November 2019 Fixed Income Investor Roadshow

Westpac 2019 Investor Presentation

Westpac Banking Corporation ABN 33 007 457 141 Disclaimer 2

The material contained in this presentation is intended to be general background information on Westpac Banking Corporation (“Westpac”) (ABN 33 007 457 141) and its activities. It should not be reproduced, distributed or transmitted to any person without the consent of Westpac and is not intended for distribution in any jurisdiction in which such distribution would be contrary to local law or regulation. It does not constitute a prospectus, offering memorandum or offer of securities. The information is supplied in summary form and is therefore not necessarily complete. Also, it is not intended that it be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending upon their specific investment objectives, financial situation or particular needs. The material contained in this presentation may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. All amounts are in Australian dollars unless otherwise indicated. Financial information in this presentation may be presented on a cash earnings basis. Cash earnings is a non-GAAP measure. Refer to Westpac’s 2019 Annual Report on Form 20-F for the year ended 30 September 2019 (“2019 Annual Report on Form 20-F”) filed with the SEC for details of the basis of preparation of cash earnings. Refer to Appendix 6 for a reconciliation of reported net profit to cash earnings. Financial data in this presentation is as at 30 September 2019 unless otherwise indicated. Comparisons of FY19 financial results are to FY18 unless otherwise stated. Information contained in or otherwise accessible through the websites mentioned in this presentation does not form part of the presentation unless we specifically state that the information is incorporated by reference thereby forming part of the presentation. All references in this presentation to websites are inactive textual references and are for information only. Disclosure regarding forward-looking statements This presentation contains statements that constitute “forward-looking statements” within the meaning of Section 27A of the US Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended. Forward-looking statements are statements about matters that are not historical facts. Forward-looking statements appear in a number of places in this presentation and include statements regarding our intent, belief or current expectations with respect to our business and operations, market conditions, results of operations and financial condition, including, without limitation, future loan loss provisions, financial support to certain borrowers, indicative drivers, forecasted economic indicators and performance metric outcomes. We use words such as ‘will’, ‘may’, ‘expect’, 'indicative', ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘aim’, ‘probability’, ‘risk’, ‘forecast’, ‘likely’, ‘estimate’, ‘anticipate’, ‘believe’, or other similar words to identify forward-looking statements. These forward- looking statements reflect our current views with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many instances, beyond our control and have been made based upon management’s expectations and beliefs concerning future developments and their potential effect upon us. There can be no assurance that future developments will be in accordance with our expectations or that the effect of future developments on us will be those anticipated. Should one or more of the risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results could differ materially from the expectations described in this presentation. Factors that may impact on the forward-looking statements made include, but are not limited to, those described in the section entitled ‘Risk factors’ in Westpac’s 2019 Annual Report on Form 20-F filed with the SEC. When relying on forward-looking statements to make decisions with respect to us, investors and others should carefully consider such factors and other uncertainties and events. We are under no obligation, and do not intend, to update any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise, after the date of this presentation.

Westpac Group Debt Investor Presentation I November 2019 Westpac FY19 3 Summary Balance sheet strength prioritised • CET1 capital ratio 10.7%, APRA Basel III basis, above APRA’s “unquestionably strong” benchmark • CET1 capital ratio 15.9%, Basel III internationally comparable1 basis • LCR 127% • NSFR 112% • TLAC framework announced July 2019; Issued A$4.2bn in FY19; Tier 2 at 2.8% at 30 Sep 2019 • Highly rated AA- / Aa3 / AA- (Stable outlook S&P and Moody’s; Negative outlook Fitch)

Asset quality sound • Loan impairment charges to average loans annualised 11bps in FY19 (FY18: 12bps) • Stressed assets to total committed exposures 1.20% (30 Sep 2018: 1.08%) • Australian mortgages 90+ day delinquencies 88bps (30 Sep 2018: 72bps)

Acting decisively to reshape our business • Restructured wealth business, including exiting Financial Planning business • Provisioned for customer remediation • Responding to Royal Commission and Culture, Governance and Accountability (CGA) self- assessment • Expect to raise $2.5bn via an equity capital raising, expected to increase 30 Sep 2019 pro forma CET1 ratio to ~11.25% (16.6% Basel III internationally comparable1 basis) • Dividend reset

Operating environment subdued • Australian economy – election uncertainty removed, fiscal position strong, housing market recovering but overall growth is below trend • Low rate environment resulting in slower balance sheet growth

1 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ dated 13 July 2015. Westpac Group Debt Investor Presentation I November 2019 CET1 ratio of 10.7%, increasing to ~11.25% on a pro forma basis 4

Table does not add due to rounding

Capital ratios (APRA basis, %) Sep-18 Mar-19 Sep-19 CET1 capital ratio (%) and CET1 capital ($bn) CET1 capital ratio 10.6 10.6 10.7 Westpac CET1 capital (lhs, $bn) Additional Tier 1 capital 2.2 2.2 2.2 Westpac CET1 capital ratio (rhs, %) Tier 1 capital ratio 12.8 12.8 12.8 ~11.25 55 10.6 10.5 10.6 10.6 10.7 12 10.0 Tier 2 capital 2.0 1.8 2.8 50 10 Total regulatory capital ratio 14.7 14.6 15.6 45 8 40 Risk weighted assets (RWA) ($bn) 425 420 429 35 6 47 Leverage ratio 5.8 5.7 5.7 30 44 45 45 46 40 43 4 25 Internationally comparable ratios1 2 20 Leverage ratio 6.5 6.4 6.4 15 0 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Sep-19 Pro CET1 capital ratio 16.1 16.2 15.9 forma Key capital ratios (%) Internationally comparable1 basis Future developments APRA basis BIS 75th Percentile2 22.1 • AASB16 leasing accounting standard applies from 1 October 2019 (~8bps reduction to the CET1 ratio) 18.6 15.6 15.9 12.8 • APRA unquestionably strong capital of 10.5% to be met by 1 January 2020 10.7 • Further clarity on revised APRA capital framework expected over 2019/20

• Final RBNZ capital proposals expected in December 2019

CET1 Tier 1 Total CET1 Tier 1 Total regulatory regulatory capital capital

1 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ dated 13 July 2015. For more details on adjustments refer slide Appendix 2 2. Group 1 banks BIS 75th percentile fully phased-in Basel III capital ratios from BIS monitoring report released 2 October 2019.

Westpac Group Debt Investor Presentation I November 2019 Long term wholesale funding 5

• A$33.5bn new term wholesale funding raised in Term debt issuance and maturity profile1,2,3 ($bn) FY19 • Majority of new issuance in senior unsecured Covered bond Hybrid Senior/Securitisation Sub debt bonds (51%) and covered bonds (24%) in line with 42 Issuance Maturities prior years 37 34 • Increased Tier 2 issuance ($4.2bn), as the Group 33 31 32 31 33 28 made good progress towards meeting APRA’s 26 25 TLAC requirements 18 • Additional diversity provided through issuance of $1.4bn AT1 and $2.8bn in RMBS 6 • Higher proportion of AUD term issuance in FY19 reflects strong liquidity and demand in the Australian market relative to prior years FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 >FY25

New term issuance by tenor2,4 (%) New term issuance by type (%) New term issuance by currency (%) Charts may not add to 100 due to rounding. Charts may not add to 100 due to rounding. Charts may not add to 100 due to rounding. 5.8yrs 6.5yrs 6.0yrs WAM5 4 8 5 13 Subordinated AUD 4 5 21 5 4 debt 32 43 41 >5years 13 8 46 18 Hybrid 46 5 years USD 24 4 years Securitisation 49 32 30 27 EUR 42 3 years Covered bonds 38 66 73 2 years 51 21 1 17 Senior 22 21 Other 7 11 1 year unsecured 15 8 7 1 5 7 7 FY17 FY18 FY19 FY17 FY18 FY19 FY17 FY18 FY19

1 Based on residual maturity and FX spot currency translation. Includes all debt issuance with contractual maturity greater than 13 months excluding US Commercial Paper and Yankee Certificates of Deposit. 2 Contractual maturity date for hybrids and callable subordinated instruments is the first scheduled conversion date or call date for the purposes of this disclosure. 3 Perpetual sub-debt has been included in >FY25 maturity bucket. Maturities exclude securitisation amortisation. 4 Tenor excludes RMBS and ABS. 5 WAM is weighted average maturity.

Westpac Group Debt Investor Presentation I November 2019 Tier 2 capital – good progress in FY19 in meeting TLAC requirements 6

Westpac Tier 2 issuance and calls/maturities1,2 (notional amount, A$m)

3 A$m Tier 2 maturities Approx. TLAC requirement based on RWAs at 30 Sep 19 5,000 Issuance Maturities

4,000

3,000

2,000 4,209

2,465 1,000 2,221 1,851 1,071 1,227 1,150 1,350 552 0 260 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 >FY29

Westpac Total Regulatory Capital Westpac Tier 2 capital (notional amount, %) CET1 Additional Tier 1 Tier 2 By format1 By currency1

5.0% USD 2.8% ($12bn) (approx. $21bn3) 31 AUD Domestic 21 8 2.2% ($9bn) 2 CNY 10 Callable AUD EMTN 2 51 10.7% ($46bn) Bullet SGD JPY 79 22 NZD 30 Sep 2019 1 Jan 2024 HKD APRA-basis APRA-basis

1 Represents AUD equivalent notional amount using spot FX translation at 30 September 2019. 2 Securities in callable format profiled to first call date, excluding the Perpetual Floating Rate Notes issued 30 September 1986. Securities in bullet format profiled to maturity date. 3 Estimates are based on Westpac’s RWAs as at 30 September 2019, as measured under the current capital adequacy framework. Assumes no risk-weighted asset growth over the transition period and no management buffer.

Westpac Group Debt Investor Presentation I November 2019 Benefits of SEC registration; USD issuance volumes lower 7

Fixed tranche WSTP 3.300% 02/24 CBA 3.350% 06/24 Secondary trading analysis SEC Registered vs 144A/Reg S Trade date 19 Feb 2019 25 Feb 2019 Days traded Days not traded Volume: >$250k Volume: All trades Format SEC Registered 144A Reg S Days traded1 Volume ($m) Number of trades

Maturity 26 Feb 2024 4 Jun 2024 1323 Tenor 5 year FXD 5.25 year FXD 151 867 912 Currency/size US$1.25bn US$750m 120 101 Denoms 2,000 / 1,000 2,000 / 1,000 53 424 34 293 297 Reoffer spread T+85bps T+88bps 161 194 7 Reoffer yield 3.308% 3.363% WSTP CBA 144A CBA Reg S WSTP CBA (Total) WSTP CBA (Total) Coupon 3.300% 3.350% SEC-Reg

Australian major bank USD term issuance vs USD term maturities2 (US$bn)

WSTP ANZ CBA NAB

Issuance Maturities Issuance Maturities Issuance Maturities Issuance Maturities

10.2 9.6 8.9 9.0 7.3 7.2 6.0 6.2 5.5 5.0 5.0 4.3 4.1

1.5 0.0 2.1 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 YTD YTD YTD YTD YTD YTD YTD YTD

1. Trading days calculated from issue date to 2 October 2019. Source: TRACE (note all trades >US$5m are reported by TRACE as US$5m); JP Morgan. 2 Source: Bloomberg, Bank of America.

Westpac Group Debt Investor Presentation I November 2019 Financial performance impacted by remediation and wealth reset 8

FY19 Financial Performance FY18 Financial Performance Provisions for refunds & payments

• Customer refunds associated with certain 8,095 0 8,376 7,914 281 ongoing advice service fees associated with: 958 172 6,784 – the Group’s salaried financial planners, and – the Group’s authorised representatives under the Magnitude and Securitor brands where records of financial advice were insufficient • Refunds for certain consumer and business customers that had interest only loans that did not automatically switch, when required, to P&I • Refunds to certain business customers who were provided with business loans where they should have been provided with loans covered by the FY19 Estimated Wealth reset FY19 FY18 Estimated Wealth reset FY18 Reported customer Reported Reported customer Reported National Consumer Credit Protection Act NPAT refunds, NPAT NPAT refunds, NPAT payments ex-estimated payments ex-estimated Reset our wealth strategy and costs customer refunds, and costs customer refunds, payments and costs, payments and costs, • Changes announced in March 2019 and wealth reset and wealth reset • BT brand retained, however BT Financial Group no longer a standalone division FY19 Reported FY18 Reported Financial FY19 Financial FY18 ex-estimated customer ex-estimated customer – Insurance integrated into expanded Consumer metrics Reported metrics Reported refunds and wealth reset refunds and wealth reset division – Private Wealth, Platforms & Investments and Return on Return on 10.65 12.42 13.05 13.51 Superannuation integrated into expanded equity (%) equity (%) Business division Net interest Net interest 2.12 2.16 2.13 2.14 • Exited personal advice by salaried and aligned margin (%) margin (%) planners Expense to Expense to • Moved to a referral model for providing personal 48.94 44.22 43.47 42.44 income (%) income (%) financial advice

Westpac Group Debt Investor Presentation I November 2019 FY19 financial metrics 9

Net interest margin (%) Operating expenses ($m) Impairment charges (bps)

3.0 Expenses Notable items Impairment charges to 100 average gross loans1 (bps) 2.5 10,106 2.14 2.09 2.09 2.10 2.06 2.13 2.12 9,566 80 2.0 AASB 9 / 1.5 AASB 15 60 5,091 5,015 1.0 40

0.5 20 11

0.0 0 FY18 FY19 1H19 2H19 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

Balance sheet ($bn) Stressed exposures as a % of TCE (%)

Total loans Aust. Housing 3.0 Customer deposits Watchlist and substandard 710 715 90+ day past due and not impaired Impaired 518 525 Up 1% 2.0

1.20 445 449 Up 1% Up 1% 1.0 0.55

0.48

0.0 0.17 FY18 FY19 FY18 FY19 Sep-11 Sep-13 Sep-15 Sep-17 Sep-19

1 Pre-2008 does not include St.George. 2008 and 2009 are pro forma including St.George for the entire period with 1H09 ASX Profit Announcement providing details of the pro forma adjustment.

