Westpac U.S. Annual Report on Form 20-F
6 November 2024
Market Announcements Office
ASX Limited
20 Bridge Street
SYDNEY NSW 2000
Dear Sir/Madam
Westpac Place
Level 18, 275 Kent Street
Sydney NSW 2000
T. (02) 9155 7713
F. (02) 8253 1215
westpac.com.au
Westpac Banking Corporation US Annual Report on Form 20-F
Westpac Banking Corporation (Westpac) has filed with the US Securities and Exchange
Commission an Annual Report on Form 20-F for the financial year ended 30 September 2024
which has been prepared specifically for distribution in the United States (2024 Form 20-F). This
filing has been prepared to meet US securities law requirements and is necessary to update
Westpac’s US debt issuance programs. As the 2024 Form 20-F has been prepared to meet US
requirements, its presentation differs in some limited respects from Westpac’s 2024 Annual
Report lodged with ASX Limited on 4 November 2024.
This document has been authorised for release by Tim Hartin, Company Secretary
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
Or
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2024
Or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Or
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-10167
WESTPAC BANKING CORPORATION
Australian Business Number 33 007 457 141
(Exact name of Registrant as specified in its charter)
New South Wales, Australia
(Jurisdiction of incorporation or organization)
275 Kent Street, Sydney, NSW 2000, Australia
(Address of principal executive offices)
Westpac Banking Corporation, New York branch,
575 Fifth Avenue, 39th Floor, New York, New York 10017-2422,
Attention: Branch Manager, telephone number: (212) 551-1800
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act: None
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: 5.350% Notes due October 18, 2024 1.019% Notes due November 18, 2024, Floating Rate Notes due November 18, 2024, 2.350% Notes due February
19, 2025, Floating Rate Note due August 26, 2025, 3.735% Notes due August 26, 2025, 5.512% Notes due November 17, 2025, Floating Rate Notes due November 17, 2025, 5.200% Notes due April 16, 2026, Floating Rate Notes due April
16, 2026, 2.850% Notes due May 13, 2026, 1.150% Notes due June 3, 2026, Floating Rate Notes due June 3, 2026, 2.700% Notes due August 19, 2026, 3.350% Notes due March 8, 2027, 4.043% Notes due August 26, 2027, 5.457% Notes
due November 18, 2027 3.400% Notes due January 25, 2028, 5.535% Notes due November 17, 2028, 1.953% Notes due November 20, 2028, 5.050% Notes due April 16, 2029, Floating Rate Notes due April 16, 2029, 2.650% Notes due
January 16, 2030, 2.894% Subordinated Notes due February 4, 2030, 2.150% Notes due June 3, 2031, 4.322% Subordinated Notes due November 23, 2031, 5.405% Subordinated Notes due August 10, 2033, 6.820% Subordinated Notes
due November 17, 2033, 4.110% Subordinated Notes due July 24, 2034, 2.668% Subordinated Notes due November 15, 2035, 3.020% Subordinated Notes due November 18, 2036, 4.421% Subordinated Notes due July 24, 2039, 2.963%
Subordinated Notes due November 16, 2040, 3.133% Subordinated Notes due November 18, 2041 and 5.000% Fixed Rate Resetting Perpetual Subordinated Contingent Convertible Securities
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
Ordinary shares3,441,411,361 fully paid
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such
shorter period that the registrant was required to submit such files).
Yes ☒No ☐ (not currently applicable to registrant)
Exhibit 15.2
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the
Sarbannes-Oxley Act (15 U.S.C. 7262(b)) by the registered public account firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued
financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by any of the registrant’s executive officers during the relevant
recovery period pursuant to §240.10D-1(b) ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
“Item 17” ☐“Item 18” ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company.
Yes ☐No ☒
I
TABLE OF CONTENTS
FORM 20-F CROSS-REFERENCE INDEXii PERFORMANCE REVIEW270
FINANCIAL REPORT1Reading this report271
Income statements2Group performance276
Statements of comprehensive income3Segment reporting302
Balance sheets4Review of earnings: 2023 vs 2022314
Statements of changes in equity5Risk factors317
Cash flow statements7FINANCIAL STATEMENTS333
Notes to the Financial Statements8SHAREHOLDER INFORMATION334
Statutory Statements130Shareholding Information335
EXHIBITS INDEX136Additional Information350
STRATEGIC REVIEW156Glossary of Abbreviations and Defined Terms363
Strategic review156
Corporate governance196
Directors’ report222
Remuneration Report236
Information on Westpac263
In this Annual Report a reference to ‘Westpac’, ‘Group’, ‘Westpac Group’, ‘we’, ‘us’ and ‘our’ is to Westpac Banking Corporation ABN 33 007 457 141 and its subsidiaries unless it clearly
means just Westpac Banking Corporation.
For certain information about the basis of preparing the financial information in this Annual Report see ‘Reading this report’ in Section 2. In addition, this Annual Report contains
statements that constitute ‘forward-looking statements’ within the meaning of Section 21E of the US Securities Exchange Act of 1934. For an explanation of forward-looking statements
and the risks, uncertainties and assumptions to which they are subject, see ‘Reading this report’ in Section 2. Please consider those important disclaimers when reading the forward-
looking statements in this Annual Report.
References to the 2024 Risk Factors are to the ‘Risk factors’ section in this 2024 Annual Report on Form 20-F.
Information contained in or accessible through the websites mentioned in this Annual Report does not form part of this report unless we specifically state that it is
incorporated by reference and forms part of this report. All references in this report to websites are inactive textual references and are for information only.
II WESTPAC GROUP 2024 ANNUAL REPORT
FORM 20-F CROSS-REFERENCE INDEX
20-F item number and description
Page
Part I
Item 1.Identity of directors, senior management and advisersNot applicable
Item 2.Offer statistics and expected timetableNot applicable
Item 3.Key information
Capitalisation and indebtednessNot applicable
Reasons for the offer and use of proceedsNot applicable
Risk factors317-331
Item 4.Information on Westpac
History and development of Westpac158-163
Business overview158-163
Organisational structure109-110
Property, plants and equipment360
Item 4A.Unresolved staff commentsNot applicable
Item 5.Operating and financial review and prospects
Operating results276-279
Liquidity and capital resources103-107
Research and development, patents and licences, etc.Not applicable
Trend information276-301, 302-313
Critical accounting estimates25, 26, 84, 94, 97, 118
Item 6.Directors, senior management and employees
Directors and senior management222-229, 232-233
Compensation113-117, 236-261
Board practices196-220
Employees288
Share ownership123, 232-233, 335
Item 7.Major shareholders and related party transactions
Major shareholders335-340
Related party transactions122-123
Interests of experts and counselNot applicable
III
FORM 20-F CROSS-REFERENCE INDEX
20-F item number and description
Page
Item 8.Financial information
Consolidated statements and other financial information1-135
Significant changes263-265
Item 9.The offer and listing
Offer and listing detailsNot applicable
Plan of distributionNot applicable
MarketsNot applicable
Selling shareholdersNot applicable
DilutionNot applicable
Expenses of the issueNot applicable
Item 10.Additional information
Share capitalNot applicable
Memorandum and articles of association350-353
Material contracts360
Exchange controls346-347
Taxation347-349
Dividends and paying agentsNot applicable
Statements by expertsNot applicable
Documents on display353
Subsidiary informationNot applicable
Item 11.Quantitative and qualitative disclosures about market risk82-83
Item 12.Description of securities other than equity securities
Debt securitiesNot applicable
Warrants and rightsNot applicable
Other securitiesNot applicable
American depositary sharesNot applicable
Part II
Item 13.Defaults, dividend arrearages and delinquenciesNot applicable
Item 14.Material modifications to the rights of security holders and use of proceedsNot applicable
IV WESTPAC GROUP 2024 ANNUAL REPORT
FORM 20-F CROSS-REFERENCE INDEX
20-F item number and description
Page
Item 15.Controls and procedures131, 362
Item 16A.Audit committee financial expert206
Item 16B.Code of ethics210-211
Item 16C.Principal accountant fees and services, PCAOB ID: 1379; Auditor Remuneration121, 216-218
Item 16D.Exemptions from the Listing Standards for audit committeesNot applicable
Item 16E.Purchases of equity securities by Westpac and affiliated purchasersNot applicable
Item 16F.Changes in Westpac’s certifying accountant268-269
Item 16G.Corporate governance196
Item 16H.Mine safety disclosureNot applicable
Item 16I.Disclosure regarding foreign jurisdictions that prevent inspectionsNot applicable
Item 16J.Insider trading policies138
Item 16K.Cybersecurity268
Part III
Items 17. & 18.Financial statements1-135
Item 19.Exhibits136
Consolidated income statements for the years ended 30 September 2024, 2023 and 20222
Consolidated balance sheets as at 30 September 2024 and 20234
Consolidated statements of comprehensive income for the years ended 30 September 2024, 2023 and 20223
Consolidated statements of cash flows for the years ended 30 September 2024, 2023 and 20227
Notes to the financial statements8-126
Management’s report on the internal control over financial reporting131
Report of independent registered public accounting firm132-135
Item 1402: Distribution of assets, liabilities and stockholders’ equity; interest rates and interest differential
Average balance sheets17-18, 282
Analysis of net interest earnings16, 280-281
Interest rate and interest differential analysis17-20, 280-281
V
FORM 20-F CROSS-REFERENCE INDEX
20-F item number and description
Page
Item 1403: Investments in debt securities t II Investment portfolio
Weighted average yield of debt securities64
Calculation of weighted average yield; tax-exempt obligations64
Item 1404: Loan Portfolio
Maturity and interest rate profile of loan portfolio33
Item 1405: Allowances for Credit Losses
Credit ratios and material changes34-43
Allocation of the allowance for credit losses34-43
Item 1406: Deposits
Deposits by category53-54
Uninsured deposits53-54
Time deposits53-54
VI WESTPAC GROUP 2024 ANNUAL REPORT
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FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
PERFORMANCE
REVIEW
SHAREHOLDER
INFORMATION1
FINANCIAL
STATEMENTS
Income statements
Statements of comprehensive income
INTANGIBLE ASSETS, PROVISIONS, COMMITMENTS AND
CONTINGENCIES
Balance sheetsNote 24. Intangible assets
Statements of changes in equity
Cash flow statements
Note 25. Provisions, contingent liabilities, contingent assets
and credit commitments
NOTES TO THE FINANCIAL STATEMENTS
CAPITAL AND DIVIDENDS
Note 1. Financial statements preparationNote 26. Shareholders’ equity
Note 27. Capital adequacy
FINANCIAL PERFORMANCENote 28. Dividends
Note 2. Segment reporting
Note 3. Net interest income and average balance sheet and
interest ratesGROUP STRUCTURE
Note 4. Non-interest incomeNote 29. Investments in subsidiaries and associates
Note 5. Operating expensesNote 30. Structured entities
Note 6. Impairment charges
Note 7. Income taxOTHER
Note 8. Earnings per shareNote 31. Share-based payments
Note 32. Superannuation commitments
FINANCIAL ASSETS AND FINANCIAL LIABILITIESNote 33. Auditor’s remuneration
Note 34. Related party disclosures
Lending and credit riskNote 35. Notes to the cash flow statements
Note 9. LoansNote 36. Subsequent events
Note 10. Provision for expected credit losses
Note 11. Credit risk managementCONSOLIDATED ENTITY DISCLOSURE STATEMENT
Deposits and other funding arrangementsSTATUTORY STATEMENTS
Note 12. Deposits and other borrowingsDirectors’ declaration
Note 13. Debt issuesManagement’s report on internal control over financial reporting
Note 14. Loan capitalReport of Independent Registered Public Accounting Firm
Note 15. Securitisation, covered bonds and other
transferred assets
Other financial instrument disclosures
Note 16. Trading securities and financial assets measured at
fair value through income statement (FVIS)
Note 17. Investment securities
Note 18. Other financial assets
Note 19. Other financial liabilities
Note 20. Derivative financial instruments
Note 21. Risk management, funding and liquidity risk and
market risk
Note 22. Fair values of financial assets and financial liabilities
Note 23. Offsetting financial assets and financial liabilities
2 WESTPAC GROUP 2024 ANNUAL REPORT
INCOME STATEMENTS
for the years ended 30 September
Westpac Banking Corporation
ConsolidatedParent Entity
$mNote20242023202220242023
Interest income:
Calculated using the effective interest method
3 52,739 42,515 22,981 48,358 38,909
Other
3 1,608 1,237 270 1,571 992
Total interest income54,34743,75223,25149,92939,901
Interest expense3(35,594)(25,435)(6,090)(34,492)(24,786)
Net interest income
18,753 18,317 17,161 15,437 15,115
Non-interest income
Net fees
4 1,672 1,645 1,671 1,494 1,461
Net wealth management and insurance4441562808--
Trading4704717664637678
Other418404(698)1,8511,668
Total non-interest income2,8353,3282,4453,9823,807
Net operating income
21,588 21,645 19,606 19,419 18,922
Operating expenses
5 (10,944) (10,692) (10,802) (9,728) (9,473)
Impairment (charges)/benefits
6 (537) (648) (335) (475) (511)
Profit before income tax expense
10,107 10,305 8,469 9,216 8,938
Income tax expense
7 (3,117) (3,104) (2,770) (2,525) (2,504)
Profit after income tax expense
6,990 7,201 5,699 6,691 6,434
Net profit attributable to non-controlling interests (NCI)
- (6) (5) - -
Net profit attributable to owners of Westpac Banking Corporation (WBC)
6,990 7,195 5,694 6,691 6,434
Earnings per share (cents)
Basic
8 200.9 205.3 159.9
Diluted
8 191.7 195.2 152.4
The above income statements should be read in conjunction with the accompanying notes.
FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
PERFORMANCE
REVIEW
SHAREHOLDER
INFORMATION3
STATEMENTS OF COMPREHENSIVE INCOME
for the years ended 30 September
Westpac Banking Corporation
ConsolidatedParent Entity
$m20242023202220242023
Profit after income tax expense
6,990 7,201 5,699 6,691 6,434
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)
(588) (201) (318) (813) (178)
Cash flow hedging instruments
501 (635) 1,107 873 (570)
Transferred to income statement:
Debt securities measured at FVOCI5(125)(254)5(125)
Cash flow hedging instruments
77 (309) (237) 132 (349)
Loss allowance on debt securities measured at FVOCI
1 1 (2) 1 1
Exchange differences on translation of foreign operations (net of associated hedges)(300)367(264)(134)54
Income tax on items taken to or transferred from equity:
Debt securities measured at FVOCI
179 98 166 242 92
Cash flow hedging instruments
(182) 283 (253) (301) 276
Items that will not be reclassified subsequently to profit or loss
Gains/(losses) on equity securities measured at FVOCI (net of tax)
1 (10) 92 (3) (20)
Own credit adjustment on financial liabilities designated at fair value (net of tax)
13 (21) 80 13 (21)
Remeasurement of defined benefit obligation recognised in equity (net of tax)(14)(105)446(12)(110)
Net other comprehensive income/(expense) (net of tax)
(307) (657) 563 3 (950)
Total comprehensive income
6,683 6,544 6,262 6,694 5,484
Attributable to:
Owners of WBC
6,685 6,536 6,257 6,694 5,484
NCI
(2) 8 5 - -
Total comprehensive income
6,683 6,544 6,262 6,694 5,484
The above statements of comprehensive income should be read in conjunction with the accompanying notes.
4 WESTPAC GROUP 2024 ANNUAL REPORT
BALANCE SHEETS
as at 30 September
Westpac Banking Corporation
ConsolidatedParent Entity
$mNote2024202320242023
Assets
Cash and balances with central banks
35 65,667 102,522 58,400 93,466
Collateral paid
6,269 4,535 6,199 4,505
Trading securities and financial assets measured at fair value through income statement (FVIS)
16 49,228 30,507 47,014 27,987
Derivative financial instruments
20 24,109 21,343 23,902 21,038
Investment securities17103,88575,32695,62367,508
Loans
9 806,767 773,254 710,043 678,021
Other financial assets
18 5,456 6,219 4,951 5,812
Due from subsidiaries
- - 52,339 53,644
Investment in subsidiaries
- - 9,095 8,019
Property and equipment
2,251 2,245 1,804 1,833
Tax assets
7 2,160 2,100 1,896 1,962
Intangible assets
24 10,746 10,886 9,131 9,260
Other assets
1,006 837 837 705
Total assets
1,077,544 1,029,774 1,021,234 973,760
Liabilities
Collateral received
3,078 3,525 2,935 3,243
Deposits and other borrowings
12 720,489 688,168 644,481 610,357
Other financial liabilities
19 38,077 44,870 33,917 38,780
Derivative financial instruments
20 30,974 24,647 30,795 24,574
Debt issues
13 169,284 156,573 143,882 134,957
Tax liabilities
7 569 780 408 607
Due to subsidiaries
- - 55,722 55,663
Provisions
25 2,505 2,777 2,271 2,543
Other liabilities
2,633 2,719 2,065 2,177
Total liabilities excluding loan capital
967,609 924,059 916,476 872,901
Loan capital
14 37,883 33,176 36,770 32,085
Total liabilities
1,005,492 957,235 953,246 904,986
Net assets
72,052 72,539 67,988 68,774
Shareholders’ equity
Share capital:
Ordinary share capital
26 37,958 39,826 37,958 39,826
Treasury shares
26 (758) (702) (816) (760)
Reserves
26 1,732 1,935 1,757 1,659
Retained profits
32,773 31,436 29,089 28,049
Total equity attributable to owners of WBC
71,705 72,495 67,988 68,774
NCI
26 347 44 - -
Total shareholders’ equity and NCI
72,052 72,539 67,988 68,774
The above balance sheets should be read in conjunction with the accompanying notes.
FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
PERFORMANCE
REVIEW
SHAREHOLDER
INFORMATION5
STATEMENTS OF CHANGES IN EQUITY
for the years ended 30 September
Westpac Banking Corporation
Total equityTotal
Shareattributableshareholders’
ConsolidatedcapitalReservesRetainedto ownersNCIequity
$m (Note 26) (Note 26) profits of WBC (Note 26) and NCI
Balance as at 30 September 2021
40,995 2,227 28,813 72,035 57 72,092
Profit after income tax expense
- - 5,694 5,694 5 5,699
Net other comprehensive income/(expense)
- 37 526 563 - 563
Total comprehensive income/(expense)
- 37 6,220 6,257 5 6,262
Transactions in capacity as equity holders:
Dividends on ordinary shares
a
- - (4,337) (4,337) - (4,337)
Other equity movements:
Off-market share buyback (net of transaction costs)
b
(1,902)-(1,601)(3,503)-(3,503)
Share-based payment arrangements
- 87 - 87 - 87
Purchase of shares
(33) - - (33) - (33)
Net acquisition of treasury shares
(49) - - (49) - (49)
Other
- 27 (32) (5) (5) (10)
Total contributions and distributions
(1,984) 114 (5,970) (7,840) (5) (7,845)
Balance as at 30 September 2022
39,011 2,378 29,063 70,452 57 70,509
Profit after income tax expense
- - 7,195 7,195 6 7,201
Net other comprehensive income/(expense)
- (533) (126) (659) 2 (657)
Total comprehensive income/(expense)
- (533) 7,069 6,536 8 6,544
Transactions in capacity as equity holders:
Dividends on ordinary shares
a
- - (4,696) (4,696) - (4,696)
Dividend reinvestment plan
192 - - 192 - 192
Other equity movements:
Share-based payment arrangements
- 90 - 90 - 90
Purchase of shares
(32) - - (32) - (32)
Net acquisition of treasury shares
(47) - - (47) - (47)
Other
- - - - (21) (21)
Total contributions and distributions
113 90 (4,696) (4,493) (21) (4,514)
Balance as at 30 September 2023
39,124 1,935 31,436 72,495 44 72,539
Profit after income tax expense
- - 6,990 6,990 - 6,990
Net other comprehensive income/(expense)
- (304) (1) (305) (2) (307)
Total comprehensive income/(expense)
- (304) 6,989 6,685 (2) 6,683
Transactions in capacity as equity holders:
Dividends on ordinary shares
a
- - (5,652) (5,652) - (5,652)
Share buyback
c
(1,812)--(1,812)-(1,812)
Other equity movements:
Share-based payment arrangements
- 96 - 96 - 96
Purchase of shares
(56) - - (56) - (56)
Net acquisition of treasury shares
(56) - - (56) - (56)
Acquisition of minority interest
d
-5-5(30)(25)
Preference shares issued
e
----339339
Other
- - - - (4) (4)
Total contributions and distributions
(1,924) 101 (5,652) (7,475) 305 (7,170)
Balance as at 30 September 2024
37,200 1,732 32,773 71,705 347 72,052
a. Relates to fully franked dividends at 30%:
- 2024: 2024 interim dividend of 75 cents per share and special dividend of 15 cents per share ($3,125 million) and 2023 final dividend of 72 cents per share ($2,527 million);
- 2023: 2023 interim dividend of 70 cents per share ($2,456 million) and 2022 final dividend of 64 cents per share ($2,240 million); and
- 2022: 2022 interim dividend of 61 cents per share ($2,136 million) and 2021 final dividend of 60 cents per share ($2,201 million).
b. In 2022, the Group completed a $3.5 billion off-market share buyback of Westpac ordinary shares.
c. During 2024, Westpac announced its intention to undertake a $2.5 billion on market buyback of WBC ordinary shares. As at 30 September 2024 Westpac has bought back and cancelled 67,665,599 ordinary shares
($1,812 million) at an average price of $26.78.
d. During 2024, Westpac acquired 8.74% of the non-controlling interest in Westpac Bank-PNG-Limited, which will raise its interest to 98.65%.
e. During 2024, Westpac New Zealand Limited issued NZD 375 million (AUD 339 million) of perpetual preference shares that qualified as Additional Tier 1 capital under RBNZ’s criteria. Westpac recognises this instrument
as a non-controlling interest.
The above statements of changes in equity should be read in conjunction with the accompanying notes.
6 WESTPAC GROUP 2024 ANNUAL REPORT
STATEMENTS OF CHANGES IN EQUITY
for the years ended 30 September
Westpac Banking Corporation
Total equity
Shareattributable
Parent EntitycapitalReservesRetainedto owners
$m (Note 26) (Note 26) profits of WBC
Balance as at 30 September 2022
38,953 2,388 26,442 67,783
Profit after income tax expense
--6,4346,434
Net other comprehensive income/(expense)
-(819)(131)(950)
Total comprehensive income/(expense)
-(819)6,3035,484
Transactions in capacity as equity holders:
Dividends on ordinary shares
a
- - (4,696) (4,696)
Dividend reinvestment plan192 - - 192
Other equity movements:
Share-based payment arrangements
- 90 - 90
Purchase of shares
(32) - - (32)
Net acquisition of treasury shares
(47) - - (47)
Other----
Total contributions and distributions
113 90 (4,696) (4,493)
Balance as at 30 September 2023
39,066 1,659 28,049 68,774
Profit after income tax expense
--6,6916,691
Net other comprehensive income/(expense)
-213
Total comprehensive income/(expense)
-26,6926,694
Transactions in capacity as equity holders:
Dividends on ordinary shares
a
- - (5,652) (5,652)
Share buyback
b
(1,812)--(1,812)
Other equity movements:
Share-based payment arrangements
- 96 - 96
Purchase of shares
(56) - - (56)
Net acquisition of treasury shares
(56) - - (56)
Other----
Total contributions and distributions
(1,924) 96 (5,652) (7,480)
Balance as at 30 September 2024
37,142 1,757 29,089 67,988
a. Relates to fully franked dividends at 30%:
- 2024: 2024 interim dividend of 75 cents per share and special dividend of 15 cents per share ($3,125 million) and 2023 final dividend of 72 cents per share ($2,527 million); and
- 2023: 2023 interim dividend of 70 cents per share ($2,456 million) and 2022 final dividend of 64 cents per share ($2,240 million).
b. During 2024, Westpac announced its intention to undertake a $2.5 billion on market buyback of WBC ordinary shares. As at 30 September 2024 Westpac has bought back and cancelled 67,665,599 ordinary shares
($1,812 million) at an average price of $26.78.
The above statements of changes in equity should be read in conjunction with the accompanying notes.
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INFORMATION7
CASH FLOW STATEMENTS
for the years ended 30 September
Westpac Banking Corporation
ConsolidatedParent Entity
$m Note 2024 2023 2022 2024 2023
Cash flows from operating activities
Interest received 52,515 41,970 22,423 48,242 38,311
Interest paid (34,000) (22,654) (5,091) (33,039) (22,634)
Dividends received excluding life business 3 1 4 1,285 1,051
Other non-interest income received 4,314 3,567 4,208 4,274 3,301
Operating expenses paid (9,679) (9,856) (9,724) (8,464) (8,762)
Income tax paid excluding life business (3,369) (2,439) (2,278) (2,871) (2,141)
Life business:
Receipts from policyholders and customers - - 845 - -
Interest and other items of similar nature - - 1 - -
Dividends received - - 25 - -
Payments to policyholders and suppliers - - (619) - -
Income tax paid - - (65) - -
Cash flows from operating activities before changes in operating assets and liabilities 9,784 10,589 9,729 9,427 9,126
Net (increase)/decrease in:
Collateral paid(2,097)1,545(1,524)(2,057)1,537
Trading securities and financial assets measured at FVIS (18,994) (4,524) (3,750) (19,452) (4,162)
Derivative financial instruments (836) 4,082 2,451 1,358 4,414
Loans (35,083) (27,270) (36,345) (32,528) (25,080)
Other financial assets (348) 128 279 (231) 94
Life insurance assets and liabilities - - 266 - -
Other assets (34) 8 20 2 11
Net increase/(decrease) in:
Collateral received (318) (2,888) 3,643 (181) (3,092)
Deposits and other borrowings 35,243 24,692 35,054 35,870 23,347
Other financial liabilities (7,084) (17,146) 7,120 (5,281) (18,117)
Other liabilities - (12) 11 (9) (3)
Net cash provided by/(used in) operating activities 35 (19,767) (10,796) 16,954 (13,082) (11,925)
Cash flows from investing activities
Proceeds from investment securities 47,624 36,480 36,022 40,089 33,383
Purchase of investment securities(72,786)(33,753)(34,076)(65,072)(29,406)
Net movement in amounts due to/from controlled entities - - - (1,283) (625)
Proceeds from disposal of controlled entities and other businesses, net of cash disposed 35 - 293 2,115 - -
Purchase of controlled entities and other businesses35(30)-(14)--
Net (increase)/decrease in investments in controlled entities - - - (254) 640
Purchase of associates (4) (1) - (3) -
Proceeds from disposal of property and equipment4672253771
Purchase of property and equipment (235) (238) (166) (168) (165)
Purchase of intangible assets(782)(1,141)(1,099)(673)(952)
Net cash provided by/(used in) investing activities (26,167) 1,712 2,807 (27,327) 2,946
Cash flows from financing activities
Proceeds from debt issues (net of issue costs) 80,245 70,974 73,309 68,438 62,992
Redemption of debt issues (67,100) (62,596) (55,899) (58,931) (52,671)
Payments for the principal portion of lease liabilities(416)(401)(427)(365)(358)
Issue of loan capital (net of issue costs) 6,326 3,453 6,527 6,326 2,894
Redemption of loan capital (1,957) (1,171) (2,344) (1,951) (1,171)
Payments for share buyback(1,812)-(3,503)(1,812)-
Issue of perpetual preference shares (net of issue cost)339----
Purchase of shares relating to share-based payment arrangements(56)(32)(33)(56)(32)
Purchase of treasury shares (including RSP and EIP restricted shares) (56) (47) (49) (56) (47)
Payment of dividends (5,652) (4,504) (4,337) (5,652) (4,504)
Dividends paid to NCI (4) (21) (5) - -
Purchase of shares from NCI35(25)----
Net cash provided by/(used in) financing activities 9,832 5,655 13,239 5,941 7,103
Net increase/(decrease) in cash and balances with central banks (36,102) (3,429) 33,000 (34,468) (1,876)
Effect of exchange rate changes on cash and balances with central banks (753) 694 897 (598) 160
Net (increase)/decrease in cash and balances with central banks included in assets held for sale--7--
Cash and balances with central banks as at beginning of year 102,522 105,257 71,353 93,466 95,182
Cash and balances with central banks as at end of year 35 65,667 102,522 105,257 58,40093,466
The above cash flow statements should be read in conjunction with the accompanying notes.
8 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Financial statements preparation
This financial report of Westpac Banking Corporation (the Parent Entity), together with its controlled entities (the Group or Westpac), for the year ended 30 September 2024, was
authorised for issue by the Board of Directors on 3 November 2024. The Directors have the power to amend and reissue the financial report.
The material accounting policies are set out below and in the relevant notes to the financial statements. The accounting policy for the recognition and de-recognition of financial assets
and financial liabilities precedes Note 9. These policies have been consistently applied to all the years presented, unless otherwise stated.
a. Basis of preparation
(i) Basis of accounting
This financial report is a general purpose financial report prepared in accordance with:
●The requirements for an Authorised Deposit-taking Institution (ADI) under the Banking Act 1959 (as amended);
●Australian Accounting Standards (AAS) and Interpretations as issued by the Australian Accounting Standards Board (AASB); and
●The Corporations Act 2001.
Westpac Banking Corporation is domiciled and incorporated in Australia and is a for-profit entity for the purposes of preparing these financial statements.
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and Interpretations as issued
by the IFRS Interpretations Committee (IFRIC). It also includes additional disclosures required for foreign registrants by the United States Securities and Exchange Commission (US
SEC).
All amounts have been rounded in accordance with ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191, to the nearest million dollars, unless otherwise
stated.
(ii) Historical cost convention
The financial report has been prepared under the historical cost convention, as modified by applying fair value accounting to financial assets and financial liabilities (including derivative
instruments) measured at fair value through income statement (FVIS) or in other comprehensive income (OCI).
(iii) Standards adopted during the year ended 30 September 2024
AASB 2023-2 Amendments to Australian Accounting Standards – International Tax Reform – Pillar Two Model Rules (AASB 2023-2) was issued on 22 June 2023 and adopted by
Westpac for the year ended 30 September 2024.
This Standard amends AASB 112 as a result of the Organisation for Economic Co-operation and Development’s (OECD) international tax reform, known as Pillar Two, to introduce:
●a mandatory temporary exception to the recognition and disclosure of deferred taxes arising from the implementation of Pillar Two, which has been adopted by Westpac; and
●disclosure requirements for impacted entities to help financial statement users better understand Westpac’s exposure to Pillar Two income taxes.
Pillar Two introduces new ‘top-up’ taxes for multinational enterprises (MNEs) within the scope of the rules to ensure that these MNEs pay a minimum effective rate of tax of 15% on profits
in all jurisdictions.
The Pillar Two legislation has been enacted or substantially enacted in certain jurisdictions in which Westpac operates. The legislation is effective for Westpac’s financial year beginning 1
October 2024. Westpac has performed an assessment of its potential exposure to Pillar Two income taxes.
The assessment is based on the most recent tax filings, country-by-country reporting and financial statements for the constituent entities in the Group. Based on the assessment
performed, Westpac does not expect a material exposure to Pillar Two top-up taxes. The impact of the Pillar Two legislation on future financial performance will continue to be assessed.
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Note 1. Financial statements preparation (Continued)
(iv) Other changes during the year ended 30 September 2024
Multinational tax reforms – Consolidated entity disclosure statement
During the year, the Federal Government passed legislation that made amendments to the Corporations Act 2001 to address tax transparency. The amendments require all public
companies (listed and unlisted) to include a new “consolidated entity disclosure statement” in their financial reports. This statement requires information about entities in the consolidated
group including the entities’ name, legal structure, location of incorporation or formation, percentage ownership and country of tax residency. These amendments apply to Westpac for the
year ended 30 September 2024 and are included the Consolidated Entity Disclosure Statement of this Annual Report on page 127.
(v) Business combinations
Business combinations are accounted for using the acquisition method of accounting. Acquisition cost is measured as the aggregate of the fair value at the date of acquisition of the
assets given, equity instruments issued or liabilities incurred or assumed. Acquisition-related costs are expensed as incurred (except for those costs arising on the issue of equity
instruments which are recognised directly in equity).
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at fair value on the acquisition date. Goodwill is measured as the
excess of the acquisition cost, the amount of any non-controlling interest and the fair value of any previous Westpac equity interest in the acquiree, over the fair value of the identifiable
net assets acquired.
(vi) Foreign currency translation
Functional and presentational currency
The consolidated financial statements are presented in Australian dollars which is the Parent Entity’s functional and presentation currency. The functional currency of offshore entities is
usually the main currency of the economy they operate in.
Transactions and balances
Foreign currency transactions are translated into the functional currency of the relevant branch or subsidiary using the exchange rates prevailing at the dates of the transactions. Foreign
exchange (FX) gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement, except when deferred in OCI for qualifying cash flow hedges and qualifying net investment hedges.
Foreign operations
Assets and liabilities of foreign branches and subsidiaries that have a functional currency other than the Australian dollar are translated at exchange rates prevailing on the balance date.
Income and expenses are translated at average exchange rates prevailing during the year. Equity balances are translated at historical exchange rates.
The resulting exchange differences are recognised in the foreign currency translation reserve in OCI.
Where Westpac hedges the currency translation risk arising from net investments in foreign operations, the gains or losses on the hedging instruments are also reflected in OCI to the
extent the hedge is effective. When all or part of a foreign operation is disposed or borrowings that are part of the net investments are repaid, a proportionate share of such exchange
differences is recognised in the income statement as part of the gain or loss on disposal or repayment of borrowing.
(vii) Comparative revisions
Comparative information has been revised where appropriate to conform to changes in presentation in the current year and to enhance comparability.
10 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 1. Financial statements preparation (Continued)
b. Critical accounting assumptions and estimates
Applying Westpac’s accounting policies requires the use of judgement, assumptions and estimates which impact the financial information. The significant assumptions and estimates used
are discussed in the relevant notes below:
Note 7 Income tax
Note 10 Provision for expected credit losses (ECL)
Note 22 Fair values of financial assets and financial liabilities
Note 24 Intangible assets
Note 25 Provisions, contingent liabilities, contingent assets and credit commitments
Note 32 Superannuation commitments
Impact of climate-related risks
Westpac has considered the potential risk of climate change on its financial statements including both physical risks and transition risks. Westpac has concluded that based on the
information and methodologies currently used, climate-related risks do not have a material impact on the judgements, assumptions and estimates for the year ended 30 September 2024.
This conclusion also reflects that the most significant impacts of climate change is expected to mostly occur beyond the expected life of our exposures.
Key considerations in reaching this conclusion included assessing Westpac’s exposure to:
●high transition risk industries as a proportion of overall credit exposures; and
●physical risks that may arise from changing weather patterns and extreme weather events, with a particular focus on Westpac’s housing loans.
Climate change represents a significant source of uncertainty in the medium to long term which may affect our financial statements in the future. Measuring the financial impact of climate
change continues to evolve and Westpac will continue to improve its climate scenario analysis and stress testing capabilities to assess these impacts.
Details of the provision for ECL, including overlays held in relation to physical climate-related risk, are provided in Note 10.
c. Future developments
(i) Accounting standards
AASB 18 Presentation and Disclosure in Financial Statements (AASB 18) was issued on 7 June 2024 and will be effective for the 30 September 2028 year end unless early adopted.
AASB 18 will replace AASB 101 Presentation of Financial Statements. This standard will not change the recognition and measurement of items in the financial statements, but will impact
the presentation and disclosure in the financial statements, including:
●new categories and subtotals in the income statement to enhance comparability;
●enhancing the disclosure of management defined performance measures; and
●changes to the grouping of information in the financial statements to provide more useful information.
Westpac is continuing to assess the impact of adopting AASB 18.
AASB 2024-2 Amendments to Australian Accounting Standards – Classification and Measurement of Financial Instruments (AASB 2024-2) was issued on 29 July 2024 and is effective for
the 30 September 2027 year end unless early adopted.
The amendments include:
●changes to disclosures for investments in equity instruments designated at fair value through other comprehensive income and additional disclosures for financial instruments with
contingent features that do not relate directly to basic lending risks and costs;
●guidance on derecognition of financial liabilities criteria when using an electronic payments system; and
●guidance on assessing contractual cash flow characteristics of financial assets with environmental, social and corporate governance (ESG) and similar features.
The standard is not expected to have a material impact for Westpac.
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Note 1. Financial statements preparation (Continued)
(ii) Other developments
AASB S1 General Requirements for Disclosure of Sustainability-related Financial Information (AASB S1) and AASB S2 Climate-related Disclosures (AASB S2) were issued by the AASB
on 20 September 2024. AASB S1 is a voluntary standard while AASB S2 is mandatory. Both standards are effective for the Group for the 30 September 2026 year end unless early
adopted.
These standards are Australian Sustainability Reporting Standards which are issued by the AASB and set out the sustainability-related and climate-related financial disclosures for
sustainability reports and general purpose financial reports. The main features of these standards are described below.
AASB S1
This Standard applies to reporting sustainability-related financial information across a range of possible sustainability topics, including climate-related financial disclosures that form part of
an entity’s general-purpose financial reporting. It sets out general requirements for the presentation of those disclosures, guidelines for their structure and minimum requirements for their
content (including disclosures on governance, strategy, risk management, and metrics and targets), the location of disclosures, the timing of reporting and disclosures relating to
judgements, uncertainties and errors.
AASB S2
This standard sets out disclosure requirements in general purpose financial reports about climate-related risks and opportunities that could reasonably be expected to affect the entity’s
cash flows, access to finance or cost of capital over the short, medium or long term. The main climate-related financial disclosure requirements relate to four key areas of governance,
strategy, risk management, and metrics and targets. The standard also requires disclosures on scenario analysis and greenhouse gas emissions (Scope 1, 2 and 3). General
requirements such as the conceptual foundations for reporting such information, the location of disclosures, the timing of reporting and disclosures relating to judgements, uncertainties
and errors are also provided.
The Group is continuing to assess the impact of adopting AASB S1 and AASB S2.
12 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL PERFORMANCE
Note 2. Segment reporting
Accounting policy
Operating segments are presented on a basis consistent with information provided internally to Westpac’s key decision makers and reflect the management of the business, rather
than the legal structure of Westpac.
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 Westpac’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 Westpac’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
In 2024, Westpac established a new operating segment called Business & Wealth and dissolved the Specialist Business Division (SBD). The remaining operating businesses of SBD,
which included the Platforms business, Pacific Banking, Margin lending and the Auto finance portfolio were aggregated into the Business & 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: Revised capital allocations to align to the Basel III framework adopted in January 2023.
●Expense allocations: Reallocation of Enterprise functions across segments.
These changes have been reflected in segment reporting so that the information presented aligns with information reported internally to 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, Asia and the Pacific. 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 & 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.
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Note 2. Segment reporting (Continued)
The following tables present the segment results for Westpac.
WestpacWestpacNotable
Business &InstitutionalNewGroupItemsIncome
$m Consumer Wealth Bank Zealand (A$) Businesses Total (pre-tax) statement
2024
Net interest income
7,632 5,3382,2402,388 1,318 18,916 (163) 18,753
Net fee income
515 341653179 (16) 1,672 - 1,672
Net wealth management income-395-397441-441
Trading income-5763540(16)716(12)704
Other income135(23)(1)2418-18
Notable Items---(8)(167)(175)175-
Net operating income
8,160 6,1363,5052,637 1,150 21,588 - 21,588
Operating expenses
a
(4,787) (2,626)(1,465)(1,262) (804) (10,944) - (10,944)
Total operating expenses(4,787) (2,626)(1,465)(1,262) (804) (10,944) - (10,944)
Pre-provision profit
3,373 3,5102,0401,375 346 10,644 - 10,644
Impairment (charges)/benefits
(248) (142)(120)(25) (2) (537) - (537)
Profit before income tax expense
3,125 3,3681,9201,350 344 10,107 - 10,107
Income tax (expense)/benefit
b
(941) (1,012)(553)(377) (234) (3,117) -(3,117)
Net profit attributable to NCI
- --- - - - -
Net profit attributable to owners of WBC2,184 2,3561,367973 110 6,990 - 6,990
Notable Items (post-tax)
- --(6) (117) (123)
Balance sheet
Loans510,317101,989100,58293,83346806,767
Deposits and other borrowings334,462144,289119,79574,91247,031720,489
2023
Net interest income8,177 4,9921,9262,317 1,002 18,414 (97) 18,317
Net fee income504 360596177 8 1,645 - 1,645
Net wealth management income-425-33114572(10)562
Trading income-4769233(22)750(33)717
Other income201279(3)53161243404
Notable Items-(88)--191103(103)-
Net operating income
8,701 5,7483,2932,557 1,346 21,645 - 21,645
Operating expenses
c
(4,533) (2,459)(1,316)(1,186) (738) (10,232) (460) (10,692)
Notable Items(202) (64)(15)(9) (170) (460) 460 -
Total operating expenses(4,735) (2,523)(1,331)(1,195) (908) (10,692) - (10,692)
Pre-provision profit3,966 3,2251,9621,362 438 10,953 - 10,953
Impairment (charges)/benefits(179) (257)(87)(124) (1) (648) - (648)
Profit before income tax expense3,787 2,9681,8751,238 437 10,305 - 10,305
Income tax (expense)/benefit
b
(1,142) (877)(538)(350) (197) (3,104) - (3,104)
Net profit attributable to NCI- (5)-- (1) (6) - (6)
Net profit attributable to owners of WBC2,645 2,0861,337888 239 7,195 - 7,195
Notable Items (post-tax)(148) (107)(10)(7) 99 (173)
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 the segments except for $55 million in Consumer.
b. Includes tax benefits on Notable Items of $52 million (2023: $184 million)
c. Impairment of assets (including goodwill and other intangible assets) were insignificant for all the segments except for $36 million in Group Businesses.
14 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 2. Segment reporting (Continued)
WestpacWestpacNotable
Business &InstitutionalNewGroupItemsIncome
$m Consumer Wealth Bank Zealand (A$) Businesses Total (pre-tax) statement
2022
Net interest income8,473 3,5081,4382,107 1,080 16,606 555 17,161
Net fee income508 381605185 (7) 1,672 (1) 1,671
Net wealth management and insurance income-441-54364859(51)808
Trading income-41516432062044664
Other income491829(3)55148(846)(698)
Notable Items-(1)-120(418)(299)299-
Net operating income9,030 4,3882,5882,506 1,09419,606 - 19,606
Operating expenses
a
(4,411) (2,446)(1,265)(1,072) (987) (10,181) (621) (10,802)
Notable Items
(66) (13)-- (542) (621) 621 -
Total operating expenses
(4,477) (2,459)(1,265)(1,072) (1,529) (10,802) - (10,802)
Pre-provision profit4,553 1,9291,3231,434(435)8,804-8,804
Impairment (charges)/benefits(187)(97)(85)25 9 (335) - (335)
Profit before income tax expense4,366 1,8321,2381,459 (426) 8,469 - 8,469
Income tax (expense)/benefit
b
(1,314) (553)(372)(382) (149) (2,770) - (2,770)
Net profit attributable to NCI- (4)-- (1) (5) - (5)
Net profit attributable to owners of WBC3,052 1,2758661,077 (576) 5,694-5,694
Notable Items (post-tax)
(47)(9)-119(937) (874)
Balance sheet
Loans474,59194,77685,18285,285(187)739,647
Deposits and other borrowings280,534142,133117,25271,20248,008659,129
a. Impairment of assets (including goodwill and other intangible assets) were insignificant for all the segments except for the following:
- Group Businesses: $291 million; and
- Westpac Institutional Bank: $45 million.
b. Includes tax benefits on Notable Items of $46 million.
Notable Items after tax
$m 2024 2023 2022
Economic hedges
(128) (92) 470
Hedge ineffectiveness
5 66 (52)
Provisions for remediation, litigation, fines and penalties
- (176) (133)
Asset sales and revaluations
- 256 (876)
The write-down of assets
- (87) (283)
Restructuring costs
- (140) -
Total Notable Items after tax
(123) (173) (874)
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Note 2. Segment reporting (Continued)
Revenue from products and services
Details of revenue from external customers by product or service are disclosed in Note 3 and Note 4. No single customer amounted to greater than 10% of the Group’s revenue.
Geographic segments
Geographic segments are based on the location of the office where the following items were recognised:
202420232022
$m%$m%$m%
Revenue
Australia
48,442 84.7 40,222 85.4 20,198 78.6
New Zealand
6,809 11.9 5,053 10.7 5,010 19.5
Other overseas
a
1,931 3.4 1,805 3.9 488 1.9
Total
57,182 100.0 47,080 100.0 25,696 100.0
Non-current assets
b
Australia
11,573 89.0 11,782 89.7 11,606 91.0
New Zealand
1,319 10.1 1,282 9.8 1,088 8.5
Other overseas
a
105 0.9 67 0.5 62 0.5
Total
12,997 100.0 13,131 100.0 12,756 100.0
a. Other overseas included Pacific Islands, Asia, the Americas and Europe.
b. Non-current assets represents property and equipment, and intangible assets.
16 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 3. Net interest income and average balance sheet and interest rates
Net interest income
1
Accounting policy
Interest income and interest expense for all interest earning financial assets and interest bearing financial liabilities at amortised cost or FVOCI, detailed within the table below, are
recognised using the effective interest method. Net income from treasury’s interest rate and liquidity management activities and the cost of the Bank levy are included in net interest
income.
The effective interest method calculates the amortised cost of a financial instrument by discounting the financial instrument’s estimated future cash receipts or payments to their
present value and allocates the interest income or interest expense, including any fees, costs, premiums or discounts integral to the instrument, over its expected life.
Interest income is calculated based on the gross carrying amount of financial assets in stages 1 and 2 of the Group’s ECL model and on the carrying amount net of the provision for
ECL for financial assets in stage 3.
ConsolidatedParent Entity
$m 2024 2023 2022 2024 2023
Interest income
Calculated using the effective interest method
Cash and balances with central banks
4,123 4,277 683 3,651 3,785
Collateral paid
647 581 68 646 578
Investment securities
3,494 2,037 1,126 3,254 1,846
Loans
44,460 35,582 21,096 38,217 30,518
Other financial assets
15 38 2 13 37
Due from subsidiaries
- - - 2,577 2,145
Assets held for sale--6--
Total interest income calculated using the effective interest method52,73942,51522,98148,35838,909
Other
Net ineffectiveness on qualifying hedges894(77)1694
Trading securities and financial assets measured at FVIS1,6001,1433471,4741,044
Due from subsidiaries
- - - 81 (146)
Total other
1,608 1,237 270 1,571 992
Total interest income
54,347 43,752 23,251 49,929 39,901
Interest expense
Calculated using the effective interest method
Collateral received(317)(327)(64)(302)(319)
Deposits and other borrowings(21,268)(14,993)(2,810)(18,190)(12,666)
Debt Issues(6,094)(4,667)(2,257)(5,422)(4,221)
Due to subsidiaries---(3,324)(2,802)
Loan capital(1,848)(1,448)(1,026)(1,773)(1,408)
Other financial liabilities(394)(516)(162)(177)(302)
Total interest expense calculated using the effective interest method(29,921)(21,951)(6,319)(29,188)(21,718)
Other
Deposits and other borrowings
(2,389) (1,925) (399) (2,248) (1,789)
Trading liabilities
a
(2,643) (653) 1,169 (2,785) (671)
Debt issues
(194) (494) (93) (82) (338)
Bank levy
(357) (332) (340) (357) (332)
Due to subsidiaries
- - - 242 131
Other interest expense
(90) (80) (108) (74) (69)
Total other
(5,673) (3,484) 229 (5,304) (3,068)
Total interest expense
(35,594) (25,435) (6,090) (34,492) (24,786)
Net interest income
18,753 18,317 17,161 15,437 15,115
a. Includes net impact of Treasury balance sheet management activities.
