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1 | Westpac Group Full Year 2016 Presentation & Investor - PowerPoint PPT Presentation

Jan 19, 2023 •110 likes •1.45k views

1 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack Westpac Full Year 2016 result index Full Year 2016 Result Presentation 3 Investor Discussion Pack of Full Year 2016 Result 29 Strategy 30 Overview 35

  1. Results at a glance Cash earnings 2H16 – 1H16 ($m) Infrequent/volatile items ($m) No large institutional $41m in additional Cash earnings impact 2H15 1H16 2H16 impairments this half regulatory and compliance costs Asset sales 64 0 (4) 210 (101) 42 (77) 3,918 3,904 (60) Performance fees 25 0 22 Trading income down 16% Group CVA 1 (1) 3 3 AIEA up 2%, margins down 3bps Flat Tax matters resolved 57 57 0 1H16 Net interest Non-interest Expenses Impairment Tax & non- 2H16 controlling interests charges income income Total cash earnings 145 60 21 impact 1 CVA is credit valuation adjustment. 16 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  2. Targeted balance sheet growth Loan/deposit growth 2H16 v 1H16 (%) Strong deposit growth lifted customer deposit SME up 5% to loan ratio over 70% 6 3 3 Growth (2) Includes 21% fall in trade exposures overseas Australian 1 Business Bank Institutional 2 Customer deposits Housing (Excl. Mortgages) Bank 1 Total Australian mortgages across all divisions. 2 Institutional bank includes Australian and offshore balance sheet 17 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  3. Margins impacted by cost of funds Net interest margin (NIM) (%) (2bps) 2.14 3bps (3bps) (1bp) 2.11 0 0 0.07 Treasury & Markets 0.07 impact on NIM 2.07 2.04 NIM excl. Treasury and Markets down 3bps NIM excl. Treasury & Markets 1H16 Assets Customer wholesale Capital & Liquidity 2H16 deposits Treasury & funding costs other Term markets Net interest margin drivers 9% 1.5% Australian term deposit costs over benchmark 1 Lower interest rates 1.3% 7% 1.1% 5% 0.9% 3 year swap rate (spot) 3% 0.7% 2 Tractor 1% 0.5% 1 Term deposit rates less equivalent term swap rate. 2 Three year swap rate average moving average which reflects a return on capital balances and other low rate deposits. 18 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  4. Non-interest income Non-interest income by division ($m) Markets income, long term view ($m) (18) 6 18 2,966 (94) 1,155 1,082 2,889 1,047 12 (1) 2H 47% 2 1 1H16 CB BB BTFG WIB NZ Other 2H16 46% 1H 55% Non-interest income growth in 2H16 (%) Consumer Bank 4 Business Bank 1 53% 54% 45% BTFG (2) WIB (12) New Zealand (in NZ$) (2) FY14 FY15 FY16 1 New Zealand in A$. 2 Other includes Group Businesses. 19 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  5. Expenses include a rise in regulatory & compliance costs Expense movement ($m) Expense growth in 2H16 (%) Consumer Bank 0 Productivity accelerated in 2H16 $263m for year Business Bank 0 99 (147) 41 BTFG 5 4,479 67 WIB 1 4,438 4,419 New Zealand (in NZ$) 1 Group Businesses 4 0.4% 1.0% Productivity benefits ($m) 1.4% 263 239 219 1H16 Ongoing expenses Productivity Investments reg/compliance reg/compliance 2H16 2H16 pre- Additional FY14 FY15 FY16 20 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  6. Drivers of investment spend Investment spend ($m) Investment spending • FY16 spend $1.23bn, skewed to 2H16 1,227 • Per cent expensed increased from change in accounting approach 1,025 – 42% in FY16 – 37% in FY15 57 % 55% 2H Capitalised software ($bn) 1H Balance 1.78 1.65 Annual amortisation 45% 3.8 2.9 43% 0.57 0.55 Average amortisation period (years) FY15 FY16 FY15 FY16 21 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  7. Asset quality remains sound Stressed exposures as a % of TCE 1 Stressed exposure by sector/industry ($bn) 3.5 Watchlist & substandard Sep-15 Mar-16 Sep-16 90+ days past due and not impaired 3.0 3.09 3.20 Impaired 2.5 2.48 2.0 2.17 1.5 1.60 1.0 1.30 1.24 1.20 0.5 0.99 0.0 Consumer Agri, forestry & fishing W'sale & retail trade Business services Manufacturing Property Services industries Transport & storage Construction Mining Accom'tion & restaurants Finance & insurance Other Utilities Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 1 TCE is total committed exposure. 22 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  8. Asset quality – commercial property Commercial property (%) Residential development portfolio >$20m % of TCE (lhs) 10 20 Lending for residential apartment $5.1bn % of TCE in stress (rhs) 8 development >$20m (“high rise”) 15 6 10 Weighted average LVR 54% 4 5 2 Estimated market share 14% - - Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Exposure to Sydney major markets, Perth $3.2bn metro, Inner Brisbane, Inner Melbourne LVRs of residential apartment development portfolio Mortgages for inner city apartments >$20m, by completion date (%) Loans $13.0bn Average 54% Average LVR at origination 69% 58.0 55.1 49.9 Average dynamic LVR 54% 45.0 Dynamic LVR >90% 2.9% 1 2016 2017 2018 2020 90+ day delinquencies 30bps Year of completion 1 There are no completions currently in the portfolio for 2019. 23 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  9. Asset quality – consumer delinquencies and NZ dairy NZ dairy portfolio Aust. mortgage 90+ day delinquencies (%) 1.5 Sept-15 Sept-16 NSW/ACT VIC/TAS QLD WA SA/NT ALL Market share 1 (%) 12.3 13.0 1.0 NZ dairy TCE (NZ$bn) 5.6 5.9 0.66 0.5 0.47 0.45 0.53 % of NZ dairy stressed 2 4.74 25.29 0.0 % of NZ dairy impaired 0.13 0.34 Sep-13 Sep-14 Sep-15 Sep-16 Aust. other personal 90+ day delinquencies (%) Prudent management of NZ dairy • Built dairy economic overlay since 2014 2.5 Credit cards Personal (excl. auto) Total unsecured Auto • Comprehensive file review using milk 2.0 1.82 price of NZ$4.25 1.5 1.17 • Stressed assets increased $647m in 4Q16 1.0 0.91 • Impaired 0.34% (up from 0.13% at Mar-16) 0.85 0.5 • In September 2016, Fonterra lifted milk price 0.0 forecast to NZ$5.25 (from NZ$4.25) Sep-13 Sep-14 Sep-15 Sep-16 1 RBNZ Agricultural market share. 2 Includes impaired. 24 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  10. Impairment charge reflects sound asset quality Impairment charge components ($m) Individually assessed provisions (IAP) Collectively assessed provisions Total Write-backs Write-offs Other movements in New IAPs & recoveries direct collective provisions 667 $298m increase from larger names 463 418 484 471 457 412 341 330 293 273 256 (48) (64) (110) (114) (174) (173) (218)(210) 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 25 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  11. CET1 capital ratio above preferred range CET1 capital ratio (% and bps) Includes 9bps for credit spread risk in 14.43 theetete the liquids portfolio (14bps) Other (4bps) Organic 15bps 96 10.47 (110) 96 (69) (6) 14 (12) (6) 9.50 1 (6) 9.48 Loan growth largely offset Data improvements, by lower interest rate risk lower unutilised limits, in the banking book and lower exposures market risk RWA 2 Sep-15 movements Entitlement Mar-16 Mortgage RWA Cash earnings (net of DRP) Ordinary movements RWA efficiency Regulatory FX - Credit Sep-16 Int. Comp. APRA APRA modelling APRA growth changes Sep-16 RWA dividend 1 Interim RWA Other Other initaitives offer changes 1. APRA’s revision to the calculation of RWA for Australian residential mortgages, which came into effect on 1 July 2016. 2 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ dated 13 July 2015. 26 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  12. Well positioned for liquidity regulation Assets 1 ($bn) Liabilities and equity 1 ($bn) 52 +13% 89 45 W'sale - onshore 64 -11% 79 Third party 2 short term 52 72 liquid assets 53 125 W'sale - offshore 123 2 short term +11% 59 Loans - 53 W'sale - long term 4 supporting CLF 610 3 Equity 570 Loans - 467 not supporting 427 CLF Customer deposits 2015 2016 2015 2016 2015 2016 2017 LCR customer 15% 14% CLF ($bn) 66 59 49 deposit run-off 1 Excludes other assets and liabilities. Refer to Section 2.4.1 of Westpac’s 2016 Full Year Financial Results for details of total assets and total liabilities for 2015 and 2016. 2 Includes long term wholesale funding with a residual maturity less than or equal to 1 year. 3 Equity excludes FX translation, Available-for-Sale securities and Cash Flow Hedging Reserves. 4 Relates to internally securitised assets that are eligible for repurchase with the RBA. 27 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  13. Considerations for FY17 • Continued discipline on growth/return • New liquidity rules see tighter link between loan and deposit growth • Active margin management required given competition and higher funding costs • Target expense growth at bottom end of 2-3% range • Productivity gains similar to FY16 • Asset quality expected to remain sound • Continue to invest to support franchise growth and productivity 28 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  14. Investor Discussion Pack Westpac Banking Corporation ABN 33 007 457 141. Financial results based on cash earnings unless otherwise stated. Refer page 36 for definition. Results principally cover the FY16 and FY15 years, including 2H16 and 1H16. Comparison of 2H16 versus 1H16 (unless otherwise stated)

  15. Strategy Westpac Banking Corporation ABN 33 007 457 141. Financial results based on cash earnings unless otherwise stated. Refer page 36 for definition. Results principally cover the FY16 and FY15 years, including 2H16 and 1H16. Comparison of 2H16 versus 1H16 (unless otherwise stated)

  16. STRATEGY Westpac Group at a glance: Australia’s First Bank • Australia’s first bank and first company, opened in 1817 Consumer Business BT Financial Institutional Westpac Australia’s 2nd largest bank and 13 th largest bank in the world, ranked by • Bank Bank Group Bank New Zealand market capitalisation 1 • Well positioned across key markets with a service-led strategy focused on customers and differentiated through service • Supporting consumers and businesses in Australia and New Zealand and customers with ties to these markets • Unique portfolio of brands providing a full range of financial services including consumer, business and institutional banking, wealth management and insurance Pacific • Strong capital, funding, liquidity, with sound asset quality • Credit ratings AA- / Aa2 / AA- 3 • One of the most efficient banks globally 2 WBC • Consistent earnings profile over time listed on • Leader in sustainability 4 ASX & NZX Key statistics as at 30 Sep 2016 Key financial data for FY16 (30 Sep 2016) Customers 13.4m Reported net profit after tax $7,445m Australian household deposit market share 5 23% Cash earnings $7,822m Australian mortgage market share 6 23% Expense to income ratio 9 42.0% Australian business market share 6 19% Common equity Tier 1 capital ratio (APRA basis) 9.5% New Zealand deposit market share 7 20% Return on equity 9 14.0% New Zealand consumer lending market share 7 20% Total assets $839bn Australian wealth platforms market share 8 19% Market capitalisation 10 $99bn 1 30 September 2016. Source: S&P Capital IQ, based in US Dollars. 2 S&P Global Ratings, Moody’s Investors Service and Fitch Ratings respectively. S&P Global Ratings and Moody’s Investors Services have Westpac on a negative outlook, Fitch Ratings has Westpac on a stable outlook. 3 Credit Suisse analysis of expense to income ratio of world’s largest banks September 2016. 4 Included in 2016 Global 100 most sustainable companies, announced at World Economic Forum in January 2016. 5 APRA Banking Statistics, September 2016. 6 RBA Financial Aggregates, September 2016. 7 RBNZ, September 2016. 8 Strategic Insight, June 2016, All Master Funds Admin. 9 Cash earnings basis. 10 Based on share price as at 30 September 2016, $29.51. 