Westpac Banking Corporation · ASX:WBC
Westpac Banking — Westpac New Zealand — Debt Investor Presentation (September 2022)
31 slides from Westpac Banking's debt investor presentation, September 2022
Slide 1: Fixed Income Investor Presentation September 2022
Fixed Income Investor Presentation September 2022 The material contained in this presentation should not be reproduced, distributed or transmitted to any person without consent of Westpac New Zealand Limited.
Slide 2: Westpac Group Australia New Zealand
Westpac Group Australia New Zealand • Locally incorporated bank, wholly owned but not guaranteed by Westpac Banking Corporation • Comprises Westpac’s consumer, business and institutional banking operations in NZ Westpac New Zealand • A+ (Stable Outlook) / A1 (Stable Outlook) / AA- (Stable Outlook) b
Slide 3: Economic activity and GDP
Economic activity (calendar year) GDP (Real, quarterly $bn) 2020 2021 2022 (F) 2023 (F) 75 75 Westpac forecast ‘Red Traffic light’ (Omicron) GDP (production, % year total) -2.1 5.6 2.2 2.2 70 Initial Covid 70 lockdown Delta Consumers Price Index (% year end) 1.4 5.9 5.1 3.2 65 lockdown 65 Unemployme
Slide 4: New Zealand dwelling prices by region
Key summary New Zealand dwelling prices by region (Index = 1000 in 2010) 3250 3250 • Following large gains in recent years, house prices have begun to fall in response OCR increases begin to rising mortgage rates. Prices have fallen by around 9% since their peak in Auckland 2750 2750 November, with
Slide 5: Highlights for the six months ended 31 March 2022
Key financial metrics Highlights for the six months ended 31 March 2022 For the six months ending FY18 FY19 FY20 FY21 1H22 • Net Interest Income has increased by $63m over the prior comparable period, Net interest margin (%)1 2.09 2.14 1.90 1.95 1.94 primarily due to higher lending volumes Cost to i
Slide 6: Mortgage portfolio at March 2022
Mortgage portfolio at 31 March 2022 Monthly new flows1 (%) Mortgage 90+ day delinquencies (%) Owner occupied Investor 1.00% Total portfolio $62b 12 0.80% 45 42 37 37 0.60% Fixed / Floating (%) 88 / 12 0.40% 0.30% 88 0.20% 55 58 63 63 Owner occupied (%) 72.9 0.00% Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 M
Slide 7: Covered Bond Pool eligibility criteria
Covered Bond Pool eligibility criteria Cover Pool Loan Statistics as at 31 August 2022 • First ranking mortgage registered under the New Zealand Real Property Legislation. Total Pool Loan Balance1 NZ$7,385,418,668 • All loans are secured by a mortgage over land and a completed residential dwelling.