Westpac Group Debt Investor Presentation I November 2019 Credit quality sound; Provisions higher on adoption of AASB 9 10

New and increased gross impaired assets ($m) Total impairment provisions ($m)

1,748 Individually assessed provisions Collectively assessed provisions Overlay 1,519 • Adopted AASB9 on 1 October 2018 1,343 • Provisions increased by $989m 1,218 1,194 4,241 1,060 1,078 997 3,949 4,042 958 363 3,922 3,602 267 171 708 633 389 3,481 609 607 589 550 3,332 477 471 450 519 389 440 389 3,119 3,053 388 323 301 2,408 2,196 3,353 2,225 2,344 3,339 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 2,275 2,316 2,330 Australian listed non-financial corp’s financial position1 (%) 1,470 Debt Servicing Gearing 1,364 867 669 869 Resources Other Resources Other 480 422 422 412 40 120 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Oct-18 Sep-19 35 100 30 Sep-18 Mar-19 Sep-19 25 80 20 60 Total provisions to gross loans (bps) 43 56 54 15 40 10 Impaired asset provisions to impaired assets (%) 46 46 45 5 20 0 0 Collectively assessed provisions to credit RWA (bps) 73 98 95 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

1 Source: RBA, Morningstar. Debt servicing is the ratio of net interest expense to Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA). Gearing is the ratio of debt to equity.

Westpac Group Debt Investor Presentation I November 2019 Australian dwelling prices: Sydney, Melbourne prices recovering; Turnover remains low 11

Australian dwelling prices Finance approvals by segment (%, value of housing finance)

index All dwellings (index, Jan 2004 = 100) index % 'Upgraders' Investor Foreign buyers1 FHBs % 70 70 230 230 Rest of Australia 60 latest 60 210 Other capitals 210 50 54% 50 Sydney-Melbourne 40 40 190 190 30 30 26% 170 170 20 20 18% 10 10 150 150 2% 0 0 Sep-99 Sep-03 Sep-07 Sep-11 Sep-15 Sep-19 130 130 Sources: ABS, Westpac Economics. 110 110 Residential property: listings and sales2

90 90 ‘000s new listings (lhs) sales (lhs) ‘000s Jan-04 Jan-06 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 Jan-20 31 31 Sources: CoreLogic, Westpac Economics. 29 29 27 27 Dwelling prices %ch Dwelling prices YoY 25 25 Capital city Pop’n last 3mths (Sep-19) (Sep-19) 23 23 Sydney 4.8m Up 3.5% Down 4.8% 21 21 Melbourne 4.5m Up 3.4% Down 3.9% 19 19 17 17 Brisbane 2.3m Up 0.5% Down 2.1% 15 15 Perth 1.9m Down 1.9% Down 9.0% Aug-07 Aug-09 Aug-11 Aug-13 Aug-15 Aug-17 Aug-19

Sources: ABS, CoreLogic, Westpac Economics. Sources: CoreLogic, Westpac Economics

1 Foreign buyers based on annual FIRB approvals. 2 Monthly, capital cities combined, seasonally adjusted by Westpac, smoothed.

Westpac Group Debt Investor Presentation I November 2019 Physical supply/demand fundamentals 12

Dwelling supply has not kept pace with stronger demand Rental vacancy rates Population versus dwelling stock (annual average change ‘000) Rental vacancy rates (%, quarterly, annual average) ‘000 ‘000 % 450 Population Total increase in dwellings 450 Sydney Brisbane f’casts 8 Melbourne Perth 400 400 7 350 350 6 300 high 300 National rise 5 250 250 average since 4 200 200 1980 150 150 3 100 100 2 50 50 1 0 0 0 1950s 1960s 1970s 1980s 1990s 2000s Last 9yrsNext 2yrs Jun-87 Jun-92 Jun-97 Jun-02 Jun-07 Jun-12 Jun-17 Sources: ABS, Westpac Economics. Dwelling stock is net of demolitions – implied by Census data. Sources: REIA, Westpac Economics

Pipeline - dwellings under construction Projected dwelling completions, major metro areas

ann% ann% Dwelling completions by capital city (‘000s, rolling 6mth totals) 80 80 ‘000s Non-high rise Other high rise High rise top 5 areas ‘000s NSW (-19%yr 2019) 35 35 60 60 Projected Projected Projected Vic (-11%yr) 30 30 Projected 40 Qld (-16%yr) 40 25 25 20 20 20 20 15 15 0 0 10 10 5 5 -20 -20 0 0 -40 -40 Dec-07 Dec-13 Dec-19 Dec-07 Dec-13 Dec-19 Dec-07 Dec-13 Dec-19 Jun-05 Jun-07 Jun-09 Jun-11 Jun-13 Jun-15 Jun-17 Jun-19 Jun-21 Sydney Melbourne Brisbane/SEQ Sources: ABS, Westpac Sources: ABS, Westpac

Westpac Group Debt Investor Presentation I November 2019 Australian mortgage portfolio performance 13

Australian mortgage portfolio Sep-18 Mar-19 Sep-19 Australian mortgage delinquencies and loss rates (%)

90+ day past due total 30+ day past due total Loss rates 30+ day delinquencies (bps) 140 159 161 3.0

90+ day delinquencies (bps) 72 82 88 (inc. impaired mortgages) 2.0 Consumer 396 482 558 properties in possession 1.0 Mortgage loss rate 223 annualised (bps)1

• Australian mortgage 90+ day delinquencies had a peak in July 2019 of 91bps and 0.0 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 declined in August and September 2019 • Increase in FY19 reflects: – Existing 90+ day borrowers remaining in collections for longer due mainly to Australian mortgage 90+ day delinquencies by State (%) weak housing market activity in most of FY19 3.0 NSW/ACT VIC/TAS QLD – A greater proportion of P&I loans in the portfolio (70% of portfolio at 30 WA SA/NT ALL September 2019)

– NSW/ACT delinquencies rose 6bps in 2H19 (16bps higher over FY19) to 69bps 2.0 at 30 September 2019 (NSW/ACT represents 41% of the portfolio) – Seasoning of the RAMS portfolio, as this portfolio has a higher delinquency profile 1.0 • Properties in possession continue to be mostly in WA and Qld

0.0 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19

1 Mortgage loss rate is for the 6 months ending.

Westpac Group Debt Investor Presentation I November 2019 Australian mortgage portfolio composition 14

Sep-18 Mar-19 Sep-19 2H19 Australian mortgage portfolio balance balance balance Flow1 Housing lending portfolio by State (%)

5 Total portfolio ($bn) 444.7 447.2 449.2 30.6 Australian banking system 41 43 Westpac Group portfolio Owner occupied (%) 56.8 57.3 58.3 61.6 38 FY19 Westpac Group drawdowns 31 Investment property loans (%) 39.1 39.1 38.5 38.1 29 27

Portfolio loan/line of credit (%) 4.1 3.6 3.2 0.6 16 16 14 12 Variable rate / Fixed rate (%) 77 / 23 76 / 24 75 / 25 65 / 35 9 6 6 7 7 Interest only (%) 34.8 30.6 26.9 21.3

Proprietary channel (%) 56.1 56.3 55.7 51.4 NSW & ACT VIC & TAS QLD WA SA & NT

First home buyer (%) 7.8 8.0 8.4 10.9 Switching from I/O to P&I ($m)6

Mortgage insured (%) 16.3 15.9 15.6 11.3 Interest only Principal & interest Line of credit 2H19 Sep-18 Mar-19 Sep-19 100% 3% Flow1 80% Average loan size2 ($’000) 273 275 277 372 60% 70% Customers ahead on repayments 69 69 70 40% including offset account balances3 (%) 20% Actual mortgage losses net of insurance4 27% 38 51 57 ($m, for the 6 months ending) 0%

Actual mortgage loss rate annualised 223 Mar-19 Mar-18 Mar-17 Mar-16 Mar-15 Sep-19 Sep-18 Sep-17 Sep-16 (bps, for the 6 months ending) Sep-15

1 Flow is new mortgages settled in the 6 months ended 30 September 2019 and includes RAMS. 2 Includes amortisation. Calculated at account level, where split loans represent more than one account. 3 Loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments. 4 Mortgage insurance claims 2H19 $5m (1H19 $7m; 2H18 $4m). 5 Source Comparator Apr-Jun 2019. 6 I/O is interest only mortgage lending. P&I is principal and interest mortgage lending.

Westpac Group Debt Investor Presentation I November 2019 Australian mortgage portfolio – borrower equity sound 15

Australian housing loan-to-value ratios (LVRs) (%) Australian home loan customers ahead on repayments6 (%)

100 FY19 drawdowns LVR at origination By balance

90 Portfolio LVR at origination Sep-18 Mar-19 Sep-19 Portfolio dynamic LVR1 80 29 29 28

22 22 22 21 70 20 20 21 21 21

60 50 49 6 6 6 50 47 • Negative equity remains low 1 2 2 • National dwelling prices remain 40 14% higher relative to 5 years ago2 Behind On time < 1 Mth < 1 Yr < 2 Yrs >2 Yrs 30 20 20 17 18 15 14 15 Variable mortgage interest rates7 (%) 11 11 12 7 10 6 Owner occupied Investor Buffer . Loans assessed at the 3 4 N/A 1.7 0 1 higher of the customer rate 0 Serviceability assessment rate (including any discounts) 0<=60 60<=70 70<=80 80<=90 90<=95 95<=100 >100 plus 2.50% buffer, or 6.63 6.59 6.85 6.04 minimum assessment rate (“floor rate”) 5.35% 2.50 2.50 2.50 Sep-18 Mar-19 Sep-19 Australian mortgage portfolio LVRs APRA advised that ADI’s balance balance balance Floor 2.50 will set their own floor for Weighted LVR at origination (%) 74 74 74 rate use in serviceability averages3 4.35 assessments, effective 5 3.54 4.13 4.09 Dynamic LVR1,4 (%) 54 57 58 July 2019 Westpac now applies a 5 LVR of new loans (%) 71 72 72 P&I I/O P&I I/O minimum floor rate of 5.35% 1 Dynamic LVR is the loan-to-value ratio taking into account the current loan balance, changes in security value, offset account balances and other loan adjustments. Property valuation source Australian Property Monitors. 2 Source: CoreLogic , 1 October 2019. 3 Weighted average LVR calculation considers size of outstanding balances. 4 Includes RAMS in 1H19 and 2H19. Excludes RAMS in 2H18. 5 Average LVR of new loans is on rolling 6 months. 6 Customer loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments. Includes mortgage offset accounts. ‘Behind’ is more than 30 days past due. ‘On time’ includes up to 30 days past due. 7 Interest rates for Westpac Rocket Repay Home Loan inclusive of Premier Advantage Package discount assuming loan amount above $250,000. Pricing at 16 October 2019. Westpac Group Debt Investor Presentation I November 2019 Australian economic snapshot 16

Australian economy key statistics Inflation remains subdued1 Labour market slack (latest available as at October 2019) %yr Avg RBA core CPI %qtr (rhs) %qtr 7.5 % unemployment rate (lhs)* % 7.5 8 Headline CPI %yr (lhs) 3.2 7.0 RBA – Aug 2019 7.0 GDP (June quarter 2019) 1.4% 7 Avg RBA core CPI %yr (lhs) 2.8 6.5 Westpac forecast f/cs 6.5 6 2.4 Westpac Economics Forecast f/cs 6.0 6.0 2.4% 5 2.0 5.5 5.5 (end calendar 2020) 4 1.6 5.0 2 5.0 3 1.2 ‘old’ NAIRU Unemployment 4.5 ~4.75-5% 4.5 2 0.8 ‘new’ NAIRU2 5.2% 4.0 4.0 Rate 1 0.4 ~4.5% 0 0.0 3.5 3.5 Westpac Economics Forecast 3.0 3.0 5.6% -1 -0.4 (end calendar 2020) Jun-97 Jun-01 Jun-05 Jun-09 Jun-13 Jun-17 Sep-03 Sep-07 Sep-11 Sep-15 Sep-19 Sources: ABS, RBA, Westpac Economics Sources: ABS, RBA, Westpac Economics Inflation 1.6% Federal budget – back in surplus AUD expected to move lower Westpac Economics Forecast % of GDP Underlying cash balance $bn AUD/USD 1.9% (end calendar 2020) 4 40 $bn (rhs) % of GDP (lhs) 1.20 1.10 2 Budget f/cs 20 Cash Rate 0.75% to 2022/23 1.00 0 0 0.90 Westpac Economics Forecast 0.50% (end calendar 2020) 0.80 -2 -20 0.70 0.60 AUD/USD US$0.68 -4 -40 0.50 Westpac Economics Forecast US$0.67 -6 -60 0.40 (end calendar 2020) 1985/86 1993/94 2001/02 2009/10 2017/18 1989 1994 1999 2004 2009 2014 2019

