Westpac Banking Corporation · ASX:WBC
Westpac Banking — FY2004 Earnings Presentation
81 slides from Westpac Banking's earnings presentation, Nov 8, 2004
Slide 1: Investor Discussion Pack November 2004
Wifestpac Australia’s First Bank Investor Discussion Pack November 2004
Slide 2: Index
Index Summary of results Consistent growth and return Segment contributions Market share Business and Consumer Banking Business markets strategy Institutional Bank New Zealand BT Financial Group Net interest income analysis Loan and deposit growth Margin analysis Non-interest income Credit card inte
Slide 3: Maintaining consistent growth and return
3 Maintaining consistent growth and return * High quality result — maintaining the balance - Cash earnings $2,559m up 13% ~ Cash earnings per share of 139 cents up 11% - Cash return on average equity 21% - Full year dividend of 86 cents, fully franked up 10% - Expenses up 5% - Cost to income ratio 4
Slide 4: Driving the gap between revenue and expenses
Driving the gap between revenue and expenses Revenue and expense performance ($m) 8,500 4 (7,500 + 6,500 4 5,500 4 | 4,500 4 3,500 + | 2,500 + 5 Year CAGR‘ —@— Revenue 7.3% -™-Expenses ” 3.4% =a Core earnings 12.1% 5 year CAGR Cash earnings 10.6% Cash EPS 11.0% ROE (5 year avg) | 20.1% + 1,500 1999
Slide 5: A revenue driven result
5 A revenue driven result _ Movement in cash earnings ($m)* 53 DO me = 2,800 5 | 2,700. | | 2,600. | | 2,500 | | 2,400 | | 2,300 + | 2,200 | 2,100 4 2,000 | 2,271 2003 412 (133) (44) Revenue Expenses * Tax-effected and excluding outside equity interest Bad Debts Tax 2004 Investor Discussion Pack Nov
Slide 6: Cash earnings — maintaining the growth
Cash earnings — maintaining the growth $m FY04 FY03 % Change FY03.— FY04 Net interest income 4,755 4,326 10 Non-interest income 3,255 3,004 8 Operating income 8,010 7,330 9 Operating expenses (3,940) (3,763) (5) Bad debts (414) (485) 15 Net profit before tax 3,492 2,919 20 Net profit after tax & OEI
Slide 7: Consistently delivering strong growth and returns
Consistently delivering strong growth and returns | Economic profit ($m) 1,800.7 1,600 + 1,400 + 1,200 + 1,000 + B00 - oO OQ © 1 t 1999 2000.2001.2002* 2003 2004 : * Assumes 2H99 dividend was fully franked 4 Underlying EP excludes significant items in 2002 | Company Westpac “ANZ Commonwealth NAB Tot
Slide 8: Sound contribution across all businesses
Sound contribution across all businesses Cash earnings ($m) Business a _ Consumer Banking 4 2002 “Institutional 02003 Bank m 2004 T T T 1 $m i) 500 1000 1500 _ Growth 2003 — 2004 (%) 1. NZ % growth in AUD terms Investor Discussion Pack November 2004 Westpac Austratia’s First Bank
Slide 9: Composition of cash earnings and operating income
Composition of cash earnings and operating income omposition of cash earnings Composition of operating income | % of total group operating income Mortgages 13% S&l 14% 6% 27% BCB - Consumer 27% BCB Consumer 33% BCB - Business 25% BCB Business 27% Total Business and Consumer Banking (BCB) 52.8% Westp
Slide 10: Aggregate market share
Aggregate market share * Westpac has consistently Australian financial system market share (%) increased its market share in key | 184 segments over the last three 47. years (to 30 Sep): * Business lending up 220bps 16 * Retail deposits up 130bps =| 18-4 * Cautious approach to housing 4145 and perso
Slide 11: BCB — profitable growth momentum
BCB — profitable growth momentum ¢ The powerhouse of Westpac's earnings $m 2004 2003 % with 16% growth in cash earnings from a Change business contributing 53% of Group earnings + Substantially enhanced customer Operating income... 4,730 °.°4,344 9 satisfaction due to: - Business banker roles Operat
Slide 12: Consistent strategy since 1999 to capture business market