1. Included items relating to remediation costs recognised as a $47 million addition to net interest income (2023: $57 million reduction, 2022: $1 million addition) for the Group, and an addition of $38 million (2023: $67 million
reduction) for the Parent Entity. Refer to Note 25 for further details.
FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
PERFORMANCE
REVIEW
SHAREHOLDER
INFORMATION17
Note 3. Net interest income and average balance sheet and interest rates (Continued)
Average balance sheet and interest rates
The daily average balances of Westpac’s interest earning assets and interest bearing liabilities are shown below along with their interest income or expense.
202420232022
AverageInterestAverageAverageInterestAverageAverageInterestAverage
balanceincomeratebalanceincomeratebalanceincomerate
Consolidated$m$m%$m$m%$m$m%
Assets
Interest earning assets
Loans:
a
Australia
633,772 37,865 6.0 607,154 30,164 5.0 582,456 17,694 3.0
New Zealand
92,222 6,155 6.7 90,130 5,028 5.6 87,236 3,203 3.7
Other overseas
6,666 440 6.6 6,548 390 6.0 6,362 199 3.1
Housing
a
Australia439,12124,9825.7424,42719,6404.6411,95011,8512.9
New Zealand60,8103,5615.959,3192,7024.657,0501,7963.1
Other overseas407174.2468183.8492193.9
Personal
Australia10,6841,0399.711,9541,0018.413,9101,0847.8
New Zealand1,063979.11,0941029.31,12611510.2
Other overseas7114.37114.37114.3
Business
a
Australia183,96711,8446.4170,7739,5235.6156,5964,7593.0
New Zealand30,3492,4978.229,7172,2247.529,0601,2924.4
Other overseas6,2524226.76,0733716.15,8631793.1
Trading securities and financial assets measured at FVIS:
Australia
28,605 1,223 4.3 23,486 843 3.6 16,715 235 1.4
New Zealand
4,718 251 5.3 3,959 201 5.1 3,784 76 2.0
Other overseas
3,027 126 4.2 2,641 99 3.7 2,337 36 1.5
Investment securities:
Australia85,2083,2273.866,6311,8222.770,8049851.4
New Zealand6,5702013.16,1641482.44,950851.7
Other overseas
2,147 66 3.1 2,082 67 3.2 2,027 56 2.8
Other interest earning assets:
b
Australia
79,226 3,340 4.2 96,291 3,424 3.6 82,102 366 0.4
New Zealand
8,636 465 5.4 10,496 496 4.7 9,769 153 1.6
Other overseas
19,258988 5.1 24,8671,070 4.3 17,238157 0.9
Assets held for sale:
Australia------42561.4
Total interest earning assets and interest income
a
970,055 54,347 5.6 940,449 43,752 4.7 886,205 23,251 2.6
Non-interest earning assets
Derivative financial instruments
16,786 23,423 23,395
Assets held for sale--2,444
All other assets
a,c
70,468 59,356 62,719
Total non-interest earning assets
a
87,254 82,779 88,558
Total assets
1,057,309 1,023,228 974,763
a. Certain portions of loans are non-interest bearing and are presented below in All other assets. The non-interest bearing portion represents the impact of mortgage offset deposits which are taken into consideration when
calculating interest charged on loans. In 2024, offset loans within New Zealand were reclassified and presented within All other assets. Comparatives have been revised to align with current period presentation.
b. Interest income includes net ineffectiveness on qualifying hedges.
c. Includes property and equipment, intangible assets, deferred tax assets, non-interest earning loans relating to mortgage offset accounts and all other non-interest earning assets. Mortgage offset balances were $57,028
million (2023: $49,702 million, 2022: $47,328 million).
18 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 3. Net interest income and average balance sheet and interest rates (Continued)
202420232022
AverageInterestAverageAverageInterestAverageAverageInterestAverage
balanceexpenseratebalanceexpenseratebalanceexpenserate
Consolidated$m$m%$m$m%$m$m%
Liabilities
Interest bearing liabilities
Deposits and other borrowings:
a
Australia
489,693 19,413 4.0 460,149 13,544 2.9 427,097 2,249 0.5
New Zealand
65,070 3,220 4.9 63,760 2,464 3.960,678 765 1.3
Other overseas
19,356 1,024 5.3 20,132 910 4.5 21,175 195 0.9
Certificates of deposit
Australia33,598 1,509 4.531,822 1,128 3.529,8392050.7
New Zealand2,424 141 5.82,727 136 5.02,956531.8
Other overseas12,867 736 5.713,338 657 4.914,5131370.9
Transactions
a
Australia122,235 4,112 3.4129,760 3,083 2.4131,9236290.5
New Zealand8,836 404 4.68,647 322 3.78,878770.9
Other overseas823 13 1.6868 7 0.884230.4
Savings
a
Australia189,405 7,007 3.7164,800 4,620 2.8160,2616540.4
New Zealand18,465 635 3.419,376 537 2.820,7221320.6
Other overseas996 25 2.51,035 25 2.493550.5
Term
Australia144,4556,7854.7133,7674,7133.5105,0747610.7
New Zealand35,3452,0405.833,0101,4694.528,1225031.8
Other overseas4,6702505.44,8912214.54,885501.0
Repurchase agreements:
Australia22,0406923.134,5113140.935,1361090.3
New Zealand4,3182345.44,9222314.72,543391.5
Other overseas193115.7219115.010022.0
Loan capital:
Australia
37,229 1,676 4.5 31,895 1,313 4.1 28,961 934 3.2
New Zealand
2,983 172 5.8 2,489 135 5.4 1,747 92 5.3
Other interest bearing liabilities:
b
Australia
164,722 8,370 5.1 154,859 5,990 3.9137,796 1,308 0.9
New Zealand
20,134 768 3.8 19,986 464 2.3 18,579 403 2.2
Other overseas
953 14 1.5 1,854 59 3.2 1,876 (6) (0.3)
Total interest bearing liabilities and interest expense
a
826,691 35,594 4.3 794,776 25,435 3.2 735,688 6,090 0.8
Non-interest bearing liabilities
Deposits and other borrowings:
a
Australia
119,408 117,538 121,074
New Zealand
10,891 12,213 14,139
Other overseas
1,333 1,292 1,038
Derivative financial instruments
21,413 26,353 24,750
Liabilities held for sale--682
All other liabilities
6,024 (218) 7,069
Total non-interest bearing liabilities
a
159,069 157,178 168,752
Total liabilities
985,760 951,954 904,440
Shareholders’ equity
71,493 71,229 70,268
Non-controlling interests
56 45 55
Total equity
71,549 71,274 70,323
Total liabilities and equity
1,057,309 1,023,228 974,763
a. In 2024, certain deposit products were reclassified between Savings and Transactions to align with how they are marketed to customers. The Group has also revised the attribution of certain deposit products between
interest bearing and non-interest bearing. Comparatives have been revised to align with current period presentation.
b. Interest expense includes the net impact of Treasury balance sheet management activities and the bank levy.
FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
PERFORMANCE
REVIEW
SHAREHOLDER
INFORMATION19
Note 3. Net interest income and average balance sheet and interest rates (Continued)
Calculation of variances
Net interest income may vary from year to year due to changes in the volume of, and interest rates associated with, interest earning assets and interest bearing liabilities. The following
table allocates the change in net interest income between changes in volume and interest rate for those assets and liabilities:
●Volume changes are determined based on the movements in average asset and liability balances; and
●Interest rate changes are determined based on the change in interest rate associated with those assets and liabilities. Variances that arise due to a combination of volume and interest
rate changes are allocated to interest rate changes.
20242023
ConsolidatedChange due toChange due to
$m Volume Rate Total Volume Rate Total
Interest earning assets
Loans:
a
Australia
1,3376,3647,701 74711,72312,470
New Zealand
1171,0101,127 1061,7191,825
Other overseas
74350 6185191
Housing
a
Australia8534,4895,3424927,2977,789
New Zealand6579485957849906
Other overseas-(1)(1)1(2)(1)
Personal
Australia43(5)3846(129)(83)
New Zealand2(7)(5)4(17)(13)
Business
Australia4411,8802,3212094,5554,764
New Zealand5022327345887932
Other overseas744515187192
Trading securities and financial assets measured at FVIS:
Australia
185195380 101507608
New Zealand
381250 4121125
Other overseas
151227 55863
Investment securities:
Australia5088971,405(65)902837
New Zealand104353214263
Other overseas
2(3)(1) 2911
Other interest earning assets:
Australia
(569)485(84) 722,9863,058
New Zealand
(88)57(31) 13330343
Other overseas
(245)163(82) 76837913
Assets held for sale:
Australia---(6)-(6)
Total change in interest income
a
1,3179,27810,595 1,08219,41920,501
a. Comparatives have been revised to align with current period presentation.
20 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 3. Net interest income and average balance sheet and interest rates (Continued)
20242023
ConsolidatedChange due toChange due to
$m Volume Rate Total Volume Rate Total
Interest bearing liabilities
Deposits and other borrowings:
a
Australia
9224,9475,869 15011,14511,295
New Zealand
51705756 401,6591,699
Other overseas
(35)149114 (10)725715
Certificates of deposits
Australia12825338123900923
New Zealand32538083
Other overseas(25)10479(7)527520
Transactions
a
Australia1828471,029282,4262,454
New Zealand775824241245
Other overseas-66-44
Savings
a
Australia2782,1092,387603,9063,966
New Zealand1187986399405
Other overseas(1)1--2020
Term
Australia3341,7382,072393,9133,952
New Zealand3054157127939966
Other overseas(9)3829(3)174171
Repurchase agreements:
Australia134244378(17)222205
New Zealand(28)31337155192
Other overseas(1)1-279
Loan capital:
Australia
219144363 84295379
New Zealand
271037 39443
Other interest bearing liabilities:
Australia
3502,0302,380 2974,3854,682
New Zealand
3301304 154661
Other overseas
(41)(4)(45) (1)6665
Total change in interest expense
a
1,6018,55810,159 63618,70919,345
Change in net interest income:
Australia
a
(164)576412 33571406
New Zealand
a
247599 13348361
Other overseas
(144)69(75) 98291389
Total change in net interest income
a
(284)720436 4467101,156
a. Comparatives have been revised to align with current period presentation.
FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
PERFORMANCE
REVIEW
SHAREHOLDER
INFORMATION21
Note 4. Non-interest income
Accounting policy
Non-interest income includes net fee income, net wealth management and insurance income, trading income and other income.
Net fee income
When another party is involved in providing goods or services to a Westpac customer, Westpac assesses whether the nature of the arrangement with its customer is as a principal
provider or an agent of another party. Where Westpac is acting as an agent for another party, the income earned by Westpac is the net consideration received (i.e. the gross amount
received from the customer less amounts paid to a third-party provider). As an agent, the net consideration represents fee income for facilitating the transaction between the customer
and the third-party provider with primary responsibility for fulfilling the contract.
Fee income
Fee income is recognised when the performance obligation is satisfied by transferring the promised good or service to the customer. Fee income includes facility fees, transaction fees
and other non-risk fee income.
Facility fees include certain line fees, annual credit card fees and fees for providing customer bank accounts. They are recognised over the term of the facility/period of service on a
straight-line basis.
Transaction fees are earned for facilitating banking transactions such as FX fees, telegraphic transfers and issuing bank cheques. Fees for these one-off transactions are recognised
once the transaction has been completed. Transaction fees are also recognised for credit card transactions including interchange fees net of scheme charges. These are recognised
once the transaction has been completed; however, a component of interchange fees received is deferred as unearned income as Westpac has a future service obligation to
customers under Westpac’s credit card reward programs.
Other non-risk fee income includes advisory and underwriting fees which are recognised when the related service is completed.
Income which forms an integral part of the effective interest rate of a financial instrument is recognised using the effective interest method and recorded in interest income (for example,
loan origination fees).
Fee expenses
Fee expenses include incremental external costs that vary directly with the provision of goods or services to customers. An incremental cost is one that would not have been incurred if
a specific good or service had not been provided to a specific customer. Fee expenses which form an integral part of the effective interest rate of a financial instrument are recognised
using the effective interest method and recorded in net interest income. Fee expenses include the costs associated with credit card loyalty programs which are recognised as an
expense when the services are provided on the redemption of points as well as merchant transaction costs.
Net wealth management and insurance income
Net wealth management income
Wealth management fees earned for the ongoing management of customer funds and investments are recognised when the performance obligation is satisfied which is over the period
of management.
Insurance premium income
Insurance premium income includes premiums earned for life insurance, life investment, loan mortgage insurance and general insurance products:
●Life insurance premiums with a regular due date are recognised as revenue on an accrual basis;
●Life investment premiums include a management fee component which is recognised as income over the period the service is provided. The deposit components of life insurance
and investment contracts are not revenue and are treated as movements in life insurance liabilities; and
●General insurance premium comprises amounts charged to policyholders, excluding taxes, and is recognised based on the likely pattern in which the insured risk is likely to
emerge. The portion not yet earned based on the pattern assessment is recognised as unearned premium liability.
22 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 4. Non-interest income (Continued)
Insurance claims expense
●Life and general insurance contract claims are recognised as an expense when the liability is established; and
●Claims incurred in respect of life investment contracts represent withdrawals and are recognised as a reduction in life insurance liabilities.
Changes in life insurance liabilities
Changes in life insurance liabilities includes the change in the value of life insurance contract liabilities calculated using the margin on services methodology (MoS), specified in the
Prudential Standard LPS 340 Valuation of Policy Liabilities.
Regulation, competition, interest rates, taxes, securities market conditions and general economic conditions also affect the estimation of life insurance liabilities.
Trading income
●Realised and unrealised gains or losses from changes in the fair value of trading assets, liabilities and derivatives are recognised in the period in which they arise (except day one
profits or losses which are deferred, refer to Note 22); and
●Net income related to Treasury’s interest rate and liquidity management activities is included in net interest income.
Other income - dividend income
●Dividends on quoted shares are recognised on the ex-dividend date; and
●Dividends on unquoted shares are recognised when the Company’s right to receive payment is established.
FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
PERFORMANCE
REVIEW
SHAREHOLDER
INFORMATION23
Note 4. Non-interest income (Continued)
ConsolidatedParent Entity
$m
2024
2023
2022
2024
2023
Net fees
Facility fees
763
697
686
709
647
Transaction fees
1,118
1,146
1,132
935
959
Other non-risk fee income
135
154
122
125
136
Fee income
2,016
1,997
1,940
1,769
1,742
Credit card loyalty programs
(134)
(153)
(126)
(106)
(120)
Transaction fee related expenses
(210)
(199)
(143)
(169)
(161)
Fee expenses
(344)
(352)
(269)
(275)
(281)
Net fees
1,672
1,645
1,671
1,494
1,461
Net wealth management and insurance
Net wealth management income
441
562
726
-
-
Life insurance premium income
-
-
834
-
-
Life insurance investment and other income
-
-
(141)
-
-
Total insurance premium, investment and other income
-
-
693
-
-
Life insurance claims, changes in life insurance liabilities and other expenses
-
-
(611)
-
-
Total insurance claims, changes in life insurance liabilities and other expenses
-
-
(611)
-
-
Net wealth management and insurance
441
562
808
-
-
Trading
704
717
664
637
678
Other
Dividends received from subsidiaries
-
-
-
1,284
1,050
Transactions with subsidiaries
-
-
-
564
550
Dividends received from other entities
3
1
4
1
1
Net gain/(loss) on disposal of assets
6
-
(3)
8
1
Net gain/(loss) on hedging of overseas operations
(1)
-
-
(4)
(51)
Net gain/(loss) on derivatives held for risk management purposes
a
7
1
9
7
1
Net gain/(loss) on financial instruments measured at fair value
(24)
78
12
(32)
71
Net gain/(loss) on disposal of controlled entities and other businesses
b
-
268
(823)
-
-
Other
27
56
103
23
45
Total other18404(698)1,8511,668
Total non-interest income
c
2,8353,3282,4453,9823,807
a. Income from derivatives held for risk management purposes reflects the impact of economic hedges of earnings.
b. Included gains/loss on sale of:
●2023: $243 million gain for Advance Asset Management Limited; and
●2022: $1,112 million loss for Australian life insurance business, $170 million gain for Auto Finance and $119 million gain for NZ life insurance.
c. Included items relating to remediation costs recognised as a $44 million reduction to non-interest income (2023: $52 million, 2022: $64 million) for the Group, and $30 million reduction (2023: $56 million) for the Parent
Entity. Refer to Note 25 for further details.
Deferred income in relation to the credit card loyalty programs for Westpac was $338 million as at 30 September 2024 (2023: $324 million, 2022: $330 million) and $35 million for the
Parent Entity (2023: $32 million). This will be recognised as fee income as the credit card reward points are redeemed.
There were no other material contract assets or contract liabilities for Westpac or the Parent Entity.
24 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 5. Operating expenses
ConsolidatedParent Entity
$m
2024
2023
2022
2024
2023
Staff
Employee remuneration, entitlements and on-costs
5,160
5,254
5,111
4,540
4,674
Superannuation
551
521
533
491
459
Share-based payments
97
90
88
94
88
Restructuring costs
91
233
134
75
226
Total staff
5,899
6,098
5,866
5,200
5,447
Occupancy
Operating lease rentals
116
153
170
99
128
Depreciation and impairment of property and equipment
a
455
474
626
387
420
Other
129
159
118
120
139
Total occupancy
700
786
914
606
687
Technology
Amortisation and impairment of software assets
a
908
629
655
802
573
Depreciation and impairment of IT equipment
125
132
177
99
108
Technology services
b
871
735
721
770
645
Software maintenance and licences
770
603
506
653
504
Telecommunications
90
112
144
69
91
Total technology
b
2,764
2,211
2,203
2,3931,921
Other
Professional and processing services
b
798
905
1,056
696
762
Postage and stationery
130
139
144
109
114
Advertising
176
169
158
150
137
Non-lending losses
111
65
104
88
52
Amortisation and impairment of other intangible assets and deferred expenditure
a
34
2
123
2
2
Impairment of investments in subsidiaries
-
-
-
117
(14)
Other expenses
b
332
317
234
367
365
Total other
b
1,581
1,597
1,819
1,529
1,418
Total operating expenses
c
10,944
10,692
10,802
9,728
9,473
a. Impairment expenses included:
●$32 million (2023: nil, 2022: $122 million) for goodwill and other intangibles assets for the Group, and nil (2023: nil) for the Parent Entity;
●$19 million (2023: $8 million, 2022: $110 million) for computer software for the Group, and $19 million (2023: $8 million) for the Parent Entity; and
●$8 million (2023: $31 million, 2022: $117 million) for property and equipment for the Group, and $8 million (2023: $31 million) for the Parent Entity.
b. In 2024, the Group removed an immaterial expense line and reallocated the associated costs to other relevant expense categories. Comparatives have been revised to align with current period presentation.
c. Included items relating to compliance, regulation and remediation costs of $1 million addition (2023: $7 million addition, 2022: $63 million addition) for the Group and $1 million addition (2023: $3 million reduction) for the
Parent Entity. Refer to Note 25 for further details.
FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
PERFORMANCE
REVIEW
SHAREHOLDER
INFORMATION25
Note 6. Impairment charges
Accounting policy
Impairment charges are based on an expected loss model which measures the difference between the current carrying amount and the present value of expected future cash flows
taking into account past experience, current conditions and multiple probability-weighted macroeconomic scenarios for reasonably supportable future economic conditions. Further
details of the calculation of ECL and the critical accounting assumptions and estimates relating to impairment charges are included in Note 10.
Impairment charges are recognised in the income statement, with a corresponding amount recognised as follows:
●Loans, debt securities at amortised cost and due from subsidiaries balances: as a reduction of the carrying value of the financial asset through an offsetting provision account (refer
to Note 10);
●Debt securities at FVOCI: in reserves in OCI with no reduction of the carrying value of the debt security (refer to Note 26); and
●Credit commitments: as a provision (refer to Note 25).
Uncollectable loans
A loan may become uncollectable in full or part if, after following Westpac’s loan recovery procedures, Westpac remains unable to collect that loan’s contractual repayments.
Uncollectable amounts are written off against their related provision for ECL, after all possible repayments have been received.
Where loans are secured, amounts are generally written off after receiving the proceeds from the security, or in certain circumstances, where the net realisable value of the security has
been determined and this indicates that there is no reasonable expectation of full recovery, write-off may be earlier. Unsecured consumer loans are generally written off after 180 days
past due.
Westpac may subsequently be able to recover cash flows from loans written off. In the period which these recoveries are made, they are recognised in the income statement.
The following table details impairment charges.
Consolidated
Parent Entity
$m
2024
2023
2022
2024
2023
Provisions raised/(released)
Performing
(150)
274
225
(142)172
Non-performing
877
565
299
801523
Recoveries
(190)
(191)
(189)
(184)(184)
Impairment charges/(benefits)
537
648
335
475511
of which relates to:
Loans and credit commitments536647333469517
Debt securities at amortised cost--41-
Debt securities at FVOCI
1
1
(2)
11
Due from subsidiaries---4(7)
Impairment charges/(benefits)
537648335475511
Further details are included in Note 10.
26 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 7. Income tax
Accounting policy
The tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement, except to the extent that it relates to items recognised directly in OCI, in
which case it is recognised in the statement of comprehensive income. 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.
Current tax is the tax payable for the year using enacted or substantively enacted tax rates and laws for each jurisdiction. Current tax also includes adjustments to tax payable for
previous years.
Deferred tax accounts for temporary differences between the carrying amounts of assets and liabilities in the financial statements and their values for taxation purposes.
Deferred tax is determined using the enacted or substantively enacted tax rates and laws for each jurisdiction which are expected to apply when the assets will be realised or the
liabilities settled.
Deferred tax assets and liabilities have been offset where they relate to the same taxation authority, the same taxable entity or group, and where there is a legal right and intention to
settle on a net basis.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available to utilise the assets.
Deferred tax is not recognised for the following temporary differences:
●The initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither the accounting nor taxable profit or loss;
●The initial recognition of goodwill in a business combination; and
●Retained earnings in subsidiaries which the Parent Entity does not intend to distribute for the foreseeable future.
The Parent Entity is the head entity of a tax consolidated group with its wholly owned Australian subsidiaries. All entities in the tax consolidated group have entered into a tax sharing
agreement which, in the opinion of the Directors, limits the joint and several liabilities in the case of a default by the Parent Entity.
Current and deferred tax are recognised using a ‘group allocation basis’. As head entity, the Parent Entity recognises all current tax balances and deferred tax assets arising from
unused tax losses and relevant tax credits for the tax-consolidated group. The Parent Entity fully compensates/is compensated by the other members for these balances.
Critical accounting assumptions and estimates
Westpac operates in multiple tax jurisdictions and significant judgement is required in determining the worldwide current tax liability. There are many transactions with uncertain tax
outcomes and provisions are determined based on the expected outcomes.
FINANCIAL
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INFORMATION27
Note 7. Income tax (Continued)
Income tax expense
The following table reconciles income tax expense to the profit before income tax expense.
ConsolidatedParent Entity
$m
2024
2023
2022
2024
2023
Profit before income tax
10,107
10,305
8,469
9,216
8,938
Tax at the Australian company tax rate of 30%
3,032
3,092
2,541
2,765
2,681
The effect of amounts which are not deductible/(assessable) in calculating taxable income:
Hybrid capital distributions
139
117
67
139
117
Life insurance tax adjustment on policyholder earnings
-
-
(1)
-
-
Dividend adjustments
-
3
-
(379)
(315)
Other non-assessable items
(4)
(9)
(97)
(3)
(1)
Other non-deductible items
25
49
409
23
44
Adjustment for overseas tax rates
(27)
(25)
(31)
(4)
(4)
Income tax (over)/under provided in prior years
(20)
7
(77)
(13)
(2)
Other items
a
(28)
(130)
(41)
(3)
(16)
Total income tax expense
3,117
3,104
2,770
2,525
2,504
Income tax expense comprises:
Current income tax
3,125
3,009
2,661
2,520
2,393
Movement in deferred tax
b
12
88
186
18
113
Income tax (over)/under provision in prior years
(20)
7
(77)
(13)
(2)
Total income tax expense
3,117
3,104
2,770
2,525
2,504
Total Australia
2,632
2,637
2,316
2,480
2,430
Total Overseas
485
467
454
45
74
Total income tax expense
3,117
3,104
2,770
2,525
2,504
a. 2023 included $86 million (Parent Entity: nil) related to the sale of Advance Asset Management Limited.
b. 2022 included a $41 million credit (Parent Entity: nil) in relation to assets and liabilities held for sale.
The effective tax rate was 30.84% in 2024 (2023: 30.12%, 2022: 32.71%).
Tax assets
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Current tax assets135135
Deferred tax assets
2,147 2,095 1,883 1,957
Total tax assets
2,160 2,100 1,896 1,962
Tax liabilities
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Current tax liabilities
569 780 408 607
Total tax liabilities
569 780 408 607
28 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 7. Income tax (Continued)
Deferred tax assets
The balance comprises temporary differences attributable to:
ConsolidatedParent Entity
$m2024202320242023
Amounts recognised in the income statements and opening retained profits
Provision for ECL on loans and credit commitments
1,519
1,465
1,314
1,267
Provision for long service leave, annual leave and other employee benefits407403388384
Property and equipment203222192195
Other provisions167240141219
Lease liabilities
576
592
508
531
All other liabilities
222
240
205
226
Total amounts recognised in the income statements and opening retained profits
3,094
3,162
2,748
2,822
Amounts recognised directly in OCI
Investment securities206-206-
Cash flow hedges
-
87
-
87
Total amounts recognised directly in OCI
206
87
206
87
Gross deferred tax assets
3,300
3,249
2,954
2,909
Set-off of deferred tax assets and deferred tax liabilities
(1,153)
(1,154)
(1,071)
(952)
Net deferred tax assets
2,147
2,095
1,883
1,957
Movements
Balance as at beginning of year
2,095
1,754
1,957
1,646
Recognised in the income statements
(68)
(141)
(74)
(155)
Recognised in OCI
119
87
119
87
Set-off of deferred tax assets and deferred tax liabilities
1
395
(119)
379
Balance as at end of year
2,147
2,095
1,883
1,957
Deferred tax liabilities
The balance comprises temporary differences attributable to:
ConsolidatedParent Entity
$m
2024
2023
2024
2023
Amounts recognised in the income statements and opening retained profits
Finance lease transactions
112
194
106
190
Property and equipment
538
497
482
446
All other assets
232
247
232
240
Total amounts recognised in the income statements and opening retained profits
882
938
820
876
Amounts recognised directly in OCI
Investment securities-34-34
Cash flow hedges233138214-
Defined benefit38443742
Total amounts recognised directly in OCI27121625176
Gross deferred tax liabilities
1,153
1,154
1,071
952
Set-off of deferred tax assets and deferred tax liabilities
(1,153)
(1,154)
(1,071)
(952)
Net deferred tax liabilities
-
-
-
-
Movements
Balance as at beginning of year
-
-
-
-
Recognised in the income statements(56)(53)(56)(42)
Recognised in OCI55(342)175(337)
Set-off of deferred tax assets and deferred tax liabilities
1
395
(119)
379
Balance as at end of year
-
-
-
-
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INFORMATION29
Note 7. Income tax (Continued)
Unrecognised deferred tax balances
The following potential deferred tax balances have not been recognised. The tax effect of the gross balances disclosed below would be based on the corporate tax rates applicable in the
relevant jurisdictions, which range between 15% and 45%.
ConsolidatedParent Entity
$m
2024
2023
2024
2023
Deductible temporary differences
Tax losses on revenue account422448422448
Tax losses on capital account
265
184
150
64
Taxable temporary differences
Retained earnings of subsidiaries that would be subject to withholding tax if distributed
402
365
-
-
Note 8. Earnings per share
Accounting policy
Basic earnings per share (EPS) is calculated by dividing the net profit attributable to owners of WBC by the weighted average number of ordinary shares on issue during the period.
These numbers are adjusted for treasury shares and the dividends related to treasury shares. Diluted EPS is calculated by adjusting the basic EPS by assuming all dilutive potential
ordinary shares are converted. Refer to Note 14 and Note 31 for further information on the potential dilutive instruments.
202420232022
$m
Basic
Diluted
Basic
Diluted
Basic
Diluted
Net profit attributable to owners of WBC ($m)
6,990
6,990
7,195
7,195
5,694
5,694
Adjustment for restricted share dividends
a
(7)
-
(5)
-
(3)
-
Adjustment for potential dilution:
Distributions to convertible loan capital holders
b
-
476
-
400
-
233
Adjusted net profit attributable to owners of WBC
6,983
7,466
7,190
7,595
5,691
5,927
Weighted average number of ordinary shares (# m)
Weighted average number of ordinary shares on issue
3,481
3,481
3,507
3,507
3,564
3,564
Treasury shares (including RSP and EIP restricted shares)
a
(5)
(5)
(5)
(5)
(5)
(5)
Adjustment for potential dilution:
Share-based payments
-
6
-
4
-
4
Convertible loan capital
b
-
413
-
385
-
326
Adjusted weighted average number of ordinary shares
3,476
3,895
3,502
3,891
3,559
3,889
Earnings per ordinary share (cents)
200.9
191.7
205.3
195.2
159.9
152.4
a. Restricted shares are explained in Note 31. 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.
b. The Group has issued convertible loan capital which may convert into ordinary shares in the future (refer to Note 14 for further details). These convertible loan capital instruments are potentially dilutive instruments, and
diluted EPS is therefore calculated as if the instruments had been converted at the beginning of the year, or at the instruments’ issue dates, where issuance occurred partway through the year.
30 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Accounting policy
Recognition
Financial assets and financial liabilities, other than regular way transactions, are recognised when Westpac becomes a party to the terms of the contract, which is generally on
settlement date (the date payment is made or cash advanced). Purchases and sales of financial assets in regular way transactions are recognised on trade date (the date on which
Westpac commits to purchase or sell an asset).
De-recognition
Financial assets are de-recognised when the rights to receive cash flows from the asset have expired, or when Westpac has either transferred its rights to receive cash flows from the
asset or has assumed an obligation to pay the received cash flows in full under a ‘pass through’ arrangement and transferred substantially all the risks and rewards of ownership.
There may be situations where Westpac has partially transferred the risks and rewards of ownership but has neither transferred nor retained substantially all the risks and rewards of
ownership. In such situations, where Westpac retains control of the transferred asset, it will continue to be recognised in the balance sheet to the extent of Westpac’s continuing
involvement in the asset.
Financial liabilities are de-recognised when the obligation is discharged, cancelled or expires. Where an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, the exchange or modification is treated as a de-recognition of the original liability and the
recognition of a new liability, with the difference in the respective carrying amounts recognised in the income statement.
The terms are deemed to be substantially different if the discounted present value of the cash flows under the new terms (discounted using the original effective interest rate) is at least
10% different from the discounted present value of the remaining cash flows of the original financial liability. Qualitative factors such as a change in the currency the instrument is
denominated in, a change in the interest rate from fixed to floating and conversion features are also considered.
Classification and measurement basis
Financial assets
Financial assets are grouped into the following classes: cash and balances with central banks, collateral paid, trading securities and financial assets measured at FVIS, derivative
financial instruments, investment securities, loans and other financial assets.
Financial assets are classified based on a) the business model within which the assets are managed, and b) whether the contractual cash flows of the instrument represent solely
payment of principal and interest (SPPI).
Westpac determines the business model at the level that reflects how groups of financial assets are managed. When assessing the business model Westpac considers factors
including how performance and risks are managed, evaluated and reported and the frequency and volume of, and reason for, sales in previous periods and expectations of sales in
future periods.
When assessing whether contractual cash flows are SPPI, interest is defined as consideration primarily for the time value of money and the credit risk of the principal outstanding. The
time value of money is defined as the element of interest that provides consideration only for the passage of time and not consideration for other risks or costs associated with holding
the financial asset. Terms that could change the contractual cash flows so that they may not meet the SPPI criteria include contingent and leverage features, non-recourse
arrangements, and features that could modify the time value of money.
Debt instruments
If the debt instruments have contractual cash flows which represent SPPI on the principal balance outstanding they are classified at:
●Amortised cost if they are held within a business model whose objective is achieved through holding the financial asset to collect these cash flows; or
●FVOCI if they are held within a business model whose objective is achieved both through collecting these cash flows or selling the financial asset; or
●FVIS if they are held within a business model whose objective is achieved through selling the financial asset.
Debt instruments are classified and measured at FVIS where the contractual cash flows do not represent SPPI on the principal balance outstanding or where it is designated at FVIS to
eliminate or reduce an accounting mismatch.
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FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Continued)
Equity securities
Equity securities are classified and measured at FVOCI where they:
●Are not held for trading; and
●An irrevocable election is made by Westpac.
Otherwise, they are measured at FVIS.
Financial liabilities
Financial liabilities are grouped into the following classes: collateral received, deposits and other borrowings, other financial liabilities, derivative financial instruments, debt issues and
loan capital.
Financial liabilities are measured at amortised cost if they are not held for trading or designated at FVIS, otherwise they are measured at FVIS.
Financial assets and financial liabilities measured at FVIS are recognised initially at fair value. All other financial assets and financial liabilities are recognised initially at fair value plus
or minus directly attributable transaction costs, respectively.
Further details of the accounting policy for each category of financial asset or financial liability mentioned above are set out in the note for the relevant item.
Westpac’s policies for determining the fair value of financial assets and financial liabilities are set out in Note 22.
32 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Lending and credit risk
Note 9. Loans
Accounting policy
Loans are financial assets initially recognised at fair value plus directly attributable transaction costs and fees.
Loans are subsequently measured at amortised cost using the effective interest method where they have contractual cash flows which represent SPPI on the principal balance
outstanding and they are held within a business model whose objective is achieved through holding the loans to collect these cash flows. They are presented net of any provision for
ECL.
Loans are subsequently measured at FVIS where they do not have cash flows which represent SPPI, are held within a business model whose objective is achieved by selling the
financial asset, or are designated at FVIS to eliminate or reduce an accounting mismatch.
Refer to Note 22 for balances which are measured at fair value and amortised cost.
Loan products that have both mortgage and deposit facilities are presented gross in the balance sheet, segregating the asset and liability component, because they do not meet the
criteria to be offset. Interest earned on these products is presented on a net basis in the income statement as this reflects how the customer is charged.
The loan portfolio is dis-aggregated by location of booking office and product type, as follows.
ConsolidatedParent Entity
$m
2024
2023
2024
2023
Australia
Housing503,271485,474503,270485,466
Personal10,17411,28910,17411,288
Business195,483181,509193,042179,241
Total Australia708,928678,272706,486675,995
New Zealand
Housing62,48461,235--
Personal1,0581,083--
Business31,05531,008306369
Total New Zealand94,59793,326306369
Total other overseas7,8106,0897,1895,470
Gross loans811,335777,687713,981681,834
Provision for ECL on loans (refer to Note 10)(4,568)(4,433)(3,938)(3,813)
Total loans
a,b
806,767773,254710,043678,021
a. Total net loans included securitised loans of $5,185 million (2023: $3,949 million) for the Group and $6,054 million (2023: $4,734 million) for the Parent Entity. The level of securitised loans excludes loans where Westpac is
the holder of related debt securities.
b. Total net loans included assets pledged for the covered bond programs of $42,228 million (2023: $43,029 million) for the Group and $36,825 million (2023: $36,300 million) for the Parent Entity.
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Note 9. Loans (Continued)
The following table shows Westpac’s contractual maturity distribution of all loans as at 30 September 2024.
ConsolidatedOver 1 year toOver 5 years to
$m
Up to 1 year
5 years
15 years
Over 15 years
Total
Australia
Housing5,2721,00721,536475,456503,271
Personal6,3853,074715-10,174
Business63,263115,3969,2257,599195,483
Total Australia74,920119,47731,476483,055708,928
New Zealand
Housing1925664,43857,28862,484
Personal8781773-1,058
Business19,76211,21577131,055
Total New Zealand20,83211,9584,51857,28994,597
Total other overseas2,5644,982264-7,810
Total loans98,316136,41736,258540,344811,335
The following table shows Westpac’s interest rate segmentation of loans maturing after one year as at 30 September 2024.
Loans atLoans at
Consolidatedvariablefixed
$m
interest rates
interest rates
Total
Interest rate segmentation of loans maturing after one year
Australia
Housing452,82445,175497,999
Personal1,8141,9753,789
Business127,5404,680132,220
Total Australia582,17851,830634,008
New Zealand
Housing6,57155,72162,292
Personal1791180
Business93710,35611,293
Total New Zealand7,68766,07873,765
Total other overseas4,8603865,246
Total loans maturing after one year594,725118,294713,019
34 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 10. Provision for expected credit losses
Accounting policy
Note 6 provides details of impairment charges.
Impairment applies to all financial assets at amortised cost, lease receivables, debt securities measured at FVOCI, due from subsidiaries and credit commitments.
The ECL is recognised as follows:
●Loans (including lease receivables), debt securities at amortised cost and due from subsidiaries: as a reduction of the carrying value of the financial asset through an offsetting
provision account (refer to Note 9 and Note 17);
●Debt securities at FVOCI: in reserves in OCI with no reduction of the carrying value of the debt security itself (refer to Note 17 and Note 26); and
●Credit commitments: as a provision (refer to Note 25).
Measurement
Westpac calculates the provision for ECL based on a three-stage approach. The provision for ECL is a probability-weighted estimate of the cash shortfalls expected to result from
defaults over the relevant time frame. They are determined by evaluating a range of possible outcomes and taking into account the time value of money, past events, current conditions
and forecasts of future economic conditions.
The models use three main components to determine the ECL (as well as the time value of money) including:
●Probability of default (PD): the probability that a counterparty will default;
●Loss given default (LGD): the loss that is expected to arise in the event of a default; and
●Exposure at default (EAD): the estimated outstanding amount of credit exposure at the time of the default.
Model stages
The three stages are as follows:
Stage 1: 12 months ECL – performing
For financial assets where there has been no significant increase in credit risk since origination, a provision for 12 months ECL is recognised.
Stage 2: Lifetime ECL – performing
For financial assets where there has been a significant increase in credit risk since origination but where the asset is still performing, a provision for lifetime ECL is recognised. The
indicators of a significant increase in credit risk are described on the following page.
Stage 3: Lifetime ECL – non-performing
Financial assets in Stage 3 are those that are in default. This is aligned to the regulatory definition of default applied in the calculation of credit risk weighted assets. A default occurs
when:
●Westpac considers that the customer is unable to repay its credit obligations in full, irrespective of recourse by Westpac to actions such as realising security. Indicators include a
breach of contract with Westpac such as a default on interest or principal payments, a borrower experiencing significant financial difficulties or observable economic conditions that
correlate to defaults on an individual basis; or
●The customer is more than 90 days past due on any material credit obligation.
A provision for lifetime ECL is recognised on these financial assets.
Collective and individual assessment
Financial assets that are in Stages 1 and 2 are assessed on a collective basis. This means that they are grouped in pools of similar assets with similar credit risk characteristics including
the type of product and the customer risk grade. Financial assets in Stage 3 are assessed on an individual basis and calculated collectively for those below a specified threshold.
Expected life
In considering the lifetime time frame for ECL in Stages 2 and 3, the standard generally requires use of the remaining contractual life adjusted, where appropriate, for prepayments,
extension and other options. For certain revolving credit facilities which include both a drawn and undrawn component (e.g. credit cards and revolving lines of credit), Westpac’s
contractual ability to demand repayment and cancel the undrawn commitment does not limit the exposure to credit losses to the contractual notice period. For these facilities, lifetime is
based on historical behaviour.
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Note 10. Provision for expected credit losses (Continued)
Movement between stages
Financial assets may move in both directions through the stages of the impairment model. Financial assets previously in Stage 2 may move back to Stage 1 if it is no longer considered
that there has been a significant increase in credit risk. Similarly, financial assets in Stage 3 may move back to Stage 1 or Stage 2 if they are no longer assessed to be non-performing.
Critical accounting assumptions and estimates
Key judgements include when a significant increase in credit risk has occurred, the estimation of forward-looking macroeconomic information and overlays. Other factors which can
impact the provision include the borrower’s financial situation, the realisable value of collateral, Westpac’s position relative to other claimants, the reliability of customer information and
the likely cost and duration of recovering the loan.
Significant increase in credit risk (SICR)
Determining when a financial asset has experienced a SICR since origination is a critical accounting judgement which is based on the change in the probability of default (PD) since
origination. In determining whether a change in PD represents a significant increase in risk, relative changes in PD and absolute PD thresholds are both considered based on the
portfolio of the exposure.
Westpac does not rebut the presumption that instruments that are 30 days past due have experienced a SICR but this is used as a backstop rather than the primary indicator. In
addition, the deferral of payments by customers in hardship arrangements is generally treated as an indication of a SICR.
Forward-looking macroeconomic information
The measurement of ECL for each stage and the assessment of significant increase in credit risk considers information about past events and current conditions as well as reasonable
and supportable projections of future events and economic conditions. The estimation of forward-looking information is a critical accounting judgement. Westpac considers three future
macroeconomic scenarios including a base case scenario along with upside and downside scenarios.
The macroeconomic variables used in these scenarios, based on current economic forecasts, include (but are not limited to) employment to population rates, real gross domestic
product growth rates and residential and commercial property price indices.
●Base case scenario
This scenario utilises the internal Westpac economics forecast used for strategic decision making and forecasting.
●Upside scenario
This scenario represents a modest improvement on the base case scenario.
●Downside scenario
The downside scenario is a more severe scenario with ECL higher than those under the base case scenario.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 ECL across all portfolios from the reporting
date.
The three macroeconomic scenarios are probability weighted and together represent Westpac’s view of the forward looking distribution of potential loss outcomes. The weighting applied
to each of the three macroeconomic scenarios takes into account historical frequency, current trends, and forward-looking conditions.
The macroeconomic variables and probability weightings of the three macroeconomic scenarios are subject to the approval of the Group Chief Financial Officer and Group Chief Risk
Officer with oversight from the Board of Directors (and its Committees).
Overlays
Where appropriate, adjustments will be made to modelled outcomes to reflect reasonable and supportable information not already incorporated in the models.
Judgements can change with time as new information becomes available which could result in changes to the provision for ECL.
36 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 10. Provision for expected credit losses (Continued)
Loans and credit commitments
The following tables disclose the provision for ECL on loans and credit commitments by stage for Westpac and the Parent Entity.
2024 2023
Non- Non-
PerformingPerformingPerformingPerforming
$mStage 1Stage 2Stage 3TotalStage 1Stage 2Stage 3Total
Consolidated
Provision for ECL on loans
Housing
162 879 639 1,680 152 1,036 513 1,701
Personal
61 207 99 367 64 198 98 360
Business
405 1,163 953 2,521 355 1,231 786 2,372
Total loans ECL provision (Note 9)
628 2,249 1,691 4,568 571 2,465 1,397 4,433
Provision for ECL on credit commitments
Housing
7 18 - 25 6 16 - 22
Personal
16 27 - 43 18 27 - 45
Business
110 300 38 448 111 300 19 430
Total credit commitments ECL provision (Note 25)
133 345 38 516 135 343 19 497
Total provision for ECL on loans and credit commitments
761 2,594 1,729 5,084 706 2,808 1,416 4,930
Presented as provision for ECL on:
Individually assessed provisions
- - 536 536 - - 351 351
Collectively assessed provisions
761 2,594 1,193 4,548 706 2,808 1,065 4,579
Total provision for ECL on loans and credit commitments
761 2,594 1,729 5,084 706 2,808 1,416 4,930
Gross loans639,900 161,121 10,314 811,335605,761 163,583 8,343 777,687
Credit commitments181,275 30,395 441 212,111177,971 27,814 366 206,151
Gross loans and credit commitments
821,175 191,516 10,755 1,023,446 783,732 191,397 8,709 983,838
Coverage ratio on loans (%)0.101.4016.400.560.091.5116.740.57
Coverage ratio on loans and credit commitments (%)
0.09 1.35 16.08 0.50 0.09 1.47 16.26 0.50
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Note 10. Provision for expected credit losses (Continued)
2024 2023
Non- Non-
PerformingPerformingPerformingPerforming
$mStage 1Stage 2Stage 3TotalStage 1Stage 2Stage 3Total
Parent Entity
Provision for ECL on loans
Housing
136 743 575 1,454 117 907 446 1,470
Personal
54 184 92 330 55 172 90 317
Business
348 968 838 2,154 306 1,026 694 2,026
Total loans ECL provision (Note 9)
538 1,895 1,505 3,938 478 2,105 1,230 3,813
Provision for ECL on credit commitments
Housing
6 14 - 20 4 13 - 17
Personal
12 17 - 29 13 19 - 32
Business
105 283 27 415 105 282 18 405
Total credit commitments ECL provision (Note 25)
123 314 27 464 122 314 18 454
Total provision for ECL on loans and credit commitments
661 2,209 1,532 4,402 600 2,419 1,248 4,267
Presented as provision for ECL on:
Individually assessed provisions
- - 437 437 - - 301 301
Collectively assessed provisions
661 2,209 1,095 3,965 600 2,419 947 3,966
Total provision for ECL on loans and credit commitments
661 2,209 1,532 4,402 600 2,419 1,248 4,267
Gross loans564,844139,8289,309713,981533,446140,8737,515681,834
Credit commitments160,41827,033411187,862156,08024,390343180,813
Gross loans and credit commitments
725,262 166,861 9,720 901,843 689,526 165,263 7,858 862,647
Coverage ratio on loans (%)0.101.3616.170.550.091.4916.370.56
Coverage ratio on loans and credit commitments (%)
0.09 1.32 15.76 0.49 0.09 1.46 15.88 0.49
38 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 10. Provision for expected credit losses (Continued)
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 re-measurement of the provision for ECL;
●“Business activity during the year” represents new accounts originated during the year net of those that were de-recognised due to final repayments during the year;
●“Net re-measurement 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 over the year; 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.
ConsolidatedParent Entity
Non-Non-
PerformingPerforming PerformingPerforming
$m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Balance as at 30 September 2022
8852,3411,3994,6257772,0631,2404,080
Transfers to Stage 1
a
1,252(1,119)(133)-1,115(990)(125)-
Transfers to Stage 2
a
(588)1,069(481)-(503)941(438)-
Transfers to Stage 3
a
(7)(489)496-(6)(443)449-
Business activity during the year
a
226(243)(141)(158)191(223)(130)(162)
Net remeasurement of provision for ECL
a
(1,066)1,238824996(975)1,071767863
Write-offs
--(601)(601)--(554)(554)
Exchange rate and other adjustments
41153681-3940
Balance as at 30 September 2023
7062,8081,4164,9306002,4191,2484,267
Transfers to Stage 1
1,222(1,165)(57)-1,088(1,036)(52)-
Transfers to Stage 2
(315)822(507)-(274)724(450)-
Transfers to Stage 3
(3)(608)611-(3)(527)530-
Business activity during the year
303(328)(293)(318)267(308)(243)(284)
Net remeasurement of provision for ECL
(1,149)1,0701,1231,044(1,016)9371,016937
Write-offs
--(620)(620)--(573)(573)
Exchange rate and other adjustments
(3)(5)5648(1)-5655
Balance as at 30 September 2024
7612,5941,7295,0846612,2091,5324,402
a. The attribution of amounts disclosed in the movement schedule has been revised to better reflect the nature of the changes in the provision for ECL. Comparatives have been revised to align with current period
presentation.
