Westpac Banking Corporation · ASX:WBC
Westpac Banking — H1 2019 Earnings Presentation
163 slides from Westpac Banking's earnings presentation, May 6, 2019
Slide 1: Presentation and Investor Discussion Pack, six months ended 31 March 2019
"Por THE SIX MONTHS E 31 MARCH 2019 : Presentation and Investor Discussion Pack Westpac Banking Corporation ABN 33 007 457 141
Slide 2: 2019 Interim Results Index
Westpac 2 2019 Interim Results Index 2019 Interim Result Presentation 3 Investor Discussion Pack of 2019 Interim Result 33 Strategy 34 Overview 39 Performance discipline 44 Service leadership 46 Workforce revolution 51 Digital transformation 52 Sustainable futures 60 Conduct and Governance 64 Earnin
Slide 3: Brian Hartzer, Chief Executive Officer
Brian Hartzer Chief Executive Officer Financial results throughout this presentation are in Australian dollars and are based on cash earnings unless otherwise stated. Refer page 41 for definition. Results principally cover the 1H19, 2H18 and 1H18 periods. Comparison of 1H19 versus 2H18 (unless other
Slide 4: Summary 1H19
Summary 1H19 4 • Disappointing 1H19 earnings compared to 2H18: − Reported net profit down 19%, cash earnings down 14% − Excl. major remediation & restructuring items cash earnings down 1% • Taking action on key priorities: − Exiting advice; wealth strategy reset − Remediating customer issues − Actio
Slide 5: 1H19 earnings snapshot
1H19 earnings snapshot 5 Reported Change Change 1H19 1H19 – 2H181 1H19 – 1H181 Reported net profit $3,173m (19%) (24%) Cash earnings $3,296m (14%) (22%) Cash EPS2 95.8c (14%) (23%) Return on equity3,4 10.4% (165bps) (353bps) Margin (excl. Treasury & Markets)4 2.04% (2bps) (12bps) Expense to income r
Slide 6: 1H19 divisional snapshot
1H19 divisional snapshot 6 Change 1H19 – 2H18 Cash earnings 1H19 ($m) As reported Excl. major items1 Consumer Bank $1,514 7% - Business Bank $1,013 (6%) 5% BT Financial Group ($305) large (18%) Westpac Institutional Bank $543 1% 1% New Zealand (NZ$) $555 4% 1% Group Businesses $7 (85%) (89%) 1 Major
Slide 7: Strong balance sheet; dividend maintained
Strong balance sheet; dividend maintained 7 Common equity Tier 11 (ratio % and $bn) Liquidity ratios2 (%) 55 $bn Ratio (%) 10.6 10.6 10.6 12 LCR NSFR 9.5 9.5 11 50 45 9.1 9.0 10 40 8.2 9 8 134 138 35 7 133 30 43 45 45 125 124 39 114 6 25 34 108 109 112 113 30 5 20 25 28 4 15 3 Sep-12 Sep-13 Sep-14 S
Slide 8: Delivering our 2019 priorities
Delivering our 2019 priorities 8 Deal with 1 outstanding issues Momentum in 2 customer franchise Structural cost 3 reduction Westpac Group 2019 Interim Results Presentation & Investor Discussion Pack
Slide 9: Taking decisive action on outstanding issues
Taking decisive action on outstanding issues 9 Reset wealth strategy • Reset wealth strategy and commenced exit of personal financial advice Customer remediation • Provided more clarity on major areas of remediation • Approximately $200 million paid to customers to date Royal Commission response • I
Slide 10: Building momentum in customer franchise
Building momentum in customer franchise 1,2 10 New customers Depth of relationship • Increased new Australian banking customers by over • Customer Service Hub live, rollout underway, new 36,000 consumer dashboard now in place • General insurance gross written premiums up 3% • Further roll out of “li
Slide 11: Digital highlights
Digital highlights 11 More digital sales1,2 Help managing New features Leader in Fintech finances1,2 4 5 • Fully digital sales now 36% • New chat-bot ‘Red’ uses • Credit card alert emails • Expanded Reinventure of total (35% of NZ) IBM’s Watson AI • Online card limit reductions funds to $150m, portf
Slide 12: Consistent investment in technology infrastructure
Consistent investment in technology infrastructure 12 Stability and security • No severity 1 incidents since April 2018 Panorama • New reporting functionality; rolled-out digital signatures • System live – rollout underway Customer Service Hub (CSH) • Improves mortgage process for customers and bank
Slide 13: Structural cost reduction – 1H19
Structural cost reduction − 1H19 13 Productivity savings ($m) Simplify • FTE down ~800 (net) • Continued product simplification $88m • Removed over $700m 130 in cash turnover from branches Digitise • Digital sales now 36% of total1 124 • Reduced physical presence; branches, 400 $33m ATMs, and corpor
Slide 14: Summary
Summary 14 • Cash earnings lower – material uplift in provisions • Decisive action on wealth strategy and remediation • Taking costs out: structural productivity work delivering • Change underway to address RC & CGA1 recommendations • Continuing to deliver on service strategy • Maintain focus on 201
Slide 15: Peter King, Chief Financial Officer
Peter King Chief Financial Officer Financial results throughout this presentation are in Australian dollars and are based on cash earnings unless otherwise stated. Refer page 41 for definition. Results principally cover the 1H19, 2H18 and 1H18 periods. Comparison of 1H19 versus 2H18 (unless otherwis
Slide 16: Results impacted by major remediation & restructuring items
Results impacted by major remediation & restructuring items1 16 Cash earnings movements ($m) 1H19 v 2H18 281 4,095 26 (305) 70 4,049 (753) 128 35 3,814 3,296 Down 1% Down 14% 2,3 Tax & NCI 2H18 Add back 2H18 Impairment 1H19 Net interest Non-interest major items Expenses² major items major items 2H18
Slide 17: Major/infrequent/volatile items
Major/infrequent/volatile items 17 Major items1 – by area ($m after tax) Infrequent/volatile items ($m after tax) 1H18 2H18 1H19 1H18 2H18 1H19 Wealth remediation – (141) (484) Asset sales (7) – 41 Banking remediation – (140) (133) Fund manager revaluations – (13) – Wealth reset – – (136) Group CVA2
Slide 18: Australian mortgage growth slowed
Australian mortgage growth slowed 18 Australian mortgages mix (%) Mortgage growth composition (%) Line of credit P&I¹ I/O¹ 1H18 2H18 1H19 5 4 4 3 Owner occupied growth 3 3 2 Investor growth 2 1 – Total growth2 3 2 1 49 56 Runoff dynamics 61 66 Runoff ($bn) Runoff of opening balance (% annualised) 13
Slide 19: Margins well managed in difficult environment
Margins well managed in difficult environment 19 Net interest margin (bps) Treasury & Markets impact on NIM NIM excl. Treasury & Markets 2bps 2.18 1bp 1bp (1bp) 0bp (2bps) (5bps) 2.16 2.17 2.12 0.10 0.10 0.08 0.08 2.06 2.08 2.09 2.04 NIM excl. Treasury, Markets and remediation items up 1bp 2H18 2H18
Slide 20: Markets & Treasury income down 5% this half
Markets & Treasury1 income down 5% this half 20 Markets non-customer and Treasury income ($m) Markets customer income ($m) Markets non-customer Treasury 653 574 482 465 546 447 448 448 436 438 247 484 162 142 89 395 349 362 60 72 127 404 395 406 412 335 277 235 1H16 2H16 1H17 2H17 1H18 2H18 1H19 1H1
