Westpac Banking Corporation · ASX:WBC
Westpac Banking — H1 2024 Earnings Presentation
121 slides from Westpac Banking's earnings presentation, May 6, 2024
Slide 1: ASX Release
ASX Level 18, 275 Kent Street Sydney, NSW, 2000 Release 6 May 2024 Westpac 1H24 Presentation and Investor Discussion Pack Westpac Banking Corporation (“Westpac”) today provides the attached Westpac 1H24 Presentation and Investor Discussion Pack. For further information: Hayden Cooper Justin McCarthy
Slide 2: 2024 Interim Financial Results
2024 INTERIM FINANCIAL RESULTS PRESENTATION & INVESTOR DISCUSSION PACK FOR THE SIX MONTHS ENDED 31 MARCH 2024 © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714
Slide 3: Westpac 2024 Interim Results Index
WESTPAC 2024 Interim Results Presentation 3 2024 INTERIM Investor Discussion Pack of 2024 Interim Results 33 Earnings drivers 35 RESULTS INDEX Credit quality and provisions 45 Non-credit risk management 66 Capital, Funding and Liquidity 73 Customer franchise 84 Sustainability 89 Segment results 97 E
Slide 4: Peter King
PETER KING CHIEF EXECUTIVE OFFICER
Slide 5: 1H24 Highlights
1H24 HIGHLIGHTS DISCIPLINED ENHANCED RETURNING PERFORMANCE CUSTOMER FOCUS SURPLUS CAPITAL STRENGTHENED COMMENCED RISK MANAGEMENT UNITE 4 Westpac Group 2024 Interim Results Presentation & Investor Discussion Pack
Slide 6: 1H24 Financial Performance
1H24 FINANCIAL PERFORMANCE 1H24 2H23 Change 1H23 Change Net profit1 $3,342m 5% (16%) Return on tangible equity2 10.5% 44 bps (228 bps) Excluding Notable Items Revenue $10,816m 1% (1%) Expenses ($5,395m) 3% 8% Pre-provision profit $5,421m - (8%) Impairment charges to average loans annualised 9 bps 2
Slide 7: Surplus Capital Returned to Shareholders
SURPLUS CAPITAL RETURNED TO SHAREHOLDERS CET1 CAPITAL RATIO (%) • Increased share buyback program up to $2.5bn1 12.3 12.5 − Buyback announced Nov-23: $1.5bn, 59% complete2 11.3 − Buyback extension: $1bn1 • Special dividend $0.5bn, 15cps3 fully franked • Pro forma CET1 capital ratio 12.06%4 Mar-22 Ma
Slide 8: A Strategy for Growth and Return
A STRATEGY FOR GROWTH AND RETURN OUR PURPOSE Creating better futures together AMBITION To be our customers’ #1 bank and partner through life PILLARS Customer Easy Expert Advocate care at to do solutions for positive the heart business with and tools change FOUNDATIONS Strong Proactive Risk Data-info
Slide 9: Customer Service
CUSTOMER SERVICE IMPROVING SERVICE ENHANCING SAFETY PROVIDING SUPPORT Agreed 5th largest taxpayer NPS1 in employee Scam-Safe Accord in Australia5 scorecards $1.7bn income tax expense with other Australian banks and bank levy in 1H24 Mortgage time to decision Launched Increased down 4 days lending to
Slide 10: Consumer: Improving Service
CONSUMER: IMPROVING SERVICE FOCUS ON CUSTOMER ENGAGEMENT • #1 Leading mobile banking app1 • Consumer NPS up 2 points to 42,3 • 100 co-located branches4 GROWING QUALITY DEPOSITS • Household deposit growth, 1.1x system5 • Enhanced proposition and loyalty rewards • Consistent positioning in market SUST
Slide 11: Mortgages: Growth in Line with System
MORTGAGES: GROWTH IN LINE WITH SYSTEM NEW OWNER OCCUPIED LENDING FY22 FY23 1H24 • OBP roll-out commenced • OBP rolled out to brokers • >95% of loans on OBP • Inconsistent service • Improved service • Consistent service • Halved TTD 1.1x 0.9x System growth1,3 0.7x WBC Lending rate higher relative to
Slide 12: Business: Sustainable Growth
BUSINESS: SUSTAINABLE GROWTH BUSINESS LENDING • Lending up 3% in 1H241 • Simplified application process for SME customers • TTD down 2 days to 7.7 in Mar-241 DEPOSITS • Leading deposit franchise • Deposits balances maintained in competitive market PAYMENTS • Launched EFTPOS Flex • New terminal point
Slide 13: Institutional: Stronger Client Relationships
INSTITUTIONAL: STRONGER CLIENT RELATIONSHIPS CORPORATE & INSTITUTIONAL BANKING • Loan growth of 10%1 • Supported 33 sustainable finance transactions2 • Credit quality resilient TRANSACTION BANKING • PayTo launched for institutional and business customers • WestpacOne – foundational milestone for new
Slide 14: Core: Integrated Plan Complete
CORE: INTEGRATED PLAN COMPLETE1 • Strengthening risk CORE: 354 ACTIVITIES DELIVERED governance, accountability and risk culture • Integrated Plan deemed complete by Promontory “The depth of change of the organisation, both structurally and culturally, means Westpac is now a simpler, stronger bank.”