31 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  17. STRATEGY Delivering on our five strategic priorities Vision To be one of the world’s great service companies, helping our customers, communities and people to prosper and grow Performance Service Digital Targeted Workforce Discipline Leadership Transformation Growth Revolution Strategic Priorities Employee Cost growth engagement in top Measures Seeking 2-3% per annum performing norms, 13% - 14% +1m customers Stronger growth in and expense to women in ROE (2015-2017) wealth and SME income ratio below leadership (medium-term) 40% 50% by end of 2017 Digitised 7of the10 Employee SME business top manual Progress in engagement loan growth of 8% 13.4m customers transactions, ROE 69% FY16 and FUM/FUA Up 2% $263m productivity 14.0% Women in growth of 9% and Sep16 – Sep15 benefits, and leadership 7% respectively expense to income 48% ratio 42% 32 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  18. STRATEGY Sources of comparative advantage Excellent strategic position Sector leading balance sheet • Seeking to differentiate on service • Asset quality − Sector leading through global financial crisis • No. 1 or 2 position across key markets - all divisions well − Sound quality; balance sheet skewed to mortgages placed − Low impaired assets; well provisioned at 49% 1 • Unique portfolio of brands, reaching a broader customer set • Capital • Comparative advantage in wealth platforms − CET1 capital ratio in top quartile of international peers • Actively embracing digital opportunities with leading online • Liquidity and mobile capability − 85% of funding from stable sources • Underweight mining sector, NZ dairy and Western Australia − High liquidity levels; LCR of 134% Sustainability culture Global efficiency leader • Expense to income ratio at lower end of global peers and • Australia’s first bank and company, approaching 200 year below average of Australian major banks at 42.0% anniversary in 2017 • Global banking leader in Dow Jones Sustainability Index • Only major Australian bank with a target of reducing expense to income ratio below 40% since 2002, named sector leader 9 times, including 2014, 2015 and 2016 • Productivity focus has delivered $1.8bn of savings FY09 to FY16 • Ranked as one of the Global 100 most sustainable corporations in the world by Corporate Knights for 10 of the last 11 years • Only major Australian bank SEC registered and listed on NYSE 1 Gross impaired asset provisions to gross impaired loans. 33 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  19. STRATEGY Consistent performer over the long term Cash earnings ($bn) Cash earnings per share (cents) 197.8 209.3 214.8 227.8 245.4 248.2 235.5 189.4 198.3 7.8 7.8 167.2 163.7 7.6 7.1 6.6 6.3 5.9 5.0 4.7 3.5 Common equity Tier 1 capital ratio (%) 3.1 14.4 9.5 9.5 9.1 9.0 8.2 7.4 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Int. 1 comparable 1 Refer slide 89 for details of internationally comparable CET1 capital ratio. 34 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  20. Overview Westpac Banking Corporation ABN 33 007 457 141. Financial results based on cash earnings unless otherwise stated. Refer page 36 for definition. Results principally cover the FY16 and FY15 years, including 2H16 and 1H16. Comparison of 2H16 versus 1H16 (unless otherwise stated)

  21. RESULTS Cash earnings and reported net profit reconciliation Reported net profit and cash earnings 1 Cash earnings 1 policy adjustments ($m) • Westpac Group uses a measure of performance referred to as cash earnings to assess financial FY15 FY16 performance at both a Group and divisional level • This measure has been used in the Australian banking market for well over a decade and 8,012 7,445 Reported net profit management believes it is the most effective way to assess performance for the current period against prior periods and to compare performance across divisions and across peer companies • To calculate cash earnings, reported net profit is adjusted for: Partial sale of BTIM (665) - – Material items that key decision makers at the Westpac Group believe do not reflect ongoing operations (both positive and negative) Capitalised technology cost 354 - – Items that are not considered when dividends are recommended, such as the amortisation of balances intangibles, impact of Treasury shares and economic hedging impacts – Accounting reclassifications between individual line items that do not impact reported results Amortisation of intangible assets 149 158 Acquisition transaction and 66 15 integration expenses % % Reported profit and cash earnings ($bn) Lloyds tax adjustments (64) - change change FY16 FY16- 2H16- Reported profit Cash earnings ($m) FY15 1H16 Fair value (gain)/loss on 8.0 (33) 203 7.8 7.8 economic hedges 7.6 7.6 7.4 7.1 Cash earnings 7,822 - - 7.0 Ineffective hedges 1 (9) 6.8 6.6 6.3 5.9 Treasury shares 1 10 Cash EPS 235.5 (5) (1) (cents) Buyback of government (1) - guaranteed debt Reported net 7,445 (7) 1 profit 7,820 7,822 Cash earnings FY11 FY12 FY13 FY14 FY15 FY16 1 Cash earnings is not a measure of cash flow or net profit determined on a cash accounting basis, as it includes non-cash items reflected in net profit determined in accordance with AAS (Australian Accounting Standards). The specific adjustments outlined include both cash and non-cash items. Cash earnings is reported net profit adjusted for material items to ensure they appropriately reflect profits available to ordinary shareholders. All adjustments shown are after tax. For further details refer to slide 127. 36 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  22. PERFORMANCE DISCIPLINE FY16 financial snapshot Change Change Change Change FY16 FY16 – FY15 2H16 – 1H16 FY16 FY16 – FY15 2H16 – 1H16 Balance sheet Earnings 1 Total assets ($bn) 839.2 3% 1% Earnings per share (cents) 235.5 (5%) (1%) Common equity Tier 1 (CET1) 9.5 (2bps) (99bps) Core earnings ($m) 12,305 3% (2%) capital ratio (APRA basis) (%) CET1 capital ratio 14.4 123bps (24bps) Cash earnings ($m) 7,822 - - (Internationally comparable 2 ) (%) CET1 capital ($bn) 38.9 14% 2% Return on equity (%) 14.0 (185bps) (31bps) Risk weighted assets ($bn) 410.1 14% 13% Dividend (cents per share) 188 1% - Loans ($bn) 661.9 6% 3% Expense to income ratio (%) 42.0 (7bps) 71bps Customer deposits ($bn) 466.6 9% 6% Net interest margin (%) 2.13 5bps (3bps) Net tangible assets per share ($) 13.96 7% 2% Asset quality Funding and Liquidity Impairment charges to average 17 5bps (7bps) gross loans (bps) Customer deposit to 70.5 196bps 151bps loan ratio (%) Gross impaired assets to gross 32 2bps (7bps) loans (bps) Liquidity coverage ratio (%) 134 Large Large Gross impaired asset provisions 49.4 314bps 177bps Total liquid assets 3 ($bn) 144 6% 4% to gross impaired assets (%) 1 All measures on a cash earnings basis. 2 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ of 13 July 2015. 3 Total liquid assets represent cash, interbank deposits and assets eligible for existing repurchase agreements with a central bank 37 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  23. PERFORMANCE DISCIPLINE Cash earnings flat over the year and prior half % chg % chg Cash earnings features of FY16 - FY15 ($m) FY16 FY16- 2H16- ($m) AIEA up 6%, Additional investment and higher FY15 1H16 1,109 (446) margins up regulatory and compliance costs 5pbs (263) (371) Net interest 7,820 (27) 7,822 15,348 8 1 income $280m partial sale and Increased provisions from small deconsolidation of BTIM; $102m lower number of large names, higher asset sales; lower cards income and delinquencies and NZ dairy Non-interest 5,855 (7) (3) debt origination fees stress income Flat FY15 Net interest Non-interest Expenses Impairment Tax & NCI FY16 Expenses 8,898 3 1 income income charges Cash earnings features of 2H16 - 1H16 ($m) 1H16 benefitted Core earnings 12,305 3 (2) from finalisation of AIEA up 2%, Additional investment and prior period tax margins down higher regulatory and matters 3bps compliance costs Impairment 210 (101) 42 (77) 1,124 49 (31) 3,904 3,918 (60) charges Absence of large Lower trading income, single names higher insurance claims Cash earnings 7,822 - - versus 1H16 paid Flat Reported net (7) 1 7,445 1H16 Net interest Non-interest Expenses Impairment Tax & NCI 2H16 profit income income charges 38 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  24. PERFORMANCE DISCIPLINE Consumer Bank and Business Bank the main contributors FY16 divisional 1 cash earnings movements ($m) FY16 divisional 1 core earnings movements ($m) (105) 163 (146) (20) (20) 528 12,305 361 20 (38) (245) 11,905 (29) (67) 7,820 7,822 Flat Up 3% 3 2 2 3 FY15 CB BB BTFG Other FY16 FY15 CB BB BTFG Other FY16 WIB NZ WIB NZ FY16 ($m) CB BB BTFG WIB NZ 2 Other 3 Group Operating income 8,021 5,063 2,406 3,098 2,037 578 21,203 Expenses (3,270) (1,796) (1,160) (1,347) (856) (469) (8,898) Core earnings 4,751 3,267 1,246 1,751 1,181 109 12,305 Impairment (charges) / benefits (492) (410) - (177) (54) 9 (1,124) Tax & non-controlling interests (1,278) (858) (370) (476) (315) (62) (3,359) Cash earnings 2,981 1,999 876 1,098 812 56 7,822 % of Group cash earnings 38 26 11 14 10 1 1 Refer to division definitions, slide 128. 2 In A$. 3 Other is Group Businesses (including Treasury). 39 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  25. PERFORMANCE DISCIPLINE Dividends Key dividend considerations for 2H16 Dividends (cents per share) • Strong capital position; comfortably above preferred Special dividends range 10 10 • Modest RWA growth • Sustainability of the payout ratio over the long term 94 94 94 93 92 90 • Surplus franking credits 88 86 84 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 Ordinary dividend payout ratio 3 (%) 2H16 dividend Westpac dividend yield 2 (%) Payout ratio • 2H16 ordinary dividend of 94 cps, no change Ordinary yield Yield after franking on 1H16 and 2H15 Effective payout ratio (after DRP) 9.1 • Full year dividend of 188 cps, FY15 187 cps 9.0 8.8 80 8.2 • Payout ratio for 2H16 of 80.3%, FY16 80.3% 6.8 Effective payout ratio 1 72%. Issuing 6.4 6.3 6.2 – 5.7 72 shares to satisfy Final 2016 DRP with no 4.7 discount 2H16 dividend yield 2 6.4%, FY16 6.4% • – Equivalent to a fully franked dividend yield 2 of 9.1%. FY16 9.1% 2H14 1H15 2H15 1H16 2H16 1 Effective payout ratio assumes 2H16 DRP participation of 10.0%. 2 Data using half year dividends and share price as at 31 March and 30 September in each period. 3 On cash earnings basis. 40 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  26. SERVICE LEADERSHIP Building franchise value Customer numbers (#’m) Customers with a wealth product 1,2 (%) Consumer Bank Business Bank Australia 10.44 Westpac St.George brands Peers 10.26 9.94 10.09 21.3 1.56 1.52 1.48 1.45 19.8 16.2 8.88 8.61 8.74 8.49 15.0 11.8 Mar-15 Sep-15 Mar-16 Sep-16 Sep-14 Sep-15 Sep-16 New Zealand New Zealand 28.4 1.34 1.35 1.35 1.32 Sep-14 Sep-15 Sep-16 Mar-15 Sep-15 Mar-16 Sep-16 1 Refer slide 131 for metric definition. 2 No peer data available for New Zealand. 41 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  27. SERVICE LEADERSHIP Building franchise value Customer satisfaction 1 Customer complaints (#) Consumer and New Zealand (%), Business (mean) Westpac St.George brands Peers Australian retail (CB, BB and BT) Consumer 84.8% 83.4% 81.3% 79.7% 79.6% Down 37% Sep-14 Sep-15 Sep-16 Down 50% Westpac St.George brands Peers 7.6 2H14 1H15 2H15 1H16 2H16 Business 7.2 7.2 New Zealand retail 7.2 6.9 Sep-14 Sep-15 Sep-16 Down 10% Peers Westpac New Zealand 74% 74% 72% Down 22% 69% 65% 2H14 1H15 2H15 1H16 2H16 Sep-14 Sep-15 Sep-16 1 Refer slide 131 for metric definition and details of provider. 42 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  28. DIGITAL DIGITAL TRANSFORMATION TRANSFORMATION Significant momentum in our technology transformation Today Underway Omni-channel Assisted Unassisted Channels (customer interface) Customer Service Hub Westpac St.George BT Customer 4 * Westpac St.George BT Westpac St.George BT Systems of Pano- record 2 rama 3 Westpac St.George BT Common Infrastructure Common 1 1. Common IaaS (Infrastructure as a Service) foundations implemented across group. * 2. St. George Hogan deposit & transaction core system upgraded to Celeriti. Longer-term consolidation opportunities 3. Significant Panorama functionality delivered including SMSF. 4. Customer Service Hub vendor selected and “steel thread” developed to prove strategy of connecting channels and systems of record through a customer hub. 43 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  29. DIGITAL TRANSFORMATION Improving the digital customer experience: Consumer & Business Bank (7 of top 10 processes digitised) Card on hold Activate card on mobile Banker in your pocket • Customers can place their card on • Activate card on mobile saves • St.George customers can connect CONSUMER BANK hold using online or mobile without customers calling a contact centre or through to contact centre from mobile calling a contact centre visiting a branch app with no need to verity with security questions • Launched November 2015 • 3k customers per week activate their card via mobile device • Saving 50-60 seconds per call (15- • 168k cards locked to date 20% handle time) • Empowers customers with the flexibility of temporarily locking and unlocking their card Digital for bankers Digital for customers Payments • 127,000 new, state-of-the-art merchant terminals rolled out BUSINESS BANK Extended LOLA 1 to new Westpac • On-boarding completed in 5 days, • down from 23 customers and across a wider product • 77% customers migrated to new online platform 3 with NPS improved by 52 range; $1.4bn approved since launch • 16% increase in Merchant customer growth, 30% reduction in complaints points • Wider range of digital self service options – including term deposit roll 96% increase in Connect 2 lending • over and new business credit cards 1 LOLA is the business lending origination system. 