Sources: Budget papers, ABS, Westpac Economics Sources: RBA, Westpac Economics

1 Average RBA core CPI is average of seasonally adjusted trimmed mean & weighted median CPI. 2. The NAIRU – or non-accelerating inflation rate of unemployment – is a benchmark for assessing the degree of spare capacity and inflationary pressures in the labour market. When the observed unemployment rate is below the NAIRU, conditions in the labour market are tight and there will be upward pressure on wage growth and inflation. Source: RBA. Westpac Group Debt Investor Presentation I November 2019 Additional information: Tier 2 capital securities Australia’s approach to total loss-absorbing capacity (TLAC) 18

Australian D-SIB Total Regulatory Capital Westpac Total Regulatory Capital

• Australian D-SIBs (the four major banks) will meet TLAC requirements through an • Westpac’s Tier 2 required by 1 Jan 2024 – approx. $21bn (5.0% of RWA5) increase in Total Regulatory Capital • Westpac Tier 2 outstanding as at 30 September 2019 – $12bn (2.8% of RWA5) – Additional 3.0 percentage points of RWA1 in Total Regulatory Capital (which APRA expects will be primarily satisfied by Tier 2) required by 1 Jan 2024 – Additional 1-2% of RWA1 through a ‘feasible alternative method’ will be considered by APRA over the next four years

APRA’s changes to D-SIBs’ capital structures2 Westpac’s Total Regulatory Capital (% of RWA) 18.0% CET1 Additional Tier 1 Tier 2 3 Capital Surplus

15.0% 14.5%

3 4 Capital Surplus CCB 5.0% 11.5% (approx. $21bn5) 11.0% 2.8% ($12bn) CCB 4 Tier 2 2.2% ($9bn) 8.0% Tier 2 6.0% Additional Additional 6.0% Tier 1 Tier 1 10.7% ($46bn) 4.5% 4.5%

CET1 CET1

Current 1 Jan 2024 30 Sep 2019 1 Jan 2024 APRA-basis APRA-basis

1 As measured under the current capital adequacy framework. APRA does not expect changes from revisions to the capital framework to impact the absolute amount of additional capital. 2 Source: Per APRA’s paper “Response to Submissions – Loss-Absorbing Capacity” dated 9 July 2019. 3 Capital surplus of 3.5% is generally higher than the level D-SIBs may normally maintain, as D-SIBs have acted in anticipation of changes to the capital adequacy framework as a result of the ‘unquestionably strong’ capital benchmarks. APRA expects the D-SIBs to continue to maintain a normal capital surplus in excess of regulatory capital requirements once such changes are implemented. 4 CCB is the Capital Conservation Buffer. 5 All estimates are based on Westpac’s RWAs as at 30 September 2019, as measured under the current capital adequacy framework. Westpac Group Debt Investor Presentation I November 2019 Tier 2 capital comparison across jurisdictions 19

US Canada UK / EU / Scandinavia Singapore Australia

Senior to Senior to Additional Senior to Additional Senior to Additional Senior to Additional Ranking Tier 1 Capital Tier 1 Capital Tier 1 Capital Tier 1 Capital Tier 1 Capital

Step-ups Not permitted Not permitted Not permitted Not permitted Not permitted

20% p.a. beginning 20% p.a. beginning 4 years prior to 5 years prior to maturity 4 years prior to maturity 5 years prior to 5 years prior to maturity on a Capital amortisation on a straight-line on a straight-line maturity (no credit maturity (no credit straight-line amortised basis amortised basis in final year) in final year) amortised basis

Tax Event / Tax Event / Tax Event / Tax Event / Tax Event / Early redemption Regulatory Event Regulatory Event Regulatory Event Regulatory Event Regulatory Event

Point of Non-Viability

Regulatory Regulatory Regulatory Regulatory Definition n.a Discretion Discretion Discretion Discretion

Approach n.a Contractual Statutory Contractual Contractual

Disclosure n.a Terms & Conditions Risk factor Terms & Conditions Terms & Conditions

Primary loss Conversion into ordinary Conversion into ordinary Conversion into n.a Write-down absorption mechanism shares shares or Write-down ordinary shares1

Source: TD Securities. 1 The Terms and Conditions of the Subordinated Instruments include a provision that enables the sale of shares, on Conversion, for cash, subject to possible Write-off.

Westpac Group Debt Investor Presentation I November 2019 Global Yankee Tier 2 comparison 20

Mizuho Financial Westpac BMO NAB Nordea UOB Group

Issue date 24 Jul 2019 05 Oct 2018 02 Aug 2019 13 Sep 2018 20 Oct 2015 15 Apr 2019

Issue rating BBB1/Baa1/A+ BBB+/Baa1/A+ BBB1/Baa1/A+ AA-/Aa3/AA- BBB+/BBB/--- BBB+/A2/A+ S&P/Moody’s/Fitch

Issuer Rating AA-/Aa3/AA- A+/Aa2/AA- AA-/Aa3/AA- A-/Baa1/A+ A-/A1/--- AA-/Aa1/AA- S&P/Moody’s/Fitch

15NC10 & 20 year Structure 10NC5 15NC10 15NC10 10 year Bullet 10NC5 bullet

Reset Fixed / Fixed & N/A Fixed / Fixed Fixed / Fixed Fixed / Fixed N/A Fixed / Fixed

Format SEC Global SEC Global 144A / Reg S 144A / Reg S 144A / Reg S 144A / Reg S

Point of Non-Viability

Triggered by Japan’s SRB Discretion Prime Minister upon Definition APRA discretion OSFI discretion APRA discretion under BRRD or SRM suspension of MAS discretion Regulation payments or negative net worth2

Contractual acknowledgment of Approach Contractual Contractual Contractual Contractual Contractual BRRD statutory bail- in powers

Conversion into Conversion into Primary Loss Ordinary Shares Conversion into Ordinary Shares Partial-permanent Permanent Permanent Absorption subject to a floor common shares subject to a floor write-down write-off write-off Mechanism Cash out feature subject to a floor Cash out feature available available

Source: Company filings and offering documents, TD Securities. 1 On 24 October 2019 S&P raised their ratings on Basel III compliant Tier 2 hybrid instruments issued by Westpac, ANZ, CBA and NAB to BBB+ from BBB. 2 Article 126-2, Paragraph 1, Item 2 of the Deposit Insurance Act.

Westpac Group Debt Investor Presentation I November 2019 Comparison of Tier 2 non-viability loss absorption 21

Australia Canada Bank capital structures

Payout • Contractual • Contractual Canadian Bank Capital Structure Approach Rank Mechanism • Permanent conversion into ordinary shares. • Permanent conversion into common shares Legacy Senior Debt (Deposit Notes) / higher • Program documents include a provision that Bail-in Senior Debt enables the sale of shares, on conversion, for cash NVCC Legacy • Legislation also allows for loss-absorption via Subordinated Subordinated write down. To date Australian Tier 2 has relied Debt Debt on loss absorption via conversion to equity, with a write down applying as a backup provisions in NVCC Preferred AT1 Securities1 the event conversion cannot be effected. Shares1 Conversion is most likely principal loss absorption mechanism due to tax inefficiencies of write-off Rank alternative Common Equity lower Amount • Full or partial • Full Trigger • Earlier of: • (i) the OSFI publicly announces that the institution Event • (i) APRA notifies the authorised deposit-taking has been advised, in writing, that the OSFI is of Australian Bank Capital Structure institution (ADI) in writing that conversion or write- the opinion that the institution has ceased, or is off of capital instruments is necessary because, about to cease, to be viable and that, after the Customer Deposits Rank without it, APRA considers that the ADI would conversion or write-off, as applicable, of all higher become non-viable; contingent instruments and taking into account • (ii) a determination by APRA, notified to the ADI any other factors or circumstances that are Senior Debt that without a public sector injection of capital, or considered relevant or appropriate, it is equivalent support, the ADI would become non- reasonably likely that the viability of the institution viable will be restored or maintained; or Tier 2 Securities (PONV) • (ii) a federal or provincial government in Canada publicly announces that the institution has accepted or agreed to accept a capital injection, AT1 Securities (PONV) or equivalent support, from the federal government or any provincial government or political subdivision or agent or agency thereof Common Equity Rank without which the institution would have been lower determined by the OSFI to be non-viable

Source: Company filings and offering documents, TD Securities. 1 AT1 Securities issued by Canadian banks have a contractual payout of 1.25x the notional value of the security. NVCC Preferred shares have a contractual payout of 1.0x the notional value of the security. Westpac Group Debt Investor Presentation I November 2019 Australian major bank dated Tier 2 calls 22

Westpac amount callable Shown in A$m by calendar year Westpac amount called

Australian major bank peers amount callable

Australian major bank peers amount called

6,212

5,716

4,841

4,312

3,103 2,679 2,412 2,361 2,176 1,933 1,696 1,750

1,000 620 No call dates

Westpac Peers Westpac Peers Westpac Peers Westpac Peers Westpac Peers Westpac Peers Westpac Peers Westpac Peers 2010 2011 2012 2013 2014 - 2016 2017 2018 2019 YTD

Source: Bloomberg (as of 5 November 2019). Includes parent company securities >A$100m only. Amount callable determined based on the first par call date of the subordinated notes. FX as of issue date of each bond. Past performance may not be indicative of future performance. Australian major bank peers are ANZ, CBA and NAB.

Westpac Group Debt Investor Presentation I November 2019 Additional information: Westpac Banking Corporation Westpac: clear domestic focus and a strong market position 24

Unique portfolio of national and regional brands Large domestic presence

Top 10 banks in Australia by total resident assets1 (A$bn) Australian retail banking and wealth Commonwealth Bank of Australia Westpac Banking Corporation National Australia Bank Australia and New Zealand Banking Group Macquarie Bank Bendigo and Adelaide Bank ING Bank (Australia) Westpac Institutional Bank Westpac New Zealand Suncorp-Metway Bank of Queensland HSBC Bank Australia 0400800

Clear focus on Australia and New Zealand Strong franchise

Revenue by geography (%) Net loans (%) Customers 14.2m

Employees 33,288 12 11 4 2 Australian household deposit market share2 22% 3 3 21 Australian mortgage market share 23% 63 Australian business credit market share3 17% 84 Australian wealth platforms market share4 18% Australia Housing Australia Business Australia New Zealand deposit market share5 18% New Zealand Other Australia New Zealand Other Other Overseas New Zealand consumer lending market share5 18%

1 Source: APRA Banking Statistics August 2019. Total resident assets refers to all assets on the banks' domestic books that are due from residents. 2 Source: APRA Banking Statistics September 2019. 3 Source: RBA Financial Aggregates, September 2019. 4 Source: Strategic Insights July 2018, All Master Funds Admin. 5 Source: RBNZ, September 2019.

Westpac Group Debt Investor Presentation I November 2019 Westpac’s 2020 Sustainability Strategy 25

Helping people Helping people by Helping people A culture of Fundamentals make better being there when it create a prosperous doing the right financial decisions matters most to them nation thing

We believe in creating a We understand that life has its Our world is changing at an We are committed to building a We are committed to fairer, more inclusive and tough moments, and vulnerability unprecedented rate, affecting culture of care, inclusiveness continuing to lead on the confident society by helping is something that can affect how we all live and work. and high integrity – where it’s fundamentals: the people understand money. anyone at any time. expected that all our people sustainability policies, action We want to help more people demonstrate the values of our plans and frameworks. Our aim is to help customers We want to be by our customers’ gain the skills that will be needed company and speak up if track and grow their wealth so side and help more people as in the future, and accelerate how We are also continuing to something isn’t right. they will feel more confident they go through major life we identify and solve the biggest report on additional metrics with financial decisions no events. issues impacting Australia and We believe in doing the right that are expected of a bank matter their situation. the world. thing by our customers, committed to sustainable communities and people – business practices. grounded in transparency and responsiveness to the concerns of our customers and the wider community.

