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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, 2025

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: 5.512% 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, 4.600% Notes due October 20, 2026, Floating Rate Notes due October 20, 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, 4.354% Notes due July 1, 2030, Floating Rate Notes due July 1, 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, 5.618% Subordinated Notes due November 20, 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 shares

3,420,353,305 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)

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 INDEX

ii

   

PERFORMANCE REVIEW

273

FINANCIAL REPORT

1

Group performance

274

Income statements

2

Segment reporting

279

Statements of comprehensive income

3

FINANCIAL STATEMENTS

287

Balance sheets

4

ADDITIONAL INFORMATION

289

Statements of changes in equity

5

Reading this report

290

Cash flow statements

7

Shareholder Information

302

Notes to the Financial Statements

8

Other Westpac Business Information

321

Statutory Statements

128

Glossary of Abbreviations and Defined Terms

324

EXHIBITS INDEX

136

STRATEGIC REVIEW

144

Strategic review

144

Corporate governance

188

Directors’ report

208

Remuneration Report

222

Risk factors

254

Information on Westpac

268

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 3. 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 3. Please consider those important disclaimers when reading the forward-looking statements in this Annual Report.

References to the 2025 Risk Factors are to the Risk factors section in this 2025 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 2025 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 advisers

Not applicable

Item 2.

Offer statistics and expected timetable

Not applicable

Item 3.

Key information

Capitalisation and indebtedness

Not applicable

Reasons for the offer and use of proceeds

Not applicable

Risk factors

254-267

Item 4.

Information on Westpac

History and development of Westpac

144-148

Business overview

144-148

Organisational structure

107-108

Property, plants and equipment

321

Item 4A.

Unresolved staff comments

Not applicable

Item 5.

Operating and financial review and prospects

Operating results

274-286

Liquidity and capital resources

102-105

Research and development, patents and licences, etc.

Not applicable

Trend information

274-286

Critical accounting estimates

24, 33, 83, 96

Item 6.

Directors, senior management and employees

Directors and senior management

208-215, 218-219

Compensation

111-115, 222-252

Board practices

188-207

Employees

276

Share ownership

121, 218-219, 302

Item 7.

Major shareholders and related party transactions

Major shareholders

302-307

Related party transactions

120-121

Interests of experts and counsel

Not applicable

iii

FORM 20-F CROSS-REFERENCE INDEX

20-F item number and description

Page

Item 8.

Financial information

Consolidated statements and other financial information

1-135

Significant changes

268-269

Item 9.

The offer and listing

Offer and listing details

Not applicable

Plan of distribution

Not applicable

Markets

Not applicable

Selling shareholders

Not applicable

Dilution

Not applicable

Expenses of the issue

Not applicable

Item 10.

Additional information

Share capital

Not applicable

Memorandum and articles of association

316-318

Material contracts

321

Exchange controls

312-313

Taxation

313-315

Dividends and paying agents

Not applicable

Statements by experts

Not applicable

Documents on display

318

Subsidiary information

Not applicable

Item 11.

Quantitative and qualitative disclosures about market risk

81-82

Item 12.

Description of securities other than equity securities

Debt securities

Not applicable

Warrants and rights

Not applicable

Other securities

Not applicable

American depositary shares

Not applicable

Part II

Item 13.

Defaults, dividend arrearages and delinquencies

Not applicable

Item 14.

Material modifications to the rights of security holders and use of proceeds

Not applicable

iv    WESTPAC GROUP 2025 ANNUAL REPORT

FORM 20-F CROSS-REFERENCE INDEX

20-F item number and description

Page

Item 15.

Controls and procedures

129, 323

Item 16A.

Audit committee financial expert

198

Item 16B.

Code of ethics

201-203

Item 16C.

Principal accountant fees and services, PCAOB ID: 1020; Auditor Remuneration

119, 205-207

Item 16D.

Exemptions from the Listing Standards for audit committees

Not applicable

Item 16E.

Purchases of equity securities by Westpac and affiliated purchasers

Not applicable

Item 16F.

Changes in Westpac’s certifying accountant

Not applicable

Item 16G.

Corporate governance

188

Item 16H.

Mine safety disclosure

Not applicable

Item 16I.

Disclosure regarding foreign jurisdictions that prevent inspections

Not applicable

Item 16J.

Insider trading policies

Not applicable

Item 16K.

Cybersecurity

272

Part III

Items 17. & 18.

Financial statements

1-135

Item 19.

Exhibits

136

Consolidated income statements for the years ended 30 September 2025, 2024 and 2023

2

Consolidated balance sheets as at 30 September 2025 and 2024

4

Consolidated statements of comprehensive income for the years ended 30 September 2025, 2024 and 2023

3

Consolidated statements of cash flows for the years ended 30 September 2025, 2024 and 2023

7

Notes to the financial statements

8-124

Management’s report on the internal control over financial reporting

129

Report of independent registered public accounting firm

130-133

Item 1402: Distribution of assets, liabilities and stockholders’ equity; interest rates and interest differential

Average balance sheets

17-18

Analysis of net interest earnings

16, 274-275, 284

Interest rate and interest differential analysis

16-20, 274-275, 284

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 securities

63

Calculation of weighted average yield; tax-exempt obligations

63

Item 1404: Loan Portfolio

Maturity and interest rate profile of loan portfolio

32

Item 1405: Allowances for Credit Losses

Credit ratios and material changes

33-43

Allocation of the allowance for credit losses

33-43

Item 1406: Deposits

Deposits by category

52-53

Uninsured deposits

52-53

Time deposits

52-53

vi    WESTPAC GROUP 2025 ANNUAL REPORT

This page has been intentionally left blank.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

1

FINANCIAL
REPORT

Income statements
Statements of comprehensive income

INTANGIBLE ASSETS, PROVISIONS, COMMITMENTS AND CONTINGENCIES

Balance sheets

Note 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 preparation

Note 26.

Shareholders’ equity

Note 27.

Capital adequacy

FINANCIAL PERFORMANCE

Note 28.

Dividends

Note 2.

Segment reporting

Note 3.

Net interest income and average balance sheet and interest rates

GROUP STRUCTURE

Note 4.

Non-interest income

Note 29.

Investments in subsidiaries and associates

Note 5.

Operating expenses

Note 30.

Structured entities

Note 6.

Impairment charges

Note 7.

Income tax

OTHER

Note 8.

Earnings per share

Note 31.

Share-based payments

Note 32.

Superannuation commitments

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Note 33.

Auditor’s remuneration

Note 34.

Related party disclosures

Lending and credit risk

Note 35.

Notes to the cash flow statements

Note 9.

Loans

Note 36.

Subsequent events

Note 10.

Provision for expected credit losses

Note 11.

Credit risk management

CONSOLIDATED ENTITY DISCLOSURE STATEMENT

Deposits and other funding arrangements

STATUTORY STATEMENTS

Note 12.

Deposits and other borrowings

Directors’ declaration

Note 13.

Debt issues

Management’s report on internal control over financial reporting

Note 14.

Loan capital

Report of Independent Registered Public Accounting Firm

Note 15.

Securitisation, covered bonds and other transferred assets

Limitation on Independent Registered Public Accounting Firm’s Liability

Report of Predecessor Independent Registered Public Accounting Firm

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 2025 ANNUAL REPORT

INCOME STATEMENTS

for the years ended 30 September

Westpac Banking Corporation

Consolidated

Parent Entity

$m

Note

2025

2024

2023

2025

2024

Interest income:

Calculated using the effective interest method

    

3

    

53,054

    

52,739

    

42,515

    

48,851

    

48,358

Other

 

3

 

1,988

 

1,608

 

1,237

 

2,196

 

1,571

Total interest income

55,042

54,347

43,752

51,047

49,929

Interest expense

3

(35,662)

(35,594)

(25,435)

(34,949)

(34,492)

Net interest income

 

  

 

19,380

 

18,753

 

18,317

 

16,098

 

15,437

Non-interest income

Net fees

 

4

 

1,732

 

1,672

 

1,645

 

1,543

 

1,494

Net wealth management

4

476

441

562

-

-

Trading

4

717

704

717

693

637

Other

4

79

18

404

1,546

1,851

Total non-interest income

3,004

2,835

3,328

3,782

3,982

Net operating income

 

  

 

22,384

 

21,588

 

21,645

 

19,880

 

19,419

Operating expenses

 

5

 

(11,916)

 

(10,944)

 

(10,692)

 

(10,455)

 

(9,728)

Impairment (charges)/benefits

 

6

 

(424)

 

(537)

 

(648)

 

(440)

 

(475)

Profit before income tax expense

 

  

 

10,044

 

10,107

 

10,305

 

8,985

 

9,216

Income tax expense

 

7

 

(3,111)

 

(3,117)

 

(3,104)

 

(2,489)

 

(2,525)

Profit after income tax expense

 

  

 

6,933

 

6,990

 

7,201

 

6,496

 

6,691

Net profit attributable to non-controlling interests (NCI)

 

  

 

(17)

 

-

 

(6)

 

-

 

-

Net profit attributable to owners of Westpac Banking Corporation (WBC)

 

  

 

6,916

 

6,990

 

7,195

 

6,496

 

6,691

Earnings per share (cents)

 

  

 

 

 

 

  

 

  

Basic

 

8

 

201.9

 

200.9

 

205.3

 

Diluted

 

8

 

199.4

 

191.7

 

195.2

 

The above income statements should be read in conjunction with the accompanying notes.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

3

STATEMENTS OF COMPREHENSIVE INCOME

for the years ended 30 September

Westpac Banking Corporation

Consolidated

Parent Entity

$m

2025

2024

2023

2025

2024

Profit after income tax expense

    

6,933

    

6,990

    

7,201

    

6,496

    

6,691

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)

 

503

 

(588)

 

(201)

 

423

 

(813)

Cash flow hedging instruments

 

(233)

 

501

 

(635)

 

(154)

 

873

Transferred to income statement:

 

 

Debt securities measured at FVOCI

(19)

5

(125)

(19)

5

Cash flow hedging instruments

 

152

 

77

 

(309)

 

154

 

132

Loss allowance on debt securities measured at FVOCI

 

-

 

1

 

1

 

(1)

 

1

Exchange differences on translation of foreign operations (net of associated hedges)

(254)

(300)

367

31

(134)

Income tax on items taken to or transferred from equity:

Debt securities measured at FVOCI

 

(141)

 

179

 

98

 

(118)

 

242

Cash flow hedging instruments

 

22

 

(182)

 

283

 

-

 

(301)

Items that will not be reclassified subsequently to profit or loss

 

 

Gains/(losses) on equity securities measured at FVOCI (net of tax)

 

24

 

1

 

(10)

 

9

 

(3)

Own credit adjustment on financial liabilities designated at fair value (net of tax)

 

(21)

 

13

 

(21)

 

(21)

 

13

Remeasurement of defined benefit obligation recognised in equity (net of tax)

10

(14)

(105)

9

(12)

Net other comprehensive income/(expense) (net of tax)

 

43

 

(307)

 

(657)

 

313

 

3

Total comprehensive income

 

6,976

 

6,683

 

6,544

 

6,809

 

6,694

Attributable to:

 

 

 

 

 

Owners of WBC

 

6,974

 

6,685

 

6,536

 

6,809

 

6,694

NCI

 

2

 

(2)

 

8

 

-

 

-

Total comprehensive income

 

6,976

 

6,683

 

6,544

 

6,809

 

6,694

The above statements of comprehensive income should be read in conjunction with the accompanying notes.

4    WESTPAC GROUP 2025 ANNUAL REPORT

BALANCE SHEETS

as at 30 September

Westpac Banking Corporation

Consolidated

Parent Entity

$m

Note

2025

2024

2025

2024

Assets

    

  

    

  

    

  

    

  

    

  

Cash and balances with central banks

 

35

 

50,430

 

65,667

 

44,782

 

58,400

Collateral paid

 

 

4,590

 

6,269

 

4,562

 

6,199

Trading securities and financial assets measured at fair value through income statement (FVIS)

 

16

 

55,841

 

49,228

 

53,626

 

47,014

Derivative financial instruments

 

20

 

18,464

 

24,109

 

17,534

 

23,902

Investment securities

17

117,541

103,885

109,100

95,623

Loans

 

9

 

851,853

 

806,767

 

755,112

 

710,043

Other financial assets

 

18

 

10,766

 

5,456

 

10,126

 

4,951

Due from subsidiaries

 

  

 

-

 

-

 

48,830

 

52,339

Investment in subsidiaries

 

  

 

-

 

-

 

8,567

 

9,095

Property and equipment

 

  

 

2,266

 

2,251

 

1,805

 

1,804

Tax assets

 

7

 

2,078

 

2,160

 

1,843

 

1,896

Intangible assets

 

24

 

10,465

 

10,746

 

8,918

 

9,131

Other assets

 

 

1,062

 

1,006

 

916

 

837

Total assets

 

  

 

1,125,356

 

1,077,544

 

1,065,721

 

1,021,234

Liabilities

 

  

 

 

 

  

 

  

Collateral received

 

 

3,187

 

3,078

 

2,364

 

2,935

Deposits and other borrowings

 

12

 

770,457

 

720,489

 

696,660

 

644,481

Other financial liabilities

 

19

 

41,488

 

38,077

 

38,935

 

33,917

Derivative financial instruments

 

20

 

20,630

 

30,974

 

20,492

 

30,795

Debt issues

 

13

 

171,404

 

169,284

 

142,622

 

143,882

Tax liabilities

 

7

 

137

 

569

 

61

 

408

Due to subsidiaries

 

  

 

-

 

-

 

52,566

 

55,722

Provisions

 

25

 

2,612

 

2,505

 

2,376

 

2,271

Other liabilities

 

 

2,378

 

2,633

 

1,854

 

2,065

Total liabilities excluding loan capital

 

  

 

1,012,293

 

967,609

 

957,930

 

916,476

Loan capital

 

14

 

39,970

 

37,883

 

38,891

 

36,770

Total liabilities

 

  

 

1,052,263

 

1,005,492

 

996,821

 

953,246

Net assets

 

  

 

73,093

 

72,052

 

68,900

 

67,988

Shareholders’ equity

 

  

 

 

 

 

Share capital:

 

  

 

  

 

  

 

  

 

  

Ordinary share capital

 

26

 

37,263

 

37,958

 

37,263

 

37,958

Treasury shares

 

26

 

(845)

 

(758)

 

(902)

 

(816)

Reserves

 

26

 

1,880

 

1,732

 

2,176

 

1,757

Retained profits

 

  

 

34,468

 

32,773

 

30,363

 

29,089

Total equity attributable to owners of WBC

 

  

 

72,766

 

71,705

 

68,900

 

67,988

NCI

 

26

 

327

 

347

 

-

 

-

Total shareholders’ equity and NCI

 

  

 

73,093

 

72,052

 

68,900

 

67,988

The above balance sheets should be read in conjunction with the accompanying notes.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

5

STATEMENTS OF CHANGES IN EQUITY

for the years ended 30 September

Westpac Banking Corporation

Total equity

Total

Share

attributable

shareholders’

Consolidated

capital

Reserves

Retained

to owners

NCI

equity

$m

    

(Note 26)

    

(Note 26)

    

profits

    

of WBC

    

(Note 26)

    

and NCI

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 sharesa

 

-

 

-

 

(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 sharesa

 

-

 

-

 

(5,652)

 

(5,652)

 

-

 

(5,652)

Share buybackb

(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

-

5

-

5

(30)

(25)

Preference shares issuedc

-

-

-

-

339

339

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

Profit after income tax expense

 

-

 

-

 

6,916

 

6,916

 

17

 

6,933

Net other comprehensive income/(expense)

 

-

 

69

 

(11)

 

58

 

(15)

 

43

Total comprehensive income/(expense)

 

-

 

69

 

6,905

 

6,974

 

2

 

6,976

Transactions in capacity as equity holders:

 

Dividends on ordinary sharesa

 

-

 

-

 

(5,215)

 

(5,215)

 

-

 

(5,215)

Share buybackb

(672)

-

-

(672)

-

(672)

Other equity movements:

 

Share-based payment arrangements

 

-

 

94

 

-

 

94

 

-

 

94

Purchase of shares

 

(23)

 

-

 

-

 

(23)

 

-

 

(23)

Net acquisition of treasury shares

 

(87)

 

-

 

-

 

(87)

 

-

 

(87)

Acquisition of minority interest

-

-

-

-

(4)

(4)

Other

 

-

 

(15)

 

5

 

(10)

 

(18)

 

(28)

Total contributions and distributions

 

(782)

 

79

 

(5,210)

 

(5,913)

 

(22)

 

(5,935)

Balance as at 30 September 2025

 

36,418

 

1,880

 

34,468

 

72,766

327

 

73,093

a.Relates to fully franked dividends at 30%:
- 2025: 2025 interim dividend of 76 cents per share ($2,601 million) and 2024 final dividend of 76 cents per share ($2,614 million);
- 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 millions) and 2022 final dividend of 64 cents per share ($2,240 million).
b.Westpac previously announced its intention to undertake a $3.5 billion on market buyback of WBC ordinary shares. During 2025, Westpac bought back and cancelled 21,058,056 ordinary shares ($ 672 million) at an average price of $31.93 (2024: 67,665,599 ordinary shares ($1,812 million) at an average price of $26.78).
c.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 2025 ANNUAL REPORT

STATEMENTS OF CHANGES IN EQUITY

for the years ended 30 September

Westpac Banking Corporation

Total equity

Share

attributable

Parent Entity

capital

Reserves

Retained

to owners

$m

    

(Note 26)

    

(Note 26)

    

profits

    

of WBC

Balance as at 30 September 2023

 

39,066

 

1,659

 

28,049

 

68,774

Profit after income tax expense

 

-

-

6,691

6,691

Net other comprehensive income/(expense)

 

-

2

1

3

Total comprehensive income/(expense)

 

-

2

6,692

6,694

Transactions in capacity as equity holders:

 

Dividends on ordinary sharesa

 

-

 

-

 

(5,652)

 

(5,652)

Share buybackb

(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

Profit after income tax expense

 

-

-

6,496

6,496

Net other comprehensive income/(expense)

 

-

325

(12)

313

Total comprehensive income/(expense)

 

-

325

6,484

6,809

Transactions in capacity as equity holders:

 

Dividends on ordinary sharesa

 

-

 

-

 

(5,215)

 

(5,215)

Share buybackb

(672)

-

-

(672)

Other equity movements:

 

Share-based payment arrangements

 

-

 

94

 

-

 

94

Purchase of shares

 

(23)

 

-

 

-

 

(23)

Net acquisition of treasury shares

 

(86)

 

-

 

-

 

(86)

Other

-

-

5

5

Total contributions and distributions

 

(781)

 

94

 

(5,210)

 

(5,897)

Balance as at 30 September 2025

 

36,361

 

2,176

 

30,363

 

68,900

a.

Relates to fully franked dividends at 30%:
- 2025: 2025 interim dividend of 76 cents per share ($2,601 million) and 2024 final dividend of 76 cents per share ($2,614 million); and
- 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).

b.

Westpac previously announced its intention to undertake a $3.5 billion on market buyback of WBC ordinary shares. During 2025, Westpac bought back and cancelled 21,058,056 ordinary shares ($672 million) at an average price of $31.93 (2024: 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

7

CASH FLOW STATEMENTS

for the years ended 30 September

Westpac Banking Corporation

Consolidated

Parent Entity

$m

    

Note

    

2025

    

2024

    

2023

    

2025

    

2024

Cash flows from operating activities

 

  

 

  

 

  

 

  

 

  

 

  

Interest received

 

 

53,888

 

52,515

 

41,970

 

50,015

 

48,242

Interest paid

 

  

 

(35,638)

 

(34,000)

 

(22,654)

 

(34,723)

 

(33,039)

Dividends received

 

  

 

2

 

3

 

1

 

987

 

1,285

Other non-interest income received

 

  

 

2,241

 

4,314

 

3,567

 

2,173

 

4,274

Operating expenses paid

 

  

 

(10,096)

 

(9,679)

 

(9,856)

 

(9,004)

 

(8,464)

Income tax paid

 

  

 

(3,532)

 

(3,369)

 

(2,439)

 

(3,047)

 

(2,871)

Cash flows from operating activities before changes in operating assets and liabilities

 

 

6,865

 

9,784

 

10,589

 

6,401

 

9,427

Net (increase)/decrease in:

 

  

 

 

 

  

 

 

Collateral paid

1,945

(2,097)

1,545

1,905

(2,057)

Trading securities and financial assets measured at FVIS

 

  

 

(6,107)

 

(18,994)

 

(4,524)

 

(6,054)

 

(19,452)

Derivative financial instruments

 

  

 

5,650

 

(836)

 

4,082

 

1,013

 

1,358

Loans

 

  

 

(50,182)

 

(35,083)

 

(27,270)

 

(45,997)

 

(32,528)

Other financial assets

 

  

 

(48)

 

(348)

 

128

 

(26)

 

(231)

Other assets

 

  

 

(29)

 

(34)

 

8

 

2

 

2

Net increase/(decrease) in:

 

  

 

 

 

 

 

Collateral received

 

  

 

(5)

 

(318)

 

(2,888)

 

(709)

 

(181)

Deposits and other borrowings

 

  

 

51,853

 

35,243

 

24,692

 

50,803

 

35,870

Other financial liabilities

 

  

 

(457)

 

(7,084)

 

(17,146)

 

873

 

(5,281)

Other liabilities

 

  

 

4

 

-

 

(12)

 

-

 

(9)

Net cash provided by/(used in) operating activities

 

35

 

9,489

 

(19,767)

 

(10,796)

 

8,211

 

(13,082)

Cash flows from investing activities

 

  

 

 

 

 

 

Proceeds from investment securities

 

  

 

63,356

 

47,624

 

36,480

 

61,168

 

40,089

Purchase of investment securities

(75,810)

(72,786)

(33,753)

(73,463)

(65,072)

Net movement in amounts due to/from controlled entities

 

 

-

 

-

 

-

 

3,797

 

(1,283)

Proceeds from disposal of controlled entities and other businesses, net of cash disposed

 

35

 

-

 

-

 

293

 

-

 

-

Purchase of controlled entities and other businesses

35

-

(30)

-

-

-

Net (increase)/decrease in investments in controlled entities

 

  

 

-

 

-

 

-

 

478

 

(254)

Purchase of associates

 

  

 

(10)

 

(4)

 

(1)

 

(10)

 

(3)

Proceeds from sale of loans portfolioa

1,418

-

-

1,414

-

Proceeds from disposal of property and equipment

33

46

72

15

37

Purchase of property and equipment

 

 

(371)

 

(235)

 

(238)

 

(259)

 

(168)

Purchase of intangible assets

(776)

(782)

(1,141)

(674)

(673)

Net cash provided by/(used in) investing activities

 

  

 

(12,160)

 

(26,167)

 

1,712

 

(7,534)

 

(27,327)

Cash flows from financing activities

 

  

 

  

 

  

 

  

 

  

 

  

Proceeds from debt issues (net of issue costs)

 

  

 

68,850

 

80,245

 

70,974

 

59,404

 

68,438

Redemption of debt issues

 

  

 

(76,010)

 

(67,100)

 

(62,596)

 

(68,590)

 

(58,931)

Payments for the principal portion of lease liabilities

(390)

(416)

(401)

(338)

(365)

Issue of loan capital (net of issue costs)

 

  

 

5,042

 

6,326

 

3,453

 

5,042

 

6,326

Redemption of loan capital

 

  

 

(4,122)

 

(1,957)

 

(1,171)

 

(4,127)

 

(1,951)

Payments for share buyback

(672)

(1,812)

-

(672)

(1,812)

Issue of perpetual preference shares (net of issue cost)

-

339

-

-

-

Purchase of shares relating to share-based payment arrangements

(23)

(56)

(32)

(23)

(56)

Net purchase of treasury shares (including RSP and EIP restricted shares)

 

  

 

(87)

 

(56)

 

(47)

 

(86)

 

(56)

Payment of dividends

 

  

 

(5,215)

 

(5,652)

 

(4,504)

 

(5,215)

 

(5,652)

Dividends paid to NCI

 

  

 

(17)

 

(4)

 

(21)

 

-

 

-

Purchase of shares from NCI

35

(4)

(25)

-

-

-

Net cash provided by/(used in) financing activities

 

  

 

(12,648)

 

9,832

 

5,655

 

(14,605)

 

5,941

Net increase/(decrease) in cash and balances with central banks

 

  

 

(15,319)

 

(36,102)

 

(3,429)

 

(13,928)

 

(34,468)

Effect of exchange rate changes on cash and balances with central banks

 

  

 

82

 

(753)

 

694

 

310

 

(598)

Cash and balances with central banks as at beginning of year

 

 

65,667

 

102,522

 

105,257

 

58,400

 

93,466

Cash and balances with central banks as at end of year

 

35

 

50,430

 

65,667

 

102,522

 

44,782

58,400

a.The sale of the auto finance loan portfolio to Resimac Asset Finance Pty Limited was completed on 1 March 2025. A loss on sale of $8 million is included in Net gain/(loss) on disposal of assets in Note 4.

The above cash flow statements should be read in conjunction with the accompanying notes.

8    WESTPAC GROUP 2025 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 2025, was authorised for issue by the Board of Directors on 2 November 2025. 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, derecognition, classification and measurement basis 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 Accounting 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.

Westpac has elected to apply ASIC Corporations (Parent Entity Financial Statements) Instrument 2021/195 and has presented both Parent Entity and Group financial statements in the financial report.

(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 2025

No new accounting standards have been adopted by the Group for the year ended 30 September 2025. There have been no amendments to existing accounting standards that have had a material impact to the Group or the Parent Entity.

FINANCIAL
REPORT

EXHIBITS INDEX

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REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

9

Note 1. Financial statements preparation (Continued)

(iv)

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.

(v)

Foreign currency translation

Functional and presentation 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.

(vi)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 2025 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 10         Provision for expected credit losses (ECL)

Note 22         Fair values of financial assets and financial liabilities

Note 25         Provisions, contingent liabilities, contingent assets and credit commitments

Geopolitical developments including in relation to international trade and tariff policies, global tensions and continuing global military conflict, have led to heightened uncertainty as to future economic forecasts and potential impacts on the Group and its customers. Responding to this heightened uncertainty, the Group has increased the weighting of the downside scenario used in the estimate of expected credit losses from 42.5% to 47.5% (refer to Note 10 for further details).

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 did not have a material impact on the judgements, assumptions and estimates for the year ended 30 September 2025. This conclusion also reflects that the most significant impacts of climate change are expected to mostly occur beyond the expected life of our exposures.

Key considerations in reaching this conclusion included assessing Westpac’s exposure to:

higher transition risk industries as a proportion of overall credit exposures; and
physical risks that may arise from changing weather patterns and extreme weather events.

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 modelling to assess these potential impacts.

Details of the provision for ECL, including overlays held in relation to climate-related risks, are provided in Note 10.

c.

Future developments

(i)

Accounting standards

AASB 9 Financial Instruments: Recognition and Measurement (AASB 9) became effective for the Group for the financial year ended 30 September 2019. When adopted, as permitted by the standard, the Group elected to continue to comply with the hedge accounting requirements under AASB 139. The Group intends to adopt the hedge accounting requirements of AASB 9 prospectively for the financial year beginning 1 October 2025. All the Group’s existing hedge accounting relationships will continue to qualify for hedge accounting. It is intended to introduce new hedge accounting relationships under AASB 9 for our foreign currency term funding over cross currency basis risk. This will result in associated costs of hedging being reflected in a new cost of hedging reserve (COHR) rather than through the income statement. The quantum of this impact will be based on the valuation of the derivatives at the time.

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.

FINANCIAL
REPORT

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PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

11

Note 1. Financial statements preparation (Continued)

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.

Westpac is continuing to assess the impact of adopting AASB 2024-2.

(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.

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 S1 is a voluntary standard and provides guidance on the application of AASB S2.

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 progress the implementation of AASB S2 which becomes effective for the Group for the 30 September 2026 year end.

12    WESTPAC GROUP 2025 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.

Internally, Westpac uses an adjusted AAS measure of performance which excludes Notable Items in assessing the financial performance of its segments.

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

The performance of each operating segment reflects internal charges, transfer pricing adjustments and revenue and expenses resulting from inter-segment transactions. These are eliminated on consolidation in the Group Businesses segment. Inter-segment pricing is determined on an arm’s length basis.