2 Video conferencing and product capability via business connect and connect now. 3 New online platform is called NBBO. 44 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  30. DIGITAL TRANSFORMATION Improving the digital customer experience: New Zealand and WIB Westpac One CashNav Transforming the network • Launched CashNav, the first integrated • Further enhanced 24/7 capability • Market leading platform. Canstar Best app in New Zealand to track finances Online Bank in New Zealand 2016, 2015 • 162 Smart ATMs now in two thirds of NEW ZEALAND and deliver spending insights branches • Around 32% of all applications are • Over 50,000 registrations to date since online with over 50% of all card • Half of branches have 24/7 banking launched on 1 September 2016 applications lobbies • 736k active digital customers • 34% reduction in branch transactions 1 • Up 8% since WestpacOne launched in April 2015 2016 Canstar • 9 (9%) branches closed 1 Best Online with another 19 to close 1Q17 • Active digital Bank in New customers now 54% Zealand Digitised customer forms UnionPay Other digital innovations Launched UnionPay 2 as a payment • 45% reduction in turn-around times to • • Commercialised data analytics capability identify and verify new entities for channel through QuickStream and • Delivered keystroke automation, Anti-Money Laundering / Know Your PayWay reducing the end-to-end transaction Customer purposes to 11 days from 20 • Provides payments capabilities for account opening process WIB holders of Chinese UnionPay credit • Piloting LanternPay to facilitate cards to WIB and Business Bank payments through the National Disability customers who use QuickStream and Insurance Scheme PayWay receivables solutions 1 Changes since 2013. 2 UnionPay http://www.unionpayintl.com/. 45 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  31. DIGITAL TRANSFORMATION Improving the digital customer experience: BTFG Wealth review Super profile SuperCheck Digital in insurance SUPERANNUATION & INSURANCE • An innovative solution helping • Launched BT Super Profile • Personalised tool enabling members reunite customers with their lost • Policy display – customers can see • Supports customers by providing 7 super to evaluate their current and future their home and contents insurance key actions to get their super “sorted” financial situation • Westpac Live customers can search policies in their Online Banking • Customers are given a score out of and see all their super savings in • Accessible to members across 100%, and a list of actions to • Single sign-on and pre-population of less than 60 seconds Australia complete their profile customer details into online Home & • Customers can choose to open a BT Contents quotes Super for Life account and combine their super savings Commercialising Panorama – a market leading wealth management platform for customers and advisers Functionality and capability  Modular - flexible architecture to • 2,764 registered Advisers now on cater to different clients needs Panorama  Connectivity - connect to PANORAMA • Full Westpac live integration existing accounting software • Over 2,000 SMSF accounts –  Collaboration - collaborate with growing momentum in activity accounting partner to complete fund administration for SMSF • Advised Investment Platform and Direct Investor offers now complete  Compliance - embedded trading • SMSF offer - a complete end to end offer for all customers including platform to assist administration trustees, advisers and accountants 46 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  32. DIGITAL TRANSFORMATION Examples of digitisation improving service and efficiency for contact centres Card lock/unlock calls 2 (#) Contact centre average call times 1 (seconds) 378 300000 284,883 319 280000 Saving around 388 Saving an average 260000 238,380 hours per month 240000 of 150 hours per 220000 since launch 2 month since launch 1 200000 180000 160000 140000 120000 Standard call Call via mobile banking 100000 link Pre digitisation Post digitisation NPS 3 contact centre Contact centre complaints (#) 68 67 2,394 66 66 2,136 1,739 1,448 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1 Connect, the ability to connect with a contact centre via mobile banking for the St George brand, was launched in April 2016. 2 Card lock/unlock launched November 2015. 3 NPS score based on post-call customer survey captured through internal systems of NICE (Westpac) and Qfinity (SGB). 47 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  33. DIGITAL TRANSFORMATION Actively responding to new digital opportunities 1 Sponsoring & investing to build new tech Accelerating innovation businesses “The Cave” is an innovation hub in Kogarah Invested in QuintessenceLabs creating where our technology partners can showcase opportunities with quantum technology solutions that strongly encrypts confidential data “Garage” is an agile workplace where our business can solve customer problems, Uno is a digital mortgage broker providing 2 prototype solutions and develop new business customers with ability to search, compare and apply for a home loan digitally models, supported by our Entrepreneurs in residence 2 Market-leading innovation capabilities, Sponsoring companies such as Stone & Chalk including a dedicated innovation centre “the to foster and accelerate the development of hive” fintech start-ups Partnership with Inloop – Australia’s leading 2 provider of “closed loop” solutions; allowing Active member of R3 creating opportunities organisations to control and monitor through industry collaboration. Utilising transactions securely and in compliance with distributed ledger based systems to simplify incoming legislation. The range of transaction and automate more financial services solutions can be tailored to meet customer needs 1 For more information on our technology transformation, refer to September 2015 strategy update ‘Unlocking Westpac’s Potential’. 2 Logos are of the respective companies R3, Stone & Chalk & uno. 48 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  34. DIGITAL TRANSFORMATION Reinventure – Investing in new technology businesses Westpac has committed $100m to Reinventure, an independently run venture capital fund. The operation allows Westpac to gain insights into emerging fintech business models, adjacent business opportunities and entrepreneurial ways to execute at speed A bitcoin wallet and platform A trust framework and secure Via data, sheds light on high where merchants and platform that allows users to volume crimes, improving consumers can transact the exchange data safely and A social media platform for local prevention and detection digital currency, bitcoin securely communities. Nabo differentiates itself by helping residents develop real online geographical communities (by suburbs) A free, all-in-one HR and A business loan marketplace benefits platform that manages A global Big Data, business that matches SMEs to the best on-boarding and compliance intelligence and enterprise data lender based on their and lets HR professionals focus warehousing company characteristics and needs on value added tasks A peer-to-peer lending platform reducing the cost of originating and managing consumer loans, sharing A one-stop payments platform its operating cost advantage with that helps marketplaces, An app to revolutionise the A platform to help home sellers both borrowers and investors to get merchants and their customers payment process for customers find and compare real estate a better deal transact simply and securely when dining out or grabbing a agents online coffee on the go 49 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  35. WORKFORCE REVOLUTION Workforce revolution delivering Lost time injury frequency rate Agile work space providing benefits Women in leadership 2 (%) (rolling 12 months) (#) 48 • Around 10,200 employees now in Agile 46 workplaces 44 • Delivering following benefits 1.5 42 − 87% decline in paper and storage 1.1 − 25% lower office copy paper usage 1 0.8 0.8 − Respond faster to changing business needs, saving around $800k pa in relocation expenses Sep-13 Sep-14 Sep-15 Sep-16 Sep-13 Sep-14 Sep-15 Sep-16 High performer retention (rolling 12 New starter retention (rolling 12 months) (%) months) (%) Agile working 88 96 96 supported with 95 95 87 86 our worksmart 85 app Sep-13 Sep-14 Sep-15 Sep-16 Sep-13 Sep-14 Sep-15 Sep-16 1 Reduction in office copy paper costs is in real terms over the last three years. 2 Spot number as at 30 September of each of the years. 50 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  36. SUSTAINABLE FUTURES Continued sustainability leadership Strategic priorities and FY16 progress highlights Leading track record • Most sustainable bank globally in the Embracing societal change 1 • Proportion of leadership roles held by women 2016 Dow Jones Sustainability Index for the third time in a row, and among sector Help improve the moved closer to our 2017 target of 50%, leaders annually since 2002 way people work increasing to 48%, up from 46% last year • Included in the Global 100 Most and live as our Sustainable Corporations in the World by society changes • Recruited an additional 140 Indigenous Corporate Knights for 10 of the last 11 Australians in 2016 years Included in the 2016 CDP 3 Climate A list, • • Total committed exposure to the CleanTech and ranking Westpac among the top 9% of 2 Environmental solutions environmental services sector was $6.2bn as at participating companies globally 30 September 2016, remaining ahead of target 1 Help find solutions to environmental • St.George’s Barangaroo branch was the first challenges retail fit-out in Australia to be awarded a 6 Star Significant achievements Green Star rating, the first bank branch nationally to be rated by the GBCA 2 • External Stakeholder Advisory Council appointed Better financial futures • Social enterprises supported by Westpac 3 • Over 64,000 customers brought into the banking Foundation created 2,912 employment Help customers to system in the Pacific in 2016, and over 100,000 pathways including 839 jobs have a better mobile banking activations since 2014 • Made significant progress against our relationship with Sustainability Strategy with more than money, for a • Increased lending to the social and affordable half of the 2017 targets met or exceeded better life housing sector to $1.05bn, up from $1.02bn as ahead of schedule at 30 September 2015 Further information on Westpac’s Sustainability and progress on our strategic priorities is available at www.westpac.com.au/sustainability 1 From 2015, a higher threshold for green buildings was introduced in line with industry trends. 2 Rated by Green Building Council of Australia (GBCA) under the Green Star Interiors tool. 3 Formerly the Carbon Disclosure Project. 51 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  37. SUSTAINABLE FUTURES Continued support for CleanTech and renewable electricity generation (Australia and New Zealand) CleanTech 1 and environmental services TCE by type (%) Electricity generation portfolio (%) 0.5 0.4 1.3 Green buildings 3.1 Renewable Non-renewable 5.3 Renewable energy Forestry 39.3 40.6 41.4 45.1 48.3 54.8 Waste Other 34.2 55.3 60.7 58.6 59.4 Energy efficiency 54.9 51.7 45.2 Green businesses TCE 2 at 30 September 2016 $6.2bn 2011 2012 2013 2014 2015 2016 Emissions intensity (tCO 2 -e/MWh) – Australia only Electricity generation TCE by type (%) 3.1 2.0 Westpac electricty generation portfolio Renewable energy National Electrcity Market (NEM) Benchmark Gas 15.8 0.91 0.90 0.87 0.87 Black coal 0.44 0.41 0.38 0.38 Brown coal 19.7 59.4 Liquid fuel TCE 2 at 30 September 2016 $3.1bn 2013 2014 2015 2016 1 In 2016 Westpac had no exposure to waster or land remediation projects that met the criteria for the Group’s CleanTech exposures. 