Slide 1: Full Year Results 2012
For personal use only FULL YEAR RESULTS 2012 Westpac Banking Corporation ABN 33 007 457 141
Slide 2: Index
Index For personal use only Presentation of Full Year 2012 Result 3 CEO summary 4 CFO details 13 Investor Discussion Pack of Full Year 2012 Result 30 Overview 31 Features 43 Net interest income 44 Non-interest income 48 Markets and Treasury income 49 Expenses 50 Investment spend 51 Productivity 52 S
Slide 3: Full Year 2012 Financial Result - CEO
For personal use only FULL YEAR 2012 FINANCIAL RESULT Gail Kelly Chief Executive Officer CASH EARNINGS BASIS (UNLESS OTHERWISE STATED) Westpac Banking Corporation ABN 33 007 457 141
Slide 4: A strong 2012 result
A strong 2012 result For personal use only • Strengthened balance sheet across all dimensions – capital, funding, liquidity and asset quality • Excellent portfolio of businesses, all with good momentum and stronger financial and non-financial metrics • Productivity contributing to improved efficienc
Slide 5: A strong company
A strong company For personal use only Cash earnings ($m) Net interest margin (%) Customer deposit to loan ratio (%) 3,403 67.6 3,168 3,195 63.2 3,133 2.21 2.23 62.5 2.17 2.17 2.18 58.7 59.6 2,930 2H10 1H11 2H11 1H12 2H12 2H10 1H11 2H11 1H12 2H12 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Stressed assets to
Slide 6: Balanced performance across all dimensions
Balanced performance1 across all dimensions For personal use only Strong growth in targeted areas • Cash ROE at 15.5% • Customer deposits up 12% • Customer return on credit RWA • Trade finance up 32% up 8bps to 4.09% • No.1 in platform flows2 Growth Return • Strong management of • Wealth penetration
Slide 7: Good momentum across divisions (core earnings)
Good momentum across divisions (core earnings $m) 1 For personal use only Divisional contribution Westpac RBB St.George 61 (5) 17 (17) 5,466 1,760 68 1,649 1,129 111 1,619 1,102 1,551 1,054 1,061 5,231 Up 4% 1H11 2H11 1H12 2H12 1H11 2H11 1H12 2H12 BT Financial Group Westpac Institutional Bank Westpa
Slide 8: Strong earnings growth up 7%
Strong earnings growth up 7% (cash earnings $m) For personal use only Divisional contribution Westpac RBB St.George 51 5 14 (57) 1,113 83 3,403 960 1,001 657 890 112 622 611 3,195 574 Up 7% 1H11 2H11 1H12 2H12 1H11 2H11 1H12 2H12 BT Financial Group Westpac Institutional Bank Westpac New Zealand 728
Slide 9: Deeper customer relationships
Deeper customer relationships For personal use only Customer return on credit RWA1 (%) Wealth penetration2 (%) WBC Group 20.8% 4.09 18.4% 4.01 WRBB 18.4% SGB 3.60 Peer 1 15.0% 14.9% Peer 2 14.1% Peer 3 FY10 FY11 FY12 Sep-09 Sep-10 Sep-11 Sep-12 Customer deposits ($bn) Customers with 4+ products (%)
Slide 10: Productivity delivering for shareholders
Productivity delivering for shareholders For personal use only Investment Benefits delivered Efficiency supporting Westpac • Westpac RBB 2 year cash earnings investment CAGR 11% Local $238m expense savings in FY12 SIPs • Strengthened technology infrastructure • AFS1/Group Services $97m • Revitalised
Slide 11: Strong result – good momentum
Strong result – good momentum For personal use only Change Change FY12 FY11 – FY12 1H12 – 2H12 Cash earnings $6,598m 5% 7% Cash EPS 215.9c 3% 6% Reported NPAT1 $5,970m (15%) 1% Core earnings2,3 $10,697m 7% 4% Impairment charges to average loans 24bps 4bps - Common equity ratio APRA Basel III 8.2% 79
Slide 12: Our strategic priorities
Our strategic priorities For personal use only 1 A strong company • Consistent increase in dividends 2 Reorient to higher growth/higher • Maintain ROE above 15% return sectors and segments 3 Continue building deeper • Grow customer return on credit customer relationships risk weighted assets 4 Mater
Slide 13: Full Year 2012 Financial Result - CFO
For personal use only FULL YEAR 2012 FINANCIAL RESULT Philip Coffey Chief Financial Officer Westpac Banking Corporation ABN 33 007 457 141
Slide 14: Looking behind the result
Looking behind the result For personal use only Analysis focusing on four primary market themes • Quality and sustainability of financial performance • Driver of returns across the business • Investment and productivity focus and outcomes • Franchise strength and risk profile Westpac Group Full Year
Slide 15: Quality & sustainability: solid growth
Quality & sustainability Solid growth For personal use only • Operating revenue up 6% over FY12 Operating revenue ($m) and 3% over 1H12 Net interest Non-interest • J O Hambro acquisition added $73m to 2,417 2,663 2,850 revenue in FY12 Up Up 3.1% 3.4% • Revenue headwinds over FY12 included 6,205 6,22
Slide 16: Good momentum through the year
Quality & sustainability Good momentum through the year For personal use only ($m)on half by Divisions ($m)1 Core earnings movement half 187 (69) 5,466 117 246 (50) 5,231 5,017 18 Up 4% Up 4% 2H11 Net interest Non-interest Expenses 1H12 Net interest Non-interest Expenses 2H12 income income income in
Slide 17: Benefits of portfolio diversification
