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Westpac Banking Corporation - New Zealand DivisionDisclosure Statement For the nine months ended 30 June 2013

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

Westpac Banking Corporation–NewZealandDivision1

General information and definitionsCertainoftheinformationcontainedinthisDisclosureStatementisrequiredbysection81oftheReserveBankofNewZealandAct1989(‘Reserve Bank Act’)andtheRegisteredBankDisclosureStatements(OverseasIncorporatedRegisteredBanks)Order2013(‘Order’).InthisDisclosureStatement,referenceismadetofivemainreportinggroups:

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

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

■■ WestpacBankingCorporation-NewZealandDivision(otherwisereferredtoasthe‘NZ Banking Group’)–referstotheNewZealandoperationsofWestpacBankingCorporationGroupincludingthoseentitieswhosebusinessisrequiredtobereportedinthefinancialstatementsoftheOverseasBankingGroup’sNewZealandbusiness.ControlledentitiesoftheNZBankingGroupasat30September2012aresetoutinNote26tothefinancialstatementsincludedintheOverseasBank’sDisclosureStatementfortheyearended30September2012.ExceptasdetailedinNote10tothefinancialstatementsincludedinthisDisclosureStatement,therehavebeennootherchangesinthestructureorcompositionoftheNZBankingGroupsince30September2012;

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

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

WordsandphrasesnotdefinedinthisDisclosureStatement,butdefinedbytheOrder,havethemeaninggivenbytheOrderwhenusedinthisDisclosureStatement.AllamountsreferredtointhisDisclosureStatementareinNewZealanddollarsunlessotherwisestated.

General matters

DirectorsTheDirectorsoftheOverseasBankatthetimethisDisclosureStatementwassignedwere:Lindsay Philip Maxsted,DipBus(Gordon),FCA,FAICD–ChairmanGail Patricia Kelly, HigherDipEd,BA,MBA,HonDBus–ManagingDirector&ChiefExecutiveOfficer John Simon Curtis AM,BA,LLB(Hons.)–DeputyChairmanElizabeth Blomfield Bryan AM, BA(Econ.),MA(Econ.)Gordon McKellar Cairns,MA(Hons.)Ewen Graham Wolseley Crouch AM,BEc(Hons.),LLBRobert 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

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

ThefollowingchangesinthecompositionoftheOverseasBank’sBoardofDirectors(the ‘Board’)havebeeneffectedsince30September2012:

■■ PeterWilsonretiredfromtheBoardattheconclusionofWestpacBankingCorporation’s2012AnnualGeneralMeetingon13December2012;

■■ RobertElstonewasappointedasChairmanoftheOverseasBank’sBoardAuditCommitteeeffective13December2012;■■ EwenCrouchwasappointedtotheBoardeffective1February2013;and■■ PeterMarriottwasappointedtotheBoardeffective1June2013.

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

TherehavebeennochangestotheaboveOverseasBank’screditratingsorratingoutlookssince30September2012.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 Group

DisclosureStatementsoftheOverseasBankforthelastfiveyearsareavailable,freeofcharge,attheinternetaddresswww.westpac.co.nz.Aprintedcopywillalsobemadeavailable,freeofcharge,uponrequestandwillbedispatchedbytheendofthesecondworkingdayafterthedayonwhichtherequestismade.ThemostrecentlypublishedfinancialstatementsoftheOverseasBankandtheOverseasBankingGrouparefortheyearended30September2012andforthesixmonthsended31March2013andcanbeaccessedattheinternetaddresswww.westpac.com.au.

Guarantee arrangementsAsatthedatethisDisclosureStatementwassigned,nomaterialobligationsoftheOverseasBankthatrelatetotheNZBranchareguaranteed.


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,overtheninemonthsended30June2013:(a) theOverseasBankhascompliedwiththeconditionsofregistrationimposedonitpursuanttosection74oftheReserveBank

Act;and(b) theNZBranchhadsystemsinplacetomonitorandcontroladequatelytheNZBankingGroup’smaterialrisks,including

creditrisk,concentrationofcreditrisk,interestraterisk,currencyrisk,equityrisk,liquidityriskandotherbusinessrisks,andthatthosesystemswerebeingproperlyapplied.

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

PeterGrahamClare

KarenLeeAnnSilk

Datedthisthe21stdayofAugust2013


Index to financial statementsPage Contents5 Consolidatedincomestatement6 Consolidatedstatementofcomprehensiveincome7 Consolidatedstatementofchangesinequity8 Consolidatedbalancesheet9 Consolidatedstatementofcashflows10 Notestothefinancialstatements10 Note1Statementofaccountingpolicies11 Note2Non-interestincome11 Note3Impairmentchargesonloans12 Note4Tradingsecurities12 Note5Loans12 Note6Creditquality,impairedassetsandprovisionsforimpairmentchargesonloans13 Note7Deposits13 Note8Tradingliabilities13 Note9Debtissues14 Note10Relatedentities14 Note11Commitmentsandcontingentliabilities14 Note12Segmentinformation16 Note13Insurancebusiness16 Note14Riskmanagement16 14.1Creditrisk16 14.2Marketrisk17 14.3Liquidityrisk17 Note15Concentrationofcreditexposurestoindividualcounterparties18 Note16OverseasBankandOverseasBankingGroupcapitaladequacy18 Note17OtherinformationontheOverseasBankingGroup19 Note18Eventsafterthereportingdate


