EXHIBIT 1
Pillar 3 report Table of contents |
Structure of Pillar 3 report
Executive summary | 3 |
Introduction | 5 |
Group structure | 7 |
Capital overview | 8 |
Leverage ratio | 12 |
Credit risk exposures | 13 |
Securitisation | 17 |
Liquidity coverage ratio | 20 |
Appendix | |
Appendix I | APS330 Quantitative requirements | 21 |
Disclosure regarding forward-looking statements | 22 |
In this report references to ‘Westpac’, ‘Westpac Group’, ‘the Group’, ‘we’, ‘us’ and ‘our’ are to Westpac Banking Corporation and its controlled entities (unless the context indicates otherwise).
In this report, unless otherwise stated or the context otherwise requires, references to ‘$’, ‘AUD’ or ‘A$’ are to Australian dollars.
Any discrepancies between totals and sums of components in tables contained in this report are due to rounding.
In this report, unless otherwise stated, disclosures reflect the Australian Prudential Regulation Authority’s (APRA) implementation of Basel III.
Information contained in or accessible through the websites mentioned in this report does not form part of this report unless we specifically state that it is incorporated by reference and forms part of this report. All references in this report to websites are inactive textual references and are for information only.
2 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report | |
Executive summary |
Key capital ratios
30 June 2020 | 31 March 2020 | 30 June 2019 | |
Level 2 Regulatory capital structure | |||
Common equity Tier 1 capital after deductions ($m) | 48,679 | 47,982 | 44,459 |
Risk weighted assets (RWA) ($m) | 450,564 | 443,905 | 422,164 |
Common equity Tier 1 capital ratio % | 10.80 | 10.81 | 10.53 |
Additional Tier 1 capital ratio % | 2.06 | 2.13 | 2.19 |
Tier 1 capital ratio % | 12.86 | 12.94 | 12.72 |
Tier 2 capital % | 3.13 | 3.35 | 1.78 |
Total regulatory capital ratio % | 15.99 | 16.29 | 14.50 |
APRA leverage ratio % | 5.88 | 5.66 | 5.67 |
Level 1 Regulatory capital structure | |||
Common equity Tier 1 capital after deductions ($m) | 49,305 | 48,482 | 43,376 |
Risk weighted assets (RWA) ($m) | 443,613 | 437,137 | 411,240 |
Level 1 Common equity Tier 1 capital ratio % | 11.11 | 11.09 | 10.55 |
CET1 capital ratio movement for Third Quarter 2020
The Common Equity Tier 1 (CET1) ratio of 10.80% at 30 June 2020 is little changed from the 31 March CET1 ratio of 10.81%. The cash earnings contribution for the quarter was largely offset by higher RWA and an increase in other capital deductions. Higher RWA reflects the impact of credit deterioration across the portfolio together with overlays for potential further deterioration. The ratio of RWA to Exposure at Default (EAD) increased by 1.4 percentage points since March 2020 to 38.4%1, which has reduced the CET1 ratio at 30 June 2020 by 30 basis points.
CET1 movement – Third Quarter 2020
Key movements in the CET1 capital ratio over the quarter due to:
· | 3Q20 cash earnings of $1,318 million (29 basis point increase), which included impairment charges of $826 million. Impairment charges over the quarter have lifted the provision coverage, with the ratio of total provisions to credit RWA of 1.70% at 30 June 2020 up from 1.57% at 31 March 2020 |
· | RWA increase (27 basis point decrease), mainly driven by higher credit risk RWA from a deterioration in credit quality and overlays; |
· | Foreign currency impacts (3 basis point decrease)2 from the appreciation of the A$ against the NZ$ and US$; and |
· | Capital deductions and other capital movements (6 basis point decrease), comprising deferred tax assets related to credit provisions (7 basis point decrease) and other deductions (2 basis point decrease), partially offset by the sale of the remaining holding in Pendal Group Limited (3 basis point increase). The capital deduction for regulatory expected loss remained at nil as eligible provisions still exceed regulatory expected loss at 30 June 2020. |
1 Calculated as EAD/credit RWA excluding sovereigns, banks and standardised exposure classes.
2 Reflecting the net impact of movements in the foreign currency translation reserve and RWA.
![]() | Westpac Group June 2020 Pillar 3 Report | 3 |
Pillar 3 report | |
Executive summary |
Risk Weighted Assets (RWA)
$m | 30 June 2020 | 31 March 2020 | 30 June 2019 |
Risk weighted assets at Level 2 | |||
Credit risk | 373,675 | 369,142 | 366,701 |
Market risk | 9,486 | 8,396 | 8,037 |
Operational risk | 54,090 | 54,093 | 41,266 |
Interest rate risk in the banking book (IRRBB) | 6,849 | 5,305 | 2,745 |
Other | 6,464 | 6,969 | 3,415 |
Total RWA | 450,564 | 443,905 | 422,164 |
Total Exposure at Default | 1,058,269 | 1,089,104 | 1,033,702 |
Total RWA increased $6.7 billion or 1.5% over the quarter mainly driven by an increase in credit risk RWA.
The $4.5 billion increase in credit risk RWA included:
· | An overlay to the probability of default for corporate, business lending and specialised lending1 which led to a $7bn increase in RWA and an associated increase in regulatory expected loss of $323 million. In line with APRA guidance, ADI’s are permitted to maintain the existing internal rating of these borrowers and instead reflect the increase in credit risk (probability of default) of impacted borrowers through an overlay. This overlay will be reviewed regularly as individual customers are assessed and regradings are finalised. |
· | Credit quality deterioration increasing RWA by $6.2 billion mainly comprising: |
o | Mortgages up $3.6 billion primarily from a rise in customers in hardship. This reflects our approach to applying COVID-19 relief which means a number of customers were offered assistance through our hardship program. There is no impact to RWA from customers that are on repayment deferral packages in accordance with APRA guidance2; |
o | Downgrades across the corporate and business portfolios, which increased RWA by $2.1 billion; and |
o | Small business and other portfolios up $0.5 billion mainly from an increase in defaulted and impaired loans. |
· | Offset by a $8.7 billion decline in RWA from: |
o | $1.8 billion from lower lending due to subdued demand across retail and business portfolios, and from exposure reductions in corporate; |
o | Foreign currency translation impacts decreased RWA by $4.4 billion due to the appreciation of the A$ against the US$ and NZ$; and |
o | A decrease in mark-to-market related credit risk and counterparty credit risk RWA of $2.5 billion. |
Non-credit risk RWA increased $2.1 billion from higher market risk RWA (up $1.1 billion) and IRRBB (up $1.5 billion). These were partly offset by a $0.5 billion decrease in Other RWA.
Exposure at Default
Exposure at default (EAD) decreased $30.8 billion (or 2.8%) over the quarter, primarily due to lower sovereign associated with decreased liquidity needs and lower corporate exposures.