Slide 21: Non-interest income down 30%, down 12% excl. major items
Non-interest income down 30%, down 12% excl. major items1 21 Net Fees 6%1 Wealth and Insurance 31%1 Trading and Other 19%1 Cards ($19m); reduced FX fees Exit of Hastings ($180m) WIB markets income and annual fees General insurance catastrophe claims Asset sales (Paymark $38m, Ascalon $3m) Adviser re
Slide 22: Managing expenses through structural productivity
Managing expenses through structural productivity 22 1H19 – 2H18 Movement in expenses ($m) 5,007 (112) 84 5,041 190 4,895 (121) 99 (146) 9 31 4,767 Flat Down 3% excl. major remediation & restructuring items1 Up 1% BAU remediation Hastings productivity remediation 2H18 Add back 2H18 1H19 compliance I
Slide 23: $400m in productivity
Target 1% expense reduction1 on FY18; $400m in productivity 23 Expenses ($m) 5,007 5,041 112 84 Remediation provisions 190 Wealth reset provisions 4,895 Expenses excluding remediation 4,691 121 4,767 and wealth reset 37 626 635 Hastings 566 Regulation and compliance Investment (excl. regulation) 542
Slide 24: Credit quality sound
Credit quality sound 24 Stressed exposures as a % of TCE1 Corporate/business stressed exposure by sector ($bn) Watchlist & substandard Mar-18 Sep-18 Mar-19 2.0 2.17 90+ day past due (dpd) and not impaired 1.8 Impaired 1.6 1.4 1.60 1.2 1.24 1.0 1.24 1.20 1.14 0.8 0.85 1.05 1.09 1.08 1.10 0.99 0.6 0.7
Slide 25: Australian mortgage credit quality sound
Australian mortgage credit quality sound 25 Australian mortgage portfolio delinquencies (%) Australian mortgages 90+ day delinquencies by State (%) 3.0 3.0 NSW/ACT VIC/TAS QLD 90+ day past due total 90+ day past due investor 30+ day past due total WA SA/NT ALL 2.0 Introduced new 2.0 Introduced new h
Slide 26: Well collateralised mortgage portfolio
Well collateralised mortgage portfolio 26 Australian housing loan to value ratios (LVRs) (%) Australian housing LVRs (%) Portfolio LVR at origination 41 80% of portfolio % of total portfolio by State % of State portfolio with dynamic LVR >90% 49 % of State portfolio with dynamic LVR >100% 17 14 11 5
Slide 27: Impairment charge 9bps of loans
Impairment charge 9bps of loans 27 Individually assessed provisions ($m) Collectively assessed provisions ($m) Total ($m) Other movement Write-backs Write-offs New IAPs in Collective & recoveries direct provisions 444 430 428 418 368 333 198 173 173 15 (90) (108) (150) (168) (174) 1H18 2H18 1H19 1H1
Slide 28: CET1 ratio 10.6%
CET1 ratio 10.6% 28 CET1 capital ratio (% and bps) 16.17 Organic +27bps Other -26bps 96 (77) 8 7 (7) (25) 10.50 10.63 4 (5) 10.64 Up 1 bps Mar-18 Sep-18 Cash earnings Final Dividend Ordinary Other capital Major Other items FX Mar-19 Mar-19 APRA APRA excl. major dividend reinvestment RWA movements it
Slide 29: Considerations for 2H19
Considerations for 2H19 29 • Expect system credit growth to moderate • Continued focus on return • Margins: continued competition; lower interest rates; short term funding costs • Non-interest income will reflect impact of previously announced wealth reset; general insurance claims elevated in 1H19
Slide 30: Brian Hartzer, Chief Executive Officer
Brian Hartzer Chief Executive Officer Financial results throughout this presentation are in Australian dollars and are based on cash earnings unless otherwise stated. Refer page 41 for definition. Results principally cover the 1H19, 2H18 and 1H18 periods. Comparison of 1H19 versus 2H18 (unless other
Slide 31: Operating environment
Operating environment 31 • Overall economic fundamentals remain sound • Economic activity has slowed with GDP growth likely to end the year at 2.2% • Expect credit growth to remain soft across both business and consumer • Anticipating lower interest rates • Housing in good shape but a further easing
Slide 32: 2H19 Priorities
2H19 Priorities 32 • Prioritise customer refunds Deal with 1 • Implement recommendations from RC and CGA1 outstanding issues • Deal with regulatory/litigation matters • Continue to grow customer numbers and relationship depth Momentum in 2 • Roll out Customer Service Hub customer franchise • Further
Slide 33: Investor Discussion Pack
Investor Discussion Pack Financial results throughout this presentation are in Australian dollars and are based on cash earnings unless otherwise stated. Refer page 41 for definition. Results principally cover the 1H19, 2H18 and 1H18 periods. Comparison of 1H19 versus 2H18 (unless otherwise stated)
Slide 34: Strategy
Strategy
Slide 35: Westpac Group at a glance: Australia's First Bank
WBC Westpac Group at a glance: Australia’s First Bank listed on ASX & NZX Strategy 35 • In its 203rd year, Australia’s first bank and first company, opened 1817 Consumer Business BT Financial Institutional Westpac • Australia’s 2nd largest bank and 28th largest bank in the world; Bank Bank Group Ban
Slide 36: Framing our strategic agenda
Framing our strategic agenda Strategy 36 Our To be one of the world’s great service companies, Vision helping our customers, communities and people, to prosper and grow Strategic Priorities Service Performance Digital Targeted Workforce Leadership Discipline Transformation Growth Revolution • Balanc
Slide 37: Progress on our 2019 priorities
Progress on our 2019 priorities Strategy 37 Deal with outstanding issues Customer franchise momentum1 Structural cost reduction Progress: Progress: Progress: • Announced reset of Wealth Strategy • Increased Australian banking customer • $146m in productivity benefits delivered in numbers by 36k to 1
Slide 38: What sets Westpac apart
What sets Westpac apart Strategy 38 Strong strategic position – consistent strategy Conservative balance sheet • No. 1 or 2 position across key markets – all divisions well placed • Strong credit quality with lowest Impaired assets to gross loans1 (%) impaired assets to gross loans of 0.46 • Unique
Slide 39: Overview
Overview
Slide 40: Notable items in 1H19 and 2H18
Notable items in 1H19 and 2H18 Results 40 In 1H19 and 2H18 the Group raised provisions in Remediation Wealth relation to certain matters. These are known reset throughout this document as “notable items” and 1H19 notable items CB BB BTFG NZ GB1 BTFG Group relate to the following: Net interest income
Slide 41: Cash earnings and reported net profit reconciliation
Cash earnings and reported net profit reconciliation Results 41 Cash earnings1 policy Reported net profit and cash earnings adjustments ($m) • Westpac Group uses a measure of performance referred to as cash earnings to assess financial performance at both a Group and divisional level • This measure
Slide 42: 1H19 financial snapshot
