renew and enhance our technology to deliver new products and services, comply with regulatory obligations and ongoing regulatory changes, improve
automation of our systems and controls, and meet our customers’ and regulators’ expectations, or to effectively implement new technology projects, could result in cost overruns,
technology failures (including due to human error in implementation), reduced productivity, outages, operational failures or instability, compliance failures, reputational damage and/or
the loss of market share. This could place us at a competitive disadvantage and also adversely affect our business, prospects, financial performance or financial condition.
We could suffer losses due to geopolitical events
We, our customers and our suppliers operate businesses and hold assets in different geographic locations. Significant risks remain including from geopolitical instability, conflicts,
trade tensions, tariffs, sanctions, social disruption, civil unrest, war, terrorist activity, acts of international hostility, and complicity with or reluctance to take action against certain types
of crimes.
Such events could affect domestic and international economic stability and impact consumer and investor confidence which in turn could disrupt industries, businesses, service
providers and supply chains and ultimately adversely impact economic activity. This could lead to shortages of materials and labour, higher energy costs and commodity prices,
volatility in markets and damage to property. This in turn could affect asset values and impact customers’ ability to repay amounts owing to us, and our ability to recover amounts
owing. All of these impacts could adversely affect our business, prospects, financial performance or financial condition.
66WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’ REPORT
Risk factors (Continued)
Climate change and other sustainability factors such as human rights and natural capital may have adverse effects on our business
Climate and other sustainability-related risks have had and are likely to have adverse effects on us, our customers, external suppliers, and the communities in which we operate.
These risks are magnified by the significant uncertainties in modelling climate and other sustainability-related risks and opportunities and in assessing their impact.
Climate related risks may manifest as physical risks, both acute and chronic, transition risks, and risks related to legal and regulatory action.
Physical risks from climate change include risks to us directly, as well as to customers, suppliers and other stakeholders that may ultimately impact us due to disruption or changes to
business and economic activities, income, business models, asset values, insurability of assets (or inability to access insurance), and frequency or extent of damage to assets.
These risks could arise from increases and variability in temperatures, changes in precipitation, rising sea levels, loss of natural capital (including biodiversity loss), and more severe
and frequent climatic events, including fires, storms, floods and droughts. In turn, such events could also increase human rights risk and/or increase customer vulnerability.
Transition risks are risks that the transition to a lower carbon economy could impact Westpac. This could occur from climate change mitigation, obsolescence of certain businesses
including from energy transition, changes in investor appetite, shifting customer preferences, technology developments and changes in regulatory expectations/policy. Transition
risks could emerge through our lending to certain customers that experience reduced revenues or asset values or increased costs, which in turn impacts our credit risk. Westpac
may also be directly impacted by transition risks, or unable to reduce our exposure to impacted customers.
Our ambition to become a net-zero, climate resilient bank, including joining the NZBA, is leading to changes to policies and processes which may present associated execution risk.
Our ability to meet our commitments and targets is in part dependent on the orderly transition of the economy towards net-zero, which may be impacted by external factors including
(but not limited to) climate policy, levels of investment, electricity grid capacity, and constraints in the development and supply of technology, infrastructure and the skilled labour
required to deliver the necessary change. Our ability to transition, including to meet our targets and commitments, may also be impacted by challenges faced by customers in
meeting their own transition plans and commitments.
The high dependency of the global economy on nature means natural capital loss is a risk to us, primarily through our exposure to customers that are materially dependent or impact
on nature. Natural capital refers to the stock of renewable and non-renewable natural resources (e.g. plants, animals, air, water, soils, minerals) that combine to yield a flow of
benefits to people. Natural capital loss can also contribute to, and be accelerated by, climate change and these risks can be interdependent. Increasing recognition and responses to
this risk also create heightened regulatory and stakeholder expectations on Westpac. As with our climate ambitions, our ambition to become a nature positive bank will lead to
changes to policies and processes which may present associated execution risk, and our ability to meet those ambitions will be impacted by external factors outside our control.
Global strategies and standards for nature positivity are at an early stage, which increases regulatory risk and uncertainty.
Our business may be exposed to social and human rights risks through our operations, our supply chain and in the provision of financial services. If we fail to adequately identify and
manage these risks, we may cause, contribute to, or be directly linked to adverse social and human rights impacts. This includes a risk that we provide financial services to
customers involved in human rights abuses or criminal activity, or that our platforms and products may be exploited for criminal purposes. While we seek to manage and assess
social risks and act if we identify risks, we cannot be certain that our assessment will uncover these risks and/or enable us to act. This could be because of the increasing
sophistication of perpetrators and/or our monitoring systems and analytics have not kept pace with change.
Data relevant to our assessment and management of climate, environmental and social risks continues to mature. In some cases, we require data from third parties to estimate our
exposure and risks (in particular, regarding our scope 3 emissions). If those data sources are not sufficiently available or reliable, there is a risk that our decision making, including
target setting and reporting, could be affected and we may not be able to meet our targets and commitments. Associated risks become more acute where mandatory reporting
regimes are in effect.
Failure or perceived failure to adapt the Group’s strategy, governance, procedures, systems and/or controls to proactively manage or disclose climate and other sustainability-related
risks and opportunities (including, for example, perceived misstatement of, or failure to adequately implement or meet, sustainability claims, commitments and/or targets) may give
rise to business, reputational, legal and regulatory risks. This includes financial and credit risks that may impact our profitability and outlook, and the risk of regulatory action or
litigation (including class actions) against us and/or our customers.
We may also be subject, from time to time, to legal and business challenges due to actions instituted by activist or other groups. Examples of areas which have attracted activism
and challenges include: the financing of businesses perceived to be at greater risk from physical and transition risks of climate change and/or perceived not to demonstrate
responsible management of climate change or environmental and social issues; and climate- and sustainability-related disclosures (including net-zero or emissions reductions
strategies, targets and policies).
67
Risk factors (Continued)
Scrutiny from regulators, shareholders, activists and other stakeholders on climate-related risk management practices, lending policies, targets and commitments, and other
sustainability products, claims and marketing practices will likely remain high. Applicable legal and regulatory regimes, policies, and reporting and other standards are also evolving.
For example, in Australia, the government has introduced a bill proposing a new mandatory climate reporting regime, and there is an increased compliance and enforcement focus
by ASIC and ACCC on a range of issues related to sustainability, sustainable finance, and monitoring/investigation of related claims. This increases compliance, legal and regulatory
risks, and costs.
For further detail on the identification, assessment and management of these risks, please refer to our 2023 Climate Report, and the Creating Value for the Community, Creating
Value for the Environment and Sustainability Governance sections of our 2023 Annual Report.
The failure to comply with financial crime obligations has had, and could have further, adverse effects on our business and reputation
The Group is subject to anti-money laundering and counter-terrorism financing (AML/CTF) laws, anti-bribery and corruption laws, economic and trade sanctions laws and tax
transparency laws in the jurisdictions in which it operates (Financial Crime Laws). These laws can be complex and, in some circumstances, impose a diverse range of obligations. As
a result, regulatory, operational and compliance risks are heightened. In some jurisdictions (e.g. the Pacific region) financial crime risks are elevated beyond the Group’s risk
appetite.
Financial Crime Laws require us to report certain matters and transactions to regulators (such as international funds transfer instructions, threshold transaction reports and
suspicious matter reports) and ensure that we know who our customers are and that we have appropriate ongoing customer due diligence in place. The failure to comply with some
of these laws has had, and in the future could have, adverse impacts for the Group.
The Group operates within a landscape that is constantly changing, particularly with the emergence of new payment technologies, increased regulatory focus on digital assets,
increasing reliance on economic and trade sanctions to manage issues of international concern, and the rapid increase of ransomware and cyber extortion attacks. These
developments bring with them new financial crime risks for the Group (as well as other risks including scams and fraud, and criminal activity that utilises a variety of technology and
platforms), which may require adjustments to the Group’s systems, policies, processes and controls.
There has been, and continues to be, a focus on compliance with financial crime obligations, with regulators globally commencing investigations and taking enforcement action for
identified non-compliance (often seeking significant penalties). Due to the Group’s scale of operations, an undetected failure or the ineffective implementation, monitoring or
remediation of a system, policy, process or control (including a regulatory reporting obligation) has resulted, and could in the future result, in a significant number of breaches of
AML/CTF or other Financial Crime Laws. This in turn could lead to significant financial penalties and other adverse impacts for the Group, such as reputational damage and litigation
risk.
While the Group has systems, policies, processes and controls in place designed to manage its financial crime obligations (including reporting obligations), these have not always
been, and may not in the future always be, effective. This could be for a range of reasons including, for example, a deficiency in the design of a control or a technology failure or a
change in financial crime risks or typologies. Our analysis and reviews, in addition to regulator feedback, have highlighted that our systems, policies, processes and controls are not
always operating satisfactorily in a number of respects and require improvement. We continue to have an increased focus on financial crime risk management and, as such, further
issues requiring attention have been identified and may continue to be identified.
Although the Group provides updates to various regulators on its remediation and other program activities, there is no assurance that those or other regulators will agree that its
remediation and program update activities will be adequate or effectively enhance the Group’s compliance programs.
If we fail to comply with our financial crime obligations, we have faced, and could in the future face, significant regulatory enforcement action and other consequences (as discussed
in the risk factor entitled ‘We have been and could be adversely affected by failing to comply with laws, regulations or regulatory policy’) and increased reputational risks (as
discussed in the risk factor entitled ‘Reputational damage has harmed, and could in the future harm, our business and prospects’). There is additional information on financial crime
matters in ‘Significant developments’.
Reputational damage has harmed, and could in the future harm, our business and prospects
Reputational risk arises where there are differences between stakeholders’ current and emerging perceptions, beliefs and expectations and our past, current and planned activities,
processes, performance and behaviours.
Potential sources of reputational damage include where our actions (or those of our contractors, agents, authorised representatives and credit representatives) cause, or are
perceived to cause, a negative outcome for customers, shareholders, stakeholders or the community. Reputational damage could also arise from the failure to effectively
68WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’ REPORT
Risk factors (Continued)
manage risks, failure to comply with legal and regulatory requirements, enforcement or supervisory action by regulators, adverse findings from regulatory reviews, failure or
perceived failure to adequately prevent or respond to community, environmental, social and ethical issues or expectations and cyber incidents, and inadequate record-keeping,
which may prevent Westpac from demonstrating that, or determining if, a past decision was appropriate at the time it was made. We are also exposed to contagion risk from
incidents in (or affecting) other financial institutions and/or the financial sector more broadly (for example, issues affecting the cash-in-transit industry and the potential for disruption
to the availability of cash, as well as flow on consequences including runs on cash).
There are potential reputational consequences (together with other potential commercial and operational consequences) of failing to appropriately identify, assess and manage
environmental, social and governance related risks, or to respond effectively to evolving standards and stakeholder expectations. Our reputation could also be adversely affected by
the actions of customers, suppliers, contractors, authorised representatives, credit representatives, joint-venture partners, strategic partners or other counterparties.
Failure, or perceived failure, to address issues that could or do give rise to reputational risk, has created, and could in the future create, additional legal risk, subject us to regulatory
investigations, regulatory enforcement actions, fines and penalties or litigation or other actions brought by third parties (including class actions), and the requirement to remediate
and compensate customers, including prospective customers, investors and the market. It could also result in the loss of customers or restrict the Group’s ability to efficiently access
capital markets. This could adversely affect our business, prospects, financial performance or financial condition.
We have and could suffer losses due to litigation
Litigation has been, and could in the future be, commenced against us by a range of plaintiffs, such as customers, shareholders, employees, suppliers, counterparties, activists and
regulators and may, either individually or in aggregate, adversely affect the Group’s business, operations, prospects, reputation or financial condition.
In recent years, there has been an increase in class action proceedings in the broader market, many of which have resulted in significant monetary settlements. The risk of class
actions has been heightened by a number of factors, including regulatory enforcement actions, an increase in the number of regulatory investigations and inquiries, a greater
willingness on the part of regulators to commence court proceedings, more intense media scrutiny, the increasing prospect of regulatory reforms which might eliminate some of the
current barriers to such litigation, and the growth of third party litigation funding and other funding arrangements. Class actions commenced against a competitor could also lead to
similar proceedings against Westpac and a competitor’s response to those actions may impact attitudes of counterparties to Westpac proceedings.
Activism strategies directed at financial institutions, particularly in the area of climate change, sustainability and energy transition, have also increased globally in recent years, where
the focus, including through the commencement of proceedings, may be to publicly highlight particular issues, to enforce legal or regulatory standards, or to influence the financial
institution to change its operations and activities. Westpac is currently, and in the future may be, exposed to such litigation and/ or strategies employed by activist shareholders or
organisations.
Litigation is subject to many uncertainties and the outcome may not be predicted accurately. Furthermore, the Group’s ability to respond to and defend litigation may be adversely
affected by inadequate record keeping. The Group’s ability to settle litigation on reasonable terms will be affected by attitudes of counterparties.
Depending on the outcome of any litigation, the Group has been, and may in the future be, required to comply with broad court orders, including compliance orders, enforcement
orders or otherwise pay significant damages, fines, penalties or legal costs. There is a risk that the actual penalty or damages paid following a settlement or determination by a Court
for any legal proceedings may be materially higher or lower than any relevant provision (where applicable) or that any contingent liability may be larger than anticipated. There is also
a risk that additional litigation or contingent liabilities arise, all of which could adversely affect our business, prospects, reputation, financial performance or financial condition.
There is additional information on certain legal proceedings that may affect the Group in the Significant developments section in the Directors’ Report and in Note 13 to the financial
statements in this Interim Financial Results Announcement
We are exposed to adverse funding market conditions
We rely on deposits, money markets and capital markets to fund our business and source liquidity. Our liquidity and costs of obtaining funding are related to funding market
conditions, in addition to our creditworthiness and credit profile.
Funding markets can be unpredictable and experience periods of extreme volatility, disruption and decreased liquidity. Market conditions, and the behaviour of market participants,
can shift significantly over very short periods of time. The main risks we face are damage to market confidence, changes to the access and cost of funding and reduction in appetite
for exposure to Westpac, as well as the potential impacts arising from broader macroeconomic themes.
Additionally, a shift in investment preferences could result in deposit withdrawals that would increase our need for funding from other sources. These other sources may offer lower
levels of liquidity and increase costs.
69
Risk factors (Continued)
If market conditions deteriorate due to economic, political, regulatory, or other reasons (including those idiosyncratic to Westpac), there may also be a loss of confidence in bank
deposits leading to unexpected withdrawals. These events can transpire quickly and be exacerbated by information transmission on social media. This could increase funding costs,
constrain our liquidity, funding and lending activities and threaten our financial solvency. In such events, even robust levels of capital may not be sufficient to safeguard Westpac
against detrimental loss of funding.
If our current sources of funding prove to be insufficient, we may need to seek alternatives which will depend on factors such as market conditions, our credit ratings, reputation and
confidence issues and market capacity. Even if available, these alternatives may be more expensive or on unfavourable terms, which could adversely affect our financial
performance, liquidity, capital resources or financial condition.
If we are unable to source appropriate funding, we may be forced to reduce business activities (e.g. lending) or operate with smaller liquidity buffers. This may adversely impact our
business, liquidity, capital resources, financial performance or financial condition. If we are unable to source appropriate funding for an extended period, or if we can no longer realise
liquidity, we may not be able to pay our debts as and when they fall due or meet other contractual obligations.
We also enter into collateralised derivative obligations, which may require us to post additional collateral based on market movements. This has the potential to adversely affect our
liquidity or ability to use derivatives to hedge interest rate, currency and other financial risks.
We could be adversely affected by the risk of inadequate capital levels under stressed conditions
The Group is subject to the risk of an inadequate level or composition of capital to support normal business activities and meet regulatory capital requirements under normal
operating environments or stressed conditions, and to maintain our solvency. Even robust levels of capital may not be sufficient to ensure the ongoing sustainability of Westpac in the
event of a liquidity run.
Our capital levels and risk appetite are informed by stress testing. Buffers have been built to assist in maintaining capital adequacy during stressed times. We determine our internal
management buffers taking into consideration various factors. These include our balance sheet, portfolio mix, potential capital headwinds (including real estate valuations, inflation
and rising rates) and stressed outcomes, (also noting that models and assumptions may or may not be accurate in predicting the nature and magnitude of particular stress events).
The macroeconomic environment, stressed conditions and/or regulatory framework could result in a material increase to risk weighted assets or impact our capital adequacy, trigger
capital distribution constraints, threaten our financial viability and/or require us to undertake a highly dilutive capital raising.
Capital distribution constraints apply when an ADI’s Common Equity Tier 1 Capital ratio is within the prudential capital buffer range (consisting of the Capital Conservation Buffer plus
any Countercyclical Capital Buffer). Such constraints could impact future dividends and distributions on Additional Tier 1 (AT1) capital instruments. Should AT1 and Tier 2 capital
securities that we have issued be converted into ordinary shares (for example where our CET 1 ratio falls below a certain level or APRA determines we would become non-viable
without conversion of capital instruments or equivalent support), this could significantly dilute the value of existing ordinary shares. Additionally, it should be noted that APRA is
currently reviewing the effectiveness of AT1 capital instruments for use in a potential bank stress scenario, which could result in associated prudential reforms (see further discussion
in the Significant developments section in the Directors’ Report).
Our business is substantially dependent on the Australian and New Zealand economies, and could be adversely affected by a material downturn or shock to
these economies or other financial systems
Our revenues and earnings are dependent on domestic and international economic activity, business conditions and the level of financial services our customers require. Most of our
business is conducted in Australia and New Zealand so our performance is influenced by the level and cyclical nature of activity in these countries. The financial services industry
and capital markets have been, and may continue to be, adversely affected by volatility, global economic conditions (including inflation and rising interest rates), external events,
geopolitical instability, political developments, cyberattacks or a major systemic shock.
Market and economic disruptions (or the possibility of interest rates remaining higher for longer than anticipated) could cause consumer and business spending to decrease,
unemployment to rise, demand for our products and services to decline and credit losses to increase, thereby reducing our earnings. These events could undermine confidence in
the financial system, reduce liquidity, impair access to funding and adversely affect our customers and counterparties.
Given Australia’s export reliance on China, slowdown in China’s economic growth and foreign policies (including the adoption of protectionist trade measures or sanctions) could
negatively impact the Australian economy. This could result in reduced demand for our products and services and affect supply chains, the level of economic activity and the ability of
our borrowers to repay their loans.
The nature and consequences of any such event are difficult to predict but each of these factors could adversely affect our business, prospects, financial performance or financial
condition.
70WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’ REPORT
Risk factors (Continued)
Declines in asset markets could adversely affect our operations or profitability and an increase in impairments and provisioning could adversely affect our
financial performance or financial condition
Declines in Australian, New Zealand or other asset markets, including equity, bond, residential and commercial property markets, have adversely affected, and could in the future
adversely affect, our operations and profitability. Declining asset prices could also impact customers and counterparties and the value of security (including residential and
commercial property) we hold. This may impact our ability to recover amounts owing to us if customers or counterparties default. It may also affect our impairment charges and
provisions, in turn impacting our financial performance, financial condition and capital levels. Declining asset prices also impact our wealth management business as its earnings
partly depend on fees based on the value of securities and/or assets held or managed.
We establish provisions for credit impairment based on accounting standards using current information and our expectations. If economic conditions deteriorate beyond our
expectations, some customers and/or counterparties could experience higher financial stress, leading to an increase in impairments, defaults and write-offs, and higher provisioning.
Changes in regulatory expectations in relation to the treatment of customers in hardship could lead to increased impairments and/or higher provisioning. Such events could
adversely affect our liquidity, capital resources, financial performance or financial condition.
Credit risk also arises from certain derivative, clearing and settlement contracts we enter into, and from our dealings in, and holdings of, debt securities issued by other institutions
and government agencies, the financial conditions of which may be affected to varying degrees by economic conditions in global financial markets.