Consolidated income statement fortheninemonthsended30June2013 NZ Banking Group

Nine Months NineMonths Year Ended Ended Ended 30-Jun-13 30-Jun-12 30-Sep-12$ millions Note Unaudited Unaudited Audited

Interestincome 2,845 2,987 3,965Interestexpense (1,661) (1,849) (2,440)

Net interest income 1,184 1,138 1,525Non-interestincome 2 442 424 582

Net operating income 1,626 1,562 2,107Operatingexpenses (667) (651) (872)Impairmentchargesonloans 3 (84) (125) (184)

Operating profit 875 786 1,051Shareofprofitofassociateaccountedforusingtheequitymethod - - 1

Profit before income tax expense 875 786 1,052Incometaxexpense (243) (213) (293)

Profit after income tax expense 632 573 759

Profit after income tax expense attributable to: HeadofficeaccountandownersoftheNZBankingGroup 629 571 756 Non-controllinginterests 3 2 3

632 573 759

Theaccompanyingnotes(numbered1to18)formpartof,andshouldbereadinconjunctionwith,thesefinancialstatements.


Consolidated statement of comprehensive income fortheninemonthsended30June2013 NZ Banking Group

Nine Months NineMonths Year Ended Ended Ended 30-Jun-13 30-Jun-12 30-Sep-12$ millions Unaudited Unaudited Audited

Profit after income tax expense 632 573 759

Other comprehensive income which may be reclassified to the income statement: Available-for-salesecurities: Netunrealisedgainsfromchangesinfairvalueofavailable-for-salesecurities 29 71 66 Exchangedifferences 6 (3) (6) Incometaxeffect (1) (14) (11) Cashflowhedges: Netgainsfromchangesinfairvalueofcashflowhedges 53 88 56 Incometaxeffect (15) (25) (16)

Total other comprehensive income which may be reclassified to the income statement 72 117 89

Other comprehensive income/(expense) which will not be reclassified to the income statement: Actuarialgains/(losses)onemployeedefinedbenefitsuperannuationschemes 6 - (25) Incometaxeffect (2) - 7

Total other comprehensive income/(expense) which will not be reclassified to the income statement 4 - (18)

Total other comprehensive income, net of tax 76 117 71

Total comprehensive income 708 690 830

Total comprehensive income attributable to: HeadofficeaccountandownersofNZBankingGroup 705 688 827 Non-controllinginterests 3 2 3

708 690 830



Consolidated statement of changes in equity fortheninemonthsended30June2013 NZ Banking Group

Head Office Account NZ Banking Group Equity Available- Total 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 2011 1,300 89 1,284 139 1,984 31 (74) 4,753 8 4,761

Nine months ended 30 June 2012 (Unaudited)Profitafterincometaxexpense - 141 - - 430 - - 571 2 573Netgainsfromchangesinfairvalue - - - - - 71 88 159 - 159Exchangedifferences - - - - - (3) - (3) - (3) Incometaxeffect - - - - - (14) (25) (39) - (39)Actuariallossesonemployeedefined benefitsuperannuationschemes - - - - - - - - - - Incometaxeffect - - - - - - - - - -

Total comprehensive income for the nine months ended 30 June 2012 - 141 - - 430 54 63 688 2 690

Transactionswithowners: Dividendspaidonconvertible debentures(netoftax) - (36) - - - - - (36) - (36) Dividendspaidonordinaryshares - - - - - - - - (4) (4)

As at 30 June 2012 (Unaudited) 1,300 194 1,284 139 2,414 85 (11) 5,405 6 5,411

Year ended 30 September 2012 (Audited)Profitafterincometaxexpense - 196 - - 560 - - 756 3 759Netgainsfromchangesinfairvalue - - - - - 66 56 122 - 122Exchangedifferences - - - - - (6) - (6) - (6) Incometaxeffect - - - - - (11) (16) (27) - (27)Actuariallossesonemployeedefined benefitsuperannuationschemes - - - - (25) - - (25) - (25) Incometaxeffect - - - - 7 - - 7 - 7

Total comprehensive income for the year ended 30 September 2012 - 196 - - 542 49 40 827 3 830


As at 30 September 2012 (Audited) 1,300 213 1,284 139 2,526 80 (34) 5,508 7 5,515

Nine months ended 30 June 2013 (Unaudited)Profitafterincometaxexpense - 160 - - 469 - - 629 3 632 Netgainsfromchangesinfairvalue - - - - - 29 53 82 - 82 Exchangedifferences - - - - - 6 - 6 - 6 Incometaxeffect - - - - - (1) (15) (16) - (16) Actuarialgainsonemployeedefined benefitsuperannuationschemes - - - - 6 - - 6 - 6 Incometaxeffect - - - - (2) - - (2) - (2)

Total comprehensive income for the nine months ended 30 June 2013 - 160 - - 473 34 38 705 3 708


As at 30 June 2013 (Unaudited) 1,300 337 1,284 139 2,999 114 4 6,177 6 6,183



Consolidated balance sheet asat30June2013 NZ Banking Group

30-Jun-13 30-Jun-12 30-Sep-12$ millions Note Unaudited Unaudited Audited

AssetsCashandbalanceswithcentralbanks 1,644 1,404 1,714Duefromotherfinancialinstitutions 172 308 322Derivativefinancialinstruments 4,285 5,328 5,506Tradingsecurities 4 4,065 6,732 4,028Available-for-salesecurities 2,791 2,658 2,694Loans 5,6 60,936 59,198 59,892Lifeinsuranceassets 274 226 237Duefromrelatedentities 2,043 1,761 2,006Investmentinassociate 48 48 48Goodwillandotherintangibleassets 695 634 652Property,plantandequipment 166 157 162Currenttaxassets 48 8 -Deferredtaxassets 176 205 209Otherassets 355 296 384