Leverage Ratio
The leverage ratio represents the amount of Tier 1 capital relative to exposure3. At 30 June 2020, Westpac’s leverage ratio was 5.88%, up 22 basis points since 31 March 2020.
Liquidity Coverage Ratio (LCR)
Westpac’s average LCR for the quarter ending 30 June 2020 was 146% (March quarter 2020: 140%)4.
1 The overlay has impacted the following assets classes: Corporate ($0.8 billion RWA, $22 million regulatory expected loss), Busines lending ($2.1 billion RWA, $88 million regulatory expected loss) and Specialised lending ($4.1 billion RWA, $213 million regulatory expected loss).
2 23 March 2020 ‘APRA advises regulatory approach to COVID-19 support’ and updated guidance on 8 July 2020 APRA updates regulatory approach to loans subject to repayment deferral’.
3 As defined under Attachment D of APS110: Capital Adequacy.
4 Calculated as a simple average of the daily observations over the relevant quarter.
4 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report Introduction |
Westpac Banking Corporation is an Authorised Deposit–taking Institution (ADI) subject to regulation by the APRA. APRA has accredited Westpac to apply advanced models permitted by the Basel III global capital adequacy regime to the measurement of its regulatory capital requirements. Westpac uses the Advanced Internal Ratings-Based approach (Advanced IRB) for credit risk and the Advanced Measurement Approach (AMA) for operational risk.
In accordance with APS330 Public Disclosure, financial institutions that have received this accreditation, such as Westpac, are required to disclose prudential information about their risk management practices on a semi-annual basis. A subset of this information must be disclosed quarterly.
In addition to this report, the regulatory disclosures section of the Westpac website1 contains the reporting requirements for:
· | Capital instruments under Attachment B of APS330; and |
· | The identification of potential Global-Systemically Important Banks (G-SIB) under Attachment H of APS330 (disclosed annually). |
Capital instruments disclosures are updated when:
· | A new capital instrument is issued that will form part of regulatory capital; or |
· | A capital instrument is redeemed, converted into CET1 capital, written off, or its terms and conditions are changed. |
1 | http://www.westpac.com.au/about-westpac/investor-centre/financial-information/regulatory-disclosures/ |
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Pillar 3 report Group structure |
Westpac seeks to ensure that it is adequately capitalised at all times. APRA applies a tiered approach to measuring Westpac’s capital adequacy1 by assessing financial strength at three levels:
· | Level 1, comprising Westpac Banking Corporation and its subsidiary entities that have been approved by APRA as being part of a single 'Extended Licensed Entity' (ELE) for the purposes of measuring capital adequacy; |
· | Level 2, the consolidation of Westpac Banking Corporation and all its subsidiary entities except those entities specifically excluded by APRA regulations. The head of the Level 2 group is Westpac Banking Corporation; and |
· | Level 3, the consolidation of Westpac Banking Corporation and all its subsidiary entities. |
Unless otherwise specified, all quantitative disclosures in this report refer to the prudential assessment of Westpac’s financial strength on a Level 2 basis2.
The Westpac Group
The following diagram shows the Level 3 conglomerate group and illustrates the different tiers of regulatory consolidation.
Accounting consolidation3
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries (including structured entities) controlled by Westpac. Westpac and its subsidiaries are referred to collectively as the ‘Group’. The effects of all transactions between entities in the Group are eliminated. Control exists when the parent entity is exposed to, or has rights to, variable returns from its involvement with an entity, and has the ability to affect those returns through its power over that entity. Subsidiaries are fully consolidated from the date on which control commences and they are no longer consolidated from the date that control ceases.
Group entities excluded from the regulatory consolidation at Level 2
Regulatory consolidation at Level 2 covers the global operations of Westpac and its subsidiary entities, including other controlled banking, securities and financial entities, except for those entities involved in the following business activities:
· | insurance; |
· | acting as manager, responsible entity, approved trustee, trustee or similar role in relation to funds management; |
· | non-financial (commercial) operations; or |
· | special purpose entities to which assets have been transferred in accordance with the requirements of APS120 Securitisation. |
Retained earnings and equity investments in subsidiary entities excluded from the consolidation at Level 2 are deducted from capital, with the exception of securitisation special purpose entities.
1 | APS110 Capital Adequacy outlines the overall framework adopted by APRA for the purpose of assessing the capital adequacy of an ADI. |
2 | Impaired assets and provisions held in Level 3 entities are excluded from the tables in this report. |
3 | Refer to Note 31 of Westpac’s 2019 Annual Report for further details. |
6 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report Group structure |
Subsidiary banking entities
Westpac New Zealand Limited (WNZL), a wholly owned subsidiary entity, is a registered bank incorporated in New Zealand and regulated by the Reserve Bank of New Zealand (RBNZ). WNZL uses the Advanced IRB approach for credit risk and the AMA for operational risk. Other subsidiary banking entities in the Group include Westpac Bank-PNG-Limited and Westpac Europe Limited. For the purposes of determining Westpac’s capital adequacy subsidiary banking entities are consolidated at Level 2.
Restrictions and major impediments on the transfer of funds or regulatory capital within the Group
Minimum capital (‘thin capitalisation’) rules
Tax legislation in most jurisdictions in which the Group operates prescribes minimum levels of capital that must be retained in that jurisdiction to avoid a portion of the interest costs incurred in the jurisdiction ceasing to be tax deductible. Capital for these purposes includes both contributed capital and non-distributed retained earnings. Westpac seeks to maintain sufficient capital/retained earnings to comply with these rules.
Tax costs associated with repatriation
Repatriation of retained earnings (and capital) may result in tax being payable in either the jurisdiction from which the repatriation occurs or Australia on receipt of the relevant amounts. This cost would reduce the amount actually repatriated.
Intra-group exposure limits
Exposures to related entities are managed within the prudential limits prescribed by APRA in APS222 Associations with Related Entities1. Westpac has an internal limit structure and approval process governing credit exposures to related entities. This limit structure and approval process, combined with APRA’s prudential limits, is designed to reduce the potential for unacceptable contagion risk.
Prudential regulation of subsidiary entities
Certain subsidiary banking, insurance and trustee entities are subject to local prudential regulation in their own right, including capital adequacy requirements and investment or intra-group exposure limits. Westpac seeks to ensure that its subsidiary entities are adequately capitalised and adhere to regulatory requirements at all times. There are no capital deficiencies in subsidiary entities excluded from the regulatory consolidation at Level 2.
On 4 November 2019, the RBNZ advised it would change WNZL’s conditions of registration to remove the 2% overlay applying to its minimum capital requirements from 31 December 2019. This overlay had been in place since 31 December 2017 following the RBNZ’s review of WNZL’s compliance with the RBNZ’s ‘Capital Adequacy Framework’ (Internal Models Based Approach) (BS2B).
On 2 April 2020, a decision was made by the RBNZ to freeze the distribution of dividends on ordinary shares by all banks in New Zealand during the period of economic uncertainty caused by COVID-19.