ALIGNMENT TO THE ALIGNMENT TO THE ALIGNMENT TO THE ALIGNMENT TO THE ALIGNMENT TO THE SUSTAINABLE SUSTAINABLE SUSTAINABLE SUSTAINABLE SUSTAINABLE DEVELOPMENT GOALS DEVELOPMENT GOALS DEVELOPMENT GOALS DEVELOPMENT GOALS DEVELOPMENT GOALS

Westpac Group Debt Investor Presentation I November 2019 Sustainability governance framework 26

Westpac Board Westpac Westpac Stakeholder New Zealand Advisory Council Executive Team External Stakeholder Panel Westpac Group Inclusion Westpac New Zealand Sustainable Westpac Group Sustainability Council Westpac and Diversity Council Business Steering Committee Indigenous Advisory Internal Committee Committee Divisional committees and working groups External Committee

Guiding our approach Managing risk Driving action • Principles for doing business • Sustainability risk management framework • Sustainability strategy 2018-2020 • Stakeholder engagement framework • Risk management framework • Inclusion and diversity strategy • Social impact framework • Responsible sourcing code of conduct • Divisional and business unit strategies

Policies and position statements Specific policies and positions Action plans and divisional strategies • Climate Change Position Statement and 2020 • ESG credit policy • Climate Change Position Statement and 2020 Action Plan • Financing Agribusiness Position Statement Action Plan • Human Rights Position Statement and Action Plan • Financing the Defence Sector Position Statement • Reconciliation Action Plan • Responsible Investment Position Statement • Financing Tobacco Position Statement • Accessibility Action Plan • Supplier Inclusion and Diversity Policy • Privacy Policy • Financial Inclusion Action Plan • Wellbeing Policy • Customer Vulnerability 2020 Action Plan

Global commitments and partnerships • Principles for Responsible Banking – United Nations • Global Investor Statement on Climate Change • UN Environment Program - Finance Initiative Environment Programme Finance Initiative • Climate Action +100 • UN Principles for Responsible Investment • Banking Environment Initiative (Univ. of Cambridge) • Equator Principles • UN Global Compact • Business Coalition Statement on Climate Change • Financial Stability Board's TCFD • We Mean Business Coalition

Interim and annual reporting

Westpac Group Debt Investor Presentation I November 2019 Westpac Climate Change Position Statement and 2020 Action Plan 27

Westpac was the first Australian bank to recognise the importance of limiting global warming to two degrees

Westpac’s Approach Our Our 2020 to Climate Change Principles Action Plan

The Westpac Group has long recognised The following focus areas will direct Westpac’s actions The core principles that guide and inform Westpac’s that climate change is one of the most on climate change: approach to climate change are: significant issues that will impact the long-term prosperity of our economy and way of life A transition to a net zero emissions Provide finance to back 1 economy is required 1 climate change solutions

Since we set out our first climate change action plan almost a decade ago, we Economic growth and emissions Support businesses that manage have been helping customers and 2 reductions are complementary goals 2 their climate-related risks communities transition to a low carbon economy

Addressing climate change creates Help individual customers 3 financial opportunities 3 respond to climate change Westpac continues to integrate the consideration of climate-related risks and opportunities into business operations. This includes alignment with the Climate-related risk is a Improve and disclose our recommendations of the Task Force on 4 financial risk 4 climate change performance Climate-related Financial Disclosures (TCFD), which the Group has publicly committed to support Advocate for policies that stimulate Transparency and investment in climate change 5 disclosure matters 5 solutions

Westpac Group Debt Investor Presentation I November 2019 Westpac Climate Bonds 28

Climate Bonds support Westpac’s 2020 Action Plan • Westpac’s Climate Change Position Statement and 2020 Action Plan commits to provide finance to back climate change solutions: – Target lending exposure to climate change solutions of $10 billion by 2020; – Facilitating up to $3 billion in climate change solutions by 2020, e.g. green bond issuance and arrangement • Westpac climate bonds: – Provide financing for technologies and practices that are consistent with the investment required to limit global warming to less than 2 degrees and address its impacts; – Support the development of the green bonds market and provide investor diversity; – Give investors the opportunity to support environmental projects through a high-grade bond investment

Westpac Climate Bonds issuance • Westpac issued its first Climate Bond in June 2016 • Since then, Westpac has issued 4 climate bonds in both public benchmark and private placement formats • Currencies include AUD, EUR and USD • Comparable to Westpac senior bonds regarding structure and rating • Westpac Climate Bonds are eligible for the Barclays MSCI Green Bond Index and ICE BofAML Green Bond Index • The net proceeds raised to date have been allocated to projects/assets in three categories, namely – renewable energy (solar and wind), green buildings and low carbon transport (rail)

Westpac Group Debt Investor Presentation I November 2019 High quality portfolio with bias to residential mortgage lending 29

Asset composition (%) Lending composition at 30 September 2019 (% of total) Total assets ($907bn) Sep-17 Sep-18 Sep-19 Total loans of $715bn Loans 80 81 79 Available-for-sale securities and investment securities 7 7 8 Housing Trading securities and financial assets at fair value 334 through income statement 17 Business Derivative financial instruments 3 3 3 69 Institutional Cash and balances with central banks 2 3 2 11 Other consumer Collateral paid and other financial assets 1 1 1 3 Intangible assets 1 1 1 Life insurance assets and other assets 3 1 2

Exposure by risk grade at 30 September 2019 ($m) Standard and Poor’s Risk Grade1 Australia NZ / Pacific Americas Asia Europe Group % of Total AAA to AA- 104,527 10,933 10,701 3,331 729 130,221 12% A+ to A- 33,940 5,204 5,123 7,633 3,482 55,382 5% BBB+ to BBB- 57,617 11,668 3,691 10,464 2,429 85,869 8% BB+ to BB 69,317 12,043 376 1,819 112 83,667 8% BB- to B+ 60,807 10,609 15 208 - 71,639 7%

1 Risk grade equivalent. 2 Exposure by booking office.

Westpac Group Debt Investor Presentation I November 2019 Loan portfolio composition 30

Exposures at default1 by sector ($bn) Top 10 exposures to corporations and NBFIs5 (% of TCE)

Finance & insurance 2 The single largest corporation/NBFI Government admin. & defence exposure represents Includes the 0.2% of TCE 3 Group’s liquidity 1.4 1.3 1.3 Property 1.2 1.2 portfolio 1.1 1.1 1.1 1.0 1.0 1.0 Wholesale & retail trade

Manufacturing

Property services & business services Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-17 Services Sep-18 Agriculture, forestry & fishing Sep-19 Top 10 exposures to corporations & NBFIs at 30 September 2019 ($m) Transport & storage A+ Utilities BBB- BBB Reflects clearing 4 Construction A- house membership BBB+ Accommodation, cafes & restaurants BBB A- Other BBB+ A

Mining S&P rating or equivalent A- 0 20406080100120 0 400 800 1,200 1,600 2,000 2,400

1 Exposures at default is an estimate of the committed exposure expected to be drawn by a customer at the time of default. Excludes consumer lending. 2 Finance and insurance includes banks, non-banks, insurance companies and other firms providing services to the finance and insurance sectors. 3 Property includes both residential and non-residential property investors and developers, and excludes real estate agents. 4 Construction includes building and non-building construction, and industries serving the construction sector. 5 NBFI is non-bank financial institutions. Westpac Group Debt Investor Presentation I November 2019 Provision cover by portfolio category 31

Exposures as a % of TCE Provisioning to TCE (%)

Mar-18 Sep-18 Mar-19 Sep-19

Fully performing portfolio

Small cover as low probability of default (PD) 0.20 0.18 0.09 0.09 95.66 95.77 Fully 98.91 98.92 performing Non-stressed but significant increase in credit risk portfolio Stage 1 provisions

Lifetime expected loss based on future economic 4.18 4.32 conditions

Non-stressed but significant Watchlist & substandard increase in 3.24 3.03 credit risk Still performing but higher cover reflects 4.71 5.27 5.59 5.27 deterioration Stage 2

0.55 provisions Watchlist & 0.50 substandard 0.57 0.55 90+ day past due and not impaired

In default but strong security 5.03 5.11 12.34 11.07 90+ day past 0.43 0.48 due and not 0.37 0.39 impaired Impaired assets

Impaired 0.15 0.14 0.17 0.17 Stage 3 provisions In default. High provision cover reflects 45.54 46.12 45.74 44.92 Mar-18 Sep-18 Mar-19 Sep-19 expected recovery

Westpac Group Debt Investor Presentation I November 2019 Corporate and business stressed exposures increased modestly over 2H19 32

Corporate and business portfolio stressed exposures by industry ($bn)

2.0 A number of business Sep-18 Mar-19 Sep-19 exposures migrated to 1.8 Watchlist, in particular within motor vehicle retailing 1.6

1.4 A small number of 1.2 names downgraded to Watchlist 1.0

0.8

0.6

0.4

0.2

0.0 Mining Utilities Property Services retail trade Construction Wholesale & Wholesale fishing Manufacturing & restaurants business services Property services & Transport & storage Finance & insuranceFinance & Agriculture, forestry & Accommodation, cafes

Westpac Group Debt Investor Presentation I November 2019 Areas of interest: Commercial property 33

Commercial property portfolio Commercial property exposures % of TCE and % in stress Sep-18 Mar-19 Sep-19 10 Commercial property as % of TCE (lhs) 20 Total committed exposures (TCE) $67.6bn $66.9bn $66.9bn Commercial property % in stress (rhs) 8 15 Lending $52.0bn $52.3bn $51.7bn 6 Commercial property as a % of 10 6.51 6.39 6.37 Group TCE 4 BB+ BB+ BB+ 5 Median risk grade 2 equivalent equivalent equivalent 0 0 % of portfolio graded as stressed1,2 1.66 1.51 1.61

% of portfolio in impaired2 0.23 0.22 0.15 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19

Commercial property portfolio composition (%)

Region (%) Borrower type (%) Sector (%)

NSW & ACT Investors & Commercial offices 13 Developers <$10m 10 19 Vic & diversified groups Developers >$10m Residential Qld 43 23 42 45 10 SA & NT Investors >$10m Retail 7 WA 36 4 Industrial 4 NZ & Pacific Diversified Property 11 8 Groups and Property 25 Institutional Trusts >$10m (diversified)

1 Includes impaired exposures. 2 Percentage of commercial property portfolio TCE.

Westpac Group Debt Investor Presentation I November 2019 Areas of interest: Inner city apartments 34

Commercial property portfolio TCE ($bn)

Sep-18 Mar-19 Sep- 19 TCE (%)1

Residential apartment development >$20m 4.1 3.3 3.4 5.1 • Approvals and new starts lower and expected to slow further. • Tightened risk appetite for areas of concern remains in place Residential apartment development • Settlements remain slightly slower than historical experience, but 2.6 2.8 2.8 4.2 >$20m in major markets, refer below2 Westpac’s debt has been repaid in full given low LVRs

• Increase due to expanding definition of ‘major ’ Sydney suburbs in Nov-18. Sydney major markets 1.8 2.1 2.0 3.0 Comparable TCE to Sep-18 would be $1.5bn at Sep-19

Inner Melbourne 0.6 0.5 0.5 0.7 • Weighted average LVR 48.8%

Inner Brisbane 0.1 0.1 0.1 0.1 • Slow market. Exposure low

Perth metro 0.1 0.1 0.1 0.1 • Activity slowly lifting.

Residential apartment development >$20m weighted Consumer mortgages average LVR (%) Consumer mortgages where security is within an Sep-18 Mar-19 Sep-19 50.6 inner city residential apartment development 46.9 47.6 Average portfolio LVR 49% Total consumer mortgage loans for inner city $15.2bn $15.3bn $15.3bn apartments

Average LVR at origination 73% 72% 72%

Average dynamic LVR 57% 56% 56%

Dynamic LVR >90% 2.49% 3.59% 3.66% 2019 2020 2021 Expected Completion Date 90+ day delinquencies 44bps 62bps 66bps

1 Percentage of commercial property TCE. 2 Totals may not add up due to rounding.

Westpac Group Debt Investor Presentation I November 2019 Areas of interest: Retail trade 35

Retail trade portfolio Retail trade exposure (TCE) ($bn) Sep-18 Mar-19 Sep-19

Total committed exposures (TCE) $16.2bn $16.0bn $16.0bn

16.3 16.2 16.0 16.0 Lending $11.6bn $11.5bn $11.6bn 15.3 15.4 15.5

Retail trade as a % of Group TCE 1.56 1.53 1.52

BB BB BB Median risk grade equivalent equivalent equivalent

% of portfolio graded as stressed1,2 4.84 5.43 6.05

% of portfolio in impaired2 0.41 1.24 1.30 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19

% of Retail trade portfolio graded as stressed (%) Retail trade by internal risk grade category (TCE) ($bn)

Rising stress reflects challenging economic conditions, in particular the impact of lower 7.0 6.4 new car sales on motor vehicle retailing 5.3 4.8 6.05 4.5 4.2 5.43 Investment 4.67 4.84

3.02 Sub-investment 2.68 2.51 Stressed

Sep-18 Sep-19 Sep-18 Sep-19 Sep-18 Sep-19 Personal and Motor vehicle Food retailing Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 household good retailing and retailing services

1 Includes impaired exposures. 2 Percentage of retail trade portfolio TCE.

Westpac Group Debt Investor Presentation I November 2019 Areas of interest: Mining and Australian Agriculture 36

Mining (inc. oil and gas) portfolio Mining portfolio (TCE) Iron Ore and Oil prices ($)3 by sector (%) Sep-18 Mar-19 Sep-19 Iron ore (USD/t) 45Crude oil (USD/bbl) Westpac Total committed 140 $10.7bn $9.8bn $10.5bn 8 Economics exposure (TCE) 7 forecast 35 Lending $5.7bn $5.2bn $5.5bn 11 100 Median risk grade BBB- BBB- BBB (S&P equivalent) 16 % of Group TCE 1.03 0.94 1.00 60 23 % of portfolio graded as 0.99 0.81 0.99 stressed1,2 Oil and gas Other metal ore Mining services Iron ore 20 % of portfolio in impaired2 0.17 0.16 0.16 Coal Other Sep-16 Sep-17 Sep-18 Sep-19 Sep-20

Australian Agriculture portfolio Australian Agriculture (TCE) Australian Agriculture (TCE) Sep-18 Mar-19 Sep-19 by state (%) portfolio composition (%) Grain Total committed NSW/ACT $10.6bn $10.9bn $11.2bn Beef & Sheep exposure (TCE) 6 3 3 2 Horticulture 11 QLD 4 Lending $8.5bn $8.6bn $9.1bn 27 Dairy 5 32 VIC/TAS Median risk grade 5 Services to Agri BB BB BB 14 Cotton (S&P equivalent) WA 6 Fishing & Aquaculture % of Group TCE 1.02 1.04 1.07 7 Viticulture 21 SA/NT % of portfolio graded as 21 9 Forestry & Logging 4.40 4.65 4.29 24 stressed1,2 Institutional Poultry Other % of portfolio in impaired2 0.27 0.35 0.28

1 Includes impaired exposures. 2 Percentage of portfolio TCE. 3 Sourced from Westpac Economics and Bloomberg. 4 The steel index 62% Fe fines benchmark. 5 Brent oil price.