1H19 financial snapshot Results 42 Change Change 1H19– 1H19 – Change Change 1H19 2H18 1H18 1H19 1H19– 2H18 1H19– 1H18 Earnings1 Balance sheet Total assets ($bn) 891.1 1% 2% Earnings per share (cents) 95.8 (14%) (23%) Common equity Tier 1 10.6 1bp 14bps Core earnings ($m) 5,062 (14%) (23%) (CET1) cap
Slide 43: Unchanged dividend
Unchanged dividend Results 43 Dividend considerations Dividends per ordinary share (cents) • Sustainability of the payout ratio over the medium term • CET1 capital ratio = unquestionably strong benchmark 93 94 94 94 94 94 94 94 94 • Surplus franking credits • 1H19 Bank Levy equivalent to 4 cents per
Slide 44: 1H19 cash earnings impacted by notable items of $753m
1H19 cash earnings impacted by notable items of $753m Performance discipline 44 % Change % Change 1H19 1H19 – 1H19 – Cash earnings features of 1H19– 2H18 ($m) $m 2H18 1H18 Lower from no Hastings revenue $180m, AIEA1 up 2%, margins down 1bp major weather insurance claims $94m Net interest 8,389 (1) (
Slide 45: Divisional contributions
Divisional1 contributions Performance discipline 45 1H19 divisional core earnings movements ($m) 1H19 divisional cash earnings movements ($m) 380 6,299 23 (5) (107) 281 4,095 (7) 59 (67) 5 18 (54) 5,919 (24) 40 (78) 6,148 (1,086) 4,049 (753) 5,062 3,814 3,296 Down 2% Down 1% Down 14% Down 14% BB 2H1
Slide 46: More customers, deeper relationships and strong balance sheet
More customers, deeper relationships and strong balance sheet Service leadership 46 Grow customers Deepen relationships Maintain balance sheet strength Customer numbers (#m) Transaction account balances ($bn) CET1 capital ratio (%) and capital ($bn) 2 3 4 Australian banking1 BT and WIB New Zealand A
Slide 47: Supporting customers in life moments
Supporting customers in life moments Service leadership 47 Overview As Australia’s oldest company, Westpac prides itself in helping customers when they need it most, particularly in times of uncertainty and change. As a result we have established dedicated resources to help in these major moments Th
Slide 48: Supporting customers in life moments
Supporting customers in life moments Service leadership 48 Supporting customers who are planning to start (or add to) a family: • Features on mortgages such as options to reduce repayments while on parental leave; recognition of paid parental leave and back to work income when applying for a new hom
Slide 49: Helping customers through natural disaster – Townsville flood case study
Helping customers through natural disaster – Townsville flood case study Service leadership 49 When Townsville was struck by one-in-five-hundred year flood waters in February 2019, Westpac’s coordinated approach across banking and insurance, together with community organisations helped affected cust
Slide 50: Building long term franchise value – customer service
Building long term franchise value – customer service Service leadership 50 Customer satisfaction1 Improved complaints management Consumer and Business (mean), New Zealand (%) Focus on improving the experience of customers who make a complaint: Westpac St.George brands Peers • Group-wide culture pro
Slide 51: Workforce revolution delivering
Workforce revolution delivering Workforce revolution 51 Service leadership - Navigate Learning and development Simplification • The Navigate program continues to embed ‘Our • Over 1,525 leaders participated in leadership • Released PeopleHQ, a new cloud HR system for Compass’ into Westpac, providing
Slide 52: Four pillars of our digital strategy
Four pillars of our digital strategy Digital transformation 52 Reducing cost3to serve and Secure and reliable Giving customers control Investing in Fintech cost to change • Protecting both the Group • Refining digital services to • Replacing aging infrastructure • Direct investment and and customers
Slide 53: Secure and reliable service
Secure and reliable service Digital transformation 53 Protecting customers Severity 1 IT incidents (Australia) • Protecting customer’s through: - Two-factor SMS authentication 10 10 9 - Biometric fingerprint logon to mobile banking 5 5 - Customer location and payment triangulation to prevent fraud w
Slide 54: Giving customers control
Giving customers control Digital transformation 54 Customer control features Customer direct connect usage (# 000’s) Continuing to develop and implement services which allows customers Connecting to a call centre to control their finances including: directly via mobile app reducing 545 • Ability to
Slide 55: Reducing cost to serve
Reducing cost to serve Digital transformation 55 Accounts with eStatements Progress on key initiatives Number (#m) eStatements (%) Digitising processes to improve productivity and enhance the 52 customer experience 48 43 45 • More digital communication such as eConveyancing, eStatements, 36 8.4 8.9
Slide 56: Customers preferring digital channels
Customers preferring digital channels1 Digital transformation 56 Digitally active customers (#m) Sales via digital (%) 4.81 4.90 4.69 36 4.53 4.33 33 4.18 29 24 25 Up 2% Up 5% Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 1H17 2H17 1H18 2H18 1H19 Branch transactions (#m) Digital transactions (#m) 24.4 3
Slide 57: Customer Service Hub: re-engineering the home ownership process
Customer Service Hub Re-engineering the home ownership process Strategy Digital transformation 57 Digitising the end-to-end home loan origination experience by 2020 Capabilities to be delivered Customer access Banker dashboard Customer application via any channel tracker Single point for bankers At
Slide 58: Reinventure – Investing in new fintech businesses
Reinventure – Investing in new fintech businesses1 Digital transformation 58 Westpac Westpac has committed is fintech $150m to actively responding venture capital to digital fund, threats 2and Reinventure opportunities. . Reinventure enables Westpac to access We encourage digital innovation insights
Slide 59: New digital offers for customers
New digital offers for customers1 Digital transformation 59 Examples of how Westpac and Reinventure’s investments are delivering Building on Presto Smart for Westpac customers 2 Investing in • Powered by Assembly software, Presto Smart enables merchant terminals to pair with point-of-sale merchant (
Slide 60: Continued sustainability leadership
Continued sustainability leadership Sustainable futures 60 United Nations Sustainable Westpac’s sustainability 1H19 outcomes (unless otherwise stated) Development Goals alignment priority areas • Delivered a range of financial literacy programs to individuals, businesses, not-for-profit organisation
Slide 61: Delivering sustainable value for all stakeholders
Delivering sustainable value for all stakeholders1 Sustainable futures 61 Customers Employees Community Suppliers Investors Economy Environment 14.2m 37,371 ~500 $2.9bn 10.4% $1.4bn $10.1bn Customers Employees relief packages for Spent with suppliers Cash return Income tax Committed exposure custome
