Westpac Banking Corporation · ASX:WBC
Westpac Banking — Debt Investor Presentation (November 2024)
26 slides from Westpac Banking's debt investor presentation, November 2024
Slide 1: November 2024
NOVEMBER 2024 For the year ended 30 September 2024. Comparisons are to the year ended 30 September 2023 unless otherwise stated. © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714
Slide 2: Westpac 2024 Highlights
WESTPAC 2024 HIGHLIGHTS Data as at 30 September 2024 Comparisons are to the year ended 30 September 2023 unless otherwise stated. SOLID BALANCE CREDIT FINANCIAL SHEET QUALITY PERFORMANCE STRONG SOUND • Net profit after tax $7.0bn • CET1 capital ratio 12.5% • Impairment charge (FY23 $7.2bn) APRA basi
Slide 3: Improving Customer Franchise
IMPROVING CUSTOMER FRANCHISE 2024 REVENUE (%) ENHANCING SAFETY 5 Consumer 12 Business & Wealth 38 16 Institutional New Zealand Group Businesses 28 CONSUMER BUSINESS & WEALTH $237M • #1 mobile banking app1 • New merchant points of presence customer scams stopped • Household deposit growth, up 83% to
Slide 4: 2024 Group Financial Results
2024 GROUP FINANCIAL RESULTS NET PROFIT AFTER TAX (FULL YEAR, $M) NET INTEREST MARGIN (% AND BPS) Down 2bps Down 3% 502 (141) (10bps) 3bps (1bp) (666) 70 (81) 7bps 111 1.95 (2bps) 1.93 7,195 6,990 (1bp) 2bps and NCI Non-interest Expenses Notable items & FY24 FY23 Net interest Impairment businesses s
Slide 5: Growth in Deposits
GROWTH IN DEPOSITS COMPOSITION OF CUSTOMER DEPOSITS (% OF TOTAL) AUSTRALIAN HOUSEHOLD DEPOSIT GROWTH (%) 3.0% Westpac ADI System 11 18 9 29 2.0% $674bn $674bn 24 58 18 1.0% 32 0.0% Term deposits Savings Households Businesses Transaction Mortgage offset -1.0% Institutional Non-interest bearing Sep-22
Slide 6: Growth in Lending
GROWTH IN LENDING COMPOSITION OF GROSS LOANS (% OF TOTAL) AUSTRALIAN HOUSING CREDIT GROWTH (%) 1.0% Westpac (ex-RAMS) ADI System Australian mortgages 4 1 8 Australian business 0.8% 1 Institutional 12 0.6% Australian personal $811bn 0.4% New Zealand mortgages 12 62 New Zealand business/other 0.2% Oth
Slide 7: CET1 Capital Ratio
CET1 CAPITAL RATIO LEVEL 2 CET1 CAPITAL RATIO MOVEMENTS (%, BPS) Key capital ratios (APRA basis, %) Sep-23 Mar-24 Sep-24 Level 2 CET1 capital ratio 12.4 12.5 12.5 Additional Tier 1 capital ratio 2.2 2.5 2.3 Tier 1 capital ratio 14.6 15.0 14.8 160 (117) Tier 2 capital ratio 5.9 6.4 6.6 Total regulato
Slide 8: Provisions and Credit Quality
PROVISIONS AND CREDIT QUALITY IMPAIRMENT CHARGES AND STRESSED EXPOSURES (BPS) PROVISION FOR EXPECTED CREDIT LOSS1 (ECL) ($M) 7,195 Impairment charge to average loans annualised (lhs) Stressed exposures to total committed exposures (rhs) 4,930 5,084 100 350 4,625 80 3,559 250 60 145 40 150 20 7 50 0
Slide 9: Australian Mortgage Portfolio Composition
AUSTRALIAN MORTGAGE PORTFOLIO COMPOSITION Australian mortgage portfolio Sep-23 Mar-24 Sep-24 balance balance balance 2H24 flow1 FIXED RATE MORTGAGE EXPIRY SCHEDULE ($BN, FOR THE 6MTHS TO) Total portfolio ($bn) 485.6 495.2 503.3 55.2 Expired Yet to expire 51 Owner occupied (OO) (%) 67.1 67.8 67.9 64.