12 Consistent strategy since 1999 to capture business market * Business lending (SME and Middle Market) up 15% against market growth of around 8% * Strategy focused on better meeting the 11% needs of small and medium businesses : (12% 10% | 9% emt Australian business credit market share (%) Source R
Slide 13: Industry specialisation — a key differentiator
Industry specialisation — a key differentiator + — Industry specialisation work started in improvement since package 2000 introduced* * Ten industry sectors targeted including: Average . . I * Packages represent unique solutions for ndustry Number of footinon pet ocnetration each sector Connections
Slide 14: Business strategy is delivering
Business strategy is delivering SME satisfaction 65% 60% 55% —wWwBCc 50%. = Peer Average 45% + T T T T T =a T v T Jun-. Sep- Dec-. Mar. Jun- Sep- -Dec- ‘Mar. Jun- Sep 02. 02 #02 03 03 03 03 04 04 04 _ Business loans and acceptances ($bn) Middle Market & Priority satisfaction 70% 65% 60% ——~WBC. owe
Slide 15: Institutional Bank — reclaiming lead bank status
15 Institutional Bank — reclaiming lead bank status * Solid revenue growth of 10% although $m 2004 2003 % Financial markets softer Change «+ New income streams established (SCG) « Higher expenses from a - Restructuring charge $i1m |Operating income 1,236 -..1,124 10 - Private equity performance fees
Slide 16: Financial markets - enhancements underway
16 Financial markets - enhancements underway * Financial markets result consistent with expected volatility, although recent performance has been below average . Measures to improve performance implemented: - Changes to coverage of interbank markets - Operational changes . Higher return for risk tak
Slide 17: Investment securities
Investment securities - _ Upward revaluation in portfolio of investment —_ §&P sub investment grade credit spread index securities $17m — based on current quoted / prices 1,800.7 * Continue to actively manage exposure / 21,600 + however markets remain relatively illiquid 4,400 + Modelling suggests v
Slide 18: WIB - Structure and distribution of alternative assets
18 WIB - Structure and distribution of alternative assets $m Listed Unlisted Retail IPO Trust Structure Multi Asset Westpac Office Trust 365 v v v Electranet (Hastings Infrastructure Fund) 30 Halcyon Notes 66 Hastings Income Trust 40 FAL Property Trust 82 Hastings Diversified Utilities Fund (Epic) 3
Slide 19: Epic
Epic * On 2 June 2004, Hastings Funds Impact FY04 Management (51% owned by Westpac) - - acquired a 100 per cent holding in three Risk Weighted +$360m strategically placed natural gas transmission Assets pipeline assets (“Epic”) via a trust structure Deduction to including: Total Regulatory -$297m -
Slide 20: Quadrant — Westpac's private equity business
Quadrant — Westpac’s private equity business + Westpac operates a number of small private equity funds principally investing in a small number of unlisted companies — the Quadrant funds + The funds have a 10 year life and source money from high net worth individuals along with seed capital from West
Slide 21: New Zealand — repositioning delivers growth
New Zealand — repositioning delivers growth + Benefits from repositioning the business NZD$m FY04 =. FY03 % . . Change - Improved lending growth, particularly housing - Increased brand awareness Operating income. -.1,355 --1,260 8 «+ Momentum in all key segments + Effectively managing margins in a O
Slide 22: New Zealand — improving market share
22 New Zealand — improving market share + Total lending in New Zealand has increased 15% compared to total Private Sector Credit Growth of 12% for the same period. « Growth in lending has occurred across the board. Z Housing market share monthly (%) 05 “——Market share .° —-— Share of new growth 5 A
Slide 23: BT Financial Group — sustained improvement
23 BT Financial Group — sustained improvement + — Integration virtually complete on time and $m FY04 FY03 % ahead on synergies Change + Sustained fund performance improvement and ratings upgrades Operating income 628 574 10 + Well linked into Westpac customer base - 28% rise in corporate super FUA O
