Westpac Banking Corporation Fixed Income Investor Roadshow 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 2018 Annual Report on Form 20-F for the year ended 30 September 2018 (“2018 Annual Report on Form 20-F”) filed with the SEC for details of the basis of preparation of cash earnings. Refer to Appendix 3 for a reconciliation of reported net profit to cash earnings. Financial data in this presentation is as at 30 September 2018 unless otherwise indicated. Comparisons of FY18 financial results are to FY17 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 2018 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 Roadshow I November 2018 Westpac FY18 Highlights 3

A solid and consistent story from Australia’s first bank

1H18 Financials (vs 1H17) FY18 Financials (vs FY17) Balance sheet • Return on average ordinary equity 13.1%, • CET1 capital ratio 10.6%, APRA Basel III down 60bps basis • Reported net profit $8.1bn, up 1% • CET1 capital ratio 16.1%,  Included $281m in provisions (after tax) Basel III internationally comparable1 basis for customer refunds, payments and • LCR 133% associated costs in 2H18 • NSFR 114% • Net operating income $22.1bn, up 2% • Australian mortgages 90+ day delinquencies • Net interest margin 2.13%, up 7bps 72bps • Cost to income ratio 43.8%, up 52bps

A consistent strategy Franchise strength

• A service-led strategy, focussed on retail banking • Australia’s 2nd largest bank, and 21st largest and wealth in Australia and New Zealand bank in the world, ranked by market capitalisation2 • Maintaining a strong balance sheet • Total assets of $880bn • Improving customer experience through digital • 14.2 million customers • In the current environment, enhancing focus on • Well positioned across key customer structural cost reduction segments in Australia and New Zealand • Unique portfolio of brands

1 The basis of the internationally comparable CET1 capital ratio aligns with the APRA study titled “International capital comparison study", released 13 July 2015. For more details on adjustments refer to Appendix 1. 2 Source: S&P CapitalIQ, based in US Dollars.

Westpac Group Debt Investor Roadshow I November 2018 Responding to regulatory and 4 political change in Australia

Australian housing market cooling • Sydney and Melbourne housing markets have cooled, as macro-prudential measures, higher lending rates and tighter lending standards have had an impact • Household debt levels remain high although are forecast to remain stable

Political environment presents heightened scrutiny • Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is underway. Interim report delivered September 2018 and final report due February 2019 • Bank Levy on liabilities cost $378 million in FY18

Review of the capital framework • Consultation released from APRA in 3Q18 on proposed changes to international comparability • Proposed approaches would not change the amount of capital ADIs are required to hold beyond the unquestionably strong capital benchmarks announced in July 2017 • Further updates from APRA on proposals to the capital framework expected later in 2018

Ratings • Rated AA- by S&P Global Ratings, Negative outlook • Rated Aa3 by Moody’s Investor Services, Stable outlook • Rated AA- by Fitch Ratings, Stable outlook

Westpac Group Debt Investor Roadshow I November 2018 Well positioned for ‘Unquestionably strong’ capital 5

Capital ratios (%) CET1 capital ratio (%) and CET1 capital ($bn) (APRA basis) Table may not add due to rounding Sep-17 Mar-18 Sep-18 Westpac CET1 capital (lhs, $bn) APRA introduces industry CET1 capital ratio 10.6 10.5 10.6 Westpac CET1 capital ratio (rhs, %) guidelines 10.5% Building for 1% “unquestionably strong” $bn Additional Tier 1 capital 2.1 2.3 2.1 DSIB2 buffer % 55 12 10.5 10.6 10.5 10.4 10.6 Tier 1 capital ratio 12.7 12.8 12.8 10.2 10.1 50 10.1 10.0 10.0 9.5 9.5 9.3 10 9.0 Tier 2 capital 2.2 2.0 2.0 45 APRA’s changes to mortgage 8 3 Total regulatory capital ratio 14.8 14.8 14.7 40 RWA

35 6 Risk weighted assets (RWA) ($bn) 404 416 425

30 45 43 44 44 Leverage ratio 5.7 5.8 5.8 41 42 4 39 40 37 38 37 38 25 34 Internationally comparable ratios1 32 2 20

Leverage ratio (internationally comparable) 6.3 6.4 6.5 15 0

CET1 capital ratio (internationally 16.2 16.1 16.1 Jun-18 Jun-17 Jun-16 comparable) Jun-15 Mar-18 Mar-17 Mar-16 Sep-18 Sep-17 Dec-17 Sep-16 Dec-16 Sep-15 Dec-15

1 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ dated 13 July 2015. 2 DSIB is domestic systemically important bank. 3 APRA’s revision to the calculation of RWA for Australian residential mortgages, which came into effect on 1 July 2016.

Westpac Group Debt Investor Roadshow I November 2018 Internationally comparable capital ratio reconciliation 6

Westpac’s Common equity Tier 1 ratio (%) Common equity Tier 1 Additional Tier 1 Tier 2 21.5

2.5 Loss given default (LGD) of 15%, compared to the 20% LGD of 45%, compared to LGD floor under APRA’s requirements. APRA also applies the 60% or higher LGD under APRA’s requirements a correlation factor for mortgages higher than the 15% factor 2.9 prescribed in the Basel rules 0.4 0.8 0.2 14.7 0.7 0.5 1.9 1.8 0.4 2.2 0.4 0.3

Use of internal-ratings based (IRB) probabilities of default (PD) and LGDs for income producing real estate and project finance exposures, reduced by 16.1 application of a scaling factor of 1.06. APRA applies higher risk weights under a supervisory slotting approach, but does not require the 10.6 application of the scaling factors

Westpac 30- Equity Deferred tax Interest rate Residential Unsecured Non-retail Specialised Currency Capitalised Westpac 30- Sep-18 APRA investments assets risk in the mortgages non-retail undrawn lending conversion expenses Sep-18 capital ratio banking book exposures commitments threshold internationally (IRRBB) comparable capital ratio

Westpac Group Debt Investor Roadshow I November 2018 Well placed on internationally comparable CET1 and leverage ratios 7

Common equity Tier 1 ratio (%)

20%

15%

10%

5% Lloyds Citigroup Scotiabank Santander Bank of China Nordea Westpac, 16.14% Rabobank Credit Suisse Intesa Sanpaolo Barclays Unicredit ICBC Wells Fargo TD Bank BNP Paribas Credit Agricole SA China Merchants Bank of America Bank of Montreal Societe Generale RBC Norinchukin Bank ANZ RBS CBA BPCE Sumitomo Mitsui NAB Standard Chartered HSBC ING Group Deutsche Bank China Construction Commerzbank JPMorgan Chase Mizuho FG Mitsubishi UFJ 0%

Leverage ratio (%)

8%

6%

4%

2% Barclays Lloyds Santander Sumitomo Mitsui BPCE Scotiabank Commerzbank ING Group RBC Societe Generale TD Bank Credit Agricole SA ICBC Bank of China BBVA Westpac, 6.48% CBA China Merchants Bank Bank of China Agricultural Intesa Sanpaolo ANZ Rabobank NAB Norinchukin Bank Standard Chartered Credit Suisse HSBC Nordea Unicredit RBS BNP Paribas Natixis Mitsubishi UFJ Mizuho FG China Construction Bank China Construction Deutsche Bank Bank of Montreal Bank of Communications 0%

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 Jun 2018, except for Westpac, ANZ and NAB which are at 30 September 2018, while Bank of Montreal, Royal Bank of Canada and Toronto Dominion are at 31 Jul 2018. For CET1, assumes Basel III capital reforms fully implemented. Leverage ratio is on a transitional basis. Where accrued expected dividends have been deducted, these have been added back for comparability. US banks are excluded from leverage ratio analysis due to business model differences, for example loans sold to US Government sponsored enterprises. NAB’s leverage ratio is as at 31 March 2018.

Westpac Group Debt Investor Roadshow I November 2018 A$32bn new term funding raised in FY18 8

Term debt issuance and maturity profile1,2,5 ($bn)

Covered bond Hybrid Senior/Securitisation Sub debt 42 Issuance Maturities 37 33 31 32 29 30 30 27 22 17

5

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 >FY24

New term issuance by tenor2,3 (%) 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. 5.4yrs 5.8yrs 6.5yrs WAM4 5 4 8 4 5 Subordinated AUD 3 4 5 21 28 5 Debt 28 32 43 >5years 12 13 47 18 Hybrid USD 5 years Securitisation 49 EUR 45 4 years 32 30 54 30 3 years 77 73 Covered Bonds GBP 2 66 10 2 years 21 17 Senior 22 25 6 4 Other 7 1 year Unsecured 3 8 2 7 10 4 3 11 FY16 FY17 FY18 FY16 FY17 FY18 FY16 FY17 FY18

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 Tenor excludes RMBS and ABS. 4 WAM is weighted average maturity. 5 Perpetual sub-debt has been included in >FY23 maturity bucket. Maturities exclude securitisation amortisation.

