Westpac Banking Corp 6-K, filed May 9, 2022
Westpac Banking Corp (WEBNF)
About this 6-K
Westpac Banking Corp filed this 6-K on May 9, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
May 9, 2022
Commission File Number 1-10167
WESTPAC BANKING CORPORATION
(Translation of registrant’s name into English)
275 KENT STREET, SYDNEY, NEW SOUTH WALES 2000, AUSTRALIA
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Index to Exhibits
| Exhibit No. |
Description | |
| 1 | Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack | |
| 2 | Dividend/Distribution – WBC |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WESTPAC BANKING CORPORATION | ||
| (Registrant) | ||
| Date: May 9, 2022 | By: | /s/ Yvette Adiguzel |
| Yvette Adiguzel | ||
| Tier One Attorney | ||
Exhibit 1
| ASX Release 9 MAY 2022 Westpac 1H22 Presentation and Investor Discussion Pack Westpac Banking Corporation (“Westpac”) today provides the attached Westpac 1H22 Presentation and Investor Discussion Pack. For further information: Hayden Cooper Andrew Bowden Group Head of Media Relations Head of Investor Relations 0402 393 619 0438 284 863 This document has been authorised for release by Tim Hartin, Company Secretary. Level 18, 275 Kent Street Sydney, NSW, 2000 |
| Presentation and Investor Discussion Pack 2022 INTERIM FINANCIAL RESULTS Westpac Banking Corporation ABN 33 007 457 141 For the six months ended 31 March 2022 Cover image: Westpac employees at our portable 'Bank in a box' in Lismore, NSW, after the floods. Financial results throughout this presentation are in Australian dollars and are based on cash earnings unless otherwise stated. Refer page 41 for definition. Results principally cover the 1H22, 2H21 and 1H21 periods. Comparison of 1H22 versus 2H21 (unless otherwise stated). |
| Westpac 2022 Interim Results Index 2022 Interim Results Presentation 3 Investor Discussion Pack of 2022 Interim Results 35 Overview 36 Results 38 Customer franchise 42 Governance 48 Sustainability 50 Earnings drivers 56 Revenue 57 Expenses 60 Impairment charges 62 Credit quality and provisions 63 Australian mortgage credit quality 74 Capital, Funding and Liquidity 80 Segment results 91 Consumer 94 Business 95 Westpac Institutional Bank 96 Westpac New Zealand 97 Specialist Businesses 101 Economics 104 Appendix 120 Contact us 131 Disclaimer 132 |
| Peter King Chief Executive Officer |
| 1H22 Good progress on strategic priorities. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 4 Outcomes Fix Simplify Address outstanding issues Streamline and focus the business • Lifting risk management - CORE program on track • Resolved significant regulatory investigations • Two more businesses sold, six sold in total • Significant progress on digital • Earnings higher, with core earnings up • Cost reset delivering • NIM lower, pressure eased over the half Perform Sustainable long term returns Priorities |
| 1H22 Earnings snapshot. 1 Cash earnings is a measure of profit generated from ongoing operations for further detail see page 41 and 121. 2 References to notable items in this page include provisions related to estimated customer refunds, costs and litigation; write-down of intangible items; and asset sales/revaluations. 3 Return on equity is cash earnings divided by average ordinary equity. 1H21 2H21 1H22 Change 1H22–2H21 Change 1H22–1H21 Reported net profit $3,443m $2,015m $3,280m 63% (5%) Cash earnings1 $3,537m $1,815m $3,095m 71% (12%) Cash earnings1 basis excluding notable items2 Core earnings $5,120m $4,338m $4,589m 6% (10%) Impairment (charge)/benefit $372m $218m ($139m) Large Large Cash earnings $3,819m $3,134m $3,101m (1%) (19%) Net interest margin 2.07% 1.98% 1.85% (13bps) (22bps) Expenses $5,236m $5,700m $5,135m (10%) (2%) Return on equity3 11.01% 8.67% 8.75% 8bps (226bps) Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 5 |
| 1H22 Segment core earnings. 1 Excluding notable items. Core earnings excl. notable items ($m) 2H21 1H22 Change 1H22–2H21 Consumer 2,495 2,332 (7%) Business 371 504 36% WIB 353 492 39% Westpac NZ 640 651 2% Group BU 57 296 Large Specialist Businesses 422 314 (26%) Group Total 4,338 4,589 6% Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 6 • Margins down, mortgage competition • Costs down 5%1 • Improved loan growth, margins down • Costs down 15%1 • Good loan growth, improved markets • Costs down 21%1 • Steady performance • Treasury managed volatility well • Business exits, lower life insurance |
| 7 1 Completed means the activity has been finalised by Westpac. Not all complete projects have been submitted to the Independent Reviewer, Promontory Australia, for assessment. Refer to page 48 for more detail on the status of the CORE Program at 31 March 2022. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack FIX – CORE program on track after first year. Progress on CORE activities by stage (% complete1) Design March 22 Sept 21 Promontory Australia Independent Review of Westpac Banking Corporation’s Integrated Plan for the Court Enforceable Undertaking. 3 May 2022 99% 63% 9% 76% 40% 6% Sept 22 Expected Fifth Promontory report highlights our progress, and while it indicates the potential for disruption following our recent organisational changes, the report states: “The program nevertheless remains on track in terms of completing activities within the planned timeframes. The design stage of the program has laid down a solid foundation from which Westpac can address the root causes of its shortcomings…. However, much remains to be done…” Implement Embed |
| Consumer – franchise progress. 8 1 Based on time from application start (for 1st party) or application submitted (for 3rd party) to unconditional approval and is the median time for applications approved within the month. 2 Main Financial Institution for Consumer customers at February 2022. Refer page 130 for details of metric provider. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 20.6 11.7 9.9 12.6 9.6 7.6 1H21 2H21 1H22 3rd party Proprietary Mortgage time to right (days)1 • Reduced mortgage time to right • New app rolled out to android users after iOS completed in 2021 • Tripled number of deposit accounts opened digitally • Enhanced security, blocking suspect transactions/threats/gambling • Transaction deposits up 11% • Added ~200 bankers last 12 months • Consolidated 70 branches • Acquired 275 290 295 169 166 163 1H21 2H21 1H22 Owner occupied Investor & line of credit Australian mortgages ($bn) 12.6% 14.5% 15.9% 16.4% Aug-20 Feb-21 Aug-21 Feb-22 Millennial Overall MFI share (%)2 Perform Simplify |
| Business – returning to growth. 9 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack • New digital lending application process • Reduced products for sale by 17 • New SME risk grade model • Streamlined the annual review process • Business lending return to growth • Next generation merchant terminals • Digitisation has given bankers an extra day per week to spend with customers • Supported 6,000 small businesses with SME government guarantee Net movements in business lending ($bn) (2.1) (3.2) 0.3 2.6 2H20 1H21 2H21 1H22 Business lending settlements ($bn) 8.4 8.3 13.1 17.6 2H20 1H21 2H21 1H22 Perform Simplify |
| WIB – improving returns. 10 1 Markets income excludes DVA. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack • New online FX pricing calculator • 11,000 hours of manual work saved from reengineering processes • Consolidating international – no direct loan exposure in our China offices • Loans up 9% • Lifted sustainability capability ─ 39 sustainable transactions ─ New carbon trading desk 363 335 340 370 148 75 2H21 1H22 2H20 1H21 410 25 511 34 365 404 Non-customer income Customer income (4.9) (1.0) 5.8 6.1 1H21 2H20 1H22 2H21 Net WIB onshore lending movements ($bn) Markets income ($m)1 Perform Simplify |
| NZ – steady progress. 11 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack • Participated in around one third of all sustainable transactions in NZ • KiwiSaver default provider (one of only six providers) – 37k new customers • Agri market share up 17bps 55 58 61 62 32 32 31 31 1 1 Sep-21 1 Sep-20 Mar-22 1 Mar-21 88 91 93 94 Personal Business Mortgage 31 29 28 30 18 21 22 22 22 24 26 26 Mar-22 Sep-20 Mar-21 Sep-21 71 78 74 76 Transaction Savings Term Loans (NZ$m) Deposits (NZ$m) • Completed sale of Westpac Life NZ • Products for sale down 4% • Significant risk and regulatory projects underway – BS11, Liquidity, risk governance Perform Fix Simplify |
| Fully franked interim dividend – 61 cps. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack • Medium term outlook for return and growth • Sustainable payout ratio ~60-75% (ex notable items) • Dividend yield 5%1, fully franked 7.2%1 • Seek to neutralise DRP with no discount on DRP market price Dividends per ordinary share (cents) Dividend payout ratio (%) Dividend considerations 1 Based on 31 March 2022 closing price of $24.24. 1H21 2H21 1H22 Cash earnings 60 121 69 Cash earnings (ex notable items) 56 70 69 80 31 58 60 61 0 1H20 2H19 2H20 1H22 1H21 2H21 12 |
| Financial results throughout this presentation are in Australian dollars and are based on cash earnings unless otherwise stated. Refer page 30 for definition. Results principally cover the 1H20, 2H19 and 1H19 periods. Comparison of 1H20 versus 2H19 (unless otherwise stated). Michael Rowland Chief Financial Officer |
| 1H22 results summary. 1 Following the exit of Life Insurance expected in 2H22 of approximately 16bps. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 14 Core earnings ex notable items up 6% on 2H21 • Reduced costs by 10%, good progress on simplification, headcount down over 4,000 • Revenue down 3%, lower margins, impact of businesses sold • Credit quality continues to improve, most metrics back around pre-COVID levels • Well funded – higher deposits, well timed wholesale issuance • CET1 capital ratio 11.3%, pro forma1 11.5%, $5.5bn returned to shareholders • New CET1 operating range 11.0% – 11.5% from 1 Jan 23 Balance sheet strong |
| Notable items and simplification impacts. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 1 Contribution of businesses sold in respective period. For detail on the contribution of business under sale agreement and presented as Held for Sale refer to Westpac’s 2022 Interim Financial Results Announcement Section 5 Note 8. ($m after tax) 2H21 1H22 Remediation and litigation (172) (65) Write-down of goodwill & other assets (965) (154) Asset sales / revaluations (182) 213 Total cash earnings impact (1,319) (6) ($m) 1H21 2H21 1H22 Core earnings 88 152 25 Cash earnings 72 115 23 Notable items Contribution of businesses sold1 15 Included in businesses sold FY21 1H22 General Insurance ‒ Lenders Mortgage Insurance ‒ Vendor Finance ‒ Auto Finance & novated leasing NZ Life Insurance |
| 1H22 Cash earnings ($m) 1H22 – 2H21. 1 NCI is non-controlling interests. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 1,815 3,134 3,101 3,095 1,319 565 73 2H21 Expenses 2H21 notable items Impairment charges (357) 2H21 excl. notable items Net interest income Tax & NCI1 Non-interest income 1H22 excl. notable items 1H22 notable items 1H22 (146) (168) (6) Core earnings up 6% 16 $131m reduction from sold businesses Up 71% Down 1% |
| 5.2 2.6 6.0 (2.5) Business 0.1 Mar-21 Mortgages - Investor1 Personal (ex Auto) New Zealand (in A$) Institutional Mortgages - Owner occupier Sep-21 690.0 (1.7) 710.8 (1.0) 0.1 719.6 Mar-22 Other2 Auto Lending composition ($bn). Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 1 Includes Line of Credit and other mortgage movements. 2 Includes provisions. • Sale of wholesale dealer loan book ($1.0bn) • Auto run-off ($0.7bn) 17 Up $8.8bn or 1% Up $1.3bn in NZ$ |
| Australian mortgages. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Lending flows ($bn)2 Mortgage balances ($bn) 1 Includes Line of Credit and other non owner occupied mortgages. 2 Chart may not add through due to rounding. Stock Sep-21 Stock Mar-22 Flow 1H22 Interest only 16 14 16 Fixed rate 38 40 39 Investor1 36 35 31 Composition (% of total) 266.3 275.1 290.1 295.3 174.6 168.5 165.5 163.0 Sep-21 Sep-20 Mar-21 Sep-21 Mar-22 Sep-20 Mar-22 Mar-21 34 458 Sep-21 New lending ex refinance Net refinance Property sale and other Paydown Mar-22 456 - (13) (18) 18 Investor contraction reflects: • Continued high run-off in interest only • Reduction in non-standard products i.e SMSF, reverse mortgage and foreign • Current policies and processes Owner occupied Investor1 |
| 0% 1% 2% 3% Mar-19 Mar-20 Mar-21 Mar-22 Tractor 3 year swap rate (spot) 310 110 33 15 ≤25bps 26≤50bps 51≤75bps 76bps+ 0.11 0.11 0.15 Capital & other 1.99 Liquid assets (7bps) 1.70 1.85 4bps 1H22 (1bp) 1.98 1.88 2H21 Notable items 2H21 excl. notable items - (15bps) 4bps Treasury & Markets Loans 1.87 Customer deposits Funding 1bp Margins down from low rates & intense competition. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Net interest margin (% and bps) 1 Exit margin refers to margin for the month of March-22 excluding Treasury & Markets. 2 Excludes mortgage offset balances. 3 Tractor is the blended average rate earned on hedged capital and low rate deposits. Exit margin 1.68%1 Treasury & Markets impact on NIM NIM excl. Treasury & Markets 19 Australian deposits2 by interest rate bands ($bn) Tractor rate3 (%) • Capital $54bn: 3yr hedge • Deposits $65bn: 3yr hedge |
| Margin drivers – ex Treasury & Markets.1 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Lending 1H22 (15bps) Deposits 1H22 4bps • (4bps) fixed rate mortgages (rate and mix) • (4bps) variable mortgages competition and front book/back book pressure • (3bps) business & institutional lending • (2bps) New Zealand mortgages • At call and term deposit repricing in 2Q22 1H22 movement detail 2H22 considerations • Fixed rate impact dissipating, March flow ~24% • Very competitive environment • Business and NZ pressure reducing 20 1 The information on this page contains ‘forward-looking statements’ and statements of expectation reflecting Westpac’s current views on future events. They are subject to change without notice and certain risks, uncertainties and assumptions which are, in many instances, beyond its control. They have been based upon management's expectations and beliefs concerning future developments and their potential effect on Westpac. Should one or more of the risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may differ materially from those expressed or implied in such statements. Investors should not place undue reliance on forward-looking statements and statements of expectation. Except as required by law, Westpac is not responsible for updating, or obliged to update, any matter arising after the date of this presentation. The information in this page is subject to the information in Westpac’s ASX filings, including in its 2022 Interim Financial Results and elsewhere in this presentation. Hedged balances 1H22 (~1bp) • Tractor drag ~1bp in 1H22 • Lengthened capital hedge back to 3 years (from 1 year) provided benefit compared to deposits • Tractor to be a benefit as higher rates roll through ‒ Deposit tractor 60bps in 1H22 ‒ Capital tractor 69bps in 1H22 • Full period impact of repricing Liquidity 1H22 (7bps) • Liquidity build for CLF phase out • Minimal impact – liquidity build largely complete Interest rates • Cash rate 10bps • 3yr swap rates increased ~200bps to 2.57% • Rising rate environment, Westpac Economics’ forecast cash rate of 1.75% by end of CY22 |
| Non-interest income excluding notable items.1 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack • Insurance business exits ($125m) • Funds income down from lower fees following Panorama migration • Revaluation of Life policyholder liabilities • Increased customer demand in fixed income and FX • Lower DVA - wider credit spreads $73m • GI distribution payment $25m (one off) • Increased card spend $19m 1 Excluding notable items. References to notable items in this page include provisions related to estimated customer refunds, payments, and asset sales/revaluations. Net fees1 up $30m 4% Wealth & insurance1 down $185m 29% Trading and other1 up $9m 2% 356 345 353 300 295 308 148 175 184 815 1H21 2H21 1H22 804 845 Other fees Cards & merchants Business & institutional 394 358 366 90 153 113 94 86 9 1H21 683 629 24 28 2H21 41 1H22 444 Other Funds Life insurance Divested businesses 453 262 339 18 143 75 405 1H21 2H21 1H22 471 414 Other Trading 21 |
| Markets & Treasury income.1 1 Markets income includes net interest income and non-interest income but excludes derivative valuation adjustments. Markets non-customer and Treasury income ($m) Markets customer income ($m) Up 28% in 1H22 from stronger Treasury contribution. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 235 282 444 459 482 396 568 127 114 174 148 75 25 34 1H19 1H20 2H19 421 2H20 1H21 2H21 1H22 362 396 618 607 557 602 Treasury Markets non-customer 438 455 420 363 335 340 370 2H21 2H20 1H20 2H19 1H19 1H21 1H22 22 |
| 7,302 5,700 5,135 5,366 231 (142) 2H21 Notable items Notable items Excl. notable items SBD Invest (excl. Fix) Fix one-off Ongoing expenses Excl. notable items 1H22 (170) (1,602) (188) (65) 1H22 – 2H21 expenses ($m). Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Down 10% ex notable items Down 27% 23 • Lower amortisation following WIB write-off • Completion of key mortgage platform projects • Reduction in 3rd party spend ($78m) • Higher annual leave utilisation ($80m) • Lower property costs • Partly offset by annual salary and super increases • Investment typically higher in 2H of year |
| Progress on $8bn cost target.1 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 1 This page contains 'forward-looking statements' and statements of expectation. Please refer to the disclaimer on page 132. The $8bn FY24 cost target is subject to completion of sales of specialist business by end of FY23 which will depend on final terms with counterparties and regulatory approvals. Expenses ($bn) 0.5 0.6 0.5 0.4 0.4 0.4 0.7 1.6 0.2 4.4 1H22 2H21 1H21 4.7 4.3 6.0 7.3 5.4 Notable items Specialist businesses Fix - one-off WBC ongoing 24 2H22 costs expected to be 0 - 2% lower than 1H22 ex-notable items Full period impact of reduced headcount and office space Seasonality in investment spend – typically higher in second half Small rise in Fix spending, particularly in NZ |
| Select cost reset targets.1 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 1 This page contains 'forward-looking statements' and statements of expectation. Please refer to the disclaimer on page 132. 2 Percentage of home loan applications through digital mortgage origination platform for 1st party lending (excl. RAMS). FY24 target refers to both 1st and 3rd party across Consumer and Business. 3 Refer to page 130 for definition. 4 Reduction to FY24 represents decrease on baseline. 5 Includes products for sale and not for sale across Australia and New Zealand, except for business lending and institutional products which are for sale only. 6 Represents international locations excluding New Zealand and Westpac Pacific. 7 Corporate space represents head office and operations and excludes branches and business banking centres. Metric FY20 Baseline 1H22 FY24 • Sale of non-core businesses • Completion of sales 1 under sale agreement 1 under sale agreement 6 completed 9 transactions completed • Mortgages processed on digital origination platform2 • Consumer sales via digital3 • Branch transactions4 • Number of products5 32%2 42% 29 million 1,191 82% 45% 22.2 million ann. 959 100% 70% ~40% less ~450 • Complete Fix spend • Offshore locations6 $1.1bn 8 $0.5bn 6 - 4 • Reduce third party and contractor spend >$200m per annum $78m $200m p.a • Reduce head office roles and corporate space ~ more than 20%7 (8%) (20%) 25 Business simplification Organisational simplification Portfolio simplification |
| Credit quality metrics improved. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 1 TCE is total committed exposure. Stressed exposures as a % of TCE1 Australian mortgage delinquencies (%) Australian unsecured 90+ day delinquencies (%) 0.20 0.15 0.17 0.20 0.26 0.19 0.19 0.14 0.35 0.37 0.43 0.50 0.80 0.66 0.68 0.56 0.59 0.57 0.50 0.62 0.85 0.75 0.49 0.40 Mar- 17 Mar- 18 Mar- 19 Mar- 20 Sep - 21 Mar- 21 Sep - 20 1.32 Mar- 22 1.10 1.14 1.09 1.10 1.91 1.60 1.36 Watchlist & substandard 90+ day past due and not impaired Impaired 26 0.88 1.47 0.0 1.0 2.0 3.0 4.0 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 90+ day delinquencies 30+ day delinquencies 1.64 0.50 1.50 2.50 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 |
| Impairment provisions. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack At Sep 2021 At Mar 2022 Forecast period 2022 2022 2023 GDP growth 7.4% 5.5% 2.7% Unemployment 4.0% 3.8% 3.9% Residential property price increase/(decrease) 5.0% 1.6% (7.0%) Forecasts used in base case economic scenario5 Total impairment provisions1 ($m) Provision coverage Sep-20 Mar-21 Sep-21 Mar-22 Provisions to Credit RWA 171bps 159bps 140bps 130bps Provisions to TCE 58bps 51bps 44bps 40bps IAP to impaired assets 41% 47% 54% 48% 412 564 832 501 943 1,327 1,131 989 1,578 1,806 1,606 1,262 818 853 791 794 958 647 1,136 Mar-22 5,508 171 5,007 Sep-19 Mar-21 Sep-21 3,922 4,682 Overlay2 Stage 3 CAP3 Stage 1 CAP3 Stage 2 CAP3 Stage 3 IAP4 27 1 Includes provisions for debt securities. 2 Overlay from Mar-20 includes New Zealand overlay. Overlay from Sep-21 shows portfolio overlays. 3 CAP is Collectively Assessed Provision. 4 IAP is Individually Assessed Provision. 5 GDP and Residential property price growth is annual growth to December each year. Unemployment rate forecast is at year end. Forecast date is 21 February 2022. |
| Credit impairment charge / (benefit) composition. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Individually assessed provisions ($m). Collectively assessed provisions Total 283 144 466 97 (147) (194) (203) (166) 438 318 296 218 366 (640) (777) (10) 940 (372) (218) 139 1H21 2H21 1H22 2H20 1H21 1H22 2H21 1H22 2H20 1H22 2H20 1H21 2H21 2H20 1H21 2H21 2H20 1H21 2H21 1H22 28 New IAPs Write-backs & recoveries Write-offs direct Other movement in CAP |
| 10.25% 0.75% Capital – returned $5.5bn to shareholders. • Minimal RWA impact expected from updated Basel III standards CET1 Capital (%, bps) New CET1 operating range 11.0% - 11.5% (From 1 Jan 2023) Westpac operating range Sep-21 12.32 Cash earnings Final dividend Buy- back RWA Other Divest- ments Mar-22 67bps 11.33 (76bps) (48bps) (70bps) 15bps 13bps • 1.00% Countercyclical buffer • 1.00% D-SIB buffer • 3.75% Capital conservation buffer • 4.50% Minimum CET1 Management buffer above CCB Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 29 11.0% 11.5% 11.49% pro forma after sale of Life Insurance Mainly from $16.3bn increase in IRRBB RWA |
