Westpac Banking Corporation · ASX:WBC
Westpac Banking — Credit Suisse First Boston Asian Investment Conference 2004
21 slides from Westpac Banking's conference presentation, Mar 25, 2004
Slide 1: Westpac at CSFB Asian Investment Conference
AMfestpac Australia’s First Bank Credit Suisse First Boston — Asian Investment Conference Philip Chronican | Chief Financial Officer Westpac Banking Corporation ~ 25 March 2004
Slide 2: Westpac at a glance
Westpac at a glance °* Established 1817 * Top 100 bani CSFB Asian Investment Conference — Mar 2004
Slide 3: Improved staff and customer satisfaction
Improved staff and customer satisfaction _ Employee commitment Consumer Satisfaction -% of main-financial _% of employees reporting a positive score institution customers very or fairly satisfied 100 68% | 012000 -- mi 2001 65% 80.7. 2002 mi 2003 | 62% 604 / 59% (407 56% 20 4. 53% / 50% 0 - dun Of D
Slide 4: Driving the gap between revenue and expenses
Driving the gap between revenue and expenses $m 4,000 9 : / 4 Year CAGR' 3,500.4 | 3,000 + —@ Revenue ; 75% 2,500 + ; : lll Expenses 3.5% —& Core earnings 12.5% 4. Underlying basis (excl. significant items but wy We not adjusted for acquisitions and disposals) ~ ye 2. Excluding goodwill CSFB Asian I
Slide 5: Points of differentiation
Points of differentiation * Strategy ~ Focused on core markets of Australia, New Zealand and near Pacific ~ Customer centric organisational structure ~ Balanced wealth management position * Customer franchise ~ Large customer base skewed towards higher value segments * Low risk ~ Continued improveme
Slide 6: Current issues
Current issues * Impact of the economy on our business * Housing market — coming off the boil * Capital generation parameters * Maintaining the efficiency momentum * Credit cards — industry developments and implications CSFB Asian Investment Conference — Mar 2004
Slide 7: Australian and New Zealand economic outlook
Australian and New Zealand economic outlook * Australia and New Zealand Key economic indicators economic fundamentals sound | 2004 2005 - Solid domestic demand World : - Strong business sentiment GDP 7 43 3.8 * In year ahead, activity will be : boosted by an export recovery Australia driven by the r
Slide 8: Economy operating with a more sustainable mix
Economy operating with a more sustainable mix 8 8 5 Key contributors to Domestic Demand 3.64 . bo. : £ 02002 3 a) ; _—— ; a Ss ABS, Westp - a 2 OUNCE esipas 9 7 a 2003 Consumption Dwellings Business invest . Domestic demand 8 8 C1 2004f Key contributors to GDP 6 Mm 2005f : li oe ee Il 2 Source: ABS,
Slide 9: Credit growth returning to longer term average
Credit growth returning to longer term average Australian Credit Growth — | % : . Forecasts 9245 — 24 20 | \ 20 16-5 NY 16. 124 +412 84 alan) 44 +4 05 + 0 As L adh 8 — — . — 8 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 —— Housing —— Business Total eee Total period average Source: RBA CS
Slide 10: Housing market — beginning to slow
Housing market — beginning to slow * Some easing in activity but growth still above long term average * Higher proportion of re- financing/new approvals are fixed rate ¢ While growth is easing, the value is still higher than a year earlier * Easing growth has been accompanied by increasing competiti
Slide 11: Considering Westpac's overall capital position
Considering Westpac’s overall capital position * Capital levels set to maintain a strong and efficient capital base and AA rating ~ Tier 1 6.00 — 6.75% ~ ACE 4.50 — 5.00% ¢ Factors relevant when considering capital management initiatives ~ Overall capital position and capital generation/usage ~ Leve
Slide 12: Medium term parameters — capital generated
Medium term parameters — capital generated Capital generated for every $100 of equity Approximate 7 Capital Metric generated/ Comments consumed Cash return on equity $20 Above 20% for over 3. years. 20% Dividends - 60% to Payout consistent with providing strong. payments to 65%. payout “$12.6 shareh
Slide 13: Factors impacting capital generation in 2004
Factors impacting capital generation in 2004 Capital usage Metric abovel below Comments... standardised scenario : . : No reason to suggest ROE would-be significantly. Return on equity in line different in 2004 Dividends : In line Payout ratio expected to be similar. to marginally higher 7 Dividend
Slide 14: Cost philosophy and the efficiency pipeline
Cost philosophy and the efficiency pipeline * Medium term drivers suggest Growth in ongoing operating expenses’ cost growth in 2-4% band 8 54 * Higher cost growth tolerated : only if delivering higher . revenue generation +f |] ; | = & * Conservative capitalisation 2000 2001 2002 2003 . 1. Excludes
Slide 15: 2004 cost outlook
2004 cost outlook * No expectation that cost growth will exceed medium term guidance of 2-4% * Delivering result despite major initiatives underway Special factors impacting 2004 cost base Costs to be absorbed Benefits to be realised * General salary increase of 4% in October 2003 * Major compliance
Slide 16: Credit cards — undergoing significant change
Credit cards — undergoing significant change ¢ Reserve Bank of Australia announced major credit card reforms — Aug 2002 ~ Reduced interchange fees for bank issued credit cards — dropped from 95bps to around 53bps ~ Reduced barriers to entry -~ Removed prohibition on surcharging for card transactions
Slide 17: Credit cards — Westpac's strategic response
Credit cards — Westpac’s strategic response ¢ Realignment of various card related fees —- completed March 2003 * Reducing cross-subsidisation across customers ¢ Partner with Virgin Money as a supplier to the Virgin card * Reducing cost of loyalty points — including redemption costs to airline freque
Slide 18: Credit cards — financial impact
Credit cards — financial impact * In 2003, previously advised that the cost of reforms would be approximately $25m - $40m p.a. (post tax) from 2004 * The 2004 impact will be approximately $15m (post tax) * Given our strategic response, the full-year impact of the credit card reforms in 2005 and beyo
Slide 19: Effectively addressing the challenges
Effectively addressing the challenges * Robust capital generation with flexible options for capital management * Efficiency — disciplines remain * Cards — effective strategic response to changing industry dynamics CSFB Asian Investment Conference — Mar 2004
Slide 20: Westpac's on track
Westpac’s on track * Economic environment remains benign overall, despite the housing market softening * Cash earnings for all major businesses tracking ahead of that for the same time in 2003 * Asset quality remains sound * No major impact from rise in Australian dollar * The business has performed
Slide 21: 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
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