Slide 8: Capital adequacy ratios (RBNZ basis)
Capital adequacy ratios (RBNZ basis) WNZL regulatory capital ratios (%) Regulatory CET1 AT1 Tier 2 Regulatory Prudential 18.6 Minimum WNZL 16.6 17.1 Minimum capital buffer 15.9 2.0 (incl. PCB) 2.1 14.5 (“PCB”)1 2.1 2.0 2.8 Mar-22 Mar-22 Mar-22 2.7 1.2 2.8 2.6 2.0 Common Equity Tier 1 (“CET1”) 4.5% 2
Slide 9: Regulatory capital ratios and RBNZ requirements
Regulatory capital ratios (%) RBNZ regulatory capital requirements CET1 AT1 Tier 2 • The RBNZ is increasing total capital requirements for 9 Systemically Important Banks (“D-SIBs”) Domestic from 10.5% of RWA to 18.0% 18.0 o A Tier 1 capital requirement of 16.0% of RWA 2.0 Eligible Tier 1 capital com
Slide 10: BS13 Liquid asset position
Liquid assets ($bn) BS13 Liquid asset position1 Funded Liquid Assets Internal RMBS Additional RMBS (lhs) BS13 Liquid Assets (lhs) 27 23 24 Loans (lhs) BS13 Liquids / total assets (rhs) 7 Total liquid assets / loans (rhs) 9 15 11 % $bn 11 6 30% 20 120 4 15 12 9 7 100 Sep-18 Sep-19 Sep-20 Sep-21 Mar-2
Slide 11: Funding composition
Funding composition1 Wholesale funding mix as at 31 March 2022 (%) FY18 FY19 FY20 FY21 1H22 1H22 % $bn Funding programme Currency Domestic Medium Term 0.4 Customer Deposits 61.9 64.5 71.0 75.9 78.4 76% 3 Notes (DMTN) NZD 9 NZ Certificates of Deposit Wholesale Onshore <1yr 1.2 1.1 3.0 3.5 3.0 3% 16 U
Slide 12: New Zealand Economic Outlook
New Zealand Economic Outlook
Slide 13: NZ output and employment
Regional GDP NZ output and employment Nationwide GDP: $356bn NZ GDP by sector 2022 (%) Population: 5.1mil Primary industries 11 6 7 Construction Total nominal GDP 2019: Northland, $303bn $9bn 3 Electricity, gas, and water 4% of population 10 9 Manufacturing Auckland, $122bn Bay of Plenty, $19bn 5 Wh
Slide 14: GDP (Real, %yr)
GDP (Real, %yr) • GDP forecasts 2021: +5.6%, 2022: +2.2%, 2023: +2.2%. 7 Pandemic and Westpac forecast 7 • Economic activity remained elevated through the first half of 2022. However, a 6 recovery 6 5 5 slowdown is now in train. Forecast average 4 4 3 2023 to 2025: 3 • To offset the rise in inflatio
Slide 15: House prices and household spending
• The combination of high inflation, rising interest rates and the slowdown in the House prices and household spending (%yr) housing market will constrain households’ purchasing power, and there will be a related slowdown in overall economic growth. 40 10 Per capita consumption spending (year total,
Slide 16: Dwelling consents and residential construction
Dwelling consents and residential construction • Residential construction activity is expected to moderate over the coming Number $bn years. However, with a significant pipeline of projects already in train, this is 5000 likely to be an easing back from high levels over the next few years, rather Bu
Slide 17: NZ commodity prices
• New Zealand’s commodity prices hit record highs in March 2022. Since then NZ commodity price index (World Prices, Index = 100 in 1986) prices have softened as global demand has moderated, with the impact of 450 450 Covid restrictions in China a key drag on demand. Westpac Economics 400 400 expects
Slide 18: Inflation and Official Cash Rate
• Inflation rose to 7.3% in the year to June, it’s highest level in 32-years. Inflation (annual %) 8 8 Westpac o Offshore factors, like the rise in oil prices, have driven much of the forecast recent spike in inflation. 6 6 o However, domestic factors are also boosting inflation. That includes tight
Slide 19: GDP components and economic indicators
GDP components Quarterly % change Annual average % change Jun-22 Sep-22 Dec-22 Mar-23 2021 2022 2023 2024 GDP (production) 1.6 0.4 0.6 0.6 5.6 2.2 2.2 1.6 Private consumption -2.9 0.1 -0.1 0.0 6.1 2.3 -0.3 2.2 Government consumption 2.0 -0.7 -0.7 -0.7 10.1 7.6 -2.4 -1.6 Residential investment 1.0 0.
