Westpac Banking Corporation · ASX:WBC
Westpac Banking — H1 2006 Earnings Presentation
24 slides from Westpac Banking's earnings presentation, May 4, 2006
Slide 1: 2006 First Half Results
AMfestpac Australia’s First Bank 2006 First Half Results 4 May 2006 AMestpac Australia’s First Bank 2006 First Half Results David Morgan Chief Executive Officer 4 May 2006
Slide 2: Strong first half performance
Strong first half performance Cash EPS Revenue growth Cost to income ratio - “AT%, down 300 bps 2006 interim Resulte Wifestpac Australian retail & BT leading the growth ~~» Business & Consumer Banking BT. Financial Group Westpac Institutional Bank New Zealand Cash earnings (ASm) “B4HO5 ML 4HO6 +100
Slide 3: Five main features / Revenue driven result
Five main features 1. Revenue led 2. Growth momentum restored 3. High quality 4. Consistency 5. Value to shareholders 5 2006 intern Results Wifestpac Revenue driven result Movement in cash earnings ($m) 1,800 5 402 (64) 18 (148) 4,700 aE 1,600, 5 (41) 1,514 4,500.5 1,400 5 1,344 4,300 5 4,200 + AHOS
Slide 4: Growth momentum restored
Growth momentum restored Australian total credit growth * (multiple of system growth) — > 1505 0 4254 0S 4.00 O75] 0.504 a 0.25 form 0.00 pg CE Ts re pe T — T — T “3 , & : Bos ae a OB. g * Rolling three month average. 2006 Interim Resulte Wis estpac & BT — strongly positioned Current Australia Platf
Slide 5: High quality result
High quality result Price responsive —...°-.. “Margin decline within .. meeting not leading the expectations |. omarket 00 a Competitiveness Fees aligned to market. ~ both up and down +. Placing greater .* - Substantial investment - . emphasis on front line...» -.in Reach and Pinnacle. _ Investment
Slide 6: Returning value to shareholders
Returning value to shareholders Dividend per share (cents) Eeerinrninntenia 56 cents 605 | 40. 30 4 20.5 10 7 Oe bd boned renee Ee -2HO0 1HO1 2HO1 = 1HO2 -2HO2 4HO3 2HO3 1HO4 2H04 4HO5 2HOS 1HOG 11-2006 Interim Results Wilfestpac Strong performance all round Cash earnings growth %. ROE (cash basis)
Slide 7: The Details
AMfestpac Australia’s First Bank The Details Philip Coffey Chief Financial Officer 4 May 2006 The reporting approach « Continue to focus on cash earnings Reported - appropriate for assessing cash earnings growth at both group and a business unit level « Adjusted - appropriate for assessing movements
Slide 8: Another consistent performance
Another consistent performance | Net interest income. Non-interest income . Expenses Impairment losses. 6% higher W 14% growth VW 4% growth . v 2 T% higher. | an fe 1 After tax equivalent gross-up 15-2006 interim Resulte Wifestpac Revenue productivity driving earnings : Contribution to earnings ad %
Slide 9: Revenue quality - looking beyond the top line
7 Revenue quality - looking beyond the top line A ig Remove AASB 132/139 Net accounting changes & Epic © loss) “NZ$ impact? gain / ( 4| (140) Fair value of securities portfolios (28) (36) | (32) JDV Profit - (13) - Property sales ~ (5) (6) (10) Mortgage broker amortisation © (9) | ~~ (7) “- Private
Slide 10: Asset growth driving net interest income
Asset growth driving net interest income * Fully adjusted’ net interest Net interest income analysis (Sm) income increased 6% 05 ; 178 (38) 7 | * Solid balance sheet growth a with improving momentum: =?" ~ 8% growth in adjusted me, average interest earning aooo | i assets ‘ ae . . 2,860) + Adjusted
Slide 11: Analysis of margin movements
21 Analysis of margin movements Group margins 1HO5 ~ 1H06 (%)} 25 2.44% (thes) em . (ebPs) 4bps -.2.40% 2.39% 24 Sbps 39% I 23 22 T 4HOS "“Asset/ Asset/ Other. Adjusted AASB 4HO6 Liability | Liability 4HOG |. 132439 Spread Mix Adjusted margin decline 5bps Major impacts on margins: ~ Treasury +2bps ~
Slide 12: Expenses — continued tight management
Expenses — continued tight management Salary and other staff expenses 1,095..-1,165--—__ 6 — . $8m rise in Equipment and occupancy restructuring Other and higher ks . | salaries from | Reported annual ; + increases AASB 132/139 adjustments: Consolidation of Epic Consolidation of the Life Company. MI
