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Westpac Banking Corporation - New Zealand DivisionDisclosure Statement For the three months ended 31 December 2013

Index 1 Generalinformationanddefinitions 1 Generalmatters 2 Creditratings 2 DisclosurestatementsoftheOverseasBankandthefinancialstatementsoftheOverseasBankandthe OverseasBankingGroup 2 Guaranteearrangements 2 Pendingproceedingsorarbitration 2 Conditionsofregistration 3 Directors’andtheChiefExecutiveOfficer,NZBranch’sstatement 4 Indextofinancialstatements

Westpac Banking Corporation–NewZealandDivision1

General information and definitionsCertainoftheinformationcontainedinthisDisclosureStatementisrequiredbysection81oftheReserveBankofNewZealandAct1989(‘Reserve Bank Act’)andtheRegisteredBankDisclosureStatements(OverseasIncorporatedRegisteredBanks)Order(No2)2013(‘Order’).InthisDisclosureStatement,referenceismadetofivemainreportinggroups:

■■ WestpacBankingCorporationGroup(otherwisereferredtoasthe‘Overseas Banking Group’)–referstothetotalworldwidebusinessofWestpacBankingCorporationincludingitscontrolledentities;

■■ WestpacBankingCorporation(otherwisereferredtoasthe‘Overseas Bank’)–referstotheworldwideactivitiesofWestpacBankingCorporationexcludingitscontrolledentities;

■■ WestpacBankingCorporation–NewZealandDivision(otherwisereferredtoasthe‘NZ Banking Group’)–referstotheNewZealandoperationsofWestpacBankingCorporationGroupincludingthoseentitieswhosebusinessisrequiredtobereportedinthefinancialstatementsoftheOverseasBankingGroup’sNewZealandbusiness.ControlledentitiesoftheNZBankingGroupasat30September2013aresetoutinNote26tothefinancialstatementsincludedintheOverseasBank’sDisclosureStatementfortheyearended30September2013.ExceptasdetailedinNote10tothefinancialstatementsincludedinthisDisclosureStatement,therehavebeennootherchangesinthestructureorcompositionoftheNZBankingGroupsince30September2013;

■■ WestpacBankingCorporationNewZealandBranch(otherwisereferredtoasthe‘NZ Branch’)–referstotheNewZealandBranchofWestpacBankingCorporation(tradingasWestpac);and

■■ WestpacNewZealandLimited(otherwisereferredtoas‘Westpac New Zealand’)–referstoalocallyincorporatedsubsidiaryoftheOverseasBank(carryingontheOverseasBank’sNewZealandconsumer,businessandinstitutionalbankingoperations).

WordsandphrasesnotdefinedinthisDisclosureStatement,butdefinedbytheOrder,havethemeaninggivenbytheOrderwhenusedinthisDisclosureStatement.AllamountsreferredtointhisDisclosureStatementareinNewZealanddollarsunlessotherwisestated.

General matters

DirectorsTheDirectorsoftheOverseasBankatthetimethisDisclosureStatementwassignedwere:Lindsay Philip Maxsted,DipBus(Gordon),FCA,FAICD–ChairmanGail Patricia Kelly,HigherDipEd,BA,MBAwithDistinction,HonDBus–ManagingDirector&ChiefExecutiveOfficerJohn Simon CurtisAM,BA,LLB(Hons.)–DeputyChairmanElizabeth Blomfield BryanAM,BA(Econ.),MA(Econ.)Ewen Graham Wolseley CrouchAM,BEc(Hons.),LLB,FAICDRobert George Elstone,BA(Hons.),MA(Econ.),MComPeter John Oswin Hawkins,BCA(Hons.),SFFin,FAIM,ACA(NZ),FAICDPeter Ralph Marriott,BEc(Hons.),FCAAnn Darlene Pickard,BA,MA

Since30September2013, GordonCairnsretiredasaDirectoroftheOverseasBankon13December2013andJohnCurtishasannouncedthathewillretireasaDirectoroftheOverseasBankon25April2014.

Chief Executive Officer, NZ Branch Karen Lee Ann Silk,B.Com

Responsible personAlltheDirectorsnamedabovehaveauthorisedinwritingPeterGrahamClare,ChiefExecutive,WestpacNewZealandtosignthisDisclosureStatementontheDirectors’behalfinaccordancewithsection82oftheReserveBankAct.


Credit ratings

TheOverseasBankhasthefollowingcreditratingswithrespecttoitslong-termseniorunsecuredobligations,includingobligationspayableinNewZealandinNewZealanddollars,asatthedatethisDisclosureStatementwassigned:

Rating Agency Current Credit Rating Rating Outlook

FitchRatings AA- Stable

Moody’sInvestorsService Aa2 Stable

Standard&Poor’s AA- Stable

Acreditratingisnotarecommendationtobuy,sellorholdsecuritiesoftheOverseasBank.Suchratingsaresubjecttorevision,qualification,suspensionorwithdrawalatanytimebytheassigningratingagency.InvestorsintheOverseasBank’ssecuritiesarecautionedtoevaluateeachratingindependentlyofanyotherrating.

Disclosure statements of the Overseas Bank and the financial statements of the Overseas Bank and the Overseas Banking GroupDisclosureStatementsoftheOverseasBankforthelastfiveyearsareavailable,freeofcharge,attheinternetaddress www.westpac.co.nz.Aprintedcopywillalsobemadeavailable,freeofcharge,uponrequestandwillbedispatchedbytheendofthesecondworkingdayafterthedayonwhichtherequestismade.ThemostrecentlypublishedfinancialstatementsoftheOverseasBankandtheOverseasBankingGrouparefortheyearended30September2013andcanbeaccessedattheinternetaddresswww.westpac.com.au.

Guarantee arrangementsAsatthedatethisDisclosureStatementwassigned,nomaterialobligationsoftheOverseasBankthatrelatetotheNZBranchareguaranteed.

Pending proceedings or arbitrationTherearenopendinglegalproceedingsorarbitrationatthedateofthisDisclosureStatementinvolvinganymemberoftheNZBankingGroup,whetherinNewZealandorelsewhere,thatmayhaveamaterialadverseeffectontheOverseasBankortheNZBankingGroup.InMarch2013,litigationfunder,LitigationLendingServices(NZ)Limited,announcedpotentialrepresentativeactionsagainstfiveNewZealandbanksinrelationtocertainfees.Todateproceedingshavebeenfiledagainsttwobanksandtheplaintiffgrouphasannouncedtheirintentiontofileproceedingsagainsttheremainingthreebanks(includingWestpacNewZealand)on28February2014.Atthisstagetheimpactofanysuchpotentialproceedingcannotbedeterminedwithanycertainty.On12December2013,theCommerceCommissionnotifiedtheOverseasBankandWestpacNewZealandthatitintendsfilingproceedingsagainstthemundertheFairTradingAct1986inrelationtothemarketingandsaleofinterestrateswapstoruralcustomers.TheCommerceCommissionhasindicatedthattheseproceedingsarelikelytobefiledinMarch2014.Atthisstagetheimpactofthisnotificationcannotbedeterminedwithanycertainty.TheOverseasBankingGrouphasworldwidecontingentliabilitiesinrespectofactualandpotentialclaimsandproceedings,whichhavenotbeendetermined.AnassessmentoftheOverseasBankingGroup’slikelylossismadeonacase-by-casebasisandprovisionsaremadewhereappropriate.SuchcontingenciesaredisclosedintheOverseasBankingGroup’s30September2013AnnualFinancialReport.