Westpac Group Debt Investor Roadshow I November 2018 Westpac’s SEC registration offers greater liquidity vs peers 9

Secondary trading volumes of Aussie 5yr bonds (US$m)

CBA 03/23 RegS CBA 03/23 144A WSTP 05/23 SEC NAB 06/23 3(a)(2) Historical bond trading volumes for Aussie banks Westpac bonds trade more frequently in both bigger and smaller ticket sizes CBA issues $500m WSTP issues $1bn NAB issues $750mm 5yr 144A/RegS $142.7 $140.0 5yr SEC 5yr 3(a)(2) $145.7 $112.0 $72.8 $65.8 $79.2 $44.6 $33.8 $38.7 $18.7 $10.5 $21.5

March April May June July August Vol ($m) No. Vol ($m) No. Vol ($m) No. Vol ($m) No. Vol ($m) No. Vol ($m) No. CBA 03/23 RegS 5.9 10 20.4 13 28.8 14 2.2 6 7.6 7 5.1 6 CBA 03/23 144A 136.8 58 52.4 16 83.2 42 16.5 13 26.2 17 5.4 7 WSTP 05/23 SEC - - - - 140.0 252 65.8 173 79.2 229 145.7 209 NAB 06/23 3(a)(2) ------44.6 41 38.7 32 21.5 16 Secondary trading volumes of Aussie 5yr bonds excluding trades <$0.25m (US$m)

CBA 03/23 RegS CBA 03/23 144A WSTP 05/23 SEC NAB 06/23 3(a)(2) $142.1 $134.2 $139.1 $111.3 $72.3 $71.4 $59.8 $44.4 $33.1 $38.2 $18.2 $10.2 $21.5

March April May June July August Vol ($m) No. Vol ($m) No. Vol ($m) No. Vol ($m) No. Vol ($m) No. Vol ($m) No. CBA 03/23 RegS 5.5 6 20.2 11 28.4 9 2.0 1 7.3 3 5.0 1 CBA 03/23 144A 136.6 57 52.1 14 82.9 37 16.2 11 25.8 14 5.2 4 WSTP 05/23 SEC - - - - 134.2 74 59.8 37 71.4 35 139.1 66 NAB 06/23 3(a)(2) ------44.4 40 38.2 29 21.5 14

Sources: JP Morgan, Bloomberg TRACE as of September 3, 2018.

Westpac Group Debt Investor Roadshow I November 2018 Additional Tier 1 and Tier 2 issuance and maturities 10

Westpac Total Regulatory Capital (%) Westpac Additional Tier 1 (A$m) CET1 Additional Tier 1 Tier 2 Issuance1 ($m) Maturity profile2 (A$m) 21.5 AUD USD 2.5 1,702 1,690 3,013 1,576 14.8 14.7 2.9 1,384 13.1 1,311 1,324 2.2 2.0 1,732 1.9 2.1 2.1 1,690 1.7 1,384 1,324 16.1 9.5 10.6 10.6

Sep-16 Sep-17 Sep-18 Sep-18 FY13 FY14 FY15 FY16 FY17 FY18

Internationally FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 APRA basis comparable >FY27

Westpac Tier 2 Basel III Basel III issuance1 ($m) Maturity profile2 (A$m) transitional issuance1 AUD USD CNY SGD JPY NZD HKD 2,078

2,947 2,879

1,907 1,195 1,150 1,000 1,066 941 1,290 925 1,000 921 491 350 252

FY12 FY13 FY14 FY15 FY16 FY17 FY18 YTD FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 >FY27

1 Represents A$ equivalent notional amount using spot FX translation at time of issuance. 2 Represents A$ equivalent notional amount using spot FX translation at 28 September 2018. Dated callable Tier 2 trades are profiled to the first call date for the purposes of this disclosure except for the perpetual floating rate note issued September 1986.

Westpac Group Debt Investor Roadshow I November 2018 2018 financial performance 11

Reported net profit after tax movements ($m) Net interest margin (%) Asset quality

Net interest margin up 7bps, rise in Impairment charges to average 100 gross loans2 (bps) Treasury income and fair value 3.0 gain on economic hedges, partly offset by Bank Levy 2.5 2.14 2.09 2.09 2.10 2.06 2.13 80 2.0 No new large impaired 60 loans emerged during 989 (658) 1.5 the year 40 1.0 20 10 (258) 0.5 143 (111) 8,095 7,990 0.0 0 FY13 FY14 FY15 FY16 FY17 FY18 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

Lower trading income, adjustments related to Pendal1 Balance sheet ($bn) and provisions for customer refunds and payments Total loans Aust. Housing Customer deposits 518 685 710 487 Up 1% Up 4%

Up 6% 427 445

Up 4% FY17 Net Non Expenses Impairment Tax and FY18 interest interest charges NCI FY17 FY18 FY17 FY18 income income

1 The Group recognised a gain, net of costs, associated with the partial sale of shares in Pendal Group Limited (previously BTIM) in FY17. In FY18, the Group marked to market its current holding of Pendal shares. 2 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 Roadshow I November 2018 Portfolio stress remains at historically low levels 12

Stressed exposures as a % of TCE (%) New and increased gross impaired assets ($m)

1,748 1,519 Watchlist & substandard 1,343 1,218 1,194 90+ day past due (dpd) and not impaired 1,060 1,078 997 958 Impaired 708 609 607 633 589 477 440 471 450

2.48

2.17 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18

1.45 1.60 Provisions 1.24

1.24 1.20 1.14 0.85 1.05 1.09 1.08 Sep-17 Mar-18 Sep-18 0.99

0.71 0.65 0.41 0.59 0.57 0.55 Total provisions to gross loans (bps) 45 45 43 0.35 0.54 0.56 0.31 0.26 0.33 0.35 0.62 0.58 0.25 0.34 0.37 0.39 Impaired asset provisions to impaired assets (%) 46 46 46 0.44 0.27 0.20 0.22 0.20 0.15 0.15 0.14

Collectively assessed provisions to credit RWA (bps) 76 75 73 Mar-18 Mar-17 Sep-18 Sep-17 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16

Westpac Group Debt Investor Roadshow I November 2018 Australian mortgage portfolio performance 13

Australian mortgage delinquencies and Sep-17 Mar-18 Sep-18 Australian mortgage portfolio delinquencies (%) properties in possession (PIPs) 90+ day past due total 90+ day past due investor 3.0 30+ day delinquencies (bps) 130 144 140 30+ day past due total Loss rates

90+ day delinquencies (bps) Introduced new hardship treatment2 67 69 72 2.0 (includes impaired mortgages)

Consumer PIPs 437 398 396 1.0 Properties in possession continue to be mostly in WA and Qld however Qld properties reduced over the year, while WA continued to increase. A targeted collections approach has improved customer outcomes, supporting customers 0.0 through the foreclosure process Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18

Housing lending portfolio by State (%) Australian mortgages 90+ day delinquencies by State (%) Chart does not add to 100 due to rounding 3.0 Australian banking system1 NSW/ACT VIC/TAS QLD Westpac Group portfolio WA SA/NT ALL 44 41 FY18 Westpac Group drawdowns 37 2.0 2 30 Introduced new hardship treatment 27 27

17 17 14 1.0 12 9 6 6 7 7

0.0 NSW & ACT VIC & TAS QLD WA SA & NT Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18

1 Source ABA Cannex August 2018. 2 Under the changes in hardship treatment, an account in hardship continues to migrate through delinquency buckets until 90+ days past due. Accounts are then reported as 90+ days past due until full repayments are maintained for 6 months.

Westpac Group Debt Investor Roadshow I November 2018 Australian mortgage portfolio well collateralised 14

Sep-17 Mar-18 Sep-18 2H18 Australian mortgage portfolio balance balance balance flow1 Australian housing loan-to-value ratios (LVRs) (%) 100 FY18 drawdowns LVR at origination Total portfolio ($bn) 427.2 437.2 444.7 36.9 90 Portfolio LVR at origination Owner occupied (%) 55.5 56.0 56.8 62.0 80 Portfolio dynamic LVR 5 70 Investment property loans (%) 39.8 39.5 39.1 37.6 60 57 49 Portfolio loan/line of credit (%) 4.7 4.5 4.1 0.4 50 46

Variable rate / Fixed rate (%) 79 / 21 77 / 23 77 / 23 78 / 22 40 30 22 Interest only (%) 45.5 39.6 34.8 23.1 17 17 20 15 14 16 10 11 7 6 Proprietary channel (%) 57.3 56.5 56.1 51.6 10 5 4 N/A 1 0 1 1 0 First home buyer (%) 8.1 7.9 7.8 8.2 0<=60 60<=70 70<=80 80<=90 90<=95 95<=100 >100

Mortgage insured (%) 17.5 16.9 16.3 11.1 Sep-17 Mar-18 Sep-18 Australian mortgage portfolio LVRs balance balance balance Sep-17 Mar-18 Sep-18 Simple LVR at origination6 (%) 70 70 70 averages 2 Average loan size ($’000) 264 270 273 Dynamic LVR5,6,7 (%) 42 41 43

Customers ahead on repayments 70 68 69 LVR of new loans6,8 (%) 67 69 69 including offset account balances3 (%) LVR at origination9 (%) 74 74 74 Actual mortgage losses net of insurance4 Weighted 48 48 38 ($m, for the 6 months ending) averages Dynamic LVR 5,7,9 (%) 52 52 54 Actual mortgage loss rate annualised 222 (bps, for the 6 months ending) LVR of new loans 8,9 (%) 73 71 71

1 Flow is new mortgages settled in the 6 months ended 30 September 2018 and includes RAMS. 2 Includes amortisation. 3 Excludes RAMS in 2H17. Includes RAMS in 1H18 and 2H18. Loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments. 4 Mortgage insurance claims 2H18 $4m (1H18 $6m; 2H17 $9m). 5 Excludes RAMS in all periods. 6 LVR calculated as simple average by balances. 7 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. 8 Average LVR of new loans is on rolling 6 months. 9 Weighted average LVR calculation considers size of outstanding balances. Westpac Group Debt Investor Roadshow I November 2018 Impact of macro-prudential measures across Australian industry 15

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 10% limit on investment 30% limit on interest Own-occ. - principal and interest 16 Total property annual portfolio growth only originations Own-occ. - interest only Investor 7.0 Investor - principal and interest Owner-occupier 12 Investor - interest only 6.5 6.35 8 6.7 6.0 5.90 5.90 4 4.6 5.5 5.20 0.8 0 5.0 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17 Oct-18 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 13.3 30 28.8 10 20 6.5 5 10 16.6

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

Westpac Group Debt Investor Roadshow I November 2018 The Australian housing market has cooled 16

Dwelling prices cooling Price decline felt most in the top 25% of house prices Dwelling prices by property value ann% Change in Australian dwelling prices (annual %) ann% 25 30 ann % (annual %, all dwellings, seasonally adjusted by Westpac) ann % Sydney 40 40 25 35 Top 25% 35 20 30 30 Melbourne Middle 50% 25 25 20 15 Brisbane 20 Bottom 25% 20 15 15 Perth 15 10 10 10 5 5 10 0 0 5 -5 macro-prudential -5 5 -10 tightening -10 0 -15 -15 0 Oct-10 Oct-12 Oct-14 Oct-16 Oct-18 Sources: CoreLogic, Westpac Economics. -5 -5 Unit pricing vs. detached house pricing -10 -10 Oct-10 Oct-12 Oct-14 Oct-16 Oct-18 Dwelling prices by property type (%, 3month annualised, seasonally adjusted by Westpac) Sources: CoreLogic, Westpac Economics. Dwelling prices are all dwellings, 6mth annualised growth. % % 40 40 35 Houses Units 35 30 30 Capital % Change last % Change YoY Avg since 25 25 city Pop’n 3mths (Oct-18) (Oct-18) 2007 20 20 15 15 Sydney 4.8m Down 2.0% Down 7.4% Up 5.1% 10 10 5 5 Melbourne 4.5m Down 2.1% Down 4.7% Up 4.8% 0 0 -5 macro-prudential -5 Brisbane 2.3m Flat Up 0.4% Up 0.9% -10 tightening -10 -15 -15 Perth 1.9m Down 2.0% Down 3.3% Down 0.8% Oct-10 Oct-12 Oct-14 Oct-16 Oct-18 Sources: ABS, CoreLogic, Westpac Economics. Sources: CoreLogic, Westpac Economics.