Westpac Group Debt Investor Presentation I November 2019 Australian consumer unsecured lending, 3% of Group loans 37

Australian consumer unsecured lending portfolio1 Unsecured portfolio ($bn) Unsecured performing loans balance ($bn lhs) Sep-18 Mar-19 Sep-19 25 3 Unsecured 90+ day delinquencies balance ($bn rhs) 23 Lending $21.1bn $20.7bn $19.5bn 20 2

30+ day delinquencies (%) 3.65 4.08 3.68 18

15 1 90+ day delinquencies (%) 1.73 1.87 1.77 13

Small increase in consumer unsecured 90+ day delinquencies over FY19 due to 10 0 portfolio contraction, temporary changes to collections operations partly offset by an improvement in Auto Finance arrears Jul-17 Jul-18 Jul-19 Jan-17 Jan-18 Jan-19 Mar-17 Mar-18 Mar-19 Nov-16 Nov-17 Nov-18 Sep-16 Sep-17 Sep-18 Sep-19 May-17 May-18 May-19

Australian unsecured portfolio ($bn)1 90+ day delinquencies (%)

Sep-18 Mar-19 Sep-19 3.00 Total unsecured Total ex-hardship consumer lending 20.7 21.1 19.5 2.00

9.2 9.2 8.7 7.4 7.1 6.7 4.5 4.4 4.1 1.00

Credit cards Personal loans Auto loans Total consumer (consumer) unsecured - Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19

1 Does not include Margin Lending.

Westpac Group Debt Investor Presentation I November 2019 Australian mortgage portfolio underwriting 38

Notable changes to Westpac mortgage lending standards in FY19 Australian mortgage portfolio by • Increase in minimum assessment (‘floor’) rate to 7.25% and increase in serviceability assessment year of origination (% of total book) buffer to 2.25% Calendar year • Credit card repayments assessed at 3% of limit (previously 2%) 2015 • Expenses benchmark (HEM) adjusted by income bands as well as post settlement postcode location, marital status and dependants • Serviceability for loans with interest only terms assessed over the residual P&I term, not full loan term and maximum I/O terms reduced – owner occupied reduced to 5 years

• Mandatory 20% minimum shading on all non-base income (e.g. rental income, annuity income) – 66% of the portfolio originated previously non-base income discounted by varying amounts after major tightening of 16 • Ceased non-resident lending. For Australian and NZ citizens and permanent visa holders using 2016 lending standards foreign income, tightened verification and LVR restricted to 70% 15 • Maximum I/O terms for new IPLs reduced to 10 years 13 • Maximum LVRs restricted to include LMI capitalisation 11 • 30% limit on new interest-only lending, based on % of limits (removed 2019) 11 • Tighter limits on interest-only lending >80% LVR 2017 • Heightened supervision of mortgage lending warehouses 8 • Strengthened pre settlement hind-sighting process of applications with introduction of day 2 review team 5 • More granular assessment of expenses through the introduction of 13 categories to capture living 4 2018 expenses and other commitments 4 3 3 3 • Income verification requirements for self-employed applicants strengthened 2 2 1 • Categories to capture living expenses and other commitments increased to 17 (from 13) • HEM tables updated with values are based on the 2015/2016 ABS Household Expenditure Survey (HES), which replaces the 2009/2010 HES data previously used. This incorporates significant changes to spending patterns with a more up-to-date view on actual expenses, relative to income 2019 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 • Tightened policy on acceptable valuation methodology • Credit card repayments assessed at 3.8% of limit (previously 3%) Pre-2006 2019 (YTD) 2019 • Interest rate buffer increased from 2.25% to 2.50%; minimum assessment rate reduced from 7.25% in line with revised prudential guidance; Westpac minimum assessment (‘floor’) rate currently 5.35%

Westpac Group Debt Investor Presentation I November 2019 Interest only mortgages 39

• 73% weighted average LVR of interest only loans at origination1 Australian I/O loan portfolio ($bn) Australian mortgage delinquencies (%)

• 62% of customers ahead of repayments (including I/O performing loans balance (lhs) I/O P&I offset accounts)2 250 I/O 90+ day delinquencies balance (rhs) 14 2.0 • Offset account balances attached to interest only 200 12 loans represent 40% of offset account balances 10 150 1.5 • 90+ day delinquencies 77bps (compared to P&I 8 portfolio 90bps) 100 6 1.0 4 • Annualised loss rate (net of insurance claims) 5bps 50 (1H19: 3bps). Increase in 2H19 mainly due to 2 0.5 portfolio contraction 0 0

0.0 Jul-19 Jul-18 Jan-19 Jan-18 Mar-19 Mar-18 Sep-19 Sep-18 Nov-18 Sep-17 Nov-17 May-19 May-18 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19

I/O lending by dynamic LVR3 and income band (%) Scheduled I/O term expiry4 (% of total I/O loans) Applicant gross income bands

49 >$250k $100k - $250k 13 22 34 <$100k 20 18 8 17 25 17 19 5 88 9 7 11 7 3 <=60% 60%<=80% >80% Dynamic LVR bands (%) 0<1 Yr 1<2 Yrs 2<3 Yrs 3<4 Yrs 4<5 Yrs 5<10 Yrs 10 Yrs+

1 Weighted average LVR calculation takes into account size of outstanding balances. 2 Customer loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments. 3 Excludes RAMS. Dynamic LVR is the loan-to-value ratio taking into account the current loan balance, changes in security value, offset account balances and other loan adjustments. Property valuation source Australian Property Monitors. 4 Excludes line of credit loans, I/O loans without date (including bridging loans and loans with construction purpose) and I/O loans that should have switched to P&I but for the previously announced mortgage processing error. Westpac Group Debt Investor Presentation I November 2019 Australian investment property portfolio 40

Investment property lending (IPL) portfolio Sep-18 Mar-19 Sep-19 Investment property portfolio by number of properties per Weighted LVR of IPL loans at origination (%) 73 73 72 customer (%) averages1 1 1 1 LVR of new IPL loans in the period2 (%) 70 71 70 2 7 2 Dynamic LVR3 of IPL loans (%) 56 59 60 3 Average loan size4 ($’000) 321 321 322 26 4 Customers ahead on repayments 58 58 59 62 including offset accounts5 (%) 5

90+ day delinquencies (bps) 57 68 73 6+

Annualised loss rate (net of insurance claims) (bps) 3 3 4 Chart does not add to 100 due to rounding

Mortgage portfolio by gross income band (%) Mortgage portfolio by LVR at origination (%) % % Owner occupied IPL Owner occupied IPL 30 50 25 40 20 30 15 20 10 5 10 0 0 97+ 1m+ <=50 0<=60 50<=75 60<=70 70<=75 75<=80 80<=85 85<=90 90<=95 95<=97 75<=100 500<=1m 100<=125 125<=150 150<=200 200<=500 1 Weighted average LVR calculation takes into account size of outstanding balances. 2 Average LVR of new loans is on rolling 6 month window. 3 Includes RAMS in 1H19 and 2H19. Excludes RAMS in 2H18. Dynamic LVR is the loan-to-value ratio taking into account the current loan balance, changes in security value, offset account balances and other loan adjustments. Property valuation source Australian Property Monitors. 4 Includes amortisation. Calculated at account level where split loans represent more than one account. 5 Customer loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments.

Westpac Group Debt Investor Presentation I November 2019 Australian mortgage deep dive 41

Australian mortgage lending1 by origination date, dynamic LVR2 and income bands (%) Chart may not add due to rounding Year of origination <2011 2011-14 2015+ Gross income bands 79 >$250k 7 66 $100k - $250k 11 <$100k 33 41 37 34 7 8 25 22 4 23 38 14 19 4 1 14 9 7 6 21 1 12 5 10 11 6 3 2 7 2 5 Dynamic LVR2 bands (%) <60 60-80 >80 <60 60-80 >80 <60 60-80 >80

% of portfolio at 30 September 2019 16 22 62

Westpac SVR3 (%) (excl. discounts) 7.86 6.89 – 5.70 5.38 – 4.83

Westpac interest rate buffer (%) 1.80 1.80 2.25 (2.50 effective Jul 2019)

Westpac interest rate floor (%) 6.80 6.80 7.25 (5.35 effective Sep 2019)

House price changes4 At least +27% +12% to +36% (8%) to +12%

1 Portfolio comprised of residential mortgages, excluding RAMS, and business mortgages originated via a separate platform such as construction loans and loans to SMSFs. 2 Dynamic LVR is the loan-to-value ratio taking into account the current loan balance, changes in security value, offset account balances and other loan adjustments. Property valuation source Australian Property Monitors. 3 Based on a specific Rocket Repay rate offered during the period. Westpac Rocket Repay Home Loan exclusive of discounts assuming loan amount above $250,000. 4 Source, Westpac Economics, CoreLogic. All dwellings Australia - average 8 major capital cities. Prices to September 2019.

Westpac Group Debt Investor Presentation I November 2019 Lenders mortgage insurance arrangements 42

Lenders mortgage insurance (LMI) Lenders mortgage insurance arrangements

• Where mortgage insurance is required, mortgages LVR Band insurance are insured through Westpac’s captive mortgage insurer, Westpac Lenders Mortgage Insurance1 • LVR ≤80% Not required (WLMI), and reinsured through external LMI providers, based on risk profile • Low doc4 LVR ≤60% • WLMI is well capitalised (separate from bank 5 capital) and subject to APRA regulation. WLMI • LVR >80% to ≤ 90% • Where insurance required, insured through captive insurer, WLMI targets a capitalisation ratio of 1.2x PCR2 and has • Low doc4 • LMI not required for certain borrower groups consistently been above this target LVR >60% to 80% ≤ • Reinsurance arrangements: • Scenarios indicate sufficient capital to fund claims arising from events of severe stress – estimated − 40% risk retained by WLMI losses for WLMI from a 1 in 200 year event are − 60% risk transferred through quota share arrangements with Arch Reinsurance $88m net of re-insurance recoveries Limited, Renaissance Re, Endurance Re, Everest Re, Trans Re, AWAC and (1H19: $97m) Capita 2232

• LVR >90% • 100% reinsurance through Arch Reinsurance Limited Westpac’s Australian mortgage portfolio at 30 Sep 2019 (%) − Reinsurance arrangements see loans with LVR >90% insured through WLMI with 100% of risk subsequently transferred to Arch Reinsurance Limited

84 Not insured Insurance statistics

Insured by third parties 3 2H18 1H19 2H19 Insurance claims ($m) 4 7 5 Insured by WLMI 6 WLMI claims ratio6 (%) 11 25 16 9

WLMI gross written premiums7 ($m) 90 76 84 Chart does not add due to rounding

1 Since 18 May 2015 WLMI has underwritten all mortgage insurance, where required, on Westpac originated mortgages. The in-force portfolio of loans includes mortgage insurance provided by external providers. 2 Prudential Capital Requirement (PCR) calculated in accordance with APRA standards. 3 Insured coverage is net of quota share. 4 Low doc loans no longer sold. Refers to arrangements in place for legacy products. 5 No WLMI coverage if the loan goes to 90+ arrears in the first twelve months and insurance via WLMI ceases once the loans is 8 years from origination (unless in a securitised pool). 6 Loss ratio is claims over the total earned premium plus exchange commission. 7 LMI gross written premium includes loans >90% LVR reinsured with Arch Reinsurance Limited. 2H19 gross written premium includes $56m from the arrangement (1H19: $52m and 2H18: $61m) Westpac Group Debt Investor Presentation I November 2019 Mortgage portfolio stress testing outcomes 43