Slide 24: BTFG integration largely complete
24 BTFG integration largely complete * Project delivered on time and ahead on synergies Synergies (expense and revenue) ($m) * $96m in synergies achieved in 2004 - (‘40 ] 5 Synergies estimated at acquisition $48m more than originally estimated at Updated estimated synergies acquisition 420 |. MActua
Slide 25: Performance turnaround: Australian equities
25 Performance turnaround: Australian equities BT Core Fund‘ vs S&P/ASX300 Accumulation Index 1.2% 7 7 6% 0.8% 0.4% 0.0% 0.4% 0.8% -1,2% -1.6% 2.0% SM he PSP SS > Sas s w & gh CR se we o& Gam Monthly portfolio excess return (LHS) =@— One-Year Excess Return (RHS) 1. BT Institutional Core Australian S
Slide 26: Improved researcher ratings/net fund flows
Improved researcher ratings/net fund flows Large Cap Australian Equities — Flagship Retail Fund Ratings* 1,000 + Researcher Rating Last year This year Van Eyk B A ASSIRT 1 star 3 star Lonsec Sell and Recommend then Hold Morningstar 1 Star 2. Star Investorweb Sell Buy *Retail flagship fund is the BT
Slide 27: Growth in wealth products remains strong
Growth in wealth products remains strong ; Share of new Current Australian market share ; business Market Market share Product share (%) Rank (%) Rank Retail 8.0 5 4.0 9 Corporate super 6.5 5 15.4 4 Wrap and master trust 10.7 3 17:5 2 Life and risk 6.7 7 10.3 4 Margin lending 13.6 2 4.8 n/a Broking
Slide 28: Australian funds under management
Australian funds under management Sept 03 Sept 04 Total Retail | Retail % Asset class $bn Cash 7:6 6.9 4.2 61% Australian Fixed Interest §.2 5.6 3.1 55% International Fixed Interest 2.8 4.6 1.5 33% Property 3.1 3.2 2.6 81% Australian Equities 10.0 11.0 9.2 84% International Equities 8.1 8.0 6.5 81%
Slide 29: Insurance business
Insurance business * Insurance operations have continued to Cash earnings FY04-| FY03 % perform well $m $m eel * Solid growth in risk in-force premiums, up FY04 3%. Performance supported by positive — claims experience Life insurance . Australia 47 43 9 * General insurance focused on consumer insura
Slide 30: Net interest income analysis
Net interest income analysis * Net interest income up 10% Movement in net interest income ($m) * Behind these movements has been | 5600 - — Balance sheet growth up $565m — Rising interest rates supporting deposit margins and earnings on free funds _ 5,000 | 68 —_ — Additional hybrid capital contribu
Slide 31: Loan growth robust
31 Loan growth robust % Change’ $bn 2H04 1H04 2H03 ..-2H03-... 1H04 4 2H04 2H04 Business Unit Consumer (Australia) 99 92 89 11 7 Housing 92 88 82 12 5 Personal (loans & cards) 7 7 7 5 0 Business (incl. equip. finance) 36 33 32 15 9 Westpac Institutional Bank 26 23 22 15 13 New Zealand ($NZ) 28 27 25
Slide 32: Deposit growth
32 Deposit growth Investor Discussion Pack November 2004 % Change’ $bn 2H04 — 2H04 — 2H04 1H04 2H03 2HO3 4HO4 Business Unit Consumer (Australia) 50 49 47 8 3 Business (Australia) 24 24 23 7 2 Westpac Institutional Bank 14 12 11 28 13 New Zealand ($NZ) 19 18 17 8 3 Other 2 41 35 34 21 16 Group Total
Slide 33: Analysis of group margin movements
Analysis of group margin movements Margin movement 2003.—.2004 (27 2.62% - (6bps) 28 (3bPS) thos ~~ (6bps) 2.53% | Ze 3bps (1bps) SPS (25 ag -_ — = | 24 2003 2004 2.7.) Margins movement 1H04 —2H04 (26) 2.56% Obps (1PPS)” 4p ,5~ Obps —~ Obps 1bps . -(7bps) H ELL as | = oso (255 (244 fl 1H04 Asset. As
Slide 34: Margin and spread trends
34 Margin and spread trends * Margins down 9 basis points over the year in line with long term expectations ¢ Spread down 12 basis points over year but flat over second half. 1H decline due to normal trend and some cyclical factors including the change in the monetary policy cycle ¢ Most of the easi
Slide 35: Non-interest income analysis
