Slide 1: Full Year Results 2011
WESTPAC GROUP For personal use only FULL YEAR RESULTS 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion
Slide 2: Index
INDEX For personal use only PRESENTATION OF FY11 RESULT ............................................................................................................................................................................................................ 3 CEO summary 4 CFO details 10 CEO stra
Slide 3: Full Year Presentation 2011
WESTPAC GROUP For personal use only FULL YEAR PRESENTATION 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 3
Slide 4: CEO Summary
WESTPAC GROUP For personal use only FULL YEAR CEO SUMMARY 2011 Gail Kelly Chief Executive Officer WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 4
Slide 5: Sound Financial Result
SOUND FINANCIAL RESULT For personal use only change FY11 FY10 – FY11 Cash earnings $6,301m 7% Cash EPS 209.3c 6% Reported NPAT $6,991m 10% Core earnings1 $10,017m 1% Impairment charges to average loans 20bps (10bps) Tier 1 capital ratio 9.7% 59bps Return on ordinary equity (cash basis) 1
Slide 6: Retail/Wealth Strength Partly Offset by Markets
RETAIL/WEALTH STRENGTH PARTLY OFFSET BY MARKETS For personal use only Cash earnings movement ($m) highlighting Treasury & Markets impact (120) 262 463 Cash Earnings up 314 (101) (134) 6,301 7% overall and up 5,879 Up 12% 12% excluding the Up 7% fall in Treasury & Markets income FY10 Net interest Non
Slide 7: Outstanding Portfolio, All Divisions Well Placed
OUTSTANDING PORTFOLIO, ALL DIVISIONS WELL PLACED For personal use only % change in Cash earnings FY10 – FY11 Delivering on investment and deepening customer Westpac RBB + 11 relationships. Strong volumes and higher margins Westpac Good customer activity, excellent asset quality, Institutional Bank l
Slide 8: Significant Progress on Strategic Agenda
SIGNIFICANT PROGRESS ON STRATEGIC AGENDA For personal use only Customer growth & deeper relationships Distinctive multi-brand platform in place • Customers with 4+ products rising; • St.George repositioned and growing wealth/insurance cross-sell improving • Successfully launched Bank of Melbourne •
Slide 9: Ensuring a Strong Company for the Long Run
ENSURING A STRONG COMPANY FOR THE LONG RUN For personal use only Tier 1 Ratio1 increased to 9.7% Strengthened liquidity to $103bn Deposit4 to Loan ratio improving Common equity ratio(%) Liquid assets ($bn) 103 Customer deposits to Other Tier 1 (%) 9.7 loans ratio (%) 63 9.1 8.1 1.6 82 59 7.8 1.6 74
Slide 10: CFO Details
WESTPAC GROUP For personal use only FULL YEAR CFO DETAILS 2011 Philip Coffey Chief Financial Officer WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 10
Slide 11: Solid Underlying Performance for Second Half
SOLID UNDERLYING PERFORMANCE FOR SECOND HALF For personal use only Core earnings movement over 2H11 by division ($m) 89 (89) 15 (86) 48 40 (Up NZ$18m) 5,017 5,000 Down 1% 1H11 WRBB WIB SBG BTFG NZ Other 1 2H11 Core earnings movements over 2H11 ($m) Cash earnings movements over 2H11 ($m) 241 (120) 5,
Slide 12: Balance Sheet, Optimising Growth/Return Mix
BALANCE SHEET, OPTIMISING GROWTH/RETURN MIX For personal use only Aust mortgages (gross loans) ($bn) Aust business1 lending ($bn) Westpac Aust housing credit2 3.2 2.6 (0.7) (3.0) 1.2 0.4 (0.3) 1H11 2H11 11.7 (0.1) 3.2 304.6 127.1 125.3 2.6 287.8 Up 6% Down 1% 0.9 1.1 Sept-10 WRBB WRBB SGB SGB Sept-1
Slide 13: Deposits Exceeded Lending Growth by $11bn
DEPOSITS EXCEEDED LENDING GROWTH BY $11BN For personal use only • Customer deposits fully supported Sources and uses of funds over FY111 ($bn) lending Sources of funds Uses of funds 25 (1) (19) • Long term wholesale funding exceeded maturities and facilitated pre-payment of 2012 Government Guarantee
Slide 14: Funding Well Managed, Liquid Assets Higher
FUNDING WELL MANAGED, LIQUID ASSETS HIGHER For personal use only • Liquid assets $103bn, up 26% on FY10 Liquid assets ($bn) with all the increase in higher quality Cash, goverment and semi-government 103 cash, govt and semi-govt paper Securities and government guaranteed paper Self securitisation 82
Slide 15: Margins Improving Through FY11
MARGINS IMPROVING THROUGH FY11 For personal use only Net interest margin movement half on half (%) Net interest margin up 4bps Net interest margin up 2bps 9bps 2.21 5bps 2bps (2bps) 2.23 Treasury & 2.17 (1bp) (1bp) (3bps) 0bps (1bp) (2bps) 0.11 Markets impact on 0.13 margin 0.14 Margin excl. Treasur
Slide 16: Markets and Treasury Lower Although Good Customer Activity
MARKETS AND TREASURY LOWER ALTHOUGH GOOD CUSTOMER ACTIVITY For personal use only • WIB Markets and Treasury income lower WIB Markets income and customer activity ($m) principally due to tougher trading conditions 459 Market trading activity Customer activity and higher volatility 356 334 221 307 84