| 2H22 Considerations.1 1 This page contains 'forward-looking statements' and statements of expectation. Please refer to the disclaimer on page 132. 2 Exit margin is net interest margin excluding Treasury and Markets for the month of March 2022. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 30 Net interest income • Owner occupied mortgage growth to continue; improve investor lending performance • Exit margin2 excl. Tsy & Markets for March 2022 ~1.68% • Increased economic activity to benefit • Life divestment releases 16bps of capital but sees a $1bn notable item Non-interest income • 2H22 costs (ex notable items) expected to be 0% – 2% lower than 1H22 Expenses • Credit metrics expected to remain healthy Credit quality |
| Financial results throughout this presentation are in Australian dollars and are based on cash earnings unless otherwise stated. Refer page 30 for definition. Results principally cover the 1H20, 2H19 and 1H19 periods. Comparison of 1H20 versus 2H19 (unless otherwise stated). Peter King Chief Executive Officer |
| Collaborating for impact Improving our direct climate performance Helping customers transition to net zero Supporting the transition to a net zero economy. 32 1 Against 2016 baselines. 2 Accredited by Climate Active. 3 Sustainable finance transactions refers to green, social, sustainability, sustainability-linked and re-linked loans and bonds. The $36 billion represents the full amount of the transactions we participated in, not an amount held on our balance sheet.. 4 IJGlobal and Westpac Research data. 5 Thermal coal customers defined as those generating more than 25% of revenues from thermal coal, or in the case of a stand-alone mine, more than 35% of volumes from thermal coal. 6 Taskforce on Climate-related Financial Disclosures (TCFD) and Sustainability Accounting Standards Board (SASB), since 2017. 7 Taskforce on Nature-related Financial Disclosures (TNFD). New or completed in 1H22 • Reporting in line with TCFD and SASB6 • Commenced reporting financed emissions in 2021 • Joined the Australian Industry Energy Transitions Initiative • Participating in the Clean Energy Regulator’s Corporate Emissions Reductions Transparency reporting pilot • Joined the TNFD7 Forum to support the development of a nature-related financial disclosure framework • On track to reduce scope 1 and 2 emissions by 65% by the end of FY221 • On track to reduce scope 3 supply chain emissions by 35% by 20301 • Targeting 100% of our electricity consumption from renewables by 2025 • Carbon neutral2 in Australia since 2012 • Moving vehicle fleet to hybrid / electric • 2,900+ employees trained on ESG fundamentals • 200+ employees completed ESG program with Monash University and Climateworks Centre • 39 new sustainable finance transactions Group-wide in 1H22 with a total market value of $36 billion3 • Largest bank lender to greenfield renewable energy projects in Australia for past 5 years4 • NZ structured 32% of sustainable finance transactions from local borrowers in 1H22 • Engaging institutional customers on their transition plans • Progressing portfolio targets and financing strategies for sectors representing the majority of our financed emissions to support a net zero economy by 2050 • Exiting thermal coal mining5 by 2030 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 1 Forecasts from Westpac Economics. FY22 – Solid outlook, some economic uncertainty. 33 Australian economic forecasts1 Dec-22 Dec-23 Cash rate 1.75% 2.25% GDP 4.5% 2.5% Unemployment rate 3.2% 3.4% Inflation 5.6% 2.6% Credit growth 5.7% 4.3% Housing price forecasts (2%) (8%) • GDP growth above average in 2022, slowing in 2023 • Unemployment to hit historic lows • Credit growth to remain sound but moderating • Housing prices likely to moderate |
| 2H22 Areas of focus. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 34 Fix Simplify • Complete CORE program ‘implement’ activities • Announce transactions for Super and Platforms • Continue digital transformation Perform • Build on loan momentum − Continue progress in Business/Institutional − Improve performance in investor mortgages • Deliver on cost reset • Finalise climate pathways for top emitting sectors |
| Investor Discussion Pack Fix. Simplify. Perform. |
| Overview |
| Westpac Group Westpac Group at a glance. 37 Key statistics at 31 March 2022 Key financial data for 1H22 Reported net profit after tax $3,280m Cash earnings $3,095m Expense to income ratio6 53.9% Common equity Tier 1 capital ratio (APRA basis) 11.3% Return on equity6 8.7% Total assets $964.7bn Total liabilities $894.4bn Market capitalisation7 $85bn Our Purpose: Helping Australians and New Zealanders succeed. 1 31 March 2022 Source: S&P Capital IQ, based in US$. 2 S&P Global Ratings, Moody’s Investors Service and Fitch Ratings respectively. All three credit rating agencies have Westpac Banking Corporation on a stable outlook. 3 APRA Banking Statistics, March 2022. 4 RBA Financial Aggregates, March 2022. 5 RBNZ, March 2022. 6 Cash earnings basis. 7 Based on share price at 31 March 2022 of $24.24. Overview Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Customers 12.6m Australian household deposit market share3 21% Australian mortgage market share4 21% Australian business credit market share4 15% New Zealand deposit market share5 18% New Zealand consumer lending market share5 18% • Australia’s first bank and oldest company founded in 1817 • Australia’s 3rd largest bank and 31st largest bank in the world, ranked by market capitalisation1 • Strong market share in key products • Capital ratios are in the top quartile globally • Credit ratings2 AA- / Aa3 / A+ • Supporting the transition to a net zero economy by 2050 |
| 1,815 3,134 3,101 3,095 1,319 565 73 Expenses Non- interest income 2H21 Add back notable items Impairment charges 2H21 ex- notable items Net interest income (168) Tax & NCI¹ 1H22 ex- notable items Notable items 1H22 (146) (357) (6) 1H22 cash earnings. 38 2H21 ($m) 1H22 ($m) Change 1H22- 2H21 (%) Net interest income 8,245 8,028 (3) Non-interest income 1,994 1,931 (3) Expenses (7,302) (5,366) (27) Core earnings 2,937 4,593 56 Impairment benefit/(charge) 218 (139) (Large) Tax and non- controlling interests (NCI) (1,340) (1,359) 1 Cash earnings 1,815 3,095 71 Add back notable items (after tax) 1,319 6 (100) Cash earnings ex-notable items 3,134 3,101 (1) Reported net profit 2,015 3,280 63 Results Cash earnings 1H22 – 2H21 ($m) Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 6% AIEA growth mostly from liquid assets. NIM down 13bps of which 7bps due to increase in liquid assets Lower income following the sale of businesses, lower wealth and life insurance income, partly offset by higher trading and fee income Lower expenses from simplification initiatives, lower third party spend and the completion of some programs Moved from an impairment benefit to an impairment charge mostly due to an increase in provision overlays Down 1% ex-notable items Up 71% 1 NCI is non-controlling interests. |
| 3,537 3,819 3,101 3,095 282 101 324 1H21 Net interest income Add back notable items Non- interest income 1H21 ex- notable items Expenses Impairment charges Tax & NCI¹ 1H22 ex- notable items Notable items 1H22 (377) (255) (511) (6) 1H22 cash earnings. 39 1H21 ($m) 1H22 ($m) Change 1H22- 1H21 (%) Net interest income 8,469 8,028 (5) Non-interest income 2,330 1,931 (17) Expenses (5,981) (5,366) (10) Core earnings 4,818 4,593 (5) Impairment benefit/(charge) 372 (139) (Large) Tax and non- controlling interests (NCI) (1,653) (1,359) (18) Cash earnings 3,537 3,095 (12) Add back notable items (after tax) 282 6 (98) Cash earnings ex-notable items 3,819 3,101 (19) Reported net profit 3,443 3,280 (5) Results Cash earnings 1H22 – 1H21 ($m) Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Lower income following the sale of businesses, lower trading income, wealth and insurance income, partly offset by higher fee income Lower expenses from simplification initiatives, lower third party spend, partly offset by annual salary increases and other CPI increases Down 12% Down 19% ex-notable items 7% AIEA growth mostly from liquid assets. NIM down 22bps of which 8bps due to increase in liquid assets. Lower loan spreads from competition and portfolio mix partly offset by higher deposit spreads Moved from an impairment benefit to an impairment charge, mostly from an increase in provision overlays 1 NCI is non-controlling interests. |
| 1H22 financial snapshot. 1 All measures on a cash earnings basis. 2 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ dated 13 July 2015. 3 Includes items classified as held for sale. 4 NSFR is reported on a spot basis. 5 LCR is reported on a quarterly average basis. 6 Total liquid assets represent cash, interbank deposits and assets eligible for existing repurchase agreements with a central bank. 40 Results 1H22 Change 1H22 – 2H21 Change 1H22 – 1H21 Earnings1 Earnings per share (cents) 85.4 73% (12%) Core earnings ($m) 4,593 56% (5%) Cash earnings ($m) 3,095 71% (12%) Return on equity (%) 8.73 371bps (146bps) Dividend (cents per share) 61 2% 5% Expense to income ratio (%) 53.88 (Large) (150bps) Net interest margin (%) 1.85 (14bps) (24bps) Credit quality Impairment charge/(benefit) to average gross loans (bps) 4 (10bps) (15bps) Impaired assets to gross loans (bps) 23 (7bps) (7bps) Impaired provisions to impaired assets (%) 48.0 (6ppts) 1ppt Total provisions to credit RWA (bps) 130 (10bps) (29bps) Collectively assessed provisions to credit RWA (bps) 116 (1bp) (26bps) 1H22 Change 1H22 – 2H21 Change 1H22 – 1H21 Balance sheet Total assets ($bn) 964.7 3% 8% Common equity Tier 1 (CET1) capital ratio (APRA basis) (%) 11.33 (99bps) (101bps) CET1 capital ratio (Internationally comparable2) (%) 17.36 (81bps) (72bps) CET1 capital ($bn) 52.1 (3%) (2%) Risk weighted assets (RWA) ($bn) 460.0 5% 7% Average interest-earning assets ($bn) 872.1 6% 7% Loans3 ($bn) 719.6 1% 4% Customer deposits3 ($bn) 600.9 4% 9% Net tangible assets per share ($) 17.2 2% 4% Funding and liquidity Customer deposit to loan ratio (%) 83.5 186bps 375bps Net stable funding ratio4 (%) (NSFR) 125 - 2ppts Liquidity coverage ratio5 (%) (LCR) 137 8ppts 13ppts Total liquid assets6 ($bn) 244.1 7% 25% Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| 8.0 8.1 6.8 2.3 5.5 3.3 8.1 8.1 6.8 2.6 5.4 3.1 FY20 FY19 FY21 FY18 FY17 1H22 Cash earnings and reported net profit reconciliation. 41 Reported net profit and cash earnings ($bn) Cash earnings1 policy • Westpac uses a measure of performance referred to as cash earnings to assess financial performance at both a Group and segment level • This measure has been used in the Australian banking market for over 15 years and management believes it is currently an effective way to assess performance for the current period against prior periods and to compare performance across segments and across peer companies • To calculate cash earnings, reported net profit is adjusted for: − Material items that key decision makers at Westpac believe do not reflect our operating performance − Items that are not normally considered when dividends are recommended, such as the impact of economic hedges − Accounting reclassifications between individual line items that do not impact reported results Reported net profit and cash earnings adjustments ($m) 1 Cash earnings is not a measure of cash flow or net profit determined on a cash accounting basis, as it includes non-cash items reflected in net profit determined in accordance with AAS (Australian Accounting Standards). The specific adjustments outlined include both cash and non-cash items. Cash earnings is reported net profit adjusted for material items to ensure they appropriately reflect profits available to ordinary shareholders. All adjustments shown are after tax. For further details refer to page 121. Results 1H22 ($m) Change 1H22 - 2H21 (%) Change 1H22 - 1H21 (%) Cash earnings 3,095 71 (12) Cash EPS (cents) 85.4 73 (12) Reported net profit 3,280 63 (5) Reported EPS (cents) 90.5 65 (4) 2H21 1H22 Reported net profit 2,015 3,280 Fair value (gain)/loss on economic hedges (184) (204) Ineffective hedges (16) 19 Cash earnings 1,815 3,095 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Reported profit Cash earnings |
| 10.4% 10.2% 10.5% 11.0% 5.4% 5.4% 5.2% 5.3% 15.8% 15.6% 15.7% 16.4% 2H20 1H21 2H21 1H22 Westpac St.George brands Customer franchise. MFI share1,2 0.7 5.0 6.2 3.0 6.1 Aug-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Westpac St.George brands Peers 42 Customer satisfaction (CSAT)2 Net Promoter Score (NPS)2 1 Main Financial Institution for Consumer customers. Data at February 2022. 2 Refer page 130 for details of the metric provider. 3 Customer numbers related to businesses sold, held for sale or in run-off at March 2022 have been excluded from prior periods. 4 Other includes WIB, Westpac Pacific and, Platforms, Investments and Superannuation customers. Customer franchise Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Business Consumer -8.9 8.9 -18.6 -5.2 -8.3 Aug-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Westpac St.George brands Peers 11.0% 5.3% 15.0% 28.8% 11.5% 16.4% Peer 1 Peer 2 Peer 3 Westpac Group Westpac St.George brands Peers 7.5 7.7 7.5 7.6 Aug-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Westpac St.George brands Peers 7.3 7.7 6.9 7.3 7.2 Aug-19 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Westpac St.George brands Peers Customer numbers3 (#m) New Zealand 10.3 10.3 10.3 1.3 1.3 1.4 1.2 1.1 1.0 12.8 12.8 12.6 Mar-21 Sep-21 Mar-22 Australian banking New Zealand Other4 10 27 23 31 38 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Westpac Peers 61 64 69 75 77 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Westpac Peers Charts may not add due to rounding |
| Supporting customers. 43 Customers at the centre of what we do. 1 Includes business and consumer customers as of end-April 2022. 2 As of end-April 2022. 3 In May 2021, Westpac announced a new policy that allows customers entering hardship arrangements to build a savings buffer. Westpac will work with customers to introduce a short-term savings buffer of at least $100 per month when calculating hardship payments, freeing up some money for urgent expenses, paying off higher interest debts or saving for a rainy day. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Customer franchise • Supported around 24,000 customers1 through hardship • ~1,900 consumer and 395 business customers with total loans of $403m have been granted flood-related hardship support2 • 647 customers in hardship with a savings buffer3 • Established $2m fund to support flood- affected small businesses • 12,700 customers assisted through specialist vulnerable customer teams • Acquisition of MoneyBrilliant with capability available in Westpac’s app by end-2022 • New digital business lending process established • New Westpac app released to Android device users • Customers applied gambling stops on over 21,000 credit and debit cards in 1H22 • Over 25,000 payments with abusive messages stopped in 1H22 • Real-time blocking of potential scams saving $6m for 69,000 customers since January 2022 • Digitising 400+ manual processes by end- 2022 allowing customers to do more online Helping customers Migrating to digital Insight / expertise / security |
| Investing in the Westpac digital experience. 44 • Introduced behavioural pattern scam and fraud prevention capabilities1 • Dynamic CVC capability reducing rate of fraud by more than 50%2 since 2021 • Real-time scam blocks for suspect online transactions from overseas retailers, with 69k customers saving $6m since January 2022, and continuing to scale-up • Strengthened Electronic Verification to help detect identity fraud • Expanded gambling stop functionality Protect me The Westpac app. 1 Behavioural biometrics currently available for St.George, Bank of Melbourne, and BankSA. 2 Compared to customers using static CVC. 3 QR codes available to bankers. Customer franchise Help manage my money • Net financial position available on home screen • Enhanced personalised daily payment limits in the app • Helping customers to plan their spend with upcoming payments visibility • Cross-account transaction search capability • Cashflow and spend analysis tools into the app by end-2022 Improve my digital experience • Fast sign-ins • Tap on the mobile to activate card • Enhanced quick balance and cardless cash capability • Personalised messages helping customers effectively use their banking products • Supporting customers to adopt digital services via QR codes3 New app experience enabled for Android and iOS • 200+ features and capabilities • 2.5m customers using the app • Rolling out to business customers by end-2022 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| Investing in the Westpac digital experience. 45 Improving digital sales and services • 22% increase in mobile only active customers since iOS launch (February 2021) • Dynamic CVC used on average by 10,000 customers per day in March 2022 • Apply for and manage credit cards via the app, with 83% of credit cards sold via digital in 1H22, up from 71% in 2H21 • Customers can choose which channel to use across a larger product and service range • 2.1m digital password resets in the app in 1H22, up 10% on 2H21 Digital experience recognition • 2022 Mozo Experts Choice Awards for Excellent Banking App: Bank of Melbourne, BankSA, and St.George • 2022 DBM Australian Financial Awards for Best Major Digital Business Bank: Westpac • Paris Design Awards Gold Place for new Digital Service or Application: Westpac & Meld CX for their Viana (visual analytics) concept • Customer satisfaction: iOS App Store rating of 4.3 out of 5 More functionalities through the app • More self-service opportunities for customers with capability to better manage daily payment limits within the app, usage up 8% in 1H22 reducing calls to contact centres • New digital onboarding experience for new to bank customers opening deposit accounts • Term deposit renewal instructions now available through the app1 • Ability to apply online for mortgages and top ups2, track applications, accept offer letters and monitor settlement via the app • Introduction of Digital Finance Application for business lending Developments in 2H22 and beyond • New app experience to Westpac business customers by end- 2022 • Money management functionality available by end-2022 and will provide customers with: − Transaction categorisation including personal categories − Financial education − Spend analysis with trends − Cash flow analysis of income and expenses • Digitising more than 400 manual processes by end-2022 The Westpac app. 1 Capability for customers to manage their term deposit through provision of pre-maturity instructions currently available for St.George, Bank of Melbourne, and BankSA. 2 Top Ups currently available for St.George, Bank of Melbourne, and BankSA. Customer franchise Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| Investing in the Westpac digital experience. 46 Other improvements and developments. 1 Excluding RAMS. 2 For standalone business mortgages. 3 Percentage of home loan settlements (cumulative for the reporting period) through mortgage origination platform for 1st party lending (excl. RAMS) and broker. Customer franchise Merchant support Next generation smart terminals • Improved experience for merchants and their customers from - Enhanced user accessibility - Simple fee structure - Fast payments and access to funds through instant settlement • Android-based with potential of add-on services and apps coming later in 2022 • Smoother experience for vision impaired customers • Ability to add a surcharge to manage cost of payments acceptance • ~100,000 existing terminals will be upgraded in the next 24 months Mortgages • Continued roll-out of our mortgage origination platform: - Completed roll-out to all brands1 in FY21, commenced roll-out to brokers in 1H22 - Roll-out of business mortgages2 by end-2022 • Continuing to improve capabilities including digital verification using biometrics, updated calculators, and auto-income verification Better support customers • Digital Banker provides a holistic view of customers, enabling bankers to serve customers more efficiently, with: − 360 degree visibility of a customer including accounts and products across brands − Identification and service guides for vulnerable customers − Better search capabilities across brand and segment − Ability for bankers to more easily record complaints • Launch of Digital Credit Assessment Tool to provide business customers with faster lending application outcomes % of loans settled via platform3 1H21 2H21 1H22 1st party 29 42 64 Broker - - 6 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| 2,133 1,399 1,352 1,270 1,153 Mar-20 Sep-21 Sep-20 Mar-22 Mar-21 267 277 298 316 334 2H20 1H20 1H21 2H21 1H22 16.5 12.5 12.9 11.7 11.1 1H21 2H20 1H20 2H21 1H22 4.3 4.3 3.9 3.8 3.4 2H20 1H20 1H21 2H21 1H22 5.04 5.09 5.15 5.24 5.31 Mar-20 Mar-22 Sep-20 Mar-21 Sep-21 Continued migration to digital. 47 Australian ATMs (#) Australian branches (#)1 Call Centre Volume (#m) Digitally active customers (#m) Accounts with eStatements5 1 Includes all points of presence including Advisory, Community Banking Centres and Kiosks. Kiosks have been restated in comparatives. 2 Co-located branches refers to a single branch location where more than one brand operates. 3 Over the counter. 4 Refer to page 130 for definition 5. Numbers have been restated from prior periods as the methodology has been changed to increase the accuracy of account numbers and digital transactions. 6 Digital transactions include all payment transactions (Transfer Funds, Pay Anyone and BPAY) within Westpac Live and Compass, excl. Corporate Online and Business Banking online. Branch OTC3 transactions (#m) Digital transactions6 (#m) Sales via digital (%)4 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Down 14% Down 5% Up 6% Up 12% Down 12% Down 12% Increased Westpac mobile app self-serve capability Customer franchise Less physical More digital At 31 March 2022 we had 10 co-located branches2 Up 3% Up 1% 933 931 891 851 781 Mar-20 Sep-20 Sep-21 Mar-21 Mar-22 10.5 11.2 11.9 12.3 12.7 52 55 58 60 62 Sep-21 Mar-21 Mar-20 Sep-20 Mar-22 eStatements (%) Number (#m) 37 42 41 45 45 2H21 1H22 1H20 2H20 1H21 Down 9% Down 15% Down 12% Down 8% flat Up 10% Up 7% Up 3% |