Total assets 77,698 78,963 77,854

LiabilitiesDuetootherfinancialinstitutions 1,350 496 214Deposits 7 46,379 41,845 43,390Derivativefinancialinstruments 3,994 5,512 5,841Tradingliabilities 8 522 919 518Debtissues 9 11,944 15,887 12,914Currenttaxliabilities - - 49Provisions 84 90 96Otherliabilities 600 619 721

Total liabilities excluding related entities liabilities 64,873 65,368 63,743Subordinateddebentures 740 752 712Duetorelatedentities 5,902 7,432 7,884

Total related entities liabilities 6,642 8,184 8,596

Total liabilities 71,515 73,552 72,339

Net assets 6,183 5,411 5,515

EquityHead office accountBranchcapital 1,300 1,300 1,300Retainedprofits 337 194 213

Total head office account 1,637 1,494 1,513

Convertibledebentures 1,284 1,284 1,284

NZ Banking Group equityOrdinarysharecapital 139 139 139Retainedprofits 2,999 2,414 2,526Available-for-salesecuritiesreserve 114 85 80Cashflowhedgereserve 4 (11) (34)

Total equity attributable to owners of the NZ Banking Group 3,256 2,627 2,711Non-controllinginterests 6 6 7

Total equity 6,183 5,411 5,515

Interestearninganddiscountbearingassets 69,964 70,716 69,024Interestanddiscountbearingliabilities 62,509 62,813 60,877



Consolidated statement of cash flows fortheninemonthsended30June2013 NZ Banking Group


Cash flows from operating activitiesInterestincomereceived 2,841 2,986 3,955Interestexpensepaid (1,682) (1,894) (2,436)Non-interestincomereceived 464 432 562Net(increase)/decreaseintradingsecurities (97) (1,056) 1,643Netincrease/(decrease)intradingliabilities 4 (367) (768)Netmovementinderivativefinancialinstruments (573) 884 1,003Operatingexpensespaid (655) (617) (824)Incometaxpaid (305) (240) (240)

Net cash (used in)/provided by operating activities (3) 128 2,895

Cash flows from investing activitiesPurchaseofavailable-for-salesecurities (62) (1,072) (1,179)Proceedsfrommaturitiesofavailable-for-salesecurities - - 63Netloansadvancedtocustomers (1,128) (1,209) (1,962)Netincreaseinlifeinsuranceassets (37) (40) (51)Net(increase)/decreaseinduefromrelatedentities (37) 511 266Purchaseofcapitalisedcomputersoftware (71) (46) (73)Purchaseofproperty,plantandequipment (24) (23) (36)

Net cash used in investing activities (1,359) (1,879) (2,972)

Cash flows from financing activitiesNetincreaseindeposits 2,989 2,270 3,815Netdecreaseindebtissues (970) (1,743) (4,716)Net(decrease)/increaseinduetorelatedentities (1,987) 735 1,185Netincrease/(decrease)insubordinateddebentures 28 (33) (73)Dividendspaidonconvertibledebentures (50) (50) (100)Dividendspaidtominorityshareholders (4) (4) (4)

Net cash provided by financing activities 6 1,175 107

Net (decrease)/increase in cash and cash equivalents (1,356) (576) 30Cashandcashequivalentsatbeginningoftheperiod/year 1,822 1,792 1,792

Cash and cash equivalents at end of the period/year 466 1,216 1,822

Cash and cash equivalents comprise: Cashandbalanceswithcentralbanks 1,644 1,404 1,714 Due(to)/fromotherfinancialinstitutions(net) (1,178) (188) 108

Cash and cash equivalents at end of the period/year 466 1,216 1,822

Reconciliation of profit after income tax expense to net cash (used in)/provided by operating activitiesProfitafterincometaxexpense 632 573 759Adjustments: Impairmentchargesonloans 84 125 184 Computersoftwareamortisationcosts 28 29 38 Depreciationonproperty,plantandequipment 20 20 28 Share-basedpayments 5 5 7 Movementinotherassets 31 (62) (108) Movementinotherliabilities (70) (58) (10) Movementincurrentanddeferredtax (66) (5) 55 Taxoncashflowhedgereserve (15) (25) (16) Taxonavailable-for-salesecuritiesreserve (1) (14) (11) Taxonconvertibledebenturesdividends 14 14 28 Movementintradingsecurities (96) (991) 1,706 Movementintradingliabilities 4 (367) (768) Movementinderivativefinancialinstruments (573) 884 1,003