1 | For the purposes of APS222, subsidiaries controlled by Westpac, other than subsidiaries that form part of the ELE, represent ‘related entities’. Prudential and internal limits apply to intra-group exposures between the ELE and related entities, both on an individual and aggregate basis. |
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Pillar 3 report Capital overview |
Capital management strategy
Westpac’s approach to capital management seeks to ensure that it is adequately capitalised as an ADI. Westpac evaluates its approach to capital management through an Internal Capital Adequacy Assessment Process (ICAAP), the key features of which include:
· | the development of a capital management strategy, including consideration of regulatory minimums, capital buffers and contingency plans; |
· | consideration of both regulatory and economic capital requirements; |
· | a stress testing framework that challenges the capital measures, coverage and requirements including the impact of adverse economic scenarios; and |
· | consideration of the perspectives of external stakeholders including rating agencies as well as equity and debt investors. |
During the period of disruption caused by COVID-19, Westpac will seek to operate with the following principles in relation to capital:
· | prioritise maintaining capital strength; |
· | retain capital to absorb further downside on credit quality and acknowledge a high degree of uncertainty regarding the length and depth of this stress; |
· | allow for capital flexibility to support lending to customers; and |
· | in line with APRA guidance, where necessary utilise some of the “unquestionably strong” buffer and seek to maintain a buffer above the regulatory minimum. |
These principles take into consideration:
· | current regulatory capital minimums and the capital conservation buffer (CCB), which together are the Total CET1 Requirement. In line with the above, the Total CET1 Requirement for Westpac is at least 8.0%, based upon an industry minimum CET1 requirement of 4.5% plus a capital buffer of at least 3.5% applicable to D-SIBs1, 2; |
· | stress testing to calibrate an appropriate buffer against a downturn; and |
· | quarterly volatility of capital ratios due to the half yearly cycle of ordinary dividend payments. |
Westpac will revise its target capital levels once the medium to longer term impacts of COVID-19 are clearer, taking into account APRA’s expectations for the timing of any capital rebuilding required and the finalisation of APRA’s review of the capital adequacy framework.
APRA announcements on capital
On 27 July 2020, APRA released further capital management guidance for ADIs3. This guidance included APRA’s expectation that for 2020, ADIs will retain at least half of their earnings, actively use dividend reinvestment plans (DRPs) and/or other capital management initiatives to at least partially offset the diminution in capital from distributions and conduct regular stress testing to inform decision-making and demonstrate ongoing lending capacity. APRA also committed to ensuring that any rebuild of capital buffers, if required, will be conducted in a gradual manner. APRA noted that the implementation of the Basel III capital reforms, which will embed the ‘unquestionably strong’ level of capital in the framework, has been postponed to 1 January 2023.
1 | Noting that APRA may apply higher CET1 requirements for an individual ADI. |
2 | If an ADI’s CET1 ratio falls below the Total CET1 Requirement (at least 8%), they face restrictions on the distribution of earnings, such as dividends, distribution payments on AT1 capital instruments and discretionary staff bonuses. |
3 | Letter to Authorised Deposit Taking institutions – Capital Management, 29 July 2020. |
8 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report Capital overview |
Westpac’s capital adequacy ratios
% | 30 June 2020 | 31 March 2020 | 30 June 2019 |
The Westpac Group at Level 2 | |||
Common equity Tier 1 capital ratio | 10.8 | 10.8 | 10.5 |
Additional Tier 1 capital | 2.1 | 2.1 | 2.2 |
Tier 1 capital ratio | 12.9 | 12.9 | 12.7 |
Tier 2 capital | 3.1 | 3.4 | 1.8 |
Total regulatory capital ratio | 16.0 | 16.3 | 14.5 |
The Westpac Group at Level 1 | |||
Common equity Tier 1 capital ratio | 11.1 | 11.1 | 10.5 |
Additional Tier 1 capital | 2.1 | 2.2 | 2.3 |
Tier 1 capital ratio | 13.2 | 13.3 | 12.8 |
Tier 2 capital | 3.2 | 3.4 | 1.9 |
Total regulatory capital ratio | 16.4 | 16.7 | 14.7 |
Westpac New Zealand Limited’s capital adequacy ratios
% | 30 June 2020 | 31 March 2020 | 30 June 2019 |
Westpac New Zealand Limited | |||
Common equity Tier 1 capital ratio | 11.9 | 11.4 | 12.0 |
Additional Tier 1 capital | 2.6 | 2.7 | 2.7 |
Tier 1 capital ratio | 14.5 | 14.1 | 14.7 |
Tier 2 capital | 2.1 | 1.8 | 2.0 |
Total regulatory capital ratio | 16.6 | 15.9 | 16.7 |
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Pillar 3 report Capital overview |
Capital requirements
This table shows risk weighted assets and associated capital requirements1 for each risk type included in the regulatory assessment of Westpac’s capital adequacy. More detailed disclosures on the prudential assessment of capital requirements are presented in the following sections of this report.