Sovereign risk may destabilise financial markets adversely
Potential sovereign contractual defaults, sovereign debt defaults and the risk that governments will nationalise parts of their economy including assets of financial institutions (such
as Westpac) could negatively impact the value of our holdings of assets. Such an event could also destabilise global financial markets, adversely affecting our liquidity, financial
performance or financial condition.
We could be adversely affected by the failure to maintain our credit ratings
Credit ratings are independent opinions on our creditworthiness. Our credit ratings can affect the cost and availability of our funding and may be important to investors, certain
institutional customers and counterparties when evaluating their investments in the Group, our products and services.
A rating downgrade could be driven by a downgrade of Australia’s sovereign credit rating, or one or more of the risks identified in this section or by other events including changes to
the methodologies rating agencies use to determine credit ratings. A credit rating or rating outlook could be downgraded or revised where credit rating agencies believe there is a
very high level of uncertainty on the impact to key rating factors from a significant event.
A downgrade to our credit ratings could have an adverse effect on our cost of funds, collateral requirements, liquidity, competitive position, our access to capital markets and our
financial stability. The extent and nature of these impacts would depend on various factors, including the extent of any rating change, differences across agencies (split ratings) and
whether competitors or the sector are also impacted.
We face intense competition in all aspects of our business
The financial services industry is highly competitive. We compete with a range of firms, including retail and commercial banks, investment banks, other financial service companies,
fintech companies and businesses in other industries with financial services aspirations. This includes those competitors who are not subject to the same capital and regulatory
requirements as us or who derive substantial revenue from other markets, which may allow those competitors to operate more flexibly and with lower costs of funds.
Emerging competitors are increasingly altering the competitive environment by adopting new business models or seeking to use new technologies to disrupt existing business
models.
The competitive environment may also change as a result of increased scrutiny by regulators in the sector (such as in the payments space, or as a result of the recommendations
following the ACCC’s inquiry into the market for the supply of retail deposit products) and other legislative reforms, which will stimulate competition, improve customer choice and
likely give rise to increased competition from new and existing firms.
Competition in the various markets in which we operate has led, and may continue to lead, to a decline in our margins or market share.
Deposits fund a significant portion of our balance sheet and have been a relatively stable source of funding. If we are not able to successfully compete for deposits this could
increase our cost of funding, lead us to seek access to other types of funding, or result in us reducing our lending.
Our ability to compete depends on our ability to offer products and services that meet evolving customer preferences. Not responding to changes in customer preferences could see
us lose customers. This could adversely affect our business, prospects, financial performance or financial condition.
71
Risk factors (Continued)
For more detail on how we address competitive pressures refer to ‘Our Operating Environment’ in Section 1 of our 2023 Annual Report.
We have suffered, and could continue to suffer, losses due to operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. It includes, among other things, model risk,
data risk, operations risk, change execution risk and third party risk. While we have policies, processes and controls in place to manage these risks, these have not always been, or
may not be, effective.
Ineffective processes and controls (including those of our contractors, agents, authorised representatives and credit representatives, or inadequate supervision and oversight of their
activities) have resulted in, and could continue to result in, adverse outcomes for customers, employees or other third parties.
The risk of operational breakdowns occurring is heightened where measures are implemented quickly in response to external events. These types of operational failures may result
in financial losses, customer remediation, regulatory scrutiny and intervention, fines, penalties and capital overlays and, depending on the nature of the failure, litigation, including
class action proceedings.
Examples of operational risks include:
●Fraud and scams. We have incurred, and could in the future incur, losses from fraud and scams, including fraudulent applications for loans, or from incorrect or fraudulent
payments and settlements. Such losses could increase significantly if our liability for scams is impacted by regulatory change (for example, if a UK style bank reimbursement
scheme is implemented in Australia or New Zealand, making Australian and New Zealand banks liable to compensate scam victims). Fraudulent conduct can also arise from
external parties seeking to access our systems or customer accounts, the use of mule accounts and where identification records are compromised due to third party
cybersecurity events. These risks are heightened by real-time transaction capability, and we are also exposed to contagion risk from incidents affecting other institutions. If
systems, procedures and protocols for preventing and managing fraud, scams or improper access to our systems and customer accounts fail, or are inadequate or ineffective,
they could lead to losses which could adversely affect our customers, business, prospects, reputation, financial performance or financial condition. Regulatory and compliance
requirements can impede the ability to swiftly identify or respond to a fraud or scam, or to communicate with affected parties.
●Records management. We could incur losses from a failure to adequately implement and monitor effective records management policies and processes. This could impact our
ability to safeguard or locate relevant records, respond to production and regulatory notices, conduct remediation, and generally meet records lifecycle management and
compliance obligations. Where there are inadequacies or complexities in our systems, these risks are further heightened, for example retaining records and data for, or
destroying records or de-identifying records after a certain period.
●Artificial Intelligence (AI). As we increase the adoption of AI to support our customers and business processes, we may become more exposed to risks associated with AI, such
as lack of transparency, inaccurate data input, risk of unintentional bias or inaccurate outputs, breaches of confidentiality and privacy obligations, and inaccurate decisions or
unintended consequences that are inconsistent with our policies or values. In addition, failure or delays in adopting AI could lead to competitive disadvantages or otherwise not
leveraging capability that could better support risk management or improve customer outcomes. These could have financial, regulatory, conduct, reputational and customer
impacts.
●Third party. We rely on suppliers, both in Australia and overseas, to provide services to us and our customers. Failures by these third-party contractors and suppliers, including
our authorised representatives and credit representatives, to deliver services as required and in accordance with law, regulation and regulatory expectations could disrupt our
ability to provide products and services and adversely impact our customers, operations, financial performance or reputation. For example, we rely on third parties to provide
cash transport, handling and storage services. With reduced demand for cash placing pressure on the cash-in-transit (CIT) industry, we are exposed to operational risk including
loss of (or delays in accessing) cash held by CIT providers on our behalf, reduced availability of cash in the system generally (which could lead to a run on cash), and related
consequences where we or our customers suffer loss or damage due to disruptions to CIT services.
●Change execution. We are exposed to change execution risk through delivery of technology and other change programs. There are risks that a change program fails to deliver
the desired outcomes, or fails to reduce, pre-empt, mitigate and manage the challenges associated with transformation delivery. This could result in business disruption and
delays, technology challenges, financial loss or further regulatory scrutiny. If our technology systems or financial infrastructure do not operate correctly, this may also cause loss
or damage to us or our customers. This can also arise from complexities in our systems, and the interaction between those systems. This could include, for example, where
systems issues result in incorrect fees or charges being applied to customers, or other poor customer outcomes.
●Insurance coverage. There is a risk that we will not be able to obtain and/or have not obtained appropriate insurance coverage for the risks that we may be exposed to. This
could be due to lack of available or adequate insurance, an increase in the cost of insurance, or failure of the insurance underwriter. If an insurance policy is not available or does
not respond to a loss, we will not have the ability to recover its loss from an insurance policy.
72WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’ REPORT
Risk factors (Continued)
We could suffer losses due to market volatility
Market risk is the risk of an adverse impact on the Group’s financial performance or financial position resulting from changes in market factors, such as foreign exchange rates,
commodity prices, equity prices, credit spreads and interest rates. Market risk is present in both banking book and trading book. We are exposed to market risk due to our financial
markets businesses, asset and liability management, our holdings in liquid asset securities and our defined benefit plan.
Changes in market factors could be driven by a variety of developments including economic disruption, geopolitical events, market liquidity or concerns relating to major market
participants or sectors. The resulting market volatility could potentially lead to losses and may adversely affect our financial performance.
As a financial intermediary, we underwrite listed and unlisted debt securities. We could suffer losses if we fail to syndicate or sell down this risk to others. This risk is more
pronounced in times of heightened market volatility.
Poor data quality could adversely affect our business and operations
Having accurate, complete and reliable data, supported by appropriate data controls, retention and, destruction methods and access to internal frameworks and processes, is critical
to the effective operation of Westpac’s businesses. Data plays a key role in determining how we provide products and services to customers, the effectiveness of our systems and
risk management frameworks and our ability to make effective decisions and strategic planning.
Some of our businesses are affected by poor data quality and/or limited data availability. This has been, and may continue to be, due to a number of factors, including inadequacies
across systems, processes and policies, or ineffectively implemented data management frameworks.
Poor data quality could lead to poor customer service outcomes, adverse risk management outcomes, deficient system outputs (e.g. credit systems) and processes. This is because
inadequacies in data quality renders that data unreliable to assist in making informed business decisions. Deficiencies with internal systems and processes could negatively impact
Westpac’s decision-making in areas such as the provision of credit to a customer, and the terms on which a credit facility is provided. The production of accurate data is also critical
for other functions across the Westpac Group, such as financial and other reporting (internal and external).
Poor data quality and availability impacts the ability for Westpac’s business to effectively monitor and manage their operations, comply with production notices, respond to regulatory
notices, defend and respond to litigation and conduct remediation activities. Conflicting data retention or destruction obligations may increase that risk.
Poor data and/or poor data retention/destruction methods, deficient controls that result in control gaps and weaknesses, negatively impact Westpac’s ability to meet its compliance
obligations (including its regulatory reporting obligations). In the past this has led to regulatory investigations or adverse findings and actions against Westpac, and such actions are
likely to continue if we do not maintain an acceptable level of quality for the data we hold and use, as well as having effective oversight practices in place.
We need to continue focusing on improving the quality of the data we hold and the data frameworks and processes we have in place, remediating deficiencies where required, and
ensuring compliance with all of our regulatory obligations.
Potential consequences from holding data that is of a poor quality and/or having poor data oversight and controls include adversely impacting on the ability for the Group to
effectively operate its existing businesses, securing prospective business from third parties, its reputation, financial performance and financial condition.
Our failure to recruit and retain key executives, employees and Directors may have adverse effects on our business
Key executives, employees and Directors play an integral role in the operation of Westpac’s business and pursuit of our strategic objectives. Our failure to recruit and retain
appropriately skilled and qualified people into key roles could have an adverse effect on our business, prospects, reputation, financial performance or financial condition. Macro-
environmental factors such as low unemployment, restricted migration levels, on-shoring of work, the prevalence of remote and hybrid working for employees and the competitive
talent market, may also have an adverse impact on attracting specialist skills for the Group.
Certain strategic decisions may have adverse effects on our business
We routinely evaluate and implement strategic decisions, priorities and objectives including simplification, diversification, innovation, divestment, investment, acquisition, business
expansion initiatives or decisions to shut down some operations. Each of these activities can be complex, costly and may not proceed in a timely manner. For example, we may
experience difficulties in completing certain transactions, separating or integrating businesses in the scheduled timeframe or at all, disruptions to operations, diversion of
management resources or higher than expected transaction costs, there may be impacts on third parties, and there may be differing market views about a strategic choice, which
may cause reputational damage.
Any failure to successfully divest businesses means that we may have sustained exposure to higher operating costs and to the higher inherent risks in those businesses. For
example, our Pacific businesses face a number of risks including
73
Risk factors (Continued)
heightened operational risk, sovereign risk, financial crime and exchange control risks which could adversely affect our customers, business, prospects, reputation, financial
performance or financial condition. In addition, as part of the now-completed Specialist Businesses transactions, we have given a number of warranties and indemnities in favour of
counterparties relating to certain pre-completion matters and made certain other contractual commitments, including in relation to transitional services. Warranties, indemnities and
commitments may also be given in the future in relation to other divestments we undertake. Claims under these warranties, indemnities and other contractual commitments may
result in us being liable to make significant payments to these counterparties while the various contractual liability regimes remain on foot. Additional operational risk capital is
required to be held against this risk pursuant to APRA’s published guidance. These contingent liabilities are described in Note 13 to the financial statements in this Results
Announcement.
We also acquire and invest in businesses. These transactions involve a number of risks and costs. A business we invest in may not perform as anticipated, may result in the
assumption of unknown and unaccounted for liabilities, regulatory risks or may ultimately prove to have been overvalued when the transaction was entered into.
Operational, cultural, governance, compliance and risk appetite differences between us and an acquired business may lead to longer and more costly integration.
There are risks involved in not implementing strategies successfully due to internal factors, for example, inadequate funding, resourcing, business capabilities or operating model, or
failing to identify, understand or respond effectively to changes in the external business environment, including economic, geopolitical, regulatory, consumer sentiment, technological,
environmental, social and competitive factors. This could have a range of adverse effects on us, such as being unable to increase or maintain market share or resulting pressure on
margins and fees.
Any of these risks could have a negative impact on our business, growth prospects, reputation, engagement with regulators, financial performance or financial condition.
We could suffer losses due to impairment of capitalised software, goodwill and other intangible assets that may adversely affect our business, operations or
financial condition
In certain circumstances Westpac may incur a reduction in the value of intangible assets. Westpac is required to assess the recoverability of goodwill and other intangible asset
balances at least annually or whenever an indicator of impairment exists.
For this purpose, Westpac uses a discounted cash flow calculation. Changes in the methodology or assumptions in calculations, together with changes in expected cash flows, could
materially impact this assessment. Estimates and assumptions used in assessing the useful life of an asset can also be affected by a range of factors including changes in strategy,
changes in technology and regulatory requirements. In the event that an asset is no longer in use, or its value has been reduced or its estimated useful life has declined, an
impairment or accelerated amortisation will be recorded, adversely impacting our financial performance.
Changes in critical accounting estimates and judgements could expose the Group to losses
We are required to make estimates, assumptions and judgements when applying accounting policies and preparing financial statements and the determination of the fair value of
financial instruments. A change in a critical accounting estimate, assumption and/or judgement resulting from new information or from changes in circumstances or experience could
result in the Group incurring losses greater than those anticipated or recognised. This could have an adverse effect on our financial performance, financial condition and reputation.
Our financial performance and financial condition may also be impacted by changes to accounting standards or to generally accepted accounting principles. Critical accounting
estimates and judgements are discussed Note 1.
Rounding of amounts
ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 applies to Westpac and in accordance with that Legislative Instrument all amounts have been
rounded to the nearest million dollars unless otherwise stated.
74WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
DIRECTORS’ REPORT
Auditor’s Independence Declaration
As lead auditor for the review of Westpac Banking Corporation for the half-year ended 31 March 2024, I declare that to the best of my knowledge and belief, there have
been:
(a)no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
(b)no contraventions of any applicable code of professional conduct in relation to the review.
This declaration is in respect of Westpac Banking Corporation and the entities it controlled during the period.
CJ Heath
PartnerSydney
PricewaterhouseCoopers5 May 2024
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
75
Responsibility Statement
The Directors of Westpac Banking Corporation confirm that to the best of their knowledge:
(i)the interim financial statements have been prepared in accordance with AASB 134 Interim Financial Reporting and are in compliance with IAS 34 Interim Financial Reporting
issued by the International Accounting Standards Board; and
(ii)the Directors’ report includes a fair review of the information required by DTR 4.2.7 R of the Disclosure Guidance and Transparency Rules of the United Kingdom Financial
Conduct Authority.
The Directors’ report is signed in accordance with a resolution of the Board of Directors.
Steven GreggPeter King
ChairmanManaging Director and Chief Executive Officer
Sydney, Australia
5 May 2024
76WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
2024 INTERIM
FINANCIAL
REPORT
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Financial statements preparation
Note 2. Segment reporting
Note 3. Net interest income and average balance sheet and interest rates
Note 4. Non-interest income
Note 5. Operating expenses
Note 6. Income tax
Note 7. Earnings per share
Note 8. Loans
Note 9. Provision for expected credit losses
Note 10. Credit quality
Note 11. Deposits and other borrowings
Note 12. Fair values of financial assets and financial liabilities
Note 13. Provisions, contingent liabilities, contingent assets and credit commitments
Note 14. Shareholders’ equity
Note 15. Notes to the consolidated cash flow statement
Note 16. Subsequent events
STATUTORY STATEMENTS
Directors’ declaration
Independent auditor's review report to the members of Westpac Banking Corporation
77
CONSOLIDATED INCOME STATEMENT
Westpac Banking Corporation and its controlled entities
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24 Mar 24
$m
Note 2024 2023 2023 - Sept 23 - Mar 23
Interest income:
Calculated using the effective interest method325,85823,23619,2791134
Other3686677560123
Total interest income26,54423,91319,8391134
Interest expense
3(17,417)(14,709)(10,726)1862
Net interest income
9,1279,2049,113(1)-
Non-interest income
Net fees
484281882732
Net wealth management
42182153471(37)
Trading436333038710(6)
Other
44075329(47)(88)
Total non-interest income1,4631,4381,8902(23)
Net operating income
10,59010,64211,003-(4)
Operating expenses
5(5,395)(5,704)(4,988)(5)8
Impairment (charges)/benefits
9(362)(258)(390)40(7)
Profit before income tax expense
4,8334,6805,6253(14)
Income tax expense
6(1,491)(1,484)(1,620)-(8)
Profit after income tax expense
3,3423,1964,0055(17)
Net profit attributable to non-controlling interests (NCI)
-(2)(4)(100)(100)
Net profit attributable to owners of Westpac Banking Corporation (WBC)
3,3423,194 4,001 5(16)
Earnings per share (cents)
Basic
7 95.691.1 114.2 5(16)
Diluted
7 91.687.6 107.7 5(15)
The above consolidated income statement should be read in conjunction with the accompanying notes.
78WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
Westpac Banking Corporation and its controlled entities
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24 Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Profit after income tax expense3,3423,1964,0055(17)
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or loss
Gains/(losses) recognised in equity on:
Debt securities measured at fair value through other comprehensive income (FVOCI)
(31)(199) (2) (84)large
Cash flow hedging instruments
452(1,024) 389 large16
Transferred to income statement:
Debt securities measured at FVOCI
1(60) (65) largelarge
Cash flow hedging instruments
20(24) (285) largelarge
Loss allowance on debt securities measured at FVOCI1-1--
Exchange differences on translation of foreign operations (net of associated hedges)
(162)(11) 378 largelarge
Income tax on items taken to or transferred from equity:
Debt securities measured at FVOCI
1277 21 (84)(43)
Cash flow hedging instruments(147)315(32)largelarge
Items that will not be reclassified subsequently to profit or loss
Gains/(losses) on equity securities measured at FVOCI (net of tax)
1615 (25) 7large
Own credit adjustment on financial liabilities designated at fair value (net of tax)
(17)(64) 43 (73)large
Remeasurement of defined benefit obligation recognised in equity (net of tax)
(55)76 (181) large(70)
Net other comprehensive income/(expense) (net of tax)
90(899) 242 large(63)
Total comprehensive income
3,4322,297 4,247 49(19)
Attributable to:
Owners of WBC
3,4332,293 4,243 50(19)
NCI
(1)4 4 largelarge
Total comprehensive income
3,4322,297 4,247 49(19)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
79
CONSOLIDATED BALANCE SHEET
Westpac Banking Corporation and its controlled entities
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24 Mar 24
$m
Note 2024 2023 2023 - Sept 23 - Mar 23
Assets
Cash and balances with central banks
95,907102,522 117,886 (6)(19)
Collateral paid
4,6714,535 4,093 314
Trading securities and financial assets measured at fair value through income statement (FVIS)
33,94330,507 30,474 1111
Derivative financial instruments
15,79521,343 20,346 (26)(22)
Investment securities
90,58775,326 73,552 2023
Loans
8 784,839773,254 749,931 15
Other financial assets
11,2666,219 7,343 8153
Property and equipment
2,1792,245 2,415 (3)(10)
Tax assets
1,9992,100 1,728 (5)16
Intangible assets
10,70810,886 10,724 (2)-
Other assets
767837 616 (8)25
Total assets
1,052,6611,029,774 1,019,108 23
Liabilities
Collateral received
2,5343,525 3,577 (28)(29)
Deposits and other borrowings
11 702,226688,168 676,352 24
Other financial liabilities
54,39244,870 60,102 21(10)
Derivative financial instruments
18,41724,647 20,791 (25)(11)
Debt issues
159,781156,573 148,952 27
Tax liabilities
459780 363 (41)26
Provisions
13 2,4142,777 2,424 (13)-
Other liabilities
2,5982,719 2,854 (4)(9)
Total liabilities excluding loan capital
942,821924,059 915,415 23
Loan capital
37,28033,176 31,025 1220
Total liabilities
980,101957,235 946,440 24
Net assets
72,56072,539 72,668 --
Shareholders’ equity
Share capital:
Ordinary share capital
14 38,94439,826 39,824 (2)(2)
Treasury shares
14 (758)(702) (702) 88
Reserves
14 2,1571,935 2,816 11(23)
Retained profits
32,17931,436 30,686 25
Total equity attributable to owners of WBC72,52272,49572,624--
NCI384444(14)(14)
Total shareholders’ equity and NCI72,56072,53972,668--
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
80WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Westpac Banking Corporation and its controlled entities
Total
equityTotal
Shareattributableshareholders’
capitalReservesRetainedto ownersequity and
$m
(Note 14) (Note 14) profits of WBC NCI NCI
Balance as at 30 September 2022
39,011 2,378 29,063 70,452 57 70,509
Profit after income tax expense
- - 4,0014,001 4 4,005
Net other comprehensive income/(expense)
- 380 (138)242 - 242
Total comprehensive income/(expense)
- 380 3,863 4,243 4 4,247
Transactions in capacity as equity holders
Dividends on ordinary shares
a
- - (2,240) (2,240) - (2,240)
Dividend reinvestment plan190--190-190
Other equity movements:
Share-based payment arrangements
- 58 - 58 - 58
Purchase of shares
(32) - - (32) - (32)
Net acquisition of treasury shares
(47) - - (47) - (47)
Other
- - - - (17) (17)
Total contributions and distributions
111 58 (2,240) (2,071) (17) (2,088)
Balance as at 31 March 2023
39,122 2,816 30,686 72,624 44 72,668
Profit after income tax expense
- - 3,1943,194 2 3,196
Net other comprehensive income/(expense)
- (913)12(901)2(899)
Total comprehensive income/(expense)
- (913)3,2062,29342,297
Transactions in capacity as equity holders
Dividends on ordinary shares
a
- -(2,456)(2,456)-(2,456)
Dividend reinvestment plan2--2-2
Other equity movements:
Share-based payment arrangements
- 32-32-32
Other
- - - - (4) (4)
Total contributions and distributions
2 32 (2,456) (2,422) (4) (2,426)
Balance as at 30 September 2023
39,124 1,935 31,436 72,495 44 72,539
Profit after income tax expense
- - 3,3423,342-3,342
Net other comprehensive income/(expense)
- 163(72)91(1)90
Total comprehensive income/(expense)
- 163 3,270 3,433 (1) 3,432
Transactions in capacity as equity holders:
Dividends on ordinary shares
a
- - (2,527) (2,527) - (2,527)
Share buyback
b
(849)--(849)-(849)
Other equity movements:
Share-based payment arrangements
- 59 - 59 - 59
Purchase of shares
(33) - - (33) - (33)
Net acquisition of treasury shares
(56) - - (56) - (56)
Other
- - - - (5) (5)
Total contributions and distributions
(938) 59 (2,527) (3,406) (5) (3,411)
Balance as at 31 March 2024
38,186 2,157 32,179 72,522 38 72,560
a.First Half 2024 related to the 2023 final dividend of 72 cents per share ($2,527 million) (Second Half 2023: 2023 interim dividend of 70 cents per share ($2,456 million), First Half 2023: 2022 final dividend of 64 cents
per share ($2,240 million)), all fully franked at 30%.
b.On 6 November 2023, the Group announced its intention to undertake a $1.5 billion on-market buyback of WBC ordinary shares. The Group commenced the buyback in late-November 2023 and has bought back and
cancelled 34,442,450 ordinary shares ($849 million) at an average price of $24.65 in First Half 2024.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
81
CONSOLIDATED CASH FLOW STATEMENT
Westpac Banking Corporation and its controlled entities
Half YearHalf YearHalf Year% Mov’t
MarchSeptMarchMar 24 Mar 24
$m
Note 2024 2023 2023 - Sept 23 - Mar 23
Cash flows from operating activities
Interest received
25,66623,15218,8181136
Interest paid
(16,543)(13,563)(9,091)2282
Non-interest income received
1,9371,5012,06729(6)
Operating expenses paid
(4,949)(5,420)(4,436)(9)12
Income tax paid
(1,812)(1,075)(1,364)6933
Cash flows from operating activities before changes in operating assets and liabilities
4,2994,5955,994(6)(28)
Net (increase)/decrease in:
Collateral paid
(215)(353)1,898(39)large
Trading securities and financial assets measured at FVIS
(3,464)443(4,967)large(30)
Derivative financial instruments
3134,247(165)(93)large
Loans
(12,737)(22,196)(5,074)(43)151
Other financial assets
(339)276(148)large129
Other assets
4(18)26large(85)
Net increase/(decrease) in:
Collateral received
(971)(107)(2,781)large(65)
Deposits and other borrowings
15,48211,22813,4643815
Other financial liabilities
3,758(16,818)(328)largelarge
Other liabilities
(5)(8)(4)(38)25
Net cash provided by/(used in) operating activities
15 6,125(18,711)7,915large(23)
Cash flows from investing activities
Proceeds from investment securities
19,64516,181 20,299 21(3)
Purchase of investment securities
(32,371)(18,134) (15,619) 79107
Proceeds from disposal of controlled entities and other businesses, net of cash disposed15--293-(100)
Purchase of associates-(1)-(100)-
Proceeds from disposal of property and equipment
665 7 (91)(14)
Purchase of property and equipment
(90)(135) (103) (33)(13)
Purchase of intangible assets
(329)(546) (595) (40)(45)
Net cash provided by/(used in) investing activities
(13,139)(2,570) 4,282 largelarge
Cash flows from financing activities
Proceeds from debt issues (net of issue costs)
33,38329,149 41,825 15(20)
Redemption of debt issues
(32,618)(23,607) (38,989) 38(16)
Payments for the principal portion of lease liabilities(208)(196)(205)61
Issue of loan capital (net of issue costs)
3,5863,453 - 4-
Redemption of loan capital
(12)(886) (285) (99)(96)
Payment for on-market share buyback(849)----
Purchase of shares relating to share-based payment arrangements(33)-(32)-3
Purchase of treasury shares (including RSP and EIP restricted shares)
(56)- (47) -19
Payment of dividends
(2,527)(2,454) (2,050) 323
Dividends paid to NCI(5)(4)(17)25(71)
Net cash provided by/(used in) financing activities
6615,455 200 (88)large
Net increase/(decrease) in cash and balances with central banks
(6,353)(15,826) 12,397 (60)large
Effect of exchange rate changes on cash and balances with central banks
(262)462 232 largelarge
Cash and balances with central banks as at beginning of the period
102,522117,886 105,257 (13)(3)
Cash and balances with central banks as at end of the period
95,907102,522 117,886 (6)(19)
The above consolidated cash flow statement should be read in conjunction with the accompanying notes.
82WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Financial statements preparation
This general purpose Interim Financial Report for the half year ended 31 March 2024 has been prepared in accordance with Australian Accounting Standard AASB 134 Interim
Financial Reporting and the Corporations Act 2001 (Cth) and is also compliant with International Accounting Standard IAS 34 Interim Financial Reporting.
The Interim Financial Report does not include all the notes of the type normally included in an Annual Financial Report. Accordingly, this Interim Financial Report is to be read in
conjunction with the Annual Financial Report for the year ended 30 September 2023 and any relevant public announcements made by Westpac during the interim reporting period in
accordance with the continuous disclosure requirements of the Corporations Act 2001 (Cth) and the ASX Listing Rules.
The Interim Financial Report complies with current Australian Accounting Standards (AAS) as they relate to Interim Financial reports.
The Interim Financial Report was authorised for issue by the Board of Directors on 5 May 2024.
All amounts have been rounded in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, to the nearest million dollars, unless
otherwise stated.
Accounting policies
The accounting policies adopted in the preparation of this Interim Financial Report are consistent with those in the Annual Financial Report for the year ended 30 September 2023.
Critical accounting assumptions and estimates
In preparing the Interim Financial Report, the application of the Group’s accounting policies requires the use of judgement, assumptions and estimates.
The areas of judgement, assumptions and estimates in the Interim Financial Report, including the key sources of estimation uncertainty, are consistent with those in the Annual
Financial Report for the year ended 30 September 2023. Details on specific judgements in relation to the calculation of provision for ECL including overlays are included in Note 9.
Amendments to Accounting Standards effective this period
No new accounting standards have been adopted by the Group for the half year ended 31 March 2024. There have been no amendments to existing accounting standards that have
had a material impact to the Group.
Future developments in accounting standards
There are no new standards or amendments to existing standards that are not yet effective that are expected to have a material impact on the Group.
Comparative revisions
Comparative information has been revised where appropriate to conform to changes in presentation in the current period and to enhance comparability.
83
Note 2. Segment reporting
Operating segments are presented on a basis consistent with information provided internally to Westpac’s key decision makers and reflect the management of the business, rather
than the legal structure of the Group.
The statutory amount of the net operating income and operating expenses segment line items are separated to show the balances excluding Notable Items and the total Notable
Items for each of these categories. This is consistent with the information provided internally to Westpac’s key decision makers.
Notable Items are items that management believes are not reflective of the Group’s ongoing business performance and are grouped into the following broad categories:
●Unrealised fair value gains and losses on economic hedges that do not qualify for hedge accounting
●Net ineffectiveness on qualifying hedges
●Large items that are not reflective of the Group’s ordinary operations. In individual reporting periods large items may include:
Provisions for remediation, litigation, fines and penalties
The impact of asset sales and revaluations
The write-down of assets (including goodwill and capitalised software)
Restructuring costs
Changes in presentation
During First Half 2024, the Group established a new operating segment called Business and Wealth and dissolved the Specialist Business Division (SBD). The remaining operating
businesses of SBD, which included the Platforms business, Pacific Banking, Margin lending and some residual unsold auto finance loans have been aggregated into the Business
and Wealth segment. The past contribution from SBD’s sold businesses were aggregated with Group Businesses.
In addition, we have made some changes to enhance performance reporting and assessment:
●Funds transfer pricing: The methodology by which the costs of wholesale funding and liquidity are allocated to segments have been refined.
●Capital allocations: We have revised capital allocations to align to the Basel III framework adopted by the Group in January 2023.
●Expense allocations: We have refined the allocation of expenses to segments which has in some cases changed the relative allocation between segments.
These changes have been reflected in segment reporting so that the information presented aligns with information reported internally to the Group’s key decision makers.
Comparatives have been restated to align with the current period presentation.
Reportable operating segments
We are one of Australia’s leading providers of banking and selected financial services, operating under multiple brands, and predominantly in Australia and New Zealand, with a
small presence in Europe, North America and Asia. We operate through a significant online capability supported by an extensive branch and ATM network, call centres and specialist
relationship and product managers. Our operations comprise the following key segments:
●Consumer provides a full range of banking products and services to customers in Australia through three lines of business consisting of mortgages, consumer finance and cash
and transactional banking.
●Business and Wealth comprises Business Banking, generally up to $200 million in exposure, Wealth Management, Private Wealth, Westpac Pacific and auto finance.
●Westpac Institutional Bank (WIB) delivers a broad range of financial products and services to corporate, institutional and government customers.
●Westpac New Zealand provides banking, and wealth products and services for consumer, business and institutional customers in New Zealand.
●Group Businesses includes support functions such as Treasury, Customer & Corporate Services, Technology, Finance, Human Resources, Legal and other Enterprise Services.
It also includes Group-wide elimination entries arising on consolidation, centrally raised provisions and other unallocated revenue and expenses.
84WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Segment reporting (Continued)
The tables present the segment results for the Group:
WestpacWestpacNotable
Business andInstitutionalNewGroupItemsIncome
$m
Consumer Wealth Bank Zealand (A$) Businesses Total (pre-tax) statement
Half Year March 2024
Net interest income
3,771 2,616 1,090 1,1717039,351(224) 9,127
Net fee income
253 185 335 86(17)842- 842
Net wealth management income-189-1910218-218
Trading income-30313202365(2)363
Other income2518(3)1840-40
Notable Items---(6)(220)(226)226-
Net operating income
4,026 3,025 1,756 1,28749610,590- 10,590
Operating expenses
a
(2,330)(1,302)(698)(646)(419)(5,395)-(5,395)
Notable Items--------
Total operating expenses(2,330)(1,302)(698)(646)(419)(5,395)-(5,395)
Pre-provision profit1,6961,7231,058641775,195-5,195
Impairment (charges)/benefits
(144)(95)(101)(22)-(362)-(362)
Profit before income tax expense
1,552 1,628 957 619774,833- 4,833
Income tax (expense)/benefit
b
(470)(485)(268)(174)(94)(1,491)-(1,491)
Net profit attributable to NCI
- - - ---- -
Net profit attributable to owners of WBC
1,082 1,143 689 445(17)3,342- 3,342
Notable Items (post-tax)
b
---(4)(160)(164)
Balance sheet
Loans502,35496,92392,98392,586(7)784,839
Deposits and other borrowings321,255140,634115,29674,79250,249702,226
a.Impairment of assets (including goodwill and other intangible assets) were insignificant for all segments except for Consumer: $50 million.
b.The tax impact of Notable Items was a reduction to income tax (expense)/benefit of $62 million.
85
Note 2. Segment reporting (Continued)
WestpacWestpac NewNotable
Business andInstitutionalZealandGroupItemsIncome
$m
Consumer Wealth Bank (A$) Businesses Total (pre-tax) statement
Half Year Sept 2023
Net interest income
3,866 2,573 1,019 1,1715839,212(8) 9,204
Net fee income
239 188 301 94(4)818- 818
Net wealth management income-195-1713225(10)215
Trading income-2631715(17)341(11)330
Other income12645(2)1475-75
Notable Items-(88)--59(29)29-
Net operating income
4,117 2,900 1,682 1,29564810,642- 10,642
Operating expenses
a
(2,307) (1,301) (679) (613)(344)(5,244)(460) (5,704)
Notable Items(202)(64)(15)(9)(170)(460)460-
Total operating expenses(2,509)(1,365)(694)(622)(514)(5,704)-(5,704)
Pre-provision profit1,6081,5359886731344,938-4,938
Impairment (charges)/benefits
(13)(172)(91)18-(258)-(258)
Profit before income tax expense
1,595 1,363 897 6911344,680- 4,680
Income tax (expense)/benefit
b
(484) (409) (256) (196)(139)(1,484)- (1,484)
Net profit attributable to NCI
-(1)--(1)(2)-(2)
Net profit attributable to owners of WBC
1,111 953 641 495(6)3,194- 3,194
Notable Items (post-tax)
b
(148)(107)(10)(7)(79)(351)
Balance sheet
Loans492,71695,54892,56892,488(66)773,254
Deposits and other borrowings308,342140,536116,05276,54446,694688,168
a.Impairment of assets (including goodwill and other intangible assets) were insignificant for all segments except for the following:
-Consumer: $3 million;
-Group Businesses: $35 million.
b.The tax impact of Notable Items was a reduction to income tax (expense)/benefit of $138 million.
86WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Segment reporting (Continued)
WestpacWestpacNotable
Business andInstitutionalNewGroupItemsIncome
$m
Consumer Wealth Bank Zealand (A$) Businesses Total (pre-tax) statement
Half Year March 2023
Net interest income
4,311 2,419 907 1,1464199,202(89) 9,113
Net fee income
265 172 295 8312827- 827
Net wealth management income-230-16101347-347
Trading income-2137518(5)409(22)387
Other income8634(1)3986243329
Notable Items----132132(132)-
Net operating income
4,584 2,848 1,611 1,26269811,003- 11,003
Operating expenses
(2,145)(1,244)(619)(573)(407)(4,988)-(4,988)
Notable Items--------
Total operating expenses(2,145)(1,244)(619)(573)(407)(4,988)-(4,988)
Pre-provision profit2,4391,6049926892916,015-6,015
Impairment (charges)/benefits
(166)(85)4(142)(1)(390)-(390)
Profit before income tax expense
2,273 1,519 996 5472905,625- 5,625
Income tax (expense)/benefit
a
(682)(442)(287)(154)(55)(1,620)-(1,620)
Net profit attributable to NCI
- (4) - --(4)- (4)
Net profit attributable to owners of WBC
1,591 1,073 709 3932354,001- 4,001
Notable Items (post-tax)
a
----178178
Balance sheet
Loans479,75093,66584,69791,943(124)749,931
Deposits and other borrowings293,508142,773113,45377,32149,297676,352
a.The tax impact of Notable Items was a reduction to income tax (expense)/benefit of $46 million.
Half Year Half Year Half Year % Mov’t
MarchSeptMarchMar 24 Mar 24
$m202420232023- Sept 23 - Mar 23
Notable Items after tax
Economic hedges
(163)29(121)large35
Hedge ineffectiveness(1)2343largelarge
Provisions for remediation, litigation, fines and penalties
-(176)-(100)-
Asset sales and revaluations
--256-(100)
The write-down of assets
-(87)-(100)-
Restructuring costs-(140)-(100)-
Total Notable Items after tax
(164)(351)178(53)large
87
Note 3. Net interest income and average balance sheet and interest rates
Net interest income
1
Half Year Half Year Half Year % Mov’t
MarchSeptMarchMar 24 Mar 24
$m202420232023- Sept 23 - Mar 23
Interest income
Calculated using the effective interest method
Cash and balances with central banks
2,293 2,471 1,806 (7)27
Collateral paid
362 312 269 1635
Investment securities
1,595 1,119 918 4374
Loans
21,598 19,306 16,276 1233
Other financial assets
10 28 10 (64)-
Total interest income calculated using the effective interest method25,85823,23619,2791134
Other
Net ineffectiveness on qualifying hedges
(1) 32 62 largelarge
Trading securities and financial assets measured at FVIS
687 645 498 738
Total other
686 677 560 123
Total interest income
26,544 23,913 19,839 1134
Interest expense
Calculated using the effective interest method
Collateral received
(176) (185) (142) (5)24
Deposits and other borrowings
(10,285) (8,842) (6,151) 1667
Debt issues
(2,989) (2,399) (2,268) 2532
Loan capital
(905) (828) (620) 946
Other financial liabilities
(269) (282) (234) (5)15
Total interest expense calculated using the effective interest method
(14,624) (12,536) (9,415) 1755
Other
Deposits and other borrowings
(1,219) (1,124) (801) 852
Trading liabilities
a
(1,277) (465) (188) 175large
Debt issues
(83) (378) (116) (78)(28)
Bank levy
(172) (168) (164) 25
Other interest expense(42)(38)(42)11-
Total other
(2,793) (2,173) (1,311) 29113
Total interest expense
(17,417) (14,709) (10,726) 1862
Net interest income
9,127 9,204 9,113 (1)-
a.Includes net impact of Treasury balance sheet management activities.
1.Included items relating to remediation costs recognised as a $2 million addition to net interest income
(Second Half 2023: $66 million reduction, First Half 2023: $9 million addition). Refer to Note 13 for further details.
88WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Net interest income and average balance sheet and interest rates (Continued)
Average balance sheet and interest rates
Half Year March 2024Half Year Sept 2023Half Year March 2023
Average Average Average Average Average Average
balanceInterestratebalanceInterestratebalanceInterestrate
$m$m%$m$m%$m$m%
Assets
Interest earning assets
Loans
726,66921,5985.9709,75619,3065.4699,73516,2764.7
Housing497,46113,8195.6488,55112,1865.0481,53810,1744.2
Personal12,0855749.512,6285488.713,4855568.3
Business217,1237,2056.6208,5776,5726.3204,7125,5465.4
Trading securities and financial assets measured at FVIS
31,0906874.431,1226454.129,0444983.4
Investment securities
88,9411,5953.673,7451,1193.076,0159182.4
Other interest earning assets
a
119,0852,6644.5133,8822,8434.2129,4142,1473.3
Total interest earning assets and interest income
965,78526,5445.5948,50523,9135.0934,20819,8394.3
Non-interest earning assets
Derivative financial instruments
16,947 21,566 25,290
All other assets
66,205 58,433 58,425
Total non-interest earning assets
83,152 79,999 83,715
Total assets
1,048,937 1,028,504 1,017,923
Liabilities
Interest bearing liabilities
Deposits and other borrowings
b
566,292 11,5044.1 551,676 9,966 3.6 537,110 6,9522.6
Certificates of deposit49,9311,2174.950,3141,1224.445,4477993.5
Transactions
b
114,4352,0293.5113,4101,8053.2117,9781,4232.4
Savings
b
220,0753,7873.4212,2813,2693.1206,0422,0972.0
Term181,8514,4714.9175,6713,7704.3167,6432,6333.1
Repurchase agreements
29,739 4393.0 38,003 328 1.7 41,310 2281.1
Loan capital
39,140 9054.6 35,115 828 4.7 33,649 6203.7
Other interest bearing liabilities
c
183,086 4,5695.0 178,463 3,587 4.0 174,925 2,9263.4
Total interest bearing liabilities and interest expense
b
818,257 17,4174.3 803,257 14,709 3.7 786,994 10,7262.7
Non-interest bearing liabilities
Deposits and other borrowings
b
132,454 130,232 131,113
Derivative financial instruments
22,208 22,960 29,765
All other liabilities
4,134 503 (943)
Total non-interest bearing liabilities
b
158,796 153,695 159,935
Total liabilities
977,053 956,952 946,929
Shareholders’ equity
71,841 71,509 70,947
NCI
43 43 47
Total equity
71,884 71,552 70,994
Total liabilities and equity1,048,9371,028,5041,017,923
Loans
Australia
627,150 18,3815.9 611,790 16,373 5.3 602,493 13,7914.6
New Zealand
93,435 3,0166.5 91,507 2,724 5.9 90,605 2,3045.1
Other overseas
6,084 2016.6 6,459 209 6.5 6,637 1815.5
Deposits and other borrowings
Australia
b
479,854 9,3443.9 466,499 7,997 3.4 453,962 5,5472.5
New Zealand
66,025 1,6144.9 64,641 1,447 4.5 63,422 1,0173.2
Other overseas
20,413 5465.3 20,536 522 5.1 19,726 3883.9
a.Interest income includes net ineffectiveness on qualifying hedges.
b.Comparatives have been revised to conform with current period presentation.
c.Includes net impact of Treasury balance sheet management activities and the bank levy.
89
Note 4. Non-interest income
1
Half YearHalf YearHalf Year % Mov’t
MarchSeptMarchMar 24 Mar 24
$m202420232023- Sept 23 - Mar 23
Net fees
Facility fees
376 359338 511
Transaction fees
562 557589 1(5)
Other non-risk fee income
77 8668 (10)13
Fee income
1,015 1,002995 12
Credit card loyalty programs
(72) (72)(81) -(11)
Transaction fee related expenses
(101) (112)(87) (10)16
Fee expenses
(173) (184)(168) (6)3
Net fees
842 818827 32
Net wealth management
218 215 347 1(37)
Trading
363 330 387 10(6)
Other
Dividends received from other entities
1 1 - --
Net gain/(loss) on disposal of assets
(3) - - --
Net gain/(loss) on derivatives held for risk management purposes
a
5 1 - large-
Net gain/(loss) on financial instruments measured at fair value
18 49 29 (63)(38)
Net gain/(loss) on disposal of controlled entities and other businesses
b
--268-(100)
Other
19 24 32 (21)(41)
Total other
40 75 329 (47)(88)
Total non-interest income
1,463 1,438 1,890 2(23)
a.Income from derivatives held for risk management purposes reflects the impact of economic hedges of earnings.
b.First Half 2023 included a profit on sale of $243 million for AAML.
1.Included items relating to remediation costs recognised as a $5 million reduction to non-interest income
(Second Half 2023: $60 million reduction, First Half 2023: $8 million addition). Refer to Note 13 for further details.
90WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Operating expenses
1
Half YearHalf YearHalf Year % Mov’t
MarchSeptMarchMar 24 Mar 24
$m202420232023- Sept 23 - Mar 23
Staff
Employee remuneration, entitlements and on-costs
2,567 2,7092,545(5)1
Superannuation
282 251270124
Share-based payments
45 4644(2)2
Restructuring costs
37 20033(82)12
Total staff
2,931 3,2062,892(9)1
Occupancy
Operating lease rentals
65 7281(10)(20)
Depreciation and impairment of property and equipment
a
223 247227(10)(2)
Other
64 9564(33)—
Total occupancy
352 414372(15)(5)
Technology
Amortisation and impairment of software assets
a
461 3792502284
Depreciation and impairment of IT equipment
70 7458(5)21
Technology services
411 399352317
Software maintenance and licences
350 3072961418
Telecommunications
43 5359(19)(27)
Data processing
38 36396(3)
Total technology
1,373 1,2481,0541030
Other
Professional and processing services
384 447413(14)(7)
Postage and stationery
61 7267(15)(9)
Advertising
85 9079(6)8
Non-lending losses
42 641(34)large
Amortisation and impairment of other intangible assets and deferred expenditure
a
3311largelarge
Other expenses
134 162109(17)23
Total other
739 836670(12)10
Total operating expenses
5,395 5,7044,988(5)8
a.Impairment expenses included:
●$32 million (Second Half 2023: nil, First Half 2023: nil) for other intangible assets;
●$19 million (Second Half 2023: $8 million, First Half 2023: nil) for computer software; and
●$2 million (Second Half 2023: $31 million, First Half 2023: nil) for property and equipment.
1.Included items relating to remediation costs recognised as a $10 million addition to operating expenses
(Second Half 2023: $13 million addition, First Half 2023: $6 million reduction). Refer to Note 13 for further details.
91
Note 6. Income tax
The following table reconciles income tax expense to the profit before income tax:
Half Year Half Year Half Year % Mov’t
MarchSeptMarchMar 24 Mar 24
$m202420232023- Sept 23 - Mar 23
Profit before income tax
4,8334,6805,6253(14)
Tax at the Australian company tax rate of 30%
1,4501,4041,6883(14)
The effect of amounts which are not deductible / (assessable) in calculating taxable income:
Hybrid capital distributions
686354826
Dividend adjustments
-3-(100)-
Other non-assessable items
(3)(8)(1)(63)200
Other non-deductible items
103910(74)-
Adjustment for overseas tax rates
(16)(9)(16)78-
Income tax (over)/under provided in prior periods
(1)7-large-
Other items
a
(17)(15)(115)13(85)
Total income tax expense
b
1,4911,4841,620-(8)
Effective income tax rate
30.85%31.71%28.80%(86 bps)205 bps
a.First Half 2023 included $86 million related to tax losses on sale of AAML.
b.As the bank levy is not a levy on income, it is not included in income tax. It is included in interest expense in Note 3.
Note 7. Earnings per share
Basic earnings per share (EPS) is calculated by dividing the net profit attributable to owners of WBC (adjusted for RSP divdends) by the weighted average number of ordinary
shares on issue during the period, adjusted for treasury shares. Diluted EPS is calculated by adjusting the basic EPS by assuming all dilutive potential ordinary shares are
converted.
Half Year March 2024 Half Year Sept 2023 Half Year March 2023
Basic Diluted Basic Diluted Basic Diluted
Net profit attributable to owners of WBC ($m)
3,342 3,342 3,194 3,194 4,001 4,001
Adjustment for RSP dividends
a
(2) - (3) (3) (2) -
Adjustment for potential dilution:
Distributions to convertible loan capital holders
b
- 235 - 213 - 186
Adjusted net profit attributable to owners of WBC
3,3403,5773,1913,4043,9994,187
Weighted average number of ordinary shares (# m)
Weighted average number of ordinary shares on issue
3,4993,4993,5093,5093,5063,506
Treasury shares (including RSP share rights)
a
(5)(5)(5)(5)(5)(5)
Adjustment for potential dilution:
Share-based payments
-3-1-3
Convertible loan capital
b
-408-380-384
Adjusted weighted average number of ordinary shares
3,4943,9053,5043,8853,5013,888
Earnings per ordinary share (cents)
95.691.691.187.6114.2107.7
a.Some shares under the RSP and EIP restricted shares have not vested and are not outstanding ordinary shares but do receive dividends. These RSP and EIP dividends are deducted to show the profit attributable to
ordinary shareholders. Shares under RSP and EIP were dilutive in First Half 2024 (Second Half 2023: antidilutive, First Half 2023: dilutive).
b.The Group has issued convertible loan capital which may convert into ordinary shares in the future. These convertible loan capital instruments are potentially dilutive instruments, and diluted EPS is therefore
calculated as if the instruments had been converted at the beginning of the respective period or, if later, the instruments’ issue date.
92WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 8. Loans
As at As at As at % Mov’t
31 March30 Sept31 MarchMar 24 Mar 24
$m202420232023- Sept 23 - Mar 23
Australia
Housing
495,058 485,474472,57025
Personal
10,863 11,28912,028(4)(10)
Business
183,883 181,509169,89118
Total Australia
689,804 678,272654,48925
New Zealand
Housing
61,859 61,23561,08111
Personal
1,081 1,0831,116-(3)
Business
30,428 31,00830,668(2)(1)
Total New Zealand
93,368 93,32692,865-1
Total other overseas
6,249 6,0897,0473(11)
Gross loans
789,421 777,687754,40125
Provision for ECL on loans (Note 9)(4,582)(4,433)(4,470)33
Total loans
a,b
784,839 773,254 749,931 15
a.Includes securitised loans of $5,821 million as at 31 March 2024 (30 September 2023: $3,949 million, 31 March 2023: $4,019 million). The level of securitised loans excludes loans where Westpac is the holder of
related debt securities.
b.Includes assets pledged for the covered bond programs of $43,779 million as at 31 March 2024 (30 September 2023: $43,029 million, 31 March 2023: $40,483 million).
Note 9. Provision for expected credit losses
Loans and credit commitments
The following table shows the provision for ECL on loans and credit commitments by stage:
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24 Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Performing - Stage 1
712 706 891 1(20)
Performing - Stage 2
2,713 2,808 2,628 (3)3
Non-performing - Stage 3
1,696 1,416 1,393 2022
Total provision for ECL on loans and credit commitments
5,121 4,930 4,912 44
Presented as:
Provision for ECL on loans (Note 8)
4,582 4,433 4,470 33
Provision for ECL on credit commitments (Note 13)
539 497 442 822
Total provision for ECL on loans and credit commitments
5,121 4,930 4,912 44
Of which:
Individually assessed provisions
461 351 382 3121
Collectively assessed provisions
4,660 4,579 4,530 23
Total provision for ECL on loans and credit commitments
5,121 4,930 4,912 44
Gross loans and credit commitments999,705983,838962,80424
Coverage ratio on loans (%)0.580.570.591 bps(1 bps)
Coverage ratio on loans and credit commitments (%)0.510.500.511 bps-
Movement in provision for ECL on loans and credit commitments
The reconciliation of the provision for ECL tables for loans and credit commitments has been determined by an aggregation of monthly movements over the year. The key line items
in the reconciliation represent the following:
●“Transfers between stages” lines represent transfers between Stage 1, Stage 2 and Stage 3 prior to remeasurement of the provision for ECL;
93
Note 9. Provision for expected credit losses (Continued)
●“Business activity during the period” line represents new accounts originated during the period net of those that were de-recognised due to final repayments during the period;
●“Net remeasurement of provision for ECL” line represents the impact on the provision for ECL due to changes in credit quality during the year (including transfers between
stages), changes in portfolio overlays, changes due to forward-looking economic scenarios and partial repayments and additional draw-downs on existing facilities during the
period; and
●“Write-offs” represent a reduction in the provision for ECL as a result of de-recognition of exposures where there is no reasonable expectation of full recovery.
ConsolidatedPerformingNon-performing
$m
Stage 1 Stage 2Stage 3 Total
Balance as at 30 September 20228852,3411,3994,625
Transfers to Stage 1694(619)(75)-
Transfers to Stage 2(159)408(249)-
Transfers to Stage 3(4)(247)251-
Business activity during the period13654(136)54
Net remeasurement of provision for ECL(670)677456463
Write-offs--(271)(271)
Exchange rate and other adjustments9141841
Balance as at 31 March 20238912,6281,3934,912
Transfers to Stage 1981(927)(54)-
Transfers to Stage 2(481)711(230)-
Transfers to Stage 3(4)(249)253-
Business activity during the period13386(160)59
Net remeasurement of provision for ECL(809)562509262
Write-offs--(330)(330)
Exchange rate and other adjustments(5)(3)3527
Balance as at 30 September 20237062,8081,4164,930
Transfers to Stage 11,471(1,434)(37)-
Transfers to Stage 2(615)835(220)-
Transfers to Stage 3(6)(320)326-
Business activity during the period147210(165)192
Net remeasurement of provision for ECL(989)618629258
Write-offs--(277)(277)
Exchange rate and other adjustments(2)(4)2418
Balance as at 31 March 20247122,7131,6965,121
The following table provides further details of the provision for ECL on loans and credit commitments by class and stage:
PerformingNon-performing
$mStage 1Stage 2Stage 3Total
Housing
1711,1234541,748
Personal
91268127486
Business
6291,2378122,678
Balance as at 31 March 2023
8912,6281,3934,912
Housing
158 1,052 513 1,723
Personal
82 225 98 405
Business
466 1,531 805 2,802
Balance as at 30 September 2023
706 2,808 1,416 4,930
Housing
1639266331,722
Personal
83252105440
Business
4661,5359582,959
Balance as at 31 March 2024
7122,7131,6965,121
94WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 9. Provision for expected credit losses (Continued)
Impact of overlays on the provision for ECL on loans and credit commitments
The following table attributes the provision for ECL on loans and credit commitments between modelled ECL and portfolio overlays.
Portfolio overlays are used to capture areas of potential risk and uncertainty in the portfolio, that are not captured in the underlying modelled ECL.
As atAs atAs at
31 March30 Sept31 March
$m
2024 2023 2023
Modelled provision for ECL on loans and credit commitments
4,8614,4984,192
Overlays
260432720
Total provision for ECL on loans and credit commitments5,1214,9304,912
Details of changes related to forward-looking economic inputs and portfolio overlays, based on reasonable and supportable information up to the date of this Interim Financial
Report, are provided below.
Modelled provision for ECL on loans and credit commitments
The modelled provision for ECL on loans and credit commitments is a probability weighted estimate based on three scenarios which together represent the Group’s view of the
forward-looking distribution of potential loss outcomes. Changes in the modelled provision for ECL are reflected through the “net remeasurement of provision for ECL” line item.
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 the following Westpac Economics forecasts:
Key economic
assumptions for base
case scenario 31 March 2024 30 September 2023 31 March 2023
Annual GDP:
AustraliaForecast growth of 1.6% for calendar year 2024 and
2.5% for calendar year 2025
Forecast growth of 1.2% for calendar year 2023 and
1.6% for calendar year 2024
Forecast growth of 1.0% for calendar year 2023 and
1.5% for calendar year 2024
New ZealandForecast growth of 0.8% for calendar year 2024 and
2.4% for calendar year 2025
Forecast growth of 0.8% for calendar year 2023 and
0.2% for calendar year 2024
Forecast growth of 0.4% for calendar year 2023 and
contraction of 0.3% for calendar year 2024
Commercial property index,
Australia
Forecast price contraction of 8.0% for calendar year
2024 and growth of 1.4% for calendar year 2025
Forecast price contraction of 15.0% for calendar year
2023 and 0.5% for calendar year 2024
Forecast price contraction of 9.4% for calendar year
2023 and growth of 1.4% for calendar year 2024
Residential property prices:
AustraliaForecast price growth of 6.0% for calendar year 2024
and 4.0% for calendar year 2025
Forecast price growth of 5.8% for calendar year 2023
and 4.0% for calendar year 2024
Forecast price contraction of 7.8% for calendar year
2023 and growth of 2.0% for calendar year 2024
New ZealandForecast price growth of 5.9% for calendar year 2024
and 6.7% for calendar year 2025
Forecast price contraction of 1.0% for calendar year
2023 and growth 7.7% for calendar year 2024
Forecast price contraction of 9.0% for calendar year
2023 and growth of 1.0% for calendar year 2024
Cash rate, AustraliaForecast cash rate of 3.85% at December 2024 and
3.10% at December 2025
Forecast cash rate of 4.1% at December 2023 and
3.6% at December 2024
Forecast cash rate of 3.85% at December 2023 and
2.85% at December 2024
Unemployment rate:
AustraliaForecast rate of 4.5% at December 2024 and 4.6% at
December 2025
Forecast rate of 3.9% at December 2023 and 4.7% at
December 2024
Forecast rate of 4.7% at December 2023 and 5.1% at
December 2024
New ZealandForecast rate of 5.1% at December 2024 and 5.2% at
December 2025
Forecast rate of 4.3% at December 2023 and 5.2% at
December 2024
Forecast rate of 4.0% at December 2023 and 5.1% at
December 2024
The downside scenario is a more severe scenario with expected credit losses higher than the base case. This scenario assumes a recession with a combination of negative GDP
growth, declines in commercial and residential property prices and an increase in the unemployment rate, which simultaneously impact expected credit losses across all portfolios
from the reporting date. The assumptions used 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 on loans and credit commitments based on the probability weighted scenarios and what the provision for ECL on
loans and credit commitments would be assuming a 100% weighting to the base case scenario and to the downside scenario (with all other assumptions held constant).
95
Note 9. Provision for expected credit losses (Continued)
As atAs atAs at
31 March30 Sept31 March
$m
2024 2023 2023
Reported probability-weighted ECL
5,1214,9304,912
100% base case ECL
3,7373,4093,391
100% downside ECL
7,0476,8496,836
If 1% of Stage 1 loans and credit commitments (calculated on a 12 month ECL) were transferred to Stage 2 (calculated on a lifetime ECL), the provision for ECL on loans and credit
commitments would increase by $89 million (30 September 2023: $78 million, 31 March 2023: $95 million) for the Group. This estimate applies the average modelled provision
coverage ratio by stage to the transfer of loans and credit commitments.
The following table discloses the economic weights applied by the Group at 31 March 2024, 30 September 2023 and 31 March 2023. In March 2024, the downside scenario weight
was reduced by 2.5% and base case weight increased by the same value, reflecting a modest reduction in broader macroeconomic uncertainty:
As atAs atAs at
31 March30 Sept31 March
Scenario weightings (%)
2024 2023 2023
Upside
5.0 5.0 5.0
Base
52.5 50.0 50.0
Downside
42.5 45.0 45.0
The Group’s definition of default is aligned to APRA’s regulatory definition of default, which is contained in Prudential Standard APS 220 Credit Risk Management.
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.
The Group’s total overlays as at 31 March 2024 were $260 million (30 September 2023: $432 million; 31 March 2023: $720 million) and comprise:
●$159 million to capture potential high consumer stress from higher interest rates, inflation and other risks (30 September 2023: $302 million; 31 March 2023: $489 million);
●$31 million relating to certain industries reflecting potential labour shortages and inflationary concerns (30 September 2023: $60 million; 31 March 2023: $100 million); and
●$70 million for the expected impact of extreme weather events on customers (30 September 2023: $70 million; 31 March 2023: $131 million).
Changes in portfolio overlays are reflected through the “net remeasurement of provision for ECL” line item.
Total provision for ECL
As at As at As at
31 March30 Sept31 March
$m202420232023
Provision for ECL on loans and credit commitments
5,121 4,930 4,912
Provision for ECL on debt securities at amortised cost
a
8 6 6
Provision for ECL on debt securities at FVOCI
b
6 5 5
Total provision for ECL
5,135 4,941 4,923
a.Provision for ECL on debt securities at amortised cost is presented as part of investment securities.
b.Provision for ECL on debt securities at FVOCI forms part of equity reserves.
96WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 9. Provision for expected credit losses (Continued)
Reconciliation of impairment charges
Half YearHalf YearHalf Year
MarchSeptMarch
$m
202420232023
Loans and credit commitments:
Business activity during the period1925954
Net remeasurement of the provision for ECL258262463
Impairment charges for debt securities at amortised cost1--
Impairment charges for debt securities at FVOCI1-1
Recoveries(90)(63)(128)
Impairment charges/(benefits)362258390
Note 10. Credit quality
Credit risk ratings system
The principal objective of the credit risk rating system is to reliably assess the credit risk to which the Group is exposed. The Group has two main approaches to this assessment.
Transaction-managed customers
Transaction-managed customers are generally customers with business lending exposures. They are individually assigned a Customer Risk Grade (CRG), corresponding to their
expected probability of default (PD). Each facility is assigned a loss given default (LGD). The 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 Ratings, and S&P Global Ratings (S&P) external senior unsecured ratings.
The table below shows Westpac’s high level CRGs for transaction-managed portfolios mapped to the Group’s credit quality disclosure categories and to their corresponding external
rating.
Transaction-managed
Financial statement disclosure
Westpac CRG Moody’s Rating S&P Rating
Strong
A Aaa – Aa3 AAA – AA–
B A1 – A3 A+ – A–
C Baa1 – Baa3 BBB+ – BBB–
Good/satisfactory
D Ba1 – B1 BB+ – B+
Westpac Rating
Weak
E Watchlist
F Special Mention
G Substandard/Default
H Doubtful/Default
97
Note 10. Credit quality (Continued)
Program-managed portfolio
The program-managed portfolio generally includes retail products such as mortgages, personal lending (including credit cards) as well as certain small to medium sized enterprise
lending. These credit exposures are grouped into pools of similar risk based on the analysis of characteristics that have historically predicted the likelihood of default, and a PD is
assigned relative to the credit exposure’s pool. The exposure is then assigned to strong, satisfactory or weak by benchmarking that PD against transaction-managed exposures,
which are in turn mapped to external ratings per the above table. In addition, any program-managed exposures that are one or more days past due are classified as weak.
The following table shows the credit quality of loans and undrawn credit commitments
1
.
As at 31 March 2024As at 30 September 2023As at 31 March 2023
$m
Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Loans - housing
Strong
299,27426,816-326,090 291,914 27,447 - 319,361 284,57830,261-314,839
Good/satisfactory
160,28647,093-207,379 156,836 48,929 - 205,765 155,22844,137-199,365
Weak
2,16815,2036,42323,794 2,533 14,178 5,237 21,948 2,37513,0214,42119,817
Total loans - housing
461,72889,1126,423557,263 451,283 90,554 5,237 547,074 442,18187,4194,421534,021
Loans - personal
Strong
4,216100-4,316 4,318 95 - 4,413 4,347117-4,464
Good/satisfactory
5,642882-6,524 6,097 802 - 6,899 6,552911-7,463
Weak
2536611971,111 252 623 192 1,067 2737112401,224
Total loans - personal
10,1111,64319711,951 10,667 1,520 192 12,379 11,1721,73924013,151
Loans - business
Strong
72,54121,771-94,312 80,177 13,564 - 93,741 74,62610,691-85,317
Good/satisfactory
66,21550,872-117,087 63,434 52,477 - 115,911 83,62930,206-113,835
Weak
1875,4543,1678,808 200 5,468 2,914 8,582 1964,7093,1728,077
Total loans - business
138,94378,0973,167220,207 143,811 71,509 2,914 218,234 158,45145,6063,172207,229
Undrawn credit commitments
Strong
135,66316,733-152,396 137,275 11,169 - 148,444 140,5749,038-149,612
Good/satisfactory
40,62214,848-55,470 40,482 15,142 - 55,624 47,8429,191-57,033
Weak
2211,7674302,418 214 1,503 366 2,083 2511,1103971,758
Total undrawn credit commitments
176,50633,348430210,284 177,971 27,814 366 206,151 188,66719,339397208,403
Total strong
511,69465,420-577,114 513,684 52,275 - 565,959 504,12550,107-554,232
Total good/ satisfactory
272,765113,695-386,460 266,849 117,350 - 384,199 293,25184,445-377,696
Total weak
2,82923,08510,21736,131 3,199 21,772 8,709 33,680 3,09519,5518,23030,876
Total loans and undrawn credit
commitments
787,288202,20010,217999,705 783,732 191,397 8,709 983,838 800,471154,1038,230962,804
1.In 2024, the Group revised the methodology that it uses to classify program-managed exposures as strong, satisfactory, or weak in order to better align the mapping of program-
managed exposures to transaction-managed exposures. This is a change in disclosure methodology only and does not represent a change in underlying credit quality of the
Group’s credit exposures, or a change in ECL. Comparatives have been revised accordingly.
98WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Deposits and other borrowings
As at As at As at % Mov’t
31 March30 Sept31 MarchMar 24Mar 24
$m202420232023- Sept 23- Mar 23
Australia
Certificates of deposit
35,727 32,947 32,227 811
Non-interest bearing, repayable at call
a
121,245 120,338 114,134 16
Other interest bearing - transactions
a
98,65397,95098,7621-
Other interest bearing - savings
a
202,480 195,273 191,490 46
Other interest bearing term
148,110 144,220 140,704 35
Total Australia
606,215 590,728 577,317 35
New Zealand
Certificates of deposit
2,414 2,247 2,618 7(8)
Non-interest bearing, repayable at call
10,568 11,183 12,251 (5)(14)
Other interest bearing - transactions8,9408,7299,4502(5)
Other interest bearing - savings
18,273 18,558 18,945 (2)(4)
Other interest bearing term
34,597 35,827 34,057 (3)2
Total New Zealand
74,792 76,544 77,321 (2)(3)
Other overseas
Certificates of deposit
13,139 12,023 13,922 9(6)
Non-interest bearing, repayable at call
1,323 1,358 1,340 (3)(1)
Other interest bearing - transactions8497891,0328(18)
Other interest bearing - savings
990 1,003 1,015 (1)(2)
Other interest bearing term
4,918 5,723 4,405 (14)12
Total other overseas
21,219 20,896 21,714 2(2)
Total deposits and other borrowings
702,226 688,168 676,352 24
a.Comparatives have been revised to align with current period presentation.
Note 12. Fair values of financial assets and financial liabilities
Fair Valuation Control Framework
The 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 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 Group categorises all fair value instruments according to the hierarchy described below.
Valuation techniques
The Group applies market accepted valuation techniques in determining the fair valuation of over the counter (OTC) derivatives. This includes CVA and FVA, which incorporate credit
risk and funding costs and benefits that arise in relation to uncollateralised derivative positions, respectively.
The specific valuation techniques, the observability of the inputs used in valuation models and the subsequent classification for each significant product category are outlined as
follows:
99
Note 12. Fair values of financial assets and financial liabilities (Continued)
Level 1 instruments (Level 1)
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.
Instrument Balance sheet category Includes Valuation
Exchange traded productsDerivativesExchange traded interest rate futures and options
and commodity and carbon futures
All these instruments are traded in liquid, active markets where
prices are readily observable. No modelling or assumptions are
used in the valuation.
FX productsDerivativesFX spot and futures contracts
Equity productsDerivatives
Trading securities and financial assets
measured at FVIS
Other financial liabilities
Listed equities and equity indices
Debt instrumentsTrading securities and financial assets
measured at FVIS
Investment securities
Other financial liabilities
Australian Commonwealth and New Zealand
government bonds
100WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Fair values of financial assets and financial liabilities (Continued)
Level 2 instruments (Level 2)
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.
Instrument Balance sheet category Includes Valuation
Interest rate productsDerivativesInterest rate and inflation swaps, swaptions,
caps, floors, collars and other non-vanilla
interest rate derivatives
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 and active 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 productsDerivativesFX swaps, FX forward contracts, FX options
and other non-vanilla FX derivatives
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.
Other credit productsDerivativesSingle name and index credit default swapsValued using an industry standard model that incorporates the credit
spread as its principal input. Credit spreads are obtained from
consensus data providers. If consensus prices are not available,
these are classified as Level 3 instruments.
Commodity productsDerivativesCommodity and carbon derivativesValued using industry standard models.
The models calculate the expected future value of deliveries and
payments and discount them back to a present value. The model
inputs include forward curves, volatilities implied from market
observable inputs, discount curves and underlying spot and futures
prices. The significant inputs are market observable or available
through a consensus data service. If consensus prices are not
available, these are classified as Level 3 instruments.
Equity productsDerivativesExchange traded equity options, OTC equity
options and equity warrants
Due to low liquidity, exchange traded options are Level 2.
Valued using industry standard models based on observable
parameters such as stock prices, dividends, volatilities and interest
rates.
Asset backed debt instrumentsTrading securities and financial assets
measured at FVIS
Investment securities
Australian residential mortgage backed
securities (RMBS) and other asset backed
securities (ABS)
Valued using an industry approach to value floating rate debt with
prepayment features. Australian RMBS are valued using prices
sourced from a consensus data provider. If consensus prices are not
available, these are classified as Level 3 instruments.
Non-asset backed debt instrumentsTrading securities and financial assets
measured at FVIS
Investment securities
Other financial liabilities
State and other government bonds, corporate
bonds and commercial paper
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
prices are not available from these sources, these are classified as
Level 3 instruments.
Loans at fair valueLoansFixed rate bills and syndicated loansDiscounted cash flow approach, using a discount rate which reflects
the terms of the instrument and the timing of cash flows, adjusted for
creditworthiness, or expected sale amount.
Certificates of depositDeposits and other borrowingsCertificates of depositDiscounted cash flow using market rates offered for deposits of
similar remaining maturities.
Debt issues at fair valueDebt issuesDebt issuesDiscounted 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 Westpac’s implied credit worthiness.
101
Note 12. Fair values of financial assets and financial liabilities (Continued)
Level 3 instruments (Level 3)
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.
Instrument Balance sheet category Includes Valuation
Debt instrumentsTrading securities and financial assets
measured at FVIS
Investment securities
Certain debt securities with low observability,
usually issued via private placement
These securities are evaluated by an independent pricing service or
based on third party revaluations. Due to their illiquidity and/or
complexity these are classified as Level 3 assets.
Equity instrumentsTrading securities and financial assets
measured at FVIS
Investment securities
Strategic equity investmentsValued using valuation techniques appropriate to the instrument,
including the use of recent arm’s length transactions where
available, discounted cash flow approach or reference to the net
assets of the entity.
Due to their illiquidity, complexity and/or use of unobservable inputs
into valuation models, they are classified as Level 3 assets.
102WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Fair values of financial assets and financial liabilities (Continued)
The following tables summarise the attribution of financial instruments measured at fair value to the fair value hierarchy.
$m
Level 1
Level 2
Level 3
Total
As at 31 March 2024
Financial assets measured at fair value on a recurring basis
Trading securities and financial assets measured at FVIS5,06928,866833,943
Derivative financial instruments2415,7482315,795
Investment securities5,03083,89746089,387
Loans--1414
Total financial assets measured at fair value on a recurring basis10,123128,511505139,139
Financial liabilities measured at fair value on a recurring basis
Deposits and other borrowings-51,273-51,273
Other financial liabilities2,04018,236-20,276
Derivative financial instruments1118,3129418,417
Debt issues-3,406-3,406
Total financial liabilities measured at fair value on a recurring basis2,05191,2279493,372
As at 30 September 2023
Financial assets measured at fair value on a recurring basis
Trading securities and financial assets measured at FVIS4,46826,0122730,507
Derivative financial instruments2721,2902621,343
Investment securities5,62067,83344173,894
Loans-41519
Total financial assets measured at fair value on a recurring basis10,115115,139509125,763
Financial liabilities measured at fair value on a recurring basis
Deposits and other borrowings-47,220-47,220
Other financial liabilities1,71410,255-11,969
Derivative financial instruments2824,6041524,647
Debt issues-3,222-3,222
Total financial liabilities measured at fair value on a recurring basis1,74285,3011587,058
As at 31 March 2023
Financial assets measured at fair value on a recurring basis
Trading securities and financial assets measured at FVIS10,88519,5781130,474
Derivative financial instruments1720,3171220,346
Investment securities2,90569,15041472,469
Loans-10624130
Total financial assets measured at fair value on a recurring basis13,807109,151461123,419
Financial liabilities measured at fair value on a recurring basis
Deposits and other borrowings-48,769-48,769
Other financial liabilities1,36110,088-11,449
Derivative financial instruments1220,7255420,791
Debt issues-5,655-5,655
Total financial liabilities measured at fair value on a recurring basis1,37385,2375486,664
103
Note 12. Fair values of financial assets and financial liabilities (Continued)
Reconciliation of non-market observables
The following table summarises the changes in financial instruments measured at fair value derived from non-market observable valuation techniques (Level 3).
Half Year March 2024
Trading
securities and
financial
assetsInvestmentDerivative andTotal Level 3DerivativeTotal Level 3
$m
measured at FVIS Securities other assets assets liabilities liabilities
Balance as at beginning of period27441415091515
Gains/(losses) on assets / (gains)/losses on liabilities recognised in:
Income statement(1)-(56)(57)4646
Other comprehensive income-11-11--
Acquisitions and issues713134154206206
Disposals and settlements(7)(6)(82)(95)(173)(173)
Transfer into or out of non-market observables(18)--(18)--
Foreign currency translation impacts-1-1--
Balance as at end of period8460375059494
Unrealised gains/(losses) recognised in the income statement for financial instrument held as
at end of period--2121(86)(86)
Transfers into and out of Level 3 have occurred due to changes in observability in the significant inputs into the valuation models used to determine the fair value of the related
financial instruments. Transfers in and transfers out are reported using the end of period fair values.
Significant unobservable inputs
Sensitivities to reasonably possible changes in non-market observable valuation assumptions would not have a material impact on the Group’s reported results.
Day one profit or loss
The closing balance of unrecognised day one profit was nil as at 31 March 2024 (30 September 2023: nil, 31 March 2023: nil).
104WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Fair values of financial assets and financial liabilities (Continued)
Financial instruments not measured at fair value
The following table summarises the estimated fair value of financial instruments not measured at fair value for the Group.
As at 31 March 2024As at 30 Sept 2023As at 31 March 2023
$m
Carrying amount Fair value Carrying amount Fair value Carrying amountFair value
Financial assets not measured at fair value
Cash and balances with central banks95,90795,907 102,522 102,522 117,886117,886
Collateral paid4,6714,671 4,535 4,535 4,0934,093
Investment securities1,2001,2001,4321,4321,0831,083
Loans784,825782,246 773,235 768,890 749,801744,302
Other financial assets11,26611,2666,2196,2197,3437,343
Total financial assets not measured at fair value897,869895,290 887,943 883,598 880,206874,707
Financial liabilities not measured at fair value
Collateral received2,5342,534 3,525 3,525 3,5773,577
Deposits and other borrowings650,953651,550 640,948 641,330 627,583627,823
Other financial liabilities34,11634,116 32,901 32,901 48,65348,653
Debt issues
a
156,375156,705 153,351 153,129 143,297142,666
Loan capital
a
37,28038,54433,17633,51231,02530,688
Total financial liabilities not measured at fair value881,258883,449 863,901 864,397 854,135853,407
a.The estimated fair values of debt issues and loan capital include the impact of changes in Westpac’s credit spreads since origination.
A detailed description of how fair value is derived for financial instruments not measured at fair value is disclosed in Note 22 of the 2023 Annual Report.
Note 13. Provisions, contingent liabilities, contingent assets and credit commitments
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. Provisions raised by the Group are set out in the table in the “Provisions” section below. Where it is not probable there will be an outflow of economic resources or
where a liability cannot be reliably estimated a contingent liability may exist.
Provisions
As at 31 March 2024
Litigation,
Annual leaveProvision fornon-lending
Longand otherimpairmentLeaseRestructuringlosses and
serviceemployeeon creditrestorationand otherremediation
$m
leave benefits commitments obligations provisions provisions Total
Balance as at beginning of period4649334971833423582,777
Additions425495428457788
Utilisation(23)(829)-(11)(109)(96)(1,068)
Reversal of unutilised provisions-(2)(12)-(47)(22)(83)
Balance as at end of period4836515391742702972,414
Litigation, non-lending losses and remediation provisions
As at 31 March 2024, provisions for the Half Year 2024 include estimates of:
●Customer refunds associated with matters of potential historical misconduct;
●Costs of completing remediation programs; and
●Potential non-lending losses and costs connected with certain litigation and regulatory investigations.
105
Note 13. Provisions, contingent liabilities, contingent assets and credit commitments (Continued)
It is possible that the final outcome could be below or above the provision, if the actual outcome differs 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.
Certain litigation
As at 31 March 2024, the Group held provisions in respect of potential non-lending losses and costs connected with certain litigation, including:
●Civil penalty proceedings commenced by ASIC against Westpac on 4 September 2023, alleging contraventions under the National Credit Code (Credit Code) and National
Consumer Credit Protection Act 2009 (Cth). The proceedings relate to system and operational failures and allege that Westpac did not respond to 288 online hardship
applications between 2015 and 2023 within the time-frames required under the Credit Code. Westpac self-reported the incidents to ASIC and is finalising the remediation of
impacted customers. ASIC also alleges that Westpac failed to do all things necessary to ensure that credit activities were engaged in efficiently, honestly and fairly. A hearing will
be fixed for a date after 1 October 2024; and
●A class action commenced against Westpac and St.George Finance Limited (SGF) on 15 July 2020, in the Supreme Court of Victoria in relation to flex commissions paid to auto
dealers from 1 March 2013 to 31 October 2018. It is alleged that Westpac and SGF are liable for the unfair conduct of dealers acting as credit representatives and engaged in
misleading or deceptive conduct. This proceeding is one of three class actions commenced against lenders in the auto finance industry. The three proceedings have been fixed
for a joint trial commencing 14 October 2024. The damages sought are unspecified. Westpac and SGF are defending the proceedings. Westpac no longer pays flex commissions
following an industry wide ban issued by ASIC on 1 November 2018.
There remains uncertainty as to the expense that may be associated with these matters, including the approach that the relevant counterparty or Courts may take in relation to the
matter, and the Court’s assessment of applicable fines, penalties, loss or damages. It is possible that the actual aggregate expense to Westpac associated with a Court determined
resolution of these matters may be higher or lower than the provision.
Restructuring provisions
The Group carries restructuring provisions for committed business restructures and branch closures. The provisions held primarily relate to separation costs and redundancies.
Lease restoration obligations
The lease restoration provision reflects an estimate of the cost of making good leasehold premises at the end of the Group’s property leases.
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 resource is remote.
Regulatory investigations, reviews and inquiries
Domestic regulators, statutory authorities and other bodies such as ASIC, ACCC, APRA, AUSTRAC, BCCC, AFCA, the OAIC, the ATO and the Fair Work Ombudsman, as well as
certain international regulators and other bodies such as the Reserve Bank of New Zealand, New Zealand Financial Markets Authority and Commerce Commission, BPNG and its
Financial Analysis & Supervision Unit, SEC and FINRA, from time to time conduct investigations, reviews or inquiries (some of which may be industry wide). These activities can
cover a range of matters (including potential contraventions and non-compliance) that involve, or may in the future, involve the Group.
These currently include:
●Engagement with various regulators in relation to RAMS. The engagements include an enforcement investigation by ASIC into RAMS Financial Group Pty Limited (RFG) and
RAMS authorised credit representatives (including RAMS franchisees) in connection with the provision of home loan products from 1 January 2019 to 1 September 2023. The
current focus of ASIC’s investigation is on RFG’s general conduct obligations, prohibitions on conducting business with unlicensed persons, and giving misleading information.