Slide 17: Expenses Well Managed; Continued Investment
EXPENSES WELL MANAGED; CONTINUED INVESTMENT For personal use only • Additional investment Expense movements in 2H11 ($m) accounted for all the Down 1% 13 52 expense growth in 2H11 (54) 108 54 (69) • Merger and productivity 3,486 3,605 3,534 3,501 Additional investment savings offset business as Flat
Slide 18: Successful Completion of St.George Merger
SUCCESSFUL COMPLETION OF ST.GEORGE MERGER For personal use only Financial Additional outcomes • Interest income higher from stronger • Multi-brand optionality customer retention and better margins • Net Promoter Score • Price/NTA 1.4x after tax consolidation • Employee engagement across Group Ahead
Slide 19: Improving Asset Quality from Strong Portfolio
IMPROVING ASSET QUALITY FROM STRONG PORTFOLIO For personal use only • Stressed exposures at 2.48% of TCE1, down Stressed exposures as a % of TCE1 37bps on 1H11 (down 72bps on 2H10) 3.5 - Watchlist & substandard down 21bps Impaired - 90+ days past due well secured down 3.0 90+ days past due well secu
Slide 20: Mortgage Delinquencies Performing Better Than Expected
MORTGAGE DELINQUENCIES PERFORMING BETTER THAN EXPECTED For personal use only • Pattern of mortgage Australian mortgage 90+ day delinquencies (%) delinquencies performing 1.0 First home buyers Investor slightly better than expected. 0.8 Owner occupied Total portfolio Over 2H11 0.6 - Group 90+ day 0.4
Slide 21: Strong Capital Generation; Well Positioned
STRONG CAPITAL GENERATION; WELL POSITIONED For personal use only Key capital statistics Sept 11 (%) Common equity ratios at Sept 11 (%) Applies Jan 2012 Common equity ratio 8.09 239bps 9.76 • Increase over 6 mths 0.15 8.09 (48bps) • Increase over 1 year 0.59 7.61 (92bps) 68bps 7.37 Tier 1 ratio 9.68
Slide 22: Continued Strong Dividend Growth Path
CONTINUED STRONG DIVIDEND GROWTH PATH For personal use only • 2H11 dividend 80 cents, up 5.2% over 1H11 Dividends per share (cents) 80 - FY11 dividend 156 cents, record level up 74 76 72 12% 68 70 65 63 • Seeking to lift dividends each half 56 60 56 60 49 51 • Pay-out ratio higher at 75% 42 44 - Con
Slide 23: Considerations for FY12
CONSIDERATIONS FOR FY12 For personal use only • First priority is balance sheet strength - further change in financial services as businesses continue to adjust to regulatory and economic demands • Environment likely to see a high saving preference and subdued credit growth – Divisions all well plac
Slide 24: CEO Strategy
WESTPAC GROUP For personal use only FULL YEAR CEO STRATEGY 2011 Gail Kelly Chief Executive Officer WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 24
Slide 25: At the End of Phase 1: Stronger Strategic Position
AT THE END OF PHASE 1: STRONGER STRATEGIC POSITION For personal use only One of the world’s • Within top 20 banks globally by market capitalisation leading banks in a • Global leader in sustainability highly attractive • Australia has been one of the best performing advanced economies and economy wi
Slide 26: Strong Strategic Position
STRONG STRATEGIC POSITION For personal use only Expense to income ratio1 (%) Market cap of large banks2 (US$bn) 85% 300 75% 250 65% 200 150 55% 100 45% 50 35% 0 25% Bk Nova… Westpac TD HSBC Citi CBA Mitsubishi UFJ ICBC Bk of China Bk of America Ag Bank of China Royal Bk Canada Santander Wells Fargo
Slide 27: Some Global Challenges – Australia Well Placed
SOME GLOBAL CHALLENGES – AUSTRALIA WELL PLACED For personal use only Global uncertainty to persist Australia well positioned Resolution of European debt issues likely to take Australian growth outlook has eased although some time, leading to the economy is well placed relative to other • Lower growt
Slide 28: Phase 2 – Drive Value - Leverage, Invest & Deliver
PHASE 2 – DRIVE VALUE - LEVERAGE, INVEST & DELIVER For personal use only Objective Detail Metrics • Higher insurance/wealth cross sell Deliver benefits • Build on investments to date to • Increase products per customer, from deeper drive higher cross sell, especially especially customers with 4+ cus
Slide 29: Phase 2 – Drive Value (Continued)
Continued PHASE 2 – DRIVE VALUE - LEVERAGE, INVEST & DELIVER For personal use only Objective Detail Metrics • Drive simplification and Accelerate • Maintain lowest expense to income standardisation across operations productivity ratio of peers1 • Implement new sourcing plans agenda • Deliver the SIP
Slide 30: Investor Discussion Pack
WESTPAC GROUP For personal use only FULL YEAR INVESTOR DISCUSSION PACK 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 30
Slide 31: Overview
WESTPAC GROUP For personal use only FULL YEAR OVERVIEW 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 31
Slide 32: Westpac Group at a Glance