Quality & sustainability Benefits of portfolio diversification For personal use only Core earnings movement by divisions ($m) 61 (5) 17 (3) (21) 5,466 68 AFS = (109) 111 125 5,231 28 24 5,017 30 (41) (98) 146 AFS = 240 Up 4% Up 4% 1 1 2H11 WRBB SGB BTFG WIB NZ PB GB 1H12 WRBB SGB BTFG WIB NZ PB GB1
Slide 18: Healthy dividend, sustainable payout
Quality & sustainability Healthy dividend, sustainable payout For personal use only • Dividend continues to be fully Dividends per share (cents) funded by capital generation with 80 82 84 76 strong franking surplus of $1bn 74 65 • Dividend reinvestment satisfied by 56 60 share issuance, with no disc
Slide 19: Drivers of return
Returns Drivers of return For personal use only Return on average interest 2011 2012 1H12 2H12 earning assets1 (AIEA) (%) Interest income (margin) 2.22 2.17 2.17 2.18 Non-interest income 0.90 0.95 0.93 0.98 Operating expenses (1.30) (1.28) (1.27) (1.28) Impairment charges (0.18) (0.21) (0.21) (0.21)
Slide 20: Underlying margins modestly lower
Returns Underlying margins modestly lower For personal use only Net interest margin1 (NIM) (%) 2.6 NIM NIM excluding Treasury and Markets 2.4 2.2 2.0 1.8 1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 Net interest margin movement (%) NIM down 6bps NIM up 1bp 2.23 (9bps) 8bps (1bp) (1bp)
Slide 21: Increased focus on capital allocation and returns
Returns Increased focus on capital allocation and returns For personal use only • Increased capital requires an even more intense focus on allocation and return – Updated transfer pricing method to ensure funding cost movements are more quickly reflected in pricing analysis – Enhanced economic capit
Slide 22: Expenses well managed supporting investment
Investment/ Productivity Expenses well managed supporting investment For personal use only • Expenses up 2% (4% FY11/FY12) Expense movements ($m) with increased investment partially Up 2% offset by productivity 33 3,724 • Productivity savings 48 14 3,655 (107) – AFS/Group Services restructure 3,605
Slide 23: Investment characteristics
Investment/ Productivity Investment characteristics For personal use only Composition of investment spending (%) Average amortisation period1 (yrs) WBC Peer 1 Peer 2 Peer 3 FY11 7.2 14 12 10 5.2 4.9 4.0 18 46 FY08 FY09 FY10 FY11 FY12 Infrastructure SIPs Growth and productivity Bank of Melbourne Capi
Slide 24: Asset quality continues to improve
Strength / Risk profile Asset quality continues to improve For personal use only Stressed exposures as a % of TCE1 Stressed exposures by sector ($bn) 4.0 Impaired 7.0 90+ days past due well secured Watchlist & substandard 6.0 3.0 2H11 1H12 2H12 5.0 2.17 4.0 2.0 3.0 1.0 2.0 1.0 0.0 2007 2008 1H09 2H0
Slide 25: Provision cover by portfolio category
Strength / Risk profile Provision cover by portfolio category For personal use only Exposures as a % of TCE1 Provisioning to TCE1 (%) 97.83 Mar-11 Sep-11 Mar-12 Sep-12 97.74 Fully 97.15 97.52 Performing portfolio performing portfolio • Small cover as low probability 0.28 0.25 0.25 0.25 of default (P
Slide 26: Consumer asset quality remains solid
Strength / Risk profile Consumer asset quality remains solid For personal use only • Mortgages delinquency trends Mortgage 90+ day delinquencies by region (%) NSW/ACT VIC/TAS QLD positive. Watching 1.2 WA SA/NT New Zealand – Queensland, reflecting tougher 1.0 0.8 conditions in that State 0.6 – Low d
Slide 27: Significant improvement in funding mix
Strength / Risk profile Significant improvement in funding mix For personal use only Sources and uses of funds over FY121 ($bn) Stable funding ratio (SFR)2 (%) SFR 64 SFR 77 SFR 83 Sources of Uses of W'sale Onshore <1Yr 9 7 funds 33 (27) funds 16 10 W'sale Offshore <1Yr 14 20 5 W'sale Onshore >1Yr (
Slide 28: Strong capital – within new preferred range
Strength / Risk profile Strong capital – within new preferred range For personal use only • APRA Basel III common equity ratio 8.2% Common equity ratio (%) includes new operational risk models 10.63 114 (69) • New preferred range for common equity 8.09 7.96 6 (9) 8.38 8.16 ratio of 8.0% to 8.5% – Ba
Slide 29: Considerations for FY13
Considerations for FY13 For personal use only • Deposit growth remaining solid. Loan growth likely to remain modest with stronger growth in target segments • Margin disciplines to remain, focus on return • Further productivity benefits to flow through, offset by higher investment and associated cost
Slide 30: Full Year Investor Discussion Pack 2012
For personal use only FULL YEAR INVESTOR DISCUSSION PACK 2012 Westpac Banking Corporation ABN 33 007 457 141
Slide 31: Full Year Overview 2012
For personal use only FULL YEAR OVERVIEW 2012 COMPARISON OF 2H12 VERSUS 1H12 CASH EARNINGS (UNLESS OTHERWISE STATED) Westpac Banking Corporation ABN 33 007 457 141
Slide 32: Westpac Group at a glance
Westpac Group at a glance For personal use only • Australia‟s first bank and first company, opened in 1817 Australian Financial Services (AFS)8 WIB Westpac NZ • Australia‟s 2nd largest bank, and within the top 20 largest banks in the world, ranked by market capitalisation1 Westpac Retail St.George B
Slide 33: FY12 Financial snapshot