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INFORMATION39
Note 10. Provision for expected credit losses (Continued)
Consolidated Parent Entity
Non- Non-
PerformingPerforming PerformingPerforming
$mStage 1Stage 2Stage 3Total Stage 1 Stage 2 Stage 3Total
Housing
Balance as at 30 September 2022
1431,0954151,6531061,0163691,491
Transfers to Stage 1
a
316(311)(5)-295(292)(3)-
Transfers to Stage 2
a
(60)316(256)-(55)290(235)-
Transfers to Stage 3
a
-(131)131--(125)125-
Business activity during the year
a
41(98)(106)(163)40(97)(99)(156)
Net remeasurement of provision for ECL
a
(284)176364256(265)128316179
Write-offs
--(50)(50)--(43)(43)
Exchange rate and other adjustments
252027--1616
Balance as at 30 September 2023
1581,0525131,7231219204461,487
Transfers to Stage 1351(345)(6)-311(307)(4)-
Transfers to Stage 2(41)310(269)-(36)276(240)-
Transfers to Stage 3-(196)196--(183)183-
Business activity during the year59(131)(158)(230)55(123)(143)(211)
Net remeasurement of provision for ECL(357)209396248(309)174357222
Write-offs--(57)(57)--(46)(46)
Exchange rate and other adjustments(1)(2)2421--2222
Balance as at 30 September 2024
1698976391,7051427575751,474
Personal
Balance as at 30 September 2022
9925012347285218112415
Transfers to Stage 1
a
359(356)(3)-323(322)(1)-
Transfers to Stage 2
a
(59)126(67)-(54)114(60)-
Transfers to Stage 3
a
-(132)132--(123)123-
Business activity during the year
a
28(15)-1326(13)-13
Net remeasurement of provision for ECL
a
(346)350256260(312)317244249
Write-offs--(358)(358)--(341)(341)
Exchange rate and other adjustments121518--1313
Balance as at 30 September 2023
82225984056819190349
Transfers to Stage 1358(356)(2)-325(324)(1)-
Transfers to Stage 2(59)106(47)-(56)98(42)-
Transfers to Stage 3-(136)136--(128)128-
Business activity during the year36(9)-2734(8)-26
Net remeasurement of provision for ECL(340)405295360(305)372283350
Write-offs--(394)(394)--(378)(378)
Exchange rate and other adjustments-(1)1312--1212
Balance as at 30 September 2024
77234994106620192359
a. The attribution of amounts disclosed in the movement schedule has been revised to better reflect the nature of the changes in the provision for ECL. Comparatives have been revised to align with current period
presentation.
40 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 10. Provision for expected credit losses (Continued)
ConsolidatedParent Entity
Non-Non-
PerformingPerforming PerformingPerforming
$m Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
Business
Balance as at 30 September 20226439968612,5005868297592,174
Transfers to Stage 1
a
577(452)(125)-497(376)(121)-
Transfers to Stage 2
a
(469)627(158)-(394)537(143)-
Transfers to Stage 3
a
(7)(226)233-(6)(195)201-
Business activity during the year
a
157(130)(35)(8)125(113)(31)(19)
Net remeasurement of provision for ECL
a
(436)712204480(398)626207435
Write-offs--(193)(193)--(170)(170)
Exchange rate and other adjustments1418231-1011
Balance as at 30 September 2023
4661,5318052,8024111,3087122,431
Transfers to Stage 1513(464)(49)-452(405)(47)-
Transfers to Stage 2(215)406(191)-(182)350(168)-
Transfers to Stage 3(3)(276)279-(3)(216)219-
Business activity during the year208(188)(135)(115)178(177)(100)(99)
Net remeasurement of provision for ECL(452)456432436(402)391376365
Write-offs--(169)(169)--(149)(149)
Exchange rate and other adjustments(2)(2)1915(1)-2221
Balance as at 30 September 2024
5151,4639912,9694531,2518652,569
a. The attribution of amounts disclosed in the movement schedule has been revised to better reflect the nature of the changes in the provision for ECL. Comparatives have been revised to align with current period
presentation.
Reconciliation of impairment charges
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Loans and credit commitments:
Business activity during the year
a
(318) (158) (284) (162)
Net remeasurement of the provision for ECL
a
1,044 996 937 863
Impairment charges for debt securities at amortised cost
- - 1 -
Impairment charges for debt securities at FVOCI
1 1 1 1
Impairment on due from subsidiaries--4(7)
Recoveries
(190) (191) (184) (184)
Impairment charges/(benefits) (Note 6)
537 648 475 511
a. The attribution of amounts disclosed in the movement schedule has been revised to better reflect the nature of the changes in the provision for ECL. Comparatives have been revised to align with current period
presentation.
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INFORMATION41
Note 10. Provision for expected credit losses (Continued)
Total write-offs net of recoveries to average loans
Consolidated
% 2024 2023
Write-offs net of recoveries to average loans
Housing0.010.01
Personal
2.21 1.78
Business0.050.07
Total write-offs net of recoveries to average loans
0.05 0.05
Write-offs still under enforcement activity
Of the amount of current year write-offs, $596 million for the Group (2023: $581 million) and $549 million (2023: $534 million) for the Parent Entity represent balances that the Group was
still entitled to recover.
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.
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Modelled provision for ECL on loans and credit commitments
4,905 4,498 4,205 3,880
Overlays
179432 197 387
Total provision for ECL on loans and credit commitments
5,084 4,930 4,402 4,267
Details of changes related to forward-looking economic inputs and portfolio overlays, based on reasonable and supportable information up to the date of this 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.
42 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 10. Provision for expected credit losses (Continued)
The base case scenario uses the following Westpac Economic forecasts:
Key economic assumptions for base
case scenario
30 September 202430 September 2023
Annual GDP:
Australia
Forecast growth of
1.5% for calendar year 2024 and
2.4% for calendar year 2025
Forecast growth of
1.2% for calendar year 2023 and
1.6% for calendar year 2024
New ZealandForecast growth of
0.1% for calendar year 2024 and
2.0% for calendar year 2025
Forecast growth of
0.8% for calendar year 2023 and
0.2% for calendar year 2024
Commercial property index, Australia
Forecast price contraction of
11.5% for calendar year 2024 and growth of
1.3% for calendar year 2025
Forecast price contraction of
15.0% for calendar year 2023 and
0.5% for calendar year 2024
Residential property prices:
Australia
Forecast price growth of
5.7% 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
New ZealandForecast price growth of
0.7% for calendar year 2024 and
6.4% for calendar year 2025
Forecast price contraction of
1.0% for calendar year 2023 and growth of
7.7% for calendar year 2024
Cash rate, Australia
Forecast cash rate of
4.35% at December 2024 and
3.35% at December 2025
Forecast cash rate of
4.1% at December 2023 and
3.6% at December 2024
Unemployment rate:
Australia
Forecast rate of
4.3% at December 2024 and
4.6% at December 2025
Forecast rate of
3.9% at December 2023 and
4.7% at December 2024
New ZealandForecast rate of
5.3% at December 2024 and
5.6% at December 2025
Forecast rate of
4.3% at December 2023 and
5.2% 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.
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INFORMATION43
Note 10. Provision for expected credit losses (Continued)
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).
Consolidated Parent Entity
$m 2024 2023 2024 2023
Reported probability-weighted ECL 5,084 4,930 4,402 4,267
100% base case ECL
3,559 3,409 3,089 2,927
100% downside ECL
7,195 6,849 6,221 5,957
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 $93 million (2023: $78 million) for Westpac and $81 million (2023: $70 million) for the Parent Entity. 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 Westpac and the Parent Entity. In 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:
Scenario weightings (%) 2024 2023
Upside 5.0 5.0
Base
52.5 50.0
Downside
42.5 45.0
The Group’s definition of default is aligned to the regulatory definition of default applied in the calculation of credit risk weighted assets.
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.
Westpac’s total portfolio overlays as at 30 September 2024 were $179 million (2023: $432 million) for the Group and $197 million (2023: $387 million) for the Parent Entity, and comprise:
●$77 million (2023: $302 million) for the Group and $106 million (2023: $275 million) for the Parent Entity for consumers, mostly reflecting potential high consumer stress from higher
interest rates and inflation. The Group included a negative overlay for WNZL;
●$32 million (2023: $60 million) for the Group and $21 million (2023: $42 million) for the Parent Entity mostly reflecting the impact of potential supply chain disruptions and labour
shortages in certain industries; and
●$70 million (2023: $70 million) for the Group and $70 million (2023: $70 million) for the Parent Entity for the expected impact of extreme weather events on customers.
Changes in portfolio overlays are reflected through the “net remeasurement of provision for ECL” line item.
Impact of changes in credit exposures on the provision for ECL on loans and credit commitments
●Stage 1 credit exposures increased by $37.4 billion (2023: net decrease of $15.6 billion) for Westpac and $35.7 billion (2023: net decrease of $10.8 billion) for the Parent Entity. This
was driven by new lending across the housing and business loan portfolios, which also drove the overall increase in stage 1 ECL.
●Stage 2 credit exposures increased by $0.1 billion (2023: increased by $54.3 billion) for Westpac and $1.6 billion (2023: increased by $40.5 billion) for the Parent Entity, driven by a
net transfer of business TCE from stage 1 in response to updated model economics, partly offset by net runoff across business and certain housing loan portfolios. Stage 2 ECL
decreased, driven by a reduction in overlays to the housing portfolio, reduction in downside scenario weighting and net improvement in the average credit quality of the stage 2
business portfolio.
●Stage 3 credit exposures increased by $2.0 billion (2023: increased by $1.1 billion) for Westpac and $1.9 billion (2023: increased by $0.9 billion) for the Parent Entity. This was driven
by an increase in the balance of housing loans that are 90 days past due and certain downgrades within the business portfolio.
44 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 11. Credit risk management
Note
Index
Note name number
Credit riskCredit risk management framework11.1
The risk of financial loss where a customer or counterparty fails to meet their financial
obligations to Westpac.
Credit risk ratings system11.2
Credit risk concentrations and maximum exposure to credit risk11.3
Credit quality of financial assets11.4
Credit risk mitigation, collateral and other credit enhancements
11.5
11.1. Credit risk management framework
Please refer to Note 21.1 for details of Westpac’s overall risk management framework.
●Westpac maintains a Credit Risk Management Framework, a Credit Risk Management Strategy, and a Credit Risk Appetite Statement, and a number of supporting policies and
appetite statements that define roles and responsibilities, acceptable practices, limits and key controls.
●The Credit Risk Management Framework describes the principles, methodologies, systems, roles and responsibilities, reports and key controls for managing credit risk.
●The BRiskC, Westpac Group Executive Risk Committee (RISKCO) and Westpac Group Credit Risk Committee (CREDCO) monitor the risk profile, performance and management of
Westpac’s credit portfolio and the development and review of key credit risk policies.
●The Credit Risk Rating System Policy describes the credit risk rating system philosophy, design, key features and uses of rating outcomes.
●All models materially impacting the risk rating process are periodically reviewed in accordance with Westpac’s model risk policies.
●An annual review is performed of the Credit Risk Rating System by the BRiskC and CREDCO.
●Specific credit risk estimates (including PD, LGD and EAD levels) are overseen and reviewed annually in line with Westpac’s Credit Model Risk Policy. Models are approved under
delegated authority from the Chief Risk Officer. Model Risk is overseen by Westpac’s Model Risk Committee.
●In determining the provision for ECL, the forward-looking economic inputs and the probability weightings of the forward-looking scenarios as well as any adjustments made to the
modelled outcomes are subject to the approval of the Chief Financial Officer and the Chief Risk Officer with oversight from the Board of Directors (and its Committees).
●Policies for the delegation of credit approval authorities and formal limits for the extension of credit are established throughout Westpac.
●Credit manuals are established and maintained throughout Westpac including policies governing the origination, evaluation, approval, documentation, settlement and ongoing
management of credit risks.
●Climate change related credit risks are considered in line with our Climate Change Position Statement and Action Plan. Climate change risks are managed in accordance with
Westpac’s risk framework which is supported by the Sustainability Risk Management Framework (SRMF), Group Environmental, Social and Governance (ESG) Credit Risk Policy and
Board Risk Appetite Statements (RAS). The Climate Change Credit Risk Committee oversees work to identify and manage the potential impact on credit exposures from climate
change-related transition and physical risks across Westpac and reports to CREDCO.
●Westpac’s ESG Credit Risk Policy details Westpac’s overall approach to managing ESG risks in the credit risk process for applicable transactions.
●Sector policies guide credit extension where industry-specific guidelines are considered necessary (e.g. acceptable financial ratios or permitted collateral).
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INFORMATION45
Note 11. Credit risk management (Continued)
11.2. Credit risk ratings system
The principal objective of the credit risk rating system is to assess the credit risk to which Westpac is exposed. Westpac 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 PD. Each facility is assigned an LGD. Westpac’s risk rating system has a tiered scale of risk grades for both non-defaulted customers and defaulted customers. Non-defaulted
CRGs are mapped to Moody’s and S&P Global Ratings (S&P) external senior unsecured ratings.
The table below shows Westpac’s high level CRGs for transaction-managed portfolios mapped to Westpac’s credit quality disclosure categories and to their corresponding external rating.
Transaction-managed
Financial statement disclosure
Westpac CRG Moody’s Rating S&P Rating
StrongAAaa – Aa3AAA – AA–
BA1 – A3A+ – A–
CBaa1 – Baa3BBB+ – BBB–
Good/satisfactoryDBa1 – B1BB+ – B+
Westpac Rating
WeakEWatchlist
FSpecial Mention
GSubstandard/Default
HDoubtful/Default
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.
11.3. Credit risk concentrations and maximum exposure to credit risk
Credit risk concentrations
Credit risk is concentrated when a number of counterparties are engaged in similar activities, have similar economic characteristics and thus may be similarly affected by changes in
economic or other conditions.
Westpac monitors its credit portfolio to manage risk concentrations and rebalance the portfolio.
Individual customers or groups of related customers
Westpac has large exposure limits governing the aggregate size of credit exposure normally acceptable to individual customers and groups of related customers. These limits are tiered
by customer risk grade.
Specific industries
Exposures to businesses, governments and other financial institutions are classified into a number of industry clusters based on related Australian and New Zealand Standard Industrial
Classification (ANZSIC) codes and are monitored against Westpac’s industry risk appetite limits.
Individual countries
Westpac has limits governing risks related to individual countries, such as political situations, government policies and economic conditions that may adversely affect either a customer’s
ability to meet its obligations to Westpac, or Westpac’s ability to realise its assets in a particular country.
46 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 11. Credit risk management (Continued)
Maximum exposure to credit risk
The maximum exposure to credit risk (excluding collateral received) is represented by the carrying amount of on-balance sheet financial assets (which comprise cash and balances with
central banks, collateral paid, trading securities and financial assets measured at FVIS, derivative financial instruments, investment securities, loans, other financial assets and certain
balances included in assets held for sale) and undrawn credit commitments.
The following tables set out the credit risk concentrations to which Westpac and the Parent Entity are exposed for on-balance sheet financial assets and for undrawn credit commitments.
The balances for trading securities and financial assets measured at FVIS and investment securities exclude equity securities as the primary financial risk is not credit risk.
The credit concentrations for each significant class of financial asset are:
Trading securities and financial assets measured at
FVIS (Note 16)
●47% (2023: 58%) were issued by financial institutions for Westpac;
48% (2023: 59%) for the Parent Entity.
●50% (2023: 37%) were issued by government or semi-government authorities for Westpac;
49% (2023: 37%) for the Parent Entity.
●82% (2023: 76%) were held in Australia by Westpac;
86% (2023: 83%) by the Parent Entity.
Investment securities (Note 17)●17% (2023: 21%) were issued by financial institutions for Westpac;
17% (2023: 22%) for the Parent Entity.
●82% (2023: 79%) were issued by government or semi-government authorities for Westpac;
83% (2023: 78%) for the Parent Entity.
●91% (2023: 89%) were held in Australia by Westpac;
99% (2023: 99%) by the Parent Entity.
Loans (Note 9)The following tables provides a detailed breakdown of loans by industry and geographic classification.
Derivative financial instruments (Note 20)●81% (2023: 80%) were issued by financial institutions for both Westpac and the Parent Entity.
●90% (2023: 75%) were held in Australia by Westpac;
91% (2023: 76%) by the Parent Entity.
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INFORMATION47
Note 11. Credit risk management (Continued)
2024 2023
a
Total allUndrawnTotal allUndrawn
other oncreditother oncredit
Consolidatedbalancecommit- balancecommit-
$m
Loans sheet ments Total Loans sheet ments Total
Australia
Accommodation, cafes and restaurants
9,810 26 1,637 11,473 8,818 22 1,619 10,459
Agriculture, forestry and fishing
13,733 40 2,713 16,486 11,894 52 2,695 14,641
Construction
7,900 33 4,623 12,556 7,140 37 4,496 11,673
Finance and insurance
29,484 112,860 13,801 156,145 28,162 131,658 13,718 173,538
Government, administration and defence
811 99,830 1,558 102,199 1,030 62,231 1,414 64,675
Manufacturing
9,997 499 8,361 18,857 9,721 824 7,489 18,034
Mining
2,865 415 3,038 6,318 2,506 520 3,364 6,390
Property
60,767 546 13,771 75,084 55,970 668 13,342 69,980
Property services and business services
14,321 149 7,921 22,391 13,468 207 6,542 20,217
Services
13,015 108 8,369 21,492 13,464 86 8,546 22,096
Trade
15,159 366 9,933 25,458 14,101 452 9,457 24,010
Transport and storage
10,289 681 6,313 17,283 8,862 668 5,440 14,970
Utilities
8,175 983 8,373 17,531 7,306 924 5,879 14,109
Retail lending
511,025 1,056 84,006 596,087 494,306 936 85,644 580,886
Other
1,577 592 1,781 3,950 1,524 576 1,545 3,645
Total Australia
708,928 218,184 176,198 1,103,310 678,272 199,861 171,190 1,049,323
New Zealand
Accommodation, cafes and restaurants
313 3 32 348 318 1 33 352
Agriculture, forestry and fishing
8,352 41 573 8,966 8,826 62 627 9,515
Construction
385 1 566 952 408 2 460 870
Finance and insurance
4,757 11,364 1,838 17,959 4,440 13,347 2,414 20,201
Government, administration and defence
210 8,820 812 9,842 183 7,598 809 8,590
Manufacturing
1,785 58 1,444 3,287 2,142 33 1,378 3,553
Mining
151 2 125 278 156 4 72 232
Property
7,604 649 1,080 9,333 7,011 618 1,291 8,920
Property services and business services
962 121 357 1,440 996 111 418 1,525
Services
1,961 45 823 2,829 1,621 26 1,106 2,753
Trade
2,164 32 1,154 3,350 2,409 25 1,118 3,552
Transport and storage
661 105 362 1,128 763 115 404 1,282
Utilities
1,621 557 1,340 3,518 1,566 606 1,488 3,660
Retail lending
63,563 117 14,221 77,901 62,339 92 13,960 76,391
Other
108 77 123 308 148 81 161 390
Total New Zealand
94,597 21,992 24,850 141,439 93,326 22,721 25,739 141,786
Other overseas
Accommodation, cafes and restaurants
85 - 11 96 107 - 10 117
Agriculture, forestry and fishing
2 - 1 3 3 - 1 4
Construction
34 - 73 107 60 - 127 187
Finance and insurance
3,656 9,447 4,964 18,067 2,414 14,091 4,417 20,922
Government, administration and defence
- 4,389 - 4,389 - 3,218 - 3,218
Manufacturing
958 3 1,500 2,461 212 1 1,639 1,852
Mining
28 - 931 959 33 - 666 699
Property
472 2 37 511 466 1 43 510
Property services and business services
503 35 797 1,335 543 22 400 965
Services
36 - 629 665 196 2 335 533
Trade
909 3 1,813 2,725 999 3 1,359 2,361
Transport and storage
527 15 108 650 438 6 132 576
Utilities
232 1 139 372 233 1 39 273
Retail lending
328 - 13 341 347 3 14 364
Other
40 97 47 184 38 75 40 153
Total other overseas
7,810 13,992 11,063 32,865 6,089 17,423 9,222 32,734
Total gross credit risk
811,335 254,168 212,111 1,277,614 777,687 240,005 206,151 1,223,843
a. In 2024, the Group revised the attribution of certain exposures between industry categories to better align with their presentation for regulatory reporting. Certain LCH cleared derivative exposures were also reclassified
between locations to better reflect the location of the underlying risk. Comparatives have been revised to align with current period presentation.
48 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 11. Credit risk management (Continued)
2024 2023
a
Total allUndrawnTotal allUndrawn
other oncreditother oncredit
Parent Entitybalancecommit- balancecommit-
$m
Loans sheet ments Total Loans sheet ments Total
Australia
Accommodation, cafes and restaurants
9,777 26 1,637 11,440 8,784 22 1,619 10,425
Agriculture, forestry and fishing
13,659 40 2,713 16,412 11,828 52 2,695 14,575
Construction
7,188 31 4,623 11,842 6,540 36 4,496 11,072
Finance and insurance
29,430 160,947 13,801 204,178 28,098 178,999 13,718 220,815
Government, administration and defence
809 99,831 1,558 102,198 1,028 62,231 1,414 64,673
Manufacturing
9,811 496 8,361 18,668 9,544 824 7,489 17,857
Mining
2,816 415 3,038 6,269 2,464 520 3,364 6,348
Property
60,743 548 13,771 75,062 55,934 668 13,341 69,943
Property services and business services
14,013 151 7,921 22,085 13,147 207 6,542 19,896
Services
12,802 107 8,369 21,278 13,258 86 8,546 21,890
Trade
14,962 365 9,933 25,260 13,924 452 9,457 23,833
Transport and storage
9,978 682 6,313 16,973 8,593 668 5,440 14,701
Utilities
8,145 983 8,373 17,501 7,280 924 5,879 14,083
Retail lending
511,023 1,056 84,006 596,085 494,297 934 85,644 580,875
Other
1,330 521 1,781 3,632 1,276 474 1,545 3,295
Total Australia
706,486 266,199 176,198 1,148,883 675,995 247,097 171,189 1,094,281
New Zealand
Accommodation, cafes and restaurants
- 2 - 2 - - - -
Agriculture, forestry and fishing
- 11 4 15 - 29 4 33
Construction
2 - 78 80 4 - 52 56
Finance and insurance
- 5,969 112 6,081 - 7,484 112 7,596
Government, administration and defence
- 2,087 2 2,089 - 1,761 2 1,763
Manufacturing
35 55 82 172 43 26 85 154
Mining
- 1 61 62 - 3 - 3
Property
- 141 - 141 - 138 1 139
Property services and business services
2 21 13 36 5 19 13 37
Services
- 39 6 45 - 20 7 27
Trade
266 28 223 517 316 20 254 590
Transport and storage
1 76 32 109 1 15 20 36
Utilities
- 327 94 421 - 311 77 388
Retail lending
- - - - - - - -
Other
- - 1 1 - 2 1 3
Total New Zealand
306 8,757 708 9,771 369 9,828 628 10,825
Other overseas
Accommodation, cafes and restaurants
74 - 11 85 75 - 10 85
Agriculture, forestry and fishing
1 - 1 2 2 - 1 3
Construction
24 - 66 90 53 - 109 162
Finance and insurance
3,648 9,047 4,957 17,652 2,408 14,196 4,409 21,013
Government, administration and defence
- 3,288 - 3,288 - 1,831 - 1,831
Manufacturing
895 4 1,498 2,397 195 1 1,637 1,833
Mining
2 - 928 930 6 - 663 669
Property
241 1 16 258 235 1 20 256
Property services and business services
480 35 794 1,309 521 22 395 938
Services
17 - 626 643 173 1 332 506
Trade
768 3 1,787 2,558 868 3 1,243 2,114
Transport and storage
499 15 103 617 410 6 128 544
Utilities
228 1 139 368 207 1 18 226
Retail lending
282 - 10 292 290 - 11 301
Other
30 94 20 144 27 75 20 122
Total other overseas
7,189 12,488 10,956 30,633 5,470 16,137 8,996 30,603
Total gross credit risk
713,981 287,444 187,862 1,189,287 681,834 273,062 180,813 1,135,709
a. In 2024, the Group revised the attribution of certain exposures between industry categories to better align with their presentation for regulatory reporting. Certain LCH cleared derivative exposures were also reclassified
between locations to better reflect the location of the underlying risk. Comparatives have been revised to align with current period presentation.
FINANCIAL
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REVIEW
SHAREHOLDER
INFORMATION49
Note 11. Credit risk management (Continued)
11.4. Credit quality of financial assets
Credit quality disclosures
The following tables show the credit quality of gross credit risk exposures measured at amortised cost or at FVOCI to which the impairment requirements apply. The credit quality is
determined by reference to the credit risk ratings system (refer to Note 11.2) and expectations of future economic conditions under multiple scenarios.
Consolidated 2024 2023
a
$m
Stage 1 Stage 2 Stage 3 Total
b
Stage 1 Stage 2 Stage 3 Total
b
Loans - housing
Strong
311,054 24,975 - 336,029 291,914 27,447 - 319,361
Good/satisfactory
159,016 45,242 - 204,258 156,836 48,929 - 205,765
Weak
2,512 16,389 6,893 25,794 2,533 14,178 5,237 21,948
Total loans - housing
472,582 86,606 6,893 566,081 451,283 90,554 5,237 547,074
Loans - personal
Strong
4,104 104 - 4,208 4,318 95 - 4,413
Good/satisfactory
5,254 825 - 6,079 6,097 802 - 6,899
Weak
191 570 190 951 252 623 192 1,067
Total loans - personal
9,549 1,499 190 11,238 10,667 1,520 192 12,379
Loans - business
Strong
81,696 19,387 - 101,083 80,177 13,564 - 93,741
Good/satisfactory
75,873 47,282 - 123,155 63,434 52,477 - 115,911
Weak
200 6,347 3,231 9,778 200 5,468 2,914 8,582
Total loans - business
157,769 73,016 3,231 234,016 143,811 71,509 2,914 218,234
Investment securities
Strong
102,721 - - 102,721 73,963 - - 73,963
Good/satisfactory
- 71 - 71 - 51 - 51
Weak
- 649 - 649 - 876 - 876
Total investment securities
c
102,721 720 - 103,441 73,963 927 - 74,890
All other financial assets
Strong
76,264 - - 76,264 112,482 - - 112,482
Good/satisfactory
899 - - 899 597 - - 597
Weak
229 - - 229 197 - - 197
Total all other financial assets
77,392 - - 77,392 113,276 - - 113,276
Undrawn credit commitments
Strong
140,786 14,341 - 155,127 137,275 11,169 - 148,444
Good/satisfactory
40,271 14,186 - 54,457 40,482 15,142 - 55,624
Weak
218 1,868 441 2,527 214 1,503 366 2,083
Total undrawn credit commitments
181,275 30,395 441 212,111 177,971 27,814 366 206,151
Total strong
716,625 58,807 - 775,432 700,129 52,275 - 752,404
Total good/satisfactory
281,313 107,606 - 388,919 267,446 117,401 - 384,847
Total weak
3,350 25,823 10,755 39,928 3,396 22,648 8,709 34,753
Total on and off-balance sheet
1,001,288 192,236 10,755 1,204,279 970,971 192,324 8,709 1,172,004
a.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 to
align with current period presentation.
b. This credit quality disclosure differs to that of credit risk concentration as it relates only to financial assets measured at amortised cost or at FVOCI and therefore excludes trading securities and financial assets measured at
FVIS, and derivative financial instruments.
c. Excludes equity instruments. Includes $1,172 million (2023: $1,438 million) at amortised cost. $452 million (2023: $511 million) of these are classified as strong, $71 million (2023: $51 million) are classified as
good/satisfactory and $649 million (2023: $876 million) are classified as weak.
Details of collateral held in support of these balances are provided in Note 11.5.
50 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 11. Credit risk management (Continued)
Parent Entity2024 2023
a
$m
Stage 1 Stage 2 Stage 3 Total
b
Stage 1 Stage 2 Stage 3 Total
b
Loans - housing
Strong
304,169 24,829 - 328,998 285,019 27,316 - 312,335
Good/satisfactory
117,339 33,284 - 150,623 117,007 36,087 - 153,094
Weak
2,233 15,471 6,235 23,939 2,255 13,342 4,754 20,351
Total loans - housing
423,741 73,584 6,235 503,560 404,281 76,745 4,754 485,780
Loans - personal
Strong
3,721 92 - 3,813 3,917 82 - 3,999
Good/satisfactory
4,849 647 - 5,496 5,692 625 - 6,317
Weak
178 512 180 870 236 561 180 977
Total loans - personal
8,748 1,251 180 10,179 9,845 1,268 180 11,293
Loans - business
Strong
70,448 18,047 - 88,495 68,229 12,647 - 80,876
Good/satisfactory
61,784 42,132 - 103,916 50,967 46,127 - 97,094
Weak
123 4,814 2,894 7,831 124 4,086 2,581 6,791
Total loans - business
132,355 64,993 2,894 200,242 119,320 62,860 2,581 184,761
Investment securities
Strong
95,346 - - 95,346 67,257 - - 67,257
Good/satisfactory
- 71 - 71 - 51 - 51
Weak--------
Total investment securities
c
95,346 71 - 95,417 67,257 51 - 67,308
All other financial assets
Strong
119,265 - - 119,265 155,014 - - 155,014
Good/satisfactory
731 - - 731 515 - - 515
Weak
71 - - 71 50 - - 50
Total all other financial assets
120,067 - - 120,067 155,579 - - 155,579
Undrawn credit commitments
Strong
129,379 13,659 - 143,038 124,609 10,412 - 135,021
Good/satisfactory
30,827 11,667 - 42,494 31,265 12,655 - 43,920
Weak
212 1,707 411 2,330 206 1,323 343 1,872
Total undrawn credit commitments
160,418 27,033 411 187,862 156,080 24,390 343 180,813
Total strong
722,328 56,627 - 778,955 704,045 50,457 - 754,502
Total good/satisfactory
215,530 87,801 - 303,331 205,446 95,545 - 300,991
Total weak
2,817 22,504 9,720 35,041 2,871 19,312 7,858 30,041
Total on and off-balance sheet
940,675 166,932 9,720 1,117,327 912,362 165,314 7,858 1,085,534
a. 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 to
align with current period presentation.
b. This credit quality disclosure differs to that of credit risk concentration as it relates only to financial assets measured at amortised cost or at FVOCI and therefore excludes trading securities and financial assets measured at
FVIS, and derivative financial instruments.
c. Excludes equity instruments. Includes $71 million (2023: $51 million) at amortised cost which are all classified as good/satisfactory.
Details of collateral held in support of these balances are provided in Note 11.5.
FINANCIAL
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SHAREHOLDER
INFORMATION51
Note 11. Credit risk management (Continued)
11.5. Credit risk mitigation, collateral and other credit enhancements
Westpac uses a variety of techniques to reduce the credit risk arising from its lending activities. This includes Westpac establishing that it has direct, irrevocable and unconditional
recourse to collateral and other credit enhancements through obtaining legally enforceable documentation.
Collateral
The table below describes the nature of collateral or security held for each relevant class of financial asset.
Loans – housing and personal
a
Housing loans are secured by a mortgage over property and additional security may take the form of guarantees and deposits.
Personal lending (including credit cards and overdrafts) is predominantly unsecured. Where security is taken, it is restricted to eligible motor vehicles, caravans, campers, motor
homes and boats. Personal lending also includes margin lending which is secured primarily by shares or managed funds.
Loans – businessBusiness loans may be secured, partially secured or unsecured. Security is typically taken by way of a mortgage over property and/or a general security agreement over
business assets or other assets.
Other security such as guarantees, standby letters of credit or derivative protection may also be taken as collateral, if appropriate.
Trading securities, financial assets measured at FVIS and
derivatives
These exposures are carried at fair value which reflects the credit risk.
For trading securities, no collateral is sought directly from the issuer or counterparty; however this may be implicit in the terms of the instrument (such as an asset-backed
security). The terms of debt securities may include collateralisation.
For derivatives, master netting agreements are typically used to enable the effects of derivative assets and liabilities with the same counterparty to be offset when measuring
these exposures. Additionally, collateralisation agreements are also typically entered into with major institutional counterparties to avoid the potential build-up of excessive mark-
to-market positions. Derivative transactions are increasingly being cleared through central clearers.
a. This includes collateral held in relation to associated credit commitments.
Management or risk mitigation
Westpac mitigates credit risk through controls covering:
Collateral and valuation management
The estimated realisable value of collateral held in support of loans is based on a combination of:
●Formal valuations currently held for such collateral; and
●Management’s assessment of the estimated realisable value of all collateral held.
This analysis also takes into consideration any other relevant knowledge available to management at the time. Updated valuations are obtained when appropriate.
Westpac revalues collateral related to financial markets positions on a daily basis and has formal processes in place to promptly call for collateral top-ups, if required. These
processes include margining for non-centrally cleared customer derivatives as regulated by Australian Prudential Standard CPS226. The collateralisation arrangements are
documented via the Credit Support Annex of the ISDA dealing agreements and Global Master Repurchase Agreements (GMRA) for repurchase transactions.
In relation to financial markets positions, Westpac only recognises collateral which is:
●Cash, primarily in Australian dollars (AUD), New Zealand dollars (NZD), US dollars (USD), Canadian dollars (CAD), British pounds (GBP) or European Union euro (EUR);
●Bonds issued by Australian Commonwealth, State and Territory governments or their Public Sector Enterprises, provided these attract a zero risk-weighting under
Australian Prudential Standard (APS) 112;
●Securities issued by other sovereign governments and supranationals as approved by an authorised credit officer; or
●Protection bought via credit-linked notes (provided the proceeds are invested in cash or other eligible collateral).
Other credit enhancements
Westpac only recognises guarantees, standby letters of credit, or credit derivative protection from entities meeting minimum eligibility requirements (provided they are not
related to the entity with which Westpac has a credit exposure) including but not limited to:
●Sovereign;
●Australia and New Zealand public sector;
●ADIs and overseas banks with a minimum risk grade equivalent of A3 / A–; and
●Others with a minimum risk grade equivalent of A3 / A–.
Credit Portfolio Management (CPM) manages Westpac’s corporate, sovereign and bank credit portfolios through monitoring the exposure and any offsetting hedge positions.
CPM purchases credit protection from entities that meet minimum eligibility requirements.
OffsettingCreditworthy customers domiciled in Australia and New Zealand may enter into formal agreements with Westpac, permitting Westpac to set-off gross credit and debit balances
in their nominated accounts. Cross-border set-offs are not permitted.
Close-out netting is undertaken with counterparties with whom the Group has entered into a legally enforceable master netting agreement for their off-balance sheet financial
market transactions in the event of default.
Further details of offsetting are provided in Note 23.
Central clearingWestpac executes derivative transactions through central clearing counterparties. Central clearing counterparties mitigate risk through stringent membership requirements, the
collection of margin against all trades placed, the default fund, and an explicitly defined order of priority of payments in the event of default.
52 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 11. Credit risk management (Continued)
Collateral held against loans
Westpac analyses the coverage of the loan portfolio which is secured by the collateral that it holds. Coverage is measured as follows:
Coverage
Secured loan to collateral value ratio
Fully securedLess than or equal to 100%
Partially securedGreater than 100% but not more than 150%
Unsecured
Greater than 150%, or no security held (e.g. can include credit cards, personal loans, and exposure to highly rated corporate entities)
Westpac and the Parent Entity’s loan portfolio have the following coverage from collateral held:
2024 2023
HousingPersonalBusinessHousingPersonalBusiness
% loans
a
loansloansTotalloans
a
loansloansTotal
Performing loans
Consolidated
Fully secured
100.0 9.7 68.1 89.6 100.0 10.0 66.1 89.1
Partially secured
- 11.1 14.2 4.2 - 16.4 15.2 4.5
Unsecured
- 79.2 17.7 6.2 - 73.6 18.7 6.4
Total
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Parent Entity
Fully secured
100.0 10.7 68.3 89.9 100.0 10.9 66.3 89.4
Partially secured
- 12.2 14.1 4.1 - 18.0 15.3 4.5
Unsecured
- 77.1 17.6 6.0 - 71.1 18.4 6.1
Total
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Non-performing loans
Consolidated
Fully secured
91.5 - 56.7 79.093.9 - 55.3 78.2
Partially secured
8.5 23.2 23.4 13.4 6.1 33.9 23.9 13.0
Unsecured
- 76.8 19.9 7.6 - 66.1 20.8 8.8
Total
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Parent Entity
Fully secured
91.8 - 59.7 80.0 93.9 - 56.8 78.9
Partially secured
8.2 24.4 21.7 12.7 6.1 35.6 23.3 12.7
Unsecured
- 75.6 18.6 7.3 - 64.4 19.9 8.4
Total
100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
a. For the purpose of collateral classification, housing loans are classified as fully secured, unless they are non-performing in which case they may be classified as partially secured.
Details of the carrying value and associated provision for ECL are disclosed in Note 9 and Note 10 respectively. The credit quality of loans is disclosed in Note 11.4.
Collateral held against financial assets other than loans
Consolidated Parent Entity
$m2024 20232024 2023
Cash, primarily for derivatives
3,079 3,526 2,936 3,244
Securities under reverse repurchase agreements
a
17,950 11,862 17,950 11,821
Securities under derivatives
a
112 53 112 53
Total other collateral held
21,141 15,441 20,998 15,118
a. Securities received as collateral are not recognised in the Group and Parent Entity’s balance sheet.
FINANCIAL
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SHAREHOLDER
INFORMATION53
Deposits and other funding arrangements
Note 12. Deposits and other borrowings
Accounting policy
Deposits and other borrowings are initially recognised at fair value and subsequently either measured at amortised cost using the effective interest method or at fair value.
Deposits and other borrowings are designated at fair value if they are managed on a fair value basis, reduce or eliminate an accounting mismatch or contain an embedded derivative.
Where they are measured at fair value, any changes in fair value (except those due to changes in credit risk) are recognised in the income statement. The change in the fair value that
is attributable to changes in credit risk is recognised in OCI except where it would create an accounting mismatch, in which case it is also recognised in the income statement.
Refer to Note 22 for balances measured at fair value and amortised cost.
Interest expense incurred is recognised in net interest income using the effective interest method.
Non-interest bearing relates to instruments which do not carry an entitlement to interest.
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Australia
Certificates of deposit
33,215 32,947 33,215 32,947
Non-interest bearing, repayable at call
a
128,705 120,354 128,705 120,354
Other interest bearing - transactions
a
110,393 114,097 110,393 114,097
Other interest bearing - savings
a
197,415179,110197,415179,110
Other interest bearing term
157,282 144,220 157,282 144,220
Total Australia
627,010 590,728 627,010 590,728
New Zealand
Certificates of deposit
1,711 2,247 - -
Non-interest bearing, repayable at call
a
10,287 11,514 - -
Other interest bearing - transactions
a
8,815 8,160 - -
Other interest bearing - savings
a
17,85418,796--
Other interest bearing term
36,245 35,827 - -
Total New Zealand
74,912 76,544 - -
Other overseas
Certificates of deposit
11,948 12,023 11,948 12,023
Non-interest bearing, repayable at call
1,193 1,358 503 548
Other interest bearing - transactions
736 789 532 573
Other interest bearing - savings9871,003892883
Other interest bearing term
3,703 5,723 3,596 5,602
Total other overseas
18,567 20,896 17,471 19,629
Total deposits and other borrowings
720,489 688,168 644,481 610,357
a. In 2024, certain deposit products were reclassified between Savings and Transactions to align with how they are marketed to customers. The Group has also revised the attribution of certain deposit products between
interest bearing and non-interest bearing. Comparatives have been revised to align with current period presentation.
54 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 12. Deposits and other borrowings (Continued)
Uninsured time deposits
Uninsured time deposits are deposits that are not covered by a government based deposit insurance scheme and which have contractual impediments on withdrawal. For Westpac, this
encompass certificates of deposits and term deposits that are in excess of, or ineligible for, the Australian Government’s Financial Claims Scheme (FCS) limit. The table below shows the
time deposits by categories and remaining maturity:
ConsolidatedOver 3 months toOver 6 months to
$m
Up to 3 months 6 months 1 year Over 1 year Total
Certificates of deposit in excess of insured amounts
Australia
11,627 20,405 1,161 22 33,215
New Zealand
1,532 170 9 - 1,711
Other overseas
2,129 4,742 5,077 - 11,948
Total certificates of deposit in excess of insured amounts
15,288 25,317 6,247 22 46,874
Term deposits in excess of insured amounts
Australia
61,500 23,100 28,351 8,025 120,976
New Zealand
14,463 12,914 6,848 2,020 36,245
Other overseas
1,722 927 944 108 3,701
Total term deposits in excess of insured amounts
77,685 36,941 36,143 10,153 160,922
Interbank term deposits in excess of insured amounts
a
Australia
802 1,891 857 7 3,557
New Zealand
- - - - -
Other overseas
5 -7 27 39
Total interbank term deposits in excess of insured amounts
807 1,891 864 34 3,596
a. Interbank term deposits are included in Note 19.
FINANCIAL
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PERFORMANCE
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SHAREHOLDER
INFORMATION55
Note 13. Debt issues
Accounting policy
Debt issues are bonds, notes, commercial paper and debentures that have been issued by entities in Westpac.
Debt issues are initially measured at fair value and subsequently either measured at amortised cost using the effective interest method or at fair value.
Debt issues are designated at fair value if they reduce or eliminate an accounting mismatch or contain an embedded derivative.
Where they are measured at fair value, any changes in fair value (except those due to changes in credit risk) are recognised in the income statement. The change in the fair value that
is attributable to changes in credit risk is recognised in OCI except where it would create an accounting mismatch, in which case it is also recognised in the income statement.
Refer to Note 22 for balances measured at fair value and amortised cost.
Interest expense incurred is recognised within net interest income using the effective interest method.
In the following table, the distinction between short-term (12 months or less) and long-term (greater than 12 months) debt is based on the original maturity of the underlying security.
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Short-term debt
Own issuances
32,328 29,285 28,905 27,915
Total short-term debt
32,328 29,285 28,905 27,915
Long-term debt
Covered bonds
39,472 41,605 35,513 36,954
Senior
91,945 81,385 79,464 70,088
Securitisation
5,539 4,298 - -
Total long-term debt
136,956 127,288 114,977 107,042
Total debt issues
169,284 156,573 143,882 134,957
Movement reconciliation
Balance as at beginning of year156,573144,868134,957122,339
Issuances80,24570,97468,43862,992
Maturities, repayments, buybacks and reductions(67,100)(62,596)(58,931)(52,671)
Total cash movements13,1458,3789,50710,321
FX translation impact(5,798)3,458(5,167)2,530
Fair value adjustments283(135)275(144)
Fair value hedge accounting adjustments4,338(346)3,659(348)
Other743350651259
Total non-cash movements(434)3,327(582)2,297
Balance as at end of year169,284156,573143,882134,957
56 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 13. Debt issues (Continued)
Consolidated
$m
2024 2023
Short-term debt
Own issuances:
US commercial paper
22,507 22,687
EUR commercial paper1,048-
Senior Debt:
AUD1,9002,090
EUR483-
GBP5,3133,265
USD-564
Other1,077679
Total short-term debt
32,328 29,285
Long-term debt (by currency):
AUD
41,191 36,346
CHF
2,554 3,358
EUR
32,182 34,002
GBP
5,695 3,202
JPY
78 80
NZD
3,483 3,324
USD
50,258 45,288
Other
1,515 1,688
Total long-term debt
136,956 127,288
Westpac manages FX exposure from debt issuances as part of its hedging activities. Further details of Westpac’s hedge accounting are in Note 20.
FINANCIAL
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PERFORMANCE
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SHAREHOLDER
INFORMATION57
Note 14. Loan capital
Accounting policy
Loan capital are instruments issued by Westpac which qualify for inclusion as regulatory capital under the standards issued by the prudential regulator in the relevant jurisdiction. Loan
capital is initially measured at fair value and subsequently measured at amortised cost using the effective interest method. Interest expense incurred is recognised in net interest income.
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Additional Tier 1 (AT1) loan capital
Westpac capital notes
8,3768,0568,376 8,056
USD AT1 securities
1,7281,7501,728 1,750
Total AT1 loan capital
10,1049,80610,104 9,806
Tier 2 loan capital
Subordinated notes
27,77923,37026,666 22,279
Total Tier 2 loan capital
27,77923,37026,666 22,279
Total loan capital
37,88333,17636,770 32,085
Movement reconciliation
Balance as at beginning of year33,17631,25432,08530,734
Issuances6,3263,4536,3262,894
Maturities, repayments, buybacks and reductions(1,957)(1,171)(1,951)(1,171)
Total cash movements4,3692,2824,3751,723
FX translation impact(1,416)235(1,401)212
Fair value hedge accounting adjustments1,714(623)1,675(611)
Other40283627
Total non-cash movements338(360)310(372)
Balance as at end of year37,88333,17636,77032,085
Additional Tier 1 loan capital
A summary of the key terms and common features of AT1 instruments is provided below.
Consolidated and Parent EntityPotential scheduledOptional
$m
Distribution or interest rate conversion date
a
redemption date
b
2024 2023
Westpac capital notes (WCN)
AUD 1,690 million WCN5(3-month BBSW rate + 3.20% p.a.)22 September 202722 September 20251,6881,686
x (1 - Australian corporate tax rate)
AUD 1,423 million WCN6(3-month BBSW rate + 3.70% p.a.)31 July 202631 July 2024
c
-1,421
x (1 - Australian corporate tax rate)
AUD 1,723 million WCN7(3-month BBSW rate + 3.40% p.a.)22 March 202922 March 20271,7161,714
x (1 - Australian corporate tax rate)
AUD 1,750 million WCN8(3-month BBSW rate + 2.90% p.a.)21 June 203221 September 20291,7401,739
x (1 - Australian corporate tax rate)
AUD 1,509 million WCN9(3-month BBSW rate + 3.40% p.a.)22 June 203122 September 20281,4991,496
x (1 - Australian corporate tax rate)
AUD 1,750 million WCN10(3-month BBSW rate + 3.10% p.a.)22 June 203422 September 20311,733-
x (1 - Australian corporate tax rate)
Total WCN
8,376 8,056
USD AT1 securities
USD 1,250 million USD AT1 securities
Fixed 5.00% p.a.
d
n/a 21 September 20271,728 1,750
Total USD AT1 securities
1,728 1,750
a. Conversion is subject to the satisfaction of the scheduled conversion conditions. If the conversion conditions are not satisfied on the relevant scheduled conversion date, conversion will not occur until the next distribution
payment date on which the scheduled conversion conditions are satisfied, if ever.
b. Certain AT1 instruments may have more than one optional redemption date and for the purposes of the table above the first optional redemption date is shown. Westpac may elect to redeem the relevant AT1 instrument on
the optional redemption date or dates, subject to APRA’s prior written approval.
c. On 18 December 2023, AUD 802 million of WCN6 were transferred to the WCN6 nominated party for AUD 100 each pursuant to the WCN10 reinvestment offer. Those WCN6 were subsequently redeemed and cancelled
by Westpac. On 31 July 2024, the outstanding AUD 621 million of WCN6 were redeemed and cancelled by Westpac for AUD 100 each.
d. Until but excluding 21 September 2027 (first reset date). If not redeemed, converted or written-off earlier, from, and including, each reset date to, but excluding, the next succeeding reset date, at a fixed rate p.a. equal to
the prevailing 5-year USD mid-market swap rate plus 2.89% p.a.
