Westpac Group Pillar 3 Report March 2013 - Iguana IR Sites

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PILLAR 3 REPORT CREDIT RISK MANAGEMENT Loan impairment provisions Provisions for loan impairment losses represent management’s best estimate of the losses incurred in the loan portfolios as at the balance date. There are two components of Westpac’s loan impairment provisions: individually assessed provisions (IAPs) and collectively assessed provisions (CAPs). In determining IAPs, relevant considerations that have a bearing on the expected future cash flows are taken into account, for example: the business prospects of the customer; the realisable value of collateral; Westpac’s position relative to other claimants; the reliability of customer information; and the likely cost and duration of the work-out process. These judgements and estimates can change with time as new information becomes available or as work-out strategies evolve, resulting in revisions to the impairment provision as individual decisions are made. CAPs are established on a portfolio basis taking into account: the level of arrears; collateral; past loss experience; expected defaults based on portfolio trends; and the economic environment. The most significant factors in establishing these provisions are estimated loss rates and the related emergence periods. The future credit quality of these portfolios is subject to uncertainties that could cause actual credit losses to differ from reported loan impairment provisions. These uncertainties include: differences between the expected and actual economic environment; interest rates and unemployment levels; repayment behaviour; and bankruptcy rates. Regulatory classification of loan impairment provisions APS220 Credit Quality requires that Westpac report specific provisions and a General Reserve for Credit Loss (GRCL). All IAPs raised under A-IFRS are classified as specific provisions. All CAPs raised under A-IFRS are either classified into specific provisions or a GRCL. A GRCL adjustment is made for the amount of GRCL that Westpac reports for regulatory purposes under APS220 in addition to provisions reported by Westpac under A-IFRS. For capital adequacy purposes the GRCL adjustment is deducted from common equity Tier 1. 24
PILLAR 3 REPORT CREDIT RISK EXPOSURES Loan impairment provisions 1 31 March 2013 A-IFRS Provisions GRCL Total Regulatory $m IAPs CAPs Total Adjustment 1 Provisions Specific Provisions for impaired loans 1,494 218 1,712 NA 1,712 for defaulted but not impaired loans NA 145 145 NA 145 General Reserve for Credit Loss NA 2,331 2,331 118 2,449 Total provisions for impairment charges 1,494 2,694 4,188 118 4,306 30 September 2012 A-IFRS Provisions GRCL Total Regulatory $m IAPs CAPs Total Adjustment 1 Provisions Specific Provisions for impaired loans 1,470 171 1,641 NA 1,641 for defaulted but not impaired loans NA 153 153 NA 153 General Reserve for Credit Loss NA 2,447 2,447 187 2,634 Total provisions for impairment charges 1,470 2,771 4,241 187 4,428 31 March 2012 A-IFRS Provisions GRCL Total Regulatory $m IAPs CAPs Total Adjustment 1 Provisions Specific Provisions for impaired loans 1,482 215 1,697 NA 1,697 for defaulted but not impaired loans NA 173 173 NA 173 General Reserve for Credit Loss NA 2,521 2,521 171 2,692 Total provisions for impairment charges 1,482 2,909 4,391 171 4,562 1 The GRCL adjustment of $118m at 31 March 2013 ($187m at 30 September 2012, $171m at 31 March 2012,) is reported on a pre-tax basis. For capital deduction purposes, the GRCL adjustment is reported on an after-tax basis, which at 31 March 2013 was $83m (30 September 2012 $131m, 31 March 2012 $119m). 25
Page 1 and 2: WESTPAC GROUP PILLAR 3 REPORT MARCH
Page 3 and 4: PILLAR 3 REPORT EXECUTIVE SUMMARY B
Page 5 and 6: PILLAR 3 REPORT INTRODUCTION Westpa
Page 7 and 8: PILLAR 3 REPORT CONTROLLING AND MAN
Page 13 and 14: PILLAR 3 REPORT GROUP STRUCTURE Wes
Page 15 and 16: PILLAR 3 REPORT CAPITAL OVERVIEW Ca
Page 17 and 18: PILLAR 3 REPORT CAPITAL OVERVIEW 12
Page 19 and 20: PILLAR 3 REPORT CREDIT RISK MANAGEM
Page 21 and 22: PILLAR 3 REPORT CREDIT RISK MANAGEM
Page 23: PILLAR 3 REPORT CREDIT RISK MANAGEM
Page 27 and 28: PILLAR 3 REPORT CREDIT RISK EXPOSUR
Page 51 and 52: PILLAR 3 REPORT CREDIT RISK MITIGAT
Page 53 and 54: PILLAR 3 REPORT COUNTERPARTY CREDIT
Page 55 and 56: PILLAR 3 REPORT SECURITISATION A se
Page 57 and 58: PILLAR 3 REPORT SECURITISATION Cons
Page 59 and 60: PILLAR 3 REPORT SECURITISATION Bank
Page 61 and 62: PILLAR 3 REPORT SECURITISATION Bank
Page 63 and 64: PILLAR 3 REPORT SECURITISATION Trad
Page 65 and 66: PILLAR 3 REPORT SECURITISATION Trad
Page 67 and 68: PILLAR 3 REPORT MARKET RISK Risk mi
Page 69 and 70: PILLAR 3 REPORT MARKET RISK Back-te
Page 71 and 72: PILLAR 3 REPORT OPERATIONAL RISK We
Page 73 and 74: PILLAR 3 REPORT EQUITY RISK Book va
Page 75 and 76:
PILLAR 3 REPORT INTEREST RATE RISK
Page 77 and 78:
PILLAR 3 REPORT APPENDIX I - APS330
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PILLAR 3 REPORT APPENDIX II - REGUL
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PILLAR 3 REPORT APPENDIX III - CAPI
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PILLAR 3 REPORT APPENDIX IV - REGUL
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PILLAR 3 REPORT APPENDIX IV - REGUL
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PILLAR 3 REPORT GLOSSARY Term Actua
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PILLAR 3 REPORT GLOSSARY Internal a
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PILLAR 3 REPORT GLOSSARY Trading bo
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Westpac Group Pillar 3 Report March 2013 - Iguana IR Sites

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