Westpac Group Debt Investor Roadshow I November 2018 Physical supply/demand fundamentals remain supportive across wider market 17

Dwelling supply has not kept pace with stronger demand Rental vacancy rates remain low in Sydney and Melbourne

Population versus dwelling stock (annual average change ‘000) ‘000 Rental vacancy rates (%, quarterly, seasonally adjusted by Westpac) ‘000 % Population Total increase in dwellings Sydney Brisbane 450 450 8 400 400 Melbourne Perth 7 350 350 6 300 high 300 National rise 5 5.0 250 250 average since 4 200 200 1980 3 150 150 2.5 2 2.4 100 100 2.1 50 50 1 0 0 0 1950s 1960s 1970s 1980s 1990s 2000s Last 6yrs Next 4yrs Jun-88 Jun-93 Jun-98 Jun-03 Jun-08 Jun-13 Jun-18 Sources: ABS, Westpac Economics. Dwelling stock is net of demolitions – implied by Census data. Sources: REIA, Westpac Economics

Dwelling approvals down from 2016 highs Population growth remains high in Australia Dwelling approvals (‘000 month, annualised) % ann % ann 2.4 Peak, 2008 2.4 Private approvals Trend SA Population growth 2.0 2.0 240 240 RBA easing cycles 1.6 1.6 200 200 1.2 1.2 Average from 2010 = 1.6% 160 160 0.8 0.8 Average to 2004 =1.1% 120 120 0.4 0.4

0.0 0.0 80 80 Mar-92 Mar-96 Mar-00 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 Sep-98 Sep-02 Sep-06 Sep-10 Sep-14 Sep-18

Sources: ABS, RBA, Westpac Economics. Source: ABS, Westpac Economics

Westpac Group Debt Investor Roadshow I November 2018 Australian economic snapshot – growth to moderate 18

Australian economy key statistics Global backdrop less positive Inflation remains subdued1 (latest available as at November 2018) Westpac global trade PMI Avg RBA core CPI %qtr (rhs) %qtr Index %yr Headline CPI %yr (lhs) JPMorgan global manufacturing PMI 8 3.2 60 GDP 3.4% 7 Avg RBA core CPI %yr (lhs) 2.8 55 6 f/cs 2.4 Westpac Economics Forecast 2.7% 5 2.0 (end calendar 2019) 50 4 1.6 45 Unemployment 3 1.2 5.0% 40 2 0.8 1 0.4 Rate 35 0 0.0 Westpac Economics Forecast 5.0% 30 -1 -0.4 (end calendar 2019) Sep-98 Sep-02 Sep-06 Sep-10 Sep-14 Sep-18 Sep-96 Sep-00 Sep-04 Sep-08 Sep-12 Sep-16 Sources: Reuters, Westpac Economics Sources: ABS, RBA, Westpac Economics Inflation 1.9% Commodity prices resilient in 2018 AUD has moved lower Westpac Economics Forecast RBA Commodity Price Index, AUD terms, 1.7% based to 100 in 2016-17 USD 'fair value' band (end calendar 2019) fc/s to index 1.20 AUD/USD actual & forecast2 180 end 1.10 Cash Rate 1.50% 160 2019 1.00 140 Westpac Economics Forecast 120 0.90 1.50% (end calendar 2019) 100 0.80 80 0.70 AUD/USD US$0.72 60 0.60 40 0.50 Westpac Economics Forecast 20 US$0.72 0.40 (end calendar 2019) Oct-03 Oct-06 Oct-09 Oct-12 Oct-15 Oct-18 Sep-94 Sep-99 Sep-04 Sep-09 Sep-14 Sep-19

Sources: RBA, Westpac Economics. Sources: RBA, Westpac Economics. 1 Average RBA core CPI is average of seasonally adjusted trimmed mean & weighted median CPI. 2 Includes WCFI+BI commodities index, 2 year swap spread and NFD to GDP.

Westpac Group Debt Investor Roadshow I November 2018 Economics Australian and New Zealand economic forecasts 20

Calendar year Key economic indicators (%) as at November 2018 2017 2018F 2019F World GDP1 3.8 3.8 3.6 Australia GDP2 2.4 3.3 2.7 Private consumption2 3.0 2.6 2.6 Business investment2,3 6.9 1.1 2.5 Unemployment – end period 5.5 5.1 5.0 CPI headline – year end 1.9 2.0 1.7 Interest rates – cash rate 1.50 1.50 1.50 Credit growth, Total – year end 4.8 4.4 3.5 Credit growth, Housing – year end 6.3 4.8 4.0 Credit growth, Business – year end 3.1 4.4 3.5 New Zealand GDP2 2.9 3.0 3.1 Unemployment – end period 4.5 4.6 4.6 Consumer prices 1.6 2.3 1.4 Interest rates – official cash rate 1.75 1.75 1.75 Credit growth – Total4 6.5 5.2 4.8 Credit growth – Housing4 7.4 5.7 4.9 Credit growth – Business4 5.2 4.4 4.5

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 Roadshow I November 2018 The Australian economy 21

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

Output 2017 - sector contribution to GDP (%)1 Services Mining 56% 7 Manufacturing 19 7 Construction Transport, Utilities 9 Wholesale, Retail 10 Agriculture 9 Household services 6 Health 10 Education 6 8 6 3 Public administration Finance Business services

Relative size of States (Share of Australia, 2016/17, %) Australian employment by sector 2017 (%) GSP Population Employment Exports Services Mining 35 60% 33 2 Manufacturing 32 32 15 7 Construction 9 26 26 Transport, Utilities 24 4 23 Wholesale, Retail 20 20 20 6 6 18 Agriculture 14 14 8 Household services 10 11 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 Roadshow I November 2018 Australian economic outlook: positive but uneven 22

Australian growth mix: shifting drivers Positive but moderating business conditions Contributions to GDP growth (ppts) Australian business conditions (net balance) ppts ppts net bal. 2015 2016 2017 2018f 2019f Goods related Consumer sectors 3 3 30 Business services 20 2 2 10 1 1 0 0 0 -10 3 month moving avg. -1 ^ incl. housing -1 * mining investment -20 deviation from avg. -2 -2 Consumer^ Mining * Non-mining Public Net exports GDP -30 investment Sep-06 Sep-08 Sep-10 Sep-12 Sep-14 Sep-16 Sep-18 Sources: ABS, Westpac Economics. Sources: NAB survey, Westpac Economics. Consumer spending constrained by income growth Australian private sector credit growth subdued

Australian consumer spending (% ann) vs labour income (% ann) Australian private sector credit growth (% ann) ann% % ann Labour income real Housing Total credit Business 10 Consumption 25 Forecasts end 2019 8 Consumption 20 6 long run avg: 3.3%yr 15 4 10 2 5 0 0 -2 -5 -4 -10 Jun-98 Jun-02 Jun-06 Jun-10 Jun-14 Jun-18 Sep-94 Sep-98 Sep-02 Sep-06 Sep-10 Sep-14 Sep-18 Sources: ABS, Westpac Economics. Sources: RBA, Westpac Economics.

Westpac Group Debt Investor Roadshow I November 2018 Population growth, public spending, lower AUD boosting activity 23

Population growth remains high Services exports remains strong Population growth 2006-2016 average (% ann) $bn Rolling annual, nominal $bn 30 30 EU 0.28 Education Total service exports: +7% yr +14% Developed 0.33 25 25 Leisure UK 0.76 20 travel 20 US 0.80 Business 1 Canada 1.08 15 services 15 +8% NZ 1.15 10 10 Transportation World 1.20 5 5 Developing 1.37 Business travel Australia 1.69 0 0 Jun-94 Jun-98 Jun-02 Jun-06 Jun-10 Jun-14 Jun-18 0.0 0.5 1.0 1.5 2.0 Sources: ABS, Westpac Economics Infrastructure starts returning to boom levels Lower AUD supports the local economy

$bn Commencements $bn USD % chg 'fair value' band AUD/USD actual & forecast2 120 Oil & gas 120 1.20 +46% 100 Iron ore & coal 100 1.10 fc/s to Resource related end -33 1.00 80 Private ex resources 80 2019 +11+5 Public 0.90 60 -24 60 0.80 40 40 0.70 20 20 0.60 0.50 0 0 1997 2001 2005 2009 2013 2017 0.40 June years Sep-94 Sep-99 Sep-04 Sep-09 Sep-14 Sep-19 Sources: ABS, Westpac Economics Sources: RBA, Westpac Economics.

