Slide 1: Trends and challenges in Australian banking
Wifestpac Australia’s First Bank Trends and challenges in Australian banking Philip Chronican Chief Financial Officer 15 July 2004
Slide 2: Westpac at a glance
Westpac at a glance Established 1817 Top 100 bank globally’ Market cap $32 billion Total assets Leetonia $234billion Pacific Rin... Cook Islands, Fiji, *., 7.7 million Niue, PNG, Samoa, Solomon Islands, customers ¢ 1,069 branches Tonga and Vanuatu i ra Our core 4 New Zealand.” market ‘ eS * ¢ 26,755
Slide 3: Cash earnings — maintaining the growth
Cash earnings — maintaining the growth * Revenue growth ahead of % r peers $m 1H04 .-1HO3 Change ¢ Achieved profitable growth across the business Operating income 3,878 3,537. 10 * Restored downward trend in Operating exp (1,925) (1,857) (4) cost to income ratio Core earnings 1,869. 1,602 17 * Quali
Slide 4: Sound contribution across all businesses
Sound contribution across all businesses Cash earnings ~ Proportion of Growth’ Group 1H03 - 1H04 / Contribution | Business & Consumer 9 ° "institutional @ H1 2003 20% 11% Bank OH2 2003 7 @H12004- a 17% | 9 100.200 300 . 400 . 500 .--600 . -700 $m 1.NZ % growth in AUD terms Wlfestpac ASA Presentation
Slide 5: Market share improvements underpinning revenue
Market share improvements underpinning revenue e Westpac has consistently Australian financial system market share increased market share of financial system credit over the last 3 years (year to 30 18% fo September): 20% 16% 7 * 2001 - 30 basis point increase 14% 4 12% 4 * 2002 - 10 basis point inc
Slide 6: Efficient operating structure
Efficient operating structure Expense to income _ IN 2H99 4HOO 2HOO 1HO1 2HO1 1HO02 2HO2 1HO3 2H03 1HO4 Wlfestpac ASA Presentation Australia's First Bank
Slide 7: High quality book, well provisioned
High quality book, well provisioned Categories of stressed exposures as. a % of total commitments 16% 14% + : 12% + : 1.0% + 0.8%. -P 0.6% 0.4% 02% + 0.0% », Specific provisions / impaired assets 60 50 40 30 20 40 o+ 1 FY98. FY99.FYO0. FYO1 FYO2 FY.03.°4HO4 _ General provisions / non-housing perform
Slide 8: Our strategy — delivering superior customer service
Our strategy — delivering superior customer service Delivering sustainable returns requires — a focus on all elements of the service profit chain etn + ro 2? A company where An institution - Enhance people want to work customers want to sustainability do business with of returns ° improved employee
Slide 9: Customer satisfaction improving
Customer satisfaction improving Consumer Satisfaction -.% of-main financial institution customers very or fairly satisfied 70% = ONAN 60% o* Peer average >. “= Westpac. 55% 1G ILO OOO EPPS OOOO Hd HPV HW GOS Dove HS SME satisfaction - total satisfied 85% 60%. 4 55% 50% 45% —}-BankX -@-WBC li BankZ =
Slide 10: Focused strategy
Focused strategy * Core markets of Australia, New Zealand and near Pacific remain highly attractive - Australian system credit growth 15% to March 2004 - New Zealand private sector credit growth 11% to March 2004 * Acquisition guidelines - No particular requirement to acquire further customers - Dis
Slide 11: Sustaining core earnings growth
Sustaining core earnings growth 5 Year CAGR ' —@- Revenue 7% lilly Expenses? 3% : ~t&- Core earnings: 12% . Underlying basis (excl. significant items but not adjusted for. acquisitions and disposals) . Excluding goodwill amortisation ASA Presentation Wlfestpac Australia’s First Bank 11
Slide 12: Optimising value for shareholders — our priorities
Optimising value for shareholders — our priorities 1-| Profitable growth Reinvesting in profitable growth 2.| Franked dividend Pay a high proportion of earnings as dividends while retaining sufficient capital growth — : current ratio 63% : Maintaining consistency .in.dividend growth 3.| Buyback Seek
Slide 13: Optimising value for shareholders — the outcome
Optimising value for shareholders — the outcome * Dividends growing at or above earnings: - Cash EPS up 11% - Dividends up 11% Franking capacity remains strong - in excess of $400m post buy-back Returned $3bn by way of buy-backs over the last 5 years _ Dividends per share (cents) ab pe 40 (38 30 2s
Slide 14: Share performance
Share performance Five-year relative performance to All Ordinaries Index and peers — WBC —ANZ CBA —NAB +» All Ordinaries Source: IRESS Wlfestpac ASA Presentation Australia’s First Bank 14
Slide 15: Consistent returns over the medium term
Consistent returns over the medium term * Achieved total shareholder return of 80% over the last 5 years * Shareholder performance hall of fame ranks those companies with a market cap greater than $US10 billion who have most frequently been placed in the top third in the annual Shareholder Performan
Slide 16: Financial sector short-term trends & challenges
Financial sector short-term trends & challenges ¢ Credit growth moderating to more sustainable levels * Ongoing competitive intensity ¢ Bad debt environment benign ¢ Wealth management environment remaining favourable ¢ Rising demands around customer experience ¢ Overall sector dynamics are favourabl
Slide 17: Housing market — beginning to slow
Housing market — beginning to slow * Overall housing lending up 18% against system growth of 20% leading to market share easing by 70 basis points over past year * Strategy has been to focus on profitable growth: ~ Proportion of third party originated loans constant at 30% ~ Investor housing growing
Slide 18: Continued focus on risk management
Continued focus on risk management Credit Risk * Rigorously managed with the most advanced tools of our risk monitoring systems « Further-enhancements in pipeline with Basel 1] implementation Market Risk ». Re-assessed position following NAB report Confident that same issues could not have emerged I
Slide 19: Australian and New Zealand economic outlook
Australian and New Zealand economic outlook * Australia and New Zealand economic fundamentals sound due to: - Solid domestic demand - Low unemployment ¢ Export recovery to boost economy in 2004, driven by stronger global economy and the recent rebound in farm output * Further slight rise in interest
Slide 20: Well positioned to maintain momentum
Well positioned to maintain momentum Established track record in delivering growth and executing well - Consistent growth / return mix - Strong performance from all businesses - Disciplined expense management - Active capital management Improved sustainability of earnings - Market share improvements
Slide 21: Outlook
Outlook * Operating environment remains accommodating: - Credit growth lower but still above the 15 year average - No immediate signs of asset quality deterioration * Good momentum with first half earnings growth above medium-term guidance * Positive full year outlook for solid earnings growth in 20
Slide 22: Westpac ASA Presentation July 2004
Wifestpac Australia’s First Bank ASA Presentation 15 July 2004
Slide 23: Disclaimer
Disclaimer The material contained in this presentation is intended to be general background information on Westpac Banking Corporation and its activities. The information is supplied in summary form and is therefore not necessarily complete. Also, it is not intended that it be relied upon as advice