Following review by Westpac and RFG of the RAMS business, RFG has exited a number of franchisees and is considering strategic options in relation to the RAMS business.
Disputes have been raised by franchisees in relation to these actions. We are also responding to enquiries from APRA;
●Enquiries by ASIC into principal, interest and fee repayment calculations in relation to certain business lending products;
●Engagement with the ATO in relation to remediating and uplifting Westpac’s Common Reporting Standard (CRS) reporting. Should Westpac not satisfactorily complete its uplift
activities in the timeframe communicated, the ATO may take enforcement action against Westpac;
106WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Provisions, contingent liabilities, contingent assets and credit commitments (Continued)
●Investigation by the FWO in relation to Westpac’s self-disclosed remediation program regarding employee pay- related entitlements. The FWO has an enforcement policy for
pay-related remediation and may take enforcement action against Westpac in relation to these issues; and
●Regulatory investigations, reviews or inquiries into other areas such as risk governance, AML/CTF Program, including Transaction Monitoring Program and associated processes
and procedures, compliance with industry codes, consumer credit contracts, hardship processes, and design and distribution obligations.
It is uncertain what (if any) actions will result following the conclusion of these investigations or matters. No provisions have yet been made in relation to any financial liability that
might arise, or costs that may be incurred in the event proceedings are pursued in relation to the matters outlined above.
Such investigations, reviews or inquiries, or risk-based decisions taken by Westpac regarding relevant businesses, have previously resulted, and/or may in the future result in
litigation (including class action proceedings and criminal proceedings), significant fines and penalties, infringement notices, enforcement action including enforceable undertakings,
requirement to undertake a review, referral to the relevant Commonwealth or State Director of Public Prosecutions for consideration for criminal prosecution, imposition of capital or
liquidity requirements, licence revocation, suspension or variation, customer remediation or other sanctions or action being taken by regulators or other parties. Investigations have in
some instances resulted, and could in the future result, in findings of a significant number of breaches of obligations. This in turn could lead to significant financial and other
penalties. Prior penalties and contraventions by Westpac in relation to similar issues can also affect penalties that may be imposed. Reliance on third parties and any contributing
actions of third parties may not mitigate penalties.
Litigation
There are ongoing Court proceedings, claims and possible claims against the Group. Contingent liabilities exist in respect of actual and potential claims and proceedings, including
those listed below.
In addition to the class action litigation noted under Provisions, above:
●On 5 October 2023 a class action was commenced in the Federal Court of Australia against BT Funds Management Limited (BTFM), Westpac Securities Administration Limited
(WSAL) and Westpac Life Insurance Services Limited (now known as TAL Life Insurance Services Limited) (WLIS), a former Group subsidiary. The class action is brought on
behalf of superannuation fund members in the period October 2017 to April 2023 and relates to group insurance policies placed by BTFM and WSAL (as superannuation
trustees) with WLIS. It is alleged that BTFM and WSAL failed to adhere to a number of obligations owed as superannuation trustees (including under the Superannuation
Industry (Supervision) Act 1993 (Cth)), and that WLIS was knowingly concerned with the alleged contraventions. The quantum of the claim is unspecified. The proceedings are
being defended.
●Westpac is defending a class action proceeding which was commenced in December 2019 in the Federal Court of Australia on behalf of certain investors who acquired an
interest in Westpac securities between 16 December 2013 and 19 November 2019. The proceeding involves allegations relating to market disclosure issues connected to
Westpac’s monitoring of financial crime over the relevant period and matters which were the subject of the AUSTRAC civil proceedings. The damages sought on behalf of
members of the class have not yet been specified. However, in the course of a procedural hearing in August 2022, the applicant indicated that a preliminary estimate of the
losses that may be alleged in respect of a subset of potential group members exceeded $1 billion. While it remains unclear how the applicant will ultimately formulate their
estimate of alleged damages claimed on behalf of group members, it is possible that the claim may be higher (or lower) than the amount referred to above. Given the time period
and the nature of the claims alleged to be in question, along with the reduction in our market capitalisation at the time of the commencement of the AUSTRAC civil proceedings,
it is likely that any total alleged damages (when, and if, ultimately articulated by the applicant) will be significant. Westpac continues to deny both that its disclosure was
inappropriate and, as such, that any group member has incurred damage.
107
Note 13. Provisions, contingent liabilities, contingent assets and credit commitments (Continued)
Internal reviews and remediation
As in prior periods, Westpac is continuing to undertake a number of reviews to identify and resolve issues that have the potential to impact our customers, employees, other
stakeholders and reputation. These internal reviews continue to identify issues in respect of which we are taking, or will take, steps to put things right, including so that our customers
and employees (as applicable) are not disadvantaged from certain past practices, including by making compensation/ remediation payments and providing refunds where
appropriate. These issues include, among other things, compliance with lending obligations; sufficiency of training, policies, processes and procedures; AML/CTF Program, including
Transaction Monitoring Program and associated processes and procedures; product disclosure; destruction and retention of personal information; and impacts from inadequate
product governance, including the way some product terms and conditions are operationalised.
By undertaking these reviews, we can also improve our processes and controls, including those of our contractors, agents, and authorised credit representatives. An assessment of
the Group’s likely loss has been made on a case-by-case basis for the purpose of the financial statements but cannot always be reliably estimated. Even where Westpac has
remediated or compensated customers, employees or issues, there can still be the risk of regulators challenging the basis, scope or pace of remediation, taking enforcement action
(including enforceable undertakings and contrition payments), or imposing fines/penalties or other sanctions, including civil or criminal prosecutions. Contingent liabilities may exist in
respect of actual or potential claims or proceedings (which could be brought by customers, employees/ unions, regulators or criminal prosecutors), compensation/remediation
payments and/or refunds identified as part of these reviews.
Contingent levies
The Group is subject to a number of regulatory levies, which may be imposed at the discretion of the relevant regulating body. These include levies that fund the Financial Claims
Scheme and the Compensation Scheme of Last Resort.
Exposures to third parties relating to divested businesses
The Group has potential exposures relating to warranties, indemnities and other commitments it has provided to third parties in connection with various divestments of entities,
businesses and assets. The warranties, indemnities and other commitments cover a range of matters, conduct and risks. We have made payments under these indemnities and are
in discussions with one or more parties in relation to claims made, and potential claims, under these arrangements. Provisions have been raised for matters where a present
obligation exists, and a probable settlement can be reliably estimated.
Contingent tax risk
Tax and regulatory authorities in Australia and in other jurisdictions review, in the normal course of business, the direct and indirect taxation treatment of transactions (both historical
and present-day transactions) undertaken by the Group. The Group also responds to various notices and requests for information it receives from tax and regulatory authorities.
These reviews, notices and requests may result in additional tax liabilities (including interest and penalties).
The Group has assessed these and other taxation matters arising in Australia and elsewhere, including seeking independent advice.
Clearing and settlement obligations
The Group is subject to the rules governing clearing and settlement activities under which loss sharing arrangements may arise. This includes the requirements of central clearing
houses where the Group has made contributions to a default fund. In the event of a default of another clearing member, the Group could be required to make additional default fund
contributions.
Parent entity guarantees and undertakings to subsidiaries
Consistent with 2023, Westpac Banking Corporation, as the parent entity of the Group, makes the following guarantees and undertakings to its subsidiaries:
●Letters of comfort for certain subsidiaries which recognise that Westpac has a responsibility that those subsidiaries continue to meet their obligations; and
●Guarantees to certain wholly owned subsidiaries which are Australian financial services or credit licensees to comply with legislative requirements. All but two guarantees are
capped at $20 million per year (with an automatic reinstatement for another $20 million) and two specific guarantees are capped at $2 million (with an automatic reinstatement for
another $2 million).
Contingent assets
The credit commitments shown in the following table also constitute contingent assets. These commitments would be classified as loans in the balance sheet on the contingent event
occurring.
108WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Provisions, contingent liabilities, contingent assets and credit commitments (Continued)
Undrawn credit commitments
The Group enters into various arrangements with customers which are only recognised in the balance sheet when called upon. These arrangements include commitments to extend
credit, bill endorsements, financial guarantees, standby letters of credit and underwriting facilities.
They expose the 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. Some of the arrangements can be cancelled by the Group at any time and a significant portion is expected to expire
without being drawn. The actual liquidity and credit risk exposure varies in line with amounts drawn and may be less than the amounts disclosed.
The Group uses the same credit policies when entering into these arrangements as it does for on-balance sheet instruments. Refer to Notes 11 and 21 of the 2023 Annual Report for
further details of credit risk and liquidity risk management, respectively.
Undrawn credit commitments excluding derivatives are as follows:
As atAs atAs at% Mov’t
31 March30 Sept31 MarchMar 24Mar 24
$m
2024 2023 2023 - Sept 23 - Mar 23
Undrawn credit commitments
Letters of credit and guarantees
a
12,91812,44711,93648
Commitments to extend credit
b
197,258193,457195,76521
Other108247702(56)(85)
Total undrawn credit commitments210,284206,151208,40321
a.Standby letters of credit 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 Group may hold cash as collateral for certain guarantees issued.
b.Commitments to extend credit include all obligations on the part of the Group to provide credit facilities. As facilities may expire without being drawn upon, the notional amounts do not necessarily reflect future cash
requirements. In addition to the commitments disclosed above, as at 31 March 2024, the Group had $6.8 billion of credit exposures that were offered and accepted but still revocable (30 September 2023: $8.8 billion;
31 March 2023 $7.4 billion). These represent part of Westpac Group’s maximum exposure to credit risk.
109
Note 14. Shareholders’ equity
As atAs atAs at
31 March30 Sept31 March
$m
2024 2023 2023
Share capital
Ordinary share capital, fully paid38,94439,82639,824
Treasury shares
a
(758)(702)(702)
Total share capital38,18639,12439,122
NCI384444
a.31 March 2024: 5,645,501 unvested RSP and EIP treasury shares held (30 September 2023: 5,249,663, 31 March 2023: 5,396,087).
Ordinary Shares
Westpac does not have authorised capital and the ordinary shares have no par value. Ordinary shares entitle the holder to participate in dividends and, in the event of Westpac
winding up, to a share of the proceeds in proportion to the number of and amounts paid on the shares held.
Each ordinary share entitles the holder to one vote, either in person or by proxy, at a shareholder meeting.
Reconciliation of movement in number of ordinary shares
Half YearHalf YearHalf Year
MarchSeptMarch
2024 2023 2023
Balance as at beginning of period3,509,076,9603,509,076,9603,501,127,694
Shares issued from dividend reinvestment plan
a
--7,949,266
Share buyback
b
(34,442,450)--
Balance as at end of period3,474,634,5103,509,076,9603,509,076,960
a.The DRPs for the 2023 interim and final dividends were satisfied with the purchase of existing shares by a third party and therefore does not impact the numbers of shares on issue. For the 2022 final dividend,
participants received shares at an average price per share of $23.86, which increased share capital by $192 million, including related issuance costs of $2 million.
b.On 6 November 2023, the Group announced its intention to undertake a $1.5 billion on-market buyback of WBC ordinary shares. The Group commenced the buyback in late November 2023 and has bought back and
cancelled 34,442,450 ordinary shares ($849 million) at an average price of $24.65 in First Half 2024.
Ordinary shares purchased on market
Half Year March 2024
Average price
Consolidated
Number ($)
For share-based payment arrangements:
Employee share plan (ESP)1,294,80321.05
Restricted Shares
a
2,456,24723.02
Westpac Performance Plan (WPP) - share rights exercised302,11821.75
Westpac Equity Incentive Plan (EIP) - Non-performance share rights exercised83621.47
Net number of ordinary shares purchased on market4,054,00422.30
a.Ordinary shares allocated to employees under the Restricted Share Plan (RSP) and Equity Incentive Plan (EIP) are classified as treasury shares until the shares vest.
110WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 14. Shareholders’ equity (Continued)
Reconciliation of movement in reserves
Half Year Half Year Half Year
MarchSeptMarch
$m2024 2023 2023
Debt securities at FVOCI reserve
Balance as at beginning of period
(165)17 62
Net gains/(losses) from changes in fair value
(34)(200) 13
Income tax effect
1259 -
Transferred to income statement
1(60) (65)
Income tax effect
-18 21
Loss allowance on debt securities measured at FVOCI1-1
Other
31 (15)
Balance as at end of period
(182)(165) 17
Equity securities at FVOCI reserve
Balance as at beginning of period
126111 136
Net gains/(losses) from changes in fair value
1415 (34)
Income tax effect2-9
Balance as at end of period
142126 111
Share-based payment reserve
Balance as at beginning of period
1,9831,951 1,893
Share-based payment expense
5932 58
Balance as at end of period
2,0421,983 1,951
Cash flow hedge reserve
Balance as at beginning of period
152885 813
Net gains/(losses) from changes in fair value
452(1,024) 389
Income tax effect
(140)307 (118)
Transferred to income statement
20(24) (285)
Income tax effect
(7)8 86
Balance as at end of period
477152 885
Foreign currency translation reserve
Balance as at beginning of period
(138)(127) (505)
Exchange differences on translation of foreign operations
(174)(31) 553
Gains/(losses) on net investment hedges
1220 (175)
Balance as at end of period
(300)(138) (127)
Other reserves
Balance as at beginning of period
(23)(21) (21)
Transactions with owners
1(2) -
Balance as at end of period
(22)(23) (21)
Total reserves
2,1571,935 2,816
111
Note 15. Notes to the consolidated cash flow statement
Reconciliation of net cash provided by/(used in) operating activities to profit after income tax expense for the period is set out below:
Half Year Half Year Half Year % Mov’t
MarchSeptMarchMar 24Mar 24
$m2024 2023 2023- Sept 23- Mar 23
Profit after income tax expense3,3423,1964,0055(17)
Adjustments:
Depreciation, amortisation and impairment7877015361247
Impairment charges/(benefits)45232151841(13)
Net decrease/(increase) in current and deferred tax(321)409256largelarge
(Increase)/decrease in accrued interest receivable(287)(172)(558)67(49)
(Decrease)/increase in accrued interest payable5361,0501,350(49)(60)
(Decrease)/increase in provisions(363)353(526)large(31)
Other non-cash items153(1,263)413large(63)
Cash flows from operating activities before changes in operating assets and liabilities4,2994,5955,994(6)(28)
Net (increase)/decrease in:
Collateral paid(215)(353)1,898(39)large
Trading securities and financial assets measured at FVIS(3,464)443(4,967)large(30)
Derivative financial instruments3134,247(165)(93)large
Loans(12,737)(22,196)(5,074)(43)151
Other financial assets(339)276(148)large129
Other assets4(18)26large(85)
Net increase/(decrease) in:
Collateral received(971)(107)(2,781)large(65)
Deposits and other borrowings15,48211,22813,4643815
Other financial liabilities3,758(16,818)(328)largelarge
Other liabilities(5)(8)(4)(38)25
Net cash provided by/(used in) operating activities6,125(18,711)7,915large(23)
112WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 15. Notes to the consolidated cash flow statement (Continued)
Details of the assets and liabilities over which control ceased
Half YearHalf YearHalf Year
MarchSeptMarch
$m
2024 2023 2023
Assets:
Cash and balances with central banks
- - 18
Other financial assets
- - 18
Intangible assets
- - 55
Total assets
- - 91
Liabilities:
Other financial liabilities
- - 22
Provisions
- - 1
Total liabilities
- - 23
Total equity attributable to owners of WBC
- - 68
Cash proceeds received (net of transaction costs)
- - 311
Total consideration
- - 311
Gain/(loss) on disposal
- - 243
Reconciliation of cash proceeds from disposal:
Cash proceeds received (net of transaction costs)
- - 311
Less: Cash deconsolidated
- - (18)
Cash consideration received (net of transaction costs and cash held)
- - 293
Businesses disposed
No businesses were disposed of during First Half 2024 and Second Half 2023.
During First Half 2023, Westpac disposed of its 100% interest in AAML through a sale to Mercer (Australia), and merged its BT personal and corporate superannuation fund with
Mercer Super Trust by way of successor fund transfer.
Non-cash financing activities
Half YearHalf YearHalf Year % Mov’t
MarchSeptMarchMar 24Mar 24
$m202420232023- Sept 23- Mar 23
Shares issued under the dividend reinvestment plan
- 2 190 (100)(100)
Increase in lease liabilities
168 77 158 1186
Restricted cash
Certain of our foreign operations are required to maintain reserves or minimum balances with central banks in their respective countries of operation, totalling $295 million (30
September 2023: $299 million, 31 March 2023: $328 million) which are included in cash and balances with central banks.
113
Note 16. Subsequent events
Since 31 March 2024, the Board has determined to pay a fully franked interim dividend of 75 cents and a 15 cents special dividend per fully paid ordinary share. The ordinary and
special dividend is expected to total to $3,127 million. The dividend is not recognised as a liability at 31 March 2024. The proposed payment date of the dividend is 25 June 2024.
The Board has determined that the DRP will apply to the 2024 interim ordinary dividend and the special dividend and participants' entitlement to shares under the DRP will be
satisfied by arranging for the purchase of shares in the market by a third party. The market price used to determine the number of shares to be provided to DRP participants will be
set over the 20 trading days commencing 15 May 2024 and will not include a discount.
The Board has also determined to extend the share buyback announced in November 2023 by a further $1.0 billion to a total of $2.5 billion.
No other matters have arisen since the half year ended 31 March 2024, which are not otherwise dealt with in this 2024 Interim Financial Report, that have significantly affected or
may significantly affect the operations of the Group, the results of its operations or the state of affairs of the Group in subsequent periods.
114WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
STATUTORY STATEMENTS
Directors’ declaration
In the Directors’ opinion
(i)the interim financial statements and notes set out on pages 76-113 are in accordance with the Corporations Act 2001, including that they:
(a)comply with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
(b)give a true and fair view of the Group’s financial position as at 31 March 2024 and of its performance for the six months ended 31 March 2024; and
(ii)there are reasonable grounds to believe that Westpac will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Directors.
For and on behalf of the Board
Steven Gregg Peter King
Chairman Managing Director and Chief Executive Officer
Sydney, Australia
5 May 2024
115
Independent auditor's review report to the members of Westpac Banking Corporation
Report on the interim financial report
Conclusion
We have reviewed the interim financial report of Westpac Banking Corporation (the Company) and the entities it controlled during the half-year (together the Group), which
comprises the consolidated balance sheet as at 31 March 2024, the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated
cash flow statement and consolidated income statement for the half-year ended on that date, material accounting policy information and selected explanatory notes and the directors'
declaration.
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying interim financial report of Westpac Banking
Corporation does not comply with the Corporations Act 2001 including:
1.giving a true and fair view of the Group's financial position as at 31 March 2024 and of its performance for the half-year ended on that date
2.complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
Basis for conclusion
We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity (ASRE 2410). Our responsibilities are
further described in the Auditor's responsibilities for the review of the interim financial report section of our report.
We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to the audit of the
annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Responsibilities of the directors for the interim financial report
The directors of the Company are responsible for the preparation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards
and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the interim financial report that gives a true and fair
view and is free from material misstatement whether due to fraud or error.
Auditor's responsibilities for the review of the interim financial report
Our responsibility is to express a conclusion on the interim financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter
that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group's financial position as at
31 March 2024 and of its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations
Regulations 2001.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo NSW 2000,
GPO BOX 2650 Sydney NSW 2001
T: 1300 799 615, F: 1300 799 618, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
116WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
STATUTORY STATEMENTS
A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
PricewaterhouseCoopers
CJ HeathSydney
Partner5 May 2024
117
OTHER
INFORMATION
3. OTHER INFORMATION
3.1.Disclosure regarding forward-looking statements
3.2.References to websites and other reports
3.3.Credit ratings
3.4.Dividend reinvestment plan
3.5.Information on related entities
3.6.Financial calendar and Share Registry details
3.7.Exchange Rates
3.8.Net profit contribution of businesses sold
3.9.Additional information for Non-AAS financial measures
GLOSSARY
118WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
3.OTHER INFORMATION
3.1.Disclosure regarding forward-looking statements
This Results Announcement 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 Results Announcement and include
statements regarding our current intent, belief or expectations with respect to our business and operations, macro and micro economic and market conditions, results of operations
and financial condition and performance, 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 sustainability-related statements, commitments, targets, projections and
metrics, and other estimated and proxy data.