1 Business services: $21bn, including: legal & professional services $5.3bn, financial services $4.3bn, IT & Telecomm $3.8bn, Intellectual property rights $1.1bn and other $6.3bn. 2 Includes WCFI+BI commodities index, 2 year swap spread and NFD to GDP. Westpac Group Debt Investor Roadshow I November 2018 Housing slowdown and wages are headwinds 24

Jobs are being created… …but Australian wage inflation remains low

Employment by major sector: Australia %yr Australian wage inflation (%, yr) (‘000 change in employment over the last 2 years) 8 Aus private sector wages 7 education & health Mining industry wages 6 production 5 construction 4

white collar 3 2 retail & wholesale 1 leisure & hospitality 0 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Jun-10 Jun-12 Jun-14 Jun-16 Jun-18 0 50 100 150 200 250 Sources: ABS, Westpac Economics. Sources: ABS, Westpac Economics. Cooling housing market Election uncertainty %ann %ann Australian employment 30 prices new dwelling investment turnover 50 % % 5 5 40 20 6mth annualised pace 4 4 Forecast 30 Jul ‘16 10 3 election 3 20 Sep ‘13 election 0 10 2 2 0 1 1 -10 -10 0 0 -20 -20 -1 -1 -30 -30 -2 -2 Feb-09 Jun-10 Oct-11 Feb-13 Jun-14 Oct-15 Feb-17 Jun-18 Oct-19 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sources: CoreLogic, ABS, Westpac Economics Sources: ABS, Westpac Economics.

Westpac Group Debt Investor Roadshow I November 2018 Australian household balance sheets 25

Affordability on repayment basis around long run average Australian households debt to income ratio remains high Housing affordability: all dwellings Australian households debt to income ratio (%) (% income required to service mortgage of 75% median dwelling, all regions) Total (gross) debt Forecasts % 200 Total debt net of offset accounts end 2019 40 Deteriorate If mortgage 180 Total debt net of all deposits* 160 Debt net of all 35 rate was 1% Trend since Jun-07 higher 140 deposits also 30 Improve 120 excludes funds held 100 in mortgage offset 25 10yr avg 80 60 accounts –16pts 20 long run avg 40 since peak 20 * Westpac Economics estimates prior to 1988 15 0 -20 10 -40 Sep-83 Sep-88 Sep-93 Sep-98 Sep-03 Sep-08 Sep-13 Sep-18 Jun-88 Jun-93 Jun-98 Jun-03 Jun-08 Jun-13 Jun-18 Sources: RBA, Westpac Economics. Housing credit in 6 month % change annualised. Sources: ABS, RBA, Westpac Economics Higher income households have increased borrowings Australian household net wealth has also increased % Annual household disposable income % Australian household debt-to-income ratios by income quintile (%) % % 250 Total assets Jun-07 2002 2006 2010 2014 1400 Since Jun-07: 1200 Total liabilities 200 +120pts 1200 Total net worth 1000 1000 +90pts 150 800 800 600 100 600 400 400 50 +30pts 200 200 0 0 0 1st 2nd 3rd 4th 5th Jun-83 Jun-88 Jun-93 Jun-98 Jun-03 Jun-08 Jun-13 Jun-18 Jun-23 Sources: ABS, RBA, Westpac Economics. Sources: ABS, RBA, Westpac Economics.

Westpac Group Debt Investor Roadshow I November 2018 Australia’s high rise apartment market – past the peak although supply still coming online 26

Aggregate supply/demand fundamentals remain positive Dwelling construction: indicative completion times1 Population versus dwelling stock (annual average change ‘000) ‘000 ‘000 % % 450 Population Total increase in dwellings 450 100 100 90 90 400 400 80 Detached houses 80 350 350 70 Low-mid rise 70 300 high 300 rise 60 High rise 60 250 250 50 50 200 200 40 Average construction time for 40 150 150 30 ‘high rise’ about 2-2½yrs 30 100 100 20 20 50 50 10 10 0 0 0 0 1950s 1960s 1970s 1980s 1990s 2000s last 6 yrsnext 4yrs 0 1224364860 Sources: REIA, Westpac Economics. Dwelling stock is net of demolitions – implied by Census data. Source: RBA, CoreLogic. Projected dwelling completions, major metro areas Dwelling completions by capital city (‘000s, rolling 6mth totals) ‘000s Non-high rise Other high rise High rise top 5 areas ‘000s 35 35 30 Projected Projected Projected 30 25 10% 10% 25 20 18% 20 41% 8% 15 71% 15 17% 10 49% 76% 10 5 5 0 0 Jun-07 Jun-13 Jun-19 Jun-07 Jun-13 Jun-19 Jun-07 Jun-13 Jun-19 Sydney Melbourne Brisbane/SEQ Sources: ABS, Westpac Economics 1 Estimated proportion of approved dwellings completed by months after approval. Note that not all approved dwellings are completed, reflecting both cancellations and reductions in project size. Also, ‘high rise’ projects often have significant delays between approval and commencement.

Westpac Group Debt Investor Roadshow I November 2018 The New Zealand economy 27

Regional GDP - 2017, nominal $NZ NZ output and employment

Total nominal GDP 2017: $280bn Output 2018 - sector contribution to GDP (%) Population 4.9 mil Primary 7 Electricity, gas and water 9 3 Northland, $7bn 6 Construction 11 7% of population 3 Food manufacturing 7 Manufacturing (excl. food) Auckland, $101bn 4 Bay of Plenty, $14bn Wholesale, retail and accommodation 5% of population 3% of population Transport 12 Waikato, $23bn Financial and professional services 6% of population 32 5 Public administration Taranaki, Gisborne/Hawke’s Social services (incl. health) Whanganui/Manawatu, $10bn Bay, $9bn Other 8% of population 4% of population Tasman/Nelson, $5bn NZ employment by sector 2018 (%) 2% of population Wellington, $36bn 11% of population 2 4 Primary 8 West Coast, $2bn Marlborough, $3bn 16 Construction 1% of population 1% of population 10 Manufacturing Wholesale, retail and accommodation Southland, $6n Canterbury, $35bn 17 2% of population 13% of population Transport 21 Financial and professional services Otago, $12bn Public administration 17 4 5% of population Social services (incl. health) Other Sources: Stats NZ, Westpac Economics.. Sources: Stats NZ, Westpac Economics

Westpac Group Debt Investor Roadshow I November 2018 New Zealand economic snapshot – growth has taken a step down 28

New Zealand economy key statistics GDP holding firm Spending to slow as housing cools (latest available as at October 2018) % GDP (%) % % House prices and household spending % House price inflation 6 Qtr % chg 6 30 (left axis) Forecast 6 GDP 2.7% Annual average % change 25 Per capita household 5 20 spending (right axis) 4 Westpac Economics Forecast 4 4 3.1% 15 3 (end calendar 2019) 10 2 2 2 5 1 Unemployment 0 0 -5 -1 4.5% 0 0 Rate -10 -2 -15 -3 Westpac Economics Forecast -20 -4 4.6% -2 -2 (end calendar 2019) 2005 2007 2009 2011 2013 2015 2017 2019 -25 -5 2000 2003 2006 2009 2012 2015 2018 2021 Source: Stats NZ, Westpac Economics Source: Stats NZ, Westpac Economics Inflation 1.9% Large pipeline of construction work Migration cycle has started to turn down Westpac Economics Forecast $bn Construction spending (annual $bn) $bn Net migration (annual ‘000s) 1.4% 000s 000s (end calendar 2019) 40 40 Total Kaikoura earthquake costs Forecast Canterbury rebuild New Zealanders Forecast 75 75 Construction (excl. quake costs) Other Cash Rate 1.75% 30 30 50 50 Westpac Economics Forecast 1.75% (end calendar 2019) 20 20 25 25 0 0 NZD/USD US$0.65 10 10 -25 -25 Westpac Economics Forecast US$0.65 0 0 -50 -50 (end calendar 2019) 2005 2008 2011 2014 2017 2020 2023 2000 2004 2008 2012 2016 2020 Source: Westpac Economics estimates Source: Stats NZ, Westpac Economics

Westpac Group Debt Investor Roadshow I November 2018 New Zealand economic indicators 29

Inflation off its lows, boosted by oil prices Export prices remain favourable % Inflation (%) % NZ export commodity price index (world prices) Index 6 6 Meat,skins & wool Forestry Dairy CPI inflation Forecast 500 450 5 CPI excluding petrol 5 400 4 4 350 3 3 300 250 2 2 200 150 1 1 100 0 0 50 2007 2009 2011 2013 2015 2017 2019 2006 2008 2010 2012 2014 2016 2018

Source: Stats NZ, Westpac Economics Source: ANZ, Westpac Economics RBNZ on hold, overseas trends to push term rates higher Payout to dairy farmers at average levels % Interest rates (%) % Dairy payout and dividend ($/Kg Ms) Kg Ms 10 10 Milk price Dividend 90 day bank bill rate $10 Forecast 9 Forecast 9 2 year swap rate 8 8 $8 5 year swap rate 7 7 $6 6 6 $4 5 5 4 4 $2 3 3 $0 2 2 1 1 2001 2005 2009 2013 2017 2021 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Source: RBNZ, Westpac Economics Source: Fonterra, Westpac Economics

Westpac Group Debt Investor Roadshow I November 2018 New Zealand housing market expected to be dampened by policy changes 30

Policy changes have softened housing demand… …and a period of subdued prices is expected New Zealand house prices by region (index) New Zealand house prices (nationwide, %) 220 220 NZ ex Auckland and Canterbury 20 Forecast 20 200 200 Auckland 2008100 in = Index 15 15 180 Canterbury 180 10 10 160 160 5 5 140 140 0 0 120 120 -5 -5 Index Index = in 100 2008 100 100 -10 -10 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 Source: REINZ Macroprudential policies have eased… …further easing likely if property market slows further

Investors’ share of new mortgage lending (%) New Zealand house debt statistics % % % Investors below 70% LVR Investors above 70% LVR (% of households’ disposable incomes) 50 20 175 LVRs LVRs LVRs 40 tightened tightened eased 15 150 30 10 125 20 5 Spending on debt servicing 100 10 Household liabilities (right axis) 0 0 75 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Source: RBNZ Source: REINZ, RBNZ, Westpac Economics