Notable Items presentation

In prior years, Segment information was presented with a separate line item for Notable Items impacting Operating income and Operating expense for each segments. To align with internal presentation in 2025, Segment results are presented excluding Notable Items, and reconciled at a Group level to the Statutory Profit. Accordingly, prior period presentations have been reclassified to reflect current 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 significant online capability supported by an extensive branch and ATM network, call centres and relationship bankers. Our operations comprise the following key segments:

Consumer provides 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 for customers generally up to $200 million in exposure, Wealth Management, Private Wealth and Westpac Pacific.
Institutional delivers a broad range of financial products and services to corporate, institutional and government customers.
New Zealand provides banking, and wealth products and services for consumer, business and institutional customers in New Zealand.
Group Businesses includes Treasury, Enterprise services and other costs not directly attributable to segments including Corporate Affairs, Finance and HR services, a portion of enterprise technology costs related to UNITE in prior periods, certain customer remediation expenses and enterprise provisions. It also includes Group-wide consolidation entries.

Changes in Segment Composition

In 2025, the following changes to Segment results were applied:

The merchants services business was transferred from Business & Wealth to Institutional given strategic alignment with the management of payments infrastructure;
The contribution from the auto finance portfolio, which was sold in March 2025, was transferred from Business & Wealth to Group Businesses; and
The realignment of Consumer, Business & Wealth and Institutional Human Resources and Finance function expenses to Group Businesses.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

13

Note 2.Segment reporting (Continued)

Results for 2025 reflect the new segment composition. As the impact of these changes on segment results were immaterial, comparatives were not revised.

The following tables present the segment results for Westpac.

Business &

New

Group

Notable

Income

$m

    

Consumer

    

Wealth

    

Institutional

    

Zealand (A$)

    

Businesses

    

Total

    

Items

    

Statement

2025

Net interest income

 

7,863

 

5,346

2,413

2,568

 

1,283

 

19,473

 

(93)

 

19,380

Net fee income

 

538

 

256

773

170

 

(5)

 

1,732

 

-

 

1,732

Net wealth management income

-

434

-

43

(1)

476

-

476

Trading income

10

67

577

37

13

704

13

717

Other income

13

7

45

(4)

18

79

-

79

Net operating income

 

8,424

 

6,110

3,808

2,814

 

1,308

 

22,464

 

(80)

 

22,384

Operating expenses

 

(4,932)

 

(2,727)

(1,647)

(1,342)

 

(1,268)

 

(11,916)

 

-

 

(11,916)

Pre-provision profit

 

3,492

 

3,383

2,161

1,472

 

40

 

10,548

 

(80)

 

10,468

Impairment (charges)/benefits

 

(217)

 

(245)

1

41

 

(4)

 

(424)

 

-

 

(424)

Profit before income tax expense

 

3,275

 

3,138

2,162

1,513

 

36

 

10,124

 

(80)

 

10,044

Income tax (expense)/benefit

 

(993)

 

(952)

(587)

(423)

 

(180)

 

(3,135)

 

24

(3,111)

Net profit attributable to NCI

 

-

 

-

-

-

 

(17)

 

(17)

 

-

 

(17)

Net profit attributable to owners of WBC (excluding Notable Items)

2,282

 

2,186

1,575

1,090

 

(161)

 

6,972

 

(56)

 

6,916

Notable Items (post-tax)

 

-

 

-

-

(3)

 

(53)

 

(56)

 

 

Net profit attributable to owners of WBC

2,282

2,186

1,575

1,087

(214)

6,916

Balance sheet

Loans

525,447

115,203

117,704

93,443

56

851,853

Deposits and other borrowings

366,299

152,312

131,379

72,806

47,661

770,457

2024

Net interest income

7,632

 

5,338

2,240

2,388

 

1,318

 

18,916

 

(163)

 

18,753

Net fee income

515

 

341

653

179

 

(16)

 

1,672

 

-

 

1,672

Net wealth management income

-

395

-

39

7

441

-

441

Trading income

-

57

635

40

(16)

716

(12)

704

Other income

13

5

(23)

(1)

24

18

-

18

Net operating income

 

8,160

 

6,136

3,505

2,645

 

1,317

 

21,763

 

(175)

 

21,588

Operating expenses

(4,787)

 

(2,626)

(1,465)

(1,262)

 

(804)

 

(10,944)

 

-

 

(10,944)

Pre-provision profit

3,373

 

3,510

2,040

1,383

 

513

 

10,819

 

(175)

 

10,644

Impairment (charges)/benefits

(248)

 

(142)

(120)

(25)

 

(2)

 

(537)

 

-

 

(537)

Profit before income tax expense

3,125

 

3,368

1,920

1,358

 

511

 

10,282

 

(175)

 

10,107

Income tax (expense)/benefit

(941)

 

(1,012)

(553)

(379)

 

(284)

 

(3,169)

 

52

(3,117)

Net profit attributable to NCI

-

 

-

-

-

 

-

 

-

 

-

 

-

Net profit attributable to owners of WBC (excluding Notable Items)

2,184

 

2,356

1,367

979

 

227

 

7,113

 

(123)

 

6,990

Notable Items (post-tax)

-

 

-

-

(6)

(117)

 

(123)

 

 

Net profit attributable to owners of WBC

2,184

2,356

1,367

973

110

6,990

Balance sheet

Loans

510,317

101,989

100,582

93,833

46

806,767

Deposits and other borrowings

334,462

144,289

119,795

74,912

47,031

720,489

14    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 2.Segment reporting (Continued)

Business &

New

Group

Notable

Income

$m

    

Consumer

    

Wealth

    

Institutional

    

Zealand (A$)

    

Businesses

    

Total

    

Items

    

Statement

2023

Net interest income

8,177

 

4,992

1,926

2,317

 

1,002

 

18,414

 

(97)

 

18,317

Net fee income

504

 

360

596

177

 

8

 

1,645

 

-

 

1,645

Net wealth management income

-

425

-

33

114

572

(10)

562

Trading income

-

47

692

33

(22)

750

(33)

717

Other income

20

12

79

(3)

53

161

243

404

Net operating income

8,701

 

5,836

3,293

2,557

 

1,155

21,542

 

103

 

21,645

Operating expenses

 

(4,533)

 

(2,459)

(1,316)

(1,186)

 

(738)

 

(10,232)

 

(460)

 

(10,692)

Pre-provision profit

4,168

 

3,377

1,977

1,371

417

11,310

(357)

10,953

Impairment (charges)/benefits

(179)

(257)

(87)

(124)

 

(1)

 

(648)

 

-

 

(648)

Profit before income tax expense

3,989

 

3,120

1,890

1,247

 

416

 

10,662

 

(357)

 

10,305

Income tax (expense)/benefit

 

(1,196)

 

(922)

(543)

(352)

 

(275)

 

(3,288)

 

184

 

(3,104)

Net profit attributable to NCI

-

 

(5)

-

-

 

(1)

 

(6)

 

-

 

(6)

Net profit attributable to owners of WBC (excluding Notable Items)

2,793

 

2,193

1,347

895

 

140

 

7,368

(173)

7,195

Notable Items (post-tax)

 

(148)

(107)

(10)

(7)

99

 

(173)

 

 

Net profit attributable to owners of WBC

2,645

2,086

1,337

888

239

7,195

Balance sheet

Loans

492,716

95,548

92,568

92,488

(66)

773,254

Deposits and other borrowings

308,342

140,536

116,052

76,544

46,694

688,168

Notable Items after tax

$m

    

2025

    

2024

    

2023

Economic hedges

 

(43)

 

(128)

 

(92)

Hedge ineffectiveness

 

(13)

 

5

 

66

Hedging items

(56)

(123)

(26)

Provisions for remediation, litigation, fines and penalties

 

-

 

-

 

(176)

Asset sales and revaluations

 

-

 

-

 

256

The write-down of assets

 

-

 

-

 

(87)

Restructuring costs

 

-

 

-

 

(140)

Large items

-

-

(147)

Total Notable Items after tax

 

(56)

 

(123)

 

(173)

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

15

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:

2025

2024

2023

$m

%

$m

%

$m

%

Revenue

    

    

  

    

  

    

  

    

  

    

  

Australia

 

48,212

 

83.1

 

48,442

 

84.7

 

40,222

 

85.4

New Zealand

 

8,014

 

13.8

 

6,809

 

11.9

 

5,053

 

10.7

Other overseasa

 

1,820

 

3.1

 

1,931

 

3.4

 

1,805

 

3.9

Total

 

58,046

 

100.0

 

57,182

 

100.0

 

47,080

 

100.0

Non-current assetsb

 

Australia

 

11,322

 

89.0

 

11,573

 

89.0

 

11,782

 

89.7

New Zealand

 

1,252

 

9.8

 

1,319

 

10.1

 

1,282

 

9.8

Other overseasa

 

157

 

1.2

 

105

 

0.9

 

67

 

0.5

Total

 

12,731

 

100.0

 

12,997

 

100.0

 

13,131

 

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 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 3.Net interest income and average balance sheet and interest rates

Net interest income

Accounting policy

Interest income and interest expense for all interest earning financial assets and interest bearing financial liabilities at amortised cost or FVOCI, detailed within the table below, are recognised using the effective interest method. Net income from treasury’s interest rate and liquidity management activities 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.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2023

    

2025

    

2024

Interest income

 

  

 

  

 

  

 

  

 

  

Calculated using the effective interest method

Cash and balances with central banks

 

2,533

 

4,123

 

4,277

 

2,260

 

3,651

Collateral paid

 

468

 

647

 

581

 

467

 

646

Investment securities

 

4,587

 

3,494

 

2,037

 

4,274

 

3,254

Loans

 

45,451

 

44,460

 

35,582

 

39,617

 

38,217

Other financial assets

 

15

 

15

 

38

 

11

 

13

Due from subsidiaries

 

-

 

-

 

-

 

2,222

 

2,577

Total interest income calculated using the effective interest method

53,054

52,739

42,515

48,851

48,358

Other

Net ineffectiveness on qualifying hedges

(19)

8

94

(15)

16

Trading securities and financial assets measured at FVIS

2,007

1,600

1,143

1,911

1,474

Due from subsidiaries

 

-

 

-

 

-

 

300

 

81

Total other

 

1,988

 

1,608

 

1,237

 

2,196

 

1,571

Total interest income

 

55,042

 

54,347

 

43,752

 

51,047

 

49,929

Interest expense

 

 

  

 

  

 

 

  

Calculated using the effective interest method

Collateral received

(268)

(317)

(327)

(242)

(302)

Deposits and other borrowings

(21,121)

(21,268)

(14,993)

(18,743)

(18,190)

Debt Issues

(6,439)

(6,094)

(4,667)

(5,587)

(5,422)

Due to subsidiaries

-

-

-

(2,929)

(3,324)

Loan capital

(2,041)

(1,848)

(1,448)

(1,967)

(1,773)

Other financial liabilities

(334)

(394)

(516)

(246)

(177)

Total interest expense calculated using the effective interest method

(30,203)

(29,921)

(21,951)

(29,714)

(29,188)

Other

 

 

 

 

 

Deposits and other borrowings

 

(2,125)

 

(2,389)

 

(1,925)

 

(2,046)

 

(2,248)

Trading liabilitiesa

 

(2,610)

 

(2,643)

 

(653)

 

(2,633)

 

(2,785)

Debt issues

 

(227)

 

(194)

 

(494)

 

(88)

 

(82)

Bank levy

 

(393)

 

(357)

 

(332)

 

(390)

 

(357)

Due to subsidiaries

 

-

 

-

 

-

 

2

 

242

Other interest expense

 

(104)

 

(90)

 

(80)

 

(80)

 

(74)

Total other

 

(5,459)

 

(5,673)

 

(3,484)

 

(5,235)

 

(5,304)

Total interest expense

 

(35,662)

 

(35,594)

 

(25,435)

 

(34,949)

 

(34,492)

Net interest income

 

19,380

 

18,753

 

18,317

 

16,098

 

15,437

a.

Includes net impact of Treasury balance sheet management activities.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

17

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.

2025

2024

2023

Average

Interest

Average

Average

Interest

Average

Average

Interest

Average

balance

income

rate

balance

income

rate

balance

income

rate

Consolidated

$m

$m

%

$m

$m

%

$m

$m

%

Assets

    

  

    

  

    

  

    

  

    

  

    

  

    

  

    

  

    

  

Interest earning assets

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Loans:

 

  

 

  

 

  

 

  

 

 

  

 

  

 

  

 

  

Australia

 

660,395

 

39,151

 

5.9

 

633,772

 

37,865

 

6.0

 

607,154

 

30,164

 

5.0

New Zealand

 

93,509

 

5,680

 

6.1

 

92,222

 

6,155

 

6.7

 

90,130

 

5,028

 

5.6

Other overseas

 

10,456

 

620

 

5.9

 

6,666

 

440

 

6.6

 

6,548

 

390

 

6.0

Housinga

Australia

445,860

25,527

5.7

439,121

24,982

5.7

424,427

19,640

4.6

New Zealand

61,975

3,564

5.8

60,810

3,561

5.9

59,319

2,702

4.6

Other overseas

374

16

4.3

407

17

4.2

468

18

3.8

Personal

Australia

9,450

969

10.3

10,684

1,039

9.7

11,954

1,001

8.4

New Zealand

1,061

101

9.5

1,063

97

9.1

1,094

102

9.3

Other overseas

7

1

14.3

7

1

14.3

7

1

14.3

Business

Australia

205,085

12,655

6.2

183,967

11,844

6.4

170,773

9,523

5.6

New Zealand

30,473

2,015

6.6

30,349

2,497

8.2

29,717

2,224

7.5

Other overseas

10,075

603

6.0

6,252

422

6.7

6,073

371

6.1

Trading securities and financial assets measured at FVIS:

Australia

 

38,878

 

1,615

 

4.2

 

28,605

 

1,223

 

4.3

 

23,486

 

843

 

3.6

New Zealand

 

5,279

 

217

 

4.1

 

4,718

 

251

 

5.3

 

3,959

 

201

 

5.1

Other overseas

 

4,229

 

175

 

4.1

 

3,027

 

126

 

4.2

 

2,641

 

99

 

3.7

Investment securities:

 

 

 

 

 

 

 

 

 

Australia

102,571

4,183

4.1

85,208

3,227

3.8

66,631

1,822

2.7

New Zealand

7,174

265

3.7

6,570

201

3.1

6,164

148

2.4

Other overseas

 

3,524

 

139

 

3.9

 

2,147

 

66

 

3.1

 

2,082

 

67

 

3.2

Other interest earning assets:b

 

 

 

 

 

 

 

 

 

Australia

 

54,359

 

2,091

 

3.8

 

79,226

 

3,340

 

4.2

 

96,291

 

3,424

 

3.6

New Zealand

 

7,176

 

271

 

3.8

 

8,636

 

465

 

5.4

 

10,496

 

496

 

4.7

Other overseas

 

15,306

635

 

4.1

 

19,258

988

 

5.1

 

24,867

1,070

 

4.3

Total interest earning assets and interest income

 

1,002,856

 

55,042

 

5.5

 

970,055

 

54,347

 

5.6

 

940,449

 

43,752

 

4.7

Non-interest earning assets

 

 

Derivative financial instruments

 

24,885

 

 

16,786

 

 

23,423

 

All other assetsa,c

 

83,338

 

 

70,468

 

 

59,356

 

Total non-interest earning assets

 

108,223

 

 

87,254

 

 

82,779

 

Total assets

 

1,111,079

 

 

1,057,309

 

 

1,023,228

 

a.

Certain portions of loans are non-interest earning and are presented in All other assets. The non-interest earning portion represents the impact of mortgage offset deposits which are taken into consideration when calculating interest charged on loans.

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 $65,482 million (2024: $57,028 million, 2023: $49,702 million).

18    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 3.Net interest income and average balance sheet and interest rates (Continued)

2025

2024

2023

Average

Interest

Average

Average

Interest

Average

Average

Interest

Average

balance

expense

rate

balance

expense

rate

balance

expense

rate

Consolidated

$m

$m

%

$m

$m

%

$m

$m

%

Liabilities

    

  

    

  

    

  

    

  

    

  

    

  

    

  

    

  

    

  

Interest bearing liabilities

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Deposits and other borrowings:

 

 

 

 

 

 

 

 

 

Australia

 

513,451

 

19,865

 

3.9

 

489,693

 

19,413

 

4.0

 

460,149

 

13,544

 

2.9

New Zealand

 

65,233

 

2,454

 

3.8

 

65,070

 

3,220

 

4.9

63,760

 

2,464

 

3.9

Other overseas

 

20,705

 

927

 

4.5

 

19,356

 

1,024

 

5.3

 

20,132

 

910

 

4.5

Certificates of deposit

Australia

31,926

 

1,390

 

4.4

33,598

 

1,509

 

4.5

31,822

 

1,128

 

3.5

New Zealand

1,914

 

78

 

4.1

2,424

 

141

 

5.8

2,727

 

136

 

5.0

Other overseas

13,487

 

654

 

4.8

12,867

 

736

 

5.7

13,338

 

657

 

4.9

Transactions

Australia

119,953

 

4,051

 

3.4

122,235

 

4,112

 

3.4

129,760

 

3,083

 

2.4

New Zealand

9,136

 

242

 

2.6

8,836

 

404

 

4.6

8,647

 

322

 

3.7

Other overseas

853

 

13

 

1.5

823

 

13

 

1.6

868

 

7

 

0.8

Savings

Australia

209,812

 

7,513

 

3.6

189,405

 

7,007

 

3.7

164,800

 

4,620

 

2.8

New Zealand

18,540

 

396

 

2.1

18,465

 

635

 

3.4

19,376

 

537

 

2.8

Other overseas

1,126

 

26

 

2.3

996

 

25

 

2.5

1,035

 

25

 

2.4

Term

Australia

151,760

6,911

4.6

144,455

6,785

4.7

133,767

4,713

3.5

New Zealand

35,643

1,738

4.9

35,345

2,040

5.8

33,010

1,469

4.5

Other overseas

5,239

234

4.5

4,670

250

5.4

4,891

221

4.5

Repurchase agreements:

Australia

14,032

683

4.9

22,040

692

3.1

34,511

314

0.9

New Zealand

2,529

98

3.9

4,318

234

5.4

4,922

231

4.7

Other overseas

1,099

49

4.5

193

11

5.7

219

11

5.0

Loan capital:

 

 

 

 

 

 

 

 

 

Australia

 

40,130

 

1,869

 

4.7

 

37,229

 

1,676

 

4.5

 

31,895

 

1,313

 

4.1

New Zealand

 

3,021

 

172

 

5.7

 

2,983

 

172

 

5.8

 

2,489

 

135

 

5.4

Other interest bearing liabilities:a

 

 

 

 

 

 

 

 

 

Australia

 

171,977

 

8,481

 

4.9

 

164,722

 

8,370

 

5.1

154,859

 

5,990

 

3.9

New Zealand

 

22,636

 

1,078

 

4.8

 

20,134

 

768

 

3.8

 

19,986

 

464

 

2.3

Other overseas

 

594

 

(14)

 

(2.4)

 

953

 

14

 

1.5

 

1,854

 

59

 

3.2

Total interest bearing liabilities and interest expense

 

855,407

 

35,662

 

4.2

 

826,691

 

35,594

 

4.3

 

794,776

 

25,435

 

3.2

Non-interest bearing liabilities

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Deposits and other borrowings:

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Australia

 

134,244

 

  

 

  

 

119,408

 

  

 

  

 

117,538

 

  

 

  

New Zealand

 

10,755

 

  

 

  

 

10,891

 

  

 

  

 

12,213

 

  

 

  

Other overseas

 

1,202

 

  

 

  

 

1,333

 

  

 

  

 

1,292

 

  

 

  

Derivative financial instruments

 

26,751

 

  

 

  

 

21,413

 

  

 

  

 

26,353

 

  

 

  

All other liabilities

 

10,835

 

  

 

  

 

6,024

 

  

 

  

 

(218)

 

  

 

  

Total non-interest bearing liabilities

 

183,787

 

  

 

  

 

159,069

 

  

 

  

 

157,178

 

  

 

  

Total liabilities

 

1,039,194

 

  

 

  

 

985,760

 

  

 

  

 

951,954

 

  

 

  

Shareholders’ equity

 

71,544

 

  

 

  

 

71,493

 

  

 

  

 

71,229

 

  

 

  

NCI

 

341

 

  

 

  

 

56

 

  

 

  

 

45

 

  

 

  

Total equity

 

71,885

 

  

 

  

 

71,549

 

  

 

  

 

71,274

 

  

 

  

Total liabilities and equity

 

1,111,079

 

  

 

  

 

1,057,309

 

  

 

  

 

1,023,228

 

  

 

  

a.

Interest expense includes the net impact of Treasury balance sheet management activities and the bank levy.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

19

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. Changes due to volume and rates are calculated at the balance sheet line items. Disaggregation into product classification includes the impact of compositional changes (mix) from prior periods. As such, calculations at a product level will result in a different outcome and will not sum to the balance sheet line item.

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.

2025

2024

Consolidated

Change due to

Change due to

$m

    

Volume

    

Rate

    

Total

    

Volume

    

Rate

    

Total

Interest earning assets

 

  

 

  

 

  

 

  

 

  

 

  

Loans:

 

  

 

  

 

  

 

  

 

  

 

  

Australia

 

1,583

(297)

1,286

 

1,337

6,364

7,701

New Zealand

 

86

(561)

(475)

 

117

1,010

1,127

Other overseas

 

249

(69)

180

 

7

43

50

Housing

Australia

1,174

(629)

545

853

4,489

5,342

New Zealand

50

(47)

3

65

794

859

Other overseas

9

(10)

(1)

-

(1)

(1)

Personal

Australia

46

(116)

(70)

43

(5)

38

New Zealand

1

3

4

2

(7)

(5)

Other overseas

1

(1)

-

-

-

-

Business

Australia

363

448

811

441

1,880

2,321

New Zealand

35

(517)

(482)

50

223

273

Other overseas

239

(58)

181

7

44

51

Trading securities and financial assets measured at FVIS:

 

 

Australia

 

448

(56)

392

 

185

195

380

New Zealand

 

30

(64)

(34)

 

38

12

50

Other overseas

 

50

(1)

49

 

15

12

27

Investment securities:

 

 

Australia

658

298

956

508

897

1,405

New Zealand

18

46

64

10

43

53

Other overseas

 

42

31

73

 

2

(3)

(1)

Other interest earning assets:

 

 

Australia

 

(1,057)

(192)

(1,249)

 

(569)

485

(84)

New Zealand

 

(80)

(114)

(194)

 

(88)

57

(31)

Other overseas

 

(201)

(152)

(353)

 

(245)

163

(82)

Total change in interest income

 

1,826

(1,131)

695

 

1,317

9,278

10,595

20    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 3.Net interest income and average balance sheet and interest rates (Continued)

2025

2024

Consolidated

Change due to

Change due to

$m

    

Volume

    

Rate

    

Total

    

Volume

    

Rate

    

Total

Interest bearing liabilities

 

 

Deposits and other borrowings:

 

 

Australia

 

956

(504)

452

 

922

4,947

5,869

New Zealand

 

8

(774)

(766)

 

51

705

756

Other overseas

 

71

(168)

(97)

 

(35)

149

114

Certificates of deposits

Australia

54

(173)

(119)

128

253

381

New Zealand

-

(63)

(63)

3

2

5

Other overseas

51

(133)

(82)

(25)

104

79

Transactions

Australia

192

(253)

(61)

182

847

1,029

New Zealand

2

(164)

(162)

7

75

82

Other overseas

1

(1)

-

-

6

6

Savings

Australia

335

171

506

278

2,109

2,387

New Zealand

1

(240)

(239)

11

87

98

Other overseas

1

-

1

(1)

1

-

Term

Australia

375

(249)

126

334

1,738

2,072

New Zealand

5

(307)

(302)

30

541

571

Other overseas

18

(34)

(16)

(9)

38

29

Repurchase agreements:

Australia

(150)

141

(9)

134

244

378

New Zealand

(97)

(39)

(136)

(28)

31

3

Other overseas

51

(13)

38

(1)

1

-

Loan capital:

 

 

Australia

 

133

60

193

 

219

144

363

New Zealand

 

2

(2)

-

 

27

10

37

Other interest bearing liabilities:

 

 

Australia

 

322

(211)

111

 

350

2,030

2,380

New Zealand

 

78

232

310

 

3

301

304

Other overseas

 

(22)

(6)

(28)

 

(41)

(4)

(45)

Total change in interest expense

 

1,352

(1,284)

68

 

1,601

8,558

10,159

Change in net interest income:

 

 

Australia

 

371

267

638

 

(164)

576

412

New Zealand

 

63

(110)

(47)

 

24

75

99

Other overseas

 

40

(4)

36

 

(144)

69

(75)

Total change in net interest income

 

474

153

627

 

(284)

720

436

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

21

Note 4.Non-interest income

Accounting policy

Non-interest income includes net fee income, net wealth management, 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 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.

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.

22    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 4.Non-interest income (Continued)

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2023

    

2025

    

2024

Net fees

 

  

 

  

 

 

  

 

  

Facility fees

 

795

 

763

 

697

 

746

 

709

Transaction fees

 

1,126

 

1,118

 

1,146

 

944

 

935

Other non-risk fee income

 

195

 

135

 

154

 

138

 

125

Fee income

 

2,116

 

2,016

 

1,997

 

1,828

 

1,769

Credit card loyalty programs

 

(130)

 

(134)

 

(153)

 

(103)

 

(106)

Transaction fee related expenses

 

(254)

 

(210)

 

(199)

 

(182)

 

(169)

Fee expenses

 

(384)

 

(344)

 

(352)

 

(285)

 

(275)

Net fees

 

1,732

 

1,672

 

1,645

 

1,543

 

1,494

Net wealth management

 

476

441

562

-

-

Trading

 

717

 

704

 

717

 

693

 

637

Other

 

 

 

 

 

Dividends received from subsidiaries

 

-

 

-

 

-

 

986

 

1,284

Transactions with subsidiaries

 

-

 

-

 

-

 

453

 

564

Dividends received from other entities

 

2

 

3

 

1

 

1

 

1

Net gain/(loss) on disposal of assets

 

1

 

6

 

-

 

1

 

8

Net gain/(loss) on hedging of overseas operations

 

-

 

(1)

 

-

 

42

 

(4)

Net gain/(loss) on derivatives held for risk management purposesa

 

12

 

7

 

1

 

12

 

7

Net gain/(loss) on financial instruments measured at fair value

 

38

 

(24)

 

78

 

31

 

(32)

Net gain/(loss) on disposal of controlled entities and other businessesb

 

-

 

-

 

268

 

-

 

-

Other

 

26

 

27

 

56

 

20

 

23

Total other

79

18

404

1,546

1,851

Total non-interest income

3,004

2,835

3,328

3,782

3,982

a.

Income from derivatives held for risk management purposes reflects the impact of economic hedges of earnings.

b.

2023 included a $243 million gain on sale of Advance Asset Management Limited.

Deferred income in relation to the credit card loyalty programs for Westpac was $329 million as at 30 September 2025 (2024: $338 million, 2023: $324 million) and $37 million for the Parent Entity (2024: $35 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

23

Note 5.Operating expenses

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2023

    

2025

    

2024

Staff

 

  

 

  

 

  

 

 

  

Employee remuneration, entitlements and on-costs

 

5,626

 

5,160

 

5,254

 

4,977

 

4,540

Superannuation

 

597

 

551

 

521

 

538

 

491

Share-based payments

 

95

 

97

 

90

 

91

 

94

Restructuring costs

 

267

 

91

 

233

 

234

 

75

Total staff

 

6,585

 

5,899

 

6,098

 

5,840

 

5,200

Occupancy

 

 

 

 

 

Operating lease rentals

 

127

 

116

 

153

 

109

 

99

Depreciation and impairment of property and equipment

 

420

 

455

 

474

 

348

 

387

Other

 

105

 

129

 

159

 

97

 

120

Total occupancy

 

652

 

700

 

786

 

554

 

606

Technology

 

 

 

 

 

Amortisation and impairment of software assets

 

1,018

 

908

 

629

 

887

 

802

Depreciation and impairment of IT equipment

 

121

 

125

 

132

 

85

 

99

Technology services

 

1,052

 

871

 

735

 

942

 

770

Software maintenance and licences

 

869

 

770

 

603

 

736

 

653

Telecommunications

 

76

 

90

 

112

 

55

 

69

Total technology

 

3,136

 

2,764

 

2,211

 

2,705

2,393

Other

 

 

 

 

 

Professional and processing services

 

692

 

798

 

905

 

602

 

696

Postage and stationery

 

145

 

130

 

139

 

122

 

109

Advertising

 

220

 

176

 

169

 

194

 

150

Non-lending losses

 

147

 

111

 

65

 

102

 

88

Amortisation and impairment of other intangible assets and deferred expenditure

 

2

 

34

 

2

 

1

 

2

Impairment of investments in subsidiaries

 

-

 

-

 

-

 

10

 

117

Other expenses

 

337

 

332

 

317

 

325

 

367

Total other

 

1,543

 

1,581

 

1,597

 

1,356

 

1,529

Total operating expenses

 

11,916

 

10,944

 

10,692

 

10,455

 

9,728

24    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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

 

2025

    

2024

    

2023

    

2025

    

2024

Provisions raised/(released)

 

 

 

 

Performing

 

(36)

 

(150)

 

274

 

14

(142)

Non-performing

 

707

 

877

 

565

 

666

801

Recoveries

 

(247)

 

(190)

 

(191)

 

(240)

(184)

Impairment charges/(benefits)

 

424

 

537

 

648

 

440

475

of which relates to:

 

Loans and credit commitments

427

536

647

466

469

Debt securities at amortised cost

(3)

-

-

(2)

1

Debt securities at FVOCI

 

-

 

1

 

1

 

(1)

1

Due from subsidiaries

-

-

-

(23)

4

Impairment charges/(benefits)

 

424

537

648

440

475

Further details are included in Note 10.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

25

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.