35 Non-interest income analysis Investor Discussion Pack November 2004 3,350 7 Non-interest movement 2003 - 2004 ($m) 3,255 33 (14) 27 | 3,250 33 —_ Y 3,176 == Zz 3,150 ns 60 (39) | | 3,050 5 3.004 (15) = 2,950 | 2003 2004 i ‘800.7 Non-interest movement 1H04 — 2HO4 ($m) 18 (14) 27-°-4,716 1,700 4116
Slide 36: Credit cards — fee impact of recent changes
Credit cards — fee impact of recent changes * Net impact of interchange reforms and our strategic response will be broadly earnings neutral by 2005 and beyond. ¢ Repricing implemented in 1HO3 ¢ — Interchange reforms Oct 03 * Reward point changes to impact in 2H04 — Airline point changes — Reward poi
Slide 37: Expense to income — comfortably under 50%
Expense to income — comfortably under 50% inking — expense to income.% / Group - expense to income % s2 50 49 49 2H02 1HO3 0 2HO3. 00 104.0 2HO4 60.5 55.5 _— 488% 53 51 50 50 | 50 45. 40 4 35.4 304 : : 2H02 1HO3 -- 2HO3 1HO4 -- 2HO4 On o.n O.0 © 2HO2 4HO3 2H03 1HO4 2HO4 Westpac 37 Investor Discussio
Slide 38: Expenses — continued tight management
38 Expenses — continued tight management % Major compliance | Spend to | 2005 Expected $m 2004..----2003 Change spending - $m 2004 .:| Expected | spend after Operating expenses 3,940. 3,763 47% FY05 Epic (22) Basel Il 7.0 10.0 3.0 Unit Trusts (3) IFRS 6.4 11.0 4.0 Private equity FSR 1.0 - (13) perfo
Slide 39: Deferred expenditure trends
39 Deferred expenditure trends 400.4 (360 - 300 | (250 | (200 | 150 - 100 - Deferred expenditure — ($m) 50.5 0 T 1 2HO3 1HO4 2H04 @ Deferred acquistion costs @ Other deferred expenditure Deferred expenditure increased 15% over year - Higher mortgage broker fees from increased volumes - Capitalisatio
Slide 40: Movements in capitalised software
Movements in capitalised software : . . Amort- ° Major investments in Reach, Capitalised software -...| isation Sep Sep Pinnacle and the One Bank major projects $m youre) 2003] 2004 Platform are the major Loan process re 3 ” ” contributors to the increase engineering (Pinnacle) : tal} Institutional
Slide 41: Superannuation expense
Superannuation expense * Westpac adopted IAS 19 in 2002, with a one-off after tax adjustment of $160m * We have absorbed the lift to more ‘normal’ superannuation expense within our normal expense growth * Total expense has the potential to go above 9% as the full economic cost of defined benefit obl
Slide 42: Risk management framework
42 Risk management framework Board Considers and approves the risk / reward strategy of the Group Approves key risk parameters and monitor the effectiveness of risk management by Westpac Review and approve Westpac’s Group risk management policies relating to credit risk, market risk, operational ris
Slide 43: Forward credit indicators in good shape
Forward credit indicators in good shape Housing Portfolio - 90 day delinquencies (%) Aust. Business Banking ~ 90 day : delinquencies (3. month moving average) (%) 15 ~ 2.5 2.0 1.04 1.47 1.0 15 1.40 0.64 41.0 Os 0.38 : 0.26 raul 0.23 0.15 0-18..0.16 08 +99 — 0.9 + T T T T T T T T 1 9.0 4+ r ; T , T 1
Slide 44: Stressed exposures continue to decline
44 Stressed exposures continue to decline | Categories of stressed exposures as a_% of total commitments .(%) 1.6% Tosco c croc esccr ROOT Wonca 2,7at" _ 0 Watchlist & substandard 4.4% bopor Ee ---------- _. #90 days past due well secured W impaired 1.2% += naan 1.0% += bans 0.8% +> 0.6% +> | boencc
Slide 45: Bad debt analysis
45 Bad debt analysis Investor Discussion Pack November 2004 | $m 2H04 1H04 2H03 | Write-offs (146) (128) (133) | Net transfer (to)/from specific provisions (58) (73) (70) Recoveries of debts previously W/O 38 35 27| Bad debt charge (166) (166) (176) Increase in general provision (41) (41) (95) | Net
Slide 46: Bad debt analysis
Bad debt analysis 2004 Bad debts by business unit _ Total bad & doubtful debt charge to average New specific 82 loans and acceptances (basis points) Write-offs 236 BCB - 504 W'backs/Recoveries (68) Dynamic provision 90 | 340 451 4&3 New specific 79 40.4 WIB Write-offs 3 3 W'backs/Recoveries (22) Spa