| 82% 99% 93% Customer Outcomes and Risk Excellence (CORE) program. 48 1 At 31 March 2022. Definitions of Completed, Submitted and Closed are as following: Completed means activities have been finalised but not yet submitted to Promontory Australia for assessment. Submitted means activities have been completed and submitted to Promontory Australia for assessment. Closed means activities have been completed and assessed by Promontory Australia as complete and effective. Governance Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Delivery of CORE activities yet to be completed 0 40 80 120 160 200 240 ~99% of Design activities complete ~95% of Implement activities targeted to be complete 100% of Embed activities targeted to be complete Design Implement Embed Classification of activities and % progress 1 63% 9% % complete 57% 8% % submitted 41% 4% % closed • CORE is a three-year program of work to strengthen risk governance, improve accountability and enhance our risk culture • CEO and Group Executive accountability for program delivery − performance measures in remuneration scorecards as agreed with regulators • Quarterly independent assurance by Promontory Australia • 19 workstreams, 82 deliverables and 343 activities − 210 (61%) activities completed, 194 (57%) activities submitted, and 157 (46%) activities closed1 − In 1H22 two deliverables and 16 activities added to program to further strengthen accountability, end-to-end processes and data management CY2021 CY2022 CY2023 Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept Dec |
| 98% of technology investments aligned to initiatives agreed in our strategic roadmaps 1H22 CORE progress. 49 Governance Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack STRONGER OVERSIGHT AND IMPROVING EXECUTION CULTURE AND CLEAR ACCOUNTABILITIES END-TO-END RISK MANAGEMENT EMBEDDING THREE LINES OF DEFENCE (3LOD) DATA QUALITY AND MANAGEMENT Employees have a greater understanding of their accountabilities in the context of end-to-end customer processes and across the organisation 95% of employees have a risk goal All senior leaders have defined risk accountabilities 99% completion rate for Code of Conduct learning modules Employee survey results on risk culture questions improved over last 18 months: ↑6% Constructive challenge ↑4% Safe to call out risks and/or concerns ↑3% Role clarity ~99% of key controls assessed in 1H22 assessed in accordance with strengthened control standard requirements Proactive risk management. Focus on root cause analysis and emerging risks to provide insights to management and the Board 33% reduction in the six-month average of severe, very high or high rated incidents 88% of complaints resolved at first point 100% of Second Line roles hired against target capacity Consistent implementation of Control Self Assessments by Line 1 and assurance processes from Line 2 and Line 3 Defined First Line capability uplift requirements for financial and non- financial risk classes Implemented processes to maintain and refresh the 3LOD target-state models and guides >99% of data incidents and problems have owners, defined action plans and due dates that are being tracked Improving data through the identification of ~1,700 Critical Data Elements (CDEs) Dedicated management of a further ~100 CDEs (~700 CDEs currently under management) Consolidation of legacy complaints systems onto one platform 23% improvement in the Data Quality Management rating >97% of new incidents owned within 8 days of recording 99% completion rate for Risk in Change learning modules by change leaders and practitioners Tracking to plan on delivery of key technology roadmaps |
| Collaborating for impact Helping when it matters most Backing a stronger Australia and NZ Our commitment to sustainability. Helping Australians and New Zealanders succeed. Sustainability • Sustainability disclosures in line with TCFD3 and SASB3 since 2017 • Reported financed emissions in 2021 • Joined the Australian Industry Energy Transitions Initiative • Joined the TNFD4 Forum to support the development of a nature-related financial disclosure framework • Safer Children, Safer Communities program – $18.4 million committed in multi-year funding to over 50 child safeguarding organisations since 2020 including partnerships with Save the Children and International Justice Mission • Child Safeguarding Position Statement released in 1H22 • Westpac's fifth Reconciliation Action Plan (RAP) to be released in 2H22 • Supported 1,500+ customers with a natural disaster relief package • $1.3 million in payments to approx. 450 small business customers impacted by the floods in NSW and QLD • 100,000+ people accessed our Recovery Hub – resources to manage financial stress • 12,000+ cases assisted by our specialist vulnerability teams • Partnership with Head Start Homes extended – a not-for-profit aiming to provide secure and stable homes to those living in community housing • Financial education resources offered through our Davidson Institute • Improved banking accessibility for 9,200+ Indigenous and remote Australians since the beginning of FY21 through Yuri Ingkarninthi, our Indigenous Connection Team • $2.8 billion in new lending to climate change solutions (TCE)1 • Westpac Scholars Trust awarded 100 new scholarships2 • Westpac NZ structured 32% of sustainable finance transactions executed by local borrowers in 1H22 • Completed a $250 million structured auto finance facility to fund electric vehicles and related features such as recharge equipment for consumer fintech lender, Plenti • Engaging institutional customers in high emitting sectors on their ambitions for climate change mitigation and their transition plans • Continued support for Indigenous- owned businesses, including spend on carbon credits from savannah fire management projects in Arnhem Land 1 Cumulative since 2020. See 2021 Sustainability Appendix for glossary. 2 Westpac Scholars Trust (ABN 35 600 251 071) is administered by Westpac Scholars Limited (ABN 72 168 847 041) as trustee for the Westpac Scholars Trust. Westpac Scholars Trust is a private charitable trust and neither the Trust nor the Trustee are part of the Westpac Group. Westpac provides administrative support, skilled volunteering, and funding for operational costs of Westpac Scholars Trust. 3 Taskforce on Climate-related Financial Disclosures (TCFD) and Sustainability Accounting Standards Board (SASB). 4 Taskforce on Nature-related Financial Disclosures (TNFD). Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 50 |
| Collaborating for climate and nature-related impact Improving our direct climate performance Helping customers transition to net zero Taking action on climate change. Progressing our Climate Change Position Statement and 2023 Action Plan. Sustainability • Working with peer organisations, industry groups and NGOs including: ̶ Australian Industry Energy Transitions Initiative ̶ Clean Energy Regulator’s Corporate Emissions Reductions Transparency reporting pilot ̶ UNEP6 FI’s Principles for Responsible Banking ̶ TNFD7 Forum • On track to reduce scope 1 and 2 emissions by 65% by the end of FY221 • On track to reduce scope 3 supply chain emissions by 35% by 20301 • On track to source 100% our global electricity consumption from renewables by 2025 • Carbon neutral2 in Australia since 2012 • 2,900+ employees trained on ESG fundamentals. 200+ also completed a half day ESG program with Monash University and Climateworks Centre • 39 new sustainable finance transactions Group-wide in 1H22 with a total market value of $36 billion3 • Largest bank lender to greenfield renewable energy projects in Australia for the past 5 years4 • Developing products/services to help customers transition to a net zero economy • Progressing portfolio targets and financing strategies for sectors representing the majority of our financed emissions to support a net zero economy by 2050 • Exiting thermal coal5 mining by 2030; on an attributable basis, currently finance less than 0.5% of Australia’s total thermal coal production A transition to a net zero emissions economy is required by 2050 Economic growth and emissions reductions are complementary goals Addressing climate change creates opportunities Climate-related risk is a financial risk Collective action, transparency and disclosure matter Our principles 1 Against 2016 baselines. 2 Accredited by Climate Active. 3 Sustainable finance transactions refers to green, social, sustainability, sustainability-linked and re-linked loans and bonds. The $36 billion represents the full value of the transactions we participated in, not an amount held on our balance sheet. 4 IJGlobal and Westpac Research data. 5 Thermal coal customers defined as those generating more than 25% of revenues from thermal coal, or in the case of a stand-alone mine, more than 35% of volumes from thermal coal. 6 UNEP is the United Nations Environment Programme. 7 Taskforce on Nature-related Financial Disclosures. Climate Change Action Plan and Position Statement – westpac.com.au/sustainability Our commitments and actions Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 51 |
| Climate-related metrics. 1 Climate solutions definition is available in our 2021 Sustainability Appendix. TCE is Total Committed Exposure. 2 Reduction in TCE due to amortisation of a number of significant project finance facilities. 3 Exposures in Westpac Institutional Bank only, at 30 September 2021. 4 Australia only. NEM benchmark is sourced from Australian Energy Market Operator. 5 Other mining includes iron ore, metal ore, construction material, exploration and services. Lending to thermal coal mining is 36% of total coal mining in Westpac Institutional Bank. Thermal coal customers defined as those generating more than 25% of revenues from thermal coal, or in the case of a stand-alone mine, more than 35% of volumes from thermal coal. All other coal customers or mines are deemed as metallurgical. Sustainability 9.1 9.3 10.1 10.8 10.7 Sep-18 Sep-19 Sep-20 Sep-21 Mar-22 79.0 13.2 4.3 2.8 0.7 Renewable energy Gas Black coal Liquid Fuel Brown coal TCE $4.4bn 52% 79% 48% 21% Renewable Non-renewable 0.26 0.25 0.26 0.75 0.72 0.69 FY19 FY20 FY21 Westpac electricity generation portfolio National electricity market (NEM) benchmark 2025 target: below 0.23tCO ₂ e/MWh 48.3 33.9 8.8 3.5 2.11.5 2.0 Green buildings Renewable energy Low carbon transport Forestry Waste Adaptation infrastructure Other TCE $10.7bn 8.0 5.2 2.3 0.5 8.4 5.5 2.4 0.5 8.4 5.4 2.4 0.6 Total Other mining Oil and gas extraction Coal - thermal & metallurgical Mar-21 Sep-21 Mar-22 Lending to climate change solutions ($bn, TCE)1,2 Electricity generation exposure (% of TCE)3 Mining exposure ($bn, TCE)5 Lending to electricity generation in Australia and New Zealand (% of total) Emissions intensity (tCO2-e/MWh)3,4 Climate change solutions exposure (% of TCE)1 Increase in coal exposure attributed to the metallurgical coal sub-sector Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 52 Charts does not add to 100 due to rounding |
| Sustainable financing solutions. Helping customers transition to a low carbon future. Sustainability Supporting our customers’ transition to net zero Sustainable finance highlights • Joint Green Bond Coordinator and Joint Lead Manager for GPT Wholesale Office Fund’s (GWOF) inaugural $250 million green bond which will refinance GWOF assets that meet Climate Bonds Initiative’s Low Carbon Buildings Criteria • Sole Sustainability Coordinator for Genesis Energy’s NZ$100 million SLL which was the first SLL in New Zealand aligned to the Climate Transition Finance Handbook Green tailored deposits Green term deposit balances up $1 billion in 1H22 to $2.1 billion Assets supporting the green deposit pool are externally verified and certified annually, and can include renewable energy, low carbon transport, low carbon buildings and water infrastructure Carbon trading and sales Established carbon trading desk in Australia Launched AUD spot carbon and Renewable Energy Certificates and progressed AUD carbon forwards trading capabilities, complementing our franchise in the NZ carbon market • 39 sustainable finance transactions Group-wide with a total market value of $36 billion1 − Over 70% of the transactions were loans and the majority of these were Sustainability Linked Loans (SLLs) where pricing is linked to the customer’s sustainability performance against targets − Up from eight transactions in 1H21 with a total value of $5 billion • Financing 23 projects with combined capacity to power 2.6 million homes Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 53 1 Sustainable finance transactions refers to green, social, sustainability, sustainability-linked and re-linked loans and bonds. The $36 billion represents the full value of the transactions we participated in, not an amount held on our balance sheet. |
| Strengthening diversity and inclusion. Building a workforce that reflects the customers we serve through three areas of focus. Sustainability Targets • Maintain 50% (+/- 2%) women in leadership1 across Westpac; 49% at 1H22 • 40:40:202 gender balance for Board, Executives and General Managers by 2030 women represent: 40% Board; 36% Executives; 42% General Mangers at 1H22 • 40% female Senior Executives3; 41% at 1H22 • Leadership representation targets, including 50:50 gender shortlists Focus on pay equity • 97% to 102% pay comparison between genders across majority of levels • >5% pay gaps between genders in same roles with same experience is being investigated and addressed Recent policy changes • Increased pay transparency4 • Increased paid parental leave for primary and support carers; special paid parental leave for premature births and pregnancy loss Group-wide survey to understand cultural diversity of workforce • Inclusion & Diversity survey conducted in 1H22 • Results to be finalised in 2H22 and used to better understand the diversity of our people and to inform future policy, strategy and targets Awareness, training and development • 300+ employees participated in leadership shadowing program in 1H22 • 1,000+ Cultural Diversity Employee Action Group members (representing 62 cultures) help promote awareness and advocate for greater cultural diversity in leadership Targeted development programs and career pathways • 5th Reconciliation Action Plan to be released in 2H22 • Early career engagement with Indigenous talent through traineeships and Career Trackers internship programs • 4,800+ employees completed refreshed cultural competency training • ‘Join our mob’ campaign launched to attract new Indigenous employees • 900+ Employee Action Group members working towards a shared vision of building a workplace that understands, respects and celebrates Indigenous employees GENDER EQUALITY CULTURAL DIVERSITY INDIGENOUS REPRESENTATION 1 Women in Leadership refers to women in leadership roles. It includes the CEO, Group Executives, General Managers, senior leaders with significant influence on business outcomes (direct reports to General Managers and their direct reports), large (3+) team people leaders three levels below General Manager, and Bank and Assistant Bank Managers. 2 40:40 Vision is an initiative led by HESTA and supported by various industry partners including some large Australian fund managers, Chief Executive Women, the Workplace Gender Equality Agency and ACSI. Refers to 40% female, 40% male and 20% of any gender. 3 Defined as a combined Executive and General Manager population. 4 Employees can disclose salaries to other employees. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 54 |
| Comprehensive sustainability reporting. A suite of disclosures for more information and depth. Sustainability 2021 Sustainability Supplement Available at westpac.com.au/sustainability Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 55 2021 Annual Report 2021 Annual Report FY21 Disclosure Standards FY21 Modern Slavery Statement Climate Change Position Statement and Action Plan Human Rights Position Statement and Action Plan FY21 Sustainability Datasheet |
| Earnings drivers |
| 550.3 580.3 600.9 9.8 6.1 5.4 0.3 Sep - 21 Mar - 21 Other Consumer WIB Business New Zealand Mar - 22 (1.0) 444 456 458 51 Mar - 21 Run- off Sep - 21 New Lending Mar - 22 (48) 695.0 715.4 725.5 723.8 2.9 2.6 6.0 Consumer Sep - 21 Mar - 21 New Zealand Business WIB Other Mar - 22 Businesses sold and run- off (1.1) Mar - 22 (0.3) (1.7) +NZ$1.3bn Composition of lending and deposits. Composition of loans1 (% of total) 57 Gross loans ($bn) Customer deposits ($bn) 1 Gross loans. 2 In AUD. The large difference between the NZD and AUD movement is due to a ~3% change in the exchange rate over the period; March 2022: 1.0759, September 2021: 1.0477. 3 Includes Group Businesses and Specialist Businesses, for gross loans excluding businesses sold and from run-off. Revenue Australian mortgage lending1 ($bn) Composition of deposits (% of total) Lending up 1% and deposits grew 4% over the half. Up 4% Up 1% Up 3% Up 1% Australian deposits ($bn) 2 3 +NZ$2.5 bn Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 64 11 10 2 1 12 Aust. mortgages Aust. business New Zealand Aust. institutional Aust. other consumer Other overseas 23 36 41 Term deposits Savings Transaction 187 194 213 220 166 171 185 196 126 110 103 105 479 Sep-20 521 Mar-21 Sep-21 475 501 Mar-22 Term Savings Transaction Up 9% Up 4% 2 3 Charts may not add due to rounding. |
| 1.96 1.88 1.87 1.70 0.13 0.11 0.11 0.15 2.09 Wholesale funding Deposits Loans Notable Items 1H21 2H21 ex - notable items 2H21 Capital Liquid assets (15bps) Treasury & Markets 1H22 1.99 1.85 (1bp) 1.98 4bps 1bp (7bps) 4bps Net interest margin. 58 Net interest margin (%) Net interest margin by division (%) Net interest margin (NIM) movement (%, bps) Revenue 58 NIM NIM ex notable items 1H21 2H21 1H22 1H21 2H21 1H22 Consumer 2.34 2.27 2.09 2.34 2.27 2.09 Business 3.86 3.69 3.33 3.68 3.43 3.33 WIB 1.26 1.24 1.17 1.26 1.24 1.17 NZ 2.06 1.94 1.98 2.07 2.00 1.96 Excluding Treasury & Markets and liquid assets down 10bps Treasury & Markets impact on NIM NIM excl. Treasury & Markets 2.17 1.85 2.06 1.70 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21 1H22 NIM NIM excl. Treasury & Markets 0bp Margin ex Treasury & Markets down 17bps Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| 803 813 845 593 476 416 453 262 339 18 139 75 1,867 1,690 1,675 1H21 2H21 1H22 370 333 335 110 49 38 1H22 1H21 382 2H21 373 480 369 348 344 378 387 429 80 72 1H21 57 2H21 845 1H22 815 804 Non-interest income. 59 Non-interest income contributors ($m) Net fee income ($m) Wealth management income ($m) Non-interest income contributors excluding notable items and businesses sold.1 1 Income for Businesses sold includes General Insurance, Lenders Mortgage Insurance, NZ Life Insurance and Vendor Finance, prior figures have been aligned to current presentation for comparability. Revenue Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Other non-risk fee income Net transaction fees Facility fees Other (incl NZ) Funds Australia Down 10% Down 1% Up 1% Up 4% Down 2% Down 20% 399 223 373 54 39 -34 18 139 75 471 401 414 1H21 2H21 1H22 Down 15% Up 3% Trading and other ($m) Trading DVA Other Fees Other Trading Wealth and insurance |
| 7,302 5,700 5,135 5,366 231 Specialist Businesses Notable items (65) 2H21 Reported 2H21 ex notable items 1H22 ex notable items Fix Ongoing expenses Investment (ex Fix) (142) 1H22 Reported Notable items (1,602) (170) (188) Expense movements 1H22 – 2H21 ($m) Expenses. 60 FTE (#) 40,143 38,823 BAU Sep-21 Fix Investment (ex Fix) Mar-22 Specialist Businesses (583) (350) (114) (273) Down 1,320 or 3% Down $565m or 10% Expenses 1 Details of initiatives on page 61. 2 Headcount refers to total number of people. Direct includes people employed directly by Westpac including permanent and temporary staff, and contractors. Third party includes consultants and processing services. Ongoing expenses down from simplification benefits1, lower leave provisions, lower third party spending, and write-down of certain assets in 2H21 Investment (ex Fix) down from lower investment spend1 as some projects completed, partly offset by increased spend on digital Fix down from the completion of a number of initiatives including the initial design phase of CORE Headcount (#)2 Mar-21 Sep-21 Mar-22 Direct 41,661 43,447 41,088 Third party 17,470 19,357 17,442 Total 59,131 62,804 58,530 In setting an FY24 $8bn cost target we made certain economic and business exit assumptions: • Inflation of 2.5% FY22-FY24 • Completion of sales of specialist businesses by end of FY23, which will depend on final terms with counterparties and regulatory approvals • No material new regulatory costs/requirements • Exchange rates: $1.09 NZD/AUD, $0.77 USD/AUD FY24 $8bn cost target supporting assumptions Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| Expenses. 61 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 1 Refer page 48 for further detail on our progress on CORE. 2 Includes capitalised software, fixed assets and prepayments. Expenses 218 184 160 141 152 100 144 153 622 572 859 653 1,163 2H20 1H21 2H21 1H22 947 992 856 Fix Simplify Perform Investment spend ($m) 2H20 1H21 2H21 1H22 Expensed 384 502 720 528 Capitalised2 608 354 443 419 Total investment spend 992 856 1,163 947 Investment spend expensed 39% 59% 62% 56% Investment spend mix ($m) Total investment spending. • Continued to eliminate and rationalise the number of fees and products • Launched new digital mortgage application process • Launched an automated credit assessment tool, which helps to speed- up approval times for SME, Commercial and Private Wealth customers • Further digitisation and automation of processes Fix Simplify Perform • Continued investment in our CORE program1 • Updated our AML/CTF systems • Rectification of our electronic security register for business customers • Expanded open banking capability to all brands and products • Regulatory change updates across our systems and processes for DDO, anti-hawking and Basel III • RBNZ’s requirements including BS11 and Section 95 • Completed the roll-out of Westpac mobile banking app to android users • Increased digital self-serve options for customers • Deployment of next generation merchant terminals |
| 1H22 impairment charge of $139m. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 62 283 144 466 97 (147) (194) (203) (166) 438 318 296 218 366 (640) (10) 940 (372) (218) 139 2H20 1H21 2H21 1H22 2H20 1H21 2H21 1H22 2H20 1H21 2H21 1H22 2H20 1H21 2H21 1H22 2H20 1H21 2H21 1H22 (777) Impairment charges and stressed exposures (bps) Impairment charges ($m) New IAPs Write-backs & recoveries Write-offs direct Other mvmts in CAP Individually assessed Collectively assessed 4bps 110bps -100 0 100 200 300 400 -20 0 20 40 60 80 2008 2009 2010 2011 2012 2013 2014 2015 2016 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21 1H22 Impairment charge to average loans annualised (lhs) Stressed exposures to TCE (rhs) Total Impairment charges Charge driven by higher overlays and increased weight to downside scenario. |
| Credit quality and provisions |