Net cash (used in)/provided by operating activities (3) 128 2,895



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)Order2013(‘Order’)andtheReserveBankofNewZealandAct1989(‘Reserve Bank Act’).ThesefinancialstatementshavealsobeenpreparedinaccordancewithGenerallyAcceptedAccountingPracticeinNewZealand,asappropriateforprofit-orientedentities,andtheNewZealandEquivalenttoInternationalAccountingStandard(‘NZ IAS’)34Interim Financial ReportingandshouldbereadinconjunctionwiththeDisclosureStatementsfortheyearended30September2012andfortheperiodsended31December2012and31March2013.ThesefinancialstatementscomplywithInternationalAccountingStandard34Interim Financial ReportingasissuedbytheInternationalAccountingStandardsBoard.Asaresultoftherevisedaccountingstandardwhichbecameoperativefortheannualreportingperiodcommencing1October2012,theNZBankingGroupadoptedPresentation of Items of Other Comprehensive Income (AmendmentstoNZIAS1).Undertheamendedstandard,theformatofothercomprehensiveincomehaschangedtoseparateitemsthatmayberecycledtotheincomestatementfromitemsthatwillnotberecycled.AdoptionofthisrevisedaccountingstandardonlyrelatestodisclosuresandhasnoimpacttotheNZBankingGroup’sreportedresultorfinancialposition.ThesefinancialstatementswereauthorisedforissuebytheOverseasBank’sBoardofDirectors(‘Board’)on21August2013.TheBoardhasthepowertoamendthefinancialstatementsaftertheyareauthorisedforissue.

Basis of preparationThesefinancialstatementsarebasedonthegeneralprinciplesofhistoricalcostaccounting,asmodifiedbyfairvalueaccountingforavailable-for-salefinancialassets,financialassetsandfinancialliabilitiesatfairvaluethroughprofitorlossandallfinancialderivativecontracts.Thegoingconcernconceptandtheaccrualbasisofaccountinghavebeenadopted.AllamountsareexpressedinNewZealanddollarsunlessotherwisestated.Thesameaccountingpoliciesandmethodsofcomputationhavebeenfollowedinpreparingthesefinancialstatementsaswereusedinpreparingthefinancialstatementsfortheyearended30September2012,exceptasamendedforthechangesrequiredduetotheadoptionoftherevisedaccountingstandardasexplainedinthe‘Statutorybase’section.Certaincomparativeinformationhasbeenrestatedtoensureconsistenttreatmentwiththecurrentreportingperiod.Wheretherehasbeenamaterialrestatementofcomparativeinformationthenatureof,andthereasonfor,therestatementisdisclosedintherelevantnote.

Basis of aggregationTheNZBankingGroupasat30June2013,hasbeenaggregatedbycombiningthesumofthecapitalandreservesoftheNZBranch,HastingsForestryInvestmentsLimitedandtheconsolidatedcapitalandreservesofBTFinancialGroup(NZ)Limited,WestpacFinancialServicesGroup-NZ-Limited,WestpacGroupInvestment-NZ-Limited,WestpacNewZealandGroupLimitedandtheircontrolledentities.ForNewZealandentitiesacquiredbytheOverseasBankingGroup,capitalandreservesatacquisitionarenettedandrecognisedascapitalcontributedtotheNZBankingGroup.AlltransactionsandbalancesbetweenentitieswithintheNZBankingGrouphavebeeneliminated.Controlexistswhentheparententityhasthepower,directlyorindirectly,togovernthefinancialandoperatingpoliciesofanentitysoastoobtainbenefitsfromitsactivities.Inassessingcontrol,potentialvotingrightsthatarepresentlyexercisableorconvertiblearetakenintoaccount.Subsidiariesarefullyconsolidatedfromthedateonwhichcontrolcommencesandarede-consolidatedfromthedateonwhichcontrolceases.TheacquisitionmethodofaccountingisusedtoaccountfortheacquisitionofsubsidiariesbytheNZBankingGroup.TheNZBankingGroupmayinvestinorestablishspecialpurposeentitiestoenableittoundertakespecifictypesoftransactions.WheretheNZBankingGroupcontrolssuchentities,theyareconsolidatedintotheNZBankingGroup’sfinancialresults.Non-controllinginterestsarestatedattheproportionofthenetprofitandnetassetsofasubsidiaryattributabletoequityintereststhatarenotowned,directlyorindirectlybytheNZBankingGroup.Lossesareattributedtothenon-controllinginterestevenifthatresultsinadeficitbalance.



Note 2 Non-interest income NZ Banking Group


Fees and commissionsTransactionfeesandcommissions 185 181 244Lendingfees(loanandrisk) 48 46 61Insurancecommissionsreceived 13 11 17Othernon-riskfeeincome 12 14 18

Total fees and commissions 258 252 340

Wealth management revenueFeesfromtrustandotherfiduciaryactivities 102 97 134Netlifeinsuranceincomeandchangeinpolicyliabilities (33) (29) (32)

Total wealth management revenue 69 68 102

Trading incomeForeignexchangetrading 66 65 85Interestratetrading 35 22 31

Total trading income 101 87 116

Net ineffectiveness on qualifying hedges 2 (1) 1

Other non-interest incomeNet(losses)/gainsonderivativesheldforriskmanagementpurposes (1) 4 6Dividendincome 2 2 2 Rentalincome - 1 1 Other 11 11 14

Total other non-interest income 12 18 23

Total non-interest income 442 424 582

Note 3 Impairment charges on loans

NZ Banking Group

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

Nine months ended 30 June 2013 (Unaudited)Collectivelyassessedprovisions 5 4 (13) (4)Individuallyassessedprovisions 21 - 38 59 Baddebtswritten-offdirectlytotheincomestatement 3 31 17 51 Interestadjustments (3) (7) (12) (22)

Total impairment charges on loans 26 28 30 84

Nine months ended 30 June 2012 (Unaudited)Collectivelyassessedprovisions (1) 4 (40) (37)Individuallyassessedprovisions 20 - 110 130Baddebtswritten-offdirectlytotheincomestatement 4 32 21 57Interestadjustments (2) (7) (16) (25)