26    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 7.Income tax (Continued)

Income tax expense

The following table reconciles income tax expense to the profit before income tax expense.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2023

    

2025

    

2024

Profit before income tax

 

10,044

 

10,107

 

10,305

 

8,985

 

9,216

Tax at the Australian company tax rate of 30%

 

3,013

 

3,032

 

3,092

 

2,696

 

2,765

The effect of amounts which are not deductible/(assessable) in calculating taxable income:

 

  

 

  

 

  

 

  

 

  

Hybrid capital distributions

 

129

 

139

 

117

 

129

 

139

Dividend adjustments

 

1

 

-

 

3

 

(295)

 

(379)

Other non-assessable items

 

(1)

 

(4)

 

(9)

 

(1)

 

(3)

Other non-deductible items

 

24

 

25

 

49

 

16

 

23

Adjustment for overseas tax rates

 

(15)

 

(27)

 

(25)

 

6

 

(4)

Income tax (over)/under provided in prior years

 

-

 

(20)

 

7

 

-

 

(13)

Other itemsa

 

(40)

 

(28)

 

(130)

 

(62)

 

(3)

Total income tax expense

 

3,111

 

3,117

 

3,104

 

2,489

 

2,525

Income tax expense comprises:

 

  

 

  

 

  

 

  

 

  

Current income tax

 

3,128

 

3,125

 

3,009

 

2,559

 

2,520

Movement in deferred tax

 

(17)

 

12

 

88

 

(70)

 

18

Income tax (over)/under provision in prior years

 

-

 

(20)

 

7

 

-

 

(13)

Total income tax expense

 

3,111

 

3,117

 

3,104

 

2,489

 

2,525

Total Australia

 

2,614

 

2,632

 

2,637

 

2,449

 

2,480

Total Overseas

 

497

 

485

 

467

 

40

 

45

Total income tax expense

 

3,111

 

3,117

 

3,104

 

2,489

 

2,525

a.

2023 included $86 million (Parent Entity: nil) related to the sale of Advance Asset Management Limited.

The effective tax rate was 30.97% in 2025 (2024: 30.84%, 2023: 30.12%).

International Tax Reform – Pillar Two Model Rules

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.

Pillar Two legislation has been enacted or substantively enacted in certain jurisdictions in which Westpac operates and became effective for the Group for the financial year beginning 1 October 2024.

The Group has recognised a current tax expense for Pillar Two top-up tax obligations of $7 million for the year ended 30 September 2025 which is included in the above total income tax expense. The Group has applied the mandatory temporary exception from recognising and disclosing Pillar Two deferred taxes under AASB 112.

Tax assets

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Current tax assets

20

13

17

13

Deferred tax assets

 

2,058

 

2,147

 

1,826

 

1,883

Total tax assets

 

2,078

 

2,160

 

1,843

 

1,896

Tax liabilities

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Current tax liabilities

 

137

 

569

 

61

 

408

Total tax liabilities

 

137

 

569

 

61

 

408

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

27

Note 7.Income tax (Continued)

Deferred tax assets

The balance comprises temporary differences attributable to:

Consolidated

Parent Entity

$m

2025

2024

2025

2024

Amounts recognised in the income statements and opening retained profits

    

  

    

  

    

  

    

  

Provision for ECL on loans and credit commitments

 

1,481

 

1,519

 

1,312

 

1,314

Provision for long service leave, annual leave and other employee benefits

422

407

405

388

Property and equipment

190

203

192

192

Other provisions

195

167

172

141

Lease liabilities

 

518

 

576

 

456

 

508

All other liabilities

 

188

 

222

 

173

 

205

Total amounts recognised in the income statements and opening retained profits

 

2,994

 

3,094

 

2,710

 

2,748

Amounts recognised directly in OCI

 

 

 

 

Investment securities

83

206

83

206

Total amounts recognised directly in OCI

 

83

 

206

 

83

 

206

Gross deferred tax assets

 

3,077

 

3,300

 

2,793

 

2,954

Set-off of deferred tax assets and deferred tax liabilities

 

(1,019)

 

(1,153)

 

(967)

 

(1,071)

Net deferred tax assets

 

2,058

 

2,147

 

1,826

 

1,883

Movements

 

 

 

 

Balance as at beginning of year

 

2,147

 

2,095

 

1,883

 

1,957

Recognised in the income statements

 

(100)

 

(68)

 

(38)

 

(74)

Recognised in OCI

 

(123)

 

119

 

(123)

 

119

Set-off of deferred tax assets and deferred tax liabilities

 

134

 

1

 

104

 

(119)

Balance as at end of year

 

2,058

 

2,147

 

1,826

 

1,883

Deferred tax liabilities

The balance comprises temporary differences attributable to:

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Amounts recognised in the income statements and opening retained profits

 

  

 

  

 

  

 

  

Finance lease transactions

 

18

 

112

 

12

 

106

Property and equipment

 

514

 

538

 

464

 

482

All other assets

 

233

 

232

 

236

 

232

Total amounts recognised in the income statements and opening retained profits

 

765

 

882

 

712

 

820

Amounts recognised directly in OCI

 

 

 

 

Cash flow hedges

211

233

214

214

Defined benefit

43

38

41

37

Total amounts recognised directly in OCI

254

271

255

251

Gross deferred tax liabilities

 

1,019

 

1,153

 

967

 

1,071

Set-off of deferred tax assets and deferred tax liabilities

 

(1,019)

 

(1,153)

 

(967)

 

(1,071)

Net deferred tax liabilities

 

-

 

-

 

-

 

-

Movements

 

Balance as at beginning of year

 

-

 

-

 

-

 

-

Recognised in the income statements

(117)

(56)

(108)

(56)

Recognised in OCI

(17)

55

4

175

Set-off of deferred tax assets and deferred tax liabilities

 

134

 

1

 

104

 

(119)

Balance as at end of year

 

-

 

-

 

-

 

-

28    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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 40%.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Deductible temporary differences

 

  

 

  

 

  

 

  

Tax losses on revenue account

414

422

414

422

Tax losses on capital account

 

424

 

265

 

380

 

150

Taxable temporary differences

 

  

 

  

 

  

 

  

Retained earnings of subsidiaries that would be subject to withholding tax if distributed

 

401

 

402

 

-

 

-

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.

2025

2024

2023

    

Basic

    

Diluted

    

Basic

    

Diluted

    

Basic

    

Diluted

Net profit attributable to owners of WBC ($m)

 

6,916

 

6,916

 

6,990

 

6,990

 

7,195

 

7,195

Adjustment for restricted share dividendsa

 

(6)

 

-

 

(7)

 

-

 

(5)

 

-

Adjustment for potential dilution:

 

 

 

 

 

 

Distributions to convertible loan capital holdersb

 

-

 

442

 

-

 

476

 

-

 

400

Adjusted net profit attributable to owners of WBC

 

6,910

 

7,358

 

6,983

 

7,466

 

7,190

 

7,595

Weighted average number of ordinary shares (# m)

 

 

 

 

 

 

Weighted average number of ordinary shares on issue

 

3,427

 

3,427

 

3,481

 

3,481

 

3,507

 

3,507

Treasury shares (including RSP and EIP restricted shares)a

 

(5)

 

(5)

 

(5)

 

(5)

 

(5)

 

(5)

Adjustment for potential dilution:

 

 

 

 

 

 

Share-based payments

 

-

 

7

 

-

 

6

 

-

 

4

Convertible loan capitalb

 

-

 

261

 

-

 

413

 

-

 

385

Adjusted weighted average number of ordinary shares

 

3,422

 

3,690

 

3,476

 

3,895

 

3,502

 

3,891

Earnings per ordinary share (cents)

 

201.9

 

199.4

 

200.9

 

191.7

 

205.3

 

195.2

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 date, where issuance occurred partway through the year.

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EXHIBIT 15.4

ADDITIONAL
INFORMATION

29

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).

Derecognition

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 derecognition of the original liability and the recognition of a new liability, with the difference in the respective carrying amounts recognised in the income statement.

The terms are deemed to be substantially different if the discounted present value of the 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.

30    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Continued)

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.

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.

FINANCIAL
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EXHIBIT 15.4

ADDITIONAL
INFORMATION

31

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.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Australia

  

  

Housing

518,654

503,271

518,654

503,270

Personal

9,043

10,174

9,043

10,174

Business

221,840

195,483

219,187

193,042

Total Australia

749,537

708,928

746,884

706,486

New Zealand

Housing

62,672

62,484

-

-

Personal

1,043

1,058

-

-

Business

30,554

31,055

436

306

Total New Zealand

94,269

94,597

436

306

Total other overseas

12,556

7,810

11,760

7,189

Gross loans

856,362

811,335

759,080

713,981

Provision for ECL on loans (refer to Note 10)

(4,509)

(4,568)

(3,968)

(3,938)

Total loansa,b

851,853

806,767

755,112

710,043

a.

Total loans included Australian securitised residential loans of $5,195 million (2024: $5,185 million) for the Group and $5,988 million (2024: $6,054 million) for the Parent Entity. The level of securitised loans excludes loans where Westpac is the holder of related debt securities.

b.

Total loans included assets pledged for the covered bond programs of $35,106 million (2024: $42,228 million) for the Group and $29,762 million (2024: $36,825 million) for the Parent Entity.

32    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 9.Loans (Continued)

The following table shows Westpac’s contractual maturity distribution of all loans as at 30 September 2025.

Consolidated

Over 1 year to

Over 5 years to

$m

    

Up to 1 year

    

5 years

    

15 years

    

Over 15 years

    

Total

Australia

Housing

4,669

952

21,853

491,180

518,654

Personal

6,145

2,254

644

-

9,043

Business

65,300

136,863

10,833

8,844

221,840

Total Australia

76,114

140,069

33,330

500,024

749,537

New Zealand

Housing

152

560

4,244

57,716

62,672

Personal

830

211

2

-

1,043

Business

20,059

10,275

218

2

30,554

Total New Zealand

21,041

11,046

4,464

57,718

94,269

Total other overseas

4,432

6,912

1,212

-

12,556

Total loans

101,587

158,027

39,006

557,742

856,362

The following table shows Westpac’s interest rate segmentation of loans maturing after one year as at 30 September 2025.

Loans at

Loans at

Consolidated

variable

fixed

$m

    

interest rates

    

interest rates

    

Total

Interest rate segmentation of loans maturing after one year

  

Australia

Housing

499,981

14,004

513,985

Personal

1,644

1,254

2,898

Business

152,954

3,586

156,540

Total Australia

654,579

18,844

673,423

New Zealand

Housing

7,686

54,834

62,520

Personal

213

-

213

Business

882

9,613

10,495

Total New Zealand

8,781

64,447

73,228

Total other overseas

7,751

373

8,124

Total loans maturing after one year

671,111

83,664

754,775

FINANCIAL
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EXHIBIT 15.4

ADDITIONAL
INFORMATION

33

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 or 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),

34    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 10.Provision for expected credit losses (Continued)

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.

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, providing a program-managed customer with a hardship arrangement or downgrading a transaction-managed exposure to a performing but weak credit risk grade of E (watchlist) or worse is generally treated as an indication of a SICR. Note 11.2 provides further details on the Group’s credit risk rating system.

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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

35

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.

    

2025

    

2024

    

Non-

    

    

    

    

Non-

    

Performing

Performing

Performing

Performing

$m

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Consolidated

  

 

  

 

  

 

  

Provision for ECL on loans

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Housing

 

186

 

804

 

615

 

1,605

 

162

 

879

 

639

 

1,680

Personal

 

59

 

179

 

84

 

322

 

61

 

207

 

99

 

367

Business

 

538

 

1,067

 

977

 

2,582

 

405

 

1,163

 

953

 

2,521

Total loans ECL provision (Note 9)

 

783

 

2,050

 

1,676

 

4,509

 

628

 

2,249

 

1,691

 

4,568

Provision for ECL on credit commitments

 

 

 

 

 

 

 

 

Housing

 

11

 

21

 

-

 

32

 

7

 

18

 

-

 

25

Personal

 

14

 

20

 

-

 

34

 

16

 

27

 

-

 

43

Business

 

132

 

241

 

30

 

403

 

110

 

300

 

38

 

448

Total credit commitments ECL provision (Note 25)

 

157

 

282

 

30

 

469

 

133

 

345

 

38

 

516

Total provision for ECL on loans and credit commitments

 

940

 

2,332

 

1,706

 

4,978

 

761

 

2,594

 

1,729

 

5,084

Presented as provision for ECL on:

Individually assessed provisions

 

-

 

-

 

539

 

539

 

-

 

-

 

536

 

536

Collectively assessed provisions

 

940

 

2,332

 

1,167

 

4,439

 

761

 

2,594

 

1,193

 

4,548

Total provision for ECL on loans and credit commitments

 

940

 

2,332

 

1,706

 

4,978

 

761

 

2,594

 

1,729

 

5,084

Gross loans

711,230

 

135,475

 

9,657

 

856,362

639,900

 

161,121

 

10,314

 

811,335

Credit commitments

200,393

 

20,306

 

470

 

221,169

181,275

 

30,395

 

441

 

212,111

Gross loans and credit commitments

 

911,623

 

155,781

 

10,127

 

1,077,531

 

821,175

 

191,516

 

10,755

 

1,023,446

Coverage ratio on loans (%)

0.11

1.51

17.36

0.53

0.10

1.40

16.40

0.56

Coverage ratio on loans and credit commitments (%)

 

0.10

 

1.50

 

16.85

 

0.46

 

0.09

 

1.35

 

16.08

 

0.50

36    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 10.Provision for expected credit losses (Continued)

    

2025

    

2024

    

    

Non-

    

    

    

    

Non-

    

Performing

Performing

Performing

Performing

$m

Stage 1

Stage 2

Stage 3

Total

Stage 1

Stage 2

Stage 3

Total

Parent Entity

  

 

  

 

  

 

  

Provision for ECL on loans

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Housing

 

155

 

712

 

540

 

1,407

 

136

 

743

 

575

 

1,454

Personal

 

52

 

159

 

77

 

288

 

54

 

184

 

92

 

330

Business

 

472

 

922

 

879

 

2,273

 

348

 

968

 

838

 

2,154

Total loans ECL provision (Note 9)

 

679

 

1,793

 

1,496

 

3,968

 

538

 

1,895

 

1,505

 

3,938

Provision for ECL on credit commitments

 

 

 

 

 

 

 

 

Housing

 

7

 

16

 

-

 

23

 

6

 

14

 

-

 

20

Personal

 

12

 

16

 

-

 

28

 

12

 

17

 

-

 

29

Business

 

128

 

223

 

28

 

379

 

105

 

283

 

27

 

415

Total credit commitments ECL provision (Note 25)

 

147

 

255

 

28

 

430

 

123

 

314

 

27

 

464

Total provision for ECL on loans and credit commitments

 

826

 

2,048

 

1,524

 

4,398

 

661

 

2,209

 

1,532

 

4,402

Presented as provision for ECL on:

Of which:

Individually assessed provisions

 

-

 

-

 

459

 

459

 

-

 

-

 

437

 

437

Collectively assessed provisions

 

826

 

2,048

 

1,065

 

3,939

 

661

 

2,209

 

1,095

 

3,965

Total provision for ECL on loans and credit commitments

 

826

 

2,048

 

1,524

 

4,398

 

661

 

2,209

 

1,532

 

4,402

Gross loans

628,492

121,947

8,641

759,080

564,844

139,828

9,309

713,981

Credit commitments

177,414

17,852

438

195,704

160,418

27,033

411

187,862

Gross loans and credit commitments

 

805,906

 

139,799

 

9,079

 

954,784

 

725,262

 

166,861

 

9,720

 

901,843

Coverage ratio on loans (%)

0.11

1.47

17.31

0.52

0.10

1.36

16.17

0.55

Coverage ratio on loans and credit commitments (%)

 

0.10

 

1.46

 

16.79

 

0.46

 

0.09

 

1.32

 

15.76

 

0.49

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

37

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” represents transfers between Stage 1, Stage 2 and Stage 3 prior to remeasurement 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 remeasurement of provision for ECL” 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” represents a reduction in the provision for ECL as a result of derecognition of exposures where there is no reasonable expectation of full recovery.

Consolidated

Parent Entity

Non-

Non-

 

Performing

Performing

 

Performing

Performing

$m

    

Stage 1

    

Stage 2

    

Stage 3

    

Total

    

Stage 1

    

Stage 2

    

Stage 3

    

Total

Balance as at 30 September 2023

 

706

2,808

1,416

4,930

600

2,419

1,248

4,267

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)

1,070

1,123

1,044

(1,016)

937

1,016

937

Write-offs

 

-

-

(620)

(620)

-

-

(573)

(573)

Exchange rate and other adjustments

 

(3)

(5)

56

48

(1)

-

56

55

Balance as at 30 September 2024

 

761

2,594

1,729

5,084

661

2,209

1,532

4,402

Transfers to Stage 1

 

1,386

(1,299)

(87)

-

1,214

(1,132)

(82)

-

Transfers to Stage 2

 

(201)

807

(606)

-

(174)

720

(546)

-

Transfers to Stage 3

 

(4)

(596)

600

-

(4)

(530)

534

-

Business activity during the year

 

306

(409)

(277)

(380)

266

(385)

(229)

(348)

Net remeasurement of provision for ECL

 

(1,304)

1,281

1,077

1,054

(1,137)

1,202

989

1,054

Write-offs

 

-

-

(763)

(763)

-

-

(705)

(705)

Exchange rate and other adjustments

 

(4)

(46)

33

(17)

-

(36)

31

(5)

Balance as at 30 September 2025

 

940

2,332

1,706

4,978

826

2,048

1,524

4,398

38    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 10.Provision for expected credit losses (Continued)

 

Consolidated

 Parent Entity

    

    

Non-

    

    

    

    

Non-

    

    

Performing

Performing

    

Performing

Performing

    

$m

Stage 1

Stage 2

Stage 3

Total

    

Stage 1

    

Stage 2

    

Stage 3

Total

Housing

Balance as at 30 September 2023

 

158

1,052

513

1,723

121

920

446

1,487

Transfers to Stage 1

 

351

(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 year

59

(131)

(158)

(230)

55

(123)

(143)

(211)

Net remeasurement of provision for ECL

 

(357)

209

396

248

(309)

174

357

222

Write-offs

 

-

-

(57)

(57)

-

-

(46)

(46)

Exchange rate and other adjustments

 

(1)

(2)

24

21

-

-

22

22

Balance as at 30 September 2024

 

169

897

639

1,705

142

757

575

1,474

Transfers to Stage 1

377

(367)

(10)

-

305

(295)

(10)

-

Transfers to Stage 2

(46)

445

(399)

-

(42)

398

(356)

-

Transfers to Stage 3

-

(173)

173

-

-

(152)

152

-

Business activity during the year

81

(177)

(170)

(266)

71

(160)

(141)

(230)

Net remeasurement of provision for ECL

(385)

197

409

221

(314)

180

342

208

Write-offs

-

-

(52)

(52)

-

-

(44)

(44)

Exchange rate and other adjustments

1

3

25

29

-

-

22

22

Balance as at 30 September 2025

 

197

825

615

1,637

162

728

540

1,430

Personal

 

Balance as at 30 September 2023

 

82

225

98

405

68

191

90

349

Transfers to Stage 1

358

(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 year

36

(9)

-

27

34

(8)

-

26

Net remeasurement of provision for ECL

(340)

405

295

360

(305)

372

283

350

Write-offs

-

-

(394)

(394)

-

-

(378)

(378)

Exchange rate and other adjustments

-

(1)

13

12

-

-

12

12

Balance as at 30 September 2024

 

77

234

99

410

66

201

92

359

Transfers to Stage 1

342

(340)

(2)

-

310

(309)

(1)

-

Transfers to Stage 2

(53)

92

(39)

-

(51)

85

(34)

-

Transfers to Stage 3

-

(127)

127

-

(1)

(119)

120

-

Business activity during the year

31

(15)

-

16

29

(15)

-

14

Net remeasurement of provision for ECL

(319)

368

360

409

(288)

337

347

396

Write-offs

-

-

(461)

(461)

-

-

(447)

(447)

Exchange rate and other adjustments

(5)

(13)

-

(18)

(1)

(5)

-

(6)

Balance as at 30 September 2025

 

73

199

84

356

64

175

77

316

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

39

Note 10.Provision for expected credit losses (Continued)

Consolidated

Parent Entity

Non-

Non-

 

Performing

Performing

 

Performing

Performing

$m

    

Stage 1

    

Stage 2

    

Stage 3

    

Total

    

Stage 1

    

Stage 2

    

Stage 3

    

Total

Business

Balance as at 30 September 2023

466

1,531

805

2,802

411

1,308

712

2,431

Transfers to Stage 1

513

(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 year

208

(188)

(135)

(115)

178

(177)

(100)

(99)

Net remeasurement of provision for ECL

(452)

456

432

436

(402)

391

376

365

Write-offs

-

-

(169)

(169)

-

-

(149)

(149)

Exchange rate and other adjustments

(2)

(2)

19

15

(1)

-

22

21

Balance as at 30 September 2024

 

515

1,463

991

2,969

453

1,251

865

2,569

Transfers to Stage 1

667

(592)

(75)

-

599

(528)

(71)

-

Transfers to Stage 2

(102)

270

(168)

-

(81)

237

(156)

-

Transfers to Stage 3

(4)

(296)

300

-

(3)

(259)

262

-

Business activity during the year

194

(217)

(107)

(130)

166

(210)

(88)

(132)

Net remeasurement of provision for ECL

(600)

716

308

424

(535)

685

300

450

Write-offs

-

-

(250)

(250)

-

-

(214)

(214)

Exchange rate and other adjustments

-

(36)

8

(28)

1

(31)

9

(21)

Balance as at 30 September 2025

 

670

1,308

1,007

2,985

600

1,145

907

2,652

Total provision for ECL

Consolidated

Parent Entity

$m

2025

2024

2025

2024

Provision for ECL on loans and credit commitments

4,978

5,084

4,398

4,402

Provision for ECL on debt securities at amortised costa

3

6

-

2

Provision for ECL on debt securities at FVOCIb

6

6

5

6

Total provision for ECL

4,987

5,096

4,403

4,410

a.

Provision for ECL on debt securities at amortised cost is presented as part of investments securities.

b.

Provision for ECL on debt securities at FVOCI forms part of equity reserves.

Reconciliation of impairment charges

Consolidated

Parent Entity  

$m

    

2025

    

2024

    

2025

    

2024

Loans and credit commitments:

 

  

 

  

 

  

 

  

Business activity during the year

 

(380)

 

(318)

 

(348)

 

(284)

Net remeasurement of the provision for ECL

 

1,054

 

1,044

 

1,054

 

937

Impairment charges for debt securities at amortised cost

 

(3)

 

-

 

(2)

 

1

Impairment charges for debt securities at FVOCI

 

-

 

1

 

(1)

 

1

Impairment on due from subsidiaries

-

-

(23)

4

Recoveries

 

(247)

 

(190)

 

(240)

 

(184)

Impairment charges/(benefits) (Note 6)

 

424

 

537

 

440

 

475

40    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 10.Provision for expected credit losses (Continued)

Total write-offs net of recoveries to average loans

Consolidated

%

    

2025

    

2024

Housing

0.01

0.01

Personal

 

2.66

 

2.21

Business

0.08

0.05

Total write-offs net of recoveries to average loans

 

0.06

 

0.05

Write-offs still under enforcement activity

Of the amount of current year write-offs, $664 million for the Group (2024: $596 million) and $609 million (2024: $549 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 individually assessed and collectively assessed provisions. Collectively assessed provisions are disaggregated into the modelled ECL provision 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.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Individually assessed provisions

539

536

459

437

Modelled provision for ECL on loans and credit commitments

 

4,201

 

4,369

 

3,691

 

3,768

Overlays

 

238

179

 

248

 

197

Total provision for ECL on loans and credit commitments

 

4,978

 

5,084

 

4,398

 

4,402

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. Overlays are used to capture potential risk and uncertainty in the portfolio that are not captured in the underlying modelled ECL. Changes in the modelled provision for ECL and overlays are reflected through the “net remeasurement of provision for ECL” line item.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

41

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 2025

30 September 2024

Annual GDP:

Australia

Forecast growth of
1.9% for calendar year 2025 and
2.4% for calendar year 2026

Forecast growth of
1.5% for calendar year 2024 and
2.4% for calendar year 2025

New Zealand

Forecast growth of
1.7% for calendar year 2025 and
3.1% for calendar year 2026

Forecast growth of
0.1% for calendar year 2024 and
2.0% for calendar year 2025

Commercial property index, Australia

Forecast price growth of
0.9% for calendar year 2025 and
3.8% for calendar year 2026

Forecast price contraction of
11.5% for calendar year 2024 and growth of
1.3% for calendar year 2025

Residential property prices:

Australia

Forecast price growth of
5.6% for calendar year 2025 and
9.0% for calendar year 2026

Forecast price growth of
5.7% for calendar year 2024 and
4.0% for calendar year 2025

New Zealand

Forecast price growth of
0.6% for calendar year 2025 and
5.4% for calendar year 2026

Forecast price growth of
0.7% for calendar year 2024 and
6.4% for calendar year 2025

Cash rate, Australia

Forecast cash rate of
3.35% at December 2025 and
2.85% at December 2026

Forecast cash rate of
4.35% at December 2024 and
3.35% at December 2025

Unemployment rate:

Australia

Forecast rate of
4.4% at December 2025 and
4.5% at December 2026

Forecast rate of
4.3% at December 2024 and
4.6% at December 2025

New Zealand

Forecast rate of
5.3% at December 2025 and
4.6% at December 2026

Forecast rate of
5.3% at December 2024 and
5.6% at December 2025

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.

42    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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

    

2025

    

2024

    

2025

    

2024

Reported probability-weighted ECL

 

4,978

 

5,084

 

4,398

 

4,402

100% base case ECL

 

3,031

 

3,559

 

2,673

 

3,089

100% downside ECL

 

7,143

 

7,195

 

6,316

 

6,221

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 $113 million (2024: $93 million) for Westpac and $97 million (2024: $81 million) for the Parent Entity. If 1% of Stage 2 loans and credit commitments (calculated on a lifetime ECL) were transferred to Stage 1 (calculated on a 12 month ECL), the provision for ECL on loans and credit commitments would decrease by $20 million (2024: $21 million) for Westpac and $17 million (2024: $18 million) for the Parent Entity. These estimates apply 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 2025, the following changes were applied to scenario weights to reflect greater uncertainty from geopolitical developments, including in relation to international trade and tariff policies, global tensions and continuing global military conflicts:

5.0% increase to downside; and
2.5% decrease to both the upside and base scenarios.

Scenario weightings (%)

    

2025

    

2024

Upside

 

2.5

 

5.0

Base

 

50.0

 

52.5

Downside

 

47.5

 

42.5

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 2025 were $238 million (2024: $179 million) for the Group and $248 million (2024: $197 million) for the Parent Entity, and comprise:

Climate-related risk: $71 million (2024: $70 million) for the Group and $71 million (2024: $70 million) for the Parent Entity for the expected impact of climate-related physical risk and transition risk to both retail and non-retail portfolios;
Non-retail portfolios: $159 million (2024: $32 million) for the Group and $146 million (2024: $21 million) for the Parent Entity. Current period overlays primarily relate to portfolio seasoning in business lending and geographical areas experiencing higher stress not related to modelled outcomes; and
Retail portfolios: $8 million (2024: $77 million) for the Group and $31 million (2024: $106 million) for the Parent Entity. Current period overlays relate to geographical areas experiencing higher stress and other risks not included in modelled outcomes.