58 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 14. Loan capital (Continued)
Common features of AT1 instruments issued by Westpac Banking Corporation
Payment conditions
Distributions and interest payments on the AT1 instruments are discretionary and will only be paid if the payment conditions are satisfied, including that the payment will not result in a
breach of Westpac’s capital requirements under APRA’s prudential standards; not result in Westpac becoming, or being likely to become, insolvent; and if APRA does not object to the
payment.
Broadly, if for any reason a distribution or interest payment has not been paid in full on the relevant payment date, Westpac must not determine or pay any dividends on Westpac ordinary
shares or undertake a discretionary buyback or capital reduction of Westpac ordinary shares, unless the unpaid amount is paid in full within 20 business days of the relevant payment
date or in certain other circumstances.
The AT1 instruments convert into Westpac ordinary shares in the following circumstances:
●Scheduled Conversion
On the scheduled conversion date, provided certain conversion conditions are satisfied, the relevant AT1 instrument
1
will convert and holders will receive a variable number of
Westpac ordinary shares calculated using the face value of the relevant AT1 instrument and the Westpac ordinary share price determined over the 20 business day period prior to the
scheduled conversion date, including a 1% discount.
●Capital Trigger Event or Non-Viability Trigger Event
Westpac will be required to convert some or all AT1 instruments upon the occurrence of:
– A capital trigger event, when Westpac determines, or APRA notifies Westpac in writing that it believes, Westpac’s Common Equity Tier 1 Capital ratio is equal to or less than
5.125% (on a Level 1 or Level 2 basis
2
); or
– A non-viability trigger event, when APRA notifies Westpac in writing that it believes conversion, write-off or write-down of capital instruments of the Westpac, or public sector
injection of capital (or equivalent support), in each case is necessary because without it, Westpac would become non-viable
For each AT1 instrument converted, holders will receive a variable number of Westpac ordinary shares calculated using the face value of the relevant AT1 instrument and the Westpac
ordinary share price over the five business day period prior to the capital trigger event date or non-viability trigger event date and includes a 1% discount, subject to a maximum
conversion number. The maximum conversion number is based on an ordinary share price broadly equivalent to 20% of the Westpac ordinary share price at the time of issue.
Following the occurrence of a capital trigger event or non-viability trigger event, if conversion does not occur within five business days, holders’ rights in relation to the relevant AT1
instrument will be immediately and irrevocably terminated.
●Conversion in other circumstances
Westpac is able to elect to convert
1
, or may be required to convert
1
, AT1 instruments early in certain circumstances. The terms of conversion are broadly similar to scheduled
conversion, however, the maximum conversion number will depend on the conversion event.
●Early Redemption
Westpac is able to elect to redeem the relevant AT1 instrument on the optional redemption dates or for certain taxation or regulatory reasons, subject to APRA’s prior written approval.
1. Excludes USD AT1 securities.
2. Level 1 comprises Westpac Banking Corporation and its subsidiary entities that have been approved by APRA as being part of an ‘Extended Licensed Entity’ for the purpose of measuring capital adequacy. Level 2 is the
consolidation of Westpac Banking Corporation and all its subsidiary entities except those entities specifically excluded by APRA regulations. The head of the Level 2 group is Westpac Banking Corporation.
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Note 14. Loan capital (Continued)
Tier 2 loan capital
A summary of the key terms and common features of Westpac’s Tier 2 instruments (subordinated notes) is provided below:
Optional
$m Interest rate
a
Maturity date redemption date
b
2024 2023
Subordinated notes issued by Westpac Banking Corporation
USD 100 million Fixed 23 February 2046 n/a 110 103
JPY 20,000 million Fixed 19 May 2026 n/a 202 206
JPY 10,200 million Fixed 2 June 2026 n/a 103 105
JPY 10,000 million Fixed 9 June 2026 n/a 101 103
USD 1,500 million Fixed 23 November 2031 23 November 2026 2,095 2,127
AUD 350 million Fixed 16 August 2029 16 August 2024 - 350
AUD 185 millionFixed24 January 2048n/a184184
AUD 130 millionFixed2 March 2048n/a130130
USD 1,000 millionFixed24 July 2039n/a1,1961,134
USD 1,250 millionFixed24 July 203424 July 20291,6861,677
AUD 1,000 millionFloating27 August 202927 August 2024-1,000
USD 1,500 millionFixed4 February 20304 February 20252,1412,199
USD 1,500 millionFixed15 November 203515 November 20301,8541,802
USD 1,000 millionFixed16 November 2040n/a1,010939
AUD 1,250 millionFloating29 January 203129 January 20261,2501,236
EUR 1,000 millionFixed13 May 203113 May 20261,5441,476
USD 1,000 millionFixed18 November 2041n/a1,059989
USD 1,250 millionFixed18 November 203618 November 20311,5721,529
JPY 26,000 millionFixed8 June 20328 June 2027261266
USD 1,000 millionFixed10 August 203310 August 20321,3681,346
SGD 450 millionFixed7 September 20327 September 2027516498
AUD 1,500 millionFloating23 June 203323 June 20281,4961,494
AUD 300 millionFixed/Floating23 June 202323 June 2028300292
AUD 1,100 millionFixed/Floating23 June 203823 June 20331,1001,092
AUD 1,500 millionFixed/Floating15 November 2038n/a1,502-
USD 750 millionFixed17 November 2033n/a1,148-
AUD 650 millionFloating3 April 20343 April 2029649-
AUD 600 millionFixed/Floating3 April 20343 April 2029593-
AUD 1,000 millionFloating10 July 203410 July 2029996-
AUD 500 millionFixed/Floating10 July 203410 July 2029500-
Total subordinated notes issued by Westpac Banking Corporation26,66622,277
Subordinated notes issued by Westpac New Zealand Limited
c
NZD 600 millionFixed/Floating16 September 203216 September 2027541553
NZD 600 millionFixed/Floating14 February 203414 February 2029572540
Total subordinated notes issued by Westpac New Zealand Limited1,1131,093
Total subordinated notes
27,779 23,370
a. Certain subordinated notes have a fixed interest rate for the period up to the optional redemption date and a floating interest rate thereafter.
b. Certain Tier 2 instruments may have more than one optional redemption date and for the purposes of the table above the first optional redemption date is shown. Westpac Banking Corporation may elect to redeem the
relevant Tier 2 instrument on the optional redemption date or dates, subject to APRA’s prior written approval.
c. For subordinated notes issued by Westpac New Zealand Limited, it may elect to redeem all or some of the Tier 2 instruments for their face value together with accrued interest (if any) on the optional redemption date or any
interest payment date thereafter, subject to RBNZ’s prior written approval. Early redemption of all of the Tier 2 instruments for certain tax or regulatory reasons is permitted on an interest payment date subject to the RBNZ’s
prior written approval.
60 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 14. Loan capital (Continued)
Common features of subordinated notes
Issued by Westpac Banking Corporation
Interest payments are subject to Westpac being solvent at the time of, and immediately following, the interest payment.
Non-viability trigger event
The definition of non-viability trigger event is described under AT1 loan capital. Upon the occurrence of a non-viability trigger event, Westpac will be required to convert some or all
subordinated notes into a variable number of Westpac ordinary shares calculated in a manner similar to that described under AT1 loan capital.
Following the occurrence of a non-viability trigger event, if conversion of a Tier 2 instrument does not occur within five business days, holders’ rights in relation to the relevant Tier 2
instrument will be immediately and irrevocably terminated.
Issued by Westpac New Zealand Limited
Interest payments are subject to Westpac New Zealand Limited being solvent at the time of, and immediately following, the interest payment.
Non-viability trigger event
Tier 2 instruments issued by Westpac New Zealand Limited do not have a non-viability trigger event. These instruments qualify as Tier 2 capital under the RBNZ capital adequacy
framework but not under APRA’s capital adequacy framework.
Note 15. Securitisation, covered bonds and other transferred assets
Westpac enters into transactions in the normal course of business by which financial assets are transferred to counterparties or structured entities. Depending on the circumstances,
these transfers may result in de-recognition of the assets in their entirety, partial de-recognition or no de-recognition of the assets subject to the transfer. For Westpac’s accounting policy
on de-recognition of financial assets refer to the Financial Assets and Financial Liabilities (see page 30).
Securitisation
Securitisation is the transferring of assets (or an interest in either the assets or the cash flows arising from the assets) to a structured entity which then issues the majority of interest
bearing debt securities to third party investors for funding deals and to Westpac for liquidity deals.
Securitisation of its own assets is used by Westpac as a funding and liquidity tool. For securitisation structured entities which Westpac controls, as defined in Note 30, the structured
entities are classified as subsidiaries and consolidated. When assessing whether Westpac controls a structured entity, it considers its exposure to and ability to affect variable returns.
Westpac may have variable returns from a structured entity through ongoing exposures to the risks and rewards associated with the assets, the provision of derivatives, liquidity facilities,
trust management and operational services.
Undrawn funding and liquidity facilities of $345 million (2023: $356 million) were provided by Westpac for the securitisation of its own assets.
Covered bonds
Westpac has two covered bond programs relating to Australian residential mortgages (Australian Program) and New Zealand residential mortgages (New Zealand Program). Under these
programs, selected pools of residential mortgages are assigned to bankruptcy remote structured entities which provide guarantees on the payments to bondholders. Through the
guarantees and derivatives with the structured entities, Westpac has variable returns from these structured entities and consolidates them.
Repurchase agreements
Where securities are sold subject to an agreement to repurchase at a predetermined price, they remain recognised in the balance sheet in their original category (i.e. Trading securities or
Investment securities).
The cash consideration received is recognised as a liability (Repurchase agreements). Refer to Note 19 for further details.
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Note 15. Securitisation, covered bonds and other transferred assets (Continued)
The following tables present Westpac’s assets transferred and their associated liabilities.
For those liabilities that only have
recourse to the transferred assets:
CarryingCarrying
amount ofamount ofFair value ofFair value of
transferredassociatedtransferredtransferredNet fair
$m
assets liabilities assets liabilities value position
Consolidated
2024
Securitisation
a
5,5805,5395,5755,55223
Covered bonds
b
50,26939,472n/an/an/a
Repurchase agreements
19,93818,848n/an/an/a
Total
75,78763,8595,5755,55223
2023
Securitisation
a
4,3294,2984,3064,29412
Covered bonds
b
50,29641,605n/an/an/a
Repurchase agreements
35,07525,059n/an/an/a
Total
89,70070,9624,3064,29412
Parent Entity
2024
Securitisation
a
6,4496,4076,4436,42023
Covered bonds
b
43,33735,512n/an/an/a
Repurchase agreements
16,20516,071n/an/an/a
Total
65,99157,9906,4436,42023
2023
Securitisation
a
5,1145,0825,0885,0799
Covered bonds
b
43,29136,954n/an/an/a
Repurchase agreements
28,96820,315n/an/an/a
Total
77,37362,3515,0885,0799
a. The carrying amount of assets securitised exceeds the amount of notes issued primarily because the carrying amount includes both principal and income received from the transferred assets.
b. The difference between the carrying values of covered bonds and the assets pledged reflects the over-collateralisation required to maintain the ratings of the covered bonds and also additional assets to allow immediate
issuance of additional covered bonds if required. These additional assets can be repurchased by Westpac at its discretion, subject to the conditions set out in the transaction documents.
62 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Other financial instrument disclosures
Note 16. Trading securities and financial assets measured at fair value through income statement (FVIS)
Accounting policy
Trading securities
Trading securities comprise actively traded debt and equity instruments, and those instruments acquired for sale in the near term, including those backed by government and semi-
government securities. The instruments are measured at fair value.
As part of its trading activities, Westpac also lends and borrows securities on a collateralised basis. Securities lent remain on Westpac’s balance sheet and securities borrowed are not
reflected on Westpac’s balance sheet, as the risks and rewards of ownership remain with the initial holder. Where cash is provided as collateral, the amount advanced to or received
from third parties is recognised as a receivable in collateral paid or as a borrowing in collateral received respectively.
Reverse repurchase agreements
Securities purchased under these agreements are not recognised in the balance sheet, as Westpac has not obtained the risks and rewards of ownership. The cash consideration paid
is recognised as a reverse repurchase agreement, which forms part of a trading portfolio that is measured at fair value.
Other financial assets measured at FVIS
Other financial assets measured at FVIS include:
●Non-trading securities managed on a fair value basis;
●Non-trading debt securities that do not have contractual cash flows that represent SPPI on the principal balance outstanding; or
●Non-trading equity securities for which we have not made irrevocable designation to be measured at FVOCI.
Fair value gains and losses on these financial assets are recognised in the income statement. Interest earned from debt securities is recognised in interest income (Note 3) while
dividends on equity securities are recognised in non-interest income (Note 4).
ConsolidatedParent Entity
$m
2024 2023 2024 2023
Trading securities
Government and semi-government securities
24,532 10,808 23,225 9,772
Other debt securities
5,958 5,835 5,089 4,435
Equity securities
- 5 - 5
Other
285 448 282 448
Total trading securities30,77517,09628,59614,660
Reverse repurchase agreements
17,990 12,054 17,990 12,013
Other financial assets measured at FVIS
Other debt securities
461 1,351 428 1,310
Equity securities
2 6 - 4
Total other financial assets measured at FVIS4631,3574281,314
Total trading securities and financial assets measured at FVIS
49,228 30,507 47,014 27,987
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Note 17. Investment securities
Accounting policy
Investment securities include debt securities and equity securities. It includes debt and equity securities that are measured at FVOCI and debt securities measured at amortised cost.
These instruments are classified based on the criteria disclosed under the heading “Financial assets and financial liabilities” prior to Note 9.
Debt securities measured at FVOCI
Includes debt instruments that have contractual cash flows which represent SPPI on the principal balance outstanding and they are held within a business model whose objective is
achieved both through collecting these cash flows or selling the financial asset.
These securities are measured at fair value with unrealised gains and losses recognised in OCI except for interest income, impairment charges, FX gains and losses and fair value
hedge adjustments which are recognised in the income statement.
Impairment is measured using the same ECL model applied to financial assets measured at amortised cost. Impairment is recognised in the income statement with a corresponding
amount in OCI with no reduction of the carrying value of the debt security which remains at fair value. Refer to Note 6 and Note 10 for further details.
The cumulative gain or loss recognised in OCI is subsequently recognised in the income statement when the instrument is disposed.
Debt securities measured at amortised cost
Include debt instruments that have contractual cash flows which represent SPPI on the principal balance outstanding and are held within a business model whose objective is achieved
through holding the financial asset to collect these cash flows.
These securities are initially recognised at fair value plus directly attributable transaction costs. They are subsequently measured at amortised cost using the effective interest method
and are presented net of any provision for ECL, determined using the ECL model.
Equity securities
Equity securities are measured at FVOCI where they are not held for trading, Westpac does not have control or significant influence over the investee and where an irrevocable
election is made to measure them at FVOCI.
These securities are measured at fair value with unrealised gains and losses recognised in OCI except for dividend income which is recognised in the income statement. The
cumulative gain or loss recognised in OCI is not subsequently recognised in the income statement when the instrument is disposed.
Consolidated Parent Entity
$m2024 2023 2024 2023
Investment securities
Investments securities measured at FVOCI
Government and semi-government debt securities
83,403 56,370 78,798 52,562
Other debt securities
18,866 17,082 16,548 14,695
Equity securities
450 442 208 202
Total investment securities measured at FVOCI
a
102,719 73,894 95,554 67,459
Investment securities measured at amortised cost
Government and semi-government debt securities
1,172 1,438 71 51
Total investment securities measured at amortised cost
1,172 1,438 71 51
Provision for ECL on debt securities at amortised cost
(6) (6) (2) (2)
Total net investment securities measured at amortised cost
1,166 1,432 69 49
Total investment securities
103,885 75,326 95,623 67,508
a. Impairment is recognised in the income statement with a corresponding amount in OCI (refer to Note 26). There is no reduction of the carrying value of the debt securities which remains at fair value.
64 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 17. Investment securities (Continued)
The following table shows the maturities and the weighted average yield of Westpac’s outstanding investment securities as at 30 September 2024. There are no tax-exempt securities.
Over 1Over 5No
Up to 1year to 5years toOver 10specificWeighted
yearyears10 yearsyearsmaturityTotalaverage
2024 $m % $m % $m % $m % $m % $m %
Carrying Amount
Government and semi-government securities
17,166 3.733,3492.819,7023.714,3525.0--84,5693.6
Other debt securities
3,471 5.415,0885.23074.7----18,8665.2
Equity securities
- -------450-450-
Total by maturity
20,637 48,43720,00914,352450103,885
The maturity profile is determined based upon contractual terms for investment securities.
Note 18. Other financial assets
ConsolidatedParent Entity
$m
2024 2023 2024 2023
Accrued interest receivable
2,223 1,996 1,987 1,780
Securities sold not delivered
1,716 2,905 1,716 2,905
Trade debtors
343 333 320 282
Interbank lending1749717395
Clearing and settlement balances602454480445
Accrued fees and commissions
276 289 155 161
Other
122 145 120 144
Total other financial assets
5,456 6,219 4,951 5,812
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Note 19. Other financial liabilities
Accounting policy
Other financial liabilities include liabilities measured at amortised cost as well as liabilities which are measured at FVIS. Financial liabilities measured at FVIS include:
●Trading liabilities (i.e. securities sold short); and
●Liabilities designated at FVIS (i.e. certain repurchase agreements).
Refer to Note 22 for balances measured at fair value and amortised cost.
Repurchase agreements
Where securities are sold subject to an agreement to repurchase at a predetermined price, they remain recognised in the balance sheet in their original category (i.e. ‘Trading securities’
or ‘Investment securities’).
The cash consideration received is recognised as a liability (‘Repurchase agreements’). Repurchase agreements are designated at fair value where they are managed as part of a
trading portfolio, otherwise they are measured on an amortised cost basis.
Where a repurchase agreement is designated at fair value, any changes in fair value (except those due to changes in credit risk) are recognised in the income statement as they arise.
The change in fair value that is attributable to credit risk is recognised in OCI except where it would create an accounting mismatch, in which case it is also recognised in the income
statement.
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Repurchase agreements
18,848 25,059 16,071 20,315
Interbank placements3,6354,5373,6314,533
Accrued interest payable4,9404,1384,0943,337
Securities purchased not delivered2,9663,4772,9663,477
Trade creditors and other accrued expenses2,3752,1911,9941,723
Settlement and clearing balances934832801805
Securities sold short3,2483,4963,2483,496
Other1,1311,1401,1121,094
Total other financial liabilities
38,077 44,870 33,917 38,780
66 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 20. Derivative financial instruments
Accounting policy
Derivative financial instruments are instruments whose values are derived from the value of an underlying asset, reference rate or index and include forwards, futures, swaps and
options.
Westpac uses derivative financial instruments for meeting customers’ needs, our Asset and Liability Management (ALM) activities, and undertaking market making and positioning
activities.
Trading derivatives
Derivatives which are used in our ALM activities but are not designated into a hedge accounting relationship are considered economic hedges. These derivatives, along with derivatives
used for meeting customers’ needs and undertaking market making and positioning activities, are measured at FVIS and are disclosed as trading derivatives.
Hedging derivatives
Hedging derivatives are those which are used in our ALM activities and have also been designated into one of three hedge accounting relationships: fair value hedge; cash flow hedge;
or hedge of a net investment in a foreign operation. These derivatives are measured at fair value. These hedge designations and the associated accounting treatment are detailed
below.
For more details regarding Westpac’s ALM activities, refer to Note 21.
Fair value hedges
Fair value hedges are used to hedge the exposure to changes in the fair value of an asset or liability.
Changes in the fair value of derivatives and the hedged asset or liability in fair value hedges are recognised in interest income. The carrying value of the hedged asset or liability is
adjusted for the changes in fair value related to the hedged risk.
If a hedge is discontinued, any fair value adjustments to the carrying value of the asset or liability are amortised to net interest income over the period to maturity. If the asset or liability
is sold, any unamortised adjustment is immediately recognised in net interest income.
Cash flow hedges
Cash flow hedges are used to hedge the exposure to variability of cash flows attributable to an asset, liability or future forecast transaction.
For effective hedges, changes in the fair value of derivatives are recognised in the cash flow hedge reserve through OCI and subsequently recognised in interest income when the cash
flows attributable to the asset or liability that was hedged impact the income statement.
For hedges with some ineffectiveness, the changes in the fair value of the derivatives relating to the ineffective portion are immediately recognised in interest income.
If a hedge is discontinued, any cumulative gain or loss remains in OCI. It is amortised to net interest income over the period in which the asset or liability that was hedged also impacts
the income statement.
If a hedge of a forecast transaction is no longer expected to occur, any cumulative gain or loss in OCI is immediately recognised in net interest income.
Net investment hedges
Net investment hedges are used to hedge FX risks arising from a net investment of a foreign operation.
For effective hedges, changes in the fair value of derivatives are recognised in the foreign currency translation reserve through OCI.
For hedges with some ineffectiveness, the changes in the fair value of the derivatives relating to the ineffective portion are immediately recognised in non-interest income.
If a foreign operation is disposed of, any cumulative gain or loss in OCI is immediately recognised in non-interest income.
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Note 20. Derivative financial instruments (Continued)
Total derivatives
The carrying values of derivative instruments are set out in the tables below.
Total derivatives
ConsolidatedTradingHedgingcarrying value
$m
Assets Liabilities Assets Liabilities Assets Liabilities
2024
Interest rate contracts
Swap agreements
47,697(49,742)5,619(5,969)53,316(55,711)
Options
235(186)--235(186)
Total interest rate contracts
47,932(49,928)5,619(5,969)53,551(55,897)
FX contracts
Spot and forward contracts
10,887(11,643)20(171)10,907(11,814)
Cross currency swap agreements
9,330(14,783)183(373)9,513(15,156)
Options
152(135)--152(135)
Total FX contracts
20,369(26,561)203(544)20,572(27,105)
Credit default swaps
Credit protection bought-(276)---(276)
Credit protection sold225---225-
Total credit default swaps225(276)--225(276)
Commodity contracts
235(85)--235(85)
Total of gross derivatives
68,761(76,850)5,822(6,513)74,583(83,363)
Impact of netting arrangements
(45,045)46,533(5,429)5,856(50,474)52,389
Total of net derivatives
23,716(30,317)393(657)24,109(30,974)
2023
Interest rate contracts
Swap agreements65,324(68,945)5,689(10,730)71,013(79,675)
Options301(317)--301(317)
Total interest rate contracts65,625(69,262)5,689(10,730)71,314(79,992)
FX contracts
Spot and forward contracts9,406(8,219)-(74)9,406(8,293)
Cross currency swap agreements7,650(8,973)394(596)8,044(9,569)
Options110(132)--110(132)
Total FX contracts17,166(17,324)394(670)17,560(17,994)
Credit default swaps
Credit protection bought-(127)---(127)
Credit protection sold105---105-
Total credit default swaps105(127)--105(127)
Commodity contracts116(266)--116(266)
Total of gross derivatives83,012(86,979)6,083(11,400)89,095(98,379)
Impact of netting arrangements(62,259)63,111(5,493)10,621(67,752)73,732
Total of net derivatives20,753(23,868)590(779)21,343(24,647)
68 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 20. Derivative financial instruments (Continued)
Total derivatives
Parent EntityTradingHedgingcarrying value
$m
Assets Liabilities Assets Liabilities Assets Liabilities
2024
Interest rate contracts
Swap agreements
47,973(50,141)5,186(5,495)53,159(55,636)
Options
235(186)--235(186)
Total interest rate contracts
48,208(50,327)5,186(5,495)53,394(55,822)
FX contracts
Spot and forward contracts
10,887(11,665)20(149)10,907(11,814)
Cross currency swap agreements
9,411(14,917)52(135)9,463(15,052)
Options
152(135)--152(135)
Total FX contracts
20,450(26,717)72(284)20,522(27,001)
Credit default swaps
Credit protection bought-(276)---(276)
Credit protection sold225---225-
Total credit default swaps225(276)--225(276)
Commodity contracts
235(85)--235(85)
Total of gross derivatives
69,118(77,405)5,258(5,779)74,376(83,184)
Impact of netting arrangements
(45,323)46,938(5,151)5,451(50,474)52,389
Total of net derivatives
23,795(30,467)107(328)23,902(30,795)
2023
Interest rate contracts
Swap agreements66,248(69,227)4,616(10,412)70,864(79,639)
Options301(317)--301(317)
Total interest rate contracts66,549(69,544)4,616(10,412)71,165(79,956)
FX contracts
Spot and forward contracts9,406(8,230)-(63)9,406(8,293)
Cross currency swap agreements7,824(9,369)64(163)7,888(9,532)
Options
110(132)--110(132)
Total FX contracts
17,340(17,731)64(226)17,404(17,957)
Credit default swaps
Credit protection bought-(127)---(127)
Credit protection sold105---105-
Total credit default swaps105(127)--105(127)
Commodity contracts
116(266)--116(266)
Total of gross derivatives
84,110(87,668)4,680(10,638)88,790(98,306)
Impact of netting arrangements
(63,187)63,415(4,565)10,317(67,752)73,732
Total of net derivatives
20,923(24,253)115(321)21,038(24,574)
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Note 20. Derivative financial instruments (Continued)
Hedge accounting
Westpac designates derivatives into hedge accounting relationships in order to manage the volatility in earnings and capital that would otherwise arise from interest rate and FX risks that
may result from differences in the accounting treatment of derivatives and underlying exposures. These hedge accounting relationships and the risks they are used to hedge are
described below.
Westpac enters into one-to-one hedge relationships to manage specific exposures where the terms of the hedged item significantly match the terms of the hedging instrument. Westpac
also uses dynamic hedge accounting where the hedged items are part of a portfolio of assets and/or liabilities that frequently change. In this hedging strategy, the exposure being hedged
and the hedging instruments may change frequently rather than there being a one-to-one hedge accounting relationship for a specific exposure.
Fair value hedges
Interest rate risk
Westpac hedges its interest rate risk to reduce exposure to changes in fair value due to interest rate fluctuations over the hedging period. Interest rate risk arising from fixed rate debt
issuances and fixed rate bonds classified as investment securities at FVOCI is hedged with single currency fixed to floating interest rate derivatives. Westpac also hedges its benchmark
interest rate risk from fixed rate foreign currency denominated debt issuances using interest rate swaps and cross currency swaps. In applying fair value hedge accounting, Westpac
primarily uses one-to-one hedge accounting to manage specific exposures.
Westpac also uses a dynamic hedge accounting strategy for fair value portfolio hedge accounting of some fixed rate mortgages to reduce exposure to changes in fair value due to interest
rate fluctuations over the hedging period. These fixed rate mortgages are allocated to time buckets based on their expected repricing dates and the fixed-to-floating interest rate
derivatives are designated accordingly to the capacity in the relevant time buckets.
Westpac hedges the benchmark interest rate which generally represents the most significant component of the changes in fair value. The benchmark interest rate is a component of
interest rate risk that is observable in the relevant financial markets, for example, BBSW and AONIA for AUD interest rates, SOFR for USD interest rates and BKBM for NZD interest
rates. Ineffectiveness may arise from timing or discounting differences on repricing between the hedged item and the derivative. For the portfolio hedge accounting ineffectiveness also
arises from prepayment risk (i.e. the difference between actual and expected prepayment of loans). In order to manage the ineffectiveness from early repayments and accommodate new
originations the portfolio hedges are de-designated and re-designated periodically.
Cash flow hedges
Interest rate risk
Westpac’s exposure to the volatility of interest cash flows from customer deposits and loans is hedged with interest rate derivatives using a dynamic hedge accounting strategy called
macro cash flow hedges. Customer deposits and loans are allocated to time buckets based on their expected repricing dates. The interest rate derivatives are designated accordingly to
the gross asset or gross liability positions for the relevant time buckets. Westpac hedges the benchmark interest rate which generally represents the most significant component of the
changes in fair value. The benchmark interest rate is a component of interest rate risk that is observable in the relevant financial markets, for example, BBSW and AONIA for AUD interest
rates, SOFR for USD interest rates and BKBM for NZD interest rates. Ineffectiveness may arise from timing or discounting differences on repricing between the hedged item and the
interest rate derivative. Ineffectiveness also arises if the notional values of the interest rate derivatives exceed the capacity for the relevant time buckets. The hedge accounting
relationship is reviewed on a monthly basis and the hedging relationships are de-designated and re-designated if necessary.
FX risk
Westpac’s exposure to foreign currency principal and credit margin cash flows from fixed and floating rate foreign currency debt issuances is hedged through the use of cross currency
and foreign exchange derivative contracts in a one-to-one hedging relationship to manage the changes between the foreign currency and AUD. In addition, for floating rate foreign
currency debt issuances, Westpac hedges from foreign floating to primarily AUD or NZD floating interest rates. These exposures represent the most significant components of fair value.
Ineffectiveness may arise from timing or discounting differences on repricing between the hedged item and the cross currency derivative.
70 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 20. Derivative financial instruments (Continued)
Net investment hedges
FX risk
Structural FX risk results from Westpac’s capital deployed in offshore branches and subsidiaries, where it is denominated in currencies other than Australian dollars. As exchange rates
move, the Australian dollar equivalent of offshore capital is subject to change that could introduce significant variability to Westpac’s reported financial results and capital ratios.
Westpac uses FX forward contracts when hedging the currency translation risk arising from net investments in foreign operations. Westpac currently applies hedge accounting,
predominantly to its net investment in New Zealand operations which is the most material offshore operation and therefore the hedged risk is the movement of the NZD against the AUD.
Ineffectiveness only arises if the notional values of the FX forward contracts exceed the net investment.
Economic hedges
As part of Westpac’s ALM activities, economic hedges may be entered into to hedge New Zealand future earnings and long-term funding transactions for risk management purposes.
These hedges do not qualify for hedge accounting and therefore are not included in the hedging instrument disclosures below.
Hedging instruments
The following tables show the carrying value of hedging instruments and a maturity analysis of the notional amounts of the hedging instruments in one-to-one hedge relationships
categorised by the types of hedge relationships and the hedged risk.
Notional amounts
ConsolidatedWithin 1Over 1 yearOver 5Carrying value
$m
Hedging instrument Hedged risk
year
to 5 years
years
Total
Assets
Liabilities
2024
One-to-one hedge relationships
Fair value hedgesInterest rate swapInterest rate risk21,40082,57155,004158,9753,611(4,858)
Cross currency swapInterest rate risk1,09813,18898115,267(22)(281)
Cash flow hedgesCross currency swapFX risk1,09813,18898115,267205(92)
Foreign exchange forwards and swapsFX risk3,663--3,6632(144)
Net investment hedgesForward contractsFX risk3,631--3,63118(27)
Total one-to-one hedge relationships30,890108,94756,966196,8033,814(5,402)
Macro hedge relationships
Portfolio fair value hedgesInterest rate swapInterest rate riskn/an/an/a16,31735(204)
Macro cash flow hedgesInterest rate swapInterest rate riskn/an/an/a422,9431,973(907)
Total macro hedge relationshipsn/an/an/a439,2602,008(1,111)
Total of gross hedging derivatives n/an/an/a636,0635,822(6,513)
Impact of netting arrangements n/an/an/an/a(5,429)5,856
Total of net hedging derivatives n/an/an/an/a393(657)
2023
One-to-one hedge relationships
Fair value hedgesInterest rate swapInterest rate risk16,17980,53740,307137,0233,072(8,979)
Cross currency swapInterest rate risk3,69610,8401,10215,638(274)(806)
Cash flow hedgesCross currency swapFX risk3,69610,8401,10215,638668210
Foreign exchange forwards and swapsFX riskn/an/an/an/an/an/a
Net investment hedgesForward contractsFX risk3,486--3,486-(74)
Total one-to-one hedge relationships27,057102,21742,511171,7853,466(9,649)
Macro hedge relationships
Portfolio fair value hedgesInterest rate swapInterest rate riskn/an/an/a21,524217(20)
Macro cash flow hedgesInterest rate swapInterest rate riskn/an/an/a287,5102,400(1,731)
Total macro hedge relationshipsn/an/an/a309,0342,617(1,751)
Total of gross hedging derivatives n/an/an/a480,8196,083(11,400)
Impact of netting arrangements n/an/an/an/a(5,493)10,621
Total of net hedging derivatives n/an/an/an/a590(779)
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Note 20. Derivative financial instruments (Continued)
Notional amounts
Parent EntityWithin 1Over 1 yearOver 5Carrying value
$m
Hedging instrument Hedged risk
year to 5 years years Total Assets Liabilities
2024
One-to-one hedge relationships
Fair value hedgesInterest rate swapInterest rate risk20,96277,73954,797153,4983,457(4,789)
Cross currency swapInterest rate risk3771,0026592,038(23)(23)
Cash flow hedgesCross currency swapFX risk3771,0026592,03875(112)
Foreign exchange forwards and swapsFX risk3,663--3,6632(144)
Net investment hedgesForward contractsFX risk2,636--2,63618(5)
Total one-to-one hedge relationships28,01579,74356,115163,8733,529(5,073)
Macro hedge relationships
Portfolio fair value hedgesInterest rate swapInterest rate riskn/an/an/a1,79732-
Macro cash flow hedgesInterest rate swapInterest rate riskn/an/an/a398,5191,697(706)
Total macro hedge relationshipsn/an/an/a400,3161,729(706)
Total of gross hedging derivatives n/an/an/a564,1895,258(5,779)
Impact of netting arrangements n/an/an/an/a(5,151)5,451
Total of net hedging derivatives n/an/an/an/a107(328)
2023
One-to-one hedge relationships
Fair value hedgesInterest rate swapInterest rate risk15,63679,62738,674133,9372,933(8,966)
Cross currency swapInterest rate risk951,3406742,109(32)(104)
Cash flow hedgesCross currency swapFX risk951,3406742,10996(59)
Foreign exchange forwards and swapsFX riskn/an/an/an/an/an/a
Net investment hedgesForward contractsFX risk2,585--2,585-(63)
Total one-to-one hedge relationships18,41182,30740,022140,7402,997(9,192)
Macro hedge relationships
Portfolio fair value hedgesInterest rate swapInterest rate riskn/an/an/a2,63284-
Macro cash flow hedgesInterest rate swapInterest rate riskn/an/an/a263,1881,599(1,446)
Total macro hedge relationshipsn/an/an/a265,8201,683(1,446)
Total of gross hedging derivatives n/an/an/a406,5604,680(10,638)
Impact of netting arrangements n/an/an/an/a(4,565)10,317
Total of net hedging derivatives n/an/an/an/a115(321)
The following tables show the weighted average FX rate related to significant hedging instruments in one-to-one hedge relationships.
Weighted average rate
Hedging instrument
Hedged risk
Currency pair
2024
2023
Consolidated
Cash flow hedgesCross currency swapFX riskEUR:NZD0.59630.5943
USD:NZD0.62520.6716
Foreign exchange swapFX riskUSD:AUD0.6676n/a
Net investment hedgesForward contractsFX riskNZD:AUD1.09841.0857
USD:AUD0.67450.6839
Parent Entity
Cash flow hedgesCross currency swapFX riskEUR:AUD0.66500.6650
JPY:AUD79.644879.6448
CNH:AUD4.73344.7275
HKD:AUD5.61245.6124
Foreign exchange swapFX riskUSD:AUD0.6676n/a
Net investment hedgesForward contractsFX riskNZD:AUD1.09051.0842
USD:AUD0.67450.6839
72 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 20. Derivative financial instruments (Continued)
Impact of hedge accounting in the balance sheets and reserves
The following tables show the carrying amount of hedged items in a fair value hedge relationship and the component of the carrying amount related to accumulated fair value hedge
accounting adjustments (FVHA).
20242023
Carrying amount ofCarrying amount of
$m
hedged item FVHA hedged item FVHA
Consolidated
Interest rate risk
Investment securities
a
65,585(165)40,402(3,257)
Loans16,6387721,223(301)
Debt issues and loan capital(102,039)3,749(100,176)9,801
Parent Entity
Interest rate risk
Investment securities
a
61,775(294)37,995(3,170)
Loans2,019(22)2,510(122)
Debt issues and loan capital(87,495)3,532(86,575)8,866
a. The carrying amount of investment securities at fair value through other comprehensive income does not include a fair value hedge adjustment as the hedged asset is measured at fair value. The fair value hedge
accounting adjustment results in a transfer from other comprehensive income to the income statement.
There were nil FVHA gains/losses (2023: Nil) included in the above carrying amounts relating to hedged items that have ceased to be adjusted for hedging gains and losses.
The pre-tax impact of cash flow and net investment hedges on reserves is detailed below:
20242023
InterestFXInterestFX
$m
rate risk risk Total rate risk risk Total
Consolidated
Cash flow hedge reserve
Balance as at beginning of year249(47) 2021,147(1) 1,146
Net gains/(losses) from changes in fair value878(377) 501(311)(324) (635)
Transferred to interest income(149)226 77(587)278 (309)
Balance as at end of year978(198) 780249(47) 202
Parent Entity
Cash flow hedge reserve
Balance as at beginning of year(288)(1) (289)6291 630
Net gains/(losses) from changes in fair value1,049(176) 873(535)(35) (570)
Transferred to interest income9141 132(382)33 (349)
Balance as at end of year852(136) 716(288)(1) (289)
There were net gains of $16 million (2023: net gains $2 million) remaining in the cash flow hedge reserve relating to hedge relationships for which hedge accounting is no longer applied
for Westpac and the Parent Entity.
As disclosed in Note 26, the net gains from changes in the fair value of net investment hedges were $28 million (2023: net loss $155 million) for Westpac and $31 million (2023: net loss
$97 million) for the Parent Entity. Included in the foreign currency translation reserve is a loss of $158 million (2023: $158 million loss) for Westpac and $162 million (2023: $162 million
loss) for the Parent Entity relating to discontinued hedges of our net investment in USD operations. This would only be transferred to the income statement on disposal of the related USD
operations.
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Note 20. Derivative financial instruments (Continued)
Hedge effectiveness
Hedge effectiveness is tested prospectively at inception and during the lifetime of hedge relationships. For one-to-one hedge relationships this testing uses a qualitative assessment of
matched terms where the critical terms of the derivatives used as the hedging instrument match the terms of the hedged item. In addition, a quantitative effectiveness test is performed for
all hedges which could include regression analysis, dollar offset and/or sensitivity analysis.
Retrospective testing is also performed to determine whether the hedge relationship remains highly effective so that hedge accounting can continue to be applied and also to determine
any ineffectiveness. These tests are performed using regression analysis and the dollar offset method.
The following tables provide information regarding the determination of hedge effectiveness:
Change in fair
value ofChange in
hedgingvalue of theHedge
instrumenthedged itemHedgeineffectiveness
used forused forineffectivenessrecognised
calculatingcalculatingrecognised inin non-
$m
Hedging instrument Hedged risk
ineffectiveness ineffectiveness interest income interest income
Consolidated
2024
Fair value hedges
Interest rate swap Interest rate risk
1,845 (1,817) 28 n/a
Cross currency swap Interest rate risk761(765)(4)n/a
Cash flow hedges
Interest rate swap Interest rate risk
698 (714) (16) n/a
Cross currency swap FX risk(25)25-n/a
Foreign exchange forwards and swapsFX risk(126)126-n/a
Net investment hedges
Forward contracts FX risk
28 (28) n/a -
Total
3,181 (3,173) 8 -
2023
Fair value hedges
Interest rate swap Interest rate risk
(2,355) 2,397 42 n/a
Cross currency swap Interest rate risk(12)153n/a
Cash flow hedges
Interest rate swap Interest rate risk
(849) 898 49 n/a
Cross currency swap FX risk(46)46-n/a
Foreign exchange forwards and swapsFX riskn/an/an/an/a
Net investment hedges
Forward contracts FX risk
(155) 155 n/a -
Total
(3,417) 3,511 94 -
Parent Entity
2024
Fair value hedges
Interest rate swap Interest rate risk
2,295 (2,274) 21 n/a
Cross currency swap Interest rate risk84(84)-n/a
Cash flow hedges
Interest rate swap Interest rate risk
1,121 (1,126) (5) n/a
Cross currency swap FX risk(9)9-n/a
Foreign exchange forwards and swapsFX risk(126)126-n/a
Net investment hedges
Forward contracts FX risk
31 (31) n/a -
Total
3,396 (3,380) 16 -
2023
Fair value hedges
Interest rate swap Interest rate risk
(2,226) 2,260 34 n/a
Cross currency swap Interest rate risk(17)181n/a
Cash flow hedges
Interest rate swap Interest rate risk
(858) 917 59 n/a
Cross currency swap FX risk(2)2-n/a
Foreign exchange forwards and swapsFX riskn/an/an/an/a
Net investment hedges
Forward contracts FX risk
(97) 97 n/a -
Total
(3,200) 3,294 94 -
74 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 21. Risk management, funding and liquidity risk and market risk
Financial instruments are fundamental to Westpac’s business of providing banking and financial services. The associated financial risks (including credit risk, funding and liquidity risk and
market risk) are a significant proportion of the total risks faced by Westpac.
This note details the financial risk management policies, practices and quantitative information of Westpac’s principal financial risk exposures.
Note
IndexNote Namenumber
OverviewRisk management frameworks21.1
Credit riskRefer to Note 11 Credit risk management11
Funding and liquidity risk
The risk that Westpac cannot meet its payment obligations or that it does not
have the appropriate amount, tenor and composition of funding and liquidity to
support its assets.
Liquidity modelling
Sources of funding
Assets pledged as collateral
Contractual maturity of financial liabilities
Expected maturity
21.2.1
21.2.2
21.2.3
21.2.4
21.2.5
Market risk
The risk of an adverse impact on Westpac’s financial performance or financial
position resulting from changes in market factors, such as foreign exchange
rates, commodity prices and equity prices, credit spreads and interest rates.
This includes interest rate risk in the banking book which is the risk of loss in
earnings or economic value in the banking book as a consequence of
movements in interest rates.
Value-at-Risk (VaR)
Traded market risk
Non-traded market risk
21.3.1
21.3.2
21.3.3
21.1. Risk management frameworks
The Board is responsible for approving Westpac’s Risk Management Framework, Risk Management Strategy and Board Risk Appetite Statement and for monitoring the effectiveness of
risk management by Westpac. The Board has delegated to the Board Risk Committee (BRiskC) responsibility to:
●Review and recommend Westpac’s Risk Management Framework, Risk Management Strategy and Board Risk Appetite Statement to the Board for approval;
●Review and monitor Westpac’s risk profile and controls for consistency with the Board Risk Appetite Statement;
●Approve frameworks, policies and processes for managing risk (consistent with the Risk Management Framework and Board Risk Appetite Statement); and
●Review and, where appropriate, approve risks beyond the approval discretion provided to management.
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Note 21. Risk management, funding and liquidity risk and market risk (Continued)
For each of its primary financial risks, Westpac maintains risk management frameworks and a number of supporting policies that define roles and responsibilities, acceptable practices,
limits and key controls:
RiskRisk management framework and controls
Funding and
liquidity risk
● Funding and liquidity risk is measured and managed in accordance with the policies and processes defined in the Board-approved Liquidity Risk
Management Framework which is part of the Westpac Board-approved Risk Management Strategy.
● Responsibility for managing Westpac’s liquidity and funding positions in accordance with the Liquidity Risk Management Framework is delegated to
Treasury, under the oversight of Group ALCO and Treasury Risk.
● Westpac’s Liquidity Risk Management Framework sets out Westpac’s funding and liquidity risk appetite, roles and responsibilities of key people
managing funding and liquidity risk within Westpac, risk reporting and control processes and limits and targets used to manage Westpac’s balance
sheet.
● Treasury undertakes an annual funding review that outlines Westpac’s balance sheet funding strategy over a three year period. This review
encompasses trends in global markets, peer analysis, wholesale funding capacity, expected funding requirements and a funding risk analysis. This
strategy is continuously reviewed to take account of changing market conditions, investor sentiment and estimations of asset and liability growth
rates.
● Westpac monitors the composition and stability of its funding so that it remains within Westpac’s funding risk appetite. This includes compliance with
both the Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR).
● Westpac holds a portfolio of liquid assets for several purposes, including as a buffer against unforeseen funding requirements. The level of liquid
assets held takes into account the liquidity requirements of Westpac’s balance sheet under normal and stress conditions
● Treasury maintains a contingent funding plan that outlines the steps that should be taken by Westpac in the event of an emerging ‘funding crisis’. The
plan is aligned with Westpac’s broader Liquidity Crisis Management Policy which is approved annually by the Board
● Daily liquidity risk reports are reviewed by Westpac’s Treasury and Treasury Risk teams. Liquidity reports are presented to Group ALCO monthly and
to the Board quarterly.
Market risk
● The Market Risk Framework describes Westpac’s approach to managing traded and non- traded market risk.
● Traded market risk includes interest rate, FX, commodity, equity price, credit spread and volatility risks. Non-traded market risk includes interest rate
and credit spread risks.
● Market risk is managed using VaR and Stressed VaR (SVaR) limits, Net interest income at risk (NaR) and structural risk limits (including credit spread
and interest rate basis point value limits) as well as scenario analysis and stress testing.
● The BRiskC approves the risk appetite for traded and non-traded risks through the use of VaR, SVaR, NaR and specific structural risk limits. This
includes separate VaR sub-limits for the trading activities of Financial Markets and Treasury and for non-traded ALM activities
● Market risk limits are assigned to business management based upon the Bank’s risk appetite and business strategies in addition to the consideration
of market liquidity and concentration.
● Market risk positions are managed by the trading desks and ALM unit consistent with their delegated authorities and the nature and scale of the
market risks involved.
● Daily monitoring of current exposure and limit utilisation is conducted independently by Market Risk teams, which monitor market risk exposures
against VaR and structural risk limits. Daily VaR position reports are produced by risk type, by product lines and by geographic region. Quarterly
reports are produced for the Westpac Group Market Risk Committee (MARCO), RISKCO and the BRiskC.
● Daily stress testing and back testing of VaR results are performed to support model integrity and to analyse extreme or unexpected movements, and
the Head of Market, Capital & Liquidity Risk has ratified an approved stress escalation framework.
● The BRiskC has approved a framework for profit or loss escalation which considers both single day and 20 day cumulative results.
● Treasury’s ALM unit is responsible for managing the non-traded interest rate risk including risk mitigation through hedging using derivatives. This is
overseen by the Market Risk unit and reviewed by Treasury Financial Risk Committee (TRFC), MARCO, RISKCO and BRiskC. The Group ALCO
provides additional oversight of non-traded market risk and alignment with Group strategy in reviewing NaR and the durations of capital and non-rate
sensitive deposit hedges.
76 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 21. Risk management, funding and liquidity risk and market risk (Continued)
21.2. Funding and liquidity risk
21.2.1. Liquidity modelling
In managing liquidity for Westpac, Treasury utilises balance sheet forecasts and the maturity profile of Westpac’s wholesale funding portfolio to project liquidity outcomes. Local liquidity
limits are also used by Westpac in applicable jurisdictions to ensure liquidity is managed efficiently and prudently.
In addition, Westpac conducts regular stress testing to assess its ability to meet cash flow obligations under a range of market conditions and scenarios. These scenarios inform liquidity
limits and strategic planning.