Slide 62: Climate-related metrics
Climate-related metrics Sustainable futures 62 Climate change solutions exposure Electricity generation exposure Total scope 1, 2 and 3 emissions ($bn of TCE) (% of TCE)1,3 (tCO2-e, 000s)3 TCE at 30 September 2018 $3.5bn 1.9 0.8 10.1 220 9.1 Renewable energy 11.8 7.0 Gas 6.2 203 14.1 Black coal 194
Slide 63: Climate-related disclosures – scenario analysis
Climate-related disclosures – scenario analysis Sustainable futures 63 Continued alignment with the TCFD Transition risk – key points • Westpac continues to integrate the consideration of climate-related risks • Westpac assessed potential transition risks (policy, legal, technology and and opportuni
Slide 64: Conduct and Governance
Conduct and Governance
Slide 65: Rebuilding trust is integral to our service strategy
Rebuilding trust is integral to our service strategy Conduct and governance 65 The Royal Commission and other regulator and government-led inquiries have highlighted shortcomings in the financial services industry, including in the management of non-financial risks, incentive models and treatment of
Slide 66: Coordinated programs of work underway
Coordinated programs of work underway Conduct and governance 66 Westpac’s response to the lessons outlined on the prior page represent a turning point for the Group. A coordinated program of work brings together actions which reinforce our service strategy and embed more deeply the ‘customer first’
Slide 67: Royal Commission response plan
1 Royal Commission response plan Conduct and governance 67 The Royal Commission Final Report’s recommendations raise important points of policy, principle and behaviour for the industry and regulators. Westpac is actively responding to the findings with a detailed response plan that has Board oversi
Slide 68: Royal Commission response plan implementation examples
1 Royal Commission response plan implementation examples Conduct and governance 68 Implementation of Westpac’s Royal Commission response plan is underway. Examples of some recommendations, along with our progress and considerations, are set out below Topic area Recommendation Accountability Progress
Slide 69: Culture, Governance and Accountability self-assessment
2 Culture, Governance and Accountability self-assessment Conduct and governance 69 In 2018 Westpac completed a Culture, Governance and Accountability (CGA) self-assessment examining the Group’s risk culture, governance and accountability frameworks and practices, and the impact on the management of
Slide 70: Self-assessment action plan underway
Culture, Governance and Accountability self-assessment 2 action plan underway Conduct and governance 70 The Group has commenced implementing the recommendations of the self-assessment with Group Executive sponsorship and Board oversight. The work is focused on five key areas, which are set out below
Slide 71: Remuneration and accountability
3 Remuneration and accountability Conduct and governance 71 In addition to responses specific to recommendations of the Royal Commission and CGA self-assessment, a number of initiatives are underway (several commenced prior to the establishment of these inquiries) to address root causes of issues, s
Slide 72: Product design, performance and remediation
4 Product design, performance and remediation Conduct and governance 72 Westpac is committed to doing the right thing for customers. However, when mistakes are made, putting things right is a priority. Our focus remains on customer remediation and refunding customers as quickly as possible. At the s
Slide 73: Customer care transformation
5 Customer care transformation Conduct and governance 73 A centralised Customer and Corporate Relations division has been established and a new complaints strategy is being rolled out to make things better for customers: Lifting our Group-wide complaints culture: Progress: Culture & • Focused campai
Slide 74: Earnings Drivers
Earnings Drivers
Slide 75: Composition of lending and deposits
Composition of lending and deposits Revenue 75 Composition of lending (% of total) Net loans ($bn) Australian mortgage lending1 ($bn) 30 (28) 2 Aust. mortgages 710 2 (1) (1) 5 (1) 714 437 445 447 701 11 Aust. business 3 Aust. institutional 8 Up 1% Aust. other consumer 13 63 New Zealand lending Mar-1
Slide 76: NIM excluding Treasury & Markets and notable items up 1bp
NIM excluding Treasury & Markets and notable items up 1bp Revenue 76 Net interest margin (NIM) movement (%) Net interest margin (%) Treasury & Markets impact on NIM NIM NIM excl. Treasury & Markets Restated for NIM excl. Treasury & Markets adoption of AASB 2.28 9 and 15 1bp 1bp 0bp 0bp (1bp) 0bp (2b
Slide 77: Non-interest income down 30% from notable items
Non-interest income down 30% from notable items, higher general insurance claims and impact of the sale of Hastings Revenue 77 Non-interest income contributors ($m) Net fee income ($m) Fees Wealth and insurance Trading Other Notable items Facility fees Net transaction fees Other non-risk fee income
Slide 78: Expenses ex notable items down 3% from Hastings exit
Expenses ex notable items down 3% from Hastings exit, while productivity benefits offsetting other cost increases Expenses 78 Expense movements ($m) FTE run versus change (#) Run: ongoing operations 5,007 99 274 5,041 Change: project based (112) 4,895 (146) 31 9 (121) 4,767 35,720 (497) (194) 35,029
Slide 79: Investment spend focused on growth, productivity and compliance
Investment spend focused on growth, productivity and compliance Expenses 79 Investment spend mix ($m) Investment spend ($m) Capitalised software2 Other technology 1H18 2H18 1H19 Capitalised software balance ($bn) Regulatory change Amortisation ($bn) Expensed 271 312 331 Growth and productivity Avera
Slide 80: Continued low impairment charge reflects sound credit quality
Continued low impairment charge reflects sound credit quality Impairments 80 Impairment charges ($m) Individually assessed Collectively assessed 1 New IAPs Write-backs & recoveries Write-offs direct Other movements in CAP 1,2 Total 430 428 418 444 368 333 173 198 173 15 (90) (108) (174) (168) (150)
Slide 81: Credit Quality
Credit Quality
Slide 82: High quality portfolio with bias to mortgage lending
High quality portfolio with bias to mortgage lending Credit Quality 82 Asset composition (%) Lending composition at 31 March 2019 (% of total) Total assets ($891bn) Mar-18 Sep-18 Mar-19 Total loans of $714bn Loans 80 81 80 Available-for-sale securities and investment securities 7 7 8 Housing Trading
Slide 83: A well diversified loan portfolio