• Westpac regularly conducts a range of portfolio stress tests as part of its Australian mortgage portfolio stress testing regulatory and risk management activities • The Australian mortgage portfolio stress testing scenario assumes a severe Stressed scenario recession in which significant reductions in consumer spending and business investment lead to six consecutive quarters of negative GDP growth. This results Key assumptions Current Year 1 Year 2 Year 3 in a material increase in unemployment and nationwide falls in property and other asset prices Portfolio size ($bn) 449 432 423 421 • Estimated Australian housing portfolio losses under these stressed conditions are manageable and within the Group’s risk appetite and capital base Unemployment rate (%) 5.3 11.6 10.6 9.6 − Cumulative total losses of $5.1bn over three years for the uninsured portfolio (FY18: $4.4bn) Interest rates (cash rate, %) 1.00 0.00 0.00 0.00 − Cumulative claims on LMI, both WLMI and external insurers, of $1.0bn over the House prices three years (FY18: $1.0bn) - (18.5) (29.7) (35.2) (% change cumulative) − Loss rates have increased primarily due to further declines in house prices which lead to a higher dynamic LVR starting point for the portfolio and an increase in the LMI claim rejection rate from 30% to 50% Annual GDP growth (%) 1.4 (3.9) (0.2) 1.7 • WLMI separately conducts stress testing to test the sufficiency of its capital 1 position to cover mortgage claims arising from a stressed mortgage environment Stressed loss outcomes (net of LMI recoveries) • Capital targets incorporate buffers at the Westpac Group level that also consider Portfolio at 31 March 2019 the combined impact on the mortgage portfolio and WLMI of severe stress scenarios $ million 1022 1,837 2,578 874

Basis points3 2 385419

Portfolio at 30 September 2019

$ million 108 1,948 2,729 973

Basis points3 2 405721

1 Assumes 50% of LMI claims will be rejected in a stressed scenario. 2 Represents 1H19 actual losses of $51m annualised. 3 Stressed loss rates are calculated as a percentage of average exposure at default (EAD).

Westpac Group Debt Investor Presentation I November 2019 Funding and liquidity metrics 44

Funding composition by residual maturity (%) Liquidity coverage ratio (LCR)3 ($bn and %)

Bars may not add to 100 due to rounding LCR 138% LCR 127% 143.9 133.7 Wholesale Onshore <1yr1 113.4 5 5 97.0 16 7 7 Wholesale Offshore <1yr1

20 4 5 Wholesale Onshore >1yr Net cash outflows Liquid assets Net cash outflows Liquid assets 12 12 1 1 31 March 2019 30 September 2019 8 8 Wholesale Offshore >1yr Customer deposits High Quality Liquid Assets 4 Wholesale funding Committed Liquidity Facility Other flows 10 Securitisation 1 5 Net stable funding ratio (NSFR) at 30 September 2019 ($bn)

2 606.8 Equity Wholesale 544.0 NSFR funding and Liquids 63 63 4 other liabilities and other 31 Mar 2019 113% Corporate & 44 Customer deposits Institutional Other 30 Sep 2019 112% deposits loans5 Retail & SME deposits Residential mortgages ≤35% risk weight Sep-08 Sep-18 Sep-19 Capital Available Stable Funding Required Stable Funding

1 Includes long term wholesale funding with a residual maturity less than or equal to 1 year. 2 Equity excludes FX translation, Available-for-Sale securities and Cash Flow Hedging Reserves. 3 LCR is calculated as the percentage ratio of stock of HQLA and CLF over the total net cash outflows in a modelled 30 day defined stressed scenario. Calculated on a spot basis. HQLA includes HQLA as defined in APS 210, RBNZ eligible liquids, less RBA open repos funding end of day ESA balances with the RBA. Committed Liquidity Facility or CLF is made available to Australian Authorised Deposit-taking Institutions by the RBA that, subject to qualifying conditions, can be accessed to meet LCR requirements under APS210 – Liquidity. Other flows include credit and liquidity facilities, collateral outflows and inflows from customers. 4 Other includes derivatives and other assets. 5 Other loans includes off balance sheet exposures and residential mortgages >35% risk weight.

Westpac Group Debt Investor Presentation I November 2019 Economics Australian and New Zealand economic forecasts 46

Calendar year Key economic indicators (%) as at October 2019 2017 2018 2019F 2020F World GDP1 3.8 3.6 3.0 3.2 Australia GDP2 2.5 2.2 2.3 2.4 Private consumption2 2.8 2.0 1.9 2.3 Business investment2,3 7.3 –0.8 –0.4 2.8 Unemployment – end period 5.5 5.0 5.4 5.6 CPI headline – year end 1.9 1.8 1.7 1.9 Interest rates – cash rate 1.50 1.50 0.75 0.50 Credit growth, Total – year end 4.8 4.3 2.5 3.3 Credit growth, Housing – year end 6.3 4.7 3.0 3.7 Credit growth, Business – year end 3.0 4.7 2.8 3.3 New Zealand GDP2 3.1 2.8 2.2 2.3 Unemployment – end period 4.5 4.3 4.2 4.2 Consumer prices 1.6 1.9 1.7 1.7 Interest rates – official cash rate 1.75 1.75 1.00 0.75 Credit growth – Total4 6.5 5.2 5.5 5.3 Credit growth – Housing4 7.4 5.9 6.3 6.5 Credit growth – Business4 5.2 4.3 4.9 3.8

Source: Westpac Economics. 1 Year average growth rates. 2 Through the year growth rates. 3 Business investment adjusted to exclude the effect of public sector purchases of public assets. 4 NZ credit forecasts are for growth over the calendar year.

Westpac Group Debt Investor Presentation I November 2019 The Australian economy 47

NSW and Victoria 58% of population and employment Services employ a large part of the Australian workforce

Output 2018 - sector contribution to GDP (%)1 Services Mining 54% Manufacturing 9 18 Construction 7 Transport, Utilities 9 Wholesale, Retail 10 Agriculture 8 Household services 6 Health 5 10 Education Public administration 8 6 3 Finance Business services

Relative size of States (Share of Australia, 2017/18, %) Australian employment by sector 2018 (%) GSP Population Employment Exports Services Mining 35 59% 2 Manufacturing 33 32 32 15 7 Construction 26 9 26 26 4 Transport, Utilities 23 Wholesale, Retail 20 20 20 6 6 19 Agriculture 14 14 8 Household services 10 10 13 Health, Social Assistance 6 7 7 Education 4 13 3 2 2 Public Administration 2 1 13 Finance NSW Victoria Queensland WA SA Tasmania Business services Sources: ABS, Westpac Economics Sources: ABS, Westpac Economics. 1 Excludes ownership of dwellings and taxes less subsidies. 1. Real, financial years, experimental estimates

Westpac Group Debt Investor Presentation I November 2019 Australian economic outlook: growth to remain below trend 48

Australia: 28 years of uninterrupted growth %ann %ann Quarterly GDP Annual GDP period averages 8 8

6 6

4 4

2 2

0 0

-2 -2 1989 1993 1997 2001 2005 2009 2013 2017 Sources: ABS, Westpac Economics. Australian growth mix: shifting drivers Australian private sector credit growth subdued ppts/%ann Contributions to GDP growth ppts/%ann Australian private sector credit growth (% ann) 3 3 ann% 2016 2017 2018 2019f 2020f Housing Total credit Business 2 2 25 Forecasts 20 end 2020 1 1 15 0 0 10 5 -1 -1 ^ incl. housing 0 * mining investment -2 -2 -5 Consumer^ Mining * Non-mining Public Net exports GDP -10 investment Aug-95 Aug-99 Aug-03 Aug-07 Aug-11 Aug-15 Aug-19 Sources: ABS, Westpac Economics. Sources: RBA, Westpac Economics.

Westpac Group Debt Investor Presentation I November 2019 Ongoing weakness centred on consumer and housing construction 49

Australian wage inflation remains low Consumer sentiment remains weak

%yr Australian wage inflation (% ann) index index 8 140 140 Aus private sector wages Westpac-MI Consumer Sentiment Index 7 Mining industry wages 130 'family finances vs 12mths ago' 130 6 120 120 5 110 110 4 100 100 3 90 90 2 80 80 1 70 70 0 60 60 Jun-99 Jun-01 Jun-03 Jun-05 Jun-07 Jun-09 Jun-11 Jun-13 Jun-15 Jun-17 Jun-19 Oct-99 Oct-04 Oct-09 Oct-14 Oct-19 Sources: ABS, Westpac Economics. Sources: Melbourne Institute, Westpac Economics. Household savings ratio: poised to rise Dwelling approvals down from 2016 highs % income % income Dwelling approvals (‘000 month, annualised) 12 12 Private approvals Trend SA F’casts 9 9 240 240 RBA easing cycles 6 6 200 200

3 3 160 160

0 0 120 120

-3 -3 80 80 Jun-91 Jun-95 Jun-99 Jun-03 Jun-07 Jun-11 Jun-15 Jun-19 Aug-99 Aug-03 Aug-07 Aug-11 Aug-15 Aug-19 Sources: ABS, Westpac Economics Sources: ABS, RBA, Westpac Economics.

Westpac Group Debt Investor Presentation I November 2019 Some offset from infrastructure, Government spending and population growth 50

Infrastructure pipeline ($bn, rolling annual) Household incomes: one off policy support

$bn $bn %ann household disposable income %ann 9 9 160 160 without tax cuts 8 F’casts 8 140 Work done 140 without tax cuts or interest rate cuts 7 7 120 Commencements 120 Work Pipeline 6 6 100 100 5 5 80 80 4 4 60 60 3 3 40 40 2 2 1 1 20 20 0 0 0 0 Jun-11 Jun-13 Jun-15 Jun-17 Jun-19 Jun-99 Jun-03 Jun-07 Jun-11 Jun-15 Jun-19 Sources: ABS, Westpac Economics Sources: ABS, Westpac Economics. Exports Population growth Export volumes Export earnings Population growth 2008-2018 average (% ann) $bn/qtr $bn/mth 60 28 EU Resources (54%) Resources 26 0.24 50 24 Developed 0.49 Non resources Non-resources 22 UK 0.72 40 (46%) 20 US 0.72 30 18 Canada 1.09 16 World 1.16 20 14 Developing 12 1.28 10 10 NZ 1.42 0 8 Australia 1.60 Mar-98 Mar-08 Mar-18 Aug-12 Aug-14 Aug-16 Aug-18 0.0 0.5 1.0 1.5 2.0 Sources: ABS, Westpac Economics Source: IMF, Westpac Economics

Westpac Group Debt Investor Presentation I November 2019 Australian housing market trends 51

Consumer housing sentiment Auction clearance rates3

ann ch 1 2 ann ch % Sydney Melbourne % Westpac Consumer Housing Sentiment Index Sales 95 95 2.5 2.5 weekly monthly 85 85 1.5 1.5 75 75 0.5 0.5 65 65 -0.5 -0.5 55 55 latest -1.5 month -1.5 45 45

-2.5 -2.5 35 35 Aug-09 Aug-11 Aug-13 Aug-15 Aug-17 Aug-19 Sep-14 Sep-16 Sep-18 Sep-14 Sep-16 Sep-18 Sources: ABS, CoreLogic, Westpac – Melbourne Institute. Sources: APM, CoreLogic, Westpac Economics. New finance approvals (% month) NSW: affordability to remain relatively stretched Total value of finance approvals incl. investor excluding refinance mth% % % mth% 12 12 6 6 14 improve 14 16 16 4 4 18 Westpac 18 deteriorate forecast 2 2 20 20 0 0 22 22 24 24 -2 -2 30yr 26 26 -4 -4 avg 28 28 -6 -6 30 *% income required to finance the purchase 30 of a median-priced dwelling -8 -8 32 32 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 Jun-98 Jun-02 Jun-06 Jun-10 Jun-14 Jun-18 Jun-22

Sources: ABS, Westpac Economics. Sources: CoreLogic, ABS, Westpac-Melbourne Institute

1 Advanced 3mths. 2 % stock seasonally adjusted by Westpac, smoothed. 3 Seasonally adjusted by Westpac, smoothed.

Westpac Group Debt Investor Presentation I November 2019 Trends in Australian home lending 52

Change in composition of housing credit Introduction of differentiated mortgage pricing

Australian housing credit growth (6mth % change annualised) % Mortgage interest rates (major bank average) % 7.5 Own-occ. - principal and interest Total 10% limit on investment 30% limit on interest property annual portfolio growth only originations 7.0 Own-occ. - interest only Investor 14 Investor - principal and interest Owner-occupier 6.5 Investor - interest only 10 6.0 5.67 6 4.5 5.5 5.38 5.32 2 2.7 5.0 4.80 -0.5 -2 4.5 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 Oct-19 Sources: RBA, Westpac Economics. Source: APRA, RBA, Westpac Economics Lower flow of interest only loans Lower new flow of 90%+ LVR loans Interest only housing loans % High LVR housing loans % 25 60 80-90% 90%+ Outstanding loans 10% investor APRA 30% interest only new 50 credit growth limit 20 New loans flow limit 40 15 15.4 30 10 20 21.6 15.8 7.0 5 10

0 0 Jun-09 Jun-11 Jun-13 Jun-15 Jun-17 Jun-19 Jun-09 Jun-11 Jun-13 Jun-15 Jun-17 Jun-19 Sources: ABS, APRA, RBA, Westpac Economics. Sources: ABS, APRA, RBA, Westpac Economics

Westpac Group Debt Investor Presentation I November 2019 Australian household balance sheets 53

Australian household debt to income ratio Australian household net wealth Australian households debt to income ratio (%) % Annual household disposable income Total (gross) debt Forecasts % Total assets % 200 Total debt net of offset accounts end 2020 1400 1200 180 Total liabilities Total debt net of all deposits 160 1200 Total net worth 1000 140 Trend since Jun-07 1000 120 800 100 800 80 600 60 600 40 400 20 400 0 200 200 -20 -40 0 0 Jun-89 Jun-94 Jun-99 Jun-04 Jun-09 Jun-14 Jun-19 Jun-84 Jun-89 Jun-94 Jun-99 Jun-04 Jun-09 Jun-14 Jun-19 Sources: ABS, RBA, Westpac Economics Sources: ABS, RBA, Westpac Economics. Higher income households have increased borrowings

% Australian household debt-to-income ratios by income quintile (%) 250 2002 2006 2010 2014 200

150

100

50

0 1st 2nd 3rd 4th 5th Sources: ABS, RBA, Westpac Economics.