FY12 Financial snapshot For personal use only change1 change1 change1 change1 FY12 FY12 1H12 – 2H12 FY11– FY12 1H12 – 2H12 FY11 – FY12 Earnings Balance sheet Cash earnings ($m) 6,598 7% 5% Total assets ($bn) 675 3% 1% EPS2,3 (cents) 216 6% 3% Common equity ratio (APRA Basel III) 8.2 42bps 79bps (%)
Slide 34: Reconciliation between Cash earnings and Reported profit
Reconciliation between Cash earnings and Reported profit For personal use only Cash earnings policy1 Reported profit and Cash earnings1 adjustments ($m) • In assessing financial performance, including divisional results, Westpac Group FY11 FY12 uses a measure of performance referred to as Cash earni
Slide 35: Cash earnings is a fair measure of profit
Cash earnings is a fair measure of profit for Westpac Group For personal use only Cash earnings and Reported profit1,2 ($bn) Cash Earnings Reported profit 7.0 6.3 6.6 6.3 5.9 6.0 4.7 3.5 3.5 3.7 3.9 3.4 2.8 2.7 3.1 3.1 2.6 2.5 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Cash earnings appropriate me
Slide 36: Strong Cash earnings growth
Strong Cash earnings growth For personal use only Cash earnings FY12 ($m) % change1 % change1 1H12-2H12 FY11-FY12 Cash earnings FY11 – FY12 ($m) Cash earnings 1H12 – 2H12 ($m) Net interest income 12,563 2 3 559 (273) 187 (69) 4 (31) 3,403 (219) Non–interest 394 (164) 117 5,513 7 11 6,598 3,195 incom
Slide 37: Our strategic priorities
Our strategic priorities For personal use only Strategic priorities Priorities FY12 outcomes 1 A strong company • Common equity ratio (APRA Basel III) up 79bps to 8.16% • Stable funding ratio up 600bps to 831% Strong • Customer deposit to loan ratio up 510bps to 67.6% Reorient to higher growth/ high
Slide 38: Delivering against target metrics
Delivering against target metrics For personal use only Customer return1 improving (%) Customer deposit to loan ratio improving (%) Wealth penetration2 leads sector (%) Peer 1 Peer 2 Peer 3 67.6 SGB WRBB WBC Group 4.09 4.01 20.8% 62.5 18.4% 18.4% 3.60 58.7 15.0% 14.9% 14.1% FY10 FY11 FY12 Sep-10 Sep
Slide 39: Delivering against target metrics (cont.)
Delivering against target metrics (cont.) For personal use only Impairment charges consistently at lower end of Expense to income ratio2 well below sector Common equity ratio1,2 sector leading (%) sector average3 (bps to avg gross loans) average (%) APRA Basel III WBC Peer 1 45.6 46.0 Peer 2 Peer 3
Slide 40: Growth driven by AFS, WIB, New Zealand and Pacific
Growth driven by AFS, WIB, New Zealand and Pacific For personal use only FY12 divisional contribution to Cash earnings growth ($m)1 FY12 divisional contribution to core earnings growth ($m)1 106 31 (72) 97 10,697 264 (2) (76) 6,598 93 63 46 259 239 34 (105) 10,017 6,301 AFS division $186m AFS divisi
Slide 41: FY12 Highlights quality franchise
FY12 Highlights quality franchise For personal use only Cash earnings Core Business % of Group earnings Earnings summary Performance highlights Unit Cash earnings $m % chg % change • Deposits up 11%, deposit to loan up 360bps • Deposits grew above system2 • Business lending up 4% • Sector leading we
Slide 42: Continued strong dividend growth path
Continued strong dividend growth path For personal use only • FY12 record dividend of 166cents, up 6% – 1H12 dividend 82 cents and 2H12 dividend 84 cents Dividends per share (cents) • Payout ratio at 77% in FY12 consistent with strong capital position. Effective 166 156 payout ratio lower at 63% giv
Slide 43: Full Year Features 2012
For personal use only FULL YEAR FEATURES 2012 COMPARISON OF 2H12 VERSUS 1H12 CASH EARNINGS (UNLESS OTHERWISE STATED) Westpac Banking Corporation ABN 33 007 457 141
Slide 44: Solid operating income
Solid operating income For personal use only • Net operating income up 3% (up 6% FY11/FY12) Net operating income movement half on half ($m) • Net interest income up 2% (up 3% FY11/FY12) – Modest loan growth, strong customer deposit growth (67) 207 35 9,190 – Margins up 1bp • Non-interest income up 7
Slide 45: Loan growth predominantly in housing
Loan growth predominantly in housing For personal use only • Westpac Group loans up 2% (up 4% FY11/FY12 Net loans Sep11 – Sep12 ($bn) • Australian housing loans up 2% (up 4% FY11/FY12) 1.2 0.8 514.4 – Growth continues to be driven predominantly by proprietary channel 1.6 0.3 2.2 and a strong take-up
Slide 46: Customer deposit growth funding loan growth
Customer deposit growth funding loan growth For personal use only • Customer deposits up $28bn or 9% (up 12% FY11/FY12) Customer deposit composition1 ($bn and %) • Increase in customer deposits more than three times loan growth • Growth was spread across product types Term deposits Savings Online Tr
Slide 47: Underlying margins modestly lower
Underlying margins modestly lower For personal use only • Net interest margin (NIM) up 1bp to 2.18% (down 5bps FY11/FY12) NIM1 (%) – 9bps decline from deposit impacts o 7bps decline in spreads, reflecting continued intense competition for deposits, particularly term and lower hedge benefit on low in
Slide 48: Non-interest income solid performance