21.2.2. Sources of funding
Sources of funding are regularly reviewed to maintain a wide diversification by currency, geography, product and term. Sources include, but are not limited to:
●Deposits;
●Debt issues;
●Proceeds from sale of marketable securities;
●Repurchase agreements with central banks;
●Principal repayments on loans;
●Interest income; and
●Fee income.
Liquid assets
Treasury holds a portfolio of high-quality liquid assets as a buffer against unforeseen funding requirements. These assets are held in cash, or are otherwise eligible for repurchase
agreements with the Reserve Bank of Australia or another central bank and include Government, State Government and highly rated investment grade securities. The level of liquid asset
holdings is reviewed frequently and is consistent with both the requirements of the balance sheet and market conditions.
A summary of Westpac’s liquid asset holdings is as follows:
ConsolidatedParent Entity
2024202320242023
$m Actual Average Actual Average Actual Average Actual Average
Cash
65,356 94,468 102,223 118,38058,236 85,384 93,300 107,189
Trading securities and financial assets measured at FVIS
31,717 19,183 19,516 19,93729,538 16,954 17,080 17,941
Investment securities103,43592,62274,88472,10195,41585,07667,30665,199
Other financial assets1741999713417319595126
Total on-balance sheet liquid assets
200,682 206,472 196,720 210,552183,362 187,609 177,781 190,455
In addition, Westpac has $70,306 million (2023: $65,155 million) and the Parent Entity has $62,770 million (2023: $59,418 million) of loans that are self-originated AAA rated mortgage
backed securities which are eligible for repurchase with the RBA and Reserve Bank of New Zealand under certain circumstances. Average year-to-date balances amount to $70,282
million (2023: $60,083 million) for Westpac and $63,975 million (2023: $54,437 million) for the Parent Entity.
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Note 21. Risk management, funding and liquidity risk and market risk (Continued)
Westpac’s funding composition
Westpac monitors the composition and stability of its funding so that it remains within Westpac’s funding risk appetite. This includes compliance with both the LCR and NSFR.
%
2024 2023
Customer deposits
66.9 66.0
Wholesale term funding with residual maturity greater than 12 months
13.9 13.8
Wholesale funding with a residual maturity less than 12 months
11.4 12.3
Equity
7.2 7.5
Securitisation
0.6 0.4
Group’s total funding
100.0 100.0
Movements in Westpac’s funding composition in 2024 included:
●Customer deposits increased by $32.7 billion in 2024 and now accounts for 66.9% of Westpac’s total funding (including equity) at 30 September 2024, up from 66.0% at 30
September 2023;
●Long-term funding with a residual maturity greater than 12 months accounted for 13.9% of Westpac’s total funding at 30 September 2024. Funding from securitisation accounted for a
further 0.6% of total funding. Westpac raised $41.9 billion of long-term wholesale funding in 2024, leveraging the scale and diversity of its wholesale funding franchise across global
capital markets;
●Wholesale funding with a residual maturity less than 12 months accounted for 11.4% of Westpac’s total funding at 30 September 2024, down from 12.3% at 30 September 2023. This
portfolio, including long-term funding with a residual maturity less than one year, had a weighted average maturity of 151 days; and
●Funding from equity decreased by $0.5 billion in 2024 and made up 7.2% of total funding at 30 September 2024, reflecting the impact of the share buyback and higher dividend
payout.
Borrowings and outstanding issuances from existing debt programs at 30 September 2024 can be found in Note 12, Note 13, Note 14 and Note 19.
Funding for Lending Programme (FLP)
On 11 November 2020, the Reserve Bank of New Zealand (RBNZ) announced a stimulus through the FLP commencing in December 2020. The FLP provided funding to New Zealand
banks at the prevailing OCR for a term of three years secured by high quality collateral. The size of the funding available under the FLP included an initial allocation of 4% of each bank’s
eligible loans. A conditional additional allocation of up to 2% of eligible loans was also available, subject to growth in eligible loans, for a total size of up to 6% of eligible loans. The
programme started on 7 December 2020 and ran until 6 December 2022. During the year, Westpac New Zealand Limited has made scheduled repayments on the programme and as at
30 September 2024 the amount outstanding totalled NZ$2,981 million (30 September 2023: NZ$4,981 million).
Credit ratings
As at 30 September 2024 the Parent Entity’s credit ratings were:
2024
Short-term Long-term Outlook
Fitch Ratings
F1+AA-Stable
Moody’s Ratings
P-1Aa2Stable
S&P Global Ratings
A-1+AA-Stable
78 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 21. Risk management, funding and liquidity risk and market risk (Continued)
21.2.3. Assets pledged as collateral
Westpac and the Parent Entity are required to provide collateral (predominantly to other financial institutions), as part of standard terms, to secure liabilities. In addition to assets
supporting securitisation and covered bond programs disclosed in Note 15, the carrying value of these financial assets pledged as collateral is:
ConsolidatedParent Entity
$m
2024 2023 2024 2023
Cash6,2694,5356,1994,505
Securities (including certificates of deposit)
1,721 2,166 1,721 2,166
Securities pledged under repurchase agreements
19,938 35,075 16,205 28,968
Securities pledged on contingent liabilities
56 - 56 -
Total amount pledged to secure liabilities/contingent liabilities
27,984 41,776 24,181 35,639
21.2.4. Contractual maturity of financial liabilities
The following tables present cash flows associated with financial liabilities, payable at the balance sheet date, by remaining contractual maturity. The amounts disclosed in the table are
the future contractual undiscounted cash flows, whereas Westpac manages inherent liquidity risk based on expected cash flows.
Cash flows associated with financial liabilities include both principal payments as well as fixed or variable interest payments incorporated into the relevant coupon period. Principal
payments reflect the earliest contractual maturity date. Derivative liabilities designated in hedge accounting relationships and used as economic hedges are expected to be held for their
remaining contractual lives, and reflect gross cash flows over the remaining contractual term.
Derivatives held for trading (excluding economic hedges) and certain liabilities classified in “Other financial liabilities” which are measured at FVIS are not managed for liquidity purposes
on the basis of their contractual maturity, and accordingly these liabilities are presented in the up to 1 month column. Only the liabilities that Westpac manages based on their contractual
maturity are presented on a contractual undiscounted basis in the following tables.
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Note 21. Risk management, funding and liquidity risk and market risk (Continued)
Consolidated Over 1 month Over 3 months Over 1 year to
$mUp to 1 monthto 3 monthsto 1 year5 yearsOver 5 yearsTotal
2024
Financial liabilities
Collateral received
3,092 - - - - 3,092
Deposits and other borrowings
518,458 69,841 129,864 10,056 50 728,269
Other financial liabilities
25,7591,8514,5931,049533,257
Derivative financial instruments:
Held for trading
23,158 - - - - 23,158
Held for hedging purposes (net settled)
(18) (198) (269) (381) 36 (830)
Held for hedging purposes (gross settled):
Cash outflow
13,556 20,755 39,009 92,784 44,267 210,371
Cash inflow
(11,622) (16,220) (38,699) (91,167) (41,207) (198,915)
Debt issues
5,609 12,192 47,472 105,035 18,327 188,635
Total financial liabilities excluding loan capital
577,992 88,221 181,970 117,376 21,478 987,037
Loan capital
62 332 889 9,650 42,891 53,824
Total undiscounted financial liabilities
578,054 88,553 182,859 127,026 64,369 1,040,861
Total contingent liabilities and commitments
Letters of credit and guarantees
13,118 - - - - 13,118
Commitments to extend credit
198,876 - - - - 198,876
Other117----117
Total undiscounted contingent liabilities and commitments
212,111 - - - - 212,111
2023
Financial liabilities
Collateral received
3,540 - - - - 3,540
Deposits and other borrowings
492,759 77,985 115,224 8,847 47 694,862
Other financial liabilities
20,37483216,9052,767540,883
Derivative financial instruments:
a
Held for trading
18,542 - - - - 18,542
Held for hedging purposes (net settled)
2 (6) 113 130 302 541
Held for hedging purposes (gross settled):
Cash outflow
7,555 13,131 41,532 93,762 27,158 183,138
Cash inflow
(6,395) (11,931) (40,619) (90,167) (25,049) (174,161)
Debt issues
5,258 13,656 39,958 102,529 18,116 179,517
Total financial liabilities excluding loan capital
541,635 93,667 173,113 117,868 20,579 946,862
Loan capital
18 267 815 9,416 38,430 48,946
Total undiscounted financial liabilities
541,653 93,934 173,928 127,284 59,009 995,808
Total contingent liabilities and commitments
Letters of credit and guarantees
12,447 - - - - 12,447
Commitments to extend credit193,457 - - - - 193,457
Other commitments247----247
Total undiscounted contingent liabilities and commitments
206,151 - - - - 206,151
a. Derivatives not in hedge accounting relationships were all previously presented in the held for trading line. In 2024, economic hedges have been presented within the relevant held for hedging purposes lines to better reflect
how these derivatives are managed. Comparatives have been revised to align with current period presentation.
80 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 21. Risk management, funding and liquidity risk and market risk (Continued)
Parent Entity Over 1 month Over 3 months Over 1 year to
$mUp to 1 monthto 3 monthsto 1 year5 yearsOver 5 yearsTotal
2024
Financial liabilities
Collateral received
2,949 - - - - 2,949
Deposits and other borrowings
472,586 59,872 109,208 7,816 50 649,532
Other financial liabilities25,2171,8512,8298-29,905
Derivative financial instruments:
Held for trading
23,158 - - - - 23,158
Held for hedging purposes (net settled)
(23) (187) (287) (322) 43 (776)
Held for hedging purposes (gross settled):
Cash outflow
13,566 20,885 39,202 98,148 44,600 216,401
Cash inflow
(11,622) (16,288) (38,924) (96,397) (41,544) (204,775)
Debt issues
5,245 11,104 42,214 85,150 16,935 160,648
Due to subsidiaries
12,301 651 3,114 13,039 55,010 84,115
Total financial liabilities excluding loan capital
543,377 77,888 157,356 107,442 75,094 961,157
Loan capital
62 315 836 9,375 41,551 52,139
Total undiscounted financial liabilities
543,439 78,203 158,192 116,817 116,645 1,013,296
Total contingent liabilities and commitments
Letters of credit and guarantees
12,539 - - - - 12,539
Commitments to extend credit
175,206 - - - - 175,206
Other117----117
Total undiscounted contingent liabilities and commitments
187,862 - - - - 187,862
2023
Financial liabilities
Collateral received
3,257 - - - - 3,257
Deposits and other borrowings
447,791 66,071 94,886 6,969 47 615,764
Other financial liabilities19,78883214,977(9)535,593
Derivative financial instruments:
a
Held for trading
18,536 - - - - 18,536
Held for hedging purposes (net settled)
(73) (147) (24) (194) 292 (146)
Held for hedging purposes (gross settled):
Cash outflow
7,526 12,236 40,401 84,213 26,654 171,030
Cash inflow
(6,386) (11,276) (39,761) (81,435) (24,547) (163,405)
Debt issues4,847 12,820 33,866 86,665 17,068 155,266
Due to subsidiaries
13,921 546 2,670 12,195 48,625 77,957
Total financial liabilities excluding loan capital
509,207 81,082 147,015 108,404 68,144 913,852
Loan capital
18 249 761 9,133 36,922 47,083
Total undiscounted financial liabilities
509,225 81,331 147,776 117,537 105,066 960,935
Total contingent liabilities and commitments
Letters of credit and guarantees
11,847 - - - - 11,847
Commitments to extend credit168,719 - - - - 168,719
Other
247----247
Total undiscounted contingent liabilities and commitments
180,813 - - - - 180,813
a. Derivatives not in hedge accounting relationships were all previously presented in the held for trading line. In 2024, economic hedges have been presented within the relevant held for hedging purposes lines to better reflect
how these derivatives are managed. Comparatives have been revised to align with current period presentation.
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Note 21. Risk management, funding and liquidity risk and market risk (Continued)
21.2.5. Expected maturity
The following tables present the balance sheet based on expected maturity dates. The liability balances in the following tables will not agree to the contractual maturity tables (Note
21.2.4) due to the analysis below being based on expected rather than contractual maturities, the impact of discounting and the exclusion of interest accruals beyond the reporting period.
Included in the following tables are equity securities classified as trading securities, investment securities and life insurance assets that have no specific maturity. These assets have been
classified based on the expected period of disposal. Deposits are presented in the following table on a contractual basis, however as part of our normal banking operations, Westpac
would expect a large proportion of these balances to be retained.
20242023
Consolidated Due withinGreater thanDue within Greater than
$m
12 months 12 months Total 12 months 12 months Total
Assets
Cash and balances with central banks
65,667-65,667102,522-102,522
Collateral paid
6,269-6,2694,535-4,535
Trading securities and financial assets measured at FVIS
33,09016,13849,22825,0465,46130,507
Derivative financial instruments21,9782,13124,10918,6332,71021,343
Investment securities20,93082,955103,88517,22158,10575,326
Loans (net of provisions)
97,010709,757806,76792,419680,835773,254
Other financial assets
5,3551015,4566,219-6,219
All other assets
92115,24216,16390115,16716,068
Total assets
251,220826,3241,077,544267,496762,2781,029,774
Liabilities
Collateral received
3,078-3,0783,525-3,525
Deposits and other borrowings
711,0769,413720,489679,9038,265688,168
Other financial liabilities
37,0241,05338,07742,0502,82044,870
Derivative financial instruments
25,3905,58430,97419,7374,91024,647
Debt issues
59,911109,373169,28453,854102,719156,573
All other liabilities
2,7322,9755,7073,0903,1866,276
Total liabilities excluding loan capital
839,211128,398967,609802,159121,900924,059
Loan capital
3,82934,05437,8832,77030,40633,176
Total liabilities
843,040162,4521,005,492804,929152,306957,235
Net assets/(liabilities)
(591,820)663,87272,052(537,433)609,97272,539
82 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 21. Risk management, funding and liquidity risk and market risk (Continued)
20242023
Parent Entity Due withinGreater thanDue within Greater than
$m
12 months 12 months Total 12 months 12 months Total
Assets
Cash and balances with central banks
58,400-58,40093,466-93,466
Collateral paid
6,199-6,1994,505-4,505
Trading securities and financial assets measured at FVIS
31,73615,27847,01423,4474,54027,987
Derivative financial instruments21,9761,92623,90218,5002,53821,038
Investment securities18,74876,87595,62314,22653,28267,508
Loans (net of provisions)
76,274633,769710,04368,391609,630678,021
Other financial assets
4,8501014,9515,812-5,812
Due from subsidiaries
8,73543,60452,33910,03143,61353,644
Investment in subsidiaries-9,0959,095-8,0198,019
All other assets
71912,94913,66878112,97913,760
Total assets
227,637793,5971,021,234239,159734,601973,760
Liabilities
Collateral received
2,935-2,9353,243-3,243
Deposits and other borrowings
637,0887,393644,481603,8166,541610,357
Other financial liabilities
33,8833433,91738,7364438,780
Derivative financial instruments
25,3925,40330,79519,7224,85224,574
Debt issues
53,98289,900143,88247,17687,781134,957
Due to subsidiaries
13,49242,23055,72214,74840,91555,663
All other liabilities
2,3572,3874,7442,4642,8635,327
Total liabilities excluding loan capital
769,129147,347916,476729,905142,996872,901
Loan capital
3,82932,94136,7702,77029,31532,085
Total liabilities
772,958180,288953,246732,675172,311904,986
Net assets/(liabilities)
(545,321)613,30967,988(493,516)562,29068,774
21.3. Market risk
21.3.1. Value-at-Risk
Westpac uses VaR as one of the mechanisms for controlling both traded and non-traded market risk.
VaR is a statistical estimate of the potential loss in earnings over a specified period of time and to a given level of confidence based on historical market movements. The confidence level
indicates the probability that the loss will not exceed the VaR estimate on any given day.
VaR seeks to take account of all material market variables that may cause a change in the value of the portfolio, including interest rates, FX rates, price changes, volatility and the
correlations between these variables. Daily monitoring of current exposures and VaR and structural concentration limit utilisation is conducted independently by the Market Risk unit.
These limits are supplemented by escalation triggers for material profit or loss, and stress testing of risks beyond the 99% confidence interval.
The key parameters of VaR are:Traded market riskNon-traded market risk
Holding period
1 day1 year
Confidence level
99%99%
Period of historical data used
1 year6 years
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Note 21. Risk management, funding and liquidity risk and market risk (Continued)
21.3.2. Traded market risk
The following table depicts the aggregate VaR, by risk type:
Consolidated and Parent Entity202420232022
$m
High Low Average High Low Average High Low Average
Interest rate risk
21.2 5.4 10.8 21.8 7.2 11.0 20.2 5.0 9.2
FX risk
7.3 0.9 2.4 14.2 1.1 4.3 8.3 0.3 2.5
Equity risk
0.0 0.0 0.0 0.1 0.0 0.0 0.1 0.0 0.0
Commodity risk
1.7 0.6 1.2 3.5 0.9 2.0 4.0 1.5 2.5
Other market risks
a
10.1 1.9 5.4 9.4 3.2 6.0 6.5 1.4 2.9
Diversification effect
n/a n/a (6.9) n/a n/a (8.1) n/a n/a (6.5)
Net market risk
23.4 6.8 12.9 31.8 8.8 15.2 21.2 5.4 10.6
a. Includes prepayment risk and credit spread risk (exposure to movements in generic credit rating bands).
21.3.3. Non-traded market risk
Non-traded market risk includes Interest Rate Risk in the Banking Book (IRRBB) – the risk to net interest income or the economic value on banking book items as a result of interest rate
changes.
Net interest income (NII) sensitivity is monitored using the Net interest income-at-Risk (NaR) model. The NaR model combines the underlying balance sheet data with assumptions about
runoffs, new business, and expected repricing behaviour. This simulates a series of potential NII outcomes, over a one year time horizon subject to 100 and 200 basis point shifts up and
down from the current market interest rates in Australia and New Zealand.
Net interest income-at-Risk
The following table depicts potential NII outcomes assuming a worst case 100 basis point rate shock (up and down) with a 12 month time horizon (expressed as a percentage of reported
NII):
20242023
MaximumMinimumAverageMaximumMinimumAverage
% (increase)/decrease in NII
As at exposure exposure exposure As at exposure exposure exposure
Consolidated
1.84 1.84 0.97 1.42 1.81 1.88 0.82 1.42
Parent Entity1.40 1.43 0.59 1.03 1.47 1.67 0.49 1.20
Value at Risk - IRRBB
The table below depicts internal VaR for IRRBB
1
:
20242023
$m As at High Low Average As at High Low Average
Consolidated
77.7 80.6 37.5 50.0 49.5 68.4 45.7 55.8
As at 30 September 2024 the Value at Risk – IRRBB for the Parent Entity was $77 million (2023: $49 million).
Risk mitigation
IRRBB stems from the ordinary course of banking activities, including structural interest rate risk (the mismatch between the duration of assets and liabilities) and capital management.
Westpac hedges its exposure to such interest rate risk using derivatives. Further details on Westpac’s hedge accounting are discussed in Note 20.
The same controls used to monitor traded market risk allow management to monitor and manage IRRBB.
Structural FX risk
Structural FX risk results from the generation of foreign currency denominated earnings and from Westpac’s capital deployed in offshore branches and subsidiaries, where it is
denominated in currencies other than Australian dollars. As exchange rates move, the Australian dollar equivalent of offshore earnings and capital is subject to change that could
introduce significant variability to the Bank’s reported financial results and capital ratios.
Note 20 includes details on the net investment hedges related to structural FX risk and economic hedges of New Zealand future earnings.
1.
Based on a 1 day holding period and 1 year of historical data to allow comparison to the traded market risk results, noting IRRBB is managed to a longer holding period.
84 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 22. Fair values of financial assets and financial liabilities
Accounting policy
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date.
On initial recognition, the transaction price generally represents the fair value of the financial instrument unless there is observable information from an active market to the contrary.
Where significant unobservable information is used, the difference between the transaction price and the fair value (day one profit or loss) is recognised in the income statement over the
life of the instrument or when the inputs become observable.
Critical accounting assumptions and estimates
The majority of valuation models used by Westpac employ only observable market data as inputs. However, for certain financial instruments data may be employed which is not readily
observable in current markets.
The availability of observable inputs is influenced by factors such as:
● Product type;
● Depth of market activity;
● Maturity of market models; and
● Complexity of the transaction.
Where unobservable market data is used, more judgement is required to determine fair value. The significance of these judgements depends on the significance of the unobservable
input to the overall valuation. Unobservable inputs are generally derived from other relevant market data and adjusted against:
● Standard industry practice;
● Economic models; and
● Observed transaction prices.
In order to determine a reliable fair value for a financial instrument, management may apply adjustments to the techniques previously described. These adjustments reflect Westpac’s
assessment of factors that market participants would consider in setting the fair value.
These adjustments incorporate bid/offer spreads, credit valuation adjustments (CVA) and funding valuation adjustments (FVA).
Fair Valuation Control Framework
Westpac 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 Westpac. 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.
Westpac categorises all fair value instruments according to the hierarchy described below.
Valuation techniques
Westpac 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:
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Note 22. 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
FX productsDerivativesFX spot and futures contracts
Equity productsDerivatives
Trading securities and financial assets measured at
FVIS
Other financial liabilities
Listed equities and equity indices
All these instruments are traded in liquid, active
markets where prices are readily observable.
No modelling or assumptions are used in the
valuation.
Debt instrumentsTrading securities and financial assets measured at
FVIS
Investment securities
Other financial liabilities
Australian Commonwealth and New Zealand
government bonds
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.
86 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 22. Fair values of financial assets and financial liabilities (Continued)
Instrument Balance sheet category Includes Valuation
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.
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 instrumentsInvestment securitiesStrategic 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.
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Note 22. 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.
20242023
$m
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Consolidated
Financial assets measured at fair value on a recurring basis
Trading securities and financial assets measured at FVIS
15,52233,700649,2284,46826,0122730,507
Derivative financial instruments
13 24,089 7 24,109 27 21,290 26 21,343
Investment securities14,11788,155447102,7195,62067,83344173,894
Loans
- 210 15 225 - 4 15 19
Total financial assets measured at fair value on a recurring basis
29,652 146,154 475 176,281 10,115 115,139 509 125,763
Financial liabilities measured at fair value on a recurring basis
Deposits and other borrowings
a
- 46,878 - 46,878 - 47,220 - 47,220
Other financial liabilities
b
89118,428 - 19,319 1,714 10,255 - 11,969
Derivative financial instruments
14 30,955 5 30,974 28 24,604 15 24,647
Debt issues
c
- 5,385 - 5,385 - 3,222 - 3,222
Total financial liabilities measured at fair value on a recurring basis
905 101,646 5 102,556 1,742 85,301 15 87,058
Parent Entity
Financial assets measured at fair value on a recurring basis
Trading securities and financial assets measured at FVIS15,09131,918547,0144,39523,5662627,987
Derivative financial instruments
13 23,883 6 23,902 27 20,985 26 21,038
Investment securities11,16684,18220695,5543,49063,76720267,459
Loans
- 210 1 211 - 4 3 7
Due from subsidiaries-1,044-1,044-1,159-1,159
Total financial assets measured at fair value on a recurring basis
26,270 141,237 218 167,725 7,912 109,481 257 117,650
Financial liabilities measured at fair value on a recurring basis
Deposits and other borrowings
a
- 45,167 - 45,167 - 44,973 - 44,973
Other financial liabilities
b
891 18,428 - 19,319 1,714 10,213 - 11,927
Derivative financial instruments
14 30,776 5 30,795 28 24,531 15 24,574
Debt issues
c
- 1,961 - 1,961 - 1,852 - 1,852
Due to subsidiaries-344-344-1,875-1,875
Total financial liabilities measured at fair value on a recurring basis
905 96,676 5 97,586 1,742 83,444 15 85,201
a. The contractual outstanding amount payable at maturity was $47,328 million (2023: $47,614 million) for the Group and $45,603 million (2023: $45,331 million) for the Parent Entity.
b. The contractual outstanding amount payable at maturity for the Group is $19,320 million (2023: $11,970 million) and $19,320 million for the Parent Entity (2023: $11,929 million).
c. The contractual outstanding payable at maturity was $5,678 million (2023: $3,772 million) for the Group and $2,226 million (2023: $2,392 million) for the Parent Entity. The cumulative change in the fair value of debt issues
attributable to changes in Westpac’s own credit risk was $58 million decrease (2023: $45 million decrease) for the Group and Parent Entity.
88 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 22. Fair values of financial assets and financial liabilities (Continued)
Reconciliation of non-market observables
The following tables summarise the changes in financial instruments measured at fair value derived from non-market observable valuation techniques (Level 3).
Trading
securities and
financial assets
measuredInvestmentDerivative andTotal LevelDerivativeTotal Level
$mat FVISsecuritiesother assets3 assetsliabilities3 liabilities
Consolidated
Balance as at 30 September 202218387404452323
Gains/(losses) on assets/(gains)/losses on liabilities recognised in:
Income statements
--(9)(9)(7)(7)
OCI-(17)-(17)--
Acquisitions and issues
3184145260115115
Disposals and settlements
(19)(13)(124)(156)(109)(109)
Transfer into or out of non-market observables(4)-(12)(16)(7)(7)
Foreign currency translation impacts
1-12--
Balance as at 30 September 2023
27441415091515
Gains/(losses) on assets/(gains)/losses on liabilities recognised in:
Income statements(1)-(28)(29)22
OCI-(11)-(11)--
Acquisitions and issues921231261308308
Disposals and settlements(11)(5)(220)(236)(311)(311)
Transfer into or out of non-market observables(18)-(2)(20)(9)(9)
Foreign currency translation impacts-1-1--
Balance as at 30 September 202464472247555
Unrealised gains/(losses) recognised in the income statements for financial instruments held as
at:
30 September 2023(1)- 25 24(1) (1)
30 September 2024
-- 5 51 1
FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
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INFORMATION89
Note 22. Fair values of financial assets and financial liabilities (Continued)
Trading
securities and
financial assets
measuredInvestmentDerivative andTotal LevelDerivativeTotal Level
$m
at FVISsecuritiesother assets3 assetsliabilities3 liabilities
Parent Entity
Balance as at 30 September 2022 18157221972323
Gains/(losses) on assets/(gains)/losses on liabilities recognised in:
Income statements--(9)(9)(7)(7)
OCI -(30)-(30)--
Acquisitions and issues 3079144253115115
Disposals and settlements (19)(4)(116)(139)(109)(109)
Transfer into or out of non-market observables (4)-(12)(16)(7)(7)
Foreign currency translation impacts1--1--
Balance as at 30 September 2023 26202292571515
Gains/(losses) on assets/(gains)/losses on liabilities recognised in:
Income statements(1)-(28)(29)22
OCI-(13)-(13)--
Acquisitions and issues916228253308308
Disposals and settlements(11)-(220)(231)(311)(311)
Transfer into or out of non-market observables(18)-(2)(20)(9)(9)
Foreign currency translation impacts-1-1--
Balance as at 30 September 20245206721855
Unrealised gains/(losses) recognised in the income statements for financial instruments held as
at:
30 September 2023(1)- 25 24 (1) (1)
30 September 2024 -- 5 5 1 1
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 Westpac’s reported results.
Day one profit or loss
The closing balance of unrecognised day one profit for both Westpac and the Parent Entity as at 30 September 2024 was $1 million (2023: nil).
Financial instruments not measured at fair value
For financial instruments not measured at fair value on a recurring basis, fair value has been derived as follows:
Instrument Valuation
LoansWhere available, the fair value of loans is based on observable market transactions, otherwise fair value is estimated using discounted cash flow models. For variable
rate loans, the discount rate used is the current effective interest rate. The discount rate applied for fixed rate loans reflects the market rate for the maturity of the loan
and the credit worthiness of the borrower.
Investment securitiesThe carrying value approximates the fair value. The balance principally relates to government securities from illiquid markets. Fair value is monitored by reference to
recent issuances.
Deposits and other
borrowings
Fair values of deposit liabilities payable on demand (non-interest bearing, interest bearing and savings deposits) approximate their carrying value. Fair values for
term deposits are estimated using discounted cash flows, applying market rates offered for deposits of similar remaining maturities.
Debt issues and loan
capital
Fair values are calculated using a discounted cash flow model. The discount rates applied reflect the terms of the instruments, the timing of the estimated cash flows
and are adjusted for any changes in Westpac’s credit spreads.
All other financial assets
and liabilities
For all other financial assets and liabilities, the carrying value approximates the fair value. These items are either short-term in nature, re-price frequently or are of a
high credit rating.
90 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 22. Fair values of financial assets and financial liabilities (Continued)
The following tables summarise the estimated fair value and fair value hierarchy of financial instruments not measured at fair value.
Estimated fair value
ConsolidatedCarrying
$m
amount Level 1 Level 2 Level 3 Total
2024
Financial assets not measured at fair value
Cash and balances with central banks
65,667 65,667 - - 65,667
Collateral paid
6,269 6,269 - - 6,269
Investment securities
1,166 - 452 714 1,166
Loans
806,542 - - 805,776 805,776
Other financial assets
5,456 - 5,456 - 5,456
Total financial assets not measured at fair value
885,100 71,936 5,908 806,490 884,334
Financial liabilities not measured at fair value
Collateral received
3,078 3,078 - - 3,078
Deposits and other borrowings
673,611 - 670,515 3,869 674,384
Other financial liabilities
18,758 - 18,758 - 18,758
Debt issues
a
163,899 - 162,750 1,755 164,505
Loan capital
a
37,883 - 39,390 - 39,390
Total financial liabilities not measured at fair value
897,229 3,078 891,413 5,624 900,115
2023
Financial assets not measured at fair value
Cash and balances with central banks
102,522 102,522 - - 102,522
Collateral paid
4,535 4,535 - - 4,535
Investment securities1,432 - 511 921 1,432
Loans
773,235 - - 768,890 768,890
Other financial assets
6,219 - 6,219 - 6,219
Total financial assets not measured at fair value
887,943 107,057 6,730 769,811 883,598
Financial liabilities not measured at fair value
Collateral received
3,525 3,525 - - 3,525
Deposits and other borrowings
640,948 - 636,999 4,331 641,330
Other financial liabilities
32,901 - 32,901 - 32,901
Debt issues
a
153,351 - 152,131 998 153,129
Loan capital
a
33,176 - 33,512 - 33,512
Total financial liabilities not measured at fair value
863,901 3,525 855,543 5,329 864,397
a. The estimated fair values of debt issues and loan capital include the impact of changes in Westpac’s credit spreads since origination.
FINANCIAL
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INFORMATION91
Note 22. Fair values of financial assets and financial liabilities (Continued)
Estimated fair value
Parent EntityCarrying
$m
amount Level 1 Level 2 Level 3 Total
2024
Financial assets not measured at fair value
Cash and balances with central banks
58,400 58,400 - - 58,400
Collateral paid
6,199 6,199 - - 6,199
Investment securities
69 - - 69 69
Loans709,832 - - 709,048 709,048
Due from subsidiaries
a
50,517 - 4,683 45,834 50,517
Other financial assets
4,951 - 4,951 - 4,951
Total financial assets not measured at fair value
829,968 64,599 9,634 754,951 829,184
Financial liabilities not measured at fair value
Collateral received2,935 2,935 - - 2,935
Deposits and other borrowings
599,314 - 598,587 1,405 599,992
Other financial liabilities
14,598 - 14,598 - 14,598
Debt issues
b
141,921 - 142,427 - 142,427
Due to subsidiaries
55,378 - 3,505 51,873 55,378
Loan capital
b
36,770 - 38,240 - 38,240
Total financial liabilities not measured at fair value
850,916 2,935 797,357 53,278 853,570
2023
Financial assets not measured at fair value
Cash and balances with central banks
93,466 93,466 - - 93,466
Collateral paid4,505 4,505 - - 4,505
Investment securities
49 - - 49 49
Loans
678,014 - - 674,713 674,713
Due from subsidiaries
a
51,796 - 4,274 47,522 51,796
Other financial assets
5,812 - 5,812 - 5,812
Total financial assets not measured at fair value
833,642 97,971 10,086 722,284 830,341
Financial liabilities not measured at fair value
Collateral received3,243 3,243 - - 3,243
Deposits and other borrowings
565,384 - 564,310 1,443 565,753
Other financial liabilities
26,853 - 26,853 - 26,853
Debt issues
b
133,105 - 133,039 - 133,039
Due to subsidiaries
53,788 - 3,408 50,380 53,788
Loan capital
b
32,085 - 32,431 - 32,431
Total financial liabilities not measured at fair value
814,458 3,243 760,041 51,823 815,107
a. Due from subsidiaries excluded $778 million (2023: $689 million) of long-term debt instruments with equity-like characteristics which are part of the total investment in subsidiaries.
b. The estimated fair values of debt issues and loan capital include the impact of changes in Westpac’s credit spreads since origination.
92 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 23. Offsetting financial assets and financial liabilities
Accounting policy
Financial assets and liabilities are presented net in the balance sheet when Westpac has a legally enforceable right to offset them in all circumstances and there is an intention to settle
the asset and liability on a net basis, or to realise the asset and settle the liability simultaneously. The gross assets and liabilities behind the net amounts reported in the balance sheet
are disclosed in the following tables.
Some of Westpac’s offsetting arrangements are not enforceable in all circumstances. The amounts in the tables below may not tie back to the balance sheet if there are balances which
are not subject to offsetting or enforceable netting arrangements. The amounts presented in this note do not represent the credit risk exposure of Westpac or Parent Entity. Refer to Note
11 for information on credit risk management. The offsetting and collateral arrangements and other credit risk mitigation strategies used by Westpac are further explained in the
‘Management of risk mitigation’ section of Note 11.5.
Amounts subject to enforceable netting arrangements
Effects of offsettingAmounts subject to enforceable
in the balance sheetnetting arrangements but not offset
Net amountsOther
reported inrecognisedFinancial
ConsolidatedAmountsthe balancefinancialCashinstrument
$m
Gross amounts offset sheet instruments collateral
a,b
collateral Net amount
2024
Assets
Collateral paid
c
4,532(4,474)58---58
Derivative financial instruments
d
73,247(50,474)22,773(17,071)(3,065)(112)2,525
Reverse repurchase agreements
e
19,898(1,908)17,990-(14)(17,950)26
Loans
f
23,218(23,147)71---71
Total assets
120,895(80,003)40,892(17,071)(3,079)(18,062)2,680
Liabilities
Collateral received2,562(2,559)3---3
Derivative financial instruments
d
80,776(52,389)28,387(17,071)(5,870)(1,721)3,725
Repurchase agreements
g
20,756(1,908)18,848-(57)(18,791)-
Deposits and other borrowings
f
49,007(23,147)25,860---25,860
Total liabilities
153,101(80,003)73,098(17,071)(5,927)(20,512)29,588
2023
Assets
Collateral paid
c
11,162(11,107)55---55
Derivative financial instruments
d
87,261(67,752)19,509(13,344)(3,417)(53)2,695
Reverse repurchase agreements
e
12,054-12,054-(109)(11,862)83
Loans
f
25,343(25,301)42---42
Total assets
135,820(104,160)31,660(13,344)(3,526)(11,915)2,875
Liabilities
Collateral received5,131(5,127)4---4
Derivative financial instruments
d
95,461(73,732)21,729(13,364)(4,340)(2,166)1,859
Repurchase agreements
g
25,059-25,059-(19)(25,040)-
Deposits and other borrowings
f
52,421(25,301)27,120---27,120
Total liabilities
178,072(104,160)73,912(13,364)(4,359)(27,206)28,983
a. $3,078 million (2023: $3,525 million) of cash collateral on derivative financial assets and reverse repurchase agreements, is disclosed as collateral received in the balance sheet. The remainder is included in term deposits
recognised in deposits and other borrowings within Note 12.
b. $5,927 million (2023: $4,359 million) of cash collateral, subject to enforceable netting arrangements with derivative financial liabilities and repurchase agreements, forms part of collateral paid as disclosed in the balance
sheet. The remainder of collateral paid, as disclosed in the balance sheet, consists of $342 million (2023: $176 million) in futures margin that does not form part of this column.
c. Gross amounts consist of variation margin held directly with central clearing counterparties. Where variation margin is receivable it is reported as part of collateral paid. Where variation margin is payable it is reported as
part of collateral received. Amounts offset relate to variation margin.
d. $1,336 million (2023: $1,834 million) of derivative financial assets and $2,587 million (2023: $2,918 million) of derivative financial liabilities are not subject to enforceable netting arrangements.
e. Reverse repurchase agreements form part of trading securities and financial assets measured at FVIS in Note 16.
f. Gross amounts consist of debt and interest set-off accounts which meet the requirements for offsetting as described above. These accounts form part of business loans in Note 9 and part of deposits and other borrowings
in Note 12.
g. Repurchase agreements form part of other financial liabilities in Note 19.
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Note 23. Offsetting financial assets and financial liabilities (Continued)
Amounts subject to enforceable netting arrangements
Effects of offsettingAmounts subject to enforceable
in the balance sheetnetting arrangements but not offset
Net amountsOther
reported inrecognisedFinancial
Parent EntityAmountsthe balancefinancialCashinstrument
$m
Gross amounts offset sheet instruments collateral
a,b
collateral Net amount
2024
Assets
Collateral paid
c
4,532(4,474)58---58
Derivative financial instruments
d
73,041(50,474)22,567(16,971)(2,922)(112)2,562
Reverse repurchase agreements
e
19,898(1,908)17,990-(14)(17,950)26
Loans
f
23,218(23,147)71---71
Total assets
120,689(80,003)40,686(16,971)(2,936)(18,062)2,717
Liabilities
Collateral received2,562(2,559)3---3
Derivative financial instruments
d
80,595(52,389)28,206(16,971)(5,800)(1,721)3,714
Repurchase agreements
g
17,979(1,908)16,071-(57)(16,014)-
Deposits and other borrowings
f
49,007(23,147)25,860---25,860
Total liabilities
150,143(80,003)70,140(16,971)(5,857)(17,735)29,577
2023
Assets
Collateral paid
c
11,162(11,107)55---55
Derivative financial instruments
d
86,969(67,752)19,217(13,334)(3,135)(53)2,695
Reverse repurchase agreements
e
12,013-12,013-(109)(11,821)83
Loans
f
25,343(25,301)42---42
Total assets
135,487(104,160)31,327(13,334)(3,244)(11,874)2,875
Liabilities
Collateral received5,131(5,127)4---4
Derivative financial instruments
d
95,394(73,732)21,662(13,334)(4,310)(2,166)1,852
Repurchase agreements
g
20,315-20,315-(19)(20,296)-
Deposits and other borrowings
f
52,421(25,301)27,120---27,120
Total liabilities
173,261(104,160)69,101(13,334)(4,329)(22,462)28,976
a. $2,935 million (2023: $3,243 million) of cash collateral on derivative financial assets and reverse repurchase agreements, is disclosed as collateral received in the balance sheet. The remainder is included in term deposits
recognised in deposits and other borrowings within Note 12.
b. $5,857 million (2023: $4,329 million) of cash collateral, subject to enforceable netting arrangements with derivative financial liabilities and repurchase agreements, forms part of collateral paid as disclosed in the balance
sheet. The remainder of collateral paid, as disclosed in the balance sheet, consists of $342 million (2023: $176 million) in futures margin that does not form part of this column.
c. Gross amounts consist of variation margin held directly with central clearing counterparties. Where variation margin is receivable it is reported as part of collateral paid. Where variation margin is payable it is reported as
part of collateral received. Amounts offset relate to variation margin.
d. $1,335 million (2023: $1,821 million) of derivative financial assets and $2,589 million (2023: $2,912 million) of derivative financial liabilities are not subject to enforceable netting arrangements.
e. Reverse repurchase agreements form part of trading securities and financial assets measured at FVIS in Note 16.
f. Gross amounts consist of debt and interest set-off accounts which meet the requirements for offsetting as described above. These accounts form part of business loans in Note 9 and part of deposits and other borrowings
in Note 12.
g. Repurchase agreements form part of other financial liabilities in Note 19.
Other recognised financial instruments
These financial assets and liabilities are subject to master netting agreements which are not enforceable in all circumstances, so they are recognised gross in the balance sheet. The
offsetting rights of the master netting arrangements can only be enforced if a predetermined event occurs in the future, such as a counterparty defaulting.
Cash collateral and financial instrument collateral
These amounts are received or pledged under master netting arrangements against the gross amounts of assets and liabilities. Financial instrument collateral typically comprises
securities which can be readily liquidated in the event of counterparty default. The offsetting rights of the master netting arrangement can only be enforced if a predetermined event occurs
in the future, such as a counterparty defaulting.
94 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
INTANGIBLE ASSETS, PROVISIONS, COMMITMENTS AND CONTINGENCIES
Note 24. Intangible assets
Accounting policy
Indefinite life intangible assets
Goodwill
Goodwill acquired in a business combination is initially measured at cost, generally being the excess of:
(i) The consideration paid; over
(ii) The net fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Subsequently, goodwill is not amortised but rather tested for impairment. Impairment is tested at least annually or whenever there is an indication of impairment. An impairment charge is
recognised when a cash generating unit’s (CGU) carrying value exceeds its recoverable amount. Recoverable amount means the higher of the CGU’s fair value less costs to sell and its value-in-
use.
Westpac’s CGUs represent the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. They reflect
the level at which Westpac monitors and manages its operations.
Brand names
Brand names acquired in a business combination, including St.George, BT and BankSA, are initially recognised at cost. As these assets have been assessed as having indefinite useful lives they
are not amortised but tested for impairment at least annually or whenever there is an indication of impairment. The useful life of each brand name intangible assets is also reviewed each period to
determine whether events and circumstances continue to support the indefinite useful life assessment.
Finite life intangible assets
Finite life intangibles, such as computer software, are recognised initially at cost and subsequently at amortised cost less any impairment.
IntangibleUseful lifeDepreciation method
GoodwillIndefiniteNot applicable
Brand namesIndefiniteNot applicable
Computer software3 to 10 yearsStraight-line or the diminishing balance method (using the Sum of
the Years Digits)
Critical accounting assumptions and estimates
Judgement is required in determining the fair value of assets and liabilities acquired in a business combination. A different assessment of fair values would have resulted in a different goodwill
balance and different post-acquisition performance of the acquired entity.
Judgement is also required in determining the useful life of intangible assets other than goodwill.
When assessing impairment of intangible assets, significant judgement is needed to determine the appropriate cash flows and discount rates to be applied to the calculations. The significant
assumptions applied to the value-in-use calculations are outlined below.
For assets other than goodwill, management also assess whether there is any indication that an impairment loss recognised in prior periods may no longer exist or may have decreased. If any
such indication exists, the recoverable amount of the asset is estimated.
FINANCIAL
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Note 24. Intangible assets (Continued)
ConsolidatedParent Entity
$m
2024 2023 2024 2023
Goodwill
Balance as at beginning of year
7,419 7,393 6,253 6,253
Additions
a
21---
Other adjustments
(7) 26 - -
Balance as at end of year
7,433 7,419 6,253 6,253
Computer software
Balance as at beginning of year
2,797 2,264 2,371 1,992
Additions
792 1,141 673 952
Impairment
(19) (8) (19) (8)
Amortisation
(889) (621) (783) (565)
Other adjustments
(6) 21 - -
Balance as at end of year
2,675 2,797 2,242 2,371
Cost
8,856 8,450 7,493 7,187
Accumulated amortisation and impairment
(6,181) (5,653) (5,251) (4,816)
Carrying amount
2,675 2,797 2,242 2,371
Brand names638670636636
Total intangible assets10,74610,8869,1319,260
Goodwill has been allocated to the following CGUs:
Consumer4,8294,8294,4844,484
Business & Wealth
b
2,1222,1011,7691,769
New Zealand482489--
Total goodwill7,4337,4196,2536,253
Brand names has been allocated to the following CGUs:
Consumer350382350350
Business & Wealth
b
288288286286
Total goodwill
638 670 636 636
a. Related to the acquisition of HealthPoint.
b. During 2024, the Group established a new operating segment called Business & Wealth and dissolved the Specialist Business Division (SBD). Certain businesses of SBD, which included the Platforms and Margin Lending
CGUs, have been incorporated into the Business & Wealth segment. The Business & Wealth segment now comprises individual CGUs (Business, Platforms, Margin Lending and HealthPoint) to which goodwill has been
allocated. The carrying amount of goodwill for Business was $1,812 million as at 30 September 2024 and 30 September 2023. The carrying amount of goodwill allocated to the remaining individual CGUs in this segment is
not significant.
The carrying value of the RAMS brand ($32 million) was impaired in full in 2024.
96 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 24. Intangible assets (Continued)
Impairment testing and results
Impairment testing is performed at least once a year, or whenever there is an indication of impairment, by comparing the recoverable amount of each CGU with the carrying amount. For
assets other than goodwill management also assess whether there is any indication that an impairment loss recognised in prior periods may no longer exist or may have decreased. If any
such indication exists, the recoverable amount of the asset is estimated. The primary test for recoverable amount is determined based on value-in-use which refers to the present value of
expected cash flows under its current use. Fair value less costs to sell is also considered for those CGUs where value-in-use is lower than carrying value. In the current year, this was not
required to be considered.
Significant assumptions used in recoverable amount calculations
The assumptions made for goodwill impairment testing for each relevant significant CGU are provided in the following table and are based on past experience and management’s
expectations for the future. In the current year and given the present economic environment, Westpac has reassessed these assumptions and revised them where necessary in order to
provide a reasonable estimate of the value-in-use of the CGUs and Group.
Discount rate Cash flows
Post-tax rate/Pre-tax rateForecast period/terminal growth rate
2024 2023 2024 2023
Australian CGUs
a
9% / 11.7%-11.9%9% / 11.8%-12.1%5 years / 2%3 years / 2%
New Zealand
9% / 11.4%-11.7%9% / 11.5%-12.0%5 years / 2%3 years / 2%
a. Australian CGUs comprise Consumer and the CGUs within Business & Wealth.
Westpac discounts the projected cash flows by its adjusted pre-tax equity rate.
The cashflows used are based on management approved forecasts. These forecasts utilise information about current and future economic conditions, observable historical information
and management expectations of future business performance. The terminal growth rate represents the growth rate applied to extrapolate cash flows beyond the forecast period and
reflects the lower end of the RBA’s target long-term inflation rate band. For all CGUs tested, the recoverability of goodwill is not reliant on any one particular assumption. There are no
reasonably possible changes in assumptions for any significant CGU that would result in an indication of impairment or have a material impact on Westpac’s reported results.
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Note 25. Provisions, contingent liabilities, contingent assets and credit commitments
Accounting policy
Provisions
Provisions are recognised for present obligations arising from past events where a payment (or other economic transfer) is likely to be necessary to settle the obligation and can be
reliably estimated.
Employee benefits – long service leave provision
Long service leave is granted to certain employees in Australia and New Zealand. The provision is calculated based on the expected payments. When payments are expected to be
more than one year in the future, the provision is discounted to present value using assumptions for expected employee service, utilisation and average salary increases.
Employee benefits – annual leave and other employee benefits provision
The provision for annual leave and other employee benefits (including wages and salaries, inclusive of non-monetary benefits, and any associated on-costs (e.g. payroll tax)) is
calculated based on expected payments.