A well diversified loan portfolio Credit Quality 83 Exposures at default1 by sector ($bn) Top 10 exposures to corporations and NBFIs5 (% of TCE) 2 Finance & insurance The single largest corporation/NBFI 3 exposure represents Property less than 0.2% of TCE 1.4 1.3 1.3 Government admin. & defence 1.2
Slide 84: Well provisioned, sound credit quality
Well provisioned, sound credit quality Credit Quality 84 Provisions for impairments Total impairment provisions ($m) Overlay Mar-18 Sep-18 1-Oct-18 Mar-19 Collectively assessed provisions Individually assessed provisions Total provisions to gross loans (bps) 45 43 57 56 4,241 Impaired asset provisio
Slide 85: Provision cover by portfolio category
Provision cover by portfolio category Credit Quality 85 Exposures as a % of TCE Provisioning to TCE (%) Sep-17 Mar-18 Sep-18 Mar-19 Fully performing portfolio Stage 1 provisions Small cover as low probability of default (PD) 0.20 0.20 0.18 0.09 95.66 Fully performing 98.91 98.92 Non-stressed but sig
Slide 86: Stressed exposures little changed
Stressed exposures little changed Credit Quality 86 Stressed exposures as a % of TCE Movement in stressed categories (bps) 3 (5) 4 (2) (3) 109 (1) 2 108 3 110 Watchlist & substandard 1 90+ day past due (dpd) and not impaired 2.17 Impaired Mar-18 Mar-19 Watchlist Watchlist Impaired Impaired Substanda
Slide 87: Overall stressed exposures little changed over 1H19
Overall stressed exposures little changed over 1H19 Credit Quality 87 Corporate and business portfolio stressed exposures by industry ($bn) 2.0 Mar-18 Sep-18 Mar-19 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Construction Transport & storage Agriculture, forestry & Wholesale & Services Manufacturing Pro
Slide 88: Areas of interest: Commercial property
Areas of interest: Commercial property Credit Quality 88 Commercial property portfolio Commercial property exposures % of TCE and % in stress Mar-18 Sep-18 Mar-19 10 Commercial property as % of TCE (lhs) 20 Total committed exposures (TCE) $66.3bn $67.6bn $66.9bn Commercial property % in stress (rhs)
Slide 89: Areas of interest: Inner city apartments
Areas of interest: Inner city apartments Credit Quality 89 Residential apartment development TCE ($bn) Mar-18 Sep-18 Mar-19 TCE (%)1 Residential apartment development >$20m 4.0 4.1 3.3 4.9 • Approvals and new starts lower and expected to slow further. • Tightened risk appetite for areas of concern r
Slide 90: Areas of interest: Retail trade
Areas of interest: Retail trade Credit Quality 90 Overview Retail trade portfolio • The retail sector continues to be challenged by subdued consumer demand Mar-18 Sep-18 Mar-19 and growth in domestic and international online channels Total committed exposures (TCE) $15.5bn $16.2bn $16.0bn • These ch
Slide 91: Areas of interest: Aged care sector
Areas of interest: Aged care sector Credit Quality 91 Overview Aged care portfolio • Aged care sector is forecast to grow with significant investment required to Mar-18 Sep-18 Mar-19 meet demand from Australia’s aging population Total committed exposures (TCE) $2.5bn $2.7bn $2.9bn • Stress decrease
Slide 92: Areas of interest: Mining and Australian Agriculture
Areas of interest: Mining and Australian Agriculture Credit Quality 92 Mining (inc. oil and gas) portfolio Mining portfolio (TCE) Iron Ore and Oil prices ($)3 by sector (%) Mar-18 Sep-18 Mar-19 Iron ore (USD/t) 4 Crude oil (USD/bbl)5 8 Westpac Total committed 8 Economics $9.3bn $10.7bn $9.8bn foreca
Slide 93: Australian consumer unsecured lending, 3% of Group loans
Australian consumer unsecured lending, 3% of Group loans Credit Quality 93 Australian consumer unsecured lending portfolio1 90+ day delinquencies (%) by State NSW/ACT VIC/TAS QLD WA SA/NT Mar-18 Sep-18 Mar-19 3.00 Hardship reporting changes commenced2 Lending $21.8bn $21.1bn $20.7bn 2.00 30+ day del
Slide 94: Australian consumer unsecured lending portfolios
Australian consumer unsecured lending portfolios Credit Quality 94 Auto finance portfolio 90+ day delinquencies (%) Auto finance portfolio ($m) – reduced over last 2 years Auto loans Auto loans 9,000 Auto Finance performing loans balance ($m lhs) 1,600 4.00 ex-hardship Auto Finance 90+ day delinquen
Slide 95: Australian mortgage portfolio performance
Australian mortgage portfolio performance Credit quality 95 Australian mortgage delinquencies and properties in possession (PIPs) Mar-18 Sep-18 Mar-19 Housing lending portfolio by State (%) 30+ day delinquencies (bps) 144 140 159 Australian banking system1 90+ day delinquencies (bps) (includes impai
Slide 96: Australian mortgage portfolio composition
Australian mortgage portfolio composition Credit quality 96 Mar-18 Sep-18 Mar-19 1H19 Australian mortgage portfolio balance balance balance Flow1 Australian mortgage portfolio composition5 (%) Bars may not add due to rounding Total portfolio ($bn) 437.2 444.7 447.2 30.1 100 5 4 Owner occupied (%) 56
Slide 97: Australian mortgage portfolio – borrower equity sound
Australian mortgage portfolio – borrower equity sound Credit quality 97 Australian housing loan-to-value ratios (LVRs) (%) Australian housing loan-to-value ratios (LVRs) (%) 100 1H19 drawdowns LVR at origination % of total portfolio 90 Portfolio LVR at origination % of total portfolio where dynamic
Slide 98: Australian mortgage portfolio underwriting
Australian mortgage portfolio underwriting Credit quality 98 Notable changes to Westpac mortgage lending standards Australian mortgage portfolio by year 2014 • 10% limit on investment property lending growth announced – implemented by 30 September 2015 of origination (% of total book) Calendar year
Slide 99: Australian mortgage portfolio repayment buffers
Australian mortgage portfolio repayment buffers Credit quality 99 Mortgage interest rate buffers (%) Westpac Australian offset account balances2 ($bn) Westpac owner occupied SVR inc package discount • Borrowers applying 1 Linked to I/O mortgages Linked to P&I mortgages . for a mortgage must Westpac
Slide 100: Interest only (I/O) portfolio
Interest only (I/O) portfolio Credit quality 100 I/O portfolio (%) Switching from I/O to P&I1 ($m) Variable mortgage interest rates2 (%) % of total portfolio (at period end) Reached end of I/O period Customer initiated at 12 April 2019 % of all new flows by new lending (6 mnth) Owner occupied Invest
Slide 101: Performance of interest only mortgages
Performance of interest only mortgages Credit quality 101 Interest only (I/O) lending Australian I/O loan portfolio balances ($bn) • I/O loans assessed on a principal and interest basis 250 I/O performing loans balance (lhs) 14 – Loans originated prior to 2015 were assessed on a principal and intere
Slide 102: Australian investment property portfolio