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 $90.4 billion (2024: net increase of $37.4 billion) for Westpac and $80.6 billion (2024: net increase of $35.7 billion) for the Parent Entity, driven by new lending across the housing and business loan portfolios. This volume growth, along with a deterioration in scenario weights and introduction of certain overlays, drove an increase in stage 1 ECL.
Stage 2 credit exposures decreased by $35.7 billion (2024: increased by $0.1 billion) for Westpac and $27.1 billion (2024: increased by $1.6 billion) for the Parent Entity, driven by net runoff across housing and business portfolios

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

43

Note 10.Provision for expected credit losses (Continued)

and net transfers to stage 1 in response to improved model economics, partly offset by a deterioration in scenario weights and reassessment of overlays. Overall, this drove a net decrease in stage 2 ECL.

Stage 3 credit exposures decreased by $0.6 billion (2024: increased by $2.0 billion) for Westpac and $0.6 billion (2024: increased by $1.9 billion) for the Parent Entity. This was driven by a slowdown in new mortgage defaults and an increase in mortgages returning to performing, offset by certain downgrades in the business portfolio.

Note 11.Credit risk management

Note

Index

   

Note name

   

number

Credit risk

Credit risk management framework

11.1

The risk of financial loss where a customer or counterparty fails to meet their financial obligations to Westpac.

Credit risk ratings system

11.2

Credit risk concentrations and maximum exposure to credit risk

11.3

Credit quality of financial assets

11.4

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, Credit Risk Management Strategy, Credit Risk Appetite Statement, and a number of supporting policies that define roles and responsibilities, acceptable practices, limits and key controls.
The Credit Risk Management Framework describes Westpac’s approach to managing Credit Risk and to deliver fair customer outcomes. It includes the following components: business strategy, risk identification, risk appetite, stress testing and scenario analysis, people and infrastructure, controls, monitoring and reporting, and governance.
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 applies across the full credit risk ratings and risk estimates lifecycle (i.e. development, implementation, monitoring, validation, use, and independent review), helping us reliably assess the credit risk to which Westpac may be exposed. A senior management self-assessment is presented for discussion at BRiskC annually. An independent review is also completed annually.
Model Risk independently assesses and approves all credit risk models, and periodically reviews these in line with the Group Model Risk Policy and governance. Models are approved under delegated authority from the Deputy 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 are in place for the delegation of credit approval authorities and formal limits for the extension of credit.
Credit policies are established and maintained throughout Westpac covering the end-to-end credit lifecycle including origination, evaluation, approval, documentation, settlement and ongoing management of credit risks. Specific policies and limits are in place to manage concentration risks, including to large exposures, industry concentration, and country risk.
Climate change-related credit risks are considered in line with our Positions, Action Plans, and Sustainability Customer Requirements. Climate change risks are managed in accordance with the Sustainability Risk Management Framework (SRMF); Climate Risk Policy, 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 is a sub-committee of CREDCO.
Westpac’s ESG Credit Risk Policy details Westpac’s overall approach to managing ESG risks in the credit risk process for applicable customers and transactions in Business & Wealth and Institutional.

44    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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

Strong

A

Aaa – Aa3

AAA – AA–

B

A1 – A3

A+ – A–

C

Baa1 – Baa3

BBB+ – BBB–

Good/satisfactory

D

Ba1 – B1

BB+ – B+

Westpac Rating

Weak

E

Watchlist

F

Special Mention

G

Substandard/Default

H

Doubtful/Default

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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

45

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 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)

58% (2024: 47%) were issued by financial institutions for Westpac;

59% (2024: 48%) for the Parent Entity.

41% (2024: 50%) were issued by government or semi-government authorities for Westpac;

40% (2024: 49%) for the Parent Entity.

87% (2024: 82%) were held in Australia by Westpac;

90% (2024: 86%) by the Parent Entity.

Investment securities (Note 17)

14% (2024: 17%) were issued by financial institutions for Westpac;

14% (2024: 17%) for the Parent Entity.

85% (2024: 82%) were issued by government or semi-government authorities for Westpac;

86% (2024: 83%) for the Parent Entity.

85% (2024: 91%) were held in Australia by Westpac;

92% (2024: 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)

78% (2024: 81%) were issued by financial institutions for Westpac;

77% (2024: 81%) by the Parent Entity.

73% (2024: 90%) were held in Australia by Westpac;

76% (2024: 91%) by the Parent Entity.

46    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 11.Credit risk management (Continued)

2025

    

  

    

  

    

2024

    

  

Total all

Undrawn

Total all

Undrawn

other on

credit

other on

credit

Consolidated

balance

commit-

  

balance

commit-

  

$m

    

Loans

    

sheet

    

ments

    

Total

    

Loans

    

sheet

    

ments

    

Total

Australia

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Accommodation, cafes and restaurants

 

11,517

 

29

 

1,681

 

13,227

 

9,810

 

26

 

1,637

 

11,473

Agriculture, forestry and fishing

 

16,640

 

47

 

3,102

 

19,789

 

13,733

 

40

 

2,713

 

16,486

Construction

 

8,642

 

25

 

4,907

 

13,574

 

7,900

 

33

 

4,623

 

12,556

Finance and insurance

 

31,608

 

99,150

 

17,399

 

148,157

 

29,484

 

112,860

 

13,801

 

156,145

Government, administration and defence

 

690

 

108,516

 

1,679

 

110,885

 

811

 

99,830

 

1,558

 

102,199

Manufacturing

 

10,483

 

331

 

8,065

 

18,879

 

9,997

 

499

 

8,361

 

18,857

Mining

 

3,656

 

430

 

3,157

 

7,243

 

2,865

 

415

 

3,038

 

6,318

Property

 

66,631

 

516

 

15,006

 

82,153

 

60,767

 

546

 

13,771

 

75,084

Property services and business services

 

15,194

 

136

 

8,269

 

23,599

 

14,321

 

149

 

7,921

 

22,391

Services

 

15,215

 

101

 

8,426

 

23,742

 

13,015

 

108

 

8,369

 

21,492

Trade

 

17,384

 

241

 

9,288

 

26,913

 

15,159

 

366

 

9,933

 

25,458

Transport and storage

 

12,812

 

691

 

6,076

 

19,579

 

10,289

 

681

 

6,313

 

17,283

Utilities

 

10,587

 

754

 

8,561

 

19,902

 

8,175

 

983

 

8,373

 

17,531

Retail lending

 

527,181

 

995

 

82,940

 

611,116

 

511,025

 

1,056

 

84,006

 

596,087

Other

 

1,297

 

614

 

1,356

 

3,267

 

1,577

 

592

 

1,781

 

3,950

Total Australia

 

749,537

 

212,576

 

179,912

 

1,142,025

 

708,928

 

218,184

 

176,198

 

1,103,310

New Zealand

 

 

 

 

 

 

  

 

  

 

  

Accommodation, cafes and restaurants

 

305

 

3

 

31

 

339

 

313

 

3

 

32

 

348

Agriculture, forestry and fishing

 

7,838

 

47

 

565

 

8,450

 

8,352

 

41

 

573

 

8,966

Construction

 

508

 

1

 

528

 

1,037

 

385

 

1

 

566

 

952

Finance and insurance

 

4,066

 

13,101

 

1,951

 

19,118

 

4,757

 

11,364

 

1,838

 

17,959

Government, administration and defence

 

183

 

9,872

 

712

 

10,767

 

210

 

8,820

 

812

 

9,842

Manufacturing

 

1,846

 

100

 

1,424

 

3,370

 

1,785

 

58

 

1,444

 

3,287

Mining

 

91

 

1

 

124

 

216

 

151

 

2

 

125

 

278

Property

 

7,835

 

407

 

1,362

 

9,604

 

7,604

 

649

 

1,080

 

9,333

Property services and business services

 

972

 

54

 

497

 

1,523

 

962

 

121

 

357

 

1,440

Services

 

1,951

 

42

 

968

 

2,961

 

1,961

 

45

 

823

 

2,829

Trade

 

2,475

 

30

 

1,155

 

3,660

 

2,164

 

32

 

1,154

 

3,350

Transport and storage

 

581

 

55

 

521

 

1,157

 

661

 

105

 

362

 

1,128

Utilities

 

1,768

 

416

 

2,177

 

4,361

 

1,621

 

557

 

1,340

 

3,518

Retail lending

 

63,738

 

101

 

13,877

 

77,716

 

63,563

 

117

 

14,221

 

77,901

Other

 

112

 

99

 

146

 

357

 

108

 

77

 

123

 

308

Total New Zealand

 

94,269

 

24,329

 

26,038

 

144,636

 

94,597

 

21,992

 

24,850

 

141,439

Other overseas

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Accommodation, cafes and restaurants

 

76

 

-

 

15

 

91

 

85

 

-

 

11

 

96

Agriculture, forestry and fishing

 

2

 

-

 

1

 

3

 

2

 

-

 

1

 

3

Construction

 

35

 

-

 

82

 

117

 

34

 

-

 

73

 

107

Finance and insurance

 

6,056

 

9,000

 

5,669

 

20,725

 

3,656

 

9,447

 

4,964

 

18,067

Government, administration and defence

 

53

 

11,034

 

-

 

11,087

 

-

 

4,389

 

-

 

4,389

Manufacturing

 

1,498

 

4

 

2,313

 

3,815

 

958

 

3

 

1,500

 

2,461

Mining

 

38

 

-

 

961

 

999

 

28

 

-

 

931

 

959

Property

 

651

 

2

 

131

 

784

 

472

 

2

 

37

 

511

Property services and business services

 

962

 

30

 

936

 

1,928

 

503

 

35

 

797

 

1,335

Services

 

65

 

-

 

556

 

621

 

36

 

-

 

629

 

665

Trade

 

1,324

 

4

 

2,575

 

3,903

 

909

 

3

 

1,813

 

2,725

Transport and storage

 

741

 

17

 

422

 

1,180

 

527

 

15

 

108

 

650

Utilities

 

644

 

2

 

1,495

 

2,141

 

232

 

1

 

139

 

372

Retail lending

 

340

 

-

 

22

 

362

 

328

 

-

 

13

 

341

Other

 

71

 

161

 

41

 

273

 

40

 

97

 

47

 

184

Total other overseas

 

12,556

 

20,254

 

15,219

 

48,029

 

7,810

 

13,992

 

11,063

 

32,865

Total gross credit risk

 

856,362

 

257,159

 

221,169

 

1,334,690

 

811,335

 

254,168

 

212,111

 

1,277,614

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

47

Note 11.Credit risk management (Continued)

    

    

2025

    

  

    

  

    

2024

    

  

Total all

Undrawn

Total all

Undrawn

 

other on

credit

other on

credit

 

Parent Entity

balance

commit-

  

balance

commit-

  

$m

    

Loans

    

sheet

    

ments

    

Total

    

Loans

    

sheet

    

ments

    

Total

Australia

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Accommodation, cafes and restaurants

 

11,482

 

29

 

1,681

 

13,192

 

9,777

 

26

 

1,637

 

11,440

Agriculture, forestry and fishing

 

16,551

 

47

 

3,102

 

19,700

 

13,659

 

40

 

2,713

 

16,412

Construction

 

7,835

 

24

 

4,907

 

12,766

 

7,188

 

31

 

4,623

 

11,842

Finance and insurance

 

31,561

 

143,639

 

17,399

 

192,599

 

29,430

 

160,947

 

13,801

 

204,178

Government, administration and defence

 

689

 

108,518

 

1,679

 

110,886

 

809

 

99,831

 

1,558

 

102,198

Manufacturing

 

10,289

 

331

 

8,065

 

18,685

 

9,811

 

496

 

8,361

 

18,668

Mining

 

3,609

 

430

 

3,157

 

7,196

 

2,816

 

415

 

3,038

 

6,269

Property

 

66,610

 

518

 

15,006

 

82,134

 

60,743

 

548

 

13,771

 

75,062

Property services and business services

 

14,879

 

135

 

8,269

 

23,283

 

14,013

 

151

 

7,921

 

22,085

Services

 

14,985

 

101

 

8,426

 

23,512

 

12,802

 

107

 

8,369

 

21,278

Trade

 

17,179

 

241

 

9,288

 

26,708

 

14,962

 

365

 

9,933

 

25,260

Transport and storage

 

12,424

 

691

 

6,076

 

19,191

 

9,978

 

682

 

6,313

 

16,973

Utilities

 

10,556

 

755

 

8,561

 

19,872

 

8,145

 

983

 

8,373

 

17,501

Retail lending

 

527,180

 

995

 

82,940

 

611,115

 

511,023

 

1,056

 

84,006

 

596,085

Other

 

1,055

 

559

 

1,356

 

2,970

 

1,330

 

521

 

1,781

 

3,632

Total Australia

 

746,884

 

257,013

 

179,912

 

1,183,809

 

706,486

 

266,199

 

176,198

 

1,148,883

New Zealand

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Accommodation, cafes and restaurants

 

-

 

2

 

-

 

2

 

-

 

2

 

-

 

2

Agriculture, forestry and fishing

 

-

 

27

 

3

 

30

 

-

 

11

 

4

 

15

Construction

 

1

 

-

 

38

 

39

 

2

 

-

 

78

 

80

Finance and insurance

 

-

 

8,207

 

109

 

8,316

 

-

 

5,969

 

112

 

6,081

Government, administration and defence

 

-

 

2,529

 

8

 

2,537

 

-

 

2,087

 

2

 

2,089

Manufacturing

 

29

 

96

 

83

 

208

 

35

 

55

 

82

 

172

Mining

 

2

 

1

 

-

 

3

 

-

 

1

 

61

 

62

Property

 

-

 

82

 

-

 

82

 

-

 

141

 

-

 

141

Property services and business services

 

2

 

51

 

18

 

71

 

2

 

21

 

13

 

36

Services

 

-

 

37

 

8

 

45

 

-

 

39

 

6

 

45

Trade

 

397

 

28

 

237

 

662

 

266

 

28

 

223

 

517

Transport and storage

 

1

 

56

 

30

 

87

 

1

 

76

 

32

 

109

Utilities

 

4

 

300

 

141

 

445

 

-

 

327

 

94

 

421

Retail lending

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

Other

 

-

 

5

 

1

 

6

 

-

 

-

 

1

 

1

Total New Zealand

 

436

 

11,421

 

676

 

12,533

 

306

 

8,757

 

708

 

9,771

Other overseas

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Accommodation, cafes and restaurants

 

67

 

-

 

14

 

81

 

74

 

-

 

11

 

85

Agriculture, forestry and fishing

 

1

 

-

 

1

 

2

 

1

 

-

 

1

 

2

Construction

 

23

 

-

 

66

 

89

 

24

 

-

 

66

 

90

Finance and insurance

 

6,051

 

8,926

 

5,656

 

20,633

 

3,648

 

9,047

 

4,957

 

17,652

Government, administration and defence

 

53

 

10,051

 

-

 

10,104

 

-

 

3,288

 

-

 

3,288

Manufacturing

 

1,409

 

4

 

2,309

 

3,722

 

895

 

4

 

1,498

 

2,397

Mining

 

15

 

-

 

959

 

974

 

2

 

-

 

928

 

930

Property

 

378

 

1

 

117

 

496

 

241

 

1

 

16

 

258

Property services and business services

 

894

 

30

 

932

 

1,856

 

480

 

35

 

794

 

1,309

Services

 

41

 

-

 

554

 

595

 

17

 

-

 

626

 

643

Trade

 

1,121

 

3

 

2,543

 

3,667

 

768

 

3

 

1,787

 

2,558

Transport and storage

 

705

 

17

 

419

 

1,141

 

499

 

15

 

103

 

617

Utilities

 

639

 

2

 

1,495

 

2,136

 

228

 

1

 

139

 

368

Retail lending

 

308

 

-

 

22

 

330

 

282

 

-

 

10

 

292

Other

 

55

 

90

 

29

 

174

 

30

 

94

 

20

 

144

Total other overseas

 

11,760

 

19,124

 

15,116

 

46,000

 

7,189

 

12,488

 

10,956

 

30,633

Total gross credit risk

 

759,080

 

287,558

 

195,704

 

1,242,342

 

713,981

 

287,444

 

187,862

 

1,189,287

48    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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

    

2025

    

  

    

  

    

2024

    

  

$m

    

Stage 1

    

Stage 2

    

Stage 3

    

Totala

    

Stage 1

    

Stage 2

    

Stage 3

    

Totala

Loans - housing

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Strong

 

332,203

 

27,057

 

-

 

359,260

 

311,054

 

24,975

 

-

 

336,029

Good/satisfactory

 

159,998

 

40,537

 

-

 

200,535

 

159,016

 

45,242

 

-

 

204,258

Weak

 

1,939

 

13,973

 

5,959

 

21,871

 

2,512

 

16,389

 

6,893

 

25,794

Total loans - housing

 

494,140

 

81,567

 

5,959

 

581,666

 

472,582

 

86,606

 

6,893

 

566,081

Loans - personal

 

 

 

 

 

 

 

 

Strong

 

3,964

 

81

 

-

 

4,045

 

4,104

 

104

 

-

 

4,208

Good/satisfactory

 

4,561

 

744

 

-

 

5,305

 

5,254

 

825

 

-

 

6,079

Weak

 

127

 

465

 

152

 

744

 

191

 

570

 

190

 

951

Total loans - personal

 

8,652

 

1,290

 

152

 

10,094

 

9,549

 

1,499

 

190

 

11,238

Loans - business

 

 

 

 

 

 

 

 

Strong

 

108,843

 

9,453

 

-

 

118,296

 

81,696

 

19,387

 

-

 

101,083

Good/satisfactory

 

99,300

 

37,145

 

-

 

136,445

 

75,873

 

47,282

 

-

 

123,155

Weak

 

295

 

6,020

 

3,546

 

9,861

 

200

 

6,347

 

3,231

 

9,778

Total loans - business

 

208,438

 

52,618

 

3,546

 

264,602

 

157,769

 

73,016

 

3,231

 

234,016

Investment securities

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Strong

 

116,574

 

-

 

-

 

116,574

 

102,721

 

-

 

-

 

102,721

Good/satisfactory

 

-

 

-

 

-

 

-

 

-

 

71

 

-

 

71

Weak

 

-

 

494

 

-

 

494

 

-

 

649

 

-

 

649

Total investment securitiesb

 

116,574

 

494

 

-

 

117,068

 

102,721

 

720

 

-

 

103,441

All other financial assets

 

 

 

 

 

 

 

 

Strong

 

64,722

 

-

 

-

 

64,722

 

76,264

 

-

 

-

 

76,264

Good/satisfactory

 

848

 

-

 

-

 

848

 

899

 

-

 

-

 

899

Weak

 

216

 

-

 

-

 

216

 

229

 

-

 

-

 

229

Total all other financial assets

 

65,786

 

-

 

-

 

65,786

 

77,392

 

-

 

-

 

77,392

Undrawn credit commitments

 

 

 

 

 

 

 

 

Strong

 

154,443

 

8,981

 

-

 

163,424

 

140,786

 

14,341

 

-

 

155,127

Good/satisfactory

 

45,778

 

9,984

 

-

 

55,762

 

40,271

 

14,186

 

-

 

54,457

Weak

 

172

 

1,341

 

470

 

1,983

 

218

 

1,868

 

441

 

2,527

Total undrawn credit commitments

 

200,393

 

20,306

 

470

 

221,169

 

181,275

 

30,395

 

441

 

212,111

Total strong

 

780,749

 

45,572

 

-

 

826,321

 

716,625

 

58,807

 

-

 

775,432

Total good/satisfactory

 

310,485

 

88,410

 

-

 

398,895

 

281,313

 

107,606

 

-

 

388,919

Total weak

 

2,749

 

22,293

 

10,127

 

35,169

 

3,350

 

25,823

 

10,755

 

39,928

Total on and off-balance sheet

 

1,093,983

 

156,275

 

10,127

 

1,260,385

 

1,001,288

 

192,236

 

10,755

 

1,204,279

a.

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.

b.

Excludes equity instruments. Includes $976 million (2024: $1,172 million) debt securities at amortised cost, of which $482 million (2024: $452 million) were classified as strong, Nil (2024: $71 million) as good/satisfactory and $494 million (2024: $649 million) as weak.

Details of collateral held in support of these balances are provided in Note 11.5.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

49

Note 11.Credit risk management (Continued)

Parent Entity

2025

    

  

    

  

    

2024

    

  

$m

    

Stage 1

    

Stage 2

    

Stage 3

    

Totala

    

Stage 1

    

Stage 2

    

Stage 3

    

Totala

Loans - housing

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Strong

 

325,333

 

26,908

 

-

 

352,241

 

304,169

 

24,829

 

-

 

328,998

Good/satisfactory

 

112,497

 

34,157

 

-

 

146,654

 

117,339

 

33,284

 

-

 

150,623

Weak

 

1,661

 

13,153

 

5,253

 

20,067

 

2,233

 

15,471

 

6,235

 

23,939

Total loans - housing

 

439,491

 

74,218

 

5,253

 

518,962

 

423,741

 

73,584

 

6,235

 

503,560

Loans - personal

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Strong

 

3,588

 

70

 

-

 

3,658

 

3,721

 

92

 

-

 

3,813

Good/satisfactory

 

4,135

 

585

 

-

 

4,720

 

4,849

 

647

 

-

 

5,496

Weak

 

114

 

413

 

144

 

671

 

178

 

512

 

180

 

870

Total loans - personal

 

7,837

 

1,068

 

144

 

9,049

 

8,748

 

1,251

 

180

 

10,179

Loans - business

 

 

 

 

 

 

 

 

Strong

 

96,856

 

8,462

 

-

 

105,318

 

70,448

 

18,047

 

-

 

88,495

Good/satisfactory

 

84,140

 

33,297

 

-

 

117,437

 

61,784

 

42,132

 

-

 

103,916

Weak

 

168

 

4,902

 

3,244

 

8,314

 

123

 

4,814

 

2,894

 

7,831

Total loans - business

 

181,164

 

46,661

 

3,244

 

231,069

 

132,355

 

64,993

 

2,894

 

200,242

Investment securities

 

 

 

 

 

 

 

 

Strong

 

108,880

 

-

 

-

 

108,880

 

95,346

 

-

 

-

 

95,346

Good/satisfactory

 

-

 

-

 

-

 

-

 

-

 

71

 

-

 

71

Total investment securitiesb

 

108,880

 

-

 

-

 

108,880

 

95,346

 

71

 

-

 

95,417

All other financial assets

 

 

 

 

 

 

 

 

Strong

 

105,946

 

-

 

-

 

105,946

 

119,265

 

-

 

-

 

119,265

Good/satisfactory

 

708

 

-

 

-

 

708

 

731

 

-

 

-

 

731

Weak

 

58

 

-

 

-

 

58

 

71

 

-

 

-

 

71

Total all other financial assets

 

106,712

 

-

 

-

 

106,712

 

120,067

 

-

 

-

 

120,067

Undrawn credit commitments

 

 

 

 

 

 

 

 

Strong

 

141,517

 

8,385

 

-

 

149,902

 

129,379

 

13,659

 

-

 

143,038

Good/satisfactory

 

35,731

 

8,259

 

-

 

43,990

 

30,827

 

11,667

 

-

 

42,494

Weak

 

166

 

1,208

 

438

 

1,812

 

212

 

1,707

 

411

 

2,330

Total undrawn credit commitments

 

177,414

 

17,852

 

438

 

195,704

 

160,418

 

27,033

 

411

 

187,862

Total strong

 

782,120

 

43,825

 

-

 

825,945

 

722,328

 

56,627

 

-

 

778,955

Total good/satisfactory

 

237,211

 

76,298

 

-

 

313,509

 

215,530

 

87,801

 

-

 

303,331

Total weak

 

2,167

 

19,676

 

9,079

 

30,922

 

2,817

 

22,504

 

9,720

 

35,041

Total on and off-balance sheet

 

1,021,498

 

139,799

 

9,079

 

1,170,376

 

940,675

 

166,932

 

9,720

 

1,117,327

a.

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.

b.

Excludes equity instruments. Includes Nil (2024: $71 million) debt securities 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.

50    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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 personala

    

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 – business

Business loans may be secured, partially secured or unsecured. Security is typically taken by way of a mortgage over property and/or a general security agreement over business assets or other assets.

Other security such as guarantees, 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.

Offsetting

Creditworthy 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 clearing

Westpac 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

51

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 secured

Less than or equal to 100%

Partially secured

Greater 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:

2025

    

  

    

  

    

2024

    

  

Housing

Personal

Business

Housing

Personal

Business

  

 

loansa

loans

loans

Total

loansa

loans

loans

Total

Performing loans

 

  

 

  

 

  

 

  

 

  

 

  

 

  

  

Consolidated

 

  

 

  

 

  

 

  

 

  

 

  

 

  

  

Fully secured

 

100.0

 

10.2

 

67.3

 

88.9

 

100.0

 

9.7

 

68.1

89.6

Partially secured

 

-

 

4.6

 

14.7

 

4.6

 

-

 

11.1

 

14.2

4.2

Unsecured

 

-

 

85.2

 

18.0

 

6.5

 

-

 

79.2

 

17.7

6.2

Total

 

100.0

 

100.0

 

100.0

 

100.0

 

100.0

 

100.0

 

100.0

100.0

Parent Entity

 

 

 

 

 

 

 

Fully secured

 

100.0

 

11.3

 

67.5

 

89.1

 

100.0

 

10.7

 

68.3

89.9

Partially secured

 

-

 

5.2

 

14.6

 

4.5

 

-

 

12.2

 

14.1

4.1

Unsecured

 

-

 

83.5

 

17.9

 

6.4

 

-

 

77.1

 

17.6

6.0

Total

 

100.0

 

100.0

 

100.0

 

100.0

 

100.0

 

100.0

 

100.0

100.0

  

    

  

    

  

    

  

  

    

  

    

  

  

Non-performing loans

    

  

    

  

    

  

    

  

    

  

    

  

    

  

  

Consolidated

 

  

 

  

 

  

 

  

 

  

 

  

 

  

  

Fully secured

 

88.8

 

-

 

54.6

 

74.9

91.5

 

-

 

56.7

79.0

Partially secured

 

11.2

 

4.6

 

27.9

 

17.2

 

8.5

 

23.2

 

23.4

13.4

Unsecured

 

-

 

95.4

 

17.5

 

7.9

 

-

 

76.8

 

19.9

7.6

Total

 

100.0

 

100.0

 

100.0

 

100.0

 

100.0

 

100.0

 

100.0

100.0

Parent Entity

 

 

 

 

 

 

 

Fully secured

 

89.4

 

-

 

57.9

 

76.1

 

91.8

 

-

 

59.7

80.0

Partially secured

 

10.6

 

4.9

 

26.1

 

16.3

 

8.2

 

24.4

 

21.7

12.7

Unsecured

 

-

 

95.1

 

16.0

 

7.6

 

-

 

75.6

 

18.6

7.3

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

$m

2025

    

2024

2025

    

2024

Cash, primarily for derivatives

 

3,188

 

3,079

 

2,365

 

2,936

Securities under reverse repurchase agreementsa

 

28,269

 

17,950

 

28,269

 

17,950

Securities under derivativesa

 

679

 

112

 

452

 

112

Total other collateral held

 

32,136

 

21,141

 

31,086

 

20,998

a.Securities received as collateral are not recognised in the Group and Parent Entity’s balance sheet.

