Westpac Banking Corporation · ASX:WBC
Westpac Banking — Debt Investor Presentation (July 2016)
26 slides from Westpac Banking's debt investor presentation, July 2016
Slide 1: Roadshow Presentation July 2016
NEW ZEALAND LISTED OFFER OF NZD SUBORDINATED NOTES Issued by Westpac Banking Corporation Roadshow Presentation July 2016 This investment is riskier than a bank deposit. The Westpac NZD Subordinated Notes are complex financial products that are not suitable for many investors. If you do not fully und
Slide 2: Disclaimer
Disclaimer This presentation has been prepared and authorised by Westpac Banking Corporation (ABN 33 007 457 141)(“Westpac”) in relation to the proposed offer of unsecured, subordinated, fixed rate debt securities (“Westpac NZD Subordinated Notes” or “Notes”) in New Zealand (the “Offer”). The Offer
Slide 3: A new Tier 2 capital security from Westpac Banking Corporation
A new Tier 2 capital security from Westpac Banking Corporation Summary of Notes Westpac Banking Corporation (issuer) summary • A new investment in Westpac Banking • Second largest bank in Australia, with a market capitalisation of A$101bn as at 31 March 2016 Corporation called ‘Westpac NZD Subordina
Slide 4: Westpac has a strong balance sheet across all dimensions
Westpac has a strong balance sheet across all dimensions Westpac key balance sheet ratios as at 31 March 2016 (%) Stable Funding Ratio • 83% of lending supported by funding from stable sources Includes equity, • In excess of 75% internal target securitisation and A$27bn • Stable funding includes: wh
Slide 5: Capital ratios materially strengthened
Capital ratios materially strengthened Regulatory capital ratios (Level 2 basis) (%) CET1 capital ratio Total Tier 1 capital ratio Total regulatory capital ratio 16.0 17.2 14.7 14.5 15.4 13.2 13.1 14.0 12.2 $44bn 13.3 14.0 $51bn 10.5 $38bn 10.3 11.4 12.1 12.1 8.8 9.5 Mar-15 Sep-15 Mar-16 Mar-15 Sep-
Slide 6: Total regulatory capital and Tier 2 issuance profile
Total regulatory capital and Tier 2 issuance profile Total regulatory capital (Level 2 basis) (%) CET1 Additional Tier 1 Tier 2 14.0 13.3 12.5 12.3 12.1 12.3 12.1 11.5 1.9 1.9 1.7 1.6 1.8 1.7 1.8 1.6 1.7 1.9 2.1 1.6 1.5 1.6 1.5 1.6 9.5 10.5 8.2 8.7 9.1 8.8 9.0 8.8 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14
Slide 7: Westpac NZD Subordinated Notes Offer summary
Westpac NZD Subordinated Notes Offer summary Issuer • Westpac Banking Corporation, acting through its Sydney head office ABN 33 007 457 141 (Westpac) Offer size • Up to NZ$250 million, plus unlimited oversubscriptions Issue Price • NZ$1.00 per Note Minimum Application • NZ$5,000 and in multiples of
Slide 8: Westpac NZD Subordinated Notes Overview of key terms
Westpac NZD Subordinated Notes Overview of key terms Purpose of the offer • The Notes will be treated as Tier 2 Capital of the Westpac Group by APRA • The proceeds received under the Offer will be used by Westpac for general business purposes Description of the Notes • The Notes are unsecured, subor
Slide 9: Westpac NZD Subordinated Notes Interest payments
Westpac NZD Subordinated Notes Interest payments Interest payments • Interest is scheduled to be paid in arrear: − quarterly on 1 March, 1 June, 1 September and 1 December each year (or if that day is not a Business Day, the next Business Day) to, but not including, the Maturity Date or an earlier R
Slide 10: Non-Viability Trigger Event and Conversion
Westpac NZD Subordinated Notes Non-Viability Trigger Event and Conversion Non-Viability Trigger • A Non-Viability Trigger Event occurs if APRA notifies Westpac in writing that it believes: Event − the Conversion of some or all of the Notes, or conversion, write off or write down of all or some capit
Slide 11: Subordination and ranking
Westpac NZD Subordinated Notes Subordination and ranking • In a Winding-Up of Westpac, Notes (if they have not been redeemed, or following a Non-Viability Trigger Event, Converted or Written Off) rank (as illustrated below): – ahead of Westpac Shares; – ahead of Additional Tier 1 Capital securities,
Slide 12: Comparable Basel III compliant subordinated instruments available in New Zealand
Comparable Basel III compliant subordinated instruments available in New Zealand Westpac NZD IAG Subordinated Notes BNZ Subordinated Notes ASB Subordinated Notes Subordinated Notes Westpac Banking Insurance Australia Group Issuer Bank of New Zealand ASB Bank Limited Corporation Limited BBB+ by S&P G
Slide 13: Key dates for the Offer
Key dates for the Offer Key dates for the Offer Roadshow 26-28 July 2016 Firm application bids due 4 August 2016 Rate Set Date 4 August 2016 Opening Date 5 August 2016 Closing Date 26 August 2016 Issue and Allotment Date 1 September 2016 Expected date of initial quotation and trading of the Notes on
Slide 14: Key risks
Key risks Risks affecting Westpac’s creditworthiness Risks associated with the Notes An investment in Notes may be affected by Westpac’s ongoing performance • It is possible that the Notes may trade at a market price below their and financial position and other risks associated with Westpac and the
Slide 15: Key risks (continued)
Key risks (continued) Risks associated with the Notes (Continued) Risks associated with the Notes (Continued) • The interest rate on the Notes will be fixed for 5 years from the Issue • In the event of a Winding-Up, if the Notes are still on issue and have not Date to the First Optional Redemption D
Slide 16: Additional Information
NEW ZEALAND LISTED OFFER OF NZD SUBORDINATED NOTES Issued by Westpac Banking Corporation Additional Information Westpac Banking Corporation ABN 33 007 457 141.