Slide 15: Unite – Technology Simplification
UNITE – TECHNOLOGY SIMPLIFICATION: BUSINESS LED, TECHNOLOGY ENABLED PROGRAM OBJECTIVES FOCUS ON PLANNING IN FY24 Governance External assurance 14 initiatives 1 model established and advice have commenced BETTER CUSTOMER EXPERIENCE 2 CUMULATIVE INITIATIVES COMPLETION TIMELINE IMPROVED EMPLOYEE EXPERI
Slide 16: Michael Rowland
MICHAEL ROWLAND CHIEF FINANCIAL OFFICER
Slide 17: 1H24 Financial Performance
1H24 FINANCIAL PERFORMANCE 2H23 1H24 Change Net profit $3,194m $3,342m 5% Excluding Notable Items: Revenue $10,671m $10,816m 1% Expenses ($5,244m) ($5,395m) 3% Impairment charges to average loans annualised 7 bps 9 bps 2 bps Net profit $3,545m $3,506m (1%) Cost to income ratio 49% 50% 74 bps CET1 ca
Slide 18: Notable Items and Businesses Sold
NOTABLE ITEMS AND BUSINESSES SOLD Notable Items1 ($m after tax) 2H23 1H24 Asset sales and revaluations - - Provisions for remediation, litigation, fines and penalties (176) - Restructuring costs (140) - Assets write-downs (87) - Hedging items 52 (164) Total Notable Items (351) (164) Businesses sold
Slide 19: 1H24-2H23 Net Profit
1H24-2H23 NET PROFIT ($M)1 3,823 139 6 (123) 3,545 (104) 63 (20) - 3,506 Pre-provision profit up $22m 7% lower 1% lower 1H23 2H23 Net interest Non-interest Expenses Impairment Tax Impact of 1H24 2 income income charges & NCI businesses sold 1 Excludes the impact of Notable Items. 2 Non-controlling i
Slide 20: Net Loans
NET LOANS ($BN) 9.6 2.5 0.4 0.1 0.1 (1.1) 784.8 773.3 Up $1.5bn in NZ$ 749.9 Up 3% Up 1% Mar-23 Sep-23 Mortgages Business Institutional New Personal Auto Mar-24 Zealand (in run off) (in A$) Chart may not add due to rounding. 19 Westpac Group 2024 Interim Results Presentation & Investor Discussion Pa
Slide 21: Deposit Growth
DEPOSIT GROWTH ($BN) 13.0 0.1 (0.8) (1.9) (0.5) 650.9 641.0 627.6 Down $1.0bn in NZ$ Up 2% Up 2% Mar-23 Sep-23 Consumer Business WIB New Zealand Other Mar-24 & Wealth (in A$) 20 Westpac Group 2024 Interim Results Presentation & Investor Discussion Pack
Slide 22: Net Interest Margin
NET INTEREST MARGIN (%) Core NIM1 Treasury & Markets Notable Items 1.96 1.94 (4bps) 3bps (5bps) (2bps) 4bps 0bps 1.89 0.09 (1bps) 0.11 0.14 Core NIM 3bps lower 1.89 1.83 Sep-23 Exit Core NIM 1.80%2,3 1.80 Mar-24 Exit Core NIM 1.80%3 (0.02) (0.05) 2 2 1H23 2H23 Loans Customer Wholesale Capital Liquid
Slide 23: Non-Interest Income
NON-INTEREST INCOME NON-INTEREST INCOME BY TYPE ($M)1 TRADING INCOME ($M)1 1,669 140 1,459 1,465 61 75 40 409 409 57 365 341 365 341 12 232 225 218 352 368 329 827 818 842 (3) 1H23 2H23 1H24 1H23 2H23 1H24 Fees Wealth Trading Other Businesses sold Trading (ex DVA) DVA2 1 Excludes the impact of Notab
Slide 24: 1H24 Expenses
1H24 EXPENSES ($M)1 Cost Reset benefits including: • Operating model simplified • Reduced property footprint 365 (233) (9) 28 5,395 5,244 4,988 • Average salary and • Software amort wages growth $71m higher • Higher technology costs • Offset by lower spend 5% increase 3% increase, up 2% ex businesse
Slide 25: Investment Spend
INVESTMENT SPEND Investment spend lower due to completion of large INVESTMENT SPEND ($M) programs in 2023 Growth and productivity investment • Digital enhancements • Development of the corporate cash management platform 868 • Commencement of UNITE Risk & regulatory 736 • Expansion of scam protection
Slide 26: Credit Quality
CREDIT QUALITY STRESSED EXPOSURES AS A % OF TCE AUSTRALIAN MORTGAGE DELINQUENCIES (%) 1.36 30+ day delinquencies 90+ day delinquencies 1.32 4.00 90+ ex 6 months serviceability hold-out period 1.26 3.00 1.10 0.54 2.00 1.81 0.62 0.54 1.06 1.00 0.43 0.77 0.00 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 0.24 0.0
Slide 27: Impairment Provisions Above Base Case
IMPAIRMENT PROVISIONS $1.4BN ABOVE BASE CASE ($M) CAP to credit RWA of 1.38%, up 3bps 5,135 Mortgage overlays reduced 4,923 4,941 CAP higher 260 432 • Increased mortgage and consumer finance Overlays 720 705 delinquencies 692 • Less favourable outlook for commercial property Stage 1 CAP 830 prices a
Slide 28: Credit Impairment Charge Composition
CREDIT IMPAIRMENT CHARGE COMPOSITION ($M) Individually Assessed Provisions (IAP) Collectively Assessed Provisions (CAP) Total Write-backs Write-offs Other movement New IAP & recoveries direct in CAP 390 $88m from 362 3 exposures 310 258 213 218 222 211 121 76 58 19 (104) (120) (214) 1H23 2H23 1H24 1
Slide 29: Capital Above Top End of Target Range
CAPITAL ABOVE TOP END OF TARGET OPERATING RANGE (CET1 Capital ratio %) IRRBB: 18bps Data refinement: 11bps Credit quality: (8bps) Share buyback: $1.7bn, (38bps)2 Lending: (6bps) Special dividend: $0.5bn, (11bps) 75bps (57bps) 17bps (19bps) 1bps 12.55 (49bps) 12.28 12.38 12.06 Mar-23 Sep-23 Net profi
Slide 30: 2H24 Considerations