30 June 2020 | IRB | Standardised | Total Risk | Total Capital |
$m | Approach | Approach2 | Weighted Assets | Required1 |
Credit risk | ||||
Corporate | 76,303 | 1,012 | 77,315 | 6,185 |
Business lending | 37,584 | 913 | 38,497 | 3,080 |
Sovereign | 2,194 | 1,233 | 3,427 | 274 |
Bank | 6,461 | 63 | 6,524 | 522 |
Residential mortgages | 134,425 | 4,567 | 138,992 | 11,119 |
Australian credit cards | 4,332 | - | 4,332 | 347 |
Other retail | 10,594 | 796 | 11,390 | 911 |
Small business | 17,638 | - | 17,638 | 1,411 |
Specialised lending | 59,114 | 458 | 59,572 | 4,766 |
Securitisation | 5,429 | - | 5,429 | 434 |
Mark-to-market related credit risk3 | - | 10,559 | 10,559 | 845 |
Total | 354,074 | 19,601 | 373,675 | 29,894 |
Market risk | 9,486 | 759 | ||
Operational risk | 54,090 | 4,327 | ||
Interest rate risk in the banking book | 6,849 | 548 | ||
Other assets4 | 6,464 | 517 | ||
Total | 450,564 | 36,045 | ||
31 March 2020 | IRB | Standardised | Total Risk | Total Capital |
$m | Approach | Approach2 | Weighted Assets | Required1 |
Credit risk | ||||
Corporate | 78,288 | 1,087 | 79,375 | 6,350 |
Business lending | 34,493 | 993 | 35,486 | 2,839 |
Sovereign | 2,192 | 1,354 | 3,546 | 284 |
Bank | 6,956 | 51 | 7,007 | 561 |
Residential mortgages | 131,424 | 4,714 | 136,138 | 10,891 |
Australian credit cards | 4,837 | - | 4,837 | 387 |
Other retail | 11,594 | 805 | 12,399 | 992 |
Small business | 16,812 | - | 16,812 | 1,345 |
Specialised lending | 56,004 | 503 | 56,507 | 4,521 |
Securitisation | 5,747 | - | 5,747 | 460 |
Mark-to-market related credit risk3 | - | 11,289 | 11,289 | 903 |
Total | 348,347 | 20,795 | 369,142 | 29,533 |
Market risk | 8,396 | 672 | ||
Operational risk | 54,093 | 4,327 | ||
Interest rate risk in the banking book | 5,305 | 424 | ||
Other assets4 | 6,969 | 558 | ||
Total | 443,905 | 35,514 |
1 | Total capital required is calculated as 8% of total risk weighted assets. |
2 | Westpac’s Standardised risk weighted assets are categorised based on their equivalent IRB categories. |
3 | Mark-to-market related credit risk is measured under the standardised approach. It is also known as Credit Valuation Adjustment (CVA) risk. |
4 | Other assets include cash items, unsettled transactions, fixed assets and other non-interest earning assets. |
10 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report Capital overview |
30 June 2019 | IRB | Standardised | Total Risk | Total Capital |
$m | Approach | Approach2 | Weighted Assets | Required1 |
Credit risk | ||||
Corporate | 73,728 | 1,720 | 75,448 | 6,036 |
Business lending | 35,921 | 969 | 36,890 | 2,951 |
Sovereign | 1,899 | 1,074 | 2,973 | 238 |
Bank | 7,317 | 44 | 7,361 | 589 |
Residential mortgages | 134,702 | 5,155 | 139,857 | 11,189 |
Australian credit cards | 5,741 | - | 5,741 | 459 |
Other retail | 12,898 | 917 | 13,815 | 1,105 |
Small business | 16,331 | - | 16,331 | 1,307 |
Specialised lending | 53,887 | 446 | 54,333 | 4,347 |
Securitisation | 5,749 | - | 5,749 | 460 |
Mark-to-market related credit risk3 | - | 8,203 | 8,203 | 656 |
Total | 348,173 | 18,528 | 366,701 | 29,337 |
Market risk | 8,037 | 643 | ||
Operational risk | 41,266 | 3,301 | ||
Interest rate risk in the banking book | 2,745 | 220 | ||
Other assets4 | 3,415 | 273 | ||
Total | 422,164 | 33,774 |
1 | Total capital required is calculated as 8% of total risk weighted assets. |
2 | Westpac’s Standardised risk weighted assets are categorised based on their equivalent IRB categories. |
3 | Mark-to-market related credit risk is measured under the standardised approach. It is also known as Credit Valuation Adjustment (CVA) risk. |
4 | Other assets include cash items, unsettled transactions, fixed assets and other non-interest earning assets. |
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Pillar 3 report Leverage ratio disclosure |
Leverage ratio
The following table summarises Westpac’s leverage ratio. This has been determined using APRA’s definition of the leverage ratio as specified in APS110 Capital Adequacy.
$ billion | 30 June 2020 | 31 March 2020 | 31 December 2019 | 30 September 2019 |
Tier 1 Capital | 57.9 | 57.5 | 56.8 | 55.1 |
Total Exposures | 985.6 | 1,014.2 | 948.7 | 968.8 |
Leverage ratio | 5.9% | 5.7% | 6.0% | 5.7% |
12 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report | |
Credit risk exposures |
Summary credit risk disclosure
Regulatory | ||||||||||||||||||||||||||||
Expected | Specific | Actual | ||||||||||||||||||||||||||
Risk | Regulatory | Loss for | Provisions | Losses for | ||||||||||||||||||||||||
30 June 2020 | Exposure | Weighted | Expected | non-defaulted | Impaired | for Impaired | the 9 months | |||||||||||||||||||||
$m | at Default | Assets | Loss1 | exposures | Loans | Loans | ended | |||||||||||||||||||||
Corporate | 135,178 | 76,303 | 820 | 580 | 425 | 236 | (4 | ) | ||||||||||||||||||||
Business lending | 54,710 | 37,584 | 805 | 538 | 377 | 206 | 55 | |||||||||||||||||||||
Sovereign | 116,800 | 2,194 | 1 | 1 | - | - | - | |||||||||||||||||||||
Bank | 23,919 | 6,461 | 7 | 7 | - | - | - | |||||||||||||||||||||
Residential mortgages | 551,420 | 134,425 | 1,898 | 1,125 | 379 | 102 | 96 | |||||||||||||||||||||
Australian credit cards | 17,649 | 4,332 | 269 | 195 | 127 | 75 | 247 | |||||||||||||||||||||
Other retail | 14,110 | 10,594 | 573 | 359 | 387 | 213 | 196 | |||||||||||||||||||||
Small business | 33,099 | 17,638 | 669 | 393 | 816 | 294 | 55 | |||||||||||||||||||||
Specialised Lending | 64,943 | 59,114 | 1,011 | 790 | 59 | 25 | 1 | |||||||||||||||||||||
Securitisation | 27,135 | 5,429 | - | - | - | - | - | |||||||||||||||||||||
Standardised2 | 19,306 | 19,601 | - | - | 49 | 20 | 1 | |||||||||||||||||||||
Total | 1,058,269 | 373,675 | 6,053 | 3,988 | 2,619 | 1,171 | 647 |
Regulatory | ||||||||||||||||||||||||||||
Expected | Specific | Actual | ||||||||||||||||||||||||||
Risk | Regulatory | Loss for | Provisions | Losses for | ||||||||||||||||||||||||
31 March 2020 | Exposure | Weighted | Expected | non-defaulted | Impaired | for Impaired | the 6 months | |||||||||||||||||||||
$m | at Default | Assets | Loss1 | exposures | Loans | Loans | ended | |||||||||||||||||||||
Corporate | 146,529 | 78,288 | 787 | 547 | 363 | 232 | (4 | ) | ||||||||||||||||||||
Business lending | 54,428 | 34,493 | 669 | 413 | 347 | 195 | 35 | |||||||||||||||||||||
Sovereign | 127,064 | 2,192 | 2 | 2 | - | - | - | |||||||||||||||||||||