Conditions of registration TheconditionsofregistrationimposedonWestpacBankingCorporationinNewZealandwereamendedon27September2013.Theamendmentscameintoeffecton1October2013.Theamendmentsaddednewconditionsrestrictingnewresidentialmortgagelendingwithloan-to-valuationratiosover80%tonomorethan10%ofthetotalofqualifyingnewresidentialmortgagelendingamountsarisingintheloan-to-valuationmeasurementperiod.

www.westpac.co.nz

www.westpac.com.au


Directors’ and the Chief Executive Officer, NZ Branch’s statement

EachDirectoroftheOverseasBankbelievesandtheChiefExecutiveOfficer,NZBranch,believes,afterdueenquiry,that,asatthedateonwhichthisDisclosureStatementissigned,theDisclosureStatement:(a)containsallinformationthatisrequiredbytheOrder;and(b)isnotfalseormisleading.EachDirectoroftheOverseasBankbelievesandtheChiefExecutiveOfficer,NZBranch,believes,afterdueenquiry,that,overthethreemonthsended31December2013:(a)theOverseasBankhascompliedwiththeconditionsofregistrationimposedonitpursuanttosection74oftheReserveBank

Act;and(b)theNZBranchandothermembersoftheNZBankingGrouphadsystemsinplacetomonitorandcontroladequatelythe

materialrisksofrelevantmembersoftheNZBankingGroup,includingcreditrisk,concentrationofcreditrisk,interestraterisk,currencyrisk,equityrisk,liquidityriskandotherbusinessrisksandthatthosesystemswerebeingproperlyapplied.Forthispurpose,arelevantmemberoftheNZBankingGroupmeansamemberoftheNZBankingGroupthatisnotamemberofWestpacNewZealand’sbankinggroup.

ThisDisclosureStatementhasbeensignedonbehalfoftheDirectorsbyPeterGrahamClare,ChiefExecutive,WestpacNewZealand,andbyKarenLeeAnnSilk,asChiefExecutiveOfficer,NZBranch.

PeterGrahamClare

KarenLeeAnnSilk

Datedthisthe25thdayofFebruary2014


Index to financial statementsPage Contents5 Consolidatedincomestatement6 Consolidatedstatementofcomprehensiveincome7 Consolidatedstatementofchangesinequity8 Consolidatedbalancesheet9 Consolidatedstatementofcashflows10 Notestothefinancialstatements10 Note1Statementofaccountingpolicies11 Note2Non-interestincome11 Note3Impairmentchargesonloans12 Note4Tradingsecurities12 Note5Loans12 Note6Creditquality,impairedassetsandprovisionsforimpairmentchargesonloans13 Note7Deposits13 Note8Tradingliabilities13 Note9Debtissues14 Note10Relatedentities14 Note11Fairvalueoffinancialinstruments16 Note12Commitmentsandcontingentliabilities16 Note13Segmentinformation17 Note14Insurancebusiness18 Note15Riskmanagement18 15.1Creditrisk18 15.2Marketrisk18 15.3Liquidityrisk19 Note16Concentrationofcreditexposurestoindividualcounterparties19 Note17OverseasBankandOverseasBankingGroupcapitaladequacy20 Note18OtherinformationontheOverseasBankingGroup20 Note19Eventsafterthereportingdate


Consolidated income statement forthethreemonthsended31December2013 NZ Banking Group

Three Months ThreeMonths Year Ended Ended Ended 31-Dec-13 31-Dec-12 30-Sep-13$ millions Note Unaudited Unaudited Audited

Interestincome 964 967 3,801Interestexpense (584) (575) (2,223)

Net interest income 380 392 1,578Non-interestincome 2 202 147 585

Net operating income 582 539 2,163Operatingexpenses (222) (234) (877)Impairmentchargesonloans 3 (13) (35) (105)

Operating profit 347 270 1,181Shareofprofitofassociateaccountedforusingtheequitymethod - - 1

Profit before income tax expense 347 270 1,182Incometaxexpense (81) (73) (327)

Profit after income tax expense 266 197 855

Profit after income tax expense attributable to: HeadofficeaccountandownersoftheNZBankingGroup 265 196 852 Non-controllinginterests 1 1 3

266 197 855

Theaccompanyingnotes(numbered1to19)formpartof,andshouldbereadinconjunctionwith,thesefinancialstatements.


Consolidated statement of comprehensive income forthethreemonthsended31December2013 NZ Banking Group

Three Months ThreeMonths Year Ended Ended Ended 31-Dec-13 31-Dec-12 30-Sep-13$ millions Unaudited Unaudited Audited

Profit after income tax expense 266 197 855

Other comprehensive income which may be reclassified to the income statement: Available-for-salesecurities: Netunrealisedgains/(losses)fromchangesinfairvalueofavailable-for-salesecurities 36 (2) 23 Transferredtotheincomestatement(refertoNote2) (48) - - Exchangedifferences 1 1 1 Incometaxeffect (6) 3 2 Cashflowhedges: Netgains/(losses)fromchangesinfairvalueofcashflowhedges 34 (10) 34 Transferredtotheincomestatement (1) 15 30 Incometaxeffect (9) (1) (18)

Total other comprehensive income which may be reclassified to the income statement 7 6 72

Other comprehensive income which will not be reclassified to the income statement: Actuarialgainsonemployeedefinedbenefitobligations - - 39 Incometaxeffect - - (11)

Total other comprehensive income which will not be reclassified to the income statement - - 28

Total other comprehensive income, net of tax 7 6 100

Total comprehensive income 273 203 955

Total comprehensive income attributable to: HeadofficeaccountandownersofNZBankingGroup 272 202 952 Non-controllinginterests 1 1 3

273 203 955



Consolidated statement of changes in equity forthethreemonthsended31December2013 NZ Banking Group

Head Office Account NZ Banking Group Equity Available- Total Ordinary for-sale Cash Flow before Non- Non- Branch Retained Convertible Share Retained Securities Hedge controlling controlling Total$ millions Capital Profits Debentures Capital Profits Reserve Reserve Interests Interests Equity

As at 1 October 2012 as previously reported (Audited) 1,300 213 1,284 139 2,526 80 (34) 5,508 7 5,515Adjustmentduetoamendmentsin NZIAS19(refertoNote1) - - - - 16 - - 16 - 16As at 1 October 2012 (Restated) 1,300 213 1,284 139 2,542 80 (34) 5,524 7 5,531Three months ended 31 December 2012 (Unaudited)Profitafterincometaxexpense - 53 - - 143 - - 196 1 197Netlossesfromchangesinfairvalue - - - - - (2) (10) (12) - (12) Incometaxeffect - - - - - 3 3 6 - 6Exchangedifferences - - - - - 1 - 1 - 1Transferredtoincomestatement - - - - - - 15 15 - 15 Incometaxeffect - - - - - - (4) (4) - (4)Total comprehensive income for the three months ended 31 December 2012 - 53 - - 143 2 4 202 1 203As at 31 December 2012 (Unaudited) 1,300 266 1,284 139 2,685 82 (30) 5,726 8 5,734