2H24 CONSIDERATIONS REVENUE EXPENSES • System credit growth steady • Increased investment in UNITE from 2H24 • 1H24 Core NIM 1.80%, Exit 1.80%1 • Lower software capitalisation rate • Mortgage competition continuing, but • Inflation impacts moderating moderating • Cost reset to continue • Deposits mi
Slide 31: Peter King
PETER KING CHIEF EXECUTIVE OFFICER
Slide 32: Australian Economy: Outlook Improving
AUSTRALIAN ECONOMY: OUTLOOK IMPROVING AUSTRALIAN ECONOMICS1 SOFT LANDING WITH ACTIVITY H2 2023 2024F 2025F EXPECTED TO RECOVER • Real household incomes rising GDP2 1.0 1.6 2.5 • Tax relief from mid 2024 CPI2 3.6 3.0 2.7 • Modest rise in unemployment expected Unemployment rate3 3.9 4.5 4.6 CONSUMER S
Slide 33: 1H24 Highlights
1H24 HIGHLIGHTS DISCIPLINED ENHANCED RETURNING PERFORMANCE CUSTOMER FOCUS SURPLUS CAPITAL STRENGTHENED COMMENCED RISK MANAGEMENT UNITE 32 Westpac Group 2024 Interim Results Presentation & Investor Discussion Pack
Slide 34: Investor Presentation and Discussion Pack
HALF YEAR FINANCIAL RESULTS FOR THE 6 MONTHS ENDED 31 MARCH 2024 INVESTOR PRESENTATION AND DISCUSSION PACK © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714
Slide 35: Creating Better Futures in 1H24
CREATING BETTER FUTURES IN 1H24 – SUPPORTING OUR CUSTOMERS, SHAREHOLDERS, EMPLOYEES, COMMUNITY AND ENVIRONMENT OVERVIEW SHAREHOLDERS CUSTOMERS OUR PEOPLE COMMUNITY ENVIRONMENT $3,342m 13 million 75 $1.7bn 83% Net Profit, up 5% Customers across the Organisational Health Income tax expense, Reduction
Slide 36: Earnings Drivers
ABfestpac GRoup EARNINGS DRIVERS
Slide 37: 1H24 Net Profit Earnings
1H24 NET PROFIT EARNINGS NET PROFIT 2H23 – 1H24 ($M) Higher software amortisation and technology expenses, average FTE down 5% AIEA up 2% due to loan growth. Higher charge due Core NIM down 3bps, Treasury a small number & Markets NIM up 3bps of new IAPs 139 6 (123) 351 (20) 3,525 (104) 63 3,506 (164
Slide 38: 1H24 Net Profit Earnings
1H24 NET PROFIT EARNINGS NET PROFIT 1H23 – 1H24 ($M) Lower trading income, partly Inflation, wage growth, Lower CAP charge offset by higher fee income technology expenses and higher partly offset by a small software amortisation, number of new IAPs average FTE down 7% AIEA up 3% due to loan growth.
Slide 39: Single Measure of Performance
SINGLE MEASURE OF PERFORMANCE – NET PROFIT AFTER TAX EARNINGS Westpac uses net profit after tax to assess financial performance at both a Group and segment level Notable Items are shown separately to clarify underlying operating performance and allocated to the following categories: • Large items th
Slide 40: Composition and Movement in Lending
COMPOSITION AND MOVEMENT IN LENDING REVENUE COMPOSITION OF GROSS LOANS (% OF TOTAL) BUSINESS AND INSTITUTIONAL LENDING ($BN) Australian mortgages 4 <1 218 3 (1) 0 (1) 220 8 Australian business 207 1 Institutional 11 Up 1% $789bn Australian personal New Zealand mortgages 12 63 Up 6% New Zealand busin
Slide 41: Composition and Movement in Deposits
COMPOSITION AND MOVEMENT IN DEPOSITS REVENUE COMPOSITION OF CUSTOMER DEPOSITS (% OF TOTAL) CUSTOMER DEPOSITS BY TYPE (%) 1 2 Term deposits Savings Transaction Mortgage offset NIB deposits 628 641 651 18 11% 11% 11% 9% 9% 9% Households 18% 18% 17% $651bn Businesses 34% 33% 34% 24 58 Institutional 29%
Slide 42: Net Interest Margin
NET INTEREST MARGIN REVENUE NET INTEREST MARGIN (%) Core NIM 1 Treasury & Markets Notable Items Composition of NIM (%) 1H23 2H23 1H24 1.94 (4bps) (2bps) 4bps 0bps 3bps (5bps) 1.89 (1bps) 0.11 Core NIM2 1.89 1.83 1.80 0.14 Treasury & Markets2 0.09 0.11 0.14 Sep-23 Exit Core NIM 1.80%2,3 1.83 Mar-24 E
Slide 43: Non-Interest Income
NON-INTEREST INCOME1 REVENUE NON-INTEREST INCOME BY TYPE ($M) NET FEE INCOME BY SEGMENT ($M) Fees Trading Wealth management Other Businesses sold 14 (3) 39 (13) (13) 842 827 818 1,669 140 1,529 61 1,459 1,465 75 40 232 218 225 1H23 2H23 Consumer Business WIB New Other 1H24 & Wealth Zealand 409 365 3
Slide 44: Expenses
EXPENSES EXPENSES EXPENSES 2H23 – 1H24 ($M) Cost reset benefits including: • Lower FTE from simpler operating model • Reduced property footprint Software amort up $71m offset by lower spend 5,704 (460) 365 (233) (9) 5,395 28 5,272 Average salary and wages growth and higher technology costs Up 2% ex
Slide 45: 1H24 Impairment Charge of $362M
1H24 IMPAIRMENT CHARGE OF $362M IMPAIRMENT CHARGES IMPAIRMENT CHARGES ($M) Individually assessed Collectively assessed Total New Write-backs Write-offs Other movements IAPs & recoveries direct in CAP 390 362 310 258 213 218 222 211 121 76 58 19 $88m from (104) (120) 3 exposures (214) 1H23 2H23 1H24
Slide 46: Credit Quality and Provisions
CREDIT QUALITY AND PROVISIONS
Slide 47: Provisions for Expected Credit Loss