2 TCE represents exposures in WIB. For further details refer to Westpac Group 2016 Sustainability Performance Report or www.westpac.com.au/sustainability. 52 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  38. SUSTAINABLE FUTURES Actively supporting Australia Supporting communities 1 Income tax expense on a cash earnings basis ($m) FY15 FY16 • Provide loans to help Australians own $103bn Notional income tax based on the Australian Backing 3,346 3,354 their home or grow their business new lending 2 economic company tax rate of 30% • Support the efficient flow of funds in the $576bn activity economy and keep deposits safe total Aust. loans Net amounts not deductible/(not assessable) (72) (10) $6.3bn Wealth • Support working and retired Australians in dividends; of many either directly (622K shareholders) or via Market Total income tax expense in the income statement 3,274 3,344 Australians their super funds capitalisation $99bn Effective tax rate (%) 29.4 29.9 The >$3.3bn 3 rd largest Australian taxpayer 3 paying • bottom in income tax more than $3bn in income tax in 2015 line expense Other tax/government payments ($m) FY15 FY16 $4.6bn The Net GST, Payroll tax, FBT 443 447 • Employ 39,568 people in payments to workforce employees Westpac also makes a number of other government and regulatory • $10m launch of Westpac 200 Businesses >1% of tomorrow payments including fees for committed liquidity facility, APRA fees and The community • First 100 Westpac Scholars nation stamp duties which are not included in the above. Similarly, Westpac also contributions to • 40+ years continuous support of the collects tax on behalf of others, such as withholding tax, PAYG and GST. pre-tax profit Westpac Rescue Helicopter Service These are excluded from this analysis 1 All figures for the full year to 30 September 2016 unless otherwise stated. Divdends paid represents the 1H16 and 2H16 dividend. 2 New mortgage and new business lending in Australian retail operations which includes CB, BB and BTFG. 3 Source: Bloomberg. 53 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  39. Earnings Drivers Westpac Banking Corporation ABN 33 007 457 141. Financial results based on cash earnings unless otherwise stated. Refer page 36 for definition. Results principally cover the FY16 and FY15 years, including 2H16 and 1H16. Comparison of 2H16 versus 1H16 (unless otherwise stated)

  40. REVENUE Net operating income flat over half, up 3% over year Net operating income movement ($m) (89) 75 273 (149) 150 (108) 71 (82) (96) 5 29 10,619 10,584 (15) 10,520 Net interest Net interest Non-interest down 8% Non-interest down 3% up 5% up 1% 2 1 1 2H15 AIEA Margins Fees & Wealth Trading Other 1H16 AIEA Margins Fees & Wealth Trading Other 2H16 growth commissions growth commissions Net operating income by division ($m) and divisional contribution to net operating income 2H16 (%) 2H16 Divisional contribution 69 (95) 39 (12) (100) 194 81 3% CB (51) (84) 41 (21) 3 10,619 10,584 10,520 BB 10% BTFG 14% 38% WIB Up 1% Flat NZ 4 11% 3 Group 24% 2 3 4 4 3 2H15 CB BB BTFG WIB NZ Group 1H16 CB BB BTFG WIB NZ Group 2H16 1 AIEA is average interest-earning assets. 2 Impact of partial sale and deconsolidation of BTIM. 3 New Zealand contribution represented in A$. 4 Group Businesses. 55 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  41. REVENUE Composition of lending Composition of lending (% of total) Net loans ($bn) 7.1 0.4 661.9 (1.6) 4.2 11.1 640.7 623.3 12.9 Australian mortgages 3.6 Australian business 9.2 Up 3% Australian institutional 61.0 13.3 Australian other consumer 1 Sep-15 Mar-16 Consumer Business WIB Zealand (inc. BT) Sep-16 Other (NZ & Overseas) Other New Bank Bank Australian business lending 2 ($bn) Australian mortgage lending 2 ($bn) New Zealand net loans (NZ$bn) 1.8 75.1 1.6 (7.6) 71.7 10.0 69.0 41.8 (28.4) (1.0) 150.2 145.5 148.7 0.1 404.2 390.8 375.8 Up 3% Up 5% Up 1% 3 3 4 Sep-15 Mar-16 lending run-off Sep-16 Sep-15 Mar-16 BB new BB run-off WIB net Other Sep-16 lending Mar-16 Consumer Business lending Sep-15 Sep-16 New Net 1 In A$. 2 Gross loans. 3.Run-off includes repayment. 4 Other includes business lending in Private Wealth. 56 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  42. REVENUE Customer deposits Customer deposit composition ($bn) Customer deposit mix ($bn) and % of total Term deposits Savings Online Transaction CB BB WIB BTFG, NZ & Other 467 467 442 427 442 427 87 79 77 130 123 121 88 83 80 28% 84 80 40% 111 80 106 102 3% 6% 64 68 70 181 174 168 18% 189 171 156 14% Sep-15 Mar-16 Sep-16 LCR customer Sep-15 Mar-16 Sep-16 14.2% 15.2% 13.5% deposit run-off Mortgage offset 1 balances ($bn) New Zealand customer deposits (NZ$bn) Term deposits Savings Online Transaction 58 55 52 35.1 14 14 30.5 13 24% 23.5 12 12 11 18.4 3 6% 5% 4 51% 14.6 3 11.9 20% 29 25 24 6% Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-15 Mar-16 Sep-16 1 Included in transaction accounts. 57 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  43. REVENUE Net interest margin down 3bps, primarily due to higher funding costs and lower interest rates Net interest margin (NIM) movement (%) Net interest margin (NIM) (%) NIM excl. Treasury & Markets Treasury & Markets impact on NIM NIM NIM excl. Treasury & Markets Full period impact of repricing decisions Lower CLF fee in 1H16, partly offset by competition offset by cost of holding more 3bps (2bps) HQLA 2.21 (3bps) 2.11 2.14 2.08 2.04 (1bps) 2.11 0bp 0bp 2.11 0.07 Term deposit 0.06 0.07 competition and the Widening of spreads, 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 impact of and lengthening of lower interest average tenor in rates on preparation for NSFR Net interest margin by division (%) transactional deposit 2.07 2.05 spreads 2.04 2H15 1H16 2H16 2.74 2.75 2.74 2.37 2.28 2.34 2.27 2.15 2.11 1.78 1.75 1.71 2H15 1H16 Assets Customer Term wholesale Capital & other Liquidity costs 2H16 deposits Treasury & Markets funding CB BB WIB NZ 58 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  44. REVENUE Non-interest income down 3%, primarily from lower trading income Non-interest income contributors ($m) Fees and commission income ($m) Higher cards income partly offset by 3,215 lower institutional income 29 (96) 2,966 5 (15) 2,889 Down 3% 1,478 1,464 1,375 1,380 2H15 1H16 Fees and Wealth Trading Other 2H16 commision and income 1H15 2H15 1H16 2H16 insurance Wealth and insurance income ($m) Trading income ($m) Higher Hastings performance fees, higher funds Lower commodities management income from increased flows risk management partly offset by higher insurance claims and lower sales activity 1,134 610 1,090 539 970 941 514 425 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 59 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  45. REVENUE Markets and Treasury income Markets income by activity 1 ($m) Group market risk related income 1 ($m) Customer Market risk Derivative Total markets Treasury Market risk Derivative Total Group income related income valuation income income related income valuation risk related adjustments 2 adjustments 2 income Markets income 4% lower, with FX and 10% lower Fixed Income sales Group market risk impacted by lower activity related income 609 580 13% lower 546 473462465 447 467 Treasury income 3% lower 403 349 349 Lower FX and commodities 259 250 result 231 147131142 147131142 119 113 89 89 10 10 2 2 (13) (13) (153) (153) 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1 Prior periods have been restated to include Westpac Pacific . 2 1H15 includes charge for methodology changes to derivative valuations of $122m (pre-tax) and CVA of $31m (pre-tax). 60 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  46. EXPENSES Peer leading expense to income ratio, at 42% Productivity benefits accelerated in 2H16. $263m over the year Expense movements ($m) FTE run versus change (#) ( 147 ) 99 4,479 41 35,241 454 (589) 35,280 4,438 34,677 149 4,419 67 25 Up 1.0% Up 0.4% 1H16 Operating Productivity Investments compliance compliance 2H16 2H15 1H16 2H16 expenses regulatory/ regulatory/ Run Change Run Change Additional benefits 2H16 costs costs Global peer comparison of expense to income ratios 1 (%) Divisional expense to income (%) 64.0 2H15 1H16 2H16 61.9 60.5 49.7 55.4 48.2 50.6 46.7 46.4 45.2 42.7 42.4 42.0 42.2 41.8 41.8 41.8 41.2 41.2 40.3 40.5 36.0 35.7 35.3 European US regional Canadian average Peer 1 Singapore Peer 3 Peer 2 WBC Korean average average average average CB BB BTFG WIB NZ 1 Company data, Credit Suisse. Expense to income ratio average for banks based on their FY16 results, European average excludes Deutsche Bank. 61 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  47. EXPENSES Investment spend focused on growth and productivity Investment spend 2H15 1H16 2H16 capitalised 1 ($m) Investment spend ($m) FY14 FY15 FY16 Investment spend 2H15 1H16 2H16 expensed ($m) Capitalised software Expensed 357 375 517 Opening balance 2,102 1,654 1,651 Additions 356 268 428 Investment spend 208 256 261 expensed Amortisation (291) (271) (294) % expensed 33% 37% 42% Write-offs, impairments and (31) - (4) foreign exchange translation Investment spend Capitalised 1 711 650 710 Capitalised technology cost expensed as a % of total 37% 49% 37% (482) - - balances investment Closing balance 1,654 1,651 1,781 Total investment spend 1,068 1,025 1,227 Other deferred expenses Software amortisation 291 271 294 Deferred acquisition costs 119 116 101 Software amortisation 465 545 565 Other deferred expenses 14 27 45 Capitalised software balance and Average amortisation period 2 (years) Investment spend ($bn) and mix (%) amortisation 3 ($bn) Other technology Total investment 7.0 Regulatory change spend ($bn) Growth & productivity 2.34 5.8 2.23 2.20 5.5 0.57 0.53 0.70 1.78 14 14 22 2.9 22 23 27 0.57 0.50 0.38 64 63 0.30 51 Peer 1 Peer 2 Peer 3 WBC 2H15 1H16 2H16 Peer 1 Peer 2 Peer 3 WBC 1 Investment spend capitalised also includes technology hardware equipment. 2 Data based on FY16 cash earnings results, excludes write-offs. 3 Amortisation expense is based on amortisation expense excluding any impairment or accelerated amortisation and is based on FY16 amortisation expense. 62 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  48. EXPENSES Consistent track record of delivering productivity savings: $1.8bn in last 8 years • Business Connect and Connect Now $1.8bn saved from efficiency programs since FY09 ($m) video conferencing now in 89% of sites 1 • 31% reduction in retail and business Targeting FY16-FY18 annual 263 1,828 banking and wealth complaints over last productivity savings to average $270m 1,565 239 12 months 219 • 65,000 Westpac customers requested 225 to temporarily lock or unlock cards 238 298,000 times online since launched in 289 November 2015. Online now accounts 212 for 59% of all card locks 143 • 600,000 downloads of Proof of Balance and interim statements online since FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY09-FY15 FY16 Cumulative launch. Previously these customers cumulative would have needed to visit a branch or call a contact centre Metrics • Connect – the ability of customers to connect to a banker via their mobile FY14 FY15 FY16 without needing to be re-verified. This has driven reduction, on average, of % of new format Australian branches 2,3 25% 36% 45% between 50 – 60 seconds per call • E-statement functionality launched on Australia % of Smart ATMs of ATM network 3 25% 34% 41% Westpac One in New Zealand in March has grown from 13,000 elections in the Number of branches 4 1,534 1,429 1,309 first month to 121,000 as at September 2016 Consumer Bank and Business Bank active digital customers 3 (# m) 4.0 4.0 4.2 • Over 50% of credit card applications in Number of IT applications closed 3 77 119 151 New Zealand originated online 1 Sites includes branches and standalone business banking centres and excludes instores. 2 Branches excluding instores. 3 Cumulative numbers. 4 Total branches Australia, New Zealand and Westpac Pacific. 63 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  49. IMPAIRMENTS 2H16 impairment charges down due to lower new IAPs Impairment charges ($m) Individually assessed Collectively assessed Total New IAPs Write-backs Write-offs direct Other movements & recoveries in CAP 667 484 471 463 457 418 412 293 330 256 341 273 (48) (64) (110) (114) (174) (173) (218) (210) 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 Impairment charges and stressed exposures 1 (bps) 120 500 100 400 80 Impairment charge to average loans 300 annualised (lhs) 60 Stressed exposures to TCE (rhs) 200 40 120bps 100 20 14bps 0 0 2007 2008 2009 2010 2011 2012 2013 2014 1H15 2H15 1H16 2H16 1 Pre-2008 does not include St.George. 2008 and 2009 are pro forma including St.George for the entire period with 1H09 ASX Profit Announcement providing details of pro forma adjustments. 64 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  50. Asset Quality Westpac Banking Corporation ABN 33 007 457 141. Financial results based on cash earnings unless otherwise stated. Refer page 36 for definition. Results principally cover the FY16 and FY15 years, including 2H16 and 1H16. Comparison of 2H16 versus 1H16 (unless otherwise stated)

