Westpac Banking Corporation · ASX:WBC
Westpac Banking — Westpac New Zealand — Debt Investor Presentation (May 2018)
39 slides from Westpac Banking's debt investor presentation, May 2018
Slide 1: Westpac New Zealand Limited European Investor Roadshow
Westpac New Zealand Limited European Investor Roadshow Jim Reardon – Treasurer Ian Hankins – Chief Financial Officer May / June 2018 Document Classification: PROTECTED
Slide 2: Disclaimer
Disclaimer The material contained in this presentation is intended to be general background information on Westpac Securities NZ Limited, Westpac NZ Covered Bond Limited and Westpac New Zealand Limited and their activities. It should not be reproduced, distributed or transmitted to any person withou
Slide 3: Agenda
Agenda WNZL Overview 5 New Zealand Coalition Government 12 New Zealand Economic Outlook 17 Funding, Liquidity and Capital Management 23 WNZL Loan Portfolios 29 Appendix 35 Document Classification: PROTECTED
Slide 4: An important part of the Westpac Group
An important part of the Westpac Group Westpac Group New Zealand Australia Locally incorporated Bank, wholly owned but not guaranteed by Westpac Banking Westpac New Zealand Limited Corporation. (WNZL) Comprises Westpac’s consumer, business and institutional banking operations in NZ. Rated AA- / A1 /
Slide 5: WNZL Overview
WNZL Overview Document Classification: PROTECTED
Slide 6: Performance & Growth 1H18 vs PCP
Performance & Growth 1H18 vs PCP $640m 2.06% 41.8% ↑ ↑ ↓ 15% 0.10% 3.6% Core Earnings Net Interest Cost/Income Margin Ratio 6 Document Classification: PROTECTED
Slide 7: Customers & communities
Customers & communities 7 Document Classification: PROTECTED
Slide 8: Environmental, social and governance
Environmental, social and governance Dow Jones Sustainability Index recognised Westpac Banking Corporation as the world’s most sustainable bank for the fourth year in a row. Lending to climate change solutions and committed to 2020 target of $1.7b $2.0bn. $3.1m Invested in community partnerships and
Slide 9: WNZL transformation delivering
WNZL transformation delivering 9 Document Classification: PROTECTED
Slide 10: Results at a glance
Results at a glance 10 Document Classification: PROTECTED
Slide 11: Balance Sheet drivers
Balance Sheet drivers 11 Document Classification: PROTECTED
Slide 12: New Zealand Coalition Government
New Zealand Coalition Government Document Classification: PROTECTED
Slide 13: NZ Government - Centre left coalition
NZ Government - Centre left coalition NZ Labour (Centre Left) lead government in coalition with NZ First (Centre Right). Supported (supply and confidence) by NZ Green Party (Environmentally Left). Coalition holds 55 seats + NZ Green (8 seats) gives Government 63 seats against Opposition (National Pa
Slide 14: Significant policies and initiatives
Significant policies and initiatives Review and reform the Reserve Bank Act. Around $8.4bn of additional spending over the next four years focused on health and education. Establish a $1 billion Regional Development Fund. Making the first year of tertiary education or training free from 1 January 20
Slide 15: First Budget – No Surprises
First Budget – No Surprises Met the fiscal responsibility test. Net debt still in line for >20% GDP by 2022. Assumption is 3% GDP annual growth. Higher taxation receipts have been offset by higher spending. Confirmation of removal of previous government planned income tax cuts. Budget spend aimed pr
Slide 16: Revised Reserve Bank New Zealand Act
Revised Reserve Bank New Zealand Act Finance Minister Grant Robertson and incoming Reserve Bank Governor Adrian Orr signed a new Policy Targets Agreement (PTA) setting out specific targets for maintaining price stability and a requirement for employment outcomes to be considered in the conduct of mo
Slide 17: New Zealand Economic Outlook
New Zealand Economic Outlook Document Classification: PROTECTED
Slide 18: New Zealand Economy
New Zealand Economy Westpac forecast economic growth above 3% GDP over next 2 years. Strong employment outlook. Growing government sector with infrastructure and social spend balanced against responsible fiscal management. Economy experiencing growth on back of: Construction activity associated with
Slide 19: New Zealand Economy
19 New Zealand Economy GDP growth (%) New Zealand unemployment rate (%) Westpac Westpac forecast forecast Source: Statistics NZ, Westpac Economics Source: Statistics NZ, Westpac Economics Population growth (%) New Zealand residential investment Westpac forecast Westpac forecast Source: Statistics NZ
Slide 20: Solid growth with benign inflation outlook
20 Solid growth with benign inflation outlook While inflation has picked up, imported inflation remains Inflation low. There is a strong outlook for residential construction centred on Auckland, and a pipeline of non-residential construction work, including infrastructure spending both in Westpac fo
Slide 21: Conditions are improving for the dairy sector