WESTPAC GROUP AT A GLANCE For personal use only • Australia‟s first bank and first company, opened in 1817 Key financial data for FY11 (30 September 2011)9 • Australia‟s 2nd largest bank, and within the top 20 largest banks in the world, ranked by market capitalisation1 Net profit after tax (reporte
Slide 33: FY11 Summary and FY12 Considerations
FY11 SUMMARY AND FY12 CONSIDERATIONS For personal use only FY11 a sound result, strategic agenda gaining traction Leading metrics • Good quality result, with retail and wealth divisions delivering Core and Cash • Expense to income ratio lowest of peer banks, at 41.5% earnings growth on both FY10 and
Slide 34: FY11 Financial Snapshot
FY11 FINANCIAL SNAPSHOT For personal use only change1 change1 change1 change1 FY11 FY11 1H11 – 2H11 FY10 – FY11 1H11 – 2H11 FY10 – FY11 Earnings Balance sheet Cash earnings ($m) 6,301 (1%) 7% Total assets ($bn) 670 8% 8% EPS2, cash basis (cents) 209.3 (2%) 6% Tier 1 ratio5 (%) 9.68 15bps 59bps Cash
Slide 35: Reconciliation Between Cash Earnings and Reported Earnings
RECONCILIATION BETWEEN CASH EARNINGS AND REPORTED EARNINGS For personal use only Cash earnings policy Reported earnings and Cash earnings1 ($bn) • In assessing financial performance, including divisional results, the Westpac Group 7.0 uses a measure of performance referred to as Cash Earnings Cash E
Slide 36: Sound Cash Earnings Growth
SOUND CASH EARNINGS GROWTH For personal use only % change1 % change1 Cash earnings FY11 ($m) 1H11-2H11 FY10-FY11 Cash earnings FY10 – FY11 ($m) Cash earnings 1H11 – 2H11 ($m) Net interest income 12,169 4 3 463 (120) 241 (120) 6,301 (104) Non–interest income 4,954 (5) (2) 314 (101) (134) 3,168 (67) 1
Slide 37: Retail/Wealth Divisions Driving Growth
RETAIL/WEALTH DIVISIONS DRIVING GROWTH For personal use only FY11 Business unit contribution1 to Cash earnings growth ($m) FY11 Business unit contributions1,2 to earnings (% of total) 89 (13) 6,301 11 10 Other 126 54 5 7 10 9 NZ 193 (27) 19 21 5,879 BTFG 24 20 SGB Up 7% WIB 31 33 WRBB 2 FY10 WRBB WI
Slide 38: FY11 Highlights Quality Franchise
Cash +11% Core +7% FY11 HIGHLIGHTS QUALITY FRANCHISE For personal use only Cash earnings Core Business Brand % earnings Earnings summary Performance summary Unit $m change % change • Good balance sheet growth, mortgages • Deepening customer relationships, up 8% and deposits up 9% wealth penetration
Slide 39: Strengthened Balance Sheet
STRENGTHENED BALANCE SHEET For personal use only Tier 1 Ratio increased to 9.7%1 Strengthened liquidity position to $103bn Common Equity (%) Other Tier 1 (%) Liquid assets ($bn) 103 9.7 9.1 7.8 8.1 82 74 7.5 8.1 45 6.0 6.6 2 Sep-08 2 Sep-09 Sep-10 Sep-11 Sep-08 Sep-09 Sep-10 Sep-11 Stressed assets t
Slide 40: Continued Strong Dividend Growth Path
CONTINUED STRONG DIVIDEND GROWTH PATH For personal use only • 2H11 dividend 80 cents, up 5% over 1H11 Dividends per share (cents) • FY11 dividend 156 cents, at record level, up 12% FY10/FY11 • Highest half year and full year dividend ever paid 80 76 • Payout ratio higher at 75% in FY11 consistent wi
Slide 41: Features
WESTPAC GROUP For personal use only FULL YEAR FEATURES 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 41
Slide 42: Sound Cash Earnings Performance
SOUND CASH EARNINGS PERFORMANCE For personal use only Cash earnings movement half on half ($m) Cash earnings movement half on half by Business Unit ($m)1 241 (120) 114 (73) (104) 77 (47) 31 29 (128) (67) 96 3,168 3 33 3,168 15 3,133 3,133 60 60 13 15 1 104 53 2,930 2,930 Up 8% Down 1% Up 8% Up 8% Do
Slide 43: Sound Operating Income
SOUND OPERATING INCOME For personal use only • Net operating income up 1% on 1H11 (up 1% FY10/FY11) • Net interest income up 4% on 1H11 (up 3% FY10/FY11) Operating income 1H11 – 2H11 ($m) - Modest loan growth and higher margins 109 (56) 33 2 1 • Non-interest income down 5% on 1H11 (down 2% FY10/FY11
Slide 44: Asset Growth, Predominantly Mortgages
ASSET GROWTH, PREDOMINANTLY MORTGAGES For personal use only • Average interest earning assets up 2% and lending up 4% FY10/FY11 Australian mortgage flow (gross loans) Sep10 – Sep11 ($bn) - Australian mortgages up 6%, mortgage flow predominantly driven by proprietary channels 3.2 2.6 (0.7) 304.6 - Au
Slide 45: Good Growth in Customer Deposits
GOOD GROWTH IN CUSTOMER DEPOSITS For personal use only • Customer deposits up $21bn (7%) on 1H11 and up $30bn (11% FY10/FY11) Customer deposit composition1 ($bn) • Customer deposits more than fully funded lending for 2H11 and for Term Deposits Transaction Online Savings FY11 310 280 289 • In 2H11 35
Slide 46: Margins Modestly Higher Over Half
MARGINS MODESTLY HIGHER OVER HALF For personal use only • Net interest margin up 2bps to 2.23% (stable FY10/FY11) Net interest margin1 (NIM) (%) - 5bps increase from repricing of loan facilities, predominantly mortgages 2.6 NIM NIM excl. Treasury and Markets - 3bps decline from deposit impacts mostl