Australian investment property portfolio Credit quality 102 Mortgage applications by Investment property portfolio by LVR at origination (%) number of properties per customer (%) gross income band (%) Owner occupied IPL Owner occupied IPL 1 1 30 50 1 25 40 20 7 2 2 30 15 3 10 20 26 5 10 4 62 0 0 5 <
Slide 103: Australian mortgage deep dive
Australian mortgage deep dive Credit quality 103 Australian mortgage lending1 by origination date, dynamic LVR2 and income bands (%) Chart may not add due to rounding Year of origination <2011 2011-14 2015+ Gross income bands 79 >$250k 7 67 $100k - $250k 11 <$100k 33 42 38 35 7 8 25 3 23 20 38 15 19
Slide 104: Lenders mortgage insurance arrangements
Lenders mortgage insurance arrangements Credit quality 104 Lenders mortgage insurance (LMI) Lenders mortgage insurance arrangements • Where mortgage insurance is required, mortgages LVR Band Insurance are insured through Westpac’s captive mortgage insurer, Westpac Lenders Mortgage Insurance1 • LVR ≤
Slide 105: Mortgage portfolio stress testing outcomes
Mortgage portfolio stress testing outcomes Credit quality 105 • Westpac regularly conducts a range of portfolio stress tests as part of its Australian mortgage portfolio stress testing regulatory and risk management activities • The Australian mortgage portfolio stress testing scenario presented her
Slide 106: Capital, Funding and Liquidity
Capital, Funding and Liquidity
Slide 107: Organic capital generation offset by impact of notable items
Organic capital generation offset by impact of notable items Capital, Funding and Liquidity 107 CET1 capital ratio (%) and CET1 capital ($bn) Highlights (APRA basis) Westpac CET1 capital (lhs, $bn) • CET1 ratio up 1bp from September 2018 Westpac CET1 capital ratio (rhs, %) CET1 ratio of 10.64% • Org
Slide 108: Current proposals on the capital framework
Current proposals on the capital framework1 Capital, Funding and Liquidity 108 First half 2019 Second half 2019 2020 2021 2022 Standardised approach Consult Finalise Implementation to credit risk Advanced approach Consult, Quantitative impact study Implementation to credit risk Operational risk Cons
Slide 109: RBNZ capital proposals
RBNZ capital proposals Capital, Funding and Liquidity 109 Summary of proposals Potential WNZL implications Potential Group implications In December 2018, the RBNZ released a paper WNZL’s Tier 1 capital ratio was 14.5% at 31 Assuming a further $2.0 – $2.5bn2 of Tier 1 capital “Capital Review Paper 4:
Slide 110: CET1 capital ratio, top quartile globally
CET1 capital ratio, top quartile globally Capital, Funding and Liquidity 110 Capital ratios Key capital ratios (%) APRA basis Internationally comparable basis1 % Mar-18 Sep-18 Mar-19 BIS 75th percentile2 21.3 CET1 capital ratio 10.5 10.6 10.6 19.1 Additional Tier 1 capital 2.3 2.2 2.2 16.2 Tier 1 ca
Slide 111: CET1 capital ratio and RWA movements
CET1 capital ratio and RWA movements Capital, Funding and Liquidity 111 CET1 capital ratio (% and bps) 16.17 96 (77) 8 7 (7) (25) 10.50 10.63 4 (5) 10.64 Organic Other Items (+27bps) (-26bps) Up 1 basis point Mar-18 Sep-18 Cash Final dividend Dividend Ordinary Other capital Notable Other items FX Ma
Slide 112: Well placed on internationally comparable CET1 and leverage ratios
Well placed on internationally comparable CET1 and leverage ratios Capital, Funding and Liquidity 112 Common equity Tier 1 ratio (%)1 20% 15% Standard Chartered China Construction Bank Credit Agricole SA Toronto Dominion Bank China Merchants Bank Norinchukin Bank 10% JPMorgan Chase Societe Generale
Slide 113: Internationally comparable capital ratio reconciliation
Internationally comparable capital ratio reconciliation Capital, Funding and Liquidity 113 APRA’s Basel III capital requirements are more conservative than those of the Basel Committee on Banking Supervision (BCBS), leading to lower reported capital ratios by Australian banks. In July 2015, APRA pub
Slide 114: A$22bn new term funding raised in 1H19
A$22bn new term funding raised in 1H19 Capital, Funding and Liquidity 114 Term debt issuance and maturity profile1,2,3 ($bn) Lengthening funding profile Covered bond Hybrid Senior/Securitisation Sub debt ahead of NSFR transition 42 Issuance Maturities 37 33 31 32 32 30 24 22 20 21 18 14 6 FY14 FY15
Slide 115: Funding and liquidity metrics
Funding and liquidity metrics Capital, Funding and Liquidity 115 Funding composition by residual maturity (%) Liquidity coverage ratio (LCR)3 (%) LCR 133% LCR 138% 133.5 133.7 1 5 5 Wholesale Onshore <1yr 100.4 97.0 16 7 9 Wholesale Offshore <1yr 1 20 4 4 Wholesale Onshore >1yr Net cash outflows Liq
Slide 116: Divisional Results
Divisional Results
Slide 117: Consumer Bank earnings reflect challenging environment
Consumer Bank earnings reflect challenging environment Consumer 117 Cash earnings ($m) Key financial metrics AIEA up 1%, margin up Lower card Change Higher impairment 3bps (ex notable items) fees and FX 1H18 2H18 1H19 on 2H18 charges driven by from improved mortgage revenue mortgage delinquencies, a
Slide 118: 1H19 performance reflects the challenging environment
1H19 performance reflects the challenging environment Consumer 118 Revenue ($m) Core earnings ($m) Cash earnings ($m) Revenue reduced by notable Core earnings reduced by Cash earnings reduced by items of 2H18:($105m) notable items of notable items of 1H19:($47m) 2H18:($144m) 1H19:($16m) 2H18:($110m)
Slide 119: Improving the customer experience through digital
Improving the customer experience through digital Consumer 119 Innovation Digitising Making it easier to connect Term deposit pricing platform St.George online home loan application Digital Mail3 • Platform allowing customers to view, accept and • Applications can be completed online or via mobile •
Slide 120: Business Bank, headline results impacted by remediation provisions
Business Bank, headline results impacted by remediation provisions, up 5% excl. notable items Business 120 Cash earnings ($m) Key financial metrics Change 1H18 2H18 1H19 on 2H18 AIEA flat. Margins up 7bps Impairment charges (ex notable items) from Lower lending volumes lower due to a reduction Reven
Slide 121: 1H19 performance impacted by notable items
1H19 performance impacted by notable items Business 121 Revenue ($m) Core earnings ($m) Cash earnings ($m) Revenue lower from Core earnings lower from Cash earnings lower from notable items of notable items of notable items of 1H19:($174m) 2H18:($5m) 1H19:($188m) 2H18:($5m) 1H19:($131m) 2,677 1,710
Slide 122: Transforming the Business Bank
Transforming the Business Bank Business 122 Investing in bankers Digital for customers Payment and transaction solutions Enabling bankers to build great Empowering more customers Helping customers take customer relationships through industry with online capabilities such as and make payments, meet c