PROVISIONS FOR EXPECTED CREDIT LOSS CREDIT QUALITY TOTAL PROVISIONS FOR EXPECTED CREDIT LOSSES1 ($M) EXPECTED CREDIT LOSS (ECL) ($M) $1.4bn in provisions Overlay Stage 1 CAP Stage 2 CAP above the base case ECL 7,061 Stage 3 CAP Stage 3 IAP Reduction for risks reflected in 5,135 5,135 modelled 5,007
Slide 48: Provision Cover
PROVISION COVER CREDIT QUALITY EXPOSURES AS A % OF TCE KEY RATIOS Stage 3 Stage 2 Stage 1 Mar-23 Sep-23 Mar-24 Provisions to gross loans (bps) 65 63 65 Impaired asset provisions 43 43 47 to impaired assets (%) Collectively assessed provisions 133 135 138 to credit RWA (bps) 82.85 83.53 86.17 PROVISI
Slide 49: Portfolio Composition
PORTFOLIO COMPOSITION CREDIT QUALITY TOTAL COMMITTED EXPOSURE (TCE) BY RISK GRADE AT 31 MARCH 2024 ($M) Standard and Poor’s risk grade1 Australia NZ / Pacific Other overseas Group % of total AAA to AA- 207,397 24,379 21,051 252,827 20% A+ to A- 42,417 5,760 10,625 58,802 5% BBB+ to BBB- 76,922 10,69
Slide 50: Credit Quality Metrics
CREDIT QUALITY METRICS CREDIT QUALITY STRESSED EXPOSURES AS A % OF TCE MOVEMENT IN STRESS CATEGORIES (BPS) Impaired Non-performing, 90+ days 7 2 2 (2) 136 Non-performing, <90 days Watchlist & substandard 1 126 1.36 1.36 1.26 1.10 0.49 1.07 0.54 0.54 Sep-23 Impaired Non- Non- Sub- Watchlist Mar-24 pe
Slide 51: Credit Quality Across Sectors
CREDIT QUALITY ACROSS SECTORS CREDIT QUALITY CORPORATE AND BUSINESS STRESSED EXPOSURES BY INDUSTRY SECTOR (%) 8.0 Mar-23 Sep-23 Mar-24 Downgrade of Downgrades across a small 7.0 a single name number of customers 6.0 5.0 4.0 3.0 2.0 1.0 0.0 Property Wholesale Manufacturing Services Agriculture, Prope
Slide 52: Sectors in Focus: Commercial Property
SECTORS IN FOCUS: COMMERCIAL PROPERTY CREDIT QUALITY • Single credit policy, supported by COMMERCIAL PROPERTY EXPOSURES COMMERCIAL PROPERTY PORTFOLIO industry sector concentration limits (% OF TCE) COMPOSITION (TCE) (%) • Maintained credit standards, with close oversight of portfolio Sub-sector 6.4
Slide 53: Sectors in Focus: Commercial Property – Office
SECTORS IN FOCUS: COMMERCIAL PROPERTY – OFFICE CREDIT QUALITY COMMERCIAL PROPERTY – OFFICE S&P EQUIVALENT RISK GRADE Mar-233 Sep-233 Mar-24 • Office exposure has reduced to 1.4% of Group TCE in Mar-24 from 2.1% in A+ to A- TCE ($bn) 17.8 17.7 17.0 Sep-20 24 % of Group TCE 1.46 1.45 1.37 • Weighted t
Slide 54: Sectors in Focus: Accommodation, Cafes and Restaurants; Retail Trade
SECTORS IN FOCUS: ACCOMMODATION, CAFES AND RESTAURANTS; RETAIL TRADE CREDIT QUALITY ACCOMMODATION, CAFES AND PORTFOLIO SECURITY COMPOSITION PORTFOLIO BY SUB-SECTOR RESTAURANTS (TCE) (%) (TCE) (%) Mar-233 Sep-233 Mar-24 Accommodation 4 4 TCE ($bn) 10.3 10.8 11.5 14 Fully secured 20 Pubs, taverns % of
Slide 55: Sectors in Focus: Agriculture; Mining
SECTORS IN FOCUS: AGRICULTURE; MINING CREDIT QUALITY AGRICULTURE MINING (INCL. OIL AND GAS) Mar-233 Sep-233 Mar-24 Mar-233 Sep-233 Mar-24 TCE ($bn) 24.1 24.1 24.3 TCE ($bn) 8.9 8.1 7.6 % of Group TCE 1.97 1.98 1.96 % of Group TCE 0.73 0.66 0.61 Lending ($bn) 20.4 20.7 20.7 Lending ($bn) 2.9 2.7 2.7
Slide 56: Australian Consumer Finance
AUSTRALIAN CONSUMER FINANCE CREDIT QUALITY AUSTRALIAN CONSUMER AUSTRALIAN CONSUMER FINANCE FINANCE PORTFOLIO1 90+ DELINQUENCIES (%) Mar-23 Sep-23 Mar-24 6.0 Credit cards Personal loans Auto finance 5.0 Lending ($bn) 11.0 10.3 9.9 4.0 3.60 As a % of Group loans 1.5 1.3 1.3 3.0 2.46 2.0 30+ day delinq
Slide 57: Australian Mortgage Portfolio Composition
AUSTRALIAN MORTGAGE PORTFOLIO COMPOSITION MORTGAGE CREDIT QUALITY Australian mortgage portfolio Mar-23 Sep-23 Mar-24 balance balance balance 1H24 flow1 OWNER OCCUPIED / INVESTMENT PROPERTY LOANS AS A % OF THE AUSTRALIAN MORTGAGE PORTFOLIO Total portfolio ($bn) 472.7 485.6 495.2 51.0 OO IPL5 66 67 68
Slide 58: Australian Mortgage Portfolio Composition
AUSTRALIAN MORTGAGE PORTFOLIO COMPOSITION MORTGAGE CREDIT QUALITY BY PRODUCT AND REPAYMENT TYPE (%) BY YEAR OF ORIGINATION (% OF TOTAL BOOK) 23 Mar-23 (Portfolio) Sep-23 (Portfolio) Mar-24 (Portfolio) 1H24 Flows 64 65 65 64 18 15 12 6 4 4 4 5 22 21 21 21 4 4 10 10 10 12 2 1 1 3 2 2 3 0 Pre- 2016 201
Slide 59: Australian Mortgage Portfolio Loan-to-Value Ratios
AUSTRALIAN MORTGAGE PORTFOLIO LOAN-TO-VALUE RATIOS (LVRS) MORTGAGE CREDIT QUALITY LOAN-TO-VALUE RATIOS (%) SERVICEABILITY ASSESSMENT CREATES A BUFFER 100 1H24 drawdowns LVR at origination FOR BORROWERS 90 • Loans are assessed at the higher of: Portfolio LVR at origination 80 − The customer rate, inc
Slide 60: Australian Mortgage Portfolio Repayment Buffers
AUSTRALIAN MORTGAGE PORTFOLIO REPAYMENT BUFFERS MORTGAGE CREDIT QUALITY CUSTOMERS AHEAD ON REPAYMENTS1 (% BY ACCOUNTS) OFFSET ACCOUNT BALANCES2 ($BN) 1 >2yrs 60 18 57 53 >6mths <2yrs 51 33 46 39 41 <6 mths 16 < 1 mth On time 14 18 Behind Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Mar-24 CUSTOMERS AHE