21 Conditions are improving for the dairy sector Global dairy prices recovered sharply through H2 2016, and Dairy payout and dividend in January were 50% higher than in the middle of last year. Fundamentals have shifted in favour of dairy producers. The previous period of low prices has led to milk
Slide 22: House sales have slowed
22 House sales have slowed House prices rose rapidly from 2014 to 2016. Auckland Household debt statistics prices have peaked and the market has cooled a little but maintained current levels. Significant changes in housing market policy are planned which will have a large impact on property investor
Slide 23: Funding, Liquidity and Capital Management
Funding, Liquidity and Capital Management Document Classification: PROTECTED
Slide 24: WNZL Funding and Liquidity position remain strong
24 WNZL Funding and Liquidity position remain strong Funding overview WNZL’s customer deposit to loan ratio was 77.9% at 31 March 2018. Both BS13 and APS210 lenses are applied to the deposit book – active effort to attract deposits that represent stable long term funding under both prudential standa
Slide 25: Targeting a sustainable wholesale funding profile
Targeting a sustainable wholesale funding profile Funding composition Term maturities by financial year ($bn) Wholesale Offshore <1Yr 6.0 DMTN EMTN Covered NZD equivalent ($bn) Wholesale Onshore <1Yr 4.5 Wholesale Offshore >1Yr 3.0 Wholesale Onshore >1Yr Intercompany Debt 1.5 Equity (incl. AT1 + T2)
Slide 26: Well balanced and diversified funding
Well balanced and diversified funding Wholesale funding (%) Wholesale funding by currency (%) Domestic Medium Term Notes 4 NZD 7 20 NZ Certificates of Deposit 26 34 USD 4 34 Euro Medium Term Notes EUR US Commercial Paper CHF 38 30 4 Covered Bonds GBP Funding mix (%) Commentary Funding composition we
Slide 27: Stable and high quality liquid assets
Stable and high quality liquid assets Liquid assets ($bn) Liquid assets as % short term funding (%) 16.0 600 HQLA RMBS 12.0 4.0 4.0 400 4.0 4.0 4.0 4.0 4.0 4.0 8.0 513 8.8 200 4.0 7.1 7.2 6.9 7.9 7.7 8.5 6.8 209 251 140 136 157 193 146 0.0 0 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1H18 FY11 FY12 FY13 FY1
Slide 28: Strong capital position
Strong capital position Headroom to Capital adequacy ratios WNZL Target Regulatory Mar-18 regulatory (RBNZ basis) levels minimum minimum CET1 Capital (incl. Capital Conservation Buffer (CCB) 11.8% 9.5% 9.0% 2.8% Tier One Capital (incl. CCB) 14.6% 12.0% 10.5% 4.1% Total Regulatory Capital (incl. CCB)
Slide 29: WNZL Loan Portfolios
WNZL Loan Portfolios Document Classification: PROTECTED
Slide 30: WNZL lending portfolio diversified
WNZL lending portfolio diversified Lending by industry (%) Commercial Property by Booking office 30 Document Classification: PROTECTED
Slide 31: Agribusiness overview
Agribusiness overview Agribusiness portfolio TCE by sector (%) Agribusiness portfolio by Region Agribusiness portfolio Stressed Assets Commentary Improved dairy payouts are improving farmers’ financial profiles, and resultant dairy portfolio risk grade profile. Impairments remain low, however dairy
Slide 32: Home Loan portfolio composition
Home Loan portfolio composition Key Statistics – as at 31 March 2018 Mortgage portfolio – LVR profile (%) Investor vs owner occupied (%) of new flows Mortgage portfolio – LVR profile (%) Commentary 100 WNZL continues to manage mortgage flows against 38 35 36 35 40 LVR appetite. 75 43 Delinquencies a
Slide 33: Mortgage portfolio composition
Mortgage portfolio composition Regional profile (%) Mortgage portfolio – Approved loan amount (%) Auckland 39% Wellington 45% Christchurch 8% Other 9% Mortgage portfolio loss rates (%) 90+ delinquencies (%) 0.40% 0.80% 0.35% 0.70% 0.30% 0.60% 0.25% Loss Rate 0.50% 90+ dpd 0.20% 0.40% 0.15% 0.10% 0.3
Slide 34: Commercial Property portfolio
Commercial Property portfolio Commercial Property by Market Segment (%) Commercial Property by Booking office Commentary Total portfolio committed exposure (TCE) at Mar 18 has increased 1.64% since FY17 and represents 6.9% ($7.5b) of WNZL’s TCE. Development/Investment portfolio mix has shifted from
Slide 35: Appendix
Appendix Document Classification: PROTECTED
Slide 36: New Zealand Economy - population distribution
New Zealand Economy - population distribution Region Population Northland 151,689 Northern Auckland 1,415,689 (53% of population) Waikato 403,639 Bay of Plenty 267,741 Gisborne 46,653 Central Hawke's Bay 151,179 (24% of population) Taranaki 109,608 Manawatu-Wanganui 222,689 Wellington 471,315 Tasman
Slide 37: Composition of the New Zealand economy
Composition of the New Zealand economy Composition of GDP Source: Statistics NZ Date: December 2017 37 Document Classification: PROTECTED
Slide 38: Digital Transformation
Digital Transformation 38 Document Classification: PROTECTED
Slide 39: Contact us
39 Contact us For further information Jim Reardon Treasurer Westpac New Zealand Limited +64 9 367 3539 Jim.Reardon@westpac.co.nz Xinyu Ru Westpac Securities NZ Limited +44 20 7621 7540 nzfunding@westpac.com.au WNZL and WSNZL Funding and Securitisation Programmes. WNZL Disclosure Statement. WSNZL Fin
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