Bank | 26,633 | 6,956 | 9 | 9 | - | - | - | |||||||||||||||||||||
Residential mortgages | 553,866 | 131,424 | 1,788 | 1,229 | 404 | 114 | 67 | |||||||||||||||||||||
Australian credit cards | 18,601 | 4,837 | 314 | 238 | 123 | 92 | 164 | |||||||||||||||||||||
Other retail | 15,223 | 11,594 | 601 | 419 | 312 | 218 | 135 | |||||||||||||||||||||
Small business | 33,181 | 16,812 | 557 | 378 | 501 | 183 | 39 | |||||||||||||||||||||
Specialised Lending | 65,866 | 56,004 | 813 | 583 | 52 | 26 | 1 | |||||||||||||||||||||
Securitisation | 28,097 | 5,747 | - | - | - | - | - | |||||||||||||||||||||
Standardised2 | 19,616 | 20,795 | - | - | 52 | 19 | - | |||||||||||||||||||||
Total | 1,089,104 | 369,142 | 5,540 | 3,818 | 2,154 | 1,079 | 437 |
Regulatory | ||||||||||||||||||||||||||||
Expected | Specific | Actual | ||||||||||||||||||||||||||
Risk | Regulatory | Loss for | Provisions | Losses for | ||||||||||||||||||||||||
30 June 2019 | Exposure | Weighted | Expected | non-defaulted | Impaired | for Impaired | the 9 months | |||||||||||||||||||||
$m | at Default | Assets | Loss1 | exposures | Loans | Loans | ended | |||||||||||||||||||||
Corporate | 134,686 | 73,728 | 554 | 468 | 161 | 75 | (5 | ) | ||||||||||||||||||||
Business lending | 55,274 | 35,921 | 646 | 428 | 294 | 160 | 33 | |||||||||||||||||||||
Sovereign | 80,171 | 1,899 | 2 | 2 | - | - | - | |||||||||||||||||||||
Bank | 26,224 | 7,317 | 8 | 8 | - | - | - | |||||||||||||||||||||
Residential mortgages | 562,101 | 134,702 | 1,708 | 1,139 | 422 | 119 | 87 | |||||||||||||||||||||
Australian credit cards | 18,493 | 5,741 | 355 | 283 | 116 | 74 | 235 | |||||||||||||||||||||
Other retail | 16,375 | 12,898 | 619 | 448 | 310 | 169 | 246 | |||||||||||||||||||||
Small business | 33,429 | 16,331 | 504 | 347 | 399 | 164 | 53 | |||||||||||||||||||||
Specialised Lending | 63,525 | 53,887 | 780 | 554 | 108 | 41 | 11 | |||||||||||||||||||||
Securitisation | 26,169 | 5,749 | - | - | - | - | - | |||||||||||||||||||||
Standardised2 | 17,255 | 18,528 | - | - | 62 | 17 | 2 | |||||||||||||||||||||
Total | 1,033,702 | 366,701 | 5,176 | 3,677 | 1,872 | 819 | 662 |
1 | Includes regulatory expected losses for defaulted and non-defaulted exposures. |
2 | Includes mark-to-market related credit risk. |
![]() | Westpac Group June 2020 Pillar 3 Report | 13 |
Pillar 3 report | |
Credit risk exposures |
Exposure at Default by major type
30 June 2020 | On balance | Off-balance sheet | Total Exposure | Average | ||||||||||||||||
$m | sheet | Non-market related | Market related | at Default | 3 months ended1 | |||||||||||||||
Corporate | 61,212 | 60,146 | 13,820 | 135,178 | 140,854 | |||||||||||||||
Business lending | 42,209 | 12,501 | - | 54,710 | 54,569 | |||||||||||||||
Sovereign | 103,877 | 1,675 | 11,248 | 116,800 | 121,932 | |||||||||||||||
Bank | 14,237 | 2,010 | 7,672 | 23,919 | 25,276 | |||||||||||||||
Residential mortgages | 484,540 | 66,880 | - | 551,420 | 552,643 | |||||||||||||||
Australian credit cards | 7,268 | 10,381 | - | 17,649 | 18,125 | |||||||||||||||
Other retail | 10,841 | 3,269 | - | 14,110 | 14,667 | |||||||||||||||
Small business | 26,023 | 7,076 | - | 33,099 | 33,140 | |||||||||||||||
Specialised lending | 53,231 | 9,652 | 2,060 | 64,943 | 65,405 | |||||||||||||||
Securitisation2 | 21,554 | 5,457 | 124 | 27,135 | 27,616 | |||||||||||||||
Standardised | 12,838 | 1,211 | 5,257 | 19,306 | 19,461 | |||||||||||||||
Total | 837,830 | 180,258 | 40,181 | 1,058,269 | 1,073,688 |
31 March 2020 | On balance | Off-balance sheet | Total Exposure | Average | ||||||||||||||||
$m | sheet | Non-market related | Market related | at Default | 12 months ended3 | |||||||||||||||
Corporate | 69,038 | 57,950 | 19,541 | 146,529 | 140,586 | |||||||||||||||
Business lending | 42,083 | 12,345 | - | 54,428 | 54,546 | |||||||||||||||
Sovereign | 119,847 | 1,857 | 5,360 | 127,064 | 102,570 | |||||||||||||||
Bank | 14,899 | 2,415 | 9,319 | 26,633 | 27,505 | |||||||||||||||
Residential mortgages | 486,270 | 67,596 | - | 553,866 | 555,459 | |||||||||||||||
Australian credit cards | 8,218 | 10,383 | - | 18,601 | 18,434 | |||||||||||||||
Other retail | 11,881 | 3,342 | - | 15,223 | 15,607 | |||||||||||||||
Small business | 26,181 | 7,000 | - | 33,181 | 33,311 | |||||||||||||||
Specialised lending | 54,066 | 9,750 | 2,050 | 65,866 | 65,739 | |||||||||||||||
Securitisation2 | 22,690 | 5,276 | 131 | 28,097 | 27,269 | |||||||||||||||
Standardised | 13,476 | 1,162 | 4,978 | 19,616 | 19,992 | |||||||||||||||
Total | 868,649 | 179,076 | 41,379 | 1,089,104 | 1,061,018 |
30 June 2019 | On balance | Off-balance sheet | Total Exposure | Average | ||||||||||||||||
$m | sheet | Non-market related | Market related | at Default | 3 months ended4 | |||||||||||||||
Corporate | 63,514 | 59,650 | 11,522 | 134,686 | 135,094 | |||||||||||||||
Business lending | 43,029 | 12,245 | - | 55,274 | 54,787 | |||||||||||||||
Sovereign | 76,109 | 1,518 | 2,544 | 80,171 | 79,872 | |||||||||||||||
Bank | 16,609 | 2,236 | 7,379 | 26,224 | 25,848 | |||||||||||||||
Residential mortgages | 488,220 | 73,881 | - | 562,101 | 560,131 | |||||||||||||||
Australian credit cards | 9,477 | 9,016 | - | 18,493 | 18,672 | |||||||||||||||
Other retail | 12,974 | 3,401 | - | 16,375 | 16,479 | |||||||||||||||
Small business | 26,622 | 6,807 | - | 33,429 | 33,355 | |||||||||||||||
Specialised lending | 51,704 | 10,503 | 1,318 | 63,525 | 64,153 | |||||||||||||||
Securitisation2 | 20,619 | 5,354 | 196 | 26,169 | 26,049 | |||||||||||||||
Standardised | 13,451 | 1,149 | 2,655 | 17,255 | 17,322 | |||||||||||||||
Total | 822,328 | 185,760 | 25,614 | 1,033,702 | 1,031,766 |
1 | Average is based on exposures as at 30 June 2020 and 31 March 2020. |
2 | The EAD associated with securitisations is for the banking book only. |
3 | Average is based on exposures as at 31 March 2020, 31 December 2019, and 30 September 2019. |
4 | Average is based on exposures as 30 June 2019 and 31 March 2019. |
14 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report | |
Credit risk exposures |
Loan impairment provisions
APS220 Credit Quality requires that Westpac report specific provisions and a General Reserve for Credit Loss (GRCL). All Individually Assessed Provisions (IAP) raised under Australian Accounting Standards (AAS) are classified as specific provisions. All Collectively Assessed Provisions (CAP) raised under AAS are either classified into specific provisions or a GRCL.