Slide 47: Composition of portfolio
Composition of portfolio - Mortgages represent 42% of total _ Total Committed Exposure’ by customer segment commitments and 57% of funded lending | 100% an 1% i i rT * 64% business / corporate exposure aan: exceed investment grade 60% * Other consumer includes credit cards, 40% personal lending and
Slide 48: Total exposure by region
Total exposure by region + Exposures outside core markets represent less than 3% of total committed exposures — sub investment grade represent less than 0.3% of total exposures (excluding core markets of Australia and New Zealand) . NZ/ : $m Australia Pacific Americas». Europe Japan Japan Group AAA
Slide 49: Reduced single name concentrations
Reduced single name concentrations | Top 10 exposures to corporations and NBFls — September 04 S&P_Rating or equivalent 0....-200 ~.-.400 --"600.-. 800 -.1,000. 1,200 $m Top 10 exposures as a % of total committed exposure -- September 04 3.5% 4 of, | Total exposure of 0% Top 10 = $6.0bn - September
Slide 50: Industry concentrations
Industry concentrations % of Total Committed Exposure - September 04 Banks Property Financial Instituttons Agriculture and Fishing Food and Beverage Business Services Machinery and Equipment Construction Utilities ‘Transport and Postal Services Personal and Household Goods Retailing Personal and Oth
Slide 51: Key portfolio exposures - Energy
Key portfolio exposures - Energy | Global energy portfolio 2% $m W Australia/NZ (89% Investment grade) 4,500 -7 © Asia (75% investment grade) 9 4,000 &% Europe (100% investment grade) i AAA to BBB+ “ Nth America (79% Investment grade) 3,500 7 5 996 © BBB to BBB- 89% 3,000 - 5 W BB+ to BB 2,500.4 m B
Slide 52: Housing market cools, but still healthy
Housing market cools, but still healthy * — Housing has cooled following a strong run- up and after the RBA lifted rates late in 2003. * Total finance, after an initial fall, has stabilised, with monthly new lending of _ Housing finance remaining at high levels AUDbnimth AUBbaimth 48+ .~ 7 total fin
Slide 53: Housing demand
53 Housing demand + The housing construction downturn is set to be mild compared with past cycles. + Net overseas migration numbers are up a third from the second half of the 1990s. + — This has boosted housing requirements by almost 15% from that of the late 1990s. + Dwelling approvals are 17% lowe
Slide 54: Household debt - a 'catch-up' phase
Household debt - a ‘catch-up’ phase * Australian household debt levels lifted 'Hoysehold debt higher over the last decade. 10-2 % 160, + This was from below average levels by a f° international standards. ord j “2° boed + 100 + This catch-up reflected Australia’s delayed osd | go shift to a low infl
Slide 55: Households are still feeling good
Households are still feeling good * Consumer confidence is the best in a _ Consumer confidence at a decade high decade. H o Source; Westpac, Melbourne tnstitute sae | 130 * Households feel a sense of job security, | 160 120 with the unemployment rate the lowest in to to 23 years. of SN Vvnl \ r | 00
Slide 56: Mortgage portfolio — characteristics
Mortgage portfolio — characteristics HMM Equity Access ch + Housing growth has remained solid Australian Mortgage Portfolio proportion! - Owner occupied up 4% $ bn . - of total - Investment up 18% LJ Owner occupied Alo - Equity Access up 20% 90 .— E23] Investment GR* ond + Funding for alterations an
Slide 57: Mortgage — delivering profitable growth
Mortgage — delivering profitable growth * Mortgages lending up 12% * Mortgages margins down 4 basis points * Mortgage growth below system (with market share easing) due to: - Holding the proportion of lending via brokers constant - Not aggressively pursuing low-doc lending - Avoiding higher risk inv
Slide 58: Mortgage Insurance