Year ended 30 September 2013 (Audited)Profitafterincometaxexpense - 201 - - 651 - - 852 3 855Netgainsfromchangesinfairvalue - - - - - 23 34 57 - 57 Incometaxeffect - - - - - 2 (10) (8) - (8)Exchangedifferences - - - - - 1 - 1 - 1 Incometaxeffect - - - - - - - - - -Transferredtoincomestatement - - - - - - 30 30 - 30 Incometaxeffect - - - - - - (8) (8) - (8)Actuarialgainsonemployeedefined benefitobligations - - - - 39 - - 39 - 39 Incometaxeffect - - - - (11) - - (11) - (11)Total comprehensive income for the year ended 30 September 2013 - 201 - - 679 26 46 952 3 955Transactionswithowners: Redemptionofconvertible debentures - (9) (1,284) - - - - (1,293) - (1,293) Dividendspaidonconvertible debentures(netoftax) - (66) - - - - - (66) - (66) Dividendspaidonordinaryshares - - - - (323) - - (323) (4) (327)As at 30 September 2013 (Audited) 1,300 339 - 139 2,898 106 12 4,794 6 4,800Adjustmentduetoamendments inNZIAS19(refertoNote1) - - - - (3) - - (3) - (3)As at 30 September 2013 (Restated) 1,300 339 - 139 2,895 106 12 4,791 6 4,797

Three months ended 31 December 2013 (Unaudited)Profitafterincometaxexpense - 32 - - 233 - - 265 1 266 Netgainsfromchangesinfairvalue - - - - - 36 34 70 - 70 Incometaxeffect - - - - - (6) (9) (15) - (15)Exchangedifferences - - - - - 1 - 1 - 1 Incometaxeffect - - - - - - - - - - Transferredtoincomestatement - - - - - (48) (1) (49) - (49) Incometaxeffect - - - - - - - - - - Total comprehensive income for the three months ended 31 December 2013 - 32 - - 233 (17) 24 272 1 273 Transactionswithowners: Aggregationofnewentities (refertoNote10) - - - 4 - - - 4 - 4 As at 31 December 2013 (Unaudited) 1,300 371 - 143 3,128 89 36 5,067 7 5,074



Consolidated balance sheet asat31December2013 NZ Banking Group

31-Dec-13 31-Dec-12 30-Sep-13$ millions Note Unaudited Unaudited Audited

AssetsCashandbalanceswithcentralbanks 1,546 2,235 1,848Duefromotherfinancialinstitutions 367 424 173Derivativefinancialinstruments 3,361 4,965 3,661Tradingsecurities 4 4,121 4,672 4,313Available-for-salesecurities 2,724 2,826 2,715Loans 5,6 62,839 59,652 62,037Lifeinsuranceassets 302 252 289Duefromrelatedentities 899 1,584 1,036Investmentinassociate 48 48 48Goodwillandotherintangibleassets 724 663 714Property,plantandequipment 165 167 169Deferredtaxassets 134 210 154Otherassets 301 314 397

Total assets 77,531 78,012 77,554

LiabilitiesDuetootherfinancialinstitutions 423 741 335Deposits 7 48,901 45,554 48,182Derivativefinancialinstruments 3,084 4,953 3,786Tradingliabilities 8 517 328 498Debtissues 9 13,042 12,856 11,645Currenttaxliabilities 28 44 24 Provisions 72 75 87Otherliabilities 889 617 671

Total liabilities excluding related entities liabilities 66,956 65,168 65,228Subordinateddebentures 693 718 693Duetorelatedentities 4,808 6,392 6,836

Total related entities liabilities 5,501 7,110 7,529

Total liabilities 72,457 72,278 72,757

Net assets 5,074 5,734 4,797

EquityHead office accountBranchcapital 1,300 1,300 1,300Retainedprofits 371 266 339

Total head office account 1,671 1,566 1,639

Convertibledebentures - 1,284 -

NZ Banking Group equityOrdinarysharecapital 143 139 139Retainedprofits 3,128 2,685 2,895Available-for-salesecuritiesreserve 89 82 106Cashflowhedgereserve 36 (30) 12

Total equity attributable to owners of the NZ Banking Group 3,396 2,876 3,152Non-controllinginterests 7 8 6

Total equity 5,074 5,734 4,797

Interestearninganddiscountbearingassets 71,781 69,549 71,369Interestanddiscountbearingliabilities 63,875 62,229 63,671



Consolidated statement of cash flows forthethreemonthsended31December2013 NZ Banking Group

Three Months ThreeMonths Year Ended Ended Ended 31-Dec-13 31-Dec-12 30-Sep-13$ millions Unaudited Unaudited1 Audited

Cash flows from operating activitiesInterestincomereceived 967 974 3,801Interestexpensepaid (526) (539) (2,225)Non-interestincomereceived 145 159 646Netloans(advancedto)/repaidbycustomers (835) 205 (2,250)Netincreaseindeposits 719 2,164 4,792Netdecrease/(increase)intradingsecurities 556 (672) (363)Netincrease/(decrease)intradingliabilities 19 (190) (20)Netmovementinderivativefinancialinstruments (369) (341) (146)Operatingexpensespaid (263) (280) (800)Incometaxpaid (71) (79) (305)

Net cash provided by operating activities 342 1,401 3,130

Cash flows from investing activitiesPurchaseofavailable-for-salesecurities (2) (133) (23)Proceedsfrommaturitiesofavailable-for-salesecurities - - 26Netincreaseinlifeinsuranceassets (13) (15) (52)Netdecreaseinduefromrelatedentities 139 422 970Purchaseofcapitalisedcomputersoftware (21) (21) (98)Purchaseofproperty,plantandequipment (3) (12) (37)

Net cash provided by investing activities 100 241 786

Cash flows from financing activitiesNetincrease/(decrease)indebtissues 1,397 (58) (1,269)Netdecreaseinduetorelatedentities (2,035) (1,494) (1,053)Netincrease/(decrease)insubordinateddebentures - 6 (19)Netdecreaseinconvertibledebentures - - (1,293)Dividendspaidonconvertibledebentures - - (91)Dividendspaidtoordinaryshareholders - - (323)Dividendspaidtominorityshareholders - - (4)

Net cash used in financing activities (638) (1,546) (4,052)

Net (decrease)/increase in cash and cash equivalents (196) 96 (136)Cashandcashequivalentsatbeginningoftheperiod/year 1,686 1,822 1,822

Cash and cash equivalents at end of the period/year 1,490 1,918 1,686

Cash and cash equivalents comprise: Cashandbalanceswithcentralbanks 1,546 2,235 1,848 Duetootherfinancialinstitutions(net) (56) (317) (162)

Cash and cash equivalents at end of the period/year 1,490 1,918 1,6861 Thepresentationofthestatementofcashflowshasbeenrevisedtobetterreflectthenatureofourbusiness.Cashflowsfromloansanddepositshavebeenreclassified

frominvestingandfinancingactivities,respectively,tooperatingactivities.Comparativefigureshavebeenrevisedinordertoensureconsistency.Thesechangeshavehadnoimpactonthereportednet(decrease)/increaseincashandcashequivalents.



