Company: WEBNF
Filing Date: 2025-11-04
Form Type: 20-F
Source: 0001104659-25-105894
Chunk: 47

Company: WESTPAC BANKING CORP
Filing Date: 2025-11-04
Form: 20-F
Item: Item 14
Chunk 47
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 for the Parent Entity. If 1% of Stage 2 loans and credit commitments (calculated on a lifetime ECL) were transferred to Stage 1 (calculated on a 12 month ECL), the provision for ECL on loans and credit commitments would decrease by $20 million (2024: $21 million) for Westpac and $17 million (2024: $18 million) for the Parent Entity. These estimates apply the average modelled provision coverage ratio by stage to the transfer of loans and credit commitments. 
The following table discloses the economic weights applied by Westpac and the Parent Entity. In 2025, the following changes were applied to scenario weights to reflect greater uncertainty from geopolitical developments, including in relation to international trade and tariff policies, global tensions and continuing global military conflicts:

●   5.0% increase to downside; and
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●   2.5% decrease to both the upside and base scenarios.
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Scenario weightings (%)      2025      2024
Upside                        2.5       5.0
Base                         50.0      52.5
Downside                     47.5      42.5
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The Group’s definition of default is aligned to the regulatory definition of default applied in the calculation of credit risk weighted assets.
Portfolio overlays
Portfolio overlays are used to address areas of risk, including significant uncertainties that are not captured in the underlying modelled ECL. Determination of portfolio overlays requires expert judgement and is thoroughly documented and subject to comprehensive internal governance and oversight. Overlays are continually reassessed and if the risk is judged to have changed (increased or decreased), or is subsequently captured in the modelled ECL, the overlay will be released or remeasured.
Westpac’s total portfolio overlays as at 30 September 2025 were $238 million (2024: $179 million) for the Group and $248 million (2024: $197 million) for the Parent Entity, and comprise:

●   Climate-related risk: $71 million (2024: $70 million) for the Group and $71 million (2024: $70 million) for the Parent Entity for the expected impact of climate-related physical risk and transition risk to both retail and non-retail portfolios;
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●   Non-retail portfolios: $159 million (2024: $32 million) for the Group and