Westpac Group Debt Investor Roadshow I November 2018 Additional information Westpac: clear domestic focus and a strong market position 32

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 Westpac CBA NAB ANZ Macquarie Bendigo and Adelaide Bank ING Bank (Australia) Westpac Institutional Bank Westpac New Zealand Suncorp-Metway Bank of Queensland HSBC Bank Australia 0 200 400 600 800 1,000

Clear focus on Australia and New Zealand Strong market share positions

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

Australian household deposit market share2 23% 12 10 3 2 3 Australian mortgage market share3 23%

22 3 63 Australian business market share 19%

86 Australian wealth platforms market share4 19%

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 19%

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

Westpac Group Debt Investor Roadshow I November 2018 Funding and liquidity metrics 33

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

LCR 134% LCR 133% 129.0 133.5 Wholesale Onshore <1yr1 6 5 96.0 100.4 16 8 7 Wholesale Offshore <1yr1

4 20 4 Wholesale Onshore >1yr Net cash outflows Liquid assets Net cash outflows Liquid assets 11 12 31 March 2018 30 September 2018 1 1 8 Wholesale Offshore >1yr 8 Customer deposits High Quality Liquid Assets 4 Wholesale funding Committed Liquidity Facility 10 Other flows Securitisation 1 5 Net stable funding ratio (NSFR) at 30 September 2018 ($bn)

2 601.2 Equity Wholesale 529.5 NSFR 63 funding and Liquids 62 other liabilities and other4 31 Mar 2018 112% Corporate & 44 Customer deposits Institutional Other 30 Sep 2018 114% deposits loans5 Retail & SME deposits Residential mortgages ≤35% risk weight Sep-08 Sep-17 Sep-18 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 Roadshow I November 2018 High quality portfolio with bias to mortgage lending 34

Asset composition (%) Lending composition at 30 September 2018 (% of total) Total assets ($880bn) Sep-16 Sep-17 Sep-18 Total loans of $710bn Loans 79 81 81 Trading securities, financial assets at fair value and 10 10 9 available-for-sale securities Housing

Derivative financial instruments 4 3 3 17 Business Cash and balances with central banks 2 2 3 69 Institutional Life insurance assets 2 1 1 11 Other consumer Goodwill 1 1 1 3 Receivables due from other financial institutions 1 1 1 Other assets 1 1 1

Exposure by risk grade at 30 September 2018 ($m) Standard and Poor’s Risk Grade1 Australia NZ / Pacific Asia Americas Europe Group % of Total AAA to AA- 92,881 8,691 2,174 17,744 745 122,235 12% A+ to A- 34,948 4,645 7,763 5,191 3,501 56,048 5% BBB+ to BBB- 56,281 11,585 9,687 2,600 1,412 81,565 8% BB+ to BB 72,064 11,900 1,487 383 108 85,942 8% BB- to B+ 62,836 9,621 120 17 0 72,594 7%

1 Risk grade equivalent. 2 Exposure by booking office.

Westpac Group Debt Investor Roadshow I November 2018 A well diversified loan portfolio 35

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

2 Finance & insurance The single largest corporation/NBFI 3 Property exposure represents less than 0.3% of TCE 1.4 1.3 Government admin. & defence 1.3 1.1 1.2 1.2 1.1 1.0 1.1 1.0 Wholesale & retail trade

Manufacturing

Property services & business services Sep-18 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Services Mar-18 5 Agriculture, forestry & fishing Top 10 exposures to corporations & NBFIs Sep-17 at 30 September 2018 ($m) Transport & storage BBB Utilities A BBB+ Construction4 BBB+ A- Accommodation, cafes & restaurants BBB+ A- Mining BBB+ BBB-

Other S&P rating or equivalent A+ 0 20406080100120 0 300 600 900 1,200 1,500 1,800 2,100 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 Roadshow I November 2018 Overall stressed exposures little changed over 2H18 36

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

2.0 Sep-17 Mar-18 Sep-18

1.8 New Zealand dairy 1.6 improvements Reflects retail trade sector challenges 1.4

1.2 2 exposures 1.0

0.8 2 exposures 0.6 in FY18

0.4

0.2

0.0 1 Mining Other Property Services retail trade Construction Wholesale & Wholesale fishing Manufacturing & restaurants business services Property services & Transport & Transport storage Agriculture, forestry & Accommodation, cafes

1 Includes Finance & insurance, Utilities, Government admin. & defence.

Westpac Group Debt Investor Roadshow I November 2018 Areas of interest: Commercial property 37

Commercial property portfolio Commercial property exposures % of TCE and % in stress

Sep-17 Mar-18 Sep-18 10 Commercial property as % of TCE (lhs) 20 Commercial property % in stress (rhs) Total committed exposures (TCE) $65.2bn $66.3bn $67.6bn 8 15 Lending $49.6bn $51.1bn $52.0bn 6 10 Commercial property as a % of 6.48 6.48 6.51 4 Group TCE BB BB BB+ 5 Median risk grade 2 equivalent equivalent equivalent 0 0 % of portfolio graded as stressed1,2 1.27 1.74 1.66

2 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18

% of portfolio in impaired 0.38 0.28 0.23 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18

Commercial property portfolio composition (%)

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

NSW & ACT Exposures <$10m Commercial offices 15 10 Vic 15 & diversified groups Developers >$10m Residential Qld 11 21 44 42 46 SA & NT Investors >$10m Retail 8 WA 31 6 Industrial 4 NZ & Pacific Diversified Property 10 10 Groups and Property 27 Institutional Trusts >$10m (diversified)

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

Westpac Group Debt Investor Roadshow I November 2018 Areas of interest: Inner city apartments 38

Commercial property portfolio TCE ($bn) Sep-17 Mar-18 Sep-18 TCE1 • Market activity is slowing as demand eases and pre-sales and new Residential apartment development 4.2 4.0 4.1 6.1% developments start to slow. Sydney completions expected to peak in 2018, >$20m other cities peaked in 2017, still a lot of units to complete. Tightened risk appetite in areas of higher concern, which has been progressively introduced Residential apartment development since 2012 2.7 2.7 2.6 3.8% >$20m in major markets, shown below • Settlements remain slightly slower, but Westpac’s debt has been repaid in full given low LVRs Sydney major markets 1.5 1.9 1.8 2.7% • Still active in key markets Inner Melbourne 0.7 0.6 0.6 0.9% • Weighted average LVR 47% Inner Brisbane 0.4 0.2 0.1 0.1% • Slow market. Exposure low Perth metro 0.0 0.0 0.1 0.1% • Activity slowly lifting. New loans at 46.3% weighted average LVR Adelaide CBD 0.1 0.0 0.0 - • Project completed Residential apartment development >$20m weighted average LVR (%) Consumer mortgages

Consumer mortgages where security is within an inner city residential apartment development Mar-18 Sep-18 50.2 Average portfolio LVR 48% 48.5 47.3 48.4 Total loans $14.7bn $15.2bn

Average LVR at origination 73% 73%

Average dynamic LVR 56% 57%

Dynamic LVR >90% (% of portfolio) 2.65% 2.48% 2018 2019 2020 2021 Expected completion date 90+ day delinquencies 40bps 44bps

1 Percentage of commercial property TCE.

Westpac Group Debt Investor Roadshow I November 2018 Areas of interest: Retail trade 39

Overview Retail trade portfolio

• The retail sector continues to be challenged by subdued consumer demand Sep-17 Mar-18 Sep-18 and growth in domestic and international online channels Total committed exposures (TCE) $15.4bn $15.5bn $16.2bn • These changes have been emerging for a number of years and businesses need to continue to adapt Lending $11.5bn $11.3bn $11.6bn • Whilst there has been a small increase in stress, the portfolio is diversified and the asset quality remains sound Retail trade as a % of Group TCE 1.53 1.51 1.56 • The increase in exposure over 2H18 was to high quality investment grade BB BB BB customers Median risk grade equivalent equivalent equivalent

% of portfolio graded as stressed1,2 3.02 4.67 4.84

% of portfolio in impaired2 0.31 0.48 0.41

Retail trade portfolio composition

Retail trade exposure (TCE) $bn % of portfolio graded as stressed Retail trade by internal risk grade category $bn Investment 6.4 Sub-investment 16.4 16.3 16.2 15.3 15.4 15.5 14.4 5.3 Stressed 4.5 4.67 4.84 3.58 2.68 3.02 2.29 2.51

Personal and Motor vehicle Food retailing household good retailing and Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 retailing services

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

Westpac Group Debt Investor Roadshow I November 2018 Areas of interest: Aged Care sector 40

Overview Aged Care portfolio

• Aged care sector is forecast to grow with significant investment required to Sep-17 Mar-18 Sep-18 meet demand from Australia’s aging population Total committed exposures (TCE) $2.6bn $2.5bn $2.7bn • The stress increase over the year has been driven by the downgrade of three exposures Lending $1.5bn $1.5bn $1.6bn • The portfolio more generally is diversified and credit quality remains sound. Westpac maintains a strong history of involvement in this sector Aged Care as a % of Group TCE 0.26 0.24 0.26

• On 16th September, a Royal Commission into Aged Care Quality and Safety BB+ BB+ BB+ Median risk grade was announced. The interim report is to be provided by 31 October 2019 equivalent equivalent equivalent with a final report no later than 30 April 2020 % of portfolio graded as stressed1,2 1.97 4.17 4.94

% of portfolio in impaired2 0.00 0.00 0.00

Aged Care portfolio composition

Aged Care exposure (TCE) $bn % of portfolio graded as stressed Aged Care portfolio (TCE) by sector (%)

2.7 2.6 2.5 2.6 2.5 4.94 45 2.2 4.17 2.1 55

1.97 1.50 0.89 0.86 0.79

Nursing homes Accommodation for the aged Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18

1 Includes impaired exposures. 2 Percentage of Aged Care portfolio TCE.

Westpac Group Debt Investor Roadshow I November 2018 Areas of interest: Areas experiencing drought conditions 41