Notestothefinancialstatements

Note 1 Statement of accounting policies

Statutory baseInthesefinancialstatementsreferenceismadetothefollowingreportingentities:

■■ WestpacBankingCorporationGroup(otherwisereferredtoasthe‘Overseas Banking Group’)–referstothetotalworldwidebusinessofWestpacBankingCorporationincludingitscontrolledentities;

■■ WestpacBankingCorporation(otherwisereferredtoasthe‘Overseas Bank’)–referstotheworldwideactivitiesofWestpacBankingCorporationexcludingitscontrolledentities;

■■ WestpacBankingCorporation–NewZealandDivision(otherwisereferredtoasthe‘NZ Banking Group’)–referstotheNewZealandoperationsofWestpacBankingCorporationGroupincludingthoseentitieswhosebusinessisrequiredtobereportedinthefinancialstatementsoftheOverseasBankingGroup’sNewZealandbusiness;

■■ WestpacBankingCorporationNewZealandBranch(otherwisereferredtoasthe‘NZ Branch’)–referstotheNewZealandBranchofWestpacBankingCorporation(tradingasWestpac);and

■■ WestpacNewZealandLimited(otherwisereferredtoas‘Westpac New Zealand’)–referstoalocallyincorporatedsubsidiaryoftheOverseasBank(carryingontheOverseasBank’sNewZealandconsumer,businessandinstitutionalbankingoperations).

TheseconsolidatedfinancialstatementshavebeenpreparedandpresentedinaccordancewiththeRegisteredBankDisclosureStatements(OverseasIncorporatedRegisteredBanks)Order(No2)2013(‘Order’)andtheReserveBankofNewZealandAct1989(‘Reserve Bank Act’).ThesefinancialstatementshavealsobeenpreparedinaccordancewithGenerallyAcceptedAccountingPracticeinNewZealand,asappropriateforprofit-orientedentities,andtheNewZealandEquivalenttoInternationalAccountingStandard(‘NZ IAS’)34Interim Financial Reporting(‘NZ IAS 34’)andshouldbereadinconjunctionwiththeDisclosureStatementfortheyearended30September2013.ThesefinancialstatementscomplywithInternationalAccountingStandard34Interim Financial Reporting asissuedbytheInternationalAccountingStandardsBoard.AsoutlinedintheDisclosureStatementfortheyearended30September2013,anumberofnewstandardshavebecomeoperativefortheannualreportingperiodcommencing1October2013.Thefollowingnewandamendedstandardshaveanimpactonthesefinancialstatements:

■■ NZIFRS13Fair Value Measurement(‘NZ IFRS 13’)–Thenewstandardreplacesexistingguidanceonfairvaluemeasurementinseveralstandardswithasingle,unifieddefinitionoffairvalueandaframeworkformeasuringanddisclosingfairvalues.NZIFRS13appliestoallassetsandliabilitiesmeasuredatfairvalue,notjustfinancialinstruments.NZIAS34requiresthedisclosureofcertaininformationrelatingtofairvalueasprescribedinNZIFRS13andaccordinglythisdisclosureisprovidedinNote11FairValueofFinancialInstruments.

■■ NZIAS19Employee Benefits (‘NZ IAS 19’)–TheamendedstandardhasresultedinchangestothediscountrateappliedtothemeasurementoftheNZBankingGroup’sdefinedbenefitsuperannuationobligationwithretrospectiveapplication.

Adoptionoftheamendmenthasresultedinadjustmentstocomparativeinformationasoutlinedbelow.Theimpacttothecomparativeconsolidatedincomestatementsandconsolidatedstatementsofcomprehensiveincomeisnotmaterialandthereforethesestatementshavenotbeenrestated.However,theadjustmentsoutlinedbelowinrespectofthe30September2012balancesheethavealsobeenappliedtothe31December2012balancesheet.

NZ Banking Group NZBankingGroup Previously Previously Reported Increase/ Restated Reported Increase/ Restated

$ millions 30-Sep-13 (Decrease) 30-Sep-13 30-Sep-12 (Decrease) 30-Sep-12

Balance sheet (extract) Deferredtaxassets 159 (5) 154 209 (6) 203 Otherliabilities 689 (18) 671 721 (22) 699 Retainedprofits 2,882 13 2,895 2,526 16 2,542

ThesefinancialstatementswereauthorisedforissuebytheOverseasBank’sBoardofDirectors(‘Board’)on25February2014.TheBoardhasthepowertoamendthefinancialstatementsaftertheyareauthorisedforissue.

Basis of preparationThesefinancialstatementsarebasedonthegeneralprinciplesofhistoricalcostaccounting,asmodifiedbyfairvalueaccountingforavailable-for-salefinancialassets,financialassetsandfinancialliabilitiesatfairvaluethroughprofitorlossandallfinancialderivativecontracts.Thegoingconcernconceptandtheaccrualbasisofaccountinghavebeenadopted.AllamountsareexpressedinNewZealanddollarsunlessotherwisestated.Thesameaccountingpoliciesandmethodsofcomputationhavebeenfollowedinpreparingthesefinancialstatementsaswereusedinpreparingthefinancialstatementsfortheyearended30September2013,exceptasamendedforthechangesrequiredduetotheadoptionofthenewandamendedaccountingstandardsasexplainedinthe‘Statutorybase’section.Certaincomparativeinformationhasbeenrestatedtoensureconsistenttreatmentwiththecurrentreportingperiod.Wheretherehasbeenamaterialrestatementofcomparativeinformationthenatureof,andthereasonfor,therestatementisdisclosedintherelevantnote.



Note 2 Non-interest income NZ Banking Group

Three Months ThreeMonths Year Ended Ended Ended 31-Dec-13 31-Dec-12 30-Sep-13$ millions Unaudited Unaudited Audited

Fees and commissionsTransactionfeesandcommissions 58 60 233Lendingfees(loanandrisk) 16 16 66Othernon-riskfeeincome 10 8 35

Total fees and commissions 84 84 334

Wealth management revenueFeesfromtrustandotherfiduciaryactivities 9 6 33Netlifeinsuranceincomeandchangeinpolicyliabilities 21 19 82

Total wealth management revenue 30 25 115

Trading incomeForeignexchangetrading 23 21 86Interestratetrading 15 8 39

Total trading income 38 29 125

Net ineffectiveness on qualifying hedges 1 (1) (1)

Other non-interest incomeNetlossesonderivativesheldforriskmanagementpurposes - - (1)Dividendincome - - 2Gainonsaleofavailable-for-salesecurities 48 - -Other 1 10 11

Total other non-interest income 49 10 12

Total non-interest income 202 147 585

Duringthethreemonthsended31December2013,WestpacNewZealandrealisedagainof$48millionuponthesaleof$58millionofavailable-for-saleoverseasequitysecurities.Asat31December2013,theproceedsofthesalehadnotbeenreceivedandwererecordedasreceivablewithinotherassets.