Words such as ‘will’, ‘may’, ‘expect’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘estimate’, ‘anticipate’, ‘believe’, ‘probability’, ‘indicative’, ‘risk’, ‘aim’, ‘outlook’,
‘forecast’, ‘assumption’, ‘projection’, ‘target’, ‘goal’, ‘guidance’, ‘ambition’ or other similar words, are used to identify forward-looking statements. These statements reflect our
current views on future events and are subject to change, certain known and unknown risks, uncertainties and assumptions and other factors which are, in many instances, beyond
our control (and the control of our officers, employees, agents, and advisors), and have been made based on management’s current expectations or beliefs concerning future
developments and their potential effect upon Westpac.
Forward-looking statements may also be made, verbally or in writing, by members of Westpac’s management or Board in connection with this Results Announcement. Such
statements are subject to the same limitations, uncertainties, assumptions and disclaimers set out in this document.
There can be no assurance that future developments or performance will align with our expectations or that the effect of future developments on us will be those anticipated. Actual
results could differ materially from those we expect or which are expressed or implied in forward-looking statements, depending on various factors including, but not limited to:
●information security breaches, including cyber attack events
●the effect of, and changes in, laws, regulations, regulatory policy, taxation or accounting standards or practices, and government and central bank monetary policies, including
changes to liquidity, leverage and capital requirements
●regulatory investigations, reviews (including industry reviews) and other actions, inquiries, litigation, fines, penalties, restrictions or other regulator-imposed conditions, including
from our actual or alleged failure to comply with laws, regulations or regulatory policy
●the effectiveness of our risk management practices, including our framework, policies, processes, systems and employees
●the reliability and security of Westpac’s technology and risks associated with changes to technology systems
●geopolitical events or other changes in countries in which Westpac or its customers or counterparties operate
●climate-related risks (including physical and transition risks) that may arise from changing climate patterns, and risks associated with the transition to a lower carbon economy
(including Westpac’s ambition to become a net-zero, climate resilient bank) or other sustainability factors such as human rights and natural capital
●the failure to comply with financial crime obligations (including anti-money laundering and counter-terrorism financing laws, anti-bribery and corruption laws, sanctions laws and
tax transparency laws), which has had, and could further have, adverse effects on our business and reputation
●internal and external events which may adversely impact our reputation
●litigation and other legal proceedings and regulator investigations and enforcement actions (including the liability of Westpac to pay significant monetary settlements and legal
costs in order to resolve a dispute)
●market volatility and disruptions, including uncertain conditions in funding, equity and asset markets and any losses or business impacts we or our customers or counterparties
may experience
●the incidence of inadequate capital levels under stressed conditions
●changes in economic conditions, consumer or business spending, saving and borrowing habits in Australia, New Zealand and other countries in which we or our customers or
counterparties operate and our ability to maintain or to increase market share, margins and fees, and control expenses
●adverse asset, credit or capital market conditions or an increase in defaults, impairments and provisioning because of a deterioration in economic conditions
●sovereign risks, including the risk that governments will default on their debt obligations, fail to perform contractual obligations, or be unable to refinance their debts
●changes to Westpac’s credit ratings or the methodology used by credit rating agencies
●the effects of market competition and competition regulatory policy impacting the areas in which we operate
●operational risks resulting from ineffective processes and controls
●levels of inflation, changes to interest rates, exchange rates and market and monetary fluctuations and volatility
●poor data quality, data availability or data retention
●failure to recruit and retain key executives, employees and Directors
119
3.1.Disclosure regarding forward-looking statements (Continued)
●strategic decisions including diversification, innovation, divestment, acquisitions, expansion activity, integration and decisions to shut down some operations
●changes to our critical accounting estimates and judgements and changes to the value of our intangible assets; and
●various other factors including those beyond Westpac’s control.
The above list is not exhaustive. For certain other factors that may impact on forward-looking statements made by Westpac, refer to Risk factors in this Results Announcement.
When relying on forward-looking statements to make decisions with respect to Westpac, investors and others relying on information in this Results Announcement should carefully
consider the foregoing factors and other uncertainties and events.
Except as required by law, we assume no obligation to revise or update any forward-looking statements in this Results Announcement, whether from new information, future events,
conditions, or otherwise, after the date of this Results Announcement.
Further important information regarding climate change and sustainability-related statements
This Results Announcement contains forward-looking statements and other representations relating to ESG topics, including but not limited to climate change, net zero, climate
resilience, natural capital, emissions intensity, human rights and other sustainability-related statements, commitments, targets, projections, scenarios, risk and opportunity
assessments, pathways, forecasts, estimated projections and other proxy data.
These are subject to known and unknown risks, and there are significant uncertainties, limitations, risks and assumptions in the metrics and modelling on which these statements
rely.
In particular, the metrics, methodologies and data relating to climate and sustainability are rapidly evolving and maturing, including variations in approaches and common standards
in estimating and calculating emissions, and uncertainty around future climate- and sustainability-related policy and legislation. There are inherent limits in the current scientific
understanding of climate change and its impacts. Some material contained in this Results Announcement may include information including, without limitation, methodologies,
modelling, scenarios, reports, benchmarks, tools and data, derived from publicly available or government or industry sources that have not been independently verified. No
representation or warranty is made as to the accuracy, completeness or reliability of such information. There is a risk that the estimates, judgements, assumptions, views, models,
scenarios or projections used by Westpac may turn out to be incorrect. These risks may cause actual outcomes, including the ability to meet commitments and targets, to differ
materially from those expressed or implied in this Results Announcement. The climate- and sustainability-related forward-looking statements made in this Results Announcement are
not guarantees or predictions of future performance and Westpac gives no representation, warranty or assurance (including as to the quality, accuracy or completeness of these
statements), nor guarantee that the occurrence of the events expressed or implied in any forward-looking statement will occur. There are usually differences between forecast and
actual results because events and actual circumstances frequently do not occur as forecast and these differences may be material. Westpac will continue to review and develop its
approach to ESG as this subject area matures.
3.2.References to websites and other reports
Information contained in or accessible through the websites or other reports mentioned in this Results Announcement does not form part of this Results Announcement unless we
specifically state that it is incorporated by reference and forms part of this Results Announcement. All references in this Results Announcement to websites are inactive textual
references and are for information only.
3.3.Credit ratings
1
Rating agency
Short TermLong Term Outlook
Fitch Ratings
F1A+ Stable
Moody’s Ratings
P-1Aa2 Stable
S&P Global Ratings
A-1AA- Stable
1.As at 31 March 2024.
120WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
3.OTHER INFORMATION
3.4.Dividend reinvestment plan
The Board has determined to pay a fully franked 2024 interim ordinary dividend of 75 cents per share. In addition, the Board has determined to pay a fully franked special dividend of
15 cents per share. Both the 2024 interim ordinary dividend and special dividend will be paid on 25 June 2024 to shareholders on the register at the record date of 10 May 2024.
Westpac operates a DRP that is available to holders of fully paid ordinary shares who are resident in, and whose address on the register of shareholders is in Australia or New
Zealand. Shareholders can choose to receive their 2024 interim ordinary and special dividend as cash or reinvest their dividends in additional shares under the DRP. As noted in
Section 1.8, the Board have made certain determinations in relation to the DRP, including that the DRP will apply for the 2024 interim ordinary dividend and the special dividend and
the market price used to determine the number of shares to be provided to DRP participants will be set over the 20 trading days commencing 15 May 2024 and will not include a
discount. These determinations are for the 2024 interim ordinary dividend and special dividend only.
Shareholders who wish to commence participation in the DRP, or to vary their current participation election, must do so by 5.00pm (Sydney time) on 13 May 2024
Shareholders can provide these instructions:
●Online for shareholders with holdings that have a market value of less than $1,000,000 within their Link Market Services portfolio, by logging into or creating a Portfolio via the
Westpac share registry’s website at linkmarketservices.com.au; or
●By completing and returning a DRP application or variation form to Westpac’s share registry. Registry contact details are listed in Section 3.6.
3.5.Information on related entities
a. Changes in control of Group entities
During the six months ended 31 March 2024 the following controlled entities were acquired, formed, or incorporated:
●Series 2024-1 WST Trust (formed 17 October 2023)
During the six months ended 31 March 2024 the following controlled entities ceased to be controlled:
●Westpac Nominees NZ - Limited (deregistered 11 October 2023)
●Westpac Superannuation Nominees - NZ - Limited (deregistered 11 October 2023)
●Aotearoa Financial Services Limited (deregistered 26 October 2023)
●Westpac Investment Vehicle No.2 Pty Limited (deregistered 29 October 2023)
b.Associates
As at 31 March 2024
Ownership Interest Held (%)
Akahu Technologies Ltd
35.03%
OpenAgent Pty Ltd
22.55%
mx51 Group Pty Ltd20.99%
Safe Will Pty Ltd
14.20%
121
3.6.Financial calendar and Share Registry details
Westpac shares are listed on the securities exchanges in Australia (ASX) and New Zealand (NZX). Westpac Capital Notes 5, Westpac Capital Notes 6, Westpac Capital Notes 7,
Westpac Capital Notes 8, Westpac Capital Notes 9 and Westpac Capital Notes 10 are listed on the ASX.
Important dates to note are set out below, subject to change. Payment of any distribution, dividend or interest payment is subject to the relevant payment conditions and the key
dates for each payment will be confirmed to the ASX for securities listed on the ASX.
Westpac Ordinary Shares (ASX code: WBC, NZX code: WBC)
Interim results and dividend announcement
6 May 2024
Ex-dividend date for interim and special dividend9 May 2024
Record date for interim and special dividend10 May 2024
Interim and special dividend payable25 June 2024
Financial Year end30 September 2024
Closing date for receipt of director nominations before Annual General Meeting25 October 2024
Final results and dividend announcement4 November 2024
Ex-dividend date for final dividend7 November 2024
Record date for final dividend8 November 2024
Annual General Meeting13 December 2024
a
Final dividend payable19 December 2024
a.Details regarding the location of the meeting and the business to be dealt with will be contained in a Notice of Meeting sent to shareholders in the November before the meeting.
Westpac Capital Notes 5 (ASX code: WBCPH)
Ex-date for quarterly distribution
13 June 2024
Record date for quarterly distribution14 June 2024
Payment date for quarterly distribution24 June 2024
a
Ex-date for quarterly distribution12 September 2024
Record date for quarterly distribution13 September 2024
b
Payment date for quarterly distribution23 September 2024
a
Ex-date for quarterly distribution12 December 2024
Record date for quarterly distribution13 December 2024
b
Payment date for quarterly distribution23 December 2024
a
a.Adjusted to next business day as payment date falls on a non-ASX business day or a date on which banks are not open for general business in Sydney.
b.Adjusted to immediately preceding business day as record date falls on a non-ASX business day or a date on which banks are not open for general business in Sydney.
122WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
3.OTHER INFORMATION
3.6.Financial calendar and Share Registry details (Continued)
Westpac Capital Notes 6 (ASX code: WBCPI)
Ex-date for quarterly distribution
6 June 2024
Record date for quarterly distribution7 June 2024
a
Payment date for quarterly distribution18 June 2024
Ex-date for quarterly distribution9 September 2024
Record date for quarterly distribution10 September 2024
Payment date for quarterly distribution18 September 2024
Ex-date for quarterly distribution9 December 2024
Record date for quarterly distribution10 December 2024
Payment date for quarterly distribution18 December 2024
a.Adjusted to immediately preceding business day as record date falls on a non-ASX business day or a date on which banks are not open for general business in Sydney.
Westpac Capital Notes 7 (ASX code: WBCPJ)
Ex-date for quarterly distribution
13 June 2024
Record date for quarterly distribution14 June 2024
Payment date for quarterly distribution24 June 2024
a
Ex-date for quarterly distribution12 September 2024
Record date for quarterly distribution13 September 2024
b
Payment date for quarterly distribution23 September 2024
a
Ex-date for quarterly distribution12 December 2024
Record date for quarterly distribution13 December 2024
b
Payment date for quarterly distribution23 December 2024
a
a.Adjusted to next business day as payment date falls on a non-ASX business day or a date on which banks are not open for general business in Sydney.
b.Adjusted to immediately preceding business day as record date falls on a non-ASX business day or a date on which banks are not open for general business in Sydney.
Westpac Capital Notes 8 (ASX code: WBCPK)
Ex-date for quarterly distribution
12 June 2024
Record date for quarterly distribution
13 June 2024
Payment date for quarterly distribution21 June 2024
Ex-date for quarterly distribution12 September 2024
Record date for quarterly distribution13 September 2024
Payment date for quarterly distribution23 September 2024
a
Ex-date for quarterly distribution12 December 2024
Record date for quarterly distribution13 December 2024
Payment date for quarterly distribution23 December 2024
a
a.Adjusted to next business day as payment date falls on a non ASX business day or a date on which banks are not open for general business in Sydney.
123
3.6.Financial calendar and Share Registry details (Continued)
Westpac Capital Notes 9 (ASX code: WBCPL)
Ex-date for quarterly distribution
13 June 2024
Record date for quarterly distribution14 June 2024
Payment date for quarterly distribution24 June 2024
a
Ex-date for quarterly distribution12 September 2024
Record date for quarterly distribution13 September 2024
b
Payment date for quarterly distribution23 September 2024
a
Ex-date for quarterly distribution12 December 2024
Record date for quarterly distribution13 December 2024
b
Payment date for quarterly distribution23 December 2024
a
a.Adjusted to next business day as payment date falls on a non ASX business day or a date on which banks are not open for general business in Sydney.
b.Adjusted to immediately preceding business day as record date falls on a non-ASX business day or a date on which banks are not open for general business in Sydney.
Westpac Capital Notes 10 (ASX code: WBCPM)
Ex-date for quarterly distribution
13 June 2024
Record date for quarterly distribution14 June 2024
Payment date for quarterly distribution24 June 2024
a
Ex-date for quarterly distribution12 September 2024
Record date for quarterly distribution13 September 2024
b
Payment date for quarterly distribution23 September 2024
a
Ex-date for quarterly distribution12 December 2024
Record date for quarterly distribution13 December 2024
b
Payment date for quarterly distribution23 December 2024
a
a.Adjusted to next business day as payment date falls on a non ASX business day or a date on which banks are not open for general business in Sydney.
b.Adjusted to immediately preceding business day as record date falls on a non-ASX business day or a date on which banks are not open for general business in Sydney.
124WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
3.OTHER INFORMATION
3.6.Financial calendar and Share Registry details (Continued)
Registered Office and Contact
Level 18, 275 Kent Street Sydney NSW 2000 Australia
Telephone: +61 2 9155 7713
Fax: +61 2 9055 3575
International Customers: +61 2 9155 7700
Shareholders: +61 1800 804 255
Website: www.westpac.com.au/westpacgroup
Share Registries
AustraliaNew Zealand
Ordinary shares on the main register,
Westpac Capital Notes 5,
Westpac Capital Notes 6,
Westpac Capital Notes 7,
Westpac Capital Notes 8,
Westpac Capital Notes 9, and
Westpac Capital Notes 10.
Ordinary shares on the New Zealand branch register.
Link Market Services Limited
Level 12, 680 George Street
Sydney NSW 2000 Australia
Postal Address: Locked Bag A6015,
Sydney South NSW 1235, Australia
Link Market Services Limited
Level 30, PwC Tower 15 Customs Street
WestAuckland 1010 New Zealand
Postal Address: P.O. Box 91976,
Auckland 1142, New Zealand
Website: www.linkmarketservices.com.au
Email: westpac@linkmarketservices.com.au
Website: www.linkmarketservices.co.nz
Email: enquiries@linkmarketservices.co.nz
Telephone: 1800 804 255 (toll free in Australia)
International: +61 1800 804 255
Facsimile: +61 2 9287 0303
Telephone: 0800 002 727 (toll free in New Zealand)
International: +64 9 375 5998
Facsimile: +64 9 375 5990
125
3.7.Exchange Rates
3.7.1.Exchange rates against A$
Six months to/as at
Half Year March 2024 Half Year Sept 2023 Half Year March 2023
Currency
Average Spot Average Spot Average Spot
US$0.65420.6528 0.66160.6467 0.67080.6709
GBP0.5215 0.51670.5256 0.52840.5615 0.5418
NZ$1.07591.0892 1.08161.0738 1.08761.0678
3.7.2.Impact of exchange rate movements on Group results
Half Year March 2024 vsHalf Year March 2024 vs
Half Year September 2023Half Year March 2023
FX impactGrowthFX impactGrowth
$mGrowth$mex- FXGrowth$mex- FX
Net interest income
(1%) 7 (1%) - 11 -
Non-interest income
2% 1 2%(23%)13 (23%)
Net operating income
(1%) 8 (1%)(4%) 24 (4%)
Operating expenses
(5%) (5) (6%)8% (18) 8%
Pre-provision profit5% 35%(14%) 6(14%)
Impairment (charges)/benefits
40% - 40%(7%) - (7%)
Profit before income tax expense
3% 3 3%(14%) 6 (14%)
Income tax expense
1% (1) -(8%) (2) (8%)
Profit after income tax expense
5% 2 5%(17%) 4 (17%)
Profit attributable to non-controlling interests (NCI)
(100%) - (100%)(100%) - (100%)
Net profit attributable to owners of WBC
5% 2 5%(17%) 4 (17%)
3.7.3.Exchange rate risk on future NZ$ earnings
Westpac’s policy in relation to the hedging of the future earnings of the Group’s New Zealand division is to manage the economic risk for volatility of the NZ$ against A$. Westpac
manages these flows over a time horizon under which up to 100% of the expected earnings for the following twelve months and 50% of the expected earnings for the subsequent
twelve months can be hedged. NZ Future Earnings hedges are only implemented when AUD/NZD is trading at the low end of the range or is expected to move higher over the next
6 months. As at 31 March 2024, Westpac has hedges in place to June 2024 with an average rate of NZ$1.0751.
126WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
3.OTHER INFORMATION
3.8.Net profit contribution of businesses sold
To assist in understanding the contribution of these businesses, the following tables provide the earnings (excluding Notable Items), attributable to the entities sold. Earnings
attributed to each business reflect its contribution up to the sale date, and any other gains/losses on these transactions which were not identified as Notable Items. Balance sheet
data is at completion date. Businesses sold in the 2023 financial year had negligible balance sheet contribution. No businesses were sold in First Half 2024.
Businesses sold
BT PersonalContribution
AdvanceandWestpac Lifeof
Asset Corporate Insurance businesses
$mManagementSuper
a
Ltd.sold
Half Year Sept 2023
Operating expenses
- - 28 28
Income tax expense and NCI
- - (8) (8)
Net profit
- - 20 20
Half Year March 2023
Non-interest income
38 77 25 140
Operating expenses
(8) 26 - 18
Income tax expense and NCI
(9) (31) (7) (47)
Net profit
21 72 18 111
a.Transfer of the members and benefits of BT Funds Management Limited’s personal and corporate (non-platform) superannuation products, via an SFT, to Mercer Super Trust.