Overview Australian Agribusiness1 portfolio

• Many parts of Australia are currently affected by drought, in particular, NSW. Sep-17 Mar-18 Sep-18 Other areas such as WA are performing well. This is typical in Australia where conditions can vary across the country Total committed exposures (TCE) $10.3bn $10.6bn $10.6bn • In response, Westpac extended its existing support to farmers and agribusiness customers in all states under a new $100m Drought Assistance Package Lending $8.1bn $8.2bn $8.5bn

• Past droughts have not impacted the long term health of the portfolio due to a Australian Agribusiness as a % of 1.02 1.04 1.02 considered approach and limited exposure to farming regions subject to poorer Group TCE agricultural conditions and which have historically had lower levels of production BB BB BB • Westpac has focused on building a customer base across reliable regions with Median risk grade equivalent equivalent equivalent higher rainfall and access to irrigation, close to a reliable workforce and markets • Since May 2018, we have contacted all agribusiness customers across Western % of portfolio graded as stressed2,3 3.47 4.27 4.40 Queensland, NSW and Northern Victoria to assist managing through current conditions % of portfolio in impaired3 0.18 0.31 0.27

Areas of rainfall deficiencies last 18mts4 Australian Agribusiness portfolio composition Agriculture, Forestry and Fishing Portfolio by industry portfolio by state Grain NSW/ACT Beef & Sheep 6 3 22 Horticulture QLD 5 13 26 5 31 Dairy VIC/TAS 5 Services to Agri 6 Cotton 14 WA Fishing & Aquaculture 6 SA/NT Viticulture 23 10 18 25 Forestry & Logging Institutional Poultry Other

1 Agribusiness defined by ANZSICS in Pillar 3 industry Agriculture, fishing and forestry. 2 Includes impaired exposures. 3 Percentage of Australian Agribusiness portfolio TCE. 4 Source: Commonwealth of Australia 2018, Australian Bureau of Meteorology. Issued 7/10/2018.

Westpac Group Debt Investor Roadshow I November 2018 Areas of interest: Mining and NZ dairy 42

Mining (inc. oil and gas) portfolio Mining portfolio (TCE) Iron Ore and Oil prices ($)3 by sector (%) Sep-17 Mar-18 Sep-18 Iron ore (USD/t)4 Crude oil (USD/bbl)5 7 Westpac Total committed Economics $9.7bn $9.3bn $10.7bn exposure (TCE) 15 forecast 37 100 Lending $5.1bn $5.1bn $5.7bn 13 % of Group TCE 0.96 0.91 1.03 60 18 10 % of portfolio graded as 2.33 1.72 0.99 stressed1,2 Oil and gas Iron ore % of portfolio in impaired2 0.44 0.31 0.17 Other metal ore Coal 20 Mining services Other Sep-15 Sep-16 Sep-17 Sep-18 Sep-19

New Zealand dairy portfolio NZ dairy portfolio (TCE) Milk price & Fonterra dividend6 by security (%) (NZ$) Sep-17 Mar-18 Sep-18 Kg Ms Westpac Dividend Economics Total committed $10 $6.0bn $6.1bn $6.3bn Milk price forecast exposure (TCE) (NZD) 24 1 $8 Lending (NZD) $5.8bn $5.8bn $6.0bn 0.40 0.10 0.30 $6 0.25 % of Group TCE 0.55 0.55 0.55 0.40 75 $4 6.12 6.69 6.25 % of portfolio graded as 17.02 14.94 11.90 $2 4.40 stressed1,2 3.90 $0 % of portfolio in impaired2 0.34 0.47 0.36 Fully secured Partially secured Unsecured 2014/15 2015/16 2016/17 2017/18 2018/19

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. 6 Source Fonterra.

Westpac Group Debt Investor Roadshow I November 2018 Australian consumer unsecured lending, 3% of Group loans 43

Australian consumer unsecured lending portfolio 90+ day delinquencies (%) by State NSW/ACT VIC/TAS QLD WA SA/NT Sep-17 Mar-18 Sep-18 3.00 Hardship reporting changes commenced1 Lending $22.0bn $21.8bn $21.1bn 2.00 30+ day delinquencies (%) 3.60 3.95 3.65

1.00 90+ day delinquencies (%) 1.66 1.71 1.73

- The small increase in Australian unsecured lending portfolio 90+ day delinquencies over FY18 was driven by an operational issue in collections delaying the write-off of Auto Finance defaulted loans

Australian unsecured portfolio ($bn) 90+ day delinquencies (%) 90+ day delinquencies (%) Personal loans Auto loans Sep-17 Mar-18 Sep-18 Total unsecured Credit cards consumer lending Personal loans Auto loans 22 22 Total ex-hardship Credit cards 21 ex-hardship ex-hardship ex-hardship Hardship reporting 3.00 Hardship reporting 3.00 changes commenced1 changes commenced1 10 10 9 2.00 2.00 7 7 7 5 5 5 1.00 1.00

Credit cards Personal Auto loans Total - - loans (consumer) consumer unsecured

1 Westpac changed hardship treatment following guidance from APRA which is intended to standardise the industry treatment of delinquency classification of facilities in hardship. Hardship allows eligible customers to reduce or defer repayments in the short term to manage through a period of financial difficulty (e.g. unemployment, injury, natural disasters). Solutions are tailored to customer circumstances and may include extending the loan or restructuring.

Westpac Group Debt Investor Roadshow I November 2018 Westpac Australian mortgages: selected characteristics and policies 44

Owner-occupied P&I Owner-occupied I/O Investor P&I Investor I/O

Current mortgage rate1 4.58% 5.17% 5.13% 5.64%

Recourse Full recourse Full recourse Full recourse Full recourse

Maximum 30 year contractual • I/O period limited to 5 years Maximum 30 year contractual • I/O period limited to 10 years Contractual term term since 2015 term since 2015 • 30 year contractual term • 30 year contractual term

Assessed on P&I basis Assessed on P&I basis over the Assessed on P&I basis Assessed on P&I basis over the Serviceability residual term2 residual term2

• Borrower’s income verified via payslip/group certificate/tax return/ salary credit to transaction account (credit policy has minimum Income standards for acceptable documents) • Discount of 20% applies to less certain income sources i.e. rental income/bonuses/pensions

• Higher of declared expenses or HEM3 Expenses (HEM indexed for adjusted by income bands, post settlement postcode location, marital status and dependants)

Interest rate buffer applied • Higher of 7.25% (minimum assessment or floor rate) and 2.25% plus actual customer rate

• LVR restrictions apply depending on location, property value and nature of security • Security valuation methods are primarily full valuation and electronic valuation Security and valuation • Other types of valuations such as desktop assessment, existing valuation and contract price may be accepted in certain circumstances where policy requirements are met

Maximum LVR 95% 80% 90% 80%

LMI Mortgage insurance generally applies4 for loans with LVR >80% - covers entire loan

• No tax deductibility on primary residence • Negative gearing benefit applies – interest payments in excess of Tax • No capital gains tax payable on primary residence sale rental income and costs are tax deductible

1 Interest rates as at 17 October 2018 for Westpac Rocket Repay Home Loan inclusive of Premier Advantage Package discount assuming loan amount $250,000 - $499,999. 2 Assessed on residual term basis since 2015. Prior to 2015, interest only loans were assessed on a P&I basis over the full contractual term. 3 HEM is the Household Expenditure Measure, produced by the University of Melbourne. 4 Exception policy applies for certain professionals and Westpac Group staff.

Westpac Group Debt Investor Roadshow I November 2018 Australian mortgage portfolio standards tightening 45

Notable changes to Westpac mortgage lending standards Australian mortgage portfolio by • 10% limit on investment property lending growth announced – calendar year of origination (% of total book) 2014 implemented by 30 September 2015 • Stricter loan affordability tests for new borrowers – Increase in minimum assessment (‘floor’) rate to 7.25% – Increase in serviceability assessment buffer to 2.25% • 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 59% of the portfolio 17 residual P&I term, not full loan term originated after lending • Maximum I/O terms reduced – owner occupied reduced to 5 years standards tightened 15 14 • Mandatory 20% minimum shading on all non base income (e.g. rental 13 income, annuity income) – previously non base income discounted by varying amounts • Stopped non-resident lending 9 2016 – For Australian and NZ citizens and permanent visa holders using 7 foreign income, tightened verification and LVR restricted to 70% • Maximum I/O terms for new IPLs reduced to 10 years 4 4 4 • Maximum LVRs restricted to include LMI capitalisation 3 4 2 2 • 30% limit on new interest-only lending originations (based on limits) 2 • Tighter limits on interest-only lending >80% LVR 2017 • Heightened supervision of mortgage lending warehouses • Strengthened pre settlement hind-sighting process of applications with 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 introduction of day 2 review team Pre-2006

• More granular assessment of expenses through the introduction of 13 (YTD) 2018 2018 categories to capture living expenses and other commitments Calendar year

Westpac Group Debt Investor Roadshow I November 2018 Australian mortgage portfolio repayment buffers 46

Mortgage interest rate buffers (%) Westpac Australian offset account balances2 ($bn)

Westpac owner occupied SVR1 inc package • Borrowers applying Linked to I/O mortgages Linked to P&I mortgages . discount for a mortgage must be able to service Westpac minimum assessment ('floor') rate 38.6 39.2 9 the higher of either: 36.2 37.4 33.4 34.9 7.25 30.5  7.25% minimum 26.8 23.6 7 assessment rate; 20.9 or 4.58 5  Product rate plus 2.25% buffer 3 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Mar-15 Mar-16 Mar-17 Mar-18 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18

Australian home loan customers ahead on repayments3 (% by balances)

Sep-17 Mar-18 Sep-18 • 69.2% of Westpac Loans ‘On time' and <1 mth ahead (% of balances) borrowers are ahead on their mortgage 49 Investment property loans - 30 repayments, including incentivised to keep repayments 29 29 offset account balances high for tax purposes 24 Accounts opened in the last 12 23 22 22 22 21 24 20 months 18 19 6 Loans with structural restrictions on 6 repayments e.g. fixed rate 6 6 6 1 1 1 13 Residual - less than 1 month repayment buffer Behind On time < 1 Mth < 1 Yr < 2 Yrs >2 Yrs Sep-18

1 SVR is the Standard Variable Rate for owner-occupied Westpac Rocket Repay Home Loan inclusive of Premier Advantage Package discount. 2 Excludes RAMS. 3 Includes RAMS in 1H18 and 2H18. 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.