| 64 4,675 2,993 6,752 Reported probability-weighted ECL 100% base case ECL 100% downside ECL Mar-21 Sep-21 Mar-22 Provisions to gross loans (bps) 79 70 65 Impaired asset provisions to impaired assets (%) 47 54 48 Collectively assessed provisions to credit RWA (bps) 142 117 116 412 606 611 564 832 501 943 1,051 1,561 1,327 1,131 989 1,578 2,317 2,247 1,806 1,606 1,262 818 1,019 1,032 853 791 794 171 795 708 958 647 1,136 3,922 5,788 6,159 5,508 5,007 4,682 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Overlay Stage 1 CAP Stage 2 CAP Stage 3 CAP Stage 3 IAP Provisions. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Provisions for impairments Total impairment provisions2 ($m) Credit quality 3 Higher overlays from supply chain disruption, labour shortages, inflation, asset price risks and floods Lower provisions across all stages from improvement in credit metrics Decrease driven by partial write-off of Forum exposure Expected Credit Loss1 (ECL) ($m) $1.7bn in impairment provisions above the base case economic scenario 1 Includes ECL Overlays and IAP. Excludes provisions for debt securities. 2 Includes provisions for debt securities. 3 Overlay from Mar-20 includes New Zealand overlay. Overlay from Sep-21 shows portfolio overlays. Sound coverage; increase in overlays for uncertainties and floods. COVID-19 Downside weight increased to 45% from 40% |
| 0.26 0.19 0.19 0.14 0.80 0.66 0.68 0.56 0.85 0.75 0.49 0.40 5.99 5.30 6.40 7.25 92.10 93.10 92.25 91.65 Sep-20 Mar-21 Sep-21 Mar-22 Stage 1 reduction due to larger TCE transfer to Stage 2 from additional overlay provisions Stage 2 increase partly driven by TCE transfer from Stage 1 from additional overlay provisions, partly offset by lower watchlist and substandard exposures from upgrades and repayments Reduction in Stage 3 reflects improvement in 90+ day mortgage delinquencies and the partial write-off of Forum exposure Provision cover by portfolio category. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Exposures as a % of TCE Fully performing portfolio Watchlist & substandard 90+ day past due and not impaired Impaired Non-stressed but significant increase in credit risk 65 Sep-20 Mar-21 Sep-21 Mar-22 Stage 1 provisions Fully performing portfolio Small cover as low probability of default (PD) 0.11 0.10 0.09 0.10 Stage 2 provisions (includes portfolio overlays) Non-stressed but significant increase in credit risk Lifetime expected loss based on future economic conditions 3.41 3.29 2.16 1.92 Watchlist & substandard Still performing but higher cover reflects deterioration 8.25 9.07 9.80 10.95 Stage 3 provisions 90+ day past due and not impaired In default but strong security 11.98 12.91 10.57 10.62 Impaired assets In default. High provision cover reflects expected recovery 41.45 47.03 54.43 48.03 Credit quality Provisioning to TCE (%) Increase in portfolio overlays reflected in higher Stage 2 exposures. |
| 1,194 997 958 708 609 607 633 1,078 477 589 440 471 450 519 550 897 864 222 614 222 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21 1H22 0.62 0.58 0.44 0.27 0.20 0.22 0.15 0.14 0.17 0.26 0.19 0.14 0.41 0.35 0.31 0.26 0.25 0.33 0.34 0.39 0.48 0.80 0.68 0.56 1.45 1.24 0.85 0.71 0.54 0.65 0.56 0.55 0.55 0.85 0.49 0.40 2.48 2.17 1.60 1.24 0.99 1.20 1.05 1.08 1.20 1.91 1.36 1.10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Mar-22 Credit quality metrics improved. 66 Stressed exposures down 26bps. 1 Facilities 90 days or more past due date not impaired. These facilities, while in default, are not treated as impaired for accounting purposes. 2 Group 90+ day mortgage delinquencies, Australian 90+ day mortgage delinquencies decreased by 19bps. 3 Includes exposures that are managed on a facility by facility basis. Credit quality Stressed exposures as a % of TCE Movement in stress categories (bps) New and increased gross impaired assets ($m)3 Watchlist and substandard • Improvement from customer rating upgrades and repayments, mostly institutional 90+ day past due and not impaired1 • Reduction driven by 17bps decrease in mortgage 90+ day delinquencies2 Impaired • Reduction from the partial write-off of Forum exposure Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 136 0 2 160 110 (0) (8) (18) (5) (12) (1) (8) Mar-21 Impaired 90+ dpd not impaired Substandard Watchlist Sep-21 Impaired 90+ dpd not impaired Substandard Watchlist Mar-22 1 1 |
| Portfolio composition. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 67 Total committed exposure (TCE) by risk grade at 31 March 2022 ($m) 1 Risk grade equivalent. 2 Exposure by booking office. Standard and Poor’s Risk Grade1 Australia NZ / Pacific Asia Americas Europe Group % of Total AAA to AA- 194,296 22,152 570 11,787 842 229,647 18% A+ to A- 38,430 5,802 1,246 3,188 4,155 52,821 5% BBB+ to BBB- 67,151 12,652 2,681 3,212 1,379 87,075 8% BB+ to BB 73,947 14,305 518 200 133 89,103 8% BB- to B+ 55,892 7,832 301 238 241 64,504 6% <B+ 5,981 1,939 30 - - 7,950 1% Mortgages 525,512 68,424 - - - 593,936 51% Other consumer products 31,646 3,882 - - - 35,528 3% TCE 992,855 136,988 5,346 18,625 6,750 1,160,564 TCE at 30 September 2021 959,067 132,925 5,974 21,092 6,224 1,125,282 Exposure by region2 (%) 85% 12% <1% 2% <1% 100% Credit quality 72 16 10 2 Housing Business Institutional Other consumer Loan composition at 31 March 2022 (% of total) Total loans $724bn No direct exposure to Russia or Ukraine |
| 0 600 1,200 1,800 2,400 3,000 3,600 A- A A+ A+ BBB BBB A- A- BBB AA- S&P rating or equivalent 1.1 1.0 1.0 1.1 1.0 1.2 1.0 Sep-17 Sep-18 Sep-19 Sep-20 Mar-21 Sep-21 Mar-22 0 50 100 150 200 250 Other Mining Accommodation, cafes & restaurants Construction Utilities Transport & storage Property services & business services Manufacturing Services Agriculture, forestry & fishing Wholesale & retail trade Property Government admin. & defence Finance & insurance Mar-21 Sep-21 Mar-22 Loan portfolio composition. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 68 Top 10 exposures to corporations and NBFIs5 (% of TCE) Top 10 exposures to corporations & NBFIs at 31 March 2022 ($m) Exposures at default1 by sector ($bn) 1 Exposures at default is an estimate of the committed exposure expected to be drawn by a customer at the time of default. Excludes consumer lending. 2 Finance and insurance includes banks, non-banks, insurance companies and other firms providing services to the finance and insurance sectors. 3 Property includes both residential and non-residential property investors and developers and excludes real estate agents. 4 Construction includes building and non-building construction, and industries serving the construction sector. 5 NBFI is non-bank financial institutions. 2 4 Credit quality Clearing house membership Includes increased liquid assets 3 |
| 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 Property Accommodation, cafes & restaurants Wholesale & retail trade Agriculture, forestry & fishing Property & business services Services Manufacturing Construction Transport & storage Mining Finance & insurance Utilities Mar-21 Sep-21 Mar-22 Credit quality improved across most sectors. 1 Services includes education, health & community services, cultural & recreational and personal & other services. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 69 Corporate and business stressed exposures by industry sector ($bn) Credit quality Stress to TCE by sector Sector Property Accomm., cafes & restaurants Wholesale & retail trade Agriculture, forestry & fishing Property & business services Services1 Manufacturing Construction Transport & storage Mining Finance & Insurance Utilities Sep-21 (%) 2.2 12.4 3.6 4.4 4.0 4.5 3.2 5.5 2.3 1.7 0.2 0.2 Mar-22 (%) 2.1 7.6 3.1 3.7 3.6 2.8 2.7 5.5 1.7 0.6 0.1 0.2 Decrease driven by partial write-off of Forum exposure Reduction mainly due to refinance of one exposure in accommodation sector |
| 23 15 8 5 17 6 26 Building Construction Non-Building Construction Site Preparation Services Building Structure Services Installation Trade Services Building Completion Services Other Construction Services Sectors in focus. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 70 Accommodation, cafes and restaurants Accommodation, cafes & restaurants and Construction. 1 Includes impaired exposures. 2 Percentage of portfolio TCE. 3 Fully secured: Secured loan to collateral value ratio ≤ 100%, Partially secured: Secured loan to collateral value ratio > 100%, but < 150%, Unsecured: Secured loan to collateral value ratio > 150%, or no security held. Credit quality Mar-21 Sep-21 Mar-22 Total committed exposure (TCE) ($bn) 9.7 9.6 9.9 Lending ($bn) 8.3 8.2 8.1 As a % of Group TCE 0.91 0.85 0.85 % of portfolio graded as stressed1,2 14.55 12.38 7.64 % of portfolio impaired2 0.67 0.94 0.68 Portfolio security composition3 (TCE) (%) Portfolio by sub-sector (TCE) (%) 36 35 23 6 Accommodation Pubs, Taverns and Bars Cafes and Restaurants Clubs (Hospitality) 74 21 5 Fully Secured Partially Secured Unsecured Construction Portfolio security composition3 (TCE) (%) Portfolio by sub-sector (TCE) (%) Mar-21 Sep-21 Mar-22 TCE ($bn) 11.1 11.2 11.2 Lending ($bn) 7.6 6.7 6.8 As a % of Group TCE 1.04 1.00 0.96 % of portfolio graded as stressed1,2 6.06 5.51 5.46 % of portfolio impaired2 1.11 0.86 0.80 59 18 23 Fully Secured Partially Secured Unsecured |
| Sectors in focus. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 71 Commercial property Commercial property exposures % of TCE and % in stress Commercial property portfolio composition (TCE) (%) Commercial property. 1 Includes impaired exposures. 2 Percentage of commercial property portfolio TCE. Credit quality Mar-21 Sep-21 Mar-22 TCE ($bn) 67.4 70.0 74.3 Lending ($bn) 52.2 51.7 56.5 As a % of Group TCE 6.28 6.22 6.40 Median risk grade (S&P equivalent) BB+ BB+ BB+ % of portfolio graded as stressed1,2 2.92 2.16 2.06 % of portfolio impaired2 0.14 0.21 0.16 0 2 4 6 8 10 12 14 16 18 20 0 2 4 6 8 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Commercial property as % of TCE (lhs) Commercial property % in stress (rhs) 30 19 22 12 13 4 Commercial offices Residential Retail Industrial Corporate Other 26 10 6 1 3 9 45 NSW & ACT VIC QLD SA & NT WA NZ & Pacific Institutional 37 7 40 16 Investors & developers <$10m Developers >$10m Investors >$10m Diversified property groups and property trusts >$10m Borrower type (%) Region (%) Sector (%) |
| Sectors in focus. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 72 Mining portfolio by sub-sector (TCE) (%) Mining (incl. oil and gas) Australian Agriculture; Mining incl. oil and gas; Retail trade. 1 Includes impaired exposures. 2 Percentage of portfolio TCE. Credit quality Mar-21 Sep-21 Mar-22 TCE ($bn) 8.0 8.4 8.4 Lending ($bn) 4.4 3.6 3.4 As a % of Group TCE 0.75 0.75 0.72 % of portfolio graded as stressed1,2 3.42 1.73 0.60 % of portfolio in impaired2 0.25 0.17 0.14 29 33 14 10 7 7 Oil and gas Metal ore Mining services Iron ore Coal Other Australian Agriculture portfolio by sub-sector (TCE) (%) Mar-21 Sep-21 Mar-22 TCE ($bn) 12.6 13.0 13.4 Lending ($bn) 9.9 10.5 10.6 As a % of Group TCE 1.17 1.15 1.16 % of portfolio graded as stressed1,2 4.68 3.30 1.96 % of portfolio in impaired2 0.34 0.41 0.40 32 26 10 8 5 4 4 4 3 22 Grain Beef & Sheep Horticulture Dairy Cotton Fishing & Aquaculture Services to Agriculture Viticulture Other Forestry & Logging Poultry Australian Agriculture Retail trade Mar-21 Sep-21 Mar-22 TCE ($bn) 13.9 14.0 12.5 Lending ($bn) 8.7 8.6 8.3 As a % of Group TCE 1.30 1.24 1.08 % of portfolio graded as stressed1,2 5.48 3.68 3.69 % of portfolio impaired2 1.82 1.55 1.42 Retail trade exposure by sub-sector (TCE) ($bn) 6.4 4.0 3.4 6.2 4.2 3.6 5.9 2.9 3.7 Personal and household goods retailing Motor vehicle retailing and services Food retailing Mar-21 Sep-21 Mar-22 Decrease mostly due to sale of Auto Finance business |
| Australian consumer finance. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 73 Australian consumer finance portfolio1 Australian consumer finance 90+ day delinquencies (%) Australian consumer finance portfolio ($bn) Australian consumer finance portfolio ($bn) 1 Does not include Margin Lending. 2 Loans to customers through dealers in Specialist Businesses. These loans will be run-down over their contractual term. Credit quality 6.8 2.8 5.4 15.0 6.0 2.4 4.8 13.2 6.4 2.4 4.0 12.8 Credit cards Personal loans Auto loans (consumer) Total consumer finance Mar-21 Sep-21 Mar-22 Higher credit card balances from spending lift; consumer auto loans in run-off. Mar-21 Sep-21 Mar-22 Lending ($bn) 15.0 13.2 12.8 As a % of Group loans 2.0 1.8 1.8 30+ day delinquencies (%) 3.58 3.26 3.06 90+ day delinquencies (%) 1.92 1.76 1.64 90+ day delinquencies down 12bps over the period, reflecting 15bps improvement in portfolio, partly offset by 3bps from contraction in portfolio 2 In run-off 1.64 0.50 1.50 2.50 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 0 1 2 3 0 5 10 15 20 25 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 Performing loans balance ($bn lhs) 90+ day delinquencies balance ($bn rhs) |
| Australian mortgage delinquencies. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 74 Improvement in delinquencies across the portfolio. 1 Financial hardship assistance is available to customers experiencing unforeseen events, including changes in income due to illness, a relationship breakdown or natural disasters. Hardship assistance often takes the form of a reduction or deferral of repayments for a short period. Customer requesting financial hardship assistance, excluding those seeking COVID-19 related support, must provide a statement of financial position and an assessment is made regarding the customer’s eligibility. Mortgage credit quality Australian mortgage delinquencies (%) Australian mortgage portfolio Mar-21 Sep-21 Mar-22 Total portfolio 30+ day delinquencies (bps) 179 220 147 Total portfolio 90+ day delinquencies, including impaired mortgages (bps) 120 107 88 Investment property loans 90+ day delinquencies (bps) 118 109 89 Interest only loans 90+ day delinquencies (bps) 91 82 66 Customers in hardship1 including 6mth serviceability period (by balances, bps) 113 196 75 Consumer properties in possession (number) 180 224 201 Impaired mortgages (by balances, bps) 6 6 5 Australian mortgage 90+ day delinquencies by State (%) 0.0 1.0 2.0 3.0 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 NSW/ACT VIC/TAS QLD WA SA/NT ALL 0.88 1.47 0.0 1.0 2.0 3.0 4.0 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 90+ day delinquencies 30+ day delinquencies Australian mortgage hardship1 balances (% of portfolio) COVID deferrals 0.75 0.0 0.5 1.0 1.5 2.0 2.5 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Non-COVID-19 support COVID-19 support . |
| Australian mortgage portfolio composition. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 1 Flow is new mortgages settled in the 6 months ended 31 March 2022. 2 Includes amortisation. Calculated at account level, where split loans represent more than one account. 3 Loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments. 4 Mortgage loss rates for March balances are annualised, based on losses for the 6 months. Mortgage loss rates for September are actual losses for the 12 months ending. 75 Mortgage credit quality Australian mortgage portfolio Mar-21 balance Sep-21 balance Mar-22 balance 1H22 Flow1 Total portfolio ($bn) 443.6 455.6 458.3 50.8 Owner occupied (OO) (%) 62.0 63.7 64.8 69.4 Investment property loans (IPL) (%) 35.2 33.8 33.4 30.5 Portfolio loan/line of credit (LOC) (%) 2.3 1.9 1.7 0.1 Variable rate / Fixed rate (%) 68/32 62/38 60/40 61/39 Interest only (I/O) (%) 18.2 15.8 14.2 16.4 Proprietary channel (%) 54.2 52.8 52.7 48.2 First home buyer (%) 9.4 9.6 9.7 11.7 Mortgage insured (%) 16.1 15.8 15.4 14.0 Mar-21 Sep-21 Mar-22 1H22 Flow1 Average loan size2 ($’000) 284 277 280 420 Customers ahead on repayments including offset account balances3 (%) 72 70 70 Actual mortgage losses net of insurance ($m, for 6 months ending) 44 27 28 Actual mortgage loss rate annualised4 (bps) 2 2 1 Australian mortgage portfolio and 1H22 flow by product and repayment type (%) 17 21 38 48 19 17 18 2 1 3 3mths to Jun22 Dec-22 Jun-23 Dec-23 Jun-24 Dec-24 Jun-25 Dec-25 Jun-26 Dec-26 Australian fixed rate mortgage expiry schedule ($bn, every 6 months to) 2 13 22 5 57 2 12 22 4 60 2 11 23 3 62 0 13 19 3 66 LOC IPL-I/O IPL-P&I OO-I/O OO-P&I Mar-21 (Portfolio) Sep-21 (Portfolio) Mar-22 (Portfolio) 1H22 Flows Chart does not add to 100 due to rounding. |
| Australian mortgage portfolio. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 76 Australian housing loan-to-value ratios (LVRs) (%) Equity increased for existing loans. 1 Dynamic LVR is the loan-to-value ratio taking into account the current loan balance, changes in security value, offset account balances and other loan adjustments. Property valuation source CoreLogic. 2 Weighted average LVR calculation considers size of outstanding balances. 3 Average LVR of new loans is on rolling 6 months. Mortgage credit quality Australian mortgage portfolio LVRs Mar-21 balance Sep-21 balance Mar-22 balance Weighted averages2 LVR at origination (%) 73 73 73 Dynamic LVR1 (%) 54 50 47 LVR of new loans3 (%) 72 71 71 1 Serviceability assessment creates a buffer for borrowers 22 16 40 15 7 0 N/A 19 15 46 12 7 2 69 15 10 4 1 0 0 0 10 20 30 40 50 60 70 80 90 100 0<=60 60<=70 70<=80 80<=90 90<=95 95<=100 >100 1H22 drawdowns LVR at origination Portfolio LVR at origination Portfolio dynamic LVR • Loans are assessed at the higher of − The customer rate, including any life-of-loan discounts, plus the serviceability buffer of 3.0% (up from 2.50% in October 2021); or − The minimum assessment rate, called the “floor rate”, currently 5.05% • Interest only (I/O) loans are assessed based on the residual principal and interest (P&I) term using the applicable P&I rate • Fixed rate loans are assessed on the variable rate to which the loan will revert after the fixed period 7 9 11 12 20 33 8 3 5 7 7 16 46 17 <75k 75k to 100k 100k to 125k 125k to 150k 150k to 200k 200k to 500k >500k Owner Occupied Investment Property Loan Applicant gross income band (1H22 drawdowns, % by approved limits) Chart does not add to 100 due to rounding. Chart does not add to 100 due to rounding. |
| 10 8 9 11 8 11 20 19 Mar-21 Mar-22 Investment property loans - incentive is to keep repayments high for tax purposes Accounts opened in the last 12 months Loans with structural restrictions on repayments e.g. fixed rate Residual - less than 1 month repayment buffer Loans ‘on time’ and <1 mth ahead (% of balances) Australian mortgage portfolio repayment buffers. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 77 Offset account balances1 ($bn) 1 Includes RAMS from September 2020 onwards. 2 Customer loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments. Includes mortgage offset accounts. ‘Behind’ is more than 30 days past due. ‘On time’ includes up to 30 days past due. Mortgage credit quality 49 Mar- 19 41 Sep- 17 Sep- 15 Sep- 18 Sep- 19 Mar- 16 Sep- 16 48 Mar- 18 Mar- 17 Mar- 21 Mar- 20 Sep- 20 Sep- 21 Mar- 22 31 33 35 36 37 39 39 40 42 46 51 53 Linked to I/O mortgages Linked to P&I mortgages Offset account balances continue to increase. 2 27 20 16 6 6 24 2 28 20 16 6 6 23 1 29 20 15 5 6 23 Behind On time < 1 Mth < 6 Mths < 1 Yr < 2 Yrs >2 Yrs Mar-21 Sep-21 Mar-22 47 Australian home loan customers ahead on repayments2 (% by balances) Higher % of loans ‘on time’ and <1mth ahead reflects new lending flows and higher proportion of fixed rate lending 1 23 17 15 6 6 31 2 23 16 14 6 6 33 1 24 16 14 5 6 33 Behind On time < 1 Mth < 6 Mths < 1 Yr < 2 Yrs >2 Yrs Mar-21 Sep-21 Mar-22 Australian home loan customers ahead on repayments2 (% by accounts) Chart does not add to 100 due to rounding. Chart does not add to 100 due to rounding. |
| Calendar year Australian mortgage portfolio underwriting. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 78 Credit policy at April 2022 Australian mortgage portfolio by year of origination (% of total book) 1 HEM is the Household Expenditure Measure, produced by the Melbourne Institute. 2 In Second Half 2021 Westpac Lender’s Mortgage Insurance Limited was sold to Arch Capital Group. The sale was completed on 31 August 2021. Westpac has entered into a 10-year exclusive supply agreement for Arch to provide lenders mortgage insurance to the Group. 3 Includes loans where LMI applies to >70% LVR loans, for example, single industry towns. Mortgage credit quality 2 1 1 1 2 1 2 2 3 5 6 7 8 8 8 12 25 6 Pre-2006 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Income • Verified via payslips, tax returns or salary credits, with other supporting documentation such as PAYG payment summaries or ATO Statements (minimum standards apply) • Shading of at least 20% applies to less certain income sources i.e. overtime, bonuses Credit Score & Credit Bureau • Bespoke application scorecards segmented by new and existing customers • Credit and score override rates tracked and capped • Credit bureau checks required Expenses • Assessed as the higher of a borrower’s HEM1 comparable expenses or HEM, plus any expenses that are not comparable to HEM (e.g. private school fees, life insurance) • HEM is applied by income bands, post settlement postcode location, marital status and dependants • 17 expense categories used, aligned with Melbourne Institute guidelines and LIXI standards Serviceability assessment • For serviceability assessment, loans are assessed at the higher of: - The customer rate, including any life-of-loan discounts, plus the serviceability buffer of 3.0% (up from 2.50% in October 2021), or - The minimum assessment rate, called the “floor rate”, currently 5.05% (from October 2020, previously 5.35%) • For I/O Loans, serviceability is assessed on a P&I basis over the residual term • Fixed rate loans assessed on the variable rate to which the loan will revert after fixed period • All existing customer commitments are verified • Review Westpac Group accounts and Comprehensive Credit Reporting (CCR) to identify customer commitments • Limits apply to higher debt-to-income lending; above 7x referred for manual credit assessment • Credit card repayments assessed at 3.8% of limit Genuine savings deposit requirements • Minimum 5% proof of genuine savings for higher LVR loans (typically LVR >90%). Any Home Owners Grants are not considered genuine savings Security • LVR restrictions apply depending on location, property value and nature of security • Restrictions on high-density apartments based in postcode defined areas (generally capital city CBD’s) and properties in towns heavily reliant on a single industry (e.g. mining, tourism) LMI • Mortgage insurance for higher risk loans, such as LVRs >80%. Exception policy applies for certain professionals and Westpac staff Australian mortgage portfolio by insurance profile2 (%) Insurance not required (Low risk profile including loans <80% LVR) Not insured >80% LVR (LMI waiver policy applies to certain professionals and staff) Insured (>80% LVR) 79 15 6 3 |