Slide 47: High Quality Non-Interest Income
HIGH QUALITY NON-INTEREST INCOME For personal use only • Non-interest income down 5% (down 2% FY10/FY11) with flat wealth and fee income and lower trading income Fees and commissions ($m) • Fees & commissions flat (up 4% FY10/FY11) with higher business facility fees offsetting lower transaction fees
Slide 48: WIB Markets and Treasury Income
WIB MARKETS AND TREASURY INCOME For personal use only • WIB Markets income is predominantly sourced through providing risk management and markets based products to customers WIB Markets income and customer activity ($m) • Conditions were challenging, particularly in the fourth quarter, with extreme
Slide 49: Expenses Well Managed, Continued Investment
EXPENSES WELL MANAGED, CONTINUED INVESTMENT For personal use only • Sector leading expense to income ratio of 41.8% in 2H11 (41.5% FY11) Expense growth1 (%) • Expenses up 3% on 1H11 and up 2% FY10/FY11 - Annual expense growth rate down for the fourth year running 7 • Additional investment accounted
Slide 50: Further Productivity Gains in 2012 via Sourcing and Optimising Multi-Brand
FURTHER PRODUCTIVITY GAINS IN 2012 VIA SOURCING AND OPTIMISING MULTI-BRAND For personal use only Sourcing changes Optimising multi-brand • Westpac is implementing changes to its back office and technology sourcing • In October 2010, Westpac commenced a detailed productivity program to arrangements t
Slide 51: SIPs Portfolio - Delivering Projects on Plan
SIPS PORTFOLIO - DELIVERING PROJECTS ON PLAN For personal use only Number of SIPs FY11 FY12 FY13 FY14+ programs Credit Card Consolidation Single, integrated credit card processing platform SIPs (Strategic Investment New collections case handling platform that enables Collections System consolidation
Slide 52: Investment Spend
INVESTMENT SPEND For personal use only • Investment spending totaled $740m in 2H11. Including $289m on SIPs (taking total spent on SIPs so far to $1,093m). Other spending included Capitalised software & deferred expenses($m) 2H10 1H11 2H11 - Compliance $94m Capitalised software - Bank of Melbourne $
Slide 53: Impairment Charges 32% Lower on FY10
IMPAIRMENT CHARGES 32% LOWER ON FY10 For personal use only • Impairment charges have been on a declining trend as asset quality improves, new stress is easing and companies are returning to performing Impairment charges ($m) • In 2H11 impairment charges were up 14% to $530m (down 32% to $993m FY10/F
Slide 54: Business Unit Performance
WESTPAC GROUP For personal use only FULL YEAR BUSINESS UNIT PERFORMANCE 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 54
Slide 55: Westpac RBB: Strong Cash Earnings Growth Over Year
WESTPAC RBB STRONG CASH EARNINGS GROWTH OVER YEAR For personal use only Westpac RBB Cash earnings movement FY10 – FY11 ($m) Key metrics Movement FY10 – FY11 performance • Average interest earning assets up 8%, with mortgages up 8% and business1 up 4% Net interest Income 4% • Margins 2.07%, down 7bps
Slide 56: Westpac RBB: Westpac Local Strategy Delivering Competitive Advantage
WESTPAC RBB WESTPAC LOCAL STRATEGY DELIVERING A COMPETITIVE ADVANTAGE For personal use only Cash earnings movement half on half ($m) Movement 1H11 – 2H11 134 5 (50) • Cash earnings up 8% to $1,013m 1 (13) 1,013 Cash earnings 8% • Core earnings up 6% to $1,702m 36 30 (2) 12 (23) 936 883 • Mortgages
Slide 57: Westpac RBB: Strong Employee Engagement Driving Improving Customer Metrics
WESTPAC RBB STRONG EMPLOYEE ENGAGEMENT DRIVING IMPROVING CUSTOMER METRICS For personal use only Key features of 2H11 BTFG Key metrics key metrics • Prior investment in Westpac Local has delivered strong relationship based growth Change on 2H10 1H11 2H11 with building 2H11 momentum (particularly depo
Slide 58: Westpac RBB: Good Balance Sheet Growth
WESTPAC RBB GOOD BALANCE SHEET GROWTH For personal use only • Mortgages up 4% on 1H11 Balance sheet - Focused on service led strategy - Retention 97.6% with more mortgages refinanced from each major peer ($bn) 2H10 1H11 2H11 % Chg on 1H11 than lost to each major peer NET LOANS 239.1 247.8 256.0 3
Slide 59: Westpac RBB: Maintaining Strong Risk Profile
WESTPAC RBB MAINTAINING STRONG RISK PROFILE, WITH IMPROVING CONSUMER SEGMENT For personal use only Strong risk profile1 Movement in impairment charges ($m) • Stressed exposures as a % of TCE2 at 148bps, down 16bps on 1H11 (down 4bps FY10/FY11) 64 (30) - Impaired assets down 2bps at 23bps on 1H11 (fl
Slide 60: WIB: Strong Underlying Business Providing Sustainable Earnings
WIB STRONG UNDERLYING BUSINESS PROVIDING SUSTAINABLE EARNINGS For personal use only WIB Cash earnings movement FY10 – FY11($m) Key metrics Movement FY10 – FY11 performance • Average interest earning assets down 11% although lending lower Net interest Income 1% • Margins 1.97%, up 29bps supported by