Westpac Group Debt Investor Presentation I November 2019 The New Zealand economy 54

Regional GDP NZ output and employment

Total nominal GDP 2018: $293bn Output 2019 - sector shares of GDP (%) Population 4.9 mil

Northland, $7bn Primary industries 9 7 4% of population 6 Construction 11 3 Electricity, gas, and water 3 Auckland, $108bn Food manufacturing Bay of Plenty, $16bn 35% of population 7 6% of population 4 Manufacturing (excl. food) Wholesale, retail and accommodation Waikato, $24bn 10% of population 12 Transport Financial and professional services Taranaki, Gisborne/Hawke’s 33 5 Public administration Whanganui/Manawatu, $19bn Bay, $10bn Social services (incl. health) 7% of population 4% of population Other Tasman/Nelson, $5bn 2% of population NZ employment by sector 2019 (%) Wellington, $37bn 11% of population Primary industries 8 6 West Coast, $2bn Marlborough, $3bn 9 Construction 1% of population 1% of population 19 Manufacturing 9 Wholesale / Retail / Accommodation Southland, $6bn Canterbury, $35bn Transport 2% of population 13% of population 6 Financial / professional services / IT 19 Otago, $13bn Public administration 5% of population 20 4 Social services (incl. health) Other Sources: Stats NZ, Westpac Economics Sources: Stats NZ, Westpac Economics Nationwide GDP and employment figures are for the year to June 2019, regional figure are for the year to March 2018 Westpac Group Debt Investor Presentation I November 2019 New Zealand economic snapshot – growth has taken a step down 55

New Zealand economy key statistics GDP growth has cooled Housing slowdown a drag on spending (latest available as at October 2019) GDP (%) House prices and household spending % % %% House price inflation (left axis) 1 6 Forecast 6 40 8 GDP 2.4% Qtr % chg Forecast Annual average % change 30 Per capita household spending 6 (right axis) Westpac Economics Forecast 4 4 2.3% 20 4 (end calendar 2020) 10 2 2 2 Unemployment 0 0 3.9% -10 -2 Rate 0 0 -20 -4 Westpac Economics Forecast 4.2% -2 -2 -30 -6 (end calendar 2020) 2005 2008 2011 2014 2017 2020 2002 2006 2010 2014 2018 2022 Source: Stats NZ, Westpac Economics Source: Stats NZ, Westpac Economics Inflation 1.5% Construction approaching peak Population growth cooling Westpac Economics Forecast Construction spending (annual) 1.7% $bn $bn Population growth (annual) (end calendar 2020) 40 40 % % Kaikoura earthquake costs Forecast 2.5 2.5 Canterbury rebuild Forecast Construction (excl. quake costs) Cash Rate 1.00% 30 30 2.0 2.0

Westpac Economics Forecast 1.5 1.5 0.75% (end calendar 2020) 20 20 1.0 1.0 10 10 NZD/USD US$0.64 0.5 0.5 Westpac Economics Forecast US$0.63 0 0 0.0 0.0 (end calendar 2020) 2005 2008 2011 2014 2017 2020 2023 2002 2006 2010 2014 2018 2022 Source: Westpac Economics estimates Source: Stats NZ, Westpac Economics 1 Year average growth rates

Westpac Group Debt Investor Presentation I November 2019 New Zealand economic indicators – policy to support a firming in growth 56

Inflation off its lows, still moderate The RBNZ to hold the cash rate at low levels for some time. % Inflation (%) % % Interest rates (%) % 10 10 6 6 90 day bank bill rate Forecast CPI inflation Forecast 5 5 8 2 year swap rate 8 CPI excluding petrol 5 year swap rate 4 4 6 6 3 3 4 4 2 2

1 1 2 2

0 0 2005 2007 2009 2011 2013 2015 2017 2019 2021 0 0 2005 2009 2013 2017 2021 Source: Stats NZ, Westpac Economics Source: RBNZ, Westpac Economics

Low interest rates to support activity… …along with large planned increases in fiscal spending Official Cash Rate Government consumption share of GDP % % % of GDP % of GDP 4.0 4.0 Forecast Labour National Labour National Labour 3.5 3.5 24 1984- 24 1990-1999 1999-2008 2008-2017 2017- 3.0 3.0 1990 2.5 2.5 22 22 2.0 2.0 20 20 1.5 1.5 1.0 1.0 18 18 0.5 0.5 0.0 0.0 16 16 2012 2014 2016 2018 2020 1987 1992 1997 2002 2007 2012 2017 2022 Source: RBNZ, Westpac Source: StatsNZ, The Treasury, Westpac

Westpac Group Debt Investor Presentation I November 2019 New Zealand economic indicators 57

Labour market has tightened Export prices stillremain firm favourable Unemployment rate and wage growth (%) NZ export commodity price index (world prices) % %yr Index 7 4.5 Index 450 450 4.0 6 400 400 3.5 5 350 350 3.0 300 300 4 2.5 250 250 3 2.0 200 200 1.5 150 150 2 Unemployment rate (left axis) 1.0 100 100 Dairy Forestry Meat,skins & wool 1 0.5 50 50 Labour Cost Index (right axis) 0 0.0 0 0 2005 2007 2009 2011 2013 2015 2017 2019 2006 2008 2010 2012 2014 2016 2018 Source: Stats NZ, Westpac Economics Source: ANZ, Westpac Economics

Earlier policy changes dampened housing demand… …but low mortgage rates starting to drive a pick up

New Zealand house prices by region (index) New Zealand house prices (nationwide, %) 220 220 20 20 Forecast NZ ex Auckland and 200 Canterbury 200 2008100 in = Index 15 15 180 Auckland 180 10 10 160 160 5 5 Canterbury 140 140 0 0 120 120 -5 -5 100 100 -10 -10 Index Index = in 100 2008 80 80 -15 -15 Jan-08 Jan-10 Jan-12 Jan-14 Jan-16 Jan-18 2008 2010 2012 2014 2016 2018 2020 Source: REINZ Sources: QVNZ, Westpac Economics

Westpac Group Debt Investor Presentation I November 2019 Appendices Appendix 1: Westpac vs Canadian Banks 59

Westpac Period Q4 2019 Q3 2019 Q3 2019 Q3 2019 Q3 2019 Q3 2019 Period Ended 30-Sep-2019 31-Jul-2019 31-Jul-2019 31-Jul-2019 31-Jul-2019 31-Jul-2019 Aa3 / AA- / Aa3 / A / A2 / A / A2 / A- / A2 / A- / A2 / BBB+ / Senior Debt Rating1,2 AA / AA- AA / - AA / AA AA (low) / AA- AA (low) / AA- AA (low) / AA- Baa1 (hyb) / / A2 (hyb) / A- / Baa1 (hyb) / A- / Baa1 / BBB+ / Baa1 / BBB+ / Baa1 / BBB / Subordinated Debt - NVCC Rating1 BBB+ A (high) / A+ A / - A / AA- A (low) / - A (low) / A+ A (low) / A+ Currency AUD CAD CAD CAD CAD CAD Balance Sheet Total Assets ($mm) 906,626 1,405,442 1,406,893 1,066,740 839,180 642,522 Total Risk-Weighted Assets ($mm) 428,590 454,881 510,664 417,058 313,003 236,836 RWA Density3 47% 32% 36% 39% 37% 37% Liquidity Coverage Ratio 127% 132% 122% 123% 132% 129% Net Loan-to-Deposit Ratio 136% 77.7% 69.5% 81.6% 75.5% 80.2% Leverage Ratio 6.4%4 4.1% 4.4% 4.2% 4.3% 4.3% Reported Total PCL (MRQ) / Average 54 39 28 48 29 30 Net Loans (annualized) (bps) Income Statement Reported Net Interest Margin (MRQ) 2.12% 1.93% 1.62% 2.45% 1.67% 1.84% Reported Revenue 20,649 40,861 45,301 30,514 25,289 18,291 (last 12 months) ($mm) Reported NIAT 6,784 11,790 12,915 8,761 6,261 5,196 (last 12 months) ($mm) Reported Efficiency Ratio 49% 53% 52% 54% 55% 58% (last 12 months) Capital Ratios Common Equity Tier 1 15.9%4 12.0% 11.9% 11.2% 11.4% 11.4% Tier 1 18.6%4 13.4% 13.0% 12.3% 13.0% 12.7% Total 22.1%4 16.1% 15.0% 14.8% 15.3% 15.2%

1 Source: company websites. Moody's, S&P, DBRS and Fitch ratings, respectively. 2. Subject to conversion under the bank recapitalization "bail-in" regime. 3. Total risk-weighted assets / total assets. 4 Internationally comparable basis. Westpac Group Debt Investor Presentation I November 2019 Appendix 2: Internationally comparable capital ratio reconciliation 60

APRA’s Basel III capital requirements are more conservative than those of the Basel Committee on Banking Supervision (BCBS), leading to lower reported capital ratios by Australian banks. In July 2015, APRA published a study that compared the major banks’ capital ratios against a set of international peers1. The following details the adjustments from this study and how Westpac’s APRA Basel III CET1 capital ratio aligns to an internationally comparable ratio (%)

Westpac’s CET1 capital ratio (APRA basis) 10.7

Equity investments Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA’s requirements 0.4

Deferred tax assets Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA’s requirements 0.5

Interest rate risk in the banking APRA requires capital to be held for IRRBB. The BCBS does not have a Pillar 1 capital requirement for IRRBB 0.0 book (IRRBB) Loss given default (LGD) of 15%, compared to the 20% LGD floor under APRA’s requirements. APRA also applies a Residential mortgages 1.9 correlation factor for mortgages higher than the 15% factor prescribed in the Basel rules

Unsecured non-retail exposures LGD of 45%, compared to the 60% or higher LGD under APRA’s requirements 0.7

Non-retail undrawn commitments Credit conversion factor of 75%, compared to 100% under APRA’s requirements 0.5 Use of internal-ratings based (IRB) probabilities of default (PD) and LGDs for income producing real estate and project Specialised lending finance exposures, reduced by application of a scaling factor of 1.06. APRA applies higher risk weights under a supervisory 0.7 slotting approach, but does not require the application of the scaling factors Increase in the A$ equivalent concessional threshold level for small business retail and small to medium enterprise Currency conversion threshold 0.2 corporate exposures APRA requires these items to be deducted from CET1. The BCBS only requires exposures classified as intangible assets Capitalised expenses 0.3 under relevant accounting standards to be deducted from CET1

Internationally comparable CET1 capital ratio 15.9

Internationally comparable Tier 1 capital ratio 18.6

Internationally comparable total regulatory capital ratio 22.1

1 Methodology aligns with the APRA study titled “International capital comparison study", dated 13 July 2015.

Westpac Group Debt Investor Presentation I November 2019 Appendix 3: Internationally comparable CET1 and leverage ratios 61

Common equity Tier 1 ratio (%)1

20%

15%

10%

5% Lloyds Citigroup Unicredit Santander Natixis Rabobank Nordea Barclays Intesa Sanpaolo Credit Suisse JPMorgan Chase BNP Paribas Toronto Dominion Bank Wells Fargo Credit Agricole SA BBVA Bank of America Bank of Montreal Norinchukin Bank Danske Bank RBS ANZ CBA Sumitomo Mitsui Westpac 15.9% BPCE ING Group NAB HSBC Standard Chartered Deutsche Bank Commerzbank ICBC Societe Generale Royal Bank of Canada of Bank Royal Bank China Merchants China Construction Bank China Construction Mitsubishi UFJ Mizuho FG 0%

Leverage ratio (%)1

8%

6%

4%

2% Lloyds Barclays Scotiabank Bank of China Westpac 6.4% Intesa Sanpaolo Rabobank Norinchukin Bank Credit Suisse Nordea Unicredit Santander Sumitomo Mitsui Commerzbank Danske Bank ING Group Credit Agricole SA Societe Generale Mizuho FG BNP Paribas Deutsche Bank ICBC BBVA CBA China Merchants Bank ANZ RBS HSBC Standard Chartered BPCE Mitsubishi UFJ Bank of Montreal China Construction Bank China Construction Agricultural Bank of China Agricultural Royal Bank of Canada of Bank Royal 0% of Bank Communications

1. Peer group comprises listed commercial banks with assets in excess of A$700bn and which have disclosed fully implemented Basel III ratios or provided sufficient disclosure to estimate. Based on company reports/ presentations. Ratios at 30 June 2019, except for NAB which is at 31 March 2019, ANZ and Westpac which are at 30 September 2019, and Bank of Montreal, Scotiabank, Royal Bank of Canada and Toronto Dominion are at 31 July 2019. Assumes Basel III capital reforms fully implemented. Leverage ratio is on a transitional basis. Where accrued expected dividends have been deducted and disclosed, these have been added back for comparability. US banks are excluded from leverage ratio analysis due to business model differences, for example from loans sold to US Government sponsored enterprises. NAB has not disclosed an internationally comparable leverage ratio since September 2017.

