Westpac Banking Corporation · ASX:WBC
Westpac Banking — FY2000 Earnings Presentation
28 slides from Westpac Banking's earnings presentation, Nov 3, 2000
Slide 1: 2000 Results Presentation
2000 Results Presentation Dr David Morgan Chief Executive Officer 3 November 2000
Slide 2: Highlights
Highlights 2000 Results Presentation • Net profit up 18% to $1,715 million • Strong earnings growth - core earnings up 17% - EPS up 15% • Improved operating efficiency • Continued sound asset quality • Delivering on strategic initiatives 2
Slide 3: Financial highlights
Financial highlights $1,715M 89¢ 54¢ 18.4% $1,058M 2000 Results Presentation ñ 18% ñ 15% ñ 15% ñ 160bp ñ 58% 77.0 17.0 16.8 47 1,456 70.1 70.0 15.5 1,342 716 43 669 # 694 58.9 1,291 14.6 39 554 1,132 33 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 1996 1997 1998 1999 2000 1996 1997 1998 1999 20
Slide 4: Core earnings
Core earnings* 2000 Results Presentation $M $1,500 1,488 1,359 1,245 $1,250 1,197 1,179 $1,000 2H98 1H99 2H99 1H00 2H00 *Operating income less expenses (excluding amortisation of intangibles). 4
Slide 5: Economic profit
Economic profit * 2000 Results Presentation $M 1,058 Impacted $179M 2H by non franking of 1000 1H final dividend 800 716 694 565 669 600 554 400 493 200 0 1996 1997 1998 1999 2000 5 * Excess of net profit, plus 70% of the face value of franking credits, over min. required rate of return on equity in
Slide 6: Effect of accounting & tax changes
Effect of accounting & tax changes 2000 Results Presentation Permanent changes One-offs $M Consolidation of Restructure Tax adjustment Total Life Business (Market value basis) (FITB) Fees & comms (45) - - (45) Life ins. op. inc. 187 85 - 272 Non int. income 142 85 - 227 Non int. expense (74) - - (74
Slide 7: Looking at the earnings
Looking at the earnings % increase/ $M 1999 2000 2000 Results Presentation (decrease) Net interest income 3,619 3,884 7 Non-interest income 2,139 2,368 11 Operating income 5,758 6,252 9 Expenses (3,334) (3,405) 2 Core earnings 2,424 2,847 17 Bad debts (171) (202) 18 Intangibles (100) (98) (2) NPBT 2
Slide 8: Volume growth in core products
Volume growth in core products 2000 Results Presentation 17% Home mortgages Business loans 15% Credit card 25% outstandings 12% Retail FUM 20% Life risk sales 0% 5% 10% 15% 20% 25% 30% Growth (%) - 1999 to 2000 (Australia) 8
Slide 9: Funds under management - retail net quarterly inflows
Funds under management - retail net quarterly inflows 2000 Results Presentation $M 482 500 400 363 300 266 205 200 122 100 37 0 Jun-99 Sep-99 Dec-99 Mar-00 Jun-00 Sep-00 Rank: 3rd 5th 13th 13th 6th NA 9 Source: Assirt Market Share Report & Westpac accounts
Slide 10: Net interest income & margin trends
Net interest income & margin trends 2000 Results Presentation $B Margin (%) 4.0 4 3.5 3.0 3.5 2.5 2.0 3 1.5 1.0 2.5 0.5 0.0 2 1996 1997 1998 1999 2000 Net interest income (LHS) Average margin (RHS) Peer average margin (RHS) 10
Slide 11: Non-interest income growth
Non-interest income growth 2000 Results Presentation $M 1999 2000* Growth (%) Lending fees 512 584 14 Transact’n fees & comms 895 1,057 18 Other non-risk fee inc. 228 249 9 Fees & commissions paid (302) (384) 27 Funds mgt. Income 159 162 2 Life Insurance 124 130 5 General Insurance 30 46 53 Core non
Slide 12: Containment of expenses
Containment of expenses 2000 Results Presentation 1999 2000 Growth $M % Salaries & other staff exp 1,830 1,815 (1) Equipment & occupancy 602 632 5 Other expenses 902 958 6 Amortisation of intangibles 100 98 (2) Reported expenses 3,434 3,503 2 Impact of Life Co. consolidation - (74) - ‘Normalised’ ex
Slide 13: Expense to income
Expense to income* % 2000 Results Presentation 65 60 53.5% 55 50 1996 1997 1998 1999 2000 2H00 WBC Peer Average 13 * Excludes goodwill
Slide 14: Asset quality