Note 3 Impairment charges on loans NZ Banking Group

Other Loans Loans for Residential for Consumer Business$ millions Mortgages Purposes Purposes Total

Three months ended 31 December 2013 (Unaudited)Collectivelyassessedprovisions 1 2 12 15 Individuallyassessedprovisions 4 - (11) (7)Baddebtswritten-offdirectlytotheincomestatement 1 9 1 11 Interestadjustments (1) (2) (3) (6)

Total impairment charges on loans 5 9 (1) 13

Three months ended 31 December 2012 (Unaudited)Collectivelyassessedprovisions - 2 8 10Individuallyassessedprovisions 9 - 3 12Baddebtswritten-offdirectlytotheincomestatement 1 9 9 19Interestadjustments (1) (1) (4) (6)

Total impairment charges on loans 9 10 16 35

Year ended 30 September 2013 (Audited)Collectivelyassessedprovisions 7 4 (23) (12)Individuallyassessedprovisions 27 - 55 82Baddebtswritten-offdirectlytotheincomestatement 3 39 21 63Interestadjustments (4) (10) (14) (28)

Total impairment charges on loans 33 33 39 105



Note 4 Trading securities

NZ Banking Group

31-Dec-13 31-Dec-12 30-Sep-13$ millions Unaudited Unaudited Audited

Certificatesofdeposit 1,878 2,963 2,314Corporatebonds 657 561 643Mortgage-backedsecurities 3 4 3 NZGovernmentsecurities 770 360 480Localauthoritysecurities 449 394 410Off-shoresecurities 16 12 19Securitiespurchasedunderagreementtoresell 348 378 444

Total trading securities 4,121 4,672 4,313

Asat31December2013,theNZBankingGrouphad$161millionoftradingsecurities(31December2012:$16million,30September2013:$74million)thatwereencumberedthroughrepurchaseagreementsaspartofstandardtermsoftransactionswithotherbanks.

Note 5 Loans

NZ Banking Group


Overdrafts 1,217 1,180 1,281Creditcardoutstandings 1,421 1,380 1,352Moneymarketloans 854 1,062 997Termloans: Housing 38,078 35,964 37,596 Non-housing 20,907 19,826 20,542Other 847 855 821

Total gross loans 63,324 60,267 62,589Provisionsforimpairmentchargesonloans (485) (615) (552)

Total net loans 62,839 59,652 62,037

Asat31December2013,$3.9billionofhousingloansareusedbytheNZBankingGrouptosecuretheobligationsofWestpacSecuritiesNZLimited(‘WSNZL’)underWestpacNewZealand’sGlobalCoveredBondProgramme(‘CB Programme’)(31December2012:$2.9billion,30September2013:$4.2billion).ThesehousingloanswerenotderecognisedfromWestpacNewZealand’sfinancialstatementsinaccordancewiththeaccountingpoliciesoutlinedinNote1tothefinancialstatementsincludedintheDisclosureStatementfortheyearended30September2013.Asat31December2013,theNewZealanddollarequivalentofbondsissuedbyWSNZLundertheCBProgrammewas$2.2billion(31December2012:$2.0billion,30September2013:$2.2billion).

Note 6 Credit quality, impaired assets and provisions for impairment charges on loans NZ Banking Group

31-Dec-13 (Unaudited) Other Loans Loans for Residential for Consumer Business$ millions Mortgages Purposes Purposes Total

Total neither past due nor impaired 36,879 1,787 22,687 61,353

Past due assets: Lessthan90dayspastdue 1,060 139 249 1,448 Atleast90dayspastdue 55 16 79 150

Total past due assets 1,115 155 328 1,598 Individually impaired assets 84 - 289 373

Total gross loans 38,078 1,942 23,304 63,324

Individuallyassessedprovisions 28 - 129 157 Collectivelyassessedprovisions 69 69 231 369

Total provisions for impairment charges on loans and credit commitments 97 69 360 526 Provisionforcreditcommitments - - (41) (41)

Total provisions for impairment charges on loans 97 69 319 485

Total net loans 37,981 1,873 22,985 62,839



Note 7 Deposits

NZ Banking Group


Deposits at fair valueCertificatesofdeposit 1,244 1,591 1,534

Total deposits at fair value 1,244 1,591 1,534

Deposits at amortised costNon-interestbearing,repayableatcall 3,625 3,335 3,271Otherinterestbearing: Atcall 19,753 16,858 18,488 Term 24,279 23,770 24,889

Total deposits at amortised cost 47,657 43,963 46,648

Total deposits 48,901 45,554 48,182

TheNZBranchheldnoretaildepositsfromindividualsasat31December2013(31December2012:nil,30September2013:nil).

Note 8 Trading liabilities

NZ Banking Group


Held for tradingSecuritiessoldshort 356 312 424 Securitiessoldunderagreementstorepurchase 161 16 74

Total trading liabilities 517 328 498

Note 9 Debt issues

NZ Banking Group


Short-term debtCommercialpaper 4,440 4,054 2,776

Total short-term debt 4,440 4,054 2,776

Long-term debtNon-domesticmedium-termnotes 5,238 6,124 5,128Domesticmedium-termnotes 3,364 2,678 3,741

Total long-term debt 8,602 8,802 8,869

Total debt issues 13,042 12,856 11,645

Debtissuesatamortisedcost 8,602 8,771 8,869Debtissuesatfairvalue 4,440 4,085 2,776

Total debt issues 13,042 12,856 11,645

Movement in debt issuesBalanceatbeginningoftheperiod/year 11,645 12,914 12,914Issuanceduringtheperiod/year 3,022 1,343 7,641Repaymentsduringtheperiod/year (1,769) (1,643) (9,094)Effectofforeignexchangemovementsduringtheperiod/year 158 235 277Effectoffairvaluemovementsandfairvaluehedgeadjustmentsduringtheperiod/year (14) 7 (93)

Balance at end of the period/year 13,042 12,856 11,645

Asat31December2013,theNZBankingGrouphadNewZealandGovernmentguaranteeddebtof$1,889milliononissue(31December2012:$1,985million,30September2013:$1,881million).ForfurtherinformationonNewZealandGovernmentguaranteeddebtrefertoGuaranteearrangementsinWestpacNewZealand’sDisclosureStatementforthethreemonthsended31December2013.



Note 10 Related entitiesControlledentitiesoftheNZBankingGroupasat30September2013aresetoutinNote26tothefinancialstatementsincludedintheOverseasBank’sDisclosureStatementfortheyearended30September2013.On31December2013,theOverseasBankingGroupacquiredselectbusinessesofLloydsBankingGroupAustralia.AsaresultofthisacquisitionthefollowingentitieshavebeenincludedintheNZBankingGroup’saggregationasat31December2013:

■■ CapitalFinanceNewZealandLimited(‘CFNZL’);■■ Sie-Lease(NewZealand)PtyLimited(‘SLNZPL’);and■■ BOSInternational(Australia)LimitedNewZealandBranch(‘BOSILNZ’).SLNZPLisawhollyownedsubsidiaryofCFNZL.TheinclusionofCFNZL,SLNZPLandBOSILNZdidnothaveasignificantimpactontheNZBankingGroup’sfinancialpositionorresultsofoperationsforthethreemonthsended31December2013.Furthermore,BOSILNZwasremovedfromtheNewZealandCompaniesRegisteron7January2014.TherehavebeennootherchangestothestructureorcompositionoftheNZBankingGroupsince30September2013.ThetotalliabilitiesoftheNZBranch,netofamountsduetorelatedentitiesasat31December2013,amountedto$4,272million(31December2012:$5,818million,30September2013:$4,498million).

Note 11 Fair value of financial instruments

Fair valuation control frameworkTheNZBankingGroup’scontrolenvironmentusesawell-establishedFairValuationControlFrameworktoensurethatfairvalueiseitherdeterminedorvalidatedbyafunctionthatisindependentofthepartythatundertakesthetransaction.ThemethodofdeterminingafairvalueaccordingtotheFairValuationControlFrameworkdiffersdependingontheinformationavailable.

Quoted price in an active marketThebestevidenceoffairvalueisaquotedpriceinanactivemarket.