Provision for ECL on credit commitments
Westpac is committed to provide facilities and guarantees as explained below. If it is probable that a facility will be drawn and the resulting asset will be less than the drawn amount
then a provision for impairment is recognised. The provision for ECL is calculated using the methodology described in Note 10.
Compliance, Regulation and Remediation provisions
The compliance, regulation and remediation provisions relate to matters of potential misconduct in providing services to our customers identified both as a result of regulatory action
and internal reviews. An assessment of the likely cost of these matters to Westpac (including applicable customer refunds) is made on a case-by-case basis and specific provisions are
made where appropriate.
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 in the balance sheet but are disclosed unless the outflow of economic resources is remote.
Undrawn credit commitments
Westpac 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.
Contingent assets
Contingent assets are possible assets whose existence will be confirmed only by uncertain future events. Contingent assets are not recognised in the balance sheet but are disclosed if
an inflow of economic benefits is probable.
Critical accounting assumptions and estimates
The financial reporting of provisions for litigation and non-lending losses and for compliance, regulation and remediation matters involves a significant degree of judgement in relation to
identifying whether a present obligation exists and also in estimating the probability, timing, nature and quantum of the outflows that may arise from past events. These judgements are
made based on the specific facts and circumstances relating to individual events.
Provisions carried for long service leave are supported by an independent actuarial report.
98 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 25. Provisions, contingent liabilities, contingent assets and credit commitments (Continued)
Provisions
Litigation,
Annual leaveProvision for non-lending
and otherimpairment onLeaseRestructuringlosses and
Long serviceemployeecreditrestorationand otherremediation
$mleavebenefitscommitmentsobligationsprovisionsprovisionsTotal
Consolidated
Balance as at 30 September 2023
464 933 497 183 342358 2,777
Additions
99 1,139 80 7 190188 1,703
Utilisation
(58) (1,163) - (27) (274)(188) (1,710)
Reversal of unutilised provisions(28) (9) (61) - (48)(118) (264)
Other
- (1) - - -- (1)
Balance as at 30 September 2024
477 899 516 163 210240 2,505
Parent Entity
Balance as at 30 September 2023
453 844 454 160 329303 2,543
Additions
88 1,099 71 6 180158 1,602
Utilisation
(48) (1,110) - (25) (267)(168) (1,618)
Reversal of unutilised provisions
(28)(9)(61)-(44)(114)(256)
Balance as at 30 September 2024
465 824 464 141 198179 2,271
Legislative liabilities
Westpac had the following assessed liabilities as at 30 September 2024:
●$22 million (2023: $23 million) based on an actuarial assessment as a self-insurer under the Workers’ Compensation Act 1987 and the Workplace Injury Management and Workers’
Compensation Act 1998 (New South Wales);
●$7 million (2023: $8 million) based on actuarial assessment as a self-insurer under the Accident Compensation Act 1985 (Victoria);
●$7 million (2023: $8 million) based on actuarial assessment as a self-insurer under the Workers’ Rehabilitation and Compensation Act 1986 (South Australia);
●$2 million (2023: $2 million) based on an actuarial assessment as a self-insurer under the Workers’ Compensation and Rehabilitation Act 2003 (Queensland);
●Nil (2023: nil) based on an actuarial assessment as a self-insurer under the Workers’ Compensation Act 1951 (Australian Capital Territory);
●Nil (2023: nil) based on an actuarial assessment as a self-insurer under the Return to Work Act 1986 (Northern Territory);
●$1 million (2023: $1 million) based on an actuarial assessment as a self-insurer under the Workers’ Compensation and Injury Management Act 1981 (Western Australia); and
●$2 million (2023: $1 million) based on an actuarial assessment as a self-insurer under the Workers’ Rehabilitation and Compensation Act 1988 (Tasmania).
Appropriate provision has been made for these liabilities in the provision for annual leave and other employee benefits above.
FINANCIAL
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INFORMATION99
Note 25. Provisions, contingent liabilities, contingent assets and credit commitments (Continued)
Provisions
Litigation, non-lending losses and remediation provisions
Provisions for the financial 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.
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 30 September 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 has remediated 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 date has been fixed for 27 May 2025;
●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. One proceeding settled in September 2024.
The joint trial for two of the proceedings commenced 14 October 2024. Westpac and SGF are defending the proceedings. Westpac no longer pays flex commissions following an
industry wide ban and will finalise the divestment of its auto-finance business in 2025; and
●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. In September 2024 the parties agreed
to discontinue the proceedings, subject to approval of the Court.
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
Westpac carries restructuring provisions for committed business restructures and branch closures. The provisions held primarily relate to staff 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 Westpac’s property leases.
Contingent liabilities
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 (FWO), 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, the 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.
100 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 25. Provisions, contingent liabilities, contingent assets and credit commitments (Continued)
These currently include:
●Engagement with various regulators in relation to RAMS. The engagements include an enforcement investigation by ASIC into Westpac, 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 and Westpac’s general conduct obligations, prohibitions on conducting business with unaccredited loan referrers and unlicensed
persons, and giving misleading information. Following a strategic review by Westpac and RFG of the RAMS business, RFG has exited a number of franchisees and closed the RAMS
business to new home loan applications from 6 August 2024. Disputes have been raised by franchisees in relation to these actions, including the commencement of a class action in
May 2024. We are also responding to enquiries from APRA;
●Engagement with the ATO in relation to the remediation and uplift of Westpac’s Common Reporting Standard (CRS) reporting, noting unsatisfactory completion may result in
enforcement action against Westpac;
●Investigation by the FWO in relation to Westpac’s self-disclosed remediation program regarding employee pay- related entitlements. Westpac considers enforcement action against it
likely, and could include an Enforceable Undertaking; 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 banking products, hardship processes, consumer lending conduct, Consumer Data Rights 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.
Class actions
In addition to the class action litigation noted under Provisions, above:
●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. The matter has not yet been set down for a hearing.
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INFORMATION101
Note 25. 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, consumer lending conduct; compliance with lending obligations; hardship processes; 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 seeking
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 Westpac. Westpac 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).
Westpac has assessed these and other taxation matters arising in Australia and elsewhere, including seeking independent advice.
Clearing and settlement obligations
Westpac 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 Westpac has made contributions to a default fund. In the event of a default of another clearing member, Westpac 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 Westpac, 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).
102 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 25. Provisions, contingent liabilities, contingent assets and credit commitments (Continued)
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.
Undrawn credit commitments
Westpac 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 Westpac 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 Westpac 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.
Westpac uses the same credit policies when entering into these arrangements as it does for on-balance sheet instruments. Refer to Note 11 and Note 21 of the 2024 Annual Report for
further details of credit risk and liquidity risk management, respectively.
Undrawn credit commitments excluding derivatives are as follows:
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Undrawn credit commitments
Letters of credit and financial guarantees
a
13,118 12,447 12,539 11,847
Commitments to extend credit
b
198,876 193,457 175,206 168,719
Other
117 247 117 247
Total undrawn credit commitments
212,111 206,151 187,862 180,813
a. Standby letters of credit are undertakings to pay, against presentation documents, an obligation in the event of a default by a customer. Financial guarantees are unconditional undertakings given to support the obligations
of a customer to third parties. The Group may hold cash as collateral for certain financial 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, $6 billion (2023: $8.8 billion) for the Group and $5.1 billion (2023: $7.9 billion) for the Parent Entity of credit exposures were offered and accepted but still
revocable. These represent part of Westpac Group’s maximum credit exposure to credit risk.
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INFORMATION103
CAPITAL AND DIVIDENDS
Note 26. Shareholders’ equity
Accounting policy
Share capital
Ordinary shares are recognised at the amount paid up per ordinary share, net of directly attributable issue costs. Treasury shares are shares in the Parent Entity, purchased by the
Parent Entity or other entities within Westpac. These shares are adjusted against share capital as the net of the consideration paid to purchase the shares and, where applicable, any
consideration received from the subsequent sale or reissue of these shares.
Non-controlling interests
Non-controlling interests represent the share in the net assets of subsidiaries attributable to equity interests that are not owned directly or indirectly by the Parent Entity.
Reserves
Foreign currency translation reserve
Exchange differences arising on translation of Westpac’s foreign operations, and any offsetting gains or losses on hedging the net investment are reflected in the foreign currency
translation reserve. A cumulative credit balance in this reserve would not normally be regarded as being available for payment of dividends until such gains are realised and recognised
in the income statement on sale or disposal of the foreign operation.
Debt securities at FVOCI reserve
This reserve comprises the changes in fair value of debt securities measured at FVOCI (except for interest income, impairment charges and FX gains and losses which are recognised
in the income statement), net of any related hedge accounting adjustments and tax. These changes are transferred to the income statement when the asset is disposed.
Equity securities at FVOCI reserve
This reserve comprises the changes in fair value of equity securities measured at FVOCI, net of tax. These changes are not transferred to the income statement when the asset is
disposed.
Cash flow hedge reserve
This comprises the fair value gains and losses associated with the effective portion of designated cash flow hedging instruments, net of tax.
Share-based payment reserve
This comprises the fair value of equity-settled share-based payments recognised as an expense.
Other reserves
Other reserves for the Parent Entity relate to certain historic internal group restructurings performed at fair value. The reserve is eliminated on consolidation.
Other reserves for Westpac consist of transactions relating to changes in the Parent Entity’s ownership of a subsidiary that do not result in a loss of control.
The amount recorded in other reserves reflects the difference between the amount by which NCI are adjusted and the fair value of any consideration paid or received.
104 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 26. Shareholders’ equity (Continued)
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Share capital
Ordinary share capital, fully paid37,95839,82637,95839,826
Treasury shares
a
(758)(702)(816)(760)
Total share capital37,20039,12437,14239,066
Non-controlling interest
Perpetual Preference Shares (PPS)339---
Other
b
844--
Total non-controlling interests34744--
a. 2024: 6,173,874 unvested RSP and EIP treasury shares held (2023: 5,249,663).
b. Westpac acquired 8.74% of the non-controlling interest in Westpac Bank-PNG-Limited.
Perpetual Preference Shares (PPS)
On 13 September 2024, Westpac New Zealand Limited (WNZL), a wholly-owned subsidiary of Westpac, issued NZD375 million PPS to external investors. The PPS is recognised as a
non-controlling interests to the Group at the amount paid up per share, net of directly attributable issue costs (NZD6 million). Discretionary distributions on PPS are recognised in equity
when paid.
A summary of the key terms of the PPS is provided below.
$
Issue date
PPS distribution rate
Optional redemption date
NZ$375 million13 September 2024Fixed at 7.10% until 13 September 2029 (when it resets to a floating rate equal to the
NZ 3 month bank bill rate + 3.50% p.a.)
13 September 2029 and each quarterly scheduled
distribution payment date after that date
PPS distribution payable
Quarterly PPS distributions are at the absolute discretion of WNZL. In addition, PPS distributions will only be paid if WNZL is solvent on the payment date and remains solvent
immediately after such payment is made and the payment of the PPS distribution will not result in a breach of WNZL’s conditions of registration as at the time of the payment.
PPS distributions are non-cumulative. If a PPS distribution is not paid in full, WNZL may not determine or pay any dividends on its ordinary shares or undertake a discretionary buy-back
or capital reduction of WNZL’s ordinary shares until a subsequent PPS distribution is paid in full (except in limited circumstances).
Redemption
WNZL may elect to redeem all of the PPS, on the relevant optional redemption date, or at any time for certain tax or regulatory reasons. Redemption is subject to certain conditions,
including the Reserve Bank of New Zealand’s prior written approval and WNZL remaining solvent immediately after the redemption. Holders have no right to require redemption.
Conversion
The PPS have no conversion or exchange options and no non-viability triggers.
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.
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INFORMATION105
Note 26. Shareholders’ equity (Continued)
Reconciliation of movement in number of ordinary shares
Consolidated and Parent Entity
(number) 2024 2023
Opening balance
3,509,076,960 3,501,127,694
Shares issued from dividend reinvestment plan
a
-7,949,266
Share buyback
b
(67,665,599)-
Closing balance
3,441,411,361 3,509,076,960
a. The dividends re-investment plans for the 2024 interim, 2023 interim and 2023 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.
b. During 2024, Westpac announced its intention to undertake a $2.5 billion on market buyback of WBC ordinary shares. As at 30 September 2024 Westpac has bought back and cancelled 67,665,599 ordinary shares
($1,812 million) at an average price of $26.78.
Ordinary shares purchased on market
2024
Consolidated and Parent Entity Number Average Price ($)
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 exercised317,17322.00
Westpac Equity Incentive Plan (EIP) - Unhurdled share rights exercised83621.47
Westpac Long Term Variable Reward Plan (LTVR) - share rights to be exercised
b
679,69432.54
Total number of ordinary shares purchased on market4,748,753-
a. Ordinary shares allocated to employees under the RSP and EIP are classified as treasury shares until the shares vest.
b. During September 2024, 679,694 shares were purchased for future share rights exercises.
For details of the share-based payment arrangements refer to Note 31.
106 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 26. Shareholders’ equity (Continued)
Reconciliation of movement in reserves
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Debt securities at FVOCI reserve
Balance as at beginning of year(165)62103313
Net gains/(losses) from changes in fair value(591)(187)(813)(179)
Income tax effect1805924353
Transferred to income statements5(125)5(125)
Income tax effect(1)39(1)39
Loss allowance on debt securities measured at FVOCI1111
Other3(14)-1
Balance as at end of year(568)(165)(462)103
Equity securities at FVOCI reserve
Balance as at beginning of year126136(15)5
Net gains/(losses) from changes in fair value(2)(19)(5)(29)
Exchange differences on translation1---
Income tax effect2929
Balance as at end of year127126(18)(15)
Share-based payment reserve
Balance as at beginning of year1,9831,8931,8741,784
Share-based payment expense96909690
Balance as at end of year2,0791,9831,9701,874
Cash flow hedge reserve
Balance as at beginning of year152813(203)440
Net gains/(losses) from changes in fair value501(635)873(570)
Income tax effect(158)189(262)171
Transferred to income statements77(309)132(349)
Income tax effect(24)94(39)105
Balance as at end of year548152501(203)
Foreign currency translation reserve
Balance as at beginning of year(138)(505)(141)(195)
Exchange differences on translation of foreign operations(328)522(165)151
Gains/(losses) on net investment hedges28(155)31(97)
Balance as at end of year(438)(138)(275)(141)
Other reserves
Balance as at beginning of year(23)(21)4141
Transactions with owners7(2)--
Balance as at end of year(16)(23)4141
Total reserves1,7321,9351,7571,659
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INFORMATION107
Note 27. Capital adequacy
APRA is the prudential regulator of ADI’s including Westpac. APRA measures an ADI’s regulatory capital using the following measures:
Level of capitalDefinition
Common Equity Tier 1 Capital (CET1)Comprises the highest quality components of capital that consists of paid-up share capital, retained profits and
certain reserves, less certain intangible assets, capitalised expenses and software, and investments and
retained profits in insurance and funds management subsidiaries that are not consolidated for capital adequacy
purposes.
Tier 1 CapitalThe sum of CET1 and AT1 Capital. AT1 Capital comprises high quality components of capital that consists of
certain securities not included in CET1, but which include loss absorbing characteristics. AT1 instruments
convert into equity and absorb losses when certain triggers are met.
Total Regulatory CapitalThe sum of Tier 1 Capital and Tier 2 Capital. Tier 2 Capital includes subordinated instruments and other
components of capital that, to varying degrees, do not meet the criteria for Tier 1 Capital, but nonetheless
contribute to the overall strength of an ADI and its capacity to absorb losses when certain triggers are met.
Leverage ratioThe Leverage ratio is calculated as Tier 1 Capital divided by the Exposure Measure, where the Exposure
Measures consists of on balance sheet items, derivatives exposure, securities financing transaction (SFT)
exposures and non-market related off balance sheet exposures.
Under APRA’s Prudential Standards, Australian ADIs, including Westpac, are required to maintain minimum Prudential Capital Requirements (PCRs) being:
●CET1 Ratio of at least 4.5%;
●Tier 1 Capital Ratio of at least 6.0%; and
●Total Regulatory Capital Ratio of at least 8.0%.
APRA may also require ADIs, including Westpac, to meet PCRs above the industry PCRs. APRA does not allow the PCRs for individual ADIs to be disclosed. APRA also requires ADIs to
hold additional CET1 buffers comprising of:
●A capital conservation buffer of 4.75% that includes a 1% surcharge for ADIs designated by APRA as D-SIBs. APRA has determined that Westpac is a D-SIB; and
●Countercyclical capital buffer of 1.0%. The countercyclical buffer is set on a jurisdictional basis and APRA is responsible for setting the requirement in Australia. The countercyclical
buffer requirement is currently set to the default of 1.0% for Australian exposures, however this may be varied by APRA in the range of 0% to 3.5%.
Collectively, the above buffers are referred to as the “Capital Buffer”. Should the CET1 capital ratio fall within the capital buffer range, restrictions on the distribution of earnings will apply.
This includes restrictions on the amount of earnings that can be distributed through dividends, AT1 Capital distributions and discretionary staff bonuses.
The Total CET1 Requirement for Westpac is at least 10.25%, (based on an industry minimum CET1 requirement of 4.5% plus a Capital Buffer of at least 5.75% applicable to D-SIBs), the
Tier 1 Capital Ratio requirement is at least 11.75% and the Total Regulatory Capital Ratio requirement is at least 13.75%
1
.
In addition, APRA’s capital framework also requires an ADI to maintain a minimum leverage ratio of 3.5%. APRA may also vary the minimum leverage ratio for an individual ADI.
Capital management strategy
Westpac evaluates its approach to capital management through an annual Internal Capital Adequacy Assessment Process (ICAAP). Key features include:
●The development of a capital management strategy, including consideration of regulatory capital minimums, capital buffers and contingency plans;
●Consideration of regulatory capital requirements and the perspectives of external stakeholders including rating agencies as well as equity and debt investors; and
●A stress testing framework that tests our resilience under a range of adverse economic scenarios.
The Board has determined a target CET1 operating capital range of between 11.0% and 11.5%, in normal operating conditions.
1. Noting that APRA may apply higher requirements for an individual ADI.
108 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 28. Dividends
ConsolidatedParent Entity
$m20242023202220242023
Dividends not recognised at year end
Since year end the Directors have proposed the following dividends:
Final dividend 76 cents per share (2023: 72 cents, 2022: 64 cents) all fully franked at 30%2,615 2,527 2,241 2,615 2,527
Total dividends not recognised at year end
2,615 2,527 2,241 2,615 2,527
The Board has determined a final fully franked dividend of 76 cents per share, to be paid on 19 December 2024 to shareholders on the register at the record date of 8 November 2024.
Shareholders can choose to receive their dividends as cash or reinvest their dividend in additional shares under the Dividend Reinvestment Plan.
The Board has determined to satisfy the Dividend Reinvestment Plan (DRP) for the final ordinary dividend by arranging for the purchase of shares in the market by a third party. The
market price used to determine the number of shares provided to DRP participants will be set over the 15 trading days commencing 13 November 2024 and will not include a discount.
Details of dividends recognised during the year are provided in the statement of changes in equity.
Australian franking credits available to the Parent Entity for subsequent years are $3,504 million (2023: $3,520 million, 2022: $3,298 million). This is calculated as the year end franking
credit balance, adjusted for the Australian current tax liability and the proposed 2024 final dividend.
New Zealand imputation credits
New Zealand imputation credits of NZ$0.06 (2023: NZ$0.07, 2022: NZ$0.08) per share will be attached to the proposed 2024 final dividend. New Zealand imputation credits available to
the Parent Entity for subsequent years are NZ$374 million (2023: NZ$557 million, 2022: NZ$678 million). This is calculated on the same basis as the Australian franking credits but using
the New Zealand current tax liability.
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INFORMATION109
GROUP STRUCTURE
Note 29. Investments in subsidiaries and associates
Accounting policy
Subsidiaries
Westpac’s subsidiaries are entities which it controls and consolidates as it is exposed to, or has rights to, variable returns from the entity, and can affect those returns through its power
over the entity.
When Westpac ceases to control a subsidiary, any retained interest in the entity is remeasured to fair value, with any resulting gain or loss recognised in the income statement.
Changes in Westpac’s ownership interest in a subsidiary which do not result in a loss of control are accounted for as transactions with equity holders in their capacity as equity holders.
In the Parent Entity’s financial statements, investments in subsidiaries are initially recorded at cost and are subsequently held at the lower of cost and recoverable amount.
All transactions between Westpac entities are eliminated on consolidation.
Associates
Associates are entities in which Westpac has significant influence, but not control, over the operating and financial policies. Westpac accounts for associates using the equity method.
The investments are initially recognised at cost (except where recognised at fair value due to a loss of control of a subsidiary), and increased (or decreased) each year by Westpac’s
share of the associate’s profit (or loss). Dividends received from the associate reduce the investment in the associate.
Overseas companies predominantly carry on business in the country of incorporation. For unincorporated entities, ‘Country of incorporation’ refers to the country where business is carried
on. The financial years of all controlled entities are the same as that of Westpac unless otherwise stated. From time to time, Westpac consolidates a number of unit trusts where Westpac
has variable returns from its involvement with the trusts, and has the ability to affect those returns through its power over the trusts. These unit trusts are excluded from the table.
A complete list of controlled entities can be found in the Consolidated Entity Disclosure Statement. The following table includes the material controlled entities of Westpac as at
30 September 2024.
Country Country
Nameof incorporation Nameof incorporation
Westpac Financial Services Group Pty Limited
Australia Westpac Equity Holdings Pty Limited Australia
BT Portfolio Services Limited
Australia Westpac Overseas Holdings No. 2 Pty Limited Australia
Capital Finance Australia Limited
Australia Westpac Securitisation Holdings Pty Limited Australia
Crusade trust No.2P of 2008
Australia Westpac New Zealand Group Limited New Zealand
Series 2008-1M WST Trust
Australia Westpac New Zealand Limited New Zealand
Series 2022-1P WST Trust
Australia Westpac NZ Covered Bond Limited
a
New Zealand
Series 2024-1 WST TrustAustralia Westpac NZ Securitisation Limited
a
New Zealand
Westpac Term PIE FundNew Zealand Westpac Securities NZ LimitedNew Zealand
Westpac Covered Bond TrustAustralia Westpac Bank - PNG - LimitedPapua New Guinea
a. The Group indirectly owns 19% of these entities, however, due to contractual and structural arrangements both these entities are considered to be controlled entities within the Group.
The following controlled entities have been granted relief from compliance with the balance date synchronisation provisions in the Corporations Act 2001: Westpac Cash PIE Fund;
Westpac Notice Saver PIE Fund; and Westpac Term PIE Fund.
The following material controlled entities are not wholly owned:
Percentage Owned 2024 2023
Westpac Bank - PNG - Limited
a
89.9%89.9%
Westpac NZ Covered Bond Limited
19.0%19.0%
Westpac NZ Securitisation Limited
19.0%19.0%
a. In September 2024, Westpac acquired an additional 8.74%. As at the reporting date, the registration of the share transfer in PNG was still pending. Once this is completed, Westpac’s shareholding will increase to 98.65%.
110 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 29. Investments in subsidiaries and associates (Continued)
Non-controlling interests
Details of the balance of NCIs are set out in Note 26. There are no NCIs that are material to Westpac.
Significant restrictions
There were no significant restrictions on the ability to transfer cash or other assets, pay dividends or other capital distributions, provide or repay loans and advances between the entities
within Westpac. There were also no significant restrictions on Westpac’s ability to access or use the assets and settle the liabilities of Westpac resulting from protective rights of NCIs.
Associates
There are no associates that are material to Westpac.
Changes in ownership of subsidiaries or other businesses
Businesses acquisitions
During the year ended 30 September:
2024 - Westpac acquired:
●8.74% of the non-controlling interest in Westpac Bank - PNG - Limited on 11 September 2024, which will raise Westpac’s interest to 98.65%; and
●The business of HealthPoint Claims Pty Ltd on 6 April 2024.
2023 - no businesses were acquired.
2022 - Westpac acquired a 100% interest in MoneyBrilliant Pty Ltd on 13 December 2021.
Businesses disposals
During the year ended 30 September:
2024 - no businesses were sold.
2023 - Westpac sold its interest in Advance Asset Management Limited on 31 March 2023.
2022 - Westpac sold its interest in the following businesses:
●Westpac Life-NZ- Limited (sold on 28 February 2022);
●Westpac Motor Vehicle Dealer Finance and Novated Leasing business (sold on 24 March 2022); and
●Westpac Life Insurance Services Limited (sold on 1 August 2022).
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INFORMATION111
Note 30. Structured entities
Accounting policy
Structured entities are generally created to achieve a specific, defined objective and their operations are restricted such as only purchasing specific assets. Structured entities are
commonly financed by debt or equity securities that are collateralised by and/or indexed to their underlying assets. The debt and equity securities issued by structured entities may
include tranches with varying levels of subordination.
Structured entities are classified as subsidiaries and consolidated if they meet the definition in Note 29. If Westpac does not control a structured entity then it will not be consolidated.
Westpac engages in various transactions with both consolidated and unconsolidated structured entities that are mainly involved in securitisations, asset backed and other financing
structures and managed funds.
Consolidated structured entities
Securitisation and covered bonds
Westpac uses structured entities to securitise its financial assets, including two covered bond programs, to assign pools of residential mortgages to bankruptcy remote structured entities.
Refer to Note 15 for further details.
Westpac managed funds
Westpac acts as the responsible entity and/or fund manager for various investment management funds. As fund manager, if Westpac is deemed to be acting as a principal rather than an
agent then it consolidates the fund. The principal versus agent decision requires judgement of whether Westpac has sufficient exposure to variable returns.
Non-contractual financial support
Westpac does not provide non-contractual financial support to these consolidated structured entities.
Unconsolidated structured entities
Westpac has interests in various unconsolidated structured entities including debt or equity instruments, guarantees, liquidity and other credit support arrangements, lending, loan
commitments, certain derivatives and investment management agreements.
Interests exclude non-complex derivatives (e.g. interest rate or currency swaps), instruments that create, rather than absorb, variability in the entity (e.g. credit protection under a credit
default swap), and lending to a structured entity with recourse to a wider operating entity, not just the structured entity.
Westpac’s main interests in unconsolidated structured entities, which arise in the normal course of business, are:
Trading securitiesWestpac actively trades interests in structured entities and normally has no other involvement with the structured entity. Westpac earns interest
income on these securities and also recognises fair value changes through trading income in non-interest income.
Investment securitiesWestpac holds mortgage-backed securities for liquidity purposes and Westpac normally has no other involvement with the structured entity. These
assets are highly-rated, investment grade and eligible for repurchase agreements with the RBA or another central bank. Westpac earns interest
income and net gains or losses on selling these assets are recognised in the income statements.
Loans and other credit commitmentsWestpac lends to unconsolidated structured entities, subject to Westpac’s collateral and credit approval processes, in order to earn interest and
fee income. The structured entities are mainly property trusts, securitisation entities and those associated with project and property
financing transactions.
Investment management agreementsWestpac manages funds that provide customers with investment opportunities. Westpac earns management fee income which is recognised in
non-interest income.
Westpac may also retain units in these investment management funds. Westpac earns fund distribution income and recognises fair value
movements through non-interest income.
112 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 30. Structured entities (Continued)
The following tables show Westpac’s interests in unconsolidated structured entities and its maximum exposure to loss in relation to those interests. The maximum exposure does not take
into account any collateral or hedges that will reduce the risk of loss.
●For on-balance sheet instruments, including debt and equity instruments in and loans to unconsolidated structured entities, the maximum exposure to loss is the carrying value.
●For off-balance sheet instruments, including liquidity facilities, loan and other credit commitments and guarantees, the maximum exposure to loss is the notional amounts.
Investment in third
party mortgage Financing to
Consolidatedand other asset-securitisationGroupInterest in other
$mbacked securities
a
vehiclesmanaged fundsstructured entitiesTotal
2024
Assets
Trading securities and financial assets measured at FVIS
1,055-28,2419,298
Investment securities
8,881---8,881
Loans
-27,786-23,87151,657
Other financial assets
2-53-55
Total on-balance sheet exposures
9,93827,7865532,11269,891
Total notional amounts of off-balance sheet exposures
-7,638-9,14516,783
Maximum exposure to loss
9,93835,4245541,25786,674
Size of structured entities
b
90,86435,42415,81141,257183,356
2023
Assets
Trading securities and financial assets measured at FVIS
1,436 - 2 1,989 3,427
Investment securities6,538 - - - 6,538
Loans
- 26,176 - 22,439 48,615
Other financial assets
1 - 54 - 55
Total on-balance sheet exposures
7,975 26,176 56 24,428 58,635
Total notional amounts of off-balance sheet exposures
- 9,269 - 7,930 17,199
Maximum exposure to loss
7,975 35,445 56 32,358 75,834
Size of structured entities
b
71,193 35,445 16,352 49,943 172,933
a. The Group’s interests in third-party mortgages and other asset-backed securities are senior tranches of notes and are investment grade rated.
b. Represents either the total assets or market capitalisation of the entity, or if not available, the Group’s total committed exposure (for lending arrangements and external debt and equity holdings), funds under management
(for Group managed funds) or the total value of notes on issue (for investments in third-party asset-backed securities).
Non-contractual financial support
Westpac does not provide non-contractual financial support to these unconsolidated structured entities.
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INFORMATION113
OTHER
Note 31. Share-based payments
Accounting policy
Westpac enters into various share-based payment arrangements with its employees as a component of overall compensation for services provided. Share-based payment
arrangements comprise rights to receive shares for free (share rights) and restricted shares (issued at no cost). Share-based payment arrangements typically require a specified period
of continuing employment (the service period or vesting period) and may include performance targets (vesting conditions). Specific details of each arrangement are provided below.
Share-based payments must be classified as either cash-settled or equity-settled arrangements. Westpac’s significant arrangements are equity-settled, as Westpac is not obliged to
settle in cash.
Share rights
Share rights are equity-settled arrangements. The fair value is measured at grant date and is recognised as an expense over the service period, with a corresponding increase in the
share-based payment reserve in equity.
The fair values of share rights are estimated at grant date using a binomial/Monte Carlo simulation pricing model which incorporates the vesting and market-related performance targets
of the grants. The fair value of share rights excludes non-market vesting conditions such as employees’ continuing employment by Westpac. The non-market vesting conditions are
instead incorporated in estimating the number of share rights that are expected to vest and are therefore recognised as an expense. At each reporting date the non-market vesting
assumptions are revised and the expense recognised each year takes into account the most recent estimates. The market-related assumptions are not revised each year as the fair
value is not re-estimated after the grant date.
Up to 1 January 2023 share rights were issued under the Westpac Long Term Variable Reward Plan (LTVR) and Westpac Performance Plan (WPP). From 1 January 2023 share rights
are issued under the Equity Incentive Plan (EIP). Refer below for further details.
Restricted shares
Restricted shares are accounted for as an equity-settled arrangement. The fair value of shares allocated to employees for nil consideration is recognised as an expense over the vesting
period with a corresponding increase in the share-based payments reserve in equity. The fair value of ordinary shares issued to satisfy the obligation to employees is measured at grant
date and is recognised as a separate component of equity.
Up to 1 January 2023 restricted shares were issued under the Restricted Share Plan (RSP). From 1 January 2023 restricted shares will be issued under the Equity Incentive Plan (EIP).
Refer below for further details.
Equity incentive plan (EIP)
The Equity Incentive Plan (EIP) was introduced effective 1 January 2023 and is a consolidated plan that has replaced the RSP, WPP & LTVR plans. Existing allocations under the RSP,
WPP and LTVR will continue to be governed by their respective plan rules, however, all grants from 1 January 2023 are made under the EIP. Securities issued under the EIP include
restricted shares, unhurdled share rights, performance rights and restricted rights. The underlying terms of the EIP are similar to RSP, WPP & LTVR and are accounted for as equity-
settled arrangements in line with the Share rights and Restricted Shares specified above.
In respect of the above mentioned plans, the Board has discretion to adjust unvested allocations, including to zero, in specified circumstances. Clawback may also apply to vested
awards, to the extent legally permissible and practicable.
Employee share plan (ESP)
The value of shares expected to be allocated to employees for nil consideration is recognised as an expense over the financial year and provided for as other employee benefits. The
fair value of any ordinary shares issued to satisfy the obligation to employees is recognised in equity. Alternatively, shares may be purchased on market to satisfy the obligation to
employees.
114 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 31. Share-based payments (Continued)
Scheme name
Westpac Long Term Variable Reward Plan (LTVR)/ EIP
LTVR – Performance Rights
and Restricted Rights
Westpac Performance Plan (WPP)/ EIP
- Unhurdled Share Rights
Restricted Share Plan
(RSP)/ EIP -
Restricted SharesEmployee Share Plan (ESP)
Type of share-based paymentShare rights (allocated at no cost).Share rights (allocated at no cost).Westpac ordinary shares (allocated at no
cost).
Westpac ordinary shares (allocated at
no cost) of up to $1,000 per
employee per year.
How it is usedAligns executive remuneration and accountability
with shareholder interests over the long term.
Primarily used for mandatory deferral of a
portion of short-term variable reward for New
Zealand employees and key employees based
outside Australia.
Primarily used to reward key employees
and for mandatory deferral of a portion of
short-term variable reward for certain
Australian employees and some other
offshore jurisdictions.
To reward eligible Australian
employees (unless they have already
been provided instruments under
another scheme for the previous
year).
Exercise priceNil Niln/an/a
Performance conditions
a
For the 2024 awards: 50% of the award is
measured against Relative Total Shareholder
Return (TSR) over a four year performance period
(performance rights) and the remaining 50% is
measured against risk culture and other internal
measures (restricted rights). After the testing
period, further deferral periods are applicable for
performance rights granted to all participants and
for restricted rights granted to the CEO.
Awards from 2020 to 2023: TSR over a four-year
performance period.
NoneNoneNone
Service conditionsContinued employment throughout the vesting
period or as determined by the Board.
Continued employment throughout the vesting
period or as determined by the Board.
Continued employment throughout the
restriction period or as determined by the
Board.
Shares must normally remain within
the ESP for three years from granting
unless the employee leaves Westpac.
Vesting period (period over which
expenses are recognised)
b
Awards for 2020 to 2023: 4 years
2024 performance rights CEO award: 6 years
2024 performance rights GE award: 5 years
2024 restricted rights CEO award: 50% over 4
years and 50% over 5 years
2024 restricted rights GE award: 4 years
Defined period set out at time of grant
b
Defined period set out at time of grant1 year
Treatment at end of termAutomatically exercised at the end of the term.Automatically exercised at the end of the term. Shares are released at the end of the
restriction period.
Shares are released at the end of the
restriction period or when the
employee leaves Westpac.
Does the employee receive dividends
and voting rights during the vesting
period?
c
NoNoYesYes
a. The Board has discretion to adjust the number of restricted shares, unhurdled share rights, performance rights and restricted rights downwards, including to zero, in specified circumstances including serious misconduct, if
serious circumstances or new information come to light which mean that in the Board’s view all or part of the award was not appropriate, or where required by law or prudential standards. The Board will typically apply the
adjustment to unvested LTVR where an adjustment to current and deferred STVR is considered insufficient or unavailable. Clawback may also apply to vested LTVR, to the extent legally permissible and practicable.
b. Vested share rights granted after July 2015 under the 2020 to 2023 LTVR awards and unhurdled WPP/EIP awards may be exercised up to a maximum of 15 years (generally 10 years for NZ) from their commencement
date. Vested share rights under the 2024 LTVR award (performance rights and restricted rights) are exercisable up to 2 years after the vesting date.
c. For LTVR restricted rights, dividends are accrued for the vesting period. For LTVR performance rights, dividends are only accrued for the further deferral period after the performance period. These dividend equivalent
payments are calculated by multiplying the number of LTVR restricted or performance rights eligible to vest by the declared dividend price on each respective record date during the applicable period. The calculation
excludes franking credits. They are paid at the end of the deferral period.
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INFORMATION115
Note 31. Share-based payments (Continued)
Each share-based payment scheme is quantified below.
i. Westpac Equity Incentive Plan (EIP) - Unhurdled Share Rights
Outstanding
Outstanding asand exercisable
at beginning Granted during Exercised Lapsed during Outstanding as as at end
of year the year during the year the year at end of year of year
2024
Share rights
One-year vesting period4,252111,4588363,416111,458-
Two-year vesting period7,71481,828--89,542-
Three-year vesting period2,86229,584--32,446-
Four-year vesting period9,87076,116-4,22581,761-
Five-year vesting period-15,270--15,270-
Six-year vesting period-9,661--9,661-
Seven-year vesting period-10,250--10,250-
Total share rights24,698334,1678367,641350,388-
Weighted average remaining contractual life10.6 years13.8 years
2023
Share rights
- 24,698 - - 24,698 -
The weighted average fair value at grant date of EIP service-based share rights issued during the year was $20.65 (2023: $19.52).
ii. Westpac Equity Incentive Plan (EIP) Long Term Variable Reward (LTVR) - Performance Rights and Restricted Rights
Outstanding and
Outstanding as atGranted duringExercised duringLapsed duringOutstanding as atexercisable as at
beginning of yearthe yearthe yearthe yearend of yearend of year
2024
Share rights
- 898,756 - - 898,756 -
Weighted average remaining contractual life
0 years 5.8 years
2023
Share rights
- - - - - -
The weighted average fair value at grant date of EIP LTVR Performance Rights and Restricted Rights issued during the year was $18.00 (2023: nil).
iii. Westpac Long-Term Variable Reward Plan (LTVR)
Outstanding and
Outstanding asexercisable
at beginningGranted duringExercised duringLapsed duringOutstanding as atas at end
of yearthe yearthe yearthe yearend of yearof year
2024
Share rights 4,028,972--645,1743,383,798-
Weighted average remaining contractual life12.6 years 11.9 years
2023
Share rights3,777,1791,054,449-802,6564,028,972-
No LTVR share rights were issued in the year ending 30 September 2024 following the introduction of the EIP from 1 January 2023. The weighted average fair value at grant date of
LTVR share rights issued during the year ended 30 September 2023 was $11.90.
116 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 31. Share-based payments (Continued)
iv. Westpac Performance Plan (WPP)
Outstanding
Outstanding as atand exercisable
beginningGranted duringExercisedLapsed duringOutstanding asas at end
of yearthe yearduring the yearthe yearat end of yearof year
2024
Share rights
One-year vesting period136,521 -56,966 15,219 64,336 60,779
Two-year vesting period173,646 -46,602 28,533 98,511 38,257
Three-year vesting period50,168-12,523-37,6459,243
Four-year vesting period428,203-201,08213,323213,7982,799
Five-year vesting period6,927---6,927-
Six-year vesting period6,576 -- - 6,576 -
Seven-year vesting period6,977 -- - 6,977 -
Total share rights809,018-317,17357,075434,770111,078
Weighted average remaining contractual life12.2 years 11.7 years
2023
Share rights788,794265,859182,62463,011809,018100,303
No WPP share rights were issued in the year ending 30 September 2024 following the introduction of the EIP from 1 January 2023. The weighted average fair value at grant date of WPP
share rights issued during the year ended 30 September 2023 was $20.81.
v. Westpac Equity Incentive Plan (EIP) - Restricted Shares
Outstanding as atGranted duringForfeited duringOutstanding as at
Allocation datebeginning of yearthe yearReleasedthe yearend of year
2024310,6492,393,902115,75238,3272,550,472
2023
-313,5992,950-310,649
The weighted average fair value at grant date of EIP restricted shares issued during the year was $23.14 (2023: $22.23).
vi. Restricted Share Plan (RSP)
Outstanding as atGranted duringForfeited duringOutstanding as at
Allocation datebeginning of yearthe yearReleasedthe yearend of year
20244,916,346-2,085,41792,5402,738,389
2023
5,036,3461,908,1701,845,884182,2864,916,346
No RSP shares were issued in the year ending 30 September 2024 following the introduction of the EIP from 1 January 2023. The weighted average fair value at grant date of RSP
shares issued during the year ended 30 September 2023 was $23.50.
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INFORMATION117
Note 31. Share-based payments (Continued)
vii. Employee Share Plan (ESP)
Average number of
Number shares allocated perTotal number ofMarket price
Allocation date of participants participant shares allocated per share
a
Total fair value
202423 November 202327,549471,294,803 $21.20 $ 27,449,824
2023
24 November 202227,541421,156,722 $23.75 $ 27,472,148
a. The market price per share for the allocation is based on the five day volume-weighted average price up to the grant date.
The 2023 ESP award was satisfied through the purchase of shares on market.
The liability accrued for the ESP at 30 September 2024 was $28 million (2023: $28 million) and was provided for as other employee benefits.
viii. Other plans
Westpac also provides plans for small, specialised parts of the Group. The benefits under these plans are directly linked to growth and performance of the relevant part of the business.
The plans, individually and in aggregate, are not material to Westpac in terms of expenses and dilution of earnings.
The names of all persons who hold share options and/or rights currently on issue are entered in Westpac’s register of option holders which may be inspected at Link Market Services,
Level 12, 680 George Street, Sydney, New South Wales.
ix. Fair value assumptions
The fair value of share rights have been independently calculated at their respective grant dates.
The fair value of share rights with performance targets based on relative TSR takes into account the average TSR outcome determined using a Monte Carlo simulation pricing model.
The fair value of share rights without TSR based performance targets (i.e. unhurdled share rights and restricted rights) have been determined with reference to the share price at grant
date. A discount rate reflecting the expected dividend yield over their vesting periods also applies to unhurdled share rights and LTVR performance rights.
Other significant assumptions include:
●Risk-free rates of return of 3.8% applied to TSR-hurdled grants;
●The dividend yield on Westpac shares applied to TSR-hurdled grants was 5.5% for those issued under the LTVR and for those issued under the EIP;
●Volatility in Westpac’s TSR of 26%, applied to TSR-hurdled grants; and
●Volatilities of, and correlation factors between, TSR of the comparator group and Westpac for TSR-hurdled grants.
118 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 32. Superannuation commitments
Accounting policy
Westpac recognises an asset or a liability for its defined benefit schemes, being the net of the defined benefit obligations and the fair value of the schemes’ assets. The defined benefit
obligation is calculated as the present value of the estimated future cash flows, discounted using high-quality long dated corporate bond rates.
The superannuation expense is recognised in operating expenses and remeasurements are recognised through OCI.
Critical accounting assumptions and estimates
The actuarial valuation of plan obligations is dependent upon a series of assumptions, principally price inflation, salary growth, mortality, morbidity, discount rate and investment returns.
Different assumptions could significantly alter the valuation of the plan assets and obligations and the resulting remeasurement recognised in OCI and the superannuation expense
recognised in the income statement.
Westpac had the following defined benefit plans at 30 September 2024:
Date of last actuarial assessment of the
Name of plan Type Form of benefit funding status
Westpac Group Plan (WGP)
Defined benefit and accumulation Indexed pension and lump sum
30 June 2023
Westpac New Zealand Superannuation Scheme (WNZS)
Defined benefit and accumulation Indexed pension and lump sum
30 June 2023
Westpac Banking Corporation UKDefined benefitIndexed pension and lump sum5 April 2021
a
Staff Superannuation Scheme (UKSS)
Westpac UK Medical Benefits Scheme
Defined benefit Medical benefits
n/a
a.
The 2024 final actuarial assessment of the funding status for UKSS will be available in 2025.
The defined benefit sections of the schemes are closed to new members. Westpac has no obligation beyond the annual contributions for the accumulation or defined contribution sections
of the schemes.
The WGP is Westpac’s principal defined benefit plan and is managed and administered in accordance with the terms of its trust deed and relevant legislation in Australia. Its defined
benefit liabilities are based on salary and length of membership for active members and inflation in the case of pensioners.
The defined benefit schemes expose Westpac to the following risks:
●Discount rate – reductions in the discount rate would increase the present value of the future payments;
●Inflation rate – increases in the inflation rate would increase the payments to pensioners;
●Investment risk – lower investment returns would increase the contributions needed to offset the shortfall;
●Mortality risk – members may live longer than expected extending the cash flows payable by Westpac;
●Behavioural risk – higher proportion of members taking some of their benefits as a pension rather than a lump sum would increase the cash flows payable by Westpac; and
●Legislative risk – legislative changes could be made which increase the cost of providing defined benefits.
Investment risk is managed by setting benchmarks for the allocation of plan assets between asset classes. The long-term investment strategy will often adopt relatively high levels of
equity investment in order to:
●Secure attractive long-term investment returns; and
●Provide an opportunity for capital appreciation and dividend growth, which gives some protection against inflation.
Funding recommendations for the WGP, WNZS and the UKSS are made based on actuarial valuations. The funding valuations of the defined benefit plans are based on different
assumptions to the calculation of the defined benefit surplus/deficit for accounting purposes. Based on the most recent valuations, the defined benefit plan assets are adequate to cover
the present value of the accrued benefits of all members with a combined surplus of $140 million (2023: $47 million). Current contribution rates are as follows:
●WGP – contributions are made to the WGP at the rate of 19.5% of members’ salaries;
●WNZS – contributions are made to the WNZS at the rate of 17.4% of members’ salaries; and
●UKSS – not required to make contributions under the 2021 actuarial assessment.
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Note 32. Superannuation commitments (Continued)
Contributions
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Employer contributions
30 89 30 87
Member contributions
7 8 7 8
Expected employer contributions for the year ended 30 September 2025 are $29 million.
Expense recognised
ConsolidatedParent Entity
$m20242023202220242023
Current service cost
27 26 40 26 25
Net interest cost on net benefit liability
(11) (14) 11 (10) (14)
Total defined benefit expense
16 12 51 16 11
Defined benefit balances recognised
ConsolidatedParent Entity
$m2024202320242023
Benefit obligation as at end of year
2,218 2,110 2,169 2,062
Fair value of plan assets as at end of year
2,424 2,320 2,380 2,274
Net surplus/(deficit)
206 210 211 212
Defined benefit surplus included in other assets
215 217 215 217
Defined benefit deficit included in other liabilities
(9) (7) (4) (5)
Net surplus/(deficit)
206 210 211 212
The average duration of the defined benefit obligation is 12 years (2023: 12 years).
Significant assumptions
20242023
Consolidated and Parent Entity Australian funds Overseas funds Australian funds Overseas funds
Discount rate
5.6% 4.3%-5.0%5.8% 5.1%-5.5%
Salary increases
3.5% 3.0%-3.9%3.6% 3.0%-4.0%
Inflation rate (pensioners received inflationary increase)
2.5% 2.0%-3.2%2.6% 2.0%-3.3%
Life expectancy of a 60-year-old male
31.9 27.6-27.831.7 27.5-27.9
Life expectancy of a 60-year-old female34.5 29.634.3 29.6
120 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 32. Superannuation commitments (Continued)
Sensitivity to changes in significant assumptions
The following table shows the impact of changes in assumptions on the defined benefit obligation for the WGP. No reasonably possible changes in the assumptions of Westpac’s other
defined benefit plans would have a material impact on the defined benefit obligation.
Increase in obligation
$m20242023
0.5% decrease in discount rate
136 135
0.5% increase in annual salary increases
3 5
0.5% increase in inflation rate (pensioners receive inflationary increase)
131 127
1 year increase in life expectancy
46 45
Asset allocation
The table below provides a breakdown of the schemes’ investments by asset class.
20242023
$m Australian funds Overseas funds Australian funds Overseas funds
Cash
5%3%5%3%
Equity instruments
43%9%43%8%
Debt instruments
26%5%26%7%
Property
8%2%8%1%
Other assets
18%81%18%81%
Total
100%100%100%100%
Equity and debt instruments are mainly quoted assets while property and other assets are mainly unquoted. Other assets include infrastructure funds and private equity funds.