Mortgage Insurance 100% mortgage insurance where loan to value (LVR) ratio > 80%. Some exceptions include LVR 80-80.99, short-term /bridging loans and some employee loans — this represents approx. $2b in exposure. Stop loss reinsurance cover over all retained Lenders Mortgage Insurance underwriting
Slide 59: Housing portfolio quality
Housing portfolio quality * Nominal changes in sensitivities since last year * Changes due to portfolio growth and levelling out of house prices * Capacity to absorb interest rate rises strong with 75% of amortising borrowers repaying in excess of required minimum Westpac 2004 Stress Test Results Ba
Slide 60: Group business unit and Pacific Banking
Group business unit and Pacific Banking Pacific Banking Group business unit $m 2003 2004 %| |$m 2003 2004 % Change Change Net interest Operating income a re 1 income a ae @) Non-interest 61 67 40| |Operating exp. (6) 101°. Large income Core earnings 105 159 51 Operating exp. (51) (51) - Bad debts (1
Slide 61: Group business unit
61 Group business unit Other Includes Group Treasury and Corporate Office activities Group Treasury Management of centralised funding and asset and liability management. Cash earnings down $9m on prior period. Earnings on Surplus. equity over that required by. business. 2H04.buy- unallocated equity
Slide 62: Strong dividend — sustainable pay-out ratio
62 Strong dividend — sustainable pay-out ratio Dividends per share (cents) Illustrative pay-out ratio analysis’ Presented July 2004 RWA Growth Derived maximum Scenarios payout ratio 7% 75% 8% 72% 9% 69% 10% 66% 12% 61% 1 Assumptions: ~ Return on equity 20%, ACE Ratio of 4.75% - Maximum payout ratio
Slide 63: Capital - target ranges
63 Capital - target ranges Capital levels at or above target ranges ACE ratio calculated on consistent basis ie. APRA deduction of deferred expenses ($269m) not removed Westpac will review its target capital ranges once impact of IFRS and Basel li becomes clear | 6.0%. | 5.5% | 4.5% . | | | 4.0% _ A
Slide 64: 2004 hybrid issue complicates reporting
64 2004 hybrid issue complicates reporting Historical practice 2004 Trust Preferred Securities USD issues accounted for as equity, no hedge accounting available Issued in USD (525m) and funds used in NZ (NZD) Typically swapped into NZD Swap put in place for.risk management but not given hedge treatm
Slide 65: Basel II progress
Basel Il progress * Basel Il developments: - Final accord released end June 2004 — recalibration of factors could still occur - Start date delayed to 2008 * Westpac will be capable of Basel Il reporting by end 2006 * Repeated quantitative impact studies show Westpac's risk weighted assets falling by
Slide 66: IFRS — key issues
66 IFRS — key issues ¢ IFRS project costs are within normal compliance spend and arise over 3 years * Start date for comparatives may be delayed to 1 October 2004 following SEC ruling * Planning to run the general ledger in parallel for 2005 (and potentially 2006) with only a summarised reconciliati
Slide 67: Structured Finance — portfolio
Structured Finance — portfolio « Westpac conducts certain structured finance transactions with exposure primarily to global financial institutions * Total portfolio size approx $10.6bn with a mix of asset and liability transactions * Structured Finance transactions currently under review by the New
Slide 68: Structured Finance — portfolio
Structured Finance — portfolio * On 21 September 2004 the NZ government announced a change in taxation rules with the introduction of a thin capitalisation regime + New rules specific to banks will deny interest deductions if the Bank does not hold a level of capital equivalent to four percent of Ne
Slide 69: Clear and simple strategy
69 Clear and simple strategy Vision Strategy / How? \ Outcomes Differentiator: Superio. Execution + Medium term “To be a great Australian Objectives a and NZ Company = Best practice employee Cc t commitment = A great place to work ustomer = Service leadership in our = A superior customer Focus indus
