Slide 1: Westpac 2006 Full Year Results
Wlfestpac Australia’s First Bank 2006 Full Year Results 2 November 2006 Westpac Australia’s First Bank 2006 Full Year Results David Morgan Chief Executive Officer 2 November 2006
Slide 2: A sound full year result
A sound full year result Cash earnings Cash EPS Cost to.income ratio! $3,079m 167 cents 47% down.190.bps 1 Adjusted for AASB 132 & 139 accounting rectassifications, NZ$ impacts, and significant one-off items 3 Westpac 2006 Full Year Results Allfestpac Consistent solid growth Cash earnings, revenue a
Slide 3: Solid underlying growth across the business
Solid underlying growth across the business + Strong cash earnings up 20%! * Strength in capital solutions and financial markets * Run-down in structured finance + A key growth driver, underlying cash earnings up. 21%, ROE 16% +. Growth opportunities in superannuation and insurance +.Strong institut
Slide 4: Loan growth back above system
Loan growth back above system 4.45 4.27 4.0 5 0.8.5 0.6 4 0.4.4 027 —— Multiple --..: System Westpac total Australian credit growth* as a multiple of system growth 0.0 T T T T Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 * Source:RBA. Rolling three month average. Westpac 2006 Full Year Results T T Sep-05 Dec-
Slide 5: Dividend up 16%
Dividend up 16% * Strong dividend increase supported _ Dividends per share (cents) by: 1205 116 - 23% ROE with $2bn in surplus 100.4 capital generated - Significant franking surplus of $417m ~ Strong capital position ~ Confidence in future 80 4 60 40, * Sustainable increase in pay-out 20 ratio to ci
Slide 6: Revenue growth driving the bottom line
Revenue growth driving the bottom line Contributions to cash earnings growth ($m) Reported Adjusted Mba 720 Net interest income 7 6) | 3400 a we) Non interest income 4 12) 4.200. (78) 3,080 Operating income 6 Q) 3,000. (188) ~ 2,801 Expenses (3) (4)| 2,800 5 Core earnings 8 13] 2,600 4 Impaired loss
Slide 7: Improved 2nd half momentum
13 Improved 2°¢ half momentum Half on half cash earnings* Reported cash earings $1,511m Reported cash earnings $1,568m Underlying growth 7% Cards impact $16m Cards impact $(34)m AHOG 2H06 1. Trading and tax provision movements broadly offset at the bottom line Westpac 2006 Full Year Results Haif on
Slide 8: Analysis of year on year margin movement
15 Analysis of year on year margin movement Group margins FY05 — FY06 (%) 28. 245% (9bps) 24 Bz (3b \ / PS) 24 | Eze 2.28% ‘bp 2.29% as Underlying margin decline 10bp 22 24 : 2 > R _ Q R os R a ait Ee fs a 3 z BS os Bae 3s eggs 2 i 3 3 => ge a ze g° 8 < 8 2 s er N S Westpac 2006 Full Year Results Wf
Slide 9: Starting point for 2007 margins
Starting point for 2007 margins + One-off impacts on margins in Group margins 2H05 ~ 2HO6 (%) 2006 provides a different 26> starting point for 2007 + Starting point should be around = a5 4 2.27% being the 2HO6 margin 2.45% (2.19%) adjusted for: - Cards impact 4bps ~ More normal Treasury performance
Slide 10: Expenses — delivering capability
Expenses — delivering capability ay y Ptenae Boosting front line: 2005——“‘“‘*™SCCi ; - + 581 sales employees 2006 +2006 2Hos —_2H06 eempey . . + Change in workforce Salaries & staff expenses 2,186 2,324 6 1,165 1,159 (1 mix contributed to Equipment and 596| 614 3) 304° 310 2 |_ Salary occupancy H Ot
Slide 11: Collectively assessed provisions increased with asset growth
Collectively assessed provisions increased with asset growth Adjusted impairment josses on loans ($m) 300 7 (C_AJFRS reclassification of interest considered part of collective provisions Rise in interest reclassification Collective provision due to growth in cards 250 4 @ individually assessed (net
Slide 12: BCB — Sound underlying result, improving momentum
23 BCB — Sound underlying result, improving momentum Cash earnings ($m) ”. —e— yyithout cards revenue accrual adjustment 900 827 700 500 206 4H05 2HO5 1HO06 BCB Cash Earnings ($m) 2600, , 284 {87) 23 (72) 4,682 4B4T. | — 1500 1069 2005 “Operating | Expenses. impairment Taxand QEt. ” 2008 income. tos
Slide 13: WIB — strengthening position in a competitive market
WIB — strengthening position in a competitive market Cash earnings ($m) Financial markets income ($m) 300 institutional Banking O Structured Finance Eas FX a Capital Markets (J Other =.= = VaR (rhs), : 250 | a | 8 “s i 200 i q i ! 150 5 | | 400. | 3) 50 1 1 1 i , 4) 41HO5 2H05 4Ho6 2H06 | 4HO5 2HOS
Slide 14: BT and New Zealand results
27 1HO5 205 HOG 2HO6 « Reported cash earnings growth 10%, underlying cash eamings up 21% * 16% Retum on equity « All major portfolios experienced significant growth, including Wrap FUA up 34% « Top quartile investment performance over 3 years « Planner sales up 32% Westpac 2006 Full Year Results Key
Slide 15: New Zealand — consumer rebuilding, business strong
29 New Zealand — consumer rebuilding, business strong Consumer Banking + High customer attrition in early 2006 + Initiatives underway ~ Fee/product enhancemenis ~ Early signs of net customer growth Business Banking Revenues up 8%, driven by: - Market leading sales in middle markets and corporate - A
Slide 16: Strong capital generation
34 Strong capital generation Capital ratios and target ranges (%) ee 46 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 | transitional relief until 1 Jan 2008 ~~] New ACE ratio target range: Movements in ACE ratio (%) 7 1863 {47 Thps) 6 {6Gp3) 54% — . (88bps) | |
Slide 17: 2007 — setting the scene
2007 — setting the scene » Lending expected to grow.in line with system Revenue * Margin decline possible at upper end of 5-10 basis points contraction * Solid non-interest income with continuing contributions from BT and WIB + Average expense growth 4% over last 5 years Expenses * 2007 growth expec
Slide 18: Environment remains positive
Environment remains positive 35 * Australian economy remaining strong: - Growth improving modestly - Unemployment remaining at recent lows - Further rate rise expected * New Zealand softer: - Subdued growth - Unemployment rising - Interest rates stable Westpac 2006 Full Year Results Calendar year Ke
Slide 19: Building sustainable growth
Building sustainable growth + 440 additional front line bankers; more to come BCB « Sector leading infrastructure enhancing momentum « Volume growth back at system * Significant opportunities in debt & capital solutions WIB * Good deal pipeline in SCG / Hastings NZ * Improving consumer customer rete
Slide 20: Westpac 2006 Full Year Results
Wlfestpac Australia’s First Bank 2006 Full Year Results 2 November 2006