| Australian mortgages. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 79 Scheduled I/O term expiry2 (% of total I/O loans) I/O lending by dynamic LVR1 and income band (% of total I/O lending) Interest only and Investment property lending. 1 Dynamic LVR is the loan-to-value ratio taking into account the current loan balance, changes in security value, offset account balances and other loan adjustments. Property valuation source CoreLogic. 2 Based on outstanding balance. Excludes line of credit loans, I/O loans without date (including bridging loans and loans with construction purpose) and I/O loans that should have switched to P&I but for the previously announced mortgage processing error. 3 Includes amortisation. Calculated at account level where split loans represent more than one account. 4 Customer loans ahead on payments exclude equity/line of credit products as there are no scheduled principal payments. Mortgage credit quality 10 3 1 31 13 2 26 12 3 66 28 6 <=60% 60%<=80% >80% Dynamic LVR bands (%) <$100k $100k - $250k >$250k Applicant gross income bands Chart does not add due to rounding Investment property portfolio by number of properties per customer (%) Investment property lending (IPL) portfolio Mar-21 Sep-21 Mar-22 Investment property loans ($bn) 157 154 153 Weighted averages LVR of IPL loans at origination (%) 72 72 71 LVR of new IPL loans in the period (%) 70 70 70 Dynamic LVR1 of IPL loans (%) 54 50 47 Average loan size3 ($’000) 320 318 321 Customers ahead on repayments including offset accounts4 (%) 63 61 61 90+ day delinquencies (bps) 118 109 89 Annualised loss rate (net of insurance claims) (bps) 3 2 2 16 18 15 12 15 23 1 10 Yrs+ 5<10 Yrs 0<1 Yr 2<3 Yrs 1<2 Yrs 3<4 Yrs 4<5 Yrs 65 25 6 2 11 1 2 3 4 5 6+ |
| Capital, funding and liquidity |
| 12.32 67bps 14bps 1bp 13bps 11.33 16bps 11.49 (48bps) (76bps) (70bps) Sep-21 Cash earnings Final Dividend Off- Market Share Buy-back RWA De- ductions and other FX trans- lation impact Divest- ments Mar-22 Future asset sales Pro forma Mar-22 Capital deductions and other capital movements mostly reflect lower DTA1 and cash earnings adjustments CET1 capital ratio 11.33%. 81 Capital, funding and liquidity Key capital ratios (%) Mar-21 Sep-21 Mar-22 Level 2 CET1 capital ratio 12.3 12.3 11.3 Additional Tier 1 capital ratio 2.2 2.3 2.1 Tier 1 capital ratio 14.5 14.6 13.4 Tier 2 capital ratio 3.9 4.2 4.3 Total regulatory capital ratio 18.4 18.9 17.7 Risk weighted assets (RWA) ($bn) 429 437 460 Leverage ratio 6.3 6.0 5.6 Level 1 CET1 capital ratio 12.6 12.6 11.2 Internationally comparable ratios3 Leverage ratio (internationally comparable) 6.9 6.6 6.1 CET1 capital ratio (internationally comparable) 18.1 18.2 17.4 1 Deferred tax assets. 2 Subject to completion occurring as expected. 3 Internationally comparable methodology aligns with the APRA study titled ‘International Capital Comparison Study’ dated 13 July 2015. Level 2 CET1 capital ratio movements (%, bps) Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 2 Down 99bps Divestments includes sale of Westpac Life-NZ- Limited and our motor vehicle dealer finance and novated leasing business The Level 1 CET1 capital ratio decreased 18bps following the implementation of the final revised standards for APS 111 Capital Adequacy: Measurement of Capital and APS 222 Associations with Related Entities on 1 January 2022 From RWA movements refer next page |
| 428.9 436.7 460.0 2.4 2.9 16.3 2.0 Market risk Mar-22 Mar-21 Other Sep-21 Credit risk (0.3) Operational risk IRRBB Risk weighted assets. 82 • RWA increased $23.3bn over 1H22, mostly from higher IRRBB RWA • Interest rate risk in the banking book (IRRBB) RWA increased $16.3bn as Westpac invests its capital over a three year term. Increased interest rate volatility and the widening in two and three year market swap rates resulted in valuation differences to capital invested over a one year term • Market risk RWA increased $2.9bn mainly due to the introduction of an industry-wide overlay for updated market risk models pending regulatory approval • Operational risk RWA increased $2.0bn from adopting the standardised measurement approach Risk weighted assets (RWA) ($bn) Movement in credit risk weighted assets ($bn) Increase mostly from higher non-credit risk RWA. Commentary Capital, funding and liquidity Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 347.1 357.3 359.7 5.9 0.7 Mar-21 Mar-22 FX translation Sep-21 Exposures Credit quality Counterparty credit and mark-to-market risk Modelling and methodology changes (1.4) (1.7) (1.1) Up $2.4bn or 0.7% Growth across specialised lending, mortgages and corporate Up $23.3bn or 5.3% |
| Update on capital management. 83 APRA’s revisions to capital framework and our new operating range. Capital, funding and liquidity Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack CET1 capital operating range • We will seek to operate with a CET1 capital ratio of between 11.0% and 11.5% (including to account for dividend payments) under the new capital framework from 1 January 2023 • On 29 November 21, APRA finalised its capital framework, which increased the CET1 capital ratio requirement for Domestic Systemically Important Banks (D-SIBs) from 8% to 10.25% from 1 January 2023 • Under the framework, the capital conservation buffer increases from 2.5% to 3.75% and a base level for the countercyclical capital buffer of 1.0% was introduced • APRA also indicated that it expects the major banks will likely operate with a CET1 capital ratio above 11% under the new framework Current APRA requirements APRA's final capital framework Minimum Prudential Capital Requirement (4.5%,) Minimum Prudential Capital Requirement (4.5%) 10.25% APRA requirement Operating range 11.0% - 11.5% Buffer 0.75% Capital Conservation Buffer (3.75%) and D-SIB (1.0%,) Capital Conservation Buffer (3.75%) and D-SIB (1.0%) Countercyclical capital buffer (1.0%) Countercyclical capital buffer (1.0%) Westpac’s CET1 operating range Minimum Prudential Capital Requirement (4.5%) Management buffer Capital Conservation Buffer (2.5%) and D-SIB (1.0%) Unquestionably strong expectation (2.5%) 10.5% Unquestionably strong benchmark Management buffer Effective 1 January 2023 |
| Implementation Change Details Current and finalised by 1 Jul 2028 RBNZ Capital Review • Implementation from 1 January 2022 with a transitional period of ~6 years • RWA of IRB banks including WNZL increased to 90% of that required under a standardised approach through the introduction of an 85% output floor and increasing IRB scalar from 1.06 to 1.2 • D-SIB Tier 1 capital requirement of 16% with at least 13.5% in the form of CET1 1 Jan 2023 APRA’s revisions to the ADI capital framework APRA’s final capital standard includes: • Increasing the CET1 capital requirement for D-SIBs from 8.0% to 10.25% through higher regulatory buffers, with an increase in the capital conservation buffer (to 4.75% from 3.5%)1 and the introduction of a base level countercyclical capital buffer of 1.0% • Adjustments to RWA calculations for certain assets (residential mortgages, non-retail lending) • Implementing a 72.5% output floor to limit the capital benefit for Advanced ADIs relative to Standardised ADIs • RWA for New Zealand subsidiaries to be determined under RBNZ rules at the consolidated group level 1 Jan 2024 CPS 190 Financial Contingency Planning CPS 900 Resolution Planning APRA has released two draft prudential standards for consultation for: • Bank’s to develop plans to responding to financial stress • Bank’s to prepare for resolution with limited adverse impacts on the community and financial system, in the event of their failure 1 Jan 2023 Leverage ratio • Proposed minimum 3.5%. At 31 March 2022, our leverage ratio was 5.6% 1 Jan 2024 and 1 Jan 2026 Loss Absorbing Capacity (LAC) • APRA requires D-SIBs to lift the total capital ratio by 3% of RWA by 1 January 2024. Increasing a further 1.5 to 4.5% by 1 January 2026 • At 31 March 2022 our Tier 2 capital ratio was 4.3% 1 Jan 2024 1 Jan 2025 APS117 - IRRBB APS116 - Market Risk • Non-traded: standardising aspects of the calculation of IRRBB capital to reduce volatility over time and variation between ADIs • Traded: APRA is yet to commence consultation on Fundamental Review of the Trading Book Regulatory capital changes. 84 Key regulatory changes and timeline. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Capital, funding and liquidity 1 Includes 1% D-SIB buffer. |
| Internationally comparable capital ratio reconciliation. 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 published a study that compared the major banks’ capital ratios against a set of international peers1. The following details the adjustments from this study and how Westpac’s APRA Basel III CET1 capital ratio aligns to an internationally comparable ratio. 85 1 Methodology aligns with the APRA study titled “International capital comparison study", dated 13 July 2015. Westpac’s CET1 capital ratio (APRA basis) 11.3 Equity investments Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA’s requirements 0.3 Deferred tax assets Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA’s requirements 0.4 Interest rate risk in the banking book (IRRBB) APRA requires capital to be held for IRRBB. The BCBS does not have a Pillar 1 capital requirement for IRRBB 0.9 Residential mortgages Loss given default (LGD) of 15%, compared to the 20% LGD floor under APRA’s requirements. APRA also applies a correlation factor for mortgages higher than the 15% factor prescribed in the Basel rules 2.1 Unsecured non-retail exposures LGD of 45%, compared to the 60% or higher LGD under APRA’s requirements 0.7 Non-retail undrawn commitments Credit conversion factor of 75%, compared to 100% under APRA’s requirements 0.5 Specialised lending Use of internal-ratings based (IRB) probabilities of default (PD) and LGDs for income producing real estate and project finance exposures, reduced by application of a scaling factor of 1.06. APRA applies higher risk weights under a supervisory slotting approach, but does not require the application of the scaling factors 0.6 Currency conversion threshold Increase in the A$ equivalent concessional threshold level for small business retail and small to medium enterprise corporate exposures 0.2 Capitalised expenses APRA requires these items to be deducted from CET1. The BCBS only requires exposures classified as intangible assets under relevant accounting standards to be deducted from CET1 0.4 Internationally comparable CET1 capital ratio 17.4 Internationally comparable Tier 1 capital ratio 20.2 Internationally comparable total regulatory capital ratio 26.2 Capital, funding and liquidity Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| Well placed on internationally comparable. Common equity Tier 1 ratio (%)1 86 Leverage ratio (%)1 CET1 and leverage ratios. 1 Comparison group comprises listed commercial banks with assets in excess of A$700bn and which have disclosed fully implemented Basel III ratios or provided sufficient disclosure to estimate. Based on company reports/ presentations. Ratios at 31 December 2021, except for Westpac, ANZ and NAB which are at 31 March 2022 and Bank of Montreal, Scotiabank, Royal Bank of Canada, CIBC and Toronto Dominion are at 31 January 2022. Leverage ratio is on a transitional basis. Where accrued expected dividends have been deducted and disclosed, these have been added back for comparability. US banks are excluded from leverage ratio analysis due to business model differences, for example from loans sold to US Government sponsored enterprises. NAB has not disclosed an internationally comparable leverage ratio since September 2017. Shows ratios at the last reporting date, which may take account of measures taken by jurisdictions in response to COVID-19. Capital, funding and liquidity Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Norinchukin Bank NatWest CBA ANZ NAB Danske Bank Lloyds Rabobank Westpac (17.4%) Nordea ING Group Morgan Stanley Unicredit HSBC BPCE Sumitomo Mitsui Toronto Dominion Bank Barclays UBS Goldman Sachs Credit Suisse Intesa Sanpaolo Standard Chartered Bank of Montreal Societe Generale China Construction Bank Commerzbank Royal Bank of Canada ICBC Deutsche Bank JPMorgan Chase BBVA Mitsubishi UFJ BNP Paribas China Merchants Bank Wells Fargo Mizuho FG CIBC Citigroup Santander Bank of America Scotiabank Credit Agricole SA Agricultural Bank of China Bank of China 0% 5% 10% 15% 20% Norinchukin Bank ICBC China Construction Bank China Merchants Bank Agricultural Bank of China Bank of China Rabobank BBVA Intesa Sanpaolo CBA Credit Suisse Westpac (6.1%) ING Group ANZ Lloyds Mitsubishi UFJ BPCE Unicredit UBS NAB Nordea Barclays HSBC Commerzbank Santander Standard Chartered Societe Generale Deutsche Bank Danske Bank Royal Bank of Canada Bank of Montreal NatWest Credit Agricole SA Scotiabank Toronto Dominion Bank CIBC Sumitomo Mitsui Mizuho FG BNP Paribas 0% 2% 4% 6% 8% 10% |
| Balance sheet funding and liquidity. 87 Funding composition (%) Customer deposits provide 66% of the Group’s funding. 1 Includes long term wholesale funding with a residual maturity less than or equal to 1 year. 2 Equity excludes FX translation, Available-for-Sale securities and Cash Flow Hedging Reserves. 3 Short term funding includes wholesale funding with an original maturity greater than 12 months that now has a residual maturity less than 12 months. Long term includes securitisation. Capital, funding and liquidity Chart does not add to 100 due to rounding By residual maturity Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 555 550 580 601 693 690 711 720 80.1 79.8 81.6 83.5 Sep-20 Mar-21 Sep-21 Mar-22 Customer deposits Net loans Customer deposits to net loans ratio (%) 66 65 66 9 8 8 9 9 9 6 6 6 5 5 6 5 6 5 Mar-22 Mar-21 1 1 Sep-21 1 Wholesale funding by residual maturity3 ($bn) Wholesale offshore >1yr1 Wholesale onshore <1yr1 Wholesale onshore >1yr1 Wholesale offshore <1yr1 Securitisation Equity2 Customer deposits 105 150 255 85 131 216 101 143 244 Short term Long term Total wholesale Mar-20 Mar-21 Mar-22 Long term includes Term Funding Facility drawn down (cumulative): Mar-21 $22bn; Mar-22: $30bn • Total funding includes equity • Customer deposits 71% of total funding excluding equity Customer deposits and net loans ($bn) |
| Funding and liquidity ratios. 88 Liquidity coverage ratio1 (LCR) (quarterly average, $bn) Increase in LCR reflects higher liquid assets; NSFR unchanged. 1 LCR is calculated as the percentage ratio of stock of liquid assets over the total net cash outflows in a modelled 30 day defined stressed scenario. Liquid assets include HQLA as defined in APS 210, RBNZ eligible liquids, CLF eligible securities less RBA open repos funding end of day ESA balances with the RBA. CLF and TFF are made available to Australian Authorised Deposit-taking Institutions by the RBA that, subject to qualifying conditions, can be accessed to meet LCR requirements under APS210 – Liquidity. Other flows include credit and liquidity facilities, collateral outflows and inflows from customers. 2 Other flows includes net cash outflow overlay. Effective 1 January 2021, the Group is required to increase the value of its net cash outflows by 10% for the purpose of calculating LCR, in response to action taken by APRA for breaches of Westpac’s liquidity requirements predominantly relating to WNZL. This reduces the average LCR for the quarter ended 31 March 2022 by 14 percentage points. 3 Other flows includes derivatives and other assets. 4 Calculated on a spot basis at 31 March 2022. 5 APRA updated guidance CLF will now cease to exist by 1/01/2023 instead of 31/12/2022. Capital, funding and liquidity Net cash outflows (NCOs) Other flows2 Wholesale funding Customer deposits Liquid assets Committed Liquidity Facility (CLF) High Quality Liquid Assets (HQLA) Liquidity coverage ratio1 (quarterly average, %) Sep qtr 2021: LCR 129% Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Mar qtr 2022: LCR 137% 90 137 96 169 10 37 12 28 34 36 134 174 144 197 Net cash outflows Liquid assets Net cash outflows Liquid assets 129 137 24 (7) (6) (1) (2) Sep-21 Qtr HQLA CLF Customer Deposits Wholesale funding Other flows Mar-21 Qtr LCR increase due to higher HQLA in preparation for CLF reduction over 2022 118% ex. CLF4 37.00 27.75 18.50 9.25 30/09/2021 1/01/2022 1/05/2022 1/09/2022 1/01/2023 Westpac CLF phase-out ($bn) 3 5 Net stable funding ratio (%) 125 125 (0.2) 2.1 1.2 0.5 (2.6) (0.9) Sep-21 Capital Retail & SME Deposits Corporate & Institutional Deposits Wholesale funding and other Residential Mortgages ≤35% Risk Weight Other loans, liquids & other Mar-22 0 |
| Long term wholesale funding. 89 1 Based on residual maturity and FX spot currency translation. Includes all debt issuance with contractual maturity greater than 13 months excluding US Commercial Paper and Yankee Certificates of Deposit. Contractual maturity date for hybrids and callable subordinated instruments is the first scheduled conversion date or call date for the purposes of this disclosure. Maturities exclude securitisation amortisation. Return to normal funding activities post TFF conclusion. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack By program (%) Capital, funding and liquidity Term debt issuance and maturity profile1 ($bn) 64 17 5 14 By currency (%) Senior bonds Covered bonds Securitisation Tier 2 capital 30 3 50 11 6 1 AUD EUR USD NZD GBP Other By tenor (%) 1H22 term debt issuance (%) 32 13 32 23 3yrs >5yrs 4yrs 5yrs Charts do not add to 100 due to rounding 31 42 37 32 34 31 35 22 11 37 39 18 17 15 27 FY15 FY16 FY17 FY18 FY19 FY20 FY21 1H22 2H22 FY23 FY24 FY25 FY26 FY27 >FY27 Funding for Lending Programme (NZ) Term Funding Facility (Aus) Subordinated debt Senior/Securitisation Hybrid Covered bond Issuance Maturities |
| Tier 2 capital issuance. 90 Well positioned to meet increased TLAC requirements. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Westpac Total Regulatory Capital 31 March 2022 APRA-basis 1 Jan 2026 APRA-basis CET1 Additional Tier 1 Tier 2 6.5% (approx. $30bn3) 11.3% ($52bn) 2.1% ($10bn) 4.3% ($20bn) Westpac Tier 2 issuance and calls/maturities1,2 (notional amount, A$bn) Issuance Maturities Westpac Tier 2 capital (notional amount, %) By format4 By currency4 1 Represents AUD equivalent notional amount using spot FX translation at date of issue for issuance and spot FX translation at 31 March 2022 for maturities. 2 Securities in callable format profiled to first call date. Securities in bullet format profiled to maturity date. 3 Based on capital regulation at 31 March 2022. Does not include balance sheet growth or management buffer. 4 Represents AUD equivalent notional amount using spot FX translation at 31 March 2022. New TLAC requirement effective 1 Jan 2026 Capital, funding and liquidity 4.2 2.2 6.2 3.0 0.7 1.2 1.4 2.0 3.2 2.0 9.8 0.0 FY20 FY25 FY23 1H22 FY27 FY19 FY24 FY21 2H22 FY26 FY28 >FY28 76 24 Callable Bullet 68 16 4 7 3 2 USD JPY AUD Domestic AUD EMTN EUR SGD Remaining Tier 2 issuance expected for FY22 approx. $2 billion (including buffer above regulatory minimum) |
| Segment results |
| Segment1 contributions. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 92 Cash earnings and notable items. Segments 1H22 cash earnings ($m) Consumer Business WIB NZ2 Specialist Businesses Group Businesses Group Net interest income 4,377 1,323 481 1,041 242 564 8,028 Non-interest income 324 163 588 270 550 36 1,931 Expenses (2,369) (982) (577) (534) (584) (320) (5,366) Core earnings 2,332 504 492 777 208 280 4,593 Impairment (charges)/benefits 27 (158) (58) 9 38 3 (139) Tax & non-controlling interests (713) (107) (128) (189) (114) (108) (1,359) Cash earnings 1,646 239 306 597 132 175 3,095 Cash earnings contribution 53% 8% 10% 19% 4% 6% 1H22 notable items ($m) Consumer Business WIB NZ2 Specialist Businesses Group Businesses Group Net interest income - - - 7 - - 7 Non-interest income - - - 119 109 - 228 Expenses - - - - (215) (16) (231) Core earnings - - - 126 (106) (16) 4 Impairment charges - - - - - - - Tax and non-controlling interests - - - (2) (8) - (10) Cash earnings impact - - - 124 (114) (16) (6) 1 Refer to segment descriptions, page 129. 2 NZ in A$. |
| Segment Lines of Business (LOB) Major changes Consumer & Business Banking Consumer • Mortgages • Consumer finance • Consumer deposits • All Australian mortgages (both business and consumer) now included in Mortgage LOB • Ceased revenue sharing from sale of certain institutional products (ie FX and interest rate hedging). Reduces non- interest income across Consumer and Business segments with all income for these products recorded in WIB • Addition of share broking business in Consumer Business • Business lending • Business deposits Westpac Institutional Bank • Financial markets • Corporate and institutional banking • Global transaction services • Ceased revenue sharing for sale of institutional products to Consumer and Business customers. All non-interest income from these products is now reported in WIB Westpac New Zealand • Consumer banking and wealth • Corporate and institutional banking • No major changes Specialist Businesses • Life Insurance (under sale agreement) • Superannuation and Platforms • Westpac Pacific • Retail Auto (in run-off) • Share broking business moved to Consumer as it is no longer expected to be exited Group Businesses • Treasury • Head office activities • Small changes related to establishment of the Consumer and Business segments Segment reporting change from 1H22. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 93 Segments |
| Cash earnings ($m) 1 Refer page 130 for metric definitions and details of provider. 2 Includes all brands. 3 Users of the new Westpac app only. 4 Includes all points of presence including Advisory, Community Banking Centres and Kiosks. Kiosks have been restated in comparatives. Key financial metrics 1H21 2H21 1H22 Change on 2H21 Revenue ($m) 5,019 4,985 4,701 (6%) Net interest margin (%) 2.34 2.27 2.09 (18 bps) Expense to income (%) 47.3 50.6 50.4 (20 bps) Customer deposit to loan ratio (%) 56.3 57.6 59.3 172 bps Stressed exposures to TCE (%) 1.06 0.98 0.81 (17 bps) Mortgage 90+ day delinquencies (%) 1.20 1.07 0.88 (19 bps) Consumer 1H22 performance. 94 Consumer Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack NIM 18bps down from lower loan spreads, partly offset by higher deposit spreads One-off payment for new insurance distribution agreement and higher card income Simplification benefits and lower risk and compliance costs 1,927 1,780 1,809 1,646 29 61 118 55 2H21 Net interest income (342) Impairment charges 1H21 Tax and NCI 2H21 ex - notable Items Notable items Non- interest income Operating expenses 1H22 (55) Down $163m or 9% Down $134m or 8% Lower impairment benefit from increase in overlay provisions Key operating metrics 1H21 2H21 1H22 Change on 2H21 Main financial institution1 (%) 15.6 15.7 16.4 70bps Active digital banking customers2 (#m) 4.58 4.67 4.74 1% Active new Westpac app users3 (#m) 1.3 1.7 2.5 47% Branches (#)4 891 851 781 (70) ATMs (#) 1,352 1,270 1,153 (117) |