Slide 10: Australian Mortgage Portfolio Repayment Buffers
AUSTRALIAN MORTGAGE PORTFOLIO REPAYMENT BUFFERS CUSTOMERS AHEAD ON REPAYMENTS1 (% by accounts) (% by balances) Loans ‘on time’ and <1mth ahead Investment property loans Sep-23 Sep-24 – (generally maintain 1 16 >2yrs 24 24 higher balances for tax 22 43 33 20 19 21 37 purposes) >6mths <2yrs 18 19 17 1
Slide 11: Credit Quality Across Sectors
CREDIT QUALITY ACROSS SECTORS CORPORATE AND BUSINESS STRESSED EXPOSURES BY INDUSTRY SECTOR (%) 8.0 Downgrades of a small Sep-23 Mar-24 Sep-24 7.0 number of customers 6.0 Large single name 5.0 downgrade Large single 4.0 name downgrade 3.0 2.0 1.0 0.0 Property Wholesale Services Manufacturing Agricult
Slide 12: Long Term Wholesale Funding Profile
LONG TERM WHOLESALE FUNDING PROFILE TERM DEBT ISSUANCE AND MATURITY PROFILE1 ($BN) Issuance Maturities Funding for Lending Programme (NZ) 43 42 Term Funding Facility (Aus) 34 35 35 34 33 31 29 Tier 2 capital 28 28 25 12 18 Additional Tier 1 capital Covered bond Senior/Securitisation FY19 FY20 FY21 F
Slide 13: APRA Proposal to Phase Out AT1 Instruments
APRA PROPOSAL TO PHASE OUT AT1 INSTRUMENTS PROPOSED CHANGES TO CAPITAL CET1 CAPITAL (LEVEL 2, %) TOTAL CAPITAL (%) — On 10 September 2024, APRA released a Minimum CET1 CCB D-SIB CCyB CET1 AT1 Tier 2 21.38 Discussion Paper outlining proposed 12.49 18.25 changes to the capital framework for 18.25 bank
Slide 14: APRA Proposal - Tier 2 Impact Manageable
APRA PROPOSAL - TIER 2 IMPACT MANAGEABLE Regulatory Westpac requirement as at 30 September 2024 PROPOSED CHANGES TO CAPITAL % % $m Westpac expects the replacement of AT1 RWA at 30 Sep 2024 437,430 securities with Tier 2 securities over the transition period to be manageable, should Total Tier 2 requ
Slide 15: Australian and New Zealand Economic Forecasts
AUSTRALIAN AND NEW ZEALAND ECONOMIC FORECASTS As at 29 October 2024 2023 2024 2025 Calendar Years % Q3 Q4 Q1 Q2 Q3E Q4F Q1F Q2F 2023 2024F 2025F 2026F World GDP1 - - - - - - - - 3.2 3.3 3.3 3.2 Australia GDP2 2.1 1.6 1.3 1.0 1.2 1.5 1.9 2.2 1.6 1.5 2.4 2.4 Unemployment – end period 3.7 3.9 3.9 4.1 4
Slide 16: Australian Housing Market – Prices Upturn Moderates
AUSTRALIAN HOUSING MARKET – PRICES UPTURN MODERATES DWELLING PRICES (%, 3 MONTH ANNUALISED) 40 % Macro- COVID-19 ‘Delta’ rate cuts 2019 election 35 prudential rate hikes 30 measures Macro-prudential 25 measures 20 15 10 5 0 -5 -10 -15 -20 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 Oct-21 Oct-22 Oct-23 Oct-2
Slide 17: Appendix
APPENDIX Westpac Group
Slide 18: Long Term Wholesale Funding
LONG TERM WHOLESALE FUNDING TIER 2 CAPITAL ISSUANCE BY CURRENCY3 ($BN) LONG TERM WHOLESALE FUNDING BACK BOOK (%) AUD USD Other By currency1 (%) 7.0 6.0 Other 3 Finalisation of 5.0 TLAC July 2019 NZD 3 4.0 GBP 3 3.0 EUR 20 2.0 AUD 31 1.0 USD 40 0.0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY
Slide 19: Funding Composition
FUNDING COMPOSITION FUNDING BY RESIDUAL MATURITY (%) NET STABLE FUNDING RATIO (%) • Focus on stable funding sources 4.3 0.2 (0.9) • Customer deposits provide 67% of total funding, or 72% excluding equity (3.8) 115 0.0 (2.5) • Additional 22% from stable sources of long-term wholesale and equity 112 6
Slide 20: Liquidity Coverage Ratio (LCR)
LIQUIDITY COVERAGE RATIO (LCR) LCR ($BN) MOVEMENT IN LCR (%) September 2024 quarterly average 133% 134 (6.6) 133 173 3.9 Net cash outflows (NCOs) 130 4.3 Other flows1 26 Wholesale funding (0.2) (2.0) 9 173 Customer deposits 95 Liquid assets HQLA Sep-23 HQLA RBNZ Customer Wholesale Other Sep-24 Net c
Slide 21: Sectors in Focus: Commercial Property
SECTORS IN FOCUS: COMMERCIAL PROPERTY COMMERCIAL PROPERTY PORTFOLIO COMMERCIAL PROPERTY Sep-236 Mar-24 Sep-24 (TOTAL COMMITTED EXPOSURE, %) • Single credit policy, supported by industry Sub-sector TCE ($bn) 80.7 82.2 85.5 sector concentration limits Office • Maintained credit standards, with close %
Slide 22: New Zealand Credit Quality
NEW ZEALAND CREDIT QUALITY Mortgage portfolio Sep-23 Sep-24 MORTGAGE 90+ DAY UNSECURED CONSUMER 90+ DAY DELINQUENCIES3 (%) DELINQUENCIES3 (%) Total portfolio (NZ$bn)1 65.8 68.0 1.0 3.0 Owner occupied (%) 74.1 74.4 0.8 2.0 Investment property 0.6 25.9 25.6 0.49 loans (IPL) (%) 0.4 Broker introduced (
Slide 23: UNITE: Technology Simplification
UNITE: TECHNOLOGY SIMPLIFICATION PROGRAM OBJECTIVES FY24 PROGRESS • Governance model established and operating 1 • Initiatives consolidated to 61 from ~85 BETTER • 39 initiatives commenced; 2 complete CUSTOMER NPS • Deposit processor consolidation confirmed (3 to 1) EXPERIENCE UNITE investment: 2
Slide 24: Internationally Comparable Capital Ratio Reconciliation
INTERNATIONALLY COMPARABLE CAPITAL RATIO RECONCILIATION1 APRA’s capital requirements are more conservative than those of the Basel Committee on Banking Supervision (BCBS), leading to lower reported capital ratios by Australian banks. The following details the adjustments and how Westpac’s APRA CET1
Slide 25: Our Climate Targets
OUR CLIMATE TARGETS PROGRESS ON OPERATIONAL EMISSIONS TARGETS1 Reduction in emissions from 2021 baseline (%) FY23 FY24 2025 Target 2030 Target Progress Scope 1 and 2 emissions (market-based) (66) (86) (64) (76) Surpassed 2030 target Scope 3 (upstream) emissions (38) (41) NA (50) On track for 2030 ta
Slide 26: Disclaimer
DISCLAIMER The material contained in this presentation is intended to be general background information on Westpac Banking Corporation (“Westpac”) (ABN 33 007 457 141) and its activities. It should not be reproduced, distributed or transmitted to any person without the consent of Westpac and is not
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