30 June 2020 | A-IFRS Provisions | Total Regulatory | ||||||||||
$m | IAPs | CAPs | Provisions | |||||||||
Specific Provisions | ||||||||||||
for impaired loans | 607 | 564 | 1,171 | |||||||||
for defaulted but not impaired loans | NA | 860 | 860 | |||||||||
For Stage 2 | NA | 2,167 | 2,167 | |||||||||
Total Specific Provision1 | 607 | 3,591 | 4,198 | |||||||||
General Reserve for Credit Loss1 | NA | 2,172 | 2,172 | |||||||||
Total provisions for ECL | 607 | 5,763 | 6,370 |
31 March 2020 | A-IFRS Provisions | Total Regulatory | ||||||||||
$m | IAPs | CAPs | Provisions | |||||||||
Specific Provisions | ||||||||||||
for impaired loans | 606 | 473 | 1,079 | |||||||||
for defaulted but not impaired loans | NA | 628 | 628 | |||||||||
For Stage 2 | NA | 2,184 | 2,184 | |||||||||
Total Specific Provision1 | 606 | 3,285 | 3,891 | |||||||||
General Reserve for Credit Loss1 | NA | 1,900 | 1,900 | |||||||||
Total provisions for ECL | 606 | 5,185 | 5,791 |
30 June 2019 | A-IFRS Provisions | Total Regulatory | ||||||||||
$m | IAPs | CAPs | Provisions | |||||||||
Specific Provisions | ||||||||||||
for impaired loans | 438 | 381 | 819 | |||||||||
for defaulted but not impaired loans | NA | 573 | 573 | |||||||||
For Stage 2 | NA | 1,281 | 1,281 | |||||||||
Total Specific Provision1 | 438 | 2,235 | 2,673 | |||||||||
General Reserve for Credit Loss1 | NA | 1,394 | 1,394 | |||||||||
Total provisions for ECL | 438 | 3,629 | 4,067 |
1 Provisions classified according to APRA’s letter dated 4 July 2017 “Provisions for regulatory purposes and AASB 9 financial instruments”.
![]() | Westpac Group June 2020 Pillar 3 Report | 15 |
Pillar 3 report Credit risk exposures |
Impaired and past due loans
The following tables disclose the crystallisation of credit risk as impairment and loss. Analysis of exposures defaulted not impaired, impaired loans, related provisions and actual losses is broken down by concentrations reflecting Westpac’s asset categories.1