52    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Australia

 

 

 

 

Certificates of deposit

 

33,940

 

33,215

 

33,940

 

33,215

Non-interest bearing, repayable at call

 

140,842

 

128,705

 

140,842

 

128,705

Other interest bearing - transactions

 

120,830

 

110,393

 

120,830

 

110,393

Other interest bearing - savings

223,216

197,415

223,216

197,415

Other interest bearing term

 

157,675

 

157,282

 

157,675

 

157,282

Total Australia

 

676,503

 

627,010

 

676,503

 

627,010

New Zealand

 

 

 

 

Certificates of deposit

 

1,593

 

1,711

 

-

 

-

Non-interest bearing, repayable at call

 

10,700

 

10,287

 

-

 

-

Other interest bearing - transactions

 

7,884

 

8,815

 

-

 

-

Other interest bearing - savings

18,502

17,854

-

-

Other interest bearing term

 

34,128

 

36,245

 

-

 

-

Total New Zealand

 

72,807

 

74,912

 

-

 

-

Other overseas

 

 

 

 

Certificates of deposit

 

11,953

 

11,948

 

11,953

 

11,948

Non-interest bearing, repayable at call

 

1,147

 

1,193

 

546

 

503

Other interest bearing - transactions

 

910

 

736

 

729

 

532

Other interest bearing - savings

1,254

987

1,161

892

Other interest bearing term

 

5,883

 

3,703

 

5,768

 

3,596

Total other overseas

 

21,147

 

18,567

 

20,157

 

17,471

Total deposits and other borrowings

 

770,457

 

720,489

 

696,660

 

644,481

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

53

Note 12.Deposits and other borrowings (Continued)

Uninsured time deposits

Uninsured time deposits are the principal amount of 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 as at 30 September 2025:

Consolidated

Over 3 months to

Over 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

 

15,215

 

18,210

 

492

 

23

 

33,940

New Zealand

 

1,392

 

201

 

-

 

-

 

1,593

Other overseas

 

3,713

 

4,666

 

3,574

 

-

 

11,953

Total certificates of deposit in excess of insured amounts

 

20,320

 

23,077

 

4,066

 

23

 

47,486

Term deposits in excess of insured amounts

 

 

 

 

 

Australia

 

62,513

 

24,044

 

30,812

 

5,615

 

122,984

New Zealand

 

13,178

 

8,660

 

4,292

 

2,037

 

28,167

Other overseas

 

3,485

 

906

 

1,406

 

84

 

5,881

Total term deposits in excess of insured amounts

 

79,176

 

33,610

 

36,510

 

7,736

 

157,032

Interbank term deposits in excess of insured amountsa

 

 

 

 

 

Australia

 

1,939

 

2,326

 

1,795

 

7

 

6,067

Other overseas

 

270

 

-

-

 

27

 

297

Total interbank term deposits in excess of insured amounts

 

2,209

 

2,326

 

1,795

 

34

 

6,364

a.

Interbank term deposits are included in Note 19.

54    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Short-term debt

 

 

 

 

Own issuances

 

34,665

 

32,328

 

32,252

 

28,905

Total short-term debt

 

34,665

 

32,328

 

32,252

 

28,905

Long-term debt

 

 

 

 

Covered bonds

 

37,671

 

39,472

 

31,911

 

35,513

Senior

 

93,489

 

91,945

 

78,459

 

79,464

Securitisation

 

5,579

 

5,539

 

-

 

-

Total long-term debt

 

136,739

 

136,956

 

110,370

 

114,977

Total debt issues

 

171,404

 

169,284

 

142,622

 

143,882

Movement reconciliation

Balance as at beginning of year

169,284

156,573

143,882

134,957

Issuances

68,850

80,245

59,404

68,438

Maturities, repayments, buybacks and reductions

(76,010)

(67,100)

(68,590)

(58,931)

Total cash movements

(7,160)

13,145

(9,186)

9,507

FX translation impact

8,442

(5,798)

7,295

(5,167)

Fair value adjustments

(125)

283

(118)

275

Fair value hedge accounting adjustments

396

4,338

265

3,659

Other

567

743

484

651

Total non-cash movements

9,280

(434)

7,926

(582)

Balance as at end of year

171,404

169,284

142,622

143,882

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

55

Note 13.Debt issues (Continued)

Consolidated

    

    

$m

    

2025

    

2024

Short-term debt

 

 

Own issuances:

US commercial paper

 

25,958

 

22,507

EUR commercial paper

4,014

1,048

Senior Debt:

AUD

1,199

1,900

EUR

-

483

GBP

1,834

5,313

USD

152

-

Other

1,508

1,077

Total short-term debt

 

34,665

 

32,328

Long-term debt (by currency):

 

 

AUD

 

38,398

 

41,191

CHF

 

2,853

 

2,554

EUR

 

36,605

 

32,182

GBP

 

5,705

 

5,695

JPY

 

72

 

78

NZD

 

3,104

 

3,483

USD

 

48,583

 

50,258

Other

 

1,419

 

1,515

Total long-term debt

 

136,739

 

136,956

Westpac manages FX exposure from debt issuances as part of its hedging activities. Further details of Westpac’s hedge accounting are in Note 20.

56    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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.

Consolidated

Parent Entity 

$m

    

2025

    

2024

    

2025

    

2024

Additional Tier 1 (AT1) loan capital

 

 

Westpac capital notes

 

6,697

8,376

6,697

 

8,376

USD AT1 securities

 

1,838

1,728

1,838

 

1,728

Total AT1 loan capital

 

8,535

10,104

8,535

 

10,104

Tier 2 loan capital

 

 

Subordinated notes

 

31,435

27,779

30,356

 

26,666

Total Tier 2 loan capital

 

31,435

27,779

30,356

 

26,666

Total loan capital

 

39,970

37,883

38,891

 

36,770

Movement reconciliation

Balance as at beginning of year

37,883

33,176

36,770

32,085

Issuances

5,042

6,326

5,042

6,326

Maturities, repayments, buybacks and reductions

(4,122)

(1,957)

(4,127)

(1,951)

Total cash movements

920

4,369

915

4,375

FX translation impact

1,219

(1,416)

1,267

(1,401)

Fair value hedge accounting adjustments

(68)

1,714

(74)

1,675

Other

16

40

13

36

Total non-cash movements

1,167

338

1,206

310

Balance as at end of year

39,970

37,883

38,891

36,770

Additional Tier 1 loan capital

A summary of the key terms and common features of AT1 instruments is provided below.

Consolidated and Parent Entity

Potential scheduled

Optional

$m

    

Distribution or interest rate

    

conversion datea

    

redemption dateb

    

2025

    

2024

Westpac capital notes (WCN)

 

  

 

  

 

  

 

  

 

  

AUD 1,690 million WCN5

(3-month BBSW rate + 3.20% p.a.)

22 September 2027

22 September 2025c

-

1,688

 

x (1 - Australian corporate tax rate)

 

  

 

  

 

 

AUD 1,723 million WCN7

(3-month BBSW rate + 3.40% p.a.)

22 March 2029

22 March 2027

1,719

1,716

x (1 - Australian corporate tax rate)

AUD 1,750 million WCN8

(3-month BBSW rate + 2.90% p.a.)

21 June 2032

21 September 2029

1,742

1,740

x (1 - Australian corporate tax rate)

AUD 1,509 million WCN9

(3-month BBSW rate + 3.40% p.a.)

22 June 2031

22 September 2028

1,501

1,499

x (1 - Australian corporate tax rate)

AUD 1,750 million WCN10

(3-month BBSW rate + 3.10% p.a.)

22 June 2034

22 September 2031

1,735

1,733

x (1 - Australian corporate tax rate)

Total WCN

 

 

  

 

  

 

6,697

 

8,376

USD AT1 securities

 

  

 

  

 

  

 

 

USD 1,250 million USD AT1 securities

 

Fixed 5.00% p.a.d

 

n/a

 

21 September 2027

1,838

 

1,728

Total USD AT1 securities

 

  

 

  

 

  

 

1,838

 

1,728

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 22 September 2025, Westpac redeemed all Westpac Capital Notes 5 (WCN5) on issue.
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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

57

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 instrument1 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 basis2); 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 convert1, or may be required to convert1, 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.

58    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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 ratea

    

Maturity date

    

redemption dateb

    

2025

    

2024

Subordinated notes issued by Westpac Banking Corporation

 

  

 

  

 

  

 

  

USD 100 million

 

Fixed

 

23 February 2046

 

n/a

 

107

 

110

JPY 20,000 million

 

Fixed

 

19 May 2026

 

n/a

 

204

 

202

JPY 10,200 million

 

Fixed

 

2 June 2026

 

n/a

 

104

 

103

JPY 10,000 million

 

Fixed

 

9 June 2026

 

n/a

 

102

 

101

USD 1,500 million

 

Fixed

 

23 November 2031

 

23 November 2026

 

2,227

 

2,095

AUD 185 million

Fixed

24 January 2048

n/a

184

184

AUD 130 million

Fixed

2 March 2048

n/a

130

130

USD 1,000 million

Fixed

24 July 2039

n/a

1,205

1,196

USD 1,250 million

Fixed

24 July 2034

24 July 2029

1,782

1,686

USD 1,500 million

Fixed

4 February 2030

4 February 2025

-

2,141

USD 1,500 million

Fixed

15 November 2035

15 November 2030

1,978

1,854

USD 1,000 million

Fixed

16 November 2040

n/a

1,013

1,010

AUD 1,250 million

Floating

29 January 2031

29 January 2026

1,249

1,250

EUR 1,000 million

Fixed

13 May 2031

13 May 2026

1,753

1,544

USD 1,000 million

Fixed

18 November 2041

n/a

1,054

1,059

USD 1,250 million

Fixed

18 November 2036

18 November 2031

1,660

1,572

JPY 26,000 million

Fixed

8 June 2032

8 June 2027

262

261

USD 1,000 million

Fixed

10 August 2033

10 August 2032

1,425

1,368

SGD 450 million

Fixed

7 September 2032

7 September 2027

544

516

AUD 1,500 million

Floating

23 June 2033

23 June 2028

1,500

1,496

AUD 300 million

Fixed/Floating

23 June 2033

23 June 2028

299

300

AUD 1,100 million

Fixed/Floating

23 June 2038

23 June 2033

1,093

1,100

AUD 1,500 million

Fixed/Floating

15 November 2038

n/a

1,495

1,502

USD 750 million

Fixed

17 November 2033

n/a

1,177

1,148

AUD 650 million

Floating

3 April 2034

3 April 2029

648

649

AUD 600 million

Fixed/Floating

3 April 2034

3 April 2029

600

593

AUD 1,000 million

Floating

10 July 2034

10 July 2029

1,000

996

AUD 500 million

Fixed/Floating

10 July 2034

10 July 2029

500

500

USD 1,500 million

Fixed

20 November 2035

20 November 2034

2,318

-

AUD 850 million

Floating

12 February 2035

12 February 2030

843

-

AUD 400 million

Fixed/Floating

12 February 2035

12 February 2030

400

-

AUD 1,500 million

Fixed/Floating

4 June 2040

4 June 2035

1,500

-

Total subordinated notes issued by Westpac Banking Corporation

30,356

26,666

Subordinated notes issued by Westpac New Zealand Limitedc

NZD 600 million

Fixed/Floating

16 September 2032

16 September 2027

525

541

NZD 600 million

Fixed/Floating

14 February 2034

14 February 2029

554

572

Total subordinated notes issued by Westpac New Zealand Limited

1,079

1,113

Total subordinated notes

 

  

 

  

 

31,435

 

27,779

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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

59

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 derecognition of the assets in their entirety, partial derecognition or no derecognition of the assets subject to the transfer. For Westpac’s accounting policy on derecognition of financial assets refer to the Financial Assets and Financial Liabilities.

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. The Group transfers residential mortgages to these structured entities, however the Group retains the risks and rewards of the residential mortgages and continues to recognise the mortgages as financial assets.

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 $251 million (2024: $345 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. The Group retains the majority of the risks and rewards of the residential mortgages and continues to recognise the mortgages as financial assets. 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.

60    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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:

Carrying

Carrying

amount of

amount of

Fair value of

Fair value of

transferred

associated

transferred

transferred

Net fair

$m

    

assets

    

liabilities

    

assets

    

liabilities

    

value position

Consolidated

2025

Securitisationa

 

5,627

5,587

5,627

5,617

10

Covered bondsb

 

42,890

37,671

n/a

n/a

n/a

Repurchase agreements

 

15,230

14,664

n/a

n/a

n/a

Total

 

63,747

57,922

5,627

5,617

10

2024

Securitisationa

 

5,580

5,539

5,575

5,552

23

Covered bondsb

 

50,269

39,472

n/a

n/a

n/a

Repurchase agreements

 

19,938

18,848

n/a

n/a

n/a

Total

 

75,787

63,859

5,575

5,552

23

Parent Entity

2025

Securitisationa

 

6,420

6,380

6,421

6,410

11

Covered bondsb

 

36,264

31,911

n/a

n/a

n/a

Repurchase agreements

 

13,379

13,183

n/a

n/a

n/a

Total

 

56,063

51,474

6,421

6,410

11

2024

Securitisationa

 

6,449

6,407

6,443

6,420

23

Covered bondsb

 

43,337

35,512

n/a

n/a

n/a

Repurchase agreements

 

16,205

16,071

n/a

n/a

n/a

Total

 

65,991

57,990

6,443

6,420

23

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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

61

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 include portfolios of actively traded debt and equity instruments, pledged instruments and 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 portfolio that is measured at fair value.

Other financial assets measured at FVIS

Other financial assets measured at FVIS include:

Non-trading portfolio securities measured at fair value where this eliminates or significantly reduces an accounting mismatch, or they are part of a group of instruments that are 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).

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Trading securities

Government and semi-government securities

 

10,429

 

24,532

 

10,429

 

23,225

Other debt securities

 

4,124

 

5,958

 

4,124

 

5,089

Other

 

376

 

285

 

376

 

282

Total trading securities

14,929

30,775

14,929

28,596

Reverse repurchase agreements

 

28,304

 

17,990

 

28,304

 

17,990

Other financial assets measured at FVIS

Government and semi-government securities

11,681

-

10,250

-

Other debt securities

 

927

 

461

 

143

 

428

Equity securities

 

-

 

2

 

-

 

-

Total other financial assets measured at FVIS

12,608

463

10,393

428

Total trading securities and financial assets measured at FVIS

 

55,841

 

49,228

 

53,626

 

47,014

62    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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 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

Includes 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

$m

2025

    

2024

    

2025

    

2024

Investment securities

 

 

 

 

Investments securities measured at FVOCI

 

 

 

 

Government and semi-government debt securities

 

98,456

 

83,403

 

93,639

 

78,798

Other debt securities

 

17,636

 

18,866

 

15,241

 

16,548

Equity securities

 

476

 

450

 

220

 

208

Total investment securities measured at FVOCIa

 

116,568

 

102,719

 

109,100

 

95,554

Investment securities measured at amortised cost

 

 

 

 

Government and semi-government debt securities

 

976

 

1,172

 

-

 

71

Total investment securities measured at amortised cost

 

976

 

1,172

 

-

 

71

Provision for ECL on debt securities at amortised cost

 

(3)

 

(6)

 

-

 

(2)

Total net investment securities measured at amortised cost

 

973

 

1,166

 

-

 

69

Total investment securities

 

117,541

 

103,885

 

109,100

 

95,623

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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

63

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 2025. There are no tax-exempt securities.

Over 1

Over 5

No

Up to 1

year to 5

years to

Over 10

specific

Weighted

year

years

10 years

years

maturity

Total

average

2025

    

$m

    

%

    

$m

    

%

    

$m

    

%

    

$m

    

%

    

$m

    

%

    

$m

    

%

Carrying Amount

 

 

Government and semi-government securities

 

12,466

 

3.6

44,201

3.6

35,025

4.4

7,737

5.1

-

-

99,429

4.0

Other debt securities

 

4,702

 

4.8

12,934

5.0

-

-

-

-

-

-

17,636

4.9

Equity securities

 

-

 

-

-

-

-

-

-

-

476

-

476

-

Total by maturity

 

17,168

 

57,135

35,025

7,737

476

117,541

The maturity profile is determined based upon contractual terms for investment securities.

Note 18. Other financial assets

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Accrued interest receivable

 

1,921

 

2,223

 

1,735

 

1,987

Securities sold not delivered

 

7,048

 

1,716

 

7,041

 

1,716

Trade debtors

 

430

 

343

 

255

 

320

Interbank lending

319

174

246

173

Clearing and settlement balances

530

602

474

480

Accrued fees and commissions

 

401

 

276

 

258

 

155

Other

 

117

 

122

 

117

 

120

Total other financial assets

 

10,766

 

5,456

 

10,126

 

4,951

64    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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 this eliminates or significantly reduces an accounting mismatch, or they are part of a group of instruments that are managed on a fair value basis. 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.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Repurchase agreements

 

14,664

 

18,848

 

13,183

 

16,071

Interbank placements

6,405

3,635

6,402

3,631

Accrued interest payable

4,235

4,940

3,684

4,094

Securities purchased not delivered

7,574

2,966

7,574

2,966

Trade creditors and other accrued expenses

2,363

2,375

1,887

1,994

Settlement and clearing balances

869

934

848

801

Securities sold short

4,215

3,248

4,215

3,248

Other

1,163

1,131

1,142

1,112

Total other financial liabilities

 

41,488

 

38,077

 

38,935

 

33,917

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

65

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.

66    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 20.Derivative financial instruments (Continued)

Total derivatives

The carrying values of derivative instruments are set out in the tables below.

Total derivatives

Consolidated

Trading

Hedging

carrying value

$m

    

Assets

    

Liabilities

    

Assets

    

Liabilities

    

Assets

    

Liabilities

2025

Interest rate contracts

 

Swap agreements

 

48,585

(51,397)

5,301

(5,334)

53,886

(56,731)

Options

 

256

(109)

-

-

256

(109)

Total interest rate contracts

 

48,841

(51,506)

5,301

(5,334)

54,142

(56,840)

FX contracts

 

Spot and forward contracts

 

7,141

(6,963)

83

(37)

7,224

(7,000)

Cross currency swap agreements

 

5,596

(9,460)

1,830

(104)

7,426

(9,564)

Options

 

134

(126)

-

-

134

(126)

Total FX contracts

 

12,871

(16,549)

1,913

(141)

14,784

(16,690)

Credit default swaps

Credit protection bought

-

(408)

-

-

-

(408)

Credit protection sold

353

-

-

-

353

-

Total credit default swaps

353

(408)

-

-

353

(408)

Commodity contracts

 

151

(50)

-

-

151

(50)

Total of gross derivatives

 

62,216

(68,513)

7,214

(5,475)

69,430

(73,988)

Impact of netting arrangements

 

(45,845)

48,218

(5,121)

5,140

(50,966)

53,358

Total of net derivatives

 

16,371

(20,295)

2,093

(335)

18,464

(20,630)

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 sold

225

-

-

-

225

-

Total credit default swaps

225

(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)

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

67

Note 20.Derivative financial instruments (Continued)

Total derivatives

Parent Entity

Trading

Hedging

carrying value

$m

    

Assets

    

Liabilities

    

Assets

    

Liabilities

    

Assets

    

Liabilities

2025

Interest rate contracts

 

Swap agreements

 

48,751

(51,819)

4,960

(4,777)

53,711

(56,596)

Options

 

256

(109)

-

-

256

(109)

Total interest rate contracts

 

49,007

(51,928)

4,960

(4,777)

53,967

(56,705)

FX contracts

 

Spot and forward contracts

 

7,179

(6,963)

45

(37)

7,224

(7,000)

Cross currency swap agreements

 

6,589

(9,457)

83

(104)

6,672

(9,561)

Options

 

133

(126)

-

-

133

(126)

Total FX contracts

 

13,901

(16,546)

128

(141)

14,029

(16,687)

Credit default swaps

Credit protection bought

-

(408)

-

-

-

(408)

Credit protection sold

353

-

-

-

353

-

Total credit default swaps

353

(408)

-

-

353

(408)

Commodity contracts

 

151

(50)

-

-

151

(50)

Total of gross derivatives

 

63,412

(68,932)

5,088

(4,918)

68,500

(73,850)

Impact of netting arrangements

 

(46,014)

48,645

(4,952)

4,713

(50,966)

53,358

Total of net derivatives

 

17,398

(20,287)

136

(205)

17,534

(20,492)

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 sold

225

-

-

-

225

-

Total credit default swaps

225

(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)

68    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

69

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

Consolidated

Within 1

Over 1 year

Over 5

Carrying value

$m

  

Hedging instrument

  

Hedged risk

  

 year

  

to 5 years

  

years

  

Total

  

Assets

  

Liabilities

2025

One-to-one hedge relationships

  

  

  

  

Fair value hedges

Interest rate swap

Interest rate risk

21,314

83,617

67,516

172,447

3,766

(4,398)

Cross currency swap

Interest rate risk

3,484

15,127

1,079

19,690

(89)

(23)

Cash flow hedges

Cross currency swap

FX risk

3,484

15,127

1,079

19,690

1,919

(81)

Foreign exchange forwards and swaps

FX risk

3,623

-

-

3,623

2

(37)

Net investment hedges

Forward contracts

FX risk

4,106

-

-

4,106

81

-

Total one-to-one hedge relationships

36,011

113,871

69,674

219,556

5,679

(4,539)

Macro hedge relationships

  

  

Portfolio fair value hedges

Interest rate swap

Interest rate risk

n/a

n/a

n/a

16,776

3

(220)

Macro cash flow hedges

Interest rate swap

Interest rate risk

n/a

n/a

n/a

607,343

1,532

(716)

Total macro hedge relationships

n/a

n/a

n/a

624,119

1,535

(936)

Total of gross hedging derivatives

  

  

n/a

n/a

n/a

843,675

7,214

(5,475)

Impact of netting arrangements

  

  

n/a

n/a

n/a

n/a

(5,121)

5,140

Total of net hedging derivatives

  

  

n/a

n/a

n/a

n/a

2,093

(335)

2024

One-to-one hedge relationships

  

  

  

  

Fair value hedges

Interest rate swap

Interest rate risk

21,400

82,571

55,004

158,975

3,611

(4,858)

Cross currency swap

Interest rate risk

1,098

13,188

981

15,267

(22)

(281)

Cash flow hedges

Cross currency swap

FX risk

1,098

13,188

981

15,267

205

(92)

Foreign exchange forwards and swaps

FX risk

3,663

-

-

3,663

2

(144)

Net investment hedges

Forward contracts

FX risk

3,631

-

-

3,631

18

(27)

Total one-to-one hedge relationships

30,890

108,947

56,966

196,803

3,814

(5,402)

Macro hedge relationships

  

  

Portfolio fair value hedges

Interest rate swap

Interest rate risk

n/a

n/a

n/a

16,317

35

(204)

Macro cash flow hedges

Interest rate swap

Interest rate risk

n/a

n/a

n/a

422,943

1,973

(907)

Total macro hedge relationships

n/a

n/a

n/a

439,260

2,008

(1,111)

Total of gross hedging derivatives

  

  

n/a

n/a

n/a

636,063

5,822

(6,513)

Impact of netting arrangements

  

  

n/a

n/a

n/a

n/a

(5,429)

5,856

Total of net hedging derivatives

  

  

n/a

n/a

n/a

n/a

393

(657)

70    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 20.Derivative financial instruments (Continued)

Notional amounts

Parent Entity

Within 1

Over 1 year

Over 5

Carrying value

$m

  

Hedging instrument

  

Hedged risk

  

year

  

to 5 years

  

years

  

Total

  

Assets

  

Liabilities

2025

One-to-one hedge relationships

Fair value hedges

Interest rate swap

Interest rate risk

21,226

79,652

65,475

166,353

3,602

(4,270)

Cross currency swap

Interest rate risk

815

213

723

1,751

(6)

(23)

Cash flow hedges

Cross currency swap

FX risk

815

213

723

1,751

89

(81)

Foreign exchange forwards and swaps

FX risk

3,623

-

-

3,623

2

(37)

Net investment hedges

Forward contracts

FX risk

3,107

-

-

3,107

43

-

Total one-to-one hedge relationships

29,586

80,078

66,921

176,585

3,730

(4,411)

Macro hedge relationships

  

  

Portfolio fair value hedges

Interest rate swap

Interest rate risk

n/a

n/a

n/a

100

3

-

Macro cash flow hedges

Interest rate swap

Interest rate risk

n/a

n/a

n/a

579,797

1,355

(507)

Total macro hedge relationships

n/a

n/a

n/a

579,897

1,358

(507)

Total of gross hedging derivatives

  

  

n/a

n/a

n/a

756,482

5,088

(4,918)

Impact of netting arrangements

  

  

n/a

n/a

n/a

n/a

(4,952)

4,713

Total of net hedging derivatives

  

  

n/a

n/a

n/a

n/a

136

(205)

2024

One-to-one hedge relationships

Fair value hedges

Interest rate swap

Interest rate risk

20,962

77,739

54,797

153,498

3,457

(4,789)

Cross currency swap

Interest rate risk

377

1,002

659

2,038

(23)

(23)

Cash flow hedges

Cross currency swap

FX risk

377

1,002

659

2,038

75

(112)

Foreign exchange forwards and swaps

FX risk

3,663

-

-

3,663

2

(144)

Net investment hedges

Forward contracts

FX risk

2,636

-

-

2,636

18

(5)

Total one-to-one hedge relationships

28,015

79,743

56,115

163,873

3,529

(5,073)

Macro hedge relationships

  

  

Portfolio fair value hedges

Interest rate swap

Interest rate risk

n/a

n/a

n/a

1,797

32

-

Macro cash flow hedges

Interest rate swap

Interest rate risk

n/a

n/a

n/a

398,519

1,697

(706)

Total macro hedge relationships

n/a

n/a

n/a

400,316

1,729

(706)

Total of gross hedging derivatives

  

  

n/a

n/a

n/a

564,189

5,258

(5,779)

Impact of netting arrangements

  

  

n/a

n/a

n/a

n/a

(5,151)

5,451

Total of net hedging derivatives

  

  

n/a

n/a

n/a

n/a

107

(328)

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

    

2025

    

2024

Consolidated

Cash flow hedges

Cross currency swap

FX risk

EUR:NZD

0.5846

0.5963

USD:NZD

0.6071

0.6252

Foreign exchange swap

FX risk

USD:AUD

0.6658

0.6676

Net investment hedges

Forward contracts

FX risk

NZD:AUD

1.1113

1.0984

USD:AUD

0.6537

0.6745

Parent Entity

Cash flow hedges

Cross currency swap

FX risk

EUR:AUD

0.6650

0.6650

JPY:AUD

79.6448

79.6448

CNH:AUD

4.7418

4.7334

HKD:AUD

5.5978

5.6124

Foreign exchange swap

FX risk

USD:AUD

0.6658

0.6676

Net investment hedges

Forward contracts

FX risk

NZD:AUD

1.1185

1.0905

USD:AUD

0.6537

0.6745

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

71

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).

2025

2024

Carrying amount of

Carrying amount of

$m

    

hedged item

    

FVHA

    

hedged item

    

FVHA

Consolidated

Interest rate risk

  

  

  

  

Investment securitiesa

83,382

494

65,585

(165)

Loans

17,234

117

16,638

77

Debt issues and loan capital

(102,521)

3,421

(102,039)

3,749

Parent Entity

Interest rate risk

  

  

  

  

Investment securitiesa

78,771

284

61,775

(294)

Loans

442

1

2,019

(22)

Debt issues and loan capital

(83,381)

3,341

(87,495)

3,532

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 (2024: 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 cash flow hedge reserves is detailed below:

2025

2024

Interest

FX

Interest

FX

$m

    

rate risk

    

risk

    

Total

    

rate risk

    

risk

    

Total

Consolidated

Balance as at beginning of year

978

(198)

 

780

249

(47)

 

202

Net gains/(losses) from changes in fair value

(364)

131

 

(233)

878

(377)

 

501

Transferred to interest income

80

72

 

152

(149)

226

 

77

Balance as at end of year

694

5

 

699

978

(198)

 

780

Parent Entity

Balance as at beginning of year

852

(136)

 

716

(288)

(1)

 

(289)

Net gains/(losses) from changes in fair value

(305)

151

 

(154)

1,049

(176)

 

873

Transferred to interest income

129

25

 

154

91

41

 

132

Balance as at end of year

676

40

 

716

852

(136)

 

716

There were nil net gains/losses (2024: net gains $16 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 $95 million (2024: net gain $28 million) for Westpac and $53 million (2024: net gain $31 million) for the Parent Entity. Included in the foreign currency translation reserve is a loss of $158 million (2024: $158 million loss) for Westpac and $162 million (2024: $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.