Slide 17: Westpac Group at a glance
Westpac Group at a glance • Australia’s 2nd largest bank, and 13th largest bank in the world, ranked by Key statistics as at 31 March 2016 market capitalisation1 • Supporting consumer and business customers in Australia and New Customers 13.2m Zealand and customers with ties to these markets • Uniqu
Slide 18: First Half 2016 financial results
First Half 2016 financial results % Change Core earnings (A$m) Net interest margin2 (%) 1H16 Cash Earnings1 Results 1H16 1H16 – 1H15 (Profit before impairment charges) Financial results (A$m) 6,139 6,200 2.14 Net operating income 10,619 6 5,766 Expenses (4,419) 4 2.17 2.18 2.19 2.12 2.11 2.06 2.05 2
Slide 19: Asset quality remains sound
Asset quality remains sound Stressed exposures as a % of TCE (%) Provisions Mar-15 Sep-15 Mar-16 Total provisions to gross loans (bps) 58 53 57 Watchlist & substandard Impaired asset provisions to impaired 3.20 90+ days past due and not impaired 48 46 48 assets (%) 3.09 Impaired Collectively assesse
Slide 20: Areas of interest: mining, agriculture and commercial property
Areas of interest mining, agriculture and commercial property All amounts are in A$ Mining (incl. Oil and Gas) portfolio Agriculture portfolio Commercial property portfolio Sep-15 Mar-16 Sep-15 Mar-16 Sep-15 Mar-16 TCE $14.4bn $11.8bn TCE $18.1bn $17.1bn TCE $65.6bn $67.5bn Lending $7.1bn $5.9bn Len
Slide 21: Stable sources provide 83% of all funding
Stable sources provide 83% of all funding % Mov’t Stable funding ratio (%) Liquidity Coverage Ratio (A$bn) Sep-15 Mar-16 Mar 16 – Sep 15 High Quality Liquid Assets1 (HQLA) 61 66 9 83.2% 83.8% 83.3% Committed Liquidity Facility2 (CLF) 66 59 (11) 5 127 125 (2) 6.2 6.2 7.4 Wholesale Onshore <1yr Total
Slide 22: Targeting a diversified funding base
Targeting a diversified funding base 1H16 new term issuance composition1 (%) Wholesale funding composition5 (%) 0.1 CDs By type By tenor 2,3 By currency 2 3 Commercial Paper 33 Domestic MTN 7 22 5 EMTN 16 6 4 11 19 53 0.4 0.3 Covered Bonds 49 4 Securitisation 77 10 144a 28 29 14 SEC Registered 4 3 1
Slide 23: Appendix 1: Cash earnings adjustments
Appendix 1: Cash earnings adjustments Cash earnings 2H15 (A$m) 1H16 (A$m) Description adjustment Reported net profit 4,403 3,701 During Second Half 2015 the Group recognised a significant gain following the partial sale and deconsolidation of the Group’s shareholding in BT Partial sale of BTIM (665)
Slide 24: Appendix 2: Definitions
Appendix 2: Definitions Financial performance and capital Asset quality Is a measure of the level of profit that is generated by ongoing operation and is therefore available for distribution to shareholders. Three categories of TCE Total committed exposures adjustments are made to reported results t
Slide 25: Appendix 3: Internationally comparable capital ratio reconciliation
Appendix 3: Internationally comparable capital ratio reconciliation The APRA Basel III capital requirements are more conservative than those of the Basel Committee on Banking Supervision (BCBS), leading to lower reported capital ratios. In July 2015, APRA published a study that compared the major ba
Slide 26: Key contacts
Key contacts Westpac Banking Corporation contacts Joint Lead Managers Information for investors Westpac Banking Corporation Westpac NZD Copies of the PDS are Curt Zuber (acting through its New Zealand branch) Subordinated available at Group Treasurer 0800 942 822 Notes www.westpac.com.au/ 02 8253 42
Westpac Banking — Debt Investor Presentation (July 2016) on 6ix