Slide 20: Classification: PROTECTED
Classification: PROTECTED
Slide 21: Purpose, strategic priorities and objectives
Our purpose Ignite Financial Possibilities Strategic priorities Objectives • Deliver Regulatory Outcomes • Modernise Technology • Build Performance Culture • Strengthen Risk Management • Optimise Technology • Enhance Financial Disciplines • Develop to a Mature Risk Culture • Deliver 100% Digitally E
Slide 22: Sustainability
Sustainability Priorities What 2025 Targets* Progress and HY22 Highlights We want to support ❑ Reduce annual Scope 1, 2, and Scope 3 ❑ Operational emissions reduced by 51% for six months ended 31 December 2021 Aotearoa’s transition to a Mandatory operational emissions by 30% annualised against a 201
Slide 23: Balance sheet extract and lending portfolio
Balance sheet extract ($m) Total lending portfolio6 (%) Assets FY18 FY19 FY20 FY21 1H22 Residential Mortgages Other Retail Corporate Other Advances to Customers 80,378 84,160 87,959 92,632 94,029 0.3% 0.1% 0.1% 0.1% 0.2% Cash and Liquid Assets1 6,314 7,994 11,818 15,432 18,444 Other Assets2 1,860 1,
Slide 24: Total committed exposure (TCE)
Total committed exposure (TCE) Mar-21 Sep-21 Mar-22 %TCE vs Sep-21 vs Mar-21 $bn Consumer Lending 73.9 76.6 78.0 54.6% 1.90% 5.50% Home Loans 69.4 72.3 73.8 51.7% 2.16% 6.35% Credit Cards 4.0 3.9 3.8 2.7% -2.18% -4.21% Other Retail 0.5 0.4 0.4 0.3% -12.53% -30.04% Business Lending 58.7 61.7 64.8 45.
Slide 25: Agribusiness and Commercial Property Portfolio
Agribusiness Portfolio Commercial Property Portfolio Mar-21 Sep-21 Mar-22 Mar-21 Sep-21 Mar-22 Total committed exposure (TCE) Total committed exposure (TCE) 10.1 10.1 10.1 8.9 8.9 8.8 ($bn) ($bn) Agriculture as a % of total TCE 17.3 16.4 15.6 Property as a % of total TCE 15.2 14.4 13.6 % of portfoli
Slide 26: Classification: PROTECTED
Classification: PROTECTED
Slide 27: Covered bond programme summary
Issuer Westpac Securities NZ Limited, London Branch Group Guarantor Westpac New Zealand Limited Group Guarantor Rating AA-/A1/A+ by S&P / Moody’s / Fitch Format Legislative Covered Bond registered with the Reserve Bank of New Zealand Covered Bond Rating Aaa / AAA by Moody’s / Fitch Programme Size €5
Slide 28: Covered bond structure diagram
Westpac Westpac NZ Westpac Banking 1 Corporation (WBC) New Zealand Covered Bond 8 Limited (WNZL) Limited (CBG) Covered Bond Swap Provider Seller, Group Guarantor, & 2 Covered Bond Interest Rate Swap Provider Guarantor 7 8 Key 1. Loans sold by WNZL to CBG Westpac Securities 3 4 2. CBG pays WNZL, fund
Slide 29: Covered bond structure and security
Structure Covered Bonds are issued by Westpac Securities NZ Limited, and guaranteed by WNZL (AA- /A1/A+) , backed by an unconditional and irrevocable guarantee by the Covered Bond Guarantor (Westpac NZ Covered Bond Limited), which is limited in recourse to its assets. Security Security comprises a h
Slide 30: Contacts WNZL
Contacts Ben Turner Liam Cleary Treasurer Executive Director, Head of Funding Westpac New Zealand Limited Balance Sheet and Securitisation 16 Takutai Square Westpac New Zealand Limited Auckland 1010, New Zealand 16 Takutai Square Phone: (64 9) 348 9995 Auckland 1010, New Zealand Email: ben.turner@we
Slide 31: Important notice
The material contained in this presentation is intended to be general background information on Westpac Securities NZ Limited (“WSNZL”), and Westpac New Zealand Limited (“WNZL”) and their activities. By attending or reading the presentation (as applicable), you will be deemed to have agreed to the f
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