Year ended 30 September 2012 (Audited)Collectivelyassessedprovisions (5) (6) (60) (71)Individuallyassessedprovisions 23 - 190 213Baddebtswritten-offdirectlytotheincomestatement 2 43 29 74Interestadjustments (4) (10) (18) (32)




Note 4 Trading securities

NZ Banking Group

30-Jun-13 30-Jun-12 30-Sep-12$ millions Unaudited Unaudited Audited

Certificatesofdeposit 2,204 2,989 2,172Corporatebonds 712 568 485Mortgage-backedsecurities 3 5 -NZGovernmentsecurities 462 1,095 478Localauthoritysecurities 375 248 349Securitiespurchasedunderagreementtoresell 309 1,827 544

Total trading securities 4,065 6,732 4,028

Asat30June2013,theNZBankingGrouphad$149millionoftradingsecurities(30June2012:$540million,30September2012:$12million)thatwereencumberedthroughrepurchaseagreementsaspartofstandardtermsoftransactionswithotherbanks.

Note 5 Loans

NZ Banking Group


Overdrafts 1,210 1,218 1,460Creditcardoutstandings 1,350 1,320 1,311Moneymarketloans 975 993 1,165Termloans: Housing 37,063 35,869 35,963 Non-housing 20,048 19,571 19,798Other 855 870 802

Total gross loans 61,501 59,841 60,499Provisionsforimpairmentchargesonloans (565) (643) (607)

Total net loans 60,936 59,198 59,892

Asat30June2013,$2.6billionofhousingloansand$1.1billionofcashareusedbytheNZBankingGrouptosecuretheobligationsofWestpacSecuritiesNZLimited(‘WSNZL’)underWestpacNewZealand’sGlobalCoveredBondProgramme(‘CB Programme’)(30June2012:$3.4billionofhousingloansand$0.3billionofcash,30September2012:$3.1billionofhousingloansand$0.6billionofcash).ThesehousingloanswerenotderecognisedfromWestpacNewZealand’sfinancialstatementsinaccordancewiththeaccountingpoliciesoutlinedinNote1tothefinancialstatementsincludedintheDisclosureStatementfortheyearended30September2012.Asat30June2013,theNewZealanddollarequivalentofbondsissuedbyWSNZLundertheCBProgrammewas$2.1billion(30June2012:$2.0billion,30September2012:$2.0billion).

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

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

Total neither past due nor impaired 35,878 1,704 21,731 59,313

Past due assets: Lessthan90dayspastdue 1,013 140 267 1,420 Atleast90dayspastdue 59 17 59 135

Total past due assets 1,072 157 326 1,555 Individually impaired assets 113 - 520 633

Total gross loans 37,063 1,861 22,577 61,501

Individuallyassessedprovisions 36 - 204 240 Collectivelyassessedprovisions 66 67 229 362

Total provisions for impairment charges on loans and credit commitments 102 67 433 602 Provisionforcreditcommitments - - (37) (37)

Total provisions for impairment charges on loans 102 67 396 565

Total net loans 36,961 1,794 22,181 60,936



Note 7 Deposits

NZ Banking Group


Deposits at fair valueCertificatesofdeposit 1,070 973 1,423

Total deposits at fair value 1,070 973 1,423

Deposits at amortised costNon-interestbearing,repayableatcall 3,209 2,962 2,969Otherinterestbearing: Atcall 17,437 16,013 15,931 Term 24,663 21,897 23,067

Total deposits at amortised cost 45,309 40,872 41,967

Total deposits 46,379 41,845 43,390

TheNZBranchheldnoretaildepositsfromindividualsasat30June2013(30June2012:nil,30September2012:nil).

Note 8 Trading liabilities

NZ Banking Group


Held for tradingSecuritiessoldshort 373 379 506Securitiessoldunderagreementstorepurchase 149 540 12

Total trading liabilities 522 919 518

Note 9 Debt issues

NZ Banking Group


Short-term debtCommercialpaper 3,935 7,432 4,033

Total short-term debt 3,935 7,432 4,033

Long-term debtNon-domesticmedium-termnotes 5,325 6,384 6,207Domesticmedium-termnotes 2,684 2,071 2,674

Total long-term debt 8,009 8,455 8,881

Total debt issues 11,944 15,887 12,914

Debtissuesatamortisedcost 8,009 8,423 8,851Debtissuesatfairvalue 3,935 7,464 4,063

Total debt issues 11,944 15,887 12,914

Movement in debt issuesBalanceatbeginningoftheperiod/year 12,914 17,630 17,630Issuanceduringtheperiod/year 4,942 11,107 12,589Repaymentsduringtheperiod/year (6,417) (12,137) (16,196)Effectofforeignexchangemovementsduringtheperiod/year 572 (779) (1,188)Effectoffairvaluemovementsduringtheperiod/year (67) 66 79

Balance at end of the period/year 11,944 15,887 12,914

Asat30June2013,theNZBankingGrouphadNewZealandGovernmentguaranteeddebtof$1,977milliononissue(30June2012:$2,039million,30September2012:$1,970million).ForfurtherinformationonNewZealandGovernmentguaranteeddebtrefertoGuaranteearrangementsinWestpacNewZealand’sDisclosureStatementfortheninemonthsended30June2013.