Valuation techniquesWherenodirectquotedpriceinanactivemarketisavailable,theNZBankingGroupappliespresentvalueestimatesorothermarketacceptedvaluationtechniques.Theuseofamarketacceptedvaluationtechniquewilltypicallyinvolvetheuseofavaluationmodelandappropriateinputstothemodel.ThemajorityofmodelsusedbytheNZBankingGroupemployonlyobservablemarketdataasinputs.However,forcertainfinancialinstrumentsdatamaybeemployedwhichisnotreadilyobservableincurrentmarkets.Typicallyintheseinstancesvaluationinputswillbederivedusingalternativemeans(includingextrapolationfromotherrelevantmarketdata)andtestedagainsthistorictransactions.Theuseoftheseinputswillrequireahighdegreeofmanagementjudgment.

Fair value hierarchyTheNZBankingGroupcategorisesallfairvaluemeasurementsaccordingtothefollowingfairvaluehierarchy:

■■ Quotedmarketprice(‘Level 1’) Financialinstrumentsvaluedusingrecentunadjustedquotedpricesinactivemarketsforidenticalassetsorliabilities.

FinancialinstrumentsincludedintheLevel1categoryareexchange-tradedequitiesandspotandexchangedtradedderivatives.

■■ Valuationtechniquesusingobservableinputs(‘Level 2’) Valuationtechniquesusingobservablemarketpricesappliedtotheseassetsorliabilitiesincludetheuseofdiscounted

cashflowanalysis,optionpricingmodelsandothervaluationtechniqueswidelyusedandacceptedbymarketparticipants.Managementjudgmentwillbeusedintheapplicationofthesetechniques(e.g.theselectionoftheappropriatediscountratetovalueabond).

Thefinancialinstrumentsincludedinthiscategoryaremainlyover-the-counterderivativeswithobservablemarketinputsandfinancialinstrumentsforwhichfairvalueisderivedfromconsensuspricingwithsufficientcontributors.

FinancialinstrumentsincludedintheLevel2categoryare:■ depositsatfairvalue,debtissuesatfairvalue,lifeinsuranceassets,tradingliabilities,reverserepurchaseagreements

withrelatedparties,andtradingandavailable-for-saledebtsecuritiesincludingcertificatesofdeposit,corporatebonds,mortgage-backedsecurities,NZGovernmentsecurities,localauthoritysecurities,off-shoresecuritiesandsecuritiespurchasedunderagreementstoresell;and

■ derivativesincludinginterestrateswaps,interestrateforwards,interestrateoptionsandforeignexchangeforwardsandforeignexchangeswaps.

■■ Valuationtechniquewithsignificantnon-observableinputs(‘Level 3’) Financialinstrumentsvaluedusingatleastoneinputthatcouldhaveasignificanteffectontheinstrument’svaluationwhich

isnotbasedonobservablemarketdata(unobservableinput).Unobservableinputsarethosenotreadilyavailableinanactivemarketduetoilliquidityorcomplexityoftheproduct.Theseinputsaregenerallyderivedandextrapolatedfromotherrelevantmarketdataandcalibratedagainstcurrentmarkettrendsandhistorictransactions.

FinancialinstrumentsincludedintheLevel3categoryareNZunlistedequitysecurities,long-datedNZDcapsandinflationindexedderivativeinstruments.

Afinancialinstrument’scategorisationwithinthevaluationhierarchyisbasedonthelowestlevelinputthatissignificanttothefairvaluemeasurement.



Note 11 Fair value of financial instruments (continued)Thefollowingtablesummarisestheattributionoffinancialinstrumentstothefairvaluehierarchybasedonthemeasurementbasisafterinitialrecognition:

NZ Banking Group 31-Dec-13$ millions Level 1 Level 2 Level 31 Total

Financial assetsDerivativefinancialinstruments - 3,360 1 3,361 Tradingsecurities - 4,121 - 4,121 Available-for-salesecurities 59 2,637 28 2,724 Lifeinsuranceassets - 302 - 302 Duefromrelatedentities - 786 - 786

Total financial assets carried at fair value 59 11,206 29 11,294

Financial liabilitiesDepositsatfairvalue - 1,244 - 1,244 Derivativefinancialinstruments - 3,080 4 3,084 Tradingliabilities - 517 - 517 Debtissuesatfairvalue - 4,440 - 4,440 Duetorelatedentities - 626 - 626

Total financial liabilities carried at fair value - 9,907 4 9,9111 BalanceswithinthiscategoryofthefairvaluehierarchyarenotconsideredmaterialtothetotalAvailable-for-salesecuritiesortotalDerivativefinancialinstruments

balances.

Transfersbetweenlevelsofthefairvaluehierarchyaredeterminedattheendofthereportingperiod.TherehavebeennosignificanttransfersbetweenLevels1and2duringthethreemonthsended31December2013.Therehavealsobeennosignificanttransfersinto/outofLevel3duringthethreemonthsended31December2013.

Classification of financial instruments and estimates of fair valueFinancialassetsandfinancialliabilitiesaremeasuredonanongoingbasiseitheratfairvalueoratamortisedcost.Thefairvalueistheamountforwhichanassetcouldbeexchanged,oraliabilitysettled,inanarm’slengthtransactionbetweenknowledgeable,willingparties.Thefairvaluedisclosuredoesnotcoverthoseinstrumentsthatarenotconsideredtobefinancialinstrumentsfromanaccountingperspective,suchasincometaxandintangibleassets.Thetablebelowsummarisesfinancialinstrumentsforwhichthecarryingamountinthebalancesheetisdifferentfromtheestimatedfairvalue:

NZ Banking Group 31-Dec-13 Total Carrying Estimated$ millions Amount Fair Value

Financial assetsLoans 62,839 62,691

Total financial assets 62,839 62,691

Financial liabilitiesDeposits 47,657 47,727 Debtissues 8,602 9,013 Subordinateddebentures 693 669

Total financial liabilities 56,952 57,409

Forcashandbalanceswithcentralbanks,duefromandduetootherfinancialinstitutions,non-derivativebalancesduefromandduetorelatedentitiesatamortisedcostandothertypesofshort-termfinancialinstrumentsrecognisedinthebalancesheetunder‘otherassets’and‘otherliabilities’,thecarryingamountisequivalenttofairvalue.Theseitemsareeithershort-terminnatureorrepricefrequently,andareofahighcreditrating.