72    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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 of

Change in

hedging

value of the

Hedge

instrument

hedged item

Hedge

ineffectiveness

used for

used for

ineffectiveness

recognised

calculating

calculating

recognised in

in non-

$m

    

Hedging instrument

    

Hedged risk

    

ineffectiveness

    

ineffectiveness

    

interest income

    

interest income

Consolidated

2025

Fair value hedges

 

Interest rate swap

 

Interest rate risk

 

(526)

 

491

 

(35)

 

n/a

 

Cross currency swap

 

Interest rate risk

117

(120)

(3)

n/a

Cash flow hedges

 

Interest rate swap

 

Interest rate risk

 

(249)

 

268

 

19

 

n/a

 

Cross currency swap

 

FX risk

21

(21)

-

n/a

Foreign exchange forwards and swaps

FX risk

182

(182)

-

n/a

Net investment hedges

 

Forward contracts

 

FX risk

 

95

 

(95)

 

n/a

 

-

Total

 

  

 

  

 

(360)

 

341

 

(19)

 

-

2024

Fair value hedges

 

Interest rate swap

 

Interest rate risk

 

1,845

 

(1,817)

 

28

 

n/a

 

Cross currency swap

 

Interest rate risk

761

(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 swaps

FX risk

(126)

126

-

n/a

Net investment hedges

 

Forward contracts

 

FX risk

 

28

 

(28)

 

n/a

 

-

Total

 

  

 

  

 

3,181

 

(3,173)

 

8

 

-

Parent Entity

2025

Fair value hedges

 

Interest rate swap

 

Interest rate risk

 

(455)

 

420

 

(35)

 

n/a

 

Cross currency swap

 

Interest rate risk

7

(10)

(3)

n/a

Cash flow hedges

 

Interest rate swap

 

Interest rate risk

 

(136)

 

159

 

23

 

n/a

 

Cross currency swap

 

FX risk

(6)

6

-

n/a

Foreign exchange forwards and swaps

FX risk

182

(182)

-

n/a

Net investment hedges

 

Forward contracts

 

FX risk

 

53

 

(53)

 

n/a

 

-

Total

 

  

 

  

 

(355)

 

340

 

(15)

 

-

2024

Fair value hedges

 

Interest rate swap

 

Interest rate risk

 

2,295

 

(2,274)

 

21

 

n/a

 

Cross currency swap

 

Interest rate risk

84

(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 swaps

FX risk

(126)

126

-

n/a

Net investment hedges

 

Forward contracts

 

FX risk

 

31

 

(31)

 

n/a

 

-

Total

 

  

 

  

 

3,396

 

(3,380)

 

16

 

-

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

73

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

Index

Note Name

number

Overview

Risk management frameworks

21.1

Credit risk

Refer to Note 11 Credit risk management

11

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 Strategy (incorporating the Risk Management Framework) 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 Strategy (incorporating the Risk Management Framework) 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 Strategy and Board Risk Appetite Statement); and
Review and, where appropriate, approve risks beyond the approval discretion provided to management.

74    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 21.Risk management, funding and liquidity risk and market risk (Continued)

For each of its material risks, Westpac maintains risk management frameworks and a number of supporting policies that define roles and responsibilities, acceptable practices, limits and key controls:

Risk

Risk 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 five 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

75

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:

Consolidated

Parent Entity

2025

2024

2025

2024

$m

    

Actual

    

Average

    

Actual

    

Average

    

Actual

    

Average

    

Actual

    

Average

Cash

    

50,157

    

66,322

    

65,356

    

94,468

44,607

    

58,836

    

58,236

    

85,384

Trading securities and financial assets measured at FVIS

 

40,840

 

31,936

 

31,717

 

19,183

39,257

 

29,702

 

29,538

 

16,954

Investment securities

117,065

113,488

103,435

92,622

108,880

105,065

95,415

85,076

Other financial assets

319

273

174

199

246

240

173

195

Total on-balance sheet liquid assets

 

208,381

 

212,019

 

200,682

 

206,472

192,990

 

193,843

 

183,362

 

187,609

In addition, Westpac has $81,653 million (2024: $70,306 million) and the Parent Entity has $76,094 million (2024: $62,770 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 $76,439 million (2024: $70,282 million) for Westpac and $70,708 million (2024: $63,975 million) for the Parent Entity.

76    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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.

%  

    

2025

    

2024

Customer deposits

 

68.1

 

66.9

Wholesale term funding with residual maturity greater than 12 months

 

12.9

 

13.9

Wholesale funding with a residual maturity less than 12 months

 

11.6

 

11.4

Equity

 

6.9

 

7.2

Securitisation

 

0.5

 

0.6

Group’s total funding

 

100.0

 

100.0

Movements in Westpac’s funding composition in 2025 included:

Customer deposits increased by $49.4 billion and now account for 68.1% of Westpac’s total funding (including equity) at 30 September 2025, up from 66.9% at 30 September 2024;
Long-term funding with a residual maturity greater than 12 months accounted for 12.9% of Westpac’s total funding at 30 September 2025. Funding from securitisation accounted for a further 0.5% of total funding. Westpac raised $28.1 billion of long-term wholesale funding in 2025, supported by constructive conditions in global capital markets. This was lower than prior financial years reflecting strong growth in customer deposits and lower wholesale funding maturities to be refinanced;
Wholesale funding with a residual maturity less than 12 months accounted for 11.6% of Westpac’s total funding at 30 September 2025, up from 11.4% at 30 September 2024. This portfolio, including long-term funding with a residual maturity less than one year, had a weighted average maturity of 153 days; and
Funding from equity increased by $1.0 billion in 2025 and made up 6.9% of total funding at 30 September 2025, down from 7.2% at 30 September 2024, reflecting the impact of the on-market share buyback.

Borrowings and outstanding issuances from existing debt programs at 30 September 2025 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 2025 the amount outstanding totalled NZ$1,110 million (30 September 2024: NZ$2,981 million).

Credit ratings

As at 30 September 2025 the Parent Entity’s credit ratings were:

2025

    

Short-term

    

Long-term

    

Outlook

Fitch Ratings

 

F1+

AA-

Stable

Moody’s Ratings

 

P-1

Aa2

Stable

S&P Global Ratings

 

A-1+

AA-

Stable

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

77

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:

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Cash

4,590

6,269

4,562

6,199

Securities (including certificates of deposit)

 

2,535

 

1,721

 

2,307

 

1,721

Securities pledged under repurchase agreements

 

15,230

 

19,938

 

13,379

 

16,205

Securities pledged on contingent liabilities

 

119

 

56

 

119

 

56

Total amount pledged to secure liabilities/contingent liabilities

 

22,474

 

27,984

 

20,367

 

24,181

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.

78    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 21.Risk management, funding and liquidity risk and market risk (Continued)

Consolidated

    

    

Over 1 month

    

Over 3 months

    

Over 1 year to

    

    

    

$m

Up to 1 month

to 3 months

to 1 year

5 years

Over 5 years

Total

2025

    

    

    

    

    

    

Financial liabilities

 

  

 

  

 

  

 

  

 

  

 

Collateral received

 

3,194

 

-

 

-

 

-

 

-

 

3,194

Deposits and other borrowings

 

564,053

 

77,359

 

125,412

 

9,924

 

62

 

776,810

Other financial liabilities

 

30,575

2,445

4,724

8

-

37,752

Derivative financial instruments:

 

Held for trading

 

15,915

 

-

 

-

 

-

 

-

 

15,915

Held for hedging purposes (net settled)

 

18

 

(39)

 

(42)

 

239

 

391

 

567

Held for hedging purposes (gross settled):

Cash outflow

 

15,370

 

19,254

 

56,774

 

103,183

 

40,431

 

235,012

Cash inflow

 

(14,750)

 

(17,974)

 

(56,043)

 

(100,546)

 

(38,150)

 

(227,463)

Debt issues

 

3,401

 

10,307

 

57,360

 

102,381

 

16,597

 

190,046

Total financial liabilities excluding loan capital

 

617,776

 

91,352

 

188,185

 

115,189

 

19,331

 

1,031,833

Loan capital

 

56

 

456

 

1,433

 

7,874

 

48,506

 

58,325

Total undiscounted financial liabilities

 

617,832

 

91,808

 

189,618

 

123,063

 

67,837

 

1,090,158

Total contingent liabilities and commitments

 

Financial guarantees, letters of credit and other credit substitutes

 

15,721

 

-

 

-

 

-

 

-

 

15,721

Performance-related contingencies

 

6,709

 

-

 

-

 

-

 

-

 

6,709

Remaining commitments to extend credit

198,739

-

-

-

-

198,739

Total undiscounted contingent liabilities and commitments

 

221,169

 

-

 

-

 

-

 

-

 

221,169

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

 

25,759

1,851

4,593

1,049

5

33,257

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

 

Financial guarantees, letters of credit and other credit substitutes

 

15,220

 

-

 

-

 

-

 

-

 

15,220

Performance-related contingencies

5,393

 

-

 

-

 

-

 

-

 

5,393

Remaining commitments to extend credit

191,498

-

-

-

-

191,498

Total undiscounted contingent liabilities and commitments

 

212,111

 

-

 

-

 

-

 

-

 

212,111

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

79

Note 21.Risk management, funding and liquidity risk and market risk (Continued)

Parent Entity

    

    

Over 1 month

    

Over 3 months

    

Over 1 year to

    

    

    

$m

Up to 1 month

to 3 months

to 1 year

5 years

Over 5 years

Total

2025

    

    

    

    

    

    

Financial liabilities

 

  

 

  

 

  

 

  

 

  

 

  

Collateral received

 

2,371

 

-

 

-

 

-

 

-

 

2,371

Deposits and other borrowings

 

519,315

 

66,463

 

108,989

 

7,295

 

62

 

702,124

Other financial liabilities

28,910

1,804

4,703

8

-

35,425

Derivative financial instruments:

 

Held for trading

 

15,915

 

-

 

-

 

-

 

-

 

15,915

Held for hedging purposes (net settled)

 

18

 

(39)

 

(46)

 

143

 

353

 

429

Held for hedging purposes (gross settled):

 

 

 

 

 

 

Cash outflow

 

15,370

 

19,254

 

56,774

 

103,183

 

40,431

 

235,012

Cash inflow

 

(14,750)

 

(17,974)

 

(56,043)

 

(100,546)

 

(38,150)

 

(227,463)

Debt issues

 

2,425

 

8,961

 

50,517

 

79,968

 

15,381

 

157,252

Due to subsidiaries

 

16,022

 

572

 

2,957

 

10,337

 

41,308

 

71,196

Total financial liabilities excluding loan capital

 

585,596

 

79,041

 

167,851

 

100,388

 

59,385

 

992,261

Loan capital

 

56

 

439

 

1,382

 

7,633

 

47,295

 

56,805

Total undiscounted financial liabilities

 

585,652

 

79,480

 

169,233

 

108,021

 

106,680

 

1,049,066

Total contingent liabilities and commitments

 

Financial guarantees, letters of credit and other credit substitutes

 

15,254

 

-

 

-

 

-

 

-

 

15,254

Performance-related contingencies

 

6,484

 

-

 

-

 

-

 

-

 

6,484

Remaining commitments to extend credit

173,966

-

-

-

-

173,966

Total undiscounted contingent liabilities and commitments

 

195,704

 

-

 

-

 

-

 

-

 

195,704

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 liabilities

25,217

1,851

2,829

8

-

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

 

Financial guarantees, letters of credit and other credit substitutes

 

14,642

 

-

 

-

 

-

 

-

 

14,642

Performance-related contingencies

5,369

 

-

 

-

 

-

 

-

 

5,369

Remaining commitments to extend credit

 

167,851

-

-

-

-

167,851

Total undiscounted contingent liabilities and commitments

 

187,862

 

-

 

-

 

-

 

-

 

187,862

80    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 21.Risk management, funding and liquidity risk and market risk (Continued)

21.2.5. Expected maturity

The financial liability balances in the following tables will not agree to the contractual maturity tables (Note 21.2.4) due to the impact of discounting and the exclusion of interest accruals beyond the reporting period. Assets and liabilities that have no specific maturity (such as equity securities) are generally included in the ‘Greater than 12 months’ column. Loans and deposits are presented in the following table on a contractual basis, however the behavioural life may differ. Loans may be repaid earlier than their contractual maturity and Westpac would expect a large proportion of deposit balances to be retained.

    

2025

2024

Consolidated

    

Due within

Greater than

Due within

    

Greater than

    

$m

    

12 months

    

12 months

    

Total

    

12 months

    

12 months

    

Total

Assets

 

  

 

  

 

  

Cash and balances with central banks

 

50,430

-

50,430

65,667

-

65,667

Collateral paid

 

4,590

-

4,590

6,269

-

6,269

Trading securities and financial assets measured at FVIS

 

43,742

12,099

55,841

33,090

16,138

49,228

Derivative financial instruments

15,983

2,481

18,464

21,978

2,131

24,109

Investment securities

17,168

100,373

117,541

20,930

82,955

103,885

Loans (net of provisions)

 

100,242

751,611

851,853

97,010

709,757

806,767

Other financial assets

 

10,663

103

10,766

5,355

101

5,456

All other assets

 

1,016

14,855

15,871

921

15,242

16,163

Total assets

 

243,834

881,522

1,125,356

251,220

826,324

1,077,544

Liabilities

 

Collateral received

 

3,187

-

3,187

3,078

-

3,078

Deposits and other borrowings

 

761,063

9,394

770,457

711,076

9,413

720,489

Other financial liabilities

 

41,481

7

41,488

37,024

1,053

38,077

Derivative financial instruments

 

17,137

3,493

20,630

25,390

5,584

30,974

Debt issues

 

66,785

104,619

171,404

59,911

109,373

169,284

All other liabilities

 

2,409

2,718

5,127

2,732

2,975

5,707

Total liabilities excluding loan capital

 

892,062

120,231

1,012,293

839,211

128,398

967,609

Loan capital

 

3,412

36,558

39,970

3,829

34,054

37,883

Total liabilities

 

895,474

156,789

1,052,263

843,040

162,452

1,005,492

Net assets/(liabilities)

 

(651,640)

724,733

73,093

(591,820)

663,872

72,052

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

81

Note 21.Risk management, funding and liquidity risk and market risk (Continued)

    

2025

2024

Parent Entity

    

Due within

Greater than

Due within

    

Greater than

    

    

$m

    

12 months

    

12 months

    

Total

    

12 months

    

12 months

    

Total

Assets

 

  

 

  

 

  

Cash and balances with central banks

 

44,782

-

44,782

58,400

-

58,400

Collateral paid

 

4,562

-

4,562

6,199

-

6,199

Trading securities and financial assets measured at FVIS

 

42,284

11,342

53,626

31,736

15,278

47,014

Derivative financial instruments

15,979

1,555

17,534

21,976

1,926

23,902

Investment securities

15,699

93,401

109,100

18,748

76,875

95,623

Loans (net of provisions)

 

79,253

675,859

755,112

76,274

633,769

710,043

Other financial assets

 

10,023

103

10,126

4,850

101

4,951

Due from subsidiaries

 

12,286

36,544

48,830

8,735

43,604

52,339

Investment in subsidiaries

-

8,567

8,567

-

9,095

9,095

All other assets

 

821

12,661

13,482

719

12,949

13,668

Total assets

 

225,689

840,032

1,065,721

227,637

793,597

1,021,234

Liabilities

 

Collateral received

 

2,364

-

2,364

2,935

-

2,935

Deposits and other borrowings

 

689,722

6,938

696,660

637,088

7,393

644,481

Other financial liabilities

 

38,928

7

38,935

33,883

34

33,917

Derivative financial instruments

 

17,130

3,362

20,492

25,392

5,403

30,795

Debt issues

 

58,590

84,032

142,622

53,982

89,900

143,882

Due to subsidiaries

 

17,678

34,888

52,566

13,492

42,230

55,722

All other liabilities

 

2,105

2,186

4,291

2,357

2,387

4,744

Total liabilities excluding loan capital

 

826,517

131,413

957,930

769,129

147,347

916,476

Loan capital

 

3,412

35,479

38,891

3,829

32,941

36,770

Total liabilities

 

829,929

166,892

996,821

772,958

180,288

953,246

Net assets/(liabilities)

 

(604,240)

673,140

68,900

(545,321)

613,309

67,988

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 risk

Non-traded market risk

Holding period

    

1 day

    

1 year

Confidence level

 

99%

99%

Period of historical data used

 

1 year

6 years

82    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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 Entity

2025

2024

2023

$m

    

High

    

Low

    

Average

    

High

    

Low

    

Average

    

High

    

Low

    

Average

Interest rate risk

 

16.7

 

4.3

 

8.6

 

21.2

 

5.4

 

10.8

 

21.8

 

7.2

 

11.0

FX risk

 

4.4

 

1.1

 

2.1

 

7.3

 

0.9

 

2.4

 

14.2

 

1.1

 

4.3

Equity risk

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.0

 

0.1

 

0.0

 

0.0

Commodity risk

 

1.2

 

0.3

 

0.5

 

1.7

 

0.6

 

1.2

 

3.5

 

0.9

 

2.0

Other market risksa

 

7.4

 

2.3

 

4.3

 

10.1

 

1.9

 

5.4

 

9.4

 

3.2

 

6.0

Diversification effect

 

n/a

 

n/a

 

(5.8)

 

n/a

 

n/a

 

(6.9)

 

n/a

 

n/a

 

(8.1)

Net market risk

 

17.9

 

6.6

 

9.7

 

23.4

 

6.8

 

12.9

 

31.8

 

8.8

 

15.2

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 basis point shift 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 outcome between a 100 basis point rate shock up or down with a 12 month time horizon (expressed as a percentage of reported NII):

2025

2024

Maximum

Minimum

Average

Maximum

Minimum

Average

% (increase)/decrease in NII

    

As at

    

exposure

    

exposure

    

exposure

    

As at

    

exposure

    

exposure

    

exposure

Consolidated

    

1.05

 

1.63

 

0.57

 

1.23

 

1.84

 

1.84

 

0.97

 

1.42

Parent Entity

0.46

 

1.21

 

0.16

 

0.80

 

1.40

 

1.43

 

0.59

 

1.03

Value at Risk - IRRBB

The table below depicts internal VaR for IRRBB1:

2025

2024

$m

    

As at

    

High

    

Low

    

Average

    

As at

    

High

    

Low

    

Average

Consolidated

 

96.2

 

101.7

 

67.5

 

85.7

 

77.7

 

80.6

 

37.5

 

50.0

As at 30 September 2025 the Value at Risk – IRRBB for the Parent Entity was $104 million (2024: $77 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

83

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 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 primarily 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:

84    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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 products

Derivatives

Exchange traded interest rate futures and options and commodity and carbon futures

FX products

Derivatives

FX spot and futures contracts

Equity products

Derivatives

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 instruments

Trading securities and financial assets measured at FVIS

Investment securities

Other financial liabilities

Australian government and semi-government bonds, New Zealand government bonds, US Treasury Securities

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 products

Derivatives

Interest 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 actively quoted interest rates in the swap, bond and futures markets. Interest rate volatilities are sourced from brokers and consensus data providers. If consensus prices are not available, these are classified as Level 3 instruments.

FX products

Derivatives

FX 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 products

Derivatives

Single name and index credit default swaps

Valued 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 products

Derivatives

Commodity and carbon derivatives

Valued 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 products

Derivatives

Exchange traded equity options, OTC equity options and equity warrants

Due to low liquidity, exchange traded equity options are Level 2.

Valued using industry standard models based on observable parameters such as stock prices, dividends, volatilities and interest rates.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

85

Note 22.Fair values of financial assets and financial liabilities (Continued)

Instrument

    

Balance sheet category

    

Includes

    

Valuation

Asset backed debt instruments

Trading 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 instruments

Trading 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 value

Loans

Fixed rate bills and syndicated loans

Discounted 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 deposit

Deposits and other borrowings

Certificates of deposit

Discounted cash flow using market rates offered for deposits of similar remaining maturities.

Debt issues at fair value

Debt issues

Debt issues

Discounted cash flows, using a discount rate which reflects the terms of the instrument and the timing of cash flows adjusted for market observable changes in 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 instruments

Trading 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 instruments

Investment securities

Strategic equity investments

Valued 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.

86    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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.

2025

2024

$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

 

17,431

38,408

2

55,841

15,522

33,700

6

49,228

Derivative financial instruments

 

16

 

18,442

 

6

 

18,464

 

13

 

24,089

 

7

 

24,109

Investment securities

77,044

39,049

475

116,568

14,117

88,155

447

102,719

Loans

 

-

 

51

 

15

 

66

 

-

 

210

 

15

 

225

Total financial assets measured at fair value on a recurring basis

 

94,491

 

95,950

 

498

 

190,939

 

29,652

 

146,154

 

475

 

176,281

Financial liabilities measured at fair value on a recurring basis

Deposits and other borrowingsa

 

-

 

47,514

 

-

 

47,514

 

-

 

46,878

 

-

 

46,878

Other financial liabilitiesb

 

3,740

14,143

 

-

 

17,883

 

891

18,428

 

-

 

19,319

Derivative financial instruments

 

7

 

20,619

 

4

 

20,630

 

14

 

30,955

 

5

 

30,974

Debt issuesc

 

-

 

4,478

 

-

 

4,478

 

-

 

5,385

 

-

 

5,385

Total financial liabilities measured at fair value on a recurring basis

 

3,747

 

86,754

 

4

 

90,505

 

905

 

101,646

 

5

 

102,556

Parent Entity

    

    

    

    

    

    

    

    

Financial assets measured at fair value on a recurring basis

Trading securities and financial assets measured at FVIS

17,196

36,428

2

53,626

15,091

31,918

5

47,014

Derivative financial instruments

 

16

 

17,512

 

6

 

17,534

 

13

 

23,883

 

6

 

23,902

Investment securities

73,589

35,291

220

109,100

11,166

84,182

206

95,554

Loans

 

-

 

51

 

-

 

51

 

-

 

210

 

1

 

211

Due from subsidiaries

-

806

-

806

-

1,044

-

1,044

Total financial assets measured at fair value on a recurring basis

 

90,801

 

90,088

 

228

 

181,117

 

26,270

 

141,237

 

218

 

167,725

Financial liabilities measured at fair value on a recurring basis

Deposits and other borrowingsa

 

-

 

45,920

 

-

 

45,920

 

-

 

45,167

 

-

 

45,167

Other financial liabilitiesb

 

3,740

 

13,659

 

-

 

17,399

 

891

 

18,428

 

-

 

19,319

Derivative financial instruments

 

7

 

20,481

 

4

 

20,492

 

14

 

30,776

 

5

 

30,795

Debt issuesc

 

-

 

2,064

 

-

 

2,064

 

-

 

1,961

 

-

 

1,961

Due to subsidiaries

-

1,190

-

1,190

-

344

-

344

Total financial liabilities measured at fair value on a recurring basis

 

3,747

 

83,314

 

4

 

87,065

 

905

 

96,676

 

5

 

97,586

a.

The contractual outstanding amount payable at maturity was $47,838 million (2024: $47,328 million) for the Group and $46,239 million (2024: $45,603 million) for the Parent Entity.

b.

The contractual outstanding amount payable at maturity for the Group is $20,032 million (2024: $19,320 million) and $19,548 million for the Parent Entity (2024: $19,320 million).

c.

The contractual outstanding payable at maturity was $4,877 million (2024: $5,678 million) for the Group and $2,446 million (2024: $2,226 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 $37 million decrease (2024: $58 million decrease) for the Group and Parent Entity.

$48,184 million of assets and $274 million of liabilities for the Group and Parent Entity have been transferred from Level 2 to Level 1 in 2025. This followed a detailed review of the levelling of certain US Treasury securities and certain Australian semi-government bonds using additional granular data sourced from independent pricing services, which confirmed that observable prices in an active market are available for the securities transferred. Transfers in and transfers out are reported using the end of period fair values.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

87

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

measured

Investment

Derivative and

Total Level

Derivative

Total Level 

$m

at FVIS

securities

other assets

3 assets

liabilities

3 liabilities

Consolidated

Balance as at 30 September 2023

27

441

41

509

15

15

Gains/(losses) on assets/(gains)/losses on liabilities recognised in:

Income statements

 

(1)

-

(28)

(29)

2

2

OCI

-

(11)

-

(11)

-

-

Acquisitions and issues

 

9

21

231

261

308

308

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 2024

 

6

447

22

475

5

5

Gains/(losses) on assets/(gains)/losses on liabilities recognised in:

Income statements

-

-

1

1

7

7

OCI

-

25

-

25

-

-

Acquisitions and issues

8

1

4

13

14

14

Disposals and settlements

(12)

(1)

(4)

(17)

(3)

(3)

Transfer into or out of non-market observables

-

-

(1)

(1)

(19)

(19)

Foreign currency translation impacts

-

3

(1)

2

-

-

Balance as at 30 September 2025

2

475

21

498

4

4

Unrealised gains/(losses) recognised in the income statements for financial instruments held as at:

30 September 2024

-

-

 

5

 

5

1

 

1

30 September 2025

 

-

-

 

1

 

1

(2)

 

(2)

88    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 22.Fair values of financial assets and financial liabilities (Continued)

    

Trading

    

    

    

    

    

    

    

    

    

    

securities and

financial assets

measured

Investment

Derivative and

Total Level

Derivative

Total Level 

$m

at FVIS

securities

other assets

3 assets

liabilities

3 liabilities

Parent Entity

Balance as at 30 September 2023

 

26

202

29

257

15

15

Gains/(losses) on assets/(gains)/losses on liabilities recognised in:

Income statements

(1)

-

(28)

(29)

2

2

OCI

 

-

(13)

-

(13)

-

-

Acquisitions and issues

 

9

16

228

253

308

308

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 2024

 

5

206

7

218

5

5

Gains/(losses) on assets/(gains)/losses on liabilities recognised in:

Income statements

-

-

1

1

7

7

OCI

-

10

-

10

-

-

Acquisitions and issues

8

1

2

11

14

14

Disposals and settlements

(11)

-

(3)

(14)

(3)

(3)

Transfer into or out of non-market observables

-

-

(1)

(1)

(19)

(19)

Foreign currency translation impacts

-

3

-

3

-

-

Balance as at 30 September 2025

2

220

6

228

4

4

Unrealised gains/(losses) recognised in the income statements for financial instruments held as at:

30 September 2024

-

-

 

5

 

5

 

1

 

1

30 September 2025

 

-

-

 

1

 

1

 

(2)

 

(2)

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 2025 was $2 million (2024: $1 million).

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

Loans

Where available, the fair value of loans is based on observable market transactions, otherwise fair value is estimated using discounted cash flow models. For variable rate loans, the discount rate used is the current effective interest rate. The discount rate applied for fixed rate loans reflects the market rate for the maturity of the loan and the credit worthiness of the borrower.

Investment securities

The 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

89

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

Consolidated

Carrying

$m

    

amount

    

Level 1

    

Level 2

    

Level 3

    

Total

2025

Financial assets not measured at fair value

Cash and balances with central banks

 

50,430

 

50,430

 

-

 

-

 

50,430

Collateral paid

 

4,590

 

4,590

 

-

 

-

 

4,590

Investment securities

 

973

 

-

 

482

 

491

 

973

Loans

 

851,787

 

-

 

-

 

852,108

 

852,108

Other financial assets

 

10,766

 

-

 

10,766

 

-

 

10,766

Total financial assets not measured at fair value

 

918,546

 

55,020

 

11,248

 

852,599

 

918,867

Financial liabilities not measured at fair value

Collateral received

 

3,187

 

3,187

 

-

 

-

 

3,187

Deposits and other borrowings

 

722,943

 

-

 

720,311

 

3,360

 

723,671

Other financial liabilities

 

23,605

 

-

 

23,605

 

-

 

23,605

Debt issuesa

 

166,926

 

-

 

165,969

 

1,762

 

167,731

Loan capitala

 

39,970

 

-

 

41,731

 

-

 

41,731

Total financial liabilities not measured at fair value

 

956,631

 

3,187

 

951,616

 

5,122

 

959,925

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 issuesa

 

163,899

 

-

 

162,750

 

1,755

 

164,505

Loan capitala

 

37,883

 

-

 

39,390

 

-

 

39,390

Total financial liabilities not measured at fair value

 

897,229

 

3,078

 

891,413

 

5,624

 

900,115

a.

The estimated fair values of debt issues and loan capital include the impact of changes in Westpac’s credit spreads since origination.