Note 10 Related entitiesWestpacNZSecuritisationNo.2Limited(‘WNZSL 2’)wasincorporatedon2November2012.WNZSL2isawhollyownedsubsidiaryofWestpacNZSecuritisationHoldingsLimited.WestpacCashPIEFundwasestablishedon14November2012andcommencedoperationon22November2012.WestpacCashPIEFundisnotownedbytheNZBankingGroup,butisregardedasacontrolledentityduetocontractualarrangements.OthercontrolledentitiesoftheNZBankingGroupasat30September2012aresetoutinNote26tothefinancialstatementsincludedintheOverseasBank’sDisclosureStatementfortheyearended30September2012.InterchangeandSettlementLimited(‘ISL’)wasremovedfromtheNewZealandCompaniesRegisteron25February2013.TheremovalofISLdidnothaveasignificantimpactontheNZBankingGroup’sfinancialpositionorresultsofoperationsfortheninemonthsended30June2013.MondexNZLimited(‘Mondex’)wasremovedfromtheNewZealandCompaniesRegisteron4July2013.MondexdidnothaveasignificantimpactontheNZBankingGroup’sfinancialpositionorresultsofoperationsfortheninemonthsended30June2013.TherehavebeennootherchangestothestructureorcompositionoftheNZBankingGroupsince30September2012.ThetotalliabilitiesoftheNZBranch,netofamountsduetorelatedentitiesasat30June2013,amountedto$5,785million(30June2012:$6,729million,30September2012:$6,372million).

Note 11 Commitments and contingent liabilities

NZ Banking Group


Commitments for capital expenditureDuewithinoneyear 7 1 4

Other expenditure commitments: Oneyearorless 106 77 95 Betweenoneandfiveyears 228 285 293 Overfiveyears 2 - -

Total other expenditure commitments 336 362 388

Lease commitments (all leases are classified as operating leases)Premisesandsites 269 211 219Motorvehicles 8 6 8

Total lease commitments 277 217 227

Lease commitments are due as follows: Oneyearorless 53 42 44 Betweenoneandfiveyears 146 108 117 Overfiveyears 78 67 66

Total lease commitments 277 217 227

Other contingent liabilities and commitmentsDirectcreditsubstitutes 1,031 334 335 Loancommitmentswithcertaindrawdown 222 192 177Transaction-relatedcontingentitems 903 803 796Short-term,selfliquidatingtrade-relatedcontingentliabilities 418 386 397Othercommitmentstoprovidefinancialservices 18,700 19,181 19,118

Total other contingent liabilities and commitments 21,274 20,896 20,823

Note 12 Segment informationTheNZBankingGroupoperatespredominantlyintheconsumer,businessandinstitutionalbankingsectorswithinNewZealand.Onthisbasis,nogeographicalsegmentinformationisprovided.Thebasisofsegmentreportingreflectsthemanagementofthebusiness,ratherthanthelegalstructureoftheNZBankingGroup.Thereisnodifferenceinaccountingmeasurementbetweenthemanagementandlegalstructures.Theoperatingsegmentresultshavebeenpresentedonamanagementreportingbasisandconsequentlyinternalchargesandtransferpricingadjustmentshavebeenreflectedintheperformanceofeachoperatingsegment.Intersegmentpricingisdeterminedonacostrecoverybasis.TheNZBankingGroupdoesnotrelyonanysinglemajorcustomerforitsrevenuebase.TheNZBankingGroup’soperatingsegmentsaredefinedbythecustomerstheyserveandtheservicestheyprovide.TheNZBankingGrouphasidentifiedthefollowingmainoperatingsegments:

■■ RetailBankingprovidesfinancialservicesforindividuals;■■ Wealthprovidesfinancialservicesforhighnetworthindividuals,fundsmanagementandinsurancedistribution;■■ BusinessBankingprovidesfinancialservicesforsmalltomediumsizedenterprisecustomers,corporatesandagriculturalbusinesses;and

■■ InstitutionalBankingprovidesabroadrangeoffinancialservicestolargecorporate,institutionalandgovernmentcustomersandthesupplyofderivativesandriskmanagementproductstotheentireWestpaccustomerbaseinNewZealand.



Note 12 Segment information (continued)RetailBankingandWealthhavebeenaggregatedanddisclosedastheConsumerBankingreportablesegment.BusinessBankingandInstitutionalBankingareseparatereportablesegments.Reconcilingitemsprimarilyrepresent:

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

■■ resultsofcertainbusinessunitsexcludedformanagementreportingpurposes,butincludedwithintheaggregatedfinancialstatementsoftheNZBankingGroupforstatutoryfinancialreportingpurposes.

Netinterestincomeandnon-interestincomehavebeenincludedinthefollowingtabletoalignwiththeinformationprovidedtothe‘chiefoperatingdecisionmaker’.Comparativeinformationhasbeenchangedtoensureconsistentpresentationwiththecurrentreportingperiod.Additionally,profitbeforeincometaxexpensefromdomestictransactionalbankingdepositsofcertaincustomersandtheassociateddepositshasbeenreclassifiedfromtheBusinessBankingsegmenttotheInstitutionalBankingsegment.Therevisedpresentationhasnoimpactontotalprofitbeforeincometaxexpensefortheninemonthsended30June2012andtheyearended30September2012.