Slide 123: BTFG, committed to putting it right
BTFG, committed to putting it right: announced wealth reset, repriced platforms and ceased grandfathered commission payments BT Financial Group 123 Cash earnings (CE) ($m) ($m) Key financial metrics Weaker market performance Change on and lower advice revenue from 1H18 2H18 1H19 2H18 reduced activit
Slide 124: Sound fundamentals
Sound fundamentals BT Financial Group 124 Funds ($bn) Insurance premiums ($m) Insurance claims rates (%) Legacy platforms Panorama Superannuation Group Life in-force premiums General Insurance Life Insurance Packaged funds Other Retail Life in-force premiums 205.6 203.1 191.5 191.4 197.7 General Ins
Slide 125: Meeting customers' wealth needs via digital
Meeting customers’ wealth needs via digital BT Financial Group 125 New and improved customer services Digitising insurance: improving customer experience Panorama Quote and Buy tool for H&C launched in 1H19 Voted No1 investment platform for online business Improved design, redesigned questions t
Slide 126: Panorama: supporting advisers and investors
Panorama: supporting advisers and investors BT Financial Group 126 New pricing structure success measures FUA on Panorama ($m) Investors on Panorama (#) since 1st October 2018: 1,066 new advisers registered on Panorama 32,444 7,152 accounts on Asgard Open eWrap and 17,041 20,685 accounts on BT W
Slide 127: WIB discipline delivers a solid performance
WIB discipline delivers a solid performance Westpac Institutional Bank 127 Cash earnings ($m) Key financial metrics Non-repeat of Hastings fees Change ($180m) in 2H18 partly offset by higher trading Non-repeat of Hastings 1H18 2H18 1H19 on 2H18 Hastings income costs ($121m) in 2H18 cash earnings imp
Slide 128: Maintaining focus on returns
Maintaining focus on returns Westpac Institutional Bank 128 Deposits ($bn) Net loans ($bn) Risk weighted assets ($bn) Lower government balances, Reduced utilisation of partly offset by higher mortgage warehouse facilities corporate term deposits 77.3 77.0 78.1 104.9 99.0 95.7 76.3 77.4 76.5 Down 9%
Slide 129: Opportunities in Institutional banking
Opportunities in Institutional banking Westpac Institutional Bank 129 Westpac • Leading financial markets, financing and transactional banking product capability • Deep expertise and industry insights Institutional Bank • Digital and banker-led service aligned to customer needs Infrastructure Renewa
Slide 130: Sound NZ earnings
Sound NZ earnings New Zealand 130 Cash earnings (NZ$m) Key financial metrics AIEA up 2% and margin down 2bps Increase in risk management Change from product mix changes offset by and compliance expenses 1H18 2H18 1H19 on 2H18 higher business spreads Revenue (NZ$m) 1,174 1,190 1,248 5% 52 (16) Net in
Slide 131: New Zealand key metrics
New Zealand key metrics1 New Zealand 131 Revenue ($m) Core earnings ($m) Cash earnings ($m) 1,248 768 555 726 534 1,190 708 508 1,174 686 1,158 482 1,099 463 622 1H17 2H17 1H18 2H18 1H19 1H17 2H17 1H18 2H18 1H19 1H17 2H17 1H18 2H18 1H19 Expense to income ratio (%) Net interest margin (%) Loans ($bn)
Slide 132: Improving the customer experience through digital and new services
Improving the customer experience through digital and new services New Zealand 132 Digital for customers Making it easier for customers Deeper customer relationships Digital sales1 (%) • Apple pay Solutions based on customer goals launched 2nd April, • Your Story2, is a tool, allows customers to use
Slide 133: Balance sheet drivers
Balance sheet drivers New Zealand 133 New Zealand net loans (NZ$bn) New Zealand deposits (NZ$bn) 80.4 0.7 1.0 82.1 79.1 0.9 1.4 64.2 61.6 61.9 Up 2% Up 4% Mar-18 Sep-18 Consumer Business Mar-19 Mar-18 Sep-18 Consumer Business Mar-19 New Zealand customer loans (NZ$bn) and % of total New Zealand custo
Slide 134: Stressed exposures remain low
Stressed exposures remain low New Zealand 134 Business stressed exposures as a % of New Zealand business TCE Watchlist & substandard Property 13.2 90+ day past due (dpd) and not impaired Impaired 8 16 Manufacturing 6 6 6 Agriculture, 9.6 6.8 forestry & fishing 5.5 5.3 Wholesale trade 4.9 4.4 4.4 3.4
Slide 135: Consumer credit quality in good shape
Consumer credit quality in good shape New Zealand 135 Mortgage 90+ Mortgages 90+day daydelinquencies daysdelinquencies past due (%)(%) Unsecured consumer 90+ day delinquencies (%) 1.5 1.0 Portfolio run-off and operational changes 1.02 1.0 0.5 0.5 0.14 0.0 0.0 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-1
Slide 136: Economics
Economics
Slide 137: Australian and New Zealand economic forecasts
Australian and New Zealand economic forecasts Economics 137 Calendar year Key economic indicators (%) as at April 2019 2017 2018 2019F World GDP1 3.8 3.6 3.5 Australia GDP2 2.4 2.3 2.2 Private consumption2 2.8 2.0 2.2 Business investment2,3 6.9 -0.2 1.0 Unemployment – end period 5.5 5.0 5.5 CPI head
Slide 138: Australian economic snapshot
Australian economic snapshot Economics 138 Australian economy key statistics Inflation remains subdued1 Labour market to cool (latest available as at 30 April 2019) Avg RBA core CPI %qtr (rhs) %qtr % %yr Unemployment rate smoothed 8 Headline CPI %yr (lhs) 3.2 10.0 GDP 2.3% 7 Avg RBA core CPI %yr (lh
Slide 139: The Australian economy
The Australian economy Economics 139 NSW and Victoria 58% of population and employment Services employ a large part of the Australian workforce Output 2018 - sector contribution to GDP (%)1 Services Mining 54% Manufacturing 9 18 Construction 7 Transport, Utilities 9 Wholesale, Retail 10 Agriculture
Slide 140: Australian economic outlook: slower growth ahead
Australian economic outlook: slower growth ahead Economics 140 Australia: 27 years of uninterrupted growth %ann %ann Quarterly GDP Annual GDP period averages 8 8 6 6 4 4 2 2 0 0 -2 -2 1988 1992 1996 2000 2004 2008 2012 2016 2020 Sources: ABS, Westpac Economics. Australian growth mix: shifting driver
Slide 141: Public sector supporting growth; service exports solid
Public sector supporting growth; service exports solid Economics 141 Budget balance: return to surplus in 2019/20 Services exports rising % of GDP Underlying cash balance $bn $bn Rolling annual, nominal $bn 4 f/cs 40 40 40 Education $bn (rhs) % of GDP (lhs) to 2022/23 35 35 Total service exports: +9
Slide 142: Australia's commodity prices holding up
Australia’s commodity prices holding up Economics 142 Australia: key commodity exports ($bn) Australia: commodity prices (index) $bn $bn index index Iron ore Coal LNG RBA non-rural commodity price index 8 8 200 AUD USD 200 7 7 180 180 6 6 160 160 5 5 140 140 4 4 120 120 3 3 100 100 2 2 80 80 1 1 60
Slide 143: Some headwinds for the Australian consumer