  51. ASSET QUALITY High quality portfolio with bias to secured consumer lending Asset composition as at 30 September 2016 (%) 1 Total assets On balance sheet lending Loans 1 Trading securities, financial assets at fair value 1 2 Housing and available-for-sale securities Derivative financial instruments Business 17 Cash and balances with central banks 2 Institutional 4 68 Life insurance assets 79 Other consumer 11 10 Goodwill Receivables due from other financial institutions 4 Other assets Exposure by risk grade as at 30 September 2016 ($m) Updated Standard and Poor’s risk grade 1 Australia NZ / Pacific Asia Americas Europe Group % of Total AAA to AA- 91,355 7,852 1,145 8,181 917 109,450 11% A+ to A- 28,317 5,570 5,443 3,980 3,257 46,567 5% 60,039 10,718 8,859 1,806 2,303 83,725 BBB+ to BBB- 9% BB+ to BB 73,544 10,342 1,959 338 561 86,744 9% BB- to B+ 57,836 9,915 126 15 32 67,924 7% 6,058 3,382 - 31 - 9,471 <B+ 1% Secured consumer 468,952 51,576 778 - - 521,306 53% Unsecured consumer 46,286 5,410 - - - 51,696 5% Total committed exposures (TCE) 832,387 104,765 18,310 14,351 7,070 976,883 Exposure by region 2 (%) 85% 11% 2% 1% 1% 100% 1 Risk grade equivalent. 2 Exposure by booking office. 66 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  52. ASSET QUALITY A well diversified portfolio across industries and large exposures Top 10 exposures to corporations and NBFIs 5 Exposures at default 1 by sector ($bn) as a % of TCE 6 (%) • Largest corporation/NBFI single name 2 Finance & insurance exposure represents less than 0.2% of TCE 3 Property 2.0 1.9 Government admin. & defence 1.4 1.3 1.3 1.2 1.2 1.1 1.1 1.0 Wholesale & retail trade Manufacturing Services Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Property services & business services Sep-15 Top 10 exposures to corporations & NBFIs 5 Transport & storage as at 30 September 2016 ($m) Mar-16 Agriculture, forestry & fishing A- Sep-16 AA- Utilities S&P rating or equivalent BBB+ BBB+ Mining A 4 BBB- Construction A Accommodation, cafes BBB- & restaurants A- Other BBB- 0 300 600 900 1,200 0 20 40 60 80 100 1 Exposures at default represents an estimate of the amount of committed exposure expected to be drawn by the customer at the time of default. Chart 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. 6 Includes St.George from 2009 onwards. 67 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  53. ASSET QUALITY Strong provisioning maintained Total provisions ($m) Asset quality 2H15 1H16 2H16 Impairment charges to average loans Total provisions 13 21 14 annualised (bps) Economic overlay Collectively assessed provisions Impairment charges to average loans annualised (bps) 16 24 17 including interest carrying adjustment Total provisions up 5,061 8% over the year 4,734 Gross impaired assets to gross loans 453 0.30 0.39 0.32 4,414 (%) 502 4,241 346 3,949 363 Stressed exposures to TCE (%) 0.99 1.03 1.20 3,669 3,602 389 3,481 3,332 393 389 Provisions 389 388 2,986 Total provisions to gross loans (bps) 53 57 54 2,607 3,004 2,408 2,196 Impaired asset provisions to impaired 2,324 2,344 46 48 49 2,225 assets (%) 2,275 Collectively assessed provisions to 86 87 76 1 credit RWA (bps) 1,622 1,461 1,470 1,364 1,228 952 87bps excluding the impact of increase in 867 869 669 mortgage risk weights from 1 July 2016 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Mar-16 Sep-16 Economic overlay ($m) 388 393 389 1 Change in mortgage risk weights increased credit RWA by $43bn, reducing the collectively assessed provisions to credit RWA ratio by 11bps. 68 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  54. ASSET QUALITY New impaired assets lower; Increase in stress mainly in Watchlist and Substandard Stressed exposures as a % of TCE (%) Movement in stress categories (bps) . 10 120 Watchlist & substandard 6 3 (2) (3) 6 103 (4) 5 90+ day past due and not impaired 99 Impaired Mainly NZ Dairy and WIB large names a small number of downgraded from stressed to impaired single names in WIB 3.20 3.09 Sep-15 Impaired 90+ dpd not Substandard Watchlist Mar-16 Impaired 90+ dpd not Substandard Watchlist Sep-16 impaired impaired 2.48 2.17 2.07 2.23 New and increased gross impaired assets ($m) 1.45 1.60 1.24 1.30 1.24 1,748 1.20 1.12 1,519 0.85 1.03 0.99 1,343 0.88 1,218 1,194 0.46 0.71 0.65 0.91 1,078 0.41 0.62 1,060 997 958 0.49 0.35 0.29 0.54 0.31 0.62 708 609 607 633 477 0.26 0.28 0.26 0.33 0.67 0.25 0.15 0.62 0.58 0.57 0.44 0.13 0.27 0.26 0.24 0.24 0.20 0.22 0.13 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 69 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  55. ASSET QUALITY Increase in stressed exposures by industry mainly in NZ dairy and mining-related exposures Corporate and business portfolio stressed exposures by industry ($bn) Sep-15 Mar-16 Sep-16 2.5 • Across sectors, the increase in stress is due to higher Watchlist and Substandard facilities. These facilities are still performing but have been downgraded due to early signs of stress. Provisions have increased as a result. • Increases in stress across sectors are mainly due to 2.0 − Agriculture, forestry and fishing – mostly NZ dairy, where our review of all our major customers in 2H16 led to an increase in provisions − Services – associated with a specific development 1.5 − Increases in wholesale and retail trade, construction and mining due to companies directly in mining services or supporting mining activities 1.0 0.5 0.0 Agriculture, forestry & Wholesale & Property services & Manufacturing Property Services Transport & storage Construction Mining Accommodation, cafes Finance & insurance Other Utilities business services retail trade & restaurants fishing 70 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  56. ASSET QUALITY Areas of interest: Commercial property Commercial property portfolio Mar-16 Sep-16 Commercial property exposures % of TCE and % in stress Commercial property as % of TCE (lhs) Total committed exposures (TCE) $67.5bn $67.1bn 10 20 Commercial property % in stress (rhs) 8 Lending $52.1bn $52.6bn 15 6 Commercial property as a % of Group 7.06 6.87 10 TCE 4 Median risk grade 1 BB equivalent BB equivalent 5 2 % of portfolio graded as ‘stressed’ 1 1.34 1.32 - - 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 % of portfolio in impaired 0.54 0.53 Commercial property portfolio composition (%) Sector 2 (%) Region (%) Borrower type (%) Commercial offices Exposures <$10m NSW & ACT 9 & diversified 16 17 groups VIC Residential Developers >$10m 20 44 43 44 QLD 10 Retail Investors >$10m SA & NT 30 9 WA Industrial Diversified Property 6 27 5 Groups and Property 9 11 NZ & Pacific Trusts >$10m Institutional (diversified) 1 Includes impaired exposures. 2 Following a review of the commercial property sector mapping $4.6bn (6.9% of total commercial property) was reclassified from “Commercial offices & diversified groups” to “Residential”. 71 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  57. ASSET QUALITY Areas of interest: Inner city apartments Residential apartment development >$20m Commercial property portfolio TCE ($bn) Sep-16 % weighted average LVR (%) Commercial property total committed exposures 67.1 100% Average LVR 54% Residential apartment development >$20m (“high rise”) 5.1 7.6% 58.0 55.1 49.9 Residential apartment development >$20m (“high rise”) 3.2 4.8% 45.0 in major markets Inner Melbourne 1.4 2.1% Inner Brisbane 0.4 0.6% 2016 2017 2018 2020 Perth metro area 0.2 0.3% Year of completion Sydney major markets 1.2 1.8% (No completions on book for 2019) Consumer mortgage lending standards are tighter for Underwriting standards tightening inner city apartments • We have been progressively tightening risk appetite in areas of higher Total consumer mortgage loans for inner city apartments $13.0bn concern since 2012 • LVRs have been reducing, limiting the impact on debt repayment of any Average LVR at origination 69% slow down in settlements. Weighted average LVR for total high rise residential development portfolio 54%; more recent projects have significantly lower LVRs Average Dynamic LVR 54% • All 2H16 debt facilities with presale settlements have been repaid in full • Active management of concentration risk, including exposure to residential Dynamic LVR >90% 2.9% apartment developments taking into consideration both the commercial property and residential mortgage portfolios 90+ day delinquencies 30bps 72 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  58. ASSET QUALITY Areas of interest: Mining and New Zealand dairy Mining portfolio Mar-16 Sep-16 New Zealand dairy portfolio Mar-16 Sep-16 Total committed exposures (TCE) $11.8bn $11.3bn Total committed exposure (TCE) NZ$5.8bn NZ$5.9bn Lending $5.9bn $6.2bn Lending NZ$5.5bn NZ$5.7bn Mining as a % of Group TCE 1.23 1.16 New Zealand dairy as a % of Group TCE 0.55 0.58 Median risk grade 1 BBB- equivalent BBB- equivalent % of portfolio graded as ‘stressed’ 1 10.04 25.29 % of portfolio graded as ‘stressed’ 1 3.03 3.94 % of portfolio in impaired 0.13 0.34 % of portfolio in impaired 1.26 1.32 Mining portfolio (TCE) NZ dairy portfolio (%) • Impaired assets remain low • Diversified by commodity, by sector (%) customers and region • Increase in stress from a portfolio review undertaken in 2H16 at a milk price of • Focused on operators with 9 NZ$4.25kgm/s efficient, lower cost operating 12 • Origination standards sound models 28 44 − Max 65% LVR on farmland 8 • Approx. 65% of the performing − Majority of dairy security assets are in prime portfolio is Investment Grade 71 15 farming areas where values have been • Specific provisions to impaired 1 maintained 12 assets at 48% − Focused on quality operators with efficient, • Approximately half of the economic lower cost models Fully secured Oil and gas Iron ore overlay allocated to the mining and − Averaged payout used to determine long mining-related sectors Partially secured Other metal ore Coal term viability and debt servicing ability Unsecured • Oil and gas exposure $5.0bn • Growth in dairy exposures mostly existing Mining services Other customers drawing on facilities 1 Includes impaired exposures. 73 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  59. ASSET QUALITY Provision cover by portfolio category Provisioning to TCE (%) Exposures as a % of TCE Mar-15 Sep-15 Mar-16 Sep-16 Fully performing portfolio • Small cover as low probability of default (PD) 0.22 0.21 0.22 0.22 • Includes economic overlay Collective provisions Fully performing 98.80 98.88 portfolio 98.97 99.01 Watchlist & substandard • Still performing but higher cover 6.55 6.93 4.89 4.51 reflects elevated PD 90+ day past due and not impaired Watchlist & • In default but strong security 5.36 5.28 4.99 4.57 substandard 0.65 0.62 0.49 0.54 90+ day past Impaired assets provisions Impaired due and not 0.28 0.33 0.26 asset 0.25 impaired • In default. High provision cover 47.82 46.27 47.65 49.44 Impaired reflects expected recovery 0.26 0.24 0.22 0.20 Mar-15 Sep-15 Mar-16 Sep-16 74 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  60. ASSET QUALITY Australian consumer unsecured lending portfolio performance remains sound Australian consumer unsecured lending Australian unsecured lending 90+ day delinquencies (%) • Australian consumer unsecured lending Total unsecured lending Credit cards remains a very small part of the Group Personal loans (excl Auto) Auto loans (consumer) portfolio 3.00 • 90+ day delinquencies decreased by 32bps to 2.50 117bps, primarily driven by the improvement in 2.00 1.82 personal loans and auto finance delinquencies 1.50 1.17 • Changes in hardship reporting are expected to 1.00 0.91 see a rise in reported delinquencies in 2017. 