NZ Banking Group

Consumer Business Institutional Reconciling $ millions Banking Banking Banking Items 1 Total

Nine months ended 30 June 2013 (Unaudited)Netinterestincome 596 351 139 98 1,184 Non-interestincome 221 69 134 18 442

Net operating income 817 420 273 116 1,626

Netoperatingincomefromexternalcustomers 1,012 742 257 (385) 1,626 Netinternaloperating(expense)/income (195) (322) 16 501 -


Operatingexpenses (137) (54) (39) (437) (667)Impairment(charges)/recoveriesonloans (50) 1 (36) 1 (84)

Profit before income tax expense 630 367 198 (320) 875

Total gross loans 32,450 22,298 6,936 (183) 61,501 Total deposits 25,974 11,384 7,951 1,070 46,379

Nine months ended 30 June 2012 (Unaudited)Netinterestincome 599 366 136 37 1,138Non-interestincome 202 68 132 22 424


Netoperatingincomefromexternalcustomers 1,104 802 285 (629) 1,562Netinternaloperating(expense)/income (303) (368) (17) 688 -


Operatingexpenses (138) (54) (39) (420) (651)Impairment(charges)/recoveriesonloans (44) (84) 3 - (125)

Profit before income tax expense 619 296 232 (361) 786

Total gross loans 31,285 21,978 6,808 (230) 59,841Total deposits 23,906 10,413 6,553 973 41,845

Year ended 30 September 2012 (Unaudited)Netinterestincome 800 488 181 56 1,525Non-interestincome 283 94 180 25 582

Net operating income 1,083 582 361 81 2,107

Netoperatingincomefromexternalcustomers 1,466 1,063 380 (802) 2,107Netinternaloperating(expense)/income (383) (481) (19) 883 -

Net operating income 1,083 582 361 81 2,107

Operatingexpenses (184) (73) (56) (559) (872)Impairmentchargesonloans (39) (144) (6) 5 (184)Shareofprofitofassociateaccountedforusingequitymethod - - - 1 1

Profit before income tax expense 860 365 299 (472) 1,052

Total gross loans 31,383 22,129 7,209 (222) 60,499Total deposits 24,744 10,809 6,414 1,423 43,390

1 Includedinthereconcilingitemsfortotaloperatingexpensesis$434million(30June2012:$422million;30September2012:$562million)ofheadofficeoperatingexpenses,whicharenotallocatedtoabusinessunitthatmeetsthedefinitionofanoperatingsegment.



Note 13 Insurance businessThefollowingtablepresentstheaggregateamountoftheNZBankingGroup’sinsurancebusinessconductedthroughoneofitscontrolledentities,WestpacLife-NZ-LimitedcalculatedinaccordancewiththeOverseasBank’sconditionsofregistrationasatthereportingdate:

NZ Banking Group

30-Jun-13 $ millions Unaudited

Totalassets 242

AsapercentageoftotalassetsoftheNZBankingGroup 0.31%

Note 14 Risk managementA14.1 Credit risk

The NZ Banking Group’s residential mortgages by loan-to-value ratio (‘LVR’) as at 30 June 2013 (Unaudited)InordertocalculateoriginationLVR,thecurrentexposureisthatusedintheinternalratingsbasedapproachformortgagelending.Forloansoriginatedfrom1January2008,theNZBankingGrouputilisesitsloanoriginationsystem.Forloansoriginatedpriorto1January2008,theoriginationLVRisnotseparatelyrecorded,andthereforeisnotavailablefordisclosureasrequiredunderClause1ofSchedule9totheOrder.Fortheseloans,theNZBankingGrouputilisesitsdynamicLVRprocesstocalculateanoriginationLVR.ExposuresforwhichnoLVRisavailablehavebeenincludedinthe‘Exceeds90%’categoryinaccordancewiththerequirementsoftheOrder.

NZ Banking Group

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

On-balancesheetexposures 28,384 5,745 2,851 36,980 Undrawncommitmentsandotheroff-balancesheetexposures 6,348 411 178 6,937

Value of exposures 34,732 6,156 3,029 43,917

14.2 Market risk ThefollowingtableprovidesasummaryoftheNZBankingGroup’snotionalcapitalchargesbyrisktypeasatthereportingdate.

NZ Banking Group

30-Jun-13 (Unaudited) Implied Notional Risk-weighted Capital $ millions Exposure Charge

End-of-periodInterestraterisk 2,313 185 Foreigncurrencyrisk 104 8 Equityrisk 101 8



Note 14 Risk management (continued)14.3 Liquidity risk

Liquid assetsThetablebelowshowstheNZBankingGroup’sholdingofliquidassetsandrepresentsthekeyliquidityinformationprovidedtomanagement.LiquidassetsincludehighqualityassetsreadilyconvertibletocashtomeettheNZBankingGroup’sliquidityrequirements.Inmanagement’sopinion,liquidityissufficienttomeettheNZBankingGroup’spresentrequirements.