Westpac Group Debt Investor Roadshow I November 2018 Interest only (I/O) portfolio 47

I/O portfolio (%) Switching from I/O to P&I ($m) Variable mortgage interest rates2 (%)

% of total portfolio (at period end) Reached end of I/O period Customer initiated at 17 October 2018 % of all new flows1 by limit (6 mnth) Owner occupied Investor 5.64 4,716 4,326 4,044 3,788 5.17 5.13 45.5 4.58 39.6 34.2 34.8 3,911 3,623 4,110 4,149 22.6 23.1 1Q18 2Q18 3Q18 4Q18 • In FY18 $33bn (17%) of the I/O portfolio switched to P&I (52% proactively; 48% contractually) 2H17 1H18 2H18 • Total of $51bn has switched to P&I in last 18mths P&I I/O P&I I/O

I/O lending (%) Scheduled I/O term expiry4 By dynamic LVR3 and income band (%) Applicant (% of total I/O loans) gross income bands 56 19 >$250k 19 16 13 $100k - $250k 16 14 34 <$100k 29 8 9 18 11 7 2 13 7 6 2 <=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+ Chart does not add due to rounding

1 Flow is based on APRA definition. 2 I/O is interest only mortgage lending. P&I is principal and interest mortgage lending. 2 Interest rates as at 7 March 2018 for Westpac Rocket Repay Home Loan inclusive of Premier Advantage Package discount assuming loan amount $250,000 - $499,999. 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 I/O loans that should have switched to P&I but for the previously announced mortgage processing error.

Westpac Group Debt Investor Roadshow I November 2018 Performance of interest only mortgages 48

Interest only lending Australian interest only loan portfolio balances ($m)

• Interest only (I/O) loans assessed on a principal and interest basis 250 I/O performing loans balance (lhs) 14 – Loans originated prior to 2015 were assessed on a principal and interest basis I/O 90+ day delinquencies balance (rhs) 200 12 over the full contractual term 10 – Loans originated from 2015 were assessed on a principal and interest basis 150 8 over the residual amortising term 100 6 • Current serviceability assessments also include an interest rate buffer (at least 4 2.25%), minimum assessment rate (7.25%) and a requirement to be in surplus1 50 2 • I/O loans are full recourse 0 0 Jul-18 Jul-17 Jul-16 Jan-18 Jan-17 Jan-16 Mar-18 Mar-17 Mar-16 Sep-18 Sep-17 Nov-17 Sep-16 Nov-16 Sep-15 Nov-15 May-18 May-17 May-16 Interest only portfolio statistics as at 30 September 2018

• 74% weighted average LVR of interest only loans at origination2 (portfolio) Australian mortgage portfolio delinquencies (%)

• 65% of customers ahead of repayments (including offset accounts)3 I/O P&I • Offset account balances attached to interest only loans represent 50% of offset 2.0 account balances Increase in 90+ day delinquencies includes impact of decreasing balances of 1.5 Introduced new I/O loans as borrowers switch to P&I and hardship treatment new flows have declined Interest only portfolio performance as at 30 September 2018 1.0

• 90+ day delinquencies 64bps (compared to P&I portfolio 73bps) 0.5 • Annualised loss rate 2bps (net of insurance claims) 0.0 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18

1 A surplus requirement measures the extent to which a borrower’s income exceeds loan repayments, expenses and other commitments, as assessed. 2 Weighted average LVR calculation takes into account size of outstanding balances. 3 Customer loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments.

Westpac Group Debt Investor Roadshow I November 2018 Investment property portfolio 49

Mortgage applications by Investment property portfolio by LVR at origination (%) gross income band (%) number of properties per customer (%) Owner occupied IPL Owner occupied IPL 1 25 1 50 1 20 40 7 2 2 15 30 3 10 20 26 5 10 4 62 0 0 5 97+ 1m+ <=50 6+ 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 Australian mortgage portfolio at 30 September 2018 Australian mortgage portfolio at 30 September 2018 Chart does not add to 100 due to rounding

Investment property lending (IPL) portfolio Sep-17 Mar-18 Sep-18

Weighted averages LVR of IPL loans at origination1 (%) 73 73 73

LVR of new IPL loans in the period1,2 (%) 72 71 70

Dynamic LVR1,3 of IPL loans (%) 54 54 56

Average loan size4 ($’000) 313 318 321

Customers ahead on repayments 59 58 58 including offset accounts5 (%)

90+ day delinquencies (bps) 49 53 57

Annualised loss rate (net of insurance claims) (bps) 3 2 3

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 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 Includes amortisation. 5 Includes RAMS in 1H18 and 2H18. Customer loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments.

Westpac Group Debt Investor Roadshow I November 2018 Australian mortgage deep dive 50

Australian mortgage lending1 by origination date, dynamic LVR2 and income (%) Chart may not add due to rounding Year of origination <2011 2011-14 2015+ Gross income bands 80 >$250k 7 69 $100k - $250k 12 34 <$100k 45 41 36 8 9 23 3 25 38 14 21 14 3 1 6 22 13 8 7 1 8 5 11 13 6 3 2 7 2 4 Dynamic LVR2 bands (%) <60 60-80 >80 <60 60-80 >80 <60 60-80 >80

% of portfolio at 30 September 2018 17 24 59

Westpac SVR3 (%) (excl. discounts) 7.86 6.89 – 5.70 5.24

Westpac interest rate buffer (%) 1.80 1.80 2.25

Westpac interest rate floor (%) 6.80 6.80 7.25

House price changes4 At least 33% 19% – 42% (4%) – 18%

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 $250,000 - $499,999. 4 Source, Westpac Economics, CoreLogic. All dwellings Australia - average 8 major capital cities. Prices to September 2018.

Westpac Group Debt Investor Roadshow I November 2018 Lenders mortgage insurance arrangements 51

Lenders mortgage insurance Lenders mortgage insurance arrangements

• Where mortgage insurance is required, mortgages LVR Band Insurance are insured through Westpac’s captive mortgage 1 insurer, Westpac Lenders Mortgage Insurance • 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 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 $105m net of re-insurance recoveries Limited, Tokio Millennium Re, Endurance Re, Everest Re, Trans Re, AWAC and (1H18: $110m) Capita 2232

• LVR >90% • 100% reinsurance through Arch Reinsurance Limited Westpac’s Australian mortgage portfolio at 30 Sep 2018 (%) − Reinsurance arrangements see loans with LVR >90% insured through WLMI with 100% of risk subsequently transferred to Arch Reinsurance Limited

85 Not insured Insurance statistics

Insured by third parties 3 2H17 1H18 2H18 Insurance claims ($m) 9 6 4 Insured by WLMI 6 WLMI claims ratio5 (%) 27 20 11 9

WLMI gross written premiums6 ($m) 109 90 90

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 Loss ratio is claims over the total earned premium plus exchange commission. 6 LMI gross written premium includes loans >90% LVR reinsured with Arch Reinsurance Limited. 2H18 gross written premium includes $61m from the arrangement (1H18: $62m and 2H17: $73m)

Westpac Group Debt Investor Roadshow I November 2018 Mortgage portfolio stress testing outcomes 52

• Westpac regularly conducts a range of portfolio stress tests as part of its Australian mortgage portfolio stress testing regulatory and risk management activities at 30 September 2018 • The Australian mortgage portfolio stress testing scenario assumes a severe recession in which significant reductions in consumer spending and business Stressed scenario investment lead to six consecutive quarters of negative GDP growth. This results in a material increase in unemployment and nationwide falls in property and other Key assumptions Current Year 1 Year 2 Year 3 asset prices • Estimated Australian housing portfolio losses under these stressed conditions are manageable and within the Group’s risk appetite and capital base Portfolio size ($bn) 444 428 419 417 − Cumulative total losses of $3.9bn over three years for the uninsured portfolio (1H18: $3.5bn) Unemployment rate (%) 5.0 11.6 10.6 9.6 − Cumulative claims on LMI, both WLMI and external insurers, of $911m over the three years (1H18: $911m) Interest rates (cash rate, %) 1.50 0.25 0.25 0.25 − Peak loss rate in year 2 has increased to 52bps (1H18: 48bps) due to recent declines in house prices which leads to a higher dynamic LVR starting point for the portfolio. In addition, the unemployment rate for September of 5.0% House prices - (18.5) (29.7) (35.2) creates a bigger peak to trough change compared to 1H18 (% change cumulative) − WLMI separately conducts stress testing to test the sufficiency of its capital position to cover mortgage claims arising from a stressed mortgage environment Annual GDP growth (%) 2.4 (3.9) (0.2) 1.7 • Capital targets incorporate buffers at the Westpac Group level that also consider the combined impact on the mortgage portfolio and WLMI of severe stress scenarios Stressed loss outcomes (net of LMI recoveries)1

$ million 86 1,271 2,186 802

Basis points2 2305219

1 Assumes 30% of LMI claims will be rejected in a stressed scenario. 2 Stressed loss rates are calculated as a percentage of mortgage gross loans.

