Westpac Banking Corporation · ASX:WBC
Westpac Banking — Westpac New Zealand — Debt Investor Presentation (July 2021)
31 slides from Westpac Banking's debt investor presentation, July 2021
Slide 1: Westpac New Zealand Limited Fixed Income Investor Presentation
Westpac New Zealand Limited Fixed Income Investor Presentation July 2021 The material contained in this presentation should not be reproduced, distributed or transmitted to any person without consent of Westpac New Zealand Limited.
Slide 2: The New Zealand economy
The New Zealand economy GDP components Annual average % change GDP (Real, quarterly $bn) 2019A 2020A 2021F 2022F GDP (production) 2.4 -2.9 5.8 4.5 75 75 Westpac forecasts Economic indicators Annual % change 70 70 2019A 2020A 2021F 2022F Consumer price index 1.9 1.4 2.2 1.7 65 65 Unemployment rate 4.
Slide 3: The New Zealand housing market
The New Zealand housing market • The Government has announced a suite of new housing market policies affecting both demand and supply New Zealand dwelling prices by region • The most significant changes relate to the tax treatment of mortgage interest costs 2800 Index = 1000 in 2007 Index = 1000 in
Slide 4: Westpac New Zealand
Westpac New Zealand Westpac Group Australia New Zealand • Locally incorporated bank, wholly owned but not guaranteed by Westpac Banking Corporation • Comprises Westpac’s consumer, business and institutional banking operations in NZ Westpac New Zealand • A+ (Stable Outlook) / A1 (Stable Outlook) / AA
Slide 5: Our focus
Our focus Our purpose Ignite Financial Possibilities Strategic priorities Objectives • Deliver Regulatory Outcomes • Modernise Technology • Build Performance Culture • Strengthen Risk Management • Optimise Technology • Enhance Financial Disciplines • Develop to a Mature Risk Culture • Deliver 100% D
Slide 6: Our sustainability strategy
Our sustainability strategy Sustainability Priorities What 2025 Targets Progress and 1H21 Highlights We want to support • Reduce operational emissions by 30% • Operating emissions reduced by 38% Aotearoa’s transition to a (vs 2019)1. Offset remaining emissions to be • Enabled $2.25b in sustainable f
Slide 7: 1H21 financial performance
1H21 financial performance Net profit after tax ($m) Key financial metrics Change on For the six months ending Mar-20 Sep-20 Mar-21 Mar-20 +104% Revenue (NZ$m) 1,093 1,025 1,151 5% -98 Net interest margin (%) 1.94 1.80 1.99 5 bps 309 523 Cost to income (%) 48.0 49.3 45.8 (2 ppts) -10 -2 Customer dep
Slide 8: Asset quality
Asset quality Business stressed exposures as a % of business TCE (%) Watchlist & substandard 90+ day past due and not impaired Impaired Property Manufacturing 5.5 4.9 17 19 4.4 Agriculture, forestry 3.4 4 & fishing 3.3 3.3 3.1 3.2 2.9 2.6 2.8 4 9 5.0 Wholesale trade 2.3 2.4 4.0 0.2 3.0 2.9 2.5 2.2 2
Slide 9: COVID-19: Putting customers first
COVID-19: Putting customers first Total mortgage deferral packages provided (% by balances) Mortgage deferrals update • 29k mortgage accounts supported with $6.5bn in balances (~11% of eligible mortgage lending) Returned to normal repayment or paid 94.0 down • 1.6k accounts required further assistan
Slide 10: WNZL mortgage portfolio
WNZL mortgage portfolio Mortgage portfolio at 31 March 2021 Mortgage portfolio LVR1 (%) of portfolio Mortgage 90+ day delinquencies (%) 93% of portfolio less than 80% LVR Total portfolio $58bn 1.00% 0.80% 47% 0.60% Fixed / Floating (%) 86 / 14 0.40% 23% 23% 0.33% 0.20% Owner occupied (%) 71.9 5% 0.0
Slide 11: Capital position
Capital position WNZL regulatory capital ratios (%) Capital adequacy ratios (RBNZ basis) Current CET1 AT1 Tier 2 Regulatory Mar-21 Minimum 18.2 Common Equity Tier 1 (CET1) Capital 7.0% 13.4% 17.1 (incl. Capital Conservation Buffer (CCB)) 2.0 15.9 15.9 Tier One Capital (incl. CCB) 8.5% 16.2% 2.1 2.0
Slide 12: Wholesale funding profile
Wholesale funding profile Funding composition (%) Term maturities by financial year (NZD $bn) 3 3 3 DMTN EMTN Covered FLP1 1 8 Wholesale Offshore <1Yr 4.5 2 10 13 4 4 10 Wholesale Onshore <1Yr 3 9 9 Wholesale Offshore >1Yr 3.0 Wholesale Onshore >1Yr 71 74 64 1.5 Intercompany Loan Equity (incl. AT1 +
Slide 13: Liquid assets
Liquid assets Liquid assets ($bn) BS13 Liquid Asset position1 HQLA RMBS Additional RMBS (lhs) BS13 Liquid Assets (lhs) 23 23 Loans (lhs) BS13 Liquids / total assets (rhs) Liquid assets / total assets (rhs) 15 11 9 $bn 13 % 12 11 6 120 30% 4 4 4 12 14 8 9 7 9 100 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Ma
Slide 14: Additional Information
Additional Information
Slide 15: 1H21 balance sheet
1H21 balance sheet Net customer loans ($bn) Customer Deposits ($bn) 87.0 88.0 3.0 90.6 2.1 74.1 69.1 71.0 1.0 (0.4) Up 3% Up 4% Mar-20 Sep-20 Consumer Business Mar-21 Mar-20 Sep-20 Consumer Business Mar-21 Net customer loans ($bn) and % of total Customer deposits ($bn) and % of total 88 Up 3% 91 Up
Slide 16: WNZL lending portfolio
WNZL lending portfolio Total committed exposure (TCE) 1H21 commentary vs vs • 1H21 loan growth mainly driven by an increase in home $bn Mar-20 Sep-20 Mar-21 %TCE Mar-20 Sep-20 loans, given buoyant housing market Consumer Lending 70.5 72.6 75.7 58.5% 7.4% 4.3% • Unsecured consumer portfolios continue
Slide 17: Agribusiness portfolio
Agribusiness portfolio Agribusiness Portfolio Portfolio TCE by sector (%) Mar-20 Sep-20 Mar-21 2 1 Dairy cattle Total committed exposure (TCE) 13 9.6 10.0 10.1 ($bn) Grain, sheep & beef Agriculture as a % of total TCE 7.6 7.9 7.7 Horticulture & fruit 20 64 % of portfolio graded as ‘stressed’1 9.8 8.