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Note 33. Auditor’s remuneration
The fees payable to the auditor, PricewaterhouseCoopers (PwC), and overseas firms belonging to the PwC network of firms were:
ConsolidatedParent Entity
$’000 2024 2023 2024 2023
Audit and audit-related fees
Audit fees
PwC Australia
28,03525,859 27,67325,580
Overseas PwC network firms
5,4295,712 689812
Total audit fees
33,46431,571 28,36226,392
Audit-related fees
PwC Australia
2,8882,605 2,8882,605
Overseas PwC network firms
27996 30-
Total audit-related fees
3,1672,701 2,9182,605
Total audit and audit-related fees
36,63134,272 31,28028,997
Other fees
Overseas PwC network firms69282--
Total other fees69282--
Total audit and non-audit fees
36,70034,554 31,28028,997
Fees payable to the auditor have been categorised as follows:
AuditThe year end audit, half-year review and comfort letters associated with debt issues and capital raisings.
Audit-relatedConsultations regarding accounting standards and reporting requirements, regulatory compliance reviews and assurance related to debt and capital offerings.
OtherVarious services including systems assurance, compliance advice and controls reviews.
It is Westpac’s policy to engage PwC on assignments additional to its statutory audit duties only if its independence is not impaired or seen to be impaired and where its expertise and
experience with Westpac is important. All services were approved by the Board Audit Committee in accordance with Westpac’s Pre-Approval of Engagement of PricewaterhouseCoopers
for Audit or Non-Audit Services Policy.
PwC also received fees of $6.6 million (2023: $8.7 million) for various entities which are related to Westpac but not consolidated. These non-consolidated entities include entities
sponsored by Westpac, trusts of which a Westpac entity is trustee, manager or responsible entity, superannuation funds and pension funds.
122 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 34. Related party disclosures
Related parties
Westpac’s related parties are those it controls or can exert significant influence over. Examples include subsidiaries, associates, joint ventures and superannuation plans as well as key
management personnel and their related parties.
Key management personnel (KMP)
Key management personnel are those persons who have the authority and responsibility for planning, directing and controlling the activities of Westpac, directly or indirectly, including any
director (whether executive or otherwise).
Parent Entity
Westpac Banking Corporation is the ultimate parent company of the Group.
Subsidiaries - Note 29
The Parent Entity has the following related party transactions and balances with subsidiaries:
Type of transaction/balanceDetails disclosed in
Balances due to/from subsidiariesBalance Sheet
Dividend income/Transactions with subsidiariesNote 4
Interest income and Interest expenseNote 3
Tax consolidated group transactions and undertakingsNote 7
Guarantees and undertakingsNote 25
The balances due to/from subsidiaries include a wide range of banking and other financial facilities.
The terms and conditions of related party transactions between the Parent Entity and subsidiaries are sometimes different to commercial terms and conditions. Related party transactions
between the Parent Entity and subsidiaries eliminate on consolidation.
Associates - Note 29
Westpac provides a wide range of banking and other financial facilities and funds management activities to its associates on commercial terms and conditions.
Superannuation plans
Westpac contributed $535 million (2023: $509 million) to defined contribution plans and $30 million (2023: $89 million) to defined benefit plans. Refer to Note 32.
Remuneration of KMP
Total remuneration of the KMP was:
Post
Short-employmentOther long-TerminationShare-
$term benefitsbenefitsterm benefitsbenefitsbased paymentsTotal
Consolidated
202422,085,122613,423175,780-15,481,11438,355,439
202322,430,187601,682147,0901,187,21513,494,67537,860,849
Parent Entity
202420,907,779493,529175,780-14,569,56536,146,653
202321,252,526487,514147,0901,187,21512,904,70335,979,048
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Note 34. Related party disclosures (Continued)
Other transactions with KMP
KMP receive personal banking and financial investment services from Westpac in the ordinary course of business. The terms and conditions, for example interest rates and collateral, and
the risks to Westpac are comparable to transactions with other employees and did not involve more than the normal risk of repayment or present other unfavourable features.
Details of loans provided and the related interest charged to KMP and their related parties are as follows:
Interest payable Closing Number of KMP
$for the yearloan balancewith loans
20241,030,28032,064,18410
2023
a
741,81420,443,54610
a. Loan balance as at 30 September 2023 has been revised.
Share rights holdings
For compliance with SEC disclosure requirements, the following table sets out certain details of the performance share rights and unhurdled share rights held at 30 September 2024 by
the CEO and other key management personnel (including their related parties):
Latest Date of ExerciseNumber of Share Rights
Managing Director and Chief Executive Officer
Peter King
Ranges from 15 November 2029 to 1 October 2037635,251
Group Executives
a
Christine Parker
Ranges from 15 November 2029 to 1 October 2037281,151
Carolyn McCann
Ranges from 15 November 2029 to 1 October 2037260,824
Nell HuttonRanges from 15 November 2029 to 15 November 203084,637
Catherine McGrathRanges from 1 October 2026 to 1 October 2037228,294
Jason Yetton
Ranges from 15 November 2029 to 1 October 2037397,027
Michael RowlandRanges from 15 November 2029 to 1 October 2037316,795
Anthony MillerRanges from 15 November 2029 to 1 October 2037391,789
Scott Collary
Ranges from 15 November 2029 to 1 October 2037401,683
Ryan ZaninRanges from 15 November 2029 to 1 October 2037239,355
a. References to Group Executives are only to those who are KMP.
Westpac has not issued any options during the year and there are no outstanding options as at 30 September 2024.
124 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 35. Notes to the cash flow statements
Accounting policy
Cash and balances with central banks include cash held at branches and in ATMs, balances with overseas banks in their local currency and balances with central banks including
accounts with the RBA and accounts with overseas central banks.
Reconciliation of net cash provided by/(used in) operating activities to net profit for the year is set out below.
ConsolidatedParent Entity
$m20242023202220242023
Profit after income tax expense
6,9907,2015,699 6,6916,434
Adjustments:
Depreciation, amortisation and impairment
1,5221,2371,581 1,4071,089
Impairment charges/(benefits)
727839524 659695
Net decrease/(increase) in current and deferred tax
(252)665427 (346)363
(Increase)/decrease in accrued interest receivable
(227)(730)(544) (207)(657)
(Decrease)/increase in accrued interest payable
8022,400794 7571,863
(Decrease)/increase in provisions
(272)(173)(621) (272)(162)
Other non-cash items
494(850)1,869 738(499)
Cash flows from operating activities before changes in operating assets and liabilities
9,78410,5899,729 9,4279,126
Net (increase)/decrease in:
Collateral paid(2,097)1,545(1,524)(2,057)1,537
Trading securities and financial assets measured at FVIS
(18,994)(4,524)(3,750) (19,452)(4,162)
Derivative financial instruments(836)4,0822,4511,3584,414
Loans
(35,083)(27,270)(36,345) (32,528)(25,080)
Other financial assets(348)128279(231)94
Life insurance assets and life insurance liabilities--266--
Other assets
(34)820 211
Net increase/(decrease) in:
Collateral received(318)(2,888)3,643(181)(3,092)
Deposits and other borrowings
35,24324,69235,054 35,87023,347
Other financial liabilities(7,084)(17,146)7,120(5,281)(18,117)
Other liabilities
-(12)11 (9)(3)
Net cash provided by/(used in) operating activities
(19,767)(10,796)16,954 (13,082)(11,925)
Business acquired
Acquisition of HealthPoint Claims Pty Ltd
On 6 April 2024, Westpac acquired the HealthPoint business through its wholly owned subsidiary Westpac Investment Vehicle Pty Limited (WIV) for a total consideration of $30 million.
The acquired business comprises technology, intellectual property, contracts, employees and associated assets. Goodwill of $21 million was recognised as part of this business
combination.
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Note 35. Notes to the cash flow statements (Continued)
Details of the assets and liabilities over which control ceased
Details of the entities over which control ceased are provided in Note 29.
ConsolidatedParent Entity
$m20242023202220242023
Assets
Cash and balances with central banks
-18169 --
Loans--965--
Other financial assets
-1866 --
Life insurance assets--2,366--
Tax assets--39--
Intangible assets-55---
Other assets--168--
Total assets
-913,773 --
Liabilities
Other financial liabilities-2234--
Tax liabilities--36--
Life insurance liabilities
--185 --
Provisions-152--
Other liabilities
--213 --
Total liabilities
-23520 --
Total equity attributable to owners of WBC
-683,253 --
Cash proceeds received (net of transaction costs)
-3112,284 --
Expected receivable (completion settlement)/ deferred consideration--146--
Total consideration
-3112,430 --
Gain/(loss) on disposal
-243(823) --
Reconciliation of cash proceeds from disposal:
Cash proceeds received (net of transaction costs)
-3112,284 --
Less: Cash deconsolidated
-(18)(169) --
Cash consideration (paid)/received (net of transaction costs and cash held)
-2932,115 --
Non-cash investing activities
On 21 December 2023, WNZL issued two classes of AT1 Perpetual Preference Shares to the Parent Entity, Westpac Banking Corporation Limited, totalling NZD1,000 million. The
transactions were settled through the redemption of NZD1,000 million AT1 loan capital notes and as a result no cash was transferred. As WNZL is a wholly owned subsidiary of the Parent
Entity, these transactions eliminate on consolidation.
Non-cash financing activities
ConsolidatedParent Entity
$m 20242023 2022 2024 2023
Shares issued under the dividend reinvestment plan
-192- -192
Increase in lease liabilities
399235244 319217
On 11 September 2024, Westpac Bank - PNG - Limited (WPNG) paid PGK66 million to minority shareholders, on behalf of the Parent Entity, to acquire 8.74% in WPNG. This was in lieu
of the Parent Entity receiving unpaid dividends from WPNG and as a result was a non-cash transaction for the Parent Entity.
On 18 December 2023, $802 million of WCN6 were transferred to the WCN6 nominated party for $100 each pursuant to the WCN10 reinvestment offer. Those WCN6 were subsequently
redeemed and cancelled by Westpac. On 31 July 2024, Westpac redeemed the remaining outstanding WCN6.
126 WESTPAC GROUP 2024 ANNUAL REPORT
NOTES TO THE FINANCIAL STATEMENTS
Note 35. Notes to the cash flow statements (Continued)
Cash and balances with central banks
The following table provides the breakdown of cash and cash balances with central banks.
ConsolidatedParent Entity
$m 2024 2023 2024 2023
Cash and cash at bank
9,320 13,852 8,961 13,490
Exchange settlement accounts
56,036 88,371 49,276 79,810
Regulatory deposits with central banks
311 299 163 166
Total cash and balances with central banks
65,667 102,522 58,400 93,466
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 $311 million (2023: $299
million) for Westpac and $164 million (2023: $166 million) for the Parent Entity which are included in cash and balances with central banks.
Note 36. Subsequent events
Since 30 September 2024, the Board has determined to pay a fully franked final dividend of 76 cents per fully paid ordinary share. The dividend is expected to be $2,615 million. The
dividend is not recognised as a liability at 30 September 2024. The proposed payment date of the dividend is 19 December 2024.
The Board has determined to satisfy the DRP for the 2024 final dividend by arranging for the purchase of existing shares by a third party. The market price used to determine the number
of shares allocated to DRP participants will be set over the 15 trading days commencing 13 November 2024 and will not include a discount.
The Board has also determined to extend the share buyback announced in November 2023 and May 2024 by a further $1.0 billion to a total of $3.5 billion. As at 30 September 2024,
Westpac has bought back and cancelled 67,665,599 ordinary shares ($1,812 million).
In addition, on 3 October 2024, Westpac announced it has entered into an agreement to sell its auto finance loans and lease receivables to Resimac Group Limited. The sale is
anticipated to complete in the first half of 2025, with an expected transaction value of $1.4 - $1.6 billion that will approximate the book value at the date of sale.
No other matters have arisen since the year ended 30 September 2024 which are not otherwise dealt with in this report, that have significantly affected or may significantly affect the
operations of Westpac, the results of its operations or the state of affairs of Westpac in subsequent periods.
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INFORMATION127
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
The following table includes details of the controlled entities of Westpac. The entity’s role as a trustee, partner or participant in a joint venture (if applicable), of an entity within the Group is
disclosed in ‘Type of entity’. Overseas companies predominantly carry on business in the country of incorporation. For unincorporated entities, ‘Country of incorporation’ refers to the
country where business is carried on. Where the tax residency of an entity is foreign (as defined in the Income Tax Assessment Act 1997), the relevant country of tax residency is
disclosed.
% of share
capital
Name of entityType of entity
held
Country of incorporationTax residency
1925 (Commercial) Pty Limited
Body Corporate 100 Australia Australia
1925 (Industrial) Pty Limited
Body Corporate 100 Australia Australia
1925 Advances Pty Limited
Body Corporate 100 Australia Australia
Altitude Administration Pty Limited
Body Corporate, trustee 100 Australia Australia
Altitude Rewards Pty Limited
Body Corporate 100 Australia Australia
Asgard Capital Management Ltd
Body Corporate 100 Australia Australia
Asgard Wealth Solutions Pty Limited
Body Corporate 100 Australia Australia
Bill Acceptance Corporation Pty Limited
Body Corporate 100 Australia Australia
BT (Queensland) Pty. Limited
Body Corporate 100 Australia Australia
BT Financial Group (NZ) Limited
Body Corporate 100 New Zealand Foreign - New Zealand
BT Financial Group Pty Limited
Body Corporate 100 Australia Australia
BT Funds Management (NZ) Limited
Body Corporate 100 New Zealand Foreign - New Zealand
BT Funds Management Limited
Body Corporate 100 Australia Australia
BT Funds Management No. 2 Limited
Body Corporate 100 Australia Australia
BT Portfolio Services Ltd
Body Corporate 100 Australia Australia
BT Securities Ltd
Body Corporate 100 Australia Australia
Capital Finance Australia Limited
Body Corporate 100 Australia Australia
CBA Pty Limited
Body Corporate 100 Australia Australia
Challenge Pty Limited
Body Corporate 100 Australia Australia
Crusade Trust No.2P of 2008
Trust N/A Australia Australia
Danaby Pty. Limited
Body Corporate 100 Australia Australia
General Credits Pty Limited
Body Corporate 100 Australia Australia
GIS Private Nominees Pty Limited
Body Corporate 100 Australia Australia
HealthPoint Claims Pty. Limited
Body Corporate 100 Australia Australia
Hyde Potts Insurance Services Pte. Limited
Body Corporate 100 Singapore Foreign - Singapore
Magnitude Group Pty Ltd
Body Corporate 100 Australia Australia
Mortgage Management Pty Limited
Body Corporate 100 Australia Australia
Net Nominees Limited
Body Corporate 100 Australia Australia
Number 120 Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Pendal Short Term Income Fund
Trust N/A Australia Australia
Qvalent Pty Ltd
Body Corporate 100 Australia Australia
RAMS Financial Group Pty Limited
Body Corporate 100 Australia Australia
Red Bird Ventures Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Reinventure Fund, I.L.P.
a
Limited Partnership N/A Australia Australia
Reinventure Fund II I.L.P.
a
Limited Partnership N/A Australia Australia
Reinventure Fund III I.L.P
a
Limited Partnership N/A Australia Australia
Reinventure Special Purpose Investment Unit Trust
Trust N/A Australia Australia
RMS Warehouse Trust 2007-1
Trust N/A Australia Australia
Sallmoor Pty. Ltd.
Body Corporate 100 Australia Australia
Securitor Financial Group Pty Limited
Body Corporate 100 Australia Australia
128 WESTPAC GROUP 2024 ANNUAL REPORT
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
% of share
capital
Name of entityType of entity
heldCountry of incorporationTax residency
Series 2008-1M WST Trust
Trust N/A Australia Australia
Series 2014-2 WST Trust
Trust N/A Australia Australia
Series 2015-1 WST Trust
Trust N/A Australia Australia
Series 2019-1 WST Trust
Trust N/A Australia Australia
Series 2020-1 WST Trust
Trust N/A Australia Australia
Series 2021-1 WST Trust
Trust N/A Australia Australia
Series 2022-1P WST Trust
Trust N/A Australia Australia
Series 2023-1P WST Trust
Trust N/A Australia Australia
Series 2024-1 WST Trust
Trust N/A Australia Australia
Sixty Martin Place (Holdings) Pty Ltd
Body Corporate 100 Australia Australia
St.George Business Finance Pty. Limited
Body Corporate 100 Australia Australia
St.George Finance Holdings Limited
Body Corporate 100 Australia Australia
St.George Finance Limited
Body Corporate 100 Australia Australia
St.George Motor Finance Limited
Body Corporate 75 Australia Australia
The Home Mortgage Company Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Value Nominees Pty. Limited
Body Corporate 100 Australia Australia
Waratah Receivables Corporation Pty Limited
b
Body Corporate 0 Australia Australia
Westpac (NZ) Investments Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac Administration 2 Pty Limited
Body Corporate 100 Australia Australia
Westpac Administration 3 Pty Limited
Body Corporate 100 Australia Australia
Westpac Administration 4 Pty. Limited
Body Corporate 100 Australia Australia
Westpac Administration Pty. Limited
Body Corporate 100 Australia Australia
Westpac Altitude Rewards Trust
Trust N/A Australia Australia
Westpac Americas Inc.
Body Corporate 100 United States Foreign - United States
Westpac Bank - PNG - Limited
c
Body Corporate 89.91 Papua New Guinea Foreign - Papua New Guinea
Westpac Banking Corporation
Body Corporate, partner N/A Australia Australia
Westpac Capital - NZ - Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac Capital Markets Holding Corp.
Body Corporate 100 United States Foreign - United States
Westpac Capital Markets LLC
Body Corporate100 United States Foreign - United States
Westpac Cash PIE Fund
b
TrustN/ANew ZealandForeign - New Zealand
Westpac Covered Bond Trust
Trust N/A Australia Australia
Westpac Equity Holdings Pty Ltd
Body Corporate 100 Australia Australia
Westpac Equity Investments NZ Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac Europe GmbH
Body Corporate 100 Germany Foreign - Germany
Westpac Financial Services Group Pty Limited
Body Corporate 100 Australia Australia
Westpac Financial Services Group-NZ- Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac Financial Services Limited
Body Corporate 100 Australia Australia
Westpac Group Investment-NZ-Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac Holdings - NZ - Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac Investment Capital Corporation
Body Corporate 100 United States Foreign - United States
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% of share
capital
Name of entityType of entityheldCountry of incorporationTax residency
Westpac New Zealand Group Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac New Zealand Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac New Zealand Staff Superannuation Scheme Trustee Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac Notice Saver PIE Fund
b
Trust N/A New Zealand Foreign - New Zealand
Westpac NZ Covered Bond Holdings Limited
d
Body Corporate 19 New Zealand Foreign - New Zealand
Westpac NZ Covered Bond Limited
d
Body Corporate 19 New Zealand Foreign - New Zealand
Westpac NZ Operations Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac NZ Securitisation Holdings Limited
d
Body Corporate 19 New Zealand Foreign - New Zealand
Westpac NZ Securitisation Limited
d
Body Corporate 19 New Zealand Foreign - New Zealand
Westpac Overseas Holdings No. 2 Pty Limited
Body Corporate 100 Australia Australia
Westpac Overseas Holdings Pty Ltd
Body Corporate 100 Australia Australia
Westpac Properties Pty Limited
Body Corporate 100 Australia Australia
Westpac RE Pty Limited
Body Corporate 100 Australia Australia
Westpac Securities Administration Limited
Body Corporate 100 Australia Australia
Westpac Securities Limited
Body Corporate 100 Australia Australia
Westpac Securities NZ Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac Securitisation Holdings Pty Limited
Body Corporate 100 Australia Australia
Westpac Securitisation Management NZ Limited
Body Corporate 100 New Zealand Foreign - New Zealand
Westpac Securitisation Management Pty Limited
Body Corporate 100 Australia Australia
Westpac Term PIE Fund
b
Trust N/A New Zealand Foreign - New Zealand
a. The Reinventure Funds are registered Early Stage Venture Capital Partnerships (ESVCLPs) which are treated as partnerships for Australian tax purposes. Australia’s Income Tax Assessment Act does not contain a
residency test for partnerships such as ESVCLPs given the income of the partnership is taxed to the partners. The taxable income of the Reinventure Funds is calculated in accordance with Australian tax principles and
Westpac’s share is brought to account for tax in Australia by Westpac.
b. The Group has funding agreements in place with these entities and is deemed to have exposure to the associated risks and rewards. These entities are consolidated where the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
c. In September 2024, Westpac acquired an additional 8.74%. As at the reporting date, the registration of the share transfer in PNG was still pending. Once this is completed, Westpac’s shareholding will increase to 98.65%.
d. The Group indirectly owns 19% of these entities, however, due to contractual and structural arrangements these entities are considered to be controlled entities within the Group.
130 WESTPAC GROUP 2024 ANNUAL REPORT
STATUTORY STATEMENTS
Directors’ declaration
In the Directors’ opinion:
(a) the financial statements and notes set out in
‘Financial statements’ for the year ended 30 September 2024 are in accordance with the Corporations Act 2001, including:
(i) complying with Australian Accounting Standards, the Corporations Regulations 2001 (Cth) and other mandatory professional reporting requirements; and
(ii) giving a true and fair view of Westpac Banking Corporation (Westpac) and the Group’s financial position as at 30 September 2024 and of their performance for the financial year
ended on that date.
(b) The Consolidated Entity Disclosure Statement included in
‘Financial statements’ as at 30 September 2024 has been prepared in accordance with the Corporation Act 2001 and is true
and correct.
(c) there are reasonable grounds to believe that Westpac will be able to pay its debts as and when they become due and payable.
Note 1(a) includes a statement that the financial report also complies with International Financial Reporting Standards as issued by the International Accounting Standards Board.
The Directors have been given the declaration by the Chief Executive Officer and the Chief Financial Officer required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
For and on behalf of the Board.
Steven Gregg
Chairman
Sydney
3 November 2024
Peter King
Managing Director and Chief Executive Officer
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Management’s report on internal control over financial reporting
The following report is required by rules of the US Securities and Exchange Commission.
The management of Westpac is responsible for establishing and maintaining adequate internal control over financial reporting for Westpac as defined in Rule 13a - 15(f) under the
Securities Exchange Act of 1934, as amended. Westpac’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with applicable accounting standards.
Westpac’s internal control over financial reporting includes policies and procedures that: pertain to the maintenance of records that in reasonable detail accurately reflect the transactions
and dispositions of the assets of Westpac and its consolidated entities; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with applicable accounting standards, and that receipts and expenditures of Westpac are being made only in accordance with authorizations of management
and directors of Westpac and its consolidated entities; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
assets of Westpac and its consolidated entities that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Westpac management, with the participation of the CEO and CFO, assessed the effectiveness of Westpac’s internal control over financial reporting as of 30 September 2024 based on
the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 Internal Control Integrated Framework. Based on this assessment,
management has concluded that Westpac’s internal control over financial reporting as of 30 September 2024 was effective.
The effectiveness of Westpac’s internal control over financial reporting as of 30 September 2024 has been audited by PricewaterhouseCoopers, an independent registered public
accounting firm, as stated in its report which is included herein.
132 WESTPAC GROUP 2024 ANNUAL REPORT
STATUTORY STATEMENTS
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Westpac Banking Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Westpac Banking Corporation and its subsidiaries (the “Company”) as of September 30, 2024 and 2023, and the
related consolidated income statements, statements of comprehensive income, statements of changes in equity and cash flow statements for each of the three years in the period ended
September 30, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial
reporting as of September 30, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 30, 2024 and 2023,
and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2024 in conformity with Australian Accounting Standards as issued by
the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing on page 131 of the 2024 Annual Report.
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a
public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all
material respects.
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
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Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Supplemental Information
The parent entity only information on the face of the consolidated financial statements and other parent entity only disclosures in the notes to the financial statements (the “supplemental
information”) have been subjected to audit procedures performed in conjunction with the audit of the Company’s consolidated financial statements. The supplemental information is the
responsibility of the Company’s management. Our audit procedures included determining whether the supplemental information reconciles to the consolidated financial statements or the
underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information.
The supplemental information, which is presented for purposes of additional analysis, is presented on a basis that differs from the consolidated financial statements and is not a required
part of the consolidated financial statements presented in accordance with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International
Financial Reporting Standards as issued by the International Accounting Standards Board. In our opinion, the supplemental information is fairly stated, in all material respects, in relation
to the consolidated financial statements as a whole.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
134 WESTPAC GROUP 2024 ANNUAL REPORT
STATUTORY STATEMENTS
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be
communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we
are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Provisions for expected credit losses on loans and credit commitments (ECL)
As described in Note 10 to the consolidated financial statements, the provision for expected credit losses on loans and credit commitments (ECL) was $5,084 million at 30 September
2024. ECL is a probability- weighted estimate of the cash shortfalls expected to result from defaults over the relevant timeframe 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. Management’s model to estimate the ECL includes critical
accounting assumptions to determine when a significant increase in credit risk (SICR) has occurred, estimating forward-looking macroeconomic scenarios and applying a probability
weighting to these, and judgmental adjustments to modelled outcomes (overlays).
The principal considerations for our determination that performing procedures relating to the ECL is a critical audit matter were: (i) there was a high degree of auditor judgment,
subjectivity and effort to evaluate audit evidence related to the ECL model and significant assumptions used to estimate the ECL, (ii) there was a high degree of auditor judgment,
subjectivity and effort to test management’s judgments relating to the severity of the forward-looking macroeconomic downside scenario and the associated weighting applied, (iii) there
was a high degree of auditor effort to test critical data elements used in the model, (iv) there was a high degree of auditor effort required to test relevant IT controls used in determining the
ECL, and (v) the nature and extent of audit effort required to test the models, assumptions and judgments required the use of professionals with specialised skill and knowledge.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These
procedures included testing the effectiveness of controls relating to management’s ECL estimation process, which included controls over the data, model and significant assumptions
used in determining the ECL as well as relevant IT controls. These procedures also included, among others (i) the involvement of professionals with specialised skill and knowledge to
assist in testing management’s process for determining the ECL by evaluating the appropriateness of the models and the reasonableness of the assumptions related to SICR and the
downside severity, (ii) testing the reasonableness of the probability weights assigned to the forward-looking macroeconomic scenarios, (iii) testing the accuracy and completeness of
critical data elements that are inputs used in the ECL model, and (iv) testing the reasonableness and completeness of overlays.
Litigation, remediation provisions and regulatory investigations
As described in Note 25 to the consolidated financial statements, the Company recorded provisions for litigation, non-lending losses and remediation of $240 million at September 30,
2024. A portion of the provisions relate to 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. An assessment of the likely cost to the Company of these matters is made on a case-by-case
basis and specific provisions or disclosures are made where management considers appropriate. Disclosures are also made in Note 25 for contingent liabilities for 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 estimated.
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The principal considerations for our determination that performing procedures relating to litigation, remediation provisions and regulatory investigations is a critical audit matter were (i)
there was significant judgment by management to identify contingent liabilities and quantify required provisions, which included assumptions related to the probability of loss and the
timing, nature and quantum of related cash outflows, and (ii) there was a moderate degree of auditor judgment and effort in performing procedures and evaluating audit evidence related
to the provisions and key assumptions, and in evaluating the appropriateness of the related disclosures.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These
procedures included testing the effectiveness of controls relating to management’s evaluation of provisions to determine whether a present obligation with a probable cash outflow exists
and can be reliably estimated. For contingent liabilities, these procedures also included testing the effectiveness of controls relating to management’s identification and evaluation of
contingent liabilities, including controls over determining whether or not it is possible that a loss has occurred or whether there is a probable outflow from a present obligation. These
procedures also included, among others, (i) evaluating the evidence of management’s quantification of provisions and the assumptions applied and (ii) assessing the appropriateness of
management’s disclosures.
PricewaterhouseCoopers
Sydney, Australia
November 3, 2024
We have served as the Company’s auditor since 1968.
136 WESTPAC GROUP 2024 ANNUAL REPORT
ITEM 19. EXHIBITS INDEX
1.
Constitution (as amended) incorporated by reference to our Form 6-K filed on 15 December 2021.
4(c).2
Form of Access and Indemnity Deed between Westpac Banking Corporation and Director, incorporated by reference to our Annual Report on Form 20-F for the year
ended 30 September 2008.
4(c).3
Indemnity Deed Poll dated 10 September 2009, of Westpac Banking Corporation, incorporated by reference to our Annual Report on Form 20-F for the year ended 30
September 2009.
8.
List of controlled entities – refer to Note 29 to the financial statements in this Annual Report.
11(b)
Insider trading policies
12.
Certifications pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934.
13.
Certifications pursuant to 18 U.S.C. Section 1350.
15.1
Auditor consent dated 5 November 2024
15.2
Westpac Group 2024 Annual Report on Form 20-F
16.1
Letter from PricewaterhouseCoopers to the SEC
101.INSInline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL
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 Label Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
Copies of any instrument relating to the long-term debt of Westpac Banking Corporation that is not being attached as an exhibit to this Annual Report on Form 20-F and which does not
exceed 10% of the total consolidated assets of Westpac Banking Corporation will be furnished to the SEC upon request.
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Signatures
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this Annual Report on its
behalf.
WESTPAC BANKING CORPORATION
By: /s/ Michael Clayton
Michael Clayton
General Counsel – Corporate, Treasury and WIB
Dated 5 November 2024
Exhibit 11(B)
138 WESTPAC GROUP 2024 ANNUAL REPORT
EXHIBIT 11(B): INSIDER TRADING POLICIES
Securities trading
Westpac’s Group Securities Trading Policy prohibits Directors, employees, secondees and contractors from trading in any securities and other financial products that they possess
inside information on. They are also prohibited from passing on inside information to others who may use that information to trade in securities or from procuring others to trade. The
policy requirements also apply to associate accounts.
In addition, Directors and any employees, secondees or contractors who, because of their seniority or the nature of their position, may have access to material non-public
information about Westpac (known as Prescribed Employees) are subject to further restrictions, including prohibitions on trading prior to and immediately following annual and half
year results announcements. These restrictions also apply to their associates.
The Westpac Group Securities Trading Policy is available in the Corporate Governance section of our website at
www.westpac.com.au/about-westpac/westpac-group/corporate-
governance/principles-policies/.
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1Westpac Group Securities Trading Policy
Westpac Group Securities Trading Policy
Policy Owner: GM Non-Financial Risk and Chief
Compliance Officer
Last Policy approval:23 February 2023
Last Policy Owner review:5 September 2022
Effective date:20 March 2023
Policy Contact:Head of Group Control Room
Location:Compliance and Financial Crime
Policy Centre
This Policy forms part of the following Risk Document hierarchy:
Level 1: Framework
Compliance and Conduct Management Framework
Level 2: Policy
Westpac Group Securities Trading Policy
Level 3: Standard
Westpac Group Key Prescribed Employee Trading Standard
Level 4: Procedure
Westpac Group Securities Trading Policy Procedures for Identifying Prescribed Employees
140 WESTPAC GROUP 2024 ANNUAL REPORT
2
Westpac Group Securities Trading Policy
Table of contents
1. Overview3
1.1 Purpose3
1.2 Key Principles3
1.3 Application3
1.3.1Employee and associate accounts3
2. Policy Requirements4
2.1 Insider trading and general obligations for all employees4
2.1.1Insider trading prohibition4
2.1.2Use of derivatives and hedging over unvested Westpac securities prohibition4
2.1.3Short-term trading prohibition4
2.2 Rules for Westpac Directors and PEs when trading Westpac securities4
2.2.1Identifying PEs and KPEs4
2.2.2Monitoring of PEs and KPEs4
2.2.3No trading during Blackout Periods5
2.2.4PEs trading outside a Blackout Period5
2.2.5Key Prescribed Employees trading outside a Blackout Period5
2.2.6Westpac Directors trading outside a Blackout Period5
2.2.7Participation in corporate actions and employee share plans6
2.2.8Margin loans6
2.2.9Short selling is prohibited6
2.2.10Exceptions to Blackout Periods6
3.Roles and Responsibilities7
4.Policy Control7
4.1Policy Ownership, Approval and Review7
4.2Prudential and Statutory Requirements8
4.3Monitoring and Reporting8
4.4Breaches and Exceptions8
Appendix 1 – Key terms and related documents9
Appendix 2 – Criteria for Identifying PEs and KPEs11
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3Westpac Group Securities Trading Policy
1.Overview
1.1 Purpose
Delivering on Westpac’s Purpose requires that we observe proper standards of market conduct. This Westpac Group Securities Trading Policy (the Policy) sets out the obligations
and minimum standards required to manage risks around insider trading and other conflicts of interest relating to employee trading in securities (including Westpac securities
1
).
Appendix 1 contains the key terms and definitions used within this Policy. Defined terms are bolded on first use.
This Policy supports the Westpac Group Compliance and Conduct Risk Management Framework
2
, and the Code of Conduct
3
Outcome, ‘Being ethical’.
1.2 Key Principles
i.Westpac Employees who are in receipt of inside information must not:
a) Trade in the relevant securities (including Westpac securities) to which that information relates;
b) Tip or procure another person to trade in those securities; or
c) Share that information with anyone else.
ii. Westpac Employees must not use derivatives or any other hedging instrument to manage the risk of unvested Westpac securities.
iii. Westpac Employees must not undertake any short-term trading activity.
iv. Westpac Directors and Prescribed Employees (PEs) or their associates must not trade in Westpac securities during Blackout Periods.
v. PEs are subject to pre-trade notification requirements when trading in Westpac securities outside of Blackout Periods.
vi.Key Prescribed Employees (KPEs) and Westpac Directors are subject to pre-clearance requirements when trading in Westpac securities outside of Blackout Periods.
vii. Westpac Directors and PEs must not engage in short selling of Westpac securities.
viii. Westpac Directors and Westpac Employees must ask ‘Should We?’, as well as ‘Can We?’ to ensure they exercise good judgement when trading in securities, and to avoid
any perception that they have misused inside information for personal benefit.
1.3 Application
This Policy applies to all full-time and part-time employees, contractors, secondees, interns and consultants of Westpac Group globally (Westpac Employees)
4
and Directors of
Westpac Banking Corporation and its controlled entities. The Policy also applies to employees on extended leave, such as parental leave, career break, long service leave or leave
without pay. Compliance with this Policy is a condition of employment or a contract for service with Westpac. Specific requirements (subsection 2.2) apply only to Westpac Directors
and employees who have been classified by Control Room Operations as PEs.
1.3.1 Employee and associate accounts
The Policy requirements apply to all trading or investment accounts held individually or jointly by Westpac Employees. They also apply to trading or investment accounts held by
their associates (associate accounts).
Associates are:
■Children under age 18, and
■Any other persons or legal entities (including self-managed superannuation funds) where Westpac Employees have the control or influence over trading or investment
decisions.
When identifying associate accounts, Westpac Employees should consider whether they could be perceived as having control over or investment influence on trading of a particular
account.
1
Westpac securities include Westpac New Zealand Limited (WNZL) securities.
2
The New Zealand Group Compliance and Conduct Risk Management Framework for Employees in New Zealand.
3
The New Zealand Code of Conduct for Employees in New Zealand.
4
This definition is for the purpose of this Policy only. It is deliberately broad in order to incorporate the broad categories of applicable persons. It differs from the definition of
“employees” in the Compliance Glossary.
142 WESTPAC GROUP 2024 ANNUAL REPORT
4
Westpac Group Securities Trading Policy
Westpac Employees must take all reasonable steps to inform their associates of the requirements of this Policy and ensure their associates act in accordance with the Policy. In
instances where an associate is required under this Policy to act, the Westpac Employee must take that action on their associate’s behalf; for example, obtaining pre-clearance prior
to trading by a KPE’s associate outside of the Blackout Period.
2.Policy Requirements
2.1 Insider trading and general obligations for all employees
2.1.1 Insider trading prohibition
Insider trading is illegal and therefore strictly prohibited. In circumstances where Westpac Employees are in possession of inside information, employees must not trade in
securities to which that information relates. Inside information is information that is not generally available and, if the information were generally available, a reasonable person
would expect it to have a material effect on the price or value of securities. Inside information may relate to Westpac, one of our subsidiaries, a corporate customer or any other
company with listed securities.
Westpac Employees also must not encourage others to trade in those securities or share inside information with others (except when permitted by Westpac policy and for legitimate
business purposes).
The insider trading prohibition applies regardless of how an employee acquired the information. The prohibition continues to apply even when the employee is no longer employed
by or providing services to Westpac.
2.1.2 Use of derivatives and hedging over unvested Westpac securities prohibition
Westpac Employees are prohibited from entering into any options, derivatives or other arrangements which operate to limit the economic risk of an unvested holding in Westpac
securities or other unvested entitlements under employee share plans.
This prohibition does not apply to vested holdings in Westpac securities, although approval or notification and other arrangements apply to Westpac Directors and PEs dealing in
vested securities (refer to subsection 2.2 below).
2.1.3 Short-term trading prohibition
Westpac Employees are prohibited from engaging in short-term or day trading. Their trading activities should have a medium to long term investment objective and they must hold
securities for a minimum period of 30 calendar days.
2.2 Rules for Westpac Directors and PEs when trading Westpac securities
2.2.1 Identifying PEs and KPEs
Heads of business units or functions (Heads) are responsible for identifying Westpac Employees within their business unit or function who satisfy the criteria of PEs or KPEs.
PEs■Westpac Employees who, due to the nature of their position, are likely to come in contact with, or have access to, key financial,
operational or strategic information about Westpac that will, or is likely to have, a material effect on the price or value of
Westpac securities.
■Includes Westpac Directors and Group Executives
KPEs■Certain PEs, such as those who hold senior positions, whose trading activities may give rise to heightened regulatory or
reputational scrutiny.
■KPEs are subject to more onerous obligations in relation to trading in Westpac securities.
The Policy Owner or delegate may from time to time nominate additional Westpac Employees who are working on a particular market-sensitive matter as KPEs or impose ad hoc
trading restrictions on them for the duration of the matter.
2.2.2 Monitoring of PEs and KPEs
The MyComplianceOffice (MCO) system:
■Contains all active PEs and KPEs and
■Notifies these individuals upon their appointment as PEs or KPEs, or their removal from the Register.
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5Westpac Group Securities Trading Policy
Upon appointment, PEs and KPEs must input details of their and their associates’ HINs/SRNs/CSNs and other information as may be required relating to their Westpac securities
holdings in their personal and associate accounts into MCO, to enable Control Room Operations to conduct monitoring of their compliance with the Policy.
2.2.3 No trading during Blackout Periods
In addition to the general prohibition on Westpac Employees trading in Westpac securities while in receipt of inside information, Westpac Directors and PEs (including KPEs) and
their associates are prohibited from trading in Westpac securities during the following Blackout Periods:
■The period commencing on 15 March and ending at the beginning of trading in Sydney one day following the announcement of Westpac’s half year results in early May; and
■The period commencing on 15 September and ending at the beginning of trading in Sydney one day following the announcement of Westpac’s full year results in early
November.
The GM Non-Financial Risk and Chief Compliance Officer has discretion to extend or reduce (conditionally or unconditionally) the Blackout Periods. Control Room Operations
provides notifications to PEs before the start and end of Blackout Periods.
In addition, the GM Non-Financial and Chief Compliance Officer has discretion to impose ad hoc restrictions at times when matters subject to ASX Listing Rule 3.1A or NZX Listing
Rule 3.1.2 are being considered
5
. Any such ad hoc restrictions may be imposed on all PEs or limited to KPEs or individually identified employees, depending on the nature of the
matter.
If you have inside information about Westpac, you must not trade in Westpac securities at any time, including outside a Blackout Period.
2.2.4 PEs trading outside a Blackout Period
PEs (other than KPEs) must submit a trade pre-clearance request in MCO before they or their associates do any of the following outside a Blackout Period:
■Trade Westpac securities, or enter into a hedging arrangement over vested Westpac securities; or
■Arrange for another person to enter into arrangements of those kinds.
PEs who do not have access to MCO must notify Control Room Operations by email at
groupcontrolroomprescribedemployees@westpac.com.au of their intention to trade.
Any transaction which causes a change in ownership of Westpac securities will be considered a trade of securities under this Policy. This includes a transfer to a family member,
family trust or personal superannuation scheme.
2.2.5 Key Prescribed Employees trading outside a Blackout Period
KPEs must obtain pre-clearance prior to trading in Westpac securities, as set out in the Westpac Group Key Prescribed Employees Trading Standard (KPE Trading Standard). They
are not required to complete the Prescribed Employee Trade Notification Form, as set out in subsection 2.2.3 of this Policy.
2.2.6 Westpac Directors trading outside a Blackout Period
Westpac Directors must obtain the approval of the Chairman before they or their associates do any of the following outside a Blackout Period:
■Trade Westpac securities, or enter into a hedging arrangement over vested Westpac securities; or
■Arrange for another person to enter into arrangements of those kinds.
In the case of the Chairman, approval must be obtained from the Chairman of the Board Audit Committee. Westpac Directors must also notify the General Manager, Company
Secretary as soon as practical of any trading by either themselves or their associates in Westpac securities, including entering into a hedging arrangement over vested Westpac
securities.
5
This relates to potentially market sensitive matters that are not required to be disclosed immediately to the market under ASX Listing Rule 3.1 due to the application of the
exceptions in ASX Listing Rule 3.1A or NZX Listing Rule 3.1.2
144 WESTPAC GROUP 2024 ANNUAL REPORT
6
Westpac Group Securities Trading Policy
2.2.7 Participation in corporate actions and employee share plans
Westpac Directors and PEs who are eligible may participate in dividend reinvestment plans, rights issues or bonus issues (corporate actions) which are offered to all Westpac
shareholders, even where the corporate action is made, or acceptance falls, within a Blackout Period. However, Westpac Directors and PEs must not elect to participate in a
corporate action or change their election if they are in possession of inside information relating to Westpac.
PEs may accept an invitation to participate in an employee share plan, regardless of when the offer is made, even if the acceptance falls within a Blackout Period. PEs must then
comply with all rules in this Policy for trading in Westpac securities acquired under an employee share plan.
2.2.8 Margin loans
Westpac Directors and PEs are permitted to take out margin loans over their holdings in Westpac securities. However, they must not meet margin calls by the sale of Westpac
securities at a time when trading in Westpac securities is prohibited under this Policy, including trading when in receipt of inside information relating to Westpac or during a Blackout
Period.
Westpac Directors and PEs are expected to have sufficient resources to meet a margin call by means other than a sale of Westpac securities. If a Westpac Director or PE has any
doubt about their ability to meet a margin call by means other than a sale of their Westpac securities, they should take steps to rearrange their affairs to have a facility that does not
contain price triggers (for example, an investment loan secured against other assets). If a margin lender sells Westpac securities during a Blackout Period or without the relevant
pre-trade notification or pre-clearance approval being provided outside of a Blackout Period, it will be considered a breach of this Policy, whether executed on the Westpac Director’s
or PE’s instructions to do so, or not.
In addition, KPEs are required to disclose to Control Room Operations any margin lending arrangements they may have in respect to Westpac securities.
2.2.9 Short selling is prohibited
Westpac Directors and PEs must not short sell Westpac securities; that is, sell Westpac securities that have been borrowed with a view to repurchasing them later at a lower price
and returning them to the lender.
Short selling can send a negative message about the level of confidence in the prospects of the company. It could also be speculated that short selling of Westpac securities by a
Westpac Director or PE is due to their knowledge or awareness of negative information about Westpac that the market is not aware of or has not fully absorbed.
2.2.10 Exceptions to Blackout Periods
Generally, no exceptions will be made to the prohibition on Westpac Directors and PEs, or their associates, trading in Westpac securities during a Blackout Period. However,
Westpac Directors and PEs who have an unreasonable financial impost or who are in other exceptional circumstances may apply in writing to be exempted from the prohibition on
selling Westpac securities during a Blackout Period.
ApplicantSubmit application to
PEs, KPEs, Group Executives■GM Non-Financial Risk and Chief Compliance Officer
Westpac Directors■Chair
Westpac Chair■Chair of Board Audit Committee
In the application, the applicant must confirm that they are not in receipt of inside information relating to Westpac and provide details of all relevant circumstances, including why the
proposed sale of Westpac securities is the only reasonable course of action available to overcome the circumstances.
The applicant will be informed in writing of the outcome of their application and any conditions imposed for an exception to trading during a Blackout Period. In certain
circumstances, it may not be appropriate to advise the applicant of the reasons for the decision made.
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7Westpac Group Securities Trading Policy
If the person to whom the application is made, as set out in the table above, possesses inside information about Westpac themselves, they must decline the application.
Where approval to trade during a Blackout Period has been provided to a Westpac Director or a Group Executive, the applicant is required to advise the Group General Counsel
and the General Manager, Company Secretary to assist in the preparation of any 3Y Notice which may need to be lodged with the ASX.
3.Roles and Responsibilities
First Line of Defence
All staff■Understand and comply with obligations under this Policy including prohibition on insider trading, short selling and hedging of unvested
Westpac securities.
PEs and KPEs■Input all required information relating to personal and associate holdings and accounts into MCO.
■Do not trade in Westpac securities during Blackout Periods.
■Submit a trade pre-clearance request in MCO of your intention to trade in Westpac securities outside of Blackout Periods.
Directors■Provide Control Room Operations with all required information relating to personal and associate holdings and accounts.
■Do not trade in Westpac securities during Blackout Periods.
■Obtain pre-clearance approval prior to trading in Westpac securities outside of Blackout Periods.
Business and Support − Group and
Divisional teams
■Implement this Policy by ensuring staff understand their obligations under the Policy.
■Identify employees within business unit or function who satisfy the criteria of PEs or KPEs.
■Ensure that all PEs (including KPEs) within business unit or function have provided all required information to Control Room Operations.
■Establish effective business procedures and controls to comply with Policy.
■Escalate actual, likely, or suspected violations of this Policy.
Second Line of Defence
GM Non-Financial Risk and Chief
Compliance Officer
■Accountable for ownership and approval of this Policy.
■Apply discretion to extend or reduce (conditionally or unconditionally) Blackout Periods (or apply additional restrictions) where appropriate.
■Consider and approve exceptions to this Policy where appropriate.
Control Room Operations – Enterprise
Compliance
■Responsible for ongoing maintenance of this Policy.
■Monitor for PE and KPE compliance with this Policy.
■Act as delegate of Policy Owner for purposes of nominating additional Westpac Employees as KPEs and handling breaches of this Policy.
■Support the Group Securities Trading functionality in MCO.
Divisional Compliance■Provide oversight and control to ensure Business compliance with this Policy.
■Provide Compliance advice to Business stakeholders.
Third Line of Defence
Group Audit■Provide independent assurance by evaluating and opining on the adequacy and effectiveness of both First and Second Line risk
management approaches.
■Track remediation progress, with the aim of providing the Board, and Senior Executives, with comfort that the Group’s governance, risk
management and internal controls are operating effectively.
4.Policy Control
4.1 Policy Ownership, Approval and Review
This Policy is owned by the GM Non-Financial Risk and Chief Compliance Officer, who is accountable for its ongoing management. The Head of Control Room Operations is
responsible for the Policy’s ongoing maintenance.
This Policy is approved by the GM Non-Financial Risk and Chief Compliance Officer.
146 WESTPAC GROUP 2024 ANNUAL REPORT
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Westpac Group Securities Trading Policy
This Policy must be reviewed every two years to ensure it remains relevant, fit for purpose and aligns to the Compliance and Conduct Risk Management Framework.