Some headwinds for the Australian consumer Economics 143 Australian wage inflation remains low Consumer spending constrained by income growth %yr Australian wage inflation (% ann) Australian consumer spending (% ann) vs labour income (% ann) 8 Aus private sector wages % ann Labour income real 7 Mini
Slide 144: The Australian housing market in a period of adjustment
The Australian housing market in a period of adjustment Economics 144 Australian dwelling prices Finance approvals index All dwellings (index, Jan 2004 = 100) index $bn Value of housing finance commitments ($bn) $bn 14 14 230 230 'Upgraders' Rest of Australia 12 12 Investors 210 Other capitals 210 1
Slide 145: Quality of banks' new lending continues to improve
Quality of banks’ new lending continues to improve Economics 145 Change in composition of housing credit Introduction of differentiated mortgage pricing Australian housing credit growth (6mth % change annualised) % Mortgage interest rates (major bank average) % 7.5 10% limit on investment 30% limit
Slide 146: Physical supply/demand fundamentals remain sound across wider market
Physical supply/demand fundamentals remain sound across wider market Economics 146 Dwelling supply has not kept pace with stronger demand Rental vacancy rates Population versus dwelling stock (annual average change ‘000) ‘000 Rental vacancy rates (%, quarterly, annual average) ‘000 % 450 Population
Slide 147: Australian household balance sheets
Australian household balance sheets Economics 147 Affordability & buyer sentiment Australian household debt to income ratio remains high index Buyer sentiment (Time to buy dwelling) (lhs) % Australian households debt to income ratio (%) 200 12 Total (gross) debt Forecasts Affordability (rhs)* 200 en
Slide 148: Australia's high rise apartment market – past the peak
Australia’s high rise apartment market – past the peak although supply still coming online Economics 148 Aggregate supply/demand fundamentals remain positive Dwelling construction: indicative completion times1 Population versus dwelling stock (annual average change ‘000) ‘000 % % ‘000 Population Tot
Slide 149: New Zealand economic snapshot – growth has taken a step down
New Zealand economic snapshot – growth has taken a step down Economics 149 New Zealand economy key statistics GDP growth has cooled Spending to slow as housing cools (latest available as at 30 April 2019) GDP (%) House prices and household spending % % % 6 6 House price inflation % 30 6 GDP1 2.8% Qt
Slide 150: The New Zealand economy
The New Zealand economy Economics 150 Regional GDP NZ output and employment Total nominal GDP 2018: $293bn Output 2018 - sector contribution to GDP (%) Population 4.9 mil Primary industries 3 7 Construction 11 7 Northland, $7bn Electricity / Gas / Water 4% of population 5 3 3 Food Manufacturing Manu
Slide 151: New Zealand economic indicators
New Zealand economic indicators Economics 151 Inflation off its lows, still moderate Export prices remain favourable % Inflation (%) % NZ export commodity price index (world prices) Index 6 6 450 Meat,skins & wool Forestry Dairy CPI inflation Forecast 5 5 400 CPI excluding petrol 350 4 4 300 3 3 250
Slide 152: New Zealand housing market expected to be dampened by policy changes
New Zealand housing market expected to be dampened by policy changes Economics 152 Policy changes have softened housing demand… …and a period of subdued price growth is expected New Zealand house prices by region (index) New Zealand house prices (nationwide, %) 220 220 20 20 NZ ex Auckland and Cante
Slide 153: Appendix and Disclaimer
Appendix and Disclaimer
Slide 154: Appendix 1: Cash earnings adjustments
Appendix 1: Cash earnings adjustments Appendix and Disclaimer 154 Cash earnings 1H18 2H18 1H19 adjustment $m $m $m Description Reported net profit 4,198 3,897 3,173 Net profit attributable to owners of Westpac Banking Corporation Identifiable intangible assets arising from business acquisitions are
Slide 155: Appendix 2: Sustainability
Appendix 2: Sustainability Appendix and Disclaimer 155 Industry awards1 Sustainability indexes1 Inclusion and diversity recognition1 Awarded Bronze Class ranking A world leader and member of DJSI World, DJSI Asia Pacific, Included in the 2019 in RobecoSAM’s 2019 and DJSI Australia Indexes Bloomberg
Slide 156: Appendix 2: Sustainability
Appendix 2: Sustainability Appendix and Disclaimer 156 Key commitments and partnerships1 Principles for Responsible Banking Principles for Responsible Investment UN Sustainable Development Goals Paris Climate Agreement Founding bank of the PRBs, and first to report Signatory (2007) CEO Statement of
Slide 157: Appendix 3: Definitions – Divisions
Appendix 3: Definitions – Divisions Appendix and Disclaimer 157 Consumer Bank (CB) is responsible for sales and service to consumer customers in Australia under the Westpac, St.George, BankSA, Bank of Westpac Institutional Bank (WIB) delivers a broad range of financial Melbourne and RAMS brands. Act
Slide 158: Appendix 3: Definitions – Credit quality
Appendix 3: Definitions – Credit quality Appendix and Disclaimer 158 Includes facilities where: For financial assets that are non-performing a provision for lifetime Stage 3 Lifetime • contractual payments of interest and / or principal are 90 or more expected losses is recognised. Interest revenue
Slide 159: Appendix 3: Definitions – Earnings, capital and liquidity
Appendix 3: Definitions – Earnings, capital and liquidity Appendix and Disclaimer 159 Earnings Drivers As defined by APRA (unless stated otherwise). Tier 1 capital divided by ‘exposure measure’ and expressed as a percentage. ‘Exposure measure’ Leverage ratio is the sum of on-balance sheet exposures,
Slide 160: Appendix 3: Definitions – Other
Appendix 3: Definitions – Other Appendix and Disclaimer 160 3 month rolling Retail Market Monitor data (survey conducted by Camorra Data based on DBM Consultants, Respondents aged 18+ and 12 month Research). Main bank customers are asked to rate the overall level of rolling. Wealth penetration is de
Slide 161: Appendix 3: Definitions – Other
Appendix 3: Definitions – Other Appendix and Disclaimer 161 Source: DBM Consultants Business Financial Services Monitor, 12 months Commercial MFI to March 2019, MFI customers, Commercial businesses. Commercial NPS – overall Source: DBM Consultants Consumer Atlas, March 2017 – March 2019, share busin
Slide 162: Investor Relations Team
Investor Relations Team Contact us 162 Investor Relations Team www.westpac.com.au/investorcentre Andrew Bowden Nicole Mehalski Annual reports Presentations and webcasts Head of Investor Relations Director +61 2 8253 4008 +61 2 8253 1667 5 year financial summary andrewbowden@westpac.com.au nicole.meh
Slide 163: Disclaimer
Disclaimer 163 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 be relied upon as