Slide 13: Credit charges increasing with loan growth
25 Credit charges increasing with loan growth 250 5 200 | 150 | 100 + 1HO4 impairment losses on loans ($m) -G Collective provision. -- . @ individually assessed {net of atite-offs and recoveries) 2HO04 THOS HO 4HO6 | 2006 interim Resulte Wifestpac 26 Asset quality remains positive Impaired assets de
Slide 14: BCB — growth momentum enhanced
27 BCB — growth momentum enhanced * Solid performance with | Si volume growth skewed to : latest half Net interest 8. 5 income ».--..- : : * Strong consumer result, a : . . Non-interest 547 (3) 42 slower in business income + All portfolios close to, or Operating 4 933 eg above system, except SME exp
Slide 15: BCB Business lending picking up
29 BCB Business lending picking up * Growth in loans and acceptances 11% - Strong gains in middle markets - Small business lending growing slower * Growth skewed to late in the period with strong pipeline of deals * Modest spread compression + Pinnacle embedded and delivering Business net loans and
Slide 16: WIB — solid underlying performance
31 WIB — solid underlying performance * Cash earnings decline impacted by: ~ Run off of NZ structured finance transactions ~ Run down of Quadrant private equity business ~ Lower credit spreads and lending fees « Excluding structured finance cash earnings up 26%: ~ Strong financial markets ~ Transact
Slide 17: New Zealand — tougher conditions
33 New Zealand — tougher conditions * Balance sheet growth in line with system: ~ Housing up 13% - Business up 12% - Deposits up 8% * Significant margin decline from fixed / floating housing loan mix « Fee income lower from customer switching « Expenses under control income 469 4 2 Non-interest inco
Slide 18: BT Financial Group
35 BT Financial Group * Solid revenue growth from: ~ Above market growth in FUA ~ Favourable equity market conditions and excellent investment performance ~ Strong growth in margin lending « Life company tax changes increasing tax expense « Planner productivity up 29% Operating income ° Operating ex
Slide 19: Strong capital generation
Strong capital generation * $580m in capital generated over Capital ratios and target ranges (%) half * Strong capital position has supported: - $1bn buy-back - Uplift in dividends + A-IFRS adjustments from July 06 “Mar. Sep: -Mer- Sep- Mar- Sep- Mac Sep- Mar Sep- Mar- manageable. Inclusion of these
Slide 20: Continuing to perform at upper end of sector
Continuing to perform at upper end of sector Cash earnings per.share. growth 12% Double digit Dividend growth Leading peers Revenue / expense growth differential Percentage points Excluding NZ structured finance transactions 39 2006 Interim Resulte Wifestpac AMestpac Australia’s First Bank Outlook D
Slide 21: Economic environment sound
41 Economic environment sound « Global growth above par * Headline inflation boosted by rising energy prices, but core inflation still contained « Unemployment at 30 year Annual GDP (Calendar years %} GDP (NZ) eo AN Ok 2003 lows 2004 2005{e) “ 2006(f) « Expansion continues in Annual CPI (Calendar ye
Slide 22: Competitive environment remains challenging
Competitive environment remains challenging * Competitors expanding © * Compliance their footprint requirements remain . * Price increasingly used oa oS “to attract business «International ~~ harmonisation. - * Competition for talent i is challenges under control intense. oe + Significant progress o
Slide 23: Westpac is in a strong position
Westpac is in a strong position Momentum restored Economic profit ($m) 4,200 9 Impaired assets lower hae a 800.4 Strong provisioning for all | known risks 400 4 * Capital ratios strong 200 ~2—AGAAP. —@-AJFRS 0. Tee we ee EEEEPS EEE ESE * Underlying EP excludes significant items in 2002 45 2006 inter
Slide 24: Disclaimer
47 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 advi