1. Corporate Governance What can we learn from the west?

2. After the last 4 years, many could legitimately ask “Can we learn anything from the West”?

3. Westpac has remained strong through adverse economic events and learned from the experiences 181618501900195020002011 Australian banking crisis, 1843 Widespread defaults among merchants Reduction in bank deposits in Australia Crash of 1893 Fall in export prices particularly wool Collapse in domestic investment and increased business failures Increase in overseas debt The Great Depression, 1930s Global stock market crash Reduction in foreign lending Negative growth and high unemployment Australian banking crisis, 1990s Deregulation and bank reforms Speculative lending Commercial property crash Failure of non-bank financial institutions Global Financial Crisis, 2007 Over-leveraged capital and debt markets Loose credit conditions (esp US housing) Over-inflated asset prices Systemic bank failures Learnings Maintain discipline in concentration management: counterparty, industry Don’t over-rely on security – ensure customers have the capacity to repay Don’t lend where you don’t fully understand the risk Leverage the direct memories of your senior managers and credit officers Bank of New South Wales / Westpac

4. Westpac has a well established corporate governance and risk management model Board Board Risk Management Committee Board Nominations Committee Board Remuneration Committee Board Audit Committee Board Sustainability Committee Board Technology Committee Westpac Group Credit Risk Committee (CREDCO) Westpac Group Asset & Liability Committee (ALCO) Westpac Group Operational Risk & Compliance Committee (OPCO) Westpac Group Market Risk Committee (MARCO) Chief Executive Officer Board committees Executive risk committees Group RiskDivisional Risk Chief Risk OfficerExecutive Team Independent Assurance Delegation Assurance, oversight through reporting Division-specific policies, limits, controls and reporting Optimisation of risk-reward Risk frameworks Key policies Risk profile Emerging risks Execute Board-approved strategy Operate within risk appetite Monitor risks within business unit Safeguard the Group’s reputation Independent governance over risk management Direct access to Chair of the Board and BRMC External auditors Group Assurance Integrity of financial statements and reporting Board size and composition Group remuneration practices Risk appetite and risk management Information technology strategy and policies Corporate responsibility standards and compliance Delegation Accountability Groups frameworks Limits Monitoring & reporting

5. Westpac’s risk appetite is set by the Board. The Board Risk Appetite Statement −Target debt rating −Economic and regulatory capital −Liquidity risk −Rate of return The Group Risk Appetite Statement Operationalises the Board Statement of Risk Appetite Defines and consolidates key metrics and appetite limits for the various risk classes for each division (credit risk, market risk, operational risk, insurance risk, reputation risk, liquidity risk and funding risk) Provides the framework for the divisional risk appetite statements Divisional Risk Appetite Statements Define each division’s appetite for risk in the context of their own business strategy and objectives, consistent with, and in support of, the Group risk appetite statement and Board Statement of Risk Appetite Each division develops a set of key metrics to monitor risk tolerance and appetite limits covering those consolidated at a Group level and additional risk metrics relevant to their respective businesses −Core and non-core risk −Volatility of results −Concentration risk −Compliance Westpac executes its strategy consistently with a Board endorsed risk appetite – actioned via group and divisional risk appetites

6. Credit Risk Portfolio credit loss appetite Property concentration limit Mortgage limits - 90 days+ delinquencies - Loan-to-valuation ratio > 95% concentration Business portfolio - Stressed assets Operational Risk & Compliance Project performance risk – % with “green” status Technology performance risk - Tolerance for significant incidents per month - Time taken to restore performance after interruption Staff health and wellbeing – number of days lost to injury Compliance & control risk – number of high outstanding audit issues aged > 180 days Liquidity & Funding Risk Stable funding ratio Deposits to loans ratio Short term funding balance Volume of long-term funding required in next 12 months Level of liquid asset holdings Market risk Trading Book Value-at-Risk (VaR) limit Treasury-Asset Liability Management VaR limit Asset Liability Management net interest income at risk BTFG shareholder capital VaR limit Reputation risk Customer sentiment - Consumer net promoter score - Business net promoter score Community perceptions (external polling) Employee sentiment Investor perceptions Sustainability rating Government and regulators’ perceptions Insurance Risk Reinsurers credit rating Underwriting retention limits Capital & debt Tier 1 capital ratio Total regulatory capital ratio Target debt rating Key risk metrics included in the Group risk appetite dashboard Westpac’s group risk appetite sets tolerances for all major risk classes and is monitored quarterly

7. Accountability for risk management starts with the front line and is supported by a separate risk control group and independent assurance

8. Prudential requirements for remuneration governance have obliged us to create an entirely new framework WBC BOARD (1) Responsible for the overarching governance of Westpac’s remuneration arrangements BOARD REMUNERATION COMMITTEE (BRC) (1) Makes recommendations to the Board REMUNERATION OVERSIGHT COMMITTEE (ROC) / GROUP REWARD Provides the BRC with assurance that remuneration arrangements have been examined from a people, risk and finance perspective; approves incentive plans (other than the Group Executive incentive plan); and reviews remuneration outcomes  The ROC is comprised of the Group Executive People and Transformation, Chief Risk Officer, Chief Financial Officer, and Group General Manager Human Resources CHIEF EXECUTIVE OFFICER BOARD MANAGEMENT (1) - The diagram does not outline the specific Westpac New Zealand (WNZL) Board governance arrangements but includes the WNZL ROC. (2) - The FROC includes review of Corporate Core incentive plans and remuneration outcomes. FUNCTIONAL ROC (FROC) RISK 2 FINANCE 2 LEGAL 2 PEOPLE 2 TECH 2 WBC RBB DROC SGB RBB DROC P&O DROC WIB DROC BTFG DROC WNZL (1) ROC  Each Divisional Remuneration Oversight Committee (DROC) is responsible for designing/proposing incentive plans and monitoring the remuneration outcomes for the respective division.  The DROC is comprised of the Divisional Group Executive, Divisional People General Manager, Divisional Risk General Manager, and Divisional Chief Financial Officer

9. But for all of the new rules, policies and procedures, successful corporate governance, and a sustainable organisation, can only occur with a great culture Great cultureNot so good culture Do the right thing ethos Recognition of community licence to operate No fear of speaking up or out Win at all costs My business unit competes against your business unit I’m paid for my financial results, not my behaviours

10. Thank you.