NZ Banking Group

30-Jun-13 $ millions Unaudited

Cashandbalanceswithcentralbanks 1,644 Supranationalsecurities 436 NZGovernmentsecurities 2,298 NZpublicsecurities 458 NZcorporatesecurities 2,591 Residentialmortgage-backedsecurities 3,992

Total liquid assets 11,419

Note 15 Concentration of credit exposures to individual counterpartiesThefollowingcreditexposuresarebasedonactualcreditexposurestoindividualcounterpartiesandgroupsofcloselyrelatedcounterparties.Thenumberofindividualbankcounterparties(whicharenotmembersofagroupofcloselyrelatedcounterparties),andgroupsofcloselyrelatedcounterpartiesofwhichabankistheparent,towhichtheNZBankingGrouphasanaggregatecreditexposureorpeakend-of-dayaggregatecreditexposurethatequalsorexceeds10%oftheOverseasBankingGroup’sequity:

■■ asat30June2013wasnil; and■■ inrespectofpeakend-of-dayaggregatecreditexposureforthethreemonthsended30June2013wasnil.Thenumberofindividualnon-bankcounterparties(whicharenotmembersofagroupofcloselyrelatedcounterparties),andgroupsofcloselyrelatedcounterpartiesofwhichabankisnottheparent,towhichtheNZBankingGrouphasanaggregatecreditexposureorpeakend-of-dayaggregatecreditexposurethatequalsorexceeds10%oftheOverseasBankingGroup’sequity:

■■ asat30June2013wasnil; and■■ inrespectofpeakend-of-dayaggregatecreditexposureforthethreemonthsended30June2013wasnil.Thepeakend-of-dayaggregatecreditexposureshavebeencalculatedbydeterminingthemaximumend-of-dayaggregateamountofactualcreditexposureovertherelevantthree-monthperiodandthendividingthatamountbytheOverseasBankingGroup’sequityasat31March2013.Creditexposurestoindividualcounterparties(notbeingmembersofagroupofcloselyrelatedcounterparties)andtogroupsofcloselyrelatedcounterpartiesexcludeexposurestothecentralgovernmentofanycountrywithalong-termcreditratingofA-orA3orabove,oritsequivalent,ortoanybankwithalong-termcreditratingofA-orA3orabove,oritsequivalent.ThesecalculationsrelateonlytoexposuresheldinthefinancialrecordsoftheNZBankingGroup(excludingexposuresbookedoutsideNewZealand)andwerecalculatednetofindividuallyassessedprovisions.



Note 16 Overseas Bank and Overseas Banking Group capital adequacyThetablebelowrepresentsthecapitaladequacycalculationfortheOverseasBankandOverseasBankingGroupbasedontheAustralianPrudentialRegulationAuthority’s(‘APRA’)applicationoftheBaselIIIcapitaladequacyframework.TheinformationforthecomparativeperiodiscalculatedbasedonAPRA’sapplicationoftheBasel2.5capitaladequacyframework.

30-Jun-13 30-Jun-12% Unaudited Unaudited

Overseas Banking Group1

CommonEquityTierOneCapitalratio 8.4 8.2AdditionalTierOneCapitalratio 2.1 1.9TierTwoCapitalratio 1.3 0.6

TotalRegulatoryCapitalratio 11.8 10.7

Overseas Bank (Extended Licensed Entity)1,2

CommonEquityTierOneCapitalratio 8.5 8.1AdditionalTierOneCapitalratio 2.3 2.0TierTwoCapitalratio 1.4 0.9

TotalRegulatoryCapitalratio 12.2 11.0

1 ThecapitalratiosrepresentinformationmandatedbyAPRA.2 ThecapitalratiosoftheOverseasBank(ExtendedLicensedEntity)arepubliclyavailableintheOverseasBankingGroup’sPillar3report.Thisinformationismade

availabletousersviatheOverseasBank’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),exceededtheminimumcapitaladequacyrequirementsasspecifiedbyAPRAasat30June2013.APRAspecifiesaminimumprudentialcapitalratiofortheOverseasBankingGroup,whichisnotmadepubliclyavailable.

Note 17 Other information on the Overseas Banking GroupOtherinformationontheOverseasBankingGroupisfromthemostrecentlypublishedfinancialstatementsoftheOverseasBankingGroupforthesixmonthsended31March2013.

31-Mar-13Profitability Unaudited

Netprofitaftertaxforthesixmonthsended31March2013(A$millions) 3,339 Netprofitaftertax(forthe12monthperiodto31March2013)asapercentageofaveragetotalassets 0.9%

31-Mar-13Total assets and equity Unaudited

Totalassets(A$millions) 677,509 Percentagechangeintotalassetsforthe12monthsended31March2013 3.6%Totalequity(A$millions) 45,217

31-Mar-13Asset quality Unaudited

Totalindividuallyimpairedassets1,2(A$millions) 3,759 Asapercentageoftotalassets 0.6%Totalindividualcreditimpairmentallowance(A$millions) 1,505 Asapercentageoftotalindividuallyimpairedassets 40.0%Totalcollectivecreditimpairmentallowance(A$millions) 2,694

1 Totalindividuallyimpairedassetsarebeforeallowancesforcreditimpairmentlossandnetofinterestheldinsuspense.2 Non-financialassetshavenotbeenacquiredthroughtheenforcementofsecurity.



Note 18 Events after the reporting dateMondexwasremovedfromtheNewZealandCompaniesRegisteron4July2013.MondexdidnothaveasignificantimpactontheNZBankingGroup’sfinancialpositionorresultsofoperationsfortheninemonthsended30June2013.On8August2013,WestpacNewZealandissued$385millionofdomesticseniorunsecuredmediumtermnotes.On31July2013,WestpacGroupInvestment-NZ-Limitedpaidadividendof$303milliontoWestpacOverseasHoldingsPtyLimitedandWestpacCustodianNomineesLimited.InadditionWestpacFinancialServices-Group-NZ-Limitedpaidadividendof$20milliontoWestpacFinancialServicesGroupLimited.

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

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