Slide 1: Westpac 2008 Full year results
Westpac 2008 For personal use only Full year results 30 October 2008 Westpac 2008 Full year results Gail Kelly Chief Executive Officer
Slide 2: Key messages
Key messages • Performed well in a challenging environment, delivering a robust financial result and enhancing our risk management focus For personal use only • Underway with a strong and clear strategic agenda • Positioned to actively support customers 3 Westpac 2008 Full Year Results Responded qui
Slide 3: Robust performance in challenging conditions
Robust performance in challenging conditions Change FY07 – FY08 Cash earnings $3,726m i 6% NPAT $3,859m i 12% For personal use only Revenue (cash basis) $11,117m i 10% Impairment charge to average loans 31bps i 12bps Cash EPS 198.3c i 5% Cash ROE 22.3% j 150bps Cost to income ratio (cash basis) 43.9
Slide 4: Strong strategic performance
Strong strategic performance • Developed and implemented a new strategic agenda – putting customers at the centre For personal use only • Intensity of focus on risk management enhanced • Delivering on opportunities: - RAMs franchise acquisition – business on track - Proposed St.George merger • Maint
Slide 5: Strongly capitalised
Strongly capitalised Capital ratios (%) Basel I Basel II • Strong capital position 12 Tier 1 Total Capital 10.8 11 10.1 9.7 9.7 - New, higher capital targets 10 9.6 9.5 For personal use only 9 7.8 8 7.2 7.4 - Tier 1 ratio 7.8% 7 6.9 6.9 6.5 6 - To be further strengthened via 1H08 2H08 2004 2005 2006
Slide 6: Result discussion and analysis
Result discussion and analysis • FY08 performance • Analysis of key earnings components For personal use only • Credit quality and impairment charges • Funding and capital • Forward considerations 11 Westpac 2008 Full Year Results Robust result in current conditions • Absorbed end year challenges: C
Slide 7: Revenue momentum drives earnings in the second half
Revenue momentum drives earnings in the second half • Strong revenue growth, up 5% with all Cash earnings 1H08 – 2H08 ($m) 2,250 business units contributing - Good loan growth in Australia – 257 (58) For personal use only Consumer (6%), Business (10%) (65) 2,000 (86) - Stronger customer deposit grow
Slide 8: Margins – a tale of two halves
Margins – a tale of two halves Net interest margins half on half (%) 2.2 Down 9 bps Up 5 bps 2.14% For personal use only 2.2 4 bps 5 bps 2.10 % 2.1 2 bps 1 bp 2.05% 1bp 2.1 (7 bps) (7 bps) (3 bps) 2.0 Underlying (3bps) Underlying (1bp) 2.0 1.9 Sep-07 Asset Liability Treasury WIB & Mar-08 Asset Liabi
Slide 9: Weaker investment markets impacted returns
Weaker investment markets impacted returns • Lower investment markets impacting Change FUM / FUA wealth cash earnings: FY07 – FY08 Excluding Including - Lower FUM/FUA $55m market market For personal use only - Lower returns on invested movements movements capital $38m FUA 9% (10)% - Excluding mark
Slide 10: Impaired exposures rising with the weaker environment
Impaired exposures rising with the weaker environment 37bps of Impaired exposures ($m) gross loans Majority of change in 4 large exposures. increase 17 1,177 1,200 not specific to any 118 182 (83) industry For personal use only 1,000 Small number of large 22 9 956 (13) exposures in WIB 308 Repayment
Slide 11: Impairment charge increase consistent with environment
Impairment charge increase consistent with environment Charge Change Category Comments ($m) over yr ($m) Individually assessed WIB, mostly in 1H08 from a small number of impaired For personal use only 160 loans New individually assessed 447 Impaired loans in BFS ($92m) predominantly 2 large 157 faci
Slide 12: Funding and liquidity well managed
Funding and liquidity well managed • Raised A$39bn in term markets over Monthly term issuance ($m) 7,500 2008 6,000 4,500 • Consistent access to markets For personal use only 3,000 benefiting from: 1,500 0 - Diverse funding franchise De 7 Fe 8 08 M 8 Ap 8 Au 8 Ja 7 Se 8 08 M 8 8 No 7 0 0 -0 l-0 0 0
Slide 13: Strong Tier 1 capital
Strong Tier 1 capital • Tier 1 capital ratio of 7.8%, accommodating: Tier 1 Capital (%) 11 - Rapid RWA growth; and 191bps 10.1% 10 - New Treasury RWA 24bps For personal use only • Total Regulatory Capital ratio 10.8% 9 • FSA Tier 1 equivalent 10.1% 8.0% (137bps) 8 52bps 7.8% • Capital management fac
Slide 14: FY09 considerations
FY09 considerations Revenues • Looking to grow share in lower growth environment • Manage margin decline to lower end of long term average (5-10bps) For personal use only Expenses • Benefit from restructuring program to emerge in 2009 • Expenses will be impacted by one-offs of around 1%- 2% from: ad
Slide 15: Strategic agenda well underway
Westpac 2008 For personal use only Full year results Gail Kelly Chief Executive Officer Strategic agenda well underway • Drive a strong customer culture • Strengthen distribution and drive locally empowered businesses • Transform service delivery and redesign processes around customer • Strengthen t
Slide 16: Good progress on the strategic priorities
Good progress on the strategic priorities 1H08 Progress Commentary • Strategies in place for key segments: affluent, SME and For personal use only commercial Drive a strong • Lifted focus on the customer including improved call centre customer culture management and complaint resolution and the use
Slide 17: Forward agenda – delivering more for customers
Forward agenda – delivering more for customers • Finalise the merger with St.George: - Move quickly on integration – planning is well advanced For personal use only - Focus on retaining customers and deepening relationships • Complete IT architecture/roadmap and enhance system reliability • Focused
Slide 18: Summary
Summary • High quality and robust performance - Solid growth, strong returns - Portfolio of businesses delivering For personal use only • Excellent progress on strategic agenda - Redefined strategy with a clear path - Getting closer to customers • Positioned for tougher environment - Demonstrated po