Slide 70: Improving sustainability — staff, customers, community
70 Improving sustainability — staff, customers, community eadership (%) Westpac senior leadership provides a clear ense of direction - % favourable tll 2000 2001 2002 2003 2004 0 0 ie] 0 ie) ie] Consumer satisfaction % of main financial institution customers very or fairly satisfied quarterly moving
Slide 71: Strategic options
71 Strategic options Option Comments Status Organic growth Aust/NZ lowest risk and highest value available Significant opportunities still. remain within existing customer franchise No diversion risk Aggressively pursue Acquisition No major capability gaps Very limited opportunity to generate value
Slide 72: An experienced executive team
72 An experienced executive team 3 Fen e Piograp OUD Da SiarGan i OES 4: oy Hana Atlas Group Executive People | Nov 2002 | Joined Westpac 2000, as Group Secretary and General Counsel. and Performance Previously Partner of a Major Law firm, Maliesons Stephen Jaques. -In current role since 2002 Philip
Slide 73: Australian and New Zealand economic outlook
Australian and New Zealand economic outlook Australia and New Zealand economic fundamentals sound: - Solid domestic demand - Low unemployment Business surveys continue to paint a positive outlook Further slight rise in interest rates not expected in Australia until 2005 Key economic indicators . : J
Slide 74: Credit growth expected to ease as housing cools
Credit growth expected to ease as housing cools | Australian credit growth (%) Forecasts (To Sep 2008) = 24 + 20 \ NS 2 rr; 8 r 4 0 } 4 “Sep-90 Sep-92 Sep-94 Sep-96 Sep98 Sep-00 Sep-02 Sep-04 aie SS rot Ho Total (Aust) «««« Total credit average °° ----- Total Housing average Source: RBA, Westpac | W
Slide 75: Credit growth and nominal non-farm GDP
Credit growth and nominal non-farm GDP Credit growth has historically tracked the direction of nominal GDP growth but with a multiplier of around 1.5 times Currently credit growth is tracking above this long term trend at twice nominal GDP Looking forward, credit growth is expected to remain higher
Slide 76: Supportive credit quality environment
Supportive credit quality environment + Forward indicators of credit quality remain Households ‘stress’ not apparent strong y to index - Unemployment at generational low - Consumer confidence is at a decade high, households positive about their finances ~ Robust corporate profits ~~ Unemployment rat
Slide 77: Known influences on 2005 earnings
Known influences on 2005 earnings Medium term ranges| Specific influences in 2005 (%) *.Lower.credit growth Interest 5-8 *:Income loss from NZ structured finance. impact expected to be $20m Income. to $40 in 2005 depending on alternative transactions * Continuing competition — particularly in deposi
Slide 78: Where are the risks?
78 Where are the risks? Risk Probability of occurrence * Further intensified competition Medium * Impact of new entrants Medium * Housing market collapse Low * Blow-out in bad debts Low * Greater than expected funds outflows Low * Re-regulation Low * New wave of corporate collapses Low * Global econ
Slide 79: Positive outlook
Positive outlook * More challenging environment * Asset quality remaining pristine * Good earnings momentum across all businesses * Continue to deliver strong results at the upper end of the sector Aifestpac 79 Investor Discussion Pack November 2004 Australia’s First Bank
Slide 80: Investor relations contacts
Investor relations contacts Westpac’s Investor Relations Team Andrew Bowden 61 2 9226 4008 andrewbowden@westpac.com.au Hugh Devine 61 2 9226 1047 hdevine@westpac.com.au Suzanne Evans 61 2 9226 3133 suzanneevans@westpac.com.au Natasha O'Reilly 61 2 9226 3143 noreilly@westpac.com.au For further inform
Slide 81: Slide 81