Slide 61: WIB: Strong Customer Relationships Offsetting Lower Markets
WIB STRONG CUSTOMER RELATIONSHIPS OFFSETTING LOWER MARKETS For personal use only Cash earnings movement half on half ($m) Movement 1H11 – 2H11 • Cash earnings down 6% to $720m Cash earnings 6% 71 (19) 767 26 (103) • Core earnings down 8% to $968m 707 28 (29) 9 (12) 54 (12) 720 Net interest • Impro
Slide 62: WIB: Lead Australasian Institutional Bank
WIB LEAD AUSTRALASIAN INSTITUTIONAL BANK For personal use only Strategy Global Transactional Services Australasian footprint • Deliver superior returns by providing market-leading • No.1 Lead Domestic Transactional Bank1 solutions, service and insight to earn all our customers‟ Peter Lee Associates
Slide 63: WIB: High Quality Customer Earnings
WIB HIGH QUALITY CUSTOMER EARNINGS For personal use only • Strong customer franchise and lead positions in Debt Markets and Global Transactional Services driving solid returns, partially offset by lower markets Income by business segment ($m) income due to volatile market conditions from European So
Slide 64: WIB: Improved Deposit Gathering; Stabilising Loan Balances
WIB IMPROVED DEPOSIT GATHERING; STABILISING LOAN BALANCES For personal use only • Deposits increased 2% to $52bn (up 9% FY10/FY11) due to an increase in Term deposits and Corporate cash balances WIB net loans and deposits ($bn) and Margins (%) - Leading position and ongoing investment in Transaction
Slide 65: WIB: Excellent Asset Quality
WIB EXCELLENT ASSET QUALITY DEMONSTRATING STRENGTH OF INSTITUTIONAL PORTFOLIO For personal use only Impairment benefit from improvement in stressed assets Movement in impairment charges/(benefits) ($m) • Asset quality continued to strengthen resulting in an impairment benefit of 123 (7) (101) $75m i
Slide 66: St.George: Good Momentum and Improving Asset Quality
ST.GEORGE GOOD MOMENTUM AND IMPROVING ASSET QUALITY For personal use only St.George Banking Group Cash earnings movement FY10 – FY11 ($m) Key metrics Movement FY10 – FY11 performance • Average interest earning assets broadly flat with a 2% rise in mortgages offset by lower 122 (54) business balances
Slide 67: St.George: Restoring Momentum with Brands Well Positioned
ST.GEORGE RESTORING MOMENTUM WITH BRANDS WELL POSITIONED For personal use only Cash earnings movement half on half ($m) Movement 1H11 – 2H11 • Cash earnings up 1% to $585m Cash earnings 1% 40 15 (15) • Core earnings up 4% to $1,048m 52 (21) (9) 4 (13) (37) 582 585 • Mortgages up 1% with proprietar
Slide 68: St.George: Solid Improvement in Key Metrics
ST.GEORGE SOLID IMPROVEMENT IN KEY METRICS WITH WEALTH CROSS SELL UP SIGNIFICANTLY For personal use only Key features of 2H11 Key metrics • Momentum being restored, with growth in lending and deposits improving over the Change on 2H10 1H11 2H11 half while maintaining effective management of margins
Slide 69: St.George: Momentum Improving, Particularly Deposits
ST.GEORGE MOMENTUM IMPROVING, PARTICULARLY DEPOSITS For personal use only • Mortgages up 1% on 1H11, focus on proprietary channels (brokers 36% of 2H11 flow down from 48% two years ago) Balance sheet - Brand specific advertising campaigns gaining traction - Broker balances continue to decline due to
Slide 70: BankSA: Sound Core Earnings Growth Over Year
BANKSA SOUND CORE EARNINGS GROWTH OVER YEAR For personal use only BankSA Cash earnings movement FY10 – FY11 ($m) Key metrics Movement FY10 – FY11 performance • Average interest earning assets up 5%, with mortgages up 5% and business up 1% Net interest Income 5% • Margins 2.25%, up 2bps due to improv
Slide 71: St.George: Solid Risk Profile
ST.GEORGE SOLID RISK PROFILE For personal use only Improving risk profile1 Movement in impairment charges ($m) • Stressed exposures as a % of TCE2 at 371bps, down 15bps on 1H11 (down 48bps FY10/FY11) as upgrades have increased over the half 57 (64) 76 (178) - Impaired assets down 1bp at 108bps (stea
Slide 72: BTFG: Cash Earnings Up 9% Over Year
BTFG CASH EARNINGS UP 9% OVER YEAR FROM STRONG FUNDS MANAGEMENT RESULT For personal use only BTFG Cash earnings movement FY10 – FY11 ($m) Key metrics Movement FY10 – FY11 performance • Higher deposits and mortgage balances in Legend included Net interest Income 9% Private banking in table 97 (41) 3
Slide 73: BTFG: Strongly Positioned Across the Value Chain
BTFG STRONGLY POSITIONED ACROSS THE VALUE CHAIN For personal use only Cash earnings movement half on half ($m) Movement 1H11 – 2H11 51 (29) 49 (19) 340 Cash earnings 10% • Cash earnings up 10% to $340m 294 (7) 309 1 • Cash earnings flat at $204m, a strong performance given market declines • Averag
Slide 74: BTFG: Strong Performance in Challenging Markets