Westpac Group Debt Investor Roadshow I November 2018 Appendix 1: Internationally comparable capital ratio reconciliation 53

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) 10.6

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 0.3

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 0.4 book (IRRBB) Loss given default (LGD) of 15%, compared to the 20% LGD floor under APRA’s requirements. APRA also applies a Residential mortgages 1.8 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 0.8 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 0.4 under relevant accounting standards to be deducted from CET1

Internationally comparable CET1 capital ratio 16.1

Internationally comparable Tier 1 capital ratio 19.0

Internationally comparable total regulatory capital ratio 21.5

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

Westpac Group Debt Investor Roadshow I November 2018 Appendix 2: Regulatory capital agenda 54

2H18 2019 2020 2021

New Basel III framework Consult Finalise Implementation

Counterparty credit risk Implement – 1 July 2019

Leverage ratio Finalise Implement – 1 July 2019

Standardised approach to Consult Consult and finalise Implementation credit risk

Advanced approach to credit Consult Consult and finalise Implementation risk capital

Measurement of capital Consult Finalise Implementation

Related party exposures Consult Finalise Implementation

Loss absorbing capacity Commence consult

Westpac Group Debt Investor Roadshow I November 2018 Appendix 3: Cash earnings adjustments 55

Cash earnings FY18 FY17 adjustment ($m) ($m) Description

Reported net profit 8,095 7,990 Net profit attributable to owners of Westpac Banking Corporation

Identifiable intangible assets arising from business acquisitions are amortised over their useful lives, ranging between four and twenty Amortisation of 17 137 years. The amortisation (excluding capitalised software) is a cash earnings adjustment because it is a non-cash flow item and doe intangible assets not 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 reversed in deriving cash earnings as their may create a material timing difference on reported results but do not affect the Fair value (gain)/loss (126) 69 Group’s cash earnings over the life of the hedge; and on 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

The unrealised (gain)/loss on ineffective hedges is reversed in deriving cash earnings for the period because the gain or loss Ineffective hedges 13 16 arising from the fair value movement in these hedges reverses over time and does not affect the Group’s profits over time

The Group recognised a gain, net of costs, associated with the partial sale of shares in Pendal Group Limited in FY17. In FY18, Adjustments related the Group marked to market its current holdings of Pendal shares. Consistent with prior years, these items have been treated as a to Pendal 73 (171) cash earnings adjustment given their size and that it does not reflect ongoing operations. The Group has indicated that it may sell (previously BTIM) the remaining 10% shareholding in Pendal at some future date. Any future gain or loss on this shareholding will similarly be 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 Treasury shares (7) 21 results are 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 8,065 8,062

Westpac Group Debt Investor Roadshow I November 2018 Appendix 4: Estimated impact of AASB 9 and AASB 15 56

Approach to provisioning Estimated transition impacts • The current requirement for provisioning (AASB 139) is based on an • Impairment provisions “incurred loss approach”, with the revised methodology (AASB 9) based on ─ $974m increase in impairment provisions due to forward-looking factors an “Expected Credit Loss” (ECL) approach and lifetime expected credit losses on stage 2 loans • The key principles of the new approach are: ─ Collectively assessed provisions (CAP) to risk weighted assets increase ─ a one year expected loss will be recognised from initial recognition (Stage to 99bps (from 73bps) 1) of a financial instrument [recognised on the balance sheet] • Retained earnings ─ if the credit risk on that financial instrument has “increased significantly since initial recognition” then a lifetime ECL is recognised (Stage 2) ─ Increase in provisions will be taken through retained earnings with no impact on cash earnings ─ if the financial instrument is impaired (default) lifetime ECL is recognised (Stage 3) • CET1 capital ratio • The measurement of the lifetime expected loss needs to be an “unbiased ─ Expected to be little changed (~1bp) and probability weighted outcome” taking into account past events, current ─ Impacts will be largely netted off in regulatory capital conditions and future forecasts. This differs from the current AASB 139 • More details will be provided in 1H19 requirements that do not allow for the consideration of future events, no matter how likely Interest carrying adjustment Impacts of AASB 15 30 Sept 2018 1 Oct 2018 4.7 4.7 • Under AASB 9 the interest carrying Still an • Not expected to have a material $1.6bn capital adjustment (ICA) will no longer 4.0 excess impact on earnings or capital deduction for apply, except where the asset is • Income and expenses will be 3.1 excess over $0.7bn impaired. In FY18 the CAP Stage 1 higher from the grossing up of provisions component of the ICA was $182m items previously netted • This will result in higher impairment Stage 2 • Will impact some metrics, such as CAP charges and net interest income net interest margin and expenses • Will impact some metrics, such as to income ratio Stage 3 net interest margin and expense to IAP • More details will be provided in income ratio AASB 139 Accounting New AASB 9 Accounting 1H19 provisions capital provisions capital and capital and capital deductions deductions

Westpac Group Debt Investor Roadshow I November 2018 Appendix 5: Definitions 57

Capital ratios As defined by APRA (unless stated otherwise) The NSFR is defined as the ratio of the amount of available stable funding (ASF) to the amount of required stable funding Assets (both on and off-balance sheet) are risk weighted (RSF) defined by APRA. The amount of ASF is the portion of an Net stable according to each asset’s inherent potential for default and what ADI’s capital and liabilities expected to be a reliable source of funding ratio Risk weighted the likely losses would be in case of default. In the case of non funds over a one year time horizon. The amount of RSF is a (NSFR) assets or RWA asset-backed risks (i.e.. market and operational risk), RWA is function of the liquidity characteristics and residual maturities of determined by multiplying the capital requirements for those risks an ADI’s assets and off-balance sheet activities. Effective by 12.5 1 January 2018, ADI’s must maintain an NSFR of at least 100%

As defined by APRA (unless stated otherwise). Tier 1 capital divided by ‘exposure measure’ and expressed as a percentage. An APRA requirement to maintain an adequate level of Leverage ratio ‘Exposure measure’ is the sum of on-balance sheet exposures, unencumbered high quality liquid assets, to meet liquidity needs derivative exposures, securities financing transaction exposures for a 30 calendar day period under an APRA-defined severe and other off-balance sheet exposures Liquidity stress scenario. Absent a situation of financial stress, the value of coverage ratio the LCR must not be less than 100%, effective 1 January 2015. (LCR) LCR is calculated as the percentage ratio of stock of HQLA and The internationally comparable common equity Tier 1 (CET1) CLF over the total net cash out flows in a modelled 30 day defined capital ratio is an estimate of Westpac’s CET1 ratio calculated on stressed scenario rules comparable with global peers. The ratio adjusts for Internationally differences between APRA’s rules and those applied to global comparable peers. The adjustments are applied to both the determination of ratios regulatory CET1 and the determination of risk weighted assets. Methodology aligns with the APRA study titled “International High quality As defined by APRA in Australian Prudential Standard APS210 capital comparison study” dated 13 July 2015 liquid assets Liquidity, including BS-13 qualifying liquid assets, less RBA open (HQLA) repos funding end of day ESA balances with the RBA Is a measure of the level of profit that is generated by ongoing operation and is therefore available for distribution to shareholders. Three categories of adjustments are made to reported results to determine cash earnings: material items that The RBA makes available to Australian Authorised Deposit- Cash earnings key decision makers at Westpac believe do not reflect ongoing Committed taking Institutions a CLF that, subject to qualifying conditions, operations; items that are not considered when dividends are liquidity facility can be accessed to meet LCR requirements under APS210 recommended; and accounting reclassifications that do not (CLF) impact reported results. For details of these adjustments refer Liquidity to Appendix 3.

Westpac Group Debt Investor Roadshow I November 2018 Appendix 5: Definitions (cont.) 58

Total Represents the sum of the committed portion of direct lending Loans not found to be individually impaired or significant will be committed (including funds placement overall and deposits placed), contingent collectively assessed in pools of similar assets with similar risk exposures and pre-settlement risk plus the committed portion of secondary characteristics. The size of the provision is an estimate of the (TCE) market trading and underwriting risk losses already incurred and will be estimated on the basis of Collectively historical loss experience for assets with credit characteristics Includes exposures that have deteriorated to the point where full assessed similar to those in the collective pool. The historical loss collection of interest and principal is in doubt, based on an provisions experience will be adjusted based on current observable data. assessment of the customer’s outlook, cashflow, and the net Included in the collectively assessed provision is an economic realisation of value of assets to which recourse is held and includes: overlay provision which is calculated based on changes that • facilities 90 days or more past due, and full recovery is in doubt: occurred in sectors of the economy or in the economy as a whole exposures where contractual payments are 90 or more days in arrears and the net realisable value of assets to which recourse Stressed assets are the total of watchlist and substandard, 90 days Stressed assets is held may not be sufficient to allow full collection of interest and past due and not impaired and impaired assets principal, including overdrafts or other revolving facilities that Loan facilities where customers are experiencing operating remain continuously outside approved limits by material amounts Watchlist and weakness and financial difficulty but are not expected to incur loss for 90 or more calendar days; substandard of interest or principal Impaired • non-accrual assets: exposures with individually assessed assets impairment provisions held against them, excluding restructured loans; Includes facilities where: • restructured assets: exposures where the original contractual • contractual payments of interest and / or principal are 90 or terms have been formally modified to provide for concessions of more calendar days overdue, including overdrafts or other interest or principal for reasons related to the financial difficulties revolving facilities that remain continuously outside approved of the customer; limits by material amounts for 90 or more calendar days, • other assets acquired through security enforcement (includes including accounts for customers who have been granted other real estate owned): includes the value of any other assets hardship assistance; or acquired as full or partial settlement of outstanding obligations 90 days past • an order has been sought for the customer’s bankruptcy or through the enforcement of security arrangements; and due and not similar legal action has been instituted which may avoid or • any other assets where the full collection of interest and principal impaired delay repayment of its credit obligations; and is in doubt. • the estimated net realisable value of assets / security to which Westpac has recourse is sufficient to cover repayment of all Provisions raised for losses that have already been incurred on loans principal and interest, where there are otherwise reasonable that are known to be impaired and are assessed on an individual Individually grounds to expect payment in full and interest is being taken to basis. The estimated losses on these impaired loans is based on assessed profit on an accrual basis. expected future cash flows discounted to their present value and as provisions These facilities, while in default, are not treated as impaired for this discount unwinds, interest will be recognised in the income accounting purposes statement

Westpac Group Debt Investor Roadshow I November 2018 More information | www.westpac.com.au/investorcentre 59

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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 Roadshow I November 2018