Westpac Group Debt Investor Presentation I November 2019 Appendix 4: 1 Expected timetable on various regulatory changes 62

Second half First half Second half 2021 2022 2019 2020 2020

Standardised approach to Consult, additional quantitative impact study Finalise Implementation credit risk Advanced approach to Consult, additional quantitative impact study Finalise Implementation credit risk

Operational risk Consult and finalise Implementation

Leverage ratio Finalise Implementation

Measurement of capital Consult Finalise Implementation

Capital floor Consult Finalise Implementation

Interest-rate risk in the Consult Finalise Implementation banking book

Level 1 equity exposures Consult and finalise Implementation

RBNZ capital framework Finalise Implementation date and transition under consultation

Related party exposures Finalise Implementation

1st phase announced 2024 Loss absorbing capacity +3ppts of RWA as Further consultation on 2nd phase Tier 2 Implementation 1 Regulatory change timeline based on APRA’s paper “Revisions to the capital framework for authorised deposit-taking institutions” (published 12 June 2019).

Westpac Group Debt Investor Presentation I November 2019 Appendix 5: New Zealand Capital Review 63

Level 1 and New Zealand Capital Review Level 1 CET1 capital ratio (%, bps)

• APRA has proposed changes to the capital treatment of a parent ADI’s (“Level 1”) equity investments in subsidiary banking and insurance companies to 2 commence 1 January 20211 10.98 (40) 63 11.21 ~11.25

• Based on 30 September 2019, the impact is a ~40bps reduction in Westpac’s Level 1 CET1 ratio, primarily from Westpac’s equity investment in WNZL

• Taking into account the expected $2.5bn2 capital raise, the Level 1 pro forma Proposed change to APRA would be 11.21% treatment of equity investments1

• The RBNZ is consulting on capital requirements for New Zealand banks, including a Tier 1 capital requirement of 16% for systemically important NZ banks including WNZL, and changes to risk weighted asset measurement. Further clarity from the Sep-19 APRA proposal Capital expected Sep-19 Sep-19 Level 1 to be Level 1 Level 2 RBNZ is expected in December 2019 raised pro forma pro forma • On a pro forma basis, the proposals would increase Westpac’s Level 1 capital requirements by NZ$1.2- NZ$1.8 billion (assuming a WNZL Tier 1 capital ratio RBNZ proposals – WNZL Tier 1 capital ratio (%, bps) of 16-17%) if the proposals were applied at 30 September 20193

• Westpac is well placed to respond to the changes with the proposed transition 16.0 – 17.0 period (currently 5 years) 13.9

Sep-19 WNZL Tier 1 WNZL Tier 1 capital ratio capital ratio with RBNZ

1 “Revisions to APS 111 Capital Adequacy: Measurement of Capital” released on 15 October 2019. For this purpose equity investments includes Additional Tier 1 and Tier 2 capital. 2 63 basis point increase reflects the Level 1 impact of the underwritten $2.0bn Placement and assumes the SPP raises $500 million after allowing for the change to risk weights from the proposed change to APS 111. The basis point impact is net of issue costs. 3 Based on the WNZL balance sheet as at 30 September 2019 including the estimated impact of the RBNZ’s proposed changes to risk weighted assets. Assumes that some of WNZL’s supplementary capital can be issued externally over time.

Westpac Group Debt Investor Presentation I November 2019 Appendix 6: Cash earnings adjustments 64

$m FY19 FY18 Description Reported net 6,784 8,095 Net profit attributable to owners of Westpac Banking Corporation profit

Identifiable intangible assets arising from business acquisitions are amortised over their useful lives, ranging between four and twenty Amortisation of -17years. The amortisation (excluding capitalised software) is a cash earnings adjustment because it is a non-cash flow item and doe not intangible assets affect cash distributions available to shareholders. The last of these intangible assets were fully amortised in December 2017

Fair value on economic hedges (which do not qualify for hedge accounting under AAS) comprise: • The unrealised fair value (gain)/loss on foreign exchange hedges of future New Zealand earnings impacting non-interest income is Fair value reversed in deriving cash earnings as their may create a material timing difference on reported results but do not affect the (gain)/loss on 35 (126) Group’s cash earnings over the life of the hedge; and economic hedges • The unrealised fair value (gain)/loss on hedges of accrual accounted term funding transactions are reversed in deriving cash earnings as they may create a material timing difference on reported results but do not affect the Group’s cash earnings over the life of the hedge

Ineffective The unrealised (gain)/loss on ineffective hedges is reversed in deriving cash earnings for the period because the gain or loss arising (20) 13 hedges from the fair value movement in these hedges reverses over time and does not affect the Group’s profits over time

Adjustments related to Pendal (previously BTIM): Consistent with prior periods’ treatment, this item has been treated as a cash Adjustments earnings adjustment given its size and that it does not reflect ongoing operations. The Group has indicated that it may sell the related to Pendal 45 73 remaining 10% shareholding in Pendal at some future date. From September 2018, this adjustment relates to the mark to market of (previously the shares and separation costs related to the original sell down. Any future gain or loss on this shareholding will similarly be BTIM) excluded from the calculation of cash earnings

Under AAS, Westpac shares held by the Group in the managed funds and life businesses are deemed to be Treasury shares and the results of holding these shares can not be recognised as income in the reported results. In deriving cash earnings, these results are Treasury shares 5(7) included to ensure there is no asymmetrical impact on the Group’s profits because the Treasury shares support policyholder liabilities and equity derivative transactions which are re-valued in determining income

Cash earnings 6,849 8,065

Westpac Group Debt Investor Presentation I November 2019 Appendix 7: Definitions – Credit quality 65

Includes facilities where: For financial assets that are non-performing a provision for lifetime Stage 3 Lifetime • contractual payments of interest and / or principal are 90 or more expected losses is recognised. Interest revenue is calculated on the ECL – calendar days overdue, including overdrafts or other revolving facilities carrying amount net of the provision for ECL rather than the gross carrying non-performing that remain continuously outside approved limits by material amounts amount for 90 or more calendar days (including accounts for customers who 90 days past have been granted hardship assistance); or Includes exposures that have deteriorated to the point where full collection due and not • an order has been sought for the customer’s bankruptcy or similar legal of interest and principal is in doubt, based on an assessment of the impaired action has been instituted which may avoid or delay repayment of its customer’s outlook, cashflow, and the net realisation of value of assets to credit obligations; and which recourse is held and includes: • the estimated net realisable value of assets / security to which Westpac • facilities 90 days or more past due, and full recovery is in doubt: has recourse is sufficient to cover repayment of all principal and interest, exposures where contractual payments are 90 or more days in arrears or where there are otherwise reasonable grounds to expect payment in and the net realisable value of assets to which recourse is held may not full and interest is being taken to profit on an accrual basis. be sufficient to allow full collection of interest and principal, including overdrafts or other revolving facilities that remain continuously outside Expected credit losses (ECL) are a probability-weighted estimate of the cash approved limits by material amounts for 90 or more calendar days; Impaired Provision for shortfalls expected to result from defaults over the relevant timeframe. They • non-accrual assets: exposures with individually assessed impairment assets expected credit are determined by evaluating a range of possible outcomes and taking into provisions held against them, excluding restructured loans; losses (ECL) account the time value of money, past events, current conditions and future • restructured assets: exposures where the original contractual terms economic conditions have been formally modified to provide for concessions of interest or Collectively principal for reasons related to the financial difficulties of the customer; assessed Loans not found to be individually impaired or significant will be collectively • other assets acquired through security enforcement (includes other real provisions assessed in pools of similar assets with similar risk characteristics estate owned): includes the value of any other assets acquired as full (CAPs) or partial settlement of outstanding obligations through the enforcement of security arrangements; and Provisions raised for losses that have already been incurred on loans that Individually • any other assets where the full collection of interest and principal is in are known to be impaired and are assessed on an individual basis. The assessed doubt estimated losses on these impaired loans is based on expected future cash provisions flows discounted to their present value and, as this discount unwinds, Watchlist and substandard, 90 days past due and not impaired and (IAPs) Stressed assets interest will be recognised in the income statement impaired assets For financial assets where there has been no significant increase in credit Stage 1: 12 Represents the sum of the committed portion of direct lending (including risk since origination a provision for 12 months expected credit losses is Total committed months ECL – funds placement overall and deposits placed), contingent and pre- recognised. Interest revenue is calculated on the gross carrying amount of exposures performing settlement risk plus the committed portion of secondary market trading and the financial asset (TCE) underwriting risk For financial assets where there has been a significant increase in credit risk Stage 2: since origination but where the asset is still performing a provision for Lifetime ECL – Watchlist and Loan facilities where customers are experiencing operating weakness and lifetime expected losses is recognised. Interest revenue is calculated on the performing substandard financial difficulty but are not expected to incur loss of interest or principal gross carrying amount of the financial asset

Westpac Group Debt Investor Presentation I November 2019 Appendix 8: Definitions – Capital and liquidity 66

Capital Liquidity

Capital ratios As defined by APRA (unless stated otherwise) Committed The RBA makes available to Australian Authorised Deposit-taking liquidity facility Institutions a CLF that, subject to qualifying conditions, can be accessed (CLF) to meet LCR requirements under APS210 Liquidity Internationally comparable regulatory capital ratios are Westpac’s Internationally estimated ratios after adjusting the capital ratios determined under APRA comparable Basel III regulations for various items. Analysis aligns with the APRA study High quality ratios Assets which meet APRA’s criteria for inclusion as HQLA in the numerator titled “International capital comparison study” dated 13 July 2015 liquid assets of the LCR (HQLA)

An APRA requirement to maintain an adequate level of unencumbered high quality liquid assets, to meet liquidity needs for a 30 calendar day As defined by APRA (unless stated otherwise). Tier 1 capital divided by Liquidity period under an APRA-defined severe stress scenario. Absent a situation ‘exposure measure’ and expressed as a percentage. ‘Exposure measure’ Leverage ratio coverage ratio of financial stress, the value of the LCR must not be less than 100%, is the sum of on-balance sheet exposures, derivative exposures, securities (LCR) effective 1 January 2015. LCR is calculated as the percentage ratio of financing transaction exposures and other off-balance sheet exposures stock of HQLA and CLF over the total net cash out-flows in a modelled 30 day defined stressed scenario

The NSFR is defined as the ratio of the amount of available stable funding Assets (both on and off-balance sheet) are risk weighted according to each (ASF) to the amount of required stable funding (RSF) defined by APRA. asset’s inherent potential for default and what the likely losses would be in Net stable The amount of ASF is the portion of an ADI’s capital and liabilities Risk weighted case of default. In the case of non-asset-backed risks (i.e. market and funding ratio expected to be a reliable source of funds over a one year time horizon. assets or RWA operational risk), RWA is determined by multiplying the capital requirements (NSFR) The amount of RSF is a function of the liquidity characteristics and residual for those risks by 12.5 maturities of an ADI’s assets and off-balance sheet activities. ADI’s must maintain an NSFR of at least 100%

Westpac Group Debt Investor Presentation I November 2019 More information | www.westpac.com.au/investorcentre 67

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Contact our Global Funding team

Curt Zuber Joanne Dawson Alexander Bischoff Treasurer, Westpac Banking Corporation Deputy Treasurer, Westpac Banking Corporation Executive Director, Global Funding +61 2 8253 4230 +61 2 8204 2777 +61 2 8253 4314 [email protected] [email protected] [email protected]

Lucy Carroll Nicholas Cooper Jacqueline Boddy Senior Associate, Global Funding Senior Associate, Global Funding Director, Debt Investor Relations +61 2 8253 4314 +61 2 8253 4314 +61 2 8253 3133 [email protected] [email protected] [email protected] Westpac Group Debt Investor Presentation I November 2019