3.9.Additional information for Non-AAS financial measures
Calculation of Non-AAS financial measures
Details of the calculation of non-AAS financial measures not disclosed elsewhere are provided below:
Expense to income ratio (excluding Notable Items)
Half Year
Half YearHalf Year
MarchSeptMarch
$m202420232023
Operating expenses
5,395 5,704 4,988
less: Notable Items (operating expenses)
- (460) -
Operating expenses excluding Notable Items
5,395 5,244 4,988
Net operating income
10,590 10,642 11,003
less: Notable Items (net interest income)
224 8 89
less: Notable Items (non-interest income)
2 21 (221)
Net operating income excluding Notable Items
10,816 10,671 10,871
Expense to income ratio (excluding Notable Items)
49.88%49.14%45.88%
127
3.9. Additional information for Non-AAS financial measures (Continued)
Average tangible ordinary equity and Return on average tangible ordinary equity (ROTE)
Half Year
Half Year
Half Year
MarchSeptMarch
$m202420232023
Net profit attributable to owners of WBC (adjusted for RSP shares)
a
3,340 3,191 3,999
Average ordinary equity 71,841 71,509 70,947
less: Intangible assets (average) (10,818) (10,844) (10,483)
add: Computer software (average) 2,730 2,704 2,400
Average tangible ordinary equity 63,753 63,369 62,864
Return on average tangible ordinary equity (ROTE)
b
10.48%10.04%12.76%
a.See Note 7 to the financial statements for calculations of this profit measure.
b.Net profit is annualised before dividing by average tangible ordinary equity.
Net profit attributable to owners of WBC (adjusted for RSP shares) excluding Notable Items
Half Year Half Year Half Year
MarchSeptMarch
$m202420232023
Net profit attributable to owners of WBC (adjusted for RSP shares)
3,340 3,191 3,999
Add/(less): Notable Items (post tax)
164 351 (178)
Net profit attributable to owners of WBC (adjusted for RSP shares) excluding Notable Items
3,504 3,542 3,821
ROE (excluding Notable Items) and ROTE (excluding Notable Items)
Half Year Half Year Half Year
MarchSeptMarch
$m202420232023
Net profit attributable to owners of WBC (adjusted for RSP shares) excluding Notable Items
3,504 3,542 3,821
Average ordinary equity
71,841 71,509 70,947
Average tangible ordinary equity
63,753 63,369 62,864
Return on average ordinary equity (excluding Notable Items)
9.75%9.88%10.80%
Return on average tangible ordinary equity (excluding Notable Items)
10.99%11.15%12.19%
Pre-provision profit
Half Year
Half Year
Half Year
MarchSeptMarch
$m202420232023
Net interest income
9,127 9,204 9,113
Non-interest income
1,463 1,438 1,890
Operating expenses
(5,395) (5,704) (4,988)
Pre-provision profit
5,195 4,938 6,015
128WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
3.OTHER INFORMATION
3.9. Additional information for Non-AAS financial measures (Continued)
Dividend payout ratio (excluding Notable Items)
Half Year
Half Year
Half Year
MarchSeptMarch
$m202420232023
Ordinary dividend paid/declared on issued shares (net of Treasury shares)
2,602 2,523 2,453
divided by: Net profit attributable to owners of WBC (adjusted for RSP shares) excluding Notable Items
3,504 3,542 3,821
Dividend payout ratio (excluding Notable Items)
74.25%71.22%64.19%
Segment pre-provision profit excluding Notable Items
Westpac
BusinessWestpacNew Zealand
$mConsumerand WealthInstitutional Bank(A$)Group BusinessesGroup
Half Year March 2024
Pre-provision profit/(loss)
1,696 1,723 1,058 641 77 5,195
add/(less): Notable Items
- - - 6 220 226
Pre-provision profit/(loss) excluding Notable Items
1,696 1,723 1,058 647 297 5,421
Half Year Sept 2023
Pre-provision profit/(loss)
1,608 1,535 988 673 134 4,938
add/(less): Notable Items
202 152 15 9 111 489
Pre-provision profit/(loss) excluding Notable Items
1,810 1,687 1,003 682 245 5,427
Half Year March 2023
Pre-provision profit/(loss)
2,439 1,604 992 689 291 6,015
add/(less): Notable Items
- - - - (132) (132)
Pre-provision profit/(loss) excluding Notable Items
2,439 1,604 992 689 159 5,883
Earnings per ordinary share (ex Notable Items)
Half Year March 2024 Half Year Sept 2023 Half Year March 2023
BasicDilutedBasicDilutedBasicDiluted
Net profit attributable to owners of WBC (adjusted for RSP shares) ($m)
3,340 3,577 3,191 3,404 3,999 4,187
Add/(less): Notable Items ($m)
164 164 351 351 (178) (178)
Adjusted net profit attributable to owners of WBC (adjusted for RSP shares) (excluding Notable Items) ($m)
3,504 3,741 3,542 3,755 3,821 4,009
Adjusted weighted average number of ordinary shares ($m)
3,494 3,905 3,504 3,885 3,501 3,888
Earnings per ordinary share (excluding Notable Items) (cents)
100.3 95.8 101.1 96.7 109.1 103.1
129
GLOSSARY
Shareholder value
Average ordinary equityAverage total equity less average non-controlling interests.
Average tangible ordinary equityAverage ordinary equity less intangible assets (excluding capitalised software).
Average total equityThe average balance of shareholders’ equity, including non-controlling interests.
Dividend payout ratioOrdinary dividend paid/declared on issued shares (net of Treasury shares) divided by the net profit attributable to owners of WBC.
Earnings per ordinary share●Basic earnings per ordinary share is calculated by dividing the net profit attributable to owners of WBC (adjusted for RSP dividends) by the weighted average
number of ordinary shares on issue during the period, adjusted for treasury shares.
●Diluted earnings per ordinary share is calculated by adjusting the basic earnings per ordinary share by assuming all dilutive potential ordinary shares are
converted.
Fully franked dividends per ordinary shareDividends per share paid out of retained profits which carry a credit for Australian company income tax paid by Westpac.
Net tangible assets per shareNet tangible assets (total equity less goodwill and other intangible assets less minority interests) divided by the number of ordinary shares on issue (less Treasury
shares held).
Pre-provision profitNet interest income plus non-interest income less operating expenses.
Return on average ordinary equity (ROE)Net profit attributable to the owners of WBC adjusted for RSP dividends (annualised where applicable) divided by average ordinary equity.
Return on average tangible ordinary equity
(ROTE)
Net profit attributable to the owners of WBC adjusted for RSP dividends (annualised where applicable) divided by average tangible ordinary equity.
Weighted average ordinary sharesWeighted average number of fully paid ordinary shares listed on the Australian Stock Exchange for the relevant period less Westpac shares held by the Group
(‘Treasury shares’).
Productivity and efficiency
Expense to income ratioOperating expenses divided by net operating income.
Expense to income ratio (ex Notable Items)Operating expenses excluding Notable Items divided by net operating income excluding Notable Items.
Full time equivalent employees (FTE)A calculation based on the number of hours worked by full and part-time employees as part of their normal duties. For example, the full time equivalent of one FTE is
76 hours paid work per fortnight.
Revenue per FTETotal operating income divided by the average number of FTE for the period.
Business Performance
AverageWhere possible, daily balances are used to calculate the average balance for the period.
Average interest bearing liabilitiesThe average balance of liabilities owed by the Group that incur an interest expense. Where possible, daily balances are used to calculate the average balance for the
period.
Average interest earning assetsThe average balance of assets held by the Group that generate interest income. Where possible, daily balances are used to calculate the average balance for the
period.
Core NIMCalculated by dividing net interest income excluding Notable Items and Treasury & Markets (annualised where applicable) by average interest earning assets.
Group NIM/Net interest marginCalculated by dividing net interest income (annualised where applicable) by average interest earning assets.
Net profitNet profit attributable to owners of WBC.
Capital Adequacy
Australian Prudential Regulation Authority (APRA)
leverage ratio
Tier 1 capital divided by ‘exposure measure’ and expressed as a percentage. ‘Exposure measure’ is the sum of on-balance sheet exposures, derivative exposures,
securities financing transaction exposures and other off- balance sheet exposures.
AT1Additional Tier 1 capital
Common equity tier 1 (CET1) capital ratioTotal common equity capital divided by risk weighted assets, as defined by APRA.
Internationally comparable capital ratiosInternationally comparable methodology references the ABA study on the comparability of APRA’s new capital framework and finalised reform released on 10 March
2023.
Risk weighted assets (RWA)Assets (both on and off-balance sheet) are risk weighted according to each asset’s inherent potential for default and what the likely losses would be in case of default.
In the case of non-asset backed risks (i.e. market, IRRBB and operational risk), RWA is determined by multiplying the capital requirements for those risks by 12.5.
Credit risk weighted assets (Credit RWA)Credit risk weighted assets represent risk weighted assets (on-balance sheet and off-balance sheet) that relate to credit exposures and therefore exclude market risk,
operational risk, interest rate risk in the banking book and other assets.
Business lendingIncludes credit exposures not captured elsewhere, and where the borrower’s annual turnover is below $75 million.
CorporateExposures to corporate borrowers that do not fall within the definition of Large Corporate, Property Finance, Specialised Lending, Business Lending or Small Business
exposures.
Financial institutionIncludes exposure to entities whose primary dealings relates to management of financial assets, lending, factoring, leasing provision of credit enhancements,
securitisation, investments, financial custody, central counter party services and proprietary trading.
130WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
GLOSSARY
Capital Adequacy
Large corporateExposures to counter parties with consolidated annual revenue (of the counterparty or group that the counter party consolidates into) exceeding $750 million.
New ZealandOverseas banking subsidiary regulated by the RBNZ.
Property financeExposures to borrowers where repayments depend primarily on the cash flows generated by the property or other real estate assets owned by the borrower.
SecuritisationExposures relating to Westpac’s involvement in securitisation activities range from a seller of its own assets to an investor in third party transactions and include the
provision of securitisation services for its clients.
Small businessProgram-managed business exposures typically below $1.5 million in value. Program-managed exposures are managed on a statistical basis according to pre-
determined objective criteria.
SovereignExposures to Australian and overseas central and sub-national governments, and central banks.
Specialised lendingIncludes exposures to project and object finance lending. Project finance and object finance rely primarily on the revenues generated by a project, or equipment asset
respectively, both as a source of repayment and as security for the loan. Excludes Property Finance exposures.
Operational riskThe risk of loss resulting from inadequate or failed internal processes, people and systems or from external events, including legal risk but excluding strategic or
reputational risk.
Tier 1 capital ratioTotal Tier 1 capital divided by risk weighted assets, as defined by APRA.
Total regulatory capital ratioTotal regulatory capital divided by risk weighted assets, as defined by APRA.
Funding and liquidity
Committed Liquidity Facility (CLF)Prior to 1 January 2023, the RBA made available to Australian Authorised Deposit-taking Institutions a CLF that, subject to qualifying conditions, can be accessed to
meet LCR requirements under APS210 Liquidity.
Deposit to loan ratioCustomer deposits divided by net loans.
Funding for Lending Programme (FLP)A facility that was established by the RBNZ in December 2020 to provide 3 year term funding to eligible New Zealand institutions via repurchase transactions, subject
to qualifying conditions, to help support lending to New Zealand customers. The facility closed to new draw downs in December 2022.
High Quality Liquid Assets (HQLA)Assets which meet APRA’s criteria for inclusion as HQLA in the numerator of the LCR.
Liquid assetsHQLA and non LCR qualifying liquid assets, but excludes internally securitised assets that are eligible for a repurchase agreement with the RBA and the RBNZ.
Liquidity Coverage Ratio (LCR)An APRA requirement to maintain an adequate level of unencumbered high quality liquid assets, to meet liquidity needs for a 30 calendar day period under an APRA-
defined severe stress scenario. Absent a situation of financial stress, the value of the LCR must not be less than 100%. LCR is calculated as the percentage ratio of
stock of HQLA, and qualifying RBNZ securities over the total net cash out-flows in a modelled 30 day defined stressed scenario.
Net Stable Funding Ratio (NSFR)The NSFR is defined as the ratio of the amount of available stable funding (ASF) to the amount of required stable funding (RSF) defined by APRA. The amount of ASF
is the portion of an ADI’s capital and liabilities expected to be a reliable source of funds over a one year time horizon. The amount of RSF is a function of the liquidity
characteristics and residual maturities of an ADI’s assets and off-balance sheet activities. ADIs must maintain an NSFR of at least 100%.
Term Funding Facility (TFF)A facility that was established by the RBA in March 2020 to provide 3 year term funding to Australian ADIs via repurchase transactions, subject to qualifying
conditions, to help support lending to Australian businesses. The facility closed to new draw downs in June 2021.
Term funding from central banksTerm funding from central banks includes the drawn balances of the RBA TFF and the RBNZ FLP and Term Lending Facility.
Wholesale fundingWholesale funding includes debt issues, loan capital, certificates of deposit, term funding from central banks and interbank placements.
Credit quality
Collectively assessed provisions (CAPs)Collectively assessed provisions for expected credit loss under AASB 9 represent the Expected Credit Loss (ECL) which is collectively assessed in pools of similar
assets with similar risk characteristics. This incorporates forward- looking information and does not require an actual loss event to have occurred for an impairment
provision to be recognised.
DefaultCredit exposures that are non-performing (aligned with definition in APS 220 Credit Risk Management).
Exposure at default (EAD)The estimated outstanding amount of credit exposure at the time of the default.
Gross impaired exposures provisions to gross
impaired exposures
Impairment provisions relating to impaired exposures include individually assessed provisions plus the proportion of the collectively assessed provisions that relate to
impaired exposures.
131
Credit quality
Impaired exposuresIncludes exposures that have deteriorated to the point where full collection of interest and principal is in doubt, based on an assessment of the customer’s outlook,
cash flow, and the net realisation of value of assets to which recourse is held:
●Facilities 90 days or more past due, and full recovery is in doubt: exposures where contractual payments are 90 or more days in arrears and the net realisable
value of assets to which recourse is held may not be sufficient to allow full collection of interest and principal, including overdrafts or other revolving facilities that
remain continuously outside approved limits by material amounts for 90 or more calendar days;
●Non-accrual facilities: exposures with individually assessed impairment provisions held against them, excluding restructured loans;
●Restructured facilities: exposures where the original contractual terms have been formally modified to provide for concessions of interest or principal for reasons
related to the financial difficulties of the customer;
●Other assets acquired through security enforcement (includes other real estate owned): includes the value of any other assets acquired as full or partial settlement
of outstanding obligations through the enforcement of security arrangements; or
●Any other facilities where the full collection of interest and principal is in doubt.
Impairment charges/(benefit) to average loansCalculated as impairment charges (annualised where applicable) divided by average gross loans.
Individually assessed provisions (IAPs)Provisions raised for losses on loans that are known to be impaired and are assessed on an individual basis. The estimated losses on these impaired loans is based
on expected future cash flows discounted to their present value and, as this discount unwinds, interest will be recognised in the income statement.
Loss given default (LGD)The loss that is expected to arise in the event of a default.
Non-performing not impaired exposuresIncludes those credit exposures that are in default, but where it is expected that the full value of principal and accrued interest can be collected, generally by reference
to the value of security held.
Performing exposuresCredit exposures that are not non-performing.
Probability of default (PD)The probability that a counter party will default.
Provision for expected credit losses (ECL)Expected credit losses (ECL) are a probability-weighted estimate of the cash shortfalls expected to result from defaults over the relevant time frame. They are
determined by evaluating a range of possible outcomes and taking into account the time value of money, past events, current conditions and forecasts of future
economic conditions.
Stage 1: 12 months ECL - performingFor financial assets where there has been no significant increase in credit risk since origination a provision for 12 months expected credit losses is recognised. Interest
revenue is calculated on the gross carrying amount of the financial asset.
Stage 2: Lifetime ECL - performingFor 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 expected
losses is recognised. Interest revenue is calculated on the gross carrying amount of the financial asset.
Stage 3: Lifetime ECL - non-performingFor financial assets that are non-performing a provision for lifetime expected losses is recognised. Interest revenue is calculated on the carrying amount net of the
provision for ECL rather than the gross carrying amount.
Stressed exposuresWatchlist and substandard credit exposures plus non-performing exposures.
Total committed exposure (TCE)Represents the sum of the committed portion of direct lending (including funds placement overall and deposits placed), contingent and pre-settlement risk plus the
committed portion of secondary market trading and underwriting risk.
Watchlist and substandardLoan facilities where customers are experiencing operating weakness and financial difficulty but are not expected to incur loss of interest or principal.
Other
AAMLAdvance Asset Management Limited
AASAustralian Accounting Standards
AASBAustralian Accounting Standards Board
ABAAustralian Banking Association
ACCCAustralian Competition and Consumer Commission
ADIAuthorised Deposit-taking Institution
AFCAAustralian Financial Complaints Authority
AGMAnnual General Meeting
AIArtificial intelligence
AMLAnti-money laundering
APRAAustralian Prudential Regulation Authority
APSAustralian Prudential Standard
ASICAustralian Securities and Investments Commission
ASXAustralian Securities Exchange
132WESTPAC GROUP 2024 INTERIM FINANCIAL RESULTS
GLOSSARY
Other
ATMAutomated Teller Machine
ATOAustralian Taxation Office
AUSTRACAustralian Transaction Reports and Analysis Centre
BaFinGermany's Federal Financial Supervisory Authority
BCCCThe Banking Code Compliance Committee
BPNGBank of Papua New Guinea
bpsBasis points
CORE programCustomer Outcomes and Risk Excellence
Credit Valuation Adjustment (CVA)CVA adjusts the fair value of over-the-counter derivatives for credit risk. CVA is employed on the majority of derivative positions and reflects the market view of the
counter party credit risk. A Debit Valuation Adjustment is employed to adjust for our own credit risk.
CRSCommon reporting standard
CTFCounter-terrorism financing
Derivative Valuation Adjustment (DVA)DVA includes CVA and FVA.
DRPDividend Reinvestment Plan
D-SIBDomestic systemically important bank
EFTPOSElectronic Funds Transfer at Point of Sale
EIPEquity incentive plan
ESGEnvironment, social and governance
EUEnforceable undertaking
FATCAForeign Account Tax Compliance Act
FINRAFinancial Industry Regulatory Authority
First Half 2023Six months ended 31 March 2023
First Half 2024Six months ended 31 March 2024
Funding Valuation Adjustment (FVA)FVA relates to the funding cost or benefit associated with the uncollateralised portion of the derivative portfolio.
FVISFair value through income statement
FVOCIFair value through other comprehensive income
FWOFair Work Ombudsman
FXForeign exchange
IASBInternational Accounting Standards Board
IPIntegrated plan
IFRSInternational Financial Reporting Standards
IRRBBInterest Rate Risk in the Banking Book
NCINon-controlling interests
Non-interest bearingInstruments which do not carry a rate of interest.
NZBANet-Zero Banking Alliance
OAICThe Office of the Australian Information Commissioner
OTCOver the counter
Prior corresponding periodRefers to the six months ended 31 March 2023
Prior periodRefers to the six months ended 30 September 2023
RBAReserve Bank of Australia
RBNZReserve Bank of New Zealand
RSPRestricted Share Plan
Run-offScheduled and unscheduled repayments and debt repayments (from for example property sales and external refinancing), net of redraws.
SECSecurities and Exchange Commission
Second Half 2023Six months ended 30 September 2023.
133
Other
Segment reportingSegment reporting are presented on a management reporting basis. Internal charges and transfer pricing adjustments are included in the performance of each segment
reflecting the management structure rather than the legal entity (these results cannot be compared to results for individual legal entities). Where management reporting
structures or accounting classifications have changed, financial results for comparative periods have been restated and may differ from results previously reported.
Overhead costs are allocated to revenue generating segments.
The Group’s internal transfer pricing frameworks facilitate risk transfer, profitability measurement, capital allocation and segment alignment, tailored to the jurisdictions in
which the Group operates. Transfer pricing allows the Group to measure the relative contribution of products and segments to the Group’s interest margin and other
dimensions of performance. Key components of the Group’s transfer pricing frameworks are funds transfer pricing for interest rate and liquidity risk and allocation of
basis and contingent liquidity costs, including capital allocation.
SFTSuccessor fund transfer
SMESmall to medium sized enterprises
WIBWestpac Institutional Bank
WNZLWestpac New Zealand Limited
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.