Westpac Banking Corporation · ASX:WBC
Westpac Banking — Debt Investor Presentation (February 2018)
39 slides from Westpac Banking's debt investor presentation, Feb 5, 2018
Slide 1: Westpac Capital Notes 5 Investor Presentation
NOT FOR DISTRIBUTION IN THE UNITED STATES For personal use only 200 years proudly supporting Australia Westpac Capital Notes 5 Investor Presentation WARNING – Westpac Capital Notes 5 are not deposit liabilities of Westpac, are riskier than bank All amounts are in Australian dollars unless otherwise
Slide 2: Disclaimer
2 Disclaimer For personal use only THIS PRESENTATION IS NOT FOR DISTRIBUTION IN THE UNITED STATES. YOU SHOULD CONSIDER AND READ THE PROSPECTUS IN FULL BEFORE DECIDING WHETHER TO INVEST IN WESTPAC CAPITAL NOTES 5. This presentation has been prepared and authorised by Westpac Banking Corporation (ABN
Slide 3: Disclaimer (continued)
3 Disclaimer (continued) For personal use only No representation or warranty, express or implied, is made as to the accuracy, adequacy, currency, completeness or reliability of any statements, estimates or opinions or other information contained in this presentation. To the maximum extent permitted
Slide 4: Summary of terms and conditions
Westpac Capital Notes 5 Summary of terms and conditions 4 Issuer • Westpac Banking Corporation (“Westpac”) For personal use only Quotation • Expected to be quoted on ASX under code WBCPH Size • Approximately A$750 million with the ability to raise more or less • Notes will qualify as Additional Tier
Slide 5: Summary of terms and conditions (continued)
Westpac Capital Notes 5 Summary of terms and conditions (continued) 5 For personal use only Capital Trigger Event • A Capital Trigger Event occurs if Westpac determines, or APRA notifies Westpac in writing that it believes, that Westpac’s Common Equity Tier 1 Capital Ratio is equal to or less than 5
Slide 6: Comparison to other Westpac Group ASX listed Additional Tier 1 Securities
Comparison to other Westpac Group ASX listed Additional Tier 1 Securities1 6 Westpac Capital Notes 5 Westpac Capital Notes 4 Westpac CPS For personal use only ASX code WBCPH2 WBCPG WBCPC Issue date • 13 March 2018 • 30 June 2016 • 23 March 2012 Term • Perpetual with the first possible Scheduled • Pe
Slide 7: Westpac has limited annual Additional Tier 1 needs
Westpac has limited annual Additional Tier 1 needs 7 For personal use only Consistently managed AT1 around 1.5% - 2.0% of RWA Annual issuance in the range of AUD1.3bn - $1.7bn Westpac capital ratios (APRA basis, %) Westpac Basel . III AT1 issuance from FY13 (notional amount, AUD m) USD issuance • $8
Slide 8: Westpac offers a strong franchise, consistent strategy and solid financial performance
Westpac offers a strong franchise, consistent strategy and solid financial performance 8 For personal use only Consistent strategy for creating value Cash earnings ($bn) Market share in core segments • Continued discipline: Focus on strength and Customers2 13.8m return over growth 8.1 7.6 7.8 7.8 7.
Slide 9: Westpac capital levels well positioned for 'unquestionably strong'
Westpac capital levels well positioned for ‘unquestionably strong’ 9 For personal use only CET1 capital ratio (%) and CET1 capital ($bn) (APRA basis) Key capital ratios (%) Westpac CET1 capital (lhs, $bn) APRA Level 2 basis Mar-17 Sep-17 Dec17 APRA’s unquestionably strong benchmark is 10.5%, under t
Slide 10: Well placed on internationally comparable CET1 and leverage ratios
Well placed on internationally comparable CET1 and leverage ratios 10 For personal use only Common equity Tier 1 ratio (%) 25% 20% 16.2% 15% 10% 5% 0% Deutsche Bank Lloyds Credit Suisse Barclays Bank of America Scotiabank Westpac Credit Agricole SA Toronto Dominion Bank Rabobank Wells Fargo Santande
Slide 11: Significant capital and earnings buffers
Significant capital and earnings buffers 11 For personal use only Distribution Restriction Trigger1 Indicative Level 2 buffers3 Potential measures available to Westpac to strengthen capital • DRP discount and/or DRP underwrite • New share issuance CET1 10.1% FY17 $12.4bn • RWA management as at earni
Slide 12: Offer Summary
Westpac Capital Notes 5 Offer Summary 12 For personal use only • The Offer is for the issue of Westpac Capital Notes 5 at an Issue Price of A$100 to raise approximately A$750 million, with the ability to raise more or less • The Offer includes a Reinvestment Offer, which is a priority offer to Eligi
Slide 13: Priority Reinvestment Offer for Eligible Westpac CPS Holders