Slide 18: Commercial property portfolio
Commercial property portfolio Commercial Property Portfolio Portfolio TCE by sector (%) Mar-20 Sep-20 Mar-21 5% Commercial Industrial Total committed exposure (TCE) 8.8 8.5 8.8 27% ($bn) 26% Property as a % of total TCE 7.0 6.6 6.7 Residential Retail % of portfolio graded as ‘stressed’1 2.67 2.96 3.
Slide 19: Westpac Economics Update
Westpac Economics Update
Slide 20: Composition of the New Zealand economy
Composition of the New Zealand economy Regional GDP NZ output and employment Total nominal GDP 2020: $322 bn NZ GDP by sector 2020 (%) Total nominal GDP 2019: $303bn Primary industries Northland, $8bn 11 6 6 Construction 4% of population 3 Electricity, gas, and water Bay of Plenty, $19bn 10 Auckland
Slide 21: New Zealand economy
New Zealand economy • The New Zealand economy contracted by 2.9% in 2020. However, by the GDP (Real, quarterly $bn) March 2021 quarter it was operating around 1% above its pre-COVID-19 level. That compares favourably to most of New Zealand’s peers in the global 75 75 Westpac forecasts economy 70 70
Slide 22: Housing market and Government policy
Housing market and Government policy • The Government has announced a suite of housing market policies affecting • Leveraged investors currently account for around one-third of sales in markets like both demand and supply Auckland and Wellington. The announced policy changes will reduce the financia
Slide 23: Housing market and Government policy (cont.)
Housing market and Government policy (cont.) New Zealand dwelling prices by region Dwelling prices % change 2800 Index = 1000 in 2007 Index = 1000 in 2007 2800 Last 3 mths Last 12 mths Last 5 years Region Pop’n (to May-21) (May-21) (to Mar-21) Auckland 2300 2300 Auckland 1.7m Up 5.1% Up 26.3% Up 36.
Slide 24: Construction and population growth
Construction and population growth • Annual dwelling consent issuance has risen to an all time high, with a strong Monthly residential building consents pipeline of work over the coming year. Much of this will be centred on Auckland, although increases in activity have been widespread 5000 Number Nu
Slide 25: Households and spending
Households and spending • Retail spending has been resilient and running above the levels seen prior to Monthly retail spending excl. fuel ($m) COVID-19 6,000 March 2020: 6,000 • However, there has been a change in the composition of spending: 5,500 Covid restrictions 5,500 first imposed 5,000 5,000
Slide 26: Agriculture
Agriculture • New Zealand’s commodity prices have increased 17% so far this year, and NZ commodity price index (World Prices) Westpac Economics expect a further lift of around 5% through to the September quarter Index = 100 in 1986 450 450 400 400 • Strong Chinese demand, the firming in the global g
Slide 27: Monetary policy
Monetary policy • Inflation has picked up and is forecast to rise to 2.5% this year. However, this Inflation (annual %) rise is expected to be temporary. Inflation is being boosted by base effects following last year’s lockdown, as well as by disruptions to global supply chains 6 6 Westpac 5 forecas
Slide 28: Economic forecasts
Economic forecasts GDP components Quarterly % change Annual average % change Mar-21 Jun-21 Sep-21 Dec-21 2019 2020 2021F 2022F GDP (production) 1.6 0.6 0.9 1.3 2.4 -2.9 5.8 4.5 Private consumption 5.4 -1.0 2.3 0.7 3.6 -1.9 10.2 2.5 Government consumption 1.6 1.2 1.1 1.1 5.4 6.4 5.9 3.4 Residential i
Slide 29: Contact us
Contact us Contacts Ben Turner Liam Cleary Treasurer Head of Funding Westpac New Zealand Limited Westpac New Zealand Limited 16 Takutai Square Phone: (64 9) 336 9924 Auckland 1010, New Zealand Email: liam_cleary@westpac.co.nz Phone: (64 9) 348 9995 Email: ben.turner@westpac.co.nz Malika Hariharan We
Slide 30: Disclaimer
Disclaimer The material contained in this presentation is intended to be general background information on Westpac Securities NZ Limited (“WSNZL”) and Westpac New Zealand Limited (“WNZL”) and their activities. It should not be reproduced, distributed or transmitted to any person without the consent
Slide 31: Disclaimer
Disclaimer Prohibition of sales to EEA Retail Investors – The Instruments are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the European Economic Area (the “EEA”). For these purposes, a retail inv
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