Investor Presentaiton

Lenders mortgage insurance arrangements. WLMI continues to provide mortgage insurance to Westpac. Lenders mortgage insurance (LMI) • • Where mortgage insurance is required, mortgages are insured through Westpac Lenders Mortgage Insurance (WLMI), and reinsured through external LMI providers, based on risk profile In March, Westpac announced it would sell WLMI to Arch Capital Group (Arch) and enter into a 10-year exclusive supply agreement for Arch to provide lenders mortgage insurance to the Group Completion of this transaction is expected to occur by the end of August 2021, after which all LMI required on WBC mortgages will be underwritten by Arch Arch has provided reinsurance services to WLMI since 2011 Westpac will retain responsibility for certain legacy matters and provide protection to Arch through customary warranties and indemnities WLMI remains well capitalised (separate from bank capital) and subject to APRA regulation. WLMI targets a capitalisation ratio of 1.2x PCR2 and has consistently been above this target Lenders mortgage insurance arrangements from 1 October 2020 LVR Band • LVR ≤80% •LVR >80% to ≤ 90% • LVR >90% Insurance Not required Where insurance required, insured through WLMI LMI not required for certain borrower groups Reinsurance arrangements: - 40% risk retained by WLMI Mortgage asset quality 60% risk transferred through quota share arrangements with Arch LMI Pty Ltd, Sompo International (Endurance Speciality), Everest Re and Trans Re Where insurance required, insured through WLMI LMI not required for certain borrower groups 100% reinsurance through Arch LMI Pty Ltd Westpac's Australian mortgage portfolio at 31 March 2021 (%) Insurance statistics 1H20 2H20 1H21 84 ■Not insured Insurance claims ($m) 5 21 2 ■Insured by third parties³ WLMI claims ratio (%) 15 67 3 ■Insured by WLMI 11 5 WLMI gross written premiums5 ($m) 89 91 154 1 Since 18 May 2015 WLMI has underwritten all mortgage insurance, where required, on Westpac originated mortgages. The in-force portfolio of loans includes mortgage insurance provided by external providers. 2 Prudential Capital Requirement (PCR) calculated in accordance with APRA standards. 3 Insured coverage is net of quota share. Third party has decreased compared to 30 September 2020 due to a reclassification of loans where the insurance is provided by WLMI and 100% reinsured through Arch LMI. 4 Loss ratio is claims over the total earned premium plus exchange commission. 5 LMI gross written premium includes loans >90% LVR reinsured with Arch Reinsurance Limited. 1H21 gross written premium includes $104m from the arrangement (2H20: $61m and 1H20: $63m). 76 Westpac Group 2021 Interim Results Presentation & Investor Discussion Pack Westpac GROUP

View entire presentation