Note 12 Commitments and contingent liabilities NZ Banking Group


Commitments for capital expenditureDuewithinoneyear 3 1 3

Other expenditure commitments: Oneyearorless 85 106 108 Betweenoneandfiveyears 216 281 209 Overfiveyears 1 2 1

Total other expenditure commitments 302 389 318

Lease commitments (all leases are classified as operating leases)Premisesandsites 255 258 263Motorvehicles 7 10 7

Total lease commitments 262 268 270

Lease commitments are due as follows: Oneyearorless 42 52 54 Betweenoneandfiveyears 148 135 145 Overfiveyears 72 81 71

Total lease commitments 262 268 270

Other contingent liabilities and commitmentsDirectcreditsubstitutes 326 331 330Loancommitmentswithcertaindrawdown 200 176 205Transaction-relatedcontingentitems 776 917 818Short-term,self-liquidatingtrade-relatedcontingentliabilities 409 411 386Othercommitmentstoprovidefinancialservices 19,741 19,223 19,460

Total other contingent liabilities and commitments 21,452 21,058 21,199

Note 13 Segment informationTheNZBankingGroupoperatespredominantlyintheconsumer,businessandinstitutionalbankingsectorswithinNewZealand.Onthisbasis,nogeographicalsegmentinformationisprovided.Thebasisofsegmentreportingreflectsthemanagementofthebusiness,ratherthanthelegalstructureoftheNZBankingGroup.Thereisnodifferenceinaccountingmeasurementbetweenthemanagementandlegalstructures.Theoperatingsegmentresultshavebeenpresentedonamanagementreportingbasisandconsequentlyinternalchargesandtransferpricingadjustmentshavebeenreflectedintheperformanceofeachoperatingsegment.Intersegmentpricingisdeterminedonacostrecoverybasis.TheNZBankingGroupdoesnotrelyonanysinglemajorcustomerforitsrevenuebase.TheNZBankingGroup’soperatingsegmentshavechangedinthecurrentreportingperiodasaresultofchangesintheinformationprovidedtothe‘chiefoperatingdecisionmaker’.Comparativeinformationhasbeenrestatedtoensureconsistentpresentationwiththecurrentreportingperiod.TheNZBankingGroup’soperatingsegmentsaredefinedbythecustomerstheyserveandtheservicestheyprovide.TheNZBankingGrouphasidentifiedthefollowingmainoperatingsegments:

■■ RetailBankingprovidesfinancialservicespredominantlyforindividuals;■■ BusinessBankandWealthprovidesfinancialservicesforsmalltomediumsizedenterprisecustomersandhighnetworthindividuals,andprovidesfundsmanagementandinsurancedistributionservicestoarangeofcustomers;and

■■ CorporateandInstitutionalprovidesabroadrangeoffinancialservicestocorporate,agricultural,institutionalandgovernmentcustomers,andthesupplyofderivativesandriskmanagementproductstotheentireWestpaccustomerbaseinNewZealand.

Reconcilingitemsprimarilyrepresent:■■ businessunitsthatdonotmeetthedefinitionofoperatingsegmentsunderNZIFRS8Operating Segments;■■ eliminationentriesonconsolidation/aggregationoftheresults,assetsandliabilitiesoftheNZBankingGroup’scontrolledentitiesinthepreparationoftheaggregatedfinancialstatementsoftheNZBankingGroup;and

■■ resultsofcertainbusinessunitsexcludedformanagementreportingpurposes,butincludedwithintheaggregatedfinancialstatementsoftheNZBankingGroupforstatutoryfinancialreportingpurposes.



Note 13 Segment information (continued) NZ Banking Group Retail Business Bank Corporate and Reconciling $ millions Banking and Wealth Institutional Items1 Total

Three months ended 31 December 2013 (Unaudited)Netinterestincome 181 83 98 18 380 Non-interestincome 50 43 57 52 202

Net operating income 231 126 155 70 582

Netoperatingincomefromexternalcustomers 303 132 252 (105) 582 Netinternaloperatingexpense (72) (6) (97) 175 -


Operatingexpenses (35) (19) (20) (148) (222)Impairment(charges)/recoveriesonloans (12) (2) 1 - (13)

Profit before income tax expense 184 105 136 (78) 347

Total gross loans 29,081 13,526 20,857 (140) 63,324 Total deposits 22,600 13,496 11,561 1,244 48,901

Three months ended 31 December 2012 (Unaudited)Netinterestincome 174 79 102 37 392Non-interestincome 47 40 57 3 147


Netoperatingincomefromexternalcustomers 289 129 260 (139) 539Netinternaloperatingexpense (68) (10) (101) 179 -


Operatingexpenses (37) (20) (22) (155) (234)Impairmentchargesonloans (15) (1) (19) - (35)

Profit before income tax expense 169 98 118 (115) 270

Total gross loans 27,191 12,985 20,295 (204) 60,267Total deposits 20,992 12,625 10,346 1,591 45,554

Year ended 30 September 2013 (Unaudited)Netinterestincome 701 313 408 156 1,578Non-interestincome 183 156 260 (14) 585

Net operating income 884 469 668 142 2,163

Netoperatingincomefromexternalcustomers 1,138 490 1,052 (517) 2,163Netinternaloperatingexpense (254) (21) (384) 659 -

Net operating income 884 469 668 142 2,163

Operatingexpenses (139) (77) (79) (582) (877)Impairmentchargesonloans (63) (2) (41) 1 (105)Shareofprofitofassociateaccountedforusingtheequitymethod - - - 1 1

Profit before income tax expense 682 390 548 (438) 1,182

Total gross loans 28,590 13,414 20,745 (160) 62,589Total deposits 22,012 13,434 11,202 1,534 48,1821 Includedinthereconcilingitemsfortotaloperatingexpensesis$151million(31December2012:$160million;30September2013:$582million)ofheadoffice

operatingexpenses,whicharenotallocatedtoabusinessunitthatmeetsthedefinitionofanoperatingsegment.

Note 14 Insurance businessThefollowingtablepresentstheaggregateamountoftheNZBankingGroup’sinsurancebusinessconductedthroughoneofitscontrolledentities,WestpacLife-NZ-LimitedcalculatedinaccordancewiththeOverseasBank’sconditionsofregistrationasatthereportingdate:

NZ Banking Group

31-Dec-13 $ millions Unaudited

Totalassets 269

AsapercentageoftotalassetsoftheNZBankingGroup 0.35%



Note 15 Risk managementA

15.1 Credit risk

The NZ Banking Group’s residential mortgages by loan-to-value ratio (‘LVR’) as at 31 December 2013 (Unaudited) InordertocalculateoriginationLVR,thecurrentexposureisthatusedintheinternalratingsbasedapproachformortgagelending.Forloansoriginatedfrom1January2008,theNZBankingGrouputilisesitsloanoriginationsystem.Forloansoriginatedpriorto1January2008,theoriginationLVRisnotseparatelyrecorded,andtherefore,isnotavailablefordisclosureasrequiredunderClause1ofSchedule9totheOrder.Fortheseloans,theNZBankingGrouputilisesitsdynamicLVRprocesstocalculateanoriginationLVR.ExposuresforwhichnoLVRisavailablehavebeenincludedinthe‘Exceeds90%’categoryinaccordancewiththerequirementsoftheOrder.

NZ Banking Group

31-Dec-13 (Unaudited) Does not Exceeds 80%LVR range ($ millions) Exceed 80% and not 90% Exceeds 90% Total

On-balancesheetexposures 29,551 5,665 2,766 37,982 Undrawncommitmentsandotheroff-balancesheetexposures 6,707 433 186 7,326

Value of exposures 36,258 6,098 2,952 45,308

15.2 Market risk ThefollowingtableprovidesasummaryoftheNZBankingGroup’snotionalcapitalchargesbyrisktypeasatthereportingdate.

NZ Banking Group

31-Dec-13 (Unaudited) Implied Notional Risk-weighted Capital $ millions Exposure Charge

End-of-periodInterestraterisk 2,576 206 Foreigncurrencyrisk 124 10 Equityrisk 87 7

15.3 Liquidity risk

Liquid assets ThetablebelowshowstheNZBankingGroup’sholdingofliquidassetsandrepresentsthekeyliquidityinformationprovidedtomanagement.LiquidassetsincludehighqualityassetsreadilyconvertibletocashtomeettheNZBankingGroup’sliquidityrequirements.Inmanagement’sopinion,liquidityissufficienttomeettheNZBankingGroup’spresentrequirements.