Non-interest income solid performance For personal use only • Non-interest income up 7% (up 11% FY11/FY12) Non-interest income ($m) – Fees & commissions up 1% (up 2% FY11/FY12) with higher business facility fees partly offset by lower deposit account keeping fees. Fees and Commissions Seasonally low
Slide 49: WIB Markets and Treasury income
WIB Markets and Treasury income - strong result For personal use only • Market conditions in 2H12 improved from 1H12, however, concerns WIB Markets income and customer activity ($m) around Europe and global growth still persist. Credit spreads and market conditions improved during 2H12 leading to a
Slide 50: Expenses well managed, continued investment
Expenses well managed, continued investment For personal use only • Expenses up 2% (up 4% FY11/FY12) contributing to a 60bps reduction in the Expense growth1 (%) expense to income ratio to 40.5% (down 70bps FY11/FY12 to 40.8%) Expense Growth (LHS) Expense to income ratio (RHS) – Productivity initiat
Slide 51: Investment spend
Investment spend For personal use only • Total cash spending on investments increased to $486m Capitalised software & deferred – SIPs spending eased to $116m as a number of projects were completed. 2H11 1H12 2H12 expenses ($m) Total cash spent on SIPs to date is $1,377m and remains on track for circ
Slide 52: Continuous productivity focus
Continuous productivity focus For personal use only • Westpac Group has implemented a variety of programs over recent years to maintain a strong efficiency advantage relative to peers Efficiency programs • This has included a broad productivity program, a divisional restructure and Years Major progr
Slide 53: SIPs 70% complete
SIPs 70% complete For personal use only Number of SIPs FY11 FY12 FY13 FY14+ programs Credit Card Consolidation Single, integrated credit card processing platform SIPs (Strategic Investment Collections System New collections case handling platform that enables Priorities) is a program of major consol
Slide 54: Impairment charges little changed in 2H12
Impairment charges little changed in 2H12 For personal use only • Impairment charges fell 1% to $604m, representing 24bps of average Provisioning coverage ratios 2H11 1H12 2H12 gross loans – CAP charge of $146m, down $50m on 1H12, reflecting improved Collectively assessed provisions to credit consum
Slide 55: Capital, Funding and Liquidity
For personal use only FULL YEAR CAPITAL, FUNDING AND LIQUIDITY 2012 COMPARISON OF 2H12 VERSUS 1H12 CASH EARNINGS (UNLESS OTHERWISE STATED) Westpac Banking Corporation ABN 33 007 457 141
Slide 56: Strong capital position, up across all measures
Strong capital position, up across all measures For personal use only • Westpac‟s Common equity ratio under Basel 2.5 increased 42bps to 8.4% (up 29bps FY11/FY12 largely impacted by implementation of Basel 2.5 in 1H12) Key capital ratios (%) 2H11 1H12 2H12 • Strong organic capital generation1 contri
Slide 57: Ready for Basel III transition
Ready for Basel III transition For personal use only • Common equity ratio APRA Basel III at 8.16% Common equity ratio – APRA Basel III at Sep 12 (%) – Well above APRA‟s 4.5% minimum requirements that come into effect 1 January 2013. APRA also requires banks to maintain capital levels above 8.38 (51
Slide 58: APRA to BCBS Basel III reconciliation
APRA to BCBS Basel III reconciliation For personal use only • The Australian Prudential Regulation Authority (APRA) has maintained the conservative stance adopted under its Basel III capital standards, resulting in a significant variance between capital measured under APRA Basel III and fully harmon
Slide 59: Common equity ratio against global peers
Strong common equity ratio (Basel III) against peers globally For personal use only Global peer comparison of Basel III pro forma common equity ratios1 (%) 15.7 15.4 13.3 11.0 11.0 10.6 10.6 10.5 10.0 9.8 Average 9.7% 9.3 9.3 9.3 9.3 9.3 9.2 9.1 9.0 8.7 8.7 8.6 8.6 8.5 8.4 8.2 8.1 8.0 7.9 7.8 7.8 WB
Slide 60: Risk weighted assets relatively flat over half
Risk weighted assets relatively flat over half For personal use only • RWA decreased 1% (up 6% FY11/FY12) RWA movements ($bn) – Market risk reduction driven primarily by lower exposure to AUD interest rates – IRRBB1 decreased due to higher embedded gains associated with lower (7.2) interest rates 30
Slide 61: Balance sheet growth funded via stable sources
Balance sheet growth funded via stable sources; Lowest short term funding of peers For personal use only Funding composition by residual maturity (%) Short term wholesale funding4 ($bn) SFR1 64 SFR1 77 SFR1 83 7 Wholesale Onshore <1Yr 150 9 134 16 Reduced 10 Wholesale Offshore <1Yr 104 103 14 $31bn
Slide 62: FY12 term issuance demonstrates funding diversity
FY12 term issuance demonstrates funding diversity For personal use only • Westpac‟s term debt issuance in FY12 shows the strength and breadth of the Group‟s funding franchise Term debt issuance and maturity profile2 ($bn) • Raised $31.7bn across senior unsecured, covered bonds, securitisation Covere
Slide 63: Liquidity position further improved
