Westpac Banking Corporation · ASX:WBC
Westpac Banking — Non-Deal Roadshow (June 1999)
26 slides from Westpac Banking's roadshow presentation, Jun 10, 1999
Slide 1: US Investor Roadshow
US Investor Roadshow Dr David Morgan Managing Director and Chief Executive Officer 9-10 June 1999
Slide 2: Strategy & team in place
Strategy & team in place u Smooth leadership transition u Minimal executive team changes u Sticking to markets we know best u Growing & deepening customer relationships 2
Slide 3: 1st half 1999 report card to investors
1H97 638 2H97 653 1H98 666 2H98 676 Profit* 1H99 $701m * Pre abnormals 1H97 33.2 2H97 34.6 1H98 33.5 34.5 EPS* 2H98 1H99 36.3c 1H97 19.0 2H97 20.0 1H98 21.0 2H98 22.0 1H99 Dividends 23.0c 1H97 16.9 2H97 17.1 1H98 15.5 2H98 15.6 ROOE* 1H99 1st half 1999 report card to investors 3 16.4%
Slide 4: Looking at the 1st half 1999 earnings
Looking at the 1st half 1999 earnings Change % $m 1H99 1H98 (pcp) Net interest income 1,815 1,812 0.2 Non-interest income 1,038 976 6.4 Operating income 2,853 2,788 2.3 Bad debts (99) (50) 98.0 Expenses (1,724) (1,702) 1.3 NPBT 1,030 1,036 (0.6) Tax and OEI (329) (370) (11.1) NPAT 701 666 5.3 4
Slide 5: Rising 'cash' returns
Rising ‘cash’returns % Cash Return on Tangible Equity* 22.5 21.5 20.5 19.5 18.5 17.5 16.5 15.5 14.5 1996 1997 1998 1H99 * Pre abnormals WBC Peer Average 5
Slide 6: Business Group Results
Business Group Results NPAT 404.0 354.0 304.0 254.0 204.0 154.0 104.0 54.0 4.0 ARFS IB NZ & PRB 1H98 1H99 6
Slide 7: Achieving strong volume growth
Achieving strong volume growth 1H99 2H98 Annualised growth $bn $bn % Aust. - housing 37.9 35.4 14.4 Aust. - credit cards 3.3 3.0 26.8 Aust. - non housing 21.3 19.9 14.2 Group loans & accpt’s 108.1 103.7 8.5 FUM 22.0 19.3 28.0 7
Slide 8: Margin impacts flowing through
Margin impacts flowing through Interest Spreads and Margins - Group % 4.0 3.72 3.59 3.44 3.32 3.5 2.82 2.87 2.86 2.88 3.0 2.5 2.0 1996 1997 1998 1H99 Spread Margin 8
Slide 9: Improving non-interest income
Improving non-interest income % Non II / Total Income 41 39 37 35 33 31 29 27 25 1996 1997 1998 1H99 WBC Peer Average 9
Slide 10: Efficiency improvement focus
Efficiency improvement focus % Expenses / Total Income * 63 61 59 57 55 53 51 49 47 45 1996 1997 1998 1H99 * pre goodwill WBC Peer Average 10
Slide 11: Benefiting from a quality balance sheet
Benefiting from a quality balance sheet Net impaired assets to equity & general provision % 10 9 8 7 6 5 4 3 2 1 0 1996 1997 1998 1H99 WBC Peer Average 11
Slide 12: Provisioning cover to protect earnings
Provisioning cover to protect earnings Total provisions to total loans & acceptances % 3 2 2 1 1 0 1996 1997 1998 1H99 WBC Peer Average 12
Slide 13: Capital ratios broadly unchanged in 1H99
Capital ratios broadly unchanged in 1H99 Capital Ratios % 9.0 8.0 7.0 6.0 5.0 4.0 TTE / TA TTE / RAA Tier 1 ratio 1997 1998 1H99 13
Slide 14: Franking of dividends
Franking of dividends u The 1H 1999 interim dividend to be fully franked u But 1999 final dividend likely to be unfranked – Past tax losses utilised – Removes P&L risk from possible change to corporate tax regime u Anticipate full franking in subsequent periods 14
Slide 15: Foundations set for earnings growth
Foundations set for earnings growth u Quality balance sheet u Powerful customer base u Motivated workforce u Customer satisfaction 15
Slide 16: Motivating our workforce
Motivating our workforce 8.92 Staff Morale Index 8.42 Bottom quartile ranking vs AFS norms 7.92 7.42 6.92 Top quartile ranking vs AFS norms 6.42 5.92 SEP '97 DEC '97 MAR '98 JUNE'98 SEPT '98 DEC '98 MAR '99 Source: International Survey Research 16
Slide 17: Improving customer satisfaction ranking
Improving customer satisfaction ranking 12 week moving average NAB WBC CBA ANZ Source: Colmar Brunton Research - MarketMind 17
Slide 18: Earnings growth potential
Earnings growth potential Building the foundations for earnings growth has come at an opportunity cost to short-term earnings u Lags in achieving optimal efficiency levels u Non-interest income potential still to be fully tapped u Lower reported ROE and EPS 18
Slide 19: Progress on product holdings/customer
Progress on product holdings/customer Product holdings per customer* Main Financial Institution Total Customers 2.14 2.01 1.81 1.78 Westpac Aust. Majors + Westpac Aust. Majors + Source: Roy Morgan Survey Jan - Dec 1998. * Includes banking products but excludes insurance and retail investment product
Slide 20: The challenge - core earnings growth
The challenge - core earnings growth $m Underlying profits 2300.0 2100.0 1900.0 1700.0 1500.0 1996 1997 1998 1H99* * Annualised 20
Slide 21: The value opportunity
The value opportunity Less than 8% contribute 75% of total value 16.3% 15.5% 14.7% 12.8% 11.9% 10.9% 6.6% 3.1% 2.8% 2.4% 2.0% 0.9% Low Customer value segment High % Customers V alue per customer 21
Slide 22: Focusing on the franchise
Focusing on the franchise For the first time in a decade, management can fully focus on our franchise - driving costs down, delivering more for customers, and building long term shareholder value 22
Slide 23: Driving for growth - the priorities
Driving for growth - the priorities u Fully competitive cost structure u Initiatives to improve revenue growth u Continuing to improve capital efficiency 23
Slide 24: Going forward
Going forward Greater urgency around the unfinished work on executing the strategy 24
Slide 25: To recap
To recap u Sound first half result u Now moving to capitalise on opportunities presented u Clear agenda for moving forward – Fully competitive cost structures – Initiatives to improve revenue growth – Continuing to improve capital efficiency 25
Slide 26: Slide 26