0.85 0.50 Write-offs and recoveries will also increase as a result of changes in the treatment of - hardship Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Australian consumer unsecured lending portfolio (% and $bn) Australian consumer unsecured lending portfolio (%) Australian consumer unsecured lending portfolio ($bn) Group Consumer unsecured portfolio Sep-15 Mar-16 Sep-16 23 23 22 3.5% of Group lending 10 10 10 8 8 7 5 5 5 Credit cards Personal loans Auto loans Total consumer (consumer) unsecured 75 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  61. ASSET QUALITY High levels of borrower equity create buffers in the Australian mortgage portfolio Sep-15 Mar-16 Sep-16 2H16 Australian housing loan-to-value ratios (LVRs) 2,3 (%) Australian housing portfolio balance balance balance flow 1 FY16 drawdowns LVR at origination 100 375.8 390.8 404.2 41.8 Total portfolio ($bn) Portfolio LVR at origination Owner occupied (%) 48.9 54.3 55.0 58.6 Portfolio dynamic LVR 80 Investment property loans (%) 44.5 39.5 39.3 39.5 60 93% of portfolio with Portfolio loan/line of credit (%) 6.6 6.2 5.7 1.9 dynamic LVR ≤ 80% 40 Variable rate / Fixed rate (%) 80 / 20 83 / 17 83 / 17 77 / 23 3.0 2.7 2.4 0.5 Low Doc (%) 20 Proprietary channel (%) 59.1 58.2 57.9 55.9 0 First Home Buyer (%) 9.2 8.9 8.6 8.4 0<=60 60<=70 70<=80 80<=90 90<=95 95+ Mortgage insured (%) 19.4 18.8 18.4 15.0 Sep-15 Mar-16 Sep-16 Australian home loan customers ahead on repayments 2,6 (%) Average LVR at origination 2 (%) 70 70 70 Sep-15 Mar-16 Sep-16 Average dynamic LVR 2,3 (%) 43 43 43 30 Average LVR of new loans 2,4 (%) 71 70 70 72% ahead on repayments 25 Average loan size 5 ($’000) 242 249 254 20 Customers ahead on repayments 74 72 72 including offset accts 2,6 (%) 15 10 Actual mortgage losses 32 35 31 net of insurance 7 ($m) 5 Actual mortgage loss rate 0 2 2 2 annualised (bps) Behind On Time < 1 Month < 1 Year < 2 Years > 2 Years 1 Flow is all new mortgage originations settled during the 6 month period ended 30 September 2016 and includes RAMS. 2 Excludes RAMS. 3 Dynamic LVR represents the loan-to-value ratio taking into account the current outstanding loan balance, changes in security value and other loan adjustments. Property valuation source Australian Property Monitors. 4 Average LVR of new loans is based on rolling 6 month window. 5 Portfolio as at 30 September 2016 including amortisation. 6 Customer loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments. Includes mortgage offset account balances. ‘Behind’ is more than 30 days past due. ‘On time’ includes up to 30 days past due. 7 Mortgage insurance claims 2H16 $7m (1H16 $4m, 2H15 $3, 1H15 $1m). 76 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  62. ASSET QUALITY Prudent lending standards support Australian mortgage portfolio quality Lending standards on a tightening bias since 2015 Mortgage interest rate buffers (%) • Minimum assessment (floor) rate 7.25% and buffer rate of at least Westpac owner occupied SVR inc package discount 2.25% from September 2015 Westpac minimum assessment ('floor') rate • Tightened policy on assessment of living expenses and income Serviceability 9 verification in November 2015 7.25 • Discounting of rental income, annuity and pension income increased for 7 certain loans in January 2016 • From April 2016, non-resident customers no longer qualify for mortgage 4.39 5 loans (limited exceptions) Non-resident and ex-pat • For Australian and NZ citizens and permanent visa holders using lending foreign income, tightened verification processes and LVR restricted to 3 70% maximum Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 • Different rates for investment property loans and interest only Pricing repayment types progressively introduced from August 2015 Sound credit fundamentals underpin Australian mortgages Owner occupied vs Investment property lending growth (%) • Banks in Australia have full recourse to the borrower’s mortgaged Full recourse property, other assets and future earnings Investor Owner occupied 16.0 • Interest payments on primary residence are not tax deductible – APRA 10% limit on investment property Tax 14.0 growth effective September 2015 provides incentive to pay off mortgage 12.0 10.0 • Strict prudential supervision by one national regulator, APRA 8.0 8.9 Well regulated • National Consumer Protection Bill requires sound underwriting and 6.0 origination standards 5.9 4.0 2.0 • 83% are variable rate Sound 0.0 • Fixed rate loans for short periods of time – 3 to 5 years mortgage Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 • Interest only loans assessed on a principal and interest repayment products basis over the remaining term 77 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  63. ASSET QUALITY Australian mortgage delinquencies remain low; Impacted by changes in hardship treatment Australian mortgages delinquencies (%) Australian mortgage portfolio Sep-15 Mar-16 Sep-16 90+ day past due total 90+ day past due investor 30+ day delinquencies (bps) 102 134 130 30+ day past due total Loss rates 3.0 90+ day delinquencies (bps) 45 55 66 Introduction of new (includes impaired mortgages) 2.0 hardship treatment Estimated impact of changes to 4 9 hardship treatment (bps) (total impact 13bps) 1.0 90+ day delinquencies – 31 38 48 investment property loans (bps) - Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Consumer properties in possession (#) 255 253 262 Westpac Australian housing portfolio and Australian mortgages 90+ day delinquencies by state (%) banking system by State (%) 3.0 NSW/ACT VIC/TAS QLD Australian banking system 1 WA SA/NT ALL Westpac Group portfolio 42 40 FY16 Westpac Group drawdowns 2.0 35 28 27 26 1.0 18 17 16 13 10 7 7 7 6 0.0 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 NSW & ACT VIC & TAS QLD WA SA & NT 1 Source ABA Cannex August 2016. 78 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  64. ASSET QUALITY Changes in the treatment of hardship now largely flowed through Australian mortgage portfolio What is changing? • Following guidance from APRA the industry is aligning treatment of hardship Changes made in 1H16 Previous approach in delinquencies • Westpac changed measurement and • An account in hardship is no longer frozen and When an account enters delinquency treatment of new hardship continues to migrate through delinquency buckets hardship their position in accounts in 1H16 until 90+ days the delinquency flow (30, 60, or 90 days etc) • No impact on the risk profile of the • Accounts continue to be reported as delinquent until is frozen until they return Group or asset classes the customer has maintained repayments for 6 to performing (or not) • At the same time, hardship policies have months – called the ‘serviceability period’ tightened • Average hardship period granted 3-4 months • Further deterioration from mortgage • Hardship + serviceability period = 10 months average hardship changes expected to be minimal What is hardship? 90+ day mortgage delinquencies (%) 0.7 • Allows customers the opportunity to reduce or defer current repayment Accounts in serviceability obligations in the short term so they can 0.6 0.12 13bps period manage through a period of financial 0.01 0.03 0.01 hardship (e.g. injury, illness, separation, 0.5 Accounts in hardship increase natural disasters etc) 0.4 90+ day delinquencies • May take the form of extending loan 0.53 0.51 excl. hardship changes duration or restructuring 0.45 0.3 • Hardship solutions will differ based on customer circumstance, payment 0.2 serviceability and recoverable position Sep-15 Mar-16 Sep-16 79 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  65. ASSET QUALITY Westpac’s Australian investment property mortgage portfolio performing well Investment property lending IPL portfolio statistics Sep-15 Mar-16 Sep-16 Investment property loans (IPLs) 1 are full recourse Average LVR at origination 3 (%) • 72 72 72 • Maximum LVR for stand alone investment property loans capped at 90% % IPL loans originated at or below 80% LVR 87 87 88 Average dynamic LVR 3,4,5 (%) • Majority of IPLs interest only, however repayment behaviour closely 48 48 48 tracks the profile of the principal and interest portfolio Average LVR of new loans 3,6 (%) 68 67 66 • Discounts applied to certain forms of income. For example dividends / Average loan size ($’000) 297 299 305 rental income / bonus / overtime are all discounted by 20% Customers ahead on repayments • Loan serviceability assessments include an interest rate buffer (at least 65 62 62 including offset accounts 3 (%) 2.25%), minimum assessment rate (7.25%) and adequate surplus test 2 90+ day delinquencies (bps) 31 38 48 • Interest only loans are assessed on a principal and interest basis over Annualised loss rate (net of insurance claims) (bps) 2 2 2 the residual term • Specific credit policies apply to assist risk mitigation, including Applicants by gross LVR at origination 2 (%) income band 2 (%) ‒ Holiday apartments may be subject to tighter acceptance requirements (e.g. holiday resort style developments require approval prior to individual loans being considered) Owner occupied IPL 25 Owner occupied IPL 50 ‒ Additional LVR restrictions and additional income discounting apply to 20 single industry towns and higher risk areas 40 15 ‒ Minimum property size and location restrictions apply 30 10 • Loans to Australian citizens and permanent visa holders using foreign- 20 5 sourced income restricted to maximum 70% LVR and discounts apply to foreign income recognition (up to 20%) 10 0 <=50 100<=125 125<=150 150<=200 200<=500 50<=75 75<=100 500<=1m 1m+ 0 0<=60 60<=70 70<=75 75<=80 80<=85 85<=90 90<=95 95<=97 97+ 1 Self-Managed Super Fund (SMSF) IPLs are limited recourse however do require member guarantees. 2 An adequate surplus test measures the extent to which a borrowers income exceeds loan repayments, expenses and other commitments, as assessed. 3 Excludes RAMS. 4 Dynamic LVR represents the loan-to-value ratio taking into account the current outstanding loan balance, changes in security value and other loan adjustments. 5 Property valuation source Australian Property Monitors. 6 Average LVR of new loans is based on rolling 6 month window. 80 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  66. ASSET QUALITY Lenders mortgage insurance Lenders mortgage insurance arrangements Lenders mortgage insurance • Where mortgage insurance is required, LVR Band Insurance mortgages are insured through Westpac’s captive mortgage insurer, Westpac Lenders • LVR ≤ 80% Not required Mortgage Insurance (WLMI), and through • Low Doc LVR ≤ 60% external LMI providers, based on risk profile • LVR >80% to ≤ 90% • Where insurance required, insured through captive insurer, WLMI • WLMI is well capitalised (separate from bank • Low Doc • LMI not required for certain borrower groups. capital) and subject to APRA regulation. LVR >60% to ≤ 80% Capitalised at 1.45x PCR 1 • Reinsurance arrangements: • Scenarios indicate sufficient capital to fund − 40% risk retained by WLMI claims arising from events of severe stress – 60% risk transferred through quota share arrangements 2 with − estimated losses for WLMI from a 1 in 200 Arch Capital Group Limited, Tokio Millennium Re, Endurance Re, year event are $132m net of re-insurance Everest Re, Trans Re and AWAC recoveries (1H16: $143m) • LVR >90% • From 18 May 2015, insured externally through Arch Capital Group Australian mortgage portfolio (%) Limited for all new business − Transitional arrangements are currently in place with LMI policies initially written by WLMI and then fully reinsured with Arch Capital • Prior to 18 May 2015, external insurance provided by QBE and Not insured 82 Genworth. Existing LMI policies remain in force Insured by third 3 parties Insurance statistics 2H15 1H16 2H16 Insured by Insurance claims ($m) 3 4 7 WLMI 8 10 WLMI loss ratio 4 (%) 12 10 17 WLMI gross written premiums 5 ($m) 68 133 154 1 Prudential Capital Requirement (PCR) determined by APRA. 2 For all new business effective from 1 October 2014. 