Slide 61: Australian Mortgage Portfolio Fixed-Rate Loans
AUSTRALIAN MORTGAGE PORTFOLIO FIXED-RATE LOANS MORTGAGE CREDIT QUALITY • Approx. $146bn of fixed-rate loans have FIXED RATE MORTGAGE EXPIRY SCHEDULE ($BN PER MONTH) expired or refinanced onto higher rates Fixed rate balances ($bn, lhs) Average fixed period (years, rhs) 12.0 5.0 since 1 October 2021
Slide 62: Australian Mortgage Portfolio Underwriting
AUSTRALIAN MORTGAGE PORTFOLIO UNDERWRITING MORTGAGE CREDIT QUALITY CREDIT POLICY AT MARCH 2024 • Verified via payslips, tax returns or salary credits, with other supporting documentation such as PAYG payment summaries or Income ATO Income Statements (minimum standards apply) • Shading of at least 20
Slide 63: Australian Mortgage Portfolio Performance
AUSTRALIAN MORTGAGE PORTFOLIO PERFORMANCE MORTGAGE CREDIT QUALITY Australian mortgage portfolio Mar-23 Sep-23 Mar-24 30+ DAY AND 90+ DAY DELINQUENCIES (%) 90+ day delinquencies 90+ day delinquencies (bps): 4.0 90+ dpd excl. 6 months serviceability hold-out period 30+ day delinquencies Total portfoli
Slide 64: Australian Mortgage Portfolio Performance
AUSTRALIAN MORTGAGE PORTFOLIO PERFORMANCE MORTGAGE CREDIT QUALITY PORTFOLIO BY STATE (%) 90+ DAY DELINQUENCIES BY STATE (%) 4.0 ALL NSW/ACT VIC/TAS 7 NSW/ACT QLD WA SA/NT 8 3.0 VIC/TAS 41 15 2.0 QLD WA 1.0 29 SA/NT 0.0 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 HARDSHIP1 BALANCES BY SUPPORT SOLUTION
Slide 65: Interest Only and Investment Property Lending
AUSTRALIAN MORTGAGE PORTFOLIO INTEREST ONLY AND INVESTMENT PROPERTY LENDING MORTGAGE CREDIT QUALITY INTEREST ONLY (I/O) LENDING BY DYNAMIC LVR1 AND INVESTMENT PROPERTY PORTFOLIO BY NUMBER INCOME BAND (% OF TOTAL I/O LENDING) OF PROPERTIES PER CUSTOMER (%) Applicant gross income bands 1 1 2 61 <$100k
Slide 66: New Zealand Mortgage and Consumer Portfolios
NEW ZEALAND MORTGAGE AND CONSUMER PORTFOLIOS NEW ZEALAND CREDIT QUALITY Mortgage portfolio Sep-23 Mar-24 MORTGAGE 90+ DAY UNSECURED CONSUMER 90+ DAY DELINQUENCIES3 (%) DELINQUENCIES3 (%) Total portfolio (NZ$bn)1 65.8 67.4 1.0 3.0 Owner occupied (%) 74.1 74.4 0.8 2.0 Investment property 0.6 25.9 25.6
Slide 67: Non-Credit Risk Management
ABfestpac GRoup NON-CREDIT RISK MANAGEMENT
Slide 68: Core Program Driving Stronger Risk Governance
CORE PROGRAM DRIVING STRONGER RISK GOVERNANCE, ACCOUNTABILITY AND RISK CULTURE CORE TARGET STATES MEASURES OF PROGRESS 1 “People constructively “Jobs…are designed to “Clear in how expected High-rated issues2 challenge…”1 have clear objectives to manage risks”1 We are a well-run and accountabilities…
Slide 69: Cyber Security – A Layered Defence
CYBER SECURITY – A LAYERED DEFENCE1 CYBER RISK EMPLOYEES Controls underpin who we hire; how we grant access; and how we monitor system use CUSTOMERS Dedicated controls to help protect customers from fraud, including multi-factor authentication SUPPLIERS Security reviews, limited access to systems an
Slide 70: Protecting Customers from Fraud and Scams
PROTECTING CUSTOMERS FROM FRAUD AND SCAMS1 FRAUD & SCAMS SCAM AND DIGITAL FRAUD DETECTION (%)2 1H24 SNAPSHOT FY22 FY23 1H24 74 75 71 66 62 Customer scam losses 32% 55 lower compared to 1H23 SaferPay launched helping protect customers from scams Scam Fraud DYNAMIC CVC USERS3 Average daily users (LHS)
Slide 71: Launched SaferPay to Help Protect Customers
LAUNCHED SAFERPAY TO HELP PROTECT CUSTOMERS FROM SCAMS FRAUD & SCAMS Potential scam Transaction checked Suspicious identified using AI with customer transaction blocked 70 Westpac Group 2024 Interim Results Presentation & Investor Discussion Pack
Slide 72: Broad Suite of Security Protection Measures
BROAD SUITE OF SECURITY PROTECTION MEASURES FRAUD & SCAMS SaferPay launched, prompting Westpac Verify alerts customers to Real-time blocking of questionable customers to provide more potential scams through risk online merchants information for high scam indicators when adding new risk transactions
Slide 73: Prevention Measures Driving Down Customer Losses
PREVENTION MEASURES DRIVING DOWN CUSTOMER LOSSES FRAUD & SCAMS INVESTED OVER $100M IN DETECTION AND PREVENTION MEASURES SINCE FY21, SAVING CUSTOMERS OVER $520M IN FRAUD AND SCAM LOSSES Introduction of cryptocurrency block triggered spike following discovery and disruption of many ongoing scams Intro
Slide 74: Capital, Funding and Liquidity
CAPITAL, FUNDING AND LIQUIDITY
Slide 75: CET1 Capital Ratio 12.55%
CET1 CAPITAL RATIO 12.55% CAPITAL, FUNDING AND LIQUIDITY LEVEL 2 CET1 CAPITAL RATIO MOVEMENTS (%, BPS) Mar- Sep- Mar- Key capital ratios (%) 23 23 24 Level 2 CET1 12.3 12.4 12.5 capital ratio Additional Tier 1 75 (57) Share buyback: $1.7bn, (38bps) 2.2 2.2 2.5 capital ratio Special dividend: $0.5bn,