Liquidity position further improved For personal use only • Unencumbered liquid asset balance of $110bn as at 30 September 2012 Liquid assets ($bn) Cash, goverment and semi-government bonds − Covers all short term wholesale outstandings (offshore and onshore) Private securities1 and government guara
Slide 64: Asset Quality
For personal use only FULL YEAR ASSET QUALITY 2012 COMPARISON OF 2H12 VERSUS 1H12 (UNLESS OTHERWISE STATED) Westpac Banking Corporation ABN 33 007 457 141
Slide 65: High quality portfolio with bias to secured consumer lending
High quality portfolio with bias to secured consumer lending For personal use only Asset composition as at 30 September 2012 (%) Cash and balances with central banks Total assets On balance sheet lending Receivables due from other financial institutions 5 Trading securities, financial assets at fair
Slide 66: Diversification across industries and large exposures
Diversification across industries and large exposures For personal use only Exposures at default1 by sector ($m) Top 10 exposures to corporations and NBFIs as a % of TCE5 (%) • Top 10 single name exposures to corporations and non-bank financial Finance & insurance2 institutions (NBFIs) continue to b
Slide 67: Commercial property portfolio within appetite
Commercial property portfolio comfortably within appetite For personal use only • Commercial property represents 6.8% of Total Committed Exposure Commercial property exposures size ($bn) and % of TCE (TCE) and 7.9% of gross lending at 30 September 2012, down from peak of 10.0% and 13.0% respectively
Slide 68: Downward trend in stressed exposures
Downward trend in stressed exposures For personal use only • Asset quality continued to improve, with stressed exposures Stressed exposures as a % of TCE1(%) representing 2.17% of total committed exposures (TCE) at 30 September 2012, down 9bps (down 31bps FY11/FY12) 4.0 Impaired 90+ days past due we
Slide 69: Stressed exposures across sectors
Stressed exposures across sectors For personal use only • Asset quality in the consumer segment has remained strong, benefiting Stressed exposures by industry ($bn) from ongoing consumer caution, higher repayment levels, as well as low unemployment and interest rates 5 7 2H11 1H12 2H12 • The SME sec
Slide 70: Asset quality improving; impairment charges little changed
Asset quality improving; impairment charges little changed in 2H12 For personal use only Movements in impairment charges ($m) Impairment charges to average gross loans1,2 (bps) 38 (106) 73 (1) 39 608 12 34 604 221 18 530 (138) (43) 37 33 31 31 23 24 24 24 19 17 19 19 22 2H11 1H12 2H12 Eco o'lay Eco
Slide 71: Asset quality improving; impairment charges little changed
Asset quality improving; impairment charges little changed in 2H12 For personal use only • In 2H12, impairment charges were $604m, or 1% lower than 1H12 Impairment charges movement by business ($m) – In the Australian business portfolio, impairment charges were a little Aust Business higher, due to
Slide 72: Provision levels remain at upper end of peers
Provision levels remain at upper end of peers For personal use only • Total provisions were $4,241m at 30 September 2012 Provisioning coverage ratios 2H11 1H12 2H12 • Strong coverage was maintained, although provisioning levels have moderated consistent with reducing stress in the portfolio Collecti
Slide 73: New flows support quality Australian housing portfolio
New flows support quality Australian housing portfolio For personal use only • Australian housing portfolio $316bn, up 2% (up 4% FY11/FY12) Australian housing portfolio1 • Portfolio composition reflects brand strength across market segments FY11 FY12 2H12 − Owner occupied lending 48.2% Balance Balan
Slide 74: Australian housing portfolio well collateralised
Australian housing portfolio well collateralised For personal use only • Australian housing portfolio remains well collateralised Australian housing portfolio FY11 FY12 • Average dynamic LVR is 48% − Modestly up compared to FY11, mainly due to declines in Average LVR at origination1 (%) 68 69 proper
Slide 75: Low losses and delinquencies in housing portfolio
Low losses and delinquencies in Australian housing portfolio For personal use only • Australian mortgage delinquencies remain below industry benchmarks, Australian mortgages delinquencies and loss rates (%) with total portfolio 90+ days delinquencies 52bps, down 2bps (down 1bp FY11/FY12) 90+ Past Du
Slide 76: Australian credit card portfolio continues sound performance
Australian credit card portfolio continues sound performance For personal use only • Australian credit card portfolio has continued to perform well, largely Australian credit card average payments to balance ratio1 (%) driven by cautious consumer behaviour resulting in increased payment levels • The
Slide 77: Lenders Mortgage Insurance managing risk transfer
Lenders Mortgage Insurance managing risk transfer For personal use only • Westpac Group has one captive mortgage insurer, Westpac Lenders Australian mortgage portfolio LMI coverage (%) Mortgage Insurance (WLMI)1, which insures mortgages originated at 30 September 2012 through all brands and channels
