Westpac Banking Corporation (ASX: WBC) released its Pillar 3 Report for December 2025 on 13 February 2026. The Company disclosed key regulatory metrics showing a 12.31% CET1 ratio. This figure represents a 22 basis point decline from the previous quarter.
Figure 1: Westpac Banking Corporation headquarters signage. [Source: Herald Sun]
The Westpac Pillar 3 Report Dec 2025 provides insight into the Company’s capital adequacy under Basel III requirements. Investors tracking the banking sector will find material changes in Westpac’s capital structure and risk-weighted assets during the first quarter of 2026.
Westpac Basel III Disclosure December 2025 Shows Capital Decline
Westpac’s Level 2 CET1 capital ratio declined from 12.53% at 30 September 2025 to 12.31% at 31 December 2025.
Figure 2: Westpac Level 2 CET1 capital ratio movement for the December 2025 quarter. [Source: Westpac]
First Quarter 2026 net profit contributed a 42 basis point increase to the Westpac Basel III disclosure December 2025. However, the 2025 final ordinary dividend payment reduced the ratio by 59 basis points. Risk-weighted assets movement decreased the Westpac CET1 ratio December 2025 by 9 basis points, while capital deductions added 4 basis points.
The Company’s total capital ratio reached 21.57% at 31 December 2025. This exceeds the minimum total capital requirement of 18.25% for domestic systemically important banks effective from 1 January 2026.
Risk-Weighted Assets Rise in Westpac Pillar 3 Report Dec 2025
Total risk-weighted assets in the Westpac Basel III disclosure December 2025 increased by 0.5% to $452.4 billion. Credit RWA rose by $3.3 billion, driven by lending growth in Corporate and Residential Mortgages, partly offset by the removal of a $1 billion APRA RWA overlay and foreign currency translation impacts totalling $3.3 billion.
Figure 3: Breakdown of Westpac risk-weighted assets by risk type as at 31 December 2025. [Source: Westpac]
Non-credit RWA declined by $2.5 billion, with operational RWA falling by $4.7 billion following the removal of the remaining $500 million operational risk capital overlay. Market RWA increased by $0.9 billion due to higher market risk exposures, while the capital floor RWA adjustment stood at $1.5 billion at 31 December 2025.
Leverage Ratio Drops in Westpac CET1 Ratio December 2025 Report
Westpac’s leverage ratio in the Westpac Basel III disclosure December 2025 decreased from 5.07% to 5.00%. The 7 basis point decline resulted from higher total exposures and lower Tier 1 capital following the dividend payment.
APRA announced changes to banks’ capital requirements effective from 1 January 2027 in the Westpac Pillar 3 Report Dec 2025.
Westpac’s average Liquidity Coverage Ratio for the quarter ended 31 December 2025 was 133%. The Westpac CET1 ratio December 2025 report shows a 4 percentage point decrease from the Fourth Quarter 2025 average. High-quality liquid assets averaged $177.9 billion in the Westpac Basel III disclosure December 2025.
APRA Changes Reshape Westpac Pillar 3 Report Dec 2025
APRA published final changes to prudential standards on 4 December 2025. The Westpac Basel III disclosure December 2025 shows large banks will replace 1.5% of AT1 capital with 1.25% of Tier 2 capital and 0.25% of CET1 capital.
The total CET1 requirement in the Westpac Pillar 3 Report Dec 2025 will increase from 10.25% to 10.50% from 1 January 2027. Existing Westpac AT1 capital instruments would reach their first scheduled redemption dates by 2031.
The minimum leverage ratio requirement will be 3.25% based on CET1 capital from 1 January 2027. This replaces the current 3.50% requirement based on Tier 1 capital in the Westpac CET1 ratio December 2025 framework.
RBNZ Review Affects Westpac Pillar 3 Report Dec 2025
The Reserve Bank of New Zealand published decisions on 17 December 2025. For Group 1 deposit takers, including Westpac New Zealand Limited, the total CET1 capital ratio requirement will be 12%.
The Westpac Basel III disclosure December 2025 notes that the total capital ratio requirement will be 15%. An additional Loss Absorbing Capacity requirement of 6% will apply to New Zealand operations.
Figure 4: Reserve Bank of New Zealand headquarters in Wellington. [Source: Central Banking]
The RBNZ decisions include more granular standardised risk weights. Some areas will see lower risk weights under the new framework, affecting the Westpac Pillar 3 Report Dec 2025.
The RBNZ will consult on LAC instrument design during 2026 and 2027. This affects the Westpac CET1 ratio December 2025 calculations for New Zealand-regulated entities.
Westpac Banking Corporation (ASX: WBC) Market Snapshot
Westpac Banking Corporation’s shares last traded at $40.10, reflecting today’s market movement. The bank has a market capitalisation of $140.23 billion, with its share price ranging between $28.44 and $42.13 over the past 52 weeks.
Figure 5: Westpac Banking Corporation (ASX: WBC) share price performance over one year. [Source: ASX]
Final Thoughts
Westpac’s December 2025 Pillar 3 disclosure shows capital ratios easing modestly but remaining comfortably above regulatory and internal targets. Dividend payments and lending growth weighed on CET1, while Tier 2 issuance supported total capital strength.
FAQ
Q1. What was the Westpac CET1 ratio in December 2025?
Ans. The Westpac CET1 ratio December 2025 was 12.31% at Level 2, representing a 22 basis point decrease from 12.53% at 30 September 2025.
Q2. How did risk-weighted assets change in the Westpac Pillar 3 Report Dec 2025?
Ans. Total risk-weighted assets in the Westpac Pillar 3 Report Dec 2025 increased by 0.5% to $452.4 billion. Credit RWA rose by $3.3 billion while non-credit RWA decreased by $2.5 billion.
Q3. What is Westpac’s leverage ratio in the Westpac Basel III disclosure December 2025?
Ans. The Westpac Basel III disclosure December 2025 shows the leverage ratio decreased from 5.07% to 5.00%, remaining well above the regulatory minimum of 3.5%.
Q4. When do APRA’s new capital requirements affect the Westpac Pillar 3 Report Dec 2025?
Ans. APRA’s revised capital standards, including the phase out of AT1 capital, take effect from 1 January 2027, as noted in the Westpac Pillar 3 Report Dec 2025.