3 Insured coverage is net of quota share. 4 Loss ratio is claims over the total of earned premium plus reinsurance plus exchange commission. 5 LMI gross written premium includes loans >90% LVR reinsured with Arch Capital. 2H16 gross written premium includes $125m from transitional arrangements (1H16: $102m). 81 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  67. ASSET QUALITY Mortgage portfolio stress testing outcomes Australian mortgage portfolio stress testing • Westpac regularly conducts a range of portfolio stress tests as part of its as at 30 September 2016 regulatory and risk management activities • The Australian mortgage portfolio stress testing scenario presented Key assumptions Stressed scenario represents a severe recession and assumes that significant reductions in consumer spending and business investment lead to six consecutive quarters of negative GDP growth. This results in a material increase in Current Year 1 Year 2 Year 3 unemployment and nationwide falls in property and other asset prices • Estimated Australian housing portfolio losses under these stressed Portfolio size ($bn) 404 384 376 374 conditions are manageable and within the Group’s risk appetite and capital base – Cumulative total losses of $2.9bn over three years for the uninsured Unemployment rate (%) 5.6 11.6 10.6 9.4 portfolio (1H16: $2.6bn) – Cumulative claims on LMI, both WLMI and external insurers, of Interest rates $856m over the three years (1H16: $875m) 1.50 0.50 0.50 0.50 (cash rate, %) – Cumulative loss rates have increased (69bps compared to 59bps at 1H16) mainly due to more conservative modelling assumptions, House prices 0.0 (13.0) (22.4) (26.2) changes in portfolio quality, including as a result of changes in the (% change cumulative) treatment of hardship and some weakness in mining-related regions, as well as changes in the non-delinquent portfolio Annual GDP growth (%) 3.3 (3.9) (0.2) 1.7 – WLMI separately conducts stress testing to test the sufficiency of its capital position to cover mortgage claims arising from a stressed mortgage environment Stressed loss outcomes (net of LMI recoveries) 1 • Preferred capital ranges incorporate buffers at the Westpac Group level that also consider the combined impact on the mortgage portfolio and WLMI of severe stress scenarios $ million 66 1,069 1,581 467 Basis points 2 2 23 36 11 1 Assumes 30% of LMI claims will be rejected in a stressed scenario. 2 Stressed loss rates are calculated as a percentage of mortgage exposure at default. 82 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  68. Capital, Funding and Liquidity Westpac Banking Corporation ABN 33 007 457 141. Financial results based on cash earnings unless otherwise stated. Refer page 36 for definition. Results principally cover the FY16 and FY15 years, including 2H16 and 1H16. Comparison of 2H16 versus 1H16 (unless otherwise stated)

  69. CAPITAL CET1 capital ratio above preferred range Peer CET1 capital ratios on a comparable basis, adjusted for Common equity Tier 1 capital ratio (CET1) (%) mortgage RWA change and the impact of wealth leverage 5 (%) 10.5 6 Preferred CET1 capital ratio range 8.75% - 9.25% CET1 capital ratio Mortgage RWA change Wealth leverage 10.1 9.5 10.2 9.1 9.0 0.5 8.8 8.8 9.5 9.0 8.7 0.2 1.0 8.4 8.3 8.4 8.3 Mortgage RWA Regulatory minimum 4.5% 9.6 9.6 changes 9.5 plus capital buffers 3.5% (including CCB 1 , 9.1 D-SIB 2 and CCyB 3 ) – total of 8.0% Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Westpac Peer 1 Peer 2 Peer 3 Impact of change to Australian residential mortgage RWA Key capital ratios (%) Sep-15 Mar-16 Sep-16 methodology 6 from 1 July 2016 CET1 capital ratio 9.5 10.5 9.5 CET1 Risk CET1 Additional Tier 1 capital 1.9 1.6 1.7 Capital weighted As at 30 September 2016 capital ratio assets Tier 1 capital ratio 11.4 12.1 11.2 ratio ($bn) ($bn) Tier 2 capital 1.9 1.9 1.9 Total regulatory capital ratio 13.3 14.0 13.1 Pre-mortgage RWA change 39 367 10.6% CET1 capital ratio (internationally comparable 4 ) 13.2 14.7 14.4 Impact of mortgage RWA - 43 (1.1%) Risk weighted assets (RWA) ($bn) 359 363 410 change Leverage ratio (APRA) 4.8 5.0 5.2 Post mortgage RWA change 39 410 9.5% Leverage ratio (internationally comparable 4 ) 5.5 5.8 5.9 1 Capital Conservation Buffer. 2 Domestic Systemically Important Bank. 3 Countercyclical buffer. 4 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ of 13 July 2015. 5 Peer 1 and 3 are as at 30 Sep 2016, peer 2 is as at 30 June 2016. Peer 1 and 3 based on pro forma CET1 capital ratio. 6 Refer APRA media release entitled “APRA increases capital adequacy requirements for residential mortgage exposures under the internal ratings-based approach”; 20 July 2016. 84 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  70. CAPITAL Basel III regulatory capital ratios Regulatory capital ratios (%) BIS 75 th percentile 3 Internationally comparable basis Internationally comparable 1 APRA basis incl. transitional instruments 2 basis 19.1 17.7 16.6 16.6 16.2 14.4 14.4 14.1 13.1 13.1 11.2 9.5 CET1 Tier 1 Total CET1 Tier 1 Total CET1 Tier 1 Total CET1 Tier 1 Total regulatory regulatory regulatory regulatory capital capital capital capital Internationally comparable capital ratios • Internationally comparable ratios exclude Basel III transitional instruments, which are included in the APRA capital ratios on a transitional basis • Westpac is seeking to replace Basel III transitional instruments with Basel III instruments. Should Westpac do this, pro forma internationally comparable: Tier 1 capital ratio would be 16.6% 2 (up from 16.2%) − Total regulatory capital ratio would be 19.1% 2 (up from 17.7%) − − CET1 capital ratio would be unchanged 1 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ dated 13 July 2015. For more details on adjustments refer slide 89. 2 Includes transitional capital instruments eligible as Additional Tier 1 and Tier 2 capital under APRA Basel III rules. 3 Group 1 banks BIS 75 th percentile fully phased-in Basel III capital ratios from BIS monitoring report released 13 September 2016. 85 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  71. CAPITAL APRA CET1 capital ratio lower in 2H16 as mortgage RWA change implemented CET1 capital ratio (% and bps) 14.43 theetete (14bps) Organic 15bps Other (4bps) 96 10.47 (110) 96 (69) (6) 14 (12) (6) (6) 9.50 1 9.48 Loan growth largely offset by lower interest Data improvements, Includes 9bps for credit rate risk in the banking lower unutilised limits, spread risk in the liquids book and market risk lower exposures portfolio RWA 2 Sep-15 movements Entitlement offer Mar-16 Mortgage RWA Cash earnings Interim dividend Ordinary movements RWA efficiency Regulatory FX - Credit RWA Sep-16 Int. Comp. APRA APRA APRA modelling growth changes Sep-16 (net of DRP) RWA Other Other initaitives 1 change 1. APRA’s revision to the calculation of RWA for Australian residential mortgages, which came into effect on 1 July 2016. 2 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ dated 13 July 2015. 86 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  72. CAPITAL Total risk weighted assets up 1% (excluding mortgage RWA methodology impact) • Australian residential mortgages RWA Movement in risk weighted assets ($bn) methodology changed on 1 July 2016, increased RWA by $43.0bn 406.2 8.5 (5.7) 0.7 0.5 410.0 1.0 43.0 (1.2) • Excluding the impact of the mortgage RWA change, total RWA increased $3.8bn (or 1%) 363.2 • Credit RWA increased $2.8bn (1%) from: 358.6 $2.8bn − Increase of $8.5bn from business growth ($7.0bn), translation impacts from the Up $3.8bn or 1% higher NZ$ ($2.3bn), modelling changes ($1.0bn) related to parameter updates and reclassification of exposures in the Sep-15 Mar-16 Mortgage efficiency initiatives Market Operational IRRBB Other Sep-16 Net credit corporate, business and small business risk RWA RWA risk risk portfolios, partly offset by benefits from improved credit quality ($1.2bn) and a decrease in mark-to-market credit risk ($0.6bn) Movements in credit risk weighted assets ($bn) − RWA efficiency initiatives reduced credit RWA $5.7bn, from data improvements and refinements to parameters ($2.7bn) (1.2) (5.7) 2.3 1.0 (0.6) 43.0 358.8 7.0 356.0 and management of unutilised limits and exposures ($3.0bn) • Market risk RWA down $1.2bn mostly from 313.0 310.3 reduced interest rate risk exposure $8.5bn • Interest rate risk in the banking book (IRRBB) RWA increased $0.7bn. Capital for credit Up $2.8bn or 1% spread risk for liquid assets increased IRRBB RWA $3.6bn. This was partially offset by a higher embedded gain in the portfolio and Sep-15 Mar-16 Mortgage Business translation Regulatory quality Mark-to- efficiency Sep-16 Credit initiatives modelling market growth impacts changes RWA RWA lower RWA for repricing and yield curve risk FX ($2.9bn) 87 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  73. CAPITAL Basel III CET1 capital ratios global comparison 1 14.4% 2 2 3 2 3 3 3 Nordea Morgan Stanley RBS UBS ANZ Westpac CBA NAB ING Lloyds Intesa Sanpaolo Standard Chartered China Construction Bank Citigroup ICBC Rabobank HSBC Goldman Sachs Mitsubishi UFG China Merchants Bank Credit Suisse Sumitomo Mitsui JPMorgan Chase Barclays Commerzbank Societe Generale Credit Agricole SA BNP Paribas Natixis Bank of China Bank of Communications BBVA Deutsche Bank Mizuho FG Santander Wells Fargo Scotiabank Unicredit Bank of Montreal Bank of America Royal Bank of Canada Toronto Dominion Bank Agricultural Bank of China Peer group comprises listed commercial banks with total assets in excess of A$700 billion and which have disclosed fully implemented Basel III ratios or provided sufficient disclosure for an estimate. Based on company reports and investor presentations. 1 Based on CET1 capital ratios as at 30 June 2016 unless otherwise stated, assuming Basel III capital reforms fully implemented. For those banks where accrued expected dividends have been deducted these have been added back for comparability. 2 As at 30 September 2016. 3 As at 31 July 2016. 88 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  74. CAPITAL Internationally comparable capital ratio reconciliation 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. In July 2015, APRA published a study that compared the major banks’ capital ratios against a set of international peers 1 . The following provides details of the adjustments applied to the APRA Basel III capital requirements to derive internationally comparable ratios, which are aligned to this study APRA Study 1 (%) Westpac’s CET1 capital ratio (APRA basis) 9.5 Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA’s Equity investments 0.5 requirements Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA’s Deferred tax assets 0.4 requirements Interest rate risk in the APRA requires capital to be held for IRRBB. The BCBS does not have a Pillar 1 capital requirement for 0.2 banking book (IRRBB) IRRBB Loss given default (LGD) of 15%, compared to the 20% LGD floor under APRA’s requirements. APRA also Residential mortgages 1.6 applies a correlation factor for mortgages higher than the 15% factor prescribed in the Basel rules Unsecured non-retail LGD of 45%, compared to the 60% or higher LGD under APRA’s requirements 0.6 exposures Non-retail undrawn Credit conversion factor of 75%, compared to 100% under APRA’s requirements 0.4 commitments Use of internal-ratings based (IRB) probabilities of default (PD) and LGDs for income producing real estate Specialised lending and project finance exposures, reduced by application of a scaling factor of 1.06. APRA applies higher risk 0.6 weights under a supervisory slotting approach, but does not require the application of the scaling factors Currency conversion Increase in the A$ equivalent concessional threshold level for small business retail and small to medium 0.2 threshold enterprise corporate exposures APRA requires these items to be deducted from CET1. The BCBS only requires exposures classified as Capitalised expenses 0.4 intangible assets under relevant accounting standards to be deducted from CET1 Internationally comparable CET1 capital ratio 14.4 1 Methodology aligns with the APRA study titled “International capital comparison study", dated 13 July 2015 89 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  75. CAPITAL Optimising returns by actively managing capital Ordinary equity 1 ($bn) Actively managing returns • FY16 ROE decreased due to the significant capital raised during calendar year 2015. Average ordinary equity (AOE) rose 3% over 0.6 58.1 3.5 0.4 0.2 0.3 57.2 the half and 13% over the year 53.1 • Leverage ratio improved from the increased AOE • Continue to refine capital allocation model with more capital allocated to divisions in 2016 • Capital held centrally includes: surplus capital, capital for Treasury, and capital for the next dividend payment DRP DRP Sep-15 Entitlement Other Mar-16 Other Sep-16 offer Capital allocated to divisions ($bn) Return on equity (%) 1H15 2H15 1H16 2H16 Division FY15 FY16 Group 2 47.9 50.8 55.2 56.6 Group 15.8 14.0 Consumer Bank and 19.2 19.7 23.3 24.6 Business Bank Consumer Bank and Business Bank 17.5 16.1 BTFG 3.1 3.3 3.5 3.6 BTFG 15.8 15.0 WIB 8.9 8.8 9.3 9.2 WIB 13.8 11.0 Westpac NZ (A$) 3.7 3.7 3.4 3.7 Westpac NZ (A$) 19.5 19.4 1 Ordinary equity is spot and also includes reserves. 