Slide 76: Risk Weighted Assets
RISK WEIGHTED ASSETS CAPITAL, FUNDING AND LIQUIDITY RISK WEIGHTED ASSETS1 (RWA) ($BN) 3.0 2.2 (0.3) (4.0) 452.9 451.4 (0.8) (0.3) (6.5) (0.2) 0.0 444.4 Credit RWA flat1 See below Down $7.1 bn or 1.6% Mar-23 Sep-23 Credit Lending Counter- Data FX Market IRRBB Operational Other Mar-24 quality party cr
Slide 77: Regulatory Capital Changes
REGULATORY CAPITAL CHANGES CAPITAL, FUNDING AND LIQUIDITY Expected impact on the Group’s Implementation Change Details capital ratios • In September 2023, APRA released a discussion paper to explore options for, and seek feedback from stakeholders on improving the effectiveness of 2024 Additional Ti
Slide 78: Internationally Comparable Capital Ratio Reconciliation
INTERNATIONALLY COMPARABLE CAPITAL RATIO RECONCILIATION1 CAPITAL, FUNDING AND LIQUIDITY APRA’s capital requirements are more conservative than those of the Basel Committee on Banking Supervision (BCBS), leading to lower reported capital ratios by Australian banks. The following details the adjustmen
Slide 79: Well Placed on Internationally Comparable
WELL PLACED ON INTERNATIONALLY COMPARABLE CAPITAL, FUNDING AND LIQUIDITY COMMON EQUITY TIER 1 RATIO1 (%) 20% 15% 10% Agricultural Bank of China China Construction Bank Toronto Dominion Bank China Merchants Bank Royal Bank of Canada Standard Chartered Credit Agricole SA Norinchukin Bank Bank of Montr
Slide 80: Loss-Absorbing Capacity and Tier 2 Capital
LOSS-ABSORBING CAPACITY AND TIER 2 CAPITAL CAPITAL, FUNDING AND LIQUIDITY LOSS-ABSORBING CAPACITY (LAC) TIER 2 PROFILE1,2,3 (NOTIONAL AMOUNT, A$BN) • Westpac is well progressed to meet APRA’s Westpac New Zealand Limited (WNZL) WBC final LAC requirement of an additional 4.5% Westpac Banking Corporati
Slide 81: Funding Composition
FUNDING COMPOSITION CAPITAL, FUNDING AND LIQUIDITY FUNDING BY RESIDUAL MATURITY (%) NET STABLE FUNDING RATIO (%) • Focus on stable funding sources • Customer deposits provide 66% of total funding, or 71% excluding equity 1.9 0.2 (0.5) 0.0 (1.3) (1.4) • Additional 22% from stable sources of long-term
Slide 82: Long Term Wholesale Funding Profile
LONG TERM WHOLESALE FUNDING PROFILE CAPITAL, FUNDING AND LIQUIDITY TERM DEBT ISSUANCE AND MATURITY PROFILE1 ($BN) Issuance Maturities Funding for Lending Programme (NZ) 43 Term Funding Facility (Aus) 34 35 35 33 Tier 2 capital 31 31 33 27 27 26 12 21 Senior/Securitisation 20 18 13 AT1 capital 8 Cove
Slide 83: Long Term Wholesale Funding Diversification
LONG TERM WHOLESALE FUNDING DIVERSIFICATION CAPITAL, FUNDING AND LIQUIDITY 1H24 TERM DEBT ISSUANCE1 (%) By program (%) By currency (%) By tenor (%) 9 Senior bonds 21 AUD 17 2 years 14 28 Covered USD bonds 3 years RMBS 42 17 13 56 EUR 5 years 63 Tier 2 capital 2 >5 years Other Additional 38 Tier 1 ca
Slide 84: Liquidity Coverage Ratio
LIQUIDITY COVERAGE RATIO (LCR) CAPITAL, FUNDING AND LIQUIDITY LCR ($BN) MOVEMENT IN LCR (%) March 2024 quarterly average 132% 182 137 Net cash outflows (NCOs) (0.7) 0.4 (0.7) (1.5) 1.3 Other flows1 134 29 132 Wholesale funding 14 182 Customer deposits 95 Liquid assets HQLA Sep-23 HQLA RBNZ Customer
Slide 85: Customer Franchise
ABfestpac GRoup CUSTOMER FRANCHISE
Slide 86: Consumer
CUSTOMER FRANCHISE CUSTOMER FRANCHISE MFI SHARE1,2 CUSTOMER SATISFACTION (CSAT)2 NET PROMOTER SCORE (NPS)2 Westpac Peers 8.0 15 35.5% 7.8 10 Consumer 7.6 5 7.4 0 7.2 -5 16.6% Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 11.6% 11.9% WBC St.George Brands Peers WBC St.George Br
Slide 87: Leading Mobile Banking App
#1 LEADING MOBILE BANKING APP1 CUSTOMER FRANCHISE SEAMLESS USER EXPERIENCE SAFE AND SECURE • Intuitive navigation with new • Proactive fraud and scam Payment and Insights Hub prevention including SaferPayTM • Effortless self-service and • Embedded security and safety secure chat education prompts •
Slide 88: Evolving Our Digital Banking Experience
EVOLVING OUR DIGITAL BANKING EXPERIENCE – 1H24 INITIATIVES CUSTOMER FRANCHISE FRAUD & SCAMS MONEY SERVICING & PAYMENTS & LOYALTY & REWARDS Westpac SaferPayTM MANAGEMENT ONBOARDING TRANSACTIONS ShopBack Lounge for St.George, BankSA Tax Organiser & Empowering customers PayTo for Billers and Bank of Me
Slide 89: Customers Continue to Migrate to Digital
CUSTOMERS CONTINUE TO MIGRATE TO DIGITAL CUSTOMER FRANCHISE DIGITALLY ACTIVE CUSTOMERS1 (#M) DIGITAL TRANSACTIONS1,2 (#M) MOBILE WALLET PAYMENTS1 (#M) 5.92 387 5.80 395 412 5.64 372 350 5.48 356 320 334 5.31 273 213 Up 2% Up 4% Up 11% Up 5% Up 11% Up 21% Mar-22 Sep-22 Mar-23 Sep-23 Mar-24 1H22 2H22
Slide 90: Sustainability
ABfestpac GRoup SUSTAINABILITY
Slide 91: Sustainability Strategy