4.2 Prudential and Statutory Requirements
This Policy supports our compliance with various regulatory obligations including s1043A - Insider Trading, s.912A(1)(aa) - Conflicts of Interests of the Corporation Act 2001 (Cth)
and Chapter 12, ASX Listing Rules and Subpart 2 of Part 5 of the New Zealand Financial Markets Conduct Act 2013 and Part 3 of the NZX Listing Rules.
4.3 Monitoring and Reporting
Business units and functions are required to implement a plan to monitor for compliance with this Policy. The nature and frequency of monitoring must be proportionate to the inside
information relating to Westpac securities that the Business Unit has access to.
4.4 Breaches and Exceptions
Non-compliance with this Policy could have serious consequences for Westpac. It is important for all Westpac Employees to speak up about risks, Issues or Incidents relating to the
requirements in this Policy. Please refer to the Westpac Group Speaking up Policy
6
for more information on the channels available to raise these matters.
Where potential breaches of this Policy are identified they should be managed in accordance with the requirements of the Group Incident Management Policy, Group Regulatory
Disclosure Policy
7
and specific regulatory or legislative requirements. Breaches of this Policy must be notified to the Policy Owner or delegate for action and remediation.
Exceptions to the Policy are approved by the Policy Owner. Requests for exceptions should be in writing and include a documented rationale that considers mitigation of any risks
resulting from a departure from the Policy.
6
The New Zealand Speaking Up Policy for employees in New Zealand.
7
The New Zealand Regulatory Disclosure Policy for employees in New Zealand.
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Appendix 1 Key terms and related documents
The key terms and their definitions used within this Policy are:
TermDefinition
Associates■As defined in subsection 1.3.1.
Corporate actions■Refers to dividend reinvestment plans, rights issues, bonus issues or other securities issuances
CSNCommon Shareholder Number. This is a unique account number issued to a holder of the quoted securities (i.e., WNZL securities) that is
common to all New Zealand share registers.
HIN■Holder Identification Number. This is a unique account number issued to a person upon becoming a customer of a broker.
Inside information■Information that:
–is not generally available; and
–if it were generally available, a reasonable person would expect to have a material effect on the price or value of financial
products.
A reasonable person would be taken to expect information to have a material
effect on price or value of financial products if the information would, or is likely to, influence the trading decision of a person who
commonly trades in the market
Insider TradingInsider trading would occur if:
■a person possesses inside information about a security or an issuer of a security (insider); and
■that person (whether as principal or agent):
–trades in the security (or related derivative); or
–advises, procures, or encourages any other person to trade or enter into an agreement to trade in the security (or related
derivative); or
–communicates inside information, either directly or indirectly, to another person if the insider knows or ought reasonably to
know, that the other person would or would be likely to trade or advise, procure, or encourage
a third person to trade or enter into an agreement to trade in the relevant security (or related derivative).
Key Prescribed
Employees
■As defined in subsection 2.2.1
Prescribed Employees■As defined in subsection 2.2.1
Securities■In this Policy, securities include but are not limited to:
–Shares, bonds or debentures issued or proposed to be issued by a company; or
–derivatives; or
–options; or
–interests in a managed investment scheme; or
–debentures, stocks, or bonds issued or proposed to be issued by a government; or
–superannuation products, other than those prescribed by regulations; or
–any other financial products that can be traded on a financial market.
TradingIncludes any transaction or change affecting title or interest in securities, including:
■Acquiring or disposing of securities, whether on or off market, or instructing a third party to do so;
■Entering into or exercising options or rights over securities, including Westpac employee share options;
■Converting convertible securities;
■Engaging in margin lending or stock lending in relation to securities;
■Electing to participate in, cease or vary participation in share purchase plans or dividend reinvestment plans;
■Transferring legal ownership of securities, even if beneficial ownership does not change; or
■Agreeing or apply to do any of the above.
148 WESTPAC GROUP 2024 ANNUAL REPORT
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Westpac Group Securities Trading Policy
TermDefinition
SRN■Shareholder Reference Number. This is a unique account number issued to
a holder of sponsor-issued securities (i.e. Westpac securities).
Westpac (“we” or “us”)■Means Westpac Banking Corporation, its brands, divisions and each of its controlled entities
WNZL Securities■In this policy, WNZL securities include but are not limited to:
–Notes issued under WNZL’s domestic medium term note programme; or
–Regulatory capital in the form of subordinated debt qualifying as Tier 2 Capital or perpetual preference shares qualifying as
Additional Tier 1 Capital, for WNZL’s regulatory capital purposes, or
–Any other WNZL financial products that can be traded on a financial market.
This Policy should also be read in conjunction with the following documents:
Table 1: Key supporting risk documents
DocumentPurpose
Document Owner
Westpac Code of Conduct■Practically outlines the expectations of Westpac and our people to do what is right, including
putting the customer
and bank ahead of personal interests and identify, declare, record and appropriately manage
conflicts
■Code of Conduct Team
Westpac Group Conflicts of Interest
Policy
■Sets out the high-level principles of Conflicts management of the many types of conflicts that are
applicable across the Group.
■GM Non- Financial Risk and
Chief Compliance
Officer
Westpac Group Personal Account
Dealing Policy
■Sets out the requirements applying to employees the conduct personal trading and investments in
securities.
■GM Non- Financial Risk and
Chief Compliance
Officer
Westpac Group Securities Trading
Policy Key
Prescribed Employee Trading
Standard
■Sets out the obligations of KPEs (including Group Executives) when trading in Westpac securities.■Head of Control Room
Operations
Westpac Group Securities Trading
Policy Procedures for Identifying
Prescribed Employees
■Sets out the procedures that Heads of business units or functions should follow when identifying
employees within their business unit or function who should be classified as PEs or KPEs.
■Head of Control Room
Operations
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11Westpac Group Securities Trading Policy
Appendix 2 – Criteria for Identifying PEs and KPEs
1.Identifying PEs and KPEs by Business Unit and Function
Employees who work in a business unit or function where the nature of business activities means there is a higher risk of actual or perceived insider trading, conflict of
interest or impropriety will be classified as DEs.
Heads of business units or functions are responsible for identifying employees within their business unit or function who satisfy the above criteria and who should be
included in the register of DEs.
2.Identifying KPEs by position (irrespective of business unit or function)
The following employees are classified as KPEs:
Employees who undertake the roles or hold the specific positions of:
■Chief Executive Officer
■Group Executive
■General Manager or equivalent
Any employees who are formally appointed in the Acting role for the above positions are automatically KPEs. In addition, employees in the
immediate office of the above-mentioned employees (e.g., Chief of Staff, Business Managers, Executive Assistants etc.) should also be classified
as KPEs.
Please refer to Westpac Group Securities Trading Policy Procedures for Identifying Prescribed Employees which set out procedures that heads
of business units or functions should follow when identifying employees within their business unit or function who should be classified as PEs or
KPEs.
Exhibit 12
150 WESTPAC GROUP 2024 ANNUAL REPORT
EXHIBIT 12
SECTION 302 CERTIFICATION
I, Peter Francis King, certify that:
1. I have reviewed this annual report on Form 20-F of Westpac Banking Corporation (“the company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially
affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the
audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: 5 November 2024
/s/ Peter Francis King
Peter Francis King
Managing Director and Chief Executive Officer
FINANCIAL
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EXHIBIT 12
SECTION 302 CERTIFICATION
I, Michael Rowland, certify that:
1. I have reviewed this annual report on Form 20-F of Westpac Banking Corporation (“the company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the company as of, and for, the periods presented in this report;
4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially
affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the
audit committee of the company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the
company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.
Date: 5 November 2024
/s/ Michael Rowland
Michael Rowland
Chief Financial Officer
Exhibit 13
152 WESTPAC GROUP 2024 ANNUAL REPORT
EXHIBIT 13
SECTION 906 CERTIFICATIONS
Pursuant to 18 U.S.C. § 1350
I, Peter Francis King, certify that the Annual Report on Form 20-F for the year ended 30 September 2024 of Westpac Banking Corporation (the “issuer”) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial
condition and results of operations of the issuer.
Date: 5 November 2024
/s/ Peter Francis King
Peter Francis King
Managing Director and Chief
Executive Officer
I, Michael Rowland, certify that the Annual Report on Form 20-F for the year ended 30 September 2024 of Westpac Banking Corporation (the “issuer”) fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial
condition and results of operations of the issuer.
Date: 5 November 2024
/s/ Michael Rowland
Michael Rowland
Chief Financial Officer
Exhibit 15.1
FINANCIAL
STATEMENTSEXHIBITS INDEXSTRATEGIC REVIEW
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REVIEW
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INFORMATION153
EXHIBIT 15.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statements on Form F-3 (Nos. 333-260702 and 333-260703) of Westpac Banking Corporation of our report
dated 3 November 2024 relating to the financial statements and the effectiveness of internal control over financial reporting which appears in this Form 20- F.
/s/ PricewaterhouseCoopers
Sydney, Australia
5 November 2024
154 WESTPAC GROUP 2024 ANNUAL REPORT EXHIBIT 15.2 Westpac Group 2024 Annual Report on
Form 20-F Section 1 156 Strategic review 156 Corporate governance 196 Directors’ report 222
Remuneration report 236 Information on Westpac 263 Section 2 270 Reading this report 271 Group
performance 276 Performance summary 276 Key financial information 277 Impact of Notable Items 278
Review of earnings 280 Credit quality 291 Balance sheet and funding 294 Capital and dividends 297
Segment reporting 302 Consumer 304 Business and Wealth 306 Westpac Institutional Bank (WIB) 308
Westpac New Zealand 310 Group Businesses 313 Risk factors 317 Section 3 Financial statements 333
Section 4 334 Shareholding information 335 Additional information 350 Glossary of abbreviations and
defined terms 363
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 155 This page has been intentionally left blank.
156 WESTPAC GROUP 2024 ANNUAL REPORT HOW WE CREATE VALUE OUR FOUNDATIONS OUR
BUSINESS THE VALUE WE CREATEa Passionate people who make a difference Data-informed insights
and decision making Proactive risk management and risk culture Strong balance sheet Shareholders
Delivering improved returns to shareholders (pages 164-167) 151C 15C $2.0BN ordinary dividends per
share special dividend per share total share buyback announced b Customers Building enduring customer
relationships (pages 168-173) $807BN $674BN 13M in lending in customer deposits customers served Our
people Being a place where the best people want to work (pages 174-177) 80 $5.9BN 49% Organisational
Health Index paid to our people women in senior leadership c Community Being a leader in the community
(pages 178-181) $3.5BN $177M $21.1M taxes paid globally, including the bank levy and 5th largest tax
payer in Australiad in community investmente spent with Indigenous-owned suppliers Environment
Contributing to the net-zero transition (pages 182-185) $10BN 86% 13 increase in sustainable finance
lendingf reduction in scope 1 and 2 emissions from our 2021 baseline targets in all 9 NZBA emissions
intensive sectors a. Comparisons are to the 12 months ended 30 September 2023, unless otherwise stated.
b. Includes $1.0 billion announced in May 2024 and $1.0 billion announced in November 2024. c. Senior
Leadership includes the Executive Team, General Managers and their direct reports (excluding
administrative or support roles). d. Based on the ATO's Corporate Tax Transparency Report for the 2021-22
Income Year, published in November 2023. e. Figure includes commercial sponsorships and foregone fee
revenue. f. Total committed exposure for lending assessed as sustainable finance in line with our
Sustainable Finance Framework – movement in balance over FY24.
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 157 OUR FOUNDATIONS OUR BUSINESS THE VALUE WE CREATEa
Passionate people who make a difference Data-informed insights and decision making Proactive risk
management and risk culture Strong balance sheet Shareholders Delivering improved returns to
shareholders (pages 164-167) 151C 15C $2.0BN ordinary dividends per share special dividend per share
total share buyback announcedb Customers Building enduring customer relationships (pages 168-173)
$807BN $674BN 13M in lending in customer deposits customers served Our people Being a place where the
best people want to work (pages 174-177) 80 $5.9BN 49% Organisational Health Index paid to our people
women in senior leadershipc Community Being a leader in the community (pages 178-181) $3.5BN $177M
$21.1M taxes paid globally, including the bank levy and 5th largest tax payer in Australiad in community
investmente spent with Indigenous-owned suppliers Environment Contributing to the net-zero transition
(pages 182-185) $10BN 86% 13 increase in sustainable finance lendingf reduction in scope 1 and 2
emissions from our 2021 baseline targets in all 9 NZBA emissions intensive sectors a. Comparisons are to
the 12 months ended 30 September 2023, unless otherwise stated. b. Includes $1.0 billion announced in
May 2024 and $1.0 billion announced in November 2024. c. Senior Leadership includes the Executive Team,
General Managers and their direct reports (excluding administrative or support roles). d. Based on the ATO's
Corporate Tax Transparency Report for the 2021-22 Income Year, published in November 2023. e. Figure
includes commercial sponsorships and foregone fee revenue. f. Total committed exposure for lending
assessed as sustainable finance in line with our Sustainable Finance Framework – movement in balance
over FY24.
158 WESTPAC GROUP 2024 ANNUAL REPORT ABOUT WESTPAC Established in 1817, Westpac
provides banking and other financial services in Australia and New Zealand. As one of Australia’s largest
companies and employers, we recognise the important role we play to improve social, environmental and
economic outcomes for Australians and New Zealanders. We are dedicated to serving our 13 million
customers, helping them to build strong financial futures and navigate periods of change. We have a long-
standing commitment to the community, including a 51 year partnership with the Westpac Lifesaver Rescue
Helicopter Service. We are proud of our involvement in establishing the Westpac and St.George
Foundations and Trusts. These separate non-profit organisations have contributed $90 million in the past
decade to create meaningful change in people’s lives. We are working towards becoming a net-zero, climate
resilient bank. Our 2024 Climate Report details our efforts to reduce our emissions, assist customers in their
transition and advocate for positive change. We are proud to contribute to the nation’s prosperity through
$5.9 billion in salaries, $5.7 billion in shareholder dividends, $3.5 billion in cash taxes and levies and $4.4
billion spent with suppliers inside Australia1 . As we evolve, we draw inspiration from our customers, their
needs and our purpose. Our values guide our actions to create better futures. Our values • Helpful –
Passionate about providing a great customer experience • Ethical – Trusted to do the right thing • Leading
Change – Determined to make it better and be better • Performing – Accountable to get it done • Simple –
Inspired to keep it simple and easy Market share Australia Household depositsaa 21% Mortgagesa 21%
Business lendinga 16% New Zealand Consumer lendingbb 18% Depositsb 17% Business lendingb 16% a.
APRA Banking Statistics, September 2024. b. RBNZ, September 2024. 1. Refer to the 2024 Sustainability
Index and Datasheet for details.
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 159 Our four operating segments Consumer Business & Wealth Westpac
Institutional Bank (WIB) Westpac New Zealand Helping more Australians into their home, save for the future
and manage their money with a range of banking products under the brands of Westpac, St.George,
BankSA and Bank of Melbourne. Serving the needs of small to medium businesses and commercial and
agribusiness customers across Australia. This segment also includes Private Wealth and BT Financial
Group, along with our operations in Fiji and Papua New Guinea. Delivering a broad range of financial
services to corporate, institutional and government customers operating in, and with connections to,
Australia and New Zealand. Providing banking and wealth services to consumer, business and institutional
customers in New Zealand. Our foundations Passionate people who make a difference Data-informed
insights and decisioning Proactive risk management and risk culture Strong balance sheet The value we
create Shareholders Customers People Community Environment Delivering sustainable returns to more than
585,000 shareholders Creating better futures for the 13 million customers we serve Helping over 35,000
people in our workforce to reach their potential Investing to create stronger, more inclusive communities
Supporting global efforts towards net-zero by 2050 Pages 164-167 Pages 168-173 Pages 174-177 Pages
178-181 Pages 182-185
160 WESTPAC GROUP 2024 ANNUAL REPORT OUR STRATEGY Our strategy for growth and return is
guided by our purpose and supports our ambition to be our customers' #1 bank and partner through life. Built
on four pillars, it focuses on developing strong customer relationships to drive growth in target markets and
improve returns. In turn, this helps us to create positive change and better futures by using our influence to
support communities, the economy and the environment. Customer Easy Expert Advocate Customers are at
the heart of what we do. We value the entire customer relationship and are working hard to anticipate their
needs, including through delivering personalised experiences, offers and insights. Transaction accounts and
payments are at the centre of our customer relationships, enabling us to build early and deeper connections.
We’re making banking easier, more intuitive and digital. We’re simplifying our bank – solving pain points,
removing manual processes, making banking safer and automating workflows. We’re aiming to create a
seamless customer experience across our channels. We deliver expert solutions and tools to guide
customers in making better decisions. We help them manage their money every day as well as plan ahead
by sharing our insights. Our people work alongside customers to tackle some of the issues, including
managing the cost of living and transitioning to net-zero. We advocate for positive change and speak up for
what’s right. We’re advocating for financial inclusion, greater accountability for social media platforms
promoting scams, on climate and safer digital services across our business, industry and communities.
Measures Return on tangible equity (ROTE) Market position Sustainability Aligned with our purpose and the
pillars of our strategy, our sustainability approach is shaped by key material topics and guided by the UN
Sustainable Development Goals. Detailed information about our sustainability strategy, including metrics
from our 2024 Sustainability Index and Datasheet, is available on our website. Following the Global
Reporting Initiative (GRI) Universal Standards, we annually identify the most significant sustainability topics
to guide our strategy and focus on areas with the greatest impact on our stakeholders. The process and
details of these material topics are also outlined on our website.
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 161 A STRATEGY FOR GROWTH AND RETURN: PROGRESS The
strength of our customer relationships is crucial to our long term success. By enhancing products and
services, we are creating exceptional banking experiences that help to drive growth. Combined with
initiatives that intend to reduce our costs relative to peers, we aim to improve our market position and ROTE,
the key measures of the strategy. Shareholders Delivering improved returns to shareholders See pages 164-
167 There was a modest decline in ROTE however we grew our businesses and maintained a strong
financial position. This was reflected in higher fully franked ordinary dividends along with $2.3 billion of
capital returned to shareholders comprising a $0.5 billion in special dividend and the purchase of $1.8 billion
of sharesa through an on market buyback. a. As at 30 September 2024. Customers Building enduring
customer relationships See pages 168-173 We have enhanced customer experiences and protections
against scams through digital innovation. This has helped make banking easier, safer and more personalised
for customers. Consistent and simple everyday banking offers resulted in higher deposits, while improved
processing times stabilised our share of home loans. New convenient payments and merchant technology
saw us attract new business customers in Australia and New Zealand. Business lending grew above system.
People Being a place where the best people want to work See pages 174-177 Our Organisational Health
Index (OHI) improved by five points to 80, placing us in the top quartile globally. We attract and retain
talented people by investing in training and career development while supporting wellbeing. We are a
proudly inclusive employer, committed to fostering a safe and inclusive workplace. Community Being a
leader in the community See pages 178-181 Our success is intrinsically linked with the success of the
economy and communities. We have a proud legacy of community support through workplace giving,
volunteering, community initiatives and the separate Westpac Foundation, St.George Foundationa and
Trusts. We helped to keep cash circulating in society and made progress against our objectives for
advancing human rights and supporting reconciliation. a. Includes BankSA Foundation and Bank of
Melbourne Foundation. Environment Contributing to the net-zero transition See pages 182-185 We made
progress on our climate strategy, shifting our focus to supporting customers with their transition plans. Our
Scope 1 and 2 emissions have reduced by 86% from our 2021 baseline, achieving our 2030 targeta . With
13 targets across the 9 most emission-intensive sectors under the NZBA framework, we are engaging our
customers to help them move towards lower emission practices. a. Refer to the 2024 Sustainability Index
and Datasheet for more information.
162 WESTPAC GROUP 2024 ANNUAL REPORT OUR OPERATING ENVIRONMENT1 Australian economic
growth was subdued The Australian economy has experienced an extended period of below trend growth,
particularly in the private sector. Government spending has provided some support, alongside a tight labour
market and elevated terms of trade. However, strong population growth has masked the weakest period of
per capita growth in decades. Australian economic growth is projected to recover from 1.5% this year to
2.5% in 2025. Households absorbed squeeze to incomes Real household incomes have faced the negative
shocks of high interest rates, cost of living pressures and higher taxes. This has translated into pessimism
and weaker consumption. The impact has been uneven with younger and lower incomes households
disproportionately affected. Mortgage stress, while rising during the year, remains low. Some relief has
arrived in the form of declining inflation and tax cuts. The undersupply of housing and continued house price
growth has resulted in a recovery in housing credit growth from an annualised trough below 4% to more than
5% through the year. System credit growth of approximately 5% is expected for 2025. Strong business
growth exceeded expectations Australian businesses have navigated challenging operating conditions of
weaker demand and cost pressures. Profitability has eased to levels consistent with the decade prior to
COVID-19. Smaller businesses, particularly those exposed to consumer discretionary sectors, experienced a
more difficult trading environment. Strong financial positions, high capacity use and population growth have
boosted credit demand, especially in infrastructure, health, education and technology investments. While
overall business investment has slowed, credit demand is expected to grow by approximately 6% in 2025.
The New Zealand economy weakened New Zealand’s economy stagnated due to significant monetary
tightening aimed at combating inflationary pressures. The Reserve Bank of New Zealand began lowering
interest rates in August 2024 in response to weaker economic activity, rising unemployment and receding
inflation. The easing of financial conditions is expected to result in improved economic activity into 2025.
Global economy on track for a soft landing Global economic prospects have improved with inflation, which is
under control across major developed economies, declining from more than 8% in 2022 to below 3% by mid-
2024. This allowed G7 central banks, except Japan, to ease monetary policy. The downside risk posed by
weakness of the Chinese economy is expected to be mitigated by the announcement of significant stimulus
measures. Notwithstanding the structural challenges that China will be required to address in the medium
term, its activity will be supported in the short term. Global economic growth is expected to exceed 3% in
2025. 1. All references are to calendar years unless otherwise stated.
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 163 We regularly review our operating environment to identify changes,
emerging risks and opportunities. This helps us to evolve our strategy and approach to current and future
key risks. Below are some of the factors1 that could affect Westpac’s ability to create value in the short,
medium or long term. Our major risk categories, mitigation strategies and areas of focus are detailed in Risk
Management (page 188). For further information, see 2024 Risk Factors. Rising threat: Scams and fraud
become more sophisticated Fraud and scams are increasing with more sophisticated methods targeting a
wider range of individuals and businesses. Over the past two years, Westpac invested more than $100
million in new prevention and detection measures to support customers, such as Westpac SaferPay and
Westpac Verify. We are working closely with government and industry to further strengthen our defences and
make Australia a harder target for scammers. See Operational Risk, Cyber Risk and Creating value for
customers (page 168) Supporting financial stability: Prudent lending and customer assistance Maintaining
prudent lending practices and policies are critical to safeguarding our financial stability and profitability. Our
Customer and Business Assist teams in Australia provided 47,500 hardship and disaster support packages.
Factors including cost of living pressures and higher interest rates contributed to this increase. We continue
to provide a range of support to help customers get back on track. See Credit Risk and Creating value for
customers (page 168) Rising to the challenge: Expectations in addressing climate change Climate change
continues to have significant global impacts. Banks play an important role in supporting the transition and
helping customers become more climate resilient. New mandatory climate-related reporting requirements will
require companies to disclose climate-related risks, opportunities and emissions across their value chain.
We are strengthening our approach to managing climate change, as outlined in our 2024 Climate Report.
See Credit Risk, Reputational and Sustainability Risk and Creating value for the environment (page 182)
Navigating competition: The importance of strategic customer focus Nearly one hundred banks, including
many foreign ones, now operate in Australia. Westpac is one of four major banks and has been serving
customers for more than 200 years. The landscape is evolving and competition has intensified, particularly in
mortgages. We are investing in technology and our people, leveraging the advantages and scale that come
with being a major bank, to deliver great service and benefits to our customers. See Strategic Risk and
Creating value for customers (page 168) Protecting reputation: Strong risk management for better outcomes
Managing and responding to expectations from regulators and the community requires strong risk
management. Poor conduct, negative customer experience, or failing to adequately respond to risks such as
scams can impact our integrity and the trust of our stakeholders. Through the Integrated Plan of the CORE
Program, we have strengthened our risk governance, accountability and risk culture to drive better customer
outcomes. See Reputational and Sustainability Risk and Compliance and Conduct Risk (page 190) 1. Not
exhaustive. See Risk Management (page 188) for full table of risk categories.
164 WESTPAC GROUP 2024 ANNUAL REPORT CREATING VALUE FOR SHAREHOLDERS We are
committed to delivering long term value for shareholders by focusing on providing great customer service,
maintaining a strong balance sheet and delivering sustainable returns above our cost of capital. Key
highlights 151c FULL YEAR ORDINARY DIVIDENDS 58% TOTAL SHAREHOLDER RETURN 15c SPECIAL
DIVIDEND $2.0BN TOTAL SHARE BUYBACK ANNOUNCED1 1. $1.0 billion announced in May 2024 and
$1.0 billion announced in November 2024.
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 165 Solid financial result1 Our financial performance demonstrates the
continued focus on the delivery of sustainable returns for shareholders while growing our businesses and
maintaining a strong financial position. $7.0BN Net profit, down 3% on FY23 1.93% Net interest margin,
down 2bps on FY23 7bps Impairment charges to average loans, down 2bps on FY23 Net profit was
delivered through disciplined management of net interest margins and growth across our businesses. Pre-
provision profit declined by 3% on the prior year. Excluding Notable Items, pre-provision profit was down 4%
with the 1% increase in operating income more than offset by a 7% increase in operating expenses.
Operating income reflected solid loan growth constrained by a modest decline in the net interest margin. The
increase in operating expenses was driven by higher software amortisation and technology costs along with
the impact of closing RAMS to new business. Net interest margin (NIM) The modest contraction in NIM
reflected competition for mortgages and customers preferencing higher yield deposits which more than offset
the benefits from higher earnings on capital and hedged deposits, in addition to a larger contribution from
Treasury. Impairment charges and credit quality The low level of impairment charges reflects our prudent
lending practices and customer resilience across both households and businesses. The modest deterioration
in credit quality metrics was due to the impacts of the decline in real household disposable income and
weaker demand and cost pressures on business customers. We remain appropriately provisioned with credit
impairment provisions of $5,096 million, $1.5 billion above the expected losses of our base case economic
scenario. $m Full Year 2024 Full Year 2023 % Mov't 2024-2023 Net operating income 21,588 21,645 -
Operating expenses (10,944) (10,692) 2 Pre-provision profit 10,644 10,953 (3) Net profit 6,990 7,195 (3) For
more see Performance Review (page 276). Solid growth in our core markets Loans increased by 4%
reflecting growth across all segments: Consumer; Business & Wealth; WIB; and New Zealand. Growth in
Australian housing loans, excluding RAMS, of 5%, or 1.2x APRA housing system, mainly in owner occupied
mortgages was supported by faster and more consistent decision times and enhancements to our single
mortgage platform. Total Australian housing loans growth was 4%. See Faster lending decisions (page 171)
for more information. Australian business lending was up 8%. This reflected strong loan growth in WIB as we
deepened relationships with existing customers and selective growth in lending to international customers.
Growth in the Business segment was well diversified with strong growth in our target industries of agriculture,
health and professional services. Customer deposits grew by 5% with strong growth in the Consumer and
WIB segments. Household deposits growth of 1.1x APRA system is testament to the health of our consumer
franchise. LOANS ($BN) 739.6 773.3 806.8 Sep-22 Sep-23 Sep-24 CUSTOMER DEPOSITS ($BN) 612.8
641.0 673.6 Sep-22 Sep-23 Sep-24 1. Unless otherwise stated, all figures relate to the year ended 30
September 2024 with comparative period the year ended 30 September 2023. Certain amounts, measures
and ratios are not defined by Australian Accounting Standards (AAS). These non-AAS measures are
identified and described in the Reading this report . Notable Items are discussed further on page 278.
166 WESTPAC GROUP 2024 ANNUAL REPORT CREATING VALUE FOR SHAREHOLDERS Strong
financial position We maintained a strong financial position with capital, funding and liquidity all above
regulatory minimums. Capital CET1 capital ratio of 12.5% compares to the target operating range of 11.0%
to 11.5% in normal operating conditions equating to $4.3 billion of capital above the top end of the target
range. The CET1 capital ratio increased slightly. Solid organic capital generation and reductions in Risk
Weighted Assets (RWA), in addition to the return of $500 million in operational risk capital overlay, were
offset by the payment of dividends and the on market share buyback. CET1 CAPITAL RATIO 11.3 12.4 12.5
17.6 18.7 18.3 APRA basis Internationally comparable Sep-22 Sep-23 Sep-24 Funding and liquidity The
September quarterly average liquidity coverage ratio (LCR) and the net stable funding ratio (NSFR) were
both above regulatory minimums. The deposit to loan ratio increased slightly, with deposit growth broadly
funding loan growth during the year. The Group raised $41.9 billion of new long term wholesale funding.
83.5% Deposit to loan ratio, up 61bps on Sep-23 Simplifying banking To deliver long term value for
shareholders, we are focused on providing great customer service. Better outcomes for customers and our
people We made progress on initiatives to improve customer experience. Highlights during the year included
giving businesses new and more flexible payments technology, improving the Westpac banking app and
creating Australian-first scam protections for customers. Our people are key to our success and we are
investing in their capability. We mobilised UNITE, our business-led, technology-enabled transformation, that
is laying the foundations for our future by aiming to simplify our processes and technology. For more on our
progress, refer to: Creating value for customers (page 168) Creating value for our people (page 174)
Technology (page 186) Substantially improving risk management capability Over the past four years we
delivered a program of risk culture and risk management uplift. The CORE Integrated Plan activities were
completed in December 2023 and Promontory assessed the program as complete in May 2024. We are now
completing a transition phase to continue to embed the improvements we've made for the long term.
Subsequently, APRA reduced the $1.0 billion operational risk capital overlay by $500 million in July 2024.
Refer to Risk Management (page 188) for more.
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 167 Improved shareholder returns To create value for our 585,000
shareholders, we aim to deliver sustainable returns above our cost of capital. Shareholder returns The
decline in net profit resulted in a 38 basis points decrease in ROTE to 11.0% and earnings per ordinary
share were 201 cents, down 2%. Over the year our share price rose 50%, contributing to a 58% increase in
total shareholder return (TSR). The S&P ASX All Ordinaries accumulation index rose 22% over the same
period. Ordinary dividends This year, shareholders will receive $5.2 billion through fully franked ordinary
dividends. Ordinary dividends were up 9 cents per share, or 6%. This year’s payout ratio is 75% on a net
profit basis and 73% excluding Notable Items. ROTE (%) 9.2 11.4 11.0 FY22 FY23 FY24 ORDINARY
DIVIDEND PER ORDINARY SHARE (CENTS) 125 142 151 61 70 75 64 72 76 Interim Final FY22 FY23
FY24 Returning surplus capital to shareholders We bought back $1.8 billion of shares on market and we
returned $0.5 billion through a special dividend. With $4.3 billion of capital above the target operating range
and confidence in the medium-term economic outlook, the on market share buyback was increased by a
further $1.0 billion in November 2024. $2.0bn total share buybacks announced1 15c special dividend 1. $1.0
billion announced in May 2024 and $1.0 billion announced in November 2024.
168 WESTPAC GROUP 2024 ANNUAL REPORT CREATING VALUE FOR CUSTOMERS Delivering great
customer service motivates our people and brings our purpose to life. Through better products and services,
technology and fraud and scams protection, we're supporting customers through life's challenges to help
them realise their financial goals. Key highlights 13M CUSTOMERS # 1 BANKING APP1 21% AUSTRALIAN
MORTGAGE MARKET SHARE2 +4 CONSUMER NPS3 RANKED THIRD AMONG MAJOR PEERS 1. The
Forrester Digital Experience Review: Australian Mobile Banking Apps, Q3 2024. 2. APRA Banking Statistics,
September 2024. 3. Source: Fifth Dimension for September 2024, 6MR. MFI customers.
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 169 Number one banking app Our banking app won awards for its simple
design and rich functionality, including #1 mobile app by Forrester1 . As one of our customers' preferred
banking channels, we have continued to invest in its capabilities to make it simpler, secure and more
personalised, directly contributing to long term customer satisfaction and loyalty. Our banking app offers
essential everyday banking and money management tools. More than 1 million customers2 are using money
management features such as Net Worth view and Financial Wellbeing to help them budget, manage their
finances and understand their financial position. The Savings Finder automatically calculates a customer’s
annual spending on subscriptions and regular bills, helping to identify those that could be reduced or
cancelled. Other features include Smart Search and a Cards Hub where customers can manage their debit
and credit cards. Customers can easily switch between personal and business banking within the app to
manage their finances in one place. Westpac SaferPay and Westpac SafeCall are new Australian-first
innovations we designed to help customers avoid scams. To further enhance digital card security, dynamic
CVC refreshes every 24 hours, reducing fraud and unauthorised access. See Protecting customers and
preventing crime (page 173) for more information Building financial literacy We are committed to supporting
our customers and the broader community in building financial confidence. This helps customers to manage
their finances more effectively which builds trust and ultimately drives the sustained growth of our business.
In addition to the money management features, we introduced a Pocket Money and Chores feature in our
banking app. Parents or guardians can use this to set up regular or one-off Pocket Money payments to a
child's account to manage chores, develop their money skills and encourage saving. This helps to teach
children the value of money and how to spend and save responsibly. We also saw positive momentum in use
of the savings account features, in particular the safety features available within the Youth Debit card. We
launched a new Property Dashboard in our digital banking channels, offering customers a snapshot of their
property portfolio linked to Westpac loans. This provides valuable insights such as estimated property values
and home equity to help customers understand their financial position. To further build financial confidence
and wellbeing, we offer a range of resources to customers, employees and the community. Through Westpac
Master Your Money and the Finlit program, designed for younger adults, we provide interactive webinars,
online learning modules, articles and tools. In New Zealand, more than 12,000 people participated in
Managing Your Money workshops, alongside targeted seminars for businesses and corporate customers,
including through our partnership with key Chambers of Commerce across the country. 1. The Forrester
Digital Experience Review: Australian Mobile Banking Apps, Q3 2024. 2. In the 90 days to 30 September
2024. WESTPAC SAFERPAY: MULTI-LAYERED PROTECTION After researching investment opportunities,
a Queensland couple transferred $350,000 to an account to invest in government bonds. The transfer, made
on a Friday afternoon, was flagged by our SaferPay technology as a high scam risk. Fortunately, SaferPay
placed a 24-hour hold on the transfer, protecting the couple’s funds. After speaking with the couple, our
Fraud and Scams Operations Team was able to cancel the transaction for the customer.
170 WESTPAC GROUP 2024 ANNUAL REPORT CREATING VALUE FOR CUSTOMERS Listening to our
customers We actively gather feedback from customers and employees to improve our services. Insights
from Net Promoter Score (NPS) and complaints help us to create better solutions, measure improvements
and promote a customer-first culture. We improved in Consumer NPS to +4 and in Business NPS to -3. We
have strengthened our leadership in Branch NPS and have seen positive progress in Business Lending,
though our overall scores that reflect broader customer experience are not where we'd like them to be. For
our institutional customers, we aim to be their bank of choice and cater for all their banking needs.
Customers who consider us to be their main financial institution more than doubled over the year, improving
our position from #3 to #2. Resolving complaints Complaints are a second chance for us to make things right
for our customers and apologise for any inconvenience. Through our customer-first approach, we aim to
resolve each customer complaint objectively, fairly, efficiently and with empathy. We are improving how we
manage complaints by enhancing banker training, increasing responsiveness and improving classification
and escalation processes. Our average resolution time is stable, with 93% resolved without need for
escalation. Our Customer Advocate advises the complaints team, recommends policy changes and supports
vulnerable customers. Listening to feedback helps us to continuously improve our products and services. For
example, we improved the digital experience for customers reordering cards, which has led to a reduction in
related complaints. Maintaining community presence While customer preferences are increasingly digital, we
have 626 branches across Australia including 111 co-located branches which support multiple brands. Our
customers have access to the largest fee-free ATM network in the country and our agreement with Australia
Post’s Bank@Post service provides an additional 3,400 points of presence for customers to access our
banking services. Our Virtual Banking team provides additional support through secure phone, video and
chat services. We recognise there is more work to do to support regional communities across Australia. We
listened to customer and community feedback to better understand the unique challenges faced by many
customers who live outside major cities. We have since pledged to keep regional branches open until at
least 2027, providing greater certainty to our customers, people and communities. The opening of our 100th
co-located branch in Menai, New South Wales Promoting financial inclusion We are focused on delivering
products and services that are accessible to customers with disabilities, illnesses, injuries or who are
neurodivergent. Our Access and Inclusion Plan guides our efforts, such as creating more inclusive and
accessible workplaces, branches, services and collateral. We have also improved our digital services.
Backing female entrepreneurs: We helped more than 726 women to start or grow their business and settled
$274 million under our $500 million commitment1 to support more female-led businesses. We partnered with
The University of New South Wales Founders’ 10X Accelerator Program, providing funding for three $20,000
scholarships designed to support women to balance work and personal commitments. New banker training
helps our people better understand the barriers faced by female business owners. Supporting Indigenous
customers: Westpac supports Indigenous customers across multiple channels including a dedicated
Indigenous Call Centre where translators are available to support Indigenous languages. On-the-ground
teams in remote areas of every state and territory work in partnership with community groups to help
empower Indigenous customers with their banking needs. Putting home ownership within reach: Housing
affordability and rental supply challenges have made home ownership less accessible. We are providing
ways for people to fast-track their home ownership ambitions and our lenders are available to help
customers choose the best level of support. For 23 professional occupations, including nurses and midwives,
we offer Lenders Mortgage Insurance waivers. This benefited 13,300 customers while 4,000 customers used
our Family Security Guarantee. We have extended the Housing Australia Home Guarantee Scheme to all
our brands, settling $5.2 billion in loans under the Scheme to help customers with a smaller deposit.
Westpac New Zealand pledged NZ$1 billion in lending over the next three years to help more people secure
homes through variety of social and affordable housing options, such as shared equity and leasehold
projects, through loans to scheme providers and home buyers. 1. As of September 2024, we have helped
726 women since June 2023. $500 million has been ring fenced for lending to women in business, however
the Business Loans for Start Up and Business Loans for Scale Up are available to people of any gender.
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 171 Supporting customers How we support customers facing financial
difficulties is a true reflection of our values. We understand that tough times can impact anyone, whether due
to higher cost of living, illness, relationship breakdowns, reduced business cash flow or natural disasters.
This is why we have more than 400 skilled professionals in our Customer and Business Assist teams to
provide a range of options to help customers, such as deferring loan repayments. Over the year, we provided
47,500 hardship and disaster support packages to customers and businesses to help them get back on
track. By the end of the year, 19,000 accounts remained in hardship. Based on feedback, we also found
other ways to support our customers. In an Australian-first, we gave customers the flexibility and freedom to
use their Altitude Rewards points on everyday items1 . Additional in-app savings prompts helped 193,000
customers earn an average of $324 in additional total interest2 . Through the Westpac Rewards’ ShopBack
program, we helped customers earn more than $24 million in cashback from purchases at 4,000 retailers.
Westpac Rewards was recognised as the Best Overall Loyalty Program in financial services3 . We
participated in ASIC’s Better Banking for Indigenous Consumers Project and supported our customers
receiving ABSTUDY and those in project postcodes. This included refunding account keeping, debit interest
and overdrawn fees dating back to July 2019 for eligible customers. We also expanded access to our basic
bank account to customers who receive an Australian Government benefit payment that makes them eligible
to hold a concession or healthcare card. Our basic bank account has no account keeping fees, overdrawn
fees or debit interest. Faster lending decisions We have made the home loan experience more efficient for
customers by optimising our operations and technology. This has reduced average home loan decision times
to approximately five days and increased on-day settlements to an industry leading level. This has led to a
significant 41-point increase in Broker NPS4 and improved sentiment over the past two years. Additionally,
we are piloting a new AI-driven method to further streamline assessments. HOME LOAN APPLICATION
TIME TO DECISION (DAYS) 6.3 5.9 5.2 8.1 7.1 4.8 Proprietary Broker Sep-22 Sep-23 Sep-24 In business
lending, more than $1 billion in applications have been approved using our simplified pathway since its
launch in April last year. This lets businesses borrow up to $3 million and gives customers quick access to
their most recent financial information from their business activity statements. Business loan processing
times take 9 days and this should improve as we continue to digitise the entire process over the next few
years. 1. Pay with Points is a way of redeeming Altitude Reward points for eligible purchases under the
Altitude Reward Terms & Conditions. 2. From January to September 2024. 3. Westpac Rewards received the
award for Best Overall Loyalty Program in Financial Services at the 2023/2024 Asia Pacific Loyalty Awards.
4. Internal Broker NPS survey Sep24 - spot brand NPS for combined brands. Brokers that have settled a
loan with Westpac Group in the previous 6 months invited to participate (10,459 invitations sent, 1,399
responses / 13% response rate). BEST OVERALL LOYALTY PROGRAM 111 CO-LOCATED BRANCHES
SUPPORTING MULTIPLE BRANDS #1 $A BOND LEAGUE TABLE BUILDING SUSTAINABLE FUTURES In
response to growing customer demand for more energy efficient and climate resilient homes, we launched
the Sustainable Upgrades home and investor loans product, becoming the first bank to be backed by the
Clean Energy Finance Corporation. This loan offers existing customers a reduced interest rate on loans up
to $50,000 to make upgrades that improve their property's energy efficiency and resilience to natural
disasters.
172 WESTPAC GROUP 2024 ANNUAL REPORT CREATING VALUE FOR CUSTOMERS Driving efficiency
for businesses Small businesses make a significant contribution to our economy, representing 97% of all
Australian businesses1 . We offer a range of working capital solutions to give customers confidence, whether
they’re starting up or growing their business. In response to customer feedback, we established a dedicated
Bank Guarantee Specialist Team that allows customers to obtain a bank guarantee in less than 24 hours.
We have continuously enhanced our merchant technology for businesses since launching Australia’s first
EFTPOS machine 40 years ago. Our latest high-speed, cost-effective merchant terminal, EFTPOS Flex
integrates with more than 550 Point of Sale systems. We offered EFTPOS Air to more customers, allowing
businesses to accept instant payments through their phone or tablet. We are working to make it safer for
businesses to manage their recurring payments through real-time control over payment agreements,
reducing the risk of errors and fraud. We extended this benefit to our commercial and institutional customers.
The acquisition of HealthPoint, which offers instant e-health claiming to small business and commercial
customers, recognises the growth of the healthcare sector as the population ages. To make employee
spending easier and more secure for large businesses, new Dynamic Virtual Cards can be issued to their
people on the go. This removes the need to issue physical cards or cash while enabling control and
transparency over spending. To support our ambition to restore our institutional bank to the number one
position, we have employed more bankers to provide deeper support to new and existing customers. Our
financial markets franchise continues to perform, with a leading position in fixed income markets2 and #1
rank on the $A bond league table3 . We were joint lead manager on the Australian Office of Financial
Management’s (AOFM) first green bond issuance. Please see Collaborating for impact (page 185) for more
information. Combating financial abuse We stand against financial abuse and our specialist teams are
trained to support customers experiencing vulnerability, including domestic and family violence, financial
abuse and problem gambling. We continue to embed Safety by Design principles into our product design
and provided customer safety training to an additional 1,200 employees. See Respecting and advancing
human rights (page 180) for more information. We enhanced our protection measures to include: • Education
and Awareness: Westpac partnered with Legal Aid NSW and OurWatch to enhance the education on the
Westpac website relating to financial abuse, elder financial abuse and gambling. • Gambling Block:
Customers can apply an instant block on certain gambling-related transactions through Westpac’s mobile or
online banking. • Parental controls and child education: To help young people learn how to manage their
money safely - while giving parents the opportunity to act as banking ‘safety nets’ - we’ve added push
notifications, restrictions on online payments and daily payment limits of $50 for under 14 years olds to our
Choice Youth everyday account and Bump Savings account. • Power of attorney account monitoring: While
the vast majority of attorneys act in the best interests of account holders, sadly this is not always the case.
We have added an extra layer of transaction monitoring to flag unusual transactions from these accounts.
This allows our specialist teams to step in and support customers and their attorneys regarding their rights
and obligations. • Updated Terms & Conditions for savings, transaction, personal loan and credit card
products highlight to customers that we have a zero-tolerance for products being misused for financial
abuse. 1. Source: Australian Bureau of Statistics, describing small business as those with less than 20
employees. 2. #1 market share in bonds and semis, #1 market share in investment grade corporate bonds,
=#1 market share in interest rate swaps, #1 market share in OIS, #1 market share in asset-backed bonds –
2023 Peter Lee Associates Fixed Income Survey, ranking against all banks. 3. Bloomberg Australian Bonds
League table (excluding self-led issuance), YTD as at 27 September 2024. CUSTOMER SPOTLIGHT:
SLOANEBUILT Sloanebuilt, based in Western Sydney, has been a leading manufacturer of heavy vehicle
trailers for more than three decades. CEO Fred Marano attributes the company’s success to two core
values: producing high-quality products and delivering first-class customer service. After visiting Sloanebuilt's
operations, Anthony Miller, Chief Executive of Business & Wealth (pictured), said: “It’s a real privilege for
Westpac to support a business like Sloanebuilt. They are a significant local employer in Western Sydney,
committed to training and hiring many apprentices. Their dedication to employees and contribution to
Australia’s manufacturing industry is truly commendable.”
FINANCIAL STATEMENTS EXHIBITS INDEX STRATEGIC REVIEW PERFORMANCE REVIEW
SHAREHOLDER INFORMATION 173 Protecting customers and preventing crime We play a critical role in
safeguarding customers from fraud, scams, cyber threats and financial crime. We have invested more than
$100 million in scam prevention initiatives over the past two years, contributing to a 29% reduction in
reported customer scam losses this year. Our fraud detection systems screen approximately 30 million
banking interactions daily, using a combination of Artificial Intelligence (AI) and human intelligence to spot
unusual activity and issue 24/7 customer alerts. We block payments to reported scam and fraud accounts
and work around-the-clock to detect and take down phishing websites and threats that target customers.
WESTPAC VERIFY Alerts customers when there is a potential account name mismatch when they’re adding
a new payee using a BSB and account number WESTPAC SAFERPAY Presents customers with a series of
questions in instances where a payment is considered a high risk of being a scam WESTPAC SAFECALL
Will provide customers with calls via the banking app that are Westpac branded, verified by Optus and show
a reason for the call Strengthening customer awareness As we intensify our efforts to safeguard customers,
we focus on keeping customers informed and equipped to protect themselves. Our Cyber Response
Playbook provides current scam information and videos. The Westpac banking app includes advanced
security features such as Security Wellbeing Check, Westpac Protect SMS code and biometric
authentication. We issue digital and social alerts on new scams and raise awareness through our Scam Spot
video series and actively participate in Scams Awareness Week. Supporting affected customers Fraud and
scams can have devastating effects on customers and businesses. Our Online Banking Security Guarantee1
and Fraud Money Back Guarantee1 provide peace of mind in certain situations. Whilst we make every effort
to retrieve funds sent to scams, this is unfortunately not always possible. We work closely with affected
customers and offer free supp
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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.