2 Divisional amounts do not total to the Group given additional capital is held for Treasury, Group functions and for future dividends. 90 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  76. FUNDING & LIQUIDITY Stable sources provide 85% of all funding Key liquidity and funding Funding composition by residual maturity (%) Mar-16 Sep-16 ratios ($m) HQLA 1 66.2 69.4 Wholesale Primarily NCDs and long term to 6 7 CLF 2 58.6 58.6 onshore <1yr short term scroll 7 16 Total LCR Liquid assets 124.8 128.0 8 Wholesale Primarily USCP and Yankee CDs 10 offshore <1yr and long term to short term scroll 7 Customer deposits 63.2 63.5 Wholesale funding 13.4 13.1 20 Domestic senior unsecured bonds, 4 Wholesale Other flows 3 21.3 19.2 5 covered bonds, Additional Tier 1 and onshore >1yr Tier 2 Total cash outflows 97.9 95.8 11 11 1 Wholesale Offshore senior unsecured bonds, LCR 4 127% 134% 2 offshore >1yr covered bonds and Tier 2 8 7 Estimated NSFR n/a >100% 4 Stable funding sources 10 Securitisation RMBS and ABS Unencumbered liquid assets ($bn) 1 5 Equity Equity and reserves 8 144.3 Self securitisation Customer Consumer, business and corporate 55.7 deposits customer deposits 61 59 5 Private securities and deposits with 21.0 44 other banks 116.1 Cash, government 67.6 and semi- government bonds Sep-16 Total short term wholesale Sep-08 Sep-15 Sep-16 debt outstanding 6 at 30 Sep 16 1 Includes HQLA as defined in APS 210, RBNZ eligible liquids, less RBA open repos funding end of day ESA balances with the RBA. 2 The RBA makes available to Australian Authorised Deposit-taking Institutions a committed liquidity facility (CLF) that, subject to qualifying conditions, can be accessed to meet LCR requirements under APS210 – Liquidity. 3 Other flows include credit and liquidity facilities, collateral outflows and inflows from customers. 4 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. 5 Private securities include Bank paper, RMBS, and Supra-nationals. 6 Includes long term wholesale funding with a residual maturity less than or equal to 1 year. 7 Scroll represents wholesale funding with an original maturity >12months that now has a residual maturity <12months. 8 Equity excludes FX translation, Available-for-Sale securities and Cash Flow Hedging Reserves. 91 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  77. FUNDING & LIQUIDITY Targeting a diversified funding base Australian covered bond issuance 5 FY16 new term issuance composition 1 (%) ($bn) Charts do not add to 100 due to rounding. Remaining capacity 2,3 By currency By type By tenor (8% cap & over-collateralisation) 4 Outstanding 3 6 28 12 6 0.4 54 29 3 27 29 4 77 45 25 28 26 5 27 2 27 AUD USD 20 Senior Unsecured Covered Bonds 2 Years 3 Years 13 EUR JPY ABS Hybrid 4 Years 5 Years GBP Other >5 years Subordinated Debt Peer 1 Peer 2 Peer 3 Westpac Term debt issuance and maturity profile 1,2,4 ($bn) Issuance Maturities Higher new issuance driven by preparation for Sub Debt 42 NSFR and some pre funding for FY17 Senior 33 33 31 29 Hybrid 27 26 26 25 Covered Bond 22 19 17 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY>21 1 Based on residual maturity and FX spot currency translation. Includes all debt issuance with contractual maturity greater than 370 days 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 Perpetual sub- debt has been included in >FY21 maturity bucket. Maturities exclude securitisation amortisation. 5 Sources: Westpac, APRA Banking Statistics September 2016. 92 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  78. Divisional results Westpac Banking Corporation ABN 33 007 457 141. Financial results based on cash earnings unless otherwise stated. Refer page 36 for definition. Results principally cover the FY16 and FY15 years, including 2H16 and 1H16. Comparison of 2H16 versus 1H16 (unless otherwise stated)

  79. CONSUMER BANK Consumer Bank disciplined 2H16 result Cash earnings ($m) Key financial metrics Change Volume growth and Lower operating expenses 2H15 1H16 2H16 on 1H16 mortgage price changes, with productivity offsetting partly offset by competition run cost increases and Revenue ($m) +2% 3,776 3,970 4,051 for new lending and higher higher investment funding costs Net interest margin (%) (3bps) 2.28 2.37 2.34 (92bps) Expense to income (%) 41.8 41.2 40.3 (38) 46 18 4 1,537 63 Customer deposit to loan ratio (%) +24bps 52.4 52.1 52.4 1,444 1,380 Stressed assets to TCE (%) +10bps 0.41 0.51 0.61 Decline in other consumer lending Higher cards delinquencies income from Key operating metrics changes to rewards program Change 2H15 1H16 2H16 on 1H16 Total customers (#’m) 2% 8.6 8.7 8.9 Up $93m or 6% Active digital customers (#’m) 3% 3.5 3.6 3.7 2H15 1H16 Net interest Non-interest Operating Impairment Tax and NCI 2H16 expenses charges income income Total branches (#) (11) 1,201 1,096 1,085 Customer satisfaction 1 (%) (180bps) 83.8 83.1 81.3 Service quality – complaints (‘000’s) (20%) 20.7 16.8 13.1 1 Refer slide 89for metric definition and details of provider. 94 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  80. CONSUMER BANK Consumer Bank consistently delivering Revenue ($m) Core earnings ($m) Cash earnings ($m) 4,051 2,418 3,970 1,537 2,333 2,198 3,776 1,444 1,380 2,025 3,560 1,240 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 Loans ($bn) and customer deposit to Expense to income ratio (%) Revenue per FTE ($’000) loan ratio (%) Loans Customer deposit to loan ratio 444 439 52.4 52.1 52.4 43.1 51.7 404 369 41.8 41.2 345 40.3 334 321 311 Mar-15 Sep-15 Mar-16 Sep-16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 95 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  81. BUSINESS BANK Business Bank delivered a solid FY16 result Cash earnings ($m) Key financial metrics Change AIEA up 2%, margin down 2H15 1H16 2H16 on 1H16 1bp, pricing changes to Increased Revenue ($m) 2% 2,443 2,512 2,551 business lending was offset investment by increased funding costs Net interest margin (%) (1bp) and lower deposit spreads 2.74 2.75 2.74 6 (4) (39bps) Expense to income (%) 36.0 35.7 35.3 (2) 33 (10) 1,011 988 Customer deposit to loan ratio (%) 92bps 69.5 71.2 72.1 962 Stressed assets to TCE (%) 11bps Higher business 2.20 2.13 2.24 lending charges Rise in offset by lower Auto facility fees finance charge Key operating metrics Change 2H15 1H16 2H16 on 1H16 Total business customers (‘000’s) 2% 986 1,019 1,043 Up $23m or 2% Customer satisfaction 1 (rank) Up 1 #2 =#2 #1 Customer satisfaction - SME 1 (rank) Up 1 =#1 #2 #1 2H15 1H16 Net interest Non-interest Operating Impairment Tax and NCI 2H16 expenses charges income income Digital sales (%) - 6 9 9 Loans via LOLA ($m) 117% 253 336 729 1 Refer slide 89 for metric definition and details of provider. 96 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  82. BUSINESS BANK Sound fundamentals, trending positively Revenue ($m) Core earnings ($m) Cash earnings ($m) 1,651 1,017 2,551 1,616 1,011 1,563 988 2,512 1,541 962 2,443 2,392 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 Loans ($bn) and customer deposit to Expense to income ratio (%) Revenue per FTE ($’000) loan ratio (%) Loans Customer deposit to loan ratio 822 72.5 72.1 814 71.2 69.5 792 36.0 35.7 35.6 35.3 153 149 146 141 725 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 Mar-15 Sep-15 Mar-16 Sep-16 97 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  83. BTFG franchise, impacted by challenging environment Cash earnings movement FY15 ─ FY16 ($m) Key financial metrics Increased lending FX impacts Change on and improved FY14 FY15 FY16 FY15 Ascalon margins in Private (9%) Revenue ($m) 2,663 2,637 2,406 Wealth 48 (39) 4 (58) 36 (56bps) Expense to income (%) 49.7 48.8 48.2 914 (24) 890 5% FUM ($bn) ex BTIM (spot) 43.2 46.3 48.4 (4) (1) 876 7% 112.7 121.9 130.8 FUA ($bn) (spot) Higher premiums Revenue impact of partial sale of and lower weather (100%) 381 280 0 Increased investment BTIM ($m) related claims paid and higher regulatory and compliance costs Key operating metrics Change Down $14m or 2% 2H15 1H16 2H16 on 1H16 Customers with a wealth product 1 (%) 19.7 19.2 19.1 (10bps) Planners (salaried & aligned) 2 (#) 1,192 1,116 1,134 2% FY15 BTIM partial sale FY15 excluding BTIM Funds Mgt Underlying FX impacts on Funds Mgt Insurance income Capital & other income Expenses Impairment charge Tax and NCI FY16 BT Super for Life customers (#’000) 482 489 506 3% Platform market share 3 (inc. Corp Super) (%) impact 19.9 19.6 19.0 (60bps) Retail market share 3 (exc. cash) (%) 18.9 18.6 18.0 (60bps) Life Insurance market share 4 (%) 11.3 10.9 11.0 10bps H&C insurance market share 5 (%) 5.7 5.7 5.7 - Women in leadership 2 (%) 44 42.1 45.0 290bps 1 Refer slide 131 for wealth metrics provider. 2 Spot number as at balance date. 3 Strategic Insight, All Master Funds Admin as at June 2016 (for 2H16), as at December 2015 (for 1H16) and as at June 2015 (for 2H15) and represents the BT Wealth business market share at these times. 4 Strategic Insight (Individual Risk) rolling 12 month average. New sales includes sales, premium re-rates, age and CPI indexation June2016. 5 Internally calculated from APRA quarterly general insurance performance statistics, June 2016. 98 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  84. Funds management, positive flows impacted by FX movements Earning drivers FUA ($bn) • Significant growth in Private Wealth BT Wrap/Asgard/Panorama Corporate Super Other • Advice income lower from reduced activity Up 7% • FX movements from revaluation of Ascalon seed pool funds have also 130.8 125 reduced revenue 123.3 121.9 3.8 3.4 112.7 3.6 3.9 20.5 • FUM related revenue was flat to FY15 20.1 2.9 19.6 19.3 18.1 – Positive net flows in BT Super for Life retail FUM up 13% to $6.5bn – FUM margins down 1bp from shift in portfolio mix and competition • FUA related revenue up 2% on FY15 106.5 101.5 98.7 100.1 91.7 – Panorama had positive flows of $1.3bn – BT Wrap/Asgard platforms FUA up 8% – FUA margins were well managed, flat on FY15 2H14 1H15 2H15 1H16 2H16 FUM ($bn) FUA by asset class (%) Advance Retail Super/other BTIM (exc JOHCM ) 1 JOHCM 1 Equities Aust. Equities Intl. Property Cash Fixed interest Other inc. diversified 103.3 6 8 7 7 9 89.0 12 13 13 Deconsolidation 12 12 of BTIM 35.1 19 18 19 18 18 27.7 5 4 4 6 6 48.4 19.6 46.4 19 19 46.3 20 20 19 18.1 18.3 19.8 18.3 17.8 18.0 39 39 37 36 36 28.8 28.0 28.6 30.1 25.2 2H14 1H15 2H15 1H16 2H16 2H14 1H15 2H15 1H16 2H16 1 J O Hambro Capital Management. 99 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

  85. Insurance, premium growth continues Insurance premiums ($m) Insurance claims rates (%) General Insurance gross written premiums Life in-force premiums General Insurance claims rate Life Insurance claims rates Up 9% 62 973 927 892 827 51 50 49 38 34 34 33 Up 5% 258 246 246 245 1H15 2H15 1H16 2H16 1H15 2H15 1H16 2H16 Life Insurance individual new sales market share 1 (%) Life Insurance lapse rates 1 (%) WBC Peer 1 Peer 2 Market Avg WBC Peer1 Peer2 Avg next top 4 20 20 15 15 10 5 10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 1 Strategic Insight June 2016. 100 | Westpac Group Full Year 2016 Presentation & Investor Discussion Pack

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