Westpac Banking Corp.

Strong market position in the retail and commercial banking sectors in Australia and New Zealand. Conservative risk appetite, backed by a sound risk-management framework. Highly likely to receive timely financial support from the Australian government, if needed. Material dependence on domestic and offshore wholesale borrowing. Exposed to risks from rising house prices and high private sector debt. The negative outlook on Westpac Banking Corp. (Westpac) mirrors that on the sovereign rating on Australia (AAA/Negative/A-1+). There is a one-in-three likelihood that we will lower our long-term and short-term ratings on the bank in the next two years. We expect that Westpac's earnings in the next two years will remain sufficient to absorb the elevated credit losses due to the COVID-19 pandemic

...Outlook: Negative The negative outlook on Westpac Banking Corp. (Westpac) mirrors that on the sovereign rating on Australia (###/Negative/A-1+). There is a one-in-three likelihood that we will lower our long-term and short-term ratings on the bank in the next two years. We expect that Westpac's earnings in the next two years will remain sufficient to absorb the elevated credit losses due to the COVID-19 pandemic and containment measures. We also expect that Westpac would maintain its Common Equity Tier-1 (CET1) and Tier-1 regulatory capital ratios at about the current levels. We see a one-in-three possibility that COVID-19 and the resultant containment measures could heighten the risks to the Australian economy and banking sector. In such a scenario, we expect to assess our economic risk score within our Banking Industry Country Risk Assessment (BICRA) for Australia to have worsened by one category, and consequently apply higher risk weights in our capital analysis. In that case, Westpac's...

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