SUSTAINABILITY STRATEGY1,2 SUSTAINABILITY OUR PURPOSE Creating better futures together PILLAR Customer Easy Expert Advocate Support in Simpler, Action on climate Equitable and THEMES good times safer bank and nature inclusive society and bad OBJECTIVES 1 2 3 4 5 6 Enhance Strengthen Become Become Re
Slide 92: Sustainability Goals and Metrics
SUSTAINABILITY GOALS AND METRICS SUSTAINABILITY 1 ENHANCE FINANCIAL 2 STRENGTHEN DATA 3 BECOME A NET-ZERO, INCLUSION AND EQUALITY SECURITY AND PROTECTION CLIMATE RESILIENT BANK Inclusive access to banking Reduce impact of scams Reduce emissions consistent with our • New/improved product features/ se
Slide 93: 1H24 Climate Action Plan Progress
1H24 CLIMATE ACTION PLAN PROGRESS SUSTAINABILITY NET-ZERO AND SUPPORTING CUSTOMERS’ COLLABORATE FOR IMPACT ON CLIMATE RESILIENCE IN TRANSITION TO NET-ZERO AND TO INITIATIVES TOWARDS NET-ZERO OUR OPERATIONS BUILD THEIR CLIMATE RESILIENCE AND CLIMATE RESILIENCE • Scope 1 and 2 emissions1 83% lower • S
Slide 94: NZBA Target and Focus Area Snapshot
NZBA TARGET AND FOCUS AREA SNAPSHOT SUSTAINABILITY 1H24 FOCUS AREAS NZBA TARGETS • Setting Aluminium target (final sector Implied emissions 2030 under our NZBA commitment) Westpac sector reduction target to 2021 Type of target baseline* (%) • Enhancing processes for assessing transactions in scope o
Slide 95: Sustainability and Climate-Related Opportunities
SUSTAINABILITY AND CLIMATE-RELATED OPPORTUNITIES SUSTAINABILITY In mobilising the capital to support customers’ climate transition and build resilience, defining what is “sustainable” is critical. Our new Sustainable Finance Framework details how we consider sustainable finance transactions and clas
Slide 96: Comprehensive Sustainability Reporting
COMPREHENSIVE SUSTAINABILITY REPORTING SUSTAINABILITY Annual Report 2023: Climate Report 2023, incl. Climate Modern Slavery Statement FY23: Natural Capital Position Details financial and non- Change Position Statement and Describes modern slavery risks and actions Statement: Outlines our approach to
Slide 97: Our People
OUR PEOPLE – STRENGTHENING INCLUSION, DIVERSITY AND WELLBEING PEOPLE STRENGTHENING GENDER GROWING INDIGENOUS MEASURING DIVERSITY REPRESENTATION ORGANISATIONAL HEALTH FEMALES % MAR-24 TARGET PROGRESS 1.00% of Australian Organisational Health Index score4 0.96% workforce identify ✓ 75 Westpac Board 44
Slide 98: Segment Results
ABfestpac GRoup SEGMENT RESULTS
Slide 99: Consumer 1H24 Performance
CONSUMER 1H24 PERFORMANCE CONSUMER Higher wages, salaries and Higher CAP from lending NET PROFIT ($M) AIEA up 2%, NIM down 7bps from competition software amortisation, partly offset by Cost Reset portfolio credit metrics deterioration 1,591 148 1,259 (95) 1,111 4 (23) (131) 68 1,082 Down 14% ex Nota
Slide 100: Business and Wealth 1H24 Performance
BUSINESS AND WEALTH 1H24 PERFORMANCE BUSINESS AND WEALTH Lower CAP largely AIEA up 1%, due to revised NET PROFIT ($M) NIM increased 4bps economic forecasts 77 (30) 1,143 1,073 107 1,060 43 (6) (1) 953 Up 8% ex Notable Items Up 20% 1H23 2H23 Add back 2H23 ex- Net interest Non-interest Operating Impai
Slide 101: BT Panorama
BT PANORAMA BUSINESS AND WEALTH PANORAMA PLATFORM FUA ON BT PANORAMA ($M) NET FLOWS EXCLUDING PENSION • Managed accounts up 21% OUTFLOWS5 ON BT PANORAMA ($M) in the half 113,328 105,012 102,068 102,872 2,940 • Panorama net flows excluding 95,891 pension outflows1 of $2.1bn 2,066 2,071 in the half 1,
Slide 102: Institutional 1H24 Performance
INSTITUTIONAL 1H24 PERFORMANCE WESTPAC INSTITUTIONAL BANK NET PROFIT ($M) AIEA up 12%, partly offset by an 8bps reduction in NIM Higher software amortisation costs and a 1% increase in front line resourcing 709 71 3 (19) (10) (7) 689 641 10 651 Up 6% ex Notable Items Up 7% 1H23 2H23 Add back 2H23 ex
Slide 103: New Zealand 1H24 Performance
NEW ZEALAND 1H24 PERFORMANCE1 NEW ZEALAND Increased technology and NET PROFIT ($M) onshoring costs, software amortisation and AIEA up 1%, inflationary impacts Higher IAPs and larger overlay NIM down 3bps reversals in 2H23 535 7 542 (9) (3) (33) (42) 27 482 (5) 477 428 Down 11% ex Notable Items Down
Slide 104: New Zealand Balance Sheet
NEW ZEALAND BALANCE SHEET NEW ZEALAND NET LOANS (NZ$BN) CUSTOMER DEPOSITS (NZ$BN) 1.7 (0.2) 100.8 0.9 (1.9) 99.3 79.8 79.8 98.2 78.8 Up 2% Down 1% Mar-23 Sep-23 Consumer Business Mar-24 Mar-23 Sep-23 Consumer Business Mar-24 LOANS (NZ$BN) % OF TOTAL1 CUSTOMER DEPOSITS (NZ$BN) % OF TOTAL1 Mortgage Pe
Slide 105: Economics
ABfestpac GRoup ECONOMICS
Slide 106: Australian and New Zealand Economic Forecasts
AUSTRALIAN AND NEW ZEALAND ECONOMIC FORECASTS – (%) AT 2 MAY 2024 ECONOMICS KEY ECONOMIC INDICATORS 2023 2024 Calendar Years Q2 Q3 Q4 Q1E Q2F Q3F Q4F 2022 2023 2024F 2025F World GDP1 - - - - - - - 3.5 3.3 3.3 3.1 Australia GDP2 2.1 2.1 1.5 1.3 1.1 1.3 1.6 2.4 1.5 1.6 2.5 Unemployment – end period 3.