Slide 78: Business Unit Performance
For personal use only FULL YEAR BUSINESS UNIT PERFORMANCE 2012 COMPARISON OF 2H12 VERSUS 1H12 CASH EARNINGS (UNLESS OTHERWISE STATED) Westpac Banking Corporation ABN 33 007 457 141
Slide 79: Index – Business Units
Index Australian Financial Services For personal use only Strategy 80 Cash earnings 81 Balance Sheet 82 Asset quality 83 Westpac RBB FY12 Cash earnings 84 2H12 Cash earnings 85 2H12 Key features and metrics 86 Westpac Local strategy 87 St.George FY12 Cash earnings 88 2H12 Cash earnings 89 2H12 Key f
Slide 80: Benefits delivered by AFS structure and brands
Benefits delivered by AFS structure and AFS portfolio of brands For personal use only Benefits from new AFS structure AFS revenue per banking FTE1 ($000) • AFS brings together a strong range of banking and wealth brands across Australia 641 • AFS model allows better co-ordination of our portfolio of
Slide 81: AFS Cash earnings up 13% in 2H12
AFS Cash earnings up 13% in 2H12, AFS all businesses contributing For personal use only Cash earnings movement ($m) Cash earnings contributors (% FY12) Cash earnings contributions ($m) 146 (138) 73 (55) WRBB SGB BTFG 160 3,998 2,122 83 51 3,812 1,955 41 (48) (72) 112 1,876 Cash up 5% 16 53 Down 4% U
Slide 82: AFS deposit growth above system
AFS deposit growth above system, AFS fully funding loan growth For personal use only • Strong deposit growth exceeded loan growth, improving the deposit to loan Westpac Group market share over last 4 years1,2,3 (%) ratio 230bps to 58.1% (up 430bps FY11/FY12) • Deposits up $13.6bn or 6% (up 12% FY11/
Slide 83: AFS maintaining strong risk profile
AFS maintaining strong risk profile, AFS consumer impairment charges lower For personal use only Strong risk profile1 Movement in impairment charges ($m) • Stressed exposures as a % of TCE2 at 198bps, down 5bps (down 17bps FY11/FY12) – Impaired assets down 1bp to 47bps (down 3bps FY11/FY12) 488 464
Slide 84: WRBB: strong growth with deepening customer relationships
Strong growth with deepening customer relationships, WRBB productivity gains and reduced risk profile For personal use only Cash earnings movement ($m) Core earnings ($bn) Movement FY12 – FY11 Cash earnings 14% • Cash earnings up 14% to $2,114m 118 (93) 2,114 3.41 93 8 Core earnings 8% • Core ea
Slide 85: WRBB: stronger 2H12 with increased margin
Stronger 2H12 with increased margin and improved WRBB sales productivity driving strong core earnings For personal use only Cash earnings movement ($m) Movement 2H12 – 1H12 19 7 (6) 1,113 Cash earnings 11% • Cash earnings up 11% to $1,113m 22 56 (45) 1,001 70 960 (17) 34 13 Core earnings 7% • Co
Slide 86: WRBB: engaged employees and deeper customer relationships
Engaged employees and deeper customer relationships WRBB driving growth For personal use only Key features of 2H12 Key employee / customer metrics • Increased momentum continued from Westpac Local strategy of meeting more customer needs, combined with disciplined pricing, expenses and risk managemen
Slide 87: Westpac Local strategy driving sustainable uplift
Westpac Local strategy continuing to drive WRBB sustainable uplift across key metrics1 For personal use only Core earnings ($m) Revenue per FTE2 ($’000) Employee engagement (%) 1,760 320 89 298 1,649 293 85 1,619 278 1,551 81 81 255 255 1,493 1,490 1H10 2H10 1H11 2H11 1H12 2H12 1H10 2H10 1H11 2H11 1
Slide 88: St.George repositioning completed
St.George repositioning completed For personal use only Cash earnings movement ($m) Core earnings ($bn) Movement FY12 – FY11 16 (18) Cash earnings - Flat • Cash earnings flat (down $2m) at $1,231m 36 (40) 1,233 1,231 2.19 Core earnings 2% • Core earnings up $34m (2%) at $2,190m 4 2.16 2.04 • Stren
Slide 89: St.George delivering improved growth in 2H12
St.George delivering improved growth in 2H12 For personal use only Cash earnings movement ($m) Movement 2H12 – 1H12 47 (32) 5 Cash earnings 14% • Cash earnings up 14% to $657m 78 (15) 657 622 (46) Core earnings 6% • Core earnings up 6% to $1,129m (3) 8 (27) 20 574 • Strengthened balance sheet wi
Slide 90: St.George: solid momentum in key operating metrics
Solid momentum in key operating metrics with reinvigorated strategy For personal use only Key features of 2H12 Key metrics • St.George has seen improved momentum in 2H12 with a reinvigorated strategy. Sustainably improved share in mortgages, deposits, and wealth Change • Continued to strengthen the
Slide 91: All brands on a firm footing for profitable growth
All brands on a firm footing for profitable growth For personal use only Cash earnings by brand ($m) St.George in 2H12 BankSA in 2H12 • St.George (NSW/QLD/ACT/WA) cash earnings • BankSA cash earnings higher due to a good mix of were higher aided by mortgage growth in both volume and margin growth. E
Slide 92: Strategic priorities to deliver profitable growth
Strategic priorities to deliver profitable growth For personal use only Best Bankers, driving strong employee Revenue per FTE1 ($’000) MyBank customer profile engagement (%) 354 Transaction account with a regular major deposit 83 341 81 338 Frequent transactors 80 78 326 At least two core custom