| Business 1H22 performance. 95 Cash earnings ($m) Business Key financial metrics 1H21 2H21 1H22 Change on 2H21 Revenue ($m) 1,711 1,625 1,486 (9%) Net interest margin (%)1 3.86 3.69 3.33 (36 bps) Expense to income (%) 61.5 71.7 66.1 (Large) Customer deposit to loan ratio (%) 159.2 164.0 166.4 242 bps Stressed exposures to TCE (%) 7.02 5.90 5.07 (83 bps) Key operating metrics 1H21 2H21 1H22 Change on 2H21 Main financial institution2 (%) 21.2 20.8 21.5 70bps Customer satisfaction2 (rank) – Westpac Brand #3 =#2 =#1 Up 1 Customer satisfaction – SME2 (rank) Westpac Brand =#2 =#2 =#1 Up 1 Digital sales3 (%) 27 30 28 (2ppt) 1 NIM includes the benefit of notable items provision write-backs. 2 Refer page 130 for metric definitions and details of provider. 3 Share of sales made digitally for eligible products, alignment of definition with Consumer share of bank wide sales. Refer page 130 for metric definitions. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack NIM excluding notable items 10bps lower from lower asset spreads partly offset by higher deposit spreads Simplification benefits and lower risk and compliance costs 239 169 100 1H22 (11) 542 1H21 Net interest income 2H21 482 Notable Items Tac and NCI Impairment charges Operating expenses Non- interest income 2H21 ex - notable items 535 (60) (25) (476) Down $243m or 50% Down $303m or 56% Impairment charge compared to impairment benefit in 2H21 mainly due to overlay provisions |
| 298 134 306 23 154 96 Notable items 2H21 1H21 Non -interest income 2H21 ex -notable Items Net interest income Operating expenses Impairment charges Tax and NCI (63) 1H22 (831) 965 (38) AIEA growth of 12% partly offset by 7bps NIM decline from increased market inventory Key financial metrics 1H21 2H21 1H22 Change on 2H21 Revenue ($m) 1,154 1,084 1,069 (1%) Net interest margin (%) 1.26 1.24 1.17 (7bps) Expense to income ratio excluding notable items (%) 58.1 67.4 54.0 (Large) Net loans 63.1 67.7 74.0 9% Customer deposits 92.7 99.3 104.7 5% Customer deposit to loan ratio (%) 146.8 146.6 141.5 (Large) Stressed exposures to TCE (%) 0.56 0.64 0.20 (44bps) Key operating metrics 1H21 2H21 1H22 Change on 2H21 Customer revenue2 ($m) 1,065 1,073 1,127 5% Derivative valuation adjustment (DVA) ($m) 53 44 (29) (Large) Trading revenue (non-customer) ($m) 75 25 34 36% Other3 (39) (58) (63) (9%) Revenue per FTE ($’000) 589 567 555 (2%) WIB 1H22 performance. 96 Cash earnings ($m) 1 Software amortisation and property costs were lower from a write-down of assets in 2H21. 2 WIB customer revenue is lending revenue, deposit revenue, sales and fee income. 3 Other is bank levy and capital benefit. Westpac Institutional Bank Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Simplification initiatives, lower investment spend, software amortisation and property costs1 Up $172m or 128% Up $8m or 3% Improved credit quality metrics, one large IAP in 2H21 Negative DVA contribution partly offset by higher markets income. Customer markets income up $30m |
| An impairment benefit in 1H22 compared to an impairment charge in 2H21 Key financial metrics 1H21 2H21 1H22 Change on 2H21 Revenue (NZ$m) 1,245 1,218 1,389 14% Net interest margin (%) 2.06 1.94 1.98 4 bps Expense to income (%) 43.1 48.9 40.6 Large Customer deposit to loan ratio (%) 81.8 82.0 83.4 143 bps Stressed exposures to TCE (%) 1.56 1.19 1.14 (5 bps) New Zealand 1H22 performance.1 97 Cash earnings (NZ$m) 1 In NZ$ unless otherwise noted. 2 Refer to page 130 for details of metric definition and provider. New Zealand Key operating metrics Mar-21 Sep-21 Mar-22 Change Sep-21 Customers (#m) 1.33 1.33 1.35 2% Branches (#) 134 116 114 (2) ATMs (#) 482 464 446 (18) Consumer NPS2 +16 +14 +10 (4) Business NPS2 (1) (14) (6) +8 Agri NPS2 +8 +13 +33 +20 Funds (NZ$bn) (spot) 11.9 12.0 11.7 (3%) Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack AIEA up 4%, NIM excluding notable items down 4bps Lower income from KiwiSaver and banking fees Mainly due to timing of risk and compliance spending 430 474 504 635 44 10 15 25 131 Tax and NCI Operating expenses Net interest income 2H21 ex -notable Items 2H21 Notable items Impairment charges Non -interest income 1H22 ex -notables Notable items 1H22 (12) (8) Up $205m or 48% Up $30m or 6% |
| 55 58 61 62 32 32 31 31 Mar-22 1 Sep-21 Sep-20 1 Mar-21 1 1 88 91 93 94 66% 33% 1% New Zealand balance sheet. 98 Net loans (NZ$bn) Deposits (NZ$bn) Loans (NZ$bn) and % of total Customer deposits (NZ$bn) and % of total Up 2% Up 2% Up 3% New Zealand Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 90.6 92.6 94.0 1.5 Sep-21 Mar-21 Consumer Business Mar-22 (0.1) 74.1 75.9 78.4 2.3 0.2 Mar-22 Mar-21 Business Sep-21 Consumer Mortgage Business Personal 31 29 28 30 18 21 22 22 22 24 26 26 74 Sep-20 Mar-21 76 Mar-22 Sep-21 71 78 Transaction Savings Term deposits Up 2% Up 3% 33% 28% 39% Up 3% Up 2% Up 4% |
| New Zealand business exposures. 99 Business stressed exposures as a % of business TCE Agribusiness1 portfolio Milk price Dairy portfolio summary • Portfolio quality remains sound with risk profiles improving from higher milk prices. Focus on supporting existing dairy customers with proven long-term viability while selectively targeting new customers • Global dairy prices have surged to at or near record highs over 2022 due to COVID-19 impacts, Ukraine-Russia conflict and poor weather. Fonterra has lifted its 2021/22 milk price range to $9.30/kg to $9.90/kg • Yet, dairy farmers are facing higher on-farm costs and limited availability of some inputs, however, farm profits are higher 1 Includes forestry and fishing. 2 Includes impaired exposures. Mar-21 Sep-21 Mar-22 TCE (NZ$bn) 10.6 10.6 10.6 Agriculture as a % of total TCE 8.0 7.7 7.4 % of portfolio graded as ‘stressed’2 7.6 5.7 6.1 % of portfolio in impaired 0.28 0.13 0.08 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Business TCE by industry sector % New Zealand 6.35 7.14 7.54 9.60 9.25 0 2 4 6 8 10 12 2019/20 2021/22 2018/19 2020/21 2022/23 Westpac Economics forecast (NZ$ kg Ms) 1.5 0.9 0.8 0.5 0.2 0.1 0.2 0.1 0.1 0.1 0.2 0.2 0.2 3.2 2.3 2.4 5.0 4.0 3.0 2.9 2.2 2.4 1.6 1.5 2.8 Sep-15 0.0 Sep-19 Sep-16 0.3 0.1 Sep-17 0.0 0.3 Sep-18 Sep-14 0.1 3.3 0.3 Sep-20 0.2 Mar-21 2.6 Sep-13 0.2 Sep-21 Mar-22 4.9 3.3 3.4 5.5 3.1 4.4 2.0 1.8 Watchlist & substandard 90+ day past due and not impaired Impaired 28 16 14 9 5 5 5 4 3 3 5 21 Finance & insurance Other industries Transport & storage Agriculture, Forestry and Fishing Property Government administration & defence Trade Manufacturing Accommodation, cafes & restaurants Utilities Services Property & business services Construction |
| 1.42 0.0 1.0 2.0 3.0 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 0.30 0.0 0.1 0.2 0.3 0.4 0.5 0.6 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Mar-21 Sep-21 Mar-22 New Zealand consumer portfolio. 100 Mortgage 90+ day delinquencies1 (%) Unsecured consumer 90+ day delinquencies1 (%) Mortgage portfolio LVR2 (% of portfolio) Mortgage loss rates (%) 1 In May 2019 we made changes to the reporting of customers in hardship to align to the method used by APRA. 2 LVR based on current loan property value at latest credit event. New Zealand 0.00 0.00 0.05 0.10 0.15 0.20 0.25 1H12 2H12 1H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17 1H18 2H18 1H19 2H19 1H20 2H20 1H21 2H21 1H22 94% of mortgage portfolio has an LVR less than 80% Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 20% 22% 4% 0<=60 52% 60<=70 70<=80 80<=90 90+ 2% |
| 117 45 288 246 132 243 65 51 15 2H21 ex - notable Items Non- interest income Impairment charges Net interest income Operating expenses Notable items 1H21 2H21 Tax and NCI 1H22 ex - notable items Notable items 1H22 (22) (151) (114) Specialist Businesses 1H22 performance. 101 Cash earnings ($m) Specialist Businesses Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Lower from businesses sold and continuing run-off of auto finance book Businesses sold ($128m), lower life insurance income from revaluation of life policy liabilities, partly offset by transitional service payments Benefits from simplification initiatives and lower investment spend Impairment benefit from lower CAP. 2H21 included one larger IAP in Westpac Pacific Key financial metrics 1H21 2H21 1H22 Change on 2H21 Average funds ($bn) 205.6 223.8 224.9 - Spot funds ($bn) 211.7 227.4 222.9 (2%) Platforms deposits ($bn) 4.3 6.1 5.7 (7%) Platform FUA market share (exc. Corp Superannuation)1 (%) 18.9 18.8 18.3 (50bps) Margin lending ($bn) 1.5 1.5 1.5 - Auto finance loans ($bn)2 11.1 10.6 8.8 (17%) Westpac Pacific loans 1.4 1.4 1.3 (3%) 1 Based on market share statistics from Plan for Life at 31 December 2021 (for 1H22), at 30 June 2021 (for 2H21) and at 31 December 2020 (for 1H21). 2 Average term of Auto finance loans is 3 years (at March 2022). 3 Loss ratio is claims net of reinsurance over the total earned premium. Down $42m or 15% Up $87m or 193% Held for sale businesses Key financial metrics 1H21 2H21 1H22 Change on 2H21 Retail Life Insurance in-force premiums ($m) 938 951 960 1% Life Insurance claims ratio3 (%) 63 64 64 - |
| 9,289 12,310 14,118 25,320 26,003 Sep-19 Sep-20 Mar-21 Sep-21 Mar-22 2,494 3,017 3,524 6,034 6,059 Sep-21 Mar-21 Sep-19 Sep-20 Mar-22 44,314 67,109 236,741 Sep-19 Sep-20 Mar-22 Mar-21 234,948 Sep-21 115,369 23,387 31,240 105,012 Mar-21 49,593 Sep-19 Sep-20 Mar-22 Sep-21 104,779 Panorama Platform • Increased Panorama capabilities - Improved mobile app functionality, with BT Panorama winning Best Mobile Platform and Best Client Portal for the fourth consecutive year3 - Platform updates – made >100 upgrades and feature improvements based on adviser and member feedback • Advisers using digital consent have increased 5x compared to the prior corresponding quarter (quarter ending Mar-21) • BT ranked #1 platforms business with 18.3%4 share of the market excluding corporate superannuation • Panorama FUA has grown to $105bn, with positive net flows for 1H22 of $1.5bn BT Panorama. 102 Supporting advisers and investors. Active advisers on BT Panorama2 (#) SMSF funds on BT Panorama2 (#) FUA on BT Panorama1 ($m) Investors on BT Panorama1 (#) 1 Migration from BT Wrap to Panorama was completed in June 2021. 2 Advisers and SMSF funds that have been migrated from BT Wrap are not shown separately. 3 Investment Trends Platform Competitive Analysis and Benchmarking Report, December 2021. 4 Plan for Life, December 2021. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Specialist Businesses Up 105% Up 84% Up 112% Up 72% FUA BT Wrap migration Investors BT Wrap migration |
| Developing next generation banking technology. 1 Planned expansion of platform capability. 2 Winner to be announced June 2022. 3 The embedded finance opportunity is estimated to be ~US$3.6tn by 2030; Bain Capital Ventures 2019. 4 Ages 18-41 years of age. 103 Banking as a Service reaching new customers via strategic distribution partners. Specialist Businesses New core banking platform live in <18 months, with broader potential • Built and operating Australia’s first BaaS platform in <18 months with 2 distribution partners • Cloud-based platform of leading technology providers is built to be ‘evergreen’, reducing costs and speed to market • Platform has potential product expansion (lending) and for wider application across the Group • Recognised for excellence • 2022 Winner, IDC Asia’s Best in Infrastructure Modernisation • 2022 Finalist, iTnews Benchmark Awards2 ‘Plug and play’ APIs Channels Capabilities Products Deposits Lending1 Wallets and payments Data-driven experiences Cloud-based banking & services KYC, AML, Fraud CRM / Marketing Financial Mgmt., Risk & Compliance • First mover BaaS advantage in Australia, well positioned to capture the embedded finance opportunity3 via distribution partners • ~80% of customers are in underweight segments (Millennial or Gen Z4), and ~80% of deposit inflows are new funds to the Group • Pathway to reduce cost-to-serve: simple products, digital service and automation • Broader value creation for the Group’s 10x equity stake via multiple partnerships Reaching new customers in strategic segments and creating value Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Signed partners |
| Economics |
| Australian and New Zealand economic forecasts. 1 Year average growth rates. 2 Through the year growth rates. 105 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Key economic indicators (%) at April 2022 2021 2022 Calendar years Q2 Q3 Q4 Q1F Q2F Q3F Q4F 2020 2021 2022F 2023F World GDP1 - - - - - - - -3.3 5.5 3.7 3.5 Australia GDP2 9.6 4.0 4.2 2.5 3.7 7.2 4.5 -0.8 4.2 4.5 2.5 Unemployment – end period 5.1 4.6 4.7 4.1 3.7 3.3 3.2 6.8 4.7 3.2 3.4 CPI headline – year end 3.8 3.0 3.5 5.1 5.2 5.4 5.6 0.9 3.5 5.6 2.6 Interest rates – cash rate 0.10 0.10 0.10 0.10 0.75 1.25 1.75 0.10 0.10 1.75 2.25 New Zealand GDP2 17.9 -0.2 3.1 2.1 0.3 6.4 4.7 0.3 3.1 4.7 3.7 Unemployment – end period 4.0 3.3 3.2 3.2 3.1 3.0 3.0 4.9 3.2 3.0 3.3 Consumer prices 3.3 4.9 5.9 6.9 6.4 5.2 4.3 1.4 5.9 4.3 2.7 Interest rates – official cash rate 0.25 0.25 0.75 1.00 2.00 2.50 3.00 0.25 0.75 3.00 3.00 Key economic indicators (%) at April 2022 2020 2021 2022F 2023F Australia Credit growth Total – year end 1.7 7.2 5.7 4.3 Housing – year end 3.5 7.4 7.0 5.2 Business – year end 0.8 8.4 5.0 3.5 New Zealand Credit growth Total – year end 3.3 7.5 4.0 2.8 Housing – year end 8.3 10.5 4.9 2.0 Business – year end -2.7 3.6 2.7 4.4 Private sector credit growth (% ann) Sources: RBA, Westpac Economics Economics Sources: RBA, Statistics NZ, Westpac Economics Sources: IMF, RBA, Statistics NZ, Westpac Economics -10 -5 0 5 10 15 20 25 Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18 Mar-20 Mar-22 Housing Australia Total credit Australia Business Australia Total credit New Zealand Westpac f’casts % ann |
| Global market backdrop changing. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 106 Central banks moving from emergency settings; responding to inflation pressures. Fed Funds and RBA Cash Rate (%) Economics Global inflation (ann %) Brent crude oil prices (USD/bbl) Global supply chains (index, monthly) Sources: Bloomberg, RBA Westpac Economics 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 Mar 92 Mar 98 Mar 04 Mar 10 Mar 16 Mar 22 % Cash Rate Fed Funds (midpoint) % Sources: ABS, IMF, Macrobond, Westpac Economics -5 0 5 10 15 20 -5 0 5 10 15 20 Mar-60 Mar-70 Mar-80 Mar-90 Mar-00 Mar-10 Mar-20 ann% ann% Australia G7 * CPI inflation; ‘G7’ is GDP- weighted avg of US, EU, Japan, UK and Canada. Sources: Bloomberg, Macrobond, Westpac Economics -50 50 150 250 350 450 550 650 750 850 49.5 50.0 50.5 51.0 51.5 52.0 52.5 53.0 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Index Index Global Supply Chain Pressure Index (rhs) container freight rates (rhs)^ ^ 2017 avg = 100 Sources: ABS, Westpac Economics 0 20 40 60 80 100 120 140 0 20 40 60 80 100 120 140 Mar-92 Mar-97 Mar-02 Mar-07 Mar-12 Mar-17 Mar-22 USD/bbl USD/bbl Westpac f’casts to Dec-23 Westpac f’casts to Jun-25 |
| Australian economy: considerable momentum into 2022. 107 Economic expansion led by the consumer; household balance sheets a key positive. Economics Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Australia’s GDP profile (index) Sources: ABS, Westpac Economics 88 92 96 100 104 108 112 88 92 96 100 104 108 112 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21 Dec-22 Index Index pre COVID-19 forecast current forecast Dec 2019 = 100 Westpac f’casts to Dec-22 Sources: ABS, Westpac Economics Sources: ABS, Westpac Economics -2 -1 0 1 2 3 4 5 6 -2 -1 0 1 2 3 4 5 6 Consumer Housing Business Investment Public Net exports GDP ppts annual ppts annual 2019 2020 2021 2022f contributions to GDP growth, year end 4.2 4.5 -0.8 2.3 Australia’s growth mix (ppts, annual) Job vacancies (% of labour force) and Unemployment rate (%) Sources: ABS, Westpac Economics -2 0 2 4 6 8 10 12 0.0 0.5 1.0 1.5 2.0 2.5 3.0 Mar-89 Mar-97 Mar-05 Mar-13 Mar-21 %^ % Vacancies* (ABS survey), lhs Unemployment rate, rhs * ABS survey suspended between May ’08 & Nov ’09 ^ scale reversed Household deposits ($bn) and Household saving ratio (% of income) -4 0 4 8 12 16 20 24 28 -200 0 200 400 600 800 1000 1200 1400 1600 Sep-91 Sep-96 Sep-01 Sep-06 Sep-11 Sep-16 Sep-21 % of income $bn Household deposits (lhs) Household saving ratio (rhs) |
| RBA tightening cycle commenced. Responding to inflation and tight labour market. 1 ‘G7’ is GDP-weighted avg of US, EU, Japan, UK and Canada. Based on 1yr ahead expectations where available. 2 Mortgage repayments, owner occupied loans as % of household disposable income of owner occupiers. Economics Australia’s household debt servicing ratio2 (%) CPI inflation (%) Sources: ABS, RBA, Westpac Economics -1 0 1 2 3 4 5 6 -1 0 1 2 3 4 5 6 Mar-04 Mar-08 Mar-12 Mar-16 Mar-20 % % Core CPI, %qtr Headline CPI %yr Core CPI, avg RBA %yr RBA cash rate and 3 year bonds (%) Sources: RBA, Westpac Economics Westpac f’casts to Dec -22 0.0 0.5 1.0 1.5 2.0 2.5 3.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 May-19 May-20 May-21 May-22 May-23 % % 3 year bonds RBA cash rate Westpac f’casts to Jun-23 Wages (%) Sources: RBA, ABS, Westpac Economics 10 12 14 16 18 20 22 10 12 14 16 18 20 22 Dec-01 Dec-09 Dec-17 Dec-25 % % 2.0 4.0 3.0 Westpac f’casts to Dec-25 terminal cash rate: Consumer inflation expectations1 (ann, %) Sources: ABS, IMF, Macrobond, Melbourne Institute, Westpac Economics 2 3 4 5 6 7 8 9 2 3 4 5 6 7 8 9 Mar- 97 Mar- 01 Mar- 05 Mar- 09 Mar- 13 Mar- 17 Mar- 21 Mar- 25 ann% ann% Australia G7 latest month Sources: ABS, Westpac Economics 1 2 3 4 5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Dec- 97 Dec- 01 Dec- 05 Dec- 09 Dec- 13 Dec- 17 Dec- 21 ann% ann% RBA’s target: >3% Westpac f’casts to Dec-23 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 108 |
| Commodity prices holding higher for longer. Economics Down from peaks but fundamentals continue to firm. 109 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Australian exports to China1 ($bn) Sources: Westpac Economics, Bloomberg, ABS 20 70 120 170 220 270 320 370 420 20 70 120 170 220 270 320 Mar-14 Mar-16 Mar-18 Mar-20 Mar-22 2012=100 2012=100 Iron ore Met coal Thermal coal Brent Westpac f’casts to Dec-23 Australian commodity prices (index) Source: DFAT, ABS, Westpac Economics Australian export destinations1 ($bn) Sources: ABS, Westpac Economics Australian export composition1 ($bn) Sources: ABS, Westpac Economics 1 All figures show $bn exports in 2020, note that figures may not sum due to rounding and other small differences in source data. Iron ore, 117 Coal, 43 LNG, 36 Other resources, 75 Services, 71 Rural, 43 Mfg/Other, 50 Total $435bn China, 145 Japan, 44 Korea, 23 Asia, rest of, 65 US, 19 Europe, 12 NZ, 10 Other, 45 Goods exports $363bn Iron ore, 93 Coal, 16 LNG, 10 Other resources, 9 Services, 16 Rural, 13 Mfg/Other, 3 Terms of Trade (index) 40 60 80 100 120 140 40 60 80 100 120 140 Dec-50 Dec-60 Dec-70 Dec-80 Dec-90 Dec-00 Dec-10 Dec-20 index index Historic average Wool boom 1950/51 Wespac estimate 2022Q1, 73% above long run avg. Sources: ABS; Westpac Economics |
| Australian housing market. Australian dwelling prices (%, 3 month annualised) Sources: CoreLogic, Westpac Economics Sources: CoreLogic, Westpac Economics Capital city Pop’n Last 3 mths (to Apr-22) Last 12 mths (Apr-22) Last 5 years (to Apr-22) Sydney 5.4m Down 0.5% Up 14.7% Up 21.7% Melbourne 5.1m Down 0.1% Up 8.4% Up 16.7% Brisbane 2.6m Up 5.7% Up 29.3% Up 45.0% Perth 2.1m Up 2.4% Up 6.7% Up 15.2% 110 Westpac Economics dwelling price forecasts (annual %) * average last 10yrs Sources: CoreLogic, Westpac Economics Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Dwelling prices (% change over period) Capital city Pop’n avg* 2020 2021 2022f 2023f 2024f Sydney 5.4m 7.8 2.7 25 -3 -9 -2 Melbourne 5.1m 5.8 -1.3 15 -3 -9 -3 Brisbane 2.6m 5.0 3.6 27 4 -4 1 Perth 2.1m 1.3 7.3 13 0 -6 1 Australia 26m 5.9 1.8 21 -2 -8 -1 -15 -10 -5 0 5 10 15 20 25 30 35 40 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Apr-22 Apr-23 % rate cuts COVID-19 2019 election ‘Delta’ Macro-prudential measures Macro- prudential measures Correction expected as interest rates rise. Economics |
| Australian housing market. 111 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Residential property: sales vs listings 15 20 25 30 35 15 17 19 21 23 25 27 29 31 33 Apr-10 Apr-12 Apr-14 Apr-16 Apr-18 Apr-20 Apr-22 ‘000s ‘000s New listings (lhs) Sales (lhs) Source: CoreLogic, Westpac Economics Monthly, capital cities combined, seasonally adjusted by Westpac, smoothed Sources: ABS, Westpac Economics Housing finance approvals by segment ($bn) 0 2 4 6 8 10 12 14 16 18 0 2 4 6 8 10 12 14 16 18 Mar-02 Mar-06 Mar-10 Mar-14 Mar-18 Mar-22 $bn $bn First home buyers Upgraders Investors Value of housing finance Auction clearance rates (monthly, %) Activity levels easing in response to higher rates expectations. Sources: APM, CoreLogic, Westpac Economics 25 35 45 55 65 75 85 95 25 35 45 55 65 75 85 95 Apr-12 Apr-15 Apr-18 Apr-21 Apr-12 Apr-15 Apr-18 Apr-21 % % Seasonally adjusted by Westpac latest week Sydney Melbourne Economics Mortgage interest rates (%) Sources: RBA, Westpac Economics * Standard, owner occupied, including discount – May 2022 is Westpac estimates assuming rates rise in line with RBA’s 25bp cash rate increase 0 2 4 6 8 10 0 2 4 6 8 10 Apr-08 Apr-10 Apr-12 Apr-14 Apr-16 Apr-18 Apr-20 Apr-22 % % Variable* 3 year fixed |
| Australian housing market. Affordability challenges emerging in Sydney and Melbourne. 112 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Sources: CoreLogic, ABS, RBA, Westpac Economics Affordability: Australia (%) Housing-related consumer sentiment Sources: Melbourne Institute, Westpac Economics Rental vacancy rates (% quarterly, annual average) Sources: REIA, REINSW, REIV, SQM Research, Westpac Economics 0 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6 7 8 Mar-97 Mar-02 Mar-07 Mar-12 Mar-17 Mar-22 % % Sydney Melbourne Perth Brisbane latest month (where available) 40 60 80 100 120 140 160 180 200 60 80 100 120 140 160 Apr-08 Apr-10 Apr-12 Apr-14 Apr-16 Apr-18 Apr-20 Apr-22 index index 'time to buy a dwelling' (lhs) house price expectations (rhs) Share of average income required to raise a deposit over 5yrs and pay mortgage over first 5yrs for purchase of median-priced dwelling Westpac f’casts to Dec-22 2017 peaks 10 15 20 25 30 35 10 15 20 25 30 35 Sep-87 Sep-93 Sep-99 Sep-05 Sep-11 Sep-17 % % Sydney Melbourne Economics Dwelling stock and population: ann change Sources: ABS, Australian Government, Westpac Economics -100 0 100 200 300 400 500 -100 0 100 200 300 400 500 1900 1920 1940 1960 1980 2000 2020 ‘000s ‘000s population dwellings Govt & Westpac forecasts to Dec-24 |