Slide 107: Australian Housing Market – Prices Upturn Moderates
AUSTRALIAN HOUSING MARKET – PRICES UPTURN MODERATES ECONOMICS DWELLING PRICES (%, 3 MONTH ANNUALISED) 40 % COVID-19 ‘Delta’ 35 2019 election 30 Macro- prudential Macro-prudential 25 measures measures 20 15 10 5 0 -5 -10 -15 -20 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 Apr-24 Apr-25 So
Slide 108: New Zealand Housing Market
NEW ZEALAND HOUSING MARKET – ACTIVITY HAS STABILISED, STILL SUBDUED ECONOMICS MONTHLY HOUSE SALES AND PRICES (% YR) DWELLING PRICES (INDEX) Sales %YR Index Index Auckland Canterbury Sales (lhs) House prices (rhs) 14,000 40 Wellington Other regions 2750 2750 12,000 30 10,000 2250 2250 20 8,000 10 6,0
Slide 109: Card Activity: Consumer Spend
CARD ACTIVITY: CONSUMER SPEND 12 MONTHS TO MAR-24 (%)1 ECONOMICS BY AGE GROUP BY DEPOSIT COHORT Essentials Discretionary 6.0 4.9 3.6 2.1 1.5 1.3 1.5 1.0 0.0 (0.1) (0.9) (0.6) (2.2) (3.0) (4.0) (4.7) (5.1) (7.2) 20-24 25-34 35-44 45-54 55-60 Lowest Second Third Highest 1 Source: Westpac DataX, Westpa
Slide 110: Appendix
ABfestpac GRoup APPENDIX
Slide 111: Appendix 1: Net Profit Ex Notable Items
APPENDIX 1: NET PROFIT EX NOTABLE ITEMS1 APPENDIX Change Change $m 1H23 2H23 1H24 1H24 – 1H23 (%) 1H24 – 2H23 (%) Net interest income 9,202 9,212 9,351 2 2 Non-interest income 1,669 1,459 1,465 (12) Flat Net operating income 10,871 10,671 10,816 (1) 1 Expenses (4,988) (5,244) (5,395) 8 3 Pre-provisi
Slide 112: Appendix 2: 1H24 Notable Items
APPENDIX 2: 1H24 NOTABLE ITEMS AND IMPACT OF BUSINESSES SOLD1 APPENDIX 1H24 2H23 Net profit Net profit excluding excluding Net profit Notable Notable excluding Net profit Items & Items & Hedging hedging Other excluding Impact of impact of impact of Net profit Notable Notable Notable Notable business
Slide 113: Appendix 3: Sustainability Footnotes
APPENDIX 3: SUSTAINABILITY – FOOTNOTES APPENDIX Sustainability goals and metrics 1. Number of new and improved product features and services launched that will support vulnerable customers during the financial year. A new or improved feature or service is only counted once, irrespective of how many
Slide 114: Appendix 3: Sustainability Footnotes
APPENDIX 3: SUSTAINABILITY – FOOTNOTES APPENDIX Sustainability and climate-related opportunities 1. Our lending target will be the total committed exposure (TCE) or balance (applicable for residential mortgages) at 30 Sept-30. Reported progress against the target will be TCE or balance at a point-in
Slide 115: Appendix 3: Sustainability
APPENDIX 3: SUSTAINABILITY APPENDIX INDUSTRY RECOGNITION SUSTAINABILITY INDICES DE&I4 RECOGNITION Achieved highest ISS QualityScore At Dec 23, Westpac has received an S&P DJSI ESG Recognised in the Bloomberg Gender Equality Index for Social dimension score of 53. We have been a member of the DJSI fo
Slide 116: Appendix 3: Major Commitments, Partnerships and Memberships
APPENDIX 3: MAJOR COMMITMENTS, PARTNERSHIPS AND MEMBERSHIPS APPENDIX Industry-led UN- convened Net-Zero Banking Alliance Member, principals and UN Sustainable The Equator Principles Principles for Responsible steering groups (NZBA Development Goals Founding Adopter, Banking governance bodies) CEO St
Slide 117: Appendix 4: Definitions – Credit Quality
APPENDIX 4: DEFINITIONS – CREDIT QUALITY APPENDIX Includes exposures that have deteriorated to the point where full collection of Includes facilities less than 90 days past due and those credit exposures, that are interest and principal is in doubt, based on an assessment of the customer’s >90 days
Slide 118: Appendix 4: Definitions – Segments, Earnings Drivers, Capital and Liquidity
APPENDIX 4: DEFINITIONS – SEGMENTS, EARNINGS DRIVERS, CAPITAL AND LIQUIDITY APPENDIX SEGMENTS CAPITAL AND LIQUIDITY Consumer provides banking products and services, including mortgages, Consumer credit cards, personal loans, and savings and deposit products to Australian Capital ratios As defined by
Slide 119: Appendix 4: Definitions – Other
APPENDIX 4: DEFINITIONS – OTHER APPENDIX Branch Branch transactions are typically withdrawals, deposits, transfers and payments Average App Total number of sessions on Westpac Live & Compass initiated using an app over transactions sessions per day total number of days within a half year period Cust
Slide 120: Investor Relations Team – Contact Us
INVESTOR RELATIONS TEAM – CONTACT US CONTACT US Justin McCarthy Catherine Garcia General Manager, Investor Relations Head of Investor Relations, Institutional Jacqueline Boddy James Wibberley Head of Debt Investor Relations Manager, Investor Relations Arthur Petratos Ethan Harry Manager, Shareholder
Slide 121: Disclaimer
DISCLAIMER DISCLAIMER The material contained in this presentation is intended to be general background information on Westpac Banking Corporation (Westpac) and its activities. The information is supplied in summary form and is therefore not necessarily complete. It is not intended that it be relied