90    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 22.Fair values of financial assets and financial liabilities (Continued)

Estimated fair value

Parent Entity

Carrying

$m

    

amount

    

Level 1

    

Level 2

    

Level 3

    

Total

2025

Financial assets not measured at fair value

Cash and balances with central banks

 

44,782

 

44,782

 

-

 

-

 

44,782

Collateral paid

 

4,562

 

4,562

 

-

 

-

 

4,562

Loans

755,061

 

-

 

-

 

755,074

 

755,074

Due from subsidiariesa

 

47,242

 

-

 

6,528

 

40,714

 

47,242

Other financial assets

 

10,126

 

-

 

10,126

 

-

 

10,126

Total financial assets not measured at fair value

 

861,773

 

49,344

 

16,654

 

795,788

 

861,786

Financial liabilities not measured at fair value

Collateral received

2,364

 

2,364

 

-

 

-

 

2,364

Deposits and other borrowings

 

650,740

 

-

 

649,873

 

1,522

 

651,395

Other financial liabilities

 

21,536

 

-

 

21,536

 

-

 

21,536

Debt issuesb

 

140,558

 

-

 

141,181

 

-

 

141,181

Due to subsidiaries

 

51,376

 

-

 

2,541

 

48,835

 

51,376

Loan capitalb

 

38,891

 

-

 

40,623

 

-

 

40,623

Total financial liabilities not measured at fair value

 

905,465

 

2,364

 

855,754

 

50,357

 

908,475

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

Loans

 

709,832

 

-

 

-

 

709,048

 

709,048

Due from subsidiariesa

 

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 received

2,935

 

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 issuesb

 

141,921

 

-

 

142,427

 

-

 

142,427

Due to subsidiaries

 

55,378

 

-

 

3,505

 

51,873

 

55,378

Loan capitalb

 

36,770

 

-

 

38,240

 

-

 

38,240

Total financial liabilities not measured at fair value

 

850,916

 

2,935

 

797,357

 

53,278

 

853,570

a.

Due from subsidiaries excluded $782 million (2024: $778 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

91

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 offsetting

Amounts subject to enforceable

in the balance sheet

netting arrangements but not offset

Net amounts

Other

reported in

recognised

Financial

Consolidated

Gross

Amounts

the balance

financial

Cash

instrument

$m

    

amounts

    

offset

    

sheet

    

instruments

    

collaterala,b

collateral

    

Net amount

2025

Assets

Collateral paidc

 

5,014

(4,994)

20

-

-

-

20

Derivative financial instrumentsd

 

67,954

(50,966)

16,988

(11,320)

(3,068)

(679)

1,921

Reverse repurchase agreementse

30,453

(2,149)

28,304

-

(120)

(28,184)

-

Loansf

 

26,809

(26,784)

25

-

-

-

25

Total assets

 

130,230

(84,893)

45,337

(11,320)

(3,188)

(28,863)

1,966

Liabilities

 

Collateral received

2,684

(2,603)

81

-

-

-

81

Derivative financial instrumentsd

 

72,525

(53,358)

19,167

(11,320)

(4,256)

(2,535)

1,056

Repurchase agreementsg

 

16,813

(2,149)

14,664

-

(17)

(14,647)

-

Deposits and other borrowingsf

 

52,146

(26,784)

25,362

-

-

-

25,362

Total liabilities

 

144,168

(84,894)

59,274

(11,320)

(4,273)

(17,182)

26,499

2024

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Assets

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Collateral paidc

 

4,532

(4,474)

58

-

-

-

58

Derivative financial instrumentsd

 

73,247

(50,474)

22,773

(17,071)

(3,065)

(112)

2,525

Reverse repurchase agreementse

19,898

(1,908)

17,990

-

(14)

(17,950)

26

Loansf

 

23,218

(23,147)

71

-

-

-

71

Total assets

 

120,895

(80,003)

40,892

(17,071)

(3,079)

(18,062)

2,680

Liabilities

 

Collateral received

2,562

(2,559)

3

-

-

-

3

Derivative financial instrumentsd

 

80,776

(52,389)

28,387

(17,071)

(5,870)

(1,721)

3,725

Repurchase agreementsg

 

20,756

(1,908)

18,848

-

(57)

(18,791)

-

Deposits and other borrowingsf

 

49,007

(23,147)

25,860

-

-

-

25,860

Total liabilities

 

153,101

(80,003)

73,098

(17,071)

(5,927)

(20,512)

29,588

a.

$3,187 million (2024: $3,078 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.

$4,273 million (2024: $5,927 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 $317 million (2024: $342 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.

$1,476 million (2024: $1,336 million) of derivative financial assets and $1,463 million (2024: $2,587 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.

92    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 23.Offsetting financial assets and financial liabilities (Continued)

Amounts subject to enforceable netting arrangements

Effects of offsetting

Amounts subject to enforceable

in the balance sheet

netting arrangements but not offset

Net amounts

Other

reported in

recognised

Financial

Parent Entity

Gross

Amounts

the balance

financial

Cash

instrument

$m

    

amounts

    

offset

    

sheet

    

instruments

    

collaterala,b

collateral

    

Net amount

2025

Assets

Collateral paidc

 

5,014

(4,994)

20

-

-

-

20

Derivative financial instrumentsd

 

67,025

(50,966)

16,059

(11,199)

(2,245)

(452)

2,163

Reverse repurchase agreementse

30,453

(2,149)

28,304

-

(120)

(28,184)

-

Loansf

 

26,809

(26,784)

25

-

-

-

25

Total assets

 

129,301

(84,893)

44,408

(11,199)

(2,365)

(28,636)

2,208

Liabilities

 

Collateral received

2,684

(2,603)

81

-

-

-

81

Derivative financial instrumentsd

 

72,391

(53,358)

19,033

(11,199)

(4,228)

(2,307)

1,299

Repurchase agreementsg

 

15,332

(2,149)

13,183

-

(17)

(13,166)

-

Deposits and other borrowingsf

 

52,146

(26,784)

25,362

-

-

-

25,362

Total liabilities

 

142,553

(84,894)

57,659

(11,199)

(4,245)

(15,473)

26,742

2024

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Assets

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Collateral paidc

 

4,532

(4,474)

58

-

-

-

58

Derivative financial instrumentsd

 

73,041

(50,474)

22,567

(16,971)

(2,922)

(112)

2,562

Reverse repurchase agreementse

19,898

(1,908)

17,990

-

(14)

(17,950)

26

Loansf

 

23,218

(23,147)

71

-

-

-

71

Total assets

 

120,689

(80,003)

40,686

(16,971)

(2,936)

(18,062)

2,717

Liabilities

 

Collateral received

2,562

(2,559)

3

-

-

-

3

Derivative financial instrumentsd

 

80,595

(52,389)

28,206

(16,971)

(5,800)

(1,721)

3,714

Repurchase agreementsg

 

17,979

(1,908)

16,071

-

(57)

(16,014)

-

Deposits and other borrowingsf

 

49,007

(23,147)

25,860

-

-

-

25,860

Total liabilities

 

150,143

(80,003)

70,140

(16,971)

(5,857)

(17,735)

29,577

a.

$2,364 million (2024: $2,935 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.

$4,245 million (2024: $5,857 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 $317 million (2024: $342 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.

$1,475 million (2024: $1,335 million) of derivative financial assets and $1,459 million (2024: $2,589 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

93

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 asset 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.

Intangible

Useful life

Depreciation method

Goodwill

Indefinite

Not applicable

Brand names

Indefinite

Not applicable

Computer software

3 to 10 years

Straight-line or the diminishing balance method (using the Sum of the Years Digits)

94    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 24.Intangible assets (Continued)

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Goodwill

Balance as at beginning of year

 

7,433

 

7,419

 

6,253

 

6,253

Additionsa

-

21

-

-

Other adjustments

 

(20)

 

(7)

 

-

 

-

Balance as at end of year

 

7,413

 

7,433

 

6,253

 

6,253

Computer software

Balance as at beginning of year

 

2,675

 

2,797

 

2,242

 

2,371

Additions

 

776

 

792

 

674

 

673

Impairment

 

(23)

 

(19)

 

(23)

 

(19)

Amortisation

 

(995)

 

(889)

 

(864)

 

(783)

Other adjustments

 

(19)

 

(6)

 

-

 

-

Balance as at end of year

 

2,414

 

2,675

 

2,029

 

2,242

Cost

 

8,705

 

8,856

 

7,303

 

7,493

Accumulated amortisation and impairment

 

(6,291)

 

(6,181)

 

(5,274)

 

(5,251)

Carrying amount

 

2,414

 

2,675

 

2,029

 

2,242

Brand names

638

638

636

636

Total intangible assets

10,465

10,746

8,918

9,131

Goodwill has been allocated to the following CGUs:

Consumer

4,829

4,829

4,484

4,484

Business & Wealthb

2,122

2,122

1,769

1,769

New Zealand

462

482

-

-

Total goodwill

7,413

7,433

6,253

6,253

Brand names has been allocated to the following CGUs:

Consumer

350

350

350

350

Business & Wealth

288

288

286

286

Total brand names

 

638

 

638

 

636

 

636

a.Related to the acquisition of HealthPoint.
b.The Business and Wealth segment comprises individual CGUs (Business, Platforms, Margin Lending and HealthPoint) to which goodwill has been allocated. The carrying amount of goodwill for Business was $1,812m as at 30 September 2025 and 30 September 2024. The carrying amount of goodwill allocated to the remaining individual CGUs in this segment is not significant compared to total Group goodwill.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

95

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 the impairment testing of indefinite life of intangibles 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 rate

Forecast period/terminal growth rate

    

2025

    

2024

    

2025

    

2024

Australian CGUsa

 

9% / 11.8%-12.8%

9% / 11.7%-11.9%

5 years / 2%

5 years / 2%

New Zealand

 

9% / 11.4%

9% / 11.4%-11.7%

5 years / 2%

5 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 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.

96    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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.

Provisions carried for long service leave are supported by an independent actuarial report.

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. 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 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

97

Note 25.

Provisions, contingent liabilities, contingent assets and credit commitments (Continued)

Provisions

    

    

    

    

    

    

    

    

    

Litigation,

    

    

Annual leave

Provision for

 non-lending

and other

impairment

Lease

Restructuring

losses and

Long service

employee

on credit

restoration

and other

remediation

$m

leave

benefits

commitments

obligations

provisions

provisions

Total

Consolidated

Balance as at 30 September 2024

 

477

 

899

 

516

 

163

 

210

240

 

2,505

Additions

 

90

 

1,200

 

49

 

6

 

369

189

 

1,903

Utilisation

 

(56)

 

(1,167)

 

-

 

(8)

 

(225)

(90)

 

(1,546)

Reversal of unutilised provisions

(17)

 

(2)

 

(96)

 

(2)

 

(71)

(62)

 

(250)

Balance as at 30 September 2025

 

494

 

930

 

469

 

159

 

283

277

 

2,612

Parent Entity

Balance as at 30 September 2024

 

465

 

824

 

464

 

141

 

198

179

 

2,271

Additions

 

89

 

1,161

 

49

 

4

 

336

142

 

1,781

Utilisation

 

(55)

 

(1,128)

 

-

 

(6)

 

(203)

(70)

 

(1,462)

Reversal of unutilised provisions

 

(17)

(2)

(83)

(2)

(66)

(44)

(214)

Balance as at 30 September 2025

 

482

 

855

 

430

 

137

 

265

207

 

2,376

Legislative liabilities

Westpac had the following assessed liabilities as at 30 September 2025:

$26 million (2024: $22 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 (2024: $7 million) based on actuarial assessment as a self-insurer under the Accident Compensation Act 1985 (Victoria);
$7 million (2024: $7 million) based on actuarial assessment as a self-insurer under the Workers’ Rehabilitation and Compensation Act 1986 (South Australia);
$2 million (2024: $2 million) based on an actuarial assessment as a self-insurer under the Workers’ Compensation and Rehabilitation Act 2003 (Queensland);
Nil (2024: nil) based on an actuarial assessment as a self-insurer under the Workers’ Compensation Act 1951 (Australian Capital Territory);
Nil (2024: nil) based on an actuarial assessment as a self-insurer under the Return to Work Act 1986 (Northern Territory);
$1 million (2024: $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 (2024: $2 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.

98    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 25.

Provisions, contingent liabilities, contingent assets and credit commitments (Continued)

Provisions

Litigation, non-lending losses and remediation provisions

Provisions for the financial year 2025 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 and regulatory matters

As at 30 September 2025, the Group held provisions in respect of potential non-lending losses and costs connected with certain litigation and regulatory matters, 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 277 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. The Court’s judgment is reserved following the hearing on liability and penalty on 26 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. Westpac and SGF settled the class action on 14 March 2025 without admission of liability. On 27 August 2025, the Court approved the settlement amount of $130 million.
Agreed civil penalty proceedings between ASIC and RAMS Financial Group Pty Limited (RFG) relating to RFG’s oversight of conduct of RAMS third-party franchisees and franchisee employees who were authorised credit representatives of RFG between 3 June 2019 to 30 April 2023. On 24 October 2025, the Court delivered its judgement and imposed a penalty of $20 million plus costs.

Where matters have not been resolved, 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 these matters, 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

99

Note 25.

Provisions, contingent liabilities, contingent assets and credit commitments (Continued)

Contingent liabilities

Regulatory investigations, reviews and inquiries

Domestic regulators, statutory authorities and other bodies, such as ASIC, the 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, New Zealand Commerce Commission, BPNG and its Financial Analysis & Supervision Unit, Reserve Bank of Fiji, and the SEC, from time to time conduct investigations, reviews or inquiries (some of which may be industry wide). These activities can cover a range of matters (including potential contraventions and non-compliance) that involve, or may in the future, involve the Group.

These currently include:

An 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 the AML/CTF Program and associated processes and procedures, compliance with industry codes, monitoring of certain consumer transactions, consumer lending conduct, responsible lending and compliance with lending obligations, consumer credit contracts, banking products and services, and hardship processes.

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 actions 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 30 June 2014 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 Court has made orders for a hearing to commence on 5 April 2027 with an estimated duration of six weeks; and
Disputes have been raised by franchisees who were exited by RFG, including the commencement of a class action in May 2024. The class action and an additional proceeding commenced by an exited franchisee have been listed for hearing to commence on 31 August 2026.

100    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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 us, our customers, employees, other stakeholders and our reputation. These internal reviews continue to identify issues, in respect of which, we are taking, or will take, action so that Westpac, 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; responsible lending and compliance with lending obligations; hardship processes; sufficiency of training, policies, processes and procedures; AML/CTF Program and associated processes and procedures; use of our products or services for an improper purpose; product disclosure; protection and destruction 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, individuals, employees/unions, regulators or criminal prosecutors), compensation/remediation payments and/or refunds identified as part of these reviews.

Contingent levies

The Group is subject to a number of regulatory levies, which may be imposed at the discretion of the relevant regulating body. These include levies that fund the Financial Claims Scheme and the Compensation Scheme of Last Resort.

Exposures to third parties relating to divested businesses

The Group has potential exposures relating to warranties, indemnities and other commitments it has provided to third parties in connection with various divestments of entities, businesses and assets. The warranties, indemnities and other commitments cover a range of matters, conduct and risks. We have made payments under these indemnities and are in discussions with one or more parties in relation to claims made, and potential claims, under these arrangements. Provisions have been raised for matters where a present obligation exists, and a probable settlement can be reliably estimated.

Contingent tax risk

Tax and regulatory authorities in Australia and in other jurisdictions review, in the normal course of business, the direct and indirect taxation treatment of transactions (both historical and present-day transactions) undertaken by the Group. The Group also responds to various notices and requests for information it receives from tax and regulatory authorities.

These reviews, notices and requests may result in additional tax liabilities (including interest and penalties).

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 the Group has made contributions to a default fund. In the event of a default of another clearing member, the Group could be required to make additional default fund contributions.

Parent entity guarantees and undertakings to subsidiaries

Westpac Banking Corporation, as the parent entity of Westpac, provides letters of comfort in respect of certain subsidiaries in the normal course of business. These recognise that Westpac has a responsibility that those subsidiaries continue to meet their obligations.

Previously the parent entity also provided guarantees to certain wholly-owned subsidiaries which are Australian financial services or credit licensees to comply with legislative requirements. All but two of these guarantees were capped at $20 million per year and two specific guarantees were capped at $2 million. In 2025, these guarantees have been either replaced by a professional indemnity insurance policy or have been cancelled.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

101

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 that constitute contingent assets. If a specified contingent event occurs, these commitments will be called upon and recognised on the balance sheet as loans.

Any associated cash outflows expose Westpac to liquidity risk, while the resulting receivable exposes Westpac to credit risk should the counterparty fail to repay amounts owed as they become due. Westpac’s maximum exposure to credit losses is the contractual or notional amount of the arrangement, noting that some credit commitments can be cancelled by Westpac at any time, and a significant portion are expected to expire without being drawn upon. As a result, notional amounts do not necessarily reflect future cash requirements.

Westpac applies 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 2025 Annual Report for further details of credit risk and liquidity risk management, respectively.

Undrawn credit commitments, excluding derivatives, are disclosed in the below table:

Financial guarantees, letters of credit and other credit substitutes support the financial obligations of customers to third parties. Utilisation of these contracts is generally dependent on the creditworthiness of the customer. The Group may hold cash as collateral for certain financial guarantees issued;
Performance-related contingencies support the non-monetary obligations of customers to third parties, where payment will generally need to be made if a customer fails to fulfil a non-monetary contractual obligation to that third party;
Remaining commitments to extend credit mainly comprises various forms of credit facilities.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Undrawn credit commitmentsa

Financial guarantees, letters of credit and other credit substitutes

 

15,721

 

15,220

 

15,254

 

14,642

Performance-related contingencies

 

6,709

 

5,393

 

6,484

 

5,369

Remaining commitments to extend creditb

 

198,739

 

191,498

 

173,966

 

167,851

Total undrawn credit commitments

 

221,169

 

212,111

 

195,704

 

187,862

a.

The composition of undrawn credit commitments has been revised to better reflect the nature of the types of commitments provided. Comparatives have been revised to align with current period presentation.

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, $7.4 billion (2024: $6.0 billion) for the Group and $6.3 billion (2024: $5.1 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.

102    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

103

Note 26.Shareholders’ equity (Continued)

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Share capital

    

  

    

  

    

  

    

  

Ordinary share capital, fully paid

37,263

37,958

37,263

37,958

Treasury sharesa

(845)

(758)

(902)

(816)

Total share capital

36,418

37,200

36,361

37,142

Non-controlling interest

Perpetual Preference Shares

324

339

-

-

Other

3

8

-

-

Total non-controlling interests

327

347

-

-

a.

2025: 5,789,312 unvested RSP and EIP treasury shares held (2024: 6,173,874).

Perpetual Preference Shares (PPS)

Westpac New Zealand Limited (WNZL), a wholly-owned subsidiary of Westpac, has NZD375 million of PPS with 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.

Ordinary shares

Westpac does not have authorised capital and the ordinary shares have no par value. Ordinary shares entitle the holder to participate in dividends and, in the event of Westpac winding up, to a share of the proceeds in proportion to the number of and amounts paid on the shares held.

Each ordinary share entitles the holder to one vote, either in person or by proxy, at a shareholder meeting.

Reconciliation of movement in number of ordinary shares

Consolidated and Parent Entity

    

(number)

    

2025

    

2024

Opening balance

 

3,441,411,361

 

3,509,076,960

Share buybacka

(21,058,056)

(67,665,599)

Closing balance

 

3,420,353,305

 

3,441,411,361

a.

Westpac previously announced its intention to undertake a $3.5 billion on market buyback of WBC ordinary shares. During 2025 Westpac has bought back and cancelled 21,058,056 ordinary shares ($672 million) at an average price of $31.93.

Ordinary shares purchased on market

    

2025

Consolidated and Parent Entity

    

Number

    

Average Price ($)

For share-based payment arrangements:

  

  

Employee share plan (ESP)

807,480

31.77

Westpac Equity Incentive Plan (EIP) - Restricted Sharesa

1,913,828

32.26

Westpac Performance Plan (WPP) - share rights exercised

43,924

31.58

Westpac Equity Incentive Plan (EIP) - Unhurdled share rights exercised

21,345

32.75

Westpac on-market share purchase for future share rights exercises and restricted shares allocationsb

752,522

36.91

Long Term Variable Reward (LTVR) Plan – share rights exercised

3,835

31.10

Total number of ordinary shares purchased on market

3,542,934

a.

Ordinary shares allocated to employees under the EIP as Restricted Shares are classified as treasury shares until the shares vest.

b.

Unallocated shares in the Westpac Employee Equity Plans Trust that are classified as treasury shares.

For details of the share-based payment arrangements refer to Note 31.

104    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 26.Shareholders’ equity (Continued)

Reconciliation of movement in reserves

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Debt securities at FVOCI reserve

Balance as at beginning of year

(568)

(165)

(462)

103

Net gains/(losses) from changes in fair value

500

(591)

423

(813)

Income tax effect

(147)

180

(124)

243

Transferred to income statements

(19)

5

(19)

5

Income tax effect

6

(1)

6

(1)

Loss allowance on debt securities measured at FVOCI

-

1

(1)

1

Other

3

3

-

-

Balance as at end of year

(225)

(568)

(177)

(462)

Equity securities at FVOCI reserve

Balance as at beginning of year

127

126

(18)

(15)

Net gains/(losses) from changes in fair value

25

(2)

10

(5)

Exchange differences on translation

2

1

2

-

Income tax effect

(3)

2

(3)

2

Balance as at end of year

151

127

(9)

(18)

Share-based payment reserve

Balance as at beginning of year

2,079

1,983

1,970

1,874

Share-based payment expense

94

96

94

96

Balance as at end of year

2,173

2,079

2,064

1,970

Cash flow hedge reserve

Balance as at beginning of year

548

152

501

(203)

Net gains/(losses) from changes in fair value

(233)

501

(154)

873

Income tax effect

68

(158)

46

(262)

Transferred to income statements

152

77

154

132

Income tax effect

(46)

(24)

(46)

(39)

Balance as at end of year

489

548

501

501

Foreign currency translation reserve

Balance as at beginning of year

(438)

(138)

(275)

(141)

Exchange differences on translation of foreign operations

(349)

(328)

(22)

(165)

Gains/(losses) on net investment hedges

95

28

53

31

Balance as at end of year

(692)

(438)

(244)

(275)

Other reserves

Balance as at beginning of year

(16)

(23)

41

41

Transactions with owners

-

7

-

-

Balance as at end of year

(16)

(16)

41

41

Total reserves

1,880

1,732

2,176

1,757

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

105

Note 27.Capital adequacy

APRA is the prudential regulator of ADIs including Westpac. APRA measures an ADI’s regulatory capital using the following measures:

Level of capital

Definition

Common Equity Tier 1 (CET1) Capital

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 Capital

The sum of CET1 and Additional Tier 1 (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 Capital

The 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 ratio

The leverage ratio is defined by APRA as Tier 1 capital divided by the “Exposure measure” and is expressed as a percentage. “Exposure measure” includes on- balance sheet exposures, derivatives exposures, securities financing transaction (SFT) exposures, and other off-balance sheet exposures.

Under APRA’s Prudential Standards, Australian ADIs, including Westpac, are required to maintain minimum Prudential Capital Requirements expressed as a percentage of total risk weighted assets as follows:

CET1 Capital ratio of at least 4.5%;
Tier 1 Capital ratio of at least 6.0%; and
Total Capital ratio of at least 8.0%.

APRA may also require ADIs, including Westpac, to meet Prudential Capital Requirements above the industry minimum. APRA does not allow the Prudential Capital Requirements 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 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.

Westpac’s capital adequacy was compliant with APRA’s requirements throughout 2025.

APRA has announced changes to banks’ capital requirements with effect from 1 January 2027. This includes changes to CET1, Tier 1, Total capital and the Leverage ratio.

Capital management strategy

Westpac’s capital management strategy is reviewed on an ongoing basis, including 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 post dividend CET1 capital ratio of above 11.25% in normal operating conditions. This target includes consideration of APRA’s increase in the minimum CET1 ratio of 0.25% to 10.50% effective 1 January 2027 and replaces the previous CET1 capital operating range of between 11.00% and 11.50%.

1.

Noting that APRA may apply higher requirements for an individual ADI.

106    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 28.Dividends

Consolidated

Parent Entity

$m

2025

2024

2023

2025

2024

Dividends not recognised at year end

    

  

    

  

    

  

    

  

    

  

Since year end the Directors have proposed the following dividends:

 

 

  

 

  

 

 

  

Final dividend 77 cents per share (2024: 76 cents, 2023: 72 cents) all fully franked at 30%

2,634

 

2,615

 

2,527

 

2,634

 

2,615

Total dividends not recognised at year end

 

2,634

 

2,615

 

2,527

 

2,634

 

2,615

The Board has determined a final fully franked dividend of 77 cents per share, to be paid on 19 December 2025 to shareholders on the register at the record date of 7 November 2025.

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 2025 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 12 November 2025 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 $3,714 million (2024: $3,504 million, 2023: $3,520 million). This is calculated as the year end franking credit balance, adjusted for the Australian current tax liability and the proposed 2025 final dividend.

New Zealand imputation credits

New Zealand imputation credits of NZ$0.06 (2024: NZ$0.06, 2023: NZ$0.07) per share will be attached to the proposed 2025 final dividend. New Zealand imputation credits available to the Parent Entity for subsequent years are NZ$332 million (2024: NZ$374 million, 2023: NZ$557 million). This is calculated on the same basis as the Australian franking credits but using the New Zealand current tax liability.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

107

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 2025.

    

Country

    

    

Country

Name

of incorporation

Name

of incorporation

Asgard Capital Management Ltd

 

Australia

 

Westpac Equity Holdings Pty Limited

 

Australia

BT Portfolio Services Limited

 

Australia

 

Westpac Financial Services Group Pty Limited

 

Australia

Capital Finance Australia Limited

 

Australia

 

Westpac New Zealand Group Limited

 

New Zealand

Crusade trust No.2P of 2008

 

Australia

 

Westpac New Zealand Limited

 

New Zealand

Series 2008-1M WST Trust

 

Australia

 

Westpac NZ Covered Bond Limiteda

 

New Zealand

Series 2022-1P WST Trust

 

Australia

 

Westpac NZ Securitisation Limiteda

 

New Zealand

Series 2024-1 WST Trust

Australia

Westpac Overseas Holdings No. 2 Pty Limited

Australia

Series 2024-2 WST Trust

Australia

Westpac Securities NZ Limited

New Zealand

Sixty Martin Place (Holdings) Pty Limited

Australia

Westpac Securitisation Holdings Pty Limited

Australia

Westpac Bank - PNG - Limited

Papua New Guinea

Westpac Term Pie Fund

New Zealand

Westpac Covered Bond Trust

Australia

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.

108    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 29.Investments in subsidiaries and associates (Continued)

Non-controlling interests

The following material controlled entities are not wholly owned:

Percentage Owned

    

2025

    

2024

Westpac Bank - PNG - Limited

 

98.7%

89.9%

Westpac NZ Covered Bond Limited

 

19.0%

19.0%

Westpac NZ Securitisation Limited

 

19.0%

19.0%

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:

2025

Westpac Banking Corporation acquired 58,000 shares from a minority shareholder of Westpac Bank - PNG - Limited (WPNG) which will raise its controlling interest to 99.73%. As at the reporting date, the registration of the share transfer was pending. On behalf of the Parent Entity, the acquisition cost of PGK8 million was paid by WPNG to the minority shareholder, in lieu of the Parent Entity receiving unpaid dividends and as a result was a non-cash transaction for the Parent Entity.

2024:

Westpac Banking Corporation acquired 8.74% of shares from minority shareholders of WPNG, raising its controlling interest to 98.65%. On behalf of the Parent Entity, the acquisition cost of PGK66 million to minority shareholders, in lieu of the Parent Entity receiving unpaid dividends and as a result was a non-cash transaction for the Parent Entity; and
The business of HealthPoint Claims Pty Ltd on 6 April 2024.

2023 - no businesses were acquired.

Businesses disposals

During the year ended 30 September:

2025 - no businesses were sold.

2024 - no businesses were sold.

2023 - Westpac sold its interest in Advance Asset Management Limited on 31 March 2023.

FINANCIAL
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PERFORMANCE
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EXHIBIT 15.4

ADDITIONAL
INFORMATION

109

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 securities

Westpac 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 securities

Westpac 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 commitments

Westpac 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 agreements

Westpac 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.

110    WESTPAC GROUP 2025 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

Consolidated

and other asset-

securitisation

Group

Interest in other

$m

backed securitiesa

vehicles

managed funds

structured entities

Total

2025

Assets

 

  

 

  

 

  

 

  

 

  

Trading securities and financial assets measured at FVIS

 

795

-

1

6,483

7,279

Investment securities

 

9,162

-

-

-

9,162

Loans

 

-

28,274

-

27,602

55,876

Other financial assets

 

1

-

57

-

58

Total on-balance sheet exposures

 

9,958

28,274

58

34,085

72,375

Total notional amounts of off-balance sheet exposures

 

-

10,355

-

9,848

20,203

Maximum exposure to loss

 

9,958

38,629

58

43,933

92,578

Size of structured entitiesb

 

102,946

38,629

16,318

43,933

201,826

2024

Assets

 

  

 

  

 

  

 

  

 

  

Trading securities and financial assets measured at FVIS

 

1,055

-

2

8,241

9,298

Investment securities

8,881

-

-

-

8,881

Loans

 

-

27,786

-

23,871

51,657

Other financial assets

 

2

-

53

-

55

Total on-balance sheet exposures

 

9,938

27,786

55

32,112

69,891

Total notional amounts of off-balance sheet exposures

 

-

7,638

-

9,145

16,783

Maximum exposure to loss

 

9,938

35,424

55

41,257

86,674

Size of structured entitiesb

 

90,864

35,424

15,811

41,257

183,356

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.

