Westpac Banking Corporation · ASX:WBC
Westpac Banking — Investor Presentation (April 2006)
36 slides from Westpac Banking's investor presentation, Apr 11, 2006
Slide 1: Westpac's Approach to Managing Intangible Value
Alfestpac Australia’s First Bank Westpac’s Approach to Managing Intangible Value Noel Purcell April 2006
Slide 2: Agenda
Agenda « Westpac’s sustainability journey and approach ¢ Extended performance management, accounting and reporting at Westpac * The world of sustainability assessment and ratings * The evidence that extended performance management enhances shareholder value * The value linkages — Westpac’s prioritie
Slide 3: Strategic and management framework
Alfestpac Australia’s First Bank Strategic and management framework
Slide 4: The last years — a snapshot of major change
The last 20 years — a snapshot of major change t % | °Poor governance *Improved governance «Strong governance ‘OS | Aggressive risk taking *Risk avoidance “Risk optimisation & | °Focus on the short *Focus on restoring *Focus on medium term & term balance sheet strength value drivers LL *Higher volat
Slide 5: Westpac's sustainability journey overview
Westpac’s sustainability journey overview SQ FECOQIILION --------------—----n-nnnnnnnn anne nn nnnnnnnnn nner etenne nate nnrecorencnannnescnetas > 3 reputation management ---------------------------n-e nner > 5 FISK FEDUCION ---------- n-ne enero tateteteetes > > market differentiation ------------
Slide 6: WBC's strategic framework for intangibles management
WBC’s strategic framework for intangibles management Stakehoider responsive Service-Value Chain |) Enhance ability to deliver existing business strategy ne Di wie intangible value Employee > Customer > Shareholder Employee A Revenue Retention A i Growth internal Empioyee fe cupenor Customer Customer
Slide 7: Extended performance management at Westpac
Extended performance management at Westpac * Mandate from Board to manage ‘broad and long’ * Governed through clear values & principles * Embedded in systems, processes, decision-making and remuneration * Aligned through formal stakeholder engagement * Leveraged through new competencies and leadersh
Slide 8: Underpinned by a strong values-based culture
Underpinned by a strong values-based culture ¢ Rules and regulations can’t ensure transparency, fair dealing and the protection of stakeholder interests ¢ Ethical conduct is guided and motivated by principles and values * Our Principles sets out the conduct that our stakeholders can expect - and can
Slide 9: A managed stakeholder engagement framework
A managed stakeholder engagement framework Community Consultative Council Supplier Forum Regulators Corporate 4 ————— ) Responsibility : Employee \ & Sustainability ned networks ' Team 4 \ } I Community & : : \ . . I NGOs : . . ' Envi tal ! : Executive Office : wadvisory a ! amnmeee i : Group ! “a B
Slide 10: Measurement, reporting and assessment
Alfestpac Australia’s First Bank Measurement, reporting and assessment
Slide 11: And extensive measurement and reporting
And extensive measurement and reporting Quarterly Board Total performance Assessment and reporting reporting performance measures BE CORPORATE ¢ Multidimensional le measures oe @ * Underlying performance * Stakeholder perceptions =| — RepuTex: *« Brand metrics MOST SUSTAINABLE CORPORATIONS * Separat
Slide 12: Westpac's extended performance reporting - a snapshot
Westpac’s extended performance reporting - a snapshot « KPls explicitly linked to core strategy « Over 100 indicators reported « All data and indicators audited and independently assured « Five years of tracked KPls reported « Material stakeholder and business issues identified « Annual objectives a
Slide 13: The burgeoning world of sustainability assessments
The burgening world of sustainability assessments 4, ORY HS CORPORATE Lagoon % RESPONSIBILITY 4 % ME ex 5 i “6 = Oc CORP RATE | Llelete tet oekom tle|sle/air corporatemonitor ETHIBEL SOCIALLY RESPONSIBLE INVESTING BEST IN CLASS environmental and sociat performance « GLOBALIOO sromomnose dl MOST SUST
Slide 14: Overview of three sustainability assessments
14 Overview of three sustainability assessments ® Identifies companies that lead peers in creating long-term shareholder value Assesses ability to manage risk and leverage upside across the economic, social and environmental agenda Professional, norms-based analysis using company and public data Ass
Slide 15: Snapshot of Westpac's 2006 DJSI rating
Snapshot of Westpac’s 2006 DJSI rating Total Seore Corporate Governance Ce i Risk & Crisis Management Advanced Customer Relationship Management Human Capital Development Stakeholder Engagement r <i 0% 5D 100% 50% ' DJSI sector average on a global basis HME Westpac Banking Com. 28 Best company on a g
Slide 16: Snapshot of Westpac's 2006 Governance Metrics International (GMI) rating
Snapshot of Westpac’s 2006 Governance Metrics International (GMI) rating Global Home Rating | Market Overall Rating* 10.0] 10.0 Board Accountability 9.5 10.0 Financial Disclosure and Internal Controls 10.0 10.0 Shareholder Rights 7.5 10.0 Remuneration 9.0 9.5 Market for Control 6.5 6.5 Corporate Beh
Slide 17: Snapshot of Westpac's 2005 CRI rating
17 BE CORPORATE Snapshot of Westpac’s 2005 CRI rating ed INDEX 400.0% 99.3% 100.0% 98.20 400.0% 400.0% 400% 7 ; = , Overall Summary 0% m . i Corporate Management Social Impact Environment Strategy brpact 109.0%. 100.0% 100.0% 100.0% 100% + r 80% 4 60% 4 Corporate Strategy 10% 20% +4 O%. 4 Hea - oo L
Slide 18: Implications for financial performance
Alfestpac Australia’s First Bank Implications for financial performance
Slide 19: Relative performance: DJSI World vs MSCI World