Priority Reinvestment Offer for Eligible Westpac CPS Holders 13 For personal use only • A priority offer to Eligible Westpac CPS Holders to apply to reinvest some or all of their Westpac CPS in Notes through the Reinvestment Offer Reinvestment Offer • An Eligible Westpac CPS Holder is: Who can parti
Slide 14: Key dates
Key dates 14 For personal use only KEY DATES FOR THE OFFER KEY DATES FOR WESTPAC CAPITAL NOTES 5 Record date for determining Eligible Securityholders 29 January 2018 Record Date for first Distribution 14 June 2018 (7.00pm Sydney time) Announcement of Offer and lodgement of First Distribution Payment
Slide 15: Key risks
Westpac Capital Notes 5 key risks 15 For personal use only • Warning - Westpac Capital Notes 5 are not deposit liabilities of • There is a risk that Distributions will not be paid. Distributions are Westpac, are riskier than bank deposits and may not be suitable for discretionary, non-cumulative and
Slide 16: Key risks (continued)
Westpac Capital Notes 5 key risks (continued) 16 For personal use only • In the event of a Winding Up, if the Notes are still on issue and have not • The Ordinary Share price used to calculate the number of Ordinary been Redeemed or Converted, they will rank ahead of Ordinary Shares, Shares to be is
Slide 17: Information on Westpac Banking Corporation
For personal use only 200 years proudly supporting Australia Information on Westpac Banking Corporation All amounts are in Australian dollars unless otherwise indicated
Slide 18: Full Year 2017 financial performance
Full Year 2017 financial performance 18 % Change For personal use only FY17 Cash Earnings Results FY17 FY17-FY16 Net interest margin (%) Financial results (A$m) NIM NIM excl. Treasury & Markets Net operating income 21,556 2 Expenses (9,105) 2 Net profit before impairment charges and 12,451 1 income
Slide 19: Well progressed on FY18 term funding
Well progressed on FY18 term funding 19 For personal use only 1Q18 funding and liquidity highlights 1Q18 new term issuance composition1 (%) • LCR 116% (124% at 30 September 2017) By type By currency • Estimated NSFR 110% (109% at 30 September 2017) • Well progressed on FY18 term funding plan, with $
Slide 20: Impaired assets and stressed assets lower
Impaired assets and stressed assets lower 20 For personal use only Stressed exposures as a % of TCE (%) New and increased gross impaired assets ($m) Impaired 1,748 90+ day past due and not impaired 1,519 Watchlist & substandard 1,343 1,218 1,194 3.20 . 1,060 997 1,078 3.09 958 708 609 607 633 589 47
Slide 21: Asset quality areas of interest
Asset quality areas of interest 21 For personal use only Mining (inc. oil and gas) portfolio New Zealand dairy portfolio Retail trade portfolio Sep-17 Dec-17 Sep-17 Dec-17 Sep-17 Dec-17 Total committed exposures (TCE) $9.7bn $9.7bn Total committed exposure NZ$6.0bn NZ$6.0bn Total committed exposures
Slide 22: Australian consumer unsecured lending
Australian consumer unsecured lending 22 For personal use only Australian consumer unsecured lending portfolio 90+ day delinquencies (%) - By State Mar-17 Sep-17 Dec-17 NSW/ACT VIC/TAS QLD WA SA/NT 30+ day delinquencies (%) 3.99 3.60 3.76 3.0 90+ day delinquencies (%) 1.63 1.66 1.66 2.0 Estimated im
Slide 23: Australian mortgage delinquencies remain low
Australian mortgage delinquencies remain low 23 For personal use only Australian mortgage delinquencies and properties in possession (PIPs) Mar-17 Sep-17 Dec-17 Australian mortgage portfolio delinquencies 90+ day past due total 90+ day past due investor 30+ day delinquencies (bps) 139 130 135 3.0 30
Slide 24: Australian mortgage portfolio well collateralised
Australian mortgage portfolio well collateralised 24 Sep-16 Mar-17 Sep-17 2H17 For personal use only Australian mortgage portfolio Australian housing loan-to-value ratios (LVRs)5 (%) balance balance balance flow1 Total portfolio ($bn) 404.2 413.9 427.2 40.3 100 FY17 drawdowns LVR at origination Owne
Slide 25: Mortgages - comfortably operating within macro-prudential limits
Mortgages - comfortably operating within macro-prudential limits 25 For personal use only Flow of interest only1 (% of total limits) Switching from I/O to P&I2 ($m) Mortgage lending growth (%) New interest only flows now <30% Customers switching to P&I Investor lending3 growth remaining <10% Applica
Slide 26: Impact of macro-prudential measures on the Australian mortgage market