Asset quality 2000 Results Presentation Net impaired assets to % 10 equity & general provision 8 6 4 2 0 1996 1997 1998 1999 2000 WBC Peer Average 14
Slide 15: Provisioning cover
Provisioning cover 2000 Results Presentation % Total provisions to total impaired assets 300 250 200 150 100 50 0 1996 1997 1998 1999 2000 WBC Peer average 15
Slide 16: Capital ratios
Capital ratios 2000 Results Presentation % 8.0 7.0 6.7 6.6 7.0 6.3 6.0%- 6.5%* 6.0 5.6% * 5.0 4.0 TOE / RAA Tier 1 ratio 1999 2000 * Target ratio 16
Slide 17: Business Group Results
Business Group Results 2000 Results Presentation Net Profit on Operations + 19 % $M 1000 800 600 + 23 % -3% 400 200 0 ARFS WIB NZ (Retail) 17 FY1999 FY2000
Slide 18: Performance scorecard
Performance scorecard 2000 Results Presentation Measure Target Progress (#) EPS growth Above peer avg. (16.1%) 15.3% Return on Capital 5% > Cost of cap (12%) 18.4% TSR (rolling 3 yr) Top (1st)quartile 72nd percentile Efficiency ≤ Peer avg. (53.7%) φ 53.5% Risk Profile AA- rating Maintained Capital T
Slide 19: A clear point plan
A clear 5 point plan 2000 Results Presentation • Understanding our strengths • Being more efficient • Finding new opportunities • Getting closer to customers • Backing our people 19
Slide 20: Performance improvement initiatives delivering
Performance improvement initiatives delivering 2000 Results Presentation Performance Enhancement Projects Completed Target Actual • IT & Telecomms $300M $317M* outsourcing Phased roll- out 3,000 jobs 3,054 • Network re- developed • E-Procurement & • Operations centres purchasing Enhancements - ratio
Slide 21: Efficiency improvements from network redevelopment in Australia
Efficiency improvements from network redevelopment in Australia 2000 Results Presentation 1000 • Opened 169 in-store branches • Opened 10 new sites 750 where not previously represented • Amalgamated 118 locations 500 • Relocated 19 Mar-99 Sep-99 Mar-00 'Sep-00 branches Branches In-store Other • Refu
Slide 22: Major new e-Business developments this financial year
Major new e-Business developments this financial year Regional Proprietary 2000 Results Presentation Global portal portal application u e-Procurement ü u f2 Domain ü u FXall ü u FX Connect ü u yieldbroker.com ü u Broking ü u NZ online banking ü u Healthpay payroll solution ü u SME superannuation ü u
Slide 23: On-line banking & broking growth
On-line banking & broking growth 2000 Results Presentation On-line Banking On-line Broking - Australia = 492,000 * = 51,000 500,000 60,000 450,000 400,000 50,000 350,000 40,000 300,000 250,000 30,000 200,000 20,000 150,000 100,000 10,000 50,000 0 0 Oct-99 Nov-99 Dec-99 Jan-00 Feb-00 Mar-00 Apr-00 Ma
Slide 24: Getting closer to customers
Getting closer to customers 2000 Results Presentation 000’s Priority Customers * 1200 Number of Customers Up 37% from September 1999 1000 800 600 Sep-98 Mar-99 Sep-99 Mar-00 Sep-00 24 * Typically multi-product Consumer, Private Bank & Business Banking customers
Slide 25: Organic growth remains No.1 priority
Organic growth remains No.1 priority 2000 Results Presentation • Realising opportunities in existing customer base • Further productivity enhancements • Effective tax rate reduction • Optimising the capital structure • Maintain strong asset quality & provisioning cover • Take advantage of Internet &
Slide 26: Strategic growth
Strategic growth 2000 Results Presentation • Rapid industry change will create convergence and consolidation opportunities • Strict criteria to apply - strategic fit & scale/capability enhancement - strict valuation disciplines - not unduly diverting from our organic growth path 26
Slide 27: To recap...
To recap... 2000 Results Presentation • Profit up 18%, with strong core growth • Our customer focused strategy is delivering • Organic growth remains the No.1 priority • Outlook remains positive 27
Slide 28: 2000 Results Presentation
2000 Results Presentation 28