BTFG STRONG PERFORMANCE IN CHALLENGING MARKETS For personal use only Key features of 2H11 Key metrics • Sector leading platforms1 and continued improvement in wealth/insurance cross Change on 2H10 1H11 2H11 sell, drove solid growth, while expenses well managed prior period • Funds management sound r
Slide 75: BTFG: Cross Sell Culture Embedded Across Group
BTFG CROSS SELL CULTURE EMBEDDED ACROSS GROUP For personal use only Wealth Penetration of banks1 Sep10-Sep11 (%) Wealth penetration1 (% Change Sep10-Sep11) Industry leading3 planner productivity WRBB SGB • Customer advocacy for Westpac RBB financial Peer 1 Peer 2 12 Peer 3 planners up 14% points and
Slide 76: BTFG: Award Winning Products Capturing Share of Superannuation Market
BTFG AWARD WINNING PRODUCTS CAPTURING SHARE OF SUPERANNUATION MARKET For personal use only • BT Super for Life FUM up 19% on 1H11 to $1.5bn, with 274,000 customers Current Aust. Share of annual and sales averaging 1,500 per week in 2H11 market share2 new business2 • BT ranked #1 against the major re
Slide 77: BTFG: Asset Management Outperforming
BTFG ASSET MANAGEMENT OUTPERFORMING For personal use only • Participation in asset management with Advance through multi manager, Ascalon through alternatives and BTIM through active asset management J O Hambro - improves BTIM diversification • Advance achieving outstanding investment performance of
Slide 78: BTFG: Customer Focus Driving Superior Insurance Result
BTFG CUSTOMER FOCUS DRIVING SUPERIOR INSURANCE RESULT For personal use only • Cash earnings up 65% to $124m (up 1% FY10/FY11) • Life Insurance cash earnings up 20% (up 22% FY10/FY11) with 10% increase Insurance cash earnings contribution ($m) in net earned premiums and a stable loss ratio of 31% • L
Slide 79: Westpac NZ: Investment in Front Line Flowing Through
WESTPAC NZ INVESTMENT IN FRONT LINE FLOWING THROUGH TO STRONG CASH EARNINGS GROWTH For personal use only Westpac NZ1 Cash earnings movement FY10 – FY11 (NZ$m) Key metrics Movement FY10 – FY11 performance ($NZ) • Average interest earning assets up 3%. Solid growth relative to system in mortgages and
Slide 80: Westpac NZ: Strong Earnings and Margin Growth
WESTPAC NZ STRONG EARNINGS AND MARGIN GROWTH For personal use only Cash earnings1 movement half on half (NZ$m) Movement 1H11 – 2H11 (NZ$) • Cash earnings up 16% to $244m 38 (22) Cash earnings 16% • Core earnings up 4% to $451m 5 (12) 244 25 22 1 (11) • Net interest income up 4% to $664m 2 (1) 210
Slide 81: Westpac NZ: Key Metrics Showing Improvement
WESTPAC NZ KEY METRICS SHOWING IMPROVEMENT For personal use only Key features of 2H11 Key metrics • Momentum continues to improve, with good balance sheet growth relative to Change system, supported by increased products per customer, increased revenue per 2H10 1H11 2H11 on prior customer and improv
Slide 82: Westpac NZ: Continued Growth in Subdued Environment
WESTPAC NZ CONTINUED GROWTH IN SUBDUED ENVIRONMENT For personal use only • Home lending in New Zealand continues to be subdued with system growth of less than 1% in 2H11. Westpac New Zealand mortgages grew at 2.7x banking Balance sheet1 (NZ$bn) system2 in 2H11 and 2.0x banking system in FY11. Home l
Slide 83: Westpac NZ: Mortgage Portfolio
WESTPAC NZ NEW ZEALAND1 MORTGAGE PORTFOLIO For personal use only • Quality of portfolio remains high and well secured with 78% of portfolio less than 80% LVR Revenue New permortgage Zealand FTE portfolio by region (%) • Loan origination through proprietary channel remained relatively stable at 73% 3
Slide 84: Westpac NZ: Improving Asset Quality Across Portfolio
WESTPAC NZ IMPROVING ASSET QUALITY ACROSS PORTFOLIO For personal use only Asset quality gradually improving1 Movement in impairment charges ($NZm) • Decline in impaired and stressed exposures as economic conditions improve • Impairment charges down 28% on 1H11 (down 32% FY10/FY11) 6 6 0 5 (128) 347
Slide 85: Pacific Banking: Strong Underlying Business
PACIFIC BANKING STRONG UNDERLYING BUSINESS WITH CASH EARNINGS IMPACTED BY IMPAIRMENTS For personal use only Pacific Banking Cash earnings movement half on half ($m) Movement 1H11 – 2H11 Cash • Cash earnings down 5% to $37m (down 6% FY10/FY11) 9 (6) 5% 5 (3) earnings • Core earnings up 17% to $77m
Slide 86: Capital, Funding and Liquidity
WESTPAC GROUP For personal use only FULL YEAR CAPITAL, FUNDING AND LIQUIDITY 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 86
Slide 87: Strong Capital Position Driven by Organic Growth
STRONG CAPITAL POSITION DRIVEN BY ORGANIC GROWTH For personal use only • Strong organic capital generation1 adding 31bps in 2H11 (72bps FY10/FY11) Key capital ratios (%) 2H10 1H11 2H11 - Strong return on equity of 15.6% sees earnings contribute 112bps increase in capital ratios in 2H11 (225bps FY10/
Slide 88: Strong Foundation for Basel III Transition