Slide 93: BTFG: underlying momentum offset by weaker markets
Solid underlying business momentum offset by weaker markets and continued strategic investment For personal use only Cash earnings movement ($m) Cash earnings ($m) Movement FY12 - FY11 • Flows revenue up $176m (9%) 176 (70) 729 • J O Hambro, acquired in FY12, (101) contributed $71m of revenue 8 (48)
Slide 94: BTFG: solid underlying performance in 2H12
Solid underlying performance in 2H12 For personal use only Cash earnings movement ($m) Cash earnings ($m) Movement 2H12 – 1H12 • Flows revenue up $57m (6%) 16 (4) (39) 34 • Continued growth in Life and General 11 (21) Insurance with 11% growth in Life in-force 57 (6) 54 (8) 352 352 premiums and 9% g
Slide 95: Continued industry leadership on many key metrics
Continued industry leadership on many key metrics For personal use only Key features of 2H12 Key metrics • Cross sell continues to improve wealth penetration 1 with Westpac Group Change leading the sector at 18.4% (WRBB up 57bps to 20.8% maintaining #1 for 2H11 1H12 2H12 on prior brand penetration a
Slide 96: Financial planner growth delivering new business sales
Financial planner growth delivering new business sales momentum For personal use only Key features of 2H12 Wealth penetration1 (%) • BT Select established and launched in July 2012 Peer 1,2 & 3 SGB WRBB WBC Group • Aligned financial planners up 19% to 565 20.8% • Expanded distribution to aligned and
Slide 97: Platforms and superannuation performing above peers
Platforms and superannuation performing above peers For personal use only Key features of FY12 BTFG FUA market share growing strongly (all Platforms)1,2 (%) • Ranked #1 on All Platforms (including corporate super) with FUA share up 90bps to WBC/BTFG Peer 1 Peer 2 Peer 3 20.8%1,2. Ranked #1 for annua
Slide 98: Well represented across asset management styles
Well represented across asset management styles For personal use only FUM by asset manager and asset classes1 (%) BTIM - global asset manager3 Asset Manager Sept 2011 Sept 2012 • BTIM is separately managed and listed on the ASX, with majority share (64.5%) consolidated into BTFG 3 • BTIM Spot FUM up
Slide 99: Strong growth in Life and General Insurance
Strong growth in Life and General Insurance For personal use only Key features of 2H12 Insurance cash earnings contribution ($m) • Growth in Life and General Insurance driven by extended distribution of Life Life LMI General 137 products through network and increased bank sales of General Insurance
Slide 100: WIB: strong core earnings from increased customer flows
Strong core earnings from increased customer flows For personal use only Cash earnings movement ($m) Core earnings ($m) Movement FY12 – FY11 Cash earnings 3% • Cash earnings up 3% at $1,473m 302 (49) (217) 2,203 • Core earnings up 13% to $2,203m, up across all 1,427 6 4 1,473 Core earnings 13% 2
Slide 101: WIB: strong risk management supporting modest growth
Strong risk management supporting modest Cash earnings growth For personal use only Cash earnings movement ($m) Movement 2H12 – 1H12 Cash earnings 1% • Cash earnings up 1% to $739m 151 (10) (143) Core earnings – flat • Core earnings stable at $1,099m 728 5 3 734 (56) 78 (27) 3 7 739 • Deposits inc
Slide 102: WIB strategy: deep customer relationships and innovation
Deep customer relationships, institutional insight and innovation underpin WIB strategy For personal use only Strategy Geographic representation • Deep and enduring customer relationships form the core of WIB‟s strategy to sustainably grow and deliver superior returns – Build collaborative customer
Slide 103: Institutional leadership and deep customer relationships
Institutional leadership and deep customer relationships delivering strong revenue performance For personal use only Leading Institutional Bank Leading Transactional Bank • No.1 Lead Bank • Global Transactional Services has a comprehensive and differentiated transactional banking product suite Peter
Slide 104: Customer revenue drives strong performance
Customer revenue drives strong performance For personal use only Strong customer income growth Income (%) Customer income FY12 – FY11 ($m) • Deep and enduring relationships are a core part of WIB‟s strategy and FY12 customer driven income underpins WIB‟s strong performance 102 2,354 70 • Customer in
Slide 105: WIB balance sheet strengthening through deposit growth
Balance sheet strengthening through deposit growth For personal use only • Deposits increased 23% to $64.5bn (up 34% FY11/FY12) following a Balance sheet ($bn) concerted focus to capture more of our customers‟ business with a particular emphasis on deposits % % – Leading position and ongoing investm
Slide 106: WIB high quality portfolio
High quality portfolio, reductions in stressed exposures slowing For personal use only Asset quality remains strong Movement in impairment charges/(benefits) ($m) • Level of stressed assets was steady following a strong reduction during 67 (69) FY11 and 1H12 • Impairment charges down 5% to $62m refl
Slide 107: New Zealand: strong performance in a competitive market
