Based on Risk Indicator Analysis to Deal with Risk: A Case Study of Westpac Bank

Abstract

Under APRA’s requirements, all Australian savings institutions need to develop risk appetite statements containing various risk indicators. This article will analyze Westpac’s various risk indicators based on Westpac’s annual report and risk appetite statement. There are six sections in this article. The first part is the background introduction. In the second part, by calculating and comparing the critical capital ratios of each quarter in 2020 and the preceding year, we analyze Westpac’s capital risk and the impact of CET1 on shareholders. The third part judges whether Westpac has achieved its credit risk target by comparing Westpac with the data of other banks in Australia. The fourth part is mainly about market risk. In this part, we analyze the most significant market risk Westpac faces. Westpac’s measurement and management methods of market risk and give Westpac improvement suggestions based on these data. The fifth part mainly studies the relationship between Bank’s Net Stable Funding Ratio, Liquidity Coverage Ratio and relevant risk appetite. In the last part, we summarize the article.