STRONG FOUNDATION FOR BASEL III TRANSITION For personal use only • Basel 2.5, becomes effective on 1 January 2012. The additional market risk and securitisation risk weights will reduce capital by 48bps Common equity ratio – Proforma APRA Basel III inputs at Sep 11 (%) • On 6 September 2011, APRA re
Slide 89: Capital Movements in Greater Detail
CAPITAL MOVEMENTS IN GREATER DETAIL For personal use only • RWA movements include RWA movements ($bn) - Equity risk increased 25% to $1.5m due to an increase in investments and revaluation of existing equity holdings - Market risk increased 13% to $8.4b driven by increased liquid 277 4.6 0.3 1.0 0.4
Slide 90: Strengthened Funding and Liquidity Mix
STRENGTHENED FUNDING AND LIQUIDITY MIX For personal use only • Balance sheet strengthened since financial crisis with funding strategy focused on improving liquidity position and growing funding from more stable sources Funding composition by residual maturity1 (%) • Customer deposit to net loan rat
Slide 91: Term Funding Issuance Reduced with Self Funded Balance Sheet Growth
TERM FUNDING ISSUANCE REDUCED WITH SELF FUNDED BALANCE SHEET GROWTH For personal use only • During the year, reduced need to access term wholesale markets due to Term debt issuance2 ($bn) - Strong customer deposit growth of $30bn, exceeded loan growth by $11bn - Subdued credit growth in Australia an
Slide 92: Diverse and Flexible Funding Platform
DIVERSE AND FLEXIBLE FUNDING PLATFORM For personal use only • Funding strategy focused on diversity and flexibility giving broad access to diverse investor base Diverse and flexible funding capabilities • Westpac‟s regulatory status in the US gives it a comparative advantage ECP/ECD - Only major Aus
Slide 93: Asset Quality
WESTPAC GROUP For personal use only FULL YEAR ASSET QUALITY 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 93
Slide 94: High Quality Portfolio with Bias to Secured Consumer Lending
HIGH QUALITY PORTFOLIO WITH BIAS TO SECURED CONSUMER LENDING For personal use only Lending composition as at 30 September 2011 (%) Property, property services and business services Mortgages Business lending Corporate Other consumer Trade 5 4 5 5 Finance and insurance 34 67 7 Manufacturing 20 Agricu
Slide 95: Portfolio Diversified Across Industries
PORTFOLIO DIVERSIFIED ACROSS INDUSTRIES For personal use only Exposures at default1 by sector as at 30 September 2011 ($m) 2 Finance & insurance 3 Property Trade Manufacturing Government administration & defense Services Exposures at default1 by sector as at 30 September 2011 (%) Property Services &
Slide 96: Low Single Name Concentrations
LOW SINGLE NAME CONCENTRATIONS For personal use only • Top 10 single name exposures to corporations and non-bank financial institutions (NBFIs) continue to be well below 2% of TCE1 Top 10 exposures to corporations and NBFIs as a % of TCE1,2 (%) - Largest corporation and NBFI single name exposure rep
Slide 97: European Bank and Sovereign Exposures
EUROPEAN BANK AND SOVEREIGN EXPOSURES For personal use only • Westpac's direct exposure to European Bank and Sovereign risk is small as at 30 September 2011 Distribution of European Bank and Sovereign risk mix as at 30 Sep 11 (%) • Sovereign exposures to Euro-zone are immaterial, with no Sovereign e
Slide 98: Stressed Assets Continue to Decline
STRESSED ASSETS CONTINUE TO DECLINE For personal use only • Stressed assets to TCE1 down 37bps on 1H11 (down 72bps FY10/FY11) to 2.48%, due to Stressed assets as a % of TCE1,3(%) - Upgrades out of stress and into performing 4.0 Impaired 90 days past due well secured Watchlist & substandard - Rate of
Slide 99: Most Stress in Property Although Improving
MOST STRESS IN PROPERTY ALTHOUGH IMPROVING For personal use only • Stressed assets continue to trend down, with most sectors improving Stressed exposures by industry ($bn) - Property continues to be under the most stress of all sectors, however, it is also experiencing some improvements 7 9 • Instit
Slide 100: Commercial Property Portfolio
COMMERCIAL PROPERTY PORTFOLIO For personal use only • Commercial property represents 6.5% of TCE1 and 8.1% of gross lending at 2H11. TCE and gross Commercial property % of TCE1 (%) Commercial property stressed exposure3 (%) lending down from 7.1% and 8.5% at 1H11 - Down from peak of 10.0% and 13.0%
Slide 101: Impairment Charges
IMPAIRMENT CHARGES For personal use only FY11 Cumulative movement in impairment charges ($m) 2H11 economic overlay change ($m) Separately • NZ earthquake (net of FX) -11 provisioned 1H11 2H11 • Property overlay -16 / partially released • Qld floods -28 402 (382) • Retail sector and Increased industr
Slide 102: Impairment Charges
IMPAIRMENT CHARGES For personal use only • Impairment charges up $67m on 1H11 to $530m (down 32% FY10/FY11) Impairment losses on loans to average gross loans1 (bps) - Excluding economic overlay release, charge down 7% on 1H11 - $5m due to individually assessed provisions 100 WBC Peer 1 Peer 2 Peer 3