19 Relative performance: DJSI World vs MSCI World DJSI World — USD Performance and Risk December 1993 — December 2005, USD, Total Return Index “ ha 230 af a (ps ; Aa NAW 12/93 8/94 4/95 12/95 8/96 4/97 12/97 8/98 4/99 12/99 8/00 4/01 12/01 8/02 4/03 12/03 8/04 4/05 12/05 DJS! Monthly Update February
Slide 20: GMI governance ratings correlate with credit rating
20 GMI governance ratings correlate with credit rating GMI HOME MARKET OVERALL Number of Mean Credit Median Credit (om SCORE) companies Rating* Rating* 1 (low GMI SCORE) 8 2.75 3.00 2 18 3.44 3.00 3 31 3.29 3.00 4 50 3.30 3.00 5 80 3.63 4.00 6 212 3.54 4.00 7 248 3.98 4.00 8 182 4.14 4.00 9 89 4.33
Slide 21: Relative performance: AuSSI vs S&P/ASX
Relative performance: AuSSI vs S&P/ASX 200 Index Performance (Feb 2005 - Oct 2005) 21.00% 20.80% 20.60% 20.40% 20.20% 20.00% 19.80% 19.60% AuSSI S&P / ASX 200 At October 2005: *the Australian SAM Sustainability Index (AuSSI) up by 20.8% compared to its starting level a year ago. *1 yr out-performanc
Slide 22: Growing evidence of positive shareholder value links
Growing evidence of positive shareholder value links us Equity price performance - differential between the best and worst governed companies. Top 10% Bottom 10% PELE PEEPFEPSES — Top 10% assessment uw g Bottom 10% assessment Source: Deutsche Bank, 25 November 2005. Beyond the Numbers: Materiality o
Slide 23: GMI - low ratings led to negative SHV outcomes
23 GMI - low ratings led to negative SHV outcomes GMI reviewed the financial performance of 10 low-rated companies, all with significant corporate governance issues Source: GovernanceMetrics International 2004 Wifestpac Market Briefing 2006 -- Westpac's approach to managing intangible value
Slide 24: The value proposition
Alfestpac Australia’s First Bank The value proposition
Slide 25: The value linkages - employees
25 The value linkages - employees Employee Service-Value Chain Internal Employee Retention Service Employee Quality Commitment Employee Productivity, 7} > Customer Superior Customer FI <tisfaction{] Loyalty, IY Experience b Shareholder Revenue h Growt Shareholder Value Profitability rd Employee Valu
Slide 26: Leadership model
Leadership model | Remuneration |) Assessment + Has two separate ratings + Behaviour is a key input (objectives & behaviours) to bonus/ST! outcomes + Uses revised objective fearon | Requires that everyone is ul ( 44 : Leadership Model assessed against seven . an caninni behaviours relevant to their
Slide 27: Employee commitment
27 Employee commitment 80. 78 76. 74 72 Employee commitment (% of employees reporting a positive score) Westpac Large Australian Global Financial Companies Services Companies Median Median Source: Staff Perspectives Survey 2005 Market Briefing 2006 -- Westpac's approach to managing intangible value
Slide 28: The value linkages - customers
28 The value linkages - customers Service-Value Chain Employee Customer > Shareholder Revenue Employee Retention i Growth ‘prernal Employee cupetion Customer Customer Shareholder Quality Commitment Experience Satisfaction Loyalty q Value Profitability Customer Value Links Bul ming A TRulTWwoeTHyY ET
Slide 29: Aligning the brand
Aligning the brand emotional functional The brand needs to deliver at each level Aifestpac 29 Market Briefing 2006 -- Westpac's approach to managing intangible value
Slide 30: Ask Once Commitments driving behaviours
30 Ask Once Commitments driving behaviours * A public declaration of our determination to do the right thing by our customers *« Based on what customers have told us * Each of the commitments comprises a number of underlying goals, each with an associated quantitative measure * Progress will be publ
Slide 31: Pro-active complaints management
31 Pro-active complaints management Objective To be number 1 in complaint resolution in terms of customer access, speed and quality of resolution KPIs . % of complaints resolved at customer’s first point of contact % of complaints resolved in five days Number of cases to the BFS Ombudsman Approach U
Slide 32: Leveraging credentials via sustainability-linked products
32 Leveraging credentials via sustainability-linked products Opportunity to leverage world-leading sustainability and responsibility credentials into brand and customer proposition BT is capitalising through growth in SRI funds (targeting 20% growth target for 2006) - The BT Institutional Ethical Se
Slide 33: Some Westpac examples of value enhancement
33 Some Westpac examples of value enhancement Non-financial metric Cost reduction & value drivers I Sustainability | result Estimated financial benefit Voluntary Employee Turnover + Accrued benefits I I I + Reducedby 3 percentage | points or | 17.6% since ' 2001 I $40-$50m saving compared to the lev
Slide 34: Sustainability objectives for 2006 — a sample
34 Sustainability objectives for 2006 — a sample ¢ Develop and launch sustainability-linked products and services * Maintain top quartile employee commitment * Reduce total greenhouse gas emissions by a further 5% *« Reduce Lost Time Injury Frequency Rates by 10% * Grow SRI Funds under management by
Slide 35: Example: Why climate change is a priority
Example: Why climate change is a priority * Climate change is a fundamental issue for the economy and business *« Since 1996 Westpac has cut greenhouse gas emissions by 35% - resource savings that go straight to the bottom line * Emerging carbon-trading opportunities. It is estimated that the EU Emi
Slide 36: Where to now?
Where to now? * Continue to drive extended performance management * Investigate ways to better integrate financial and non-financial reporting * Fully adopt the Global Reporting Initiatives “G3 Guidelines” once finalised * Further research key performance drivers and value linkages * Active particip