Company: WEBNF
Filing Date: 2025-11-04
Form Type: 20-F
Source: 0001104659-25-105894
Chunk: 96

Company: WESTPAC BANKING CORP
Filing Date: 2025-11-04
Form: 20-F
Item: Item 14
Chunk 96
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 structural FX risk and economic hedges of New Zealand future earnings.

1.   Based on a 1 day holding period and 1 year of historical data to allow comparison to the traded market risk results, noting IRRBB is managed to a longer holding period.
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FINANCIAL   EXHIBITS INDEX   STRATEGIC   PERFORMANCE   EXHIBIT 15.4   ADDITIONAL 
REPORT                       REVIEW      REVIEW                       INFORMATION
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Note 22.Fair values of financial assets and financial liabilities 
Accounting policy
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                                                                                                              The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.                                                                                                              
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On initial recognition, the transaction price generally represents the fair value of the financial instrument unless there is observable information from an active market to the contrary. Where unobservable information is used, the difference between the transaction price and the fair value (day one profit or loss) is recognised in the income statement over the life of the instrument or when the inputs become observable.
Critical accounting assumptions and estimates                                                                                                                                                                                                                                                                                                                                                                                           
The majority of valuation models used by Westpac employ only observable market data as inputs. However, for certain financial instruments data may be employed which is not readily observable in current markets.                                                                                                                                                                                                                      
The availability of observable inputs is influenced by factors such as:                                                                                                                                                                                                                                                                                                                                                                 
●Product type;                                                                                                                                                                                                                                                                                                                                                                                                                          
●Depth of market activity;                                                                                                                                                                                                                                                                                                                                                                                                              
●Maturity of market models; and                                                                                                                                                                                                                                                                                                                                                                                                         
●Complexity of the transaction.                                                                                                                                                                                                                                                                                                                                                                                                         
Where unobservable market data is used, more judgement is required to determine fair value. The significance of these judgements depends on the significance of the unobservable input to the overall valuation. Unobservable inputs are generally derived from other relevant market data and adjusted against:                                                                                                                        
●Standard industry practice;                                                                                                                                                                                                                                                                                                                                                                                                            
●Economic models; and                                                                                                                                                                                                                                                                                                                                                                                                                   
●Observed transaction prices.                                                                                                                                                                                                                                                                                                                                                                                                           
In order to determine a reliable fair value for a financial instrument, management may apply adjustments to the techniques previously described. These adjustments reflect Westpac’s assessment of factors that market participants would consider in setting the fair value.                                                                                                                                                           
These adjustments incorporate bid/offer spreads, credit valuation adjustments (CVA) and funding valuation adjustments (FVA).                                                                                                                                                                                                                                                                                                            
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Fair Valuation Control FrameworkWestpac uses a