FINANCIAL
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PERFORMANCE
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EXHIBIT 15.4

ADDITIONAL
INFORMATION

111

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 have been 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 have been 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 replaced the RSP, WPP and LTVR plans. Existing allocations under the RSP, WPP and LTVR 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 and 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 purchased on market or issued to satisfy the obligation to employees is recognised in equity.

112    WESTPAC GROUP 2025 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 Shares

Employee Share Plan (ESP)

Type of share-based payment

Share 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 used

Aligns 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 price

Nil

Nil

n/a

n/a

Performance conditionsa

Awards from 2022 to 2023: TSR over a four-year performance period.

Awards from 2024 onwards: 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.

Noneb

None

None

Service conditions

Continued 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)c

Awards for 2022 to 2023: 4 years

Awards from 2024 onwards:

CEO performance rights: 6 years

GE performance rights: 5 years

CEO restricted rights: 50% over 4 years and 50% over 5 years

GE restricted rights: 4 years

Defined period set out at time of grantc

Defined period set out at time of grant

1 year

Treatment at end of term

Automatically 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 (whichever occurs first).

Does the employee receive dividends and voting rights during the vesting period?d

No

No

Yes

Yes

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.Excluding the UNITE Award that is granted as share rights under the EIP and is subject to internal performance measures.
c.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 and 2025 LTVR award (performance rights and restricted rights) are exercisable up to 2 years after the vesting date.
d.For LTVR restricted rights, dividend equivalent payments (DEP) are accrued for the vesting period. For LTVR performance rights, DEP are only accrued for the further deferral period after the performance period. These DEP 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.

FINANCIAL
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EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

113

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 as

and 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

2025

Share rights

One-year vesting period

111,458

73,112

88,657

1,164

94,749

27,527

Two-year vesting period

89,542

57,439

1,984

5,342

139,655

3,210

Three-year vesting period

32,446

34,829

-

-

67,275

-

Four-year vesting period

81,761

68,775

-

8,273

142,263

-

Five-year vesting period

15,270

313,268

-

79,573

248,965

-

Six-year vesting period

9,661

4,377

-

-

14,038

-

Seven-year vesting period

10,250

4,599

-

-

14,849

-

Total share rights

350,388

556,399

90,641

94,352

721,794

30,737

Weighted average remaining contractual life

13.8 years

13.3 years

2024

Share rights

 

24,698

 

334,167

 

836

 

7,641

 

350,388

 

-

The weighted average fair value at grant date of EIP service-based share rights issued during the year was $27.13 (2024: $20.65).

ii.Westpac Equity Incentive Plan (EIP) Long Term Variable Reward (LTVR) - Performance Rights and Restricted Rights

    

Outstanding

Outstanding as

and 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

2025

 

  

 

  

 

  

 

  

 

  

 

  

Share rights

 

898,756

 

574,717

 

-

 

-

 

1,473,473

 

-

Weighted average remaining contractual life

 

5.8 years

 

 

 

 

5.2 years

 

2024

 

  

 

  

 

  

 

  

 

  

 

  

Share rights

 

-

 

898,756

 

-

 

-

 

898,756

 

-

The weighted average fair value at grant date of EIP LTVR Performance Rights and Restricted Rights issued during the year was $22.94 (2024: $18.00).

iii.Westpac Long-Term Variable Reward Plan (LTVR)

    

    

    

    

    

Outstanding

Outstanding as

and 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

2025

Share rights

 

3,383,798

-

630,069

687,808

2,065,921

53,460

Weighted average remaining contractual life

11.9 years

 

 

11.5 years

2024

 

  

  

 

  

  

Share rights

4,028,972

-

-

645,174

3,383,798

-

No LTVR share rights were issued in the year ending 30 September 2025 following the introduction of the EIP from 1 January 2023.

114    WESTPAC GROUP 2025 ANNUAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

Note 31.Share-based payments (Continued)

iv.

Westpac Performance Plan (WPP)

    

    

    

    

    

Outstanding

Outstanding as

and 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

2025

Share rights

 

 

 

 

One-year vesting period

64,336

 

-

26,586

 

1,533

 

36,217

 

36,217

Two-year vesting period

98,511

 

-

50,107

 

3,508

 

44,896

 

41,127

Three-year vesting period

37,645

-

13,932

-

23,713

4,661

Four-year vesting period

213,798

-

87,430

20,168

106,200

-

Five-year vesting period

6,927

-

-

-

6,927

-

Six-year vesting period

6,576

 

-

-

 

-

 

6,576

 

-

Seven-year vesting period

6,977

 

-

-

 

-

 

6,977

 

-

Total share rights

434,770

-

178,055

25,209

231,506

82,005

Weighted average remaining contractual life

11.7 years

 

  

  

 

  

 

10.8 years

2024

 

  

  

 

  

 

  

Share rights

809,018

-

317,173

57,075

434,770

111,078

No WPP share rights were issued in the year ending 30 September 2025 following the introduction of the EIP from 1 January 2023.

v.

Westpac Equity Incentive Plan (EIP) - Restricted Shares

Outstanding as at

Granted during

Forfeited during

Outstanding as at

Allocation date

    

beginning of year

    

the year

    

Released

    

the year

    

end of year

2025

2,550,472

2,083,370

838,759

121,426

3,673,657

2024

 

310,649

2,393,902

115,752

38,327

2,550,472

The weighted average fair value at grant date of EIP restricted shares issued during the year was $32.46 (2024: $23.14).

vi.

Restricted Share Plan (RSP)

Outstanding as at

Granted during

Forfeited during

Outstanding as at

Allocation date

    

beginning of year

    

the year

    

Released

    

the year

    

end of year

2025

2,738,389

-

1,382,492

6,396

1,349,501

2024

 

4,916,346

-

2,085,417

92,540

2,738,389

No RSP shares were issued in the year ending 30 September 2025 following the introduction of the EIP from 1 January 2023.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

115

Note 31.Share-based payments (Continued)

vii.Employee Share Plan (ESP)

Average number

Number 

of shares allocated

Total number of

Market price

    

Allocation date

    

of participants

    

per participant

    

shares allocated

    

per sharea

    

Total fair value

2025

20 November 2024

26,916

30

807,480

$

32.82

$

26,501,494

2024

 

23 November 2023

27,549

47

1,294,803

$

21.20

$

27,449,824

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 2024 ESP award was satisfied through the purchase of shares on market.

The liability accrued for the ESP at 30 September 2025 was $28 million (2024: $28 million) and was provided for as other employee benefits.

viii.

Other plans

Westpac also provides share-based 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 MUFG Corporate Markets (AU) Limited, Liberty Place, Level 41, 161 Castlereagh 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 3.3%-3.8% applied to TSR-hurdled grants;
The dividend yield on Westpac shares applied to TSR-hurdled grants ranged from 4.0%-5.0% for those issued under the LTVR and for those issued under the EIP;
Volatility in Westpac’s TSR of 20%-21%, applied to TSR-hurdled grants; and
Volatilities of, and correlation factors between, TSR of the comparator group and Westpac for TSR-hurdled grants.

116    WESTPAC GROUP 2025 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.

Westpac had the following defined benefit plans at 30 September 2025:

Date of last actuarial assessment of

Name of plan

    

Type

    

Form of benefit

    

the 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 UK Staff Superannuation Scheme (UKSS)

Defined benefit

Indexed pension and lump sum

5 April 2024

Westpac UK Medical Benefits Scheme

 

Defined benefit

 

Medical benefits

 

n/a

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 $161 million (2024: $140 million). Current contribution rates are as follows:

WGP – contributions are made to the WGP at the rate of 16.9% 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 2024 actuarial assessment.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

117

Note 32.Superannuation commitments (Continued)

Contributions

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Employer contributions

    

29

    

30

    

28

    

30

Member contributions

 

6

 

7

 

6

 

7

Expected employer contributions for the year ending 30 September 2026 were $23 million.

Expense recognised

    

Consolidated

    

Parent Entity

$m

    

2025

    

2024

    

2023

    

2025

    

2024

Current service cost

    

23

    

27

    

26

    

23

    

26

Net interest cost on net benefit liability

 

(9)

 

(11)

 

(14)

 

(10)

 

(10)

Total defined benefit expense

 

14

 

16

 

12

 

13

 

16

Defined benefit balances recognised

    

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Benefit obligation as at end of year

    

2,282

    

2,218

    

2,238

    

2,169

Fair value of plan assets as at end of year

 

2,525

 

2,424

 

2,481

 

2,380

Net surplus/(deficit)

 

243

 

206

 

243

 

211

Defined benefit surplus included in other assets

 

247

 

215

 

247

 

215

Defined benefit deficit included in other liabilities

 

(4)

 

(9)

 

(4)

 

(4)

Net surplus/(deficit)

 

243

 

206

 

243

 

211

The average duration of the defined benefit obligation is 12 years (2024: 12 years).

Significant assumptions

    

2025

2024

Consolidated and Parent Entity

    

Australian funds

    

Overseas funds

    

Australian funds

    

Overseas funds

Discount rate

    

5.4%

 

4.2%-5.7%

5.6%

 

4.3%-5.0%

Salary increases

 

3.4%

 

3.0%-4.0%

3.5%

 

3.0%-3.9%

Inflation rate (pensioners received inflationary increase)

 

2.4%

 

2.0%-3.1%

2.5%

 

2.0%-3.2%

Life expectancy of a 60-year-old male

 

32.1

 

27.7-27.9

31.9

 

27.6-27.8

Life expectancy of a 60-year-old female

34.6

 

29.5-29.8

34.5

 

29.6

118    WESTPAC GROUP 2025 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

$m

    

2025

    

2024

0.5% decrease in discount rate

    

136

    

136

0.5% increase in annual salary increases

 

2

 

3

0.5% increase in inflation rate (pensioners receive inflationary increase)

 

133

 

131

1 year increase in life expectancy

 

48

 

46

Asset allocation

The table below provides a breakdown of the schemes’ investments by asset class.

    

2025

2024

Australian

Australian

%

    

funds

    

Overseas funds

    

funds

    

Overseas funds

Cash

    

5%

4%

5%

3%

Equity instruments

 

44%

9%

43%

9%

Debt instruments

 

26%

5%

26%

5%

Property

 

8%

1%

8%

2%

Other assets

 

17%

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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

119

Note 33.Auditor’s remuneration

Following approval by Westpac’s shareholders at the 2024 AGM on 13 December 2024, KPMG commenced as Westpac’s external auditor for the 2025 financial year.

The fees payable to the auditor in Australia and overseas firms belonging to the network of firms were:

Consolidated

Parent Entity

    

2025

    

2024

    

2025

    

2024

$’000

    

KPMG

    

PwC

    

KPMG

    

PwC

Audit and audit-related fees

    

  

    

  

Audit fees

 

  

 

  

Australia

 

23,977

28,035

 

23,605

27,673

Overseas

 

5,197

5,429

 

708

689

Total audit fees

 

29,174

33,464

 

24,313

28,362

Audit-related fees

 

 

Australia

 

2,221

2,888

 

2,221

2,888

Overseas

 

464

279

 

102

30

Total audit-related fees

 

2,685

3,167

 

2,323

2,918

Total audit and audit-related fees

 

31,859

36,631

 

26,636

31,280

Tax fees

Overseas

395

-

300

-

Total tax fees

395

-

300

-

Other fees

Overseas

-

69

-

-

Total other fees

-

69

-

-

Total audit and non-audit fees

 

32,254

36,700

 

26,936

31,280

Fees payable to the auditor have been categorised as follows:

Audit

The year end audit, half-year review and comfort letters associated with debt issues and capital raisings.

Audit-related

Consultations regarding accounting standards and reporting requirements, regulatory compliance reviews and assurance related to debt and capital offerings.

Tax

Tax compliance services.

Other

Various services including systems assurance, compliance advice and controls reviews.

It is Westpac’s policy to engage KPMG 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 the External Auditor for Audit or Non-Audit Services Policy.

KPMG also received fees of $0.2 million and PwC of $6.4 million (2024 PwC: $6.6 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.

120    WESTPAC GROUP 2025 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/balance

    

Details disclosed in

Balances due to/from subsidiaries

Balance Sheet

Dividend income/Transactions with subsidiaries

Note 4

Interest income and Interest expense

Note 3

Tax consolidated group transactions and undertakings

Note 7

Guarantees and undertakings

Note 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 $583 million (2024: $535 million) to defined contribution plans and $29 million (2024: $30 million) to defined benefit plans. Refer to Note 32.

Remuneration of KMP

Total remuneration of the KMP was:

    

Post

    

    

    

    

    

Short-

employment

Other long-

Termination

Share-

$

    

term benefits

benefits

term benefits

benefits

based payments

Total

Consolidated

  

 

  

 

  

 

  

 

  

 

  

2025

22,058,824

731,736

362,316

4,518,632

23,176,814

50,848,322

2024

22,085,122

613,423

175,780

-

15,481,114

38,355,439

Parent Entity

  

 

  

 

  

 

  

 

  

 

  

2025

20,825,040

603,850

362,316

4,518,632

22,059,466

48,369,304

2024

20,907,779

493,529

175,780

-

14,569,565

36,146,653

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

121

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 year

loan balance

with loans

2025

1,003,143

15,815,278

11

2024

1,030,280

32,064,184

10

Share rights holdings

For compliance with SEC disclosure requirements, the following table sets out certain details of the performance share rights, restricted share rights and unhurdled share rights held at 30 September 2025 by the CEO and other key management personnel (including their related parties):

    

    

    

Latest Date of Exercise

Number of Share Rights

Managing Director and Chief Executive Officer

Anthony Miller

 

Ranges from 15 November 2029 to 1 October 2037

368,811

Group Executivesa

Scott Collary

 

Ranges from 15 November 2029 to 1 October 2037

337,165

Paul Fowler

Ranges from 13 May 2031 to 13 May 2032

19,044

Peter Herbert

Ranges from 15 November 2030 to 15 November 2031

24,224

Nell Hutton

 

Ranges from 15 November 2029 to 15 November 2031

140,020

Carolyn McCann

Ranges from 15 November 2029 to 1 October 2037

241,195

Catherine McGrath

Ranges from 1 October 2026 to 1 October 2037

282,641

Michael Rowland

 

Ranges from 15 November 2029 to 1 October 2037

261,748

Ryan Zanin

Ranges from 15 November 2029 to 1 October 2037

299,764

Former Group Executives

Peter King

Ranges from 15 November 2029 to 1 October 2037

448,117

Christine Parker

Ranges from 15 November 2029 to 1 October 2037

225,269

Jason Yetton

Ranges from 15 November 2029 to 1 October 2037

326,680

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 2025.

122    WESTPAC GROUP 2025 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.

    

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2023

    

2025

    

2024

Profit after income tax expense

    

6,933

6,990

7,201

    

6,496

6,691

Adjustments:

 

 

Depreciation, amortisation and impairment

 

1,561

1,522

1,237

 

1,331

1,407

Impairment charges/(benefits)

 

671

727

839

 

680

659

Net decrease/(increase) in current and deferred tax

 

(421)

(252)

665

 

(558)

(346)

(Increase)/decrease in accrued interest receivable

 

302

(227)

(730)

 

252

(207)

(Decrease)/increase in accrued interest payable

 

(705)

802

2,400

 

(410)

757

(Decrease)/increase in provisions

 

107

(272)

(173)

 

105

(272)

Unrealised (gain)/loss in trading income

(498)

1,615

280

(498)

1,596

Other non-cash items

 

(1,085)

(1,121)

(1,130)

 

(997)

(858)

Cash flows from operating activities before changes in operating assets and liabilities

 

6,865

9,784

10,589

 

6,401

9,427

Net (increase)/decrease in:

 

 

Collateral paid

1,945

(2,097)

1,545

1,905

(2,057)

Trading securities and financial assets measured at FVIS

 

(6,107)

(18,994)

(4,524)

 

(6,054)

(19,452)

Derivative financial instruments

5,650

(836)

4,082

1,013

1,358

Loans

 

(50,182)

(35,083)

(27,270)

 

(45,997)

(32,528)

Other financial assets

(48)

(348)

128

(26)

(231)

Other assets

 

(29)

(34)

8

 

2

2

Net increase/(decrease) in:

 

 

Collateral received

(5)

(318)

(2,888)

(709)

(181)

Deposits and other borrowings

 

51,853

35,243

24,692

 

50,803

35,870

Other financial liabilities

(457)

(7,084)

(17,146)

873

(5,281)

Other liabilities

 

4

-

(12)

 

-

(9)

Net cash provided by/(used in) operating activities

 

9,489

(19,767)

(10,796)

 

8,211

(13,082)

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

123

Note 35.Notes to the cash flow statements (Continued)

Details of the assets and liabilities over which control ceased

In 2025 and 2024, there were no changes in the Group or Parent’s ownership interest in entities which resulted in a loss of control.

Details of the entity over which control ceased in 2023 are provided in Note 29.

Consolidated

$m

    

2023

Assets

    

  

Cash and balances with central banks

 

18

Other financial assets

 

18

Intangible assets

55

Total assets

 

91

Liabilities

 

Other financial liabilities

22

Provisions

1

Total liabilities

 

23

Total equity attributable to owners of WBC

 

68

Cash proceeds received (net of transaction costs)

 

311

Total consideration

 

311

Gain/(loss) on disposal

 

243

Reconciliation of cash proceeds from disposal:

 

Cash proceeds received (net of transaction costs)

 

311

Less: Cash deconsolidated

 

(18)

Cash consideration (paid)/received (net of transaction costs and cash held)

 

293

Non-cash investing activities

There were no material non-cash investing activities in 2025.

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

Consolidated

Parent Entity

$m

    

2025

2024

    

2023

    

2025

    

2024

Shares issued under the dividend reinvestment plan

 

-

-

192

 

-

-

Increase in lease liabilities

 

223

399

235

 

181

319

On 10 September 2025, Westpac Bank - PNG - Limited (WPNG) paid PGK8 million to minority shareholders, on behalf of the Parent Entity, to acquire 1.09% 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 11 September 2024, WPNG paid PGK66 million to minority shareholders, on behalf of the Parent Entity, to acquire 8.74% in WPNG. This was also 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.

124    WESTPAC GROUP 2025 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.

Consolidated

Parent Entity

$m

    

2025

    

2024

    

2025

    

2024

Cash and cash at bank

 

10,141

 

9,320

 

9,805

 

8,961

Exchange settlement accounts

 

40,017

 

56,036

 

34,802

 

49,276

Regulatory deposits with central banks

 

272

 

311

 

175

 

163

Total cash and balances with central banks

 

50,430

 

65,667

 

44,782

 

58,400

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 $273 million (2024: $311 million) for Westpac and $175 million (2024: $164 million) for the Parent Entity which are included in cash and balances with central banks.

Note 36.Subsequent events

Since 30 September 2025, the Board has determined to pay a fully franked final dividend of 77 cents per fully paid ordinary share. The dividend is expected to be $2,634 million. The dividend is not recognised as a liability at 30 September 2025. The proposed payment date of the dividend is 19 December 2025.

The Board has determined to satisfy the DRP for the 2025 final 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 12 November 2025 and will not include a discount.

No other matters have arisen since the year ended 30 September 2025 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.

FINANCIAL
REPORT

EXHIBITS INDEX

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PERFORMANCE
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EXHIBIT 15.4

ADDITIONAL
INFORMATION

125

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 entity

Type of entity

 

held

Country of incorporation

Tax 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

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

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

Mortgage Management Pty Limited

 

Body Corporate

 

100

 

Australia

 

Australia

Net Nominees Pty 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.

 

Limited Partnership

 

N/A

 

Australia

 

Australia

Reinventure Fund II I.L.P.

 

Limited Partnership

 

N/A

 

Australia

 

Australia

Reinventure Fund III I.L.P.

 

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

Securitor Financial Group Pty Limited

 

Body Corporate

 

100

 

Australia

 

Australia

126    WESTPAC GROUP 2025 ANNUAL REPORT

CONSOLIDATED ENTITY DISCLOSURE STATEMENT

    

    

% of share 

    

    

capital

Name of entity

Type of entity

 

held

Country of incorporation

Tax residency

Series 2008-1M 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

Series 2024-2 WST Trust

 

Trust

 

N/A

 

Australia

 

Australia

Sixty Martin Place (Holdings) Pty Ltd

 

Body Corporate

 

100

 

Australia

 

Australia

St.George Finance Holdings Pty Limited

 

Body Corporate

 

100

 

Australia

 

Australia

St.George Finance Pty Limited

 

Body Corporate

 

100

 

Australia

 

Australia

St.George Motor Finance Pty 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

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 - Limiteda

 

Body Corporate

 

98.65

 

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 Corporate

100

 

United States

 

Foreign - United States

Westpac Cash PIE Fundb

Trust

N/A

New Zealand

Foreign - 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

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 Fundb

 

Trust

 

N/A

 

New Zealand

 

Foreign - New Zealand

Westpac NZ Covered Bond Holdings Limitedc

 

Body Corporate

 

19

 

New Zealand

 

Foreign - New Zealand

Westpac NZ Covered Bond Limitedc

 

Body Corporate

 

19

 

New Zealand

 

Foreign - New Zealand

FINANCIAL
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EXHIBIT 15.4

ADDITIONAL
INFORMATION

127

    

    

% of share

    

    

capital

Name of entity

Type of entity

held

Country of incorporation

Tax residency

Westpac NZ Operations Limited

 

Body Corporate

 

100

 

New Zealand

 

Foreign - New Zealand

Westpac NZ Securitisation Holdings Limitedc

 

Body Corporate

 

19

 

New Zealand

 

Foreign - New Zealand

Westpac NZ Securitisation Limitedc

 

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 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 Fundb

 

Trust

 

N/A

 

New Zealand

 

Foreign - New Zealand

a.Refer to Note 29 for further details.
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.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.

128    WESTPAC GROUP 2025 ANNUAL REPORT

STATUTORY STATEMENTS

Directors’ declaration

In the Directors’ opinion:

(a)

the financial statements and notes set out in ‘Financial report’ for the year ended 30 September 2025 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 and the Group’s financial position as at 30 September 2025 and of their performance for the financial year ended on that date.

(b)

The Consolidated Entity Disclosure Statement included in ‘Financial report’ as at 30 September 2025 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 Accounting 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.

Graphic

Graphic

Steven Gregg
Chairman

Sydney

2 November 2025

Anthony Miller

Managing Director and Chief Executive Officer

FINANCIAL
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EXHIBIT 15.4

ADDITIONAL
INFORMATION

129

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 2025 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 2025 was effective.

The effectiveness of Westpac’s internal control over financial reporting as of 30 September 2025 has been audited by KPMG, an independent registered public accounting firm, as stated in its report which is included herein.

130    WESTPAC GROUP 2025 ANNUAL REPORT

STATUTORY STATEMENTS

Graphic

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of Westpac Banking Corporation

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheet of Westpac Banking Corporation and its subsidiaries (the Company) as of September 30, 2025, the related consolidated income statement, statement of comprehensive income, statement of changes in equity, and cash flow statement for the year then ended and the related notes (collectively, the ‘consolidated financial statements’). We also have audited the Company’s internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with Australian Accounting Standards as issued by the Australian Accounting Standards Board and IFRS Accounting 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, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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. Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion 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.

Our audit 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 audit 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.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

131

Graphic

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 procedures to test the completeness and accuracy of the information presented in the supplemental information. The supplemental information, which is prepared 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 IFRS Accounting 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 (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) 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 (3) 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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

132    WESTPAC GROUP 2025 ANNUAL REPORT

STATUTORY STATEMENTS

Graphic

Provisions for expected credit losses on loans and credit commitments (ECL)

As discussed in Note 10 to the consolidated financial statements, the provision for ECL was $4,978 million for the Company at 30 September 2025. The Company uses models that estimate ECL using three main components: probability of default (PD), loss given default (LGD) and exposure at default (EAD). The Company applies forward-looking economic scenarios and associated probability weights to its models when determining an ECL estimate.

We identified the assessment of the provision for ECL as a critical audit matter. A high degree of audit effort, including specialised skills and knowledge, was required because of the significant measurement uncertainty involved in the Company’s estimation of ECL. Subjective and complex auditor judgement was required to assess the following:

the Company’s modelled estimations of ECL due to the inherently judgmental and complex nature of the models, namely those used to derive the PD, LGD and EAD, and key associated model assumptions. Certain models and model assumptions are the key drivers of complexity and measurement uncertainty, and minor changes to the model assumptions could have a significant effect on the Company’s calculation of the provision for ECL; and
the Company’s economic judgements, including the severity of the forward-looking downside economic scenario and the probability weightings used in the models.

The following are the primary procedures we performed to address this critical audit matter:

We evaluated the design and tested the operating effectiveness of certain internal controls related to the ECL estimation process. This included certain controls relating to:

model validation and monitoring;

credit reviews that determine customer risk grades (CRGs); and

the selection of the downside economic scenario and probability weightings.

We involved our credit risk professionals with specialised skills and knowledge who assisted in evaluating the Company’s models and associated model assumptions as follows:

evaluating the Company’s methodology used in the models to derive the PD, LGD and EAD and associated model assumptions against criteria in the accounting standards and industry practice;

inspecting model code for the calculation of certain model components to assess its consistency with the Company’s modelling methodology;

reperforming the model output for a selection of models using the Company’s documented methodology and comparing our output with the Company’s outputs; and

reperforming model monitoring for a selection of the current models to evaluate the models’ performance.

For a selection of customers in the business portfolios, we challenged the Company’s assessment of CRGs using relevant information in the loan file, including the customer’s financial position, to inform our overall assessment of the CRG against the Company’s policies.
We involved our economic and credit risk professionals with specialised skills and knowledge, who assisted in challenging the macroeconomic variable forecasts against external economic data, evaluating the severity of the downside economic scenario and evaluating the probability weights.

We have served as the Company’s auditor since 2025.

Graphic

KPMG

Sydney, Australia

2 November 2025

FINANCIAL
REPORT

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REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

133

Limitation on Independent Registered Public Accounting Firm’s Liability

The liability of KPMG in relation to the performance of their professional services provided to Westpac including, without limitation, KPMG's audits and reviews of Westpac's financial statements, is limited under the Chartered Accountants Australia and New Zealand Scheme approved by the New South Wales Professional Standards Council or such other applicable scheme approved pursuant to the Professional Standards Act 1994 (NSW) (the "Professional Standards Act"), as amended from time to time (the "Accountants Scheme"). Specifically, the Accountants Scheme limits the liability of an accountant to a maximum amount of AU$75 million for audit. The Accountants Scheme does not limit liability for a breach of trust, fraud or dishonesty.

134    WESTPAC GROUP 2025 ANNUAL REPORT

STATUTORY STATEMENTS

Graphic

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Westpac Banking Corporation

Opinion on the Financial Statements

We have audited the consolidated balance sheet of Westpac Banking Corporation and its subsidiaries (the “Company”) as of September 30, 2024, and the related consolidated income statements, statements of comprehensive income, statements of changes in equity and cash flow statements for each of the two years in the period ended September 30, 2024, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2024, and the results of its operations and its cash flows for each of the two 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.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s consolidated financial statements 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 of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits 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

PricewaterhouseCoopers, ABN 52 780 433 757

One International Towers Sydney, Watermans Quay, BARANGAROO NSW 2000,

GPO BOX 2650 SYDNEY NSW 2001

T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

FINANCIAL
REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

135

Graphic

the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

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.

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PricewaterhouseCoopers
Sydney, Australia

November 3, 2024

We served as the Company's auditor from 1968 to 2024

136    WESTPAC GROUP 2025 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)

Westpac Group Securities Trading Policy, incorporated by reference to our Annual Report on Form 20-F for the year ended 30 September 2024

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

KPMG’s consent dated 4 November 2025

15.2

PricewaterhouseCoopers' consent dated 4 November 2025

15.3

Westpac Group 2025 Annual Report on Form 20-F

15.4

Cybersecurity management and governance disclosure

101.INS

Inline 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.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover 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.

FINANCIAL REPORT

EXHIBITS INDEX

STRATEGIC
REVIEW

PERFORMANCE
REVIEW

EXHIBIT 15.4

ADDITIONAL
INFORMATION

137

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 4 November 2025