| TAS 541k The Australian economy. Australian GDP and employment composition Population 25.8 million. Sources: ABS, Westpac Economics 1 Real, financial years.. 2 GSP, exports are for 2020-21; Population at September 2021; Employment at March 2022. Economics 11 6 8 7 9 3 5 9 6 7 10 18 Mining Manufacturing Construction Transport, Utilities Wholesale, Retail Agriculture Household services Health Education Public administration Finance Business services 2 7 9 6 13 3 12 14 9 7 4 16 Mining Manufacturing Construction Transport, Utilities Wholesale, Retail Agriculture Household services Health, Social Assistance Education Public Administration Finance Business services Output by sector 2020-21 (% contribution to GDP)1 Australian employment by sector, June 2021 (%) 32 23 18 16 6 2 32 26 20 10 7 2 31 26 20 11 7 2 20 11 18 44 3 1 NSW Victoria Queensland WA SA Tasmania GSP Population Employment Exports Relative size of States (Share of Australia, %)2 113 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Australian population ` WA 2.7m SA 1.8m QLD 5.2m NT 246k NSW 8.2m VIC 6.6m ACT 431k |
| New Zealand economic overview. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 114 New Zealand GDP ($bn) Unemployment rate (%) Sources: Stats NZ, Westpac Economics Economics Sources: RBNZ, Westpac Economics 2 3 4 5 6 7 8 2 3 4 5 6 7 8 2006 2008 2011 2014 2016 2019 2022 Westpac forecasts % % Interest rates rising in response to firming economy activity and increasing inflation. 0 1 2 3 4 0 1 2 3 4 2010 2012 2014 2016 2018 2020 2022 Westpac forecasts % % Official Cash Rate (%) Consumer prices (% year) 0 2 4 6 8 0 2 4 6 8 2005 2008 2011 2014 2017 2020 2023 RBNZ target band Westpac forecasts %yr %yr Sources: Stats NZ, Westpac Economics 55 60 65 70 75 80 55 60 65 70 75 80 Jun-18 Jun-19 Jun-20 Jun-21 Jun-22 Jun-23 Jun-24 $bn $bn ‘Red Traffic light’ (Omicron) Delta lockdown Initial Covid lockdown Sources: Stats NZ, Westpac Economics Westpac forecasts |
| New Zealand economic activity. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 115 Manufacturing conditions (index) and Service sector conditions (index) Monthly retail spending (excl. fuel) (index) Source: MBIE Economics Source: Stats NZ Demand has remained firm despite COVID headwinds. Residential dwelling consents (annual, total) Job advertisements (index) 0 5000 10000 15000 20000 25000 30000 0 5000 10000 15000 20000 25000 30000 2004 2007 2010 2013 2016 2019 2022 Annual total Annual total Auckland Rest of NZ 20 30 40 50 60 70 20 30 40 50 60 70 2017 2018 2019 2020 2021 2022 Index Index Service sector conditions Manufacturing conditions Initial Covid lockdown Delta lockdown Source: BusinessNZ 0 500 1000 1500 2000 0 500 1000 1500 2000 Feb-20 Aug-20 Feb-21 Aug-21 Feb-22 Durables Apparel Hospitality Index Index 0 25 50 75 100 125 150 175 200 225 0 25 50 75 100 125 150 175 200 225 2008 2010 2012 2014 2016 2018 2020 2022 Index Index Source: MBIE |
| New Zealand inflation and interest rates. 116 Strong demand and shortage of supplies Demand and supply pressures widespread, interest rates to rise into tight territory. Source: NZIER Economics Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Unemployment rate (%) and Wage inflation (% year) Source: Stats NZ Source: RBNZ Mortgage interest rates (%) Inflation (% yr) 0 2 4 6 8 0 2 4 6 8 2005 2008 2011 2014 2017 2020 Inflation excl. food and fuel Headline inflation RBNZ target band %yr %yr Source: Stats NZ 0 5 10 15 20 25 0 20 40 60 80 100 2000 2005 2010 2015 2020 2000 2005 2010 2015 2020 % of business highlighting a lack of demand as a constraint % of business highlighting a lack of supplies as a constraint 0 1 2 3 4 5 6 2 3 4 5 6 7 8 2005 2009 2013 2017 2021 Unemployment rate (right axis) Wage inflation(left axis) % yr % 0 2 4 6 8 10 0 2 4 6 8 10 2010 2012 2014 2016 2018 2020 2022 % OCR Two-year mortgage rate Floating rate % |
| New Zealand housing market. 117 New Zealand dwelling prices (index) The housing market is cooling as interest rates rise. Sources: REINZ, Westpac Economics Economics Sources: REINZ, Stats NZ Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 750 1250 1750 2250 2750 750 1250 1750 2250 2750 2007 2009 2011 2013 2015 2017 2019 2021 Auckland Canterbury Wellington Other regions Index Index House prices (nationwide, index) -20 -10 0 10 20 30 40 50 0 1000 2000 3000 4000 2005 2009 2013 2017 2021 Annual % change (left axis) Level (right axis) Westpac forecasts Index = 1000 in 2003 Sources: QVNZ, Westpac Economics Monthly house sales and prices (% yr) -20 -10 0 10 20 30 40 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2004 2007 2010 2013 2016 2019 2022 Sales %yr Sales (left axis) House prices (right axis) Source: REINZ Dwelling prices (% change over period) Region Pop’n Last 3 mths (to Mar-22) Last 12 mths (to Mar-22) Last 5 years (to Mar-22) Auckland 1.7m Down 5.9% Up 5% Up 35% Wellington 0.5m Down 7.0% Flat Up 73% Canterbury 0.6m Down 0.5% Up 24% Up 58% Nationwide 5.1m Down 3.6% Up 9% Up 56% Forecast (Annual %) Ave. past 10 years 2020 2021 2022f 2023f 2024f Nationwide 10% +17% +25 -6 -4 Flat |
| New Zealand exports. 118 Farmgate milk price ($/kg Ms) Commodity price strength expected to be sustained, services exports to recover. Source: Fonterra, Westpac Economics Economics Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack International visitor numbers (‘000) Source: Stats NZ, Westpac Economics Sources: RBNZ, Westpac Economics New Zealand dollar (index) NZ export commodity prices (index) Source: ANZ 0 100 200 300 400 0 100 200 300 400 2015 2017 2019 2021 2023 ‘000 ‘000 Forecast 0 2 4 6 8 10 12 0 2 4 6 8 10 12 2004 2007 2010 2013 2016 2019 2022 $/kg Ms $/kg Ms Forecast 0 50 100 150 200 250 300 350 400 450 0 50 100 150 200 250 300 350 400 450 2001 2005 2009 2013 2017 2021 Dairy Forestry products Meat, skins and wool Index = 100 in 1986 Index = 100 in 1986 50 55 60 65 70 75 80 85 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 2005 2010 2015 2020 2025 Index NZD/USD (left axis) NZD/EUR (left axis) TWI (right axis) NZD exchange rate Forecast |
| 6 7 3 9 13 4 34 5 10 11 Primary industries Construction Electricity, gas, and water Manufacturing Wholesale, retail and accommodation Transport Financial and professional services Public administration Social services (incl. health and education) Other The New Zealand economy. 119 Economy Regional GDP Population 5.1 million. Sources: Stats NZ, Westpac Economics Nationwide GDP and employment figures are for the year to Dec 2021, regional figures are for the year to March 2020. Economics NZ employment by sector (%) Output 2021 - sector shares of GDP (%) Total nominal GDP 2021: $350bn Charts may not add to 100 due to rounding. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 5 10 1 9 18 4 19 7 20 8 Primary industries Construction Electricity, gas, and water Manufacturing Wholesale, retail and accommodation Transport Financial and professional services Public administration Social services (incl. health and education) Other Total nominal GDP 2019: $303bn Northland, $8bn 4% of population Auckland, $111bn 33% of population Waikato, $26bn 10% of population Taranaki, Whanganui/Manawatu, $20bn 7% of population Wellington, $38bn 11% of population Bay of Plenty, $17bn 7% of population Southland, $6bn 2% of population Otago, $13bn 5% of population Canterbury, $37bn 13% of population West Coast, $2bn 1% of population Tasman/Nelson, $5bn 2% of population Marlborough, $3bn 1% of population Gisborne/Hawke’s Bay, $10bn 5% of population |
| Appendix and Disclaimer |
| Appendix 1: 1 For further information refer to Westpac’s 2022 Interim Results Announcement. 121 Cash earnings adjustments and notable items. Appendix Appendix Cash earnings adjustment ($m) 1H21 2H21 1H22 Description Reported net profit 3,443 2,015 3,280 Net profit attributable to owners of Westpac Banking Corporation Fair value (gain)/loss on economic hedges 46 (184) (204) Fair value on economic hedges (which do not qualify for hedge accounting under AAS) comprise: • The unrealised fair value (gain)/loss on foreign exchange hedges of future New Zealand earnings impacting non- interest income is reversed in deriving cash earnings as they may create a material timing difference on reported results but do not affect the Group’s cash earnings over the life of the hedge. Westpac has ceased this activity, and at this stage no further adjustments will be recognised; and • The unrealised fair value (gain)/loss on hedges of accrual accounted term funding transactions are reversed in deriving cash earnings as they may create a material timing difference on reported results but do not affect the Group’s cash earnings over the life of the hedge Ineffective hedges 48 (16) 19 The unrealised (gain)/loss on ineffective hedges is reversed in deriving cash earnings because the gain or loss arising from the fair value movement in these hedges reverses over time and does not affect the Group’s profits over time Cash earnings 3,537 1,815 3,095 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Notable items ($m) 1H22 Description Estimated customer refunds, payments, associated costs and litigation1 (65) The ongoing review of customer remediation, litigation and regulatory investigations has led to the following changes in provisions: • Revenue: $36m decrease for additional remediation related to wealth products partly offset by the release of some provisions in New Zealand • Expenses: $46m increase in costs from our remediation programs and for litigation matters, including an increase to prior provisions following agreement with ASIC to settle six longstanding matters announced on 30 November 2021 Write-down of goodwill, intangible and other assets1 (154) In preparation for the exit of our superannuation business, the carrying value Westpac’s superannuation intangible assets was written down. This included $122m of goodwill (all goodwill for the business); and $45m of capitalised software Asset sales and revaluations1 213 This includes the gain on sale of Westpac Life-NZ- Limited, the Group’s motor vehicle dealer finance and novated leasing business and a post-sale adjustment to earn-out payments associated with the sale of our Vendor Finance business Total notable items (6) |
| Appendix 1: 122 Cash earnings ex-notable items.1 1 For further information refer to Westpac’s 2022 Interim Results Announcement. Appendix Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Appendix 1H21 ($m) 2H21 ($m) 1H22 ($m) Change 1H22-2H21 (%) Change 1H22-1H21 (%) Net interest income 8,398 8,189 8,021 (2) (4) Non-interest income 1,958 1,849 1,703 (8) (13) Net operating income 10,356 10,038 9,724 (3) (6) Expenses (5,236) (5,700) (5,135) (10) (2) Core earnings 5,120 4,338 4,589 6 (10) Impairment benefit/(charge) 372 218 (139) (Large) (Large) Tax and non-controlling interests (NCI) (1,673) (1,422) (1,349) (5) (19) Cash earnings 3,819 3,134 3,101 (1) (19) |
| Appendix 1: 1 Excludes provisions and costs associated with litigation. Notable items only. Appendix Milestones • In 1H22, we paid or offered $378m to approximately 475,000 customers • Since 2017, we have paid more than $1.85bn in remediation 123 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Provisions for customer refunds, payments and associated costs1 ($m) 2017 2018 2019 2020 2021 1H22 Total Banking 94 122 362 144 (135) (7) 580 Wealth 75 146 802 208 251 43 1,525 Implementation costs - 62 232 196 195 18 703 Cash earnings impact of above 118 231 977 384 218 37 1,966 Provisions for customer compensation and associated costs Net provisions raised in 1H22 for: • Refunds associated with certain ongoing advice fees charged by the Group’s salaried financial planners and authorised representatives • Additional remediation for wealth products • Costs associated with the implementation and completion of remediation programs • Release of provisions related to Westpac New Zealand Customer remediation notable items. |
| 124 Transactions completed Announced Completed Divestment CET1 benefit (bps, $m1) Zip Co Ltd. Oct 2020 Oct 2020 Realised 8bps, ~$350m Coinbase Inc. May 2021 May 2021 Realised 7bps, ~$300m Westpac NZ Wealth Advisory Nov 2020 Dec 2020 - Westpac General Insurance Dec 2020 Jul 2021 Realised 12bps, ~$500m Vendor Finance Aug 2020 Jul 2021 - Westpac LMI Mar 2021 Aug 2021 Realised 7bps, ~$300m Westpac Life-NZ- Limited Jul 2021 Feb 2022 Realised 7bps, ~$300m Motor Vehicle Finance Jun 2021 Mar 2022 Realised 6bps, ~$200m Transactions announced Announced Completion expected Westpac Life Insurance2 Aug 2021 2H22 Expected 12bps, ~$500m Divestment benefits (should Westpac Life Insurance complete) 59bps, ~$2,450m Other operations within Specialist Businesses (a range of options under consideration) Superannuation Platforms and Investments Westpac Pacific3 Auto Finance (in run-off) Margin Lending (to transition to Consumer once separated) Appendix 124 Appendix 2: 1 The value of capital released also includes the benefit of lower RWA. 2 Reflects the total CET1 capital impact expected upon completion in Second Half 2022. The accounting loss on sale in Westpac Life Insurance was included in Second Half 2021 notable items impacting the CET1 capital ratio for September 21. 3 On 22 September 2021, Westpac announced that the previously announced proposed sale of Westpac Pacific to Kina Bank was terminated by mutual agreement. Portfolio simplification progress. Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| Appendix 3. New business models 125 New technology capabilities Data, AI and analytics Logos are of the respective companies. Open Banking API platform that provides connectivity to over 100 financial sources across Australia and NZ Comprehensive cloud-based human resources and employee benefits platform to streamline HR processes Full stack payments platform Uses data to shed light on high volume crimes, improving prevention and detection Digital financial service company offering credit products to tech- savvy Australian consumers and businesses Helps home sellers make decisions about who they choose to sell their property Business loan marketplace that matches SMEs to the best lender based on their characteristics and needs A payment app for customers when dining out or grabbing a coffee on the go AI company that integrates neuroscience into their platform creating capability that not only manages complex problems but is able to form intrinsic relationships with humans AI-powered, context-as-a-service platform, to deliver personalised experiences to customers B2B platform for physical retail stores that provides insights through their AI engine and in-store sensors A consumer digital lending platform Conversational voice-based AI for digital interviewing, powered by machine learning Turning buildings into community-centric dwellings Westpac has committed $150m in fintech venture capital funds, managed by Reinventure. Reinventure enables Westpac to access insights and adjacent business opportunities, both in Australia and offshore. The model also helps Westpac to source commercial partnerships that create value for customers A leading digital credit platform in Indonesia Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Empowering banks to connect seamlessly with merchants and their customers Providing digital mortgage broking Reinventure: Investing in fintech businesses. Enterprise cyber security company that protects businesses from malicious bot attacks Enabling software development teams to scale processes and improve code quality Digitised debt collection, leveraging modern communications, automation and machine learning A fund of funds for cryptocurrency and blockchain technology Smart receipts that automatically link purchase receipts to customers’ bank accounts Pioneering a new asset class called Tradeable Income Based Securities (TIBS) Creating real-game assets for developers, using blockchain technology Helps banks and fintechs make better decisions using a single API and dashboard to manage KYC/AML and fraud Helping Australians create their wills online A one-click checkout platform transforming online transactions Appendix |
| Appendix 4: Industry recognition 126 Sustainability indexes Inclusion and diversity recognition Sustainability. Appendix Rated Prime status of “C” by ISS ESG Achieved highest ISS QualityScore for Environment and Social dimensions Member of the DJSI Indices since 2002 Recognised as Silver Tier Employer in 2021 in the Australian Workplace Equality Index Awards Received “B” rating in the 2021 CDP for our response to Climate Change, announced December2021 At March 2022, Westpac has received an ESG Risk Rating of 24.2 from Sustainalytics and was assessed to be at Medium risk of experiencing material financial impacts from ESG factors1 Member of the FTSE4Good Index Series, of which Westpac has been a member since 2001 At 2022, Westpac has received an MSCI ESG Rating of A2 Recognised by the Bloomberg Gender Equality Index for the 6th consecutive year Accredited as Level 1 Activate as a Carer Friendly Employer under the CarersNSW Carers + Employers Program in 2020 1 Copyright ©2021 Sustainalytics. All rights reserved. This section contains information developed by Sustainalytics (www.sustainalytics.com). Such information and data are proprietary of Sustainalytics and/or its third party suppliers (Third Party Data) and are provided for informational purposes only. They do not constitute an endorsement of any product or project, nor an investment advice and are not warranted to be complete, timely, accurate or suitable for a particular purpose. Their use is subject to conditions available at https://www.sustainalytics.com/legal-disclaimers. 2 The use by WBC of any MSCI ESG Research LLC or its affiliates (“MSCI”) data, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship, endorsement, recommendation, or promotion of WBC by MSCI. MSCI services and data are the property of MSCI or its information providers, and are provided ‘as-is’ and without warranty. MSCI names and logos are trademarks or service marks of MSCI. Ranked #1 in the ASX-50 and #2 in the world for transparency and effectiveness of our standalone sustainability Reporting, according to the 2021 Global ESG Monitor Report Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| Appendix 4: 127 Key commitments and partnerships Sustainability. Appendix Carbon Markets Institute Corporate Member UN Environment Program Finance Initiative Founding Member (1991) Commitment to United Nations Global Compact Signatory (2002), Global Compact Network Australia Founding Member (2009) Principles for Responsible Investment Signatory (2007) Supply Nation (for Indigenous owned businesses) Founding Member (2010) Financial Stability Board’s Task Force on Climate-related Financial Disclosures Align with and support UN Sustainable Development Goals CEO Statement of Commitment (2016) Climate Action 100+ Signatory (BT Financial Group 2017) The Montreal Carbon Pledge Signatory (BT Financial Group 2014) Paris Climate Agreement Supporter (2015) Australian Sustainable Finance Initiative Founding Member The Equator Principles Founding Adopter, First Australian Bank (2003) Climate Bonds Initiative Partner Carbon Neutral Certification Since 2012 (previously NCOS) Principles for Responsible Banking Signatory 2019 RE100, an initiative of The Climate Group in partnership with CDP Member (2019) United Nations Tobacco-Free Finance pledge Founding Signatory (2018) Australian Industry Energy Transitions Initiative Partner (2022) Social Traders (for social enterprises) (2016) HESTA 40:40 Vision Signatory 2021 The Valuable 500 Signatory 2021 Climate Measurement Standards Initiative (CMSI) Industry Partner (since 2020) UN Women Partner 2021 Global Investor Statement to Government on the Climate Crisis Signatory (BT Financial Group 2021) Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| Appendix 5: 128 Definitions – Credit quality. Appendix 90 days past due and not impaired Includes facilities where: • contractual payments of interest and / or principal are 90 or more calendar days overdue, including overdrafts or other revolving facilities that remain continuously outside approved limits by material amounts for 90 or more calendar days (including accounts for customers who have been granted hardship assistance); or • an order has been sought for the customer’s bankruptcy or similar legal action has been instituted which may avoid or delay repayment of its credit obligations; and • the estimated net realisable value of assets / security to which Westpac has recourse is sufficient to cover repayment of all principal and interest, or where there are otherwise reasonable grounds to expect payment in full and interest is being taken to profit on an accrual basis. These facilities, while in default, are not treated as impaired for accounting purposes Provision for expected credit losses (ECL) Expected credit losses (ECL) are a probability-weighted estimate of the cash shortfalls expected to result from defaults over the relevant timeframe. They are determined by evaluating a range of possible outcomes and taking into account the time value of money, past events, current conditions and forecasts of future economic conditions Collectively assessed provisions (CAPs) Collectively assessed provisions for expected credit loss under AASB 9 represent the Expected Credit Loss (ECL) which is collectively assessed in pools of similar assets with similar risk characteristics. This incorporates forward- looking information and does not require an actual loss event to have occurred for an impairment provision to be recognised Individually assessed provisions (IAPs) Provisions raised for losses on loans that are known to be impaired and are assessed on an individual basis. The estimated losses on these impaired loans is based on expected future cash flows discounted to their present value and, as this discount unwinds, interest will be recognised in the income statement Stage 1: 12 months ECL – performing For financial assets where there has been no significant increase in credit risk since origination a provision for 12 months expected credit losses is recognised. Interest revenue is calculated on the gross carrying amount of the financial asset Stage 2: Lifetime ECL – performing For financial assets where there has been a significant increase in credit risk since origination but where the asset is still performing a provision for lifetime expected losses is recognised. Interest revenue is calculated on the gross carrying amount of the financial asset Stage 3 Lifetime ECL – non-performing For financial assets that are non-performing a provision for lifetime expected losses is recognised. Interest revenue is calculated on the carrying amount net of the provision for ECL rather than the gross carrying amount Impaired assets Includes exposures that have deteriorated to the point where full collection of interest and principal is in doubt, based on an