NZ Banking Group

31-Dec-13 $ millions Unaudited

Cashandbalanceswithcentralbanks 1,546 Duefromotherfinancialinstitutions 300 Supranationalsecurities 431 NZGovernmentsecurities 2,537 NZpublicsecurities 460 NZcorporatesecurities 1,980 Residentialmortgage-backedsecurities 3,992

Total liquid assets 11,246



Note 16 Concentration of credit exposures to individual counterpartiesThefollowingcreditexposuresarebasedonactualcreditexposurestoindividualcounterpartiesandgroupsofcloselyrelatedcounterparties.Thenumberofindividualbankcounterparties(whicharenotmembersofagroupofcloselyrelatedcounterparties),andgroupsofcloselyrelatedcounterpartiesofwhichabankistheparent,towhichtheNZBankingGrouphasanaggregatecreditexposureorpeakend-of-dayaggregatecreditexposurethatequalsorexceeds10%oftheOverseasBankingGroup’sequity:

■■ asat31December2013wasnil;and■■ inrespectofpeakend-of-dayaggregatecreditexposureforthethreemonthsended31December2013wasnil.Thenumberofindividualnon-bankcounterparties(whicharenotmembersofagroupofcloselyrelatedcounterparties),andgroupsofcloselyrelatedcounterpartiesofwhichabankisnottheparent,towhichtheNZBankingGrouphasanaggregatecreditexposureorpeakend-of-dayaggregatecreditexposurethatequalsorexceeds10%oftheOverseasBankingGroup’sequity:

■■ asat31December2013wasnil;and■■ inrespectofpeakend-of-dayaggregatecreditexposureforthethreemonthsended31December2013wasnil.Thepeakend-of-dayaggregatecreditexposureshavebeencalculatedbydeterminingthemaximumend-of-dayaggregateamountofactualcreditexposureovertherelevantthree-monthperiodandthendividingthatamountbytheOverseasBankingGroup’sequityasat30September2013.Creditexposurestoindividualcounterparties(notbeingmembersofagroupofcloselyrelatedcounterparties)andtogroupsofcloselyrelatedcounterpartiesexcludeexposurestothecentralgovernmentofanycountrywithalong-termcreditratingofA-orA3orabove,oritsequivalent,ortoanybankwithalong-termcreditratingofA-orA3orabove,oritsequivalent.ThesecalculationsrelateonlytoexposuresheldinthefinancialrecordsoftheNZBankingGroup(excludingexposuresbookedoutsideNewZealand)andwerecalculatednetofindividuallyassessedprovisions.

Note 17 Overseas Bank and Overseas Banking Group capital adequacyThetablebelowrepresentsthecapitaladequacycalculationfortheOverseasBankandOverseasBankingGroupbasedontheAustralianPrudentialRegulationAuthority’s(‘APRA’)applicationoftheBaselIIIcapitaladequacyframework.TheinformationforthecomparativereportingperiodiscalculatedbasedonAPRA’sapplicationoftheBasel2.5capitaladequacyframework.

31-Dec-13 31-Dec-12% Unaudited Unaudited

Overseas Banking Group1, 2

CommonEquityTierOneCapitalratio 8.3 8.8AdditionalTierOneCapitalratio 1.5 1.9

TierOneCapitalratio 9.8 10.7TierTwoCapitalratio 1.5 1.4

TotalRegulatoryCapitalratio 11.3 12.1

Overseas Bank (Extended Licensed Entity)1, 2

CommonEquityTierOneCapitalratio 8.5 8.5AdditionalTierOneCapitalratio 1.6 2.0

TierOneCapitalratio 10.1 10.5TierTwoCapitalratio 1.6 1.8

TotalRegulatoryCapitalratio 11.7 12.31 ThecapitalratiosrepresentinformationmandatedbyAPRA.2 ThecapitalratiosoftheOverseasBankingGroupandtheOverseasBank(ExtendedLicensedEntity)arepubliclyavailableintheOverseasBankingGroup’sPillar3

report.ThisinformationismadeavailabletousersviatheOverseasBank’swebsite(www.westpac.com.au).

APRA’snewcapitalstandardscameintoeffecton1January2013.TheOverseasBankingGroupisaccreditedbyAPRAtoapplytheAdvancedInternalRatingsBased(‘Advanced IRB’)approachforcreditrisk,theAdvancedMeasurementApproach(‘AMA’)foroperationalriskandtheinternalmodelapproachforinterestrateriskinthebankingbookforcalculatingregulatorycapital(knownas‘AdvancedAccreditation’)andisrequiredbyAPRAtoholdminimumcapitalatleastequaltothatspecifiedundertheAdvancedIRBandAMAmethodologies.UnderNewZealandregulationsthismethodologyisreferredtoastheBaselIII(internalmodelsbased)approach.Withthisaccreditation,theOverseasBankingGroupisrequiredtodiscloseadditionaldetailedinformationonitsriskmanagementpracticesandcapitaladequacyonaquarterlyandasemi-annualbasis.ThisinformationismadeavailabletousersviatheOverseasBankingGroup’swebsite(www.westpac.com.au).TheaimistoallowthemarkettobetterassesstheOverseasBankingGroup’sriskandrewardassessmentprocessandhenceincreasethescrutinyofthisprocess.TheOverseasBankingGroup,andtheOverseasBank(ExtendedLicensedEntityasdefinedbyAPRA),exceededtheminimumcapitaladequacyrequirementsasspecifiedbyAPRAasat31December2013.APRAspecifiesaminimumprudentialcapitalratiofortheOverseasBankingGroup,whichisnotmadepubliclyavailable.

www.westpac.com.au

www.westpac.com.au



Note 18 Other information on the Overseas Banking GroupOtherinformationontheOverseasBankingGroupisfromthemostrecentlypublishedfinancialstatementsoftheOverseasBankingGroupfortheyearended30September2013.

30-Sep-13Profitability Audited

Netprofitaftertaxfortheyearended30September2013(A$millions) 6,890 Netprofitaftertax(fortheyearended30September2013)asapercentageofaveragetotalassets 1.0%

30-Sep-13Total assets and equity Audited

Totalassets(A$millions) 696,603 Percentagechangeintotalassetsovertheyearended30September2013 3.2%Totalequity(A$millions) 46,618

30-Sep-13Asset quality Audited

Totalindividuallyimpairedassets1,2(A$millions) 3,153 Asapercentageoftotalassets 0.5%Totalindividualcreditimpairmentallowance(A$millions) 1,364 Asapercentageoftotalindividuallyimpairedassets 43.3%Totalcollectivecreditimpairmentallowance(A$millions) 2,5851 Totalindividuallyimpairedassetsarebeforeallowancesforcreditimpairmentlossandnetofinterestheldinsuspense.2 Non-financialassetshavenotbeenacquiredthroughtheenforcementofsecurity.

Note 19 Events after the reporting dateOn18February2014,WestpacNewZealandissued$325millionofdomesticseniorunsecuredmediumtermnotes.

Westpac Banking Corporation ABN 33 007 457 141, incorporated in Australia (New Zealand division).

westpac banking corporation - new zealand division€¦ · the second working day after the day on...

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