Westpac Banking Corp.

In our view, Westpac's dependence on domestic and offshore wholesale funding remains a weakness; notwithstanding improvements over the past 10 years across the Australian banking system. The ratings on Westpac also benefit from our expectation that the Australian government is highly likely to provide timely financial support to Westpac, if needed. The outlook on Westpac is stable. We forecast Westpac's credit losses in the next two years to return to their pre-COVID levels. Consequently, we expect earnings to remain sound despite low interest rates. We see very limited upside to our issuer credit ratings on Westpac in the next two years. Alternative scenario: We see a one-in-three possibility that Australian banks will face reduced industry risks in the next two

...We expect Australia-based Westpac Banking Corp.'s (Westpac) strong market position and focus on low-risk retail and commercial banking activities in Australia and New Zealand will continue to support its earnings profile. The economies of both countries are recovering strongly after the hit from the COVID-19 pandemic. Westpac's robust capitalization will remain a strength to its credit profile; as will its low credit losses, which we expect will revert to historical levels in the next one to two years. In our view, Westpac's dependence on domestic and offshore wholesale funding remains a weakness; notwithstanding improvements over the past 10 years across the Australian banking system. The ratings on Westpac also benefit from our expectation that the Australian government is highly likely to provide timely financial support to Westpac, if needed....

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