New Zealand Strong performance in a competitive market For personal use only Cash earnings movement (NZ$m) Core earnings (NZ$m) Movement FY12 – FY11 (NZ$) Cash earnings 22% • Cash earnings up 22% to $707m 36 50 (26) 707 1,171 91 (22) Core earnings 10% • Core earnings up 10% to $1,171m 578 1,066
Slide 108: New Zealand: solid growth, balance sheet strengthened
New Zealand Solid growth continued, balance sheet strengthened For personal use only Cash earnings movement (NZ$m) Movement 2H12 – 1H12 (NZ$) Cash earnings 4% • Cash earnings up 4% to $361m 19 5 (7) 5 (7) 361 10 346 Core earnings 3% • Core earnings up 3% to $594m 0 2 14 18 • Good balance sheet g
Slide 109: New Zealand: momentum maintained across key metrics
New Zealand Momentum maintained across key metrics For personal use only Key features of 2H12 Key employee / customer metrics • Solid performance has resulted from a strong distribution focus, continued front line investment, combined with localised marketing and decision making Change 2H11 1H12 2H1
Slide 110: New Zealand: good balance sheet growth
New Zealand Good balance sheet growth in a subdued environment For personal use only • Strong deposit growth with sustainable lending growth resulted in an Balance sheet (NZ$bn) improvement in the deposit to loan ratio to 71%, up 300bps in 2H12 2H11 1H12 2H12 Chg on 1H12 (%) • Total lending increase
Slide 111: New Zealand mortgage portfolio
New Zealand New Zealand mortgage portfolio For personal use only • Mortgage portfolio of $35.9bn, up 1% New Zealand mortgage portfolio by region (%) • The distribution of the mortgage portfolio across regions is consistent with population concentrations of New Zealand Auckland Wellington Christchurc
Slide 112: New Zealand: improving asset quality
New Zealand Improving asset quality across portfolios For personal use only Asset quality continues to improve1 Movement in impairment charges (NZ$m) • Impairment charges down 5% (down 21% on FY11/FY12) 81 (13) (3) (70) • Business stressed exposures as proportion of TCE 2 reduced significantly prima
Slide 113: Pacific Banking: strong performance across all regions
Strong business performance across all regions For personal use only Cash earnings movement ($m) Key Highlights FY12 – FY11 9 (10) • Pacific Banking delivered a very strong performance in FY12 with a 41% 4 55 3 (6) 4 (11) growth in Cash earnings to $107m 12 0 51 5 50 2 52 • In 2H12 Cash earnings rem
Slide 114: Economics
For personal use only FULL YEAR ECONOMICS 2012 Westpac Banking Corporation ABN 33 007 457 141
Slide 115: Australian and New Zealand economic outlook
Australian and New Zealand economic outlook For personal use only Calendar year Key economic indicators as at October 20121 (%) 2011 2012f 2013f 2014f World GDP 3.9 2.9 3.6 3.2 Australia GDP 2.1 3.5 3.2 2.8 Private consumption 3.3 4.0 3.0 3.4 Business investment2, 3 16.0 15.2 10.5 0.5 Unemployment –
Slide 116: Credit growth expected to modestly improve
Credit growth expected to modestly improve For personal use only Credit growth1 (% annual) Aust. housing Total credit (Aust.) Aust. business 30 Housing - avg (Aust. 20yr) Total credit - avg (Aust. 20yr) Total credit (NZ) 30 25 25 Forecasts to 2014 20 20 15 15 10 10 5 5 0 0 -5 -5 -10 -10 Sep-00 Sep-0
Slide 117: Appendix and Disclaimer
For personal use only FULL YEAR APPENDIX AND DISCLAIMER 2012 Westpac Banking Corporation ABN 33 007 457 141
Slide 118: Appendix 1: Cash earnings adjustments
Appendix 1: Cash earnings adjustments For personal use only Cash earnings adjustment 2H11 1H12 2H12 Description Reported NPAT 3,030 2,967 3,003 Reported net profit after tax attributable to equity holders of Westpac Group The TPS hybrid instrument is not fair valued however the economic hedge is fai
Slide 119: Appendix 2: Definitions
Appendix 2: Definitions For personal use only Westpac’s business units Financial performance Australian Financial Services is responsible for the Westpac Group‟s Australian Net profit attributable to equity holders adjusted for the impact of the economic Australian retail banking, business banking a
Slide 120: Appendix 2: Definitions (continued)
Appendix 2: Definitions (continued) For personal use only Financial performance (cont.) Asset quality Refers to an external measure of customer advocacy which looks at how willing our customers are to recommend Westpac to their family and friends. TCE Total committed exposure Net Promoter To calcula
Slide 121: Investor Relations Team
Investor Relations Team For personal use only Equity Investor Relations For further information on Westpac Andrew Bowden Leigh Short Please visit our dedicated website Head of Investor Relations Senior Manager www.westpac.com.au/investorcentre click on ‘Analysts’ Centre’ +61 2 8253 4008 +61 2 8253 1
Slide 122: Disclaimer
Disclaimer For personal use only The material contained in this presentation is intended to be general background information on Westpac Banking Corporation (Westpac) and its activities. The information is supplied in summary form and is therefore not necessarily complete. It is not intended that it