assessment of the customer’s outlook, cash flow, and the net realisation of value of assets to which recourse is held: • facilities 90 days or more past due, and full recovery is in doubt: exposures where contractual payments are 90 or more days in arrears and the net realisable value of assets to which recourse is held may not be sufficient to allow full collection of interest and principal, including overdrafts or other revolving facilities that remain continuously outside approved limits by material amounts for 90 or more calendar days; • non-accrual facilities: exposures with individually assessed impairment provisions held against them, excluding restructured loans; • restructured facilities: exposures where the original contractual terms have been formally modified to provide for concessions of interest or principal for reasons related to the financial difficulties of the customer; • other assets acquired through security enforcement (includes other real estate owned): includes the value of any other assets acquired as full or partial settlement of outstanding obligations through the enforcement of security arrangements; and • any other facility where the full collection of interest and principal is in doubt Stressed exposures Watchlist and substandard, 90 days past due and not impaired and impaired exposures Total committed exposures (TCE) Represents the sum of the committed portion of direct lending (including funds placement overall and deposits placed), contingent and pre-settlement risk plus the committed portion of secondary market trading and underwriting risk Watchlist and substandard Loan facilities where customers are experiencing operating weakness and financial difficulty but are not expected to incur loss of interest or principal Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| Appendix 5: 129 Definitions – Segments, earnings drivers, capital and liquidity. Appendix Capital and liquidity Capital ratios As defined by APRA (unless stated otherwise) Committed liquidity facility (CLF) The RBA makes available to Australian Authorised Deposit-taking Institutions (ADIs) a CLF that, subject to qualifying conditions, can be accessed to meet LCR requirements under APS210 Liquidity High quality liquid assets (HQLA) Assets which meet APRA’s criteria for inclusion as HQLA in the numerator of the LCR Internationally comparable ratios Internationally comparable regulatory capital ratios are Westpac’s estimated ratios after adjusting the capital ratios determined under APRA Basel III regulations for various items. Analysis aligns with the APRA study titled “International capital comparison study” dated 13 July 2015 Leverage ratio As defined by APRA (unless stated otherwise). Tier 1 capital divided by ‘exposure measure’ and expressed as a percentage. ‘Exposure measure’ is the sum of on- balance sheet exposures, derivative exposures, securities financing transaction exposures and other off-balance sheet exposures Liquidity coverage ratio (LCR) An APRA requirement to maintain an adequate level of unencumbered high quality liquid assets, to meet liquidity needs for a 30 calendar day period under an APRA- defined severe stress scenario. Absent a situation of financial stress, the value of the LCR must not be less than 100%, effective 1 January 2015. LCR is calculated as the percentage ratio of stock of HQLA and CLF over the total net cash out-flows in a modelled 30 day defined stressed scenario Net stable funding ratio (NSFR) The NSFR is defined as the ratio of the amount of available stable funding (ASF) to the amount of required stable funding (RSF) defined by APRA. The amount of ASF is the portion of an ADI’s capital and liabilities expected to be a reliable source of funds over a one year time horizon. The amount of RSF is a function of the liquidity characteristics and residual maturities of an ADI’s assets and off-balance sheet activities. ADI’s must maintain an NSFR of at least 100% Risk weighted assets or RWA Assets (both on and off-balance sheet) are risk weighted according to each asset’s inherent potential for default and what the likely losses would be in case of default. In the case of non-asset-backed risks (ie. market and operational risk), RWA is determined by multiplying the capital requirements for those risks by 12.5 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack Segments Consumer Consumer provides banking products and services, including mortgages, credit cards, personal loans, and savings and deposit products to Australian retail customers Business Business serves the banking needs of Australian small business, Agribusiness and Commercial customers WIB Westpac Institutional Bank (WIB) provides a broad range of financial products and services to corporate, institutional and government customers Westpac NZ Westpac New Zealand provides banking, wealth and insurance products and services for consumer, business and institutional customers in New Zealand Specialist Businesses Specialist Businesses comprises the operations that Westpac ultimately plans to exit. We have entered into a sales agreement for Westpac Life Insurance which is expected to finalise in 2022 (regulatory approvals have been obtained). Other operations include investment product and services, superannuation and retirement products as well as wealth administration platforms. It also manages Westpac Pacific which provides a full range of banking services in Fiji and Papua New Guinea Group Businesses or GB Group Businesses includes support functions such as Treasury, Customer Services and Technology, Corporate Services and Enterprise Services. It also includes Group- wide elimination entries arising on consolidation, centrally raised provisions and other unallocated revenue and expenses Earnings drivers Average interest- earning assets (AIEA) The average balance of assets held by the Group that generate interest income. Where possible, daily balances are used to calculate the average balance for the period Cash earnings per ordinary share Cash earnings divided by the weighted average ordinary shares (cash earnings basis) Core earnings Net operating income less operating expenses Full-time equivalent employees (FTE) A calculation based on the number of hours worked by full and part-time employees as part of their normal duties. For example, the full-time equivalent of one FTE is 76 hours paid work per fortnight |
| Appendix 5: 130 Definitions – Other. Appendix Branch transactions Branch transactions are typically withdrawals, deposits, transfers and payments Customer satisfaction or CSat The Customer Satisfaction score is an average of customer satisfaction ratings of the customer’s main financial institution for consumer or business banking on a scale of 0 to 10 (0 means ‘extremely dissatisfied’ and 10 means ‘extremely satisfied’) CSAT (Main Bank Service Satisfaction) (Westpac NZ) Source: 3 month rolling Retail Market Monitor data (survey conducted by Camorra Research). Respondents are asked to rate the overall level of service they receive from their main bank (self-selected which ONE bank is their main provider of financial services) on a scale of 1 (Poor) to 5 (Excellent). The rating represents % of respondents who scored 4 (Very Good) or 5 (Excellent) CSat – overall consumer Source: DBM Consultants Consumer Atlas, August 2019 – February 2022, 6MMA. MFI customers CSat – overall business Source: DBM Consultants Business Atlas, August 2019 – February 2022, 6MMA. MFI customers, all businesses Digitally active Australian consumer and business customers who have had an authenticated session (including Quickzone) on Westpac Group digital banking platforms in the prior 90 days Digital sales Sales refers to digital sales of consumer core products only. Sales with a funded deposit or activation constitute a quality sale Digital transactions Digital transactions including payment and transfers that occur on Westpac Live and Compass platforms (excludes payments on other platforms such as Corporate Online and Business Banking Online) MFI share MFI share results are based on the number of customers who have a Main Financial Institution (MFI) relationship with an institution, as a proportion of the number of customers that have a MFI relationship with any institution Consumer MFI share Source: DBM Consultants Consumer Atlas, February 2022 (1H22), August 2021 (2H21), to February 2021 (1H21), and to August 2020 (2H20), 6MMA. MFI Banking Group customers Net Promoter Score or NPS Net Promoter Score measures the net likelihood of recommendation to others of the customer’s main financial institution for retail or business banking. Net Promoter ScoreSM is a trademark of Bain & Co Inc., Satmetrix Systems, Inc., and Mr Frederick Reichheld. Using a 11 point numerical scale where 10 is ‘Extremely likely’ and 0 is ‘Extremely unlikely’, Net Promoter Score is calculated by subtracting the percentage of Detractors (0-6) from the percentage of Promoters (9-10) NPS Agri (Westpac NZ) 6 month Agri Market Monitor data (survey conducted by Key Research). Respondents are asked about likelihood to recommend their main business bank to business colleagues, friends or family on a scale of 1 (extremely unlikely) to 10 (extremely likely). Net Promoter Score is represents % of Promoters (recommend score of 9 or 10) minus % of Detractors (recommend score of 1 to 6) NPS Business (Westpac NZ) Source: 6 month rolling Business Finance Monitor data (survey conducted by Kantar TNS among businesses with an annual turnover of $5 to $150 million). Respondents are asked about likelihood to recommend their main business bank to business colleagues and associates on a scale of 1 (extremely unlikely) to 10 (extremely likely). Net Promoter Score is represents % of Promoters (recommend score of 9 or 10) minus % of Detractors (recommend score of 1 to 6) NPS Consumer (Westpac NZ) Source: 3 month rolling Retail Market Monitor data (survey conducted by Camorra Research). Respondents are asked about likelihood to recommend their main bank to family and friends on a scale of 1 (extremely unlikely) to 10 (extremely likely). Net Promoter Score is represents % of Promoters (recommend score of 9 or 10) minus % of Detractors (recommend score of 1 to 6) NPS – overall consumer Source: DBM Consultants Consumer Atlas, August 2019 – February 2022, 6MMA. MFI customers NPS – overall business Source: DBM Consultants Business Atlas, August 2019 – February 2022, 6MMA. MFI customers, all businesses St.George (SGB) Brands SGB Brands (Consumer): St.George Bank, Bank of Melbourne, BankSA, RAMS, Dragondirect SGB Brands (Business): St.George Bank, Bank of Melbourne and BankSA Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
| For all shareholding enquiries relating to: • Address details and communication preferences • Updating bank account details, and participation in the dividend reinvestment plan Investor Relations Contact Share Registry Contact For all matters relating to Westpac’s strategy, performance and results Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack 131 Contact us. Andrew Bowden Group Head of Investor Relations Louise Coughlan Head of Ratings Agencies and Analysis Arthur Petratos Manager, Shareholder Services Rebecca Plackett Director, Corporate Reporting and ESG Andrea Jaehne Director, Ratings Agencies and Analysis Jacqueline Boddy Head of Debt Investor Relations Contact us westpac@linkmarketservices.com.au investorcentre.linkmarketservices.com.au 1800 804 255 investorrelations@westpac.com.au westpac.com.au/investorcentre +61 2 8253 3143 Investor Relations Team. |
| Disclaimer 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 be relied upon as advice to investors or potential investors, who should consider seeking independent professional advice depending upon their specific investment objectives, financial situation or particular needs. The material contained in this presentation may include information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. All amounts are in Australian dollars unless otherwise indicated. Unless otherwise noted, financial information in this presentation is presented on a cash earnings basis. Cash earnings is a non-GAAP measure. Refer to Westpac’s 2022 Interim Financial Results (incorporating the requirements of Appendix 4D) for the six months ended 31 March 2022 available at www.westpac.com.au for details of the basis of preparation of cash earnings. Refer to page 41 for an explanation of cash earnings and Appendix 1 page 121 for a reconciliation of reported net profit to cash earnings. This presentation contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the US Securities Exchange Act of 1934. Forward-looking statements are statements about matters that are not historical facts. Forward-looking statements appear in a number of places in this presentation and include statements regarding our intent, belief or current expectations with respect to our business and operations, macro and micro economic and market conditions, results of operations and financial condition, including, without limitation, future loan loss provisions, financial support to certain borrowers, indicative drivers, forecasted economic indicators and performance metric outcomes. We use words such as ‘will’, ‘may’, ‘expect’, ‘indicative’, ‘intend’, ‘seek’, ‘would’, ‘should’, ‘could’, ‘continue’, ‘plan’, ‘estimate’, ‘anticipate’, ‘believe’, ‘probability’, ‘risk’, ‘aim’, ‘outlook’, ‘forecast’ or other similar words to identify forward-looking statements. These forward-looking statements reflect our current views with respect to future events and are subject to change, certain risks, uncertainties and assumptions which are, in many instances, beyond our control, and have been made based upon management’s expectations and beliefs concerning future developments and their potential effect upon us. There can be no assurance that future developments will be in accordance with our expectations or that the effect of future developments on us will be those anticipated. Actual results could differ materially from those which we expect, depending on the outcome of various factors. Factors that may impact on the forward-looking statements made include, but are not limited to, those described in the section titled ‘Risk factors' in Westpac’s 2022 Interim Financial Results (incorporating the requirements of Appendix 4D) for the six months ended 31 March 2022 available at www.westpac.com.au. When relying on forward-looking statements to make decisions with respect to us, investors and others should carefully consider such factors and other uncertainties and events. Except as required by law, we assume no obligation to update any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise, after the date of this presentation. Disclaimer 132 Westpac Group 2022 Interim Results Presentation & Investor Discussion Pack |
Exhibit 2
| Notification of dividend / distribution Notification of dividend / distribution 1 / 7 Announcement Summary Entity name WESTPAC BANKING CORPORATION Security on which the Distribution will be paid WBC - ORDINARY FULLY PAID Announcement Type New announcement Date of this announcement 9/5/2022 Distribution Amount AUD 0.61000000 Ex Date 19/5/2022 Record Date 20/5/2022 Payment Date 24/6/2022 DRP election date Monday May 23, 2022 17:00:00 Refer to below for full details of the announcement |
| Notification of dividend / distribution Notification of dividend / distribution 2 / 7 Announcement Details Part 1 - Entity and announcement details 1.1 Name of +Entity WESTPAC BANKING CORPORATION 1.2 Registered Number Type ABN Registration Number 33007457141 1.3 ASX issuer code WBC 1.4 The announcement is 1.5 Date of this announcement 9/5/2022 1.6 ASX +Security Code WBC ASX +Security Description ORDINARY FULLY PAID Part 2A - All dividends/distributions basic details 2A.1 Type of dividend/distribution 2A.2 The Dividend/distribution: relates to a period of six months 2A.3 The dividend/distribution relates to the financial reporting or payment period ending ended/ending (date) 31/3/2022 2A.4 +Record Date 20/5/2022 2A.5 Ex Date 19/5/2022 Ordinary New announcement |
| Notification of dividend / distribution Notification of dividend / distribution 3 / 7 2A.6 Payment Date 24/6/2022 2A.7 Are any of the below approvals required for the dividend/distribution before business day 0 of the timetable? Security holder approval Court approval Lodgement of court order with +ASIC ACCC approval FIRB approval Another approval/condition external to the entity required before business day 0 of the timetable for the dividend/distribution. 2A.8 Currency in which the dividend/distribution is made ("primary currency") AUD - Australian Dollar 2A.9 Total dividend/distribution payment amount per +security (in primary currency) for all dividends/distributions notified in this form AUD 0.61000000 2A.10 Does the entity have arrangements relating to the currency in which the dividend/distribution is paid to securityholders that it wishes to disclose to the market? 2A.11 Does the entity have a securities plan for dividends/distributions on this +security? 2A.11a If the +entity has a DRP, is the DRP applicable to this dividend/distribution? 2A.11a(i) DRP Status in respect of this dividend/distribution Full DRP 2A.12 Does the +entity have tax component information apart from franking? Part 2B - Currency Information 2B.1 Does the entity default to payment in certain currencies dependent upon certain attributes such as the banking instruction or registered address of the +securityholder? (For example NZD to residents of New Zealand and/or USD to residents of the U.S.A.). 2B.2 Please provide a description of your currency arrangements Details of dividend payment options for Westpac Ordinary Fully Paid Shares are available in Westpac's Investor Centre at .. https://www.westpac.com.au/about-westpac/investor-centre/dividend-information/dividend-payment/ 2B.2a Other currency/currencies in which the dividend/distribution will be paid: Yes Yes Yes We have a Dividend/Distribution Reinvestment Plan (DRP) Yes No |
| Notification of dividend / distribution Notification of dividend / distribution 4 / 7 Currency Payment currency equivalent amount per security GBP - Pound Sterling GBP NZD - New Zealand Dollar NZD 2B.2b Please provide the exchange rates used for non-primary currency payments GBP - Pound Sterling NZD - New Zealand Dollar 2B.2c If payment currency equivalent and exchange rates not known, date for information to be released 8/6/2022 Estimated or Actual? 2B.3 Can the securityholder choose to receive a currency different to the currency they would receive under the default arrangements? Part 3A - Ordinary dividend/distribution 3A.1 Is the ordinary dividend/distribution estimated at this time? 3A.1a Ordinary dividend/distribution estimated amount per +security AUD 3A.1b Ordinary Dividend/distribution amount per security AUD 0.61000000 3A.2 Is the ordinary dividend/distribution franked? 3A.2a Is the ordinary dividend/distribution fully franked? 3A.3 Percentage of ordinary dividend/distribution that is franked 100.0000 % 3A.3a Applicable corporate tax rate for franking credit (%) 30.0000 % 3A.4 Ordinary dividend/distribution franked amount per +security AUD 0.61000000 3A.5 Percentage amount of dividend which is unfranked 0.0000 % 3A.6 Ordinary dividend/distribution unfranked amount per +security excluding conduit foreign income amount AUD 0.00000000 3A.7 Ordinary dividend/distribution conduit foreign income amount per security AUD 0.00000000 Yes Yes No No Actual |
| Notification of dividend / distribution Notification of dividend / distribution 5 / 7 Part 3E - Other - distribution components / tax 3E.1 Please indicate where and when information about tax components can be obtained (you may enter a url). A New Zealand imputation credit of NZD 0.08 per Westpac Ordinary Fully Paid Share will attach to the dividend. 3E.2 Please indicate the following information if applicable. (Refer Annual Investment Income Report specification for further information) Field Name AIIR Specification Reference Value Estimated/Actual Interest 9.79 Unfranked dividends not declared to be conduit foreign income 9.80 Unfranked dividends declared to be conduit foreign income 9.81 Assessable foreign source income 9.91 Tax-free amounts 9.96 Tax-deferred amounts 9.97 Managed investment trust fund payments 9.105 Franked distributions from trusts 9.120 Gross cash distribution 9.121 Interest exempt from withholding 9.122 Capital Gains discount method Non-Taxable Australian property 9.124 Capital gains other Non-Taxable Australian property 9.126 Other income 9.130 Royalties 9.135 NCMI Excluded from NCMI |
| Notification of dividend / distribution Notification of dividend / distribution 6 / 7 Part 4A - +Dividend reinvestment plan (DRP) 4A.1 What is the default option if +security holders do not indicate whether they want to participate in the DRP? 4A.2 Last date and time for lodgement of election notices to share registry under DRP Monday May 23, 2022 17:00:00 4A.3 DRP discount rate 0.0000 % 4A.4 Period of calculation of reinvestment price Start Date 25/5/2022 End Date 7/6/2022 4A.5 DRP price calculation methodology The average of the daily volume weighted average market price per Westpac Ordinary Fully Paid Share sold on the ASX and Cboe Australia (formerly Chi-X Australia) during the 10 trading days commencing 25 May 2022, with no discount applied. 4A.6 DRP Price (including any discount): AUD 4A.7 DRP +securities +issue date 24/6/2022 4A.8 Will DRP +securities be a new issue? 4A.9 Is there a minimum dollar amount or number of +securities required for DRP participation? 4A.10 Is there a maximum dollar amount or number of +securities required for DRP participation? 4A.11 Are there any other conditions applying to DRP participation? 4A.11a Conditions for DRP participation Participation in the DRP is restricted to shareholders who are resident in, and whose address on the register of shareholders is in, Australia or New Zealand. 4A.12 Link to a copy of the DRP plan rules .. https://www.westpac.com.au/about-westpac/investor-centre/dividend-information/dividend-reinvestment-plan/ 4A.13 Further information about the DRP Westpac intends to arrange for the purchase of Westpac Ordinary Fully Paid Shares by a third party to satisfy the DRP for the 2022 interim ordinary dividend. For further information on the DRP visit https://www.westpac.com.au/about-westpac/in .. vestor-centre/dividend-information/dividend-reinvestment-plan/ Part 5 - Further information 5.1 Please provide any further information applicable to this dividend/distribution Yes No No No Do not participate in DRP (i.e. cash payment) |
| Notification of dividend / distribution Notification of dividend / distribution 7 / 7 5.2 Additional information for inclusion in the Announcement Summary |