Specific | Specific | Actual | |||
30 June 2020 | Defaulted | Impaired | Provisions for | Provisions to | Losses for the |
$m | not impaired1 | Loans | Impaired Loans | Impaired Loans | 9 months ended |
Corporate | 89 | 425 | 236 | 56% | (4) |
Business lending | 568 | 377 | 206 | 55% | 55 |
Sovereign | - | - | - | - | - |
Bank | - | - | - | - | - |
Residential mortgages | 6,692 | 379 | 102 | 27% | 96 |
Australian credit cards | - | 127 | 75 | 59% | 247 |
Other retail | 2 | 387 | 213 | 55% | 196 |
Small business | 516 | 816 | 294 | 36% | 55 |
Specialised lending | 331 | 59 | 25 | 42% | 1 |
Securitisation | - | - | - | - | - |
Standardised | 105 | 49 | 20 | 41% | 1 |
Total | 8,303 | 2,619 | 1,171 | 45% | 647 |
Specific | Specific | Actual | |||
31 March 2020 | Defaulted | Impaired | Provisions for | Provisions to | Losses for the |
$m | not impaired1 | Loans | Impaired Loans | Impaired Loans | 12 months ended |
Corporate | 91 | 363 | 232 | 64% | (4) |
Business lending | 474 | 347 | 195 | 56% | 35 |
Sovereign | - | - | - | - | - |
Bank | - | - | - | - | - |
Residential mortgages | 4,050 | 404 | 114 | 28% | 67 |
Australian credit cards | - | 123 | 92 | 75% | 164 |
Other retail | - | 312 | 218 | 70% | 135 |
Small business | 359 | 501 | 183 | 37% | 39 |
Specialised lending | 357 | 52 | 26 | 50% | 1 |
Securitisation | - | - | - | - | - |
Standardised | 78 | 52 | 19 | 37% | - |
Total | 5,409 | 2,154 | 1,079 | 50% | 437 |
Specific | Specific | Actual | |||
30 June 2019 | Defaulted | Impaired | Provisions for | Provisions to | Losses for the |
$m | not impaired1 | Loans | Impaired Loans | Impaired Loans | 9 months ended |
Corporate | 95 | 161 | 75 | 47% | (5) |
Business lending | 423 | 294 | 160 | 54% | 33 |
Sovereign | - | - | - | - | - |
Bank | - | - | - | - | - |
Residential mortgages | 3,872 | 422 | 119 | 28% | 87 |
Australian credit cards | - | 116 | 74 | 64% | 235 |
Other retail | - | 310 | 169 | 55% | 246 |
Small business | 331 | 399 | 164 | 41% | 53 |
Specialised lending | 315 | �� 108 | 41 | 38% | 11 |
Securitisation | - | - | - | - | - |
Standardised | 65 | 62 | 17 | 27% | 2 |
Total | 5,101 | 1,872 | 819 | 44% | 662 |
1 Includes items past 90 days not impaired.
16 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report Securitisation |
Banking book summary of securitisation activity by asset type
For the 3 months ended | ||
30 June 2020 | Amount | Recognised gain or |
$m | securitised | loss on sale |
Residential mortgages | 46,347 | - |
Credit cards | - | - |
Auto and equipment finance | - | - |
Business lending | - | - |
Investments in ABS | - | - |
Other | - | - |
Total | 46,347 | - |
For the 6 months ended | ||
31 March 2020 | Amount | Recognised gain or |
$m | securitised | loss on sale |
Residential mortgages | 19,547 | - |
Credit cards | - | - |
Auto and equipment finance | 318 | - |
Business lending | - | - |
Investments in ABS | - | - |
Other | - | - |
Total | 19,865 | - |
For the 3 months ended | ||
30 June 2019 | Amount | Recognised gain or |
$m | securitised | loss on sale |
Residential mortgages | 4,137 | - |
Credit cards | - | - |
Auto and equipment finance | 305 | - |
Business lending | - | - |
Investments in ABS | - | - |
Other | - | - |
Total | 4,442 | - |
![]() | Westpac Group June 2020 Pillar 3 Report | 17 |
Pillar 3 report Securitisation |
Banking book summary of on and off-balance sheet securitisation by exposure type
30 June 2020 | On balance sheet | Off-balance | Total Exposure | |
$m | Securitisation retained | Securitisation purchased | sheet | at Default |
Securities | - | 8,165 | 37 | 8,202 |
Liquidity facilities | - | - | 287 | 287 |
Funding facilities | 2,702 | - | 1,049 | 3,751 |
Underwriting facilities | - | - | - | - |
Lending facilities | 527 | - | 291 | 818 |
Warehouse facilities | 10,160 | - | 3,917 | 14,077 |
Total | 13,389 | 8,165 | 5,581 | 27,135 |
31 March 2020 | On balance sheet | Off-balance | Total Exposure | |
$m | Securitisation retained | Securitisation purchased | sheet | at Default |
Securities | - | 8,583 | 39 | 8,622 |
Liquidity facilities | - | - | 306 | 306 |
Funding facilities | 3,163 | - | 783 | 3,946 |
Underwriting facilities | - | - | - | - |
Lending facilities | 536 | - | 299 | 835 |
Warehouse facilities | 10,408 | - | 3,980 | 14,388 |
Total | 14,107 | 8,583 | 5,407 | 28,097 |
30 June 2019 | On balance sheet | Off-balance | Total Exposure | |
$m | Securitisation retained | Securitisation purchased | sheet | at Default |
Securities | - | 8,817 | 34 | 8,851 |
Liquidity facilities | - | - | 356 | 356 |
Funding facilities | 2,388 | - | 1,483 | 3,871 |
Underwriting facilities | - | - | - | - |
Lending facilities | 8 | - | 298 | 306 |
Warehouse facilities | 9,409 | - | 3,376 | 12,785 |
Total | 11,805 | 8,817 | 5,547 | 26,169 |
18 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report Securitisation |
Trading book summary of on and off-balance sheet securitisation by exposure type1
30 June 2020 | On balance sheet | Off-balance | Total Exposure | |
$m | Securitisation retained | Securitisation purchased | sheet | at Default |
Securities | - | 18 | - | 18 |
Liquidity facilities | - | - | - | - |
Funding facilities | - | - | - | - |
Underwriting facilities | - | - | - | - |
Lending facilities | - | - | - | - |
Warehouse facilities | - | - | - | - |
Credit enhancements | - | - | - | - |
Basis swaps | - | - | 109 | 109 |
Other derivatives | - | - | 18 | 18 |
Total | - | 18 | 127 | 145 |
31 March 2020 | On balance sheet | Off-balance | Total Exposure | |
$m | Securitisation retained | Securitisation purchased | sheet | at Default |
Securities | - | 92 | - | 92 |
Liquidity facilities | - | - | - | - |
Funding facilities | - | - | - | - |
Underwriting facilities | - | - | - | - |
Lending facilities | - | - | - | - |
Warehouse facilities | - | - | - | - |
Credit enhancements | - | - | - | - |
Basis swaps | - | - | 116 | 116 |
Other derivatives | - | - | 16 | 16 |
Total | - | 92 | 132 | 224 |
30 June 2019 | On balance sheet | Off-balance | Total Exposure | |
$m | Securitisation retained | Securitisation purchased | sheet | at Default |
Securities | - | 14 | - | 14 |
Liquidity facilities | - | - | - | - |
Funding facilities | - | - | - | - |
Underwriting facilities | - | - | - | - |
Lending facilities | - | - | - | - |
Warehouse facilities | - | - | - | - |
Credit enhancements | - | - | - | - |
Basis swaps | - | - | 59 | 59 |
Other derivatives | - | - | 13 | 13 |
Total | - | 14 | 72 | 86 |
1 | EAD associated with trading book securitisation is not included in EAD by major type on page 14. Trading book securitisation exposure is captured and risk weighted under APS116 Capital Adequacy: Market Risk. |
![]() | Westpac Group June 2020 Pillar 3 Report | 19 |
Pillar 3 report Liquidity Coverage Ratio |
Liquidity Coverage Ratio (LCR)
Westpac’s LCR as at 30 June 2020 was 140%1 (31 March 2020: 154%) and the average LCR for the quarter was 146%2 (31 March 2020: 140%).
Liquid assets included in the LCR comprise High Quality Liquid Assets (HQLA), the Committed Liquidity Facility (CLF) offered by the Reserve Bank of Australia and additional qualifying Reserve Bank of New Zealand securities. LCR liquid assets also includes Westpac’s Initial Allowance and Additional Allowance of the Term Funding Facility (TFF) of $21.1 billion.
Westpac’s portfolio of HQLA averaged $112.2 billion over the quarter2.
Funding is sourced from retail, small business, corporate and institutional customer deposits and wholesale funding. Westpac seeks to minimise the outflows associated with this funding by targeting customer deposits with lower LCR outflow rates and actively manages the maturity profile of its wholesale funding portfolio. Westpac maintains a buffer over the regulatory minimum of 100%.
30 June 2020 | 31 March 2020 | ||||
$m | Total unweighted value (average)2 | Total weighted value (average)2 | Total unweighted value (average)2 | Total weighted value (average)2 | |
Liquid assets, of which: | |||||
1 | High-quality liquid assets (HQLA) | 112,215 | 98,611 | ||
2 | Alternative liquid assets (ALA) | 64,641 | 46,069 | ||
3 | Reserve Bank of New Zealand (RBNZ) securities | 8,524 | 8,238 | ||
Cash Outflows | |||||
4 | Retail deposits and deposits from small business customers, of which: | 260,515 | 23,415 | 252,779 | 22,866 |
5 | Stable deposits | 127,633 | 6,382 | 121,722 | 6,086 |
6 | Less stable deposits | 132,882 | 17,033 | 131,057 | 16,780 |
7 | Unsecured wholesale funding, of which: | 163,325 | 78,824 | 133,858 | 65,160 |
8 | Operational deposits (all counterparties) and deposits in networks for cooperative banks | 65,410 | 16,277 | 53,192 | 13,224 |
9 | Non-operational deposits (all counterparties) | 86,445 | 51,077 | 68,623 | 39,893 |
10 | Unsecured debt | 11,470 | 11,470 | 12,043 | 12,043 |
11 | Secured wholesale funding | - | - | ||
12 | Additional requirements, of which: | 197,854 | 30,143 | 193,136 | 28,113 |
13 | Outflows related to derivatives exposures and other collateral requirements | 15,071 | 15,071 | 12,582 | 12,582 |
14 | Outflows related to loss of funding on debt products | 546 | 546 | 1,269 | 1,269 |
15 | Credit and liquidity facilities | 182,237 | 14,526 | 179,285 | 14,262 |
16 | Other contractual funding obligations | 324 | 324 | 526 | 526 |
17 | Other contingent funding obligations | 38,670 | 3,331 | 42,212 | 3,642 |
18 | Total cash outflows | 136,037 | 120,307 | ||
Cash inflows | |||||
19 | Secured lending (e.g. reverse repos) | 5,906 | - | 6,381 | - |
20 | Inflows from fully performing exposures | 10,458 | 6,216 | 11,675 | 7,057 |
21 | Other cash inflows | 2,791 | 2,791 | 4,282 | 4,282 |
22 | Total cash inflows | 19,155 | 9,007 | 22,338 | 11,339 |
23 | Total liquid assets | 185,380 | 152,918 | ||
24 | Total net cash outflows | 127,030 | 108,968 | ||
25 | Liquidity Coverage Ratio (%) | 146% | 140% | ||
Number of data points used | 63 | 64 |
1 | Calculated as total liquid assets divided by total net cash outflows. |
2 | Calculated as a simple average of the daily observations over the quarter. |
20 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report Appendix I - APS330 quantitative requirements |
The following table cross-references the quantitative disclosure requirements outlined in Attachment C of APS330 to the quantitative disclosures made in this report.