Impact of macro-prudential measures on the Australian mortgage market 26 For personal use only Change in composition of housing credit Introduction of differentiated mortgage pricing Australian housing credit growth (6mth % change annualised) % Mortgage interest rates (major bank average) % 10% limi
Slide 27: Housing market fundamentals
Housing market fundamentals 27 For personal use only Dwelling prices cooling Aggregate supply/demand fundamentals remain positive Change in Australian dwelling prices (annual %) Population versus dwelling stock (annual average change ‘000) rate cuts macro-prudential tightening Population Dwelling st
Slide 28: Australian economic snapshot
Australian economic snapshot 28 For personal use only Australian economy key statistics Continued strength in commodity Global conditions have improved (latest available as at January 2018) prices index 60 USD/t Iron ore (TSI 62% GDP 2.8% 340 fines benchmark) Westpac f/c’s 55 to Mar 2019 300 Coking
Slide 29: Additional information and appendices
For personal use only 200 years proudly supporting Australia Additional information and appendices All amounts are in Australian dollars unless otherwise indicated
Slide 30: Appendix 1: Additional Information
Appendix 1: Westpac Capital Notes 5 Additional Information 30 For personal use only Distributions • Non-cumulative, floating rate Distributions paid quarterly in arrear • Expected to be fully franked (if not fully franked the cash amount of the Distribution will be increased to compensate for the un
Slide 31: Appendix 1: Additional Information
Appendix 1: Westpac Capital Notes 5 Additional Information Scheduled Conversion 31 For personal use only Scheduled • On 22 September 2027 “Scheduled Conversion Date”, subject to the Scheduled Conversion Conditions being satisfied, the Notes will mandatorily Conversion Convert into Ordinary Shares •
Slide 32: Appendix 1: Additional Information
Appendix 1: Westpac Capital Notes 5 Additional Information Summary of certain events that may occur 32 The table below is a summary of certain events that may occur while the Notes are on issue and what Holders may receive under the Westpac Capital Notes 5 Terms. The events may not For personal use
Slide 33: Appendix 2: Westpac Tier issuance
Appendix 2: Westpac Tier 2 issuance 33 For personal use only Westpac Tier 2 capital1 as at 30 Sep 2017 (notional amt, %) Westpac Tier 2 capital1 as at 30 Sep 2017 (notional amt, %) Basel III and Basel III Transitional capital Tier 2 capital by currency2 AUD EMTN 3 1 9 AUD Domestic MTN 21 4 3 Basel I
Slide 34: Appendix 3: Internationally comparable capital ratio reconciliation
Appendix 3: Internationally comparable capital ratio reconciliation 34 For personal use only 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 p
Slide 35: Appendix 4: Cash earnings adjustments
Appendix 4: Cash earnings adjustments 35 Cash earnings adjustment FY17 FY16 Description For personal use only Reported net profit 7,990 7,445 Net profit attributable to owners of Westpac Banking Corporation The merger with St.George and acquisition of Lloyds resulted in the recognition of identifiab
Slide 36: Appendix 5: Definitions
Appendix 5: Definitions 36 For personal use only Capital ratios As defined by APRA (unless stated otherwise) The NSFR is defined as the ratio of the amount of available stable funding (ASF) to the amount of required stable funding Assets (both on and off-balance sheet) are risk weighted (RSF) define
Slide 37: Appendix 5: Definitions (continued)
Appendix 5: Definitions (continued) 37 Total Represents the sum of the committed portion of direct lending Loans not found to be individually impaired or significant will be For personal use only committed (including funds placement overall and deposits placed), contingent collectively assessed in p
Slide 38: Appendix 6: Joint Lead Managers
Appendix 6: Joint Lead Managers 38 For personal use only ARRANGER AND JOINT LEAD MANAGER • Allan O’Sullivan (02) 8254 1425 Westpac Institutional Bank • Ryan Evans (02) 8254 4694 JOINT LEAD MANAGERS ANZ Securities Limited • Tariq Holdich (02) 8037 0622 • Truong Le (02) 9118 1205 Commonwealth Bank of
Slide 39: More information
More information | www.westpac.com.au/investorcentre 39 For personal use only + - X Key Treasury contacts Curt Zuber Joanne Dawson Guy Volpicella Treasurer, Westpac Banking Corporation Deputy Treasurer, Westpac Banking Corporation Head of Structured Funding & Capital +61 2 8253 4230 +61 2 8204 2777
Westpac Banking — Debt Investor Presentation (February 2018) on 6ix