Slide 103: High Quality Australian Mortgage Portfolio
HIGH QUALITY AUSTRALIAN MORTGAGE PORTFOLIO For personal use only • Australian mortgage portfolio quality remains high Australian mortgage portfolio2 2H11 - Have full recourse to the borrower‟s mortgaged property and other assets - Majority of housing loans are variable rate Spot Balance Flow3 - Low
Slide 104: Australian Mortgage Portfolio Well Collateralised
AUSTRALIAN MORTGAGE PORTFOLIO WELL COLLATERALISED For personal use only • Australian mortgage portfolio is well collateralised Australian mortgage portfolio - Average dynamic1,2,3 LVR is 47% 2H10 1H11 2H11 - Increase in dynamic LVR driven by modest decline of property valuations in some regions Aver
Slide 105: Australian Mortgage Portfolio Delinquencies Falling
AUSTRALIAN MORTGAGE PORTFOLIO DELINQUENCIES FALLING, REMAIN AT LOW LEVELS For personal use only • Australian mortgages 90+ days delinquencies 53bps down 3bps on 1H11 (up 10bps FY10/FY11) remain below industry benchmarks Australian mortgage2 delinquencies and loss rates (%) • While delinquencies have
Slide 106: First Home Buyers Continue to Perform Well
FIRST HOME BUYERS (FHB1) CONTINUE TO PERFORM WELL For personal use only • FHB growth has moderated, representing less than 9% flows (versus FY09 peak of 19%) and12% of total mortgage portfolio 90+ days delinquencies of FHB and Total portfolio (%) • FHB currently performing better than overall portfo
Slide 107: Lenders Mortgage Insurance Managing Risk Transfer
LENDERS MORTGAGE INSURANCE MANAGING RISK TRANSFER For personal use only • Westpac Group has one captive mortgage insurer, Westpac Lenders Mortgage Insurance (WLMI)1 which insures mortgages originated through all brands and Lenders Mortgage Insurance structure as at 30 September 2011 channels • Capit
Slide 108: Australian Credit Card Portfolio Continues to Perform Well
AUSTRALIAN CREDIT CARD PORTFOLIO CONTINUES TO PERFORM WELL For personal use only • Australian credit card portfolio has continued to perform well, largely driven by cautious consumer behaviour resulting in increased payment levels Australian credit card average payments to balance ratio1 (%) • The a
Slide 109: Economics
WESTPAC GROUP For personal use only FULL YEAR ECONOMICS 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 109
Slide 110: Australian and New Zealand Economic Outlook
AUSTRALIAN AND NEW ZEALAND ECONOMIC OUTLOOK For personal use only Calendar year Key economic indicators as at October 2011 2009 2010 2011e 2012f World GDP -0.7 5.1 3.9 3.2 Australia GDP 1.4 2.7 1.2 2.8 Private consumption 1.0 2.8 3.0 2.3 Business investment1, 2 -5.3 -0.1 9.5 8.0 Unemployment – end p
Slide 111: Credit Growth Expected to Modestly Improve
CREDIT GROWTH EXPECTED TO MODESTLY IMPROVE For personal use only Credit growth (% annualised) Aust. housing Total credit (Aust.) Aust. business Housing - avg (Aust.) Total credit - avg (Aust.) Total credit (NZ) 30 30 25 forecasts 25 to end 2012 20 20 15 15 10 10 5 5 0 0 -5 -5 -10 -10 Sep-00 Sep-02 S
Slide 112: Appendix and Disclaimer
WESTPAC GROUP For personal use only FULL YEAR APPENDIX AND DISCLAIMER 2011 WestpacGroup Westpac BankingFull Corporation Year 2011ABN 33 007 Investor 457 141.Pack - November 2011 Discussion 112
Slide 113: Appendix 1: Cash Earnings Adjustments
APPENDIX 1: CASH EARNINGS ADJUSTMENTS For personal use only Cash earnings 2H10 1H11 2H11 Description adjustment Reported NPAT 3,471 3,961 3,030 Reported net profit after tax attributable to equity holders of The Westpac Group The TPS hybrid instrument is not fair valued however the economic hedge is
Slide 114: Appendix 2: Definitions
APPENDIX 2: DEFINITIONS For personal use only Westpac’s business units Financial performance Westpac Retail and Business Banking Net profit attributable to equity holders adjusted for the impact of the economic Westpac RBB Provides sales, marketing and customer service for all consumer and small-to-
Slide 115: Appendix 2: Definitions (Continued)
APPENDIX 2: DEFINITIONS (CONTINUED) For personal use only Asset quality Asset quality NCI Non-controlling interests Provisions raised for losses that have already been incurred on loans that are Individually known to be impaired and are individually significant. The estimated losses assessed Stresse
Slide 116: Investor Relations Team
INVESTOR RELATIONS TEAM For personal use only Equity investor relations For further information on Westpac including: Andrew Bowden Leigh Short • Annual reports Head of Investor Relations Senior Manager • Presentations and webcasts +612 8253 4008 +612 8253 1667 andrewbowden@westpac.com.au lshort@wes
Slide 117: Disclaimer
DISCLAIMER For personal use only 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