APS330 reference | Westpac disclosure | Page | |
General Requirements | |||
Paragraph 49 | Summary leverage ratio | 12 | |
Attachment C | |||
Table 3:
Capital Adequacy | (a) to (e)
(f) | Capital requirements
Westpac’s capital adequacy ratios
Capital adequacy ratios of major subsidiary banks | 10
8
8
|
Table 4:
Credit Risk - general disclosures | (a)
(b)
(c) | Exposure at Default by major type
Impaired and past due loans
General reserve for credit loss
| 14
16
15
|
Table 5: Securitisation exposures | (a)
(b)
| Banking Book summary of securitisation activity by asset type
Banking Book summary of on and off-balance sheet securitisation by exposure type
Trading Book summary of on and off-balance sheet securitisation by exposure type
| 17
18
19
|
Attachment F | |||
Table 20: Liquidity Coverage Ratio disclosure template | Liquidity Coverage Ratio disclosure | 20 | |
Exchange rates
The following exchange rates were used in this report, and reflect spot rates for the period end.
$ | 30 June 2020 | 31 March 2020 | 30 June 2019 |
USD | 0.6856 | 0.6191 | 0.7014 |
GBP | 0.5584 | 0.5017 | 0.5534 |
NZD | 1.0698 | 1.0264 | 1.0461 |
EUR | 0.6114 | 0.5620 | 0.6168 |
![]() | Westpac Group June 2020 Pillar 3 Report | 21 |
Pillar 3 report Disclosure regarding forward-looking statements |
This report contains statements that constitute ‘forward-looking statements’ within the meaning of Section 21E of the US Securities Exchange Act of 1934.
Forward-looking statements are statements about matters that are not historical facts. Forward-looking statements appear in a number of places in this report and include statements regarding Westpac’s intent, belief or current expectations with respect to its business and operations, market conditions, results of operations and financial condition, including, without limitation, future loan loss provisions and financial support to certain borrowers. Words such as ‘will’, ‘may’, ‘expect’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘estimate’, ‘anticipate’, ‘believe’, ‘probability’, ‘risk’, ‘aim’ or other similar words are used to identify forward-looking statements. These forward-looking statements reflect Westpac’s current views with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many instances, beyond Westpac’s control, and have been made based upon management’s expectations and beliefs concerning future developments and their potential effect upon Westpac. There can be no assurance that future developments will be in accordance with Westpac’s expectations or that the effect of future developments on Westpac will be those anticipated. Actual results could differ materially from those expected, depending on the outcome of various factors, including, but not limited to:
l | the effect of the global COVID-19 pandemic, which has had, and is expected to continue to have, a negative impact on our business and global economic conditions, adversely affect a wide-range of Westpac's customers, create increased volatility in financial markets and may result in increased impairments, defaults and write-offs; |
l | disruptions to our business and operations and to the business and operations of key suppliers, third party contractors and customers connected with the COVID-19 pandemic; |
l | the effect of, and changes in, laws, regulations, taxation or accounting standards or practices and government policy, particularly changes to liquidity, leverage and capital requirements; |
l | regulatory investigations, reviews, and other actions, inquiries, litigation, fines, penalties, restrictions or other regulator imposed conditions, including as a result of our actual or alleged failure to comply with laws (such as financial crime laws), regulations or regulatory policy; |
l | internal and external events which may adversely impact Westpac's reputation; |
l | information security breaches, including cyberattacks; |
l | reliability and security of Westpac's technology and risks associated with changes to technology systems; |
l | the stability of Australian and international financial systems and disruptions to financial markets and any losses or business impacts Westpac or its customers or counterparties may experience as a result; |
l | market volatility, including uncertain conditions in funding, equity and asset markets; |
l | adverse asset, credit or capital market conditions; |
l | an increase in defaults in credit exposures because of a deterioration in economic conditions; |
l | the conduct, behaviour or practices of Westpac or its staff; |
l | changes to Westpac's credit ratings or to the methodology used by credit rating agencies; |
l | levels of inflation, interest rates (including low or negative rates), exchange rates and market and monetary fluctuations; |
l | market liquidity and investor confidence; |
l | changes in economic conditions, consumer spending, saving and borrowing habits in Australia, New Zealand and in other countries (including as a result of tariffs and protectionist trade measures) in which Westpac or its customers or counterparties conduct their operations and Westpac’s ability to maintain or to increase market share, margins and fees, and control expenses; |
l | the effects of competition, including from established providers of financial services and from non-financial service entities in the geographic and business areas in which Westpac conducts its operations; |
l | the timely development and acceptance of new products and services and the perceived overall value of these products and services by customers; |
l | the effectiveness of Westpac's risk management policies, including internal processes, systems and employees; |
l | the incidence or severity of Westpac-insured events; |
l | the occurrence of environmental change (including as a result of climate change) or external events in countries in which Westpac or its customers or counterparties conduct their operations; |
l | changes to the value of Westpac's intangible assets; |
l | changes in political, social or economic conditions in any of the major markets in which Westpac or its customers or counterparties operate; |
l | the success of strategic decisions involving diversification or innovation, in addition to business expansion activity, business acquisitions and the integration of new businesses; and |
l | various other factors beyond Westpac's control. |
22 | Westpac Group June 2020 Pillar 3 Report | ![]() |
Pillar 3 report Disclosure regarding forward-looking statements |
The above list is not exhaustive. For certain other factors that may impact on forward-looking statements made by Westpac refer to ‘Risk factors’ in Westpac’s 2020 Interim Financial Results Announcement. When relying on forward-looking statements to make decisions with respect to Westpac, investors and others should carefully consider the foregoing factors and other uncertainties and events.
Westpac is under no obligation to update any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise, after the date of this report.
![]() | Westpac Group June 2020 Pillar 3 Report | 23 |